UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C.
Washington, D.C. 20549
SCHEDULE 14A
(Rule 14a-101)
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
(Amendment No. )
| Filed by a Party other than the Registrant | o |
Filed by the Registrant ☒
Filed by a Party other than the Registrant ☐
Check the appropriate box:
| o | Preliminary Proxy Statement |
| o | Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) |
| x | Definitive Proxy Statement |
| o | Definitive Additional Materials |
| o | Soliciting Material under Rule 14a-12 |
☒
Preliminary Proxy Statement
☐
Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
☐
Definitive Proxy Statement
☐
Definitive Additional Materials
☐
Soliciting Material Pursuant to §240.14a-12
Intercept Pharmaceuticals, Inc.
(Name of Registrant as Specified
In Itsin its Charter)
(Name of Person(s) Filing Proxy Statement, if
other thanOther Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
| o | Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. |
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| 4) | Proposed maximum aggregate value of transaction: |
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| 2) | Form, Schedule or Registration Statement No.: |
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(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)
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(5)
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Date Filed:
April , 2020
We are pleased to invite you to attend the
20172020 Annual Meeting of Stockholders of Intercept Pharmaceuticals, Inc., which will be held on
Tuesday, June 27, 2017,Thursday, May 28, 2020 at
9:10:00 a.m.
Eastern Time, at(Eastern Time). In light of the
New York officepublic health concerns relating to the coronavirus outbreak, government-recommended limits on public gatherings and to assist in protecting the health and well-being of
WilmerHale LLP, located at 7 World Trade Center, 250 Greenwich Street, New York, NY 10007.Intercept’s stockholders and employees, the Annual Meeting will be held virtually. You will be able to attend the Annual Meeting, ask questions and vote your shares by visiting www.virtualshareholdermeeting.com/ICPT2020. Please note that to participate you will need the 16-digit control number included in your proxy materials or on your proxy card.
Details regarding the
meeting,Annual Meeting, the business to be conducted
at the meeting and information about Intercept that you should consider when you vote your shares are described in
thisthe proxy statement.
The
boardBoard of
directorsDirectors recommends the approval of each of Proposals
1,1A through 1J, 2,
3 and
34 as set forth in the proxy statement.
We hope you will be able to attend the annual meeting.
Whether
or not you plan to attend,
the annual meeting or not, it is important that
you cast your
vote either in person or by proxy.shares be represented and voted at the Annual Meeting. You
mayare able to vote over the
internetInternet as well as by mail. After you have finished reading the proxy statement, we urge you to vote in accordance with the instructions set forth
in this proxy statement.therein. We encourage you to vote by proxy so that your shares will be represented and voted at the
meeting,Annual Meeting, whether or not you can attend.
Thank you for your continued support of Intercept. We look forward to seeing you at the
annual meeting.Annual Meeting.
Sincerely,
![[GRAPHIC MISSING]](https://capedge.com/proxy/DEF 14A/0001144204-17-023657/sig_mpruzanski.jpg)
Mark Pruzanski, M.D.
President and Chief Executive Officer
INTERCEPT PHARMACEUTICALS, INC.10 Hudson Yards,
37thFloor
37New York, NY 10001
May 1, 2017
NOTICE OF
2017 ANNUAL MEETING OF STOCKHOLDERS
TIME: 9:
TO BE HELD ON MAY 28, 2020
Dear Stockholder:
You are cordially invited to attend the 2020 Annual Meeting of Stockholders (the “Annual Meeting”) of Intercept Pharmaceuticals, Inc., a Delaware corporation (the “Company”). The Annual Meeting will be held on Thursday, May 28, 2020 at 10:00 a.m.
Eastern TimeDATE: Tuesday, June 27, 2017
PLACE: (Eastern Time). In light of the public health concerns relating to the coronavirus (“COVID-19”) outbreak, government-recommended limits on public gatherings and to assist in protecting the health and well-being of the Company’s stockholders and employees, the Annual Meeting will be held virtually. You will be able to attend the Annual Meeting, ask questions and vote your shares by visiting www.virtualshareholdermeeting.com/ICPT2020. Please note that to participate you will need the 16-digit control number included in your proxy materials or on your proxy card.
The
New York officepurposes of
WilmerHale LLP, 7 World Trade Center, 250 Greenwich Street, New York, NY 10007PURPOSES:
the Annual Meeting are:1.
To elect, by separate resolutions, the following ten nominees to serve on the Board of Directors until the 2021 Annual Meeting of Stockholders or until their respective successors are duly elected and qualified:
| | 1.1A.
Paolo Fundarò; | To elect nine directors, to serve one-year terms, expiring at the next annual meeting of stockholders in 2018; | | 1B.
Mark Pruzanski, M.D.; | | | 1C.
Srinivas Akkaraju, M.D., Ph.D.; | |
| | 1D.
Luca Benatti, Ph.D.; | | | 1E.
Daniel Bradbury; | | | 1F.
Keith Gottesdiener, M.D.; | |
| | 1G.
Nancy Miller-Rich; | | | 1H.
Gino Santini; | | | 1I.
Glenn Sblendorio; and | |
| | 1J.
Daniel Welch. | | | |
| 2. | To approve, on a non-binding advisory basis, the compensation2.
To approve an amendment to the Company’s Restated Certificate of Incorporation to increase the number of authorized shares of our named executive officers; |
| 3. | To ratify the appointment of KPMG LLP as Intercept’s independent registered public accounting firm for the fiscal year ending December 31, 2017; and |
| 4. | To transact such other business that is properly presented at the annual meeting and any adjournments or postponements thereof. |
WHO MAY VOTE:
You may vote if you were the record holder of Intercept common stock atfrom 45,000,000 to 90,000,000.
3.
To approve, on a non-binding, advisory basis, the compensation of the Company’s named executive officers.
4.
To ratify the appointment of KPMG LLP as the independent registered public accounting firm of the Company for the year ending December 31, 2020.
5.
To transact such other business as may properly come before the meeting or any adjournments thereof.
The foregoing items of business are more fully described in the proxy statement accompanying this Notice of Annual Meeting of Stockholders.
The close of business on April 6, 2020 is the record date for determining stockholders entitled to vote at the Annual Meeting. Only holders of the Company’s Common Stock, par value $0.001 per share (the “shares”), as of the record date are entitled to notice of, and to vote at, the Annual Meeting or any adjournments thereof.
By Order of the Board of Directors
/s/ Ryan T. Sullivan
Ryan T. Sullivan
General Counsel and Secretary
New York, New York
April , 2020
Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting to be held on May 28, 2017.2020. The Company’s Proxy Statement for the Annual Meeting and Annual Report on Form 10-K for the year ended December 31, 2019 are available at www.proxyvote.com.
Whether or not you plan to attend the Annual Meeting, it is important that your shares be represented and voted at the Annual Meeting. Holders of record may submit a proxy via the Internet or by completing, signing and dating the enclosed proxy card and returning it as promptly as possible in the enclosed
envelope. Holders of record must vote in accordance with the instructions listed on the proxy card. Beneficial holders whose shares are held in the name of a bank, broker or other nominee must vote in accordance with the voting instructions provided to them by their bank, broker or other nominee. Such holders may be eligible to submit a proxy electronically.
The Company’s proxy statement is dated April , 2020, and is first being mailed to stockholders on or about April , 2020.
INTERCEPT PHARMACEUTICALS, INC.
PROXY STATEMENT
TABLE OF CONTENTS
INTERCEPT PHARMACEUTICALS, INC.
PRELIMINARY PROXY STATEMENT DATED APRIL 15, 2020
SUBJECT TO COMPLETION
PROXY STATEMENT
FOR
2020 ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 28, 2020
ANNUAL MEETING MATTERS
These proxy materials are provided in connection with the solicitation of proxies by the Board of Directors (the “Board”) of Intercept Pharmaceuticals, Inc. (the “Company”) for the Company’s 2020 Annual Meeting of Stockholders (the “Annual Meeting”) to be held on Thursday, May 28, 2020 at 10:00 a.m. (Eastern Time). In light of the public health concerns relating to the coronavirus (“COVID-19”) outbreak, government-recommended limits on public gatherings and to assist in protecting the health and well-being of the Company’s stockholders and employees, the Annual Meeting will be held virtually. You will be able to attend the Annual Meeting, ask questions and vote your shares by visiting www.virtualshareholdermeeting.com/ICPT2020. Please note that to participate you will need the 16-digit control number included in your proxy materials or on your proxy card.
Unless otherwise noted or the context otherwise requires, references in this proxy statement to “we,” “us” or “our” refer to Intercept Pharmaceuticals, Inc.
General Information About the Annual Meeting and Voting
General
This proxy statement contains information about the Annual Meeting and was prepared by our management for the Board. This proxy statement and the Company’s Annual Report on Form 10-K for the year ended December 31, 2019 (the “Annual Report”) are first being mailed to stockholders on or about April , 2020. This proxy statement and the Annual Report are available at www.proxyvote.com.
Purpose of the Annual Meeting
The specific proposals to be considered and acted upon at the Annual Meeting are summarized in the accompanying Notice of Annual Meeting of Stockholders. Each proposal is described in more detail in this proxy statement.
Who can vote?
The close of business on April 6, 2020 is the record date for determining stockholders entitled to vote at the Annual Meeting. Only holders of the Company’s Common Stock, par value $0.001 per share (the “shares”), as of the record date are entitled to notice of, and to vote at, the Annual Meeting or any adjournments thereof. Each such holder is entitled to one (1) vote for each share that such holder held as of the record date.
On April 6, 2020, there were 32,943,079 of the Company’s shares outstanding.
How do I vote?
Holders of Record
If on the record date, your shares were registered directly in your name with our transfer agent, VStock Transfer, LLC, then you may vote your shares in one of the following ways:
•
by voting over the Internet as instructed on the enclosed proxy card;
•
by mailing your completed, signed and dated proxy card as instructed on the card; or
•
by attending the Annual Meeting online and voting during the meeting.
Beneficial Holders
If on the record date, your shares were held in street name through a bank, broker or other nominee, then you must vote in accordance with the voting instructions provided to you by your bank, broker or other nominee. If your shares are held in street name, you still may be eligible to submit a proxy electronically. Beneficial holders whose shares are held in street name and who plan to vote during the Annual Meeting must obtain a legal proxy, executed in their favor by or on behalf of their bank, broker or other nominee, to be able to vote during the Annual Meeting, and should contact such bank, broker or other nominee for instructions on how to obtain a legal proxy and control number.
What am I being asked to vote on?
There are four matters scheduled to be voted on at the Annual Meeting:
1.
To elect, by separate resolutions, the following ten nominees to serve on the Board of Directors until the 2021 Annual Meeting of Stockholders or until their respective successors are duly elected and qualified:
a)
Paolo Fundarò (Proposal No. 1A);
b)
Mark Pruzanski, M.D. (Proposal No. 1B);
c)
Srinivas Akkaraju, M.D., Ph.D. (Proposal No. 1C);
d)
Luca Benatti, Ph.D. (Proposal No. 1D);
e)
Daniel Bradbury (Proposal No. 1E);
f)
Keith Gottesdiener, M.D. (Proposal No. 1F);
g)
Nancy Miller-Rich (Proposal No. 1G);
h)
Gino Santini (Proposal No. 1H);
i)
Glenn Sblendorio (Proposal No. 1I); and
j)
Daniel Welch (Proposal No. 1J);
2.
To approve an amendment to the Company’s Restated Certificate of Incorporation to increase the number of authorized shares of common stock from 45,000,000 to 90,000,000 (Proposal No. 2);
3.
To approve, on a non-binding, advisory basis, the compensation of the Company’s named executive officers (Proposal No. 3); and
4.
To ratify the appointment of KPMG LLP as the independent registered public accounting firm of the Company for the year ending December 31, 2020 (Proposal No. 4).
Will any other matters be voted on at the Annual Meeting?
As of the date of this proxy statement, the Company’s management knows of no other matter that will be presented for consideration at the Annual Meeting other than those matters discussed in this proxy statement. If any other matters properly come before the Annual Meeting and call for a vote of stockholders, proxies properly submitted prior to the Annual Meeting will be voted in accordance with the judgment of the proxy holders.
How does the Board recommend that I vote on the proposals?
The Board recommends that you vote your shares as follows:
1.
FOR the election, by separate resolutions, of each of the following ten nominees to serve on the Board of Directors until the 2021 Annual Meeting of Stockholders or until their respective successors are duly elected and qualified:
a)
Paolo Fundarò (Proposal No. 1A);
b)
Mark Pruzanski, M.D. (Proposal No. 1B);
c)
Srinivas Akkaraju, M.D., Ph.D. (Proposal No. 1C);
d)
Luca Benatti, Ph.D. (Proposal No. 1D);
e)
Daniel Bradbury (Proposal No. 1E);
f)
Keith Gottesdiener, M.D. (Proposal No. 1F);
g)
Nancy Miller-Rich (Proposal No. 1G);
h)
Gino Santini (Proposal No. 1H);
i)
Glenn Sblendorio (Proposal No. 1I); and
j)
Daniel Welch (Proposal No. 1J);
2.
FOR the approval of an amendment to the Company’s Restated Certificate of Incorporation to increase the number of authorized shares of common stock from 45,000,000 to 90,000,000 (Proposal No. 2);
3.
FOR the approval, on a non-binding, advisory basis, of the compensation of the Company’s named executive officers (Proposal No.3); and
4.
FOR the ratification of the appointment of KPMG LLP as the independent registered public accounting firm of the Company for the year ending December 31, 2020 (Proposal No. 4).
How can I vote on each proposal?
For Proposal Nos. 1A, 1B, 1C, 1D, 1E, 1F, 1G, 1H, 1I and 1J you may vote FOR or WITHHOLD your vote. For Proposal Nos. 2, 3 and 4, you may vote FOR or AGAINST or ABSTAIN.
How do I attend the Annual Meeting?
Attendance at the Annual Meeting is limited to our stockholders as of the record date. To attend the virtual Annual Meeting, log in at www.virtualshareholdermeeting.com/ICPT2020. You will need your unique 16-digit control number included in your proxy materials or on your proxy card. The Annual Meeting will begin promptly at 10:00 a.m. (Eastern Time). Online check-in will begin at 9:30 a.m. (Eastern Time), and you should allow ample time for the online check-in procedures. In the event that you do not have a control number, please contact your broker, bank or other nominee as soon as possible and no later than May 18, 2020, so that you can be provided with a control number and gain access to the Annual Meeting. Beneficial holders whose shares are held in street name and who plan to vote during the Annual Meeting must also obtain a legal proxy, executed in their favor by or on behalf of their bank, broker or other nominee, to be able to vote during the Annual Meeting, and should contact such bank, broker or other nominee for instructions on how to obtain a legal proxy and control number.
It is important that your shares be represented and voted at the Annual Meeting and, whether or not you plan to attend the Annual Meeting, we encourage you to submit a proxy over the Internet or by completing and returning the proxy card. You do not need to attend the Annual Meeting in order to vote.
How can I submit a question during the Annual Meeting?
You may submit questions online in writing during the Annual Meeting at www.virtualshareholdermeeting.com/ICPT2020. You will need your unique 16-digit control number included in your proxy materials or on your proxy card.
We intend to answer questions submitted online in writing during the Award Meeting that are relevant to the Annual Meeting and pertinent to matters properly before the Annual Meeting, as time permits. Questions and answers will be grouped by topic and substantially similar questions will be answered once.
What if I need technical assistance?
Beginning 30 minutes prior to the start of and during the virtual Annual Meeting, we will have a support team ready to assist you with any technical difficulties you may have accessing or hearing the Annual Meeting. If you encounter any difficulties accessing or hearing the Annual Meeting during this time, you should call the technical support telephone number that will be posted on the virtual Annual Meeting log-in page.
Can I vote during the Annual Meeting?
Yes. To log in and cast your vote electronically during the Annual Meeting, you will need your unique 16-digit control number included in your proxy materials or on your proxy card. In the event that you do not have a control number, please contact your broker, bank or other nominee as soon as possible and no later than May 18, 2020, so that you can be provided with a control number and cast your vote electronically during the Annual Meeting.
Will a replay of the Annual Meeting be available?
A replay of the Annual Meeting will be made publicly available 24 hours after the meeting at www.virtualshareholdermeeting.com/ ICPT2020 and for two weeks thereafter.
Will a list of stockholders be made available?
Yes. A list of stockholders of record will be available
electronically during the Annual Meeting at
the annual meetingwww.virtualshareholdermeeting.com/ICPT2020 and, during the ten days prior to the
annual meeting,Annual Meeting, at our principal executive offices located at 10 Hudson Yards,
37thFloor,
37, New York, NY 10001.
All stockholders
What vote is required to approve each proposal?
1.
Approval of record onProposal Nos. 1A, 1B, 1C, 1D, 1E, 1F, 1G, 1H, 1I and 1J each requires a plurality of the record date are cordially invited to attend the annual meeting.Whether you plan to attend the annual meeting or not, we urge you to vote and submit your proxy via the internetvotes cast in person or by mail in order to ensure that your shares are represented and votedproxy at the annual meeting.You may change or revoke your proxy at any time before it is voted atAnnual Meeting.
2.
Approval of Proposal No. 2 requires the
meeting.BY ORDER OF THE BOARD OF DIRECTORS
![[GRAPHIC MISSING]](https://capedge.com/proxy/DEF 14A/0001144204-17-023657/sig_bryan-yoon.jpg)
Bryan Yoon
Corporate Secretary
i
TABLE OF CONTENTS
Intercept Pharmaceuticals, Inc.
10 Hudson Yards, Floor 37
New York, NY 10001
PROXY STATEMENT FOR THE INTERCEPT PHARMACEUTICALS, INC.
2017 ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON JUNE 27, 2017
This proxy statement, along with the accompanying notice of 2017 annual meeting of stockholders, contains information about the 2017 annual meeting of stockholders of Intercept Pharmaceuticals, Inc., including any adjournments or postponementsaffirmative vote of the annual meeting. We are holding the annual meeting at 9:00 a.m., Eastern Time, on Tuesday, June 27, 2017, at the New York officeholders of WilmerHale LLP, located at 7 World Trade Center, 250 Greenwich Street, New York, NY 10007.
In this proxy statement, we refer to Intercept Pharmaceuticals, Inc. as “Intercept,” “the Company,” “we” and “us.”
This proxy statement relates to the solicitationa majority of proxies by our board of directors for use at the annual meeting.
On or about May 5, 2017, we began sending this proxy statement, the attached Notice of Annual Meeting of Stockholders and the enclosed proxy card to all stockholders entitled to vote at the annual meeting.
Although not part of this proxy statement, we are also sending, along with this proxy statement, our 2016 annual report on Form 10-K, which includes our financial statements for the fiscal year ended December 31, 2016.
TABLE OF CONTENTS
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE STOCKHOLDER MEETING TO BE HELD ON JUNE 27, 2017
This proxy statement and our 2016 annual report on Form 10-K are available for viewing, printing and downloading athttp://www.interceptpharma.com/proxy.html. On this website, record holders can also elect to receive future distributions of our proxy statements and annual reports to stockholders by electronic delivery.
Additionally, you can find a copy of our annual report on Form 10-K, which includes our financial statements, for the fiscal year ended December 31, 2016 on the website of the Securities and Exchange Commission, or the SEC, atwww.sec.gov, or in the “Financial Information” section of the “Investors” section of our website atwww.interceptpharma.com.You may also obtain a printed copy of our annual report on Form 10-K, including our financial statements, free of charge, from us by sending a written request to: Intercept Pharmaceuticals, Inc., 10 Hudson Yards, Floor 37, New York, NY 10001, Attn: Corporate Secretary. Exhibits will be provided upon written request and payment of an appropriate processing fee.
TABLE OF CONTENTS
IMPORTANT INFORMATION ABOUT THE ANNUAL MEETING AND VOTING
Why is the Company Soliciting My Proxy?
The board of directors of Intercept is soliciting your proxy to vote at the 2017 annual meeting of stockholders to be held at the New York office of WilmerHale LLP, located at 7 World Trade Center, 250 Greenwich Street, New York, NY 10007, on Tuesday, June 27, 2017, at 9:00 a.m. Eastern Time and any adjournments of the meeting, which we refer to as the annual meeting. The proxy statement along with the accompanying Notice of Annual Meeting of Stockholders summarizes the purposes of the meeting and the information you need to know to vote at the annual meeting.
We have made available to you on the internet or have sent you this proxy statement, the Notice of Annual Meeting of Stockholders, the proxy card and a copy of our annual report on Form 10-K for the fiscal year ended December 31, 2016 because you owned shares of Intercept common stock on the record date. The Company intends to commence distribution of the proxy materials to stockholders on or about May 5, 2017.
Who Can Vote?
Only stockholders who owned our common stock at the close of business on April 28, 2017 are entitled to vote at the annual meeting. On this record date, there were 25,009,178 shares of our common stock outstanding and entitled to vote at the Annual Meeting.
3.
Approval of Proposal No. 3 requires the affirmative vote of a majority of the shares cast affirmatively or negatively in person or by proxy at the Annual Meeting.
4.
Approval of Proposal No. 4 requires the affirmative vote of a majority of the shares cast affirmatively or negatively in person or by proxy at the Annual Meeting.
Abstentions may be specified for Proposal Nos. 2, 3 and 4. For Proposal No. 2, abstentions, if any, have the same effect as a negative vote. Our common stockFor Proposal Nos. 3 and 4, abstentions, if any, have no effect on the results of the relevant vote.
For Proposal No. 2, broker non-votes, if any, have the same effect as a negative vote. For Proposal Nos. 1A, 1B, 1C, 1D, 1E, 1F, 1G, 1H, 1I, 1J, 3 and 4, broker non-votes have no effect on the results of the relevant vote.
What is our only classthe quorum requirement?
A “quorum” must be present for the Annual Meeting to be held. A quorum will be present if the holders of
a majority of the voting
stock.How Many Votes Do I Have?
Each sharepower of our common stockall of the shares entitled to vote at the Annual Meeting are present or represented by proxy at the Annual Meeting. Shares present or represented by proxy at the Annual Meeting, including broker non-votes and shares that you own entitles youabstain or do not vote with respect to one vote.
How Do I Vote?
Whether you plan to attendor more of the annual meeting or not, we urge you to vote by proxy. All shares represented by valid proxies that we receive through this solicitation, and that are not revoked,matters presented for stockholder approval, will be voted in accordance with your instructions oncounted for purposes of determining whether a quorum is present. If there is no quorum, the proxy card or as instructed viaAnnual Meeting may be adjourned, from time to time, by the internet. If you properly submit a proxy without giving specific voting instructions, yourchairman of the Annual Meeting.
Will my shares will be voted in accordance with the board’s recommendations as noted below. Voting by proxy willif I do not affect your right to attend the annual meeting. For instructions on how to change or revoke your proxy, see “May I Change or Revoke My Proxy?” below. provide a proxy?
If your shares are registered directly in your name
throughwith our
stock transfer agent,
VStock Transfer, LLC, or if you have stock certificates registered in your name, you may vote by any of the following methods: | • | By internet. Go tohttp://www.interceptpharma.com/proxy.html. Follow the instructions included in the proxy card to vote by internet. |
By mail. You can vote by mail by completing, signing, dating and returning the proxy card as instructed on the card. If you sign the proxy card but do not specify how you want your shares voted, they will be voted in accordance with the board’s recommendations as noted below.
In person at the meeting. If you attend the meeting, you may deliver a completed proxy card in person or you may vote by completing a ballot, which will be available at the meeting.
Internet voting facilities for stockholders of record will be available 24 hours a day and will close at 11:59 p.m. Eastern Time on June 26, 2017.
If your shares are held in “street name” (held in the name of a bank, broker or other holder of record), you will receive instructions from the holder of record. You must follow the instructions of the holder of record in order for your shares to be voted. Internet voting also will be offered to stockholders owning shares through certain banks and brokers. If your shares are not registered in your own name and you plan to vote your shares in person at the annual meeting, you should contact your broker or agent to obtain a legal proxy or broker’s proxy card and bring it to the annual meeting in order to vote.
TABLE OF CONTENTS
How Does the Board of Directors Recommend That I Vote on the Proposals?
The board of directors recommends that you vote as follows:
“FOR” the election of the listed nominees for directors;
“FOR” approval, on a non-binding advisory basis, of the executive compensation of our named executive officers as described in this proxy statement; and
“FOR” the ratification of the selection of KPMG LLP as our independent registered public accounting firm for our fiscal year ending December 31, 2017.
If any other matter is presented at the annual meeting, your proxy provides that your shares will be voted by the proxy holder listed in the proxy in accordance with his or her best judgment.
May I Change or Revoke My Proxy?
If you give us your proxy, you may change or revoke it at any time before the annual meeting. You may change or revoke your proxy in any one of the following ways:
if you received a proxy card, by signing a new proxy card with a date later than your previously delivered proxy and submitting it as instructed above;
by re-voting by internet as instructed above;
by notifying Intercept’s Corporate Secretary in writing before the annual meeting that you have revoked your proxy; or
by attending the annual meeting in person and voting in person. Attending the annual meeting in person will not in and of itself revoke a previously submitted proxy. You must specifically request at the annual meeting that it be revoked.
Your most current vote, whether by internet or proxy card is the one that will be counted.
What if I Receive More Than One Proxy Card?
You may receive more than one proxy card if you hold shares of our common stock in more than one account, which may be in registered form or held in street name. Please vote in the manner described above under “How Do I Vote?” for each account to ensure that all of your shares are voted.
Will My Shares be Voted if I Do Not Vote?
If your shares are registered in your name or if you have stock certificates, they will not be counted if you do not vote as described above under “How Dodo I Vote?vote?”
Generally, broker non-votes occur when shares held by a broker in “street name” for a beneficial owner are not voted with respect to a particular proposal because (1) the broker has not received voting instructions from the beneficial owner and (2) the broker lacks discretionary voting power to vote those shares. Under applicable stock exchange rules, if you do not give instructions to your brokerage firm subject to these rules, it will still be able to vote your shares with respect to certain “discretionary” items, but will not be allowed to vote your shares with respect to certain “non-discretionary” items. A broker is entitled to vote shares held for a beneficial owner on “routine” matters, such as the ratification of the appointment of independent auditors, without instructions from the beneficial owner of those shares. On the other hand, a broker may not be entitled to vote shares held for a beneficial owner on certain non-routine items, such as the election of directors, absent instructions from the beneficial owner of such shares. Broker non-votes count for purposes of determining whether a quorum exists but do not count as entitled to vote with respect to individual proposals.
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The election of directors (Proposal 1) and the non-binding advisory vote on executive compensation, or “say-on-pay” vote (Proposal 2), are both “non-discretionary” items, meaning that if you do not instruct your brokerage firm on how to vote with respect to any of these proposals, your brokerage firm will not vote with respect to that proposal and your shares will be counted as “broker non-votes.” If your shares are held in street name, andyour shares may be voted even if you do not provide voting instructions to the bank, broker or other nominee that holdsthrough which the shares are held with voting instructions. These entities have the authority, under applicable regulatory rules, to vote shares for which their customers do not provide voting instructions on certain “routine” matters. Proposal No. 4 is considered a “routine” matter for which these entities may vote unvoted shares.
Proposal Nos. 1A, 1B, 1C, 1D, 1E, 1F, 1G, 1H, 1I, 1J, 2 and 3 are not considered “routine” matters for which these entities may vote unvoted shares. Accordingly, if you hold your shares as described above,in street name, the bank, broker or other nominee that holds yourthrough which the shares has the authorityare held is not permitted to vote your unvoted shares onlywith respect to the election of directors, the approval of an amendment to the Company’s Restated Certificate of Incorporation or the approval, on a non-binding, advisory basis, of the compensation of the Company’s named executive officers if you have not provided instructions. This is called a “broker non-vote.” We strongly encourage you to submit your proxy and exercise your right to vote as a stockholder.
What if I return a proxy card or otherwise submit a proxy but do not make specific choices?
If you return a signed and dated proxy card or otherwise submit a proxy without voting on a proposal, your shares will be voted on such proposal in the manner set forth below:
1.
FOR the election, by separate resolutions, of each of the following ten nominees to serve on the Board of Directors until the 2021 Annual Meeting of Stockholders or until their respective successors are duly elected and qualified:
a)
Paolo Fundarò (Proposal No. 1A);
b)
Mark Pruzanski, M.D. (Proposal No. 1B);
c)
Srinivas Akkaraju, M.D., Ph.D. (Proposal No. 1C);
d)
Luca Benatti, Ph.D. (Proposal No. 1D);
e)
Daniel Bradbury (Proposal No. 1E);
f)
Keith Gottesdiener, M.D. (Proposal No. 1F);
g)
Nancy Miller-Rich (Proposal No. 1G);
h)
Gino Santini (Proposal No. 1H);
i)
Glenn Sblendorio (Proposal No. 1I); and
j)
Daniel Welch (Proposal No. 1J);
2.
FOR the approval of an amendment to the Company’s Restated Certificate of Incorporation to increase the authorized number of shares of common stock from 45,000,000 to 90,000,000 (Proposal No. 2);
3.
FOR the approval, on a non-binding, advisory basis, of the compensation of the Company’s named executive officers (Proposal No. 3);
4.
FOR the ratification of the appointment of
ourKPMG LLP as the independent registered public accounting firm
(Proposal 3) without receiving instructions from you, because this is considered a “discretionary” item.For any proposals requiring the affirmative vote of those shares present and entitled to vote, broker non-votes will not affect the outcome of the vote.
Therefore, we encourageCompany for the year ending December 31, 2020 (Proposal No. 4); and
5.
In the manner that the proxy holders deem appropriate for any other proposal to be considered at the Annual Meeting.
May I revoke my proxy?
If you are a holder of record, you may revoke your proxy before it is voted at the Annual Meeting by:
•
submitting another properly completed proxy card with a later date and returning it as instructed on the card so that it is received by the Company at least one hour prior to providethe commencement of the Annual Meeting;
•
submitting a new proxy via the Internet prior to the deadline listed on the proxy card;
•
providing written notice received by the Secretary of the Company at least one hour prior to the commencement of the Annual Meeting; or
•
attending the Annual Meeting and voting in accordance with the requirements described in this proxy statement.
If you are a beneficial holder whose shares are held in street name, you may submit new voting instructions toby contacting the bank, broker or other nominee through which you hold your shares. You may also vote at the Annual Meeting if you obtain a legal proxy, executed in your favor by or on behalf of your bank, broker or other designee. nominee, and control number, as described elsewhere in this proxy statement.
Who is making and paying for this proxy solicitation?
This ensuresproxy is solicited on behalf of the Board. The Company will pay the cost of distributing this proxy statement and related materials. Upon request, the Company will reimburse banks, brokers and other nominees for reasonable expenses they incur in forwarding proxy materials to beneficial owners of the Company’s shares. The Company has retained Innisfree M&A Incorporated to assist in the solicitation of proxies for a fee of approximately $17,500, plus out-of-pocket expenses. Certain of the Company’s directors, officers and employees may participate in the solicitation of proxies, including electronically or by mail or telephone, without additional compensation.
What does it mean if I receive more than one set of proxy materials?
If you receive more than one set of proxy materials, your shares may be registered in more than one name or in different accounts. Please submit proxies for all of your shares.
I share an address with another stockholder and we received only one Annual Report and one proxy statement. How may I obtain an additional copy of the Annual Report and proxy statement?
We have adopted a procedure called “householding” under which only one Annual Report and one proxy statement will be
voted atmailed to multiple stockholders sharing an address unless the
annual meetingCompany receives contrary instructions from one or more of the stockholders sharing an address. If your household has received only one Annual Report and
inone proxy statement and you wish to receive separate copies of these documents, please follow the
manner you desire.What Vote is Required to Approve Each Proposal and How are Votes Counted?
 | | |
Proposal 1: Elect Directors | | The nominees for director who receive the most votes (also known as a “plurality” of the votes cast) will be elected. You may vote FOR all of the nominees, to WITHHOLD your vote from all of the nominees or to WITHHOLD your vote from any one or more of the nominees. Votes that are withheld will not be included in the vote tally for the election of the directors. |
Proposal 2: Advisory Vote to Approve Executive Compensation, or “Say-on-Pay” | | The affirmative vote of a majority of the shares cast affirmatively or negatively for this proposal is required to approve, on an advisory basis, the compensation of our named executive officers, as described in this proxy statement. Abstentions will have no effect on the results of this vote. Although the advisory vote is non-binding, the compensation committee and the board of directors will review the voting results and take them into consideration when making future decisions regarding executive compensation. |
Proposal 3: Ratify Appointment of
Independent Registered Public Accounting Firm | | The affirmative vote of a majority of the shares cast affirmatively or negatively for this proposal is required to ratify the selection of our independent registered public accounting firm. Abstentions will have no effect on the results of this vote. Brokerage firms have authority to vote customers’ unvoted shares held by the firms in street name on this proposal. If a broker does not exercise this authority, such broker non-votes will have no effect on the results of this vote. We are not required to obtain the approval of our stockholders to select our independent registered public accounting firm. However, if our stockholders do not ratify the appointment of KPMG LLP as our independent registered public accounting firm for 2017, our audit committee of our board of directors will reconsider its appointment. |
Is Voting Confidential?
We will keep all the proxies, ballots and voting tabulations private. We only let our Inspector of Election, VStock Transfer, LLC, examine these documents. Management will not know how you voted on a specific proposal unless it is necessary to meet legal requirements. We will, however, forward to management any written comments you provide on the proxy card or through other means.
instructions set forth under “Householding.”
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WhereHow can I find out the results of the voting at the Annual Meeting?
We will publish the voting results of the Annual
Meeting?The preliminary voting results will be announced at the annual meeting, and we will publish preliminary, or final results if available,Meeting in a Current Report on Form 8-K within four business days after the Annual Meeting.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This proxy statement contains forward-looking statements, including, but not limited to, statements regarding the progress, timing and results of our clinical trials, including our clinical trials for the treatment of nonalcoholic steatohepatitis (“NASH”), the safety and efficacy of our approved product, Ocaliva (obeticholic acid or “OCA”) for primary biliary cholangitis (“PBC”), and our product candidates, including OCA for liver fibrosis due to NASH, the timing and acceptance of our regulatory filings and the potential approval of OCA for liver fibrosis due to NASH or any other indications in addition to PBC, the timing and potential commercial success of OCA and any other product candidates we may develop and our strategy, future operations, future financial position, future revenue, projected costs, financial guidance, prospects, plans and objectives.
These statements constitute forward-looking statements within the meaning of Section 27A of the
annual meeting. If final resultsSecurities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). The words “anticipate,” “believe,” “estimate,” “expect,” “intend,” “may,” “plan,” “predict,” “project,” “target,” “potential,” “will,” “would,” “could,” “should,” “possible,” “continue” and similar expressions are
unavailable atintended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the
timedate of this proxy statement, and we
file the Form 8-K, then we will file an amended reportundertake no obligation to update any forward-looking statement except as required by law. These forward-looking statements are based on
Form 8-Kestimates and assumptions by our management that, although believed to
disclose the final voting results within four business days after the final voting resultsbe reasonable, are
known.What Are the Costsinherently uncertain and subject to a number of Soliciting these Proxies?
We will payrisks. The following represent some, but not necessarily all, of the factors that could cause actual results to differ materially from historical results or those anticipated or predicted by our forward-looking statements: the impact of COVID-19, including any impact on our net sales, non-GAAP adjusted operating expenses or financial position, related quarantines and government actions, delays relating to our regulatory applications, disruptions relating to our ongoing clinical trials or involving our contract research organizations, study sites or other clinical partners, disruptions relating to our supply chain or involving our third-party manufacturers, distributors or other distribution partners, facility closures or other restrictions, and the extent and duration thereof; our ability to successfully commercialize Ocaliva for PBC; our ability to maintain our regulatory approval of Ocaliva for PBC in the United States, Europe, Canada, Israel, Australia and other jurisdictions in which we have or may receive marketing authorization; the initiation, timing, cost, conduct, progress and results of our research and development activities, preclinical studies and clinical trials, including any issues, delays or failures in identifying patients, enrolling patients, treating patients, retaining patients, meeting specific endpoints in the jurisdictions in which we intend to seek approval or completing and timely reporting the results of our NASH or PBC clinical trials; our ability to timely and cost-effectively file for and obtain regulatory approval of our product candidates, including the regulatory approval of our New Drug Application for liver fibrosis due to NASH; any advisory committee recommendation that our product candidates, including OCA for liver fibrosis due to NASH, should not be approved or approved only under certain conditions; any determination that the regulatory applications and subsequent information we submit for our product candidates, including OCA for liver fibrosis due to NASH, do not contain adequate clinical or other data or meet applicable regulatory requirements for approval; conditions that may be imposed by regulatory authorities on our marketing approvals for our products and product candidates, including OCA for liver fibrosis due to NASH, such as the need for clinical outcomes data (and not just results based on achievement of a surrogate endpoint), any risk mitigation programs such as a REMS, and any related restrictions, limitations and/or warnings contained in the label of any of our products or product candidates; any potential side effects associated with Ocaliva for PBC, OCA for liver fibrosis due to NASH or our other product candidates that could delay or prevent approval, require that an approved product be taken off the market, require the inclusion of safety warnings or precautions or otherwise limit the sale of such product or product candidate; our ability to establish and maintain relationships with, and the performance of, third-party manufacturers, contract research organizations and other vendors upon whom we are substantially dependent for, among other things, the manufacture and supply of our products, including Ocaliva for PBC and, if approved, OCA for liver fibrosis due to NASH, and our clinical trial activities; our ability to identify, develop and successfully commercialize our products and product candidates, including our ability to timely and successfully launch OCA for liver fibrosis due to NASH, if approved; our ability to obtain and maintain intellectual property
protection for our products and product candidates, including our ability to cost-effectively file, prosecute, defend and enforce any patent claims or other intellectual property rights; the size and growth of the markets for our products and product candidates and our ability to serve those markets; the degree of market acceptance of Ocaliva for PBC and, if approved, OCA for liver fibrosis due to NASH or our other product candidates among physicians, patients and healthcare payors; the availability of adequate coverage and reimbursement from governmental and private healthcare payors for our products, including Ocaliva for PBC and, if approved, OCA for liver fibrosis due to NASH, and our ability to obtain adequate pricing for such products; our ability to establish and maintain effective sales, marketing and distribution capabilities, either directly or through collaborations with third parties; competition from existing drugs or new drugs that become available; our ability to prevent system failures, data breaches or violations of data protection laws; costs and outcomes relating to any disputes, governmental inquiries or investigations, legal proceedings or litigation, including any securities, intellectual property, employment, product liability or other litigation; our collaborators’ election to pursue research, development and commercialization activities; our ability to establish and maintain relationships with collaborators with development, regulatory and commercialization expertise; our need for and ability to generate or obtain additional financing; our estimates regarding future expenses, revenues and capital requirements and the accuracy thereof; our use of soliciting these proxies.cash and short-term investments; our ability to acquire, license and invest in businesses, technologies, product candidates and products; our ability to attract and retain key personnel to manage our business effectively; our ability to manage the growth of our operations, infrastructure, personnel, systems and controls; our ability to obtain and maintain adequate insurance coverage; the impact of general U.S. and foreign economic, industry, market, regulatory or political conditions, including the potential impact of Brexit; and the other risks and uncertainties identified in our periodic filings filed with the U.S. Securities and Exchange Commission (the “SEC”), including our Annual Report.
PROPOSALS UNDER VOTE
PROPOSAL NOS. 1A, 1B, 1C, 1D, 1E, 1F, 1G, 1H, 1I AND 1J:
ELECTION OF DIRECTORS
The Board currently consists of ten directors, each of whom is standing for election at the Annual Meeting. Our directors are elected annually to serve one-year terms.
The following table sets forth the names, ages, tenures and employees may solicit proxies in person or by telephone, fax or email. We will pay these employeescommittee memberships of our directors as of April , 2020.
| Director | | | Age | | | Director
Since | |
Paolo Fundarò(1) | | | | | 46 | | | | | | 2006 | | |
| Mark Pruzanski, M.D. | | | | | 52 | | | | | | 2002 | | |
Srinivas Akkaraju, M.D., Ph.D.(2) | | | | | 52 | | | | | | 2012 | | |
Luca Benatti, Ph.D.(2)(3) | | | | | 59 | | | | | | 2014 | | |
Daniel Bradbury(3)(4) | | | | | 59 | | | | | | 2016 | | |
Keith Gottesdiener, M.D.(2) | | | | | 66 | | | | | | 2016 | | |
Nancy Miller-Rich(5) | | | | | 61 | | | | | | 2018 | | |
Gino Santini(4)(5)(6) | | | | | 63 | | | | | | 2015 | | |
Glenn Sblendorio(4) | | | | | 64 | | | | | | 2014 | | |
Daniel Welch(3)(5) | | | | | 62 | | | | | | 2015 | | |
(1)
Chairman of the Board.
(2)
Member of the Research and Development Committee.
(3)
Member of the Nominating and Governance Committee.
(4)
Member of the Audit Committee.
(5)
Member of the Compensation Committee.
(6)
Lead Independent Director.
The Board has nominated Paolo Fundarò, Mark Pruzanski, M.D., Srinivas Akkaraju, M.D., Ph.D., Luca Benatti, Ph.D., Daniel Bradbury, Keith Gottesdiener, M.D., Nancy Miller-Rich, Gino Santini, Glenn Sblendorio and Daniel Welch for election as directors
no additional compensation for these services. We will ask banks, brokers and other institutions, nominees and fiduciaries to forward these proxy materials to their principals and to obtain authority to execute proxies. We will then reimburse them for their expenses.What Constitutes a Quorum forat the Annual Meeting?
Meeting. The presence,election of each of the nominees recommended for election as directors requires a plurality of the votes cast in person or by proxy of the holders of a majority of the voting power of all outstanding shares of our common stock entitled to vote at the annual meeting is necessary to constitute a quorum at the annual meeting. Votes of stockholders of record who are present at the annual meeting in person or by proxy, abstentions, and broker non-votes are counted for purposes of determining whether a quorum exists.
Attending the Annual Meeting
The annual meeting will be held at 9:00 a.m. Eastern Time on Tuesday, June 27, 2017 at the New York office of WilmerHale LLP, located at 7 World Trade Center, 250 Greenwich Street, New York, NY 10007. You need not attend the annual meeting in order to vote.
Householding of Annual Disclosure Documents
SEC rules concerning the delivery of annual disclosure documents allow us or your broker to send a single set of our proxy materials to any household at which two or more of our stockholders reside, if we or your broker believe that the stockholders are members of the same family. This practice, referred to as “householding,” benefits both you and us. It reduces the volume of duplicate information received at your household and helps to reduce our expenses. The rule applies to our annual reports, proxy statements and information statements. Once you receive notice from your broker or from us that communications to your address will be “householded,” the practice will continue until you are otherwise notified or until you revoke your consent to the practice. Stockholders who participate in householding will continue to have access to and utilize separate proxy voting instructions.
Meeting. If your household received a single set of proxy materials this year, but you would prefer to receive your own copy, please contact our transfer agent, VStock Transfer, LLC, by calling their toll free number, 1-855-9VSTOCK.
If you do not wish to participate in “householding” and would like to receive your own set of Intercept’s proxy materials in future years, follow the instructions described below. Conversely, if you share an address with another Intercept stockholder and together both of you would like to receive only a single set of proxy materials, follow these instructions:
If your Intercept shares are registered in your own name, please contact our transfer agent, VStock Transfer, LLC, and inform them of your request by calling them at 1-855-9VSTOCK or writing them at 18 Lafayette Place, Woodmere, New York 11598.
If a broker or other nominee holds your Intercept shares, please contact the broker or other nominee directly and inform them of your request. Be sure to include your name, the name of your brokerage firm and your account number.
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Electronic Delivery of Company Stockholder Communications
Most stockholders can elect to view or receive copies of future proxy materials over the internet instead of receiving paper copies in the mail.
You can choose this option and save us the cost of producing and mailing these documents by going tohttp://www.interceptpharma.com/proxy.html and following the instructions relating to the electronic delivery of proxy materials.
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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the beneficial ownership of our common stock as of April 28, 2017, by:
our executive officers named in the Summary Compensation Table;
elected, each of our directors;
all of our current directorsMessrs. Fundarò, Bradbury, Santini, Sblendorio and executive officers as a group;Welch, Drs. Pruzanski, Akkaraju, Benatti and
each stockholder known by us to own beneficially more than five percent of our common stock.
