UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
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☐ | Soliciting Material Pursuant to §240.14a-12 | |||
BAUSCH HEALTH COMPANIES INC. | ||||
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March 23, 201716, 2020
Dear Fellow Shareholders:
On behalf of the Board of Directors of Valeant Pharmaceuticals International,Bausch Health Companies Inc. (the “Company” or “Bausch Health”), I want to take this opportunity to invite you to attend our 20172020 Annual Meeting of Shareholders.Shareholders (the “Annual Meeting”). The meetingAnnual Meeting will be held at 9:00 a.m., local time, on Tuesday, May 2, 2017April 28, 2020 at the Company’s offices located at 2150 Saint Elzear Blvd. West, Laval, Quebec, Canada H7L 4A8. At the meeting,Annual Meeting, shareholders will vote on the proposals set forth in the Notice of Annual Meeting and the accompanying management proxy circular and proxy statement (the “Proxy Statement”), as well as receive a report on the progress of the Company. For those shareholders who have previously provided instructions to receive paper copies of our proxy materials, a paper copy will be sent to you in addition to a Notice Regarding Internet Availability of Proxy Materials (the “Notice”).
We are providing access to our proxy materials, including our Annual Report on FormForm 10-K for the fiscal year ended December 31, 2016,2019, in a fast and efficient manner via the Internet. On March 23, 2017,16, 2020, we will begin mailing athe Notice Regarding Internet Availability of Proxy Materials (the “Notice”) to all shareholders of record as of March 7, 2017,2, 2020 and post our proxy materials on the website referenced in the Notice (www.proxyvote.com). As more fully described in the Notice, all shareholders may choose to access our proxy materials on the website referred to in the Notice or may request to receive a printed set of our proxy materials. In addition, the Notice and website will provide information regarding how you may request to receive proxy materials in printed form by mail or electronically by email on an ongoing basis.
Your vote at this meetingthe Annual Meeting is important. Whether or not you plan to attend the meeting,Annual Meeting, we hope you will vote as soon as possible. You will find voting instructions in the Notice, the Proxy Statement and on the Proxy Card. You may vote overvia the Internet or telephone. Alternatively, if you requested a printed copy of the proxy materials by mail, you may mark, date, sign and mail the Proxy Card in the envelope provided.
We appreciate your continued ownership of ValeantBausch Health shares and your support.
Sincerely,
Joseph C. Papa
Chairman of the Board and Chief Executive Officer
VALEANT PHARMACEUTICALS INTERNATIONAL,BAUSCH HEALTH COMPANIES INC.
2150 Saint Elzear Blvd. West
Laval, Quebec H7L 4A8
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
May 2, 2017April 28, 2020
To the Shareholders of
Valeant Pharmaceuticals International,Bausch Health Companies Inc.:
NOTICE IS HEREBY GIVEN that the 20172020 Annual Meeting of Shareholders (the “Annual Meeting” or the “Meeting”) of Valeant Pharmaceuticals International,Bausch Health Companies Inc., a British Columbia corporation (the “Company”, “we” or “our”), will be held at 2150 Saint Elzear Blvd. West, Laval, Quebec, Canada H7L 4A8, on Tuesday, May 2, 2017,April 28, 2020, at 9:00 a.m., local time, for the following purposes:
1. To receive the audited consolidated financial statements of the Company as of and for the fiscal year ended December 31, 20162019 and the auditors’ report thereon, a copy of which is enclosed with this Notice of Annual Meeting;
2. To elect 10eleven directors of the Company (each a “Director” and collectively, the “Directors”) to serve on the Company’s board of directors (the “Board”) until the close of the 20182021 Annual Meeting of Shareholders;Shareholders, their successors are duly elected or appointed, or such director’s earlier resignation or removal;
3. To approve, in anon-bindingan advisory vote, the compensation of our named executive officers as disclosed in the Compensation Discussion and Analysis section, executive compensation tables and accompanying narrative discussions contained in the Management Proxy Circular and Proxy Statement that accompanies this Notice of Annual Meeting of Shareholders;officers;
4. To vote, in anon-binding advisory vote, onapprove an amendment to the frequencyCompany’s Amended and Restated 2014 Omnibus Incentive Plan to increase the number of advisory votes oncommon shares of the compensation of our named executive officers as disclosed in the Compensation Discussion and Analysis section, executive compensation tables and accompanying narrative discussions contained in the Management Proxy Circular and Proxy Statement that accompanies this Notice of Annual Meeting of Shareholders;Company authorized for issuance under such plan;
5.4. To appoint PricewaterhouseCoopers LLP as independent registered public accountantaccountants (the “auditors”) for the Company to hold office until the close of the 20182021 Annual Meeting of Shareholders and to authorize the Company’s Board of Directors to fix the auditors’ remuneration; and
6.5. To transact such other business as may properly come before the meetingAnnual Meeting or any adjournments or postponements thereof.
The record date for the Annual Meeting is March 7, 2017.2, 2020. Only record shareholders at the close of business on March 7, 20172, 2020 will be entitled to notice of and to vote at the Annual Meeting in person or by proxy.
We are providing access to our proxy materials, including our Annual Report on Form10-K for the fiscal year ended December 31, 2016,2019, to each shareholder of record in a fast and efficient manner via the Internet. On March 23, 2017,16, 2020, we will begin mailing a Notice Regarding Internet Availability of Proxy Materials (the “Notice”), to all shareholders of record as of March 7, 2017,2, 2020 and will post our proxy materials on the website referenced in the Notice (www.proxyvote.com). As more fully described in the Notice, all shareholders may choose to access our proxy materials free of charge on the website referred to in the Notice or may request to receive a printed set of our proxy materials free of charge. These materials will remain available on the website through the conclusion of the Annual Meeting. In addition, the Notice and website provide information regarding how you may request to receive proxy materials in printed form by mail or electronically by email on an ongoing basis. For those shareholders who have previously provided instructions to receive paper copies of our proxy materials, a paper copy will be sent to you in addition to the Notice. The management proxy circular and proxy statement (the “Proxy Statement”) that accompanies this Notice of Annual Meeting of Shareholders contains additional information regarding the proposals to be considered at the Annual Meeting, and shareholders are encouraged to read it in its entirety.
Shareholders are invited to attend the Annual Meeting.Record shareholderswho are unable to attend the Annual Meeting in person are requested to vote via the Internet, by going towww.proxyvote.com and following
the instructions on the website, or vote by calling toll free1-800-690-6903 on a touch tone telephone and following the instructions provided by “Vote Voice.” You will need to refer to the Proxy Card and to your12-digit16-digit control number provided on the Proxy Card. Alternatively, you may vote by mail by completing, dating and signing the enclosed form of proxy (the “Proxy Card”)Proxy Card and sending it in the enclosed envelope to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, New York 11717, United States or to the Company at 2150 Saint Elzear Blvd. West Laval, Quebec H7L 4A8 or by faxStates.514-744-6272.Non-recordNon-record shareholders who receive these materials through their broker or other intermediary should follow the instructions provided by their broker or intermediary.
For your vote to be effective, your voting instructions must be received by Broadridge Financial Solutions, Inc. (“Broadridge”) not later than11:59 p.m. (Eastern Daylight Time) on Friday, April 28, 201724, 2020,, or, in the case of any adjournment of the Annual Meeting, not less than 48 hours, excluding Saturdays, Sundays and applicable holidays, prior to the time of the rescheduled meeting. The Company’s Board, or the chairperson of Directorsthe Annual Meeting may, at itstheir discretion, accept late proxies or waive the time limit for deposit of proxies, but isare under no obligation to accept or reject any late proxy.If you have voted by proxy using the Proxy Card, via fax or the Internet or by telephone, any subsequent vote by proxy through any of these methods will cancel any other proxy you may have previously submitted in connection with the Annual Meeting, and only the latest dated proxy received prior to the deadline will be counted.
By Order of the Board of Directors,
Christina M. Ackermann
Executive Vice President and General Counsel
Dated: March 23, 201716, 2020
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VALEANT PHARMACEUTICALS INTERNATIONAL,BAUSCH HEALTH COMPANIES INC.
2150 Saint Elzear Blvd. West
Laval, Quebec H7L 4A8
MANAGEMENT PROXY CIRCULAR AND PROXY STATEMENT
20172020 ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON MAY 2, 2017APRIL 28, 2020
This Management Proxy Circular and Proxy Statement (“Proxy Statement”) contains information about the 20172020 Annual Meeting of Shareholders of Valeant Pharmaceuticals International,Bausch Health Companies Inc., a British Columbia corporation (the “Company” or “Valeant”“Bausch Health”). The meeting will, to be held at 2150 Saint Elzear Blvd. West, Laval, Quebec, Canada H7L 4A8, on Tuesday, May 2, 2017,April 28, 2020, at 9:00 a.m., local time (the “Annual Meeting”), and any adjournments or postponements thereof, (the “Annual Meeting” or the “Meeting”), for the purposes set forth in this Proxy Statement and in the accompanying Notice of Annual Meeting of Shareholders. In this document, the words “Valeant,“Bausch Health,” “we,” “our,” “ours” and “us” refer only to Valeant Pharmaceuticals International,Bausch Health Companies Inc. and not to any other person or entity. References to “US$” or “$” are to United States dollars. Unless otherwise indicated, the statistical and financial data contained in this Proxy Statement are as of February 28, 2017.March 2, 2020.
We are providing you with this Proxy Statement and related materials in connection with the solicitation of proxies by our management. See the section titled “Questions About Voting — Who is soliciting my proxy?” on page 7 for additional information.
We are providing access to our proxy materials, including our Annual Report on Form10-K for the fiscal year ended December 31, 2016,2019, in a fast and efficient manner via the Internet. On March 23, 2017,16, 2020, we will begin mailing a Notice Regarding Internet Availability of Proxy Materials (the “Notice”) to all shareholders of record as of March 7, 2017,2, 2020 and post our proxy materials on the website referenced in the Notice (www.proxyvote.com). As more fully described in the Notice, all shareholders may choose to access our proxy materials on the website referred to in the Notice or may request to receive a printed set of our proxy materials. In addition, the Notice and website will provide information regarding how you may request to receive proxy materials in printed form by mail or electronically by email on an ongoing basis. For those shareholders who have previously provided instructions to receive paper copies of our proxy materials, a paper copy will be sent to you in addition to the Notice.
All properly executed written proxies, and all properly completed proxies submitted by mail, facsimile or telephone or via the Internet, which are delivered pursuant to, and which appoint Mr.Joseph C. Papa and Ms.Christina M. Ackermann as proxyholders in accordance with, this solicitation will be voted at the Annual Meeting in accordance with the directions given in the proxy, unless the proxy is revoked prior to completion of voting at the Annual Meeting.
ELECTRONIC DELIVERY OF VALEANTBAUSCH HEALTH SHAREHOLDER COMMUNICATIONS
We are pleased to offer to our shareholders the benefits and convenience of electronic delivery of Annual Meeting materials, including:
Emailemail delivery of the Proxy Statement, Annual Report and any related materials;
Shareholdershareholder votingon-line;
Reductionreduction of the amountnumber of bulky documents shareholders receive; and
Reductionreduction of our printing and mailing costs associated with more traditional methods.
We encourage you to conserve natural resources and to reduce printing and mailing costs by signing up for electronic delivery of ValeantBausch Health shareholder communications.
If you are a registered shareholder or a beneficial owner of common shares, no par value, of the Company (“Common Shares”), or if a broker or other nominee holds your Valeant Common Shares, and you would like to sign up for electronic delivery, please visitwww.proxyvote.com and enter the information requested to enroll. Your electronic delivery enrollment will be effective until you cancel it. If you have questions about electronic delivery, please call ValeantBausch Health Investor Relations at514-744-6792514-856-3855 or send an email toir@valeant.com.ir@bauschhealth.com.
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE
ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON MAY 2, 2017APRIL 28, 2020
Our Annual Report on Form10-K for the fiscal year ended December 31, 20162019 (the “Annual Report”) is available on the Internet at our website at www.valeant.com,www.bauschhealth.com, through the System for Electronic Document Analysis and Retrieval (“SEDAR”) at www.sedar.com or through the U.S. Securities and Exchange Commission’s electronic data system, called EDGAR, at www.sec.gov.To request a printed copy of our Annual Report, which we will provide to you without charge, either write to ValeantBausch Health Investor Relations at Valeant Pharmaceuticals International,Bausch Health Companies Inc., 2150 Saint Elzear Blvd. West, Laval, Quebec H7L 4A8, Canada, or send an email to ValeantBausch Health Investor Relations at ir@valeant.com.ir@bauschhealth.com.
This Proxy Statement and the Annual Report are available at: www.proxyvote.com.
This Proxy Statement contains information regarding, among other things:
Thethe date, time and location of the Annual Meeting;
Aa list of the proposals being submitted to shareholders for approval; and
Informationinformation concerning voting, either in person or by proxy.
Whether or not you plan to attend the Annual Meeting, please promptly provide your voting instructions.Your promptness in voting will assist in the expeditious and orderly processing of the proxies and in ensuring that a quorum is present.present at the Annual Meeting. If you vote your proxy, you may nevertheless attend the Annual Meeting and vote your Common Shares in person if you wish. Please note, however, that if your Common Shares are held of record by a broker or other nominee and you wish to vote in person at the Annual Meeting, you must follow the instructions provided to you by your broker or such other nominee. If you want to revoke your instructions at a later time prior to the vote for any reason, you may do so in the manner described in this Proxy Statement.
What decisions will the shareholders be making at the Annual Meeting?
You will be asked to vote on each of the following proposals:
the election of 10 Directorseleven directors to serve on the Company’s board of directors of the (the “Board”) until the close of the 20182021 Annual Meeting of Shareholders, their successors are duly elected or appointed, or such director’s earlier resignation or removal (“Proposal No. 1”);
the approval, in anon-bindingan advisory vote, of the compensation of our Named Executive Officers (as defined below) as disclosed in the Compensation Discussion and Analysis (“CD&A”) section,named executive compensation tables and accompanying narrative discussions contained in this Proxy Statementofficers (“Proposal No. 2”);
in anon-binding advisory vote, a recommendation on the frequencyapproval of advisory votes onan amendment to the compensationCompany’s Amended and Restated 2014 Omnibus Incentive Plan (the “ 2014 Plan”) to increase the number of Common Shares authorized for issuance under the Named Executive Officers as disclosed in the Compensation Discussion and Analysis (“CD&A”) section, executive compensation tables and accompanying narrative discussions contained in this Proxy Statement2014 Plan (“Proposal No. 3”); and
the appointment of PricewaterhouseCoopers LLP (“PwC”) as the auditors (the “auditors”) for the Company to hold office until the close of the 20182021 Annual Meeting of Shareholders and the authorization of the Company’s Board of Directors (the “Board”) to fix the auditors’ remuneration (“Proposal No. 4”).
The Board recommends that you votevote: (i) FOR:FOR (i) the electioneach of the 10 Directordirector nominees proposed by the Board in this Proxy Statement;Statement, to serve on the Board until the close of the 2021 Annual Meeting of Shareholders, their successors are duly elected or appointed, or such director’s earlier resignation or removal; (ii)FOR the approval, in anon-bindingan advisory vote, of the compensation of our named executive officers; (iii) FORthe Named Executive Officers as described inapproval of an amendment to the CD&A section, executive compensation tables and accompanying narrative discussion contained in this Proxy Statement; (iii) EVERY YEAR with respect2014 Plan to how frequently anon-binding advisory vote onincrease the compensationnumber of Common Shares authorized for issuance under the Company’s Named Executive Officers should be held2014 Plan; and (iv)FOR the appointment of PwC as our auditors until the close of the 2021 Annual Meeting of Shareholders and the authorization of the Board to fix the auditors’ remuneration.
In addition, you may be asked to vote in respect of any other matters that may properly be brought before the Annual Meeting. As of the date of this Proxy Statement, the Board is not aware of any such other matters.
A simple majority of votes cast at the Annual Meeting, whether in person, by proxy or otherwise, in favor of any of Proposal No. 1 through Proposal No. 4 will constitute approval of any such proposal submitted to a vote, subject, with respect to Proposal No. 1, to the Company’s majority vote policy described in “Proposal No. 1 — Election of Directors” under “Background” below.Directors — Background” on page 9.
What impact does a Withhold or Abstain vote have?
Proposal No. 1:1: With respect to each director nominee, you may either vote “For” the election of such nominee or “Withhold” your vote with respect to the election of such nominee. If you vote “For” the election of a nominee, your Common Shares will be voted accordingly. If you select “Withhold” with respect to the election of a nominee, your vote will not be counted as a vote cast for the purposes of electing such nominee but will be considered in the application of the majority vote policy described in “Proposal No. 1 — Election of Directors” under “Background” below.Directors — Background” on page 9.
Proposal No. 2:Proposal No. 2 is anon-binding advisory vote. You may select “For,” “Against” or “Abstain” with respect to such proposal. Abstentions will have no effect and will not be counted as votes cast on Proposal No. 2.
Proposal No. 3:Proposal No. 3 is anon-binding advisory vote. You With respect to the approval of an amendment to the 2014 Plan to increase the number of Common Shares authorized for issuance under the 2014 Plan, you may select “Every Year,” “Every Two Years,” “Every Three Years,vote “For”, “Against,” or “Abstain” with respect to such proposal. Abstentions will have nothe effect and will not be counted as votes cast onof a vote “Against” Proposal No. 3.
Proposal No. 4:With respect to the appointment of the proposed auditors, you may either vote “For” such appointment or “Withhold” your vote with respect to such appointment. If you vote “For” the appointment of the proposed auditors, your Common Shares will be voted accordingly. If you select “Withhold” with respect to the appointment of the proposed auditors, your vote will not be counted as a vote cast for the purposes of appointing the proposed auditors.
What is the effect if I do not cast my vote?
If a record shareholder does not cast its vote by proxy or in any other permitted fashion, no votes will be cast on its behalf on any of the items of business at the Annual Meeting. If anon-record shareholder does not instruct its intermediary on how to vote on any of the items of business at the Annual Meeting and the intermediary does not have discretionary authority to vote thenon-record shareholder’s Common Shares on the
matter, or elects not to vote in the absence of instructions from thenon-record shareholder, no votes will be cast on behalf of suchnon-record shareholder with respect to such item (a “brokernon-vote”). If you are a beneficial owner whose Common Shares are held of record by a broker authorized to trade on the New York Stock Exchange (“NYSE”), NYSE rules permit your broker to exercise discretionary voting authority to vote your Common Shares on Proposal No. 4, the appointment of PricewaterhouseCoopers LLPPwC as our independent registered public
accountants,auditors, even if the broker does not receive voting instructions from you. However, NYSE rules do not permit your broker to exercise discretionary authority to vote on Proposal No. 1, the election of Directors,directors, Proposal No. 2, the advisory vote to vote onapprove thenon-binding advisory compensation of our named executive officers, or Proposal No. 3, the approval of executive compensation or to vote onamend thenon-binding advisory approval of the frequency of thenon-binding advisory approval of executive compensation 2014 Plan, without instructions from you, in whichyou. In this case, a brokernon-vote will occur, and your vote will not be counted as a vote cast on these matters. If you have further questions on this issue, please contact your intermediary bank or broker or ValeantBausch Health Investor Relations at ir@valeant.com.ir@bauschhealth.com.
What constitutes a quorum for the Annual Meeting?
TwoA minimum of two persons who either are, or represent by proxy, shareholders holding, in the aggregate, at least 25% of the outstanding Common Shares entitled to vote at the Annual Meeting will constitute a quorum for the transaction of business at the Annual Meeting. Votes withheld, abstentions, and brokernon-votes will be counted for purposes of determining the presence of a quorum.
Who is entitled to vote?
Each shareholder is entitled to one vote for each Common Share registered in his or her name as of the close of business on March 7, 2017,2, 2020, the record date for the purpose of determining holders of Common Shares entitled to receive notice of and to vote at the Annual Meeting.
As of March 7, 2017, 347,850,2272, 2020, 353,356,114 Common Shares were issued and outstanding and entitled to be voted at the Annual Meeting.
How do I vote?
The voting process is different depending on whether you are a record (registered) ornon-record shareholder:
You are a record shareholder if your name appears in our share register.
You are anon-record shareholder if your Common Shares are held on your behalf by a bank, trust company, securities broker, trustee or other intermediary. This means the Common Shares are registered in your intermediary’s name, and you are the beneficial owner. Most shareholders arenon-record shareholders.
Non-record shareholders
If you are anon-record shareholder, your intermediary will send you a voting instruction form or proxy form with this Proxy Statement. This form will instruct the intermediary how to vote your Common Shares at the Annual Meeting on your behalf. You should carefully follow the instructions provided by the intermediary (including with respect to applicable timelines for providing voting instructions, which may be different from those described in this Proxy Statement) and contact the intermediary promptly if you need help. The Company will pay for delivery of proxy materials to beneficial owners, including objecting beneficial owners.
If you do not intend to attend the Annual Meeting and vote in person, mark your voting instructions on the voting instruction form or proxy form, sign it, and return it as instructed by your intermediary. Your intermediary may have also provided you with the option of voting by telephone, orby fax or throughvia the Internet.
If you wish to vote in person at the Annual Meeting, follow the instructions provided by your intermediary. Your intermediary may have also provided you with the option via the Internet of appointing yourself or someone else to attend and vote on your behalf at the Meeting through the Internet.Annual Meeting. When you arrive at the Annual Meeting, please register with the Inspector of Elections.
Your intermediary must receive your voting instructions in sufficient time for your intermediary to act on them prior to the deadline for the deposit of proxies of 11:59 p.m. (Eastern Daylight Time) on Friday, April 28, 2017,24, 2020, or, in the case of any adjournment of the Annual Meeting, not less than 48 hours (excluding Saturdays, Sundays and applicable holidays) prior to the rescheduled Annual Meeting.
Record shareholders
If you are a record shareholder, a Proxy Card is enclosed with this Proxy Statement to enable you to vote, or to appoint a proxyholder to vote on your behalf, at the Annual Meeting.
Whether or not you plan to attend the Annual Meeting, you may vote your Common Shares by proxy by any one of the following methods:
By mail: Mark, sign and date your Proxy Card and send it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, New York 11717, United States. Broadridge must receive your Proxy Card not later than 11:59 p.m. (Eastern Daylight Time) on Friday, April 28, 201724, 2020 in order for your vote to be counted. If the Annual Meeting is adjourned or postponed, Broadridge must receive your Proxy Card at least 48 hours, excluding Saturdays, Sundays and applicable holidays, before the rescheduled Annual Meeting.
By telephone: Call toll free1-800-690-6903. You will be prompted to provide your 12 digit16-digit control number printed below yourpre-printed name and address on the Proxy Card. The telephone voting service is available until 11:59 p.m. (Eastern Daylight Time) on Friday, April 28, 2017.24, 2020. You may not appoint a person as proxyholder other than the Board nominated proxies named in the Proxy Card when voting by telephone.
Via the Internet: Go to www.proxyvote.com and follow the instructions on the website prior to 11:59 p.m. (Eastern Daylight Time) on Friday, April 28, 2017.24, 2020.
We provide Internet proxy voting to allow you to vote your Common Shares online,via the Internet, with procedures designed to ensure the authenticity and correctness of your proxy vote instructions. However, please be aware that you must bear any costs associated with your Internet access, such as usage charges from Internet access providers and telephone companies.
The Board, or the Chairperson of the Annual Meeting may, at their discretion, accept late proxies or waive the time limit for deposit of proxies, but are under no obligation to accept or reject any late proxy.
If you receive more than one Notice, your Common Shares are registered in more than one name or are registered in different accounts. Please follow the voting instructions oneach Notice to ensure that all of your Common Shares are voted.
How do I appoint a proxyholder?
Your proxyholder is the person you appoint to cast your votes on your behalf.You can choose anyone you want to be your proxyholder; it does not have to be either of the persons we have designated in the Proxy Card.Card, nor does it have to be a shareholder. Just write in the name of the person you would like to appoint in the blank space provided in the Proxy Card.Please ensure that the person you have appointed will be attending the Annual Meeting and is aware that he or she will be voting your Common Shares. Proxyholders should speak to the Inspector of Elections upon arriving at the Annual Meeting. Please note that the option to appoint your own proxyholder is not available if you vote by telephone or online.via the Internet.
If you sign the Proxy Card without naming your own proxyholder, or, if you vote onlinevia the Internet or by telephone, you appoint Mr. Papa and Ms. Ackermann as your proxyholders, either of whom will be authorized to vote and otherwise act for you at the Annual Meeting, including any continuation after adjournment of the Annual Meeting.
How will my Common Shares be voted if I give my proxy?
On the Proxy Card, you can indicate how you want your proxyholder to vote your Common Shares, or you can let your proxyholder decide for you by signing and returning the Proxy Card without indicating a voting
preference in one or more proposals. If you have specified on the Proxy Card how you want to vote on a particular proposal (by marking, as applicable, FOR, WITHHOLD, AGAINST or ABSTAIN), then your proxyholder must vote your Common Shares accordingly.accordingly, including on any ballot that may be called for.
If you have not specified how to vote on a particular proposal, then your proxyholder can vote your Common Shares as he or she sees fit. Unless you specify voting instructions, Mr. Papa and Ms. Ackermann, as your proxyholders, will vote your Common Shares as follows:
FOR the electioneach of the 10 Directordirector nominees proposed by the Board in this Proxy Statement to serve until the close of the 20182021 Annual Meeting of Shareholders;Shareholders, their successors are duly elected or appointed, or such director’s earlier resignation or removal;
FOR the approval, in annon-binding advisory vote, of the compensation of the Named Executive Officers as disclosed in the CD&A section,our named executive compensation tables and the accompanying narrative discussions contained in this Proxy Statement;officers;
EVERY YEAR forFOR the approval inof annon-binding advisory vote, amendment to the 2014 Plan to increase the number of Common Shares authorized for issuance under the frequency of advisory votes on the compensation of the Named Executive Officers as disclosed in the CD&A section, executive compensation tables2014 Plan; and the accompanying narrative discussions contained in this Proxy Statement; and
FOR the appointment of PwC as the auditors for the Company to hold office until the close of the 20182021 Annual Meeting of Shareholders and the authorization of the Board to fix the auditors’ remuneration.
If I change my mind, can I revoke my proxy once I have given it?
If you are anon-record shareholder, you can revoke your prior voting instructions by providing new instructions on a voting instruction form or proxy form with a later date, or at a later time in the case of voting by telephone or throughvia the Internet. Otherwise, contact your intermediary if you want to revoke your proxy, change your voting instructions or if you change your mind and want to vote in person. Any new voting instructions given to intermediaries in connection with the revocation with proxies must be received in sufficient time to allow intermediaries to act on such instructions prior to the deadline for the deposit of proxies of 11:59 p.m. (Eastern Daylight Time) Friday, April 28, 2017,24, 2020, or at least 48 hours (excluding Saturdays, Sundays and applicable holidays) prior to the time of the Annual Meeting if it is rescheduled. If you choose to provide voting instructions multiple times, only the latest one which is not revoked and is received prior to such deadline will be counted.
If you are a record shareholder, you may revoke any proxy that you have given until the time of the Annual Meeting by voting again by telephone or overvia the Internet as instructed above, by signing and dating a new Proxy Card and submitting it as instructed above, by giving written notice of such revocation to the Corporate Secretary of the Company at our address, by revoking it in person at the Annual Meeting or by voting by ballot at the Annual Meeting. If you choose to submit a proxy multiple times whether by telephone, overvia the Internet or by mail, or a combination thereof, only your latest vote, which is not revoked and is received prior to 11:59 p.m. (Eastern Daylight Time) on Friday, April 28, 201724, 2020 (or 48 hours, excluding Saturdays, Sundays and applicable holidays, before the Annual Meeting if it is rescheduled) will be counted. A record shareholder participating in person, in a vote by ballot at the Annual Meeting, will automatically revoke any proxy previously given by that shareholder regarding business considered by that vote. However, mere attendance at the Annual Meeting by a record shareholder who has voted by proxy does not revoke such proxy. If your proxy is delivered following the proxy cut-off time it will revoke your previous proxy; however, it will not be valid for voting except at the discretion of the Board or the chairperson of the Annual Meeting, who are under no obligation to accept or reject any late proxy.
What if amendments are made to these proposals or if other matters are brought before the Annual Meeting?
The Proxy Card also gives discretionary authority to proxyholders to vote as the proxyholders see fit with respect to amendments or variations to proposals identified in the Notice of Meeting or other matters that may come before the Annual Meeting whether or not the amendment, variation or other matter that comes before the Annual Meeting is or is not routine and whether or not the amendment, variation or other matter that comes before the Annual Meeting is contested.
As of the date of this Proxy Statement, the Board is not aware of any such amendments, variations or other matters to come before the Annual Meeting. However, if any such changes that are not currently known to the Board should properly come before the Annual Meeting, the Common Shares represented by your proxyholders will be voted in accordance with the best judgment of the proxyholders.
Who is soliciting my proxy?
Management of the Company is soliciting your proxy for use at the Annual Meeting.All associated costs of solicitation will be borne by the Company. It is expected that the solicitation will be primarily by mail, but proxies may also be solicited personally, by advertisement, by telephone, Internet, telegraph, courier service, telecopies or other electronic means by Directors,directors, officers or employees of the Company without special compensation or by the Company’s proxy solicitor, D.F. King Co., Inc. (“D.F. King”) for a fee of $10,000 plus reimbursement of reasonableout-of-pocket expenses. The Company will bear the entire cost of solicitation, including the preparation, assembly, Internet hosting, maintaining a dedicated call line, and printing and mailing the Proxy Statement and form of Proxy Card. The Company will pay those entities holding Common Shares in the names of their beneficial owners, such as brokers, nominees, fiduciaries and other custodians, for their reasonable fees and expenses in forwarding solicitation materials to their beneficial owners and for obtaining their instructions. We anticipate that the Notice and the accompanying Proxy Card will be distributed to shareholders on or about March 23, 2017.16, 2020.
How can I contact the independent Directorsdirectors and/or the Chairman of the Board?
You may contact the independent directors and/or the Chairman of the Board with the assistance of the Company’s Investor Relations Department. Shareholders or other interested persons can call or send a letter, email or fax to:
Valeant Pharmaceuticals International,Bausch Health Companies Inc.
Investor Relations
2150 Saint Elzear Blvd. West
Laval, Quebec H7L 4A8
Canada
Phone:514-744-6792514-856-3855
Fax:514-744-6272
Email: ir@valeant.comir@bauschhealth.com
Whom should I contact if I have questions concerning the Proxy Statement or the Proxy Card?
If you have questions concerning the information contained in this Proxy Statement or require assistance in completing the Proxy Card, you may contact ValeantBausch Health Investor Relations as provided above.
How can I contact the Company’s transfer agent?
You may contact the Company’s transfer agent by mail or by telephone (within Canada and the United States):
CSTAST Trust Company (Canada)
P.O. Box 700
Station B
Montreal, QC H3B 3K3
Canada
Website: www.canstockta.com
Email: inquiries@canstockta.cominquiries@astfinancial.com
Tel:Fax:888-249-6189
Phone (for all security transfer inquiries):1-800-387-0825 or416-682-3860
Fax:Website:888-249-6189www.astfinancial.com/ca-en
ELECTION OF DIRECTORS
The number of DirectorWe have eleven director nominees standing for election at the Meeting is 10.Annual Meeting. Under the Company’s Articles, Directorsdirectors are elected annually. Directors elected at the Annual Meeting will hold office until the close of the 20182021 Annual Meeting of Shareholders of the Company, or until their successors are duly elected or appointed.appointed, or such director’s earlier resignation or removal. In an uncontested election, any Directordirector nominee who receives a greater number of votes “withheld” from his or her election than votes “for” such election is required to tender his or her resignation promptly following the vote, which resignation must state that it will become effective upon acceptance by the Board. The Nominating and Corporate Governance Committee shall then consider the offered resignation and make a recommendation to the Board as to whether it should accept such resignation. Thereafter,The Nominating and Corporate Governance Committee is expected to accept such resignation, except in exceptional circumstances. Within 90 days of the applicable vote, the Board must decide whether to accept such resignation, and it must promptly disclose its decision via press release. Full details of this policy are set forth in our Corporate Governance Guidelines, available on our website at www.valeant.comwww.bauschhealth.com (under the tab “About”“Investors” and under the subtab “Corporate Governance”Governance- Governance Documents”). Our website is not part of this Proxy Statement; references to our website address in this Proxy Statement are intended to be inactive textual references only.
