UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE
SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant ☒ Filed by a Party other than the Registrant ☐
Check the appropriate box:
☐ | Preliminary Proxy Statement | |
☐ | Confidential, for Use of the Commission Only (as permitted by Rule14a-6(e)(2)) | |
☒ | Definitive Proxy Statement | |
☐ | Definitive Additional Materials | |
☐ | Soliciting Material |
BIOGEN INC.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
☒ | No fee required. | |||
☐ | Fee computed on table below per Exchange Act Rules14a-6(i)(1) and0-11. | |||
1) | Title of each class of securities to which transaction applies:
| |||
2) | Aggregate number of securities to which transaction applies:
| |||
3) | Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):
| |||
4) | Proposed maximum aggregate value of transaction:
| |||
5) | Total fee paid:
| |||
☐ | Fee paid previously with preliminary materials. | |||
☐ | Check box if any part of the fee is offset as provided by Exchange Act Rule0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. | |||
1) | Amount Previously Paid:
| |||
2) | Form, Schedule or Registration Statement No.:
| |||
3) | Filing Party:
| |||
4) | Date Filed:
|
| NOTICE OF |
|
20192020 Annual Meeting of
Stockholders and Proxy Statement
Wednesday, June 19, 20193, 2020
9:00 a.m. Eastern Time
To be held online at our offices located at 225 Binney Street,
Cambridge, Massachusetts 02142 and
online atwww.virtualshareholdermeeting.com/BIIB2019BIIB2020
Letter from our Chairman
| ||||
April 30, 201920, 2020
To My Fellow Stockholders:
On behalf of the Board of Directors, I want to thank you for your investment in Biogen and for the confidence you putplace in this Board to oversee your interests in our company. For more than 40 years, Biogen has played a key role in advancing the field of biotechnology as we work to solve some of the most challenging and complex diseases. Today, as we collectively face the challenges posed by the globalCOVID-19 pandemic, the importance of developing and assuring access to therapies for patients in need is more evident than ever.
Our view is that neurological diseases are deeply connected and becauseIn response to the pathways of these diseases are interrelated, so are the potential approaches for treating them. While we made progress in a numberCOVID-19 pandemic, which has directly affected many of our corecommunities and emerging growth areas in 2018, we also know it is the naturesome of drug development that many studies fail before one succeeds. In March 2019, togetherour employees, and consistent with our collaboration partner Eisai Co. Ltd., we decided to discontinue the global Phase 3 aducanumab studies ENGAGE and EMERGE based on analysis performed by an independent data monitoring committee that concluded that aducanumab was unlikely to meet the pre-determined efficacy targets. While a decision to discontinue a program is always disappointing, most importantly for patients who need effective treatments, we remain focused on the learnings and priorities that we take away from every clinical study.
Our philosophy of Caring Deeply. Working Fearlessly. Changing Lives.™ informs, we have taken a number of actions to support our employees and their families, our stakeholders and society at large. These actions include implementing policies and practices to safeguard our employees and communities and reduce the spread of the virus, as well as supporting global relief and research efforts to help detect, treat and eradicate the virus. At the same time, we have remained committed to operating our business practices. to serve the needs of our patients and advance our mission of being pioneers in neuroscience.
We workentered 2020 following a remarkable year for Biogen. In 2019 we performed well across all of our core business areas, strengthened our pipeline and continued to haveexecute on our strategy. All while remaining focused on our goal of advancing pioneering science for the patients we serve, our communities, our employees and you, our fellow stockholders. We believe we are well positioned to continue developing transformational therapies for neurological diseases, an impact beyondarea with high disease prevalence and significant unmet need.
When I wrote to you last year, it was shortly after the announcement of the discontinuation of our medicinesglobal Phase 3 studies of aducanumab, the investigational treatment for early Alzheimer’s disease we are developing in collaboration with Eisai Co., Ltd. In the months following the discontinuation of these studies, we followed the science, as we strive to improve patient health outcomes, solve socialalways do, and environmental challenges, cultivate a workplace that enables our employees to thrive, support local communities and inspire future generations of scientists.
2018 marked our 40th anniversary, a remarkable milestone honoring our legacy as oneanalysis of the oldest independent biotechnology companies. Looking back,larger dataset available from these studies showed that sufficient exposure to high dose aducanumab reduced clinical decline across multiple endpoints. We continue to actively engage with the U.S. Food and Drug Administration, as well as regulators in Europe and Japan, to pursue potential regulatory approval for aducanumab. If approved, aducanumab would become the first therapy to reduce clinical decline in Alzheimer’s disease.
The events of this past year serve as an important reminder that the path taken in the pursuit of discovering and developing breakthrough treatments is not always direct and straight forward. It is also a reminder of the importance of our commitment to following the science and doing the right thing for patients.
We also have a great sense of responsibility about our role as corporate citizens and our impact on society both today and in the future. We care deeply about making a difference and are passionate about our commitment to corporate social responsibility and stewardship, including environmental sustainability, diversity and inclusion, STEM education and other key initiatives. We believe doing the right things for patients, employees, the environment and the communities we have always been pioneers, having the courage to take new approaches toserve will help people who suffer from devastating diseases. Thanks tobuild sustainable value for all our fearless mindset and groundbreaking research, thousands of patients today have access to life-changing treatments.stakeholders, including our stockholders.
Our Board takes its role in protecting the interest of our fellow stockholders and overseeing our long-term business strategy very seriously. We believe that good corporate governance and high ethical standards are key to our success. We are accountable to you, our fellow stockholders, and remain committed to investing time with you to increase transparency and better understand your perspectives. During 20182019 independent members of our Board met with several stockholders to discuss a variety of topics, including business strategy, capital allocation, corporate governance, executive compensation, sustainability and our corporate social responsibility initiatives. We look forward to continuing these dialogues in 2020 and beyond.
Last year, we added two new independent directors to our Board. These new directors, along with our existing directors, bring a range of skills and industry experience to our Board as we advance pioneering science for the betterment of humanity and work to build a multi-franchise neuroscience portfolio. Our Board believes ensuringhaving diverse perspectives, including a mix of skills, experience and backgrounds, areis key to representing the interests of stockholders effectively. This year we have nominated three new candidates to stand for election as directors at our 2019 annual meeting of stockholders.
We are proud of all of our accomplishments in 2018,2019, including:
Generating record revenues of $13.5$14.4 billion for the year, demonstrating resilience in our multiple sclerosis (MS) business, continuing one of the most impressive launches in the history of the biopharmaceutical industry withcontinued worldwide growth for SPINRAZA, the first approved treatment for spinal muscular atrophy, and continuing to make significant progress in ouran expanded biosimilars business, including the October 2018business.
The launch of IMRALDI,VUMERITY in the U.S., an adalimumab biosimilar referencing HUMIRA, in Europe.important new oral treatment option for MS.
The addition of sixseven clinical programs to our pipeline.
The positive Phase 2 data for BIIB059 (anti-BDCA2) in lupus.
The approximately€1.8 billion of healthcare savings in Europe that we estimate was contributed by our three anti-tumor necrosis factor biosimilars.
Being awarded, along with Ionis Pharmaceuticals, Inc. and our collaborators, the 2018Healy Center International Prix Galien as Best Biotechnology ProductPrize for SPINRAZA,Innovation in ALS, which recognized our seventh Prix Galiencontributions to the discovery and development of tofersen (BIIB067), our antisense oligonucleotide candidate for SPINRAZA, following country recognitions in the U.S., Germany, Italy, Belgium-Luxembourg, the Netherlands and the U.K.potential treatment of amyotrophic lateral sclerosis with a confirmed superdioxide dismutate 1 mutation.
Our perfect score of 100% on the Human Rights Campaign’s Corporate Equality Index (a national benchmarking tool on corporate policies and practices pertinent to LGBTQ employees) for the fifthsixth consecutive year.
Our continued commitment to operational carbon neutrality highlighted through the useyear and our perfect score of 100% renewable electricity globally.on the Disability Equality Index for the third consecutive year.
Being named the Biotechnology Industry Leadernumber one biotechnology company on the Dow Jones Sustainability World Index for the fourth time and being recognized as a corporate sustainability leader with Gold Class and Industry Mover Sustainability AwardsAward from RobecoSAM.
Our use of green chemistry processes and techniques to reduce our waste and energy consumption.
The dedication and commitment of the over 3,2003,000 employees who volunteered from 28over 30 countries during our annual Care Deeply Day.
The engagement of 50,000+more than 54,000 students inhands-on learning to inspire their passion for science since the inception of Biogen’s Community Labs.
On behalf of the Board, I am pleased to invite you to attend our 20192020 annual meeting of stockholders, which will be held at our offices located at 225 Binney Street, Cambridge, Massachusetts 02142 on Wednesday, June 19, 2019,3, 2020, beginning at 9:00 a.m. Eastern Time. For those who cannot attendDue to the public health impact of theCOVID-19 pandemic and to support the health and well-being of our employees and stockholders, this year’s annual meeting will be held in person, we are offering a virtual stockholder meeting in whichformat only. You may attend the meeting virtually via the Internet atwww.virtualshareholdermeeting.com/BIIB2020, where you canwill be able to view the meeting, submit questions and vote online atwww.virtualshareholdermeeting.com/BIIB2019.and submit questions. You will need the16-digit control number included with these proxy materials to attend the annual meeting virtually via the Internet.Stockholders who attend We plan to evaluate the format of future annual meeting virtually via the Internet will have the opportunity to participate fully in the meeting on an equal basis with those who attend in person.meetings following this public health crisis.
The following notice of our annual meeting of stockholders contains details of the business to be conducted at the meeting. Only stockholders of record at the close of business on April 22, 2019,6, 2020, will be entitled to notice of, and to vote at, the annual meeting.
OnIt is an honor to serve as your Chairman and, on behalf of the Board of Directors, I thank you for your continued support and investment in Biogen.
Very truly yours,
STELIOS PAPADOPOULOS, Ph.D.
Chairman of the Board
On behalf of the Board of Directors of Biogen Inc.
Notice of
| ||||
Date: | Wednesday, June |
Time: | 9:00 a.m. Eastern Time |
Place: |
225 Binney Street
Cambridge, Massachusetts 02142
Record Date: | April |
Items of Business: | 1. | To elect the |
2. | To ratify the selection of PricewaterhouseCoopers LLP as our independent registered public accounting firm for the fiscal year ending December 31, |
3. | To hold an advisory vote on executive compensation. |
4. | To transact such other business as may be properly brought before the annual meeting and any adjournments or postponements. |
Virtual Meeting: | To participate in the annual meeting virtually via the Internet, please visitwww.virtualshareholdermeeting.com/ |
You will not be able to attend the annual meeting |
Voting: | Your vote is extremely important regardless of the number of shares you own. Whether or not you expect to attend the annual meeting online, we urge you to vote as promptly as possible by telephone or Internet or by signing, dating and returning a printed proxy card or voting instruction form, as applicable. If you attend the annual meeting online, you may vote your shares during the annual meeting virtually via the Internet even if you previously voted your proxy. Please vote as soon as possible to ensure that your shares will be represented and counted at the annual meeting. |
Important Notice Regarding the Availability of Proxy Materials for Annual Meeting of Stockholders
To Be Held on June 19, 2019:3, 2020:
The Notice of 20192020 Annual Meeting of Stockholders, Proxy Statement and 20182019 Annual Report on Form10-K
are available at the following website:www.proxyvote.com.
By Order of Our Board of Directors,
SUSAN H. ALEXANDER,
Secretary
225 Binney Street
Cambridge, Massachusetts 02142
April 30, 201920, 2020
This Notice and Proxy Statement are first being sent to stockholders on or about April 30, 2019.20, 2020.
Our 20182019 Annual Report on Form10-K is being sent with this Notice and Proxy Statement.
|
Proxy Statement Summary | Proxy Statement Summary | iii | Proxy Statement Summary | iii | ||||||||||||
1
| General Information About the Meeting | 1 | General Information About the Meeting | 1 | ||||||||||||
| ||||||||||||||||
2
| Corporate Governance at Biogen | 7 | Corporate Governance at Biogen | 7 | ||||||||||||
7 | 7 | |||||||||||||||
8 | 8 | |||||||||||||||
9 | 9 | |||||||||||||||
Director Qualifications, Standards and Diversity
| 9 | Director Qualifications, Standards and Diversity
| 9 | |||||||||||||
3
| Board of Directors | 11 | Board of Directors | 11 | ||||||||||||
20 | 18 | |||||||||||||||
21 | 19 | |||||||||||||||
21 | 19 | |||||||||||||||
21 | 20 | |||||||||||||||
22 | 21 | |||||||||||||||
22 | 21 | |||||||||||||||
23 | 22 | |||||||||||||||
24 | 23 | |||||||||||||||
24 | 23 | |||||||||||||||
| 25 |
| 24 | |||||||||||||
4
| Audit Committee Matters | Proposal 2 – Ratification of the Selection of Our Independent Registered Public Accounting Firm | 27 | Audit Committee Matters | Proposal 2 – Ratification of the Selection of Our Independent Registered Public Accounting Firm | 26 | ||||||||||
28 | 27 | |||||||||||||||
29 | 28 | |||||||||||||||
29 | 28 | |||||||||||||||
-i- |
Proxy Statement Table of Contents(continued) |
5
| Executive Compensation Matters | 30 | Executive Compensation Matters | 29 | ||||||||||||
31 | 30 | |||||||||||||||
31 | 30 | |||||||||||||||
37 | 34 | |||||||||||||||
38 | 35 | |||||||||||||||
38 | 36 | |||||||||||||||
39 | 37 | |||||||||||||||
39 | 37 | |||||||||||||||
40 | 37 | |||||||||||||||
42 | 39 | |||||||||||||||
42 | 39 | |||||||||||||||
46 | 44 | |||||||||||||||
49 | 47 | |||||||||||||||
50 | 47 | |||||||||||||||
50 | 48 | |||||||||||||||
50 | 48 | |||||||||||||||
50 | 48 | |||||||||||||||
51 | 48 | |||||||||||||||
51 | 49 | |||||||||||||||
51 | 49 | |||||||||||||||
52 | 50 | |||||||||||||||
54 | 52 | |||||||||||||||
55 | 53 | |||||||||||||||
56 | 54 | |||||||||||||||
57 | 55 | |||||||||||||||
58 | 56 | |||||||||||||||
|
| 61
|
|
|
| 59
|
| |||||||||
6 | Additional Information | 62 | Additional Information | 60 | ||||||||||||
63 | 62 | |||||||||||||||
64 | 63 | |||||||||||||||
65 | 64 | |||||||||||||||
66 | 64 | |||||||||||||||
66 | 64 | |||||||||||||||
66 | 64 | |||||||||||||||
66 | 64 | |||||||||||||||
66 | Manner and Cost of Proxy Solicitation
|
| 64
|
| ||||||||||||
Manner and Cost of Proxy Solicitation
|
| 66
|
| |||||||||||||
Appendix A — GAAP toNon-GAAP Reconciliation | Appendix A — GAAP toNon-GAAP Reconciliation | A-1 | Appendix A — GAAP toNon-GAAP Reconciliation | A-1 |
-ii- |
|
This summary highlights important information you will find in this Proxy Statement. As it is only a summary, please review the complete Proxy Statement before you vote.
Annual Meeting Information
| ||||
DATE: | Wednesday, June | |
TIME: | 9:00 a.m. Eastern Time | |
LOCATION: |
| |
RECORD DATE:
| April
|
Voting Matters and Vote Recommendation
| ||||
Voting Matter | Board Recommendation | Page Number for more detail | ||
Item 1—Election of Directors | FOR each nominee | 11 | ||
Item 2—Ratification of the Selection of our Independent Registered Public Accounting Firm | FOR | |||
Item 3—Advisory Vote on Executive Compensation | FOR |
How to Vote
| ||||
Vote Right Away Through Advance Voting Methods Vote by Internet Using Your Computer Go to www.proxyvote.com and enter the 16-digit control number provided on your proxy card or voting instruction form. Vote by Telephone Call 800-690-6903 or the number on your proxy card or voting instruction form. You will need the 16-digit control number provided on your proxy card or voting instruction form. Vote by Mail Complete, sign and date the proxy card or voting instruction form and mail it in the accompanying pre-addressed envelope. Vote During Meeting See Part 1 - "General Information About the Meeting" for details on how to vote during the Annual Meeting.
-iii- |
Proxy Statement Summary (continued) |
Highlights of
| ||||
We are focused on discovering, developing and delivering worldwide innovative therapies for people living with serious neurological and neurodegenerative diseases as well as related therapeutic adjacencies. Our core growth areas include multiple sclerosis (MS) and neuroimmunology,neuroimmunology; Alzheimer’s disease (AD) and dementia, movement disorders, including Parkinson’s disease, anddementia; neuromuscular disorders, including spinal muscular atrophy (SMA) and amyotrophic lateral sclerosis (ALS).; movement disorders, including Parkinson’s disease; and ophthalmology. We are also focused on discovering, developing and delivering worldwide innovative therapies in our emerging growth areas of immunology; neurocognitive disorders; acute neurology, neurocognitive disorders, painneurology; and ophthalmology.pain. In addition, we are employing innovative technologies to discover potential treatments for rare and genetic disorders, including new ways of treating diseases through gene therapy in our core and emerging growth areas. We also commercialize biosimilars of advanced biologics. We support our drug discovery and development efforts through the commitment of significant resources to discovery, research and development programs and business development opportunities. For additional information, please see our 20182019 Annual Report on Form10-K.