Beneficial ownership is determined in accordance with Gottesdiener and Ms. Miller-Rich will serve on the rules of the SEC and includes voting or investment power with respect to the securities. Shares of common stock that may be acquired by an individual or group within 60 days of April 28, 2017, pursuant to derivative securities, such as options, warrants or restricted stock units, are deemed to be outstanding for the purpose of computing the percentage ownership of such individual or group, but are not deemed to be outstanding for the purpose of computing the percentage ownership of any other person shown in the table. Percentage of ownership is based on an aggregate of 25,009,178 shares of common stock outstanding as of April 28, 2017.
Except as indicated in footnotes to this table, we believe that the stockholders named in this table have sole voting and investment power with respect to all shares of common stock shown to be beneficially owned by them, based on information provided to us by such stockholders. Unless otherwise indicated, the address for each director, director nominee and executive officer is: c/o Intercept Pharmaceuticals, Inc., 10 Hudson Yards, Floor 37, New York, NY 10001.
| | | | |
| Beneficial Owner | | Number of Shares of
Common Stock
Beneficially Owned | | Percentage of
Common Stock
Beneficially Owned |
Directors, Director Nominees and Executive Officers
| | | | | | | | |
| Mark Pruzanski, M.D.(1) | | | 851,744 | | | | 3.4 | % |
| David Shapiro, M.D.(2) | | | 92,989 | | | | | * |
| Sandip Kapadia(3) | | | 22,000 | | | | | * |
| Rachel McMinn, Ph.D.(4) | | | 35,041 | | | | | * |
| Lisa Bright(5) | | | 46,692 | | | | | * |
| Srinivas Akkaraju, M.D., Ph.D.(6) | | | 21,348 | | | | | * |
| Luca Benatti, Ph.D.(7) | | | 7,045 | | | | | * |
| Daniel Bradbury(8) | | | 3,473 | | | | | * |
| Paolo Fundaro(9) | | | 22,427 | | | | | * |
| Keith Gottesdiener, M.D.(10) | | | 3,473 | | | | | * |
| Gino Santini(11) | | | 6,435 | | | | | * |
| Glenn Sblendorio(12) | | | 6,205 | | | | | * |
| Daniel Welch(13) | | | 6,435 | | | | | * |
All current executive officers and directors as a group
(15 persons)(14) | | | 1,146,147 | | | | 4.5 | % |
| Barbara Duncan(15) | | | 107,939 | | | | | * |
Five Percent Stockholders
| | | | | | | | |
| Genextra S.p.A.(16) | | | 6,454,953 | | | | 25.7 | % |
| FMR LLC(17) | | | 3,721,316 | | | | 14.8 | % |
| Carmignac Gestion(18) | | | 2,022,792 | | | | 8.1 | % |
| Capital World Investors(19) | | | 2,142,459 | | | | 8.5 | % |
| Ameriprise Financial, Inc.(20) | | | 2,507,900 | | | | 10.0 | % |
| * | Represents beneficial ownership of less than 1% of the shares of common stock. |
| (1) | Consists of 571,718 shares of common stock (including 46,706 shares underlying unvested restricted stock awards with voting rights) and options to purchase 280,026 shares of common stock that are exercisable within 60 days of April 28, 2017. |
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| (2) | Consists of 45,465 shares of common stock (including 13,897 shares underlying unvested restricted stock awards with voting rights) and options to purchase 47,524 shares of common stock that are exercisable within 60 days of April 28, 2017. |
| (3) | Consists of 22,000 shares of common stock (including 22,000 shares underlying unvested restricted stock awards with voting rights). |
| (4) | Consists of 17,659 shares of common stock (including 12,916 shares underlying unvested restricted stock awards with voting rights) and options to purchase 17,382 shares of common stock that are exercisable within 60 days of April 28, 2017. |
| (5) | Consists of 22,925 shares of common stock (including 16,006 shares underlying unvested restricted stock awards with voting rights) and options to purchase 23,767 shares of common stock that are exercisable within 60 days of April 28, 2017. |
| (6) | Consists of 13,246 shares of common stock (including 1,204 shares underlying unvested restricted stock awards with voting rights) and options to purchase 8,102 shares of common stock that are exercisable within 60 days of April 28, 2017. |
| (7) | Consists of 3,146 shares of common stock (including 1,355 shares underlying unvested restricted stock awards with voting rights) and options to purchase 3,899 shares of common stock that are exercisable within 60 days of April 28, 2017. |
| (8) | Consists of 2,407 shares of common stock (including 2,407 shares underlying unvested restricted stock awards with voting rights) and options to purchase 1,066 shares of common stock that are exercisable within 60 days of April 28, 2017. |
| (9) | Consists of 10,075 shares of common stock (including 1,204 shares underlying restricted stock awards with voting rights) and options to purchase 12,352 shares of common stock that are exercisable within 60 days of April 28, 2017. |
| (10) | Consists of 2,407 shares of common stock (including 2,407 shares underlying unvested restricted stock awards with voting rights) and options to purchase 1,066 shares of common stock that are exercisable within 60 days of April 28, 2017. |
| (11) | Consists of 2,504 shares of common stock (including 2,071 shares underlying restricted stock awards with voting rights) and options to purchase 3,931 shares of common stock that are exercisable within 60 days of April 28, 2017. |
| (12) | Consists of 2,306 shares of common stock (including 1,355 shares underlying unvested restricted stock awards with voting rights) and options to purchase 3,899 shares of common stock that are exercisable within 60 days of April 28, 2017. |
| (13) | Consists of 2,504 shares of common stock (including 2,071 shares underlying restricted stock awards with voting rights) and options to purchase 3,931 shares of common stock that are exercisable within 60 days of April 28, 2017. |
| (14) | Consists of (a) 735,644 shares of common stock beneficially owned by our officers, directors and director nominees as of, or will vest within 60 days of, April 28, 2017 (including 151,991 shares underlying unvested restricted stock awards with voting rights) and (b) options to purchase 410,503 shares of common stock beneficially owned by our officers, directors and director nominees which are exercisable within 60 days of April 28, 2017. |
| (15) | Ms. Duncan was our Chief Financial Officer until September 2016. Consists of 30,661 shares of common stock (including 6,316 shares underlying unvested restricted stock awards with voting rights) and options to purchase 77,278 shares of common stock that are exercisable within 60 days of April 28, 2017. |
| (16) | Represents shares of common stock owned by Genextra S.p.A. Francesco Micheli is the executive director of Genextra S.p.A. and, in such capacity, Mr. Micheli exercises voting control over the shares of common stock owned by Genextra S.p.A. and investment control over such shares as authorized by the board of directors of Genextra S.p.A. Mr. Micheli disclaims beneficial ownership with respect to any such shares, except to the extent of his pecuniary interest therein, if any. The address of each of Genextra S.p.A. and its affiliates is Via G. De Grassi, 11, 20123 Milan, Italy. Information relating to Mr. Micheli is based on Amendment No. 2 to Schedule 13G/A of Genextra S.p.A. filed with the SEC on February 17, 2015. |
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| (17) | Based on information supplied by FMR LLC on Schedule 13G/A filed with the SEC on February 13, 2017. Abigail P. Johnson is a Director, the Chairman and the Chief Executive Officer of FMR LLC. Members of the Johnson family, including Abigail P. Johnson, are the predominant owners, directly or through trusts, of Series B voting common shares of FMR LLC, representing 49% of the voting power of FMR LLC. The Johnson family group and all other Series B shareholders have entered into a shareholders’ voting agreement under which all Series B voting common shares will be voted in accordance with the majority vote of Series B voting common shares. Accordingly, through their ownership of voting common shares and the execution of the shareholders’ voting agreement, 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 (“FMR Co”), a wholly owned subsidiary of FMR LLC, which power resides with the Fidelity Funds’ Boards of Trustees. Fidelity Management & Research Company carries out the voting of the shares under written guidelines established by the Fidelity Funds’ Boards of Trustees. Fidelity Management & Research Company carries out the voting of the shares under written guidelines established by the Fidelity Funds’ Boards of Trustees. The address of FMR LLC and its affiliates is 245 Summer Street, Boston, Massachusetts 02210. |
| (18) | Carmignac Gestion is an investment adviser organized under the laws of France with its address at 24 Place Vendome, Paris, France 75001. Information relating to Carmignac Gestion is based on its Schedule 13G/A filed with the SEC on February 7, 2017. |
| (19) | Based on information supplied by Capital World Investors on Schedule 13G/A filed with the SEC on February 6, 2017. Capital World Investors is a division of Capital Research and Management Company (CRMC). Capital World Investors is deemed to be the beneficial owner of 2,142,459 shares of common stock as a result of CRMC acting as an investment advisor to various investment companies under Section 8 of the Investment Company Act of 1940. The address of Capital World Investors is 333 South Hope St., Los Angeles, CA 90071. |
| (20) | Based on information supplied by Ameriprise Financial, Inc. on Schedule 13G/A filed with the SEC on February 6, 2017. Ameriprise Financial, Inc. (“AFI”), is the parent holding company of Columbia Management Investment Advisors, LLC (“CMIA”), an investment advisor in accordance with Rule 13d-1(b)(1)(ii)(E) of the SEC. CMIA is the investment advisor to Columbia Select Large Cap Growth Fund (the “Fund”), an investment company in accordance with Rule 13d-1(b)(1)(ii)(D) of the SEC. CMIA and AFI do not directly own the shares of common stock. As the investment advisor to the Fund and various other unregistered and registered investment companies and other managed accounts, CMIA may be deemed to beneficially own the shares reported by the Fund. Accordingly, the shares reported by CMIA include those shares separately reported by the Fund. As the parent holding company of CMIA, AFI may be deemed to beneficially own the shares reported by CMIA. Accordingly, the shares reported by AFI include those shares separately reported by CMIA. The address of AFI is 145 Ameriprise Financial Center, Minneapolis MN 55474. |
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MANAGEMENT AND CORPORATE GOVERNANCE
The Board of Directors
Each of our directors are elected annually and hold office until their successors are duly elected and qualified or until the earlier of their death, resignation or removal. Our board of directors currently consists of nine members, all of whom were elected as directors at our 2016 annual meeting of stockholders.
Our restated certificate of incorporation and our restated bylaws provide that the authorized number of directors may be changed only by resolution of the board of directors. Our restated bylaws also provide that our directors may be removed with or without cause by the affirmative vote of the holders of a majority of the votes that all our stockholders would be entitled to cast in an annual election of directors, and our restated certificate of incorporation and amended and restated bylaws provide that any vacancy on our board of directors, including a vacancy resulting from an increase in the size of our board, may be filled only by vote of a majority of our directors then in office.
Each of the nominees listed below has been nominated by the board, upon the recommendation of the nominating and governance committee, for re-election as a director until the2021 Annual Meeting of Stockholders to be held in 2018 and until their respective successors are elected, or until their earlier death, resignationhis or removal.her respective successor is duly elected and qualified. If any of Messrs. Fundarò, Bradbury, Santini, Sblendorio or Welch, Drs. Pruzanski, Akkaraju, Benatti or Gottesdiener or Ms. Miller-Rich should become unable to accept election, the persons named as proxies may vote for a substitute nominee selected by the Board or the named proxies. Each of Messrs. Fundarò, Bradbury, Santini, Sblendorio and Welch, Drs. Pruzanski, Akkaraju, Benatti and Gottesdiener and Ms. Miller-Rich has agreed to serve if elected, and the Company’s management has no reason to believe that any nominee will be unable to serve.
The name, principal occupation and other information concerning the nominees
presently serves on the board.Set forth below are the names of the persons nominatedrecommended for election as directors their ages, their offices inat the Company, if any, their principal occupations or employment for at least the past five years, the length of their tenure as directors and the names of other public companies in which such persons hold or have held directorships during the past five years. Additionally, information aboutAnnual Meeting, including the specific experience, qualifications, attributes orand skills that led the Board to our board of directors’ conclusion atdetermine that the time of filing of this proxy statement that each person listed belownominees should serve as a director isdirectors, are set forth below:
below. There are no family relationships between or among any of our directors or executive officers. For more information regarding the independence of our directors, please see “Board of Directors and Governance—Independence.” | | | | |
Name | | Age | | Position(s) with the Company |
Paolo Fundaro | | 43 | | Chairman of the Board |
Mark Pruzanski, M.D. | | 49 | | President, Chief Executive Officer and Director |
Srinivas Akkaraju, M.D., Ph.D.(2)(4) | | 49 | | Director |
Luca Benatti, Ph.D.(3)(4) | | 56 | | Director |
Daniel Bradbury(1)(3) | | 56 | | Director |
Keith Gottesdiener, M.D.(4) | | 63 | | Director |
Gino Santini(1)(2) | | 60 | | Director |
Glenn Sblendorio(1) | | 61 | | Director |
Daniel Welch(2)(3) | | 59 | | Director |
| (1) | Member of our audit committee |
| (2) | Member of our compensation committee |
| (3) | Member of our nominating and governance committee |
| (4) | Member of our research and development committee |
Paolo FundaroFundarò has served as our Chairman since October 2015 and as a member of our board of directorsBoard since 2006 and has acted as our chairman since October 2015.2006. Mr. FundaroFundarò has been Genextra’s chief financial officerthe Chief Executive Officer of Genextra S.p.A., an investment firm focused on the life sciences industry, since July 2019 and previously served as the Chief Financial Officer of Genextra
S.p.A. from its inception in
2004.2004 until 2019. Mr. Fundarò also has served as Managing Director of certain of Genextra’s portfolio companies, including Congenia S.r.l. since 2004, Dac S.r.l. from 2004 until December 2016 and Tethis S.p.A. from 2004 until July 2016. Before joining Genextra, Mr.
FundaroFundarò was
directorDirector of
financeFinance and
strategic planningStrategic Planning for the Fastweb Group from 2000 to 2004.
Previously, heEarlier in his career, Mr. Fundarò worked for investment banks
including Salomon Smith Barney (now Citigroup) and Donaldson, Lufkin & Jenrette (now Credit Suisse). Mr.
Fundaro hasFundarò serves on the board of directors of a number of private companies, including Genextra S.p.A. Mr. Fundarò received a degree in Business Management from Bocconi University in Milan, Italy.
We believe that
Mr. Fundaro possesses specific attributes that qualify him to serve as a member of our board of directors, including hisFundarò’s significant experience in corporate finance and strategic planning, as well as his experienceexpertise in building, investing in and growing companies in diverse industries, including the biopharmaceutical industry.industry, contributed to the Board’s determination that Mr. Fundarò should be nominated to serve an additional term as a director of the Company.
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Mark Pruzanski, M.D. is a co-founderone of our companyco-founders and has served as our chief executive officerPresident and president,Chief Executive Officer, and has beenas a member of our board of directors,Board, since our inception in 2002. HeDr. Pruzanski has over 20 years of experience in life sciences company management, venture capital and strategic consulting. Prior to co-founding the Company, Dr. Pruzanski was previously a venture partner at Apple Tree Partners, an early stage life sciences venture capital firm that he co-founded, in 1999. Prior to that, he wasand an entrepreneur-in-residence at Oak Investment Partners.Partners, a venture capital firm. Dr. Pruzanski is a co-author of a number of scientific publications and is named as an inventor on several of our patents. Dr. Pruzanski has been a director of Equillium, Inc. since September 2018. Dr. Pruzanski also currently serves on the boards of the Emerging Companies Section of the Biotechnology Innovation Organization (BIO), a biotechnology-focused trade association, and the Foundation for Defense of Democracies, a non-profit policy institute focusing on foreign policy and national security. Dr. Pruzanski received his M.D. from McMaster University in Ontario,Hamilton, Canada, a M.A. degree in International Affairs from the Johns Hopkins University School of Advanced International Studies in Bologna, Italy and Washington, D.C., and a bachelor’s degree from McGill University in Montreal, Quebec. He currently also serves on the boardsCanada.
Dr. Pruzanski’s comprehensive knowledge of the
Emerging Company
Section of the Biotechnology Industry Association (BIO) and
the Foundation for the Defense of Democracies, a think tank in Washington, D.C. Dr. Pruzanski is a co-author of a number of scientific publicationsits approved product, development pipeline, management team, strategy and
an inventor of several patents relating to our product candidates and scientific discoveries.We believe that Dr. Pruzanski’s perspective and the experience he bringspartners, as our chief executive officer and president andwell as one of our company’s founders, together with his historic knowledge of our company and our products and product candidates, operational expertise and continuity to our board of directors, and his experience in managing, advising and investing in companies within the life sciences industry, qualify himcompanies, contributed to the Board’s determination that Dr. Pruzanski should be nominated to serve an additional term as a memberdirector of our board of directors.
the Company.
Srinivas Akkaraju, M.D., Ph.D. has served as a member of our board of directorsBoard since October 2012. Since FebruaryMarch 2017, Dr. Akkaraju has been the managing general partner and founderManaging General Partner of Samsara BioCapital.BioCapital, a venture capital firm that he founded. From April 2013 to February 2016,March 2017, Dr. Akkaraju served aswas a managing general partnerGeneral Partner and then a Senior Advisor of Sofinnova Ventures, and thereafter served as senior advisor until March 2017.a venture capital firm focused on the life sciences industry. From January 2009 until April 2013, Dr. Akkaraju was a managing directorManaging Director of New Leaf Venture Partners, L.L.C.an investment firm focused on the healthcare technology sector. From 2006 to 2008, Dr. Akkaraju served as a managing director atManaging Director of Panorama Capital, LLC, a private equityventure capital firm founded bythat he co-founded along with other members of the former venture capital investment team of J.P. Morgan Partners, LLC, a private equity division of JPMorgan Chase & Co. Prior to co-founding Panorama Capital, heDr. Akkaraju was with J.P. Morgan Partners, which he joined in 2001 and of which he became a partner in 2005. From 1998 to 2001, he wasDr. Akkaraju worked in business and corporate development at Genentech, Inc. (a wholly owned(now a member of the Roche Group), a biotechnology company, most recentlycompany. Dr. Akkaraju has been a director of Seattle Genetics, Inc. since 2003, Aravive, Inc. (formerly Versartis, Inc.) since July 2013 and Syros Pharmaceuticals, Inc. since June 2017. Dr. Akkaraju also serves on the board of directors of a number of private companies. During the prior five years, Dr. Akkaraju previously served as senior manager.a director of aTyr Pharma, Inc., Principia Biopharma Inc. and ZS Pharma, Inc. Dr. Akkaraju received his M.D. and a Ph.D. in Immunology from Stanford University. He received his undergraduate degrees in Biochemistry and Computer Science from Rice University.
Dr. Akkaraju’s extensive experience in venture capital, in-depth knowledge of life sciences companies and financial expertise, as well as his scientific background and public company board experience, contributed to the Board’s determination that Dr. Akkaraju
serves and has served on the boards of directors and board committees of numerous public and private companies. Dr. Akkaraju servesshould be nominated to serve an additional term as a director of
Seattle Genetics, Inc., Versartis Inc. and aTyr Pharma, Inc. Previously, Dr. Akkaraju served as a director on the
boards of Barrier Therapeutics, Inc., Eyetech Pharmaceuticals, Inc., Synageva Biopharma Corp. and ZS Pharma, Inc., all publicly traded biotechnology companies, and Amarin Corporation plc, a foreign publicly traded biotechnology company.We believe that Dr. Akkaraju’s scientific background, coupled with experience in private equity and venture capital investing, qualify him to serve as a member of our board of directors.
Company.
Luca Benatti, Ph.D.has served as a member of our board of directorsBoard since July 2014. Dr. Benatti has over 25 years of experience in the biopharmaceutical industrypharmaceutical and biotechnology industries. Since June 2012, Dr. Benatti has been servingserved as the chief executive officerChief Executive Officer and a director of EryDel S.p.A., a drug deliveryprivate biotechnology company focused on rare diseases, since June 2012.diseases. From 19991998 until May 2012, Dr. Benatti was the founder and chief executive officerChief Executive Officer of Newron Pharmaceuticals S.p.A., a publicly traded biopharmaceutical company listed on the Swiss Exchange.that Dr. Benatti co-founded. Under his guidance,Dr. Benatti’s leadership, Newron developed a pipeline of potential therapies, with its most advanced compound, Xadago, approved in Europe and recently approved in the United States for the treatment of Parkinson’s disease. He also was instrumentaldisease in finalizing multimillion licensing deals with Merck Serono, Meiji Seikavarious jurisdictions, and Zambon Pharma S.p.A., and in the acquisition of Hunter Fleming, a U.K.-based biotechnology company.undertook significant business development activities. From 1985 to 1998, heDr. Benatti held various R&Dresearch and development positions at Farmitalia, Pharmacia and Pharmacia & Upjohn.Upjohn and its predecessor companies. Dr. Benatti has authored several scientific publications and holds a number of patents. Dr. Benatti currently serves as a director of Newron Pharmaceuticals S.p.A. Dr. Benatti also serves as chairman of Italian Angels for Biotech, a member of the Advisory Board of the Sofinnova Telethon Fund, a member of the Strategic Advisory Board of Zambon, a member of the Board of Assobiotec, the Italian Biotech Association, and a member of the jury of Open Accelerator and of the European Biotechnica Award. Dr. Benatti graduated from and performed his post-doctoral training at the Milano Genetics Institute. He serves as director on the board of Newron (SIX: NWRN), as chairman of the scientific advisory board of Zambon, as chairman of the Italian Angels for Biotech association, as a member of the board of Assobiotec, the Italian Biotech Association, and member of the jury of the European Biotechnica Award. He has authored several scientific publications and holds a number of patents.
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We believe that Dr. Benatti’s scientific background, together with his significant experience in drug development, financing,the pharmaceutical and biotechnology industries, business development, financial and regulatory matters at other biopharmaceutical companies, qualify himstrategic leadership expertise and thorough understanding of pharmaceutical drug discovery and development contributed to the Board’s determination that Dr. Benatti should be nominated to serve on our boardan additional term as a director of directors.
the Company.
Daniel Bradbury has served as a member of our
board of directorsBoard since July 2016. Mr. Bradbury has over
3035 years of experience leading global, fast-growing life sciences companies.
Since 2012,Mr. Bradbury has served as Executive Chairman of Equillium, Inc., a biopharmaceutical company that Mr. Bradbury co-founded, since January 2020 and served as Chairman of Equillium, Inc. from March 2018 through December 2019. Mr. Bradbury also previously served as Chief Executive Officer of Equillium, Inc., from June 2018 through December 2019 and as President of Equillium, Inc. from March 2017 until June 2018. In addition, Mr. Bradbury has been
a managing memberManaging Member of BioBrit, LLC, a life sciences consulting and investment
firm.firm, since 2012. Previously, Mr. Bradbury
served as the presidentheld several senior positions at Amylin Pharmaceuticals, Inc., a biopharmaceutical company focused on diabetes and
chief executive officermetabolic disorders, including President and
Chief Executive Officer from March 2007 until its acquisition by Bristol-Myers Squibb Company in August 2012, President and Chief Operating Officer from 2006 to 2007, Chief Operating Officer from 2003 to 2006, Executive Vice President from 2000 to 2003 and Senior Vice President, Corporate Development from 1998 to 2000. Mr. Bradbury also served as a director of Amylin
Pharmaceuticals, a biopharmaceutical company based in San Diego, California, focused on metabolic diseases, from
March 2007 until it was acquired by the Bristol-Myers Squibb Company inJune 2006 to August 2012. Prior to
being named president and chief executive officer, Mr. Bradbury held positions of increasing responsibility atjoining Amylin
sincein 1994,
including president (2006 – 2007), chief operating officer (2003 – 2006) and executive vice president (2000 – 2003). Before joining Amylin, Mr. Bradbury worked
in marketingat SmithKline Beecham Pharmaceuticals and
sales rolesits predecessor companies for ten years
at SmithKline Beecham Pharmaceuticals.in various sales and marketing positions. Mr. Bradbury
currentlyhas been a director of Castle Biosciences, Inc. since September 2012 and serves
on the board of directors of a number of private companies and philanthropic organizations. During the prior five years, Mr. Bradbury previously served as a director of
Geron Corporation, Corcept Therapeutics
Incorporated, Illumina, Inc.
, Geron Corporation and
Illumina,BioMed Realty Trust, Inc.
, all of which are NASDAQ-listed biopharmaceutical companies, and Biocon Limited, a biopharmaceutical company traded In addition, Mr. Bradbury serves on the
National Stock ExchangeKeck Graduate Institute’s Board of
India. He is an advisory board member of Patricia Industries AB (a part of Investor AB), BioMed Ventures, Artic Aurora Life Science (a part of Artic Fund Management), ProLynx LLCTrustees and
Pharming Group NV. Mr. Bradbury also serves on the University of California San Diego’s Rady School of
Management’sManagement Dean’s Advisory
Council and the Keck Graduate Institute’s Board of Trustees.Council. Mr. Bradbury received a Bachelor of Pharmacy from Nottingham University and a Diploma in Management Studies from Harrow and Ealing Colleges of Higher Education in the United Kingdom.
We believe
Mr. Bradbury has extensive experience in the biopharmaceutical industry, has demonstrated leadership and operational skills and possesses significant research, development and commercialization expertise, as well as public company board experience. These factors, and Mr. Bradbury’s transition in January 2020 from Chief Executive Officer and Chairman of Equillium, Inc. to a more limited advisory role as Executive Chairman of Equillium, Inc., contributed to the Board’s determination that Mr.
Bradbury’s significant experience in leading biopharmaceutical companies that have brought innovative therapies to market and his deep strategic and operational understanding of rapidly growing, global life science companies qualifies himBradbury should be nominated to serve
on our boardan additional term as a director of
directors.the Company.
Keith Gottesdiener, M.D. has served as a member of our board of directorsBoard since July 2016. From October 2011 until March 2020, Dr. Keith Gottesdiener has beenserved as the chief executive officerChief Executive Officer and a memberdirector of the board of directors at Rhythm Holding Co., LLC since October 2011, a holding company with one subsidiary, Rhythm Pharmaceuticals, for which he is also the chief executive officer andInc., a board member. Hebiopharmaceutical company. Dr. Gottesdiener joined Rhythm after 16 years at Merck Research Laboratories. Dr. Gottesdiener joined Merck early clinical development in 1995, helping to transition compounds from the bench to the bedside and through to proof of concept. HeLaboratories, where he held positions of increasing responsibility, eventuallyincluding serving as a leader of Merck’s late clinical development organization from 2006 to 2011 and leading Merck’s early clinical development across all therapeutic areas from 2001 through early 2006. From 2006 to 2011, he was a leader of Merck’s late clinical development organization, first overseeingIn such roles,
Dr. Gottesdiener oversaw the development of Merck’s infectious diseases and vaccine products through pivotal trials, registration, and life cycle management, including Gardasil
TM (HPV Vaccine), Rotateq
TM (rotavirus vaccine), Zostavax
TM (zoster vaccine) and Isentress
TM (HIV integrase inhibitor), among others. In 2008, Dr. Gottesdiener was appointed Late Stage Therapeutic Group Leader, and in that role led Merck’s late-stage clinical development efforts (from Phase 2 through patent expiry) across all therapeutic areas. After Merck’s merger with
Schering PloughSchering-Plough Corporation in 2009, he continued as Co-Head of Late Development.
Dr. Gottesdiener received his B.A. from Harvard College and his M.D. from the University of Pennsylvania. He completed his residency and fellowship at the Brigham and Women’s Hospital-Beth Israel Medical Center-Dana Farber Cancer Institute Children’s Hospital programs. After his fellowship, Dr. Gottesdiener did postdoctoral research in the laboratory of Dr. Jack Strominger at Dana Farber Cancer Institute working on the molecular immunology of the T-cell receptor. In 1986, he joined the faculty as an assistant professor at Columbia University, started an independent research laboratory with NIH RO-1 funding, focusing on gene transcription, and was Associate Clinical Professor of Medicine at the time he left to join Merck in 1995.
We believe
Dr. Gottesdiener’s extensive experience as a senior executive in the pharmaceutical industry, drug development and regulatory affairs expertise and research work for both medical and academic institutions, as well as his public company experience, contributed to the Board’s determination that Dr. Gottesdiener’s scientific background and significant experience in leading the development of numerous therapies to market, together with his leadership experience at global biopharmaceutical companies, qualify himGottesdiener should be nominated to serve on our boardan additional term as a director of directors.the Company.
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Gino SantiniNancy Miller-Rich has served as a member of our Board since April 2018. Ms. Miller-Rich has 35 years of experience in the healthcare industry, with significant expertise in business development and commercial strategy. Since September 2017, Ms. Miller-Rich has served as a consultant to the pharmaceutical industry. Previously, Ms. Miller-Rich served in a number of leadership roles at Merck & Co., Inc. and, prior to the merger of the two companies, at Schering-Plough Corporation, including most recently as Senior Vice President, Global Human Health Business Development & Licensing, Strategy and Commercial Support from November 2013 to September 2017 and as Group Vice President, Consumer Care Global New Ventures and Strategic Commercial Development from January 2007 to November 2013. Prior to joining Schering-Plough in 1990, Ms. Miller-Rich served in a variety of commercial and marketing roles at Sandoz Pharmaceuticals and Sterling Drug, Inc. She is currently a director of Aldeyra Therapeutics, Inc., as well as a board member of directorsa number of private and not-for-profit entities. During the prior five years, Ms. Miller-Rich previously served as a director of UDG Healthcare plc. She received her B.S. in Business Administration, Marketing from Ithaca College in Ithaca, New York.
Ms. Miller-Rich’s significant experience in the healthcare industry, as well as her business development and commercial strategy expertise, contributed to the Board’s determination that Ms. Miller-Rich should be nominated to serve an additional term as a director of the Company.
Gino Santini has served as our Lead Independent Director since February 2018 and as a member of our Board since November 2015. From
June 1983 to
December 2010, Mr. Santini held a variety of commercial,
operational and
operationalleadership roles
of increasing responsibility at Eli Lilly and Company,
a public global pharmaceutical company, serving most recently from April 2007 to December 2010 asincluding Senior Vice President, Corporate Strategy and Business Development
where he led corporate strategy and long-range planning, mergers and acquisitions, new product licensing and the expansion of Lilly Ventures in the United States and China. During his tenure at Eli Lilly, Mr. Santini held various leadership positions of increasing responsibility, including manager of various international regions andfrom 2007 to 2010, Senior Vice President of
USCorporate Strategy and Policy from 2004 to 2007, President of U.S. Operations from 1999 to
2004.2004 and President of the Women’s Health Franchise from 1997 to 1999. Mr. Santini
serves on the boardshas been a director of
directors of the following public biopharmaceutical companies: AMAG Pharmaceuticals, Inc.
, since
2012; CollegiumFebruary 2012, Allena Pharmaceuticals, Inc.
, since
2012; andFebruary 2012 (but will not be standing for re-election as a director of Allena Pharmaceuticals, Inc. at its 2020 annual meeting of stockholders, as disclosed in its Annual Report on Form 10-K filed with the SEC on March 16, 2020), Horizon Pharma plc
(and its predecessor company), since
March 2012 and Collegium Pharmaceutical, Inc. since July 2012. Mr. Santini
was previously a director of Sorin, S.p.A., a global public medical device company, until its acquisition in October 2015 and of Vitae Pharmaceuticals until its acquisition in October 2016. Mr. Santini also serves
as a director for a number of private biopharmaceutical companies such as Intarcia Therapeutics, Inc., Allena Pharmaceuticals, Inc. and Artax Biopharma Inc. Mr. Santini is a past chairman of the board of the National Pharmaceutical Council and of Noble of Indiana, a non-profit agency serving individuals with developmental disabilities. He also served on the board of directors
for United Way andof a number of private companies. During the
executive committee and the boardprior five years, Mr. Santini previously served as a director of
directors of the Indianapolis Chamber of Commerce. HeVitae Pharmaceuticals, Inc. Mr. Santini holds an undergraduate degree in mechanical engineering from the University of Bologna and an M.B.A. from the Simon School of Business, University of Rochester.
We believe that
Mr.
Santini’sSantini has extensive experience in
a variety ofthe pharmaceutical industry, has demonstrated leadership and operational
skills and
leadership roles at Eli Lilly, including hispossesses significant domestic and international commercial, corporate strategy, business development and
transactiontransactional experience,
qualify himas well as public company board experience. These factors, and Mr . Santini’s decision not to stand for re-election as a director of Allena Pharmaceuticals, Inc. at its 2020 annual meeting of stockholders, contributed to the Board’s determination that Mr. Santini should be nominated to serve
an additional term as a
memberdirector of
our board of directors.the Company.
Glenn Sblendorio has served as a member of our
boardBoard since February 2014. Mr. Sblendorio has over 30 years of
directorsexperience in the pharmaceutical and biotechnology industries. Mr. Sblendorio has been Chief Executive Officer, President and a director of IVERIC bio, Inc. (formerly Ophthotech Corporation) since
2014. In July 2017,
January 2017 and May 2017, respectively. Mr. Sblendorio
will assume the role of presidentalso previously served at IVERIC bio, Inc. as Executive Vice President and
chief executive officer of Ophthotech Corporation. In February 2017, Mr. Sblendorio was named president and chief financial officer of Ophthotech Corporation. InChief Operating Officer from April 2016
Mr. Sblendorio joined Ophthotech Corporation as its executive vice president, chief operating officerto January 2017, Chief Financial Officer and
chief financial officer.Treasurer from April 2016 until April 2017 and a director from July 2013 through March 2016. Prior to joining IVERIC bio, Inc., Mr. Sblendorio served as the
presidentPresident and
chief financial officerChief Financial Officer of The Medicines Company from
February 2012 through March 2016. From March 2006
to February 2012, he served as chief financial officer and executive vice president of The Medicines Company. From November 2005 until
he joined The Medicines Company,December 2015. Mr. Sblendorio served as
a consultant to a company in the pharmaceutical industry. Previously, Mr. Sblendorio was executive vice presidentExecutive Vice President and
chief financial officerChief Financial Officer of Eyetech Pharmaceuticals, Inc. from February 2002 until it was acquired by OSI Pharmaceuticals, Inc. in November 2005.
From July 2000 to February 2002, Mr. Sblendorio
also held the positionserved as Senior Vice President of
chief executive officer andBusiness Development at The Medicines Company. Prior to joining The Medicines Company in 2000, Mr. Sblendorio served as a managing director
ofat MPM Capital
Advisors. His other pharmaceutical experience also includes 12 years at Hoffmann-LaRoche, Inc., a pharmaceutical company, inAdvisors, LLC and held a variety of senior financial positions
including vice president, finance ofat Hoffman-La Roche,
Molecular Systems and head of finance-controller for Amgen/Roche Europe.Inc. Mr. Sblendorio
currently serves ashas been a director of Amicus Therapeutics, Inc.
, a public biopharmaceutical company. since June 2006. During the prior five years, Mr. Sblendorio
was previously
served as a
board memberdirector of
Ophthotech Corporation through March 2016 and The Medicines
Company through December 2015.Company. Mr. Sblendorio received
hisa B.B.A. from Pace University and
hisan M.B.A. from Fairleigh Dickinson
University and is a graduate of the Harvard Business School, Advanced Management Program.We believe that University.
Mr. Sblendorio’s
extensive experience in the pharmaceutical and biotechnology industries, leadership skills, operational and strategic expertise and financial
expertise, his experience as a member of the leadership of numerous life sciences companies, together with his experience as chief financial officer and board member with numerous companies, qualifyknowledge, which enables him to serve as a
memberfinancial expert on our Audit Committee, as well as his public company board experience, strong record of
availability and dedication to service on our
board of directors. In addition,Board, contributed to the Board’s determination that Mr. Sblendorio
brings expertiseshould be nominated to
our company inserve an additional term as a director of the
areas of business operations and strategy, financial analysis and reporting, internal auditing and controls and risk management oversight.Company.
Daniel Welch has served as a member of our board of directorsBoard since November 2015. From January 2015 to February 2018, Mr. Welch has beenserved as an Executive Partner atof Sofinnova Ventures, since 2015.a venture capital firm. From September 2003 until Octoberits acquisition by Roche Holdings in September 2014, Mr. Welch was the Chairman,served as Chief Executive Officer and President of InterMune, Inc., which was listed on the Nasdaq Stock Market until the acquisition of the company by Roche. During his tenure, InterMune secured registration of Esbriet, the first medicine approved for idiopathic pulmonary fibrosis in Europe and the United States.a biotechnology company. Mr. Welch built thealso served as Chairman of InterMune development and commercial teams that delivered the successful approval and launches of Esbriet in Europe and the United States.from May 2008 to September 2014. From August 2002 to January 2003,
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Mr. Welch served as Chairman and Chief Executive Officer of Triangle Pharmaceuticals, Inc., a pharmaceutical company whichthat was acquired by Gilead Sciences. From October 2000 to June 2002, heMr. Welch served as presidentPresident of the pharmaceutical division ofBiopharmaceuticals at Elan Corporation, PLC (later acquired by Perrigo Company plc).Corporation. From September 1987 to August 2000, Mr. Welch served in various senior management roles at Sanofi-Synthelabo, (nownow Sanofi, S.A.) and its predecessor companies, Sanofi and Sterling Winthrop. During his time at Sanofi, he led the worldwide launches of Plavix®, Eloxatin® and Avapro® asincluding Vice President of Worldwide Marketing and served as Chief Operating Officer of the U.S. business. From November 1980 to September 1987, Mr. Welch was with American Critical Care, a division of American Hospital Supply. He currentlyMr. Welch has been a director of Seattle Genetics, Inc. since June 2007 and Ultragenyx Pharmaceutical Inc. since April 2015. During the prior five years, Mr. Welch previously served as a director of AveXis, Inc. and Hyperion Therapeutics, Inc. Mr. Welch also serves on the board of directors of Avexis, Inc., (where he serves as the chairmana number of the board), Ultragenyx Pharmaceutical Inc., (where he serves as the chairman of the board) and Seattle Genetics, Inc.private companies. Mr. Welch holds a B.S. from the University of Miami and an M.B.A. from the University of North Carolina.
We believe that
Mr. Welch’s
knowledge andextensive experience in
leading companies from clinical stage drug development through to large-scale commercialization,the biotechnology industry, leadership skills and commercial, operational and strategic expertise, as well as his
track record of building operations and international businesses, qualify himpublic company board experience, contributed to the Board’s determination that Mr. Welch should be nominated to serve
an additional term as a
memberdirector of
our board of directors.There are no family relationships between or among any of our directors, executive officers or director nominees. the Company.
Vote Required for Approval
The
principal occupation and employment during the past five yearselection, by separate resolutions, of each of
our directors and nominees was carried on, in each case except as specifically identified above, with a corporation or organization that is not a parent, subsidiary or other affiliate of us. There is no arrangement or understanding between any of our directors or nominees and any other person or persons pursuant to which he or she is to be selected as a director or nominee.There are no legal proceedings to which any of our directors is a party adverse to us or any of our subsidiaries or in which any such person has a material interest adverse to us or any of our subsidiaries.
Director Nominations
No material changes have been made to the procedures by which stockholders may recommendfollowing ten nominees to our board of directors.
Board Determination of Director Independence
Our board of directors has reviewed the materiality of any relationship that each of our directors has with Intercept, either directly or indirectly. Based upon this review, our board has determined that all of our directors other than Dr. Pruzanski, our chief executive officer and president, are “independent directors” as defined by NASDAQ. Our board of directors also determined that Messrs. Welch and Bradbury and Dr. Benatti, who comprise our nominating and governance committee, all satisfy the independence standards for such committee established by the SEC and the NASDAQ Marketplace Rules, as applicable. With respect to our audit committee, our board of directors has determined that Messrs. Sblendorio, Bradbury and Santini satisfy the independence standards for such committee established by Rule 10A-3 under the Securities Exchange Act of 1934, as amended, or the Exchange Act, the SEC and the NASDAQ Marketplace Rules, as applicable. With respect to our compensation committee, our board of directors has determined that Messrs. Santini and Welch and Dr. Akkaraju satisfy the independence standards for such committee established by Rule 10C-1 under the Exchange Act, the SEC and the NASDAQ Marketplace Rules, as applicable.
In making such determinations, the board of directors considered the relationships that each such non-employee director or director nominee has with our company and all other facts and circumstances the board of directors deemed relevant in determining their independence, including the beneficial ownership of our capital stock by each non-employee director. In considering the independence of our directors and director nominees, our board of directors considered the association of each such non-employee director and director nominee has with us and all other facts and circumstances our board of directors deemed relevant in determining independence.
Committees ofserve on the Board of Directors until the 2021 Annual Meeting of Stockholders or until their respective successors are duly elected and Meetings
Meeting Attendance. During the fiscal year ended 2016 there were seven meetings of our board of directors, and the various committeesqualified requires a plurality of the board met a total of 17 times. No director attended fewer than 75% of the total number of meetings of the board and of committees of the board on which he or she served
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during fiscal 2016. The board has adopted a policy under which each member of the board is strongly encouraged but not required to attend each annual meeting of our stockholders either in person or via teleconference. Six of our directors, including five of our independent directors, attended our 2016 annual meeting of stockholders eithervotes cast in person or by teleconference, includingproxy at the Annual Meeting: Paolo Fundarò (Proposal No. 1A); Mark Pruzanski, M.D. (Proposal No. 1B); Srinivas Akkaraju, M.D., Ph.D. (Proposal No. 1C); Luca Benatti, Ph.D. (Proposal No. 1D); Daniel Bradbury (Proposal No. 1E); Keith Gottesdiener, M.D. (Proposal No. 1F); Nancy Miller-Rich (Proposal No. 1G); Gino Santini (Proposal No. 1H); Glenn Sblendorio (Proposal No. 1I); and Daniel Welch (Proposal No. 1J).
THE BOARD RECOMMENDS A VOTE “FOR”
THE ELECTION OF EACH OF THE NOMINEES SET FORTH ABOVE.
PROPOSAL NO. 2:
AMENDMENT TO THE COMPANY’S RESTATED
CERTIFICATE OF INCORPORATION TO INCREASE THE
NUMBER OF AUTHORIZED SHARES OF COMMON STOCK
FROM 45,000,000 TO 90,000,000
The Board of Directors is requesting stockholder approval of an amendment to our chairmanRestated Certificate of Incorporation to increase the authorized number of our shares of common stock, par value $0.001 per share, from 45,000,000 to 90,000,000.
The additional shares of common stock that would be authorized upon approval of the boardproposed amendment would have rights identical to our currently outstanding shares of common stock. The approval of the proposed amendment and any future issuance of common stock would not affect the rights of the holders of our currently outstanding common stock, except for effects incidental to the increase in the number of shares of our common stock outstanding, such as dilution of the per share operating results and the voting rights of current holders of our common stock. If the amendment is approved, it will become effective upon the filing of an amendment to our Restated Certificate of Incorporation (in the form of a Certificate of Amendment to our Restated Certificate of Incorporation) with the Secretary of State of the State of Delaware.
As of April 6, 2020, we had 32,943,079 shares of common stock outstanding and our Board of Directors had reserved 3,388,031 shares of common stock for issuance upon the exercise of stock options and the vesting of other equity awards outstanding under our equity plans. In addition, the Board of Directors had reserved up to 5,823,784 shares of common stock for issuance upon conversion of our 3.25% Convertible Senior Notes due 2023 and our 2.00% Convertible Senior Notes due 2026. As a result, as of April 6, 2020, we had only 2,845,106 shares of common stock available for issuance for other purposes. If the proposed amendment to our Restated Certificate of Incorporation to increase the authorized number of our shares of common stock is not approved, we may not have sufficient shares of common stock available for issuance for purposes deemed to be in the best interests of the Company by our Board of Directors.
Although at present the Board of Directors has no plans to issue the additional shares of common stock, the Board of Directors believes it would be prudent and advisable to have those shares available for issuance to provide additional flexibility for future business and financial purposes. If the proposed amendment to our Restated Certificate of Incorporation is approved, additional shares may be issued for various purposes without further stockholder approval. These purposes may include: raising capital; granting equity incentive awards to employees, officers or directors; strategic partnerships; acquisitions, licensing arrangements or other transactions; and other business purposes approved by our Board of Directors.
Although the proposed amendment is not intended as an anti-takeover provision, the additional shares of common stock ultimately could be used to oppose a hostile takeover attempt or to delay or prevent changes in control or management of the Company.
If the proposed amendment is approved and becomes effective, Article FOURTH, Paragraph A of our Restated Certificate of Incorporation, which sets forth our currently authorized capital stock, will be amended to read in its entirety as follows:
“The total number of shares of all classes of stock that the Corporation shall have the authority to issue is 95,000,000 shares, consisting of 90,000,000 shares of common stock, par value $0.001 per share (the “Common Stock”), and 5,000,000 shares of preferred stock, par value $0.001 per share (the “Preferred Stock”).
The number of authorized shares of Common Stock or Preferred Stock may be increased or decreased (but not below the number of shares thereof then outstanding) by the affirmative vote of the holders of a majority of the voting power of all of the then-outstanding shares of capital stock of the Corporation entitled to vote thereon, without a vote of the holders of the Preferred Stock, or of any series thereof, unless a vote of any such holders is required pursuant to the terms of any Preferred Stock designation.”