Each of the 10 Directoreleven director nominees has established his or her eligibility and willingness to serve on the Board. Set forth belowin the section titled “Nominees for Election to the Board” beginning on page 12 are the names of the Directordirector nominees together with details about their backgrounds and experience. Also indicated is the number of the Company’s securities beneficially owned, controlled or directed, directly or indirectly, by each of the Directordirector nominees as of February 28, 2017,March 2, 2020, as well as the aggregate value based on the $23.09 per share closing price of our Common Shares as reported on the NYSE on February 28, 2017 of $14.38. YouMarch 2, 2020. For each director nominee, you will find for each Director nominee who was on the Board at any time in 2016 a record of attendance at meetings of the Board and the standing committees of the Board on which such Directordirector nominee served from January 1, 2016 to December 31, 2016.during 2019.
NineTen of the 10 Directoreleven director nominees are independent within the meaning of all applicable securities regulatory and stock exchange requirements in Canada and the U.S.United States. In addition, in accordance with the applicable stock exchange requirements and Board committee charters, all members of the Audit and Risk Committee, the Talent and Compensation Committee and the Nominating and Corporate Governance Committee are independent directors.
Unless otherwise instructed, the designated proxyholders intend to vote FOR the election of the 10 Directoreleven director nominees proposed by the Board in this Proxy Statement. If, for any reason, at the time of the Annual Meeting any of these Directordirector nominees are unable or unwilling to serve, unless otherwise specified in the signed Proxy Card, it is intended that the designated proxyholders will vote in their discretion for a substitute nominee or nominees.
The Board is responsible for nominating director candidates for election to the Board, and for appointing directors to the Board to fill any vacancies that may occur in between annual elections of directors. The Nominating and Corporate Governance Committee is responsible for identifying individuals qualified to become Directorsdirectors and recommending such individuals to the Board director candidates for nomination either for election by shareholders or for appointment by the Company’s shareholders.
Board. In making recommendations to the Board for new nominees for election or appointment,fulfilling this responsibility, the Nominating and Corporate Governance Committee considers, among other things, (i) the independence, skills, qualifications and experience of director candidates in a manner consistent with the selection criteria approved by the Board from time to time,time; (ii) the
composition, competencies and such knowledge, experience, skills expertise and diversity that the Board considers to be necessary forof the Board as a whole, to possess and for each Director to possess. In November 2015, the needs of the individual Board retained Odgers Berndtson, LLC, a third-party search firm, to assist withcommittees; and (iii) the recruitmentwide range of attributes, competencies, characteristics, experiences and backgrounds contemplated by the Company’s Board Diversity Policy, as described below; and, in evaluating incumbent directors fornon-executivere-nomination, Directors. In 2016,(iv) the Company paid Odgers Berndtson, LLC $1,351,379 for the recruitmentperformance ofnon-executive Directors and Mr. Papa. such directors.
The Nominating and Corporate Governance Committee endeavors to recommend to the Board individuals possessing certain qualities such that the resulting Board will be comprised of a diverse membership. The
Company does not have a Directordirector retirement policy; however, the Nominating and Corporate Governance Committee considers the results of its Director assessment process in determining the nominees to be put forward on a regular basis. The Company has notpolicy nor does it set term limits for independent directors, because itthe Board does not believe term limits areeither is necessary to provide for adequate Board renewal. The Nominating and Corporate Governance Committee andCompany believes that the Board, in conducting Director evaluations and nominations, considers the composition of the Board and whether there is a need to include nominees with different skills, experiences and perspectives on the Board. This mechanismdirector nomination process described above has resulted in a reasonable level of Board renewal such that ourin recent years, and the Nominating and Corporate Governance Committee actively considers this issue in recommending to the Board director candidates for nomination for election by shareholders. Our current Board is comprised of individualsdirectors who have served on our Board, orincluding, as applicable, the board of a predecessor of the Company, from less than one year to ninemore than eleven years.
The Nominating and Corporate Governance Committee views diversity in a broad context and considers a variety of factors. Upon the recommendation of the Nominating and Corporate Governance Committee, the Board has adopted a formal written diversity policy.Board Diversity Policy. The objective of the diversity policyBoard Diversity Policy is to require the considerationBoard and the Nominating and Corporate Governance Committee to consider of a wide range of attributes, competencies, characteristics, experiences and backgrounds, including specifically considering the number of women on the Board, when consideringreviewing the composition of the Board in the Directordirector nomination andre-nomination process. The key provisions of the diversity policyBoard Diversity Policy emphasize the Company’s view abouton the benefits of diverse backgrounds and the need to consider diversity in evaluating the needs of the Board. The Nominating and Corporate Governance Committee will overseeoversees and annually evaluateevaluates the implementation and effectiveness, both as measured annually and cumulatively, of the diversity policyBoard Diversity Policy in conjunction with its Boarddirector evaluation and nomination process. The Nominating and Corporate Governance Committee assesses the effectiveness of the Board Diversity Policy by reference to, among other things, the extent to which the current Board and the nominees for election to the Board reflect the stated objectives of the Board Diversity Policy. The Company has not established a specific target number or date by which to achieve a specific number of women on the Board, as we consider a multitude of factors, including the Company’s objectives and challenges and the representation of women on the Board, in determining the best nominee at the time and consider the Company’s objectives and challenges at such time. If all of our Directordirector nominees are elected by shareholders at this Annual Meeting, then 20%two directors, representing 18% of our Directorsdirectors, will be women. For a discussion of the Company’s policy regarding the level of women in executive officer positions, see ““Statement of Corporate Governance Practices — Talent and Compensation Committee — Succession Planning” below.Planning” beginning on page 31.
In considering an individual’s experience, the following additional criteria are also considered:
Healthcare and Healthcare Industry Expertise: The Board values Directorsdirectors with experience in healthcare and the healthcare industry, including the pharmaceutical, consumer and life science industries, who can draw on their functional expertise and industry relationships to assist the Board and management in executing the Company’s strategy.
International Business Experience: To complement the Company’s multinational and cross-border operations, the Board seeks to have Directorsdirectors with a global business perspective who can assist the Board and management in successfully navigating the business, political, legal and regulatory environments in the countries in which the Company conducts, or seeks to conduct, its business.
Financial Literacy: The Board believes that it is important for its Directorsdirectors to possess significant financial reporting, compliance and accounting expertise. Among other functions, the Board and the Audit and Risk Committee have oversight responsibility with respect to the quality and integrity of the Company’s financial statements, the internal and external audit functions, and internal control over financial reporting and disclosure controls and procedures. It is therefore important that Directorsits directors are financially knowledgeable.
Corporate Governance Experience: The Board is responsible for the stewardship of the Company and supervising its management, business and affairs, in addition to being responsible for adopting and
monitoring the Company’s corporate governance guidelines and policies. In order to carry out these responsibilities, it is important that the Board be comprised of individuals who understand corporate governance issues, the various constituencies interested in such issues, and have a proven track record of sound business judgment, integrity and high ethical standards. Many of the Company’s Directordirector nominees have experience serving on public company boards in multiple jurisdictions, including in the United States and Canada.
Executive Leadership: The Board believes that it is important for its Directorsdirectors to possess strong management experience at senior corporate levels. It is important that the Board be comprised of individuals
who have held senior management positions with companies or business entities who have experience with mergers, acquisitions and strategic business transactions and who have a strong background in implementing, managing and overseeing strategic planning and business development initiatives. A number of the Company’s Directordirector nominees possess extensive leadership experience and have held a number of senior management and leadership positions with global organizations.
Submitting Director Recommendations to the Nominating and Corporate Governance Committee
The Nominating and Corporate Governance Committee will also consider director recommendations for Director nominees submitted by the Company’s shareholders. Shareholders who desirewish to have the Nominating and Corporate Governance Committee consider their recommendations for nominees for Director should submit their submissionrecommendation in writing to the Nominating and Corporate Governance Committee, attention: Chairperson. RecommendationsChairperson, Bausch Health Companies Inc., 2150 Saint Elzear Blvd. West, Laval, Quebec, H7L 4A8, Canada.
Director recommendations made by shareholders in such manner will undergo the same evaluation by the Nominating and Corporate Governance Committee and the Board as all other Board recommendeddirector nominees. For more detailed information on this evaluation process, please refer to the charter of the Nominating and Corporate Governance Committee, (the “Nominating and Corporate Governance Committee Charter”) which is available on the Company’s website at www.valeant.comwww.bauschhealth.com (under the tab “About”“Investors” and under the subtab “Corporate Governance”Governance- Corporate Governance Documents”). For additional information regarding theour director standards, for nominees to the Board, please refer to our Corporate Governance Guidelines.Guidelines, which is available on the Company’s website at www.bauschhealth.com (under the tab “Investors” and under the subtab “Corporate Governance- Governance Documents”).
In order for a shareholder’s Director nomineedirector candidate recommended by a shareholder to be included as a nominee in the management proxy circular and proxy statement as a nominee for an Annual Meeting of Shareholders, such shareholder’s nomination must satisfy the criteria and procedures prescribed under theBritish Columbia Business Corporations Act(“BCBCA”) and in the Company’s Articles. For additional information regarding the deadlines and procedures for submitting such nominations for the 20182021 Annual Meeting of Shareholders, please see the discussion belowon page 92 under “Shareholder Proposals and Director Nominations for the 20182021 Annual Meeting of Shareholders” below.Shareholders.”
NOMINEES FOR ELECTION TO THE BOARD
Each of the proposed Directordirector nominees is an incumbent Director. Mr. DeSchutter and Ms. Kavanagh were not elected at last year’s annual meeting but were appointed to the Board in January 2017 and July 2016, respectively. Messrs. Ackman and Fraidin were elected at last year’s annual meeting and have announced that they are not standing for reelection at the 2017 Annual Meeting. Additionally, Mr. Ingram was elected at the 2016 Annual Meeting and is not standing for reelection at the 2017 Annual Meeting.director. Each Directordirector nominee elected at the 20172020 Annual Meeting will hold office until the close of the 20182021 Annual Meeting of Shareholders, or until his or her successor is duly elected or appointed, or until such Director’sdirector’s earlier resignation or removal.
We would like to thank Messrs. Ingram, Ackman and Fraidin for their service as Directors, and appreciate the support and guidance that they have provided during a challenging time. Serving on the Board of a company undergoing a transformation requires a significant commitment.
The voting results from last year’sthe 2019 election of Directors for each candidate who was electeddirectors are as follows:
Name | For | Percentage of Votes Cast | Withheld | Broker Non-Votes | For | Withheld | Broker Non-Votes | |||||||||||||||||||||
William A. Ackman | 198,528,445 | 98.6 | 2,803,967 | 61,983,675 | ||||||||||||||||||||||||
Dr. Frederic N. Eshelman | 197,044,996 | 98.1 | 3,787,416 | 61,983,675 | ||||||||||||||||||||||||
Stephen Fraidin | 198,643,367 | 98.9 | 2,189,045 | 61,983,675 | ||||||||||||||||||||||||
Richard U. De Schutter | 183,421,746 | 1,800,334 | 85,239,464 | |||||||||||||||||||||||||
D. Robert Hale | 196,991,641 | 98.1 | 3,840,771 | 61,983,675 | 183,370,521 | 1,851,559 | 85,239,464 | |||||||||||||||||||||
Robert A. Ingram | 185,459,606 | 92.4 | 15,372,806 | 61,983,675 | ||||||||||||||||||||||||
Dr. Argeris (Jerry) N. Karabelas | 198,470,956 | 98.8 | 2,361,456 | 61,983,675 | 182,737,951 | 2,484,129 | 85,239,464 | |||||||||||||||||||||
Sarah B. Kavanagh | 181,279,743 | 3,942,337 | 85,239,464 | |||||||||||||||||||||||||
Joseph C. Papa | 195,388,625 | 97.3 | 5,443,787 | 61,983,675 | 179,484,034 | 5,738,046 | 85,239,464 | |||||||||||||||||||||
John A. Paulson | 183,706,997 | 1,515,083 | 85,239,464 | |||||||||||||||||||||||||
Robert N. Power | 187,469,060 | 93.3 | 13,369,352 | 61,983,675 | 177,484,848 | 7,737,232 | 85,239,464 | |||||||||||||||||||||
Russel C. Robertson | 198,700,104 | 98.9 | 2,132,308 | 61,983,675 | 180,800,755 | 4,421,325 | 85,239,464 | |||||||||||||||||||||
Thomas W. Ross, Sr. | 198,249,663 | 98.7 | 2,582,749 | 61,983,675 | 180,675,227 | 4,546,853 | 85,239,464 | |||||||||||||||||||||
Andrew C. von Eschenbach, M.D. | 183,612,142 | 1,609,938 | 85,239,464 | |||||||||||||||||||||||||
Amy B. Wechsler, M.D. | 198,488,329 | 98.8 | 2,344,083 | 61,983,675 | 183,402,429 | 1,819,651 | 85,239,464 |
The following narrative providesnarratives provide details about each of the Directordirector nominees’ background and experience, and summarizes the specific attributes, competencies and characteristics that led to the determination of the Nominating and Corporate Governance Committee’sCommittee and the Board’s determinationBoard to nominate such individual as a Directordirector for election by the shareholders at the Annual Meeting. In addition, the narrative lists the number of meetings of the Board orand any applicable committee each Directordirector nominee who was a Director ofattended during 2019 and any public company directorships, other than with the Company, in 2016, attended in 2016 and lists the directorships of public companies held by the nominees during the past five years other than the Company.years. The narrative also sets out (i) the number of securities of the Company each Directordirector nominee beneficially owned, controlled or directed, directly or indirectly, as of February 28, 2017 (unless otherwise indicated), as well asMarch 2, 2020; (ii) the aggregate value of such securities based on the $23.09 per share closing price of our stockCommon Shares on March 2, 2020, as reported on the NYSE, on February 28, 2017and (iii) the progress of $14.38. The Company’s Board recently adopted a change toeach director nominee toward the Company’s Director’sdirector share ownership requirement to align withestablished by the Company’s expanded peer group. UnderBoard. For further detail regarding the Company’s new Director share ownership guidelines, eachrequirement fornon-employee Director is expected to hold or control Common Shares, vested, restricted or deferredDirectors, see the discussion in the section titled “Statement of Corporate Governance Practices — Directors’ Share Ownership” on page 28. For further detail regarding the share units or a combination thereof, having a market value at least equal to five (5) timesownership requirement for Mr. Papa, see the annual Board cash retainer not later thandiscussion in the fifth anniversary of his or her election or appointment to the Board or, for individuals who were Directorssection titled “Compensation Discussion and Analysis — Other Compensation Governance Practices — Share Ownership Guidelines” on May 30, 2012, not later than May 30, 2017. The annual cash retainer of the Board is currently at $100,000 per year (or a current aggregate amount of $500,000 at the fifth anniversary of Director’s election or appointment to the Board). Please see “Director Compensation” below. The number of options, as set out below, indicates options previously awarded to eligible participants under our stock option plans (the “Options”).Non-management Directors do not receive stock options. From 2005 through May 2011,non-management Directors received deferred share units (“DSUs”). On May 17, 2011,non-management Directors began receiving restricted share units (“RSUs”) rather than DSUs. Information for each Director nominee as to securities beneficially owned, controlled or directed, directly or indirectly, is not within our knowledge and therefore has been provided by each Director nominee.page 53.
Mr. DeSchutterDe Schutter has been servingserved on the Board since January 2017. He is currently a corporate director. Prior to his retirement, Mr. DeSchutterDe Schutter served as the Chairman and Chief Executive Officer (“CEO”)CEO of DuPont Pharmaceuticals Company from July 2000 until its acquisition by Bristol-Myers Squibb in October 2001. Mr. DeSchutterDe Schutter was also a director and Chief Administrative Officer of Pharmacia Corporation, which was created through the merger of Monsanto Company and Pharmacia & Upjohn in 2000. Prior to thethis merger, Mr. DeSchutterDe Schutter was a director, Vice Chairman and Chief Administrative Officer for Monsanto. From 1995 to 1999, he served as Chairman and CEO of G.D. Searle & Co., Monsanto’s wholly owned pharmaceutical subsidiary. Mr. DeSchutter currently servesDe Schutter earned a Bachelor of Science degree in 1963, and a Master of Science Degree in Chemical Engineering in 1965 from the University of Arizona.
Mr. De Schutter has served as a director of AuVen Therapeutics, anda private equity company focused on the healthcare industry, since 2007. He has also served as a director of Applied Silver, Inc., a private biotechnology company, since 2016, and has served as a director of Sermonix Pharmaceuticals Inc., a private biotechnology company, since April 2019. He was previously served as Chairman of Navicure, Inc. (2002 to 2016); Incyte Corporation, (2003a pharmaceutical company, from 2003 to 2015); Sprout Pharmaceuticals, Inc. (“Sprout”) (2011 to 2015); Durata Therapeutics Inc. (2012 to 2014); and Lead Independent Director (2011 to 2014) and director (2001 to 2014) of Smith & Nephew plc. Mr. DeSchutter earned a Bachelor of Science degree (1963) and a Master of Science Degree (1965) in Chemical Engineering from the University of Arizona.2015.
Director Qualifications:
The Board has determined that Mr. DeSchutter’sDe Schutter’s many years of experience in senior management and board positions of publicly-traded companies, his service as well asa director of private healthcare and biotechnology companies, and his extensive insight and knowledge of the pharmaceutical industry and healthcare related issues qualify him to serve as a member of the Board and the committeecommittees on which he sits.serves.
Mr. Richard U. DeSchutterDe Schutter
Arizona, USA
Age 7679
Independent
14,0001Stock Ownership:
254,811 Common Shares Beneficially Owned — $201,320$5,883,586
11,190 RSUs29,439 Restricted Share Units (“RSUs”) (comprised of 018,806 vested RSUs — $0$434,231, and 11,19010,633 unvested RSUs — $160,912)$245,516)
• | Total Equity Value at Risk:1 $6,317,817, representing 1,264% of the Company’s current aggregate amount of $500,000 required under the share ownership guidelines fornon-employee directors and 6,318% of the director’s annual retainer. |
No Options
No DSUs
Total Equity Value at Risk2: $201,320, representing 40% of the Company’s current aggregate amount of $500,000 required under the share ownership guidelines fornon-management Directors and 201% of the Director’s annual retainer. Mr. DeSchutter has until January 2022 to achieve the expected minimum equity ownership under the share ownership guidelines.
20162019 Meeting Attendance:
Board — N/A. Mr. DeSchutter was appointed to the Board on January 2, 2017.6/6
Talent and Compensation Committee — 5/5
Finance and Transactions Committee — 7/7
1 |
|
The Total Equity Value at Risk calculation for each |
Dr. Eshelmanhas been serving on the Board since March 2016 and has more than 35 years of strategic development, executive, operational and financial leadership experience in the pharmaceutical and healthcare industries. He is the founder and principal of Eshelman Ventures, LLC, an investment company focused on the healthcare industry. From July 2009 to July 2014, Dr. Eshelman served as the Chairman of Furiex Pharmaceuticals, Inc., a drug development company that collaborated with pharmaceutical and biotechnology companies to increase the value of their drug candidates by applying an accelerated approach to drug development. He was the founder and former CEO and Executive Chairman of Pharmaceutical Product Development, Inc., a global contract pharmaceutical research organization providing drug discovery, development and lifecycle management services from July 2009 to December 2011. Dr. Eshelman currently serves as Chairman of The Medicines Company.
Director Qualifications:
The Board has determined that Dr. Eshelman’s experience as a CEO of a publicly-traded company, where he demonstrated leadership capability and extensive knowledge of the pharmaceutical industry and complex financial and operational matters facing large organizations and his breadth of experience in corporate governance qualify him to serve as a member of the Board and the committees on which he sits.
Dr. Fredric N. Eshelman
North Carolina, USA
Age 68
Independent
1,070 Shares Beneficially Owned — $15,387
16,726 RSUs (comprised of 0 vested RSUs — $0 and 16,726 unvested RSUs — $240,520)
No Options
No DSUs
Total Equity Value at Risk: $15,387, representing 3% of the Company’s current aggregate amount of $500,000 required under the share ownership guidelines fornon-management Directors and 15% of the Director’s annual retainer. Dr. Eshelman has until March 2021 to achieve the expected minimum equity ownership under the share ownership guidelines.
2016 Meeting Attendance:
Board — 23/24;
Conduct and Compliance Committee — 3/3;
Finance and Transactions Committee — 4/4;
Talent and Compensation Committee — 3/3.
Mr. Halehas been servingserved on the Board since August 2015. He is a Partner of ValueAct Capital Management, L.P. (“ValueAct Capital”), a governance-oriented investment fund which invests in a concentrated portfolio of public companies and works collaboratively with management and the board of directors on matters such as strategy, capital structure, M&A and talent management. During his tenure at ValueAct Capital as a Partner, and formerly as a Vice President and Associate, Mr. Hale has worked on investments in the pharmaceutical, medical device, information technology and business services industries. Prior to joining ValueAct Capital in January 2011, Mr. Hale was a Principal with The Parthenon Group, a strategy consultancy firm, working with corporate and private equity clients in industries such as investment management, media, education and retail in both the Boston and Mumbai offices of Parthenon’s strategic consulting practice. He also worked in an investment role at Parthenon’s long-short public equity vehicle, Strategic Value Capital.
Mr. Hale ishas served as a formerdirector of Olympus Corporation, a manufacturer of optics and reprography products, since June 2019. He previously served as a director of MSCI, Inc., a provider of equity, fixed income, hedge fund stock market indexes and multi-asset portfolio analysis tools, from March 2015 to September 2016.
Director Qualifications:
The Board has determined that Mr. Hale’sin-depth knowledge of complex financial and global capital market issues, his proven leadership experience in investment and governance positions and his extensive knowledge of financial and operational matters qualify him to serve as a member of the Board and the committees on which he sits.serves.
Mr. D. Robert Hale
California, USA
Age 3235
Independent
17,997,224Stock Ownership:3 Shares Beneficially Owned —$258,800,081 (for details of Mr. Hale’s beneficial ownership, please see “Ownership of Management”)
16,726
17,931,594 Common Shares — $414,040,505
10,633 RSUs (comprised of 0 vested RSUs — $0 and 16,72610,633 unvested RSUs — $240,520)$245,516)
No Options
No DSUs
Total Equity Value at Risk: for this purpose, attributing the foregoing Common Shares beneficially owned to Mr. Hale, $258,800,081,$414,040,505, representing 51,726%82,808% of the Company’s current aggregate amount of $500,000 required under the share ownership guidelines fornon-managementnon-employee Directorsdirectors and 258,800%414,041% of the Director’sdirector’s annual retainer.
20162019 Meeting Attendance:
Board — 31/31;6/6
AuditTalent and RiskCompensation Committee — 9/9;5/5
Finance and Transactions Committee — 4/4;7/7
Talent and Compensation Committee — 13/13.
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Dr. Karabelashas been servingserved on the Board since June 2016. Since December 2001, Dr. Karabelas has been a Partner at Care Capital, LLC (“Care Capital”), a life sciences venture firm with $500M under management. Prior to his work at Care Capital, from July 2000 to September 2001, Dr. Karabelas was the founder and Chairman at Novartis BioVenture Fund. Dr. KarabelasFund, and served as Head of Healthcare and CEO of Worldwide Pharmaceuticals for Novartis Pharma AG from 1998 to 2000, with responsibilities for Novartis Pharma, Ciba Vision, Generics and strategic and operational leadership of research and development.AG. Prior to joining Novartis, Dr. Karabelas was Executive Vice President of SmithKline Beecham, where he was responsible for U.S. and European operations, regulatory and strategic marketing.
Dr. Karabelas has been a director of REGENEXBIO Inc., a clinical-stage biotechnology company, since May 2015, and has served on numerous boardsthe board of pharmaceutical and therapeutics companies, including Renovo, plc, VandaBraeburn Pharmaceuticals, Inc., NitroMed, Inc., Inotek Pharmaceuticals Corporation and SkyePharma, plc. Since May 2015 hasa privately-held specialty pharmaceuticals company, since 2015. Dr. Karabelas previously served as a board member of REGENEXBIO Inc. He has served as a directorChairman of Inotek Pharmaceuticals Corporation, since Julya clinical-stage biopharmaceutical company (which merged with Rocket Pharmaceuticals, Inc. in 2017), from June 2012 and is currently Chairman, however, his term as director expires into June 2016 and he is not standing for reelection. Dr. Karabelas also served as a board member of Human Genome Sciences from 2003 to 2013. He is currently Chairman of Polyphor, LTD and, since 2015, is a board member of Braeburn Pharmaceuticals, Inc.2016.
Director Qualifications:
The Board has determined that Dr. Karabelas’Karabelas’s many years of experience in senior management positions, his strong knowledge of strategic and regulatory issues, his insight into international operations and his international perspective on the pharmaceutical industry and healthcare related issues qualify him to serve as a member of the Board.Board and the committees on which he serves.
Dr. Argeris (Jerry) N. Karabelas
New Hampshire, USA
Age 6467
Independent
Stock Ownership:
4,000 Common Shares Beneficially Owned — $57,520$92,360
16,72666,646 RSUs (comprised of 056,013 vested RSUs — $0$1,293,340 and 16,72610,633 unvested RSUs — $240,520)$245,516)
No Options
No DSUs
Total Equity Value at Risk: $57,520,$1,385,700, representing 12%277% of the Company’s current aggregate amount of $500,000 required under the share ownership guidelines fornon-managementnon-employee Directorsdirectors and 58%1,386% of the Director’sdirector’s annual retainer. Dr. Karabelas has until June 2021 to achieve the expected minimum equity ownership under the share ownership guidelines.
20162019 Meeting Attendance:
Board — 6/6;6
Finance and Transactions Committee — 4/4;
Talent and Compensation Committee — 3/3.5/5
Science and Technology Committee — 4/4
Ms. Kavanaghhas been servingserved on the Board since July 2016. She is currently a corporate director. From June 2011 through May 2016, she served as a Commissioner and since 2014of the Ontario Securities Commission, where she also served as Chairchairperson of the audit committee at the Ontario Securities Commission. She is currently a director of Hudbay Minerals Inc. (chair of audit committee) and a Trustee of WPT Industrial REIT (chair of compensation and governance committee). In addition to her public company directorships, she is a director at the American Stock Transfer & Trust Company LLC (chair of audit committee) and the Canadian Stock Transfer Company, a director of Sustainable Development Technology Canada (chair of audit and investment committee), and a director of Canadian Tire Bank.starting in 2014. Between 1999 and 2010, Ms. Kavanagh served in various senior investment banking roles at Scotia Capital Inc., including Vice-Chair andCo-Head of Diversified Industries Group, Head of Equity Capital Markets, and Head of Investment Banking. Prior to Scotia Capital, she held several senior financial positions with operating companies. She started her career as an investment banker with a bulge bracket firm in New York. Ms. Kavanagh graduated from Harvard Business School with a MastersMaster of Business Administration and received a Bachelor of Arts degree in Economics from Williams College.
Since 2013, Ms. Kavanagh has been a director of Hudbay Minerals Inc., a Canadian mining corporation, and a member of the board of trustees of WPT Industrial REIT, an open-ended real estate investment trust. In addition to her public company directorships, she is a director of AST and AST Trust Company (Canada) (formerly Canadian Stock Transfer Company) and also serves as a director of Sustainable Development Technology Canada. She completed the Directors Education Program at the Institute of Corporate Directors in May 2011.
Director Qualifications:
The Board has determined that Ms. Kavanagh’s extensive experience of complex financial and capital market issues at various banking institutions, and herin-depth knowledge of financial and operational matters qualify her to serve as a member of the Board and the committeecommittees on which she sits.serves.
Ms. Sarah B. Kavanagh
Toronto,Ontario, Canada
Age 6063
Independent
Stock Ownership:
0 Common Shares Beneficially Owned— $0
14,45864,378 RSUs (comprised of 053,745 vested RSUs — $0$1,240,972 and 14,45810,633 unvested RSUs — $207,906)$245,516)
No Options
No DSUs
Total Equity Value at Risk: $0,$1,240,972, representing 0%248% of the Company’s current aggregate amount of $500,000 required under the share ownership guidelines fornon-managementnon-employee Directorsdirectors and 0%1,241% of the Director’sdirector’s annual retainer. Ms. Kavanagh has until July 2021 to achieve the expected minimum equity ownership under the share ownership guidelines.
20162019 Meeting Attendance:
Board — 5/5;6/6
Audit and Risk Committee — 7/8;8/8
Nominating and Corporate Governance Committee — 1/1.4/4
Finance and Transactions Committee — 7/7
Mr. Papahas been our Chairman of the Board and CEOChief Executive Officer of the Company since May 2016. Mr. Papa has more than 35 years of experience in the pharmaceutical, healthcare and specialty pharmaceutical industries, including 20 years of branded prescription drug experience. He served as the CEO of Perrigo Company plc (“Perrigo”) sincefrom 2006 and was appointedto April 2016, where he also served as its Chairman in 2007. He resigned from all positions at Perrigo in2007 to April 2016. Prior to joining Perrigo, Mr. Papa served from December 2004 to October 2006 as Chairman and CEO of the Pharmaceutical and Technologies Services segment of Cardinal Health, Inc. From 2001 to 2004, he served as President and Chief Operating Officer of Watson Pharmaceuticals, Inc. (“Watson”). Prior to joining Watson, Mr. Papa has also held management positions at DuPont Pharmaceuticals, Pharmacia/Searle and Novartis AG. Mr. Papa has beenserved as a director of Smith & Nephew plc, a developer of advanced medical devices, since August 2008.from 2008 to April 2018.
Director Qualifications:
The Board has determined that Mr. Papa’s extensive experience as a chief executive officer of a public company, where he demonstrated leadership capability and extensive knowledge of complex financial and operational issues facing large organizations, and his understanding of operations and financial strategy in challenging environments, qualify him to serve as a member of the Board. Additionally, Mr. Papa’s knowledge of the pharmaceutical industry and business, combined with his drive for innovation and excellence, position him well to serve as the Chairman of the Board.
Mr. Joseph C. Papa
New Jersey, USA
Age 6164
Not Independent
202,000Stock Ownership:
463,719 Common Shares Beneficially Owned — $2,904,760$10,707,272
373,367458,861 RSUs (comprised of 0 vested RSUs — $0 and 373,367458,861 unvested RSUs — $5,369,017)$10,595,100)
682,6521,598,007 Stock Options
No DSUs
Total Equity Value at Risk: $2,904,760,$10,707,272, based on the value of the Common Shares beneficially owned by Mr. Papa or $2,904,760 including all vested RSUs (but excluding all options)options and unvested RSUs).
Mr. Papa is subject to share ownership guidelines under the terms of his employment agreement with the Company, as further described in the section titled “Compensation Discussion and Analysis — Other Compensation Governance Practices — Share Ownership Guidelines” on page 53.
2019 Meeting Attendance:
Board — 6/6
Mr. Paulson has served on the Board since June 2017. Mr. Paulson is the President and Portfolio Manager of Paulson & Co. Inc., representing 58%anSEC-registered investment management company specializing in global mergers, event arbitrage and credit strategies, which he founded in 1994.
Prior to forming Paulson & Co. Inc., Mr. Paulson was a Partner of Gruss Partners and a Managing Director in mergers and acquisitions at Bear Stearns. Mr. Paulson received his undergraduate degree from New York University in 1978 and his Master of Business Administration from Harvard Business School in 1980.
Mr. Paulson has been a director of BrightSphere Investment Group plc, an asset management holding company, since November 2018. He also currently serves as a member of the $5 million worthadvisory board of Harvard Business School. Mr. Paulson previously served as a director of American International Group Inc., a multinational finance and insurance corporation, from May 2016 to June 2017.
Director Qualifications:
The Board has determined that the skills and expertise that Mr. Paulson acquired founding and leading Paulson & Co. Inc., including hisin-depth knowledge of financial transactions and leadership abilities, qualify him to serve as a member of the Board and the committee on which he serves.