20182019 Operating Performance Highlights
Full year total revenues of $13.5$14.4 billion, a 10%7% increase versus the prior year.
We continued the successful launch of SPINRAZA, the first approved treatment for SMA. As of December 31, 2018,2019, there were over 6,60010,000 patients on therapy across the post-marketing setting, the Expanded Access Program and clinical trials.studies.
In October 2018 we andWe launched VUMERITY in the U.S., an important new oral treatment option for MS.
We continued to expand our biosimilars business, with over 200,000 patients on our three anti-tumor necrosis factor (TNF) biosimilars in Europe as of December 31, 2019. We estimate that ouranti-TNF biosimilars contributed approximately€1.8 billion of healthcare savings in 2019 across Europe. We also entered into a new agreement with Samsung Bioepis Co., Ltd. (Samsung Bioepis) to commercialize potential ophthalmology biosimilars referencing LUCENTIS and EYLEA across the U.S., Canada, Europe, Japan and Australia.
In October 2019 we and our joint venture with Samsung BioLogicscollaboration partner Eisai Co., Ltd. (Samsung BioLogics)(Eisai) announced that we plan to pursue regulatory approval for aducanumab, the investigational treatment for early AD, in the U.S. The decision to file is based on a new analysis, conducted in consultation with the U.S. Drug and Food Administration (FDA), launched IMRALDI, an adalimumab biosimilar referencing HUMIRA,of a larger dataset from the Phase 3 EMERGE and ENGAGE studies that were discontinued in Europe.March 2019 following a futility analysis.
We completed six business development transactions and increased our ownership percentageacquired Nightstar Therapeutics plc (NST), a clinical-stage gene therapy company focused on adeno-associated virus (AAV) treatments for inherited retinal disorders. As a result of this acquisition, we added twomid- to late-stage clinical assets, as well as preclinical programs, in Samsung Bioepis from approximately 5% to approximately 49.9%.ophthalmology.
|
In December 2018 Alkermes Pharma Ireland Limited,We added seven clinical programs to our pipeline in 2019, including BIIB111 (timrepigene emparvovec) for choroideremia (CHM), BIIB112 (RPGR gene therapy) forX-linked retinitis pigmentosa, BIIB091 (BTK inhibitor) for MS, BIIB094 (ION859) for Parkinson’s disease, BIIB100 (XPO1 inhibitor) for ALS, BIIB093 (glibenclamide IV) for brain contusion and SB11, a subsidiary of Alkermes plc (Alkermes), submitted a New Drug Application (NDA) to the U.S. Food and Drug Administration (FDA) for the review of BIIB098 (diroximel fumarate).biosimilar referencing LUCENTIS.
We were awardednamed the 2018 International Prix Galien as Best Biotechnology Productnumber one biotechnology company on the Dow Jones Sustainability World Index for SPINRAZA. The prestigious honor marks the seventh Prix Galien for SPINRAZA, following country recognitions in the U.S., Germany, Italy, Belgium-Luxembourg, the Netherlands and the U.K.fourth time.
Throughout 20182019 we repurchased approximately 14.823.6 million shares of our common stock at a total cost of approximately $4.4$5.9 billion.
-iv- |
Proxy Statement Summary (continued)
Proxy Statement Summary (continued) |
Our Values
| ||||
Biogen Elements
Much like the periodic table of elements documents the building blocks of the universe around us, theBiogen Elements give shape to our company’s culture and are embedded into all our people processes, including performance management, goal setting and development programs and activities. The Biogen Elements drive the behaviors, actions and decisions required to achieve our strategy and promote a unified approach to our individual jobs – strengthening our mission, informing our leadership, expanding our impact and fueling our growth.
96 Cf CUSTOMER FOCUSED 13 In INCLUSIVE 14 P PIONEERING 71 Ag AGILE 02 A ACCOUNTABLE 11 E ETHICAL
As we remain focused on discovering, developing and delivering worldwide innovative therapies, we remaincustomer focused. We keep patients, payers and physicians front and center in our daily work and collaborate to solve critical scientific and business challenges. In doing so, we foster aninclusivecommunity, both internally and externally. We work in partnership to break down siloes and encourage diverse perspectives and backgrounds at all levels.
Apioneeringspirit permeates our work. We challenge the status quo and experiment to create new possibilities. We are not afraid to take calculated risks and learn from failure. We are resilient andagile, adapting in response to internal changes and external disruptors, and developing solutions quickly to take advantage of emerging opportunities.
As pioneers and leaders, we hold ourselvesaccountable for our work and results. We honor our commitments and we never compromise our integrity. We sustain anethicalenvironment of trust, honesty and transparency while ensuring appropriate confidentiality.
Environmental Sustainability
We are committed to solving environmental challenges. We work to improve our operational impact on the environment and have adopted strong sustainability policies. We aspire to be a catalyst for positive change by addressing environmental impacts resulting from our business, including carbon and water, and by increasing the environmental and social performance of our supply chain.
As part of this commitment, we utilize a science-based approach to reduce our environmental footprint, demonstrated by our Science Based Targets Initiative-approved 2030 absolute greenhouse gas reduction target of 35%. Our practice of using science to inform our targets when possible is part of our broader commitment to context-based sustainability. For example, we achieved our target to assess 100% of our major sites utilizing a context-based water approach by the end of 2019. These sites were determined to be within fair, just and proportional share of the local watersheds’ sustainable water supply. We embrace green chemistry as an opportunity to improve sustainability in our operations, and we work to find new and better ways to minimize waste and maintain zero waste to landfill in our manufacturing facilities.
Our 20182019 accomplishments include:
Named the Biotechnology Industry Leader on the Dow Jones Sustainability World Index.
Recognized as a corporate sustainability leader with Gold Class and Industry Mover Sustainability AwardsAward from RobecoSAM.
Continued commitment to operational carbon neutrality highlighted through the use of 100% renewable electricity globally.globally and financially supported carbon offset projects. In addition, we are working to find solutions that align with the recommendations of climate scientists to move beyond carbon offsets.
Committed to reduce carbon emissions by a targeted amount approved by the Science Based Target Initiative, to align ourselves with the global goal of limiting global temperature riseincrease to under two degrees Celsius.
-v- |
Proxy Statement Summary (continued) |
Earned Carbon Disclosure Project (CDP) scores of A,A-,A- and B in the areas of Supplier Engagement, Climate Change and Water, respectively.
Diversity and Inclusion
We believe that diversity in all forms is a key to our success. Different perspectives make us stronger as a business. Our diversity and inclusion strategy touches every facet of our business, focusing on three key components: expanding workforce diversity, improving health outcomes for underserved global patient populations and developing a sustainable, diverse supplier base.
We are honored to be recognized as a company of choice. In 20182019 Biogen was ranked #51#85 on theForbes list of World’s Best Employers as well as oneand #42 on theForbes list of theAmerica’s Best Employers for Women (at #38).Employers. We scored 100% on the 20182019 Disability Equality Index, which measures our policies and practices related to disability inclusion.inclusion, for the third consecutive year. Additionally, for the fifthsixth consecutive year, we were recognized as a Best Place to Work for LGBTQ Equality by the Human Rights Campaign, scoring 100% on their Corporate Equality Index.
Community Engagement
Our employees are not only passionate about how their work at Biogen may help improve lives, they are also engaged across a broad range of activities to improve our company’s work and role in the community, such as our Care Deeply Day. In 2019 alone, over 3,000 employees from over 30 countries volunteered at different service projects in the communities where we live and work during this annual day of service. Many Biogen employees at our manufacturing sites also participate in Communities of Practice (CoP),employee-led groups engaged in activities around a common interest. One such group is ourIMPACT, a CoP focused on furthering our environmental sustainability initiatives at Biogen. This group tackles issues such as reducing waste in the workplace through reuse programs, improving energy use in laboratories and bringing healthier and more climate-friendly meals into Biogen’s cafeterias.
Our Community Lab, with locations at our headquarters in Cambridge, Massachusetts, which opened in 2002, and in Research Triangle Park, North Carolina, which opened in 2014, is the longest-running,hands-on corporate science lab in the nation, serving as the model for a growing number of similar initiatives in the biotech community. At our Community Labs, local middle and high school students can engage inhands-on biotechnology experiments and interact with scientists and other biotech professionals in astate-of-the-art laboratory classroom. It offers free daylong, interactive science activities, rigorous summer programs and teacher professional development. Since its inception, our Community Labs have engaged more than 54,000 students inhands-on learning to inspire their passion for science and, in 2019, 54% of our summer Community Lab students were from underrepresented and/orlow-income household groups.
In 2019 we opened anon-profit kitchen with Food for Free in our corporate headquarters in Cambridge, Massachusetts to give back to those in our neighborhood. Food for Free, a Cambridgenon-profit whose mission is to fight food insecurity, collects leftover and donated food that otherwise would go to waste and gets it to people in need in 15 communities in our area. As of March 31, 2020, we have produced almost 20,000 meals in the Biogen Family Meals kitchen that have been distributed to over 25 different agencies and schools in the Greater Boston area, including sevenK-12 schools and four community colleges.
The Biogen Foundation
The Biogen Foundation supports access to science education and to essential human services for children and their families in the communities in which we work and live. The Biogen Foundation is deeply committed to sparking a passion for science and discovery, supporting effective science education initiatives and strengthening efforts to make science education and science careers accessible to diverse populations. Most of all, we want young people to know that through science they have the ability to change the world.
The Biogen Foundation’s grant-making programs focus on two core areas: science education and strengthening our communities. As a result, the Biogen Foundation is committed to supporting nonprofit organizations that focus on four areas: providing access tohands-on science education, teacher development in science, college readiness and support and basic social needs (child hunger, poverty and social mobility). In 2019 the Biogen Foundation’s grant program donated $4.6 million to worthy organizations ranging from food banks and community services organizations to science education and teacher development programs.
Proxy Statement Summary (continued) |
The Biogen Foundation also matches Biogen employee gifts to nonprofit organizations, up to $25,000 per employee, per year. In 2019 the matching grant program contributed $1.66 million to worthy organizations ranging from disease organizations and camps for children with serious illnesses to disaster relief efforts.
In March 2020 the Biogen Foundation committed $10 million to support global response efforts and communities around the world impacted by theProxy Statement SummaryCOVID-19 pandemic. The donations are focused on expanding testing options, easing the strain on medical systems and supporting access to necessities like food.
(continued)Our Pricing Principles
As a pioneer in neuroscience, we have the opportunity and responsibility to bring potentially transformative treatments to patients. Our patients remain at the center of everything we do as a company. We recognize that access and the price of our medicines are of concern to our patients, providers, payers and policy makers. We work collaboratively to help ensure that patients are not denied access to life-changing therapies and are guided by the following principles:
Value to Patients: We assess the value our therapies bring to patients, including clinical outcomes, improvements in daily living and quality of life, and the impact on unmet needs. We believe the prices of our medicines reflect their unique advancements in improving patient health.
Present and Future Benefit to Society: In the near term, our benefit to society includes supporting people living with serious neurological and neurodegenerative diseases while also reducing overall healthcare system costs. In the longer-term, we respect the social contract that allows free pricing of innovation followed by swift entry of biosimilars/generics after loss of exclusivity, which makes room for the next wave of innovation.
Fulfilling our Commitment to Innovation: Continued innovation is our growth strategy. We rely on the sale of our medicines to drive our ongoing research and clinical trials for new medicines in areas of high unmet medical need.
Evolution toward Value Based Care: We believe in holistic value frameworks, with benefits to patients, providers and society. We seek value-based agreements and partnerships which maximize the benefit of our therapies.
Affordability & Sustainability: It is the shared responsibility of all healthcare stakeholders to find solutions that ensure patients can afford new innovations. Biogen partners with healthcare systems so patients can access our medicines in a sustainable way. And we remain flexible to enable affordability for patients across economic circumstances.
A copy of our Pricing Principles is posted on our website,www.biogen.com, under the “Guiding Principles” subsection of the “Who We Are” section of the website.
We regularly review our pricing strategy and prioritize patient access to our therapies. We have a value-based contracting program designed to align the price of our therapies to the value our therapies deliver to patients. We also work with regulators, clinical researchers, ethicists, physicians and patient advocacy organizations and communities, among others, to determine how best to address requests for access to our investigational therapies in a manner that is consistent with our patient-focused values and compliant with regulatory standards and protocols. In appropriate situations, patients may have access to investigational therapies through Early Access Programs, single patient access or emergency use based on humanitarian or compassionate grounds.
We believe biosimilar products benefit patients and help reduce the costs of healthcare systems. We estimate that theanti-TNF biosimilars we sell may have provided healthcare savings of approximately€1.8 billion in 2019 in the markets where they are sold.
Corporate Responsibility Report
For more information on our commitment to corporate social responsibility and stewardship, including environmental sustainability, diversity and inclusion, STEM education and other key initiatives, please see our Corporate Responsibility Report, which is posted on our website,www.biogen.com, under the “Corporate Responsibility” section of the website. We believe these efforts reflect the best interests of our patients, our stockholders, various stakeholders and the communities in which we operate and serve.
-vii- |
Proxy Statement Summary (continued) |
Corporate Governance Matters
| ||||||
We are committed to the highest standards of ethics, business integrity and corporate governance, which we believe will ensure that our company is managed for the long-term benefit of our stockholders. Our governance practices are designed to establish and preserve accountability of our Board of Directors and management, provide a structure that allows our Board to set objectives and monitor performance, ensure the efficient use and accountability of resources and enhance stockholder value. Please see Part 2 – “Corporate Governance at Biogen” for more information.
Corporate Governance Highlights
Board and Board Committees | ||||
Number of Independent Director Nominees/Total Number of Director Nominees | ||||
Number of Female Director Nominees/Total Number of Director Nominees | ||||
Number of Director Nominees of International Origin/Total Number of Director Nominees | 3/ | |||
Average Age of Directors Standing for Election (as of April | 63 | |||
All Board Committees Consist of Independent Directors | Yes | |||
Risk Oversight by Full Board and Committees | Yes | |||
Active Board Oversight of Enterprise Risk Management | Yes | |||
Separate Independent Chairman and CEO | Yes | |||
Regular Executive Sessions of Independent Directors | Yes | |||
Annual Anonymous Board and Committee Self-Evaluations | Yes | |||
Annual Independent Director Evaluation of CEO | Yes | |||
Mandatory Retirement Age for Directors (75 years old) | Yes | |||
Director Education and Orientation | Yes | |||
Annual Equity Grant to Directors | Yes | |||
Director Stockholder Engagement Initiative | Yes | |||
Stockholder Rights, Accountability and Other Governance Practices | ||||
Annual Election of All Directors | Yes | |||
Majority Voting for Directors and Resignation Policy | Yes | |||
One-Share,One-Vote Policy | Yes | |||
Proxy Access Bylaw (3% ownership, 3 years, nominees for up to 25% of our Board) | Yes | |||
Annual Advisory Stockholder Vote on Executive Compensation | Yes | |||
Stockholder Ability to Call Special Meetings (25% Threshold) | Yes | |||
Stockholder Ability to Act by Written Consent | Yes | |||
Anti-Overboarding Policy Limiting the Number of Other Public Company Boards on which our Directors May Serve (four forNon-Employee Directors and one for the CEO) | Yes | |||
Stock Ownership Guidelines for Directors and Executives | Yes | |||
Prohibition from Hedging and Pledging Securities or Otherwise Engaging in Derivative Transactions | Yes | |||
Compensation | Yes | |||
Comprehensive Code of Business Conduct and Corporate Governance | Yes | |||
Related Person Transaction Policy and Conflicts of Interest and Outside Activities Policy with Oversight by the Corporate Governance Committee | Yes | |||
Active Board Engagement in Succession Planning of Executive Officers | Yes | |||
Absence of a Stockholder Rights Plan (referred to as “Poison Pill”) | Yes | |||
Strong Commitment to Environmental and Sustainability Matters | Yes | |||
Board Oversight and Expanded Disclosure on Website Related to Corporate Political Contributions and Expenditures | Yes |
Director Stockholder Engagement Initiative
We value the views of our stockholders and other stakeholders, and we solicit input throughout the year. During 20182019 independent members of our Board of Directors met with several stockholders to discuss a variety of issues, including business strategy, capital allocation, corporate governance, executive compensation, sustainability and our corporate social responsibility initiatives.
Proxy Statement Summary (continued) |
Our Director Nominees
| ||||
Proposal 1 — Election of Directors
You are being asked to vote on the election of the following 1412 nominees for director. All directors are elected annually by the affirmative vote of a majority of votes cast. Detailed information about each director’s background, skill sets and areas of expertise can be found beginning on page 11.