Vote Required for Approval
The amendment to the Company’s Restated Certificate of Incorporation to increase the authorized number of shares of common stock from 45,000,000 to 90,000,000 (Proposal No. 2) requires the affirmative vote of the holders of a majority of shares of our common stock outstanding and entitled to vote at the
time, Mr. Fundaro.Our boardAnnual Meeting.
THE BOARD RECOMMENDS A VOTE “FOR”
THE APPROVAL OF AN AMENDMENT TO THE COMPANY’S
RESTATED CERTIFICATE OF INCORPORATION TO INCREASE THE
NUMBER OF AUTHORIZED SHARES OF COMMON STOCK
FROM 45,000,000 TO 90,000,000.
PROPOSAL NO. 3:
NON-BINDING, ADVISORY VOTE ON THE COMPENSATION OF
THE COMPANY’S NAMED EXECUTIVE OFFICERS
We have adopted a performance-based compensation philosophy that is intended to attract, retain, reward and incentivize our executive officers to achieve our near-term corporate goals, as well as our long-term strategic objectives. In particular, our philosophy is designed to achieve the following objectives:
•
reward the achievement of directors intendsmeasurable corporate objectives and align executive officers’ incentives with increasing stockholder value;
•
attract, retain and motivate highly-talented individuals with the skills and demonstrated abilities necessary to make new committee designations after our directors commence their new terms in office upon the completiondeliver superior execution of our short- and long-term strategic plans and drive our continued success;
•
provide executive compensation that is competitive with that paid by our peers in the competitive and dynamic biopharmaceutical industry;
•
appropriately balance cash compensation designed to encourage the achievement of critical annual
meetinggoals with equity incentives designed to inspire the achievement of
stockholders.Audit Committee. Our audit committee met five times during fiscal 2016. This committee currently haslong-term objectives and align the interests of our executive officers more closely with those of our stockholders; and
•
align the compensation principles for our executive officers with those for all employees to help create a company-wide performance culture.
We urge our stockholders to read the “Compensation Discussion and Analysis” section of this proxy statement, which describes our executive compensation philosophy and how we implemented it through our 2019 compensation program for our principal executive officer, our principal financial officer and our three members: Messrs. Sblendorio (Chairman), Bradbury and Santini. Our boardother most highly compensated executive officers serving at the end of directors determined that Mr. Sblendorio is an audit committee financial expert, as defined by the rules of the SEC, and satisfies the financial sophistication requirements of applicable NASDAQ rules. Our board of directors has determined that each of Messrs. Sblendorio, Bradbury and Santini is an independent director under the NASDAQ Marketplace Rules and Rule 10A-32019 (the “named executive officers”).
Pursuant to Section 14A of the Exchange
Act.Act, our stockholders are entitled to vote to approve, on a non-binding, advisory basis, the compensation of our named executive officers as disclosed in this proxy statement. This non-binding, advisory vote is commonly referred to as a “say-on-pay” vote.
At our 2015 Annual Meeting of Stockholders, we asked our stockholders to indicate if we should hold a “say-on-pay” vote every year, every two years or every three years. Our audit committee’s rolestockholders indicated a strong preference for holding such a vote every year and, responsibilitiesafter taking this result into consideration, our Board determined to hold such a vote every year. Accordingly, we are set forthsubmitting the following resolution for stockholder approval at the Annual Meeting:
“RESOLVED, that the stockholders of Intercept Pharmaceuticals, Inc. approve, on a non-binding, advisory basis, the compensation of the Company’s named executive officers as disclosed in the audit committee’s written charterproxy statement for the 2020 Annual Meeting of Stockholders, including the Compensation Discussion and includeAnalysis and the authoritycompensation tables and other narrative compensation disclosures.”
This vote is not intended to retainaddress any specific item of compensation, but rather the overall compensation of the Company’s named executive officers and terminate the servicesphilosophy, programs and practices described in this proxy statement. As this is a non-binding, advisory vote, the result will not be binding on the Company, our Board or our Compensation Committee, although our Compensation Committee will consider the outcome of ourthe vote when evaluating the Company’s compensation philosophy, programs and practices.
Vote Required for Approval
The approval, on a non-binding, advisory basis, of the compensation of the Company’s named executive officers (Proposal No. 3) requires the affirmative vote of a majority of the shares cast affirmatively or negatively in person or by proxy at the Annual Meeting.
THE BOARD RECOMMENDS A VOTE “FOR”
THE APPROVAL, ON A NON-BINDING, ADVISORY BASIS,
OF THE COMPENSATION OF THE COMPANY’S NAMED EXECUTIVE OFFICERS.
PROPOSAL NO. 4:
RATIFICATION OF APPOINTMENT OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Audit Committee is responsible for the appointment, retention, compensation, evaluation and oversight of the Company’s independent registered public accounting firm. In addition,The Audit Committee has appointed KPMG LLP as the audit committee reviews our annual and quarterlyCompany’s independent registered public accounting firm for the year ending December 31, 2020.
KPMG LLP has audited the Company’s financial statements considers matters relatingsince 2008. Representatives of KPMG LLP will be present virtually at the Annual Meeting, with the opportunity to make a statement should they choose to do so, and are expected to be available to respond to questions submitted electronically, as appropriate.
While stockholder ratification is not required by the Company’s Restated Bylaws or otherwise, the Board is submitting the appointment of KPMG LLP to the stockholders for ratification as a matter of good corporate governance practices. If the Company’s stockholders fail to ratify the appointment, the Audit Committee may, but is not required to, reconsider whether to retain KPMG LLP. Even if the appointment is ratified, the Audit Committee, in its discretion, may direct the appointment of a different independent registered public accounting policyfirm at any time during the year if it determines that such a change would be in the best interest of the Company and internal controls and reviewsits stockholders.
Vote Required for Approval
Ratification of the
scopeappointment of
annual audits.Our audit committee is authorized to:
approve and retainKPMG LLP as the independent auditors to conduct the annual audit of our financial statements;
review the proposed scope and resultsregistered public accounting firm of the audit;
review and pre-approve audit and non-audit fees and services;
review accounting and financial controls withCompany for the independent auditors and our financial and accounting staff;
review and approve transactions between us and our directors, officers and affiliates;
recognize and prevent prohibited non-audit services;
establish procedures for complaints received by us regarding accounting matters;
oversee internal audit functions, if any; and
prepareyear ending December 31, 2020 (Proposal No. 4) requires the reportaffirmative vote of a majority of the audit committee thatshares cast affirmatively or negatively in person or by proxy at the rules of the SEC require to be included in our annual meeting proxy statement.Annual Meeting.
Our audit committee is also empowered by the board to oversee our corporate compliance program. As part of its duties, the audit committee receives periodic updates from management and/or our advisors regarding compliance matters and reviews the adequacy and effectiveness of our compliance programs. The audit committee then periodically reports its evaluations to the board.
Please also see the report of the audit committee set forth elsewhere in this proxy statement.
THE BOARD RECOMMENDS A
copy of the audit committee’s written charter is publicly available in the “Investors” section of our website atwww.interceptpharma.com.Compensation Committee. Our compensation committee met six times during fiscal 2016. This committee currently has three members: Messrs. Santini (Chairman) and Welch and Dr. Akkaraju. All members of the compensation committee qualify as independent under the definition promulgated by The NASDAQ Stock Market and Rule 10C-1 of the Exchange Act.
VOTE “FOR”THE RATIFICATION OF THE APPOINTMENT OF KPMG LLPAS THE COMPANY’S INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM.
BOARD OF DIRECTORS AND GOVERNANCE
Composition of the Board
The Board is currently comprised of ten directors. Our compensation committee’s roledirectors are elected annually to serve one-year terms.
Role and responsibilities are set forth inMeetings of the compensation committee’s written charter and include:Board
reviewing and approvingThe Board meets regularly to review significant developments affecting the compensation arrangements for management, including the compensation for our president and chief executive officer;
establishing and reviewing general compensation policies with the objective to attract and retain superior talent, to reward individual performanceCompany and to achieve our financial goals;
administering our equity incentive plans; and
preparingact on matters requiring the reportapproval of the compensation committee that the rules of the SEC require to be included in our annual meeting proxy statement.
In respect of the determination of the compensation of our president and chief executive officer, the compensation committee conducts its decision-making process without the president and chief executive officer present.
Our compensation committee makes all compensation decisions regarding our executive officers.
During the first calendar quarter of each year, we evaluate each executive’s performance for the prior year. In connection with each annual review cycle, Dr. Pruzanski, our president and chief executive officer, meets with our executive officers to discuss our accomplishmentsBoard. The Board held seven board meetings during the year andended December 31, 2019. During the individual’s performance and contributions overyear ended December 31, 2019, each of our incumbent directors attended at least 75%, in the prior year. Based on these discussions, Dr. Pruzanski, with respect to each executive other than himself, prepares an evaluationaggregate, of (i) the meetings of the executive’s performance. Dr. Pruzanski also prepares his own self-assessment as well as a detailed review of company performance against stated corporate goals. This process leads to a recommendation by Dr. Pruzanski toBoard held during the compensation committee with respect to each executive officer as to:
period that such director served and (ii) the achievement of stated corporate and individual performance goals;
the level of contributions made to the general management and guidance of our company;
the need for salary increases;
the amount of bonuses to be paid; and
whether or not stock option and/or other equity awards should be made.
These recommendations are reviewed and taken into accountmeetings held by the compensation committee together with the advicecommittees of the compensation committee’s independent compensation consultant. The compensation committee then makesBoard on which such director served during the period that such director served.
Corporate Governance
We maintain a
determination regarding executive compensation based on its review of this information.In designing our executive compensation program, our compensation committee considers publicly available compensation data for U.S. companies in the biopharmaceutical industry to help guide its executive compensation decisions at the time of hiring and for subsequent adjustments in compensation. Our compensation committee also retained the services of Radford, an independent compensation consultant and a part of Aon Hewitt, a business unit of Aon plc, to provide it with additional comparative data on executive compensation practices in our industry and to advise itcorporate governance page on our executive compensation program generally. For 2016, Radford provided advicewebsite that includes key information about our Global Code of Business Conduct, Corporate Governance Guidelines and data to the compensation committee on executive and director compensation matters, including the selection of our peer group, comparative market pay levels, equity dilution and annual share utilization practices, incentive plan design and emerging market trends. Although the compensation committee considers the advice and recommendationscharters for each of the compensation consultant about our executive compensation program,Audit Committee, the compensation committee ultimately makes its own decisions about these matters.
The compensation committee regularly reviewsCompensation Committee, the services provided by its outside consultant and performs an annual assessment on the independence of its compensation consultant to determine whether the compensation consultant is independent. The compensation committee conducted a specific review of its relationship with Radford in 2016, and determined that Radford is independent in providing Intercept with
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executive and director compensation consulting services and that its work for the compensation committee did not raise any conflicts of interest, consistent with SEC rules and NASDAQ listing standards.
Our compensation committee will also review and discuss annually with management our “Compensation Discussion and Analysis” disclosure to the extent such disclosure is required by SEC rules.
A copy of the compensation committee’s written charter is publicly available in the “Investors” section of our website atwww.interceptpharma.com.
Nominating and Governance Committee. Our nominating and governance committee met two time during fiscal 2016. This committee currently has three members: Messrs. Welch (Chairman) and Bradbury and Dr. Benatti. All members of the nominating and governance committee qualify as independent under the definition promulgated by The NASDAQ Stock Market.
The nominating and governance committee’s role and responsibilities are set forth in the nominating and governance committee’s written charter and include:
evaluating and making recommendations to the full board as to the size and composition of the board and its committees;
identifying and nominating members of the board of directors;
developing and recommending to the board of directors a set of corporate governance principles applicable to our company; and
overseeing the evaluation of our board of directors and its committees.
If a stockholder wishes to nominate a candidate for director who is not to be included in our proxy statement, it must follow the procedures described in our restated bylaws and in “Stockholder Proposals and Nominations for Director” at the end of this proxy statement.
Under our current corporate governance policies, the nominating and governance committee may consider candidates recommended by stockholders as well as from other sources such as other directors or officers, third party search firms or other appropriate sources. The process followed by our nominating and governance committee to identify and evaluate director candidates includes requests to board members and others for recommendations, meetings from time to time to evaluate biographical information and background material relating to potential candidates and interviews of selected candidates by members of the committee and our board. For all potential candidates, the nominating and governance committee may consider all factors it deems relevant, such as a candidate’s personal integrity and sound judgment, business and professional skills and experience, independence, knowledge of the industry in which we operate, possible conflicts of interest, diversity, the extent to which the candidate would fill a present need on the board, and concern for the long-term interests of the stockholders. In general, persons recommended by stockholders will be considered on the same basis as candidates from other sources. If a stockholder wishes to propose a candidate for consideration as a nominee by the nominating and governance committee under our corporate governance policies, it should submit such recommendation in writing c/o Corporate Secretary, Intercept Pharmaceuticals, Inc., 10 Hudson Yards, Floor 37, New York, NY 10001.
A copy of the nominating and governance committee’s written charter is publicly available in the “Investors” section of our website atwww.interceptpharma.com.
Research and Development Committee. Our research and development committee met four times during fiscal 2016. This committee currently has three members: Drs. Benatti (Chairman), Akkaraju and Gottesdiener. This committee assistsCommittee of the board of directors in its oversight of our strategic direction and investment in research and development, technology and manufacturing activities.Board. The research and development committee is also responsible for identifying and discussing significant emerging trends and issues in science and technology and considering their potential impactcorporate governance page can be found on our company.
A copywebsite at www.interceptpharma.com in the Investors & Media section under “Corporate Governance.”
Board Leadership Structure
Mr. Fundarò has served as our Chairman since October 2015 and Dr. Pruzanski has served as our President and Chief Executive Officer, and as a member of the research and development committee’s written charter is publicly availableBoard, since our inception in 2002. In February 2018, we appointed Mr. Santini to serve as the “Investors” section of our website atwww.interceptpharma.com.Board’s Lead Independent Director.
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Board Diversity
Our nominating and governance committee is responsible for reviewing with the board of directors, on an annual basis, the appropriate characteristics, skills and experience required for the board of directors as a whole and its individual members. In evaluating the suitability of individual candidates (both new candidates and current members), the nominating and corporate governance committee, in recommending candidates for election, and the board of directors, in approving (and, in the case of vacancies, appointing) such candidates, will take into account many factors, including the following:
diversity of personal and professional background, perspective, experience, age, gender, ethnicity and country of citizenship;
personal and professional integrity and ethical values;
experience in one or more fields of business, professional, governmental, scientific or educational endeavors, and a general appreciation of major issues facing public companies similar in scope and size to us;
experience relevant to our industry or with relevant social policy concerns;
relevant academic expertise or other proficiency in an area of our operations;
objective and mature business judgment and expertise; and
any other relevant qualifications, attributes or skills.
Board Leadership Structure and Role in Risk Oversight
The positions of chairman of the board and chief executive officer are presently separated at our company. We believe that separating these positionsthe roles of Chairman and Chief Executive Officer recognizes the time, effort and energy that our Chief Executive Officer is required to devote to his position and allows our chief executive officerhim to focus on our day-to-day business, while allowing our chairman of the boardChairman to lead the board of directorsBoard in its fundamental role of providing advice to, and independent oversight of, management. Our board of directorsThe Board also recognizes the time, effort and energy that the chief executive officer is required to devote to his position in the current business environment, as well as the commitment required to serve as our chairman,Chairman, particularly as the board of directors’Board’s oversight responsibilities continue to grow. Our boardgrow, and as a result, we believe that the appointment of directorsMr. Santini as our Lead Independent Director contributes to the overall effectiveness of the Board. We also believe that Mr. Santini’s appointment enhances the governance structure of the Board by reinforcing the independence of the Board in its oversight of the business and affairs of the Company. However, no single leadership model is right for all companies and at all times, and the Board may review its leadership structure in the future.
The Board has delegated certain responsibilities to the committees of the Board. The Board has created four standing committees: an Audit Committee, a Compensation Committee, a Nominating and Governance Committee and a Research and Development Committee. In addition, special ad hoc committees of the Board may be created from time to time to oversee special projects, financings and other matters. Each standing committee is chaired by an independent director who reports to the full Board on the activities and findings of his or her respective committee. The Board believes that this structure ensures a greater role fordelegation of responsibilities facilitates efficient decision-making and communication among the independent directors in the oversightand management.
Board Oversight of
our company and active participation of the independent directors in setting agendas and establishing priorities and procedures for the work of our board of directors. Our board of directors believes its administration of its risk oversight function has not affected its leadership structure.While our restated bylaws and corporate governance guidelines do not require that our chairman and chief executive officer positions be separate, our board of directors believes that having separate positions is the appropriate leadership structure for us at this time and demonstrates our commitment to good corporate governance.
Risk is inherent with every business, and how well a business manages risk can ultimately determine its success. We face a number of risks, including risks relating to the regulatory approval, commercialization and market acceptance of pharmaceutical products, product candidate development, technological and competitive uncertainty, dependence on collaborative partners and other third parties, uncertainty regarding patents and proprietary rights, comprehensive government regulations and dependence on key personnel, as more fully discussed under Item 1.A. “Risk Factors” in our annual report on Form 10-K as may be periodically updated in our filings under the Exchange Act. Management is responsible for the day-to-day management of risks we face, while our board of directors, as a whole and through its committees,
The Board has responsibility for the oversight of risk management. Inmanagement, while the Company’s management has the day-to-day responsibility for the identification and control of risk at the Company. The Board, either as a whole or through its committees, regularly discusses with management the Company’s major risk exposures, their potential impact on the Company and the appropriate steps that should be taken in order to monitor and control such exposures. The committees assist the Board in fulfilling its risk oversight role, our boardresponsibilities within their respective areas of directors hasresponsibility. For example, pursuant to its written charter, the responsibilityAudit Committee oversees the Company’s processes and procedures with respect to satisfy itself thatfinancial and
enterprise risk, including overseeing the
Company’s enterprise risk management
processes designed and implemented byprogram. The Compensation Committee assists the Board in fulfilling its oversight responsibilities with respect to the management
are adequate and functioning as designed.Our board of directors is actively involved in oversight of risks that could affect us. This oversight is conducted primarily througharising from the audit committeeCompany’s compensation policies and practices. The Nominating and Governance Committee focuses on the management of our boardrisks associated with the composition, organization and governance of directors, but the full board of directors has retained responsibility for general oversight of risks. Our board of directors satisfies this responsibility through full reports by each committee chair regarding the committee’s considerationsBoard and actions,its committees, as well as through
the corporate governance structure of the Company. The Research and Development Committee reviews risks associated with the Company’s research and development programs. Each committee of the Board meets and reports its findings to the Board on a regular basis.
Independence
The Board is currently comprised of ten directors. The Board uses the standards of independence established by the SEC and Nasdaq in determining whether its members are independent. The Board has affirmatively determined that each of the Company’s current directors (other than Dr. Pruzanski) is independent under the director independence criteria established by Nasdaq. Dr. Pruzanski is not an independent director by virtue of his employment with the Company.
In addition, the Board has determined that each member of the Audit Committee, Compensation Committee and Nominating and Governance Committee meets any additional “independence” criteria established by Nasdaq or the SEC required for service on such committees.
Executive Sessions and Meetings of Independent Directors
The Board generally holds executive sessions of the independent directors following each regularly scheduled meeting of the Board. Executive sessions do not include any employee directors or other members of management of the Company.
Board Attendance at Annual Meetings of Stockholders
In accordance with our Corporate Governance Guidelines, members of the Board are strongly encouraged to attend the Company’s Annual Meetings of Stockholders. Eight of the ten directors comprising the Board at the time were in attendance at the Company’s 2019 Annual Meeting of Stockholders held on June 20, 2019.
Communication with the Board
The Board has adopted a process by which stockholders may communicate with the Board. Stockholders who wish to communicate with the Board may do so by sending written communications to the following address:
Intercept Pharmaceuticals, Inc.
c/o Company Secretary
10 Hudson Yards, 37th Floor
New York, NY 10001
Any such communication must state the number of shares owned by the stockholder making the communication. In any such communication, an interested person may also designate a particular director, or a committee of the Board, such as the Audit Committee, to which such communication should be directed. Our legal department will forward all correspondence to the Board or the particularly designated audience, except for spam, junk mail, mass mailings, job inquiries, surveys, business solicitations or advertisements or patently offensive or otherwise inappropriate or frivolous material. Our legal department may forward certain correspondence, such as product-related inquiries, elsewhere within the Company for review and possible response.
Global Code of Business Conduct
We have adopted a Global Code of Business Conduct as our “code of ethics,” as defined by regulations promulgated under the Securities Act and the Exchange Act, which 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. Our Global Code of Business Conduct is available on our website at www.interceptpharma.com in the Investors & Media section under “Corporate Governance.” We intend to satisfy the disclosure requirement under Item 5.05 of Form 8-K regarding any future amendment to, or waiver from, a provision of our Global Code of Business Conduct that applies to our principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions by posting such information on our website at www.interceptpharma.com in the Investors & Media section under “Corporate Governance.”
Corporate Governance Guidelines
As part of the Board’s commitment to building long-term stockholder value with an emphasis on corporate governance, the Board has adopted a set of Corporate Governance Guidelines to assist it in exercising its responsibilities. Our Corporate Governance Guidelines cover, among other topics, Board composition, structure and functioning, Board membership criteria, the submission of Board nominee recommendations by stockholders, Board self-evaluations, Board access to management and advisors, leadership development and succession planning. Our Corporate Governance Guidelines are available on our website at www.interceptpharma.com in the Investors & Media section under “Corporate Governance.”
Anti-Hedging and Anti-Pledging Policy
The Company restricts its directors, officers and employees from (i) engaging in any transactions involving options, straddles, collars or other similar risk reduction or hedging devices, (ii) using the Company’s securities to secure a margin or other loan, (iii) effecting “short sales” of the Company’s securities and (iv) trading in the Company’s securities on a short-term basis.
Policies and Procedures Dealing with the Review and Approval of Related Person Transactions
Pursuant to its written charter, the Audit Committee is responsible for reviewing and approving, prior to the Company’s entry into such transactions, all transactions in which the Company is or will be a participant that would be required to be disclosed by the Company pursuant to Item 404 of Regulation S-K as a result of any executive officer, director, director nominee, beneficial owner of more than 5% of the Company’s securities or immediate family member of any of the foregoing persons, or any other person whom the Board determines may be considered to be a related person under Item 404 of Regulation S-K, having or being expected to have a direct or indirect material interest therein. For the above purposes, “immediate family member” means any child, stepchild, parent, stepparent, spouse, sibling, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law or sister-in-law, and any person (other than a tenant or employee) sharing the household with the executive officer, director, director nominee or greater than 5% beneficial owner.
In reviewing and approving such transactions, the Audit Committee shall obtain, or shall direct management to obtain on its behalf, all information that the Audit Committee believes to be relevant and important to a review of the transaction prior to its approval. Following receipt of the necessary information, a discussion shall be held of the relevant factors if deemed to be necessary by the Audit Committee prior to approval. If a discussion is not deemed to be necessary, approval may be given by written consent of the committee.
The Audit Committee shall approve only those related person transactions that are determined to be in, or not inconsistent with, the best interests of the Company and its stockholders, taking into account all available facts and circumstances as the Audit Committee determines in good faith to be necessary in accordance with principles of Delaware law generally applicable to directors of a Delaware corporation. These facts and circumstances will typically include, but not be limited to, the commercial reasonableness of the terms, the benefit and perceived benefit, or lack thereof, to the Company, opportunity costs of alternate transactions, the materiality and character of the related person’s direct or indirect interest and the actual or apparent conflict of interest of the related person. No member of the Audit Committee shall participate in any review, consideration or approval of any related person transaction with respect to which such member or any of his or her immediate family members has an interest.
No related person transaction shall be entered into or continued prior to the completion of the foregoing procedures. In the event management becomes aware of a related person transaction that has not
been previously approved, it shall be submitted to the Audit Committee promptly, and the Audit Committee shall review such related person transaction in accordance with the foregoing procedures, taking into account all of the relevant facts and circumstances available to the Audit Committee. Based on the conclusions reached, the Audit Committee shall evaluate all options, including, without limitation, approval, ratification, amendment or termination of the related person transaction.
Committees of the Board
The Board has created four standing committees: an Audit Committee, a Compensation Committee, a Nominating and Governance Committee and a Research and Development Committee. In addition, special ad hoc committees of the Board may be created from time to time to oversee special projects, financings and other matters.
Audit Committee
The Board has established an Audit Committee currently consisting of Messrs. Sblendorio, Bradbury and Santini. Mr. Sblendorio, who the Board has determined is an “audit committee financial expert” (as that term is defined in Item 407(d)(5) of Regulation S-K), serves as the chairperson of the Audit Committee. Each member of the Audit Committee is independent under Rule 10A-3 of the Exchange Act and the applicable rules of Nasdaq.
The Audit Committee’s primary purpose is to act on behalf of the Board in fulfilling the Board’s oversight responsibilities with respect to the Company’s accounting and financial reporting practices, systems of internal control over financial reporting and audit process, as well as the quality and integrity of the Company’s financial reports, the qualifications, independence and performance of the Company’s independent registered public accounting firm, the performance of the Company’s internal audit function and the Company’s processes for monitoring compliance with legal and regulatory requirements and the Company’s Global Code of Business Conduct. The Audit Committee’s report is set forth under “Audit Committee Report.”
The Audit Committee operates under a written charter adopted by the Board, a current copy of which is available on our website at www.interceptpharma.com in the Investors & Media section under “Corporate Governance.” The Audit Committee met six times during the year ended December 31, 2019.
Compensation Committee
The Board has established a Compensation Committee currently consisting of Messrs. Santini and Welch and Ms. Miller-Rich, all of whom are independent under applicable Nasdaq rules, “non-employee directors” within the meaning of Rule 16b-3 under the Exchange Act and “outside directors” within the meaning of Section 162(m) of the Internal Revenue Code (the “Code”) (which is only relevant to the extent deemed necessary to qualify for transition relief under Section 162(m)). Mr. Santini serves as the chairperson of the Compensation Committee.
The Compensation Committee’s primary purpose is to act on behalf of the Board in fulfilling the Board’s responsibilities to oversee the Company’s compensation programs, policies and practices, to review and determine the compensation to be paid to the Company’s executive officers, to review, discuss with management and approve the Company’s “Compensation Discussion and Analysis” disclosures and to review and approve the committee’s report included in the Company’s annual proxy statement in accordance with applicable rules and regulations of the SEC in effect from time to time. The Compensation Committee’s report is set forth under “Executive Compensation—Compensation Committee Report.” For a discussion of the role of management and the use of compensation consultants in determining executive compensation, see “Executive Compensation—Compensation Discussion and Analysis.”
The Compensation Committee operates under a written charter adopted by the Board, a current copy of which is available on our website at www.interceptpharma.com in the Investors & Media section under “Corporate Governance.” Under its charter, the Compensation Committee may form and delegate its authority to subcommittees of the committee when it deems it appropriate and in the best interests of the Company. The Compensation Committee met seven times during the year ended December 31, 2019.
Nominating and Governance Committee
The Board has established a Nominating and Governance Committee currently consisting of Messrs. Welch and Bradbury and Dr. Benatti, all of whom are independent under applicable Nasdaq rules. Mr. Welch serves as the chairperson of the Nominating and Governance Committee.
The Nominating and Governance Committee’s primary purpose is to: (i) evaluate and make recommendations to the Board with respect to the current size, composition, organization and governance of the Board and its committees; (ii) identify, review and evaluate candidates qualified to serve as directors and on committees of the Board and make recommendations concerning the leadership structure of the Board; (iii) recommend to the Board nominees for election to the Board at the Company’s Annual Meetings of Stockholders and appointment to the Board to fill interim vacancies, if any; (iv) administer the annual performance evaluation process for the Board and its committees; (v) oversee the executive officer succession planning process; and (vi) oversee and make recommendations to the Board with respect to corporate governance matters.
When the Board determines to seek a new member, whether to fill a vacancy or otherwise, the Nominating and Governance Committee may utilize third-party search firms and will consider recommendations from directors, management and others, including the Company’s stockholders. Our Corporate Governance Guidelines include a policy regarding the qualifications of directors, which sets forth threshold requirements for individuals nominated to serve as directors of the Company. In general, the Nominating and Governance Committee looks for new members possessing relevant expertise to offer advice and guidance to management, having demonstrated excellence in his or her field, having the ability to exercise sound business judgment, having the commitment to promote and enhance the long-term value of the Company for its stockholders and possessing the highest personal and professional standards of integrity and ethical values.
The Nominating and Governance Committee believes that all members of the Board must have sufficient time and devote sufficient attention to board duties and to otherwise fulfill the responsibilities required of directors. In identifying and considering nominees for director and directors for service on Board committees, the Nominating and Governance Committee considers whether such nominees and directors have sufficient time and attention to devote to board duties, including whether, among other things, such nominees and directors may be “overboarded,” which refers to the situation where a director serves on an excessive number of boards. Our Corporate Governance Guidelines require that before accepting an invitation to serve on another board, our directors must first provide notice to the Chairman of the Board and the chairperson of the Nominating and Governance Committee. In addition, our Corporate Governance Guidelines provide that, unless approved in advance by the Board, (i) no director may serve on more than five U.S. public company boards (including service on the Board), and (ii) no director who serves as a chief executive officer of a U.S. public company may serve on more than three U.S. public company boards (including service on the Board). Accordingly, prior to recommending a candidate as a nominee for director or a director for service on a Board committee, the Nominating and Governance Committee reviews the number of boards that the candidate or director serves on and considers whether such outside commitments may limit his or her ability to devote sufficient time and attention to the affairs of the Company. In recommending to the Board that Daniel Bradbury be nominated to serve on the Board until the 2021 Annual Meeting or until his successor is duly elected and qualified, the Nominating and Governance Committee considered, among other things, that Mr. Bradbury transitioned in January 2020 from Chief Executive Officer and Chairman of Equillium, Inc. to a more limited advisory role as Executive Chairman of Equillium, Inc. In recommending to the Board that Gino Santini be nominated to serve on the Board until the 2021 Annual Meeting or until his successor is duly elected and qualified, the Nominating and Governance Committee considered, among other things, that Mr. Santini will not be standing for re-election as a director of Allena Pharmaceuticals, Inc. at its 2020 annual meeting of stockholders, as disclosed in its Annual Report on Form 10-K filed with the SEC on March 16, 2020. In recommending that you vote for the election of Glenn Sblendorio to serve on the Board until the 2021 Annual Meeting or until his successor is duly elected and qualified, the Nominating and Governance Committee considered, among other things, his role as Chief Executive Officer of IVERIC bio, Inc. and other commitments, on the one hand, and his more than 30 years of experience in the pharmaceutical and
biotechnology industries, his leadership, financial, operational and strategic expertise, his knowledge of the Company and the insight he brings into the boardroom, as well as his strong record of availability and dedication to service on the Board, on the other hand.
The Nominating and Governance Committee does not have a formal policy with respect to diversity; however, pursuant to the policy regarding the qualifications of directors included in our Corporate Governance Guidelines, the Nominating and Governance Committee considers the diversity of the Board and its committees when identifying and considering nominees for director and directors for service on Board committees, and shall strive where appropriate to achieve a diverse balance of backgrounds, perspectives, experiences, ages, genders and ethnicities on the Board and its committees.
Candidates for director nominees are reviewed in the context of the foregoing standards and considerations, as well as the expected contributions of each candidate to the collective functioning of the Board based upon the totality of his or her credentials, experience and expertise, the composition of the Board at the time and other relevant circumstances, including the operating requirements of the Company and the long-term interests of stockholders. With respect to the nomination of continuing directors for re-election, the individual’s past performance as a director is also considered. The Nominating and Governance Committee periodically reviews the composition of the Board, including whether the directors, both individually and collectively, can and do provide the experience, qualifications, attributes and skills appropriate for the Company.
Our Corporate Governance Guidelines include policies with respect to the consideration of candidates recommended by stockholders for nomination for election to the Board and the procedures for stockholders to follow in submitting such recommendations. The Nominating and Governance Committee will consider bona fide candidates recommended by stockholders in accordance with such policies. Any such recommendation must be submitted in writing to the Nominating and Governance Committee, care of Intercept Pharmaceuticals, Inc., 10 Hudson Yards, 37th Floor, New York, NY 10001, Attention: Company Secretary, within the time frames set forth in such policies and contain the information and undertakings required by such policies. Nominees for director who are recommended by stockholders to the Nominating and Governance Committee will be evaluated in the same manner as any other nominee for director. Nominations by stockholders may also be made in the manner set forth under “Stockholders’ Proposals.”
The Nominating and Governance Committee operates under a written charter adopted by the Board. A current copy of such charter, as well as our Corporate Governance Guidelines, which include the above-referenced policies regarding the qualifications of directors, the consideration of candidates recommended by stockholders for nomination for election to the Board and the procedures for stockholders to follow in submitting such recommendations, are available on our website at www.interceptpharma.com in the Investors & Media section under “Corporate Governance.” The Nominating and Governance Committee met four times during the year ended December 31, 2019.
Research and Development Committee
The Board has established a Research and Development Committee currently consisting of Drs. Benatti, Akkaraju and Gottesdiener, all of whom are independent under applicable Nasdaq rules. Dr. Benatti serves as the chairperson of the Research and Development Committee.
The Research and Development Committee’s primary purpose is to assist the Board in its oversight of particular risks withinthe Company’s strategic direction and investment in research and development, technology and manufacturing and to identify and discuss significant emerging trends and issues in science and technology and consider their potential impact on the Company.
The Research and Development Committee operates under a written charter adopted by the Board, a copy of which is available on our company aswebsite at www.interceptpharma.com in the Investors & Media section under “Corporate Governance.” The Research and Development Committee met twice during the year ended December 31, 2019.
Compensation Committee Interlocks and Insider Participation
No member of the Compensation Committee is or has formerly been an officer or employee of the Company. In 2019, none of our boardexecutive officers (i) served on the compensation committee of directors believesanother
entity that full and open communication between management andhad one or more of its executive officers serving on the Board or the Compensation Committee of the Company or (ii) served on the board of directors is essentialof another entity that had one or more of its executive officers serving on the Compensation Committee of the Company.
Director Compensation
On an annual basis, the Compensation Committee conducts an evaluation of the design of the Company’s independent director compensation program in light of best practices and competitive market data for
effective risk managementthe Company’s compensation peer group. In 2019, the Compensation Committee also retained the services of the Rewards Solution practice at Aon plc, specifically members of their Radford advisory team (“Radford”), an independent compensation consultant, to provide it with additional comparative data on director compensation practices in the Company’s industry and
oversight.Stockholder Communicationsto advise it on the Company’s independent director compensation program generally. In May 2019, based on the input and analysis provided by Radford and the recommendation of our Compensation Committee, the Board determined that no adjustments were needed to the independent director compensation levels previously adopted by the Board
Generally, stockholders who have questions or concerns should contact our Investor Relations department at 646-747-1000. However, any stockholders who wish to address questions regarding our business directly in June 2018, which had been adopted with the board of directors, or any individual director, should direct his or her questions in writingreference to the chairman50th percentile of the board orcompetitive market based on our compensation peer group. As a result, (i) all annual cash retainers were maintained at their pre-existing levels, (ii) the aggregate equity value of the Annual Grant (as defined below) was maintained at $264,500 and (iii) the aggregate equity value of any individual director ATTN: SECURITY HOLDER COMMUNICATION, BoardNew Director Grant (as defined below) was maintained at $396,750. Only directors who are “independent” in accordance with applicable Nasdaq rules (the “Independent Directors”) receive compensation for their service as directors. Each of the Company’s current directors, other than Dr. Pruzanski, qualifies as an Independent Director.
For 2019, the annual cash retainers for the Independent Directors Intercept Pharmaceuticals, Inc. at 10 Hudson Yards, Floor 37, New York, NY 10001 or via e-mail at secretary@interceptpharma.com. Communications will be distributedwere as follows (payable quarterly in equal installments):
| Membership | | | Chairperson | | | Other Members | |
| Board of Directors. | | | | $ | 80,000 | | | | | $ | 50,000 | | |
| Audit Committee | | | | $ | 20,000 | | | | | $ | 10,000 | | |
| Compensation Committee | | | | $ | 15,000 | | | | | $ | 7,500 | | |
| Nominating and Governance Committee | | | | $ | 10,000 | | | | | $ | 5,000 | | |
| Research and Development Committee | | | | $ | 10,000 | | | | | $ | 5,000 | | |
Pursuant to the board, or to any individualindependent director or directors as appropriate, dependingcompensation levels adopted by the Board, (i) each Independent Director who had served on the factsBoard for six months or longer as of the date of the Company’s 2019 Annual Meeting of Stockholders was eligible to receive an annual equity grant (each, an “Annual Grant”) comprised of stock options with an equity value of $132,250 and circumstances outlined in the communications. Items that are unrelatedrestricted stock units with an equity value of $132,250 and (ii) each new Independent Director first appointed or elected to the dutiesBoard in 2019 was eligible to receive an equity grant (each, a “New Director Grant”) comprised of stock options with an equity value of $198,375 and responsibilitiesrestricted stock units with an equity value of $198,375. No new Independent Directors were appointed or elected to the Board in 2019 and, accordingly, no New Director Grants were made in 2019.
The number of (i) stock options granted in connection with each Annual Grant and New Director Grant is determined by dividing the equity value to be represented thereby by the value per-option derived from a Black-Scholes model with reference to the average of the
board mayper-share closing prices of the Company’s common stock on the Nasdaq Global Select Market during the 30 trading days preceding the grant date and (ii) restricted stock units granted in connection with each Annual Grant and New Director Grant is determined by dividing the equity value to be
excluded,represented thereby by the average of the per-share closing prices of the Company’s common stock on the Nasdaq Global Select Market during the 30 trading days preceding the grant date. Because the number of stock options and restricted stock units granted in connection with each Annual Grant and New Director Grant is determined using a 30-day average closing stock price, the grant date fair values of such
as:junk mailstock options and mass mailings;restricted stock units, as computed in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718 (“ASC 718”), differ from the amounts set forth above.
resumesSubject to the Independent Director’s continued service on the Board, the stock option and other formsrestricted stock unit awards granted in connection with (i) each Annual Grant vest in full on the earlier of job inquiries;(A) the
one-year anniversary of the date of grant and (B) the day immediately preceding the date of the next Annual Meeting of Stockholders and (ii) each New Director Grant vest in a series of three equal annual installments, with 1/3 of the shares subject to the award vesting on each anniversary of the date that the Independent Director was first elected or
solicitations or advertisements.
appointed to the Board (or, if earlier in any given year, the day immediately preceding the date of the Annual Meeting of Stockholders in such year). In addition, any material thatall unvested Annual Grants and New Director Grants shall immediately vest in connection with a change of control of the Company. The exercise price for stock options granted in connection with each Annual Grant and New Director Grant is unduly hostile, threatening, or illegalthe per-share closing price of the Company’s common stock on the Nasdaq Global Select Market on the date of grant.
The Company also reimburses reasonable out-of-pocket expenses incurred in
nature may be excluded, provided that any communication that is filtered out will be made available to any outside director upon request.Executive Officers
connection with attendance at Board meetings.
The following table sets forth, certainfor the fiscal year ended December 31, 2019, the total compensation paid to the Independent Directors serving on the Board during 2019.
Director Compensation for 2019
| Name | | | Fees Earned
or Paid in
Cash
($) | | | Stock
Awards
($)(10) | | | Option
Awards
($)(10) | | | Total
($) | |
| Paolo Fundarò | | | | | 80,000(1) | | | | | | 129,133 | | | | | | 132,223 | | | | | | 341,356 | | |
| Srinivas Akkaraju, M.D., Ph.D. | | | | | 55,000(2) | | | | | | 129,133 | | | | | | 132,223 | | | | | | 316,356 | | |
| Luca Benatti, Ph.D. | | | | | 65,000(3) | | | | | | 129,133 | | | | | | 132,223 | | | | | | 326,356 | | |
| Daniel Bradbury | | | | | 65,000(4) | | | | | | 129,133 | | | | | | 132,223 | | | | | | 326,356 | | |
| Keith Gottesdiener, M.D. | | | | | 55,000(5) | | | | | | 129,133 | | | | | | 132,223 | | | | | | 316,356 | | |
| Nancy Miller-Rich | | | | | 57,500(6) | | | | | | 129,133 | | | | | | 132,223 | | | | | | 318,856 | | |
| Gino Santini | | | | | 75,000(7) | | | | | | 129,133 | | | | | | 132,223 | | | | | | 336,356 | | |
| Glenn Sblendorio | | | | | 70,000(8) | | | | | | 129,133 | | | | | | 132,223 | | | | | | 331,356 | | |
| Daniel Welch | | | | | 67,500(9) | | | | | | 129,133 | | | | | | 132,223 | | | | | | 328,856 | | |
(1)
Represents an annual cash retainer for Mr. Fundarò’s service as Chairman of the Board.
(2)
Represents an annual cash retainer for Dr. Akkaraju’s service as a director and as a member of the Research and Development Committee.
(3)
Represents an annual cash retainer for Dr. Benatti’s service as a director, as Chairperson of the Research and Development Committee and as a member of the Nominating and Governance Committee.
(4)
Represents an annual cash retainer for Mr. Bradbury’s service as a director, as a member of the Nominating and Governance Committee and as a member of the Audit Committee.
(5)
Represents an annual cash retainer for Dr. Gottesdiener’s service as a director and as a member of the Research and Development Committee.
(6)
Represents an annual cash retainer for Ms. Miller-Rich’s service as a director and as a member of the Compensation Committee.
(7)
Represents an annual cash retainer for Mr. Santini’s service as a director, as Chairperson of the Compensation Committee and as a member of the Audit Committee.
(8)
Represents an annual cash retainer for Mr. Sblendorio’s service as a director and as Chairperson of the Audit Committee.
(9)
Represents an annual cash retainer for Mr. Welch’s service as a director, as a member of the Compensation Committee and as Chairperson of the Nominating and Governance Committee.
(10)
Amounts shown represent the aggregate grant date fair value, computed in accordance with ASC 718, in respect of restricted stock unit and stock option awards. These amounts do not reflect compensation actually received by the Independent Directors. Assumptions used in the calculation of these amounts are included in “Note 13” to the Notes to Consolidated Financial Statements for the year ended December 31, 2019, included in our Annual Report. Each Independent Director received an Annual Grant in 2019 comprised of 1,570 restricted stock units and 2,174 stock options. As of December 31,
2019, the aggregate number of unvested restricted stock units and shares subject to stock options (including unvested stock option awards) held by each Independent Director serving on the Board during 2019 was as follows: 1,570 restricted stock units and 12,561 shares subject to stock options (including unvested stock option awards) for Mr. Fundarò; 1,570 restricted stock units and 11,560 shares subject to stock options (including unvested stock option awards) for Dr. Akkaraju; 1,570 restricted stock units and 10,857 shares subject to stock options (including unvested stock option awards) for Dr. Benatti; 1,570 restricted stock units and 10,154 shares subject to stock options (including unvested stock option awards) for Mr. Bradbury; 1,570 restricted stock units and 10,154 shares subject to stock options (including unvested stock option awards) for Dr. Gottesdiener; 1,570 restricted stock units and 9,858 shares subject to stock options (including unvested stock option awards) for Ms. Miller-Rich; 1,570 restricted stock units and 12,056 shares subject to stock options (including unvested stock option awards) for Mr. Santini; 1,570 restricted stock units and 10,857 shares subject to stock options (including unvested stock option awards) for Mr. Sblendorio; and 1,570 restricted stock units and 12,056 shares subject to stock options (including unvested stock option awards) for Mr. Welch.
Stock Ownership Guidelines for Directors
The Company has adopted minimum stock ownership guidelines for the Board, which require, within a five-year period, the Independent Directors to hold Company equity equal to at least 3x their annual cash retainer. Until the ownership guidelines are satisfied, the Independent Directors are required to maintain a minimum retention ratio of at least 50% of their annual equity awards, net of shares sold or withheld solely to pay applicable exercise fees and/or withholding taxes. Any Independent Directors failing to meet the guidelines within the allotted compliance period will be required to maintain a minimum retention ratio of 100% of net shares after the applicable exercise fees and/or withholding taxes.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table and accompanying footnotes show information as of April 6, 2020 regarding ourthe beneficial ownership of the Company’s shares by:
•
each person who was known by the Company to own beneficially more than 5% of its shares;
•
each member of the Board and each of the Company’s named executive officers; and
•
all members of the Board and the Company’s executive officers whoas a group.