Mr. John A. Paulson
New York, USA
Age 64
Independent
Stock Ownership:
20,839,255 Common Shares he is contractually committed to purchase no later than one year following— $481,178,398
55,712 RSUs (comprised of 45,079 vested RSUs — $1,040,874 and 10,633 unvested RSUs — $245,516)
Total Equity Value at Risk: $482,219,272, representing 96,444% of the date he joinedCompany’s current aggregate amount of $500,000 required under the Company.share ownership guidelines fornon-employee directors and 482,219% of the director’s annual retainer.
20162019 Meeting Attendance:
Board — 10/10.5/6
Finance and Transactions Committee — 6/7
Mr. Powerhas been servingserved on the Board since August 2008. He is currently a corporate director. From 2009 to 2011, Mr. Power was a faculty member at The Wharton School of Business, University of Pennsylvania, where he taught multinational marketing from 2009 to 2011.marketing. Mr. Power has over 25 years’ experience working in the pharmaceutical and biotechnology industry, throughwhich he gained serving in a number of leadership positions with Wyeth beginning infrom 1985 through 2007, including Director — New Product Development, Managing Director — U.K./Ireland, Vice President — Global Marketing, President — Europe, Middle East, Africa, President — International and Executive Vice President — Global Business Operations. Mr. Power also has completed the Director Professionalism course offered by the National Association of Corporate Directors.
Director Qualifications:
The Board has determined that Mr. Power’s extensive experience in the pharmaceutical industry and international business is a valuable contribution to the Board. In addition, his experience in general management, strategic planning, working with Research and Development (“R&D&D”) organizations, business development, product marketing, merging and streamlining of organizations and his demonstrated leadership in a multi-billion dollarmulti-billion-dollar business qualify Mr. Power as a member of the Board and the committees on which he sits.serves.
Mr. Robert N. Power
Pennsylvania, USA
Age 6063
Independent
Stock Ownership:
6,601 Common Shares Beneficially Owned — $94,922$152,417
26,22176,141 RSUs (comprised of 9,49565,508 vested RSUs — $136,538$1,512,580 and 16,72610,633 unvested RSUs — $240,520)$245,516)
No Options
No DSUs
Total Equity Value at Risk: $231,460,$1,664,997, representing 46%333% of the Company’s current aggregate amount of $500,000 required under the share ownership guidelines fornon-managementnon-employee Directorsdirectors and 231%1,665% of the Director’sdirector’s annual retainer. Mr. Power has until May 2017 to achieve the expected minimum equity ownership under the share ownership guidelines. He satisfied the minimum equity ownership requirement in August 2016, but at the date of this Proxy Statement he does not satisfy the requirement due to the decline in the price of our Common Shares. Mr. Power has an additional 16,726 RSUs that are expected to vest by May 2017, in which case, using the reference price of $14.38 per Common Share, his Total Equity Value at Risk would be $471,980, representing 94% of the required share ownership amount.
20162019 Meeting Attendance:
Board — 31/31;6/6
Audit and Risk Committee — 18/18;8/8
Nominating and Corporate Governance Committee — 13/13;4/4
SustainabilityScience and Environmental Subcommittee4 — 1/1;
Talent and CompensationTechnology Committee — 10/10.4/4
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Mr. Robertsonhas been servingserved on the Board since June 2016. He is currently a corporate director. From 2013 through August 2016, Mr. Robertson served as Executive Vice President and Head, Anti-Money Laundering, at BMO Financial Group (“BMO”), a diversified financial services organization from July 2013 to August 2016.organization. Prior to that role, he served as Executive Vice President, Business Integration, at BMO Financial Group, and as Vice Chair at BMO Financial Corp. since Marchfrom 2011. He joined BMO as interim Chief Financial Officer, (“CFO”), BMO Financial Group in March 2008 and was appointed CFO,Chief Financial Officer, BMO Financial Group in August 2009. Before joining BMO, heMr. Robertson spent over 35 years as a Chartered Public Accountant. In this capacity, he held various senior positions with a number of major accounting firms, including holding the positions of Vice Chair, Deloitte & Touche LLP in Toronto, Canada, from 2002 to 2008, and Canadian Managing Partner, Arthur Andersen LLP, from 1994 to 2002. Mr. Robertson holds a Bachelor of Arts degree (Honours) from the Ivey School of Business at the University of Western Ontario. Since June 2012,
Mr. Robertson has served on the board of Hydro One Limited, an electricity transmission and distribution utility serving the Canadian province of Ontario, since August 2018, and since 2012 has served on the board of Turquoise Hill Resources. He wasResources, a Canadian mineral exploration and development company. Mr. Robertson previously served on the board of Virtus Investment Partners, Inc., a multi-manager asset management business, from May 2013 to August 2016.
Director Qualifications:
The Board has determined that Mr. Robertson’s extensive experience of complex financial matters at Deloitte & Touche LLP and Arthur Andersen LLP,in-depth knowledge of financial and accounting matters and leadership capabilities in senior finance positions qualify him to serve as a member of the Board.Board and as Chairman of the Audit and Risk Committee.
Mr. Russel C. Robertson
Toronto,Ontario, Canada
Age 6972
Independent
Stock Ownership:
0 Common Shares Beneficially Owned— $0
20,73893,983 RSUs (comprised of 4,01283,350 vested RSUs — $57,693$1,924,552 and 16,72610,633 unvested RSUs —$240,520)— $245,516)
No Options
No DSUs
Total Equity Value at Risk: $57,693,$1,924,552, representing 12%385% of the Company’s current aggregate amount of $500,000 required under the share ownership guidelines fornon-managementnon-employee Directorsdirectors and 58%1,925% of the Director’sdirector’s annual retainer. Mr. Robertson has until June 2021 to achieve the expected minimum equity ownership under the share ownership guidelines.
20162019 Meeting Attendance:
Board — 6/6;6
Audit and Risk Committee — 9/9;8/8
Conduct and Compliance Committee — 1/1;
Nominating and Corporate Governance Committee — 2/2.4/4
Mr. Rosshas been servingserved on the Board since March 2016 and was appointed our Lead Independent Director in June 2016. He has served as the President of Volcker Alliance since July 2016, andwhere he also serves as a director. He is President Emeritus of the University of North Carolina (“UNC”), having served as President from January 2011 to January 2016. HeMr. Ross currently serves as the Sanford Distinguished Fellow in Public Policy at the Duke University Sanford School of Public Policy. Prior to becoming President of the UNC system, Mr. Ross served as President of Davidson College, Executive Director of the Z. Smith Reynolds Foundation, director of the North Carolina Administrative Office of the Courts, a Superior Court judge, chief of staff to U.S. Congressman Robin Britt, a member of the Greensboro, NC law firm Smith, Patterson, Follin, Curtis, James & Harkavy, and as an Assistant Professor of Public Law and Government at UNC Chapel Hill’s School of Government.
Director Qualifications:
The Board has determined that Mr. Ross’s demonstrated leadership in senior management positions, extensive experience with corporate governance responsibilities and complex knowledge of legal, compliance and operational issues qualify him to serve as a member of the Board and the committees on which he sits.serves.
Mr. Thomas W. Ross, Sr.
North Carolina, USA
Age 6669
Independent
Stock Ownership:
9,000 Common Shares Beneficially Owned — $129,420$207,810
17,82267,742 RSUs (comprised of 1,09657,109 vested RSUs — $15,760$1,318,647 and 16,72610,633 unvested RSUs — $240,520)$245,516)
No Options
No DSUs
Total Equity Value at Risk: $145,180,$1,526,457, representing 29%305% of the Company’s current aggregate amount of $500,000 required under the share ownership guidelines fornon-managementnon-employee Directorsdirectors and 145%1,526% of the Director’sdirector’s annual retainer. Mr. Ross has until March 2021 to achieve the expected minimum equity ownership under the share ownership guidelines.
20162019 Meeting Attendance:
Board — 22/24;5/6
ConductAudit and ComplianceRisk Committee — 3/3;8/8
Nominating and Corporate Governance Committee — 6/6.4/4
Dr. von Eschenbach has served on the Board since October 2018. Dr. von Eschenbach has been the President of Samaritan Health Initiatives, Inc., a health care policy consultancy, and an Adjunct Professor at University of Texas MD Anderson Cancer Center, since 2010. From 2005 to 2009, Dr. von Eschenbach served as Commissioner of the U.S. Food and Drug Administration (the “FDA”). He was appointed Commissioner of the FDA after serving for four years as Director of the National Cancer Institute at the National Institutes of Health. As a researcher, clinician and administrator, Dr. von Eschenbach served fortwenty-six years at the University of Texas MD Anderson Cancer Center as Chairman of Urology, Director of the Prostate Cancer Research Program and Executive Vice President and Chief Academic Officer. He earned a B.S. from St. Joseph’s University and a medical degree from Georgetown University School of Medicine in Washington, D.C., where he completed a residency in surgery and urology and then a fellowship in urologic oncology.
Dr. von Eschenbach has served as a director of private biotechnology companies Banyan Biomarkers, Inc. and Celularity, Inc. since 2012 and February 2018, respectively, and as a director of Wren Therapeutics, Ltd, a private biopharmaceutical company, since November 2019. Dr. von Eschenbach also been a member of the board of the Regan Udall Foundation of the FDA, anon-profit organization formed to advance regulatory science, since December 2018. From 2011 to 2013, Dr. von Eschenbach served as a director of BioTime, Inc., a clinical-stage biotechnology company, and as a director of Elan Corporation Plc, a pharmaceutical company which was acquired by Perrigo in 2013.
Director Qualifications:
The Board has determined that Dr. von Eschenbach’s broad experience serving as a director of public and private companies andnon-profit organizations in the pharmaceutical and healthcare industries, as well as serving as an advisor and consultant to entities engaged in policy development in the pharmaceutical industry, qualify him to serve as a member of the Board and the committee on which he serves.
Andrew C. von Eschenbach, M.D.
Texas, USA
Age 78
Independent
Stock Ownership:
1,000 Common Shares — $23,090
16,465 RSUs (comprised of 5,832 vested RSUs — $134,661 and 10,633 unvested RSUs — $245,516)
Total Equity Value at Risk: $157,751, representing 32% of the Company’s current aggregate amount of $500,000 required under the share ownership guidelines fornon-employee directors and 158% of the director’s annual retainer. Dr. von Eschenbach has until October 29, 2023 to satisfy his share ownership requirements.
2019 Meeting Attendance:
Board — 6/6
Science and Technology Committee — 4/4
Dr. Wechsler has been servingserved on the Board since June 2016. She has been a practicing dermatologist in New York City since 2005. Dr. Wechsler is the author of The Mind-Beauty Connection, published by Simon & Schuster in 2008. She is board certified in both dermatology and psychiatry and is also an Adjunct Clinical Professor in Psychiatry at the Weill Cornell Medical College. As an expert on skin health, Dr. Wechsler serves as an advisor for Chanel Skin Care and is also a certified trainer and well-known KOL Speaker, qualified to teach physicians and other medical professionals in the use of various dermatological products. Dr. Wechsler is an active member of several medical professional organizations, including the American Academy of Dermatology;Dermatology, the American Psychiatric Association;Association, the American Academy of Child and Adolescent Psychiatry;Psychiatry, the Independent Doctors of New York;York, The Physicians Scientific Society;Society, and The Skin Cancer Foundation. Dr. Wechsler completed her residency in psychiatry and a fellowship in child and adolescent psychiatry at New York Presbyterian Hospital’s Payne Whitney Clinic. She also completed a residency in dermatology at SUNY Downstate Medical Center.
Director Qualifications:
The Board has determined that Dr. Wechsler’s many years of experience as a board-certified dermatologist and psychiatrist, her strong knowledge of medical products to assist patients with their medical needs and her insight into the medical field and pharmaceutical industry and healthcare related issues qualify her to serve as a member of the Board.Board and on the committees on which she serves.
Amy B. Wechsler, M.D.
New York, USA
Age 4750
Independent
Stock Ownership:
0 Common Shares Beneficially Owned— $0
19,69088,874 RSUs (comprised of 2,96478,241 vested RSUs — $42,622$1,806,585 and 16,72610,633 unvested RSUs — $240,520)$245,516)
No Options
No DSUs
Total Equity Value at Risk: $42,622,$1,806,585, representing 9%361% of the Company’s current aggregate amount of $500,000 required under the share ownership guidelines fornon-managementnon-employee Directorsdirectors and 43%1,807% of the Director’sdirector’s annual retainer. Dr. Wechsler has until June 2021 to achieve the expected minimum equity ownership under the share ownership guidelines.
20162019 Meeting Attendance:
Board — 5/6;6
Conduct and Compliance Committee — 2/3;
Talent and Compensation Committee — 2/3.4/5
Science and Technology Committee — 4/4
None of the Directorsdirectors or Directordirector nominees of the Company were selected for nomination at this year’sthe Annual Meeting pursuant to any arrangement or understanding. None of the Directorsdirectors or Directordirector nominees are related by blood, marriage or adoption to one another or to any Named Executive Officerexecutive officer of the Company.
Cease Trade Orders
From March 31, 2016 to April 29, 2016, all of our then current Directors and our then current CEO and CFO were subject to a customary management cease-trade order issued by the Autorité des marchés financiers (the “AMF”), our principal securities regulator in Canada, pending the filing of our audited annual financial statements for the year ended December 31, 2015, the related management’s discussion and analysis, certificates of our then current CEO and CFO and our 2015 Form10-K. From May 17, 2016 to June 8, 2016, all of our then current Directors, our current CEO and then current CFO were subject to a similar order issued by the AMF pending filing of our interim consolidated financial statements for the quarter ended March 31, 2016, the related management’s discussion and analysis and certificates of our CEO and then current CFO. Both these orders prohibited the affected individuals from, directly or indirectly, trading in or acquiring any of our securities during those periods, but did not affect the ability of our other shareholders to trade in our securities.
STATEMENT OF CORPORATE GOVERNANCE PRACTICES
The Board is committed to sound and effective corporate governance practices with the goal of ensuring the Company’s financial strength and overall business success. Our governance practices are periodically assessed against those practices suggested by recognized governance authorities and are designed to maintain alignment with shareholder interests and key governance best practices.
Director Independence
The Board believes that, in order to be effective, our Board must be able to operate independently of management. As described in our Corporate Governance Guidelines, available on our website at www.valeant.comwww.bauschhealth.com (under the tab “About”“Investors” and under the subtab “Corporate Governance”Governance- Corporate Governance Documents”), a sufficient number of Directorsdirectors must satisfy the applicable tests of independence, such that the Board complies with all independence requirements under applicable corporate and securities laws and stock exchange requirements applicable to the Company. The Corporate Governance Guidelines further provide that the Nominating and Corporate Governance Committee, as well as the Board, reviews the relationships that each Directordirector has with the Company in order to satisfy itself that these independence criteria have been met. On an annual basis, as part of our disclosure procedures, all Directorsdirectors complete a questionnaire pertaining to, among other things, share ownership, family and business relationships, and Directordirector independence standards. The Board must then disclose in the Company’s annual management proxy circular and proxy statement the identity of each of the independent directors and the basis for the Board’s determination for each of the Directorsdirectors who are not independent.
The Board is currently comprised of 13eleven members. The Board has determined that 12ten of our 13eleven current Directorsdirectors (or 92%91%) are “independent directors” within the meaning of applicable regulatory and stock exchange requirements in Canada and the United States, as none of them have a material relationship with the Company that could be reasonably expected to interfere with their exercise of independent judgment. The 12ten independent directors currently on the board are: Mr. Ross (Lead Independent Director), Mr. Ackman,De Schutter, Mr. DeSchutter, Dr. Eshelman, Mr. Fraidin, Mr. Hale, Mr. Ingram, Dr. Karabelas, Ms. Kavanagh, Mr. Paulson, Mr. Power, Mr. Robertson, Dr. von Eschenbach, and Dr. Wechsler. If each
None of the Director nominees is elected at the 2017 Annual Meeting, the Board will be comprised of 10 Directors, nineour current directors (all of whom will be independent directors. In rendering its determination regarding Director independence, the Board considered that in 2014, Dr. Wechslerare director nominees) have entered into a consulting agreementemployment, service or similar contracts with us, with the Company to be a memberexception of the aesthetics steering committee which advised management of the Company, for which she was paid approximately $33,000 in the aggregate for 2014 and 2015.Mr. Papa. On April 25, 2016, Mr. Papa entered into an
employment agreement with the Company as its Chairman of the Board and CEO and forCEO. For this reason, the Board has determined that he willis not be an independent director and will not be eligible to serve on the Audit and Risk Committee, the Talent and Compensation Committee, or the Nominating and Corporate Governance Committee.
None ofBoard Leadership Structure
Our Corporate Governance Guidelines provide that our current Directors or Director nominees has entered into service or similar contracts with us, withBoard may determine from time to time the exception of Mr. Papa, who has entered into an employment agreement with usmost effective leadership structure for the Company, including whether the same individual should serve both as our Chairman of the Board and CEO.
The table below sets forth each current Director’s membership onthe Chief Executive Officer (“CEO”). Mr. Papa, our standingCEO , also serves as Chairman of the Board. Due to thein-depth knowledge of the Company’s operations gained by serving as CEO, Mr. Papa is well positioned to identify and lead Board committees.
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Notes:
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Board Leadership Structure
deliberations regarding important matters relating to the Company’s operations, strategic priorities, and overall development. The Board believes that the most effective Board leadership structure for the Company at the present time is for theserving as both CEO to serve asand Chairman of the Board enables Mr. Papa to facilitate effective communication between Company management and the Board and to ensure key issues and recommendations are brought to the attention of the Board. The Board believes that this leadership structure, in conjunction with the appointment of a Lead Independent Director, as described below. Combiningis the positions of Chairman and CEO providesmost effective for the Company with decisiveat this time, and effective leadership. The Board believes that Mr. Papa’sin-depth knowledge of the Company’s operations and his vision for its development make him the best qualified person to serve as both Chairman and CEO. Because the CEO is ultimately responsible for theday-to-day operation of the Company and for executing the Company’s strategy, and because the performance of the Company is an integral part of Board deliberations, the Board believes that Mr. Papa is the Director most qualified to act as Chairman of the Board. The Board also believes that its existing corporate governance practices achieveeffectively achieves independent oversight and management accountability.
The Company’s
Our Corporate Governance Guidelines also provide that, if the same individual serves as Chairman of the Board and CEO, or if the Chairman of the Board is otherwise not independent, then theour Board shall appoint a Lead Independent Director. Our independent directors annually appoint a Lead Independent Director. Mr. Ross has been appointed to serve as Lead Independent Director each year since June 2016.
The Chairman, if independent, orresponsibilities of the Lead Independent Director if the Chairman is not independent, will assume the responsibilitiesare set forth in the Company’s Position Description for the Lead Independent Director, which is posted on the Company’s website.website at www.bauschhealth.com (under the tab “Investors” and under the subtab “Corporate Governance- Corporate Governance Documents”). These responsibilities include: (i) fostering processes that allow the Board to function independently of management and encouraging
open and effective communication between the Board and management of the Company; (ii) providing input to the Chairman on behalf of the independent directors with respect to Board agendas; (iii) presiding at all meetings of the Board at which the Chairman is not present, as well as regularly scheduled executive sessions of independent directors; (iv) in the case of a conflict of interest involving a Director,director, if appropriate, asking the conflicted Directordirector to leave the room during discussion concerning such matter and, if appropriate, asking such Directordirector to recuse him or herself from voting on the relevant matter; (v) communicating with the Chairman and the CEO, as appropriate, regarding meetings of the independent directors and resources and information necessary for the Board to effectively carry out its duties and responsibilities; (vi) serving as liaison between the Chairman and the independent directors; (vii) being available to Directorsdirectors who have concerns that cannot be addressed through the Chairman; (viii) having the authority to callcalling meetings of the independent directors;directors, as needed or when appropriate; and (ix) performing other functions as may reasonably be requested by the Board or the Chairman. TheIn the event the Company appoints an independent Chairman of the Board, annually appoints athe responsibilities of the Lead Independent Director who will assumebe assumed by the responsibilities set forth inindependent Chairman of the Company’s Position Description for the Lead Independent Director. Our independent directors have appointed Mr. Ross as the Lead Independent Director.Board.
Meetings of Independent Directors
The Corporate Governance Guidelines provide that at any meeting of the Board, the independent directors of the Board shall meet in executive session and that an opportunity shall be provided during the meeting for any member of the Board to make such a request. Consequently, the independent directors currently meet in executive sessions, chaired by our Lead Independent Director, at a majority of the regularly scheduledour Board meetings. From January 1, 2016 to December 31, 2016,During 2019, our independent directors held an executive sessionsessions at foureach of the six regularly scheduled Board meetings and at 11 of the 25 ad hocfour regularly-scheduled Board meetings.
Meetings of the Board
The Board meets regularly, at least four times per year.year, including at least once annually to review our strategic plan. Additional meetings can be called when necessary. The Board meets annually to review our strategic plan. From January 1, 20162019 to December 31, 2016,2019, the Board had sixfour regularly scheduled meetings and 25two ad hoc meetings to review specific matters. All agendas of thefor Board and Board committee meetings are set by the Chairman of the Board in consultation with the Board committee Chairpersons, as necessary.
As required underby the Company’s Articles, at least 50% of the Company,directors then in office must be present in order to transact business at any Board meeting, atmeeting. At least fifty percent81% of the Directorsour directors participated in office must be present. All meetingseach of the Board between January 1, 2016 and December 31, 2016 had fifty percent or more of Directors participating.meetings held during 2019.
In 2016,During 2019, the Board had five standing committees: the Audit and Risk Committee, the Talent and Compensation Committee, the Nominating and Corporate Governance Committee, Conduct and Compliance Committee (established on April 15, 2016) andthe Finance and Transactions Committee. In addition,Committee, and the Board established the Ad Hoc Committee on October 25, 2015Science and this committee was dissolved April 5, 2016. In February 2015, the Board established the Sustainability and Environmental Subcommittee (a subcommittee of the Nominating and Corporate Governance Committee) and dissolved such Subcommittee on June 15, 2016. The duties and responsibilities of such Subcommittee were absorbed by the Nominating and Corporate GovernanceTechnology Committee. Additionally, the Board established the Special Independent Committee in 2009, and this committee was dissolved on June 15, 2016.
Directors are expected to attend and participate in substantially all meetings of the Board and of all committees on which they serve. The attendance records of our directors at the Board and committee meetings of the committees for each Director who was a Director of the Company from January 1, 2016 to December 31, 2016held during 2019 are set forth below. Mr. DeSchutter was appointed as
Board 6 Meetings | Audit and Risk Committee 8 Meetings | Talent and Compensation Committee 5 Meetings | Nominating and Corporate Governance Committee 4 Meetings | Finance and Transactions Committee 7 Meetings | Science and Technology Committee 4 Meetings | Overall | ||||||||||||||||||||||||||||||||||||||||||||||||||
Director | # | % | # | % | # | % | # | % | # | % | # | % | # | % | ||||||||||||||||||||||||||||||||||||||||||
Richard U. De Schutter | 6/6 | 100 | % | — | — | 5/5 | 100 | % | — | — | 7/7 | 100 | % | — | — | 18/18 | 100 | % | ||||||||||||||||||||||||||||||||||||||
D. Robert Hale | 6/6 | 100 | % | — | — | 5/5 | 100 | % | — | — | 7/7 | 100 | % | — | — | 18/18 | 100 | % | ||||||||||||||||||||||||||||||||||||||
Dr. Argeris (Jerry) N. Karabelas | 6/6 | 100 | % | — | — | 5/5 | 100 | % | — | — | — | 4/4 | 100 | % | 15/15 | 100 | % | |||||||||||||||||||||||||||||||||||||||
Sarah B. Kavanagh | 6/6 | 100 | % | 8/8 | 100 | % | — | — | 4/4 | 100 | % | 7/7 | 100 | % | — | — | 25/25 | 100 | % | |||||||||||||||||||||||||||||||||||||
Joseph C. Papa | 6/6 | 100 | % | — | — | — | — | — | — | — | — | — | — | 6/6 | 100 | % | ||||||||||||||||||||||||||||||||||||||||
John A. Paulson | 5/6 | 83 | % | — | — | — | — | — | — | 6/7 | 86 | % | — | — | 11/13 | 85 | % | |||||||||||||||||||||||||||||||||||||||
Robert N. Power | 6/6 | 100 | % | 8/8 | 100 | % | — | — | 4/4 | 100 | % | — | — | 4/4 | 100 | % | 22/22 | 100 | % | |||||||||||||||||||||||||||||||||||||
Russel C. Robertson | 6/6 | 100 | % | 8/8 | 100 | % | — | — | 4/4 | 100 | % | — | — | — | — | 18/18 | 100 | % | ||||||||||||||||||||||||||||||||||||||
Thomas W. Ross, Sr. | 5/6 | 83 | % | 8/8 | 100 | % | — | — | 4/4 | 100 | % | — | — | — | — | 17/18 | 94 | % | ||||||||||||||||||||||||||||||||||||||
Andrew C. von Eschenbach | 6/6 | 100 | % | — | — | — | — | — | — | — | — | 4/4 | 100 | % | 10/10 | 100 | % | |||||||||||||||||||||||||||||||||||||||
Amy B. Wechsler, M.D. | 5/6 | 83 | % | — | — | 4/5 | 80 | % | — | — | — | — | 4/4 | 100 | % | 13/15 | 87 | % |
Although we do not have a Director on January 2, 2017 and was not a Directorformal policy requiring our directors to attend our Annual Meetings of Shareholders, we expect all directors to attend the Company in 2016.Annual Meeting absent exceptional circumstances. All directors attended the 2019 Annual Meeting of Shareholders.
Director William A. Ackman(3) Dr. Frederic N. Eshelman(4) Ronald H. Farmer(5) Stephen Fraidin(6) Colleen A. Goggins(7) D. Robert Hale Robert A. Ingram Dr. Argeris (Jerry) N. Sarah B. Kavanagh(9) Anders O. Lönner(10) Theo-Melas—Kyriazi(11) G. Mason Morfit(12) Joseph C. Papa(13) J. Michael Pearson(14) Robert N. Power Norma A. Provencio(15) Russel C. Robertson(16) Thomas W. Ross, Sr.(17) Howard B. Schiller(18) Katharine B. Stevenson(19) Amy B. Wechsler, M.D.(20) Board
31 Meetings Audit
and Risk
Committee
24 Meetings Talent and
Compensation
Committee
13 Meetings Nominating
and
Corporate
Governance
Committee
13 Meetings Sustainability
and
Environmental
Subcommittee
1 Meetings(1) Conduct and
Compliance
Committee
3 Meetings(2) Finance and
Transactions
Committee
4 Meetings Overall # % # % # % # % # % # % # % # % 20/20 100 % — — — — — — — — — — 4/4 100 % 24 100 % 24/24 100 % — — 3/3 100 % — — — — — — 4/4 100 % 31 100 % 25/25 100 % — — 10/10 100 % 10/10 100 % — — — — — — 45 100 % 24/24 100 % — — 3/3 100 % — — — — 3/3 100 % — — 30 100 % 23/25 92 % — — — — 10/10 100 % 1 100 % — — — — 34 94 % 31 100 % 9/9 100 % 13 100 % — — — — — — 4/4 100 % 57 100 % 31 100 % — — — — 13 100 % — — — — — — 44 100 %
Karabelas(8) 6/6 100 % — — 3/3 100 % — — — — — — 4/4 100 % 13 100 % 5/5 100 % 7/8 88 % — — 1/1 100 % — — — — — — 13 93 % 4/6 67 % — — 2/4 50 % — — — — — — — — 6 60 % 24/25 96 % 15/15 100 % — — — — — — — — — — 39 98 % 20/25 80 % — — — — — — — — — — — — 20 80 % 10/10 100 % — — — — — — — — — — — — 10 100 % 13/13 100 % — — — — — — — — — — — — 13 100 % 31 100 % 18/18 100 % 10/10 100 % 13 100 % 1 100 % — — — — 73 100 % 25/25 100 % 15/15 100 % — — — — — — — — — — 40 100 % 6/6 100 % 9/9 100 % — — 2/2 100 % — — 1/1 100 % — — 18 100 % 22/24 92 % — — — — 6/6 100 % — — 3/3 100 % — — 31 94 % 10/25 40 % — — — — — — — — — — — — 10 40 % 12/12 100 % 6/6 100 % — — — — — — — — — — 18 100 % 5/6 83 % — — 2/3 67 % — — — — 2/3 67 % — — 9 75 %
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Charter of the Board
The Board is responsible for the overall stewardship of the Company and its business, including supervising the management of the Company’s business and affairs. The Board discharges this responsibility directly and through delegation of specific responsibilities to committees of the Board and to our officers. Under the charter of the Board (the “Board Charter”), the Board has established committees to assist with its responsibilities:responsibilities. Our current standing Board committees are: the Audit and Risk Committee, the Talent and Compensation Committee, the Nominating and Corporate Governance Committee, the Finance and Transactions Committee, and the ConductScience and ComplianceTechnology Committee.
Under the Board Charter, the Board is responsible for, among other things, the following corporate governance relatedgovernance-related matters:
(i) overseeing the Company’s performance and the quality, depth and continuity of management needed to meet the Company’s strategic objectives;
(ii) developing and approving ourthe Company’s approach to and practices regarding corporate governance;
(iii) succession planning;
(iv) overseeing orientation and education programs for new Directorsdirectors and ongoing education opportunities for continuing Directors;
directors; (v) reviewing, discussing and approving the Company’s strategic planning and organizational structure and supervising management to oversee that the strategic planning and organizational structure preserve and enhance the business of the Company and the Company’s underlying value;
(vi) approving and assessing compliance with all significant policies and procedures by which the Company is operating, including ourthe Company’s Standards of Business Conduct (as described below);
(vii) reviewing ourthe Company’s principal risks and assessing whether appropriate systems are in place to manage such risks; and
(viii) ensuring the integrity and adequacy of ourthe Company’s internal controls.
The Board Charter is attached heretoto this Proxy Statement as Exhibit A and is available on our website at www.valeant.comwww.bauschhealth.com (under the tab “About”“Investors” and under the subtab “Corporate Governance”Governance – Corporate Governance Documents”).
Position Descriptions
The Board has developed written position descriptions for the Chairman of the Board, the CEO, the Lead Independent Director, inand the event that the Chairman is not independent, the ChairpersonChairpersons of each of the Audit and Risk Committee, the Nominating and Corporate Governance Committee, and the Talent and Compensation Committee, the Finance and Transactions
Committee, and the CEO.Science and Technology Committee. The position descriptions are reviewed annually and are posted on our website at www.valeant.comwww.bauschhealth.com (under the tab “About”“Investors” and under the subtab “Corporate Governance”Governance- Corporate Governance Documents”). The position descriptions are reviewed annually.
Orientation and Continuing Education
The Nominating and Corporate Governance Committee oversees the Board’s continuing education program, which was developed to assist Directorsdirectors in maintaining or enhancing their skills and abilities as Directorsdirectors and updating their knowledge and understanding of the Company and the pharmaceutical industry. New Directorsdirectors are oriented to the roles of the Board and individual Directorsdirectors and the business and affairs of the Company through discussions with the Company’s managementincumbent directors and the incumbent DirectorsCompany’s management by periodic presentations from senior management on major business, industry and competitive issues. Management and outside advisors provide information and education sessions to the Board and its committees as necessary to keep the Directorsdirectorsup-to-date with, among other things, (i) disclosure and corporate governance requirements and best practices,practices; (ii) the Company, and its business and the environment in which it operates, as well asand (iii) developments in the responsibilities of Directors. From time to time, Directors may accompany sales representatives to visit doctors’ offices for a better comprehension of the current trends in the pharmaceutical marketplace.directors. The Board may also invite representatives of various business units to Board meetings to discuss business strategy and market analysis, as well as makeon-site visits of the operations of the Company at the various facilities of the Company. Directors may also attend outside conferences and seminars that are relevant to their roles at the Company’s expense, with the approval of the Chairman of the Board. Directors may attend meetings with physicians for updates in the pharmaceutical industry and market. In 2016, some Directors2019, our directors participated in outside seminars and conferences on educational topics that included managing corporate risks and litigation, climate change, healthcare industry dynamics, finance and audit matters, diversity, and issues of general importance to board composition, board compensation and governance, executive compensation, governance of international operations and risk oversight.members.