Committee Memberships* | Other Public Boards | Committee Memberships* | Other Public Boards
| |||||||||||||||||||||||||||
Name, Occupation and Experience | Age* | Independent | AC | C&MDC | CGC | FC | RC | STC | Age* | Independent | AC | C&MDC | CGC | |||||||||||||||||
John R. Chiminski* Chair of the Board, President and Chief Executive Officer, Catalent, Inc. | 55 | Yes | 1 | |||||||||||||||||||||||||||
Alexander J. Denner, Ph.D. Founding Partner and Chief Investment Officer, Sarissa Capital Management LP | 49 | Yes |
|
| 1 | 50 | Yes | — | ||||||||||||||||||||||
Caroline D. Dorsa Retired Executive Vice President and Chief Financial Officer, Public Service Enterprise Group Incorporated | 59 | Yes |
|
| 3 | 60 | Yes | 3 | ||||||||||||||||||||||
William A. Hawkins* Senior Advisor, EW Healthcare Partners | 65 | Yes | 1 | |||||||||||||||||||||||||||
William A. Hawkins Senior Advisor, EW Healthcare Partners | 66 | Yes | 1 | |||||||||||||||||||||||||||
Nancy L. Leaming Retired Chief Executive Officer and President, Tufts Health Plan | 71 | Yes |
|
| — | 72 | Yes | — | ||||||||||||||||||||||
Jesus B. Mantas* Managing Partner and General Manager, IBM Global Services | 50 | Yes | — | |||||||||||||||||||||||||||
Jesus B. Mantas Senior Managing Partner for Global Strategy, Platforms and Innovation, IBM Global Business Services | 51 | Yes | — | |||||||||||||||||||||||||||
Richard C. Mulligan, Ph.D. Mallinckrodt Professor of Genetics, Emeritus, Harvard Medical School and Executive Vice Chairman, Sana Biotechnology | 64 | Yes |
|
| — | 65 | Yes | — | ||||||||||||||||||||||
Robert W. Pangia Retired Chief Executive Officer, Ivy Sports Medicine, LLC | 67 | Yes |
|
| — | 68 | Yes | — | ||||||||||||||||||||||
Stelios Papadopoulos, Ph.D. Chairman, Biogen Inc., Chairman, Exelixis, Inc. and Chairman, Regulus Therapeutics Inc. | 70 | Yes |
|
|
| 2 | 71 | Yes | 2 | |||||||||||||||||||||
Brian S. Posner Private Investor and Founder and Managing Partner, Point Rider Group LLC | 57 | Yes |
|
|
| 2 | 58 | Yes | 2 | |||||||||||||||||||||
Eric K. Rowinsky, M.D. President and Executive Chairman, RGenix, Inc. | 62 | Yes |
|
|
| 3 | 63 | Yes | 3 | |||||||||||||||||||||
The Honorable Lynn Schenk, J.D. Attorney, Former Chief of Staff to the Governor of California and Former U.S. Congresswoman | 74 | Yes |
|
| 1 | |||||||||||||||||||||||||
Stephen A. Sherwin, M.D. Clinical Professor of Medicine, University of California, San Francisco and Advisor to Life Sciences Companies | 70 | Yes |
|
|
| 3 | 71 | Yes | 3 | |||||||||||||||||||||
Michel Vounatsos Chief Executive Officer, Biogen Inc. | 57 | No | — | 58 | No | 1 |
* Age and Committee memberships are as of April 22, 2019. Messrs. Chiminski, Hawkins and Mantas are each new director nominees standing for election to our Board of Directors at the Annual Meeting.6, 2020.
AC: Audit Committee | ||||
C&MDC: Compensation and Management Development Committee |
Chair: | Member: | Financial Expert: |
Proxy Statement Summary (continued) |
Our Auditors
| ||||
Proposal 2 – Ratification of Independent Registered Public Accounting Firm
You are being asked to vote to ratify the selection of PricewaterhouseCoopers LLP as our independent registered public accounting firm for the year ending December 31, 2019.2020. Detailed information about this proposal can be found beginning on page 27.26.
Executive Compensation Matters
| ||||
Proposal 3 – Advisory Vote on Executive Compensation
Our Board of Directors recommends that stockholders vote to approve, on an advisory basis, the compensation paid to the Company’s named executive officers (NEOs) as described in this Proxy Statement (the“say-on-pay” vote). Detailed information about the compensation paid and awarded to our NEOs can be found beginning on page 30.29.
Our executive compensation programs embody apay-for-performance philosophy that supports our business strategy and aligns executive interests with those of our stockholders. Highlights of our executive compensation programs for 20182019 and our executive compensation best practices follow.
Pay-for-Performance | ||
Short- and long-term incentive compensation rewards financial, strategic and operational performance and the accomplishment ofpre-established goals that are set to support our annual and/or long-range plans.
| ||
Approximately 91% of the target compensation for Michel Vounatsos, our CEO, was performance-based andat-risk in
| ||
Approximately
| ||
Other Executive Compensation Best Practices | ||
We provide competitive total pay opportunities designed to attract, retain and motivate our executives, after consideration of many factors, including comparative data from a carefully selected peer
| ||
An independent compensation consultant assists the Compensation and Management Development Committee in setting executive andnon-employee director compensation.
| ||
| ||
Payments under our annual bonus plan are performance-based and capped.
| ||
Long-term incentive awards are generally performance-based and subject to multi-year vesting
| ||
| ||
We maintain robust stock ownership guidelines for executive officers and directors.
| ||
Compensation may be recouped/clawed back under our equity and annual bonus plans.
| ||
A double-trigger is required for accelerated equity vesting upon change in control.
| ||
In June 2009 we adopted a policy to eliminate excise tax gross ups for newly-hired
| ||
We do not offer additional special perquisites to our executive officers that are not offered to our broad employee base or senior management populations.
|
Proxy Statement Summary (continued) |
Note about Forward-Looking Statements
| ||||
This Proxy Statement contains forward-looking statements, including statements relating to: our strategy and plans; potential of our commercial business and pipeline programs; capital allocation and investment strategy; clinical development programs, clinical trials and data readouts and presentations; regulatory filings and the timing thereof; the potential benefits, safety, and efficacy of our products and investigational therapies; the anticipated benefits and potential of investments, collaborations and business development activities.activities; and the impact related to the effect ofCOVID-19 or other public health epidemics on our sales and operations, including employees, manufacturing and clinical trials. These forward-looking statements may be accompanied by such words as “aim,” “anticipate,” “believe,” “could,” “estimate,” “expect,” “forecast,” “goal,” “intend,” “may,” “plan,” “potential,” “possible,” “will,” “would” and other words and terms of similar meaning. You should not place undue reliance on these statements or the scientific data presented.
These statements involve risks and uncertainties that could cause actual results to differ materially from those reflected in such statements, including the risks and uncertainties that are described in the Risk Factors section of our most recent annual or quarterly report and in other reports we have filed with the U.S. Securities and Exchange Commission (SEC). These statements are based on our current beliefs and expectations and speak only as of the date of this Proxy Statement. We do not undertake any obligation to publicly update any forward-looking statements, whether as a result of new information, future developments or otherwise, except as required by law.
Note regarding Trademarks
| ||||
AVONEX®, PLEGRIDY®, SPINRAZA®, TECFIDERA® and ZINBRYTAVUMERITY® are registered trademarks of Biogen. BENEPALI™, FLIXABI™ and IMRALDI™ is a trademarkare trademarks of Biogen. HUMIRALUCENTIS®, EYLEA® and other trademarks referenced in this Proxy Statement are the property of their respective owners.
1 |
|
Biogen Inc.
225 Binney Street
Cambridge, Massachusetts 02142
The Board of Directors of Biogen Inc. is soliciting your proxy to vote at our 20192020 annual meeting of stockholders (Annual Meeting) to be held at 9:00 a.m. Eastern Time on Wednesday, June 19, 2019,3, 2020, for the purposes summarized in the accompanying Notice of 20192020 Annual Meeting of Stockholders. Our 20182019 Annual Report on Form10-K is also available with this Proxy Statement.
References in this Proxy Statement to “Biogen” or the “Company,” “we,” “us” and “our” refer to Biogen Inc.
What is the purpose of the Annual Meeting? |
At the Annual Meeting, stockholders will vote upon the matters that are summarized in the formal meeting notice. This Proxy Statement contains important information for you to consider when deciding how to vote on the matters before the Annual Meeting.
| |
Can I attend the Annual Meeting? |
We will be hosting the Annual Meeting Any stockholder can listen to and participate in You will not be able to attend the Annual Meeting
| |
What do I need in order to be able to participate in the Annual Meeting virtually via the Internet? |
You will need the16-digit control number included on your Notice of Internet Availability of Proxy Materials or your proxy card or voting instruction form in order to be able to vote your shares or submit questions via the Internet during the Annual Meeting. If you do not have your16-digit control number,
| |
Who can vote? |
Each share of our common stock that you own as of the close of business on the record date of April
|
1 |
1 |
General Information About the Meeting (continued) |
What am I voting on at the Annual Meeting? |
Stockholders will be asked to vote on the following items at the Annual Meeting:
• The election to our Board of Directors of the
• The ratification of the selection of PricewaterhouseCoopers LLP (PwC) as our independent registered public accounting firm for the fiscal year ending December 31,
• The advisory vote on executive compensation (Proposal 3); and
• The transaction of such other business as may be properly brought before the meeting and any adjournments or postponements.
| |
What is the recommendation of our Board of Directors on each of the matters scheduled to be voted on at the Annual Meeting? |
Our Board of Directors recommends that you vote:
• “FOR” each of the director nominees (Proposal 1);
• “FOR” the ratification of the selection of PwC as our independent registered public accounting firm for the fiscal year ending December 31,
• On an advisory basis, “FOR” the approval of our executive compensation (Proposal 3).
| |
How do proxies work? |
Our Board of Directors is asking for your proxy authorizing the individuals named as proxies to vote your shares at the Annual Meeting in the manner you direct. You may abstain from voting on any matter. If you submit your proxy without specifying your voting instructions, we will vote your shares on the matters scheduled to be voted on at the Annual Meeting in accordance with our Board of Directors’ recommendations described above. As to any other matter that may properly come before the Annual Meeting or any adjournment or postponement, the individuals named as proxies will vote your shares at the Annual Meeting in accordance with their best judgment.
Shares represented by valid proxies received in time for the Annual Meeting and not revoked before the Annual Meeting will be voted at the Annual Meeting. You can revoke your proxy and change your vote in the manner described below (under the heading “Can I revoke or change my vote after I submit my proxy?”). If your shares are held through a bank, broker or other nominee, please follow the instructions that you were provided by your bank, broker or other nominee.
|
2 |
1 |
General Information About the Meeting (continued) |
How do I vote and what are the voting deadlines? |
Stockholders of Record. If you are a stockholder of record, there are several ways for you to vote your shares.
By Internet. You may vote atwww.proxyvote.com, 24 hours a day, seven days a week. You will need the16-digit control number included on your Notice of Internet Availability of Proxy Materials or, if you received a printed copy of the proxy materials, on your proxy card. Votes submitted throughwww.proxyvote.com must be received by 11:59 p.m. Eastern Time on June
By Telephone. You may vote using a touch-tone telephone by calling1-800-690-6903, 24 hours a day, seven days a week. You will need the16-digit control number included on your Notice of Internet Availability of Proxy Materials or, if you received a printed copy of the proxy materials, on your proxy card. Votes submitted by telephone must be received by 11:59 p.m. Eastern Time on June
By Mail.If you received printed proxy materials, you may submit your vote by completing, signing and dating each proxy card received and returning it in the prepaid envelope. Sign your name exactly as it appears on the proxy card. Proxy cards submitted by mail must be received no later than June
During the Annual Meeting. You may vote during the Annual Meeting by
If you vote via the Internet or by telephone before the Annual Meeting, your electronic vote authorizes the named proxies in the same manner as if you signed, dated and returned your proxy card.If you vote via the Internet or by telephone before the Annual Meeting, do not return your proxy card.
| |
Beneficial Owners.If your shares are held in a brokerage account in your broker’s name, then you are the beneficial owner of shares held in “street name.”If you are a beneficial owner of your shares, you should have received a Notice of Internet Availability of Proxy Materials or voting instructions from the bank, broker or other nominee holding your shares. You should follow the instructions in the Notice of Internet Availability of Proxy Materials or voting instructions provided by your bank, broker or other nominee in order to instruct your bank, broker or other nominee on how to vote your shares. The availability of telephone and Internet voting will depend on the voting process of the bank, broker or other nominee.Shares held beneficially may not be voted during the Annual Meeting; instead a beneficial holder must instruct their bank, broker or other nominee in advance of the Annual Meeting. |
3 |
1 |
General Information About the Meeting (continued) |
Can I revoke or change my vote after I submit my proxy? |
Stockholders of Record. If you are a stockholder of record, you may revoke or change your vote at any time before the final vote at the Annual Meeting by:
• signing and returning a new proxy card with a later date, to be received no later than June
• submitting a later-dated vote by telephone or via the Internet — only your latest telephone or Internet proxy received by 11:59 p.m. Eastern Time on June
•
• delivering a written revocation to our Secretary at Biogen Inc., 225 Binney Street, Cambridge, Massachusetts 02142, to be received no later than June
Only your latest vote, in whatever form, will be counted.
Beneficial Owners. If you are a beneficial owner of your shares, you must contact the bank, broker or other nominee holding your shares and follow their instructions for revoking or changing your vote.
| |
Will my shares be counted if I do not vote? |
Stockholders of Record. If you are the stockholder of record and you do not vote before the Annual Meeting by proxy card, telephone or via the Internet, or during the Annual Meeting
Beneficial Owners. If you are the beneficial owner of shares, your bank, broker or other nominee, as the record holder of the shares, is required to vote those shares in accordance with your instructions. If no voting instructions are provided, these record holders can vote your shares only on discretionary, or routine, matters and not onnon-discretionary, ornon-routine, matters. Uninstructed shares whose votes cannot be counted onnon-routine matters result in what are commonly referred to as “brokernon-votes.”
The proposal to ratify the selection of our independent registered public accounting firm is a routine matter and the other proposals arenon-routine matters. If you do not give your broker voting instructions, your broker (1) will be entitled to vote your shares on the proposal to ratify the selection of our independent registered public accounting firm and (2) will not be entitled to vote your shares on the other proposals. We urge you to provide instructions to your bank, broker or other nominee so that your votes may be counted on all of these important matters.
You should vote your shares by telephone or by Internet according to the instructions provided by your bank, broker or other nominee or by signing, dating and returning a printed voting instruction form to your bank, broker or other nominee to ensure that your shares are voted on your behalf.
| |
How many shares must be present to hold the Annual Meeting? |
A majority of our issued and outstanding shares of common stock as of the Record Date must be present at the Annual Meeting to hold the Annual Meeting and conduct business. This is called a quorum. Shares voted in the manner described above (under the heading “How do I vote and what are the voting deadlines?”) will be counted as present at the Annual Meeting. Shares that are present and entitled to vote on one or more of the matters to be voted upon are counted as present for establishing a quorum. If a quorum is not present, we expect that the Annual Meeting will be adjourned until we obtain a quorum.
|
4 |
1 |
General Information About the Meeting (continued) |
What vote is required to approve each proposal and how are votes counted? |
• Proposal 1: Election of Directors: Directors are elected by a majority vote of the votes cast in uncontested elections — that is, a director will be elected if more votes are cast for that director’s election than against that director — and by a plurality of votes cast in contested elections — that is, the directors receiving the highest number of “For” votes will be elected. Abstentions and brokernon-votes, if any, are not counted for purposes of electing directors and will have no effect on the results of this vote.