For purposes of the table below, we deem shares subject to options that are
exercisable or exercisable within sixty days of April 6, 2020 and restricted stock units vesting within sixty days of April 6, 2020 to be outstanding and to be beneficially owned by the person holding the options or restricted stock units, as applicable, for the purpose of computing the percentage ownership of that person, but we do not
also directors.treat them as outstanding for the purpose of computing the percentage ownership of any other person. Except as otherwise noted, the persons or entities in this table have sole voting and investment power with respect to all of the shares beneficially owned by them. On April 6, 2020, there were 32,943,079 shares outstanding. Unless otherwise specified, the address of each director and executive officer is c/o Intercept Pharmaceuticals, Inc., 10 Hudson Yards, 37th Floor, New York, NY 10001. | | | | Shares Beneficially Owned(9) | |
| Name and Address | | | Number of
Shares | | | Percentage of
Common
Stock | |
| 5% Stockholders: | | | | | | | | | | | | | |
Genextra S.p.A.(1) | | | | | 6,095,578 | | | | | | 18.5% | | |
FMR LLC(2) | | | | | 4,919,116 | | | | | | 14.9 % | | |
BlackRock, Inc.(3) | | | | | 2,314,468 | | | | | | 7.0 % | | |
The Vanguard Group(4) | | | | | 2,296,438 | | | | | | 7.0 % | | |
| Directors and Executive Officers: | | | | | | | | | | | | | |
Paolo Fundarò(5) | | | | | 6,129,142 | | | | | | 18.6% | | |
Mark Pruzanski, M.D.(6) | | | | | 787,855 | | | | | | 2.4% | | |
Srinivas Akkaraju, M.D., Ph.D.(7) | | | | | 438,344 | | | | | | 1.3% | | |
| Luca Benatti, Ph.D. | | | | | 21,553 | | | | | | * | | |
Daniel Bradbury(8) | | | | | 26,723 | | | | | | * | | |
| Keith Gottesdiener, M.D. | | | | | 20,082 | | | | | | * | | |
| Nancy Miller-Rich | | | | | 14,809 | | | | | | * | | |
| Gino Santini | | | | | 20,910 | | | | | | * | | |
| Glenn Sblendorio | | | | | 19,513 | | | | | | * | | |
| Daniel Welch | | | | | 20,091 | | | | | | * | | |
| Jerome Durso. | | | | | 50,857 | | | | | | * | | |
| Sandip Kapadia | | | | | 54,264 | | | | | | * | | |
| Richard Kim | | | | | 32,751 | | | | | | * | | |
| Ryan Sullivan | | | | | 30,456 | | | | | | * | | |
| All directors and executive officers as group (19 persons) | | | | | 7,812,414 | | | | | | 23.7% | | |
*
Less than 1%.
(1)
In a Schedule 13G filed with the SEC on July 31, 2019 by Genextra S.p.A. (“Genextra”); Genextra, Francesco Micheli and Paolo Fundarò each reported shared voting power and shared dispositive power over 6,095,578 shares and Mr. Fundarò reported sole voting power and sole dispositive power over 28,250 shares. Mr. Micheli is the Executive Director and Chairman of the Board of Genextra and, in such capacity, Mr. Micheli exercises voting control over the shares owned by Genextra. Mr. Micheli
disclaims beneficial ownership with respect to any such shares, except to the extent of his pecuniary interest therein, if any. Mr. Fundarò is the Chief Executive Officer of Genextra and, in such capacity, Mr. Fundarò exercises voting control over the shares owned by Genextra. Mr. Fundarò disclaims beneficial ownership with respect to any such shares, except to the extent of his pecuniary interest therein, if any. Genextra’s address is Via Privata Giovannino De Grassi, 11, 20123 Milan, Italy. Genextra has informed the Company that it has pledged shares that it holds to an affiliate of Credit Suisse Securities (USA) LLC as collateral in connection with a margin loan.
(2)
Based solely on information contained in a Schedule 13G filed with the SEC on February 7, 2020 by FMR LLC (“FMR”). In the FMR Schedule 13G, FMR reported sole voting power over 383,500 shares and sole dispositive power over 4,919,116 shares. FMR’s address is 245 Summer Street, Boston, MA 02210.
(3)
Based solely on information contained in a Schedule 13G filed with the SEC on February 10, 2020 by BlackRock, Inc. (“BlackRock”). In the BlackRock Schedule 13G, BlackRock reported sole voting power over 2,241,855 shares and sole dispositive power over 2,314,468 shares. BlackRock’s address is 55 East 52nd Street, New York, NY 10055.
(4)
Based solely on information contained in a Schedule 13G filed with the SEC on February 12, 2020 by The Vanguard Group (“Vanguard”). In the Vanguard Schedule 13G, Vanguard reported sole voting power over 53,450 shares, shared voting power over 5,293 shares, sole dispositive power over 2,241,208 shares and shared dispositive power over 55,230 shares. Vanguard’s address is 100 Vanguard Blvd., Malvern, PA 19355.
(5)
Includes 6,095,578 shares held by Genextra. Mr. Fundarò is the Chief Executive Officer of Genextra. Mr. Fundarò disclaims beneficial ownership with respect to such shares, except to the extent of his pecuniary interest therein, if any.
(6)
Includes 100,000 shares held in a grantor retained annuity trust.
(7)
Includes 403,688 shares held by Samsara BioCapital, L.P. Dr. Akkaraju is a managing member of Samsara BioCapital GP, LLC, the general partner of Samsara BioCapital, L.P. Dr. Akkaraju disclaims beneficial ownership of such shares except to the extent of his pecuniary interest therein.
(8)
Includes 7,812 shares held by BioBrit, LLC. Mr. Bradbury and his spouse are the trustees and beneficiaries of a trust that is the sole member of BioBrit, LLC.
(9)
Includes the following shares issuable upon the exercise of options that are exercisable or exercisable within sixty days of April 6, 2020 or the vesting of restricted stock units vesting within sixty days of April 6, 2020: for Mr. Fundarò, 14,131 shares; for Dr. Pruzanski, 227,969 shares; for Dr. Akkaraju, 13,130 shares; for Dr. Benatti, 12,427 shares; for Mr. Bradbury, 11,724 shares; for Dr. Gottesdiener, 11,724 shares; for Ms. Miller-Rich, 10,324 shares; for Mr. Santini, 13,626 shares; for Mr. Sblendorio, 12,427 shares; for Mr. Welch, 13,626 shares; for Mr. Durso, 34,138 shares; for Mr. Kapadia, 36,426 shares; for Mr. Kim, 22,414 shares; for Mr. Sullivan, 14,819 shares; and for all directors and executive officers as a group, 551,216 shares.
EXECUTIVE OFFICERS
The executive officers of Intercept Pharmaceuticals, Inc. as of April __, 2020, their positions and their ages are as listed below.
| | | | |
| Name | | | Age | | Position(s) | Position | |
| Mark Pruzanski, M.D. | | | 52 | | | President and Chief Executive Officer | |
| Jerome Durso | | | 52 | | | Chief Operating Officer | |
| Lisa Bright | | 49 | 52 | | | President, International | |
Jerome B. DursoJason Campagna, M.D., Ph.D. | | 49 | 50 | | | Chief OperatingMedical Officer | |
| Gail Cawkwell, M.D., Ph.D. | | | 58 | | | SVP, Medical Affairs, Safety & Pharmacovigilance | |
| David Ford | | | 51 | | | Chief Human Resources Officer | |
| Sandip Kapadia | | 47 | 50 | | | Chief Financial Officer and Treasurer | |
| Richard Kim | | 48 | 51 | Senior Vice | | President, U.S. Commercial U.S.& Strategic Marketing | |
Rachel McMinn, Ph.D.Ryan Sullivan | | | 44 | | Chief Business | General Counsel and Strategy OfficerSecretary | |
David Shapiro,Christian Weyer, M.D., M.A.S. | | 62 | 51 | Chief Medical Officer and Executive Vice President, | | EVP, Research & Development | |
Lisa Bright
Mark Pruzanski, M.D. is one of our co-founders and has served as our President
Internationaland Chief Executive Officer, and as a member of our Board, since
July 2016. Sheour inception in 2002. Dr. Pruzanski has over
2520 years of experience in
the biopharmaceutical industry. Ms. Bright joined Intercept in November 2014 as senior vice presidentlife sciences company management, venture capital and
head of Europe and then served as chief commercial and corporate affairs officer from February 2015 to July 2016.strategic consulting. Prior to
joining Intercept, Ms. Bright workedco-founding the Company, Dr. Pruzanski was a venture partner at
Gilead Sciences Ltd. starting in 2008, where she held positionsApple Tree Partners, an early stage life sciences venture capital firm that he co-founded, and an entrepreneur-in-residence at Oak Investment Partners, a venture capital firm. Dr. Pruzanski is a co-author of
increasing responsibility, including: general manager United Kingdom & Ireland; vice president, Northern Europe; vice president, heada number of
Sovaldi launch planning for Europe, Asia, Middle Eastscientific publications and
Australasia; and vice president, government affairs Europe, Middle East and Australasia. Prior to holding these positions, Ms. Bright heldis named as an inventor on several of our patents. Dr. Pruzanski has been a
range of senior positions at GlaxoSmithKline plc, including vice president and managing director of
New Zealand and vice president — sales for the United Kingdom. Ms. Bright has been nominated to join the board of directors of Ascendis Pharma A/S, a Danish biopharmaceutical company listedEquillium, Inc. since September 2018. Dr. Pruzanski also currently serves on the
NASDAQ. Ms. Bright hasboards of the Emerging Companies Section of the Biotechnology Innovation Organization (BIO), a
B.Sc.biotechnology-focused trade association, and the Foundation for Defense of Democracies, a non-profit policy institute focusing on foreign policy and national security. Dr. Pruzanski received his M.D. from McMaster University in
pharmacologyHamilton, Canada, a M.A. degree in International Affairs from
the Johns Hopkins University
College London.School of Advanced International Studies in Bologna, Italy and Washington, D.C., and a bachelor’s degree from McGill University in Montreal, Canada.
Jerome B. Durso has served as our chief operating officerChief Operating Officer since February 2017. HeMr. Durso has nearlyover 25 years of experience in building and leading commercial and business operations at life sciences companies both in the United States and abroad. Prior to joining the Company, Mr. Durso served as a consultant to the biopharmaceutical industry from September 2015 to February 2017. Mr. Durso has spent the majority of his career at Sanofi, a global pharmaceutical company, where he most recently served as senior vice president, chief commercial officerSenior Vice President, Chief Commercial Officer of the global diabetes divisionGlobal Diabetes Division from June 2011 throughto April 2015. From 2010 to 2011, Mr. Durso was senior vice
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president, chief commercial officerSenior Vice President, Chief Commercial Officer of Sanofi’s U.S. pharmaceuticals business. Prior to that, he served in a number of commercial leadership roles of increasing responsibility in business unit and brand management, marketing and sales since he first joined Sanofi in 1993. Mr. Durso currently serves as an advisory board member of the Robert Wood Johnson University Hospital Somerset in Somerville, New Jersey. Mr. Durso earned his bachelorbachelor’s degree in marketing from the University of Notre Dame.
Sandip Kapadia
Lisa Brighthas served as our chief financial officerPresident, International since July 2016. Ms. Bright has over 25 years of experience in the biopharmaceutical industry. Ms. Bright joined the Company in November 2014 as Senior Vice President and treasurerHead of Europe and then served as Chief Commercial and Corporate Affairs Officer from February 2015 to July 2016. Prior to joining the Company, Ms. Bright worked at Gilead Sciences Ltd. starting in 2008, where she held positions of increasing responsibility, including: General Manager United Kingdom & Ireland; Vice President, Northern Europe; Vice President, Head of Sovaldi Launch Planning for Europe, Asia, Middle East and Australasia; and Vice President, Government Affairs Europe, Middle East and Australasia. Prior to holding these positions, Ms. Bright held a range of senior positions at GlaxoSmithKline plc, including Vice President and Managing Director of New Zealand and Vice President—Sales for the United Kingdom. Ms. Bright has been a director of Ascendis Pharma A/S since April 2017 and Dechra Pharmaceuticals PLC since February 2019. Ms. Bright has a B.Sc. in pharmacology from University College London.
Jason Campagna, M.D., Ph.D. has served as our Chief Medical Officer since December 2019, having previously served as Senior Vice President and Non-Alcoholic Steatohepatitis Program Leader since 2016. Prior to joining Intercept, Dr. Campagna held a number of roles of increasing responsibility at The Medicines Company from 2010 to 2016, including most recently as Senior Vice President and Health Science Lead of Surgery and Perioperative Care. Earlier in his career, Dr. Campagna served as the Chief Medical Quality Officer at Cottage Health System and, prior to this, held faculty appointments at the University of Pennsylvania and Massachusetts General Hospital. Dr. Campagna also served as Managing Director of Profibrix B.V. following its acquisition by The Medicines Company in 2013, and as a Director of Annovation Biopharma, Inc. prior to its acquisition by The Medicines Company in 2015. Presently, Dr. Campagna serves on the Steering Committee of the Wallace H. Coulter Center for Translational Research at the University of Miami Miller School of Medicine. Dr. Campagna received his M.D. and a Ph.D. in Molecular and Cellular Pharmacology, as well as his bachelor’s degree, from the University of Miami. Dr. Campagna completed his post-graduate training at Harvard Medical School and Massachusetts General Hospital.
Gail Cawkwell, M.D., Ph.D. has served as our SVP, Medical Affairs, Safety & Pharmacovigilance since September 2018, having previously served as SVP, Medical Affairs since February 2018. Prior to joining the Company, Dr. Cawkwell worked for Purdue Pharma L.P., where she served as Special Advisor to the Board of Directors from September 2017 to February 2018, Chief Medical Officer from January 2015 to September 2017 and VP, Medical Affairs from November 2014 to January 2015. From 2000 to November 2014, Dr. Cawkwell served in a number of roles of increasing responsibility at Pfizer Inc., including most recently as Vice President Medicine Team Lead for Pfizer’s tofacitinib franchise. Dr. Cawkwell also served as a Clinical Instructor of Pediatrics at Columbia Presbyterian Health Center from 2002 to 2015 and previously held several other clinical and academic posts. Dr. Cawkwell received her Ph.D. from the University of Cincinnati, her M.D. from McGill University in Montreal, Canada and her bachelor’s degree from Duke University.
David Ford has served as our Chief Human Resources Officer since May 2017. He brings over 25 years of experience in a variety of human resources roles across the United States, Europe, Latin America and New Zealand. Prior to joining the Company, Mr. Ford spent nearly 15 years at Sanofi, where he most recently served as Vice President Human Resources for the Sanofi Genzyme global business unit from January 2016 to May 2017. Prior to that role, from November 2011 through December 2015, Mr. Ford served as Vice President Human Resources for the Sanofi North American businesses. Mr. Ford joined the pharmaceutical industry in 2002 as the HR Director—United Kingdom and Republic of Ireland for Sanofi-Synthelabo. Mr. Ford holds a master’s degree in business administration from INSEAD, Fontainebleau (France).
Sandip Kapadia has served as our Chief Financial Officer and Treasurer since July 2016. Mr. Kapadia has over 20 years of experience in building and leading finance and administration teams at life sciences companies both in the United States and abroad.
Prior to joining the Company, Mr. Kapadia
joined Intercept from Sandoz, Inc., a divisionheld finance leadership positions over 19 years at Novartis and Novartis affiliates in the United States, Switzerland, the Netherlands and the United Kingdom, including most recently Chief Financial Officer of
Novartis AG, where he served as vice president and chief financial officer — North America
from 2014 through 2016. From 2012 to 2014,at Novartis’s generic division, Sandoz. Mr. Kapadia
has been a director of Passage Bio since January 2020 and previously was
vice president and chief financial officera director of
Novartis Pharmaceuticals UK Limited. Mr. Kapadia also served as vice president and chief financial officer of Novartis Pharmaceuticals B.V. located in the NetherlandsTherachon AG from
2009 through 2012. PriorJanuary 2019 to
that, he served as head of finance — oncology business unit for both Novartis Pharmaceuticals A.G. and Novartis Pharmaceuticals Corporation.June 2019. Mr. Kapadia earned his
bachelorbachelor’s degree in business administration and accounting from Montclair State University, an M.B.A from Rutgers Graduate School of Management and is a certified public accountant.
Richard Kim has served as our
senior vice president, commercialPresident, U.S. Commercial & Strategic Marketing since February 2018, having previously served as Senior Vice President, Commercial U.S. since July 2015. He has over 20 years of commercial, marketing and managerial experience in the biopharmaceutical industry in the United States and abroad. Prior to joining
Intercept,the Company, Mr. Kim worked at Bristol-Myers Squibb starting in 2004, where he most recently served as
general manager, hepatitisGeneral Manager, Hepatitis C
worldwide commercialization.Worldwide Commercialization. Prior to that, Mr. Kim held a number of roles of increasing responsibility at Bristol-Myers Squibb, including
vice president,Vice President, SPRYCEL
brand lead, oncology global marketing; vice president,Brand Lead, Oncology Global Marketing; Vice President, U.S.
in-line oncologyIn-Line Oncology and
global marketingGlobal Marketing for
necitumumab;Necitumumab; and
vice president, east area sales, cardiovascularVice President, East Area Sales, Cardiovascular and
metabolics.Metabolics. Prior to holding these positions, Mr. Kim held a range of senior positions in the United States, Canada and Australia at Schering-Plough, which was acquired by Merck & Co.
, Inc. Mr. Kim earned his
bachelorbachelor’s degree in chemistry from the University of Alberta.
Rachel McMinn, Ph.D.
Ryan Sullivan has served as our
chief businessGeneral Counsel and
strategy officerSecretary since
March 2015. Dr. McMinn joined Intercept as chief strategy officer in 2014. Since 2009 untilFebruary 2018. Prior to joining
Intercept, she was a managing director at Bank of America Merrill Lynch, working as the
lead research analyst covering the biotechnology industry. Previously, Dr. McMinnCompany, Mr. Sullivan worked at
Cowen and Company as a lead biotechnology analyst and started her career as a biotechnology analyst at Piper Jaffray & Co. She graduatedmagna cum laude with a Bachelor of Arts degree in chemistry from Cornell University, earned a Ph.D. in molecular and cellular biology and chemistry from The Scripps Research Institute, andAnacor Pharmaceuticals, Inc., which was
awarded a post-doctoral Miller fellowship at the University of California, at Berkeley.David Shapiro, M.D. hasacquired by Pfizer Inc. At Anacor, Mr. Sullivan served as our chief medical officerExecutive Vice President, General Counsel and executive vice president, development since 2008. He has over 25 years of clinical development experienceSecretary from February 2016 until June 2016 and as Senior Vice President, General Counsel and Secretary from April 2014 until February 2016. Before joining Anacor, Mr. Sullivan worked as an attorney in the pharmaceutical industry. Dr. Shapiro founded a consulting company, Integrated Quality Resources, that focused on development stage biopharmaceutical companies and was active in this role from 2005 to 2008. From 2000 to 2005, Dr. Shapiro was executive vice president, medical affairs and chief medical officerlegal group of Idun Pharmaceuticals, Inc.,Warner Chilcott plc prior to its acquisition by Pfizer. From 1995 to 1998, he was presidentActavis plc (now Allergan plc). During his tenure at Warner Chilcott from July 2007 until December 2013, Mr. Sullivan served in a number of positions of increasing responsibility, including most recently as General Counsel and Secretary. Before joining Warner Chilcott, Mr. Sullivan practiced in the Scripps Medical Research Center at Scripps Clinic. He alsoNew York corporate law group of Cahill Gordon & Reindel LLP. Mr. Sullivan earned his bachelor’s of science degree from Cornell University and his juris doctor degree from Cornell Law School.
Christian Weyer, M.D., M.A.S. has served as vice president, clinical research at Gensia and as director and group leader, hypertension clinical research at Merckour EVP, Research Laboratories from 1985 to 1990.& Development since November of 2017. Dr. Shapiro has authoredWeyer’s career in metabolic drug development spans more than 20 peer-reviewed publicationsyears, involving clinical studies and organizedregulatory submissions at all stages of product development and chairedacross the continuum of diabetes, obesity and NAFLD/NASH. Prior to joining the Company, Dr. Weyer was President and Chief Development Officer at ProSciento, Inc., a leading clinical R&D service provider focused on diabetes, NAFLD/NASH and obesity, from December 2015 to November 2017. Dr. Weyer has served as a senior executive in several conferences aimedcompanies, including as President, Chief Executive Officer and a director of Fate Therapeutics, Inc. from October 2012 to November 2015, where he steered the company’s transition into a publicly traded cellular therapeutics company, and as Senior Vice President of R&D at improving product development. HeAmylin Pharmaceuticals, Inc., where he contributed to the development and approval of several first-in-class medicines for diabetes and lipodystrophy. Before joining Amylin, Dr. Weyer worked at the National Institutes of Health, NIDDK, conducting clinical research on the pathogenesis of obesity and type 2 diabetes. Dr. Weyer received his medical degree from Dundee University & Medical School,M.D. and undertook his postgraduate medicalclinical training inat the university affiliated hospitals in Oxford, United KingdomDepartment of Metabolic Disorders, World Health Organization Collaborating Center for Diabetes Treatment and Prevention, at the University of Vermont. Dr. Shapiro served onDüsseldorf, Germany and holds a postdoctoral master’s degree in advanced clinical research from the boardUniversity of directors of Altair Therapeutics and served for two terms on the Executive Committee of the Board of the American Academy of Pharmaceutical Physicians. He is an elected Fellow of both the Royal College of Physicians of London and the Faculty of Pharmaceutical Physicians of the United Kingdom.California, San Diego.
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There are no family relationships between or among any of our executive officers. The principal occupation and employment during the past five years of each of our executive officers was carried on, in each case except as specifically identified above, with a corporation or organization that is not a parent, subsidiary or other affiliate of us. There is no arrangement or understanding between any of our executive officers and any other person or persons pursuant to which he was or is to be selected as an executive officer.
There are no legal proceedings to which any of our executive officers is a party adverse to us or any of our subsidiaries or in which any such person has a material interest adverse to us or any of our subsidiaries.
EXECUTIVE COMPENSATION
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EXECUTIVE OFFICER AND DIRECTOR COMPENSATION
Compensation Discussion and Analysis
Executive Summary
Overview
This
section discusses the principles underlying our policiesCompensation Discussion and
decisions with respect to the compensation ofAnalysis describes our executive
officerscompensation philosophy and
thehow we implemented it through our 2019 compensation program for our principal executive officer, our principal financial officer and our three other most
important factors relevant to an analysis of these policies and decisions. This section also describes the material elements of compensation awarded to, earned by or paid to each of our namedhighly compensated executive officers
for 2016. In addition, this section provides qualitative information regardingserving at the
manner and context in which compensation is awarded to and earned by our executive officers and is intended to place in perspective the data presented in the tables and narrative that follow. Ourend of 2019 (the “named executive officers”
for the year ended December 31, 2016 were as follows:):
| | |
| Name | | | Title | |
| Mark Pruzanski, M.D. | | | President and Chief Executive Officer and President |
David Shapiro, M.D.(“CEO”) | | Chief Medical Officer and Executive Vice President, Development |
| Sandip Kapadia | | | Chief Financial Officer and Treasurer(1) | |
Rachel McMinn, Ph.D.Jerome Durso | | | Chief Business and StrategyOperating Officer | |
Lisa BrightRyan Sullivan | | | General Counsel and Secretary | |
| Richard Kim | | | President, International(2) |
Barbara DuncanU.S. Commercial & Strategic Marketing | | Former Chief Financial Officer and Treasurer(3) |
Executive Summary
| (1) | Mr. Kapadia joined us in July 2016 as our Chief Financial Officer and Treasurer. |
| (2) | Ms. Bright joined us in November 2014 as our Head of Europe, was named our Chief Commercial and Corporate Affairs Officer in February 2015 and was named our President, International in July 2016. |
| (3) | Ms. Duncan served as our Chief Financial Officer and Treasurer until July 2016. Ms. Duncan then served as of Chief Accounting Officer until September 2016, when she ceased to be employed with us. |
2016 Performance Highlights
In 2016,2019, we successfully achieved multiple important corporate, productmade considerable progress executing against our key strategic priorities relating to our nonalcoholic steatohepatitis (“NASH”) development and commercial milestones that we believe contributed to enhancing stockholder value. Success in achieving these milestones enabled us to achieve receive marketing approval for and start the commercial launch of Ocaliva® (obeticholic acid or OCA) for use inprogram, our primary biliary cholangitis or PBC,(“PBC”) commercial efforts and continue our development of OCA for PBC, nonalcoholic steatohepatitis, or NASH,pipeline in non-viral liver diseases, and other indications. In particular:further refined and strengthened our executive compensation program and corporate governance practices. Key financial and operational highlights are described below.
| | • | Ocaliva in PBC: The accelerated approval2019 STOCK PRICE PERFORMANCE AND RELATED AWARDS | | |
| | | | | | | ✓
Solid Stock Price Appreciation. Our stock price increased by 23% over the course of Ocaliva2019. ✓
TSR-Based Performance Stock Unit Awards. In 2019, we again granted as part of our annual equity award program for use in PBC in bothour executive officers performance stock unit awards (“TSR PSUs”) that vest, if at all, based on the United States in May 2016 andTotal Shareholder Return (“TSR”) of our common stock relative to that of the conditional approvalcompanies comprising the S&P Biotechnology Select Industry Index (“TSR Peer Group”) over a 3-year period, subject to a vesting cap equal to 100% of Ocaliva for use in PBCtarget in the European Unionevent that our relative TSR exceeds target but our absolute TSR is negative. | | |
| | | KEY BUSINESS ACHIEVEMENTS | | |
| | | ✓ | | | | Achieved Positive Topline Results in December 2016 allowed usPivotal Phase 3 REGENERATE trial. In February 2019, we announced positive topline results from the planned 18-month interim analysis of our pivotal Phase 3 clinical trial of obeticholic acid (“OCA”) in patients with liver fibrosis due to commence our commercial launches within our stated timelines. |
| º | United States: Ocaliva was approved byNASH, known as the REGENERATE trial. In the primary efficacy analysis, once-daily OCA 25 mg met the primary endpoint agreed with the U.S. Food and Drug Administration or(“FDA”) of fibrosis improvement by at least one state with no worsening of NASH at the planned 18-month interim analysis and adverse events were generally mild to moderate in severity and the most common were consistent with the known profile of OCA. In November 2019, the results of the 18-month interim analysis from the REGENERATE trial were published in The Lancet. | | |
| | | ✓ | | | | Submitted First NDA to the FDA and First MAA to the EMA in May 2016Liver Fibrosis due to NASH. In September 2019, we submitted the first New Drug Application (“NDA”) to the FDA seeking accelerated approval of OCA in liver fibrosis due to NASH. In November 2019, the FDA accepted our NDA for filing and granted priority review. In December 2019, we submitted the treatment of PBC in combination with ursodeoxycholic acid, or UDCA, in adults with an inadequate responsefirst Marketing Authorization Application (“MAA”) to UDCA or as monotherapy in adults unable to tolerate UDCA. We commercially launched Ocaliva in the United States in June 2016 and in conjunction launched Interconnect®, a comprehensive, personalized program that connects patients with dedicated care coordinators who help them understand their disease and provides treatment support and, for eligible patients, financial assistance options. Net U.S. Ocaliva sales were $18.2 million for the full year 2016. |
| º | Europe: Ocaliva was grantedEuropean Medicines Agency (“EMA”) seeking conditional approval of OCA for liver fibrosis due to NASH, which was validated by the European Commission in December 2016 for the treatment of PBC in combination with UDCA in adults with an inadequate response to UDCA or as monotherapy in adults unable to tolerate UDCA. This approval allowed us to commence our European commercial launch of Ocaliva in certain European countriesEMA in January 2017.2020 thereby confirming that our MAA was sufficiently complete to begin the formal review. | | |
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| | • | OCA✓ | | | | Achieved Significant Worldwide Ocaliva Net Sales. We recognized $249.6 million in net sales of Ocaliva® (obeticholic acid) in 2019, as compared to $177.8 million in 2018. Ocaliva net sales in 2019 were comprised of U.S. net sales of $187.5 million and ex-U.S. net sales of $62.1 million, as compared to U.S. net sales of $140.8 million and ex-U.S. net sales of $37.0 million in 2018. | | |
| | | ✓ | | | | Executed $470 million Financing Significantly Strengthening our Financial Position. In May 2019, we issued and sold $230.0 million aggregate principal amount of 2.00% Convertible Senior Notes due 2026 and received net proceeds of approximately $223.4 million therefrom. In addition, we issued and sold 2,760,000 shares of common stock for $83.50 per share in a registered public offering and 119,760 shares of common stock for $83.50 per share in a concurrent private placement and received net proceeds of approximately $227.3 million. | | |
| | | ✓ | | | | Advanced Leading NASH Development Program inand Pipeline. In 2019, we continued to advance our leading NASH: We continued development program, including our Phase 3 clinical trial known as REGENERATE, in non-cirrhotic NASH patients with liver fibrosis. We are targeting completion of enrollment of the cohort of patients needed for the pre-specified interim analysis by mid-2017, with results from the interim analysis anticipated in 2019. We continued a Phase 2 clinical trial,compensated cirrhosis, known as the CONTROL trial, to characterize the lipid metabolic effects of OCA and cholesterol management effects of concomitant statin administration in NASH patients. We completed enrollment of the targeted number ofREVERSE, which is now fully enrolled with over 900 patients for our CONTROL trial in October 2016 and expect top-line results in 2017. |
| • | Other OCA Programs: We completed enrollmentrandomized. In addition, we began evaluating in a Phase 2 clinical trial, known asstudy the AESOP trial, to evaluate the effectsefficacy, safety and tolerability of varying doses ofbezafibrate, a pan-peroxisome proliferator-activated receptor (“PPAR”) agonist, in combination with OCA in patients with primary sclerosing cholangitis, or PSC. We also continued a Phase 2 clinical trial, referredPBC following our acquisition of the U.S. rights to as the CARE trial, in pediatric patients with biliary atresia.bezafibrate from Aralez Pharmaceuticals Canada Inc. | | |
| | • | Pipeline Development: We completed a Phase 1 clinical trialCEO COMPENSATION HIGHLIGHTS | | |
| | | Our CEO | | | | Break-Down of 2019 CEO Compensation | | |
| | | Dr. Mark Pruzanski co-founded our Company and has served as our CEO since our inception in 2002. Dr. Pruzanski has been critical in driving many of our second product candidateachievements over the course of our history, including those described above. | | | | | | |
| | | ✓ | | | | Market-Based CEO Compensation. For 2019, we determined total CEO compensation (including annual equity awards) with reference to enter clinical development, called INT-767,the 50th percentile of the competitive market based on our compensation peer group. In 2020, we continued this approach and again determined total CEO compensation (including annual equity awards) with reference to this percentile. | | |
| | | ✓ | | | | Significant Performance Elements. We incorporated significant performance elements, including TSR PSUs, into our CEO’s annual and long-term incentive compensation arrangements for 2019. Approximately 87% of our CEO’s 2019 total compensation consisted of variable compensation elements dependent on our achievement of corporate performance goals and our stock price performance. | | |
| | | ✓ | | | | TSR PSU Grants. As part of our annual equity award program, we grant our executive officers TSR PSUs. In each of 2019 and 2020, the proportion of our CEO’s annual equity grant attributable to TSR PSUs was approximately 60% of the total grant date fair value. | | |
| | | ✓ | | | | Executive Leadership. Our CEO leads a dual FXRhighly-experienced executive team that spearheaded our business successes described above. | | |
| | | STOCKHOLDER OUTREACH | | |
| | | Overview. We are committed to establishing and TGR5 agonist,maintaining an open and transparent dialogue with our stockholders with respect to executive compensation and important governance matters. Each year, we engage with our stockholders to request feedback regarding our executive compensation program and other governance matters of importance to our stockholders. Stockholder feedback is then reported to our Compensation Committee, Nominating and Governance Committee and the full Board for consideration. | | |
| | | Stockholder Advisory Vote on Executive Compensation. Each year, our stockholders are provided the opportunity to cast an advisory vote on the compensation of our named executive officers (a “say-on-pay” vote), and our Compensation Committee considers the outcome of the prior year’s say-on-pay vote when making decisions relating to the compensation of our named executive officers and our executive compensation program. Our 2019 advisory say-on-pay proposal was approved by approximately 98% of the votes cast on the proposal. Though we were encouraged by this feedback, we plan to continue to work to understand our stockholders’ perspective concerning our executive compensation program and remain committed to our stockholder engagement activities. In 2019, we reached out to stockholders representing over 70% of our outstanding shares, including each of our largest stockholders. Participants at our meetings with such stockholders included members of our executive management team and the Chairperson of our Compensation Committee and Lead Independent Director. | | |
| | | Stockholder Feedback. We believe that our outreach was well received, and many of the stockholders we contacted in healthy volunteers.2019 informed us that they were generally pleased with our approach to executive compensation and did not feel the need to meet to discuss such matters in detail. Generally, the stockholders that we did meet with have a long-term outlook and understand that we regularly review | | |
| | • | Structureand refine our compensation programs as we continue to transition from a development-stage company to a more mature commercial-stage company in a competitive and dynamic industry. In these interactions, among other matters, we discussed our performance-based compensation philosophy, including our practice of granting TSR PSUs to our executive officers. We consistently heard from these stockholders that they appreciated our efforts to engage with them on our compensation philosophy and practices, and they encouraged us to continue our outreach on a regular basis. | | |
| | | Commitment to Future Outreach. We believe that stockholder engagement is important and our Compensation Committee will continue to consider stockholder feedback, future say-on-pay votes and relevant market developments in order to determine whether any subsequent changes to our executive compensation program are warranted. We expect to continue our outreach efforts with respect to executive compensation and important governance matters in future years in order to ensure that we collect stockholder feedback for Success:the consideration of our Compensation Committee, Nominating and Governance Committee and the full Board. | | |
| | | COMPENSATION AND GOVERNANCE BEST PRACTICES | | |
| | | What We continuedDo | | |
| | | ✓ | | | | Independent Chairman and All Board Members other than our CEO are Independent. Paolo Fundarò serves as our Board’s Chairman, and all of the members of our Board (except Dr. Pruzanski) are independent directors. | | |
| | | ✓ | | | | Additional Independent Board Leadership and Diversity. Gino Santini serves as our Board’s Lead Independent Director, which we believe enhances our Board governance structure and contributes to add infrastructurethe overall effectiveness of our Board. In addition, in April 2018, we appointed Nancy Miller-Rich as an independent director to our Board, which increased the gender diversity of our Board. We continue to strive where appropriate to achieve a diverse balance of backgrounds, perspectives, experiences, ages, genders and personnelethnicities on our Board and its committees. | | |
| | | ✓ | | | | Independent Compensation Committee. Our Compensation Committee, which is composed entirely of independent directors, provides independent oversight of our compensation programs. | | |
| | | ✓ | | | | Independent Compensation Consultant. Our Compensation Committee uses an independent executive compensation consulting firm that reports directly to the committee. | | |
| | | ✓ | | | | Annual Compensation Review and Analysis. Our Compensation Committee conducts an annual assessment of executive compensation to ensure that we provide competitive compensation packages to attract, retain, reward and incentivize our executive management team to achieve success for us and our stockholders. | | |
| | | ✓ | | | | Multiple Performance Elements. In accordance with our performance-based compensation philosophy, our executive compensation program incorporates multiple performance elements, including target-based cash incentive bonuses payable upon the achievement of corporate goals and individual performance, and long-term equity incentive compensation, a substantial portion of which consists of stock options and TSR PSUs. | | |
| | | ✓ | | | | Market Benchmarking and Use of Reference Peer Group. Our Compensation Committee, with the assistance of its independent compensation consultant, annually analyzes similar life science companies to identify a relevant group of peer companies for purposes of ensuring the reasonableness and competitiveness of our executive compensation program. | | |
| | | ✓ | | | | Stock Ownership Requirements. We have adopted minimum stock ownership guidelines for our Board, CEO and other executive officers, including our named executive officers, which require, within specified periods of time, our non-employee directors to hold Company equity with a value equal to at least 3x their annual cash retainer and our CEO and other executive officers to hold Company equity with a value equal to at least 3x and 1x, respectively, their annual base salary. | | |
| | | ✓ | | | | Clawback Policy. We have adopted a clawback policy that permits the Company to recover from any current or former executive officer, including any named executive officer, whose fraud or intentional misconduct contributes to the circumstances requiring the Company to prepare an accounting restatement due to material non-compliance of the Company with any financial reporting requirement under U.S. federal securities laws, up to 100% of any incentive-based compensation received by such officer from the Company during the one-year period preceding the date on which the Company is required to prepare such accounting restatement. | | |
| | | ✓ | | | | Corporate Governance Guidelines. In 2019, we adopted corporate governance guidelines reflecting our Board’s commitment to building long-term stockholder value with an emphasis on corporate governance. The Nominating and Governance Committee periodically reviews the adequacy and effectiveness of our corporate governance guidelines and recommends any proposed changes to the Board for approval. | | |
| | | What We Don’t Do | | |
| | | ✘ | | | | No excise tax gross-ups. We have not provided or committed to provide excise tax gross-ups to any of our named executive officers. | | |
| | | ✘ | | | | No change in control “windfalls”. The change in control protections for our named executive officers are limited to “double-trigger” arrangements, which require both a change in control and a qualifying termination of employment, or in the United Statescase of TSR PSUs, vesting, if at all, based on our TSR performance relative to that of our TSR Peer Group through the month preceding the month in which the change in control occurs. | | |
| | | ✘ | | | | Limited perquisites. Our named executive officers generally receive the same benefits as are available to all of our salaried employees, with limited recurring exceptions primarily consisting of fully-paid health insurance premiums. | | |
| | | ✘ | | | | No automatic or guaranteed annual salary increases. We do not provide for any formulaic or guaranteed base salary increases for our named executive officers. | | |
| | | ✘ | | | | No guaranteed bonuses or annual equity grants. We do not provide guaranteed bonuses or annual equity grants to our named executive officers. In addition, our Compensation Committee determined to maintain the 2019 annual cash incentive bonus target percentages for our named executive officers at their 2018 levels. | | |
| | | ✘ | | | | No hedging or pledging of Company stock. Our named executive officers and internationally to support our product development and commercialization efforts and operationsother employees are restricted from engaging in speculative trading activities, including hedging or pledging their company securities as a public company. We procured sufficient quantities of bulk commercial supply to initiate our commercial launch for Ocaliva for PBC to date. In July 2016, we completed an underwritten public offering of $460.0 million in aggregate principal amount of 3.25% convertible senior notes due 2023, or the convertible notes. After deducting the underwriting discounts and offering expenses of approximately $12.4 million, the net proceeds from the convertible notes offering were approximately $447.6 million. We ended fiscal 2016 with a strong financial position to support our continued commercialization of Ocaliva for PBC and our development programs with approximately $689.4 million in cash, cash equivalents and investment securities.collateral. | | |
At the 2016 annual meeting of stockholders, over 99% of the shares cast affirmatively or negatively voted in favor of approving our 2015 executive compensation.
Executive Compensation Philosophy
The primary objective of our executive
We have adopted a performance-based compensation policyphilosophy that is intended to attract, retain, reward and motivateincentivize our executive officers to achieve our near-term corporate goals, as well as our long-term strategic objectives. In particular, our philosophy is designed to achieve the key executives necessary for our short-term and long-term success. We seek to tie short-term and long-term compensation to employee performance, includingfollowing objectives:
•
reward the achievement of measurable corporate objectives and
to align
executives’executive officers’ incentives with
increasing stockholder
value.The compensation committee approves compensation based on certain compensation philosophies, including the following:
| • | Pay-for-performance. Executive compensation should reward achievement of corporate objectives and provide strong alignment with increasing value for stockholders. Our incentive plans deliver greater rewards when corporate and individual performance exceeds objectives, while providing lower compensation levels if performance expectations are not met. |
| • | Attract, retain and motivate. The executive compensation program should be a differentiator that helps Intercept attract, retain and motivate highly-talented individuals with the necessary skills and demonstrated abilities to deliver superior execution of our short- and long-term strategic plans and drive our continued success. |
| • | Competitive with peer group. Executive compensation should be competitive with compensation paid by market peers who compete with us for talent. |
| • | Balanced combination of compensation elements. The executive compensation program should include a balance of cash and equity incentives that reward short- and long-term performance. Our cash compensation provides alignment with the achievement of critical annual objectives, while equity-based compensation aligns the interests of our executive officers more closely with our stockholders. |
value;
•
attract, retain and motivate highly talented individuals with the skills and demonstrated abilities necessary to deliver superior execution of our short- and long-term strategic plans and drive our continued success;
•
provide executive compensation that is competitive with that paid by our peers in the competitive and dynamic biopharmaceutical industry;
•
appropriately balance cash compensation designed to encourage the achievement of critical annual goals with equity incentives designed to inspire the achievement of long-term objectives and align the interests of our executive officers more closely with those of our stockholders; and
•
align the compensation principles for our executive officers with those for all employees to help create a company-wide performance culture.
Our Executive Compensation Process
The Role of the Compensation Committee
Our Compensation Committee is responsible for the evaluation and oversight of our executive compensation program, policies and practices. Accordingly, our Compensation Committee reviews and approves all compensation provided to our named executive officers, including adjustments to base salaries, annual target-based cash incentive bonuses, equity incentive awards, severance arrangements and benefit programs. Our Compensation Committee consists of three members of our Board, each of whom has extensive experience in our industry and is an independent director under applicable Nasdaq and SEC rules. Our Compensation Committee uses its judgment and experience to develop and approve our executive compensation program, including our Chief Executive Officer’s compensation package. In doing so, our Compensation Committee periodically meets with an independent compensation consultant in executive session without our Chief Executive Officer or any other member of management present. Our Compensation Committee also periodically evaluates the need for revisions to our executive compensation program to ensure our program is competitive with the companies with which we compete for executive talent.
Management’s Involvement in the Executive Compensation Process
A small number of executive officers, including our Chief Executive Officer, participate in general sessions of our Compensation Committee. Management does not participate in executive sessions of our Compensation Committee. At the request of our Compensation Committee, our Chief Executive Officer provides input and recommendations to the committee on salary adjustments, annual target-based cash incentive bonus amounts and appropriate equity incentive compensation levels in relation to our executive officers other than himself. In formulating these recommendations, our Chief Executive Officer may consider data obtained from third-party sources, including data provided by compensation consultants other than the independent compensation consultant retained by our Compensation Committee.
Use of Independent Compensation Consultant by the Compensation Committee
In designing our executive compensation program, our Compensation Committee considers as a reference point publicly available compensation data for other companies in the biopharmaceutical industry to help guide its executive compensation decisions at the time of hiring and for subsequent adjustments in compensation. In 2019, our Compensation Committee also retained the services of the Rewards Solution practice of Aon plc, specifically members of their Radford advisory team (“Radford”), an independent compensation consultant, to provide it with additional comparative data on executive compensation
practices in our industry and to advise it on our executive compensation program generally. For 2019, Radford provided advice and data to our Compensation Committee on executive and director compensation matters, including the selection of our compensation peer group, comparative market pay levels, equity dilution and annual share utilization practices, incentive plan design and emerging market trends. Although our Compensation Committee considers the advice and recommendations of its compensation consultant about our executive compensation program, the committee ultimately makes its own decisions about these matters. Our Compensation Committee determined that the work of Radford did not raise any conflicts of interest in 2019. In making this assessment, our Compensation Committee considered the independence factors enumerated in Rule 10C-1(b) under the Exchange Act and the applicable Nasdaq rules.