Ethical Business Conduct
Standards of Business Conduct (including the Code of Ethics for CEO and Senior Financial Executives)
We have a written code of business conduct and ethics, entitled the Standards of Business Conduct (the “Standards”) for, that applies to all employees (including our Directors, officersofficers) and employees that sets out the Board’s expectations for the conduct of such persons in their dealings on behalfdirectors of the Company. Employees, officersCompany and Directorsits worldwide subsidiaries. Among other things, the Standards are designed to deter wrongdoing and promote honest and ethical conduct, including (i) the ethical handling of actual or apparent conflicts of interest; (ii) full, fair, accurate, timely and understandable public disclosure; (iii) compliance with applicable laws and regulations; (iv) protection of the Company’s assets; and (v) maintaining a harassment-free work environment.
Our employees and directors are required to maintain an understanding of, and ensure that they complytheir compliance with, the Standards. Supervisors are responsible for maintaining awareness of the Standards, and for reporting any deviations to management. In addition,from the Standards. The Standards also require the Company to conduct regular audits to test compliance with the Standards. Subject to Board approval, responsibility for the establishment and periodic updatereview and reviewupdate of the Standards falls within the mandate of the Audit and Risk Committee andCommittee.
All individuals subject to the Conduct and Compliance Committee.
Employees, officers and DirectorsStandards are requiredobligated to immediatelypromptly report violations and potential violations of law, the Standards, or policies of the StandardsCompany referenced in the Standards. Such violations or suspected violations may be reported to the appropriate Company representative, or anonymously and can report confidentially and anonymously through the Company’s business ethics hotline,hotline. All potential violations must in additionturn be reported to having the option of reporting to their supervisors, the appropriate department head, division President, ourCompany’s General Counsel or Chief Compliance Officer or our General Counsel.& Ethics Officer. The Board has established reporting procedures in order to encourage employees officers and Directorsdirectors to raise concerns regarding matters addressed by the Standards on a confidential basis free from discrimination, retaliation or harassment. Employees and officersof the Company who violate the Standards may face disciplinary actions, including dismissal.
Code of Ethics
WeOur Standards also haveinclude a Code of Ethics for the CEO and Senior Finance Executives (the “Code of Ethics”), which is designed to deter wrongdoing and promote (i) honest and ethical conduct in the practice of
financial management, (ii) full, fair, accurate, timely and understandable disclosure, and (iii) compliance with all applicable laws and regulations. Violations of the Code of Ethics are reported to the General Counsel or Chief Compliance & Ethics Officer. Failure to observe the terms of the Code of Ethics may result in disciplinary action, including dismissal.
The foregoing description of the Standards, (includingincluding the Code of Ethics) areEthics, is intended as a summary only, and does not purport to be complete. It is subject to, and qualified in its entirety by, reference to all of the provisions of the Standards, a copy of which is available on our website at www.valeant.comwww.bauschhealth.com (under the tab “About”“Investors” and under the subtab “Corporate Governance”Governance- Governance Documents”). These documents are also available in print to
shareholders upon request. Shareholders may submit their request to Investor Relations, Valeant Pharmaceuticals International,Bausch Health Companies Inc., 2150 Saint Elzear Blvd. West, Laval, Quebec H7L 4A8, Canada.
We intend to satisfy any disclosure requirements regarding amendments to, or waivers of, any provision of the Standards, or its appendix that sets forth certain additional information relating toincluding the Code of Ethics, by posting such information on the Company’s website at www.valeant.comwww.bauschhealth.com (under the tab “About”“Investors” and under the subtab “Corporate Governance”Governance – Governance Documents”).
Directors’ Share Ownership
To support the alignment of Directors’directors’ interests with our interests and those of our shareholders, the Board has adopted share ownership guidelines for ournon-managementnon-employee Directorsdirectors. The directors’ share ownership guidelines, which are expected,set forth in accordance with our Corporate Governance Guidelines, provide that eachnon-employee director is expected to hold or control Common Shares, vested restricted or deferred share units, or a combination thereof, having a market valuevalued at least equal to five (5) times the annual Board cash retainer by not later than the fifth anniversary of such Director’shis or her election or appointment or for individuals who were Directorsto the Board. Based on May 30, 2012, not later than May 30, 2017. Thethe current annual cash retainer of the Board is currently atof $100,000, per year (or a current aggregate amountthe minimum value of $500,000 at the fifth anniversary of Director’s election or appointment to the Board). Other than Mr. Power, oneequity each of our Director nominees has met this requirement, with the remainder (each of whom has beennon-employee directors are required to hold is $500,000. Dr. von Eschenbach, who was appointed or elected to the Board since January 1, 2016) anticipatedon October 29, 2018, will have until October 29, 2023 to meet the director share ownership requirements described in this requirement prior to May 30, 2017 or by the fifth year after being elected or appointed, as applicable. Mr. Powerparagraph. All of our othernon-employee directors have satisfied the minimum equity ownership requirement in August 2016, but atbased on the date of this Proxy Statement, he does not satisfy the requirement due to the decline in the$23.09 per share closing price of our Common Shares. Shares on March 2, 2020, as reported on the NYSE.
Mr. Power has an additional 16,726 RSUs that are expected to vest by May 2017, in which case, usingPapa is excluded from the reference price of $14.38 per Common Share, his Total Equity Value at Risk would be $471,980, representing 94% of the required share ownership amount.guidelines fornon-employee directors. He is subject to share ownership guidelines established by our Talent and Compensation Committee, as further discussed in the section titled “Compensation Discussion and Analysis – Other Compensation Governance Practices – Share Ownership Guidelines” on page 53.
Risk Oversight
Our Board participates in risk management oversight, with a view of supporting the achievement of organizational objectives, including strategic objectives, improving long-term organizational performance and enhancing shareholder value. In addition, the Audit and Risk Committee and the Conduct and Compliance Committee assistassists the Board in monitoring and overseeing the Company’s Standards and risk management.management, including with respect to cybersecurity risks, provides oversight for the Company’s global ethics and healthcare compliance program, and oversees the Company’s receipt and handling of business ethics reports received pursuant to the Company’s Business Ethics Reporting Program. Various other committees of the Board also have responsibility for monitoring risk management in specific areas. For example, the Talent and Compensation Committee annually reviews and discusses with management the relationship between the Company’s compensation policies and practices and its risk management, including the extent to which those policies and practices create risks for the Company. See “Talent and Compensation Committee — Compensation Risk Determination” below. In addition, the Nominating and Corporate Governance Committee periodically provides oversight with respect to risks associated with our corporate governance policies and practices, including our Corporate Governance Guidelines. The Nominating and Corporate Governance Committee also oversees and reviews evaluations of the Board and each of our Board committees. The Conduct and Compliance Committee was formed to, among other things, oversee implementation of certain remediation measures proposed by the Ad Hoc Committee.
Under the supervision of our Board, our management is responsible for assessing and managing our exposure to various risks. We have a global Enterprise Risk Management (“ERM”) office that reports to our Executive Vice President and General Counsel. The objectives of the ERM office’s objectivesoffice include, but are not limited to, managing known risks through assessments and action plans, identifying emerging risks and reporting on the ERM process and risk findings to the ConductAudit and ComplianceRisk Committee on a quarterly basis.
Board Committees
In 2016,During 2019, the Board had five standing committees: the Audit and Risk Committee, the Talent and Compensation Committee, the Nominating and Corporate Governance Committee, the Conduct and Compliance Committee (established on April 15, 2016) and the Finance and Transactions Committee. In addition, the Special Independent Committee, was established in 2009 to review finalization and implementation of the Corporation Integrity Agreement with the Office of Inspector General of the United States Department of Health and Human Services. The term of the Corporate Integrity Agreement concluded in September 2014 and the Company filed its final Annual Report to the Office of the Inspector General in January 2015. Pursuant to the terms of the Corporate Integrity Agreement, the requirements contained therein have terminated. The Special Independent Committee was dissolved in June 2016. Furthermore, the Ad Hoc Committee was established in October 2015 to review allegations related to the Company business relationship with PhilidorScience and related matters and dissolved in April 2016. In response to the dissolution of the Ad Hoc Committee, the Conduct and Compliance Committee was established in April 2016 to, among other things, oversee implementation of certain remediation measures proposed by the Ad HocTechnology Committee. In 2015, the Board and the Nominating and Corporate Governance Committee established the Sustainability and Environmental Subcommittee of the Nominating and Corporate Governance Committee to oversee and address issues relating to sustainability and environmental impact, and this subcommittee was dissolved in June 2016. The duties and responsibilities of this Subcommittee were absorbed by the Nominating and Corporate Governance Committee.
No member of any committee is presently an employee of the Company or its subsidiaries. The specific responsibilities of each of the Audit and Risk Committee, the Talent and Compensation Committee, and the Nominating and Corporate Governance Committee, the Finance and Transactions Committee, and the Science and Technology Committee are identified in suchthe respective committee’s charter. A copyCopies of the charters for each such charter isof the foregoing committees are available on our website at www.valeant.comwww.bauschhealth.com (under the tab “About”“Investors” and under the subtab “Corporate Governance”Governance — Corporate Governance Documents”) and isare also available in print to shareholders upon request submitted to Investor Relations, Valeant Pharmaceuticals International,Bausch Health Companies Inc., 2150 Saint Elzear Blvd. West, Laval, Quebec H7L 4A8, Canada. The responsibilities of the Ad Hoc Committee, the Conduct and Compliance Committee, the Finance and Transactions Committee, the Special Independent Committee and the Sustainability and Environmental Subcommittee of the Nominating and Corporate Governance Committee were identified by the Board and the Nominating and Corporate Governance Committee, respectively, in establishing such committee and subcommittee.
The Chairman of the Board and the Chairperson of each of the Audit and Risk Committee, the Talent and Compensation Committee and the Nominating and Corporate Governance Committee are expected to be available to respond to questions from shareholders at the Annual Meeting.
The table below sets forth each current director’s membership on our standing Board committees.
Audit and Risk Committee | Talent and Compensation Committee | Nominating and Corporate Governance Committee | Finance and Transactions Committee | Science and Technology Committee | ||||||
Richard U. De Schutter | ✓ | ✓ | ||||||||
D. Robert Hale | ✓ | Chairperson | ||||||||
Dr. Argeris (Jerry) N. Karabelas | Chairperson | ✓ | ||||||||
Sarah B. Kavanagh | ✓ | ✓ | ✓ | |||||||
Joseph C. Papa(1) | ||||||||||
John A. Paulson | ✓ | |||||||||
Robert N. Power | ✓ | Chairperson | ✓ | |||||||
Russel C. Robertson | Chairperson | ✓ | ||||||||
Thomas W. Ross, Sr.(2) | ✓ | ✓ | ||||||||
Andrew C. von Eschenbach, M.D | Chairperson | |||||||||
Amy B. Wechsler, M.D | ✓ | ✓ |
(1) | Chairman of the Board |
(2) | Lead Independent Director |
Audit and Risk Committee
The Audit and Risk Committee is currently comprised of four independent directors: Messrs.Mr. Robertson (Chairperson), Hale andMs. Kavanagh, Mr. Power and Ms. Kavanagh.Mr. Ross. The responsibilities, powers and operation of the Audit and Risk Committee are set out in the written charter of the Audit and Risk Committee (the “Audit and Risk Committee Charter”).Committee. Pursuant to the Audit and Risk Committee Charter, each member of the Audit and Risk Committee is an independent director as defined and required by applicable regulatory and stock exchange rules. The Board has concluded that each member of the Audit and Risk Committee is “financially literate” as defined under National Instrument52-110 — Audit Committeesand as required under NYSE rules, and each isof Mr. Robertson and Ms. Kavanagh qualify as an “audit committee financial expert” under the regulations promulgated by the U.S. Securities and Exchange Commission.Commission (the “SEC”).
The Audit and Risk Committee operates pursuant to the Audit and Risk Committee Charter. Its responsibilities include, among other things, responsibility for reviewing and recommending to the Board our annual financial statements and management’s discussion and analysis of results of operation and financial condition (“MD&A”) and reviewing and approving our interim financial statements and MD&A. As contemplated in the Audit and Risk Committee Charter, the Audit and Risk Committee periodically meets with
our internal auditor and with our external auditors without management being present. The Audit and Risk Committee also recommends to the Board the external auditors to be nominated for approval by the Company’s shareholders, as well as the compensation of the external auditors. The Audit and Risk Committee Charter provides that the Audit and Risk Committee must establish procedures for the receipt, retention and treatment of complaints received by the Company regarding accounting, internal accounting controls, or auditing matters and the confidential, anonymous submission by employees of the Company of concerns regarding questionable accounting or auditing practices.
In accordance with the Audit and Risk Committee Charter, the Audit and Risk Committee also provides assistance to the Board in fulfilling its oversight function, including with respect to:
(i) the quality and integrity of our financial statements;
(ii) compliance with our codeStandards of conduct,Business Conduct, and legal and regulatory requirements, including with respect to disclosure of financial information;
(iii) the qualifications, performance and independence of our external auditor;
(iv) the performance of our senior finance employees and internal audit function;
(v) internal controls and certifications; and
(vi) monitoring the appropriateness and effectiveness of the Company’s risk management systems and policies, including evaluating on a regular basis the effectiveness and prudence of senior management in managing the Company’s operations and the risks to which it is exposed.
The Conductexposed; and Compliance Committee was formed to, among other things, oversee implementation of certain remediation measures proposed by(vii) overseeing the Ad Hoc Committee, including working with the AuditCompany’s compliance programs, policies and Risk Committee with its oversight function in relation to the restatementprocedures, and remediation matters related thereto.investigating compliance matters.
The Audit and Risk Committee Charter provides that no member of the Audit and Risk Committee may hold ten percent10% or more of the Company’s capital stockoutstanding Common Shares or serve simultaneously on the audit committee of more than two other public companies, unless the Board determines that such simultaneous service would not impair his or her ability to serve effectively on the Audit and Risk Committee.
Talent and Compensation Committee
The Talent and Compensation Committee is currently comprised of fivefour independent directors: Drs.Dr. Karabelas (Chairperson), Mr. De Schutter, Mr. Hale, and Wechsler and Messrs. DeSchutter, Fraidin and Hale.Dr. Wechsler. The responsibilities, powers and operation of the Talent and Compensation Committee are set out in the written charter of the Talent and Compensation Committee (the “Talent and Compensation Committee Charter”).Committee. In accordance with the Talent and Compensation Committee Charter, each member of the Talent and Compensation Committee is an independent director as defined and required by applicable regulatory and stock exchange rules.
As described in the Talent and Compensation Committee Charter, the key responsibilities of the Talent and Compensation Committee include:
(i) reviewing and approving the linkage of corporate goals and objectives toin connection with the compensation of our CEO, evaluating the CEO’s performance in light of those goals and objectives, and (either as a committee or together with the other independent directors who satisfy the independence,“non-employee” and “outside director” requirements under the Talent and Compensation Committee Charter) determining and approving the compensation of the CEO based on such evaluation;
(ii) reviewing and approving each element of total compensation for all officers (as such term is defined in Rule16a-1(f) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”));
(iii) reviewing and approving arrangements with executive officers relating to their employment relationships with us;
(iv) reviewing talent management and succession planning materials for key roles; (v) providing strategic supervision of our benefit plans, programs and policies; and
(vi) reviewing and recommending to the Board for approval the CD&ACompensation Discussion & Analysis to be included in the Company’s annual management proxy circular and proxy statement and/or annual report on Form10-K, and preparing the Talent and Compensation Committee Report.
Compensation
For details on the philosophy and approach adopted by the Talent and Compensation Committee with respect to compensation of our officers, and Directors, please see “Compensation Discussion and Analysis” and “Director Compensation.”beginning on page 39.
The Talent and Compensation Committee has the authority to retain and compensate any consultants and advisors it considers necessary to fulfill its mandate. It shall, annually or on anas-needed basis, specify the work to be performed by, and agree on the associated fees to be paid to the compensation consultants. It shall also review annually the work performed and fees paid. In addition, the Talent and Compensation Committee Charter provides that the Talent and Compensation Committee shall report to the Board, on an annual basis, the nature of any additional work ornon-Board based services conducted by any such compensation consultant and associated fees paid, if approved by the Chairperson of the Talent and Compensation Committee.
Periodically, and at least annually, the Talent and Compensation Committee selects and retains independent consultants to conduct comprehensive reviews and assessments of our policies, procedures and internal controls for setting compensation of the CEO and other members of senior management. The consultant prepares and submits relevant information and analyses to the Talent and Compensation Committee. As discussed below under “Compensation Discussion and Analysis,” in 2016,2019, the Talent and Compensation Committee retained Pay Governance LLC (“Pay Governance”), as its independent consultant to provide advice on compensation matters. Pay Governance’s services included the following: (i) periodically reviewing our executive compensation programs, including base salary, short-term incentives, equity-based incentives, total cash compensation levels and total direct compensation of certain senior positions, against those of a peer group ofsimilar-sized pharmaceutical companies as measured by revenue and/or market capitalization;group; (ii) advising the Talent and Compensation Committee with regard to the compensation packages of the CEO and other members of senior management; (iii) reviewing the proxy and specifically the Compensation Discussion and Analysis; and (iv) preparing materials for and attending select Talent and Compensation Committee Meetings; and (v) reviewing and commenting on the retention plans that the Company adopted in 2015 and 2016. All of the services provided by Pay Governance during the fiscal year 2016 were provided to the Talent and Compensation Committee.Meetings. Pay Governance did not provide any additional services to the Company during the fiscal year 2016.2019. The Talent and Compensation Committee has assessed, at the relevant times, the independence of Pay Governance and concluded that its engagement of Pay Governance did not raise any conflict of interest with the Company or any of the Company’s Directorsdirectors or executive officers.
The Talent and Compensation Committee considers the advice and analysis of the independent compensation consultants, together with other factors the Talent and Compensation Committee considers appropriate (including feedback from shareholders and corporate governance groups, market data, knowledge of the comparator group and personal knowledge and experience of the Talent and Compensation Committee members), in reaching its decisions and making compensation determinations for the CEO and executive officers to the Board.
Compensation Risk Determination
The Talent and Compensation Committee assesses the potential risks relating to our compensation policies and practices for our employees, including those related to our executive compensation programs. Periodically, at least annually, the Talent and Compensation Committee reviews and discusses with management the relationship between the Company’s compensation policies and practices and its risk management, including the extent to which those policies and practices create risks for the Company, to ensure that such policies and practices support not only
economic performance, but also compliance with our risk management objectives, to ensure that they do not encourage excessive or unnecessary risk-taking and are not reasonably likely to have a material adverse effect on the Company. The Talent and Compensation Committee is engaged in reevaluating such compensation policies and practices and its risk management in light of the restatement and the remediation efforts associated therewith.officers.
Succession Planning
The Board regularly undertakes a thorough review of succession planning for the members of the Company’s Executive Committee, including our CEO, over the course of the year, led by the efforts of the Talent and Compensation Committee. The Talent and Compensation Committee continuously reviews the Executive Committee and key positions within the Company to ensure the continuity and comprehensiveness of succession planning companywide. Among other factors, the Talent and Compensation Committee considers the level of representation of women in executive officer and managerial positions when making appointments and during succession planning by taking into account the overall number of women currently serving in such roles at the Company and by actively considering succession planning;women candidates for such positions when they become available; however, the Company does not have a specific target number or date by which to achieve a specific numberlevel of representation of women in executive officer and managerial positions, as it considers a multitude of factors in determining the best person for any position. In 2016, there were two women serving as executive officers of the Company or a material subsidiary, representing 29% of all such executive officers on the Company’s corporate executive management team. Additionally, womenWomen currently lead a substantial portion of our businesses and
global functions, including our U.S. Ophthalmology, Women’s Health and Surgical businesses, Managed Market and Commercial Operations, South Africa and Western Europe businesses and ourex-U.S. Contact Lens business, and serve as our Executive Vice Presidentin the following roles: EVP and General Counsel; Senior ViceCounsel (who also serves as an executive officer of the Company); SVP and Chief Human Resources Officer; President, Chief Compliance Officer; Senior Vice President, Treasurer; Senior Vice PresidentDiversified Products; SVP, Head of Legal International; SVP, Global Head of Ethics and General Manager, Neurology, Generics, Obagi; Senior Vice President, Global Human Resources;Compliance; VP, International Vision Care; and Vice President, Regulatory Affairs.VPs of Marketing and/or Sales for various lines of business. Currently, one (representing 17%) of the Company’s executive officers is a woman.
The Board primarily through the Talent and Compensation Committee, regularly receives exposure to executives, managers and other personnel in the organization by attendinghaving the executives and participatingmanagers participate in Board meetings and present on the Company’s business and strategy meetings.
strategy. The Board’s participation in these events provides significant exposure to the Company’s leadership team and strategic focus, which greatly enhances the Board’s ability to conduct succession planning, as well as to gain insight as it oversees organization risk and strategy.
For details with respect to changes in the executive management team, please see “Compensation Discussion and Analysis — Changes in our Executive Management Team.”
Nominating and Corporate Governance Committee
The Nominating and Corporate Governance Committee is currently comprised of fivefour independent directors: Messrs.Mr. Power (Chairperson), DeSchutter, IngramMs. Kavanagh, Mr. Robertson and Ross and Ms. Kavanagh.Mr. Ross. The responsibilities, powers and operation of the Nominating and Corporate Governance Committee are set out in the committee’s written charter (the “Nominating and Corporate Governance Committee Charter”). Pursuant tocharter. As required by the Nominating and Corporate Governance Committee Charter, each member of the Nominating and Corporate Governance Committee is an independent director as defined and required by applicable regulatory and stock exchange rules.
As described in the Nominating and Corporate Governance Committee Charter, the key responsibilities of the Nominating and Corporate Governance Committee include, among others:
include: (i) identifying individuals qualified to become Directorsdirectors and recommending to the Board new nominees for election by shareholders or for appointment by the Board;
Board, and engaging the services of third party search firms to assist in identifying such individuals; (ii) providing recommendations to the Board regarding the competencies and skills the Board as a whole should possess, and the qualifications of its Directors;
directors; (iii) recommending for Board approval, if appropriate, revisions to our corporate governance practices and procedures,procedures; (iv) developing new charters for any new committees established by the Board, if not otherwise mandated by the Board,Board; (v) monitoring relationships and communication between management and the Board and monitoring emerging best practices in corporate governance;
(vi) reviewing the composition and mandate of the Board and each committee of the Board annually and, if appropriate, recommending to the Board any changes it considers desirable with respect thereto; and
(vii) overseeing our orientation process for new Directorsdirectors and our continuing education program for all Directors.directors.
The Nominating and Corporate Governance Committee annually develops and recommends processes for assessing the performance and effectiveness of the Board as a whole and the committees of the Board and reports annuallythe results of such assessments to the Board on the results of such assessments. The Board and each committee conducts an annual self-assessment of its performance and effectiveness, including a review of its compliance with its Charter, in accordance with the processbasis. Pursuant to these processes established by the Nominating and Corporate Governance Committee and adopted by the Board.Board, the Board and each committee conduct annual self-assessments of their performance and effectiveness. The Board intends to conduct such peerself-assessments include a review of the Directors on a periodic basis to supplement the annual reviewscompliance of the Board and each committee.committee with their respective charters, the adequacy of information provided, the skills and experience of the members, and other matters. The results of the individual directors’ surveys are compiled by the Chairperson of the Nominating and Corporate Governance Committee and presented to the Lead Independent director and Chairman of the Board for discussion. Following these discussions, the Chairperson of the Nominating and Corporate Governance Committee provides a report to the full Board identifying the opportunities for improvement identified in the self-assessment process. The Board has previously conducted periodic peer reviews of the directors to supplement the annual Board and committee self-assessments, and will do so again when the Board determines peer reviews will add value to these annual self-assessments. The Nominating and Corporate Governance Committee also makes recommendations to the Board regarding Director compensation.director compensation, and may retain advisors to assist with evaluating and making these recommendations. For additional information regarding the compensation of Directors, please see “Director Compensation” below.
In February 2015,ournon-employee directors, and the role of the Nominating and Corporate Governance Committee established a Sustainabilityin reviewing and Environmental Subcommitteerecommending changes to review and assist in the oversight of the Company’s existing health, safety and environmental policies and practices and in recognition of the impact these policies and practices havenon-employee director compensation, please see “Director Compensation” beginning on the Company’s constituents and shareholders. In establishing the Subcommittee, the Nominating and Corporate Governance Committee identified the key responsibilities of the Subcommittee, including, among others, to:page 69.
develop, and periodically review, a sustainability strategy and plan that supports the Company’s business and environmental impact objectives;
liaison with the members of management responsible for areas most directly affecting sustainability and environmental impact, on the assessment of the Company’s practices with respect to sustainability and environmental impact;
communicate the Company’s policies and philosophy with respect to sustainability and environmental impact; and
keep the Board apprised of matters related to sustainability and environmental impact, and make recommendations to the Board with respect thereto.
In June 2016, the Sustainability and Environmental Subcommittee was dissolved, and its duties and responsibilities were absorbed by the Nominating and Corporate Governance Committee.
With the Company’s sustainability and environmental efforts,Newsweek’s Green Ranking of the Company substantially improved in 2016. By market capitalization, the Company is ranked 78 out of the top 500 largest publicly-traded U.S. companies and 135 out of the top 500 largest publicly-traded companies globally in 2016.
Finance and Transactions Committee
The Finance and Transactions Committee is currently comprised of four independent directors: Messrs. AckmanMr. Hale (Chairperson), Mr. De Schutter, Ms. Kavanagh, and Hale and Drs. Eshelman and Karabelas.Mr. Paulson. It was established to assist the Board in providing fiduciary oversight and strategic advice with respect to the Company’s significant transactional activities, advising the Board regarding the Company’s significantand financing activities, and monitoring the overall financial condition of the Company, andincluding the impact of our significant financing activities.
ConductScience and ComplianceTechnology Committee
The ConductScience and ComplianceTechnology Committee which was established on April 15, 2016, is currently comprised of fivefour independent directors: Messrs. RossDr. von Eschenbach (Chairperson), FraidinDr. Karabelas, Mr. Power, and RobertsonDr. Wechsler. The Science and Drs. Eshelman and Wechsler. It was established to, among other things, oversee implementation of certain remediation measures proposed by the Ad Hoc Committee.
Special Independent Committee
In June 2009, the Board established a Special Independent Committee to review finalization and implementation of the Corporate Integrity Agreement with the OIG, which expired in September 2014. The Special Independent Committee has also undertaken to review reports and oversee the implementation of recommendations generated from reports submitted by an independent consultant retained by the Board pursuant to a consent of final judgment. The consent no longer requires such reports after September 2011. Its tasks include overseeing the implementation of recommendations by the OIG and the Ontario Securities Commission. The term of the Corporate Integrity Agreement concluded in September 2014 and the Company has subsequently filed its final Annual Report to the Office of the Inspector General in January 2015. Pursuant to the terms of the Corporate Integrity Agreement, the requirements contained therein terminated in 2015. The Special Independent Committee was dissolved in June 2016.
Ad Hoc Committee
In October 2015, the Ad HocTechnology Committee was established to review allegations relatedprovide oversight and strategic advice with respect to the Company’s business relationship with Philidorresearch and related matters. On April 5, 2016, the Ad Hoc Committee was dissolveddevelopment programs and pipeline, and the Company’s Board determined that the 12 then current independent directors, including the members of the Auditstrategic direction and Risk Committeedevelopment in research and the newly created Conductdevelopment and Compliance Committee, would, among other things, oversee implementation of certain remediation measures proposed by the Ad Hoc Committee.technology.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
TheEach of Dr. Karabelas, Mr. De Schutter, Mr. Hale, and Dr. Wechsler, representing all of the directors who served on the Talent and Compensation Committee during 2019, is comprised of Drs. Karabelas (Chairperson) and Wechsler and Messrs. DeSchutter, Fraidin and Hale, each of whom is(i) anon-employee Directordirector for purposes of Rule16b-3 of the Exchange Act, as amended, each of whom is(ii) an “outside director” under Section 162(m) of the Internal Revenue Code of 1986, as amended (the “Code”), to the extent applicable, and each of whom is(iii) an independent director. None of these Directorsthe members of the Talent and Compensation Committee is a current or former officer of the Company. There were no compensation committee interlocks with other companies in 20162019 within the meaning of Item 407(e)(4)(iii) of RegulationS-K. See “Certain Transactions — Certain Related-PersonRelated-Party Transactions” belowon page 76 for a description of related-personrelated-party transactions.
The executive officers of the Company are as follows:
Name | Age | Title | ||
Joseph C. Papa | Chairman of the Board and Chief Executive Officer | |||
Paul S. Herendeen | Executive Vice President and Chief Financial Officer | |||
Christina M. Ackermann | Executive Vice President and General Counsel | |||
Thomas J. Appio |
| |||
Joseph F. Gordon | 56 | President &Co-Head Bausch + Lomb/International | ||
William D. Humphries |
Below is a description of each executive officer who is not also a Directordirector nominee of the Company.
PAUL S. HERENDEEN has been our Executive Vice President and Chief Financial Officer since August 2016. Prior to joining Valeant,Bausch Health, he served as Executive Vice President and CFO of Zoetis Inc. for two years. From 2005 to 2013 and from 1998 to 2001, Mr. Herendeen served as CFO at Warner Chilcott, a specialty pharmaceuticals company. He rejoined Warner Chilcott after four years as EVP and CFO of MedPointe Pharmaceuticals, a privately held healthcare company, where he served as CFO from 2001 until 2005. Prior to that, Mr. Herendeen spent nine years as a principal investor at both Dominion Income Management and Cornerstone Partners, where he worked on investments as well as mergers and acquisitions for the firms and their portfolio companies. He spent the early part of his career in banking and public accounting, having held various positions with the investment banking group of Oppenheimer & Company, the capital markets group of Continental Bank Corporation and as a senior auditor with Arthur Andersen & Company. Mr. Herendeen earned a Master of Business Administration (MBA) from the University of Virginia’s Darden School of Business and holds a bachelor’s degree in Business Administration from Boston College.
CHRISTINA M. ACKERMANN has been our Executive Vice President and General Counsel since August 2016. Prior to joining Valeant,Bausch Health, Ms. Ackermann was part of the Novartis group of companies for the past 14 years, most recently serving as Senior Vice President, General Counsel for Alcon, where she was responsible for the Legal, Intellectual Property and Compliance functions. Prior to this, sheShe previously served as Global Head, Legal and General Counsel at Sandoz, the generics division of Novartis, from 2007 to 2012. She joined Novartis Pharma in 2002 as Head, Legal Technical Operations and Ophthalmics and assumed the role of Head Legal General Medicine in July 2005. Before Novartis, Ms. Ackermann served in Associate General Counsel roles with Bristol Myers Squibb and DuPont Pharmaceuticals, as well as in private practice, where she focused on securities and mergers & acquisitions. Ms. Ackermann has a Post Graduate Diploma in EC Competition Law from King’s College, the University of London, U.K. and, a Bachelor of Laws from Queen’s University, Kingston, Canada.Canada, and attended York University, Toronto, Ontario, for her undergraduate studies in Math, Political Sciences and Fine Arts.
THOMAS J. APPIO has been our President &Co-Head Bausch + Lomb/International since August 2018, and was previously our Executive Vice President, Company Group Chairman, International sincefrom August 2016.2016 until July 2018. Prior to joining Bausch Health in 2013, Mr. Appio joined Valeant from Bausch & Lombserved in 2013, and under his leadership Valeant has experienced accelerated growth in revenue and profitability in the region, particularly in China. During his almost seven yearsseveral positions with Bausch &+ Lomb, Mr. Appio servedincluding as Vice President, North Asia/Japan and as Managing Director, Greater China and Japan. PreviousPrior to joining Bausch &+ Lomb, Mr. Appio served 23 years with Schering-Plough in a wide range of leadership and operations responsibilities. Mr. Appio has spent nearly 18over 20 years working in the Asia Pacific region. Mr. Appio holds a Bachelor of Science in Accounting from Arizona State University, W.P. Carey School of Business.
JOSEPH F. GORDON has been our President &Co-Head Bausch + Lomb/International since August 2018. He previously served as our President, Consumer and Vision Care from December 2016 through July 2018 and as General Manager of U.S. Consumer from August 2013 to November 2016. Prior to joining Bausch Health in 2013, Mr. Gordon served in various positions with Bausch + Lomb, where he most recently served as Vice President,
Sales and Marketing, Global Consumer from January 2011 to July 2013. Earlier in his career, he led sales and marketing organizations within Pfizer Inc., and Wyeth, a pharmaceutical company purchased by Pfizer Inc. in 2009. Mr. Gordon holds a Bachelor of Science in Economics from Rutgers University.