• Proposal 2: Ratification of the Selection of our Independent Registered Public Accounting Firm: The affirmative vote of a majority of shares present in person or represented by proxy and having voting power at the Annual Meeting is required to ratify the selection of PwC as our independent registered public accounting firm for the fiscal year ending December 31,
• Proposal 3: Advisory Vote on Executive Compensation:Because this proposal asks for anon-binding, advisory vote, there is no “required vote” that would constitute approval. We value the opinions expressed by our stockholders in this advisory vote, and the Compensation and Management Development Committee of our Board of Directors (sometimes referred to in this Proxy Statement as our “C&MD Committee”), which is responsible for overseeing and administering our executive compensation programs, will consider the outcome of this vote when designing our compensation programs and making future compensation decisions for our named executive officers. Abstentions and brokernon-votes, if any, will not have any effect on the results of those deliberations.
| |
Are there other matters to be voted on at the Annual Meeting? |
We do not know of any other matters that may come before the Annual Meeting. If any other matters are properly presented at the Annual Meeting, your proxy authorizes the individuals named as proxies to vote, or otherwise act, in accordance with their best judgment.
| |
Why did I receive aone-page notice in the mail regarding the Internet availability of proxy materials instead of a full set of proxy materials? |
We have elected to provide access to our proxy materials on the Internet, consistent with the rules of the SEC. Accordingly, in most instances we are mailing a Notice of Internet Availability of Proxy Materials to our stockholders. You can access our proxy materials on the website referred to in the Notice of Internet Availability of Proxy Materials or you may request printed versions of our proxy materials for the Annual Meeting. In addition, you may request to receive proxy materials in printed form by mail or electronically by email on an ongoing basis.
|
5 |
1 |
General Information About the Meeting (continued) |
What does it mean if I receive more than one notice regarding the Internet availability of proxy materials or more than one set of printed proxy materials? |
If you hold your shares in more than one account, you may receive a separate Notice of Internet Availability of Proxy Materials or a separate set of printed proxy materials, including a separate proxy card or voting instruction form, for each account. To ensure that all of your shares are voted, please vote by telephone or by Internet or sign, date and return a proxy card or voting instruction form for each account.
| |
Where do I find the voting results of the Annual Meeting? |
We will publish the voting results of the Annual Meeting in a Current Report on Form8-K filed with the SEC within four business days after the end of the Annual Meeting. You may request a copy of this Form8-K by contacting Investor Relations, Biogen Inc., 225 Binney Street, Cambridge, Massachusetts 02142, (781)464-2442. You will also be able to find a copy of this Form8-K on the Internet through the SEC’s electronic data system, called EDGAR, atwww.sec.govor under the “Financials” subsection of the “Investors” section of our website,www.biogen.com.
| |
Who should I call if I have any questions? |
If you have any questions or require any assistance with voting your shares, please contact the bank, broker or other nominee holding your shares, or our Investor Relations department at(781)464-2442.
|
6 |
2 |
|
Corporate Governance Practices
We are committed to the highest standards of ethics, business integrity and corporate governance, which we believe will ensure that our company is managed for the long-term benefit of our stockholders. Our governance practices are designed to establish and preserve accountability of our Board of Directors and management, provide a structure that allows our Board to set objectives and monitor performance, ensure the efficient use and accountability of resources and enhance stockholder value. A description of our corporate governance highlights is set forth in the “Proxy Statement Summary” above.
We believe that our Board of Directors’ primary functions are to appoint, evaluate and hold accountable management, oversee key strategic, operational and compliance risks and ensure optimal capital allocation such that long-term stockholder value is maximized.
We believe part of effective corporate governance includes active engagement with our stockholders. We value the views of our stockholders and other stakeholders, and we communicate with them regularly and solicit input on a number of topics such as business strategy, capital allocation, corporate governance, executive compensation, sustainability and our corporate social responsibility initiatives.
• | Director Stockholder Engagement Initiative. Our Corporate Governance Committee leads our Board of Directors’ efforts on director stockholder engagement and directs discussions with stockholders to the appropriate Board and committee members. During |
• | Corporate Responsibility. Our passion for developing medicines that make a meaningful difference in patients’ lives is reflected in our commitment to |
|
Board of Directors
All of our directors, and nominees for director, other than Michel Vounatsos, our Chief Executive Officer, satisfy the independence requirements of The Nasdaq Stock Market (Nasdaq).
Committees
Leadership Structure
We separate the roles of Chairman of the Board of Directors and Chief Executive Officer. Stelios Papadopoulos, an independent director, is the Chairman of our Board. Among other responsibilities, our Chairman:
7 |
2 |
Corporate Governance at Biogen (continued) |
We believe that having an independent Chairman promotes a greater role for the independent directors in the oversight of the Company, including oversight of material risks facing the Company, encourages active participation by the independent directors in the work of our Board of Directors, enhances our Board of Directors’ role of representing stockholders’ interests and improves our Board of Directors’ ability to supervise and evaluate our Chief Executive Officer and other executive officers. Further, separation of the Chairman and CEOChief Executive Officer roles allows our CEOChief Executive Officer to focus on operating and managing Biogen while leveraging our independent Chairman’s experience and perspectives.
Our Corporate Governance Committee is responsible for identifying individuals qualified to become members of our Board of Directors and reviewing candidates recommended by stockholders. Stockholders may recommend nominees for consideration by our Corporate Governance Committee by submitting the names and supporting information to our Secretary, Biogen Inc., 225 Binney Street, Cambridge, Massachusetts 02142. Any such recommendation should include at a minimum the name(s) and address(es) of the stockholder(s) making the recommendation and appropriate biographical information for the proposed nominee(s). Candidates who are recommended by stockholders will be considered in the same manner as candidates from other sources. For all potential candidates, our Corporate Governance Committee will consider all factors it deems relevant, including at a minimum those listed below in the subsection entitled “Director Qualifications, Standards and Diversity.” Director nominations are recommended by our Corporate Governance Committee to our Board of Directors and must be approved by a majority of independent directors.
In addition, our Fourth Amended and Restated Bylaws (Bylaws) contain provisions that address the process by which a stockholder may nominate an individual to stand for election to our Board of Directors at an annual meeting of stockholders.
• | Stockholder Nominations Not for Inclusion in Company’s Proxy Statement. Our Bylaws permit stockholders to nominate directors for consideration at an annual |
|
information required by our Bylaws and give timely notice of the nomination to our Secretary in accordance with our Bylaws, and each nominee must meet the qualifications required by our Bylaws. To nominate a director for consideration at next year’s annual meeting, stockholders must provide the notice required by our Bylaws no later than March |
• | Stockholder Nominations Under Proxy Access Bylaw. In addition, our Bylaws provide that under certain circumstances, a stockholder or group of stockholders may include director candidates that they have nominated in our annual meeting proxy statement. These proxy access provisions of our Bylaws provide, among other things, that a stockholder or group of up to 20 stockholders seeking to include director candidates in our annual meeting proxy statement must own 3% or more of our outstanding common stock continuously for at least the previous 3 years. |
The number of stockholder-nominated candidates appearing in any annual meeting proxy statement can equal up to 25% of the number of directors then serving on our Board of Directors. If 25% is not a whole number, the maximum number of stockholder-nominated candidates would be the closest whole number below 25%, subject to a minimum of one. A nominee will be counted in determining whether the 25% maximum has been reached if the nominee was included in the proxy materials as a Board-nominated candidate, if we have received notice that such nominee has been nominated by a stockholder pursuant to our Bylaws, the nominee was submitted under the proxy access procedures and later withdrawn or the nominee was nominated in any of our three preceding annual meetings and is being recommended by our Board of Directors for reelection.
The nominating stockholder or group of stockholders also must deliver the information required by our Bylaws, and each nominee must meet the qualifications required by our Bylaws.
8 |
2 |
Corporate Governance at Biogen (continued) |
and each nominee must meet the qualifications required by our Bylaws.
Requests to include stockholder-nominated candidates in our proxy materials for next year’s annual meeting must be received by our Secretary no earlier than December 2, 2019,November 21, 2020, and no later than January 1,December 21, 2020. However, if the 20202021 annual meeting of stockholders is called for more than 30 days earlier or later than the anniversary of the Annual Meeting, requests to include stockholder-nominated candidates in our proxy materials for the 20202021 annual meeting of stockholders must be received not later than (1) the 10th day after public announcement of the date of the 20202021 annual meeting of stockholders or (2) the 60th day prior to the date we file our proxy statement in connection with the 20202021 annual meeting of stockholders.
Annual Elections and Majority Voting
Our directors are elected annually to serve until the next annual meeting of stockholders and until their successors are duly elected and qualified. Our directors must be elected by a majority of votes cast in uncontested elections (meaning any election for which the number of directors nominated does not exceed the number of directors to be elected at such meeting), and by a plurality of votes cast in contested elections (meaning any election for which the number of directors nominated exceeds the number of directors to be elected at such meeting, regardless of whether such nominees were proposed by the Company or by stockholders). In addition, following their appointment or election by stockholders to our Board of Directors, directors must submit an irrevocable resignation that will be effective upon (1) the failure to receive the required number of votes for reelection at the next annual meeting of stockholders at which they face reelection and (2) acceptance of such resignation by our Board of Directors. If an incumbent director fails to receive the number of votes required for reelection, our Board of Directors (excluding the director in question) will, within 90 days after certification of the election results, decide whether to accept the director’s resignation taking into account such factors as it deems relevant. Such factors may include the stated reasons why stockholders voted against such director’s reelection, the qualifications of the director and whether accepting the resignation would cause us to fail to meet any applicable listing standards or would violate state law. Our Board of Directors will promptly disclose its decision in a filing with the SEC.
Director Qualifications, Standards and Diversity
• | Board Composition. Our Board of Directors is committed to ensuring that it is well-equipped to oversee the |
Company’s business and effectively represent the interests of stockholders. Our Board of Directors regularly reviews its composition to ensure it includes directors with the experience, skills and diversity necessary for effective, independent Board oversight. Towards this end, our Board of Directors initiated a process to add new directors with capabilities that would be beneficial to the Company and stockholders. As a result of this process, last year we |
• | General Qualifications and Standards. Our Corporate Governance Principles provide that directors should possess the highest personal and professional ethics and integrity, understand and be aligned with our core values and be committed to representing the long-term interests of our stockholders. Our directors must also be inquisitive and objective and have practical wisdom and mature judgment. |
• | Diversity. In accordance with our Corporate Governance Principles, we endeavor to have a Board of Directors that collectively represents diversity of thought and diverse experience at strategic and policy-making levels in business, government, education, healthcare, science and technology and the international arena, and collectively has knowledge and expertise in the functional areas of accounting and finance, risk management and compliance, strategic and business planning, corporate governance, human resources, marketing and commercial and research and development. Consistent with our Corporate Governance Principles, in selecting nominees to our Board of Directors, our Corporate Governance Committee considers the diversity of skills and experience that a potential nominee possesses and the extent to which such diversity would enhance the perspective, background, knowledge and experience of our Board of Directors as a whole. Our Board of Directors considers personal diversity, including gender, national origin and ethnic and racial diversity, as an additional benefit to our Board of Directors as a whole. |
• | Director Term and Resignation. Our Board of Directors does not believe that arbitrary term limits on directors’ service are appropriate, nor does it believe that directors should expect to bere-nominated. Our Corporate Governance Principles provide that directors should offer their resignation in the event of any significant change in personal circumstances, including a significant change in principal job responsibilities or any circumstances that |
9 |
2 |
Corporate Governance at Biogen (continued) |
|
• | Board and Committee Evaluations. Regular evaluations are an important determinant for continued tenure, and, to that end, our Board of Directors and its committees perform a self-evaluation on an annual basis that is intended to determine whether our Board, its committees and each member of our Board of Directors are |
|
• | Director Orientation and Continuing Education. We provide orientation for new directors and provide directors with materials or briefing sessions on subjects that we believe will assist them in discharging their duties. We also make director education program information available to directors on a regular basis and encourage directors to attend director education programs and reimburse the costs of attending such programs. |
10 |
3 |
|
Proposal 1 – Election of Directors
|
We are asking our stockholders to elect the 1412 director nominees listed below to serve aone-year term extending until the 20202021 annual meeting of stockholders and until their successors are duly elected and qualified, unless they resign or are removed:
Jesus B. Mantas | ||||
Richard C. Mulligan | ||||
Robert W. Pangia | Stephen A. Sherwin | |||
Stelios Papadopoulos | Michel Vounatsos | |||
Our Board of Directors has nominated these 1412 individuals based on its carefully considered judgment that the experience, qualifications, attributes and skills of our nominees qualify them to serve on our Board of Directors. As described in detail below, our nominees have considerable professional and business expertise. We know of no reason why any nominee would be unable to accept nomination or election.
If any nominee is unable to serve on our Board of Directors, the shares represented by your proxy will be voted for the election of such other person as may be nominated by our Board of Directors. In addition, in compliance with all applicable state and federal laws and regulations, we will file an amended proxy statement and proxy card that, as applicable, (1) identifies the alternate nominee(s), (2) discloses that such nominees have consented to being named in the revised proxy statement and to serve if elected and (3) includes the disclosure required by Item 7 of Schedule 14A with respect to such nominees. All nominees have consented to be named in this Proxy Statement and to serve if elected.
Director Skills and Qualifications
The Corporate Governance Committee believes that the 1412 director nominees collectively have the skills, experience, diversity and character to execute the Board’s responsibilities. The following is a summary of those qualifications:
Attributes, Experience and Skills
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||||||||||||||
General Management Experience
| ✓
|
|
| ✓
|
|
| ✓
|
|
| ✓
|
|
| ✓
|
|
| ✓
|
|
| ✓
|
|
| ✓
|
|
| ✓
|
|
| ✓
|
|
| ✓
|
|
| ✓
|
|
| |||||||||||||||||||||
Financial Experience |
| ✓
|
|
| ✓
|
|
| ✓
|
|
| ✓
|
|
| ✓
|
|
| ✓
|
|
| ✓
|
|
| ✓
|
|
| ✓
|
|
| ✓
|
|
| ||||||||||||||||||||||||||
Audit Committee Financial Expertise
| ✓ | ✓
|
|
| ✓
|
|
| ✓
|
|
| ✓
|
|
| ✓
|
|
| ✓
|
|
| | |||||||||||||||||||||||||||||||||||||
Mergers & Acquisitions Experience
| ✓
|
|
| ✓
|
|
| ✓
|
|
| ✓
|
|
| ✓
|
|
| ✓
|
|
| ✓
|
|
| ✓
|
|
| ✓
|
|
| ✓
|
|
| ✓
|
|
| ||||||||||||||||||||||||
Scientific Research Experience
| ✓
|
|
| ✓
|
|
| ✓
|
|
| ✓
|
|
| ✓
|
|
| ||||||||||||||||||||||||||||||||||||||||||
Drug Development Experience
| ✓
|
|
| ✓
|
|
| ✓
|
|
| ✓
|
|
| ✓
|
|
| ✓
|
|
| |||||||||||||||||||||||||||||||||||||||
Commercial Experience |
| ✓
|
|
| ✓
|
|
| ✓
|
|
| ✓
|
|
| ✓
|
|
| ✓
|
|
| ✓
|
|
| ✓
|
|
| ||||||||||||||||||||||||||||||||
International Business Experience
| ✓
|
|
| ✓
|
|
| ✓
|
|
| ✓
|
|
| |||||||||||||||||||||||||||||||||||||||||||||
Public Policy Experience
| ✓
|
|
| ✓
|
|
| ✓
|
|
| ✓
|
|
| ✓
|
|
| ||||||||||||||||||||||||||||||||||||||||||
Operations Experience |
| ✓
|
|
| ✓
|
|
| ✓
|
|
| ✓
|
|
| ✓
|
|
| ✓
|
|
| ✓
|
|
| ✓
|
|
| ✓
|
|
| ✓
|
|
| ||||||||||||||||||||||||||
Other Public Company Board Service |
| ✓
|
|
| ✓
|
|
| ✓
|
|
| ✓
|
|
| ✓
|
|
| ✓
|
|
| ✓
|
|
| ✓
|
|
| ✓
|
|
| ✓
|
|
| ✓ |
11 |
3 |
|
Our Nominees for Director
(Information is as of April 22, 2019)6, 2020)
| ||||
|
Experience
Mr. Chiminski has served as the Chief Executive Officer of Catalent, Inc., a global provider of advanced delivery technologies and development solutions for drugs, biologics, and consumer and animal health products, since March 2009, as a director since February 2009 and as Chair of the Board since October 2016. Prior to that, Mr. Chiminski spent more than 20 years at GE Healthcare in engineering, operations and senior leadership roles. From 2007 to 2009 Mr. Chiminski was President and Chief Executive Officer of GE Medical Diagnostics, a global business with sales of $1.9 billion. From 2005 to 2007 he served as Vice President and General Manager of GE Healthcare’s Global Magnetic Resonance Business and from 2001 to 2005 as Vice President and General Manager of Global Healthcare Services. Earlier at GE, he held a series of cross-functional leadership positions in both manufacturing and engineering, including a GE Medical Systems assignment in France. Mr. Chiminski holds a B.S. from Michigan State University and an M.S. from Purdue University, both in electrical engineering, as well as a Master’s Degree in Management from the Kellogg School of Management at Northwestern University.
Qualifications
Mr. Chiminski has significant experience in advising and managing companies in various segments of the healthcare industry and overseeing the day-to-day business operations of a healthcare company. He also possesses broad healthcare industry knowledge.
Other Current Public Company Boards
– Catalent, Inc. (Chair)
Former Public Company Directorships Held in the Past Five Years
– None
Alexander J. Denner, Ph.D.
| ||||
|
Director Since: 2009 Age: Biogen Board – Corporate Governance (Chair)
|
Experience
Dr. Denner is a founding partner and Chief Investment Officer of Sarissa Capital Management LP, a registered investment advisor, which he founded in 2012. Sarissa Capital focuses on improving the strategies of companies to enhance stockholder value. From 2006 to 2011 Dr. Denner served as a Senior Managing Director at Icahn Capital L.P. Prior to that, he served as a portfolio manager at Viking Global Investors, a private investment fund, and Morgan Stanley Investment Management, a global asset management firm. Dr. Denner also serves as a director of The Medicines Company, a biopharmaceutical company, where he is Chairman of the Board.
Qualifications
Dr. Denner has significant experience overseeing the operations and research and development of healthcare companies and evaluating corporate governance matters. He also has extensive experience as an investor, particularly with respect to healthcare companies, and possesses broad healthcare industry knowledge.