Peer Group
Our Compensation Committee references a peer group of publicly traded companies in the biopharmaceutical industry for purposes of gathering data to compare with our existing executive compensation levels and practices and as context for future compensation decisions. Our Compensation Committee, with the assistance of its independent compensation consultant, periodically reviews and, if appropriate, updates the compensation peer group, as appropriate, to include companies that the Compensation Committee believes are competitors for executive talent and are similar to us based on a number of criteria, including sector, market capitalization, revenue, stage of development and head count. Our Compensation Committee may consider peer group and other industry compensation data and the recommendations of its independent compensation consultant when making decisions related to executive compensation. Our Compensation Committee also considers data with respect to peer companies identified by proxy advisory firms in the prior year’s proxy cycle. Our Compensation Committee, with input from its independent compensation consultant, reviewed the composition of our 2018 compensation peer group and determined that no modifications were required for 2019. The companies included in our compensation peer group for 2019 were as follows:
| | •ACADIA Pharmaceuticals Inc. | Aligned with our corporate culture. | | Halozyme Therapeutics, Inc. | | | Radius Health, Inc. | |
| | Acorda Therapeutics, Inc. | | | Ionis Pharmaceuticals, Inc. | | | Seattle Genetics Inc. | |
| | Alkermes plc | | | Lexicon Pharmaceuticals, Inc. | | | Tesaro, Inc. | |
| | Alnylam Pharmaceuticals, Inc. | | | Neurocrine Biosciences, Inc. | | | The compensation principles for our executive leadership team should be aligned with those for all employees to help create a company-wide performance culture.Medicines Company | |
| | bluebird bio, Inc. | | | Omeros Corporation | | | Ultragenyx Pharmaceutical Inc. | |
| | Exelixis, Inc. | | | Pacira Pharmaceuticals, Inc. | | | United Therapeutics Corporation | |
| | FibroGen, Inc. | | | Puma Biotechnology, Inc. | | |
Market Benchmarking
At the beginning of 2019, based on the input and analysis provided by Radford and the recommendation of our Chief Executive Officer (except with respect to his own compensation), our Compensation Committee determined that 2019 target total direct compensation for our Chief Executive Officer and other named executive officers employed by the Company would be determined with reference to the 50th percentile of compensation for executives holding similar positions at the companies in our compensation peer group. In determining each named executive officer’s equity incentive award, our Compensation Committee examined peer group compensation data provided by Radford and other related compensation data.
Annual Compensation Review Process
On an annual basis, our Compensation Committee meets to review the performance of our Chief Executive Officer and our other named executive officers. At these meetings, our Compensation Committee typically invites our Chief Executive Officer to participate in the discussion (excluding discussions pertaining to his own compensation) in order to seek our Chief Executive Officer’s input and recommendations with respect to each named executive officer (other than himself) as to:
•
the achievement of stated corporate performance objectives;
•
the level of contributions made to the general management and guidance of the Company; and
•
the amount of any salary increases, cash incentive bonus payouts and new equity awards.
Our Compensation Committee takes into consideration these recommendations and other relevant performance and competitive market factors when it makes its determination on executive compensation matters. Our Compensation Committee also meets to monitor, review and decide compensation matters periodically throughout the year.
Compensation Risk Assessment
We periodically evaluate our compensation programs to understand which elements, if any, may pose risk to the Company and from time to time adopt additional compensation policies and practices designed to discourage excessive or unnecessary risk-taking on the part of program participants. The Company, with the assistance of an independent compensation consultant, Radford, has reviewed Company compensation policies and practices, both for executive and non-executive employees, and determined that those policies and practices do not create risks that are reasonably likely to have a material adverse effect on the Company. In conducting this review, we considered various features of our compensation policies and practices that discourage excessive or unnecessary risk-taking, including, but not limited to, the following:
•
oversight of our compensation policies and practices by our Compensation Committee, including with respect to performance goal setting and the evaluation of achievement thereunder;
•
an effective balance between fixed and variable compensation, and short-term and long-term incentive opportunities;
•
diversity in long-term incentive vehicles;
•
the adoption of performance measures that support the achievement of key goals and the Company’s business strategy;
•
the incorporation of risk-mitigating features (such as the clawback policy) into the Company’s compensation programs; and
•
reasonable severance and change of control arrangements.
Components of Our Executive Compensation Program
The primary elements of our executive compensation program are:
•
base salary;
•
annual target-based cash incentive bonuses;
•
equity incentive awards; and
•
broad-based health and welfare benefits.benefits; and
The compensation committee
•
balanced severance arrangements.
Our Compensation Committee believes that a significant amount of executive compensation should be in the form of “at risk” incentives and that the pay mix should be strongly weighted toward equity incentive awards in order to provide alignment with long-term stockholder value. However, we do not have a formal or informal policy for a pre-set allocation between long-term and short-term compensation, between cash and non-cash compensation or among different forms of non-cash compensation. Instead, our compensation committee,
Compensation Committee, after reviewing information provided by ourits independent compensation consultant and other relevant data, determines what it believes to be the appropriate level and mix of the various compensation components. We generally strive to provide our named executive officers with a balance of short-term and long-term incentives to encourage consistently strong performance. Ultimately, the objective in allocating between long-term and currently paid compensation is to ensure adequate base compensation to attract and retain personnel, while providing incentives to maximize long-term value for Interceptthe Company and ourits stockholders. Therefore, we provide base salaries that meet competitive salary norms and recognize individual performance on an annual basis. We provide an opportunity to earn annual target-based cash incentive bonuses to incentivize and reward superior short-term performance. To further focus our executivesnamed executive officers on longer-term performance and the creation of stockholder value, we rely upon equity-based awards that vest over a meaningful period of time. In addition, we provide our executives with benefits that are generally available to our salaried employees.
time and the value of which is dependent on stock price performance.
We use base salaries to recognize the experience, skills, knowledge and responsibilities of our employees, including our named executive officers. Base salaries for ournewly-hired named executive officers typically are established through an arm’s-length negotiation at the time the executiveindividual is hired, taking into account factors such as the position for which the executiveindividual is being considered, and the executive’sindividual’s qualifications, prior experience and prior salary.base salary (to the extent available) and competitive market demand. None of our named executive officers is currently party to an employment agreement that provides for automatic or scheduled increases in base salary. However, onOn an annual basis, our compensation committeeCompensation Committee reviews and evaluates, with input from our chief executive officer,Chief Executive Officer (other than with respect to his own base salary), the need for adjustment of the base salaries of our executivesnamed executive officers based on changes and expected changes in the scope of an executive’stheir responsibilities. The compensation committeeOur Compensation Committee also considers promotions, the individual contributions made by and performance of the named executive officer during the prior fiscal year, the executive’sindividual’s performance over a period of years, overall economic and labor market conditions, the relative ease or difficulty of replacing the executiveindividual with a well-qualified person, our overall growth and development as a company, general salary trends in our industry and among our compensation peer group and where the executive’sindividual’s salary falls in the salary range presented by that data. Compensation trends and cost of living increases in the New York City metropolitan area, where our headquarters is located, may also factor into such evaluation. For more information regarding our compensation peer group, see “Our“—Our Executive Compensation Process — Market Benchmarking and Process—Peer Group.”Group” above. In making decisions regarding salary increases, weaddition, our Compensation Committee may also draw upon the experience of members of our board of directorsBoard with other companies. We do not provide for any formulaic basecompanies in making decisions regarding salary increases forincreases.
For 2019, our named executive officers.
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For 2016, the compensation committee recommendedCompensation Committee determined annual base salaries for each of our named executive officers based on their overall individual performance in 2015,2018, their increased level of experience and to ensure that their salaries remained competitive with those of similarly-situatedsimilarly situated executives in our compensation peer group. For 2016,2019 and 2018, the annual base salarysalaries for each of our named executive officers was increased from his or her 2015 annual base salarywere as follows:
| | | | | | |
| Executive | | 2015
Salary | | 2016
Salary | | %
Increase |
| Mark Pruzanski, M.D. | | $ | 600,000 | | | $ | 620,000 | | | | 3.33 | % |
| David Shapiro, M.D. | | $ | 460,000 | | | $ | 475,000 | | | | 3.26 | % |
| Sandip Kapadia | | $ | — | | | $ | 400,000 | | | | — | |
| Rachel McMinn, Ph.D. | | $ | 390,000 | | | $ | 420,000 | | | | 7.69 | % |
| Lisa Bright* | | $ | 396,000 | | | $ | 430,000 | | | | 8.58 | % |
| Barbara Duncan | | $ | 415,000 | | | $ | 430,000 | | | | 3.61 | % |
| Named Executive Officer | * | Ms. Bright’s salary is paid in the British Pound equivalent of the approved U.S. dollar amount. In 2016, Ms. Bright’s salary was equal to £300,000. | 2019 Salary | | | 2018 Salary | | | Change
from 2018 | |
| Dr. Mark Pruzanski | | | $734,292 | | | $702,000 | | | 4.6% | |
| Sandip Kapadia | | | $464,100 | | | $442,000 | | | 5.0% | |
| Jerome Durso | | | $573,250 | | | $540,800 | | | 6.0% | |
| Ryan Sullivan | | | $445,520 | | | $424,300 | | | 5.0% | |
| Richard Kim | | | $442,900 | | | $430,000 | | | 3.0% | |
The change to the
annual base salary of each named executive officer,
as applicable, was effective as of January 1,
2016. Ms. Duncan left the service of our company in September 2016. Her prorated salary for 2016 was $322,500 through her last day of employment. In 2016, Ms. Duncan also received other compensation in connection with her separation in accordance with the terms of the transition agreement and release entered into between us and Ms. Duncan, as amended, or the Duncan Transition Agreement. Ms. Bright entered into an employment agreement, or the Bright-IPEL Employment Agreement, with our subsidiary Intercept Pharma Europe Ltd., or IPEL, in October 2016, pursuant to which she receives a base salary of £300,000. The Duncan Transition Agreement and the Bright-IPEL Employment Agreement are described in “— Other Named Executive Officers” under the discussion of “Employment Arrangements with Our Named Executive Officers.” Mr. Kapadia joined our company in July 2016, and his prorated salary for 2016 was $200,000.2019. Please refer to “—Compensation Decisions Relating to Fiscal Year 2017”2020” below for a listing of the annual base salaries of each of our named executive officers for 2017.
2020.
Annual
target-based cash bonusesTarget-Based Cash Incentive Bonuses
As part of our pay-for-performanceperformance-based compensation philosophy, our annual target-based cash incentive bonus program is designed to reward our named executive officers for the achievement of specified, measurable annual corporate objectives.goals and (with respect to our named executive officers other than our Chief Executive Officer) individual goals and contributions. At the beginning of each year, the cash incentive bonus opportunity for each named executive officer is established as a target percentage of his or hersuch officer’s base salary. The actual annual cash incentive bonus amounts payable to our named executive officers are determined after year end based on the compensation committee’sour Compensation Committee’s evaluation of performance against the corporate objectivesgoals and, in the case of our named executive officers other than Dr. Pruzanski,our Chief Executive Officer, individual performance levels.performance. Individual performance of the named executive officers other(other than Dr. Pruzanskiour Chief Executive Officer) is determinedassessed by the compensation committeeour Compensation Committee after considering the overall performance of theeach officer based on specific goals, individual executivecontributions and taking into account the recommendations of the chief executive officer. The overall assessment byChief Executive Officer. Consistent with past practice, our compensation committee isCompensation Committee determined that the 2019 cash incentive bonus opportunity for Dr. Pruzanski would be based entirely on the achievement of corporate goals.
Our Compensation Committee believes that a cash incentive bonus program based on the evaluation of objective metrics,multiple corporate goals and individual performance (with respect to our named executive officers other than our Chief Executive Officer) is best-suited for a biopharmaceutical company at our stage of development due to the uncertainties inherent in the development, regulatory approval and commercialization of new drug treatments. Our Compensation Committee also considers the practices of our compensation peer group and overall industry practices as part of its review of our cash incentive bonus program. In order to better align cash incentive bonus payouts with performance, our Compensation Committee may take additional significant corporate achievements into account for the current year’s cash incentive bonus calculation that were not contemplated at the time the current year corporate goals were determined. Our Compensation Committee also has the authority to shift corporate goals to subsequent fiscal years and to eliminate them for the current year’s cash incentive bonus calculation if it determines that underachievement of a goal was primarily caused by circumstances that were beyond the named executive officer’s control or if it determines that the business priorities for the year had shifted. Each of our Compensation Committee and Board has authority, in its sole discretion, to review and approve management’s evaluation of how we performed against our corporate goals and the recommended cash incentive bonus payout levels. This authority includes the ability to rate the accomplishment of particular goals at below, equal to or greater than 100% of target based on the Company’s performance. Our Compensation Committee’s assessment of the individual performance of our named executive officers (other than our Chief Executive Officer) may result in such asofficers receiving cash incentive bonuses that are higher or lower than the successfulamounts that they would otherwise receive if such bonuses were based on the achievement of the applicable goal and the weightings ascribed tocorporate goals alone.
The target annual cash incentive bonus for each named executive officer is set by our Compensation Committee as a percentage of such
goal, which is then adjusted to reflect other factors that may be pertinent to the performanceofficer’s base salary. The target percentages approved by our Compensation Committee are typically based on an evaluation of compensation peer group data, as well as consideration of the
companylevel of qualification and
experience of each named executive officer as well as internal pay comparisons. Based on this evaluation, our Compensation Committee determined to maintain the
individual2019 annual cash incentive bonus target percentages for our named executive
officer.Theofficers at their 2018 levels.
Our annual corporate objectives includegoals have historically included the achievement of specific clinical, regulatory, commercial and precommercial, operational and/or financial milestones, with a focus on regulatory achievements, commercial and precommercial preparedness, commercial net sales amounts, the advancement of our product candidates in clinical development, the pursuit of various internal initiatives and ensuring adequate funding for our growth. As we continue to transition from a development-stage company to a commercial-stage company, we have begun to introduce precommercial and commercial-related milestones into our annual corporate goals, with added focus on precommercial and commercial preparedness, commercial sales targets and regulatory achievements. The corporate objectivesgoals are proposed by senior management at the beginning of each fiscal year and reviewed andare approved by our compensation committeeCompensation Committee and board of directors in the beginning of our fiscal year,Board with such modifications as the compensation committeeour Compensation Committee and board of directorsBoard deem appropriate. The corporate objectives areIn connection with such approval, our Compensation Committee and Board conduct a rigorous review designed to require significant effortensure that such goals reflect the corporate performance measures that we believe are most important to the success of the Company and operational success on the part of our executives and Intercept, but also to be achievable with hard work and dedication.
will drive stockholder value. In addition, the corporate goals are generally set at challenging “stretch” levels so as to require our named executive officers to expend substantial effort and commitment leveraging their individual and collective skills and competencies to attain such goals.
Our
compensation committee believes that a bonus program based on the evaluation of multiple2019 corporate
objectives and individual performance is best-suited for a biopharmaceutical company at our stage of development due to the uncertainties inherent in development, regulatory approval and commercialization of new drug treatments. Our compensation committee also considers the practices of our peer group and overall industry practices as part of its review of our bonus program. In order to better align bonus payouts with performance, the compensation committee may take additional significant corporate achievements into account for the current year’s bonus calculation that were not contemplated at the time the current year corporate objectives were determined. Our compensation committee also has the authority to shift corporate objectives to subsequent fiscal years and to eliminate them for the current year’s bonus calculation if it determines that underachievement of a goal was primarily caused by circumstances that were beyond the executive’s control or if it determines that the business priorities for the year had shifted.Each of our compensation committee and our board of directors has authority, in its sole discretion, to review and approve management’s evaluation of how our company performed against its corporate objectivesgoals, their relative weightings and the recommended bonus payout levels. This authority includes the ability to rate the accomplishment of particular objectives at greater than 100% of target based on exceptional company performance. In any year, our executives can achieve up to 125% of target after factoring all potential performance achievements deemedachievement levels assessed by our compensation committee andCompensation Committee are summarized below:
| 2019 Corporate Goal Summary | | | Relative
Weighting | | | Assessed
Achievement | |
NASH Program | | | 60% | | | 59% | |
| Includes specified activities and milestones related to: | | | |
•
the delivery of topline results from the planned 18-month interim analysis of our pivotal Phase 3 clinical trial of OCA in patients with liver fibrosis due to NASH, known as the REGENERATE trial, and the timing thereof •
the acceptance of our NDA in NASH in the United States and the timing thereof •
the timely completion of launch preparation and organization ramp-up activities to support a launch of OCA in liver fibrosis due to NASH in the United States, if approved, including the establishment of marketing and medical plans and the creation and appropriate staffing of the launch organization | | | |
| PBC Commercial Program | | | 30% | | | 41% | |
| Includes specified commercial milestones such as: | | | |
•
the achievement of $230 million in worldwide annual net sales of Ocaliva •
the achievement of commercial contribution targets in PBC | | | |
| Pipeline and New Products | | | 10% | | | 9% | |
| Includes specified activities and milestones related to: | | | | | | | |
•
the initiation of a Phase 2 study of OCA/bezafibrate combination in PBC •
the development and implementation of a pipeline expansion strategy | | | | | | | |
| Total | | | 100% | | | 109% | |
In January 2020, our
board of directors as exceeding applicable objectives and goals.The target annual cash bonus for each executive officer is set by the compensation committee as a percentage of each executive officer’s base salary. The target percentages approved byCompensation Committee considered our compensation committee were based on an evaluation of peer group data, as well as consideration of the level of qualification and experience of each executive at Intercept as well as internal pay comparisons.
2016 Bonuses
For 2016, our annual corporate objectives were as follows:
Advance PBC Program:
Obtaining regulatory approval of Ocaliva in PBC in both the United States and Europe; and
Achievement of certain commercial sales metrics for Ocaliva in PBC.
Advance NASH Program:
The achievement of certain development milestones related to the REGENERATE trial in non-cirrhotic NASH patients with liver fibrosis; and
The achievement of certain development milestones related to the CONTROL trial to assess the lipid metabolic effects of OCA and the effects of concomitant statin administration in NASH patients.
Advance Product Pipeline:
The achievement of certain development milestones related to our Phase 2 AESOP trial to evaluate the effects of varying doses of OCA in patients with primary sclerosing cholangitis, or PSC; and
The achievement of certain development milestones related to the Phase 1 trial for INT-767 and planning of Phase 2 trial.
Advance Corporate Infrastructure
Implement certain key performance indicators related to our business across the company.
In February 2017, our compensation committee considered the performance of our company in light of the above goals, together with other information available to it, and determined that weour 2019 corporate goals were achieved in the aggregate at 109% of target.
As noted above, our 2016 corporate objectives at a level of 80%.
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Our compensation committee did not set any specific individual performance targets for the payment ofChief Executive Officer’s cash bonuses to our named executive officers in 2016. Instead, the compensation committee reviewed our company performance against our 2016 corporate objectives and also evaluated the individual performance of each named executive officer. Dr. Pruzanski’sincentive bonus is determined solely based on the achievement of corporate goals, whereas the cash incentive bonus for our other named executive officers is based on both our corporate goals and individual performance.
Key 2019 individual goals for, and achievements of, our named executive officers (other than our Chief Executive Officer) were as follows.
•
Mr. Kapadia: Mr. Kapadia was responsible for the oversight of all aspects of the Company’s financial management as well as the investor relations, facilities and information technology functions. In addition to the effective execution of his core duties, Mr. Kapadia led the preparation for, and execution of, the May 2019 financing transactions which significantly strengthened the Company’s balance sheet, and also directed the initiation of a global Enterprise Resource Planning (ERP) project to support the Company’s growing data management and forecasting capabilities. In the facilities area, under Mr. Kapadia’s guidance, the Company identified, selected and signed a lease on a new facility in San Diego.
•
Mr. Durso: Mr. Durso was responsible for the oversight of the global commercial performance of the Ocaliva business in PBC, which exceeded the Company’s original revenue expectations and was
effectively managed from a cost and investment perspective. He also was integrally involved in the direction of the preparations to launch OCA in liver fibrosis due to NASH, if approved, and led the development of the Company’s strategic long-range operating plan. Beyond his responsibilities in the commercial area, Mr. Durso led a number of other functional areas within the Company, including corporate communications, business development, medical affairs, pharmacovigilance and quality assurance. In 2019, he was responsible for assessing the Company’s evolving needs in such areas and significantly expanded the Company’s internal capabilities.
•
Mr. Sullivan: Mr. Sullivan was responsible for managing all aspects of the Company’s legal, intellectual property, healthcare compliance and corporate governance functions. He was integrally involved in the Company’s financing activities, including the structuring of the May 2019 convertible debt offering, public equity offering and concurrent private placement, and also was instrumental in the successful resolution of certain legal matters. Beyond these specific achievements, he provided wide-ranging legal input on a range of strategic topics across the full spectrum of the Company’s business.
•
Mr. Kim: Mr. Kim was responsible for the performance of the Ocaliva business in PBC in the United States and was directly accountable for the oversight of the Company’s launch preparations for OCA in liver fibrosis due to NASH, if approved, as part of his global strategic marketing responsibilities. The 2016 targetperformance of the United States PBC business exceeded the Company’s original revenue expectations and actual bonuseswas effectively managed from a cost and investment perspective. Mr. Kim’s launch preparation responsibilities for OCA in liver fibrosis due to NASH, if approved, involved projects in a number of critical areas, including opportunity assessment, investment planning and brand planning. Mr. Kim was also responsible for the oversight of the design, recruitment and successful build-out of the Company’s United States NASH launch organization.
For 2019, our Compensation Committee reviewed our performance against our corporate goals (as described above) and assessed the individual performance of each named executive officer
were:(other than our Chief Executive Officer) after considering such officer’s performance in light of his goals, individual contributions and the recommendations of the Chief Executive Officer. The following table sets forth the 2019 cash incentive bonus targets, achievement levels and payments for our named executive officers. | | | | 2019 Cash Incentive Bonus | |
| Named Executive Officer | | | Target
(as % of
Base Salary) | | | Corporate
Goal
Achievement
Level | | | Individual
Goal
Achievement
Level | | | Aggregate
Achievement
(as % of
Base Salary) | | | Payment | |
| Dr. Mark Pruzanski | | | | | 70% | | | | | | 109% | | | | | | — | | | | | | 76% | | | | | $ | 560,265 | | |
| Sandip Kapadia | | | | | 50% | | | | | | 109% | | | | | | 100% | | | | | | 55% | | | | | $ | 252,935 | | |
| Jerome Durso | | | | | 50% | | | | | | 109% | | | | | | 115% | | | | | | 63% | | | | | $ | 359,284 | | |
| Ryan Sullivan | | | | | 50% | | | | | | 109% | | | | | | 110% | | | | | | 60% | | | | | $ | 267,089 | | |
| Richard Kim | | | | | 50% | | | | | | 109% | | | | | | 110% | | | | | | 60% | | | | | $ | 265,519 | | |
| | | | |
| Executive | | Target Bonus
as % of
Base Salary | | Actual Bonus
as % of
Target |
| Mark Pruzanski, M.D. | | | 70 | % | | | 80 | % |
| David Shapiro, M.D. | | | 50 | % | | | 80 | % |
| Sandip Kapadia | | | 50 | % | | | 92 | % |
| Rachel McMinn, Ph.D. | | | 50 | % | | | 90 | % |
| Lisa Bright | | | 50 | % | | | 85 | % |
| Barbara Duncan(1) | | | 50 | % | | | 100 | % |
| (1) | Pursuant to the Duncan Transition Agreement, Ms. Duncan was eligible to receive a bonus equal to 50% of her pro-rated 2016 base salary. |
Equity
incentive awardsIncentive Awards
Our equity
awardincentive program is the
primary vehicle
used for
offeringproviding long-term incentives to our
executives.executive officers, including our named executive officers. We believe that equity awards provide our
executivesnamed executive officers with a strong link to our long-term performance, create an ownership culture and help to align the long-term interests of
our executivessuch officers and our stockholders. In addition, we believe that equity awards with a
time-basedtime- or performance-based vesting feature promote
executive retention because
this feature incentivizesthese features incentivize our
named executive officers to remain in our employment during the vesting period.
To date, we have used
We typically grant an initial equity award to new named executive officers at the commencement of their employment and grant annual equity awards bothas part of our ongoing executive compensation program. In addition, we may grant other special equity awards if determined to compensate our executive officersbe in the formbest interest of new hire grantsthe
Company, including at their commencementthe time of employment, and to provide ongoing long-term incentivessignificant promotions. In 2019, equity awards made to our named executive officers included, as our business has developed. We also generally plan to grant equityapplicable, stock option awards, on at least an annual basis to all of our executive officers. Typically, stock options and shares of restricted stock unit awards and TSR PSUs. Stock option and restricted stock unit awards granted to our named executive officers generally vest over a period of four years, subject to continued employment. Subject to the terms of each executive officer’s employment agreement as described below, vesting ceases upon termination of employment, and stock option exercise rights cease shortly after termination of employment.years. The exercise price for any InterceptCompany stock option is set at no less than the fair market value of our common stock on the date of grant, as determined by reference to the closing market price of our common stock on such date. TSR PSUs vest, if at all, based on our TSR relative to that of our TSR Peer Group over a 3-year period, subject to a vesting cap equal to 100% of target in the dateevent that our relative TSR exceeds target but our absolute TSR is negative. The vesting of grant.
each type of award is subject to continued employment through the applicable vesting dates, except in the case of certain qualifying terminations of employment.
Annual
equity awardsEquity Awards
In determining the size of the annual equity awards granted to our named executive officers, our
compensation committeeCompensation Committee considers recommendations developed by
ourits independent compensation consultant, including information regarding comparative stock ownership of, and equity awards received by, the executives in our
compensation peer group and our industry. In addition, our
compensation committeeCompensation Committee considers each
executive’snamed executive officer’s individual performance
and the extent to which such
executiveofficer has vested
in previous equity awards, as well as our overall corporate performance and the potential for enhancing the long-term creation of value for our stockholders.
Equity
Annual equity awards to our named executive officers are typically granted
annuallyeach year in conjunction with the review of their individual performance and
Intercept’sour overall
corporate performance for the previous year. This review typically occurs at meetings of
the compensation committeeour Compensation Committee held during the first quarter of each year. This allows
the compensation committeeour Compensation Committee to
receivereview various metrics related to our performance in the previous year before making award determinations.
In makingdetermining the annual equity awards for 2016,to be granted to our compensation committeenamed executive officers in 2019, our Compensation Committee considered, among other things, the value of the annual equity awards received by executives in our compensation peer group and our industry and the size
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of the annual equity awards as a percentage of our company’s outstanding stock, dilution to existing stockholders and the retention value in the outstanding equity program based on the value of outstanding unvested awards, all of which were considered in light of individual and companycorporate performance for the previous year, 2015. Based on the recommendation of our chief executive officer, and in consideration of our company’s performance and the market performance of our common stock, our compensation committee determined that it would be appropriate to grant equity awards targeting the 50th percentile range of our peer group and industry.2018. To promote our pay-for-performanceperformance-based compensation philosophy, individual equity awards were positioned higher or lower within the compensation peer group range based on the individual performance of each named executive officer.
We believe that a mix of compensation components incentivizes consistently strong performance. In
2016,2019, we retained the
compensation committee granted equity incentives in a mixuse of stock
optionsoption, restricted stock unit awards and
restricted stock.TSR PSUs. Our approach reflects what we believe is an appropriate equity
mix,allocation, providing
executivesour named executive officers with
exposureincentives to
downside stock-price riskdrive value creation through
performance-based TSR PSUs and stock options,
the value of which depends on our TSR relative to the TSR of our peers or an increase in our stock price, respectively, while addressing the historically high volatility of our common stock through the restricted stock
unit award
component.component, which maintains some value through any volatility. This approach also helps manage overall dilution levels and the remaining equity pool available under our 2012
Equity Incentive Plan
(“2012 Plan”) in light of our significant
recent growth
to date and
expected continued
future expansion
in company-wideof Company headcount.
We expect these two types of equity incentives to be partApproximately sixty percent of the
compensation mix on angrant date fair value of Dr. Pruzanski’s 2019 annual
basis.2016 Equity Awards
equity grant was comprised of performance-based TSR PSUs and the remaining approximately forty percent was comprised of equal proportions of stock options and restricted stock units. Approximately one third of the grant date fair value of the 2019 annual equity grants made to our other named executive officers was allocated to each of performance-based TSR PSUs, stock options and restricted stock units. Please refer to “—Compensation Decisions Relating to Fiscal Year 2019” below for a listing of grants made to each of our named executive officers in connection with our 2019 annual equity award program.
In February 2016,January 2019, as part of our annual grant process, our compensation committeeCompensation Committee approved the grant of certain time-basedstock options, to purchase shares of our commonrestricted stock units and shares of restricted stockTSR PSUs to our named executive officers. Each of the time-basedThe stock option awards and shares of restricted stock vestedgranted in connection with respect toour 2019 annual grant have (i) a four-year vesting period, with 25% of the shares on January 1, 2017, and vest with respectsubject to the remainingaward vesting in an initial installment on the date preceding the one-year anniversary of the relevant vesting commencement date and 1/48th of the shares in approximately equal monthly installments forsubject to the stock optionsaward
vesting each month thereafter and
quarterly installments for the restricted stock through January 1, 2020. The time-based stock option awards have(ii) an exercise price of
$94.29$110.80 per share, the last reported sale price of our common stock on the
NASDAQNasdaq Global Select Market on the date of grant.
| | | | |
| Name | | Time-Based Awards
(# of Shares) |
| | Options | | Restricted
Stock |
| Mark Pruzanski, M.D. | | | 30,500 | | | | 23,300 | |
| David Shapiro, M.D. | | | 10,200 | | | | 7,800 | |
| Barbara Duncan | | | 8,100 | | | | 6,200 | |
| Rachel McMinn, Ph.D. | | | 8,800 | | | | 6,700 | |
| Lisa Bright | | | 10,200 | | | | 19,525 | (1) |
| (1) | Includes 11,725 shares The restricted stock unit awards granted to Ms. Bright pursuant to the Bright-IPEL Employment Agreement, the vesting of which is conditioned on the satisfaction of certain performance criteria set forth in such agreement, in addition to 7,800 shares granted as part of our annual grant process. |
New hire equity awards
We grant a new hire equity award in connection with our 2019 annual grant have a four-year vesting period, with 25% of the commencement of an executive’s employment as appropriate and necessary to recruit talent, consistent with industry practice. The size of each new hire award is established through arm’s-length negotiation at the time the executive is hired, taking into account the position for which the executive is being considered and the executive’s qualifications, prior experience and compensation including forfeited equity awards, as well as external factors such as competitive market demand. Typically, the time-based stock options and restricted stock we grant to our newly-hired executive officers vest over a period of four years. In each case,shares subject to the terms of each executive officer’s employment agreement as described below,award vesting ceases upon termination of employment, and stock option exercise rights cease shortly after termination of employment. The following table sets forth the new hire equity awards that were granted to Mr. Kapadia, who commenced his employment in July 2016, which were consistent with the annual equity awards made to our other executives in February 2016. The stock options
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have an exercise price of $146.36, which is equal to the closing sale price for our common stock on the NASDAQ Global Select Market on the date preceding each anniversary of grant.
the vesting commencement date. The TSR PSUs granted in connection with our 2019 annual grant vest, if at all, based on our TSR relative to that of our TSR Peer Group over a 3-year period measured from January 1, 2019 through December 31, 2021. The percentage of such TSR PSUs that may vest following such period ranges from 0% to 150% as follows:| Relative TSR | | | Vesting
Percentage | |
Below 25th Percentile | | | 0% | |
25th Percentile | | | 50% | |
50th Percentile | | | 100% | |
75th Percentile and Above | | | 150% | |
| | | | |
| Name | | Time-Based Awards
(# of Shares) |
| | Options | | Restricted Stock |
| Sandip Kapadia | | | 18,000 | | | | 15,000 | |
The vesting of each type of award is subject to continued employment through the applicable vesting dates, except in the case of certain qualifying terminations of employment.
The grants made to each of our named executive officers in connection with our 2019 annual equity award program are set forth in the following table.
| Named Executive Officer | | | TSR PSUs | | | Stock
Options | | | Restricted
Stock Units | |
| Dr. Mark Pruzanski | | | | | 23,300 | | | | | | 13,700 | | | | | | 8,500 | | |
| Sandip Kapadia | | | | | 3,600 | | | | | | 7,200 | | | | | | 4,500 | | |
| Jerome Durso | | | | | 7,500 | | | | | | 15,200 | | | | | | 9,400 | | |
| Ryan Sullivan | | | | | 5,300 | | | | | | 10,700 | | | | | | 6,600 | | |
| Richard Kim | | | | | 3,200 | | | | | | 6,400 | | | | | | 4,000 | | |
Benefits and
other compensationOther Compensation
We believe that establishing competitive benefit packages for our employees is an important factor in attracting and retaining highly qualified personnel. We maintain broad-based benefits that are provided to all employees, including medical, dental,
vision, group life insurance and long- and short-term disability insurance. For our U.S.-based
executives,employees, we also provide a 401(k) plan. Under our 401(k) plan, we are permitted to make discretionary contributions and matching contributions, subject to established limits and a vesting schedule. Since 2015, we have matched an employee’s contributions to the 401(k) plan up to the first five percent of the employee’s
salary.salary, subject to such limits. We provide pension, insurance and other benefits to
executivesemployees located outside the United States in line with those provided to similar
executivesemployees in their respective countries.
All of our executivesOur named executive officers generally receive the same benefits as are
eligibleavailable to
participate in all of our
employee benefit plans availablesalaried employees, with limited recurring exceptions primarily consisting of fully-paid health insurance premiums. In addition, certain employees in
their respective countries,our United States commercial organization, including Mr. Kim, receive a car allowance or the use of a leased vehicle and payment of certain ancillary expenses. We also reimburse Mr. Kim for the taxes associated with such benefit. The amounts paid in
each case on2019 by the
same basis as other employees. The compensation committeeCompany to the named executive officers in respect of matching 401(k) plan contributions and incremental health insurance premiums, and the amount paid to Mr. Kim for his car allowance and related benefits, are included in the “All Other Compensation” column of the Summary Compensation Table below. Our Compensation Committee in its discretion may revise, amend or add to
thea named executive officer’s benefits and perquisites if it deems it advisable.
Pursuant to an employee retention program adopted in 2017 to secure the services of a limited number of key employees during a critical period for the Company, we granted cash retention awards to certain employees. In particular circumstances, we may agree to reimburse an executive officer for certain expenses, such as commuting or travel expenses, as an additional incentive to join InterceptDecember 2017, in connection with this program, Mr. Kim was granted a position where there is high market demand. Whether such expenses are covered andretention award in the amount of $202,800 that was paid in the reimbursement is determined on a case-by-case basis underfirst quarter of 2019, following the specific hiring circumstances. In 2016, we reimbursed Ms. Bright for her commuting costs, which reimbursement is capped at a maximumexpiration of £1,080 per month (approximately $1,313.93), plus gross ups on the applicable tax amounts. Ms. Bright and Dr. Shapiro also received a car allowanceretention period in 2016. See “— Summary Compensation Table.”
December 2018.
Severance and
changeChange in
control benefitsControl Benefits
Pursuant to employment agreements or arrangements that we have entered into with our named executive officers, our executivesuch officers are entitled to specified benefits in the event of the termination of their employment under specified circumstances, including termination followingin connection with a change in control of Intercept. the Company. We believe that providing such benefits is consistent with industry practices and helps us to compete for executive talent, as well as to retain and motivate our named executive officers and minimize management distraction created by uncertain job security, particularly in the event of a potential transaction that would be beneficial to our stockholders.
We have structured our change in control benefits so as to prevent unintended “windfalls” in the event of a change in control. Accordingly, change in control protections for our named executive officers are limited to “double-trigger” arrangements, which require both a change in control and a qualifying termination of the employment of the named executive officer in connection with the change in control, or in the case of TSR PSUs, vesting, if at all, based on our TSR performance relative to that of our TSR Peer Group through the month preceding the month in which the change in control occurs. We believe that structuring our change in control benefits in this manner is protective of stockholder value, while still incentivizing named executive officers to pursue change in control transactions determined by our Board to be in the best interest of our stockholders.
Please refer to “—
Narrative Disclosure to Summary Compensation Table”Employment Arrangements with Our Named Executive Officers” below for a more detailed discussion of these benefits. We have provided estimates of the value of the severance payments and other benefits that would have been made or provided to
our named executive officers under various termination
circumstancesand change in control scenarios under the caption “—Potential Payments
and Benefits Upon Termination
of Employment or Change in Control” below.
We believe that providing these benefits helps us compete
Compensation Decisions Relating to Fiscal Year 2020
In early 2020, the annual base salaries of our named executive officers were set by our Compensation Committee as follows, effective February 1, 2020:
| Named Executive Officer | | | 2020 Salary | | | 2019 Salary | | | Change
from 2020 | |
| Dr. Mark Pruzanski | | | $759,992 | | | $734,292 | | | 3.50% | |
| Sandip Kapadia | | | $478,023 | | | $464,100 | | | 3.00% | |
| Jerome Durso | | | $601,913 | | | $573,250 | | | 5.00% | |
| Ryan Sullivan | | | $461,113 | | | $445,520 | | | 3.50% | |
| Richard Kim | | | $457,294 | | | $442,900 | | | 3.25% | |
In addition, in early 2020, our Compensation Committee determined to maintain the 2020 annual cash incentive bonus target percentages for our named executive talent. After reviewingofficers at their 2019 levels, and approved cash incentive bonus targets for our named executive officers for 2020 as follows:
| Named Executive Officer | | | Target Cash
Incentive Bonus
(as % of
Base Salary) | |
| Dr. Mark Pruzanski | | | | | 70% | | |
| Sandip Kapadia | | | | | 50% | | |
| Jerome Durso | | | | | 50% | | |
| Ryan Sullivan | | | | | 50% | | |
| Richard Kim | | | | | 50% | | |
In early 2020, our Compensation Committee approved the practices of companies representedfollowing equity grants to our peer group, we believe thatnamed executive officers:
| Named Executive Officer | | | TSR PSUs | | | Stock
Options | | | Restricted
Stock Units | |
| Dr. Mark Pruzanski | | | | | 25,800 | | | | | | 17,700 | | | | | | 10,800 | | |
| Sandip Kapadia | | | | | 4,500 | | | | | | 9,200 | | | | | | 5,600 | | |
| Jerome Durso | | | | | 8,500 | | | | | | 17,400 | | | | | | 10,600 | | |
| Ryan Sullivan | | | | | 4,500 | | | | | | 9,200 | | | | | | 5,600 | | |
| Richard Kim | | | | | 4,300 | | | | | | 8,800 | | | | | | 5,400 | | |
The stock option awards granted in connection with our
severance and change in control benefits are generally in line2020 annual grant have (i) a four-year vesting period, with
severance packages offered to executives25% of the
companiesshares subject to the award vesting in
our peer group.We have structured our change in control benefits as “double trigger” benefits. In other words,an initial installment on the change in control does not itself trigger benefits. Rather, benefits are paid only ifdate preceding the employmentone-year anniversary of the executive officer is terminated duringrelevant vesting commencement date and 1/48th of the shares subject to the award vesting each month thereafter and (ii) an exercise price of $99.66 per share, the last reported sale price of our common stock on the Nasdaq Global Select Market on the date of grant. The restricted stock unit awards granted in connection with our 2020 annual grant have a specifiedfour-year vesting period, afterwith 25% of the changeshares subject to the award vesting on the date preceding each anniversary of the vesting commencement date. The TSR PSUs granted in control. We believeconnection with our 2020 annual grant vest, if at all, based on our TSR relative to that of our TSR Peer Group over a “double trigger” benefit is protective3-year period measured from January 1, 2020 through December 31, 2022. The percentage of stockholder value because it prevents an unintended windfallsuch TSR PSUs that may vest following such period ranges from 0% to executive officers150% as follows:
| Relative TSR | | | Vesting
Percentage | |
Below 25th Percentile | | | 0% | |
25th Percentile | | | 50% | |
50th Percentile | | | 100% | |
75th Percentile and Above | | | 150% | |
The percentage of such TSR PSUs that will vest in the event that our relative TSR falls between the 25th and 75th percentiles will be based on linear interpolation. In addition, in the event that our relative TSR exceeds the 50th percentile but our absolute TSR over such period is negative, the percentage of such TSR PSUs that will vest will be capped at 100%.
The vesting of each type of award is subject to continued employment through the applicable vesting dates, except in the case of certain qualifying terminations of employment.
Material Tax and Accounting Considerations
Section 162(m) of the Code generally restricts deductibility for federal income tax purposes of annual individual compensation in excess of $1 million paid to certain executive officers. Prior to the enactment of the Tax Cuts and Jobs Act of 2017 (the “TCJA”), Section 162(m) provided an exemption from this limitation for “qualified performance-based compensation.” The TCJA repealed the “qualified performance-based compensation” exemption, effective for taxable years beginning after December 31, 2017, but provides transition relief for certain contractual arrangements in place as of November 2, 2017 and not modified thereafter. We account for stock-based compensation, including annual and new hire equity awards, in accordance with the requirements of ASC 718.
Our Compensation Committee is informed about the tax deductibility and accounting treatment of compensation when making its compensation determinations. Our Compensation Committee’s general policy is to develop and maintain compensation programs that effectively attract, retain, reward and incentivize exceptional executives in a friendly changehighly competitive environment, which may include payments that might not be deductible if our Compensation Committee believes they are in control, while still providing them appropriate incentivesthe best interests of the Company and its stockholders.
Clawback Policy
We have adopted a clawback policy that permits the Company to cooperate in negotiatingrecover from any change in control incurrent or former executive officer, including any named executive officer, whose fraud or intentional misconduct contributes to the circumstances requiring the Company to prepare an accounting restatement due to material non-compliance of the Company with any financial reporting requirement under U.S. federal securities laws, up to 100% of any incentive-based compensation received by such officer from the Company during the one-year period preceding the date on which they believe they may lose their jobs.
Executivethe Company is required to prepare such accounting restatement.
Stock Ownership Guidelines
We have adopted minimum stock ownership guidelines
In order to better align for our executives’ incentives to stockholder value, in February 2017, our board of directors adopted stock ownership guidelines pursuant to which our chief executive officer is required to maintain a number of shares of common stock equal in value to three times annual base salaryBoard, Chief Executive Officer and our other executive officers are required to maintain a number of shares of common stock equal in value to one times annual base salary. Our executive officers, including our chiefnamed executive officer, will be provided withofficers, which require, within a
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five-year period, our non-employee directors to complyhold Company equity with these guidelines.a value equal to at least 3x their annual cash retainer and our Chief Executive Officer and other executive officers to hold Company equity with a value equal to at least 3x and 1x, respectively, their annual base salary. Until the ownership guidelines are satisfied, our non-employee directors and executive officers are required to maintain a minimum retention ratio of at least 50% of their annual equity awards, net of shares sold or withheld solely to pay applicable exercise fees and/or withholding taxes. Any non-employee director or executive officer failing to meet the guidelines within the allotted compliance period will be required to maintain a minimum retention ratio of 100% of net shares after the applicable exercise fees and/or withholding taxes.
Our Compensation Process
The Role of the Compensation Committee
Our compensation committee oversees our policies governing the compensation of our executive officers. In this role, the compensation committee reviews
Anti-Hedging and
approves all compensation decisions relating to our named executive officers. Our compensation committee consists of three members of our board of directors, each of whom has extensive experience in our industry and is an independent director under applicable NASDAQ and SEC rules. The compensation committee uses its judgment and experience to develop and approve executive compensation decisions, including our chief executive officer’s compensation package. In doing so, the compensation committee meets with our independent compensation consultant, in executive session, without our chief executive officer or any other member of management present. The compensation committee periodically evaluates the need for revisions to our executive compensation program to ensure our program is competitive with the companies with which we compete for executive talent. For the 2016 compensation for our named executive officers, our board of directors (other than our chief executive officer) ratified the approval of our compensation committee’s decision.Management’s Involvement in the Executive Compensation Process
A small number of executives, including our chief executive officer, our head of human resources and our head of legal affairs, participate in general sessions of our compensation committee. Management does not participate in executive sessions of our compensation committee. At the request of the compensation committee, our chief executive officer provides input and recommendations to the compensation committee on salary adjustments, annual target-based cash bonus amounts and appropriate equity incentive compensation levels in relation to our executive officers other than himself. In formulating these recommendations, our chief executive officer may consider data obtained from third-party sources, including data provided by a compensation consultant other than the compensation consultant retained by the compensation committee. Any data provided by separate compensation consultants used by management is either not customized specifically for Intercept or is customized based on parameters that are not developed by such compensation consultant and about which such compensation consultant does not provide advice.
Use of Independent Compensation Consultants by the Compensation Committee
In designing our executive compensation program, our compensation committee considers publicly available compensation data for U.S. companies in the biopharmaceutical industry to help guide its executive compensation decisions at the time of hiring and for subsequent adjustments in compensation. Our compensation committee also retained the services of Radford, an independent compensation consultant and a part of Aon Hewitt, a business unit of Aon plc, to provide it with additional comparative data on executive compensation practices in our industry and to advise it on our executive compensation program generally. For 2016, Radford provided advice and data to the compensation committee on executive and director compensation matters, including the selection of our peer group, comparative market pay levels, equity dilution and annual share utilization practices, incentive plan design and emerging market trends. Although the compensation committee considers the advice and recommendations of the compensation consultant about our executive compensation program, the compensation committee ultimately makes its own decisions about these matters.