WILLIAM D. HUMPHRIES has been our President, Ortho Dermatologics since August 2018, and was previously our Executive Vice President, Company Group Chairman, Dermatology sincefrom January 2017. He2017 through July 2018. Prior to joining Bausch Health, Mr. Humphries was previously CEO of Merz North America from March 2012 until December 2016, where he oversaw strategic direction and collaboration among three North American companies: Merz Pharmaceuticals, LLC, Merz Aesthetics, Inc. and Merz Pharma Canada, Ltd. Prior to joining Merz, he served as the President of Stiefel, a leader in global dermatology and skin health, where he spearheaded two major acquisitions, and led the global integration of Stiefel into GlaxoSmithKline. Previously, Mr. Humphries
held multiple senior executive roles within Allergan, Inc., concluding as Vice President of the U.S. Skincare business. Mr. Humphries has been a director of Clearside Biomedical, Inc., a late-stage clinical biopharmaceutical company, since January 2012, and has also served as a director of Aclaris Therapeutics, Inc., adermatologist-led biopharmaceutical company, since September 2016. He holds a Bachelor of Arts from Bucknell University and an MBAa Master of Business Administration from Pepperdine University.
None of the executive officers of the Company were selected pursuant to any arrangement or understanding, other than their respective employment agreements with the Company. None of the executive officers are related by blood, marriage or adoption to one another or to any Directordirector or nominee for Directordirector of the Company.
OWNERSHIP OF THE COMPANY’S SECURITIES
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth certain information regarding the beneficial ownership of our Common Shares and the percentage of Common Shares owned beneficially by holders of more than 5% of our outstanding Common Shares as of March 16, 2017.2, 2020.
Identity of Owner or Group | Number of Shares and Nature of Beneficial Ownership | Percentage of Class(1) | Number of Shares and Nature of Beneficial Ownership | Percentage of Class(1) | ||||||||||||
Paulson & Co. Inc. | 19,384,500 | (2) | 5.57 | |||||||||||||
FIL Ltd | 26,947,455 | (2) | 7.63 | % | ||||||||||||
Pembroke Hall, 42 Crow Lane, Hamilton, Bermuda, HM19 | ||||||||||||||||
Paulson & Co., Inc. | 20,839,035 | (3) | 5.90 | % | ||||||||||||
1251 Avenue of the Americas, New York, NY 10020 | ||||||||||||||||
VA Partners I, LLC | 17,997,224 | (3) | 5.17 | 17,942,227 | (4) | 5.08 | % | |||||||||
One Letterman Drive, Building D, Fourth Floor, San Francisco, CA 94129 |
This table is based upon information supplied by the principal shareholders, and Schedules 13D and 13G filed with the U.S. Securities and Exchange Commission (the “SEC”)SEC and “early warning reports” and similar regulatory filings filed on SEDAR.SEDAR and on the Canadian System for the Electronic Disclosure by Insiders. Unless otherwise indicated in the footnotes to this table, we believe that the shareholders named in the table have sole voting and investment power with respect to the Common Shares indicated as beneficially owned.
(1) | Based on |
(2) |
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(3) | According to information provided to the Company by Paulson & Co., Inc. on February |
According to |
The following table sets forth, as of February 28, 2017March 2, 2020 (unless otherwise noted below), certain information regarding the beneficial ownership of our Common Shares and the percentage of Common Shares beneficially owned by (i) each Directordirector and each Directordirector nominee, (ii) each executive officer named in the Summary Compensation Table on page 56 (together, the “named executive officers,” or “NEOs”), and (i) the persons serving(iii) all directors and executive officers as CEOa group. None of the Company during 2016, (ii) the persons serving as CFO of the Company during 2016, (iii) the other three most highly paidshares held by directors and executive officers of the Company who were serving as executive officers at December 31, 2016, and (iv) a highly paid executive officer of the Company who served during 2016 but was not serving as an executive officer at December 31, 2016 but who would have been included in our most highly paid executive officers had he been servingthe table are pledged as executive officer on December 31, 2016 (together, the “Named Executive Officers”), and all current Directors and Director nominees and current executive officers of the Company as a group.security.
Identity of Owner or Group | Number of Shares and Nature of Beneficial Ownership(1)(2)(3) | Percentage of Class(4) | ||||||
Named Executive Officers, Directors and Director Nominees | ||||||||
Christina M. Ackermann | 0 | * | ||||||
William A. Ackman(5) | 0 | * | ||||||
Robert R.Chai-Onn | 354,902 | * | ||||||
Richard U. DeSchutter(6) | 14,000 | * | ||||||
Dr. Fredric N. Eshelman | 1,070 | * | ||||||
Stephen Fraidin | 0 | * | ||||||
D. Robert Hale(7) | 17,997,224 | 5.17 | % | |||||
Paul S. Herendeen(8) | 24,000 | * | ||||||
Robert A. Ingram | 73,200 | * | ||||||
Dr. Argeris (Jerry) N. Karabelas. | 4,000 | * | ||||||
Sarah B. Kavanagh | 0 | * | ||||||
Dr. Ari S. Kellen | 82,041 | * | ||||||
Joseph C. Papa | 202,000 | * | ||||||
J. Michael Pearson(9) | 1,197,986 | * | ||||||
Robert N. Power | 16,096 | * | ||||||
Russel C. Robertson. | 4,012 | * | ||||||
Robert L. Rosiello. | 40,958 | * | ||||||
Thomas W. Ross, Sr. | 10,096 | * | ||||||
Howard B. Schiller | 336,751 | * | ||||||
Amy B. Wechsler, M.D. | 2,964 | * | ||||||
Anne C. Whitaker | 22,131 | * | ||||||
Directors and executive officers of the Company as a group (23 persons) | 20,410,083 | 5.87 | % |
Identity of Owner or Group | Number of Shares and Nature of Beneficial Ownership(1)(2)(3) | Percentage of Class(4) | ||||||
Named Executive Officers, Directors and Director Nominees | ||||||||
Christina M. Ackermann | 201,295 | * | ||||||
Thomas J. Appio | 249,705 | * | ||||||
Richard U. De Schutter | 284,250 | * | ||||||
D. Robert Hale(5) | 17,942,227 | 5.08 | % | |||||
Paul S. Herendeen | 1,337,706 | * | ||||||
William D. Humphries | 356,534 | * | ||||||
Dr. Argeris (Jerry) N. Karabelas | 70,646 | * | ||||||
Sarah B. Kavanagh | 64,378 | * | ||||||
Joseph C. Papa | 1,317,691 | * | ||||||
John A. Paulson(6) | 20,894,967 | 5.91 | % | |||||
Robert N. Power | 82,742 | * | ||||||
Russel C. Robertson | 93,983 | * | ||||||
Thomas W. Ross, Sr. | 76,742 | * | ||||||
Andrew C. von Eschenbach, M.D. | 17,465 | * | ||||||
Amy B. Wechsler, M.D. | 88,874 | * | ||||||
Directors and executive officers of the Company as a group (16 persons) | 43,233,503 | 12.14 | % |
* | Less than 1% of the outstanding Common Shares. |
(1) | This table is based on information supplied by current executive officers and |
(2) | The amounts reported include |
(3) |
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(4) | Applicable percentage ownership is based on |
(5) |
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According to |
According to information provided to the Company by Paulson & Co., Inc. on February 28, 2020, it has the sole power to vote and sole power to dispose of 20,839,035 of our Common Shares. Mr. |
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SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the Company’s executive officers and Directors,directors, and persons who own more than 10% of a registered class of the Company’s equity securities, to file reports of ownership and changes in ownership with the SEC and the NYSE. Such executive officers, Directorsdirectors and shareholders are required by SEC regulation to furnish the Company with copies of all Section 16(a) forms they file.
Based solely upon its review of the copies of such forms it received, or written representations from certain reporting persons for whom no such forms were required, the Company believes that during fiscal year 2016, the following of its2019, all executive officers, Directorsdirectors and 10% beneficial owners failed toof the Company timely filefiled all forms required by Section 16(a): Mr. Hale filed one late Form 4 due to an inadvertent administrative error; Ms. Kavanagh filed a late Form 3 and one late Form 4 due to issues obtaining filing access; Mr. Ingram filed two late Form 4s, one due to issues obtaining filing access and one due to inadvertent administrative errors by except for the Company; and Messrs. Robertson, Ross and Schiller,following: Dr. Wechsler and Ms. WhitakerMessrs. De Schutter, Paulson and Robertson each filed one late Form 4, all dueeach relating to inadvertent administrative errors by the Company. In addition, Mr. Osama A. Eldessouky, who was appointed as the Company’s Chief Accounting Officer effective June 15, 2016, filed a late Form 3 in 2017 and one late Form 4 in 2017, each for 2016 transactions, due to inadvertent administrative errors by the Company.single transaction.
EXECUTIVE COMPENSATION AND RELATED MATTERS
COMPENSATION DISCUSSION AND ANALYSIS
Executive Summary
At Valeant, we continue to have aThis Compensation Discussion and Analysis (“CD&A”) section describes our compensation philosophy that intends to link executive pay with long term performance. This last year was a transition year as we made progress toward stabilizing our business, resolving legacy issuesapproach and undertaking a new strategy. While we are disappointed with our financial results and share price performance, we have accomplished important steps to position the company for a turnaround, including adding several key new leaders, restructuring the management team and business segments, remediating a material weakness in financial reporting, beginning to pay down debt and adopting a new mission and strategy. With respect to executive compensation, in 2016 the Company primarily focused on stabilizing and transitioning the management of the Company through retention programs and new hire awards, and on designing a new long-term incentive (“LTI”) program to align with our new strategy, which we have launched in 2017.
For 2016, the Company determined that the financial goals that were established at the beginning of the year were not sufficiently achieved to result in a payout of our Named Executive Officers’ annual cash incentive opportunities. However, the Talent and Compensation Committee recognized the significance and quality of the contributions made by Messrs. Papa and Herendeen and Ms. Ackermann. Accordingly, the Talent and Compensation Committee determined to award Mr. Papa with a cash bonus of 50% of his annual target incentive opportunity. The Board is very supportive of Mr. Papa’s efforts to date and is confident in his abilities and those of his team to lead us through our transformation. While in 2016 we made many exceptional retention and new hire compensation awards and this may extend into 2017, going forward we intend for executive pay to come into line with our new LTI framework.
Our Business Strategy
As a company, we believe that there is significant opportunity in the eye health and branded prescription pharmaceutical segments. Our existing portfolio, commercial footprint and pipeline of product development projects position us to compete and be successful in these markets. As a result, we believe these businesses provide us with the greatest opportunity to build value for our shareholders. In order to focus our efforts, in 2016 we performed a review of our portfolio of assets to identify those areas where we believe we have, and can maintain, a competitive advantage. We identify these areas as “core”, as we believe these assets generally have a greater value to our company than to other owners, as we believe we are best positioned to grow and develop them. By narrowing our focus, we have the opportunity to reduce complexity in our business and maximize the value of our core segments. We describe our core areas by business and by geography. Within our Branded Rx segment, our core businesses include gastrointestinal and dermatology. We also view our global eye health business, within our Bausch + Lomb/International segment, as core.
Another critical element of our strategy is our lower risk, output-focused research and development model. This model allows us to advance certain development programs to drive future commercial growth, while minimizing our research and development expenses. This is achieved primarily by:named executive officers (“NEOs”) for 2019. Our NEOs for 2019 are:
focusing on innovation through our internal researchJoseph C. Papa, Chairman of the Board and development, selected acquisitions andin-licensing;Chief Executive Officer
focusing on productivity through measures such as leveraging industry overcapacity and outsourcing commodity services;
focusing on critical skills and capabilities needed to bring new technologies to the market;
pursuing life-cycle management programs for currently marketed products to increase such products’ value during their commercial lives; and
acquiring dossiers and registrations for branded generic products in emerging markets which require limited manufacturingstart-up and development activities.
Our long-term strategy has also historically included deploying cash via business development, debt repayment and repurchases and share buybacks. Since 2010, we have completed numerous transactions to expand our portfolio offering and geographic footprint, including, among others, the acquisitions of Salix Pharmaceuticals, Ltd. and Bausch & Lomb Holdings Incorporated. Although these transactions were successful in generating growth and bolstering our product portfolio, in 2016 we transitioned away from a focus on acquisitions, and took steps to stabilize our business and began placing greater emphasis on a select number of internal research and development projects, as evidenced by our continued increase in investment in development, which in 2017 is expected to reflect a number greater than 4.5% of sales. While we anticipate business development through acquisitions may be a component of our long-term strategy, we expect acquisitions to be much lower for the foreseeable future as compared to prior periods as we focus on reducing our outstanding debt levels.
We believe our increased focus on the development of new products will allow us to maximize our short term growth and profitability and allow us to stabilize the Company while bolstering our future growth.
Toward these ends, in January 2017, we entered into a definitive agreement to sell all of the outstanding equity interests in our subsidiary, Dendreon Pharmaceuticals, Inc., for $819.9 million in cash. Also in January 2017, we entered into a definitive agreement to sell our CeraVe®, AcneFree™ and AMBI® skincare brands for $1.3 billion in cash.
Changes in Our Executive Management Team
As part of our turnaround strategy and in response to shareholders, we completely reconstituted our organizational structure in 2016 and recruited several key members of our senior management team, including our CEO, CFO, General Counsel and several other critical team members.
New Chairman and CEO
In May 2016, following the Board’s thorough search process, Joseph C. Papa joined us to become our Chairman and CEO. With more than 35 years of experience in the pharmaceutical, healthcare services and specialty pharmaceutical industries, including 20 years of branded prescription drug experience, Mr. Papa joined us from Perrigo, a leading global healthcare supplier that develops, manufactures and distributesover-the-counter (OTC) and prescription (Rx) pharmaceuticals, where he served as the CEO since 2006 and was appointed Chairman in 2007.
The table below outlines the market competitive pay package provided to Mr. Papa that was required in order to attract a proven, long-tenured sitting CEO with pharmaceutical experience. For details of Mr. Papa’s employment agreement, please see “Chairman and Chief Executive Officer’s Employment Agreement.”
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The buyout awards represent forfeited unvested equity compensation at Mr. Papa’s prior employer. This practice is market practice when recruiting an active CEO. Also, 50% of the buyout RSUs may be accelerated to the second anniversary if goals are achieved relating to (i) succession planning, (ii) government relations, (iii) employee relations, (iv) customer relations and (v) shareholder relations. Finally, no 2017 LTI awards were granted to Mr. Papa.
The value of Mr. Papa’s LTI awards as of December 31, 2016 is significantly below the $52 million target value. The Company’s price would need to increase to $60 in order for the value to surpass the $52 million target value:
Other Executives
In August 2016, Paul S. Herendeen, joined us to become our Executive Vice President and CFO. With more than 30 years of broad financial experience and leadership, Mr. Herendeen joined us from Zoetis Inc. (“Zoetis”), a global developer and manufacturer of animal health medicines and vaccines, where he had served as Executive Vice President and CFO. Prior to that, from 2005 to 2013 and from 1998 to 2001, he served in that capacity at Warner Chilcott plc, a specialty pharmaceutical company.
In August 2016, Christina M. Ackermann joined us to become our Executive Vice President and General Counsel. Prior to that, Ms. Ackermann was part of the Novartis group of companies for 14 years, most recently serving as Senior Vice President, General Counsel for Alcon, where she was responsible for the Legal, Intellectual Property and Compliance functions.
As a result, 2016 was a year of transition for our Executive Committee:
In December 2015, J. Michael Pearson, our then Chairman and CEO, went on medical leave. The Board created an Office of the CEO, which was responsible for the management of the Company on an interim basis and was comprised of then Executive Vice President, General Counsel and Chief Legal Officer, Head of Corporate and Business Development, Robert R.Chai-Onn; then Executive Vice President and Company Group Chairman, Dr. Ari S. Kellen; and then Executive Vice President and CFO, Robert L. Rosiello, each of whom remained in their positions in addition to taking on the additional responsibility of the Office of the CEO.
In January 2016, the Board appointed Howard B. Schiller, who served as our CFO from 2011 to 2015 and had been serving on our Board since 2012, to serve as the Interim CEO during Mr. Pearson’s medical leave. At that time, the Board terminated the Office of the CEO, and Messrs.Chai-Onn and Rosiello and Dr. Kellen otherwise remained in their positions.
In February 2016, Mr. Pearson returned from his medical leave and resumed as our CEO. Mr. Schiller transitioned out of his interim duties and continued as a member of our Board. In addition, the Board appointed Robert A. Ingram as theNon-Executive Chairman of the Board.
In March 2016, we announced that the Board had initiated a search to identify a candidate to succeed Mr. Pearson as our CEO. As noted above, the Board identified Mr. Papa, a veteran in the pharmaceutical, healthcare services and specialty pharmaceutical industries, to succeed Mr. Pearson, and Mr. Papa joined us in May 2016. In connection with Mr. Pearson’s departure, we entered into a separation and consulting agreement. We terminated his consulting services in January 2017.
In August 2016, when Mr. Herendeen assumed his duties as our Executive Vice President and CFO, Mr. Rosiello became our Executive Vice President, Corporate Development and Strategy.
In October 2016, in connection with Ms. Ackermann’s assumption of her duties as our Executive Vice President and General Counsel in August 2016,Mr. Chai-Onn’s employment with us ended.
In December 2016, we announced that Dr. Kellen and Mr. Rosiello would be leaving us effective December 31, 2016 and that Anne C. Whitaker, then Executive Vice President and Company Group Chairman, would also be leaving us effective January 13, 2017.
Taking into account these various changes in our Executive Committee, our Named Executive Officers for 2016 were:
Joseph C. Papa — Chief Executive Officer
Paul S. Herendeen — Executive Vice President and Chief Financial Officer
Christina M. Ackermann, — Executive Vice President and General Counsel
Thomas J. Michael Pearson — former Chief Executive OfficerAppio, President &Co-Head Bausch + Lomb/International
William D. Humphries, President, Ortho Dermatologics
2019 Business Results
Howard B. Schiller — former Interim Chief Executive OfficerIn 2019 we delivered on our “pivot to offense” strategy, with eight consecutive quarters of total company organic growth and our first full year of reported revenue growth since 2015. We repaid approximately $900 million of debt using cash generated from operations in 2019, while increasing our investment in R&D by 14%, or $58 million. We achieved the following financial results for 2019:
Robert L. Rosiello — former Executive Vice President
GAAP Revenues of $8.6 billion
GAAP Net Income of ($1.788) billion
GAAP Cash Flow from Operations of $1.5 billion
Adjusted EBITDA(non-GAAP) of $3.57 billion
Please see Appendix 1 for a reconciliation of our GAAP tonon-GAAP financial measures and Chief Financial Officer and former Executive Vice President, Corporate Development and Strategyrelated disclosures.
Dr. Ari S. Kellen — former Executive Vice President and Company Group Chairman
Anne C. Whitaker — former Executive Vice President and Company Group Chairman
Robert R. Chai-Onn — former Executive Vice President, General Counsel and Chief Legal Officer, Head of Corporate and Business Development
Our Compensation Philosophy
OurBausch Health’s compensation philosophy is designed to alignattract, retain, and motivate executives, including our NEOs, who are committed to the ongoing transformation of our company and to improving people’s lives through our products. Our compensation program is intended to link executive compensation to long-term business performance, while providing compensation opportunities that are competitive as compared to our peers and align the interests of our executives with long-term performance. Specifically, we maintain an executive compensation philosophy and program that is focused on long-termpay-for-performance, while balancingthose of our shareholders. Our programs also balance appropriate risk taking and incorporatingincorporate shareholder feedback. For example,
A significant portion of total compensation is linked to satisfying our financial targets and strategic initiatives, in addition to achieving positive total returns to shareholders.
In determining the appropriate mix of base salary and incentive pay (including annual cash incentives and long-term equity) for our NEOs, the Talent and Compensation Committee seeks to balance:
Attracting and retaining our executives with the stability of a competitive base salary;
Promotingpay-for-performance, as we believe that incentive pay appropriately rewards executives for their contribution to our overall performance; and
Aligning compensation with company performance and shareholder value creation through the use of performance-based equity compensation awards.
In allocating between short-term and long-term compensation, the Talent and Compensation Committee seeks to establish a balance between rewarding past performance and recognizing potential future contributions. In that respect, the Talent and Compensation Committee designs our annual incentive program to reward executives who achievepre-determined financial metrics and strategic priorities, and it grants equity awards under our long-term incentive program to provide an opportunity for additional compensation based on delivering on our long-term performance and shareholder value creation.
The compensation opportunity provided to our NEOs is primarily performance-based. In 2019, 89% of our CEO’s $5 million share purchase requirement,and 77%, on average, of our share ownership guidelines,other NEOs’ compensation opportunity was performance-based pay, subject to the achievement of annual and long-term performance goals, including the growth of our new 2017 LTI portfolio approach and our amended claw back policy serve us well as we seek to mitigate risk andCommon Share price over time.
Shareholder-Friendly Compensation Practices
We maintain the following shareholder-friendly compensation practices which further align the interests of our executives with thatthose of our shareholders and balance appropriate risk taking.
What We Do
Share ownership guidelines — All NEOs are subject to significant share ownership guidelines. Pursuant to our Share Ownership Guidelines, our CEO is required to hold 6 times base salary, and our other NEOs are required to hold 3 times base salary.
Holding requirements — In connection with his hiring, our CEO was required to purchase $5,000,000 of Common Shares, and our other NEOs are required to hold 50% of their net shares that vest under our long-term incentive plans, until they satisfy our Share Ownership Guidelines.
Performance-based equity — We grant performance share units with rigorous absolute and relative performance goals, which align the interest of our executives with our shareholders.
For 2016, an important measure
Capped award payouts — We set maximum award levels under our annual incentive program and performance share units, with award payouts capped at 200%. In addition, payout for the portion of performance was companyshare units based on total shareholder return (“TSR”). The largest portion of an executive’s equity opportunity rests in the form of performance-based restricted share units (“PSUs”) which vest to the extent that TSR exceeds a specified level over a multi-year period, three or four years. Some executives also receive options to acquire our shares, which deliver value to the executive when the share price appreciates above the exercise price.
For 2017, in view of our evolving business strategy, the Talent and Compensation Committee has adopted new performance goals. Our 2017 annual incentive program will be based on adjusted earnings before interest, taxes, depreciation and amortization (“EBITDA”) and revenue. Further, the Company implemented a new
executive LTI program for its senior-most executives (other than its new CEO and CFO who each received multi-year grantsare capped at hire), that is more consistent with pharmaceutical industry practices (for example, annual LTI grants and balanced LTI portfolio): 75% of our 2017 PSUs will be based on return on tangible capital (“ROTC”) and 25% on100% if absolute TSR goals. We believe ROTC and LTI TSR are keyis negative over the performance objectives in our new strategy.period.
Finally, in light of the Company’s recent performance and in order to align the Company’s Director pay with the expanded peer levels, several changes to our Director compensation program were recently approved, including a decrease in the annual equity grant from $375,000 to $250,000 (effective after the 2017 Annual Meeting) and an increase in the annual Board cash retainer from $75,000 to $100,000, which resulted in a $100,000 reduction per Director.
Shareholder-Friendly Compensation PracticesClawback
Amended Claw Back Policy
In February 2017, the Company amended its claw back policy (which previously permitted the Board to claw back certain incentive compensation from executives in the event of certain material financial restatements as a result of such executive’s knowing or intentional fraudulent or illegal misconduct) to provide that the — The Board may exercise its discretion to require any employee who receives equity-based compensation to reimburse bonus, incentive or equity-based compensation awarded to such employees beginning in 2017 in the event of:
Aof (1) a material restatement or adjustment to our financial statements as a result of such employee’s knowing or intentional fraudulent or illegal misconduct; or
Such employee’s(2) detrimental conduct thatby the employee which has caused material financial, operational, or reputational harm to us, including (i) actsus.
Double trigger following a change in control — No unvested equity awards accelerate upon a change in control, unless a qualifying event results in the termination of fraud or dishonesty duringemployment.
Limited severance — Our severance arrangements are modest, providing a cash severance payment for our NEOs equal to one times annual base salary and annual target incentive (two times in the courseevent of employment; (ii) improper conducttermination following a Change in Control, and for our CEO).
Independent compensation consultant — The Talent and Compensation Committee has engaged an independent compensation consultant that causes material harmhas no other ties to us or to our affiliates; (iii) improper disclosuremanagement.
Shareholder engagement — We are committed to ongoing engagement with our shareholders through structured, engaged investor outreach that enables us to obtain ongoing feedback on our compensation program.
What We Don’t Do
No hedging — Our anti-hedging policy prohibits officers, directors and employees from engaging in hedging, short selling, or monetization transactions with our Common Shares.
No pledging — Our anti-pledging policy prohibits officers, directors and employees from holding our securities in a margin account where the securities are subject to margin sales or pledging our securities as loan collateral. The anti-pledging policy exempts any margin accounts in existence at the time the policy was adopted by the Company. None of confidential materialour NEOs or directors hold our securities in margin accounts subject to margin sales or pledging as loan collateral.
No repricing of underwater options — Repricing of stock options is expressly prohibited by our Omnibus Incentive Plan.
No excise taxgross-ups — We will notgross-up any excise tax that causes material harm to us or our affiliates; (iv) the commissionmay be triggered as a result of a felony or crime of comparable magnitude that subject us to material reputational harm; (v) commission of an act or omission that cause a violation of federalchange in control severance payment.
No single trigger vesting — We do not provide for “single trigger” equity award vesting or other applicable securities law;“single trigger” payments or (vi) gross negligencebenefits upon a change in exercising supervisory authority.control.
Following a material restatement
No dividend or adjustment ofdividend equivalents on unearned incentive awards
No supplemental executive retirement plan — Executives are only eligible to participate in our financial statements, the compensation subject to claw backtax-qualified Retirement Savings Plan that is the amount in excess of what would have been awarded basedprovided on the corrected performance measures, calculated on a pre-tax basis. If the financial reporting measure applicablesame terms to the incentiveall employees.
No automatic or equity-based compensation is a stock price or total shareholder return measure, the Board has broad authority to estimate the effect of the financial restatement on our share price in calculating recoverable compensation. In the case of detrimental conduct, the Board has the ability to recover all incentive compensation.guaranteed annual salary increases
We may not indemnify any covered employee, directly or indirectly, for any losses incurred in connection with the recovery of any compensation under the policy, including through the payment of insurance premiums,gross-up payments or supplemental payments. The policy will continue to apply to covered employees even after they cease to be employed by us.
The claw back policy is available on the Company’s website at www.valeant.com (under the tab “About” and under the subtab “Corporate Governance”).
Other Shareholder-Friendly Compensation Practices
During 2016, in addition to our claw back policy, which we recently amended as describe above, we maintained the following shareholder-friendly compensation practices:
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20162019 Shareholder Engagement
At our 20162019 Annual Meeting, of Shareholders, we held anon-binding advisory vote with respect to the compensation of our Named Executive OfficersNEOs (commonly referred to as a“say-on-pay” vote). While we have with approximately 93% of the total shareholders’ votes cast voted in favor of our executive compensation program. We believe these favorable results indicate strong support for continuing our current executive compensation program.
always sought feedback onSince our compensation program from our shareholders, since the 2016 Annual Meeting of Shareholders, given the disappointing low approval rating of our executive compensation program at that meeting, we have engaged in even more activehad significant dialogue and engagement with our shareholders in order to solicit feedback on our new compensation philosophy. The outcomephilosophy and underlying programs through direct engagement with shareholders and during investor meetings and conferences. Members of the 2016our Talent and Compensation Committee directly engaged with 8 shareholders in April 2019 representing approximately 19% of our outstanding shares at that time. Consistent with our favorablesay-on-pay“say-on-pay” vote andresults, shareholders continued to provide their support during these meetings for how our shareholder engagement were both factors we considered as we made changes to the Company’s executive compensation going forward to align with our new strategy. program has evolved in recent years.
The Talent and Compensation Committee is committed to ongoing engagement with our shareholders and will continue to solicit and consider the major proxy advisory firms and intends to continue these outreach efforts.feedback received from shareholders regarding our executive compensation program.
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Compensation Process
Role of the Talent and Compensation Committee
Our Board’s Talent and Compensation Committee, which is comprised entirely of independent directors, is responsible for establishing, implementing, monitoring, and monitoringevaluating our executive compensation philosophy and objectives.objectives and oversees the compensation program for senior executives. The Talent and Compensation Committee reviews and approves, or recommends or approvesto the Board for approval, all components of executive pay recommends orand reports its decisions to the Board, and oversees the administration of the compensation program for senior executives.Board. The Board, with the assistance of the Talent and Compensation Committee, reviews or approves matters related to executive compensation on anas-needed basis. The Board, through the TalentCommittee’s responsibilities and Compensation Committee, actively participates
authority are described fully in the establishmentCommittee’s charter, which is available on our website at www.bauschhealth.com (under the tab “Investors” and under the subtab “Corporate Governance — Corporate Governance Documents”).
Role of target and stretch goals for our short-term incentive pay opportunities and, as appropriate, reviews our compensation proposals.Management
Our CEO prepares a recommendationmakes recommendations to the Talent and Compensation Committee for base salary, annual incentive awards and equity grants for each Named Executive Officer, otherNEO (other than himself,the CEO, whose compensation is determined solely by the Talent and Compensation Committee, ornon-employee Directors recommended to the Board for approval). Our CEO and Chief Human Resources Officer also provide recommendations to the Committee on other elements of our compensation program for senior executives, including, for example, the design and metrics under our annual and long-term incentive programs.
Our CEO also leads a process each year to establish the collective strategic priorities of the Board.senior executive team, and then, with each executive, agree on individual performance goals that tie to the achievement of these strategic priorities. These strategic priorities are shared with the Talent and Compensation Committee and their input is considered before they are finalized.
Role of the Independent Compensation Consultant
In 2019, the Talent and Compensation Committee again engaged the services of Pay Governance as its independent consultant to provide advice on executive compensation matters. Pay Governance reported directly to the Talent and Compensation Committee, which instructed the consultants to give it objective advice and without influence by management, and to provide such advice for the benefit of the Board and our shareholders. Pay Governance did not provide any other services to the Company or its management. The Talent and Compensation Committee then determineshas evaluated Pay Governance’s independence by considering the compensation for each Named Executive Officer in addition torequirements adopted by the CEONYSE and updates the Board as to allSEC and has determined that no conflict of its compensation decisions, and obtains additional approval from the Board as appropriate.interest exists.
Peer Group
We hire executives largely from within the pharmaceutical industry. WhileEach year, the Talent and Compensation Committee considersreviews its peer group compensation data based on a peer group fromto determine if any changes should be made in order to ensure our peers reflect the pharmaceuticalbusinesses in which we compete for talent, and include relevant comparators, such as industry, this information serves as a reference or input but does not dictate our decisions. We do not triangulate our compensation to arrive at a target percentile of the overall peer group.business focus, and revenue.
For 2016, the Talent and Compensation Committee referred to the following group of peer companies and did not conduct any formal executive compensation benchmarking:
Allergan plc (previously Actavis Inc.)
Amgen Inc.
Biogen Inc.
Bristol-Myers Squibb Company
Celgene Corporation
Danaher Corporation
Eli Lilly and Company
Gilead Sciences, Inc.
In November 2016,2019, the Talent and Compensation Committee reviewed the recommendation of its independent compensation consultant, Pay Governance, and did not make any changes to increase the sizepeer group, that includes the following companies:
Alexion Pharmaceuticals, Inc. Eli Lilly and Company | Endo International plc Jazz Pharmaceuticals plc Mallinckrodt plc Mylan N.V. Perrigo Company plc United Therapeutics Corporation Zoetis Inc. |
As a result of recent and potential upcoming changes to certain members of our peer group, including the completed acquisition of Celgene by Bristol-Myers Squibb and to use companiesthe announcement that are more similarly sized to us. For 2017,AbbVie will acquire Allergan, the Talent and Compensation Committee has addedwill again review this peer group to determine what changes should be made in 2020.
Since we hire executives largely from within the following seven companies, in consultation with Pay Governance:
AbbVie Inc.
Alexion Pharmaceuticals, Inc.