Other Current Public Company Boards
– The Medicines Company (Chair)None
Former Public Company Directorships Held in the Past Five Years
– Ariad Pharmaceuticals, Inc. (Chair)
– Bioverativ Inc.
– The Medicines Company (Chair)
– Vivus, Inc.
|
Caroline D. Dorsa
| ||
|
Director Since: 2010 Age: Biogen Board – Audit (Chair)
|
Experience
Ms. Dorsa served as the Executive Vice President and Chief Financial Officer of Public Service Enterprise Group Incorporated, a diversified energy company, from April 2009 until her retirement in October 2015, and served on its Board of Directors from February 2003 to April 2009. From February 2008 to April 2009 she served as Senior Vice President, Global Human Health, Strategy and Integration at Merck & Co., Inc., a pharmaceutical company. From November 2007 to January 2008 Ms. Dorsa served as Senior Vice President and Chief Financial Officer of Gilead Sciences, Inc., a life sciences company. From February 2007 to November 2007 she served as Senior Vice President and Chief Financial Officer of Avaya, Inc., a telecommunications company. From 1987 to January 2007 Ms. Dorsa held various financial and operational positions at Merck & Co., Inc., including Vice President and Treasurer, Executive Director of U.S. Customer Marketing and Executive Director of U.S. Pricing and Strategic Planning. Ms. Dorsa also serves as a director of Illumina, Inc., a life sciences company, and Intellia Therapeutics, Inc., a biotechnology company, and as a Trustee of the Goldman Sachs ETF Trust, the Goldman Sachs MLP and Energy Renaissance Fund and the Goldman Sachs MLP Income Opportunities Fund, investment funds within the Goldman Sachs Asset Management fund complex.
Qualifications
Ms. Dorsa has significant financial and accounting expertise and a deep knowledge of the pharmaceutical industry. Her strategic perspective on the industry is particularly valuable to our Board of Directors as it oversees our growth initiatives and reviews both internal development projects and external opportunities.
Other Current Public Company Boards
– Illumina, Inc.
– Intellia Therapeutics, Inc.
– Goldman Sachs Investment Funds
Former Public Company Directorships Held in the Past Five Years
– None
12 |
3 | Board of Directors (continued) |
William A. Hawkins
| ||||
|
Director Since: Age: Biogen Board – |
Experience
Mr. Hawkins serves as a Senior Advisor to EW Healthcare Partners, a life sciences private equity firm. Mr. Hawkins is the former Chairman and CEO of Medtronic, Inc., a global leader in medical technology. He was at Medtronic from 2002 until 2011. After retiring from Medtronic he served as President and Chief Executive Officer of Immucor, a private equity backed global leader in transfusion and transplant medicine from October 2011 to July 2015. From 1998 to 2001 Mr. Hawkins served as President and Chief Executive Officer of Novoste Corporation, an interventional cardiology company. Prior to that, Mr. Hawkins served in a variety of senior roles at American Home Products, a consumer, pharma and medical device company, Johnson & Johnson, a healthcare company, Guidant Corporation, a medical products company, and Eli Lilly and Company, a global pharmaceutical company. Mr. Hawkins also serves as a director of Avanos Medical, Inc., a medical technology company, as Chairman of Bioventus, LLC, andas Chairman of 4 Tech and as a director of Trice Medical, Inc., AsKBio;AskBio, Virtue labs,Labs, Cerius Keratin Biosciences and Baebies, Inc., all of which are medical products companies. Mr. Hawkins is Vice Chair of the Duke University Board of Trustees and is Chair of the Duke University Health System. Mr. Hawkins was elected as a member of the AIMBE College of Fellows and the National Academy of Engineering. He has a dual degree in Electrical and Biomedical Engineering from Duke University and a M.B.A. from the University of Virginia’ s Darden School of Business.
Qualifications
Mr. Hawkins has significant leadership experience as a chief executive officer, significant knowledge of, and experience in, the healthcare industry and significant international experience. He also has extensive governance and public company board experience.
Other Current Public Company Boards
– Avanos Medical, Inc.
Former Public Company Directorships Held in the Past Five Years
– Thoratec Corporation
|
Nancy L. Leaming
| ||||
|
Director Since: 2008 Age: Biogen Board – Audit
|
Experience
Ms. Leaming has been an independent consultant since 2005. From 2003 to 2005 she served as the Chief Executive Officer and President of Tufts Health Plan, a provider of healthcare insurance. From 1986 to 2003 Ms. Leaming served in several executive positions at Tufts Health Plan, including President, Chief Operating Officer and Chief Financial Officer.
Qualifications
Ms. Leaming has well-developed leadership skills and financial acumen and provides insights into the healthcare reimbursement and payor market, where she served for 20 years in senior operational, financial and managerial roles.
Other Current Public Company Boards
– None
Former Public Company Directorships Held in the Past Five Years
– Edgewater Technology, Inc.
– Hologic, Inc.
| ||||
|
Experience
Mr. Mantas serves as Managing Partner and General Manager responsible for worldwide strategy, offerings, digital platforms and innovation for IBM Global Services, a $17 billion unit of IBM. From January 2011 to October 2014 Mr. Mantas served as a Managing Partner and General Manager, IBM Global Business Services in Latin America after he held multiple leadership positions as Vice President in North America. Prior to that, Mr. Mantas was a Partner at PricewaterhouseCoopers Consulting and an officer in the Air Force of Spain. He also serves in the World Economic Forum Global Artificial Intelligence Council.
Qualifications
Mr. Mantas has significant global operating and business leadership experience, including Europe, North America and Latin America. He has demonstrated leadership translating strategy into execution, applying technology to improve business performance and brings over 25 years of experience in information technology, data science and artificial intelligence.
Other Current Public Company Boards
– None
Former Public Company Directorships Held in the Past Five Years
– None
3 |
Board of Directors (continued) |
Jesus B. Mantas | ||||
Director Since: 2019 Age: 51 Biogen Board Committee: – Corporate Governance |
Experience
Mr. Mantas serves as the Senior Managing Partner for Global Strategy, Platforms and Innovation of IBM Global Business Services, a $17 billion unit of IBM. This includes strategy and transformation, global offerings, digital technology platforms, acquisitions, ventures and IBM Institute of Business Value, the thought leadership arm of IBM. From 2002 through 2016 Mr. Mantas led IBM’s Business Consulting unit, IBM Global Process Services unit and the Business Services unit in Latin America after he held multiple leadership positions as Vice President in North America. Prior to IBM, Mr. Mantas was a Partner in PricewaterhouseCoopers Consulting and an officer in the Air Force of Spain before that. Mr. Mantas has been a member of IBM Chairman’s Acceleration Team for 10 years, and he chairs the IBM Hispanic diversity council. He has been recognized as one of the Top 25 Global Consulting leaders byConsulting magazine, and awarded multiple times for his contributions to Hispanic diversity in technology.
Qualifications
Mr. Mantas has significant global operating and business leadership experience, having led units globally and lived in Europe, North America and Latin America. He has demonstrated leadership translating strategy into operational execution and applying technology to transform business performance, and is recognized in the industry for his lateral thinking and informed judgement. He brings over 28 years of experience in information technology, data science and artificial intelligence.
Other Current Public Company Boards
– None
Former Public Company Directorships Held in the Past Five Years
– None
Richard C. Mulligan, Ph.D.
| ||||
|
Director Since: 2009 Age: Biogen Board
– Compensation and Management Development |
Experience
Dr. Mulligan is currently the Mallinckrodt Professor of Genetics, Emeritus, at Harvard Medical School, after serving as the Mallinckrodt Professor of Genetics and Director of the Harvard Gene Therapy Initiative from 1996 to 2013. He also currently serves as Executive Vice Chairman of the Board of Sana Biotechnology, a private biotechnology company. From March 2017 to October 2018 Dr. Mulligan served as a Portfolio Manager at Icahn Capital LP. Prior to that, Dr. Mulligan was a founding partner of Sarissa Capital Management LP, a registered investment advisor, from 2013 to 2016. Prior to Harvard, Dr. Mulligan was a Professor of Molecular Biology at the Massachusetts Institute of Technology, a member of the Whitehead Institute for Biomedical Research and the Chief Scientific Officer of Somatix Therapy Corporation, a drug discovery and development company that he founded. Dr. Mulligan was named a MacArthur Foundation Fellow in 1981.
Qualifications
Dr. Mulligan has scientific expertise in the areas of molecular biology, genetics, gene therapy and biotechnology, as well as extensive experience within the healthcare industry, including overseeing the operations and research and development of healthcare companies.
Other Current Public Company Boards
– None
Former Public Company Directorships Held in the Past Five Years
– None
14 |
3 | Board of Directors (continued) |
Robert W. Pangia
| ||||
|
Director Since: 1997 Age: Biogen Board – Compensation and Management Development (Chair)
|
Experience
Mr. Pangia served as a director of the Company from 1997 to 2003 during the period the Company was operated as IDEC Pharmaceuticals, and has served as a director since 2003 following IDEC’s merger with Biogen, Inc. Mr. Pangia has been a partner in Ivy Capital Partners, LLC, the general partner of Ivy Healthcare Capital, L.P., a private equity fund specializing in healthcare investments, since 2003. From 2011 to 2016 he was also the Chief Executive Officer of Ivy Sports Medicine, LLC, a medical device company. From October 2007 to October 2009 he also served as the Chief Executive Officer of Highlands Acquisition Corp., a special purpose acquisition company. From 1996 to 2003 Mr. Pangia was self-employed as an investment banker. From 1987 to 1996 he held various senior management positions at PaineWebber, a financial services company, including Executive Vice President and Director of Investment Banking for PaineWebber Incorporated of New York, a member of the Board of Directors of PaineWebber, Inc., Chairman of PaineWebber Properties, Inc. and a member of several of PaineWebber’s executive and operating committees.
Qualifications
Mr. Pangia has significant financial acumen and breadth of expertise within the healthcare industry.
Other Current Public Company Boards
– None
Former Public Company Directorships Held in the Past Five Years
–None
|
Stelios Papadopoulos, Ph.D.
| ||||
|
Director Since: 2008 Independent Chairman Since: 2014 Age: Biogen Board –
|
Experience
Dr. Papadopoulos serves as the Chairman of Exelixis, Inc., a drug discovery and development company that heco-founded in 1994, and Regulus Therapeutics Inc., a biopharmaceutical company. Previously, he was an investment banker with Cowen & Co., LLC, a financial services company, focusing on the biotechnology and pharmaceutical sectors, from 2000 until his retirement as Vice Chairman in August 2006. Prior to joining Cowen & Co., Dr. Papadopoulos served for 13 years as an investment banker at PaineWebber, Inc., a financial services company, where he was most recently Chairman of PaineWebber Development Corp., a PaineWebber subsidiary focusing on biotechnology.
Qualifications
Having founded multiple life sciences companies and worked as an investment banker focused on the life sciences industry, Dr. Papadopoulos brings to our Board of Directors a first-hand understanding of the demands of establishing, growing and running life sciences businesses.
Other Current Public Company Boards
– Exelixis, Inc. (Chair)
– Regulus Therapeutics Inc. (Chair)
Former Public Company Directorships Held in the Past Five Years
– BG Medicine, Inc.
15 |
3 | Board of Directors (continued) |
Brian S. Posner
| ||||
|
Director Since: 2008 Age: Biogen Board –
|
Experience
Mr. Posner has been a private investor since March 2008 and is the founder and Managing Partner of Point Rider Group LLC, a boutique consulting and advisory services firm that provides customized solutions to senior executives and boards of financial,bio-pharmaceutical and other services-related companies, as well as strategic investors that make direct and control investments in those sectors. From 2005 to March 2008 Mr. Posner served as the President, Chief Executive Officer andco-Chief Investment Officer of ClearBridge Advisors LLC, an asset management company and a wholly-owned subsidiary of Legg Mason. Prior to that, Mr. Posnerco-founded Hygrove Partners LLC, a private investment fund, in 2000 and served as its Managing Partner for five years. He served as a portfolio manager and an analyst at Fidelity Investments, a financial services company, from 1987 to 1996 and, from 1997 to 1999, at Warburg Pincus Asset Management/Credit Suisse Asset Management where he also served asco-Chief Investment Officer and Director of Research. Mr. Posner also serves as a directorthe Chairman of AQR Funds, an investment fund, and as a member of the board of Arch Capital Group Ltd., a specialty insurance and reinsurance provider.
Qualifications
With more than 30 years of experience as a senior corporate executive, leading investment professional and director on public company andnot-for-profit boards, Mr. Posner brings significant management and financial expertise, a professional investor’s perspective and extensive experience in areas of corporate governance to our Board of Directors.
Other Current Public Company Boards
– AQR Funds (Chair)
– Arch Capital Group Ltd.
Former Public Company Directorships Held in the Past Five Years
– BG Medicine, Inc.
– Bioverativ Inc. (Chair)
|
Eric K. Rowinsky, M.D.
| ||||
|
Director Since: 2010 Age: Biogen Board
– Corporate Governance
|
Experience
Dr. Rowinsky has served as President of RGenix, Inc., a privately-held life sciences company, since November 2015 and as its Executive Chairman since December 2016. Since June 2016 Dr. Rowinskyhe has also been the Chief Scientific Officer of Clearpath Development Co., which rapidly advances development stage therapeutic assets topre-defined humanproof-of-concept milestones. From January 2012 to November 2015 Dr. Rowinskyhe was the Head of Research and Development and Chief Medical Officer of Stemline Therapeutics, Inc., a biotechnology company focusing on the discovery and development of therapeutics targeting cancer stem cells. Dr. Rowinsky is an Adjunct Professor of Medicine at New York Universitycells, and has been an independent consultant since January 2010. Prior to that, he was the Chief Executive Officer of Primrose Therapeutics, Inc., astart-up biotechnology company focusing on the development of therapeutics for polycystic kidney disease, from August 2010 until its acquisition in September 2011. From 2005 to December 2009 he served as the Chief Medical Officer and Executive Vice President of ImClone Systems Incorporated, a life sciences company. From 1996 to 2004 Dr. Rowinskyhe held several positions at the Cancer Therapy & Research Center’s Institute for Drug Development, including Director of the Institute and Director of Clinical Research. During that time, he held the SBC Endowed Chair for Early Drug Development and Clinical Professor of Medicine at the University of Texas Health Science Center
at San Antonio. From 1988 to 1996 Dr. Rowinskyhe was an Associate Professor of Oncology at the Johns Hopkins School of Medicine and on the staff of the Johns Hopkins Hospital. Dr. RowinskyHe also serves as a director of Biophytis, a biotechnology company, and Fortress Biotech Inc., Kitov Pharma Ltd. and Verastem, Inc., bothwhich are biopharmaceutical companies.
Qualifications
Dr. Rowinsky has extensive research and drug development experience and broad scientific and medical knowledge.
Other Current Public Company Boards
– BiophytisFortress Biotech Inc.
– Fortress Biotech Inc.Kitov Pharma Ltd.
– Verastem, Inc.
Former Public Company Directorships Held in the Past Five Years
– BIND Therapeutics, Inc.
– Biophytis S.A.
–Navidea Biopharmaceuticals, Inc.
3 |
Board of Directors (continued) |
| ||||
|
Experience
Ms. Schenk served as a director of the Company from 1995 to 2003 during the period the Company was operated as IDEC Pharmaceuticals, and has served as a director since 2003 following IDEC’s merger with Biogen, Inc. Ms. Schenk is an attorney in private practice with extensive public policy and business experience. She is also a member of the Board of Overseers of the Scripps Research Institute, a director of the California High Speed Rail Authority Board and a trustee of the University of California San Diego Foundation. From 1999 to 2003 she served as Chief of Staff to the Governor of California, during which time she led the effort to create the Institutes for Science and Innovation at the University of California. She headed the State’s Executive Branch risk management team post 9/11 and during the California energy crisis. From 1993 to 1995 Ms. Schenk was a Member of the United States House of Representatives, representing San Diego, California and served on the House Energy & Commerce Committee with a special emphasis on biotechnology. From 1980 to 1983 she was the California Secretary of Business, Transportation and Housing, during which time she formed the California Commission on Industrial Innovation. Ms. Schenk is a member of the Board of Directors of Sempra Energy, an energy services and development company, and serves on the Corporate Governance Committee, the Executive Committee and is the Chair of the Environmental Health, Safety and Technology Committee. Ms. Schenk is also a
National Association of Corporate Directors (NACD) Board Leadership Fellow, a member of the NACD Advisory Council on Risk Oversight and a Fellow of the UCLA Luskin School of Public Affairs. In 2017 Ms. Schenk was selected as an NACD Directorship 100 honoree.
Qualifications
Ms. Schenk’s strong public policy, government, legal and private sector experience provides vital insights to our Board of Directors about significant issues affecting the highly regulated life sciences industry. She brings public sector operations and management expertise to our Board of Directors. She has demonstrated her commitment to boardroom excellence by completing the NACD’s comprehensive program of study for corporate directors. She completed the NACD Cyber Risk Certificate course and earned the CERT Certificate in Cybersecurity Oversight, issued by the CERT Division of the Software Engineering Institute at Carnegie Mellon University. She supplements her skill sets through ongoing engagement with the director community and access to leading practices.