The compensation committee regularly reviews the services provided by its outside consultant and performs an annual assessment on the independence of its compensation consultant to determine whether the compensation consultant is independent. The compensation committee conducted a specific review of its relationship with Radford in 2016, and determined that Radford is independent in providing Intercept with executive and director compensation consulting services and that Radford’s work for the compensation committee did not raise any conflicts of interest, consistent with SEC rules and NASDAQ listing standards.
Anti-Pledging Policies
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Market Benchmarking and Peer Group
Our compensation committee references a peer group of publicly traded companies in the biopharmaceutical industry for purposes of gathering data to compare with our existing executive compensation levels and practices and as context for future compensation decisions. The compensation committee periodically reviews and updates the compensation peer group, as appropriate, to include companies that the compensation committee believes are competitors for executive talent and that are similar to us in stage of development, market capitalization and number of employees. The compensation committee may consider peer group and other industry compensation data and the recommendations of our compensation consultant when making decisions related to executive compensation, ultimately giving consideration to the competitiveness of our compensation program, internal perceptions of equity and individual performance. The compensation committee also considered peer companies identified by proxy advisory firms in the prior year’s proxy cycle.
The companies included in our peer group for 2016 were: ACADIA Pharmaceuticals Inc., Alkermes plc, Alnylam Pharmaceuticals, Inc., Anacor Pharmaceuticals, Inc., bluebird bio, Inc., Ironwood Pharmaceuticals, Inc., Medivation, Inc., Merrimack Pharmaceuticals, Inc., Neurocrine Biosciences, Inc., Ophthotech Corporation, Puma Biotechnology, Inc., Seattle Genetics Inc., Tesaro, Inc., Ultragenyx Pharmaceutical Inc. and United Therapeutics Corporation.
Annual Compensation Review Process
At the end of each calendar year, the compensation committee considers each executive’s performance for the completed year. This process includes the review of recommendations by our chief executive officer to the compensation committee with respect to each executive officer (other than himself) as to:
the achievement of stated corporate performance objectives;
the level of contributions made to the general management and guidance of Intercept; and
the amount of any salary increases, cash bonus payouts and new equity awards.
The compensation committee takes into consideration these recommendations and other relevant performance and competitive market factors when it makes its determination on executive compensation matters.
Consideration of Prior Stockholder Advisory Vote to Approve Named Executive Officer Compensation
Each year, our compensation committee considers the outcome of the annual stockholder advisory vote to approve named executive office compensation when making decisions relating to the compensation of our named executive officers and our executive compensation programs and policies. At our 2016 annual meeting of stockholders, our stockholders demonstrated strong support of our named executive compensation programs. The compensation committee will continue to take into account future stockholder advisory votes to approve executive compensation and other relevant market developments affecting executive officer compensationemployees are restricted from engaging in order to determine whether any subsequent changes to our programs and policies are warranted to reflect stockholder concernsspeculative trading activities, including hedging or to address market developments.
Compensation Decisions Relating to Fiscal Year 2017
In February 2017, in order to provide each of our named executive officers with base salaries that are competitive with our publicly traded peer companies, the annual base salaries of our named executive officers were increasedpledging their company securities as follows, effective January 1, 2017: for Dr. Pruzanski, to $675,000; for Dr. Shapiro, to $489,300; for Ms. Bright to £320,000; for Dr. McMinn, to $432,600; and for Mr. Kapadia, to $425,000. In addition, in February 2017, our board of directors approved bonus targets for our named executive officers for 2017 as follows: for Dr. Pruzanski, 70%; for Dr. Shapiro, 50%; for Ms. Bright, 50%; for Ms. McMinn, 50%; and for Mr. Kapadia, 50%.
In February 2017, the compensation committee of the board of directors approved the following equity grants to our named executive officers: for Dr. Pruzanski, stock options to purchase 40,000 shares of common stock and 23,200 shares of restricted stock; for Dr. Shapiro, stock options to purchase 10,000 shares of common stock and 6,000 shares of restricted stock; for Ms. Bright, stock options to purchase 7,800 shares of
collateral.
Compensation Committee Report
The information contained in this report shall not be deemed to be “soliciting material,” “filed” with the SEC or incorporated by reference into any filing under the Securities Act or the Exchange Act, or subject to the liabilities of restricted stock; for Dr. McMinn, stock options to purchase 8,300 shares of common stock and 5,000 shares of restricted stock; and for Mr. Kapadia, stock options to purchase 11,600 shares of common stock and 7,000 shares of restricted stock. The exercise price for the options awarded to our executive officers is $107.18 per share, the last reported sale price of our common stock on the NASDAQ Global Select Market on the dateSection 18 of the grant.
Exchange Act, except to the extent that the Company specifically incorporates it by reference into a document filed under the Securities Act or the Exchange Act.
The Compensation Committee
ReportThe compensation committee of the boardBoard of directorsDirectors of Intercept Pharmaceuticals, Inc.the Company has reviewed and discussed the Compensation Discussion and Analysis required by Item 402(b) of Regulation S-K with Intercept’sthe Company’s management. Based on such review and discussions, the compensation committeeCompensation Committee recommended to the boardBoard of directorsDirectors that the Compensation Discussion and Analysis be included in this proxy statement.
statement and incorporated by reference in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019.
By the
compensation committeeCompensation Committee of the
boardBoard of
directorsDirectors of Intercept Pharmaceuticals, Inc.
,
Gino Santini,Chairperson
Srini Akkaraju, M.D., Ph.D.Nancy Miller-Rich
Daniel Welch
Summary Compensation Table
The following table summarizes the compensation that was earned by our named executive officers for the year ended December 31, 2019 and, as applicable, the years ended December 31, 2018 and 2017.
| Name and Principal Position | | | Year(1) | | | Salary
($)(2) | | | Bonus
($)(3) | | | Stock
Awards
($)(4) | | | Option
Awards
($)(4) | | | Non-Equity
Incentive Plan
Compensation
($)(5) | | | All Other
Compensation
($)(6) | | | Total
($) | |
Dr. Mark Pruzanski
President and
Chief Executive Officer | | | | | 2019 | | | | | | 734,292 | | | | | | — | | | | | | 4,197,742 | | | | | | 1,116,118 | | | | | | 560,265 | | | | | | 7,368 | | | | | | 6,615,785 | | |
| | | | 2018 | | | | | | 702,000 | | | | | | — | | | | | | 1,667,718 | | | | | | 1,705,358 | | | | | | 442,260 | | | | | | 8,623 | | | | | | 4,525,960 | | |
| | | | 2017 | | | | | | 675,000 | | | | | | — | | | | | | 2,486,576 | | | | | | 2,583,556 | | | | | | 401,625 | | | | | | 7,930 | | | | | | 6,154,687 | | |
Sandip Kapadia
Chief Financial Officer
and Treasurer | | | | | 2019 | | | | | | 464,100 | | | | | | — | | | | | | 1,001,664 | | | | | | 586,573 | | | | | | 252,935 | | | | | | 21,368 | | | | | | 2,326,640 | | |
| | | | 2018 | | | | | | 442,000 | | | | | | — | | | | | | 790,164 | | | | | | 393,544 | | | | | | 228,735 | | | | | | 22,403 | | | | | | 1,876,846 | | |
| | | | 2017 | | | | | | 425,000 | | | | | | — | | | | | | 750,260 | | | | | | 749,231 | | | | | | 188,594 | | | | | | 23,930 | | | | | | 2,137,016 | | |
Jerome Durso
Chief Operating Officer | | | | | 2019 | | | | | | 573,250 | | | | | | — | | | | | | 2,089,570 | | | | | | 1,238,321 | | | | | | 359,284 | | | | | | 21,368 | | | | | | 4,281,793 | | |
| | | | 2018 | | | | | | 540,800 | | | | | | — | | | | | | 1,554,326 | | | | | | 775,844 | | | | | | 292,032 | | | | | | 22,403 | | | | | | 3,185,406 | | |
| | | | | | 2017 | | | | | | 441,333 | | | | | | — | | | | | | 1,738,950 | | | | | | 1,395,217 | | | | | | 260,000 | | | | | | 26,765 | | | | | | 3,862,266 | | |
Ryan Sullivan
General Counsel and
Secretary | | | | | 2019 | | | | | | 445,520 | | | | | | — | | | | | | 1,471,902 | | | | | | 871,713 | | | | | | 267,089 | | | | | | 21,368 | | | | | | 3,077,592 | | |
| | | | 2018 | | | | | | 376,158 | | | | | | — | | | | | | 1,239,112 | | | | | | 1,190,351 | | | | | | 229,122 | | | | | | 173,437 | | | | | | 3,208,180 | | |
Richard Kim
President, U.S. Commercial &
Strategic Marketing | | | | | 2019 | | | | | | 442,900 | | | | | | 202,800 | | | | | | 890,368 | | | | | | 521,398 | | | | | | 265,519 | | | | | | 76,343 | | | | | | 2,399,328 | | |
(1)
Mr. Sullivan joined the Company in February 2018. Mr. Kim first became a named executive officer in 2019.
(2)
Reflects (i) prorated 2017 salary for Mr. Durso, who was hired during 2017 and (ii) prorated 2018 salary for Mr. Sullivan, who was hired during 2018.
(3)
Reflects for Mr. Kim in 2019 a cash retention award in the amount of $202,800 paid in the first quarter 2019.
(4)
Amounts shown represent the aggregate grant date fair value for the fiscal years presented, computed in accordance with ASC 718, in respect of TSR PSU, restricted stock unit (or restricted stock) and option awards, as applicable. Assumptions used in the calculation of these amounts are included in “Note 13” to the Notes to Consolidated Financial Statements for the year ended December 31, 2019, included in our Annual Report. Amounts shown do not reflect the compensation actually received by the named executive officers. For Mr. Durso in 2017 and Mr. Sullivan in 2018, such amounts reflect such individuals’ new-hire equity awards.
(5)
Amounts shown reflect target-based cash incentive bonuses earned with respect to the fiscal years presented based on our Compensation Committee’s evaluation of our performance against corporate goals and, in the case of named executive officers other than our Chief Executive Officer, the relevant named executive officer’s individual performance. See “—Compensation Discussion and Analysis—Components of Our Executive Compensation Program—Annual Target-Based Cash Incentive Bonuses” above for a discussion of the target and actual cash incentive bonuses for each of the named executive officers with respect to 2019.
(6)
The following table sets forth the component amounts presented in the “All Other Compensation” column above for the year ended December 31, 2019:
| Name | | | Contributions
Under 401(k) Plan
($)(i) | | | Health
Insurance
($)(ii) | | | Miscellaneous
($)(iii) | |
| Dr. Mark Pruzanski | | | | | — | | | | | | 7,368 | | | | | | — | | |
| Sandip Kapadia | | | | | 14,000 | | | | | | 7,368 | | | | | | — | | |
| Jerome Durso | | | | | 14,000 | | | | | | 7,368 | | | | | | — | | |
| Ryan Sullivan | | | | | 14,000 | | | | | | 7,368 | | | | | | — | | |
| Richard Kim | | | | | 14,000 | | | | | | 7,368 | | | | | | 54,975 | | |
(i)
Represents the annual contribution of the Company under the terms of its 401(k) Plan.
(ii)
Represents the amount paid by the Company for health insurance premiums above the amounts generally paid for the coverage of its employees.
(iii)
Represents the amount of $30,000 paid by the Company for an annual car allowance, the amount of $15,434 for the taxes associated with such benefit and an amount paid by the Company for an immediate family member to attend a Company business trip with Mr. Kim.
Grants of Plan-Based Awards Table
The following table sets forth information regarding compensation awarded to, earned by or paidconcerning the named executive officers’ 2019 annual cash incentive bonus award opportunities and 2019 grants of TSR PSUs, restricted stock units and stock options under our 2012 Plan. All stock options granted to our named executive officers duringwere incentive stock options, to the yearsextent permissible under the Code.
| Name | | | Grant
Date | | | Estimated
Future
Payout
Under
Non-Equity
Incentive
Plan
Awards
Target
($)(2) | | | Estimated Future Payouts
Under Equity Incentive Plan
Awards(3) | | | All
Other
Stock
Awards:
Number
of
Shares
of Stock
(#)(5) | | | All Other
Option
Awards:
Number of
Securities
Underlying
Options
(#)(6) | | | Exercise
or Base
Price of
Option
Awards
($/Sh)(7) | | | Grant
Date
Fair
Value of
Stock
and
Option
Awards
($)(8) | |
| | Threshold
(#)(4) | | | Target
(#) | | | Maximum
(#) | |
| Dr. Mark Pruzanski | | | | | — | | | | | | 514,004 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
| | | | 01/16/19(1) | | | | | | — | | | | | | 11,650 | | | | | | 23,300 | | | | | | 34,950 | | | | | | — | | | | | | — | | | | | | — | | | | | | 3,255,942 | | |
| | | | 01/16/19(1) | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 8,500 | | | | | | 13,700 | | | | | | 110.80 | | | | | | 941,800 | | |
| | | | 01/16/19(1) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 1,116,118 | | |
| Sandip Kapadia | | | | | — | | | | | | 232,050 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
| | | | 01/16/19(1) | | | | | | — | | | | | | 1,800 | | | | | | 3,600 | | | | | | 5,400 | | | | | | — | | | | | | — | | | | | | — | | | | | | 503,064 | | |
| | | | 01/16/19(1) | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 4,500 | | | | | | — | | | | | | — | | | | | | 498,600 | | |
| | | | 01/16/19(1) | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 7,200 | | | | | | 110.80 | | | | | | 586,573 | | |
| Jerome Durso | | | | | — | | | | | | 286,625 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
| | | | 01/16/19(1) | | | | | | — | | | | | | 3,750 | | | | | | 7,500 | | | | | | 11,250 | | | | | | — | | | | | | — | | | | | | — | | | | | | 1,048,050 | | |
| | | | 01/16/19(1) | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 9,400 | | | | | | — | | | | | | — | | | | | | 1,041,520 | | |
| | | | 01/16/19(1) | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 15,200 | | | | | | 110.80 | | | | | | 1,238,321 | | |
| Ryan Sullivan | | | | | — | | | | | | 222,760 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
| | | | 01/16/19(1) | | | | | | — | | | | | | 2,650 | | | | | | 5,300 | | | | | | 7,950 | | | | | | | | | | | | — | | | | | | — | | | | | | 740,622 | | |
| | | | 01/16/19(1) | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 6,600 | | | | | | 10,700 | | | | | | 110.80 | | | | | | 731,280 | | |
| | | | 01/16/19(1) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 871,713 | | |
| Richard Kim | | | | | — | | | | | | 221,450 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
| | | | 01/16/19(1) | | | | | | — | | | | | | 1,600 | | | | | | 3,200 | | | | | | 4,800 | | | | | | | | | | | | — | | | | | | — | | | | | | 447,168 | | |
| | | | 01/16/19(1) | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 4,000 | | | | | | | | | | | | | | | | | | 443,200 | | |
| | | | 01/16/19(1) | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 6,400 | | | | | | 110.80 | | | | | | 521,398 | | |
(1)
Represents annual equity grants made to Dr. Pruzanski, Mr. Kapadia, Mr. Durso, Mr. Sullivan and Mr. Kim in 2019, as more fully described under “—Compensation Discussion and Analysis—Components of Our Executive Compensation Program—Equity Incentive Awards—Annual Equity Awards” above. Such awards have a vesting commencement date of January 1, 2019.
(2)
Represents the potential 2019 cash incentive bonus payouts assuming target achievement of corporate goals and, as applicable, individual performance, based upon the named executive officer’s cash incentive bonus target and base salary in effect on December 31, 2019. No minimum threshold amount or maximum amount beyond the target amount was established. See the column entitled “Non-Equity Incentive Plan Compensation” in the Summary Compensation Table for the cash incentive bonuses earned by the named executive officers in 2019 and paid in 2020.
(3)
Represents grants of TSR PSUs made to the named executive officers in 2019. Such awards vest, if at all, based on our TSR relative to that of our TSR Peer Group over a 3-year period, subject to continued employment. The percentage of such TSR PSUs that may vest following such period ranges from 0% to 150%, as more fully described under “—Compensation Discussion and Analysis—Components of Our Executive Compensation Program—Equity Incentive Awards—Annual Equity Awards” above.
(4)
Represents TSR PSUs that are eligible to vest based on the Company’s achievement of the minimum applicable relative TSR percentile.
(5)
Represents grants of restricted stock units made to the named executive officers in 2019. Such awards have a four-year vesting period, with 25% of the shares subject to the award vesting on the date preceding each anniversary of the vesting commencement date.
(6)
Represents grants of stock options made to the named executive officers in 2019. Such awards have a four-year vesting period, with 25% of the shares subject to the award vesting in an initial installment on the date preceding the one-year anniversary of the relevant vesting commencement date and 1/48th of the shares subject to the award vesting each month thereafter, subject to continued employment.
(7)
Represents the closing market price of the shares on the date of the grant.
(8)
Amounts shown represent the aggregate grant date fair value, computed in accordance with ASC 718, in respect of restricted stock unit and option awards, as applicable, granted in 2019. Assumptions used in the calculation of these amounts are included in “Note 13” to the Notes to Consolidated Financial Statements for the year ended December 31,
2016, 2015 and 2014. | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| Name and Principal Position | | Year | | Salary
($) | | Bonus(1)
($) | | Stock
Awards(2)
($) | | Option
Awards(3)(4)
($) | | Non-Equity
Incentive Plan
Compensation
($) | | All Other
Compensation
($) | | Total
($) |
Mark Pruzanski, M.D.
Chief Executive Officer and President | | | 2016 | | | | 620,000 | | | | 420,000 | | | | 2,196,957 | | | | 1,608,449 | | | | — | | | | 4,627 | (5) | | | 4,850,033 | |
| | | 2015 | | | | 600,000 | | | | 420,000 | | | | 2,255,185 | | | | 2,841,753 | | | | — | | | | 4,627 | (5) | | | 6,121,565 | |
| | | 2014 | | | | 537,500 | | | | 327,250 | | | | 1,249,981 | | | | 1,108,935 | | | | — | | | | 4,444 | (5) | | | 3,228,110 | |
David Shapiro, M.D.
Chief Medical Officer and Executive Vice President, Development | | | 2016 | | | | 475,000 | | | | 184,000 | | | | 735,462 | | | | 537,908 | | | | — | | | | 29,877 | (6) | | | 2,232,247 | |
| | | 2015 | | | | 460,000 | | | | 184,000 | | | | 769,153 | | | | 1,143,686 | | | | — | | | | 29,877 | (6) | | | 2,586,716 | |
| | | 2014 | | | | 409,250 | | | | 165,900 | | | | 400,079 | | | | 354,945 | | | | — | | | | 15,052 | (6) | | | 1,345,226 | |
Sandip Kapadia
Chief Financial Officer and Treasurer | | | 2016 | | | | 200,000 | | | | 75,000 | (7) | | | 2,195,400 | (8) | | | 1,559,019 | | | | — | | | | 7,057 | (9) | | | 4,036,476 | |
Rachel McMinn, Ph.D.
Chief Strategy and Business Officer | | | 2016 | | | | 420,000 | | | | 156,000 | | | | 631,743 | | | | 464,077 | | | | — | | | | 16,508 | (10) | | | 1,688,328 | |
| | | 2015 | | | | 390,000 | | | | 156,000 | (11) | | | 604,868 | | | | 925,424 | | | �� | — | | | | 16,508 | (10) | | | 2,092,800 | |
| | | 2014 | | | | 236,667 | | | | 130,169 | (11) | | | 1,300,263 | (12) | | | 1,166,901 | | | | — | | | | 2,560 | (10) | | | 2,836,560 | |
Lisa Bright(13)
Chief Commercial and Corporate Affairs Officer | | | 2016 | | | | 367,280 | | | | 135,680 | | | | 780,215 | | | | 537,908 | | | | — | | | | 111,854 | (14) | | | 1,932,937 | |
| | | 2015 | | | | 396,000 | (13) | | | 158,400 | | | | 776,620 | | | | 1,174,242 | | | | — | | | | 140,421 | (14) | | | 2,645,683 | |
Barbara Duncan
Former Chief Financial Officer and Treasurer | | | 2016 | | | | 322,500 | | | | 327,250 | | | | 584,598 | | | | 427,162 | | | | — | | | | 21,168 | (15) | | | 1,682,678 | |
| | | 2015 | | | | 415,000 | | | | 166,000 | | | | 604,868 | | | | 925,424 | | | | — | | | | 21,168 | (15) | | | 2,132,460 | |
| | | 2014 | | | | 372,500 | | | | 148,125 | | | | 400,079 | | | | 354,945 | | | | — | | | | 8,527 | (15) | | | 1,284,176 | |
| (1) | For 2016, 2015 and 2014, our named executive officers were granted a target-based bonus. The target-based bonuses were based on a target percentage of each named executive officer’s base salary for the fiscal year and then adjusted based on pre-determined corporate goals as well as on a subjective evaluation of individual performance, except for our chief executive officer whose annual bonus was determined solely based on attainment of our company objectives. See “Compensation Discussion and Analysis — Components of Our Executive Compensation Program — Annual target-based cash bonus” for the target achievement by each of our named executive officers. In 2015, the target-based bonus was based on the achievement of 100% of corporate goals, in the case of Dr. Pruzanski, and 100% of corporate goals and individual performance, in the case of our other named executive officers. In 2014, the target-based bonus was based on the achievement of 90% of corporate goals, in the case of Dr. Pruzanski, 90% of corporate goals and individual performance, in the case of our other named executive officers (prorated for Dr. McMinn). |
| (2) | The amounts in this column represent the aggregate grant date fair value of restricted stock units or restricted stock awards granted to the named executive officer computed in accordance with FASB ASC Topic 718. See Note 13 of the notes to our consolidated financial statements in our annual report on Form 10-K filed with the SEC on March 1, 2017 for a discussion of the assumptions used in determining the grant date fair values of equity awards. These amounts do not correspond to the actual value that will be recognized by the named executive officers. |
| (3) | The amounts in this column represent the aggregate grant date fair value of stock options granted to the named executive officer in the applicable fiscal year computed in accordance with FASB ASC Topic 718. See Note 13 of the notes to our consolidated financial statements in our annual report on Form 10-K filed with the SEC on March 1, 2017 for a discussion of the assumptions used in determining the grant date fair values of equity awards. These amounts do not correspond to the actual value that will be recognized by the named executive officers. |
2019, included in our Annual Report.
TABLE OF CONTENTS | (4) | In 2014, our executive officers were granted performance vesting options to purchase our common stock. The value of the awards on the date of grant assuming the achievement of the highest level of performance conditions were as follows: Mark Pruzanski ($5,046,700); David Shapiro ($1,816,777); Barbara Duncan ($1,463,545); and Rachel McMinn ($1,412,806). The value of these options is determined as described in footnote 3 above. |
| (5) | Amounts reflect payments made for health insurance coverage of Dr. Pruzanski and his family members, above the amounts generally paid for the coverage of our employees. |
| (6) | Amounts reflect a monthly car allowance of $1,000 paid to Dr. Shapiro under the terms of his employment agreement, described below, and the payments of $4,627, $4,627 and $3,051 made in 2016, 2015 and 2014, respectively, for health insurance coverage of Dr. Shapiro and his family members, above the amounts generally paid for the coverage of our employees. Also reflects a payment of $13,250 in 2016 for employer matched 401(k) contributions. |
| (7) | Mr. Kapadia commenced his employment with us in July 2016. Mr. Kapadia was awarded a signing bonus of $75,000, of which was paid in July 2016. |
| (8) | Mr. Kapadia’s equity grants for 2016 reflect the larger amounts awarded for initial new-hire grants. |
| (9) | Amount reflects a commuting allowance of $1,098 paid to Mr. Kapadia in 2016 and a payment of $3,959 made in 2016 for health insurance coverage of Mr. Kapadia and his family members, above the amounts generally paid for the coverage of our employees. Also reflects a payment of $2,000 in 2016 for employer matched 401(k) contributions. |
| (10) | Amounts reflect payments of $3,258, $3,258 and $2,560 made in 2016, 2015 and 2014, respectively, for health insurance coverage of Dr. McMinn and her family members, above the amounts generally paid for the coverage of our employees. Also reflects a payment of $13,250 in 2016 for employer matched 401(k) contributions. |
| (11) | Dr. McMinn commenced her employment with us in April 2014. Dr. McMinn was awarded a signing bonus of $50,000, of which $25,000 was paid in May 2014 and the remainder was paid in May 2015. |
| (12) | Dr. McMinn’s equity grants for 2014 reflect the larger amounts awarded for initial new-hire grants. |
| (13) | Ms. Bright joined Intercept on November 2014 as the head of Europe. She became an executive officer of our company when she was promoted to the position of Chief Commercial and Corporate Affairs Officer in February 2015. Ms. Bright’s compensation for 2014 is not provided in the table because she was not an executive officer for the 2014 period. Ms. Bright’s cash compensation is paid in the British Pound equivalent of the approved U.S. Dollar amount. |
| (14) | Amounts reflect a monthly car allowance of $1,445 paid to Ms. Bright under the terms of her employment agreement, described below, and the payments of $19,681 and $27,217 made in 2016 and 2015, respectively, for supplemental health coverage. Also reflects a payment of $68,157 for employer paid pension compensation and monthly commuting costs of $6,680. See “— Narrative Disclosure to Summary Compensation Table” for more information relating to additional compensation made to Ms. Bright. |
| (15) | Amounts reflect payments of $7,918, $7,918 and $8,527 made in 2016, 2015 and 2014, respectively, for health insurance coverage of Ms. Duncan and her family members, above the amounts generally paid for the coverage of our employees. Also reflects a payment of $13,250 in 2016 for employer matched 401(k) contributions. |
Outstanding Equity Awards at Fiscal Year-End Table
The following table sets forth information concerning unexercised stock options, unvested restricted stock units (or restricted stock) and unvested TSR PSUs for each of the named executive officers outstanding as of December 31, 2019. The closing market price of the shares on December 31, 2019 was $123.92.
| | | | Option Awards | | | | Stock Awards | |
| Name | | | Number of
Securities
Underlying
Unexercised
Options
(#)
Exercisable | | | Number of
Securities
Underlying
Unexercised
Options
(#)
Unexercisable(13) | | | Option
Exercise
Price
($) | | | Option
Expiration
Date | | | | Number
of Shares
or Units
of Stock
That
Have Not
Vested
(#)(14) | | | Market
Value of
Shares
or Units
of Stock
That
Have
Not
Vested
($) | | | Equity
Incentive
Plan
Awards:
Number
of
Unearned
Shares,
Units or
Other
Rights
That
Have
Not
Vested
(#)(22) | | | Equity
Incentive
Plan
Awards:
Market or
Payout
Value of
Unearned
Shares,
Units or
Other
Rights
That
Have Not
Vested
($) | |
| Dr. Mark Pruzanski | | | | | 30,084(1) | | | | | | — | | | | | | 21.50 | | | | | | 11/16/22 | | | | | | | 1,456(15) | | | | | | 180,428 | | | | | | 35,100(23) | | | | | | 4,349,592 | | |
| | | | 62,595(2) | | | | | | — | | | | | | 31.90 | | | | | | 05/07/23 | | | | | | | 7,250(16) | | | | | | 898,420 | | | | | | 34,950(24) | | | | | | 4,331,004 | | |
| | | | 5,733(3) | | | | | | — | | | | | | 266.01 | | | | | | 04/11/24 | | | | | | | 6,375(17) | | | | | | 789,990 | | | | | | — | | | | | | — | | |
| | | | — | | | | | | 5,733(3) | | | | | | 266.01 | | | | | | 04/11/24 | | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
| | | | 32,550(4) | | | | | | — | | | | | | 161.16 | | | | | | 10/01/25 | | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
| | | | 29,865(5) | | | | | | 635(5) | | | | | | 94.29 | | | | | | 02/11/26 | | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
| | | | 29,167(6) | | | | | | 10,833(6) | | | | | | 107.18 | | | | | | 02/01/27 | | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
| | | | 21,801(7) | | | | | | 23,699(7) | | | | | | 58.74 | | | | | | 02/05/28 | | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
| | | | 3,425(8) | | | | | | 10,275(8) | | | | | | 110.80 | | | | | | 01/16/29 | | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
| Sandip Kapadia | | | | | 15,375(9) | | | | | | 2,625(9) | | | | | | 146.36 | | | | | | 07/01/26 | | | | | | | 2,812(18) | | | | | | 348,463 | | | | | | 8,100(23) | | | | | | 1,003,752 | | |
| | | | 8,458(6) | | | | | | 3,142(6) | | | | | | 107.18 | | | | | | 02/01/27 | | | | | | | 2,187(16) | | | | | | 271,013 | | | | | | 5,400(24) | | | | | | 669,168 | | |
| | | | 5,030(7) | | | | | | 5,470(7) | | | | | | 58.74 | | | | | | 02/05/28 | | | | | | | 3,882(19) | | | | | | 481,057 | | | | | | — | | | | | | — | | |
| | | | 1,800(8) | | | | | | 5,400(8) | | | | | | 10.80 | | | | | | 01/16/29 | | | | | | | 3,375(17) | | | | | | 418,230 | | | | | | — | | | | | | — | | |
| Jerome Durso | | | | | 14,167(10) | | | | | | 5,833(10) | | | | | | 115.93 | | | | | | 02/23/27 | | | | | | | 4,687(20) | | | | | | 580,813 | | | | | | 15,900(23) | | | | | | 1,970,328 | | |
| | | | 9,918(7) | | | | | | 10,782(7) | | | | | | 58.74 | | | | | | 02/05/28 | | | | | | | 7,650(19) | | | | | | 947,988 | | | | | | 11,250(24) | | | | | | 1,394,100 | | |
| | | | 3,800(8) | | | | | | 11,400(8) | | | | | | 110.80 | | | | | | 01/16/29 | | | | | | | 7,050(17) | | | | | | 873,636 | | | | | | — | | | | | | — | | |
| Ryan Sullivan | | | | | 7,353(11) | | | | | | 19,122(11) | | | | | | 53.41 | | | | | | 02/13/28 | | | | | | | 13,050(21) | | | | | | 1,617,156 | | | | | | 7,950(24) | | | | | | 985,164 | | |
| | | | 2,675(8) | | | | | | 8,025(8) | | | | | | 110.80 | | | | | | 01/16/29 | | | | | | | 4,950(17) | | | | | | 613,404 | | | | | | — | | | | | | — | | |
| Richard Kim | | | | | 4,395(12) | | | | | | — | | | | | | 277.61 | | | | | | 07/18/25 | | | | | | | 127(15) | | | | | | 15,738 | | | | | | 6,750(23) | | | | | | 836,460 | | |
| | | | 4,015(5) | | | | | | 85(5) | | | | | | 94.29 | | | | | | 02/11/26 | | | | | | | 1,469(16) | | | | | | 182,038 | | | | | | 4,800(24) | | | | | | 594,816 | | |
| | | | 5,363(6) | | | | | | 2,437(6) | | | | | | 107.18 | | | | | | 02/01/27 | | | | | | | 3,263(19) | | | | | | 404,350 | | | | | | — | | | | | | — | | |
| | | | 4,216(7) | | | | | | 4,584(7) | | | | | | 58.74 | | | | | | 02/05/28 | | | | | | | 3,000(17) | | | | | | 371,760 | | | | | | — | | | | | | — | | |
| | | | 1,600(8) | | | | | | 4,800(8) | | | | | | 110.80 | | | | | | 01/16/29 | | | | | | | | | | | | | | | | | | | | | | | | | | | |
(1)
These options were granted on November 16, 2012.
(2)
These options were granted on May 7, 2013.
(3)
These options were granted on April 11, 2014, with a vesting commencement date of January 1, 2014. Such options vest upon the achievement of certain regulatory milestones related to OCA. The unexercisable options were cancelled in February 2020 in accordance with the award agreement.
(4)
These options were granted on October 1, 2015.
(5)
These options were granted on February 11, 2016, with a vesting commencement date of January 1, 2016.
(6)
These options were granted on February 1, 2017, with a vesting commencement date of January 1, 2017.
(7)
These options were granted on February 5, 2018, with a vesting commencement date of January 1, 2018.
(8)
These options were granted on January 16, 2019, with a vesting commencement date of January 1, 2019.
(9)
These options were granted on July 1, 2016, with a vesting commencement date of July 1, 2016.
(10)
These options were granted on February 23, 2017, with a vesting commencement date of February 23, 2017.
(11)
These options were granted on February 13, 2018, with a vesting commencement date of February 13, 2018.
(12)
These options were granted on July 18, 2015.
(13)
Unless otherwise noted, unexercisable stock option awards are subject to Summary a four-year vesting period, with 25% of the shares subject to the award vesting in an initial annual installment following the relevant vesting commencement date and 1/48th of the shares subject to the award vesting each month thereafter, subject to continued employment.
(14)
Unvested restricted stock unit (or restricted stock) awards granted prior to 2019 have a four-year vesting period, with 25% of the shares subject to the award vesting in an initial annual installment following the relevant vesting commencement date and 1/16th of the shares subject to the award vesting each quarter thereafter, subject to continued employment. Unvested restricted stock unit awards granted in 2019 have a four-year vesting period, with 25% of the shares subject to the award vesting on the date preceding each anniversary of the vesting commencement date, subject to continued employment.
(15)
This restricted stock was granted on February 11, 2016, with a vesting commencement date of January 1, 2016.
(16)
This restricted stock was granted on February 1, 2017, with a vesting commencement date of January 1, 2017.
(17)
This restricted stock was granted on January 16, 2019, with a vesting commencement date of January 1, 2019.
(18)
This restricted stock was granted on July 1, 2016, with a vesting commencement date of July 1, 2016.
(19)
This restricted stock was granted on February 5, 2018, with a vesting commencement date of January 1, 2018.
(20)
This restricted stock was granted on February 23, 2017, with a vesting commencement date of February 23, 2017.
(21)
This restricted stock was granted on February 13, 2018, with a vesting commencement date of February 13, 2018.
(22)
TSR PSU awards vest, if at all, based on our TSR relative to that of our TSR Peer Group over a 3-year period, subject to continued employment. The percentage of such TSR PSUs that may vest following such period ranges from 0% to 150%, as more fully described under “—Compensation Table
Discussion and Analysis—Components of Our Executive Compensation Program—Equity Incentive Awards—Annual Equity Awards” above. Amounts shown assume that such TSR PSUs will vest at the maximum level of 150% of target in light of our TSR performance relative to that of our TSR Peer Group.
(23)
These TSR PSUs were granted on February 5, 2018, with a vesting commencement date of January 1, 2018.
(24)
These TSR PSUs were granted on January 16, 2019, with a vesting commencement date of January 1, 2019.
Option Exercises and Stock Vested
The following table sets forth the number of shares and value realized by the named executive officers during 2019 on the exercise of stock options and the vesting of restricted stock units (or restricted stock).
| | | | Option Awards | | | Stock Awards | |
| Name | | | Number of
Shares
Acquired on
Exercise
(#) | | | Value Realized
on Exercise
($)(1) | | | Number of
Shares
Acquired on
Vesting
(#) | | | Value Realized
on Vesting
($)(2) | |
| Dr. Mark Pruzanski | | | | | 50,517 | | | | | | 4,420,527 | | | | | | 14,694 | | | | | | 1,396,956 | | |
| Sandip Kapadia | | | | | — | | | | | | — | | | | | | 9,643 | | | | | | 915,168 | | |
| Jerome Durso | | | | | — | | | | | | — | | | | | | 12,050 | | | | | | 1,160,076 | | |
| Ryan Sullivan | | | | | 8,825 | | | | | | 278,782 | | | | | | 11,800 | | | | | | 1,183,334 | | |
| Richard Kim | | | | | — | | | | | | — | | | | | | 5,896 | | | | | | 575,258 | | |
(1)
The value realized on the exercise of options was calculated by multiplying the number of options exercised on the applicable exercise date by the difference between the closing market price of the shares on such date and the exercise price of the options.
(2)
The value realized on the vesting of restricted stock units (or restricted stock) was calculated by multiplying the number of shares issued upon the vesting of restricted stock units (or shares vesting, in the case of restricted stock) on the applicable vesting date by the closing market price of the shares on such date.
Equity Compensation Plan Information
The following table provides information as of December 31, 2019 with respect to shares that may be issued under our equity compensation plans.
| 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 | |
Equity Compensation Plans Approved by Security Holders(1) | | | | | 2,690,460(2) | | | | | $ | 99.87(3) | | | | | | 2,784,100(4) | | |
Equity Compensation Plans Not Approved by
Security Holders | | | | | — | | | | | | — | | | | | | — | | |
(1)
All of our equity compensation plans have been approved by security holders. Our equity compensation plans are described in “Note 13” to the Notes to Consolidated Financial Statements for the year ended December 31, 2019, included in our Annual Report.
(2)
Consists of 1,981,150 shares issuable upon the exercise of stock options outstanding under the 2012 Plan or our 2003 Stock Incentive Plan (the “2003 Plan”), as well as 153,591 shares of restricted stock (including performance restricted shares) and 555,719 restricted stock units (including performance restricted stock units) outstanding under the 2012 Plan.
(3)
Does not take into account outstanding shares of restricted stock (including performance restricted shares) or restricted stock units (including performance restricted stock units), which do not require the payment of any exercise price in connection with the vesting thereof.
(4)
As of December 31, 2019, there were 2,784,100 shares available for future grants under the 2012 Plan. No shares are available for future grants under the 2003 Plan. Shares underlying awards outstanding under the 2003 Plan that expire or are forfeited or cancelled become available for issuance under the 2012 Plan. The number of shares available for future grants under the 2012 Plan automatically increases on January 1st of each year until (and including) January 1, 2022 by an amount equal to the lesser of (i) 1,211,533 shares, (ii) 4% of the total number of shares outstanding on such date and (iii) an amount determined by our Board or Compensation Committee. Accordingly, on January 1, 2020, the number of shares available for future grants increased by 1,211,533 shares.
Employment Arrangements with Our Named Executive Officers
Mark Pruzanski, M.D. Dr. Pruzanski’s
We have entered into individual agreements with our named executive officers. In addition, the agreements governing equity awards granted to our employees, including our named executive officers, contain provisions relating to the treatment of such awards in the event of certain terminations. The material terms of these agreements are summarized below. See “—Definitions” below for the meanings of certain terms used in this section.
Basic Terms
The employment agreement providesagreements with each of our named executive officers provide for (i) an annual base salary, which is subject to annual review and increase (but not decrease) or, in the case of Mr. Kim, subject to adjustment, as determined by our Board or Compensation Committee, (ii) eligibility for an annual target-based cash incentive bonus equal to a percentage of such officer’s base salary and (iii) eligibility to participate in the Company’s benefit plans and arrangements, in each case, as described in greater detail under “—Compensation Discussion and Analysis—Components of Our Executive Compensation Program” above. The employment agreements with each of our named executive officers have initial termterms of one year with automatic renewal each year thereafter unless terminated by either usparty elects not to renew or Dr. Pruzanski. Dr. Pruzanski’s baseearlier terminates the agreement.
Termination-Related Provisions
Termination for Any Reason
Upon any termination of employment, each named executive officer is entitled to receive accrued but unpaid salary effective as(including payment of January 1, 2017, was set at $675,000 per year, subject to annual review accrued but unused vacation days), such officer’s vested equity awards
and
increase (but not decrease), as determined by our board of directorsany other accrued benefits under the Company’s benefit plans or
the compensation committee.such officer’s employment agreement. In addition, Dr. Pruzanski
is also eligiblewill be entitled to receive an
annualamount equal to his cash incentive bonus
paymentfor the year preceding the year in which termination occurs, to the extent unpaid, and a prorated cash incentive bonus for the year in which termination occurs, payable in a lump sum. Except as described under “Termination Without Cause or Resignation for Good Reason,” “Termination Without Cause or Resignation for Good Reason in Connection with a Change in Control” and “Termination in the Event of
up to 70%Death or Disability” below, all unvested equity awards held by the named executive officer would be forfeited and such officer would have, in the case of
his annual base salary, based on achievement of certain performance milestones identified by our board of directors in consultation with Dr. Pruzanski. During 2016, Dr. Pruzanski’s base salary was $620,000. Dr. Pruzanski’s 2016 salary was effective on January 1, 2016.(i) Dr. Pruzanski, is also eligible to participate in our group benefits programs, including but not limited to medical, disabilitythree years and life insurance, vacation and retirement plans, and a 401(k) plan sponsored by us. We initiated a 401(k) matching program for all of our employees in(ii) the United States, including our named executive officers other than Dr. Pruzanski, 90 days (or, in 2015. We have agreed to pay 100%each case, the remaining term of the options if shorter) following termination to exercise any vested options.
Termination Without Cause or Resignation for Good Reason
In the event that the Company elects not to renew the employment agreement of a named executive officer, such officer is terminated by the Company without cause or such officer resigns with good reason, such officer will be entitled to receive (i) cash severance in an amount equal to 12 months of such officer’s base salary in effect at the time of termination, payable over 12 months, (ii) continued health
insurance premiumsbenefits for up to 12 months following termination and (iii) the same benefits as described under “Termination for Any Reason” above, except that, in the case of
(A) Dr. Pruzanski,
and his spouse and other dependents and an annual life insurance premium of $10,000. During 2016, although we paid the premium for Dr. Pruzanski’s participation in our group life insurance policy, which is available generally to all
employees, we did not purchase or pay premiums for any individual life insurance policy for Dr. Pruzanski. We are also required to purchase short-term and long-term disability policies insuring at least 60% of Dr. Pruzanski’s base salary.Ifunvested equity awards held by Dr. Pruzanski terminates his employment with us or we terminate his employmentwill vest, Dr. Pruzanski will have three years (or the remaining term of the options if shorter) following termination to exercise any vested options and, in lieu of the prorated cash incentive bonus for any reason,the year in addition to payment of accrued compensation and benefits,which termination occurs, Dr. Pruzanski will be entitled to an amount equal to his target bonus for the prior year, if unpaid, and the prorated portion of his target bonus for the year in which his termination occurs. In the event that Dr. Pruzanski does not renew his employment at the end of the employment term, is terminated for cause, is terminated due to death or disability, or he terminates his employment without good reason, Dr. Pruzanski will not be entitled to any severance benefits except as otherwise described below or otherwise required by law.
In the event we do not renew Dr. Pruzanski’s employment at the end of the employment term, Dr. Pruzanski is terminated by us without cause, as defined in the employment agreement, or he resigns with good reason, as defined in the employment agreement, Dr. Pruzanski will be entitled to receive (i) 12 months of his base salary payable according to our company’s payroll, (ii) a lump sum payment equal to the mean bonus earned by him during the prior three years, (such payment shall bepayable in lieua lump sum, (B) Mr. Kim, such officer will have one year (or the remaining term of the prorated bonus payment foroptions if shorter) following termination to exercise any vested options and (C) Messrs. Kapadia, Durso and Sullivan, the year in whichnumber of unvested equity awards held by each such officer that would otherwise have vested during the termination occurs described above) and (iii) continuation of participation in our group health and/or dental plan and the payment of his premiums for 12 monthsperiod from the date of termination to the first anniversary thereof will vest and each such officer will have one year (or the costremaining term of COBRA coverage for such period) forthe options if shorter) following termination to exercise any vested options. Furthermore, with respect to each named executive officer other than Dr. Pruzanski, his spousein the event that the Company elects not to renew the employment agreement of such officer, such officer is terminated without cause or such officer resigns for good reason following the first anniversary of the vesting commencement date of restricted stock units that were granted in 2019 or thereafter, such restricted stock units shall become vested as follows: (x) if the termination date is three months or less before the restricted stock unit’s next scheduled vesting date, seventy-five percent of the restricted stock units that were scheduled to vest on such next vesting date shall become vested, (y) if the termination date is more than three months but no more than six months before the next scheduled vesting date, fifty percent of the restricted stock units that were scheduled to vest on that vesting date shall become vested and any dependents covered(z) if the termination date is more than six months but no more than nine months before the next scheduled vesting date, twenty-five percent of the restricted stock units that were scheduled to vest on that vesting date shall become vested.
Termination Without Cause or Resignation for Good Reason in Connection with a Change in Control
In the event that the Company elects not to renew the employment agreement of a named executive officer, such officer is terminated by the Company without cause or such officer resigns with good reason, in each case, in anticipation of, within three months before (in the case of Dr. Pruzanski) or within 12 months following a change in control, such officer will be entitled to receive the same benefits as described under
our group health and/“Termination Without Cause or
dental plan prior to termination.IfResignation for Good Reason” above, except that, in the case of (i) Dr. Pruzanski, is terminatedthe cash severance will be in an amount equal to 24 months of Dr. Pruzanski’s base salary in effect at the time of termination and payable in a lump sum, the health benefits will continue for up to 24 months following termination and, in lieu of the mean bonus earned by him during the prior three years, Dr. Pruzanski will be entitled to an amount equal to two times the mean bonus earned by him during the prior three years and (ii) the named executive officers other than Dr. Pruzanski, the cash severance amount will be payable in a lump sum, all unvested equity awards held by such officer will vest and such officer will have one year (or the remaining term of the options if shorter) following termination to exercise any vested options.