Endo International plc
Mallinckrodt plc
Mylan N.V.
Perrigo Company plc
Zoetis Inc.
pharmaceutical industry, we use data from this peer group to benchmark pay levels, as well as pay practices. In addition to proxy data for the Company removed Danaher Corporation and Gilead Sciences, Inc., as bothabove companies, were no longer similarly sized in terms of revenue and therefore did not fully meet the peer group requirements.
Independent Compensation Consultant
In accordance with the Talent and Compensation Committee’s charter, the Talent and Compensation Committee has sole authorityalso utilizes the Willis Towers Watson’s Pharmaceuticals and Health Sciences Survey to retain compensation consultantssupplement this data both in terms of pay levels as well as pay practices.
The Talent and to approve such consultants’ fees and retention terms. In 2016,Compensation Committee references the median of the market data as a guide when making decisions. Market data is one element that the Talent and Compensation Committee engaged the services of Pay Governance as its independent consultantsuses to provide advice on compensation matters. Pay Governance reported directly to the Talent and Compensation Committee, which instructed the consultants to give it objective advice and without influence by management, and to provide such advice for the benefit of the Board and our shareholders. Pay Governance did not provide additional services to us, other than the services related to compensation to the Talent and Compensation Committee and the Board and other Board committees.
Components of Our Executive Compensation
A significant portion of total compensation is linked to satisfying our financial targets and strategic initiatives, in addition to achieving positive total returns to shareholders. Thismake pay methodology is designed to help us to attract, retain and motivate top talent.
decisions. Multiple factors are considered in determining total compensation opportunity, including our compensation philosophy, the executive’s role and responsibility, the executive’s past performance, internal equity, and expected contributioncontributions and experience in the role, and the pay practicesrole.
Components of our peers both within and outside the pharmaceutical industry. Executive Compensation
The components of totalexecutive compensation for Named Executive Officers include:our NEOs, as described in more detail below, include (i) base salary; (ii) incentive pay (including annual cash incentive and long-term equity incentives); (iii) retirement and welfare benefits; and (iv) executive benefits and perquisites.
In determining the appropriate mix of base salary and incentive pay (including annual cash incentives and long-term equity) for our Named Executive Officers, the Talent and Compensation Committee sought to balance:
Our desire to attract and retain our executives with the stability of competitive salary compensation;
Our desire to promote pay-for-performance compensation, as we believe that incentive pay appropriately rewards executives for their contribution to our overall performance; and
Our desire to align compensation with corporate performance and shareholder value through the use of performance-based equity compensation awards.
The value of our short-term incentives, in the form of an annual cash incentive, is dependent on the achievement ofpre-determined corporate, divisional/functional and individual performance objectives, while the value of our equity based incentives, in the form of PSU, RSU and option awards, is derived from the value of Common Shares. In allocating between short-term and long-term compensation, the Talent and Compensation Committee seeks to establish a balance between rewarding past performance and future potential, both of which it views as critical for our executives to exhibit. In that respect, the Talent and Compensation Committee designs cash bonuses to reward executives who achieve certain corporate, divisional/functional and individual objectives, and it bases grants of equity awards on the demonstration of exceptional effort, critical skills, key talents and achievements of shareholder value creation.
Base Salary
We typically set our base salaries at competitive levels necessary to attract and retain a top performing management team.senior executives, including our NEOs. Base salary addresses performance of core duties for each executive role, providingsalaries provide an amount of fixed compensation.compensation to each senior executive for the performance of their core duties.
Salary levelsBase salaries are periodically reviewed as part of our performance review process, as well as upon a promotion or other change in job responsibilities. To the extent base salaries are adjusted, the amount of any such adjustmentsadjustment would reflect a review of competitive market data, and consideration ofnon-industry data for comparative purposes, consideration of relative levels of pay internally, consideration of the individual performance of the executive, and any other circumstances that the Talent and Compensation Committee determines are relevant.
Messrs. PapaThe NEOs Base Salaries are as follows:
NEO | 2018 Salary | 2019 Salary | % Increase | |||||||||
Joseph C. Papa | $ | 1,500,000 | $ | 1,500,000 | No Change | |||||||
Paul S. Herendeen | $ | 1,000,000 | $ | 1,000,000 | No Change | |||||||
Christina M. Ackermann | $ | 660,000 | $ | 700,000 | 6 | % | ||||||
Thomas J. Appio | $ | 750,000 | $ | 775,000 | 3 | % | ||||||
William D. Humphries | $ | 750,000 | $ | 750,000 | No Change |
Effective March 28, 2020, based on a review of market data, relative levels of pay internally, and Herendeen and Ms. Ackermann, who were each hired by us in 2016, received base salaries of $1,500,000, $1,000,000 and $600,000, respectively.
Under his 2015 employment agreement, Mr. Pearson did not receive an annual base salary. In April 2016 after Mr. Pearson’s return from medical leave and the announcement as a search for his replacement,individual performance, the Talent and Compensation Committee approvedwill increase Mr. Papa’s salary to $1,600,000, which is a 7% increase and the first change made to Mr. Papa’s salary since he was hired in 2016. Ms. Ackermann’s salary will be increased to $750,000, which is a 7% increase. No changes were made to the other NEOs’ salaries.
Annual Incentive Program
Our 2019 annual incentive program (the “2019 AIP”) provides an opportunity for our senior executives, including our NEOs, to earn an annual base salary for Mr. Pearson of $2,000,000, retroactively effective as of January 1, 2016 (reinstating the annual base salaryincentive, paid in effect for Mr. Pearson prior to the employment agreement he entered into with us in January 2015) to retain him until a successor could be identified. Mr. Schiller received a monthly base salary of $400,000 when he became our Interim CEO in the first two months of 2016. Mr. Rosiello and Ms. Whitaker, who were both hired by us in 2015, received base salaries of $1,000,000 and $600,000, respectively. Dr. Kellen’s and Ms. Whitaker’s base salaries were adjusted to $1,000,000 and $750,000, respectively, effective as of April 1, 2016. At the time of his departure,Mr. Chai-Onn’s base salary was $750,000.
Short-Term Incentive Pay
We use short-term incentive pay, through our annual cash, incentive program, to reward employees for the attainment of target financial and strategic outcomes for each specific year.
In connection with their employment, Messrs. Papa and Herendeen and Ms. Ackermann received annual incentive targets of 150%, 120% and 80%, respectively, of his or her base salary.
Under his 2015 employment agreement, Mr. Pearson’s annual incentive target for 2015 was set at $6,000,000, at least $2,000,000 of which was based on the achievement of individual objectives related to his role as Chairman and CEO. In April 2016, the Talent and Compensation Committee approved an annual target incentive opportunity for Mr. Pearson in respect of the 2016 fiscal year of 200% of the reinstated annual base salary, 75% of which was to be based on the achievement of certain corporate performance metrics and 25% of which was to be based on Mr. Pearson’s assistance with the transition to our new CEO. The Talent and Compensation Committee believed these targets were consistent with our pay-for-performance compensation philosophy, and in recognition of the importance of a smooth transition of the CEO role. In connection with his separation from the Company, Mr. Pearson’s cash severance included a prorated annual incentive based on actual performance as determined by the foregoing factors.
2016 Annual Incentive Program
Our 2016 annual cash incentive cash program (the “2016 AIP”) in effect for Named Executive Officers was based on the Talent and Compensation Committee’s assessment of the achievement of certain financial targets and strategic initiatives:priorities.
For our Named Executive Officers, the financial targets are based on attaining budget or stretch targets for adjusted earnings per sharenon-GAAP (“Adjusted EPSnon-GAAP”) and adjusted revenuenon-GAAP (“Adjusted Revenuenon-GAAP”). Please see Appendices 1 and 2 for a reconciliation of ournon-GAAP financial measures to GAAP financial measures and related disclosures.
The strategic initiatives are approved by the Board at the start of the year and are intended to align the organization to achieve the most pressing objectives.
For our Named Executive Officers, performance related to the financial targets accounts for 75% of the potential payout of the 2016 AIP payout and performance related to the strategic initiatives accounts for the remaining 25% of the potential payout of the 2016 AIP payout.
The Talent and Compensation Committee determines whether the AIP performance goals have been achieved. In addition, it retains the discretion to reduce or eliminate AIP payouts for individual executives even if performance targets are met, as well as the discretion to increase AIP payouts. In exercising discretion, the Talent and Compensation Committee may consider the performance of the individual Named Executive Officer or factors, such as level of performance, financial goals or cost targets applicable to the functional area for which the Named Executive Officer is responsible, the division to which the Named Executive Officer belongs or the Company as a whole.
2016 Financial Objectives
At the outset of 2016, the Talent and Compensation Committee decided upon the financial objectives that would comprise our 2016 AIP as follows:
Objective | Weighting | Achievement | ||||||
Adjusted EPSnon-GAAP $8.80 base target $10.50 stretch target | 75% | $5.47 | ||||||
Adjusted Revenuenon-GAAP $11.1 billion base target $11.35 billion stretch target | 25% | $9.67 billion |
The 2016 AIP requires the attainment of at least 90% of the base target for payouts to be made. Based on the foregoing results, the Talent and Compensation Committee determined that the 2016 AIP corporate financial objectives had been achieved at the 0% level for both of the Adjusted EPSnon-GAAP and corporate Adjusted Revenuenon-GAAP objectives.
2016 Strategic Initiatives2019 Annual Incentive Program Opportunity
The table below outlines our payouts for the corporate strategic initiatives, which make up 25% of total targetNEOs annual incentive under the 2016 AIP for our Named Executive Officers. For each of these metrics, these executives can achieve up to 100% of target for base goals and up to 200% for stretch goals.
The Talent and Compensation Committee determined the achievement of the strategic initiative components of the 2016 AIP for our Named Executive Officers to betargets are as follows:
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2019 Annual Incentive Program Design
For our senior executives, including our NEOs, the annual incentive program is based on performance againstpre-established financial targets and strategic priorities approved by the Board. Performance against financial targets makes up 75% of the total payout, while performance against strategic priorities makes up 25% of the total payout.
In 2017, the Talent and Compensation Committee adopted Adjusted EBITDA and Revenue as the financial metrics rewarded under the Annual Incentive Program, which are two of the key financial metrics our shareholders use to assess our performance. We believe these metrics focus our NEOs on delivering both organic growth, as well as the Company’s bottom line for our shareholders. The Company’s strategic priorities are intended to focus the organization on the key initiatives that will drive shareholder value over time.
As previously disclosed, for 2019, the performance of our entire senior executive team, including all of our NEOs, was measured against the Company’s overall Adjusted EBITDA and Revenue performance for 75% of their total payout. Adjusted EBITDA makes up 75% of this financial portion of their payout, and Revenue makes up 25% of this financial portion of their payout. Company-wide strategic priorities comprise the remaining 25% of their payout. This approach rewards our senior executive team for collectively working towards our mission of improving people’s lives with our health care products, across all segments of our business.
For 2019, the threshold, target, and stretch performance and corresponding payouts were as follows, with award payouts capped at 200% of incentive target:
EBITDA/EBITA | Revenue | |||||||||||
Performance versus Plan | Payout | |||||||||||
Below Threshold | <90 | % | <95 | % | 0 | % | ||||||
Threshold | 90 | % | 95 | % | 10 | % | ||||||
Target | 100 | % | 100 | % | 100 | % | ||||||
Stretch | 110 | % | 105 | % | 200 | % | ||||||
Above Stretch | >110 | % | >105 | % | 200 | % |
The Talent and Compensation Committee determineddetermines whether the financial metrics and strategic priorities have been achieved. In addition, it retains the ability to reduce or eliminate payouts for individual executives, including the NEOs, even if financial metrics and strategic priorities are met, as well as to increase payouts based on individual performance. In making these decisions, the Talent and Compensation Committee may consider factors such as the performance of the individual executive against their individual objectives in support of strategic priorities or additional financial metrics applicable to the business or functional area for which the NEO is responsible.
2019 Financial Objectives
In the beginning of 2019, the Board approved the Company’s budget for the full-year, including Adjusted EBITDA and Revenue targets. These same financial metrics were reviewed and approved by the Talent and Compensation Committee to determine achievement under the Annual Incentive Program.
For our NEOs, the financial targets are based on attaining budget (to receive a payout at target) or stretch targets (to receive a payout above target) for Adjusted EBITDA and Adjusted Revenue, as follows:
Financial Metric(1) | Weighting | Threshold | Target | Stretch | Actual | Achieved | Payout(2) | |||||||||||||||||||||
Adjusted EBITDA | 75 | % | $ | 3,063B | $ | 3,403B | $ | 3,743B | $ | 3,581B | 105.2 | % | 152 | % | ||||||||||||||
Revenue(3) | 25 | % | $ | 8,078B | $ | 8,503B | $ | 8,928B | $ | 8,618B | 101.4 | % | 127 | % | ||||||||||||||
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146 | % |
(1) | Please see Appendix 1 for a reconciliation of ournon-GAAP financial measures to GAAP financial measures and related disclosures. |
(2) | In determining final payout versus the 2019 financial plan, the Talent and Compensation Committee reviewed external factors outside of management’s control (e.g. foreign exchange or an earlier or later than anticipated loss of exclusivity and approved adjustments). The Talent and Compensation Committee also reviewed our 2019 Adjusted EBITDA results as compared to our 2018 Adjusted EBITDA results, to ensure they exceeded the prior year (otherwise a reduction in payout would have been applied). |
(3) | Revenue for these purposes is the same as GAAP revenue, except that the exchange rates are those used for the Annual Incentive Plan. |
Based on the foregoing results, the Talent and Compensation Committee certified that the overall leveltotal payout based on the Company’s Adjusted EBITDA and Revenue was 146% for all NEOs, for 75% of achievementthe total payout.
2019 Strategic Priorities
In the beginning of 2019, the Talent and Compensation Committee reviewed and approved the following strategic priorities, which make up the remaining 25% of our 2016 corporate strategic initiatives was 76%. NEOs’ payout:
Strategic Priority | Weighting | Payout | ||||||
Continue to make Bausch Health a great place to work by recruiting, engaging, developing, rewarding and retaining talent | 25 | % | 160 | % | ||||
Drive operational excellence across the enterprise | 25 | % | 150 | % | ||||
Increase size, breadth, and value of product pipeline | 25 | % | 140 | % | ||||
Further develop “paths to win” across the enterprise | 25 | % | 100 | % | ||||
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Total | 138 | % |
Achievement for each initiative was reviewed by the Talent and Compensation Committee and credit was determined based on actual outcomes.results against each initiative, including the following:
We continued to make Bausch Health a great place to work by (i) improving or maintaining our employee retention rates year over year across the company, and continuing to improve salesforce retention in the United States to a level below our target as well as industry levels (ii) delivering strong employee engagement survey results, further increasing the sustainable engagement of our workforce, and (iii) deploying a global HR system across 55 countries for approximately 22,000 employees on time and on budget, while further standardizing global processes.
We drove operational excellence across the Company by (i) reducing finished goods/raw material inventory, eliminating additional SKUs, and delivering on continuous improvement programs, all of which well exceeded targets set, and (ii) enhancing our operational excellence program, as we further embed our total quality culture.
We increased the size, breadth, and value of our product pipeline by (i) exceeding planned filings and approvals, (ii) meeting expectations on phase III, early stage, and late stage projects, and (iii) acquiring multiple new assets, including the assets of Synergy Pharmaceuticals Inc., which strategically enhanced our Salix business.
We further developed “paths to win” by (i) growing our “Significant Seven” which collectively grew by 68% in 2019, and certain of our other key products such as products like BIOTRUE®, BAUSCH + LOMB ULTRA®, PRESERVISION®, ENVISTA® IOL, THERMAGE FLX®, APLENZIN®, TRULANCE® and XIFAXAN®, and (ii) demonstrating our pivot to offense strategy by continuing to pay down our debt, which was further repaid by $900 million in 2019, while enhancing our strategic planning process with increased focus on key products and market segments.
Our strong results and achievements for these Company-wide strategic priorities resulted in a payout of 138%, for 25% of the total payout.
Overall 2016 AIP Achievement Levels2019 Annual Incentive Program Payouts
Based on this performance againstpre-established financial targets (146% payout, comprising 75% of the total payout) and strategic priorities (138% payout, comprising 25% of the total payout) as approved by the Board, the following total payouts were approved for our NEOs:
NEO | Incentive Target (%) | Incentive Target ($) | Bonus Payout | Bonus Payout as % of Target(1) | ||||||||||||
Joseph C. Papa | 150 | % | $ | 2,250,000 | $ | 3,240,000 | 144 | % | ||||||||
Paul S. Herendeen | 120 | % | $ | 1,200,000 | $ | 1,728,000 | 144 | % | ||||||||
Christina M. Ackermann | 80 | % | $ | 560,000 | $ | 806,400 | 144 | % | ||||||||
Thomas J. Appio | 80 | % | $ | 620,000 | $ | 892,800 | 144 | % | ||||||||
William D. Humphries | 80 | % | $ | 600,000 | $ | 864,000 | 144 | % |
(1) | Bonus Payout as % of Target is shown at the nearest whole percent. |
The Talent and Compensation Committee did not make any further adjustments to the payouts as calculated above based on performance against thesepre-established financial targets and strategic priorities approved by the Board.
2020 Annual Incentive Program Design
For 2016,2020, the entire senior executive team, including all of our NEOs, will continue to be measured against the Company’s overall Adjusted EBITDA and Revenue performance for 75% of the NEOs total payout. As we continue to focus on driving organic growth while delivering on our bottom line commitments, we are shifting the weighting of the Adjusted EBITDA and Revenue metrics as follows: Adjusted EBITDA will be weighted 60% (versus 75%), and Revenue will be weighted 40% (versus 25%). Company-wide strategic priorities will continue to comprise the remaining 25% of the payout.
Long-Term Incentive Program
The Talent and Compensation Committee introduced a new Long-Term Incentive program in 2017 (the “LTIP”) for our senior executives, including our NEOs, to better align the awards with Bausch Health’s business strategy and plan to transform the Company, as well as to align with pharmaceutical industry practices pertaining
to these grants. This program provides an opportunity for our senior executives to be granted a balanced portfolio of Performance Share Units (“PSUs”), Restricted Share Units (“RSUs”), and Stock Options.
2019 Grants to NEOs
For 2019, all of our NEOs received 2019 LTIP awards, which were granted for our CEO 60% in PSUs, 20% in RSUs and 20% in Stock Options and for the other NEOs 40% in PSUs, 30% in RSUs, and 30% in Stock Options, with the following approximate grant date fair market values.
NEO | Grant Date Fair Market Value | |||
Joseph C. Papa | $ | 10,000,000 | ||
Paul S. Herendeen | $ | 4,000,000 | (1) | |
Christina M. Ackermann | $ | 1,750,000 | ||
Thomas J. Appio | $ | 1,750,000 | ||
William D. Humphries | $ | 1,250,000 |
(1) | At the same time as 2019 LTIP awards were granted, Mr. Herendeen also received an RSU grant with a grant date fair market value of $500,000 in recognition of his achievements since he joined the Company in 2016. |
2019 Performance Share Units
PSUs provide senior executives with the right to receive Common Shares at a future date, assuming performance againstpre-determined metrics are achieved, specifically our Return on Tangible Capital (“ROTC”) and relative TSR.
As previously disclosed, the Talent and Compensation Committee determined that, 2016 AIP goals were not sufficientlystarting in 2019, the senior executive team would have a portion of their PSU grant based solely on performance against relative TSR (versus absolute TSR), with any payout capped at 100% if absolute TSR is negative over the three-year period, in order to align more closely with external pay practices while maintaining a strong focus on aligning shareholder interests and our NEOs’ long-term compensation. In addition, the ROTC and TSR PSU metrics would be equally weighted 50% each for all NEOs, including the CEO, in order to further align the approach across the senior executive team.
For 2019, ROTC and TSR each comprised a portion of the total PSU award, with the number of PSUs that may be achieved to result in a payoutcapped at 200%. The value ultimately received is based on our performance against these metrics, which are two key measures of our Named Executive Officers’ annual cash incentive opportunities. However,long-term performance, as well as the growth of our Common Share price over time. 2019 PSUs vest in February 2022, subject to continued employment and achievement of minimum performance criteria.
Return On Tangible Capital Metrics
For 2019, ROTC comprised 50% of the total PSU award granted to all NEOs. ROTC is measured over three years, from 2019 through 2021. ROTC performance is measured each year; for 2019,one-third of the PSUs achieved was based on 2019 performance,one-third will be based on 2020 performance, andone-third will be based on 2021 performance.
Starting in 2019, the Talent and Compensation Committee also recognizedupdated the significanceROTC calculation by weighting the two components that comprise ROTC – Net Operating Profit After Taxes (“NOPAT”) (75%) and qualityNet Operating Assets (25%) – with a higher weighting on the profitability component of the contributions made by Messrs. Papa and Herendeen and Ms. Ackermann. In addition, the Talent and Compensation Committee acknowledged that theythis calculation. The following ROTC goals were notset at the Company duringbeginning of 2019 and apply to the budget setting processgrants made to our NEOs in 2019. Goals for 2016. Accordingly,2020 were set at the beginning of 2020 and based on their performance since their respective commencement dates, the Talent and Compensation Committee determined to award them cash bonuseswill be disclosed in the amounts of $1,125,000, $400,000 and $300,000, respectively. Mr. Papa’s accomplishments in 2016 include the following:
Built a new leadership team including the addition of several talented external hires: CFO, General Counsel, Senior Vice President — Business Strategy, Executive Vice President — Dermatology, Chief Quality Officer;
Re-recruited/re-engaged the Company’s workforce: improved our sales force retention from 89% in first quarter 2016 to 94% in fourth quarter 2016 despite asset sale rumors;
Remediated previously identified material weaknesses: tone2021 proxy statement. Goals for 2021 will be set at the top andnon-standard revenue recognition issues;beginning of 2021.
Significantly improved our customer relations, especially with Walgreens, KOL and Managed Care;
Established new governance process fortop-line calls, monthly financial review, quarterly business reviews, senior leadership team and Executive Committee meetings; and
Improved relationships with our shareholders and debt-holders.
2017 Annual Incentive Program
For our 2017 AIP, the Talent and Compensation Committee determined that, in view of our business strategy, adjusted EBITDA and revenue would be the best financial objectives to measure our performance.
Financial Metric | Weighting | Threshold | Target | Stretch | Actual | Achieved | Payout | |||||||||||||||||||||
NOPAT | 75 | % | $ | 2,583B | $ | 2,870B | $ | 3,157B | $ | 3,031B | 105.6 | % | 156 | % | ||||||||||||||
Net Operating Assets | 25 | % | $ | 1,186B | $ | 1,078B | $ | 970B | $ | 1,200B | 88.7 | % | 0 | % | ||||||||||||||
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117 | % |
Equity-Based Incentive Compensation
The Talent and Compensation Committee has implemented apay-for-performance compensation structure whereby a combinationdetermined that based on our combined NOPAT and Net Operating Asset results, 117% of the ROTC PSUs were achieved for 2019. The number of PSUs RSUs and/or options have beenultimately delivered in 2022 for this portion of the 2019 award is dependent on ROTC performance for 2019, 2020, and 2021.
Total Shareholder Return Metrics
For 2019, relative TSR comprised 50% of the total PSU award granted to all NEOs. The relative TSR performance period is three years, from January 1, 2019 through December 31, 2021, and is measured as compared to the NYSE ARCA PHARMACEUTICAL INDEX peers. The following targets were set at the beginning of 2019 and apply to grants made in 2019:
Percentile | Payout | |||||||
Below Threshold | <30 | % | 0 | % | ||||
Threshold | 30 | % | 50 | % | ||||
Target | 50 | % | 100 | % | ||||
Stretch | 80 | % | 200 | % | ||||
Above Stretch | >80 | % | 200 | % |
TSR is calculated as the stock price appreciation for the 20 days preceding the beginning of the performance period as compared to the 20 days preceding the end of the performance period, plus dividends and distributions made or declared (assuming such dividends or distributions are reinvested in the Common Shares of the Company) during the performance period. Further, if our active Named Executive Officers. Equity grant award levels are determinedabsolute TSR is negative over the three-year period, any payout will in no event exceed 100%.
2019 Restricted Share Units
RSUs provide senior executives with the right to receive Common Shares at a future date. The value ultimately received is based on competitivethe growth of our Common Share price over time. RSUs vestone-third per year, assuming continued employment.
2019 Stock Options
Stock options provide senior executives the opportunity to purchase our Common Shares at a price equal to the market data,price at the time of the grant. The value ultimately received is based on the growth of our Common Share price over time. Stock options vestone-third per year, and the individual’s role, past performance and experience.remain exercisable for aten-year term, assuming continued employment.
For PSU awards2017 Performance Share Unit Vesting
In January 2020, the PSUs granted in 2016,2017 to Ms. Ackerman, and Messrs. Appio and Humphries vested based on their continued employment through the vesting date. As previously disclosed, for 2017, ROTC comprised 75% of the total PSU award and TSR comprised 25% of the total PSU award, with the number of PSUs that could be achieved capped at 200%.
ROTC was measured over three years, from 2017 through 2019. As previously disclosed, 2017 and 2018 ROTC were achieved at 200%, and as disclosed above, 2019 ROTC was achieved at 117%. The
average of these three years resulted in a final ROTC payout of 172% for the 2017 ROTC PSUs. This applied to the grants made to Ms. Ackermann, and Messrs. Appio and Humphries.
TSR was measured on both an absolute and relative basis on January 6, 2020 for Ms. Ackermann and Mr. Appio. The following absolute stock price targets were set at the beginning of 2017 based on our Common Share price at that time ($14.65) and applied to these grants.
Stock Price in 2020 | PSUs Achieved | |||
Less than $19.53 | 0 | % | ||
$19.53 | 25 | % | ||
$29.30 | 100 | % | ||
$58.60 | 200 | % | ||
Greater than $58.60 | 200 | % |
Based on the $28.86 closing price of our Common Shares on January 6, 2020, this resulted in a final payout of 96% for Ms. Ackermann and Mr. Appio.
TSR was measured on both an absolute and relative basis for Mr. Humphries on January 2, 2020 (Mr. Humphries’ third anniversary with the Company). The following absolute stock price targets were set at the beginning of 2017 based on our Common Share price at that time ($14.63) and applied to his grant.
Stock Price in 2020 | PSUs Achieved | |||
Less than $19.51 | 0 | % | ||
$19.51 | 25 | % | ||
$29.27 | 100 | % | ||
$58.53 | 200 | % | ||
Greater than $58.53 | 200 | % |
Based on the $29.91 closing price of our Common Shares on January 2, 2020, this resulted in a final payout of 102% for Mr. Humphries.
Since our TSR over the measurement period was above the 50th percentile ranking of the TSR for NYSE ARCA PHARMACEUTICAL INDEX, the 100% cap was not applied.
These 2017 PSUs were delivered to Ms. Ackermann, Messrs. Appio and Humphries in February 2020, as shown in the Outstanding Equity Awards at Fiscal Year End Table beginning on page 60. Messrs. Papa and Herendeen were not awarded 2017 PSUs.
Matching Share Program
As previously disclosed, as of August 1, 2018, NEOs became eligible to participate in the Bausch Health Companies Matching Share Program. Under this program, shares purchased on the open market by recipients are matched with one Matching Restricted Stock Unit (“MRSU”) issued under the 2014 Plan. Generally, MRSUs granted for a period of three years may not exceed the value of 50% of the sum of the NEO’s annual base salary and target annual cash bonus, less any shares sold within the past six months (excluding any shares sold to cover a tax obligation resulting from a vesting event).
Subject to the provisions of the 2014 Plan and applicable award agreements, MRSUs vestpro-rata over a three-year period, provided that the recipient is employed through the applicable vesting dates. Vesting ceases upon termination of employment (except in limited circumstances), and any MRSUs that do not become vested prior to the recipient’s termination of employment or that do not become vested according to the provisions of the terms of the award are forfeited.
In 2019, as previously disclosed, Messrs. Papa and Humphries purchased shares under this program, and received MRSU grants, as shown in the Grants of Plan-Based Awards Table beginning on page 58.
2020 Long-Term Incentive Program Design
As mentioned above, the Talent and Compensation Committee sought to ensure that a significant portionhas approved continuing the current, balanced portfolio approach for 2020, consistent with shareholder feedback regarding long-term orientation and the alignment of total compensation would be directly related to the achievement of specified TSR thresholds. For PSU awards granted in 2017, the Talentshareholder interests and Compensation Committee determined that a key measure of ourNEO long-term growth was ROTC. In January 2017, members of our Executive Committee were granted PSUs where 75% of vesting will be determined by three annual performance periods that will measurecompensation. The ROTC and 25% of vestingTSR metrics will continue to be determined by one three-year performance period that will measure TSR.
In addition, in 2016,equally weighted 50% each for all NEOs, including the Talent and Compensation Committee granted (i) time-vesting RSUs and (ii) stock options. The equity awards granted to our Chairman and CEO, in 2016 are front-loaded and are intended to reward superior performance over a multi-year period if the TSR targets are met or exceeded. The equity awards granted to our Executive Vice President and CFO are also front-loaded. No additional LTI awards were granted to Messrs. Papa and Herendeen in 2017.
The equity awards granted in early 2017 consisted of a combination of PSUs (40% of the award), RSUs (30% of the award) and stock options (30% of the award), all of which are subject to vesting over three years. As part of this grant cycle, Ms. Ackermann received an equity award with a grant date fair value of $1,200,000.
Retention Awards, Consulting Arrangements and Other Special Situations
From time to time, the Talent and Compensation Committee may identify the need to grant retention and other special awards, to address specific needs of the Company as they arise. In addition, in connection with the departure of certain executives, we may enter into a consulting arrangement, so that we can draw upon their expertise and have the benefit of a smoother transition. In 2016, we entered into the following arrangements:
In May 2016, we entered into retention letter agreements with each of Mr. Rosiello, Dr. Kellen and Ms. Whitaker, our then Executive Vice President and Company Group Chairman, as well as Mr. Chai-Onn, our then Executive Vice President, General Counsel and Chief Legal Officer, Head of Corporate and Business Development, in order to provide transitional stability to our Executive Committee duringalign the CEO transition. Each executive:
Was eligible to receive special retention cash bonuses equal to $1 million, payable in three installments during 2016;
Received a special equity award inapproach across the form of restricted stock units that vested over 18 months following the date of grant; and
Became entitled to receive enhanced severance benefits, if the executive’s employment was terminated by us without “cause” or by thesenior executive for “good reason.”team.
When Mr. Chai-Onn, Mr. Rosiello, Dr. Kellen and Ms. Whitaker left the Company, they received payments and benefits consistent with their existing employment arrangements, including their retention letter agreements, in exchange for a release in our favor that included restrictive covenants, including a covenant prohibiting competition and the solicitation of our employees through the first anniversary of his or her respective termination date.
In Mr. Pearson’s separation agreement memorializing his departure in May 2016, he agreed to provide us with consulting services through December 31, 2017, subject toone-month renewal periods if mutually agreed upon by Mr. Pearson and us. We agreed to pay Mr. Pearson $83,333 for each month(pro-rated for
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In their separation agreements memorializing their departures in December 2016, Mr. Rosiello and Dr. Kellen agreed to provide us with consulting services through December 31, 2017, subject toone-month renewal periods if mutually agreed upon by each of them and us. We agreed to pay each of Mr. Rosiello and Dr. Kellen $20,000 for each month(pro-rated for partial months) during the consulting period that services are performed. We reserved the right to terminate the consulting period at any time prior to the second anniversary of their termination date. As of the filing of the Proxy Statement, we have not terminated the consulting agreements with Mr. Rosiello or Dr. Kellen.
In December 2016, the Board determined that we are not in a position to make any further payments to Mr. Pearson, including in connection with his then-outstanding equity awards with respect to 3,053,014 shares.
Retirement and Welfare Benefits
The retirement and welfare benefit programs are a necessary element of the total compensation package to ensure a competitive position in attracting and maintaining a committed workforce. Participation in these programs is not tied to performance.
Our specific contribution levels to these programs are adjusted annually to maintain a competitive position while considering costs.