Other Current Public Company Boards
– Sempra Energy
Former Public Company Directorships Held in the Past Five Years
– None
|
��Stephen A. Sherwin, M.D.
| ||||
|
Director Since: 2010 Age: Biogen Board –
|
Experience
Dr. Sherwin currently divides his time between advisory work in the life sciences industry and patient care and teaching in his specialty of medical oncology. He is a Clinical Professor of Medicine at the University of California, San Francisco and a volunteer Attending Physician in Hematology-Oncology at the Zuckerberg San Francisco General Hospital. Dr. Sherwin also currently serves as a venture partner with Third Rock Ventures, LLC. He previously served as the Chairman of Ceregene, Inc., a life sciences company that heco-founded, from 2001 until its acquisition by Sangamo Biosciences, Inc. in 2013. He was also aco-founder and chairman of Abgenix, Inc., an antibody company which was acquired by Amgen Inc. in 2006. From 1990 to October 2009 he served as the Chief Executive Officer of Cell Genesys, Inc., a life sciences company, and was its Chairman from 1994 until the company’s merger with BioSante Pharmaceuticals, Inc. (now ANI Pharmaceuticals, Inc.) in October 2009. Prior to that, he held various positions at Genentech, Inc., a life sciences company, most recently as Vice President, Clinical Research. In addition, Dr. Sherwin previously served on the board of directors of the Biotechnology Industry Organization from 2001 to 2014 and as its chairman from 2009 to 2011. Dr. Sherwin currently serves as a director of Aduro Biotech, Inc., Neon Therapeutics, Inc. and Neurocrine Biosciences, Inc., all of which are life sciences companies.
Qualifications
Dr. Sherwin has extensive knowledge of the life sciences industry and brings more than 30 years of experience in senior leadership positions at large and small publicly traded life sciences companies to our Board of Directors.
Other Current Public Company Boards
– Aduro Biotech, Inc.
– Neon Therapeutics, Inc.
– Neurocrine Biosciences, Inc.
Former Public Company Directorships Held in the Past Five Years
– Rigel Pharmaceuticals, Inc.
– Verastem, Inc.
– Vical, Inc.
Michel Vounatsos
| ||||
|
Director Since: 2017 Age: Biogen Board – None |
Experience
Mr. Vounatsos has served as our Chief Executive Officer and one of our directors since January 2017. Prior to that, from April 2016 until his appointment as our Chief Executive Officer, heto December 2016, Mr. Vounatsos served as our Executive Vice President, Chief Commercial Officer. Prior to joining Biogen, Mr. Vounatsos spent 20 years at Merck & Co., Inc., a pharmaceutical company, where he most recently served as President, Primary Care, Customer Business Line and Merck Customer Centricity. In this role, he led Merck’s global primary care business unit, a role which encompassed Merck’s cardiology-metabolic, general medicine, women’s health and biosimilars groups and developed and instituted a strategic framework for enhancing the company’s relationships with key constituents, including the most significant providers, payers and retailers and the world’s largest governments. Mr. Vounatsos previously held leadership positions across Europe and in China for Merck. Prior to that, Mr. Vounatsos held management positions at Ciba-Geigy, a pharmaceutical company. Mr. Vounatsos currently serves as a director of PerkinElmer, Inc., a global scientific technology and life science research company, on the advisory board of Tsinghua University School of Pharmaceutical Sciences, on the Supervisory Board of Liryc, the Electrophysiology and Heart Modeling Institute at the University of Bordeaux, on the board of directors ofN-Lorem Foundation and as a member of the MIT Presidential CEO Advisory Board. Mr. Vounatsos received his C.S.C.T. certificate in Medicine from the Universite Victor Segalen, Bordeaux II, France, and his M.B.A. from the HEC School of Management in Paris.
Qualifications
Mr. Vounatsos has significant knowledge and experience with respect to the biotechnology, healthcare and pharmaceutical industries, a comprehensive global leadership background resulting from service as an executive in the pharmaceutical industry and studied medicine and business as part of his educational background.
Other Current Public Company Boards
– NonePerkinElmer, Inc.
Former Public Company Directorships Held in the Past Five Years
– None
OUR BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTEFORTHE ELECTION OF EACH
DIRECTOR NOMINEE NAMED ABOVE.
3 |
Board of Directors (continued) |
Our Board of Directors met 1219 times in 2018. Our2019. In 2019 our Board of Directors also hashad six standing committees. committees: the Audit Committee, the C&MD Committee, the Corporate Governance Committee, the Finance Committee, the Risk Committee and the Science and Technology Committee. Effective October 1, 2019, our Board revised its committee structure by eliminating the Finance Committee, the Risk Committee and the Science and Technology Committee and assigning the functions of those committees to our Board and our Audit Committee. Our C&MD Committee and our Corporate Governance Committee operate in the same manner as prior to the committee restructuring.
The principal functions of each committee, the committee composition in 20182019 and number of meetings held in 20182019 are described in the table below. The table below also includes the additional functions of our Audit Committee following the committee restructuring. The Chair of each committee periodically reports to our Board of Directors on committee deliberations and decisions. Each committee’sThe charter of each of our current committees is posted on our website,www.biogen.com, under the “Corporate Governance” subsection of the “Investors” section of the website. Also posted there are our Corporate Governance Principles, which, together with our committee charters, comprise our governance framework.
Committee
| Function
|
| Meetings in
| |||||||
Audit |
Assists our Board of Directors in its oversight of: • the integrity of our financial statements; • our accounting and financial reporting processes; • the independence, qualifications and performance of our independent registered public accounting firm; • our global tax compliance and tax audit processes; • our internal audit and corporate compliance • the adequacy and effectiveness of the Company’s insurance programs.
Our Audit Committee has the sole authority and direct responsibility for the appointment, compensation, retention, evaluation and oversight of the work of our independent registered public accounting firm.
Effective October 1, 2019, assists our Board of Directors with oversight of financial strategy, policies and practices and risk oversight. |
Caroline D. Dorsa† (Chair) William A. Hawkins†# Nancy L. Leaming† Stelios Brian S. Posner†* Stephen A. Sherwin†# |
|
9 |
| |||||
Compensation and Management Development
|
Assists our Board of Directors with oversight of executive compensation and management development, including: • recommending to our Board of Directors the compensation for our Chief Executive Officer and approving the compensation for our other executive officers; • administration of our short- and long-term incentive plans; • reviewing executive and senior management development programs; and • recommending to our Board of Directors the compensation of ournon-employee directors.
|
Robert W. Pangia (Chair) Richard C. Mulligan Brian S. Posner# Eric K. Lynn Schenk |
|
|
| |||||
Corporate Governance |
Assists our Board of Directors in assuring sound corporate governance practices and identifying qualified nominees to our Board of Directors and its committees. | Alexander J. Denner (Chair) Jesus B. Mantas# Stelios Papadopoulos# Brian S. Eric K. Rowinsky |
|
|
| |||||
Finance |
|
Brian S. Posner (Chair) Alexander J. Denner Robert W. Pangia Stelios Papadopoulos Stephen A. Sherwin |
|
|
| |||||
Risk |
For more information on our Board oversight of risks, please see “Board Risk Oversight” below.
|
Lynn Schenk (Chair) Caroline D. Dorsa Nancy L. Leaming Stephen A. Sherwin |
|
|
| |||||
Science and Technology |
|
Richard C. Mulligan (Chair) Stelios Papadopoulos Eric K. Rowinsky Stephen A. Sherwin |
|
3 |
|
† | Determined by our Board of Directors to be an audit committee financial expert. |
# | Effective October 1, 2019, this director is a member of this committee. |
* | Effective October 1, 2019, this director is no longer a member of this committee. |
18 |
3 | Board of Directors (continued) |
• | Attendance at Board and Committee Meetings. No director attended fewer than 75% of the total number of meetings of our Board of Directors and the committees on which he or she served during |
• | Executive Sessions. Under our Corporate Governance Principles, the independent directors of our full Board of Directors are required to meet without management present at least four times each year and may also meet without management present at such other times as determined by our Chairman or if requested by at least two other directors. In |
• | Attendance at Stockholder Meeting. We expect all of our directors and director nominees to attend our annual meetings of stockholders. All of our directors attended our |
|
This section describes our compensation program for ournon-employee directors and shows the compensation paid to or earned by ournon-employee directors during 2018.2019. Mr. Vounatsos, our Chief Executive Officer, receives no compensation for his service on our Board of Directors.
Retainers, Meeting Fees and Expenses
The following table presents the annual retainers and meeting fees for allnon-employee members of our Board of Directors in effect in 2018, which were unchanged from 2017:2019:
Retainers
| Meeting Fees
| |||||||||
Annual Board Retainer | $
| 65,000
|
| Board of Directors Meetings (per meeting day):
| ||||||
Annual Retainers (in addition to Annual Board Retainer):
| In-person attendance
|
$ |
2,500 |
| ||||||
Telephonic attendance
| $ | 1,500 | ||||||||
Independent Chairman of the Board | $ | 75,000 | |
Committee Meetings (per meeting attended by each such committee member in person or telephonically)
| $ | 1,500 | | |||
Audit Committee Chair
| $ | 25,000 |
Attendance at Annual Science and Technology Committee Portfolio Review (per day) | $ | 1,500 | |||||
Compensation and Management
| $ | 20,000 | ||||||||
Corporate Governance Committee Chair
| $ | 15,000 | ||||||||
Finance Committee Chair
| $ | 15,000 | ||||||||
Risk Committee Chair
| $ | 15,000 | ||||||||
Science and Technology Committee Chair
| $ | 15,000 | ||||||||
Audit Committee Member (other than Chair)
| $ | 5,000 |
Ournon-employee directors are also eligible to be paid a fee of $1,000 for each full day of service to the Company other than in connection with meetings of our Board of Directors or one of its committees.
Ournon-employee directors may defer all or part of their cash compensation under our Voluntary Board of Directors Savings Plan, which is similar to our Supplemental Savings Plan described in the narrative preceding the “2018“2019Non-Qualified Deferred Compensation Table” in Part 5 – Executive Compensation Matters of this Proxy Statement, but without any Company matching contributions. If a
non-employee director chooses to defer compensation under our Voluntary Board of Directors Savings Plan, his or her notional account under the plan will periodically be credited with amounts of deemed investment earnings as if the deferred compensation was actually invested in the notional investment(s) selected by the director or in a default investment if the director does not make a selection. These notional investment options include the mutual funds available under our 401(k) plan as well as a fixed rate option which earns a rate of return determined each year by the Company’s retirement committee. For 20182019non-employee
director deferrals notionally invested in the fixed rate option,
19 |
3 | Board of Directors (continued) |
this rate of return was set at 5%. Deferrals notionally invested in the fixed rate option continue to be credited with the rate of return that was in effect during the year of deferral.
Non-employee directors are also reimbursed for actual expenses incurred in attending meetings of our Board of Directors and any of its committees, as well as service to our Board of Directors or any of its committees that is unrelated to such meetings.
Annually we review our compensation program for ournon-employee directors in relation to those of the peer group used for executive compensation purposes (as described below in our Compensation Discussion and Analysis) to assess its competitiveness and appropriateness. Overall, the total compensation levels, including both retainers and equity awards, for the 2019 program and the new 2020 program, discussed below, are competitively positioned within the market range of our peer group. Our C&MD Committee and our Board of Directors believe that a somewhat heavier weighting towards equity awards, as discussed below, than the weighting of equity awards of our peer group companies is appropriate because it further aligns the interests of ournon-employee directors with those of our stockholders.
2020 Changes to Director Compensation
Our C&MD Committee, working with Pearl Meyer & Partners LLC (Pearl Meyer), our C&MD Committee’s independent compensation consultant, reviews the structure and philosophy of ournon-employee director compensation program annually. We utilize the same peer group companies that are used in assessing compensation for our executive officers when reviewing and evaluating the competitiveness ofnon-employee director compensation.
In September 2019 our Board of Directors, upon the recommendation of our C&MD Committee, approved changes to the compensation paid tonon-employee directors, effective January 1, 2020. In order to align the director compensation elements with our peers, our Board eliminated meeting fees as an element ofnon-employee director compensation and increased annual retainers for members of our Board and its committees. Our Board believes that Board service extends beyond meeting attendance and that these changes are appropriate given structural changes to director pay that were observed in the market and the pay levels that were indicated by the market data. Our C&MD Committee believes that the structure of ournon-employee director compensation program, including its mix of cash and equity compensation after giving effect to these changes, is consistent with market practice and better aligns the
long-term financial interests of ournon-employee directors with those of our stockholders.
Effective January 1, 2020, annual cash retainers for ournon-employee directors are as follows:
Retainers
| ||||
Annual Board Retainer | $ | 125,000 | ||
Annual Retainers (in addition to Annual Board Retainer): | ||||
Independent Chairman of the Board | $ | 75,000 | ||
Audit Committee Chair | $ | 30,000 | ||
Compensation and Management Development Committee Chair | $ | 30,000 | ||
Corporate Governance Committee Chair | $ | 30,000 | ||
Audit Committee Member (other than Chair) | $ | 15,000 | ||
Compensation and Management Development Committee Member (other than Chair) | $ | 15,000 | ||
Corporate Governance Committee Member (other than Chair) | $ | 15,000 |
Awards Under OurNon-Employee Directors Equity Plan
Ournon-employee directors receive awards under our 2006Non-Employee Directors Equity Plan (theNon-Employee Directors Equity Plan). TheNon-Employee Directors Equity Plan was initially approved by our stockholders at our 2006 annual meeting of stockholders. In 2015 our stockholders approved an amendment to extend the term of the plan until June 10, 2025.
|
General Provisions of theNon-Employee Directors Equity Plan
Non-employee directors receive an annual award under theNon-Employee Directors Equity Plan effective on the date of each annual meeting of stockholders (or a pro rata award upon election other than at an annual meeting of stockholders). Under theNon-Employee Directors Equity Plan, a maximum of 17,500 shares of our common stock (or 30,000 shares for the independent Chairman of the Board) may be granted to anon-employee director pursuant to such annual awards each calendar year. Annual awards vest on theone-year anniversary of the date of grant or over a longer period determined in the discretion of our Board of Directors.
Awards tonon-employee directors are recommended by our C&MD Committee and approved by our Board of Directors, with the independent Chairman recused from discussion and voting upon his own awards.
20 |
3 | Board of Directors (continued) |
Awards granted under theNon-Employee Directors Equity Plan are subject to accelerated vesting upon termination of a director’s service by reason of death, disability or retirement and upon a change in control (as such terms are defined in theNon-Employee Directors Equity Plan). In addition,non-employee director awards will become fully vested upon an involuntary termination of a director’s service within two years following certain mergers or other corporate transactions, as described in theNon-Employee Directors Equity Plan.
Awards During 20182019
In June 20182019 our C&MD Committee recommended, and our Board of Directors approved, annual awards with a grant date fair value of approximately $270,000 for eachnon-employee director and an additional annual award with a grant date fair value of approximately $175,000 for the independent Chairman. These annual awards were below the limits set forth in theNon-Employee Directors Equity Plan described above and were consistent with the awards made in 2017.2018. The June 20182019 annual awards were made in the form of restricted stock units (RSUs) vesting in full on the first anniversary of the grant date, generally subject to the director’s continued service.
Periodically we review our compensation program for ournon-employee directors in relation to those of the peer
group used for executive compensation purposes (as described below in our Compensation Discussion and Analysis) to assess its competitiveness and appropriateness. While the grant date fair values of the equity awards granted in 2018 were above the median of our peer group, the annual retainer for ournon-employee directors was below the 25th percentile of that same peer group. Overall, the total compensation levels were market competitive. Our C&MD Committee and our Board of Directors believe that a somewhat heavier weighting towards equity awards than the weighting of equity awards of our peer group companies is appropriate because it further aligns the interests of ournon-employee directors with those of our stockholders.
Ournon-employee directors must usepre-established trading plans to sell shares of our common stock from their
personal accounts. Trading plans may only be entered into during an open trading window and when the director is not in possession of materialnon-public information about the Company. We require a waiting period following the establishment of a trading plan before any trades may be executed. Our policy is designed to provide safeguards while allowing ournon-employee directors to have an opportunity to realize the value intended by the Company in granting equity-based awards.