Termination in the Event of Death or Disability
In the event of termination by reason of a named executive officer’s death or disability, such officer will be entitled to receive the same benefits as described under “Termination for Any Reason” above, except that, in the case of (i) Dr. Pruzanski, all unvested equity awards held by Dr. Pruzanski will vest, Dr. Pruzanski (or his estate or legal representative, as applicable) will have three years (or the remaining term of the options if shorter) following termination to exercise any vested options and, in the case of a termination due to disability,
he isDr. Pruzanski will be entitled to
(i)(A) continued health benefits for up to 12 months
of base salary payable accordingfollowing termination and (B) solely to
our company’s payroll, so long as hethe extent that Dr. Pruzanski is not eligible to participate in
a company-sponsored short-termCompany-sponsored short- and long-term disability plans that provide for benefits of at least 60% of base salary,
cash severance in an amount equal to 12 months of his base salary in effect at the time of termination, payable over 12 months, and (ii)
continued participationthe named executive officers other than Dr. Pruzanski, (A) a prorated portion (based on the number of days accrued in
our group health and/or dental plan and the
payment of his premiums for 12 months followingcurrent vesting period prior to the date of
terminationtermination) of the unvested options held by such officer that would otherwise have vested on the next vesting date will vest and such officer (or such officer’s estate or legal representative, as applicable) will have one year (or the
cost of COBRA coverage for such period) for Dr. Pruzanski, his spouse and any dependents covered under our group health and/or dental plan prior to termination.If we do not renew Dr. Pruzanski’s employment at the endremaining term of the employment term, Dr. Pruzanski is terminatedoptions if shorter) following termination to exercise any vested options, (B) a prorated portion (based on the portion of the performance period that has elapsed as of the date of termination) of the target award amount of unvested TSR PSUs held by us without cause, he resigns with good reason or Dr. Pruzanski is terminated due to his death or disability, all of Dr. Pruzanski’s stock options and equity awardssuch officer will vest uponand (C) except as described in the effectiveness of a release of claims in our favor and his stock options will be exercisable for up to three years from the effective date of termination unless the stock plan pursuant to which the option is granted requires earlier termination. In the event that Dr. Pruzanski does not renew his employment at the end of the employment term, Dr. Pruzanski is terminated for cause or he terminates his employment without good reason,next sentence, all of hisremaining unvested equity awards and stock options will immediatelyheld by such officer would be forfeited upon the effective date of such termination and all of his
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vested stock options will be exercisable for up to three years from the effective date of termination unless the stock plan pursuant to which the option is granted requires earlier termination.
forfeited. In the event of a termination of a named executive officer other than Dr. Pruzanski due to death or disability that occurs following the first anniversary of the vesting commencement date of restricted stock units that were granted in 2019 or thereafter, such restricted stock units shall become vested as follows: (x) if the termination of Dr. Pruzanski’s employment in anticipation of, and/or withindate is three months or less before or 12 months following, a change in control, as defined in the employment agreement, (i) by us because we do not renew Dr. Pruzanski’s employment at the endrestricted stock unit’s next scheduled vesting date, seventy-five percent of the employment term, (ii) by us for any reason otherrestricted stock units that were scheduled to vest on such next vesting date shall become vested, (y) if the termination date is more than for cause or (iii) by Dr. Pruzanski for good reason, Dr. Pruzanski will be entitled to receive (a) an amount equal to 24 months’ of his then-current monthly base salary payable as a single lump sum, (b) a lump sum payment equal to two timesthree months but no more than six months before the mean bonus earned during the prior three years (such payment shall be in lieunext scheduled vesting date, fifty percent of the prorated bonus paymentrestricted stock units that were scheduled to vest on that vesting date shall become vested and (z) if the termination date is more than six months but no more than nine months before the next scheduled vesting date, twenty-five percent of the restricted stock units that were scheduled to vest on that vesting date shall become vested.
Release of Claims
Eligibility for the
year in which the termination occurs described above)severance payments and
(c) continuation of participation in our group health and/or dental plan and the payment of his premiums for up to 24 (but not less than 18) months from the date of termination (or the cost of COBRA coverage for such period) for Dr. Pruzanski, his spouse and any dependents covered under our group health and/or dental plan prior to termination.Receipt of the severance benefits described above is conditioned upon Dr. Pruzanski entering intothe execution by the named executive officer (or such officer’s legal representative, as applicable) and effectiveness, within a specified period of time following termination, of a general release of claims in favor of the Company.
Certain Code-Related Provisions
If any amounts owed to a named executive officer as a result of a termination in connection with us anda change in control of the release becoming effective and irrevocable within 60 days after termination. Dr. Pruzanski has acknowledged and agreedCompany would be subject to the excise tax imposed by Section 4999 of the Code, then such amounts will be payable either (i) in full or (ii) solely to the extent that the after-tax value of such amounts to such officer would be greater as a result of such reduction, as to such reduced amount that would maximize the after-tax value of such amounts to such officer.
In addition, the timing of payments may be modified by us to comply with Section 409A of the Internal Revenue CodeCode.
Treatment of
1986, as amended, orTSR PSUs in the
Code.ToEvent of a Change in Control
With respect to TSR PSUs, in the extent that we are required to implementevent of a clawback policy forchange in control, the incentive compensation paid to Dr. Pruzanskiperformance period shall end and such TSR PSUs shall vest, if at all, based on erroneous data containedour TSR performance relative to that of our TSR Peer Group through the month preceding the month in an accounting statement pursuantwhich the change in control occurs. The percentage of such TSR PSUs that may vest in ranges from 0% to Section 954150%, as more fully described under “—Compensation Discussion and Analysis—Components of Our Executive Compensation Program—Equity Incentive Awards—Annual Equity Awards” above.
Definitions
Under the Dodd-Frank Wall Street Reform and Consumer Protection Act, Dr. Pruzanski’s employment agreement contemplatesagreements with our named executive officers:
•
“cause” generally means (i) that the
terms of such policy will be incorporated into his employment agreement, provided that such policy applies to the other executive officers of our company.Under Dr. Pruzanski’s employment agreement, “cause” for termination shall be deemed to exist upon (a) a good faith finding by a majority of the members of the board (excluding Dr. Pruzanski) that (i) Dr. Pruzanskiofficer has engaged in material dishonesty, willful misconduct or gross negligence or (ii) Dr. Pruzanski has materially breached the employment agreement, and has failed to cure such conduct or breach within 30 days after his receipt of written notice from us or (b) Dr. Pruzanski’s conviction or entry of nolo contendere to any crime involving moral turpitude, fraud or embezzlement, or any felony. Under Dr. Pruzanski’s employment agreement, “good reason” is defined as a material change in duties, position, responsibilities or reporting requirements, relocation of Dr. Pruzanski’s place of employment by more than 50 miles from his principal residence or place of employment prior to such change or our material breach of the employment agreement.
Other Named Executive Officers
The base salary of our named executive officers other than Dr. Pruzanski, whom we refer to as the non-CEO named executive officers, is subject to annual review and increase (but not decrease), as determined by our board of directors and the compensation committee. Each of our non-CEO named executive officers is also eligible to receive an annual bonus based on a target percentage set by our board of directors and the compensation committee in consultation with our chief executive officer. See “Compensation Discussion and Analysis” above for a discussion of the 2016 and 2015 base salaries of our non-CEO named executive officers.
The following table sets forth the base salary and bonus target percentages for 2017 for each of our non-CEO named executive officers, other than Ms. Duncan who ceased to be employed with us in September 2016:
| | | | |
| Name | | 2017
Base Salary | | 2017
Bonus Target |
| David Shapiro, M.D. | | $ | 489,000 | | | | 50 | % |
| Rachel McMinn, Ph.D. | | $ | 432,000 | | | | 50 | % |
| Sandip Kapadia | | $ | 425,000 | | | | 50 | % |
| Lisa Bright | | $ | 400,000 | | | | 50 | % |
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We maintain broad-based benefits that are provided to all employees, including our executive officers, such as medical, dental, group life insurance and long- and short-term disability insurance. For our U.S.-based employees, including our U.S.-based executives, we also provide a 401(k) plan. Under our 401(k) plan, we are permitted to make discretionary contributions and matching contributions, subject to established limits and a vesting schedule. Starting in 2015, we generally match an employee’s contributions to the 401(k) plan up to the first five percent of the employee’s salary. We provide pension, insurance and other benefits to employees and executives located outside the United States in line with those provided in their respective countries to personnel of similar level and experience. All of our executives are eligible to participate in all of our employee benefit plans available in their respective countries, in each case on the same basis as other employees. We have agreed to pay 100% of the health insurance premiums of our named executive officers and their respective spouses and other dependents. For Dr. Shapiro, we provide a monthly car allowance of $1,000. For Ms. Bright, we provide a monthly car allowance of £1,180 (approximately $1,725) and we reimburse her £1,080 (approximately $1,314) per month for commuting costs plus gross ups on the applicable tax amounts for commuting. The compensation committee in its discretion may revise, amend or add to the named executive officer’s benefits and perquisites if it deems it advisable.
David Shapiro, Rachel McMinn & Sandip Kapadia
The employment agreements of Drs. Shapiro and McMinn and Mr. Kapadia provide for an initial term of one year with automatic renewal each year thereafter unless terminated by either us or them. In the event we do not renew Dr. Shapiro’s, Dr. McMinn’s or Mr. Kapadia’s employment at the end of their employment term, such named executive officer is terminated by us without cause, as defined in the employment agreement, or they resign with good reason, as defined in the employment agreement, such named executive officer will be entitled to receive (i) 12 months of their base salary (paid in a single lump sum in the case of Dr. Shapiro and in accordance with regular payroll for Dr. McMinn and Mr. Kapadia) and (ii) continuation of participation in our group health and/or dental plan and the payment of his or her premiums for 12 months (or the cost of COBRA coverage for such period) for such named executive officer and their dependents covered under our group health and/or dental plan prior to termination. In the event that Dr. Shapiro, Dr. McMinn or Mr. Kapadia does not renew their employment at the end of the employment term, is terminated for cause, is terminated due to death or disability, or terminates their employment without good reason, such named executive officer will not be entitled to severance payments unless mutually agreed upon in writing.
If we do not renew the employment of Dr. Shapiro, Dr. McMinn or Mr. Kapadia at the end of their respective employment terms, such named executive officer is terminated by us without cause or they resign with good reason, all of such named executive officer’s equity awards and stock options that would have vested within one year of the termination date will vest upon effectiveness of a release of claims in our favor and all vested stock options will be exercisable for up to one year from the effective date of termination unless the stock plan pursuant to which the option is granted requires earlier termination.
In the event of the termination of Dr. Shapiro’s, Dr. McMinn’s or Mr. Kapadia’s employment, in anticipation of, and/or within 12 months following, a change in control (i) by us because we do not renew such named executive officer’s employment at the end of the employment term, (ii) by us without cause or (iii) by such named executive officer for good reason, such named executive officer will be entitled to receive (a) an amount equal to 12 months of their then-current monthly base salary payable as a single lump sum and (b) continuation of participation in our group health and/or dental plan and the payment of their premiums for 12 months (or the cost of COBRA coverage for such period) for such named executive officer, their spouse and any dependents covered under our group health and/or dental plan prior to termination. In such instances of termination, all of such named executive officer’s unvested equity awards and stock options will, upon effectiveness of a release of claims in our favor, become fully vested and all of their vested stock options will be exercisable for a period of one year following the effective date of termination unless the stock plan pursuant to which the option is granted requires earlier termination.
In the event that either Dr. Shapiro, Dr. McMinn or Mr. Kapadia is terminated for cause or such named executive officer terminates their employment without good reason, all unvested equity awards and stock options granted will immediately be forfeited and all vested options will be exercisable for up to 90 days following termination unless the stock plan pursuant to which the option is granted requires earlier termination.
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Receipt of the severance benefits described above is conditioned upon Dr. Shapiro, Dr. McMinn or Mr. Kapdaia, as the case may be, entering into a release of claims with us and the release becoming effective and irrevocable within 60 days after termination. Dr. Shapiro, Dr. McMinn and Mr. Kapadia have acknowledged and agreed that the timing of payments may be modified by us to comply with Section 409A of the Code.
To the extent that we are required to implement a clawback policy for the incentive compensation paid to executive officers based on erroneous data contained in an accounting statement pursuant to Section 954 of the Dodd-Frank Wall Street Reform and Consumer Protection Act, Dr. Shapiro, Dr. McMinn and Mr. Kapadia’s employment agreements contemplate that the terms of such policy will be incorporated into their employment agreement, provided that such policy applies to the other executive officers of our company.
Under the employment agreements of Dr. Shapiro, Dr. McMinn and Mr. Kapadia, “cause” for termination shall be deemed to exist upon (a) a good faith finding by us that (i) the named executive officer has engaged in material dishonesty, willful misconduct or gross negligence, (ii) the named executive officer has materially breached the employment agreement, or (iii) the named executive officer has breached or threatened to breach his or her invention, non-disclosure and non-solicitation agreement, and has failed to cure such conduct or breach within 30 days after their receipt of written notice from us, or (b) the named executive officer’s conviction or entry of nolo contendere to any crime involving moral turpitude, fraud or embezzlement or any felony. Underfelony;
•
“change in control” generally means (i) any sale, lease, exchange or other transfer (in one transaction or a series of transactions) of all or substantially all of the employment agreements, “goodassets of the Company, (ii) any consolidation or merger of the Company where the stockholders of the Company immediately prior to the consolidation or merger, would not, immediately after the consolidation or merger, beneficially own, directly or indirectly, shares representing in the aggregate more than 50% of the combined voting power of all the outstanding securities of the corporation issuing cash or securities in the consolidation or merger (or of its ultimate parent corporation, if any) or (iii) a third person (other than the Company, any employee benefit plan of the Company or investors purchasing equity securities of the Company pursuant to a financing or a series of financings approved by our Board) becomes the beneficial owner, directly or indirectly, of securities representing 25% or more of the total number of votes that may be cast for the election of the directors of the Company; and
•
“good reason”
is defined asgenerally means a material
(i) change in
the officer’s duties, position, responsibilities or reporting requirements,
a(ii) relocation
of the named executive officer’s place of employment by more than 50 miles from their principal residence or
place of employment immediately prior to such change or our material(iii) breach of the employment
agreement.Lisa Bright
In October 2016, Ms. Bright entered intoagreement by us, in each case without the Bright-IPEL Employment Agreement with IPEL.
The term ofofficer’s consent and subject to the Bright-IPEL Employment Agreement will continue until it is either terminated by Ms. Bright orofficer giving us by giving six months’ written notice. Insufficient notice and time to cure the event Ms. Bright’s employment is terminated by us without equity cause or by Ms. Bright for equitygiving rise to such good reason, we shall provide Ms. Bright with cash severance equal to (a) a payment equal to 12 months of her base salary and either continue to provide her benefits (comprising car allowance, pension contributions, private medical insurance and life assurance but not bonus or other benefits) or the value thereof to which Ms. Bright was entitled for a 12 month period, less (b) any payment made by way of payment in lieu of notice, less (c) any salary paid or benefits provided in relation to any period during which she is placed on garden leave.
If Ms. Bright terminates her employment for equity good reason (as defined in the Bright-IPEL Employment Agreement) or if she is terminated by us without equity cause, all time-based unvested stock options and other equity awards that would have otherwise vested within one year of Ms. Bright’s termination shall vest, and Ms. Bright shall have until the earlier of the expiration date of the option or one year from her date of termination to exercise all vested options unless the stock plan pursuant to which the option is granted requires earlier termination. In the event that Ms. Bright is terminated for equity cause or she terminates her employment without equity good reason, or if she is terminated by reason of disability, all unvested equity awards and stock options will immediately be forfeited and all vested options will be exercisable for up to 90 days following termination unless the stock plan pursuant to which the option is granted requires earlier termination.
In the event of the termination of Ms. Bright’s employment is in anticipation of, and/or within 12 months following, a change in control, all of Ms. Bright’s time-based unvested equity awards and stock options will immediately become fully vested and all of her vested stock options will be exercisable for a period of one year following the effective date of termination, unless the provisions contained in the 2012 Plan require earlier termination in connection with a liquidation or sale of the our company.
Under the Bright-IPEL Employment Agreement, “equity cause” for termination shall be deemed to exist upon (a) a good faith finding that (i) Ms. Bright has engaged in material dishonesty, willful misconduct or gross negligence, (ii) Ms. Bright has breached or threatened to breach an agreement between herself and us related to intellectual property, non-disclosure or non-solicitation of our employees or customers,
reason.
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(iii) Ms. Bright has materially breached the Agreement and failed to cure such breach within thirty (30) days after receipt of written notice of such breach from us, or (iv) Ms. Bright’s conviction or entry of nolo contendere to any crime involving fraud, bribery, embezzlement or any other criminal offense. Under the Bright-IPEL Employment Agreement, “equity good reason” is defined as a material diminution in duties, position, responsibilities or reporting requirements other than as specified in the agreement, a relocation of Ms. Bright’s place of employment by more than 50 miles, or our material breach of the agreement.
Barbara Duncan
In January 2016, we announced the planned departure of Ms. Duncan from her role as our chief financial officer and treasurer. In accordance with such planned departure, in February 2016, we entered into the Duncan Transition Agreement. Pursuant to the terms of the Duncan Transition Agreement, Ms. Duncan served as our chief financial officer until June 30, 2016 and served as our chief accounting officer until September 30, 2016. We refer to the date of her separation as the separation date and the period of her employment as the employment period. During the employment period, Ms. Duncan received her annual base salary and participated in our benefit plans and programs. Ms. Duncan was also eligible for a prorated bonus for 2016 equal to 50% of her prorated 2016 salary. Additionally, from the separation date through October 2, 2017, which period we refer to as the consulting period, Ms. Duncan has agreed to provide consulting services to us on an as-requested basis. Compensation for the consulting period will be paid to Ms. Duncan at a rate of $500 per hour (to a maximum of $40,000 per month even if working in excess of 80 hours in such month) upon presentation of invoices in a form reasonably acceptable to us.
In consideration of Ms. Duncan’s release of any claims against us, Ms. Duncan will be entitled to the following severance and other benefits following the end of her consulting period: (i) annual base salary paid monthly for 12 months, which payments will be delayed six months in compliance with Section 409A of the Internal Revenue Code; (ii) a lump sum payment of 50% of such base salary; and (iii) reimbursement for the employer portion of the premiums for COBRA coverage for Ms. Duncan and her dependents under our company’s subsidized health benefits for a period of 12 months following the separation date or earlier if Ms. Duncan ceases to be eligible for COBRA, or chooses not to elect such coverage. Ms. Duncan will also be entitled to the following in relation to her equity awards: (a) continued vesting of options until the end of her consulting period, or initial vesting date, and accelerated vesting for all unvested time-based options that were scheduled, by their terms, to vest on or before one year following the end of her consulting period, or the extended vesting date; (b) all unvested performance based options shall be extended through the initial vesting date but will only become vested to the extent that performance targets are satisfied during that time; and (c) restricted stock and restricted stock units will continue to vest through the initial vesting date, and all unvested restricted stock and restricted stock units that were scheduled, by their terms, to vest on or before the extended vesting date, will be accelerated; and (d) if there is a change in control as defined in the respective award agreements, before the end of her consulting period such that the change in control is effective within three months following the conclusion of her consulting period, any unvested options, shares of restricted stock and restricted stock units will be accelerated.
Non-Competition, Confidential Information and Assignment of Inventions Agreements
Dr. Pruzanski is a party to a non-competition and non-solicitation agreement with us, which prevents him from competing with us or soliciting our employees or independent contractors during his employment and for a one-year period thereafter. In addition, each
Each of our named executive officers has also entered into an agreement that contains provisions relatingwith us with respect to confidentialproprietary information non-solicitation and assignment of inventions. Among other things, these provisionsagreements obligate each named executive officer to refrain from disclosing any of our proprietary information received during the course of employment andor soliciting our employees and to assign to us any inventions conceived or developed during the course of employment.
Potential Payments and Benefits Upon Termination of Employment or Change in Control
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2016 Fiscal Year GrantsAs described under “—Employment Arrangements with Our Named Executive Officers” above, we have entered into individual agreements with our named executive officers providing for severance payments and benefits in the event of Plan-Based Awards
certain terminations of employment, including in connection with a change of control. In addition, the agreements governing equity awards granted to our employees, including our named executive officers, contain provisions relating to the treatment of such awards in the event of certain terminations or a change in control. The following table sets forth information regarding grants of plan-based awards to our named executive officers during 2016. All equity awards in 2016 were issued under our 2012 Plan.
| | | | | | | | | | |
| Name | | Grant
Date | | All Other
Stock Awards:
Number of
Shares of
Stock or Units
(#) | | All Other
Option
Awards:
Number of
Securities
Underlying
Options
(#) | | Exercise or
Base Price
of Option
Awards
($/share)(1) | | Grant Date
Fair Value of
Stock and
Option
Awards(2) |
| Mark Pruzanski | | | 2/11/2016 | | | | 23,300 | | | | | | | | — | | | $ | 2,196,957 | |
| | | | 2/11/2016 | | | | | | | | 30,500 | | | $ | 94.29 | | | $ | 1,608,449 | |
| David Shapiro | | | 2/11/2016 | | | | 7,800 | | | | — | | | | — | | | $ | 735,462 | |
| | | | 2/11/2016 | | | | | | | | 10,200 | | | $ | 94.29 | | | $ | 537,908 | |
| Barbara Duncan | | | 2/11/2016 | | | | 6,200 | | | | | | | | — | | | $ | 584,598 | |
| | | | 2/11/2016 | | | | | | | | 8,100 | | | $ | 94.29 | | | $ | 427,162 | |
| Rachel McMinn | | | 2/11/2016 | | | | 6,700 | | | | — | | | | — | | | $ | 631,743 | |
| | | | 2/11/2016 | | | | | | | | 8,800 | | | $ | 94.29 | | | $ | 464,077 | |
| Lisa Bright | | | 2/11/2016 | | | | 7,800 | | | | — | | | | — | | | $ | 735,462 | |
| | | | 2/11/2016 | | | | | | | | 10,200 | | | $ | 94.29 | | | $ | 537,908 | |
| Lisa Bright | | | 11/14/2016 | (3) | | | 293 | | | | — | | | | — | | | $ | 44,753 | |
| Sandip Kapadia | | | 7/1/2016 | | | | 15,000 | | | | — | | | | — | | | $ | 2,195,400 | |
| | | | 7/1/2016 | | | | | | | | 18,000 | | | $ | 146.36 | | | $ | 1,559,019 | |
| (1) | Equal to the closing market price of our common stock on the date of grant. |
| (2) | The amounts in the “Grant Date Fair Value of Option Awards” column reflect the grant date fair value of option and restricted stock awards granted in 2016 calculated in accordance with ASC 718. |
| (3) | Shares received from the vesting of performance awards upon the satisfaction of the relevant performance criteria. |
2016 Option Exercises and Stock Vested
The following table shows information regarding exercises of options to purchase our common stock and vesting of stock awards held by each of our named executive officer during the year ended December 31, 2016.
| | | | | | | | |
| | Option Awards | | Stock Awards |
| Name | | Number
of Shares
Acquired on
Exercise
(#) | | Value
Realized on
Exercise
($) | | Number
of Shares
Acquired on
Vesting
(#) | | Value Realized
on Vesting
($) |
| Mark Pruzanski | | | 50,987 | | | | 7,642,724 | | | | 14,574 | | | | 2,165,728 | |
| David Shapiro | | | 2,700 | | | | 295,758 | | | | 5,002 | | | | 743,240 | |
| Barbara Duncan | | | — | | | | — | | | | 4,196 | | | | 623,283 | |
| Rachel McMinn | | | — | | | | — | | | | 3,003 | | | | 433,564 | |
| Lisa Bright | | | — | | | | — | | | | 4,665 | | | | 646,279 | |
| Sandip Kapadia | | | — | | | | — | | | | — | | | | — | |
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Outstanding Equity Awards at 2016 Fiscal Year-End
The following table shows grants of restricted stock units or awards, stock options and grants of unvested stock awards outstanding on the last dayestimates of the fiscal year ended December 31, 2016 to each of our named executive officers.
| | | | | | | | | | | | |
| | Option Awards | | Stock Awards |
| | | Number of
Securities
Underlying
Unexercised
Options | | Option
Exercise
Price
($/share) | | Option
Expiration
Date | | Number of
Stock Units
That Have
Not Vested
(#)(1) | | Market Value
of Stock Units
That Have
Not Vested
($)(2) |
| Name | | Exercisable | | Un-exercisable | | | | | | | | |
| (a) | | (b) | | (c) | | (e) | | (f) | | (g) | | (h) |
| Mark Pruzanski | | | — | | | | — | | | | 9.83 | | | | 7/18/2016 | | | | | | | | | |
| | | | — | | | | — | | | | 9.83 | | | | 9/18/2018 | | | | | | | | | |
| | | | 90,039 | | | | — | | | | 8.67 | | | | 8/16/2020 | | | | | | | | | |
| | | | 34,404 | | | | — | | | | 8.67 | | | | 10/13/2021 | | | | | | | | | |
| | | | 46,158 | | | | — | | | | 21.50 | | | | 11/16/2022 | | | | | | | | | |
| | | | 61,241 | | | | — | | | | 31.90 | | | | 5/7/2023 | | | | | | | | | |
| | | | 1,354 | | | | — | | | | 31.90 | | | | 5/7/2023 | | | | | | | | | |
| | | | 4,180 | | | | 1,553 | (5) | | | 266.01 | | | | 4/11/2024 | | | | | | | | | |
| | | | 11,465 | | | | 11,466 | (9) | | | 266.01 | | | | 4/11/2024 | | | | | | | | | |
| | | | 15,597 | | | | 16,953 | (10) | | | 161.16 | | | | 10/01/2025 | | | | | | | | | |
| | | | — | | | | 30,500 | (14) | | | 94.29 | | | | 2/11/2016 | | | | | | | | | |
| | | | — | | | | — | | | | — | | | | — | | | | 481 | (4) | | | 52,261 | |
| | | | — | | | | — | | | | — | | | | — | | | | 1,486 | (6) | | | 159,498 | |
| | | | — | | | | — | | | | — | | | | — | | | | 8,494 | (11) | | | 922,873 | |
| | | | — | | | | — | | | | — | | | | — | | | | 23,300 | (15) | | | 2,531,545 | |
| David Shapiro | | | 2,235 | | | | — | | | | 8.67 | | | | 10/13/2021 | | | | | | | | | |
| | | | 7,136 | | | | — | | | | 21.50 | | | | 11/16/2022 | | | | | | | | | |
| | | | 21,812 | | | | 469 | (3) | | | 31.90 | | | | 5/7/2023 | | | | | | | | | |
| | | | 1,338 | | | | 497 | (5) | | | 266.01 | | | | 4/11/2024 | | | | | | | | | |
| | | | 4,127 | | | | 4,128 | (9) | | | 266.01 | | | | 4/11/2024 | | | | | | | | | |
| | | | 6,277 | | | | 6,823 | (10) | | | 161.16 | | | | 10/01/2025 | | | | | | | | | |
| | | | | | | | 10,200 | (14) | | | 94.29 | | | | 2/11/2026 | | | | | | | | | |
| | | | — | | | | — | | | | — | | | | — | | | | 187 | (4) | | | 20,318 | |
| | | | — | | | | — | | | | — | | | | — | | | | 470 | (6) | | | 51,066 | |
| | | | — | | | | — | | | | — | | | | — | | | | 2,897 | (11) | | | 314,759 | |
| | | | — | | | | — | | | | — | | | | — | | | | 7,800 | (15) | | | 847,470 | |
| Barbara Duncan | | | 19,520 | | | | — | | | | 9.82 | | | | 5/18/2019 | | | | | | | | | |
| | | | 6,940 | | | | — | | | | 8.67 | | | | 8/16/2020 | | | | | | | | | |
| | | | 13,413 | | | | — | | | | 8.67 | | | | 10/13/2021 | | | | | | | | | |
| | | | 8,365 | | | | — | | | | 21.50 | | | | 11/16/2022 | | | | | | | | | |
| | | | 14,406 | | | | 469 | (3) | | | 31.90 | | | | 5/7/2023 | | | | | | | | | |
| | | | 1,338 | | | | 497 | (5) | | | 266.01 | | | | 4/11/2024 | | | | | | | | | |
| | | | 3,325 | | | | 3,325 | (9) | | | 266.01 | | | | 4/11/2024 | | | | | | | | | |
| | | | 5,079 | | | | 5,521 | (10) | | | 161.16 | | | | 10/01/2025 | | | | | | | | | |
| | | | — | | | | 8,100 | (14) | | | 94.29 | | | | 2/11/2026 | | | | | | | | | |
| | | | — | | | | — | | | | — | | | | — | | | | 187 | (4) | | | 20,318 | |
| | | | — | | | | — | | | | — | | | | — | | | | 470 | (6) | | | 51,066 | |
| | | | — | | | | — | | | | — | | | | — | | | | 2,278 | (11) | | | 247,505 | |
| | | | — | | | | — | | | | — | | | | — | | | | 6,200 | (15) | | | 673,630 | |
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| | | | | | | | | | | | |
| | Option Awards | | Stock Awards |
| | | Number of
Securities
Underlying
Unexercised
Options | | Option
Exercise
Price
($/share) | | Option
Expiration
Date | | Number of
Stock Units
That Have
Not Vested
(#)(1) | | Market Value
of Stock Units
That Have
Not Vested
($)(2) |
| Name | | Exercisable | | Un-exercisable | | | | | | | | |
| (a) | | (b) | | (c) | | (e) | | (f) | | (g) | | (h) |
| Rachel McMinn | | | 4,003 | | | | 2,001 | (7) | | | 264.12 | | | | 4/30/2024 | | | | | | | | | |
| | | | 3,233 | | | | 3,234 | (9) | | | 264.12 | | | | 4/30/2024 | | | | | | | | | |
| | | | 5,079 | | | | 5,521 | (10) | | | 161.16 | | | | 10/01/2025 | | | | | | | | | |
| | | | — | | | | 8,800 | (14) | | | 94.29 | | | | 2/11/2026 | | | | | | | | | |
| | | | — | | | | — | | | | — | | | | — | | | | 1,846 | (8) | | | 200,568 | |
| | | | — | | | | — | | | | — | | | | — | | | | 2,278 | (11) | | | 247,505 | |
| | | | — | | | | — | | | | — | | | | — | | | | 6,700 | (15) | | | 727,955 | |
| Lisa Bright | | | 5,329 | | | | 4,903 | (12) | | | 155.00 | | | | 11/24/2024 | | | | | | | | | |
| | | | 5,420 | | | | 5,419 | (9) | | | 155.00 | | | | 11/24/2024 | | | | | | | | | |
| | | | 6,445 | | | | 7,005 | (10) | | | 161.16 | | | | 10/01/2025 | | | | | | | | | |
| | | | — | | | | 10,200 | (14) | | | 94.29 | | | | 2/11/2026 | | | | | | | | | |
| | | | — | | | | — | | | | — | | | | — | | | | 4,193 | (13) | | | 455,569 | |
| | | | — | | | | — | | | | — | | | | — | | | | 2,925 | (11) | | | 317,801 | |
| | | | — | | | | — | | | | — | | | | — | | | | 7,800 | (15) | | | 847,470 | |
| Sandip Kapadia | | | — | | | | 18,000 | (16) | | | 146.36 | | | | 7/1/2026 | | | | | | | | | |
| | | | — | | | | — | | | | — | | | | — | | | | 15,000 | (17) | | | 1,629,750 | |
| (1) | Represents either restricted stock awards or restricted stock units, or RSUs. Each RSU represents the contingent right to receive one share of common stock upon vesting of the unit. All restricted stock awards and RSUs were granted under the 2012 Plan. |
| (2) | Computed in accordance with SEC rules as the number of unvested restricted stock awards or RSUs multiplied by the closing market price of our common stock at the end of the 2015 fiscal year, which was $149.35 on December 31, 2015 (the last business day of the 2015 fiscal year). This amount does not represent our accounting expense for these awards during the year and does not correspond to the actual cash value that may be recognized. The actual value (if any) to be realized by the officer depends on whether the restricted stock awards or RSUs vest and the future performance of our common stock. |
| (3) | Shares underlying the options vest pro rata on a monthly basis through January 1, 2017, subject to the terms and conditions of the award and the 2012 Plan. |
| (4) | The remainder of the shares underlying the RSUs vest pro rata on a quarterly basis through January 1, 2017, subject to the terms and conditions of the award and the 2012 Plan. |
| (5) | The remainder of the shares underlying this option vest pro rata on a monthly basis through January 1, 2018, subject to the terms and conditions of the award and the 2012 Plan. |
| (6) | The remainder of the shares underlying the restricted stock awards vest pro rata on every subsequent three-month anniversary of the initial vesting date through January 1, 2018, subject to the terms and conditions of the award and the 2012 Plan. |
| (7) | The remainder of the shares underlying this option vest pro rata on a monthly basis through April 30, 2018, subject to the terms and conditions of the award and the 2012 Plan. |
| (8) | 25% of the shares underlying these restricted stock awards vested on April 30, 2015, and the remainder of the shares underlying the restricted stock awards vest pro rata on each three-month anniversary thereof through April 30, 2018, subject to the terms and conditions of the award and the 2012 Plan. |
| (9) | The shares underlying this option to purchase common stock vest upon the achievement of certain regulatory milestones related to OCA at future dates. |
| (10) | 25% of the shares underlying this option vested on January 1, 2016, and the remainder of the shares underlying this option vest pro rata on a monthly basis through January 1, 2019, subject to the terms and conditions of the award and the 2012 Plan. |
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| (11) | 25% of the shares underlying these restricted stock awards vested on January 1, 2016, and the remainder of the shares underlying the restricted stock awards vest pro rata on each three-month anniversary thereof through January 1, 2019, subject to the terms and conditions of the award and the 2012 Plan. |
| (12) | 25% of the shares underlying this option vested on November 24, 2015, and the remainder of the shares underlying this option vest pro rata on a monthly basis through November 24, 2018, subject to the terms and conditions of the award and the 2012 Plan. |
| (13) | 25% of the shares underlying these restricted stock awards vested on November 24, 2015, and the remainder of the shares underlying the restricted stock awards vest pro rata on every subsequent three-month anniversary of the initial vesting date through November 24, 2018, subject to the terms and conditions of the award and the 2012 Plan. |
| (14) | 25% of the shares underlying this option vested on January 1, 2017, and the remainder of the shares underlying this option vest pro rata on a monthly basis through January 1, 2020, subject to the terms and conditions of the award and the 2012 Plan. |
| (15) | 25% of the shares underlying these restricted stock awards vested on January 1, 2017, and the remainder of the shares underlying the restricted stock awards vest pro rata on each three-month anniversary thereof through January 1, 2020, subject to the terms and conditions of the award and the 2012 Plan. |
| (16) | 25% of the shares underlying this option vested on July 1, 2017, and the remainder of the shares underlying this option vest pro rata on a monthly basis through July 1, 2020, subject to the terms and conditions of the award and the 2012 Plan. |
| (17) | 25% of the shares underlying these restricted stock awards vested on July 1, 2017, and the remainder of the shares underlying the restricted stock awards vest pro rata on each three-month anniversary thereof through July 1, 2020, subject to the terms and conditions of the award and the 2012 Plan. |
Potential Payments Upon Termination or Change in Control
The following tables set forth information regarding potential payments thatand benefits each named executive officer who was serving as an executive officer aswould have been entitled to receive from the Company upon a termination of employment under the circumstances described in the table effective December 31, 20162019. In the case of Dr. Pruzanski, such payments and benefits are inclusive or in lieu of a cash payment in the amount of $514,004 that he would have received ifbeen entitled to upon a termination of employment for any reason effective December 31, 2019. The amounts included in respect of TSR PSUs following a change in control (i) would be payable whether or not the named executive officer’s employment hadwas terminated and (ii) assume that such TSR PSUs vest at the maximum level of 150% of target in light of our TSR performance relative to that of our TSR Peer Group over 2019.
In accordance with SEC rules, the potential payments were determined under the terms of the Company’s contracts, agreements, plans and arrangements as
ofin effect on December 31,
2016 under2019. The tables do not include any previously vested equity awards or accrued benefits. Because the
circumstances set forth below. See “Narrative Disclosurepayments to
Summary Compensation Table” forbe made to a
narrative descriptionnamed executive officer depend on several factors, the actual amounts to be paid out upon a triggering event can only be determined at the time of the
compensation to which any of our named executive officers would be entitled to upon termination.triggering event.
| Name | | | | | | Termination
Due to Death
($)(4) | | | Termination
Due to
Disability
($)(5) | | | Termination
Without Cause or
Resignation for
Good Reason
($)(6) | | | Termination Without
Cause or Resignation
for Good Reason In
Connection with a
Change of Control
($)(7) | |
| Dr. Mark Pruzanski | | | | | | | | | | | | | | | | |
| | | | Cash Payments(1) | | | 514,004 | | | 1,248,296 | | | 1,131,254 | | | 2,262,507 | |
| | | | Value of Accelerated Vesting(2) | | | 12.429,102 | | | 12,429,102 | | | 12,429,102 | | | 12,429,102 | |
| | | | Health Insurance Benefits(3) | | | — | | | 34,283 | | | 34,283 | | | 34,283 | |
| | | | Total | | | 12,943,106 | | | 13,711,681 | | | 13,594,639 | | | 14,725,892 | |
| Sandip Kapadia | | | | | | | | | | | | | | | | |
| | | | Cash Payments(1) | | | — | | | — | | | 464,100 | | | 464,100 | |
| | | | Value of Accelerated Vesting(2) | | | 594,816 | | | 594,816 | | | 1,161,755 | | | 3,671,663 | |
| | | | Health Insurance Benefits(3) | | | — | | | — | | | 34,283 | | | 34,283 | |
| | | | Total | | | 594,816 | | | 594,816 | | | 1,660,138 | | | 4,170,046 | |
| Jerome Durso | | | | | | | | | | | | | | | | |
| | | | Cash Payments(1) | | | — | | | — | | | 573,250 | | | 573,250 | |
| | | | Value of Accelerated Vesting(2) | | | 1,185,501 | | | 1,185,501 | | | 1,604,353 | | | 6,665,809 | |
| | | | Health Insurance Benefits(3) | | | — | | | — | | | 34,283 | | | 34,283 | |
| | | | Total | | | 1,185,501 | | | 1,185,501 | | | 2,211,886 | | | 7,273,342 | |
| Ryan Sullivan | | | | | | | | | | | | | | | | |
| | | | Cash Payments(1) | | | — | | | — | | | 445,520 | | | 445,520 | |
| | | | Value of Accelerated Vesting(2) | | | 218,925 | | | 218,925 | | | 1,580,551 | | | 4,669,304 | |
| | | | Health Insurance Benefits(3) | | | — | | | — | | | 34,283 | | | 34,283 | |
| | | | Total | | | 218,925 | | | 218,925 | | | 2,060,354 | | | 5,149,107 | |
| Richard Kim | | | | | | | | | | | | | | | | |
| | | | Cash Payments(1) | | | — | | | — | | | 442,900 | | | 442,900 | |
| | | | Value of Accelerated Vesting(2) | | | 503,941 | | | 503,941 | | | — | | | 2,810,238 | |
| | | | Health Insurance Benefits(3) | | | — | | | — | | | 34,283 | | | 34,283 | |
| | | | Total | | | 503,941 | | | 503,941 | | | 477,183 | | | 3,287,421 | |
(1)
Includes cash severance payments calculated based on base salary in effect on December 31, 2019.
(2)
The value
realized upon the accelerated vesting of
(i) stock options
with accelerated vesting represents the value of unvested stock options,is calculated by multiplying the number of
shares“in-the-money” options subject to
the accelerated
portion of the optionvesting by the
amount (if any) by which $108.65,difference between the closing market price of
our common stockthe shares on December
30, 2016, exceeds31, 2019 and the
weighted-average exercise price of such
option. The value of RSUs andoptions, (ii) restricted stock
grants is calculated by multiplying the number of shares
of restricted stock subject to
accelerationaccelerated vesting by
$108.65, the closing
market price of
our common stockthe shares on December
30, 2016.Barbara Duncan Departure
Ms. Duncan served as our Chief Financial Officer31, 2019 and Treasurer until July 2016. Ms. Duncan then served as(iii) restricted stock units and TSR PSUs is calculated by multiplying the number of Chief Accounting Officer until September 2016, when she ceasedrestricted stock units and TSR PSUs subject to be employed with us. accelerated vesting by the closing market price of the shares on December 31, 2019. The closing market price of the shares on December 31, 2019 was $123.92.
(3)
Represents the estimated cost to the Company of continuing health insurance benefits for the named executive officers.
(4)
See “— Narrative DisclosureEmployment Arrangements with Our Named Executive Officers—Termination-Related Provisions—Termination in the Event of Death or Disability” above for a description of the circumstances that would trigger the payment of amounts set forth in this column.
(5)
See “—Employment Arrangements with Our Named Executive Officers—Termination-Related Provisions—Termination in the Event of Death or Disability” above for a description of the circumstances that would trigger the payment of amounts set forth in this column. Reflects an amount Dr. Pruzanski would be entitled to Summary Compensation Table” for more information relatingpursuant to severance arrangements made to Ms. Duncan.
Non-Renewal by Company or his employment agreement.
(6)
See “—Employment Arrangements with Our Named Executive Officers—Termination-Related Provisions—Termination Without Cause or
ForResignation for Good
Reason Without ChangeReason” above for a description of the circumstances that would trigger the payment of amounts set forth in
Control | | | | | | |
| Name | | Cash
Payment | | Value of
Equity
Accelerated | | Other
Benefits |
| Mark Pruzanski | | | 1,176,572 | | | | 7,130,908 | | | | 28,751 | |
| David Shapiro | | | 545,758 | | | | 1,214,425 | | | | 20,084 | |
| Sandip Kapadia | | | 449,568 | | | | 1,061,449 | | | | 29,595 | |
| Rachel McMinn | | | 475,045 | | | | 1,319,421 | | | | 17,193 | |
| Lisa Bright | | | 506,225 | | | | 1,608,040 | | | | — | |
(7)
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Termination Due to Disability Without Change in Control
| | | | | | |
| Name | | Cash
Payment | | Value of
Equity
Accelerated | | Other
Benefits |
| Mark Pruzanski | | | 752,885 | | | | 7,130,908 | | | | 28,751 | |
| David Shapiro | | | 56,458 | | | | — | | | | — | |
| Sandip Kapadia | | | 24,568 | | | | — | | | | — | |
| Rachel McMinn | | | 42,445 | | | | — | | | | — | |
| Lisa Bright | | | 6,813 | | | | — | | | | — | |
Termination Due to Death Without Change in Control
| | | | | | |
| Name | | Cash
Payment | | Value of
Equity
Accelerated | | Other
Benefits |
| Mark Pruzanski | | | 77,885 | | | | 7,130,908 | | | | — | |
| David Shapiro | | | 56,458 | | | | — | | | | — | |
| Sandip Kapadia | | | 24,568 | | | | — | | | | — | |
| Rachel McMinn | | | 42,445 | | | | — | | | | — | |
| Lisa Bright | | | 6,813 | | | | — | | | | — | |
Non-Renewal by Company or See “—Employment Arrangements with Our Named Executive Officers—Termination-Related Provisions—Termination Without Cause or ForResignation for Good Reason Uponin Connection with a Change in Control
| | | | | | |
| Name | | Cash
Payment | | Value of
Equity
Accelerated | | Other
Benefits |
| Mark Pruzanski | | | 2,275,261 | | | | 7,130,908 | | | | 57,502 | |
| David Shapiro | | | 545,758 | | | | 2,505,167 | | | | 20,084 | |
| Sandip Kapadia | | | 449,568 | | | | 3,188,767 | | | | 29,595 | |
| Rachel McMinn | | | 475,045 | | | | 2,534,358 | | | | 17,193 | |
| Lisa Bright | | | 506,225 | | | | 3,379,899 | | | | — | |
Director Compensation
The following table setsControl” and “—Employment Arrangements with Our Named Executive Officers—Treatment of TSR PSUs in the Event of a Change in Control” above for a description of the circumstances that would trigger the payment of amounts set forth the compensation we paid to our non-employee directors during 2016.
| | | | | | | | |
| Name(1) | | Fees Earned
or Paid in
Cash(2) | | Stock
Awards(3)(4) | | Option
Awards(3)(5) | | Total |
| Srinivas Akkaraju, M.D., Ph.D.(6)(8) | | $ | 57,782 | | | $ | 170,713 | | | $ | 137,677 | | | $ | 366,172 | |
| Luca Benatti, Ph.D.(6)(8) | | | 57,776 | | | | 170,713 | | | | 137,677 | | | | 366,166 | |
| Daniel Bradbury(7)(8) | | | 17,851 | | | | 333,303 | | | | 275,354 | | | | 626,507 | |
| Paolo Fundaro(6)(8) | | | 69,433 | | | | 170,713 | | | | 137,677 | | | | 377,882 | |
| Keith Gottesdiener, M.D.(7)(8) | | | 11,000 | | | | 333,303 | | | | 275,354 | | | | 619,656 | |
| Gino Santini(6)(8) | | | 54,460 | | | | 170,713 | | | | 137,677 | | | | 362,849 | |
| Glenn Sblendorio(6)(8) | | | 63,546 | | | | 170,713 | | | | 137,677 | | | | 371,935 | |
| Jonathan T. Silverstein | | | 50,022 | | | | — | | | | — | | | | 50,022 | |
| Klaus Veitinger, M.D. | | | 44,419 | | | | — | | | | — | | | | 44,419 | |
| Daniel Welch(6)(8) | | | 54,159 | | | | 170,713 | | | | 137,677 | | | | 362,549 | |
| (1) | Dr. Pruzanski has been omitted from this table because he received no compensation for serving on our board of directors. Dr. Pruzanski’s compensation as President and Chief Executive Officer for 2016 is detailed in “— Summary Compensation Table” above. Mr. Bradbury and Dr. Gottesdiener joined our board of directors in July 2016. Mr. Silverstien and Dr. Veitinger left the service of our board of directors in July 2016 upon the completion of our 2016 annual meeting of stockholders. |
| (2) | Includes the annual retainer paid to each director. |
in this column.