Retirement Savings Plan — All employees in the United States, including our Named Executive Officers,NEOs, are eligible to participate in atax-qualified retirement savings plan under Section 401(k) of the Code. Starting in 2012, all eligibleInternal Revenue Code (“Code”). Eligible employees are able to contribute to the Retirement Savings Plan, on abefore-tax basis, the lesser of (i) up to 50%75% of their annual salary or (ii)eligible compensation, subject to the limit prescribed by the Code. We match 50%In 2019, we matched 100% of the first 6%3% of pay and 50% on the next 3% of pay that is contributed to the Retirement Savings Plan. All employee contributions to the Retirement Savings Plan are fully vested upon contribution; matching contributions vest equallyratably over three years.
Welfare Plans — Our executives are also eligible to participate in our broad-based welfare benefits plans (including medical, dental, vision, life insurance and disability plans) upon the same terms and conditions as other employees.
Executive Benefits and Perquisites
We provide our Named Executive OfficersNEOs with limited perquisites and other personal benefits that the Talent and Compensation Committee believes are reasonable and consistent with our overall compensation program to better attract and retain superior employees for key positions. The Talent and Compensation Committee periodically reviews the levels of perquisites and other personal benefits provided to our Named Executive Officers.NEOs. The Talent and Compensation Committee intends to maintain only those perquisites and other benefits that it determines to be necessary components of total compensation and that are not inconsistent with shareholder interests.
The Talent and Compensation Committee permits the Chairman and CEO to use our aircraft for his business travel both business and, personal.on a limited basis, for personal travel. Certain travel by hisfor immediate family members is also permitted.permitted, as reported on page 57 in footnote 4 to the Summary Compensation Table. We do not gross him up for the income tax incurred by him.Mr. Papa resulting from his personal use of our aircraft. The Talent and Compensation Committee believes that making our aircraft available to our Chairman and CEO allows him to serve shareholder interests by efficiently and securely conducting business during and when traveling.
As previously disclosed, the Talent and Compensation Committee introduced an executive physical program in 2019 for our NEOs. The Talent and Compensation Committee believes that this program aligns with its philosophy regarding perquisites by providing our NEOs with a convenient program to annually monitor their health, while allowing them to maintain their focus onday-to-day business operations and our ongoing transformation.
Attributed costs of the personal benefits described above for our Named Executive OfficersNEOs for the fiscal year ended December 31, 2016,2019 are included in the column entitled “All Other Compensation” of the Summary Compensation Table.Table on page 56.
Chairman and Chief Executive Officer’sMr. Papa’s Employment Agreement
In April 2016, we entered into an employment agreement with Mr. Papa. The initial term of Mr. Papa’s agreement commenced on May 2, 2016 and continues until the fifth anniversary of the commencement date. Beginning at the expiration of the initial term, the term will automatically renew for successive one yearone-year periods unless either party gives notice ofnon-renewal.
Cash Compensation
Pursuant to his agreement, Mr. Papa currently receives a base salary of $1,500,000,and a target annual incentive opportunity equal to 150% of his base salary, andwith a maximum annual incentive opportunity equal to 200% of his annual target incentive. For 2016, 75% percent of Mr. Papa’s annual incentive opportunity will be based on the achievement of corporate financial metrics and 25% will be based on the achievement of strategic metrics determined by the Talent and Compensation Committee after consultation with Mr. Papa.
Shortly following his commencement date, Mr. Papa received a cash payment from us equal to $8,000,000 to compensate him for equity-based compensation he forfeited in connection with the termination of his employment with Perrigo, theafter-tax amount of which must be repaid by Mr. Papa to us if he is terminated by us for “cause” or voluntarily terminates his employment with us without “good reason” during the first year of his employment with us.
Equity Compensation
In connection with entering into his employment agreement, Mr. Papa received (i) 933,416 PSUs (with the potential to earn between zero and 1,866,832 PSUs depending on performance, as described below), (ii) 373,367 RSUs and (iii)(ii) an option to acquire Common Shares with a grant-date fair value equal to $10,000,000 at an exercise price equal to the fair market value of our common stockCommon Shares on the date of grant. Additionally, pursuant to his employment agreement, Mr. Papa was required to purchase $5,000,000 worth of Common Shares by no later than the first anniversary of his commencement date. Mr. Papa has satisfied this obligation.
PSUs. The PSUs will vest on the fourth anniversary of the commencement date based on the achievement of the following share prices, applying linear interpolation for performance between the applicable thresholds (and provided that Mr. Papa is employed by us through the vesting date): (a) if the share price on the vesting date is below $60, none of the PSUs will vest; (b) if the share price on the vesting date equals or exceeds $60, 25% of the PSUs will vest; (c) if the share price on the vesting date equals or exceeds $90, 50% of the PSUs will vest; (d) if the share price on the vesting date equals or exceeds $120, 75% of the PSUs will vest; (e) if the share price on the vesting date equals or exceeds $150, 100% of the PSUs will vest; (f) if the share price on the vesting date equals or exceeds $180, 125% of the PSUs will vest; (g) if the share price on the vesting date equals or exceeds $210, 150% of the PSUs will vest; (h) if the share price on the vesting date equals or exceeds $240, 175% of the PSUs will vest; and (i) if the share price on the vesting date equals or exceeds $270, 200% of the PSUs will vest. Notwithstanding the above, no more than 100% of the PSUs will vest if the Company’s total shareholder return for the period between the commencement date and the vesting date is below the 50th percentile ranking of the total shareholder return of the companies that constitute the NYSE ARCA PHARMACEUTICAL INDEX (^DRG).
RSUs. TheAs provided for under the RSU award agreement, 50% (186,684) of these RSUs will vestvested on May 2, 2018, the fourthsecond anniversary of his commencement date, subject to Mr. Papa’s continued employment through the vesting date, provided, however, that the vesting of 50% of the RSUs may be accelerated to the second anniversary of the commencement date if certainbased onpre-determined individual goals relating to (i) succession planning, (ii) government relations, (iii) employee relations, (iv) customer relations and (v) shareholder relations arebeing achieved. The Talent and Compensation Committee is tracking progressremaining 50% will vest on these goals as specifically outlined below:the fourth anniversary of his commencement date subject to Mr. Papa’s continued employment through the vesting date.
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Options. The options will vest as to 25% of the total award on each of the first four anniversaries following the commencement date, subject to Mr. Papa’s continued employment with the Company through the applicable vesting date.
Future equity grants for Mr. Papa will beare at the sole discretion of the Board or the Talent and Compensation Committee.
These equity grants and the requirement to purchase shares are consistent with our long-standing view that newly hired executive officers should be required to purchase and hold a significant amount of our shares as a condition of hiring while ensuring strong shareholder alignment.
Termination of Employment
The consequences of Mr. Papa’s termination of employment, whether or not in connection with a “change in control” of us,control,” are described below in “Potential Payments Upon Termination ofor Change in Control,” startingbeginning on page 64.
Holding Requirements
Pursuant to his employment agreement, Mr. Papa is restricted from selling, assigning, transferring or otherwise disposing of Common Shares acquired pursuant to equity awards granted to him in accordance with the employment agreement (net of any shares sold or withheld by us in payment of the exercise price or tax withholding obligations) until the fourth anniversary of his commencement date (or, if later, in the case of all of Mr. Papa’s options, and PSUs, the first anniversary of the exercise date or vesting date and, in the case of 50% of Mr. Papa’s options, and PSUs, the second anniversary of the exercise date or vesting date). In addition, Mr. Papa is restricted from selling, assigning, transferring or otherwise disposing of Common Shares he purchases pursuant
to the employment agreement until the fourth anniversary of the purchase date. Notwithstanding the foregoing, all sales restrictions will lapse upon a “change of control” (excluding any change of control following which Mr. Papa serves as the chief executive officer of the ultimate parent company), Mr. Papa’s death, disability and involuntary termination of employment without “cause” or for “good reason,” or, in the case of the purchased shares, Mr. Papa’s voluntary termination of employment.
Restrictive Covenants
Mr. Papa is subject to customary restrictive covenants, includingnon-competition andnon-solicitation covenants during his employment and for two years following termination of employment for any reason.
Mr. Herendeen’s Employment Agreement
In August 2016, we entered into an employment agreement with Mr. Herendeen. The initial three-year term of Mr. Herendeen’s agreement commenced on August 22, 2016 and automatically renewed on August 22, 2019. The term will beautomatically renew for successiveone-year periods unless either party gives notice ofnon-renewal.
Pursuant to his agreement, Mr. Herendeen receives a base salary and a target annual incentive opportunity equal to 120% of his base salary, with a maximum annual incentive opportunity equal to 200% of his annual target incentive. Ongoing equity grants are at the sole discretion of the Talent and Compensation Committee.
The consequences of Mr. Herendeen’s termination of employment, whether or not in connection with a “change in control,” are described in “Potential Payments Upon Termination or Change in Control,” beginning on page 64.
Mr. Herendeen is subject to customary restrictive covenants, includingnon-competition andnon-solicitation covenants during his employment and for one year following termination of employment for any reason.
Ms. Ackermann’s Employment Agreement
In July 2016, we entered into an employment agreement with Ms. Ackermann. Ms. Ackermann’s agreement commenced on August 8, 2016.
Pursuant to her agreement, Ms. Ackermann receives a base salary and a target annual incentive opportunity equal to 80% of her base salary, with a maximum annual incentive opportunity equal to 200% of her annual target incentive. Ongoing equity grants are at the sole discretion of the Talent and Compensation Committee.
The consequences of Ms. Ackermann’s termination of employment, whether or not in connection with a “change in control,” are described in “Potential Payments Upon Termination or Change in Control,” beginning on page 64.
Ms. Ackermann is subject to customary restrictive covenants, includingnon-competition andnon-solicitation covenants during her employment and for one year following termination of employment for any reason.
Mr. Appio’s Employment Agreement
In March 2017, we entered into an employment agreement with Mr. Appio. The initial three-year term of Mr. Appio’s agreement commenced on August 17, 2016 and automatically renewed on August 17, 2019. The term will continue to automatically renew for successiveone-year periods unless either party gives notice ofnon-renewal.
Pursuant to his agreement, Mr. Appio receives a base salary and a target annual incentive opportunity equal to 80% of his base salary, with a maximum annual incentive opportunity equal to 200% of his annual target incentive. Ongoing equity grants are at the sole discretion of the Talent and Compensation Committee.
Mr. Appio is on an expatriate assignment from New Jersey to China. As a result, Mr. Appio receives (i) Company-paid housing in China, (ii) tax equalization, with Mr. Appio responsible for actual taxes due in the United States and the Company responsible for any taxes due innon-U.S. jurisdictions in which Mr. Appio earns taxable income, and (iii) tax preparation services. These benefits are reported in the “All Other Compensation” column of the Summary Compensation Table on page 56, including reimbursement related to the taxes on imputed income for these expatriate assignment benefits, as described on page 57 in footnote 4 to such table.
The consequences of Mr. Appio’s termination of employment, whether or not in connection with a “change in control,” are described in “Potential Payments Upon Termination or Change in Control,” beginning on page 64.
Mr. Appio is subject to customary restrictive covenants, includingnon-competition andnon-solicitation covenants during his employment and for one year following termination of employment for any reason.
Mr. Humphries’ Employment Agreement
In December 2016, we entered into an employment agreement with Mr. Humphries. The initial three-year term of Mr. Humphries’ agreement commenced on January 1, 2017 and automatically renewed on January 1, 2020. The term will continue to automatically renew for successiveone-year periods unless either party gives notice ofnon-renewal.
Pursuant to his agreement, Mr. Humphries receives a base salary and a target annual incentive opportunity equal to 80% of his base salary, with a maximum annual incentive opportunity equal to 200% of his annual target incentive. Ongoing equity grants are at the sole discretion of the Talent and Compensation Committee.
The consequences of Mr. Humphries’ termination of employment, whether or not in connection with a “change in control,” are described in “Potential Payments Upon Termination or Change in Control,” starting on page 64.
Mr. Humphries is subject to customary restrictive covenants, includingnon-competition andnon-solicitation covenants during his employment and for one year following termination of employment for any reason.
Other Compensation Governance Practices
Share Ownership Guidelines
The Talent and Compensation Committee believes that purchasing and holding a large amount of Common Shares with one’s own money should create an incentive to manage the Company prudently. For some of our Named Executive Officers, there are minimum required purchase amounts. For example, whenWhen our CEO was hired in 2016, he was required to purchase at least $5,000,000 worth of Common Shares by no later than the first anniversary of his commencement date.date, which he did.
The Talent and Compensation Committee has also established minimum share ownership requirements. Each Named Executive Officerrequirements for our NEOs. Our CEO is required to hold 6 times base salary, and our other NEOs are required to hold 3 times base salary. Common Shares representingand unvested RSUs are included in the combined amountcalculation of two timesshare ownership. NEOs have five years to achieve these guidelines and must retain 50% of their base salary plus their target annual cash incentive — an amount generally in excess ofnet shares vesting until this requirement is met. Mr. Papa, Mr. Herendeen, Mr. Appio and Mr. Humphries have satisfied this requirement, and Ms. Ackermann is on track to achieve these guidelines within the share ownership requirements of our peer group companies. In addition, our CEO also has restrictions requiring him to hold shares as described above.required five-year period.
Anti-Pledging, HedgingAnti-Hedging and Claw Back PolicyClawback Policies
In 2014, we adopted anti-hedging, anti-pledgingAnti-Hedging, Anti-Pledging, and recoupment (“claw back”Clawback”) policies.Policies. The anti-hedging policyAnti-Hedging Policy generally prohibits officers, Directorsdirectors and employees from engaging in new hedging or monetization transactions with Company stock. This prohibition prevents officers, Directorsdirectors and employees from owning securities without the full risks and rewards of ownership and preserves the common interests and objectives of the Company and its officers, Directorsdirectors and employees. The anti-pledging policyAnti-Pledging Policy generally prohibits officers, Directorsdirectors and employees from holding our securities in a margin account where the securities are subject to margin sales or pledging our securities as loan collateral.
As described above, our Board amended our claw back policy inIn February 2017, the Company amended its Clawback Policy to make it more robust.provide that the Board may exercise its discretion to require any employee who receives equity-based compensation to reimburse bonus, incentive or equity-based compensation awarded to such employees beginning in 2017 in the event of:
Employment Agreements
To fosterA material restatement or adjustment to our financial statements as a result of such employee’s knowing or intentional fraudulent or illegal misconduct; or
Such employee’s detrimental conduct that has caused material financial, operational or reputational harm to us, including (i) acts of fraud or dishonesty during the retentioncourse of employment; (ii) improper conduct that causes material harm to us or our affiliates; (iii) improper disclosure of confidential material that causes material harm to us or our affiliates; (iv) the commission of a felony or crime of comparable magnitude that subject us to material reputational harm; (v) commission of an act or omission that causes a violation of federal or other applicable securities law; or (vi) gross negligence in exercising supervisory authority.
Following a material restatement or adjustment of our keyfinancial statements, the compensation subject to clawback is the amount in excess of what would have been awarded based on the corrected performance measures, calculated on apre-tax basis. If the financial reporting measure applicable to the incentive or equity-based compensation is a stock price or TSR measure, the Board has broad authority to estimate the effect of the financial restatement on our share price in calculating recoverable compensation. In the case of detrimental conduct, the Board has the ability to recover all incentive compensation.
We may not indemnify any covered employee, directly or indirectly, for any losses incurred in connection with the recovery of any compensation under the policy, including through the payment of insurance premiums,gross-up payments or supplemental payments. The policy will continue to apply to covered employees even after they cease to be employed by us.
Compensation Risk Determination
The Talent and Compensation Committee assesses the potential risks relating to our compensation policies and practices for our employees, including those related to our executive compensation programs. Periodically, the Talent and Compensation Committee reviews and discusses with management team, we have entered into an employment agreementthe relationship between the Company’s compensation policies and practices and its risk management, including the extent to which those policies and practices create risks for the Company, to ensure that such policies and practices support not only economic performance, but also compliance with our active Named Executive Officers. The agreement for our CEO is described above under “Chief Executive Officer’s Employment Agreement” startingrisk management objectives, to ensure that they do not encourage excessive or unnecessary risk-taking and are not reasonably likely to have a material adverse effect on page 54. We have also entered into agreements with Mr. Herendeen and Ms. Ackermann. These agreements set forth the terms and conditions of each executive’s employment, including their base salary, short-term and long-term incentive opportunity, consequences of a termination of employment and the restrictive and other covenants to which they will be subject, including our claw back policy.Company.
Tax and Accounting Implications
Tax DeductibilityConsiderations of Our Executive Compensation
As part of its role, the Talent and Compensation Committee reviews and considers the tax deductibility of executive compensation under Section 162(m) of the Code which provides that we may not deduct compensation in excess of $1,000,000 that is paid to certain individuals, unless that compensation is performance based and meets other requirements. We generally develop our compensation plans with the intent of maximizinglimits the tax deductibility of ourannual compensation paid by public companies for certain executive compensation program for federal income tax purposes. However, in certain situations, theofficers to $1 million.
The Talent and Compensation Committee may continue to approve compensation that will not meet these requirementsbe fully-deductible in order to ensure competitive levels of total compensation for its executive officers.
Accounting for Our Stock-Based Compensation
We account for stock-based payments, including grants under each of our equity compensation plans in accordance with the requirements of FASB ASC Topic 718.
The Report of the Talent and Compensation Committee of the Board shall not be deemed incorporated by reference by any general statement incorporating by reference this Proxy Statement into any filing under the Securities Act of 1933, as amended or under the Securities Exchange Act of 1934, as amended, except to the extent that the Company specifically incorporates this information by reference, and shall not otherwise be deemed filed under such Acts.
The Talent and Compensation Committee of our Board has reviewed and discussed the Compensation Discussion and Analysis required by Item 402(b) of RegulationS-K with management and, based on such review and discussions, the Talent and Compensation Committee recommended to the Board that the Compensation Discussion and Analysis be included in this Proxy Statement.
Talent and Compensation Committee
Dr. Argeris (Jerry) N. Karabelas, Chairperson
Richard U. DeSchutter
Stephen FraidinDe Schutter
D. Robert Hale
Amy B. Wechsler, M.D.
2019 SUMMARY COMPENSATION TABLE
The following table sets forth the annual and long-term compensation awarded to or paid to the Named Executive OfficersNEOs for services rendered to the Company in all capacities during the yearyears ended December 31, 2016.2019, 2018 and 2017.
Name and Principal Position | Year | Salary ($) | Bonus ($) | Stock Awards ($)(1) | Option Awards ($)(2) | Non-Equity Incentive Plan Compensation ($) | All Other Compensation ($)(3) | Total ($) | ||||||||||||||||||||||||
Current Officers | ||||||||||||||||||||||||||||||||
Joseph C. Papa(4) | 2016 | 980,769 | 9,125,000 | (5) | 41,994,406 | 10,000,007 | — | 617,665 | 62,717,846 | |||||||||||||||||||||||
Chief Executive Officer | ||||||||||||||||||||||||||||||||
Paul S. Herendeen(6) | 2016 | 346,154 | 10,400,000 | (7) | 4,690,500 | 15,937,869 | — | — | 31,374,523 | |||||||||||||||||||||||
Executive Vice President and Chief Financial Officer | ||||||||||||||||||||||||||||||||
Christina M. Ackermann(8) | 2016 | 230,769 | 1,800,000 | (9) | 2,109,143 | 599,987 | — | 13,306 | (10) | 4,753,204 | ||||||||||||||||||||||
Executive Vice President and General Counsel | ||||||||||||||||||||||||||||||||
Former Officers | ||||||||||||||||||||||||||||||||
J. Michael Pearson(11) | 2016 | 669,231 | (12) | — | — | — | — | 11,304,448 | 11,973,679 | |||||||||||||||||||||||
Chief Executive Officer | 2015 | — | — | 140,304,682 | — | 500,000 | 772,760 | 141,577,442 | ||||||||||||||||||||||||
2014 | 2,007,693 | — | — | — | 8,000,000 | 368,235 | 10,375,928 | |||||||||||||||||||||||||
Howard B. Schiller(13) | 2016 | 813,491 | — | — | — | — | 217,571 | 1,031,063 | ||||||||||||||||||||||||
Interim Chief Executive Officer | 2015 | 563,963 | — | — | — | — | 42,842 | 606,805 | ||||||||||||||||||||||||
2014 | 953,846 | — | 23,730,659 | — | 2,400,000 | 23,067 | 27,107,572 | |||||||||||||||||||||||||
Robert L. Rosiello(14) | 2016 | 1,000,000 | 1,000,000 | (15) | 2,118,427 | — | — | 153,504 | 4,271,931 | |||||||||||||||||||||||
Executive Vice President and Chief Financial Officer | 2015 | 546,154 | 6,000,000 | 53,126,290 | — | 712,184 | 13,770 | 60,398,398 | ||||||||||||||||||||||||
Dr. Ari S. Kellen(16) | 2016 | 932,692 | 1,000,000 | (17) | 2,875,027 | — | — | 89,915 | 4,897,634 | |||||||||||||||||||||||
Executive Vice President, Company Group Chairman | 2015 | 741,316 | 3,000,000 | — | — | 955,688 | 30,688 | 4,727,692 | ||||||||||||||||||||||||
2014 | 752,885 | 5,000,000 | 43,085,254 | — | 1,800,000 | 2,521 | 50,640,660 | |||||||||||||||||||||||||
Anne C. Whitaker(18) | 2016 | 709,615 | 1,000,000 | (19) | 945,720 | — | — | 50,183 | 2,705,518 | |||||||||||||||||||||||
Executive Vice President, Company Group Chairman | 2015 | 376,154 | 900,000 | 15,058,798 | — | 325,370 | 13,764 | 16,674,086 | ||||||||||||||||||||||||
Robert R. Chai-Onn(20) | 2016 | 591,346 | 1,000,000 | (21) | 1,513,176 | — | — | 3,354,938 | 6,459,460 | |||||||||||||||||||||||
Executive Vice President, General Counsel and Chief Legal Officer, Head of Corporate and Business Development | | 2015 2014 | | | 778,846 715,385 | | | — — |
| | — 21,389,884 | | | — — |
| | 955,688 1,800,000 | | | 41,264 26,978 | | | 1,775,798 23,932,247 | |
Name and Principal Position Joseph C. Papa(5) Chief Executive Officer Paul S. Herendeen Executive Vice President and Chief Financial Officer Christina M. Ackermann Executive Vice President and General Counsel Thomas J. Appio President &Co-Head Bausch + Lomb/International William D. Humphries President, Ortho Dermatologics Year Salary
($) Bonus
($) Stock
Awards
($)(1) Option
Awards
($)(2) Non-Equity
Incentive Plan
Compensation
($)(3) All Other
Compensation
($)(4) Total
($) 2019 1,500,000 — 10,286,634 1,999,998 3,240,000 115,014 17,141,646 2018 1,500,000 — 7,344,927 1,999,715 3,802,500 93,908 14,741,050 2017 1,500,000 — — — 2,981,250 413,858 4,895,108 2019 1,000,000 — 3,175,712 1,050,049 1,728,000 23,600 6,977,361 2018 1,000,000 — 2,310,572 1,049,860 2,028,000 12,375 6,400,807 2017 1,000,000 — — — 1,590,000 7,950 2,597,950 2019 690,308 — 1,343,982 525,050 806,400 14,192 3,379,932 2018 647,539 — 723,176 359,964 892,320 763,908 3,386,907 2017 600,000 — 906,030 360,006 636,000 293,116 2,795,152 2019 768,942 — 1,343,982 525,050 892,800 427,227 3,958,001 2018 730,385 — 1,365,256 389,954 918,000 983,007 4,386,602 2017 650,000 — 1,133,771 180,012 669,500 796,003 3,429,286 2019 750,000 — 1,613,943 375,048 864,000 12,600 3,615,591 2018 750,000 — — — 612,000 12,375 1,374,375 2017 750,000 3,000,000 3,225,011 899,995 551,250 7,950 8,434,206
(1) | This column represents the aggregate grant date fair value computed in accordance with FASB ASC Topic 718 for all stock awards granted in 2019, which includes PSUs and RSUs. The grant date fair value of PSU awards was calculated based on the expected value of the possible outcomes of the performance conditions related to these awards in accordance with FASB ASC Topic |
The number of PSUs that are ultimately distributed to Mr. Papa and Ms. Ackermann will be determined based on (i) TSR, and (ii) ROTC, which will be measured over three years, from 2019 through 2021. Of the Company’s stock price at the end of the measurement periodtotal PSU award, TSR comprised 50% and ROTC comprised 50% for their respective awards. If theall NEOs. The grant date fair value was calculated based onassuming a 200% payout, which is the maximum outcome of the performance conditions, the value in the table would be $60,952,065$14,262,054 for Mr. Papa, and $1,771,709$3,327,730 for Mr. Herendeen, $1,663,806 for Ms. Ackermann.
As described in further detail in the Compensation DiscussionAckermann, $1,663,806 for Mr. Appio and Analysis on page 52, the equity awards granted to Messrs. Papa and Herendeen are front-loaded, and it is not expected that$1,188,416 for Mr. Papa or Mr. Herendeen will receive additional equity grants before the fourth and third anniversaries of their respective commencement dates.Humphries.
(2) | For the |
(3) |
|
Name | Executive Allowance(A) | Severance | Health and Welfare(B) | 401(k) Match | Personal Use of Aircraft(C) | |||||||||||||||
Current Officers | ||||||||||||||||||||
Joseph C. Papa | — | — | — | — | $ | 617,665 | ||||||||||||||
Paul S. Herendeen | — | — | — | — | — | |||||||||||||||
Christina M. Ackermann | — | — | — | — | — | |||||||||||||||
Former Officers | ||||||||||||||||||||
J. Michael Pearson | $ | 25,962 | $ | 10,460,342 | $ | 45,157 | $ | 7,950 | $ | 150,504 | ||||||||||
Howard B. Schiller | — | — | — | $ | 7,950 | $ | 208,523 | |||||||||||||
Robert L. Rosiello | — | — | $ | 44,504 | — | — | ||||||||||||||
Dr. Ari S. Kellen | — | — | $ | 44,504 | $ | 7,950 | $ | 37,460 | ||||||||||||
Anne C. Whitaker | — | — | $ | 44,645 | $ | 5,538 | — | |||||||||||||
Robert R. Chai-Onn | — | $ | 3,300,492 | $ | 46,496 | $ | 7,950 | — | ||||||||||||
Name | Life Insurance | Relocation | Consulting | Medicare Taxes(D) | ||||||||||||||||
Current Officers | ||||||||||||||||||||
Joseph C. Papa | — | — | — | — | ||||||||||||||||
Paul S. Herendeen | — | — | — | — | ||||||||||||||||
Christina M. Ackermann | — | $ | 13,306 | — | — | |||||||||||||||
Former Officers | ||||||||||||||||||||
J. Michael Pearson | $ | 112,332 | — | $ | 499,998 | $ | 2,204 | |||||||||||||
Howard B. Schiller | — | — | — | $ | 1,098 | |||||||||||||||
Robert L. Rosiello | $ | 109,000 | — | — | — | |||||||||||||||
Dr. Ari S. Kellen | — | — | — | — | ||||||||||||||||
Anne C. Whitaker | — | — | — | — | ||||||||||||||||
Robert R. Chai-Onn | — | — | — | — |
|
|
(4) | For 2019, amounts in this column for each NEO consist of the following: |
Papa | Herendeen | Ackermann | Appio | Humphries | ||||||||||||||||
401(k) Match | $ | 12,600 | $ | 12,600 | $ | 12,600 | $ | 12,600 | $ | 12,600 | ||||||||||
Use of Company Aircraft | $ | 102,414 | (A) | — | — | — | — | |||||||||||||
Use of Company Car | — | — | $ | 1,592 | (B) | — | — | |||||||||||||
Executive Physical | — | $ | 11,000 | (C) | — | — | — | |||||||||||||
Gross up | — | — | — | $ | 32,449 | (D) | — | |||||||||||||
Expat Program Benefits | — | — | — | $ | 382,178 | — |
(A) | Amount includes the value of |
|
(C) | This amount represents the value of the executive physical benefit provided to company executives. |
(D) | This amount represents the reimbursement related to the taxes on the imputed income from Mr. Appio’s Expat Program Benefits as provided for pursuant to the Company’s standard policy. |
(5) | Mr. Papa |
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Grants of Plan-Based Awards
The following table provides information on the grants of plan-based awards to the Named Executive OfficersNEOs during the year ended December 31, 2016.2019.