Non-Employee Director Stock Ownership Guidelines
We maintain the following stock ownership guidelines for ournon-employee directors:
Position
| Stock Ownership Requirement(1)
| |
Independent Chairman | Number of shares equal in value to 5x the total annual cash retainer for (i) the independent Chairman position and (ii) othernon-employee Board members
| |
Non-Employee Directors (excluding Chairman) |
Number of shares equal in value to 5x the annual cash retainer fornon-employee Board members |
(1) | Eachnon-employee director has five years from the date of initial election or appointment to meet the stock ownership requirement. All of our |
3 |
Board of Directors (continued) |
20182019 Director Compensation
Name (a) |
Fees Earned or Paid in Cash(1) (b) | Stock Awards(2) (c) |
Change in Pension Value and Nonqualified Deferred Compensation Earnings(3) (d) | All Other Compensation(4) (e) | Total (f) | Fees Earned or Paid in Cash(1) (b) | Stock Awards(2) (c)
| Change in Pension Value and Nonqualified Deferred Compensation Earnings(3) (d)
| All Other Compensation(4) (e)
| Total (f)
| ||||||||||||||||||||||
Alexander J. Denner
|
$
|
139,000
|
|
$
|
269,447
|
|
—
|
$5,000
|
$
|
413,447
|
|
$
|
142,500
|
| $
| 270,143
|
| —
| $10,000
| $
| 422,643
|
| ||||||||||
Caroline D. Dorsa
|
$
|
143,000
|
|
$
|
269,447
|
|
—
|
—
|
$
|
412,447
|
| $
| 146,500
|
| $
| 270,143
|
| —
| —
| $
| 416,643
|
| ||||||||||
William A. Hawkins | $
| 59,893
|
| $
| 270,143
|
| —
| —
| $
| 330,036
|
| |||||||||||||||||||||
Nancy L. Leaming
|
$
|
120,500
|
|
$
|
269,447
|
|
—
|
$10,280
|
$
|
400,227
|
| $
| 125,000
|
| $
| 270,143
|
| —
| $26,190
| $
| 421,333
|
| ||||||||||
Jesus B. Mantas | $
| 63,143
|
| $
| 270,143
|
| —
| —
| $
| 333,286
|
| |||||||||||||||||||||
Richard C. Mulligan
|
$
|
138,500
|
|
$
|
269,447
|
|
—
|
—
|
$
|
407,947
|
| $
| 131,250
|
| $
| 270,143
|
| —
| —
| $
| 401,393
|
| ||||||||||
Robert W. Pangia
|
$
|
140,500
|
|
$
|
269,447
|
|
$72,763
|
—
|
$
|
482,710
|
| $
| 138,500
|
| $
| 270,143
|
| $63,452
| $25,000
| $
| 497,095
|
| ||||||||||
Stelios Papadopoulos
|
$
|
144,500
|
|
$
|
443,976
|
|
—
|
$25,000
|
$
|
613,476
|
| $
| 269,750
|
| $
| 445,560
|
| —
| $10,000
| $
| 725,310
|
| ||||||||||
Brian S. Posner
|
$
|
158,000
|
|
$
|
269,447
|
|
—
|
$25,000
|
$
|
452,447
|
| $
| 149,500
|
| $
| 270,143
|
| —
| $25,000
| $
| 444,643
|
| ||||||||||
Eric K. Rowinsky
|
$
|
138,500
|
|
$
|
269,447
|
|
—
|
—
|
$
|
407,947
|
| $
| 141,000
|
| $
| 270,143
|
| —
| —
| $
| 411,143
|
| ||||||||||
Lynn Schenk
|
$
|
134,000
|
|
$
|
269,447
|
|
—
|
$25,000
|
$
|
428,447
|
| |||||||||||||||||||||
Lynn Schenk(5) | $
| 129,250
|
| $
| 270,143
|
| —
| $25,000
| $
| 424,393
|
| |||||||||||||||||||||
Stephen A. Sherwin |
$ |
124,500 |
|
$ |
269,447 |
|
— |
$25,000 |
$ |
418,947 |
| $
| 116,750
|
| $
| 270,143
|
| —
| $25,000
| $
| 411,893
|
|
Notes to the 20182019 Director Compensation Table
(1) | Includes |
(2) | The amounts in column (c) represent the grant date fair value of RSU awards made in |
(3) | The amounts in column (d) represent earnings under the Voluntary Board of Directors Savings Plan that are in excess of 120% of the average applicable federal long-term rate. The federal long-term rate for |
(4) | The amounts in column (e) represent the amount of matching contributions made in |
(5) | Ms. Schenk is retiring from our Board of Directors, effective as of the Annual Meeting. |
3 |
Board of Directors (continued) |
Director Equity Outstanding at 20182019 FiscalYear-End
The following table summarizes the equity awards that were outstanding as of December 31, 2018,2019, for each of thenon-employee directors serving during 2018.2019.
Option Awards(1)
|
Stock Awards(2)
| Option Awards(1) | Stock Awards(2) | ||||||||||||||||||||
Name
|
Number of
|
Number of Shares or Units of Stock That Have Not Vested
| Number of
| Number of Shares or Units of Stock That Have Not Vested
| |||||||||||||||||||
Alexander J. Denner
|
—
|
880
| —
|
| 1,155
|
| |||||||||||||||||
Caroline D. Dorsa
|
—
|
880
| —
|
| 1,155
|
| |||||||||||||||||
William A. Hawkins
| —
|
| 1,155
|
| |||||||||||||||||||
Nancy L. Leaming
|
—
|
880
| —
|
| 1,155
|
| |||||||||||||||||
Jesus B. Mantas
| —
|
| 1,155
|
| |||||||||||||||||||
Richard C. Mulligan
|
—
|
880
| —
|
| 1,155
|
| |||||||||||||||||
Robert W. Pangia
|
6,114
|
880
| —
|
| 1,155
|
| |||||||||||||||||
Stelios Papadopoulos
|
—
|
1,450
| —
|
| 1,905
|
| |||||||||||||||||
Brian S. Posner
|
—
|
880
| —
|
| 1,155
|
| |||||||||||||||||
Eric K. Rowinsky
|
—
|
880
| —
|
| 1,155
|
| |||||||||||||||||
Lynn Schenk
|
—
|
880
| —
|
| 1,155
|
| |||||||||||||||||
Stephen A. Sherwin |
12,278 |
880 | 12,278
|
| 1,155
|
|
Notes to the Director Equity Outstanding at 20182019 FiscalYear-End Table
(1) | All stock option awards were granted to ournon-employee directors with a |
(2) | Represents the number of RSUs awarded tonon-employee directors in |
Our Board of Directors believes that a fundamental part of risk management is understanding the risks that we face, monitoring these risks and adopting appropriate control and mitigation of these risks. As stated in our Corporate Governance Principles, our Board of Directors and its committees are responsible for “reviewing the Company’s significant risk exposuresframework and steps taken by management to monitorgovernance and mitigate such exposure.” We also have a separate Risk Committee of our Board of Directors that assists our Board in its oversight of management’s exercise of its responsibility to assessasses, monitor and manage risk associated with the Company’s business and operations.significant risk exposures.”
Our Board of Directors oversees the management of material risks facing the Company. Biogen is committed to fostering a company culture of risk-adjusted decision-making without constraining reasonable risk-taking and innovation. Our Board of Directors and its committees oversee our efforts to foster this culture. Our Board of Directors regularly receives information about our material strategic, operational, financial and compliance risks and management’s response to, and mitigation of, such risks. In addition, our risk management systems, including our risk assessment processes, internal control over financial reporting, compliance programs and internal and external auditing procedures, are designed to inform management and our Board of Directors about our material risks. As part of its risk oversight function, our Board of Directors and its committees review this framework, its operation and our strategies for generating long-term value for our stockholders to ensure that such strategies will not motivate management to take excessive risks.
Our Board of Directors also reviews enterprise risks and discusses them with our management, including issues relevant to our business, reputation and strategy, including intellectual property risk, pipeline and business development, pricing and patient access, legal and regulatory matters and manufacturing. In addition, our Board of Directors and its committees oversee elements of our culture. Management updates our C&MD Committee on our compensation practices and progress against strategies and objectives in the areas of management and leadership development and diversity as well as steps taken to address matters such as inappropriate workplace behavior, including harassment and retaliation. In addition, our Audit Committee is responsible for the oversight of our compliance program.
3 |
Board of Directors (continued) |
taken to address matters such as inappropriate workplace behavior, including harassment and retaliation. In addition, our Audit Committee is responsible for the oversight of our compliance program.
In determining the allocation of risk oversight responsibilities, our Board of Directors and its committees generally oversee material risks within their identified areas of concern. Our Board of Directors and each of its committees meet regularly with management to ensure that management is exercising its responsibility to identify relevant risks and is adequately assessing, monitoring and taking appropriate action to mitigate risk. In the event a committee receives a report from members of management on areas of material risk to the Company, the Chair of the relevant committee reports on the discussion to the full Board of Directors at the next Board of Directors meeting. This enables our Board of Directors and its committees to coordinate their oversight of risk and identify risk interrelationships.
Our independent Chairman of the Board promotes effective communication and consideration of matters presenting significant risks to the Company through his role in developing our Board of Directors’ meeting agendas, advising committee chairs, chairing meetings of the independent directors and facilitating communications between independent directors and our Chief Executive Officer.
A summary of the key areas of risk oversight responsibility of our Board of Directors and each of its current committees is set forth below:
Board or Committee |
Area of Risk Oversight | |||
Board |
• Corporate and commercial strategy and execution, pricing and reimbursement, competition, reputational, environmental, health and sustainability and other material risks • Research and development activities, clinical development, drug safety and intellectual property • Material government and other investigations and litigation • Risk governance framework and infrastructure designed to identify, assess, manage and monitor the Company’s material risks • Risk management policies, guidelines and practices implemented by Company management
| |||
Audit |
• Financial, accounting, disclosure, corporate compliance, distributors, insurance, capital, credit, anti-bribery and anti-corruption matters and other risks reviewed in its oversight of the internal audit and corporate compliance functions • Information technology and cybersecurity risks | |||
Compensation and Management Development |
• Workforce matters, including harassment • Compensation policies and practices, including whether such policies and practices balance risk-taking and rewards in an appropriate manner as discussed further below | |||
Corporate Governance |
• Corporate governance and board succession, director independence, potential conflicts of interest and related party transactions involving directors and executive officers | |||
|
| |||
|
| |||
|
|
The Compensation Discussion and Analysis (CD&A) section of this Proxy Statement describes our compensation policies, programs and practices for our named executive officers. Our goal-setting, performance assessment and compensation decision-making processes described in the CD&A generally apply to all employees. We offer a limited number of short-term cash incentive plans, with employees eligible for either our annual bonus plan or a sales incentive compensation plan. NoExcept in limited circumstances, no employee is eligible to participate in more than one cash incentive plan at any time. Our annual bonus plan is consistently maintained for all participants globally, with the same Company performance goals, payout levels (as a percentage of target) and administrative provisions regardless of the participant’s job level, location or function in the Company. We also have a long-term incentive program that provides different forms of awards depending upon an employee’s level but is otherwise consistent throughout the Company.
3 |
Board of Directors (continued) |
In the CD&A, we describe the risk-mitigation controls for our executive compensation programs. These controls include C&MD Committee review and approval of the design, goals and payouts under our annual bonus plan and long-term incentive program and each executive officer’s compensation (or, in the case of our Chief Executive Officer’s compensation, a recommendation of that compensation to our Board of Directors for its approval). In addition, we review the processes, controls and design of our sales incentive compensation plans.
The C&MD Committee, working with the independent compensation consultant, also conducts an annual assessment of potential risks related to our compensation policies, programs and practices. Among other factors, this risk assessment considers the form of compensation (i.e., award type, fixed versus variable and short-term versus long-term), pay alignment, performance measures and goals, payout maximums, vesting periods and C&MD Committee oversight and independence. This assessment is focused on (1) having an appropriate balance in our program structure to mitigate compensation-related risk with cash versus stock, short-term versus long-term measurement and financial versusnon-financial goals; and (2) policies and practices to mitigate compensation-related risk including recoupment of compensation, stock ownership guidelines, equity administration rules and insider-trading and hedging prohibitions.
Based on our assessment, we believe that, through a combination of risk-mitigating features and incentives guided by relevant market practices and Company-wide goals, our compensation policies, programs and practices do not create risks that are reasonably likely to have a material adverse effect on the Company.
4 |
|
Proposal 2 – Ratification of the Selection of Our Independent Registered Public Accounting Firm
| ||||
Our Audit Committee is directly responsible for the appointment, compensation, retention and oversight of the independent registered public accounting firm retained to audit our consolidated financial statements. Our Audit Committee has selected PwC as our independent registered public accounting firm for the fiscal year ending December 31, 2019.2020. PwC has served as our independent registered public accounting firm since 2003.
In order to assure continuing auditor independence, our Audit Committee periodically considers whether there should be a rotation of the independent registered public accounting firm. Further, in conjunction with the rotation of the auditing firm’s lead engagement partner required by applicable SEC rules, our Audit Committee and its Chair has in the past been, and in the future will be, directly involved in the selection of PwC’s new lead engagement partner.
Our Audit Committee believes at this time that the continued retention of PwC to serve as our independent registered public accounting firm is in the best interest of Biogen and its stockholders.
Although stockholder approval of our Audit Committee’s selection of PwC is not required, our Board of Directors believes that it is a matter of good corporate practice to solicit stockholder ratification of this selection. If our stockholders do not ratify the selection of PwC as our independent registered public accounting firm, our Audit Committee will reconsider its selection. Even if the selection is ratified, our Audit Committee always has the ability to change the engagement of PwC if it considers that a change is in Biogen’s best interest. Representatives of PwC will participate in the Annual Meeting, have the opportunity to make a statement if they so desire and be available to respond to appropriate questions.
OUR BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTEFOR THE RATIFICATION OF
THE SELECTION OF PRICEWATERHOUSECOOPERS LLP AS OUR INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM FOR THE FISCAL YEAR ENDING DECEMBER 31, 2019.2020.
4 |
Audit Committee Matters (continued) |
The Audit Committee’s role is to act on behalf of our Board of Directors in the oversight of Biogen’s financial reporting, internal control and audit functions. The roles and responsibilities of the Audit Committee are set forth in the written charter adopted by our Board of Directors, which is posted on our website,www.biogen.com, under the “Corporate Governance” subsection of the “Investors” section of the website. Management has primary responsibility for the financial statements and the reporting process, including the systems of internal control.
In fulfilling its oversight responsibilities, the Audit Committee, among other things:
In reliance on these reviews and discussions, the Audit Committee recommended to our Board of Directors that the audited consolidated financial statements be included in Biogen’s Annual Report on Form10-K for the fiscal year ended December 31, 2018,2019, for filing with the SEC.
The Audit Committee of our Board of Directors:
Caroline D. Dorsa (Chair)
William A. Hawkins
Nancy L. Leaming
Stelios Papadopoulos
Brian S. PosnerStephen A. Sherwin, M.D.
4 |
Audit Committee Matters (continued) |
The following table shows fees for professional audit services billed to us by PwC for the audit of our annual consolidated financial statements for the years ended December 31, 2018,2019 and December 31, 2017,2018, and fees billed to us by PwC for other services provided during 20182019 and 2017:2018:
Fees (amounts in thousands) | 2018 | 2017 | 2019 | 2018 | ||||||||||||
Audit fees | $ | 5,177.6 | $ | 5,036.3 | $ | 6,080.3 | $ | 5,177.6 | ||||||||
Audit-related fees | 302.0 | 281.2 | 55.0 | 302.0 | ||||||||||||
Tax fees* | 609.0 | 381.0 | 641.8 | 609.0 | ||||||||||||
All other fees | 322.1 | 7.1 | 7.0 | 322.1 | ||||||||||||
Total | $ | 6,410.7 | $ | 5,705.6 | $ | 6,784.1 | $ | 6,410.7 |
* | Includes tax compliance fees of approximately $0.1 million in |
Audit feesare fees for the audit of our 20182019 and 20172018 consolidated financial statements included in our Annual Reports on Form10-K, reviews of our condensed consolidated financial statements included in our Quarterly
Reports on Form10-Q, review of the consolidated financial
statements incorporated by reference into our outstanding registration statements and statutory audit fees in overseas jurisdictions.
Audit-related fees are fees that principally relate to assurance and related services that are also performed by our independent registered public accounting firm. More specifically, these services include audits of employee benefit plan information, accounting consultations, due diligence and audits in connection with business development activity, internal control reviews and attest services related to financial reporting that are not required by statute or regulation.
Tax feesare fees for tax compliance and planning services. The increase in fees incurred in 2018 is driven by incremental support for international tax matters.
All other feesin 2018 include $0.3 million related to consultation services with respect to supply chain optimization strategies for the development of new products and services. All other fees in 20182019 and 20172018 also includelicense fees for aweb-based accounting research tool.
Policy onPre-Approval of Audit andNon-Audit Services
Our Audit Committee has the sole authority to approve the scope of the audit and any audit-related services as well as all audit fees and terms. Our Audit Committee mustpre-approve any audit andnon-audit services provided by our independent registered public accounting firm. Our Audit Committee will not approve the engagement of the independent registered public accounting firm to perform any services that the independent registered public accounting firm would be prohibited from providing under applicable securities laws, Nasdaq requirements or Public Company Accounting Oversight Board rules. In assessing whether to approve the use of our independent registered public accounting firm to provide permittednon-audit services, our Audit Committee tries to minimize relationships that could appear to impair the objectivity of our independent registered public accounting firm. Our Audit Committee will approve permittednon-audit services by our independent registered public accounting firm only when it will be more effective or economical to have such services provided by our independent registered public accounting firm than by another firm.