TABLE OF CONTENTS | (3) | The amounts in these columns represent the aggregate grant date fair value of stock awards and option awards granted to the director during 2016 computed in accordance with FASB ASC Topic 718. See Note 13 of the notesPay Ratio Disclosure In accordance with the requirements of Section 953(b) of the Dodd-Frank Act and Item 402(u) of Regulation S-K (collectively, the “Pay Ratio Rule”), we are providing the following estimated information for 2019: •
the median of the annual total compensation of all of our employees (excluding our Chief Executive Officer) was $239,066; •
the annual total compensation of our Chief Executive Officer was $6,615,785; and •
the ratio of these two amounts was approximately 28 to 1. We believe that this ratio is a reasonable estimate calculated in a manner consistent with the requirements of the Pay Ratio Rule. SEC rules for identifying the ��median employee” and calculating annual total compensation allow companies to apply various methodologies and make various assumptions and, as result, the pay ratio reported by us may not be comparable to the pay ratio reported by other companies. Methodology for Identifying Our Median Employee Employee Population To identify the median of the annual total compensation of all of our employees (other than our Chief Executive Officer), we first identified our total domestic and foreign employee population. We selected December 31, 2019 as the date upon which we would identify our “median employee”. We determined that, as of December 31, 2019, we had 583 employees. We did not make any adjustments to our employee population. Determining our Median Employee We identified our “median employee” from our total employee population for 2019 by applying the same methodology used for 2018. Accordingly, we compared each employee’s aggregate 2019 base salary (annualized in the case of newly hired employees), cash incentive target and equity award grant date fair value, in each case, converted into U.S. dollars as necessary. We identified our median employee using this compensation measure, which was consistently applied to all our employees included in the calculation.
RELATED PERSON TRANSACTIONS Public Offering and Concurrent Private Placement In May 2019, we issued and sold (i) 2,760,000 shares of common stock in a registered public offering, at a price to the public of $83.50 per share (the “Public Offering”) and (ii) 119,760 shares (the “Private Placement Shares”) in a private placement exempt from the registration requirements of the Securities Act (the “Concurrent Private Placement”), at a purchase price per share equivalent to the price to the public set in the Public Offering and pursuant to a securities purchase agreement (the “Securities Purchase Agreement”) that we entered into with Samsara BioCapital, L.P. (“Samsara”). Dr. Benatti purchased 1,200 shares in the Public Offering and Samsara purchased 119,760 shares in the Concurrent Private Placement. Dr. Akkaraju is a managing member of Samsara BioCapital GP, LLC, the general partner of Samsara. Pursuant to the Securities Purchase Agreement, we granted to Samsara certain registration rights requiring us, upon request delivered by Samsara (and/or certain affiliate transferees thereof) on or after July 9, 2019 and subject to certain terms and conditions, to register the resale by Samsara (and/or such affiliates) of the Private Placement Shares. Such registration rights have since expired. Limitation on Liability and Indemnification Matters Our Restated Certificate of Incorporation and Restated Bylaws provide that we will indemnify our consolidated financial statements in our annual report on Form 10-K filed with the SEC on March 1, 2017 for a discussion of assumptions made by us in determining the grant date fair value of our equity awards. |
| (4) | During the year ended December 31, 2016, the above-listed directors received restricted stock awards for the following number of shares of our common stock: Dr. Akkaraju (1,204); Dr. Benatti (1,204); Mr. Bradbury (2,407); Mr. Fundaro (1,204); Dr. Gottesdiener (2,407); Mr. Santini (1,204); Mr. Sblendorio (1,204); and Mr. Welch (1,204). The restricted stock grants in 2016 to our outside directors were made under the 2012 Plan. |
| (5) | During the year ended December 31, 2016, we granted to our non-employee directors options to purchase common stock at an exercise price of $145.22 per share in the following amounts: Dr. Akkaraju (1,598); Dr. Benatti (1,598); Mr. Bradbury (3,196); Mr. Fundaro (1,598); Dr. Gottesdiener (3,196); Mr. Santini (1,598); Mr. Sblendorio (1,598); and Mr. Welch (1,598). The option grants in 2016 to our outside directors were made under the 2012 Plan. |
| (6) | All of the shares of common stock underlying the options and restricted stock awards will vest in July 2017, subject to the terms and conditions of the 2012 Plan; provided, however, that if the 2017 annual meeting of stockholders is held prior to the one year anniversary date from the grant, the equity grants will vest as of the close of business on the day immediately preceding such annual meeting date. The grants will vest in full immediately prior to a change in control of our company. |
| (7) | All of the shares of common stock underlying the options and restricted stock awards will vest annually over three years on the anniversary date the director was first elected or appointed to our board of directors, subject to the terms and conditions of the 2012 Plan and our non-employee director compensation policy; provided, however, if the next subsequent annual stockholder meeting date (starting from the annual stockholder meeting date in the year after the initial equity grants are made) is held prior to the anniversary in that year, the annual vesting for such year will occur on the day immediately preceding the date of the annual stockholder meeting date in such year, subject to the non-employee director’s continued service on our board. The grants will vest in full immediately prior to a change in control of our company. |
| (8) | As of December 31, 2016, our directors and former directors had outstanding options to purchase common stock and outstanding restricted stock units or awards as set forth below: |
| | | | |
| Name | | Stock Options | | Restricted Stock |
| Srinivas Akkaraju, M.D., Ph.D. | | | 6,504 | | | | 1,204 | |
| Luca Benatti | | | 2,117 | | | | 1,355 | |
| Daniel Bradbury | | | — | | | | — | |
| Paolo Fundaro | | | 10,754 | | | | 1,204 | |
| Keith Gottesdiener, M.D. | | | — | | | | — | |
| Gino Santini | | | 1,167 | | | | 2,071 | |
| Glenn Sblendorio | | | 2,117 | | | | 1,355 | |
| Jonathan Silverstein | | | 15,237 | | | | — | |
| Klaus Veitinger, M.D., Ph.D. | | | 9,977 | | | | — | |
| Daniel Welch | | | 1,167 | | | | 2,071 | |
All directors and officers, and may indemnify our employees and other agents, to the fullest extent permitted by law. Under our Restated Certificate of Incorporation and/or Restated Bylaws, we are eligiblealso empowered to receive reimbursementpurchase insurance on behalf of our directors, officers, employees and other agents and to enter into indemnification agreements with our directors, officers, employees and other agents. We have entered into indemnification agreements with directors and officers, which provide for indemnification for all reasonable out-of-pocket expenses and liabilities incurred in connection with attendance at meetings of our board of directors, and our non-employee directors are also eligible to receive reimbursement, upon approval of the board of directorsany action or a committee thereof, for reasonable out-of-pocket expenses incurredproceeding brought against them in connection with attendance at various conferences or meetings with our management.
their services. We believe that these arrangements are necessary to attract and retain qualified directors and officers and to allow them to exercise their judgment in the best interest of the Company and its stockholders. We have also obtained director and officer liability insurance as a risk management measure.
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In April 2017, our board of directors adopted a revised non-employee director compensation policy. Pursuant
AUDIT COMMITTEE REPORT
The information contained in this report shall not be deemed to
be “soliciting material,” “filed” with the
revised policy, our non-employee directors will receiveSEC or incorporated by reference into any filing under the
following cash compensation for service on our board of directors and our board committees effective as ofSecurities Act or the
date of adoption: | | | | |
| Board of Directors or Committee of Board of Directors | | Annual
Retainer
Amount for
Chair | | Annual
Retainer
Amount for
Other
Members |
| Board of Directors | | $ | 80,000 | | | $ | 50,000 | |
| Audit Committee | | $ | 20,000 | | | $ | 10,000 | |
| Compensation Committee | | $ | 15,000 | | | $ | 7,500 | |
| Nominating and Governance Committee | | $ | 10,000 | | | $ | 5,000 | |
| R&D Committee | | $ | 10,000 | | | $ | 5,000 | |
In addition, our non-employee directors who have served on our board of directors for at least six months prior to an annual meeting of stockholders will receive options to purchase common stock and shares of restricted stock based on the following valuations:
| | | | |
| | Stock Options | | Restricted Stock |
| | | $ | 163,616 | | | $ | 173,587 | |
The equity grants will vest on the one-year anniversary of the date of grant,Exchange Act, or subject to the non-employee director’s continued service on our boardliabilities of directors;provided, however, that ifSection 18 of the next subsequent annual meeting of stockholders is held priorExchange Act, except to the one year anniversary date fromextent that the grant,Company specifically incorporates it by reference into a document filed under the equity grants shall vest asSecurities Act or the Exchange Act.
The Audit Committee’s primary purpose is to act on behalf of the
close of business onBoard in fulfilling the
day immediately preceding such annual meeting date, subject to the non-employee director’s continued service on our board. The grants will vest in full immediately prior to a change in control of our company.Newly appointed non-employee directors will be granted a non-qualified stock option under the 2012 Plan to purchase shares of our common stock equivalent to $369,823 in value and shares of restricted stock equivalent to $323,638 in value. The grant will be made automatically and without any action on the part of our board of directors on the first annual meeting of stockholders immediately following the appointment of the new non-employee director;provided, however, that if the new non-employee director is initially elected at an annual meeting, the date of grant will be the annual meeting date upon which the non-employee director was initially elected to our board of directors. The equity grants will vest annually over three years on the anniversary of the date the non-employee director was first elected or appointed to our board of directors, subject to the non-employee director’s continued service on our board of directors;provided, however, if the next subsequent annual meeting date (starting from the annual meeting date in the year after the initial equity grants are made) is held prior to the anniversary date in that year, the annual vesting for such year will occur on the day immediately preceding the date of the annual meeting in such year, subject to the non-employee director’s continued service on our board of directors. The grants will vest in full immediately prior to a change in control of our company.
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Equity Compensation Plan Information
The following table provides certain aggregate informationBoard’s oversight responsibilities with respect to allthe Company’s accounting and financial reporting practices, systems of internal control over financial reporting and audit process, as well as the quality and integrity of the Company’s equity compensation plans in effect as of December 31, 2016.
| | | | | | |
| 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 the
Second Column) |
| Equity compensation plans approved by security holders | | | 1,552,597 | (1) | | $ | 93.14 | | | | 1,531,504 | (2) |
| Equity compensation plans not approved by security holders | | | — | | | | — | | | | — | |
| Total | | | 1,552,597 | | | | 93.14 | | | | 1,531,504 | |
| (1) | Consists of options to purchase 192,982 shares of common stock under our 2003 Stock Incentive Plan, or 2003 Plan, and options to purchase 1,138,028 shares of common stock and RSUs and restricted stock awards for 221,587 shares of common stock under our 2012 Plan. |
| (2) | Consists of shares available under our 2012 Plan, as no shares are available under our 2003 Plan. Our 2012 Plan contains an “evergreen” provision, which allows for an annual increase in the number of shares of our common stock available for issuance under the plan on the first day of each fiscal year. The annual increase in the number of shares shall be equal to the lowest of: (i) 1,211,533 shares of our common stock; (ii) 4% of the number of shares of our common stock outstanding as of such date; and (iii) an amount determined by our board of directors or compensation committee. On January 1, 2017, pursuant to the evergreen provision, the number of available shares under the 2012 Plan was increased by 993,558 shares. |
Compensation Committee Interlocksfinancial reports, the qualifications, independence and Insider Participation
Since July 2016, our compensation committee has been composed of Dr. Akkaraju and Messrs. Santini and Welch. Klaus Veitinger also served on our compensation committee in 2016 before his departure from our board of directors in July 2016. No member of our compensation committee during fiscal 2016 has at any time been an officer or employee of ours. None of our executive officers serves as a member of another entity’s board of directors or compensation committee, or other committee serving an equivalent function that has one or more executive officers serving as a member of our board of directors or compensation committee.
Risk Considerations in Our Compensation Program
Our compensation committee has reviewed and evaluated the philosophy and standards on which our compensation plans have been developed and implemented across our company. It is our belief that our compensation programs do not encourage inappropriate actions or risk taking by our executive officers. We do not believe that any risks arising from our employee compensation policies and practices are reasonably likely to have a material adverse effect on our company. In addition, we do not believe that the mix and designperformance of the components of our executive compensation program encourage management to assume excessive risks.
Tax Deductibility of Executive Compensation
Section 162(m)Company’s independent registered public accounting firm, the performance of the Internal Revenue Code generally restricts deductibility for federal income tax purposes of annual individual compensation in excess of $1 million paid to each of the chief executive officerCompany’s internal audit function and the three other most highly compensated executive officers (other than the chief financial officer) if certain conditions are not satisfied. Qualified “performance-based compensation” is not subject to the deduction limitation if specified requirements are met. The compensation committee is informed about the tax deductibility and accounting treatment of compensation when making its compensation determinations. The compensation committee’s general policy is to develop and maintain compensation programs that effectively attract, motivate and retain exceptional executives in a highly competitive environment, which may include payments that might not be deductible if the compensation committee believes they are in the best interests of our company and our stockholders.
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REPORT OF AUDIT COMMITTEE
The audit committee of the board of directors has furnished the following report:
The audit committee assists the board in overseeing andCompany’s processes for monitoring the integrity of our financial reporting process, compliance with legal and regulatory requirements and the qualityCompany’s Global Code of internal and external audit processes. This committee’s role and responsibilities are set forth in ourBusiness Conduct. The Audit Committee operates under a written charter adopted by the board,Board, a current copy of which is available on the Company’s website at www.interceptpharma.comin the “Investors”Investors & Media section of our website atwww.interceptpharma.com. This committee reviews and reassesses our charter annually and recommends any changes to the board for approval. under “Corporate Governance.”
The audit committee is responsible for overseeing our overall financial reporting process, and for the appointment, compensation, retention, and oversight of the work of KPMG LLP. In fulfilling its responsibilities for the financial statements for fiscal year 2016, the audit committee took the following actions:Audit Committee has:
Reviewed•
reviewed and discussed the audited financial statements for the fiscal year ended December 31, 20162019 with management and KPMG LLP, ourthe Company’s management;
•
discussed with the Company’s independent registered public accounting firm;
Discussed withfirm, KPMG LLP, the matters required to be discussed in accordance with PCAOB standards; and
Received written disclosures andby the letter from KPMG LLP regarding its independence as required by applicable requirements of the Public Company Accounting Oversight Board (“PCAOB”) and the SEC; and
•
received the written disclosures and the letter from KPMG LLP required by applicable requirements of the PCAOB regarding KPMG LLPLLP’s communications with the audit committeeAudit Committee concerning independence, and the audit committee furtherhas discussed with KPMG LLP theirsuch firm’s independence.
The audit committee also considered the status of pending litigation, taxation matters and other areas of oversight relating to the financial reporting and audit process that the committee determined appropriate.
Based on the audit committee’sforegoing review of the audited financial statements and discussions, with management and KPMG LLP, the audit committeeAudit Committee has recommended to the boardBoard that the audited financial statements be included in our annual reportthe Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 20162019.
The Audit Committee is responsible for
filing with the SEC.In 2016, the audit committee reviewed KPMG LLP’s work relating to our annual and quarterly financial statements, along with KPMG LLP’s work relating to our public offering completed in 2016. Based on KPMG LLP’s performance, the audit committee recommends that our stockholders ratify the appointment, retention, compensation, evaluation and oversight of the Company’s independent registered public accounting firm. After reviewing the past services provided by, and performance of, KPMG LLP, the Audit Committee appointed KPMG LLP as our auditorsthe Company’s independent registered public accounting firm for fiscal 2017.
Membersthe year ending December 31, 2020. The Audit Committee recommends that the Company’s stockholders ratify such appointment at the Annual Meeting.
By the Audit Committee of the Audit Committee
Board of Directors of Intercept Pharmaceuticals, Inc.,
Glenn Sblendorio, Chairperson
Daniel Bradbury
Gino Santini
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SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
To our knowledge, based solely on a review of the reports furnished to us and written representations that no other reports were required, during the fiscal year 2016, all reports which were required to be filed pursuant to Section 16(a) of the Exchange Act were filed on a timely basis, except for the following Forms 4 which were inadvertently filed late: Form 4 of Lisa Bright filed on November 17, 2016 reporting the issuance of shares of common stock on November 14, 2017.
CERTAIN RELATIONSHIPS AND RELATED PERSON TRANSACTIONS
In addition to the director and executive officer compensation arrangements discussed above in “Executive and Director Compensation,” since January 1, 2016, we have engaged in the following transactions in which the amount involved exceeded $120,000 and in which any director, executive officer or holder of more than 5% of our voting securities, whom we refer to as our principal stockholders, or affiliates or immediate family members of our directors, executive officers and principal stockholders, had or will have a material interest. We believe that all of these transactions were on terms as favorable as could have been obtained from unrelated third parties.
Some of our directors are affiliated with our principal stockholders as indicated in the table below:
| | |
Director | | Affiliation with Principal Stockholder |
Paolo Fundaro | | | Mr. Fundaro is the chief financial officer of Genextra S.p.A., which is one of our principal stockholders. | |
Indemnification
Pursuant to our restated bylaws, we indemnify our directors and our executive officers to the fullest extent permitted by law so that they will be free from undue concern about personal liability in connection with their service to us. We have also purchased a policy of directors’ and officers’ liability insurance that insures our directors and officers against the cost of defense, settlement or payment of a judgment under certain circumstances.
Policy for Approval of Related Person Transactions
Pursuant to the written charter of our audit committee, the audit committee is responsible for reviewing and approving, prior to our entry into any such transaction, all transactions in which we are a participant and in which any parties related to us, including our executive officers, our directors, beneficial owners of more than 5% of our securities, immediate family members of the foregoing persons and any other persons whom our board of directors determines may be considered related parties under Item 404 of Regulation S-K, has or will have a direct or indirect material interest.
In reviewing and approving such transactions, the audit committee shall obtain, or shall direct our management to obtain on its behalf, all information that the committee believes to be relevant and important to a review of the transaction prior to its approval. Following receipt of the necessary information, a discussion shall be held of the relevant factors if deemed to be necessary by the committee prior to approval. If a discussion is not deemed to be necessary, approval may be given by written consent of the committee. This approval authority may also be delegated to the chair of the audit committee in some circumstances. No related party transaction shall be entered into prior to the completion of these procedures.
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The audit committee or its chair, as the case may be, shall approve only those related party transactions that are determined to be in, or not inconsistent with, the best interests of us and our stockholders, taking into account all available facts and circumstances as the committee or the chair determines in good faith to be necessary in accordance with principles of Delaware law generally applicable to directors of a Delaware corporation. These facts and circumstances will typically include, but not be limited to, the benefits of the transaction to us; the impact on a director’s independence in the event the related party is a director, an immediate family member of a director or an entity in which a director is a partner, stockholder or executive officer; the availability of other sources for comparable products or services; the terms of the transaction; and the terms of comparable transactions that would be available to unrelated third parties or to employees generally. No member of the audit committee shall participate in any review, consideration or approval of any related party transaction with respect to which the member or any of his or her immediate family members has an interest.
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ELECTION OF DIRECTORS
(Proposal 1)
Upon recommendation of the nominating and governance committee, the board of directors has nominated Srinivas Akkaraju, M.D., Ph.D., Luca Benatti, Ph.D., Daniel Bradbury, Paolo Fundaro, Keith Gottesdiener, M.D., Mark Pruzanski, M.D., Gino Santini, Glenn Sblendorio and Daniel Welch for election at the annual meeting. If they are elected, they will serve on our board of directors until the 2018 annual meeting of stockholders and until their respective successors have been elected and qualified, or until their earlier death, resignation or removal.
Unless authority to vote for any of these nominees is withheld, the shares represented by the enclosed proxy will be voted FOR the election as directors of the nominees listed above. If any nominee should be unable or unwilling to serve on our board of directors, the shares represented by the enclosed proxy will be voted for the election of such other person as the board of directors may recommend in that nominee’s place. We have no reason to believe that any nominee will be unable or unwilling to serve as a director.
A plurality of the shares voted FOR each nominee at the meeting is required to elect each nominee as a director.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE “FOR” THE ELECTION OF SRINIVAS AKKARAJU, M.D., PH.D., LUCA BENATTI, PH.D., DANIEL BRADBURY, PAOLO FUNDARO, KEITH GOTTESDIENER, M.D., MARK PRUZANSKI, M.D., GINO SANTINI, GLENN SBLENDORIO, AND DANIEL WELCH AS DIRECTORS, AND PROXIES SOLICITED BY THE BOARD WILL BE VOTED IN FAVOR THEREOF UNLESS A STOCKHOLDER HAS INDICATED OTHERWISE ON THE PROXY.
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ADVISORY VOTE TO APPROVE EXECUTIVE COMPENSATION, OR “SAY-ON-PAY”
(Proposal 2)
We are providing our stockholders the opportunity to vote to approve, on an advisory, non-binding basis, the compensation of our named executive officers as disclosed in this proxy statement in accordance with the SEC’s rules. This proposal, which is commonly referred to as “say-on-pay,” is required by the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, which added Section 14A to the Exchange Act.
Our executive compensation programs are designed to attract, motivate and retain our executive officers, who are critical to our success. Under these programs, our named executive officers are rewarded for the achievement of our short-term and longer-term financial and strategic goals and for driving corporate financial performance and stability. The programs contain elements of cash and equity-based compensation and are designed to align the interests of our executives with those of our stockholders.
The “Executive Officer and Director Compensation” section of this proxy statement, including “Compensation Discussion and Analysis,” describes in detail our executive compensation programs and the decisions made by the compensation committee and our board of directors with respect to the year ended December 31, 2016. As we describe in the Compensation Discussion and Analysis section, our executive compensation program embodies a pay-for-performance philosophy that supports our business strategy and aligns the interests of our executives with our stockholders. Our board believes this link between compensation and the achievement of our short- and long-term business goals has helped drive our performance over time. At the same time, we believe our program does not encourage excessive risk-taking by management.
Our board is asking stockholders to approve a non-binding advisory vote on the following resolution:
RESOLVED, that the compensation paid to the named executive officers of Intercept Pharmaceuticals, Inc., as disclosed pursuant to the compensation disclosure rules of the Securities and Exchange Commission, including the Compensation Discussion and Analysis, the compensation tables and any related material disclosed in this proxy statement, is hereby approved.
As an advisory vote, this proposal is not binding. The outcome of this advisory vote does not overrule any decision by us or our board of directors (or any committee thereof), create or imply any change to the fiduciary duties of us or our board of directors (or any committee thereof), or create or imply any additional fiduciary duties for us or our board of directors (or any committee thereof). However, our compensation committee and our board of directors value the opinions expressed by our stockholders in their vote on this proposal and will consider the outcome of the vote when making future compensation decisions for named executive officers.
OUR BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE “FOR” APPROVAL OF THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS.
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RATIFY APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
(Proposal 3)
The audit committee of our board of directorsAudit Committee has appointed KPMG LLP as ourthe Company’s independent registered public accounting firm to audit our financial statements for the fiscal year ending December 31, 2017. Although stockholder approval of the appointment of2020. KPMG LLP is not required by law or NASDAQ rules, our audit committee believes that it is advisable and has decidedaudited the Company’s financial statements since 2008.
Fees Paid to
give our stockholders the opportunity to ratify this appointment. KPMG LLP
audited our financial statements for the fiscal year ended December 31, 2016, and has served as our auditors since 2008. We expect that representatives of KPMG LLP will be present at the annual meeting, will be able to make a statement if they so desire, and will be available to respond to appropriate questions. The following table
presentssets forth the aggregate fees
for professional audit services rendered by KPMG LLP forbilled to the
audit of our annual financial statementsCompany for the years ended December 31,
20162019 and
December 31, 2015, and fees billed for other services rendered2018 by KPMG
LLP during those periods.LLP.| | | | Year Ended December 31, | |
| | | | 2019 | | | 2018 | |
| | | | (in thousands) | |
| Audit Fees | | | | $ | 1,777 | | | | | $ | 1,491 | | |
| Audit-Related Fees | | | | | — | | | | | | — | | |
| Tax Fees | | | | | 146 | | | | | | 94 | | |
| All Other Fees | | | | | 2 | | | | | | 2 | | |
| Total Fees | | | | $ | 1,925 | | | | | $ | 1,587 | | |
| | | | |
| (in thousands) | | 2016 | | 2015 |
| Audit fees | | $ | 1,061 | | | $ | 829 | |
| Audit related fees | | | — | | | | — | |
| Tax fees | | | 128 | | | | 25 | |
| All other fees | | | — | | | | — | |
| Total | | $ | 1,189 | | | $ | 854 | |
Audit fees include fees associated with the annual integrated audit review of our quarterly reports on Form 10-Q,financial statements and internal control over financial reporting, reviews of our interim financial information, the issuance of consents related toin connection with filings with the SEC, statutory audits and KPMG LLP’s work in connection with our financing activities.activities, including the issuance of comfort letters. Tax fees include fees associated with tax compliance services, preparation of statefederal and federalstate income tax returns, preparation of sales tax returns and certain other tax consulting services.
Auditor Independence
All other fees in 2019 consist of fees related to a subscription to KPMG LLP’s Accounting Research Online tool.
We did not incur any audit-related fees in 2019 or 2018. All fees described above were approved by the Audit Committee.
The audit committeeAudit Committee has determined that the provision of services rendered above is compatible with maintaining KPMG LLP’s independence. All
Pre-Approval Policy and Procedures
The Audit Committee has adopted a policy and procedures for the pre-approval of audit
related, tax and
othernon-audit services
are required to be pre-approvedrendered by the
audit committee.Policy on Audit Committee Pre-Approval of Audit and Permissible Non-audit Services of Independent Public Accountant
Consistent with SEC policies regarding auditor independence, the audit committee has responsibility for appointing, setting compensation and overseeing the work of our independent registered public accounting firm. In recognition of this responsibility, the audit committee has established a policy to pre-approve all audit and permissible non-audit services provided by our independent registered public accounting firm.
Prior to engagement of anCompany’s independent registered public accounting firm, for the following year’s audit,KPMG LLP. On an annual basis, management submits an aggregate ofto the Audit Committee for pre-approval specified services expected to be rendered during that year for each of four categories of services toby the audit committee for approval.
1.Audit services include audit work performed in the preparation of financial statements, as well as work that generally only anCompany’s independent registered public accounting firm can reasonably be expected to provide, including comfort letters, statutory audits, and attest services and consultation regarding financial accounting and/or reporting standards.
2.Audit-Related services are for assurance and related services that are traditionally performed by an independent registered public accounting firm, including due diligence related to mergers and acquisitions, employee benefit plan audits, and special procedures required to meet certain regulatory requirements.
3.Tax services include all services performed by an independent registered public accounting firm’s tax personnel except those services specifically related to the audit of the financial statements, and includes fees in the areasdefined categories of audit, audit-related, tax compliance, tax planning, and tax advice.
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4.Other Fees are those associated withother services not captured in the other categories. We generally do not request such services from our independent registered public accounting firm.
up to specified amounts. Prior to engagement, the audit committeeAudit Committee pre-approves these services by category of service. The fees are budgeted andIn the audit committee requires our independent registered public accounting firm and management to report actual fees versus the budget periodically throughout the year by category of service. During the year,event that circumstances may arise whenwhere it may become necessary to engage ourthe Company’s independent registered public accounting firm for additional services not contemplated in the original pre-approval. In those instances,pre-approval, pre-approval may also be given on an individual, case-by-case basis before the audit committee requires specific pre-approval before engaging ourCompany’s independent registered public accounting firm.
firm is engaged to provide such services. The audit committeeAudit Committee may delegate pre-approval authority to one or more of its members. The member or members to whom such authority is delegated must report, for informational purposes only, any pre-approval decisions to the audit committeefull Audit Committee at its meetings.
In the event the stockholders do not ratify the appointment of KPMG LLP as our independent registered public accounting firm, the audit committee will reconsider its appointment.
The affirmative vote of a majority of the shares cast affirmatively or negatively at the annual meeting is required to ratify the appointment of the independent registered public accounting firm.
The audit committee regularly evaluates the performance of KPMG LLP. In 2016, our audit committee reviewed KPMG LLP’s work relating to our annual and quarterly financial statements, along with KPMG LLP’s work relating to our public offering completed in 2016. Based on KPMG LLP’s performance relating to our annual and quarterly financial review and their performance relating to our financing activities in 2016, our audit committee recommends that our stockholders ratify the appointment of KPMG LLP as our auditors for fiscal 2017.
We expect a representative of KPMG LLP to attend the Annual Meeting either in person or via teleconference. The representative will have an opportunity to make a statement if he or she desires and also will be available to respond to appropriate questions.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE “FOR” THE RATIFICATION OF THE APPOINTMENT OF KPMG LLP AS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM, AND PROXIES SOLICITED BY THE BOARD WILL BE VOTED IN FAVOR OF SUCH RATIFICATION UNLESS A STOCKHOLDER INDICATES OTHERWISE ON THE PROXY.
next scheduled meeting.
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CODE OF CONDUCT AND ETHICS
We have adopted a global code of business conduct that applies to all of our employees, including our chief executive officer and chief financial and accounting officer. The text of the global code of business conduct is posted
STOCKHOLDERS’ PROPOSALS
Stockholder Proposals in the “Investors” sectionProxy Statement
Rule 14a-8 under the Exchange Act addresses when a company must include a stockholder’s proposal in its proxy statement and identify the proposal in its form of
our website atwww.interceptpharma.com. Disclosure regarding any amendmentsproxy card when the company holds an annual or special meeting of stockholders. Under Rule 14a-8, in order for your proposals to
or waivers from, provisions of our global code of business conduct that apply to our directors, principal executive officer and principal financial officer will be included in a Current Report on Form 8-K within four business days following the date of such amendment or waiver, unless posting on our website or the issuance of a press release of such amendments or waivers is then permitted by the rules of The NASDAQ Stock Market.OTHER MATTERS
The board of directors knows of no other business which will be presented to the annual meeting. If any other business is properly brought before the annual meeting, proxies will be voted in accordance with the judgment of the persons named therein.
STOCKHOLDER PROPOSALS AND NOMINATIONS FOR DIRECTOR
To be considered for inclusion in the proxy statement and proxy card relating to the 2021 Annual Meeting of Stockholders (the “2021 Annual Meeting”), your proposals must be sent to Intercept Pharmaceuticals, Inc., 10 Hudson Yards, 37th Floor, New York, NY 10001, Attention: Company Secretary, not less than 120 days prior to the anniversary of the date on which the Company’s proxy statement was released to stockholders in connection with the 2020 Annual Meeting of Stockholders (the “2019 Annual Meeting”). Therefore, the deadline is expected to be December 30, 2020 for the 2021 Annual Meeting. However, if the date of the 2021 Annual Meeting changes by more than 30 days from the anniversary of the 2020 Annual Meeting, the deadline is a reasonable time before we begin to print and mail our 2018 annual meetingproxy materials. We will notify you of stockholders, weany change in this deadline in a quarterly report on Form 10-Q or in another communication to you. Stockholder proposals must receive stockholder proposals (other thanalso be otherwise eligible for director nominations) no later than January 5, 2018.inclusion.
Stockholder Proposals and Nominations for Directors to Be Presented at Meetings
If you desire to bring a matter before an Annual Meeting of Stockholders outside the process of Rule 14a-8, you may do so by following the procedures set forth in the Company’s Restated Bylaws. To be considered for presentation at the 2018 annual meeting, although not included in the proxy statement, proposals (including director nominations that are not requested to be included in our proxy statement)timely, written notice must be received no earlierdelivered to Intercept Pharmaceuticals, Inc., 10 Hudson Yards, 37th Floor, New York, NY 10001, Attention: Company Secretary not less than February 27, 2018 and no later90 days nor more than March 29, 2018;120 days prior to the first anniversary of the 2020 Annual Meeting; provided, however, that ifin the 2018 annual meetingevent that the date of the 2021 Annual Meeting is more than 30 days before or more than 30 days after such anniversary date, then such notice to be timely must be delivered to the Company Secretary not more than 120 days prior to the 2021 Annual Meeting and not less than the later of (i) 90 days prior to such annual meeting or (ii) 10 days following the date of the first public announcement of the scheduled date of the 2021 Annual Meeting. As a result, in the event the 2021 Annual Meeting is not held more than 30 days before nor more than 30 days after the first anniversary of the 2017 annual meeting date,2020 Annual Meeting, notice of nominations or other business submitted pursuant to the Company’s Restated Bylaws must be delivered by the stockholder not earlier than the close of business on the 120th day prior to the 2018 annual meeting and notreceived no later than the close of business on the later of (i) the 90th day priorFebruary 27, 2021 and no earlier than January 28, 2021. Any such notice to the 2018 annual meetingCompany Secretary must include all of the information specified in the Company’s Restated Bylaws.
EXPENSES AND SOLICITATION
The cost of solicitation will be borne by the Company, and (ii)in addition to directly soliciting stockholders by mail, the closeCompany may request brokers, dealers, banks, trustees or other nominees to solicit their customers who have shares of business on the tenth dayCompany registered in the name of the nominee and, if so, will reimburse such brokers, dealers, banks, trustees or other nominees for their reasonable out-of-pocket costs. Solicitation by officers and employees of the Company may also be made of some stockholders in person or by mail, email or telephone following the day on which public announcementoriginal solicitation. The Company has retained Innisfree M&A Incorporated to assist in the solicitation of proxies for a fee of approximately $17,500, plus out-of-pocket expenses.
HOUSEHOLDING
Our Annual Report, including our audited financial statements for the year ended December 31, 2019, is being mailed to you along with this proxy statement. In order to reduce printing and postage costs, only one Annual Report and one proxy statement will be mailed to multiple stockholders sharing an address unless the Company receives contrary instructions from one or more of the datestockholders sharing an address. If your household has received only one Annual Report and one proxy statement and you wish to receive separate copies of these documents, we will deliver promptly a separate copy of such documents to any requesting stockholder who contacts our transfer agent, VStock Transfer, LLC, by telephone at 1-855-9 VSTOCK or in writing to VStock Transfer, LLC, 18 Lafayette Place, Woodmere, NY 11598. If your household is receiving multiple copies of the 2018Company’s annual meetingreports or proxy statements and you wish to request delivery of a single copy, you may send a written request to our transfer agent at VStock Transfer, LLC, 18 Lafayette Place, Woodmere, NY 11598.
OTHER BUSINESS
Management does not know of any other matters to be brought before the Annual Meeting except those set forth in the notice thereof. If other business is first made by us. Proposalsproperly presented for consideration at the Annual Meeting, it is intended that are not received in a timely mannerthe proxies will not be voted by the persons named therein in accordance with their judgment on at the 2018 annual meeting. Ifsuch matters.
We will mail without charge, upon written request, a
proposal is receivedcopy of our Annual Report on
time, the proxies that management solicitsForm 10-K for the
meeting may still exercise discretionary voting authority onfiscal year ended December 31, 2019, including the
proposal under circumstances consistent with the proxy rulesconsolidated financial statements, schedules and list of
the SEC. All stockholder proposalsexhibits, and any particular exhibit specifically requested. Requests should be
marked for the attention of Corporate Secretary,sent to: Intercept Pharmaceuticals, Inc., 10 Hudson Yards,
37th Floor,
37, New York, NY
10001.10001, Attention: Company Secretary.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Ryan T. Sullivan
Ryan T. Sullivan
General Counsel and Secretary
New York, NYNew York
May 1, 2017April , 2020
Preliminary Copy
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Signature [PLEASE SIGN WITHIN BOX] Date Signature (Joint Owners) DateTO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:KEEP THIS PORTION FOR YOUR RECORDSTHIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. DETACH AND RETURN THIS PORTION ONLYD12905-P394141a. Paolo Fundarò1b. Mark Pruzanski, M.D.1c. Srinivas Akkaraju, M.D., Ph.D.Nominees:1d. Luca Benatti, Ph.D.2. FOR the approval of an amendment to the Company’s RestatedCertificate of Incorporation to increase the number of authorizedshares of common stock from 45,000,000 to 90,000,000;3. FOR the approval, on a non-binding, advisory basis, of thecompensation of the Company’s named executive officers; and4. FOR the ratification of the appointment of KPMG LLP as theindependent registered public accounting firm of the Companyfor the year ending December 31, 2020.NOTE: Such other business as may properly come before the meeting orany adjournment thereof.1g. Nancy Miller-Rich1i. Glenn Sblendorio1j. Daniel Welch1e. Daniel Bradbury1f. Keith Gottesdiener, M.D.1h. Gino Santini1. FOR the election, by separate resolutions, of each of the followingten nominees to serve on the Board of Directors until the 2021Annual Meeting of Stockholders
JUNE 27, 2017
or until their respective successorsare duly elected and qualified:For Against Abstain! !! !! !! !! !! !! ! !! ! !! ! !! !INTERCEPT PHARMACEUTICALS, INC.The Board recommends that you vote these shares as follows:INTERCEPT PHARMACEUTICALS, INC.10 HUDSON YARDS 37TH FLOORNEW YORK, NY 10001! !! !For Withhold! !Please sign exactly as your name(s) appear(s) hereon. When signing as attorney, executor, administrator,or other fiduciary, please give full title as such. Joint owners should each sign personally. All holders mustsign. If a corporation or partnership, please sign in full corporate or partnership name by authorized officer.VOTE BY INTERNETBefore The Meeting - Go to www.proxyvote.comUse the Internet to transmit your voting instructions and for electronic deliveryof information up until 11:59 p.m. Eastern Time the day before the cut-off dateor meeting date. Have your proxy card in hand when you access the web siteand follow the instructions to obtain your records and to create an electronicvoting instruction form.During The Meeting - Go to www.virtualshareholdermeeting.com/ICPT2020You may attend the meeting via the Internet and vote during the meeting. Havethe information that is printed in the box marked by the arrow available andfollow the instructions.VOTE BY MAILMark, sign and date your proxy card and return it in the postage-paidenvelope we have provided or return it to Vote Processing, c/o Broadridge,51 Mercedes Way, Edgewood, NY 11717.
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Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting of Stockholders To Be Held on
June 27, 2017TheMay 28, 2020The Proxy Statement and 2019 Annual Report for 2016 are available at
http://www.interceptpharma.com/proxy.html
INTERCEPT www.proxyvote.com.INTERCEPT PHARMACEUTICALS, INC.
THISINC.Annual Meeting of StockholdersMay 28, 2020D12906-P39414INTERCEPT PHARMACEUTICALS, INC.THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
TheDIRECTORSThe undersigned, revoking all prior proxies, hereby appoints Mark Pruzanski, andM.D., Sandip Kapadia and Ryan T. Sullivan, or eitherany of them, with fullthe power of substitution, as proxy to represent and vote allthe shares of Common Stock, par value $0.001 per share, of Intercept Pharmaceuticals, Inc. (the “Company”),the undersigned, with all the powers which the undersigned will be entitled to vote if personally presentwould possess, at the Annual Meeting of the Stockholders of the CompanyIntercept Pharmaceuticals, Inc. to be held on June 27, 2017, May 28, 2020,at 9:10:00 a.m. ET(EDT) by visiting www.virtualshareholdermeeting.com/ICPT2020 or at the New York office of WilmerHale LLP, located at 7 World Trade Center, 250 Greenwich Street, New York, NY 10007, upon matters set forth in the Notice of 2017 Annual Meeting of Stockholders and Proxy Statement dated May 1, 2017, a copy of which has been received by the undersigned. Each share of Common Stock is entitled to one vote. The proxies are further authorized to vote, in their discretion, upon such other business as may properly come before the meeting.
Thisany postponement or adjournment thereof.This proxy, when properly executed, will be voted as directed. If no direction is made, the proxy shall be votedFORthe election of the nominees listed nomineesin Proposals 1a through 1j as directors,FOR the approval of an amendment to the Company’s Restated Certificate of Incorporation to increase the number of authorized shares of common stock from 45,000,000 to 90,000,000, FOR the approval, on a non-binding, advisory basis, of the compensation of the Company’s named executive officers, andFOR the ratification of the appointment of KPMG LLP as the Company’s independent auditorsregistered public accounting firm of the Company for the fiscal year ending December 31, 2017 and, in2020. In their discretion, the case ofProxies are authorized to vote upon such other matters that legallybusiness as may properly come before the meeting as said proxy(s) may deem advisable.
Please check here if you plan to attend the Annual Meeting of Stockholders on June 27, 2017 at 9:00 a.m. (ET).o
or any postponement or adjournment thereof.(Continued and to be signed on Reverse Side)
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VOTE ON INTERNET
Go tohttp://www.interceptpharma.com/proxy.html and
log-on using the below control number.
CONTROL #
VOTE BY MAIL
Mark, sign and date your proxy card and return it
in the envelope we have provided.
VOTE IN PERSON
If you would like to vote in person, please attend the
Annual Meeting to be held on June 27, 2017 at
9:00 a.m. ET.
Please Vote, Sign, Date and Return Promptly in the Enclosed Envelope.
Annual Meeting Proxy Card — Common Stock
DETACH PROXY CARD HERE TO VOTE BY MAIL
The Board of Directors recommends you vote FOR each director nominee:
| (1) | Election of Directors: |
| | |
o FOR ALL NOMINEES LISTED BELOW
(except as marked to the contrary below) | | o WITHHOLD AUTHORITY TO VOTE
FOR ALL NOMINEES LISTED BELOW |
INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ONE OR MORE INDIVIDUAL NOMINEES STRIKE A LINE THROUGH THE NOMINEES’ NAMES BELOW:
| | | | |
01 Srinivas Akkaraju | | 02 Luca Benatti | | 03 Daniel Bradbury |
04 Paolo Fundaro | | 05 Keith Gottesdiener | | 06 Mark Pruzanski |
07 Gino Santini | | 08 Glenn Sblendorio | | 09 Daniel Welch |
The Board of Directors recommends you vote FOR the following proposal:
| (2) | To approve, on an advisory basis, the compensation of our named executive officers: |
| | | | |
o VOTE FOR | | o VOTE AGAINST | | o ABSTAIN |
The Board of Directors recommends you vote FOR the following proposal:
| (3) | To approve a proposal to ratify the Board’s appointment of KPMG LLP as the Company’s independent auditors for the fiscal year ending December 31, 2017: |
| | | | |
o VOTE FOR | | o VOTE AGAINST | | o ABSTAIN |
| | | | |
Date | | Signature | | Signature, if held jointly |
| |
| |
|
Note: This proxy must be signed exactly as the name appears hereon. When shares are held jointly, each holder should sign. When signing as executor, administrator, attorney, trustee or guardian, please give full title as such. If the signer is a corporation, please sign full corporate name by a duly authorized officer, giving full title as such. If signer is a partnership, please sign in partnership name by an authorized person.
To change the address on your account, please check the box o
At right and indicate your new address.
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