Estimated Future Payouts |
Estimated Future | All Other Stock Awards: Number of Shares of Stock or Units(3) (#) | All Other Option Awards: Number of Securities Underlying Options(4) (#) | Exercise or Base Price of Option Awards(5) ($/Sh) | Grant Date Fair Value(6) ($) | |||||||||||||||||||||||||||||||||||||||
Name | Grant Date | Threshold ($) | Target ($) | Maximum ($) | Threshold ($) | Target (#) | Maximum (#) | |||||||||||||||||||||||||||||||||||||
Current Officers | ||||||||||||||||||||||||||||||||||||||||||||
Joseph C. Papa | 05/02/16 | 0 | 933,416 | 1,866,832 | 29,803,973 | |||||||||||||||||||||||||||||||||||||||
05/02/16 | 373,367 | (7) | 12,190,433 | |||||||||||||||||||||||||||||||||||||||||
06/09/16 | 682,652 | 23.92 | 10,000,007 | |||||||||||||||||||||||||||||||||||||||||
N/A | 0 | 2,250,000 | 4,500,000 | |||||||||||||||||||||||||||||||||||||||||
Paul S. Herendeen | 08/22/16 | 150,000 | (8) | 4,690,500 | ||||||||||||||||||||||||||||||||||||||||
08/22/16 | 1,000,000 | 28.74 | 15,937,869 | |||||||||||||||||||||||||||||||||||||||||
N/A | 0 | 1,200,000 | 2,400,000 | |||||||||||||||||||||||||||||||||||||||||
Christina M. Ackermann | 08/08/16 | 0 | 26,306 | 78,918 | 1,124,845 | |||||||||||||||||||||||||||||||||||||||
08/08/16 | 43,844 | (8) | 984,298 | |||||||||||||||||||||||||||||||||||||||||
08/10/16 | 39,469 | 27.32 | 599,987 | |||||||||||||||||||||||||||||||||||||||||
N/A | 0 | 480,000 | 960,000 | |||||||||||||||||||||||||||||||||||||||||
Former Officers | ||||||||||||||||||||||||||||||||||||||||||||
J. Michael Pearson | N/A | 0 | 2,000,000 | 4,000,000 | ||||||||||||||||||||||||||||||||||||||||
Robert L. Rosiello | 05/12/16 | 84,975 | (9) | 2,118,427 | ||||||||||||||||||||||||||||||||||||||||
N/A | 0 | 1,200,000 | 2,400,000 | |||||||||||||||||||||||||||||||||||||||||
Ari S. Kellen | 05/12/16 | 115,324 | (9) | 2,875,027 | ||||||||||||||||||||||||||||||||||||||||
N/A | 0 | 1,200,000 | 2,400,000 | |||||||||||||||||||||||||||||||||||||||||
Anne C. Whitaker | 05/12/16 | 37,935 | (9) | 945,720 | ||||||||||||||||||||||||||||||||||||||||
N/A | 0 | 600,000 | 1,200,000 | |||||||||||||||||||||||||||||||||||||||||
Robert R. Chai-Onn | 05/12/16 | 60,697 | (9) | 1,513,176 | ||||||||||||||||||||||||||||||||||||||||
N/A | 0 | 900,000 | 1,800,000 |
Estimated Possible Payouts UnderNon-Equity Incentive Plan Awards(1) | Estimated Future Payouts Under Equity Incentive Plan Awards(2) | All Other Stock Awards: Number of Shares of Stock or Units(3) (#) | All Other Option Awards: Number of Securities Underlying Options(4) (#) | Exercise or Base Price of Option Awards(5) ($/Sh) | Grant Date Fair Value(6) ($) | |||||||||||||||||||||||||||||||||||||||||||
Name | Grant Date | Committee Action Date | Threshold ($) | Target ($) | Maximum ($) | Threshold (#) | Target (#) | Maximum (#) | ||||||||||||||||||||||||||||||||||||||||
Joseph C. Papa | ||||||||||||||||||||||||||||||||||||||||||||||||
2019 AIP | 2/12/2019 | 2/12/2019 | 0 | 2,250,000 | 4,500,000 | |||||||||||||||||||||||||||||||||||||||||||
2019 TSR PSU | 2/27/2019 | 2/12/2019 | 60,887 | 121,773 | 243,546 | 4,204,822 | ||||||||||||||||||||||||||||||||||||||||||
2019 ROTC PSU | 2/27/2019 | 2/12/2019 | 30,443 | 121,773 | 243,546 | 2,926,205 | ||||||||||||||||||||||||||||||||||||||||||
2019 RSU | 2/27/2019 | 2/12/2019 | 81,182 | 1,950,803 | ||||||||||||||||||||||||||||||||||||||||||||
2019 Options | 2/27/2019 | 2/12/2019 | 236,183 | 23.16 | 1,999,998 | |||||||||||||||||||||||||||||||||||||||||||
2019 MRSU | 2/28/2019 | 8/1/2018 | 30,000 | 711,000 | ||||||||||||||||||||||||||||||||||||||||||||
2019 MRSU | 9/13/2019 | 7/29/2019 | 21,248 | 493,804 | ||||||||||||||||||||||||||||||||||||||||||||
Paul S. Herendeen | ||||||||||||||||||||||||||||||||||||||||||||||||
2019 AIP | 2/12/2019 | 2/12/2019 | 0 | 1,200,000 | 2,400,000 | |||||||||||||||||||||||||||||||||||||||||||
2019 TSR PSU | 2/27/2019 | 2/12/2019 | 14,207 | 28,413 | 56,826 | 981,101 | ||||||||||||||||||||||||||||||||||||||||||
2019 ROTC PSU | 2/27/2019 | 2/12/2019 | 7,103 | 28,413 | 56,826 | 682,764 | ||||||||||||||||||||||||||||||||||||||||||
2019 RSU | 2/27/2019 | 2/12/2019 | 62,915 | 1,511,847 | ||||||||||||||||||||||||||||||||||||||||||||
2019 Options | 2/27/2019 | 2/12/2019 | 124,002 | 23.16 | 1,050,049 | |||||||||||||||||||||||||||||||||||||||||||
Christina M. Ackermann |
| |||||||||||||||||||||||||||||||||||||||||||||||
2019 AIP | 2/12/2019 | 2/12/2019 | 0 | 560,000 | 1,120,000 | |||||||||||||||||||||||||||||||||||||||||||
2019 TSR PSU | 2/27/2019 | 2/12/2019 | 7,103 | 14,206 | 28,412 | 490,533 | ||||||||||||||||||||||||||||||||||||||||||
2019 ROTC PSU | 2/27/2019 | 2/12/2019 | 3,552 | 14,206 | 28,412 | 341,370 | ||||||||||||||||||||||||||||||||||||||||||
2019 RSU | 2/27/2019 | 2/12/2019 | 21,310 | 512,079 | ||||||||||||||||||||||||||||||||||||||||||||
2019 Options | 2/27/2019 | 2/12/2019 | 62,004 | 23.16 | 525,050 | |||||||||||||||||||||||||||||||||||||||||||
Thomas J. Appio | ||||||||||||||||||||||||||||||||||||||||||||||||
2019 AIP | 2/12/2019 | 2/12/2019 | 0 | 620,000 | 1,240,000 | |||||||||||||||||||||||||||||||||||||||||||
2019 TSR PSU | 2/27/2019 | 2/12/2019 | 7,103 | 14,206 | 28,412 | 490,533 | ||||||||||||||||||||||||||||||||||||||||||
2019 ROTC PSU | 2/27/2019 | 2/12/2019 | 3,552 | 14,206 | 28,412 | 341,370 | ||||||||||||||||||||||||||||||||||||||||||
2019 RSU | 2/27/2019 | 2/12/2019 | 21,310 | 512,079 | ||||||||||||||||||||||||||||||||||||||||||||
2019 Options | 2/27/2019 | 2/12/2019 | 62,004 | 23.16 | 525,050 | |||||||||||||||||||||||||||||||||||||||||||
William D. Humphries | ||||||||||||||||||||||||||||||||||||||||||||||||
2019 AIP | 2/12/2019 | 2/12/2019 | 0 | 600,000 | 1,200,000 | |||||||||||||||||||||||||||||||||||||||||||
2019 TSR PSU | 2/27/2019 | 2/12/2019 | 5,074 | 10,147 | 20,294 | 350,376 | ||||||||||||||||||||||||||||||||||||||||||
2019 ROTC PSU | 2/27/2019 | 2/12/2019 | 2,537 | 10,147 | 20,294 | 243,832 | ||||||||||||||||||||||||||||||||||||||||||
2019 RSU | 2/27/2019 | 2/12/2019 | 15,221 | 365,761 | ||||||||||||||||||||||||||||||||||||||||||||
2019 Options | 2/27/2019 | 2/12/2019 | 44,290 | 23.16 | 375,048 | |||||||||||||||||||||||||||||||||||||||||||
2019 MRSU | 8/16/2019 | 7/29/2019 | 30,703 | 653,974 |
(1) |
|
(2) |
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(3) | This column shows the number of RSUs granted in |
(4) | This column shows the number ofnon-qualified |
(5) | Thenon-qualified Stock Options vestone-third per year on the first, second and third anniversaries of the grant date and have aten-year term. The exercise price is the closing price of the Company’s |
(6) | This column shows the grant date fair value of each equity award computed in accordance with FASB ASC Topic 718. The grant date fair value of the TSR PSU awards |
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Outstanding Equity Awards at FiscalYear-End
The following table provides information on the holdings of stock optionsStock Options and stock awards by the Named Executive OfficersNEOs as of December 31, 2016, other than Mr. Schiller, who did not hold any outstanding equity awards at such date.2019. This table includes unexercised and unvested option awards and unvested RSUs and PSUs. Each equity grant is shown separately for each Named Executive Officer.NEO. The market value of the stock awards is based on the closing market price of our Common Shares on December 31, 2016,2019, which was $14.52.$29.92.
Name | Date of Grant* | Option Awards | Stock Awards | |||||||||||||||||||||||||||||||||
Number of Securities Underlying Unexercised Options (#) Exercisable | Number of Securities Underlying Unexercised Options (#) Unexercisable | Options Exercise Price ($) | Option Expiration Date | Number of Shares or Units of Stock That Have Not Vested (#) | Market Value of Shares or Units of Stock That Have Not Vested ($) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($) | |||||||||||||||||||||||||||||
Current Officers | ||||||||||||||||||||||||||||||||||||
Joseph C. Papa | 05/02/2016 | 373,367 | (1) | 5,421,289 | ||||||||||||||||||||||||||||||||
05/02/2016 | 933,416 | (2) | 13,553,200 | |||||||||||||||||||||||||||||||||
06/09/2016 | 0 | 682,652 | (3) | 23.92 | 05/02/2026 | |||||||||||||||||||||||||||||||
Paul S. Herendeen | 08/22/2016 | 150,000 | (1) | 2,178,000 | ||||||||||||||||||||||||||||||||
08/22/2016 | 0 | 1,000,000 | (4) | 28.74 | 08/22/2026 | |||||||||||||||||||||||||||||||
Christina M. Ackermann | 08/08/2016 | 43,844 | (1) | 636,615 | ||||||||||||||||||||||||||||||||
08/08/2016 | 26,306 | (5) | 381,963 | |||||||||||||||||||||||||||||||||
08/10/2016 | 0 | 39,469 | (3) | 27.32 | 08/10/2026 | |||||||||||||||||||||||||||||||
Former Officers | ||||||||||||||||||||||||||||||||||||
J. Michael Pearson(6) | 08/23/2011 | 500,000 | 0 | 54.76 | 05/02/2017 | |||||||||||||||||||||||||||||||
Robert L. Rosiello | 07/01/2015 | 68,000 | (7) | 987,360 | ||||||||||||||||||||||||||||||||
07/01/2015 | 68,000 | (7) | 987,360 | |||||||||||||||||||||||||||||||||
07/20/2015 | 10,320 | (8) | 149,846 | |||||||||||||||||||||||||||||||||
10/20/2015 | 6,300 | (8) | 91,476 | |||||||||||||||||||||||||||||||||
05/12/2016 | 56,650 | (9) | 822,558 | |||||||||||||||||||||||||||||||||
Dr. Ari S. Kellen | 01/09/2014 | 75,000 | (10) | 1,089,000 | ||||||||||||||||||||||||||||||||
01/20/2014 | 28,087 | (11) | 407,823 | |||||||||||||||||||||||||||||||||
02/21/2014 | 75,000 | (12) | 1,089,000 | |||||||||||||||||||||||||||||||||
05/12/2016 | 76,883 | (13) | 1,116,341 | |||||||||||||||||||||||||||||||||
Anne C. Whitaker | 05/13/2015 | 37,485 | (14) | 544,282 | ||||||||||||||||||||||||||||||||
07/20/2015 | 5,000 | (15) | 72,600 | |||||||||||||||||||||||||||||||||
05/12/2016 | 25,290 | (16) | 367,211 | |||||||||||||||||||||||||||||||||
Robert R. Chai-Onn | 12/12/2013 | 77,142 | 0 | 106.49 | 10/08/2017 |
Option Awards | Stock Awards | |||||||||||||||||||||||||||||||||||
Name | Date of Grant | Number of Securities Underlying Unexercised Options (#) Exercisable | Number of Securities Underlying Unexercised Options (#) Unexercisable | Options Exercise Price ($) | Option Expiration Date | Number of Shares or Units of Stock That Have Not Vested (#) | Market Value of Shares or Units of Stock That Have Not Vested ($) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($) | |||||||||||||||||||||||||||
Joseph C. Papa | 5/2/2016 | 186,683 | (1) | $ | 5,585,555 | |||||||||||||||||||||||||||||||
6/9/2016 | 511,989 | 170,663 | (2) | 23.92 | 5/2/2026 | |||||||||||||||||||||||||||||||
3/7/2018 | 112,686 | 225,372 | (3) | 15.32 | 3/7/2028 | |||||||||||||||||||||||||||||||
3/7/2018 | 89,787 | (4) | $ | 2,686,427 | 28,413 | (5) | $ | 850,117 | ||||||||||||||||||||||||||||
3/7/2018 | 511,434 | (6) | $ | 15,302,105 | ||||||||||||||||||||||||||||||||
3/7/2018 | 75,768 | (7) | $ | 2,266,979 | ||||||||||||||||||||||||||||||||
9/14/2018 | 20,000 | (7) | $ | 598,400 | ||||||||||||||||||||||||||||||||
2/27/2019 | 0 | 236,183 | (3) | 23.16 | 2/27/2029 | |||||||||||||||||||||||||||||||
2/27/2019 | 47,491 | (8) | $ | 1,420,931 | 81,182 | (9) | $ | 2,428,965 | ||||||||||||||||||||||||||||
2/27/2019 | 243,546 | (10) | $ | 7,286,896 | ||||||||||||||||||||||||||||||||
2/27/2019 | 81,182 | (7) | $ | 2,428,965 | ||||||||||||||||||||||||||||||||
2/28/2019 | 30,000 | (7) | $ | 897,600 | ||||||||||||||||||||||||||||||||
9/13/2019 | 21,248 | (7) | $ | 635,740 | ||||||||||||||||||||||||||||||||
Paul S. Herendeen | 8/22/2016 | 1,000,000 | 0 | (3) | 28.74 | 8/22/2026 | ||||||||||||||||||||||||||||||
3/7/2018 | 59,160 | 118,322 | (3) | 15.32 | 3/7/2028 | |||||||||||||||||||||||||||||||
3/7/2018 | 41,900 | (4) | $ | 1,253,648 | 13,259 | (5) | $ | 396,709 | ||||||||||||||||||||||||||||
3/7/2018 | 79,556 | (6) | $ | 2,380,316 | ||||||||||||||||||||||||||||||||
3/7/2018 | 39,778 | (7) | $ | 1,190,158 | ||||||||||||||||||||||||||||||||
9/14/2018 | 6,667 | (7) | $ | 199,477 | ||||||||||||||||||||||||||||||||
2/27/2019 | 0 | 124,002 | (3) | 23.16 | 2/27/2029 | |||||||||||||||||||||||||||||||
2/27/2019 | 11,081 | (8) | $ | 331,544 | 18,942 | (9) | $ | 566,745 | ||||||||||||||||||||||||||||
2/27/2019 | 56,826 | (10) | $ | 1,700,234 | ||||||||||||||||||||||||||||||||
2/27/2019 | 62,915 | (7) | $ | 1,882,417 | ||||||||||||||||||||||||||||||||
Christina M. Ackermann | 8/10/2016 | 29,601 | 9,868 | (2) | 27.32 | 8/10/2026 | ||||||||||||||||||||||||||||||
1/6/2017 | 42,267 | (11) | $ | 1,264,629 | ||||||||||||||||||||||||||||||||
1/6/2017 | 7,864 | (12) | $ | 235,291 | ||||||||||||||||||||||||||||||||
1/6/2017 | 8,192 | (7) | $ | 245,105 | ||||||||||||||||||||||||||||||||
3/1/2017 | 40,230 | 20,115 | (3) | 14.38 | 3/1/2027 | |||||||||||||||||||||||||||||||
3/7/2018 | 20,284 | 40,569 | (3) | 15.32 | 3/7/2028 | |||||||||||||||||||||||||||||||
3/7/2018 | 21,548 | (4) | $ | 644,716 | 6,819 | (5) | $ | 204,024 | ||||||||||||||||||||||||||||
3/7/2018 | 13,638 | (6) | $ | 408,049 | ||||||||||||||||||||||||||||||||
3/7/2018 | 13,638 | (7) | $ | 408,049 | ||||||||||||||||||||||||||||||||
2/27/2019 | 0 | 62,004 | (3) | 23.16 | 2/27/2029 | |||||||||||||||||||||||||||||||
2/27/2019 | 5,540 | (8) | $ | 165,757 | 9,471 | (9) | $ | 283,372 | ||||||||||||||||||||||||||||
2/27/2019 | 28,412 | (10) | $ | 850,087 | ||||||||||||||||||||||||||||||||
2/27/2019 | 21,310 | (7) | $ | 637,595 |
Option Awards | Stock Awards | |||||||||||||||||||||||||||||||||||
Name | Date of Grant | Number of Securities Underlying Unexercised Options (#) Exercisable | Number of Securities Underlying Unexercised Options (#) Unexercisable | Options Exercise Price ($) | Option Expiration Date | Number of Shares or Units of Stock That Have Not Vested (#) | Market Value of Shares or Units of Stock That Have Not Vested ($) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($) | |||||||||||||||||||||||||||
Thomas J. Appio | 8/9/2013 | 22,350 | 0 | (2) | 101.68 | 8/9/2023 | ||||||||||||||||||||||||||||||
1/6/2017 | 21,133 | (11) | $ | 632,299 | ||||||||||||||||||||||||||||||||
1/6/2017 | 3,932 | (12) | $ | 117,645 | ||||||||||||||||||||||||||||||||
1/6/2017 | 4,096 | (7) | $ | 122,552 | ||||||||||||||||||||||||||||||||
3/1/2017 | 20,116 | 10,058 | (3) | 14.38 | 3/1/2027 | |||||||||||||||||||||||||||||||
3/7/2018 | 21,974 | 43,949 | (3) | 15.32 | 3/7/2028 | |||||||||||||||||||||||||||||||
3/7/2018 | 23,343 | (4) | $ | 698,423 | 7,387 | (5) | $ | 221,019 | ||||||||||||||||||||||||||||
3/7/2018 | 14,776 | (6) | $ | 442,098 | ||||||||||||||||||||||||||||||||
3/7/2018 | 14,775 | (7) | $ | 442,068 | ||||||||||||||||||||||||||||||||
12/14/2018 | 16,960 | (7) | $ | 507,443 | ||||||||||||||||||||||||||||||||
2/27/2019 | 0 | 62,004 | (3) | 23.16 | 2/27/2029 | |||||||||||||||||||||||||||||||
2/27/2019 | 5,540 | (8) | $ | 165,757 | 9,471 | (9) | $ | 283,372 | ||||||||||||||||||||||||||||
2/27/2019 | 28,412 | (10) | $ | 850,087 | ||||||||||||||||||||||||||||||||
2/27/2019 | 21,310 | (7) | $ | 637,595 | ||||||||||||||||||||||||||||||||
William D. Humphries | 1/2/2017 | 105,783 | (11) | $ | 3,165,027 | |||||||||||||||||||||||||||||||
1/2/2017 | 20,911 | (13) | $ | 625,657 | ||||||||||||||||||||||||||||||||
1/2/2017 | 22,779 | (7) | $ | 681,548 | ||||||||||||||||||||||||||||||||
1/2/2017 | 20,501 | (7) | $ | 613,390 | ||||||||||||||||||||||||||||||||
3/1/2017 | 100,572 | 50,287 | (3) | 14.38 | 3/1/2027 | |||||||||||||||||||||||||||||||
2/27/2019 | 0 | 44,290 | (3) | 23.16 | 2/27/2029 | |||||||||||||||||||||||||||||||
2/27/2019 | 3,957 | (8) | $ | 118,393 | 6,765 | (9) | $ | 202,409 | ||||||||||||||||||||||||||||
2/27/2019 | 20,294 | (10) | $ | 607,196 | ||||||||||||||||||||||||||||||||
2/27/2019 | 15,221 | (7) | $ | 455,412 | ||||||||||||||||||||||||||||||||
8/16/2019 | 30,703 | (7) | $ | 918,634 |
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(3) | Options vestone-third per year on the first, second and third anniversary of the grant date. |
The amount reported is the maximum number of shares that may be earned based on actual results for |
(5) | The amount reported is the target number of |
for 2020, as set forth in performance metrics established in 2020. The value shown above reflects target achievement for the 2020 measurement period. The total number of PSUs delivered will be based on the average achievement with respect to each of the threeone-year periods. |
(6) | The amount reported is the maximum number of shares; the actual amount earned will be |
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(7) | RSUs and MRSUs vestone-third per year on the first, second, and third anniversary of the grant date. |
(8) | The amount reported is the maximum number of shares that may be earned based on the first measurement period of an award with threeone-year periods. The actual amount earned will |
(9) | The amount reported is the target number of shares for the second and third tranches of an award with threeone-year periods. See Footnote 8 above. The award vests based on ROTC, measured over years two and three (2020 and 2021) of the threeone-year periods, from 2019 through 2021.One-third of such PSUs delivered will be based on ROTC for 2019, which were achieved at 117% as described on page 48 and reflected in footnote 8 above,one-third will be based on the performance metrics established in 2020, andone-third will be based on the performance metrics established in 2021. The value shown above reflects target achievement for the 2020 and 2021 measurement periods. The total number of PSUs delivered will be based on the average achievement with respect to each of the threeone-year periods. |
(10) | The amount reported is the maximum number of shares; the actual amount earned will be determined in 2022. The award vests as follows: If at the end of the TSR performance period which is from January 1, 2019 through December 31, 2021, the Company’s TSR equals or exceeds the 30th percentile of the Share Unit Peer Group’s TSR, then 50% of the target shares will be delivered; equals or exceeds the 50th percentile of the Share Unit Peer Group’s TSR, then 100% of the target |
(11) | The amount reported is the number of shares earned based on the average of the results of the 2017, 2018, and 2019 annual ROTC performance which was 172% of target. The shares were distributed to the NEOs on February 20, 2020. |
(12) | The amount reported is the number of shares earned based on the closing price of the Company’s Common Shares on the vesting date plus the aggregate value of any dividends paid on the Common Shares over the three-year TSR performance period (the “Share Price”). If the Share Price equaled or exceeded $19.53, 25% of target shares delivered; if the Share Price equaled or exceeded $29.30, 100% of target shares delivered; and if the Share Price equaled or exceeded $58.60, 200% of target shares delivered. However, if the Company’s TSR between grant date and vesting date is below the 50th percentile |
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The amount reported |
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Option Exercises and Stock Vested
The following table provides information regarding option exercises by the Named Executive OfficersNEOs during 20162019 and Common Shares acquired on the vesting of RSUs and PSUs held by the Named Executive OfficersNEOs during 2016.2019.
Option Awards | Stock Awards | |||||||||||||||
Name | Number of Shares Acquired on Exercise (#) | Value Realized on Exercise ($)(1) | Net Number of Shares Acquired on Vesting (#)(2) | Value Realized on Vesting ($)(3) | ||||||||||||
Current Officers | ||||||||||||||||
Joseph C. Papa | — | — | — | — | ||||||||||||
Paul S. Herendeen | — | — | — | — | ||||||||||||
Christina M. Ackermann | — | — | — | — | ||||||||||||
Former Officers | ||||||||||||||||
J. Michael Pearson | 4,433,128 | 60,512,513 | — | — | ||||||||||||
Howard B. Schiller | — | — | 107,608 | 9,738,404 | ||||||||||||
Robert L. Rosiello | — | — | 32,480 | 605,328 | ||||||||||||
Dr. Ari S. Kellen | — | — | 47,803 | 1,524,969 | ||||||||||||
Anne C. Whitaker | — | — | 15,145 | 286,460 | ||||||||||||
Robert R. Chai-Onn | 126,157 | 2,393,109 | 20,232 | 468,573 |
Option Awards | Stock Awards | |||||||||||||||
Name | Number of Shares Acquired on Exercise (#) | Value Realized on Exercise ($) | Number of Shares Acquired on Vesting (#) | Value Realized on Vesting ($)(1) | ||||||||||||
Joseph C. Papa | — | — | 47,884 | 1,124,947 | ||||||||||||
Paul S. Herendeen | — | — | 73,222 | 1,666,044 | ||||||||||||
Christina M. Ackermann | — | — | 29,626 | 661,966 | ||||||||||||
Thomas J. Appio | — | — | 41,211 | 976,540 | ||||||||||||
William D. Humphries | — | — | 43,280 | 799,382 |
(1) | The |
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POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL
Our practice is to enter into employment agreements in connection with an executive officer’s hire or if there are any material changes in their employment arrangements and to enter into separation agreements in connection with their departure in most circumstances. The following table sets forth the material termsexpected benefits to be received by each NEO in each of the following agreements:
Employment agreements fortermination scenarios. This table assumes a termination date of December 31, 2019 and a stock price of $29.92, which was the closing price of our Chairman and CEO (Mr. Papa); Executive Vice President and CFO (Mr. Herendeen); and Executive Vice President and General Counsel (Ms. Ackermann);
Separation and consulting agreements for our former CEO (Mr. Pearson); former Interim CEO (Mr. Schiller); former Executive Vice President and CFO and former Executive Vice President, Corporate Development and Strategy (Mr. Rosiello); and former Executive Vice President and Company Group Chairman (Dr. Kellen); and
Separation agreements for our former Executive Vice President and Company Group Chairman (Ms. Whitaker) and former Executive Vice President, General Counsel and Chief Legal Officer, Head of Corporate and Business Development (Mr. Chai-Onn).
Chairman and Chief Executive Officer
In April 2016, we entered into an employment agreement with Mr. Papa, our Chairman and CEO, in connection with his hiring. The initial term of Mr. Papa’s agreement commencedCommon Shares on May 2, 2016 and continues untilDecember 31, 2019, the fifth anniversarylast business day of the commencement date. Beginning at the expirationyear. The receipt of the initial term, the term will automatically renew for successive one year periods, unless either party gives notice ofnon-renewal.
Shortly following his commencement date, Mr. Papa received a cash payment equal to $8,000,000 from us to compensate him for equity-based compensation he forfeited in connection with the termination of his employment with his former employer, theafter-tax amount of which must be repaid by Mr. Papa to us if his employmentbenefits is terminated by us for cause or he voluntarily terminates his employment without “good reason” (as defined below) during the first year of his employment with us.
If Mr. Papa’s employment is terminated by us without cause, or by Mr. Papa for good reason,generally subject to his executing and not revoking a general release of claims, Mr. Papa will be entitled to receive a cash severance payment equal toclaims. Other relevant assumptions and explanations are set forth in the sum of two timesfootnotes following the sum of his annual base salary and annual target incentive, a prorated annual incentive based on our actual performance and continued health benefits for 24 months at active employee rates.table.
Pursuant to the terms of the equity award agreements that were outstanding as of December 30, 2016, if
Termination without Cause or for Good Reason | Termination within 12 months of Change in Control | Termination due to Death or Disability | Termination due to Retirement | |||||||||||||
Joseph C. Papa | ||||||||||||||||
Cash(1) | 10,740,000 | 10,740,000 | 3,240,000 | — | ||||||||||||
RSUs(2)(6) | 7,619,675 | 8,450,934 | 12,413,240 | 2,266,979 | ||||||||||||
PSUs(7) | 12,547,544 | 6,791,639 | 12,547,544 | 12,547,544 | ||||||||||||
Stock Options(3)(8) | 575,111 | 4,314,409 | 5,462,139 | 3,290,431 | ||||||||||||
Other Benefits(1) | 26,175 | 26,175 | — | — | ||||||||||||
Total Estimated Incremental Value | 31,508,505 | 30,323,157 | 33,662,923 | 18,104,954 | ||||||||||||
Paul S. Herendeen | ||||||||||||||||
Cash(4) | 3,400,000 | 5,600,000 | 1,200,000 | — | ||||||||||||
RSUs(6) | 1,033,974 | 1,389,634 | 3,272,051 | 1,190,158 | ||||||||||||
PSUs(7) | 2,686,072 | 1,584,703 | 2,686,072 | 2,686,072 | ||||||||||||
Stock Options(8) | — | 1,727,501 | 2,565,755 | 1,727,501 | ||||||||||||
Other Benefits | — | — | — | — | ||||||||||||
Total Estimated Incremental Value | 7,120,046 | 10,301,838 | 9,723,878 | 5,603,731 | ||||||||||||
Christina M. Ackermann | ||||||||||||||||
Cash(5) | 1,820,000 | 3,080,000 | — | — | ||||||||||||
RSUs(6) | 575,340 | 653,154 | 1,290,749 | — | ||||||||||||
PSUs(7) | 2,338,009 | 1,523,679 | 2,338,009 | — | ||||||||||||
Stock Options(3)(8) | 10,052 | 930,551 | 1,334,093 | — | ||||||||||||
Other Benefits(5) | 31,719 | 31,719 | — | — | ||||||||||||
Total Estimated Incremental Value | 4,775,120 | 6,219,103 | 4,962,851 | — | ||||||||||||
Thomas J. Appio | ||||||||||||||||
Cash(5) | 2,015,000 | 3,410,000 | — | — | ||||||||||||
RSUs(6) | 506,305 | 1,072,064 | 1,709,659 | 442,068 | ||||||||||||
PSUs(7) | 1,657,888 | 1,078,776 | 1,657,888 | 907,919 | ||||||||||||
Stock Options(8) | — | 797,957 | 1,217,104 | 641,655 | ||||||||||||
Other Benefits(5) | 8,235 | 8,235 | — | — | ||||||||||||
Total Estimated Incremental Value | 4,187,428 | 6,367,032 | 4,584,651 | 1,991,642 | ||||||||||||
William D. Humphries | ||||||||||||||||
Cash(4) | 1,950,000 | 3,300,000 | 600,000 | — | ||||||||||||
RSUs(6)(9) | 1,291,577 | 1,294,938 | 2,668,984 | — | ||||||||||||
PSUs(7) | 3,790,698 | 2,453,530 | 3,790,698 | — | ||||||||||||
Stock Options(8) | — | 781,460 | 1,080,860 | — | ||||||||||||
Other Benefits(4) | 18,420 | 18,420 | — | — | ||||||||||||
Total Estimated Incremental Value | 7,050,695 | 7,848,348 | 8,140,542 | — |
(1) | If Mr. Papa’s employment is terminated by us without cause, or by Mr. Papa for good reason, including within 12 months of our change in control (or during thesix-month period prior to a change in control if such termination was in contemplation of, and directly related to, the change in control), or upon the expiration of his employment term, Mr. Papa will be entitled to receive a cash severance payment equal to |
the sum of two times the sum of his annual base salary and annual target incentive and a prorated annual incentive based on actual performance, as shown above in “Cash” under “Termination without Cause or for Good Reason” and “Termination within 12 months of a Change in Control.” Mr. Papa will also be entitled to receive continued health benefits for 24 months at active employee rates, as shown above in “Other Benefits” under “Termination without Cause or for Good Reason” and “Termination within 12 months of a Change in Control.” For Mr. Papa, “good reason” includes (i) a diminution of duties and responsibilities, including removing Mr. Papa from the position of CEO; (ii) any reduction in base salary or target incentive opportunity; (iii) any relocation of Mr. Papa’s primary place of business that results in an increase of hisone-way commute by 50 miles or more; and (iv) a material breach by the Company of a material provision of his employment agreement. If employment is terminated as a result of death or disability, the Company will pay any bonus earned but unpaid in respect to the fiscal year preceding the termination date, as shown above under “Termination due to Death or Disability.” |
(2) | Pursuant to the terms of the equity award agreements governing Mr. Papa’s 2016 RSUs, if his employment is terminated by us without cause, or by Mr. Papa for good reason, including within 12 months of a change in control (or during thesix-month period prior to a change in control if such termination was in contemplation of, and directly related to, the change in control), or due to death or disability, Mr. Papa will be entitled to accelerated vesting of unvested RSUs, as shown above under “Termination without Cause or for Good Reason,” “Termination within 12 months of a Change in Control,” and “Termination due to Death or Disability.” |
(3) | Pursuant to the terms of the equity award agreements governing Messrs. Papa and Ms. Ackermann’s 2016 Stock Options, if their employment is terminated by us without cause, by Mr. Papa or Ms. Ackermann for good reason, or due to death or disability, unvested options will vestpro-rata, unless this termination is within 12 months of a change in control (or during thesix-month period prior to a change in control if such termination was in contemplation of, and directly related to, the change in control), in which case all of unvested options will vest. |
(4) | If the employment of Mr. Herendeen or Mr. Humphries is terminated by us without cause, or by Mr. Herendeen or Mr. Humphries for good reason, they will be entitled to receive a cash severance payment equal to one times the sum of annual base salary and annual target incentive (or, if such termination occurs in contemplation of a change in control or within twelve months following a change in control, two times the sum of annual base salary and annual target incentive), and a prorated annual incentive for the year of termination equal to the lesser of the annual incentive based on our actual performance and his annual target incentive, as shown above under “Termination without Cause or for Good Reason.” And “Termination within 12 months of a Change in Control.” For Mr. Herendeen and Mr. Humphries, “good reason” includes (i) a material reduction in duties and responsibilities; (ii) any reduction in base salary or target incentive opportunity which is not comparable to the reductions for other similarly situated executive officers; (iii) any relocation of his primary place of business that results in an increase ofone-way commute by 50 miles or more; and (iv) a material breach by us of a material provision of employment agreement. Upon a termination of Mr. Herendeen’s or Mr. Humphries’ employment due to death or disability, or upon expiration of the employment term followingnon-renewal of employment agreement by either party, they are entitled to receive a prorated annual incentive for the year of termination equal to the lesser of the annual incentive based on our actual performance and annual target incentive, as shown above under “Termination due to Death or Disability.” Mr. Humphries is also entitled to continue health benefits for 12 months at active employee rates, as shown above under “Termination without Cause or for Good Reason” and “Termination within 12 months of a Change in Control.” |
(5) | If the employment of Ms. Ackermann or Mr. Appio is terminated by us without cause, or by Ms. Ackermann or Mr. Appio for good reason, they will be entitled to receive a cash severance payment equal to one times the sum of annual base salary and annual target incentive, a prorated annual incentive for the year of termination equal to the lesser of the annual incentive based on our actual performance and annual target incentive, continued health benefits for 12 months at active employee rates, and, for Ms. Ackermann, outplacement support, as shown above under “Termination without Cause or for Good |
Reason.” For Ms. Ackermann and Mr. Appio, “good reason” includes (i) a material reduction in duties and responsibilities, including a removal from their current position; (ii) any reduction in base salary or target incentive opportunity which is not comparable to the reductions for other similarly situated executive officers; and (iii) a material breach by us of a material provision of their employment agreement. If such termination occurs in contemplation of our change in control or within 12 months following our change in control, Ms. Ackermann and Mr. Appio will be entitled to receive a cash severance payment equal to two times the sum of annual base salary and annual target incentive, a prorated annual target incentive for the year of termination, continued health benefits for 12 months at active employee rates, and, for Ms. Ackermann, outplacement support, as shown above under “Termination within 12 months of a Change in Control.” |