Our Audit Committee annually reviews andpre-approves the audit, audit-related, tax and other permissiblenon-audit services that can be provided by the independent registered public accounting firm. After the annual review, any proposed services exceedingpre-set levels or amounts, or additional services not previously approved requires separatepre-approval by our Audit Committee or the Chair of our Audit Committee. Anypre-approval decision made by the Chair of our Audit Committee is reported to our Audit Committee at the next regularly scheduled Audit Committee meeting. Our Chief Financial Officer and our Chief Accounting Officer can approve up to an additional $50,000 in the aggregate per calendar year for categories of services that our Audit Committee (or the Chair through its delegated authority) haspre-approved.
All of the services provided by PwC during 20182019 and 20172018 werepre-approved in accordance with this policy.
5 |
|
Proposal 3 – Advisory Vote on Executive Compensation
| ||||
Our Compensation Discussion and Analysis, which appears below, describes our executive compensation programs and the compensation decisions that our C&MD Committee and our Board of Directors made with respect to the 20182019 compensation of our named executive officers. As required pursuant to Section 14A of the Exchange Act, our Board of Directors is asking that stockholders cast anon-binding, advisory vote FOR the following resolution:
“RESOLVED, that the compensation paid to the Company’s named executive officers, as disclosed pursuant to Item 402 of RegulationS-K, including the Compensation Discussion and Analysis, compensation tables and narrative discussion, is hereby APPROVED.”
Our Board of Directors is asking that our stockholders support this proposal. Although the vote you are being asked to cast isnon-binding, we value the views of our stockholders, and our C&MD Committee and our Board of Directors will consider the outcome of the vote when making future compensation decisions for our named executive officers.
As we describe in our Compensation Discussion and Analysis, our executive compensation programs embody apay-for-performance philosophy that supports our business strategy and aligns the interests of our executives with those of our stockholders. In particular, our executive compensation programs reward financial, strategic and operational performance, and the goals set under our plans support our short- and long-range plans. In addition, to discourage excessive risk taking, we maintain policies for stock ownership, and our equity and annual bonus incentive plans have provisions providing for the recoupment of compensation. We also cap payments under our annual bonus plan, and we generally require multi-year vesting periods for long-term incentive awards.
We will hold anon-binding, advisory vote of our stockholders on the compensation of our named executive officers every year until the next required stockholder vote on the frequency of such advisory vote. The next stockholder vote on the frequency of such advisory vote is expected to be held at the 2023 annual meeting of stockholders.
OUR BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE
FOR THE APPROVAL OF THE RESOLUTION SET FORTH ABOVE.
5 |
Executive Compensation Matters (continued) |
COMPENSATION DISCUSSION AND ANALYSIS
|
This Compensation Discussion and Analysis (CD&A) describes our compensation strategy, philosophy, policies and practices underlying our executive compensation programs for 2018.2019. It also provides information regarding the manner and context in which compensation that was earned by and awarded to our 20182019 named executive officers listed below, whom we refer to collectively as “named executive officers” or “NEOs.”
Michel Vounatsos Chief Executive Officer | Executive Vice President, | |||||||||||
Jeffrey D. Capello Executive Vice President and Chief Financial Officer | Executive Vice President, | |||||||||||
Susan H. Alexander Executive Vice President, Chief Legal Officer and Secretary | Michael Ehlers, M.D., Ph.D.* Former Executive Vice President, Research and Development |
* | Dr. Ehlers voluntarily separated from the Company on October 11, 2019. Dr. Sandrock was appointed as Executive Vice President, Research and Development on October 1, 2019. Prior to this appointment, Dr. Sandrock served as our Executive Vice President, Chief Medical Officer, and continued in this role, in addition to his duties as Executive Vice President, Research and Development, until January 27, 2020. |
|
20182019 Highlights
We had a productive and successful 2018.2019. We generated record revenues of $13.5$14.4 billion for the year, demonstrated resilience in our MS business, continued a strong global launchworldwide growth for SPINRAZA, the first approved treatment for SMA, and made significant progress inexpanded our biosimilars business.
We added sixseven clinical programs across our strategic core and emerging growth areas and had a strong year for business development.
We provided value to our stockholders through the return of approximately $4.4$5.9 billion in capital through share
repurchases, and we continued our leading efforts in environmental, sustainability and diversity matters.
Our executive compensation programs for 20182019 were aligned with stockholder interests as compensation earned under these programs was closely-linkedclosely linked to the achievement of our corporateCompany performance goals.
We achieved or exceeded the vast majority of the corporateour Company performance goals that we set at the beginning of the year under our incentive compensation plans, and, accordingly, the payouts under these plans for 20182019 were above target payout levels.
5 |
Executive Compensation Matters (continued) |
A brief summary of our 20182019 business, financial and executive compensation highlights areis as follows:
Financial Performance
The following chart provides a summary of our financial performance for 20182019 compared to 2017:2018:
A reconciliation of our GAAP toNon-GAAP financial measures is provided in Appendix A to this Proxy Statement.
Total Stockholder Return
Ourone-, three- and five-year total stockholder return (TSR)* compared to our peer group and the Standard & Poor’s 500 (S&P 500) is set forth below.
|
Product and Pipeline Developments
The following provides a summary of our product and pipeline developments for 2018:2019:
Product Developments
In March 2018 we and AbbVie Inc. announcedOctober 2019 the voluntary worldwide withdrawalFDA approved VUMERITY for the treatment of ZINBRYTA for relapsing MS, (RMS).and in November 2019 VUMERITY became available in the U.S.
In October 2018 we and Samsung Bioepis launched IMRALDI, an adalimumab biosimilar referencing HUMIRA, in Europe.
Applications for Marketing and Agency Actions
In October 2018June 2019 the FDA granted BIIB092, ananti-tau mAb,BIIB104 (AMPA) fast track designation for progressive supranuclear palsy (PSP).cognitive impairment associated with schizophrenia.
In December 2018 Alkermes submittedOctober 2019 the European Medicines Agency updated the summaries of product characteristics for AVONEX and PLEGRIDY to remove pregnancy contraindications and, where clinically needed, to allow use during pregnancy and breastfeeding by women with relapsing MS.
In October 2019 we and our collaboration partner Eisai announced that we plan to pursue regulatory approval for aducanumab in the U.S. The decision to file is based on a NDA tonew analysis, conducted in consultation with the FDA, forof a larger dataset from the review of BIIB098 (diroximel fumarate). Alkermes is seeking approval of diroximel fumarate under the 505(b)(2) regulatory pathway. If approved, we intend to market diroximel fumarate under the brand name VUMERITY. This name has been conditionally accepted by the FDAPhase 3 EMERGE and will be confirmed upon approval.ENGAGE studies that were discontinued in March 2019 following a futility analysis.
|
Clinical Trials
MS and Neuroimmunology
In September 2018July 2019 we completed enrollmentand Alkermes plc announced positive topline results fromEVOLVE-MS-2, a large, randomized, double-blind, five-week, Phase 3 study of VUMERITY for relapsing MS, compared to TECFIDERA. VUMERITY was statistically superior to TECFIDERA on the Phase 2b AFFINITY study evaluating opicinumab, anti-LINGO,study’spre-specified primary endpoint, with patients treated with VUMERITY self-reporting significantly fewer days of key gastrointestinal symptoms with intensity scores³ 2 on the Individual Gastrointestinal Symptom and Impact Scale, as anadd-on therapy in MS patients who are adequately controlled on their anti-inflammatory disease-modifying therapy (DMT), versus the DMT alone.compared to TECFIDERA (p=0.0003).
In November 2018 we initiatedMay 2019 the first participant was dosed in the Phase 3b NOVA1 study evaluating the efficacy and safety of extended interval dosing (every six weeks) for natalizumab compared to standard interval dosingBIIB091 in patients with RMS and enrolled the first patient in December 2018.
MS. In December 2018 we dosed2019 dosing began for the first patientfinal multiple ascending dose cohort in a bioequivalencethe Phase 1 study to test whether exposure levels of PLEGRIDY are maintained with intramuscular administration.BIIB091 in MS.
Neuromuscular Disorders
|
|
Alzheimer’s Disease and Dementia
In May 2018 we initiated a Phase 2 study of BIIB092 for Alzheimer’s disease.
In June 2018 we and2019 our collaboration partner Eisai Co., Ltd. (Eisai) announced that elenbecestat, the oral BACE (beta amyloid cleaving enzyme) inhibitor, demonstrated an acceptable safety and tolerability profile in the Phase 2 study, and the results demonstrated a statistically significant difference in amyloid-beta levels in the brain measured byamyloid-PET (positron emission tomography). A numerical slowing of decline in functional clinical scales of a potentially clinically important difference was also observed, although this effect was not statistically significant.
In December 2017 we and our collaboration partner Eisai announced that the Phase 2 study of BAN2401, a monoclonal antibody that targets amyloid beta aggregates, an Eisai product candidate for the treatment of Alzheimer’s disease, did not meet the criteria for success based on a Bayesian analysis at 12 months as the primary endpoint in an856-patient Phase 2 clinical study, an endpoint that was designed to enable a potentially more rapid entry into Phase 3 development. In July 2018, based upon the final analysis of the data at 18 months, we and Eisai announced that the topline results from the Phase 2 study demonstrated a statistically significant slowing in clinical decline and reduction of amyloid beta accumulated in the brain. The study achieved statistical significance on key predefined endpoints evaluating efficacy at 18 months on slowing progression in Alzheimer’s Disease Composite Score (ADCOMS) and on reduction of amyloid accumulated in the brain as measured usingamyloid-PET.
In July 2018 we completed enrollment of ENGAGE and EMERGE, the Phase 3 studies of aducanumab. In March 2019 we and our collaboration partner Eisai announced that we were discontinuing the EMERGE and ENGAGE Phase 3 studies.
Movement Disorders
In January 2018 we dosed the first patient in the global Phase 2 SPARK3 study (Clarity AD) of BIIB054,a-synuclein antibody,BAN2401 (Aß mAb) in Parkinson’s disease.early AD.
In September 20182019 we completed enrollment of the Phase 2 PASSPORT study of BIIB092 (gosuranemab) for PSP.
Acute Neurology
In March 2018 we dosed the first patient in the Phase 2 OPUS study of natalizumab in drug-resistant focal epilepsy.
In September 2018 we enrolled the first patient in the Phase 3 CHARM study of BIIB093, glibenclamide IV, in large hemispheric infarction, a severe form of ischemic stroke.early AD.
5 |
Executive Compensation Matters (continued) |
NeurocognitiveNeuromuscular Disorders
In December 2018September 2019 we dosedannounced that we plan to initiate DEVOTE, a new Phase 2/3 study evaluating whether a higher dose of SPINRAZA can offer even greater efficacy in treating SMA, as well as the safety and tolerability of SPINRAZA, when administered at a higher dose.
In March 2019 the first patient was dosed in ourthe Phase 2b3 VALOR study of BIIB104 (AMPA)tofersen (BIIB067), our antisense oligonucleotide (ASO) candidate for the potential treatment of ALS with a confirmed superoxide dismutase 1 (SOD1) mutation.
In June 2019 the first patient was dosed in CIAS.the Phase 1 study of BIIB100 in sporadic ALS.
PainMovement Disorders
In March 2018May 2019 we initiated acompleted enrollment of the Phase 2 study of BIIB054 (cinpanemab) for Parkinson’s disease.
In August 2019 the first patient was dosed in the Phase 1 study of BIIB095, a Nav 1.7 inhibitorBIIB094, an ASO targeting leucine-rich repeat kinase 2 (LRRK2) for neuropathic pain.
In May 2018 we initiated a Phase 2 study of vixotrigine (BIIB074) in small fiber neuropathy.Parkinson’s disease.
OtherOphthalmology
In September 2018November 2019 we completed enrollment of the Phase 3 STAR study of BIIB111 for CHM.
Immunology
In December 2019 we announced positivetop-line results from the Phase 2 LILAC study evaluating the efficacy and safety of BIIB059 in cutaneous lupus erythematosus and systemic lupus erythematosus.
Acute Neurology
In October 2019 we dosed the first patient in the Phase 2b2 study of BG00011(STX-100) in idiopathic pulmonary fibrosis, a chronic irreversible and ultimately fatal disease characterized by a progressive decline in lung function.BIIB093 for brain contusion.
Discontinued Programs
In February 2018August 2019 we discontinued the Phase 2b study of BG00011(STX-100) for the potential treatment of idiopathic pulmonary fibrosis.
In September 2019 we and our collaboration partner Eisai announced the decision to discontinue the global Phase 3 studies (MISSION AD1 and MISSION AD2) of the investigational oral BACE (beta amyloid cleaving enzyme) inhibitor elenbecestat (development code: E2609) in patients with early AD.
In December 2019 we announced that the Phase 2b dose-ranging ACTION2 PASSPORT study investigating natalizumabgosuranemab in individuals with acute ischemic stroke (AIS)progressive supranuclear palsy (PSP) did not meet its primary endpoint. Based on these results, we discontinued development of natalizumabgosuranemab in AIS. The results of the Phase 2b ACTION study do not impact the benefit-risk profile of natalizumab in approved indications, including MS.
In October 2018 we announced that we completed the Phase 2b study of vixotrigine (BIIB074) for the treatment of painful lumbosacral radiculopathy (PLSR). The study did not meet itsPSP and other primary or secondary efficacy endpoints and we discontinued development of vixotrigine for the treatment of PLSR. The safety data were consistent with the safety profile reported in previous studies.tauopathies.
Business Development
In January 20182019 we acquired BIIB100 from Karyopharmentered into a collaboration and research and development services agreement with Skyhawk Therapeutics, Inc. BIIB100 is a Phase 1 ready investigational oral compound for(Skyhawk) pursuant to which the treatment of certain neurological and neurodegenerative diseases, primarily in ALS. BIIB100 is a novel therapeutic candidate that works by inhibiting a protein known as XP01,companies are leveraging Skyhawk’s SkySTAR technology platform with the goal of reducing inflammation and neurotoxicity, alongdiscovering innovative small molecule treatments for patients with increasing neuroprotective responses.
In April 2018 we acquired BIIB104 from Pfizer Inc. BIIB104 is afirst-in-class, Phase 2b ready AMPA receptor potentiator for CIAS, representing our first program in neurocognitive disorders. AMPA receptors mediate fast excitatory synaptic transmission in the central nervous system, a process which can be disrupted in a number of neurological and psychiatric diseases, including schizophrenia.MS and SMA. In October 2019 we amended this agreement to add an additional discovery program.
In June 20182019 we closedcompleted our acquisition of NST, a clinical-stage gene therapy company focused on AAV treatments for inherited retinal disorders. As a result of this acquisition, we added two10-yearmid- exclusive agreement with Ionis to develop novel ASO drug candidates for a broad range of neurological diseases (the 2018 Ionis Agreement). We have the option to license therapies arising out of the 2018 Ionis Agreement and will be responsible for the development and potential commercialization of such therapies.late-stage clinical assets, as well as preclinical programs, in ophthalmology.
In June 2018August 2019 we entered into an exclusive option agreement with TMS Co., Ltd. granting uscompleted the optionsale of our subsidiary that owned our biologics manufacturing operations in Hillerød, Denmark to acquireTMS-007, a plasminogen activator with a novel mechanism of action associated with breaking down blood clots, which is in Phase 2 development in Japan, and backup compounds for the treatment of stroke.
In June 2018 we exercised our option under our joint venture agreement with Samsung BioLogics to increase our ownership percentage in Samsung Bioepis from approximately 5% to approximately 49.9%. The share purchase transaction was completed in November 2018.
In July 2018 we acquired BIIB110 (Phase 1a) andALG-802 (preclinical) from AliveGen Inc. BIIB110 andALG-802 represent novel ways of targeting the myostatin pathway. We initially plan to study BIIB110 in multiple neuromuscular indications, including SMA and ALS.FUJIFILM Corporation.
In December 20182019 we completed a transaction with Samsung Bioepis and secured the exclusive rights to commercialize two potential ophthalmology biosimilar products, SB11 referencing LUCENTIS and SB15 referencing EYLEA, in major markets worldwide, including the U.S., Canada, Europe, Japan and Australia. We also acquired an option to extend our existing commercial agreement with Samsung Bioepis for BENEPALI, IMRALDI and FLIXABI in Europe and obtained exclusive rights to commercialize these products in China.
In December 2019 we exercised our option with Ionis Pharmaceuticals, Inc. (Ionis) and obtained a worldwide, exclusive, royalty-bearing license to develop and commercialize BIIB067,BIIB080 (tau ASO), an investigational treatment for ALS with SOD1 mutations.
In December 2018 we entered into a collaborative research and license agreement with C4 Therapeutics (C4T) to investigate the use of C4T’s novel protein degradation platform to discover and develop potential new treatments for neurological diseases, such as Alzheimer’s disease and Parkinson’s disease. We will be responsible for the development and potential commercialization of any therapies resulting from this collaboration.AD.
5 |
Executive Compensation Matters (continued) |
Share Repurchase Activity
In August 2018March 2019 our Board of Directors authorized a program to repurchase up to $3.5$5.0 billion of our common stock (2018(March 2019 Share Repurchase Program). Our 2018March 2019 Share Repurchase Program does not have an expiration date. All share repurchases under our 2018March 2019 Share Repurchase Program will be retired.
In December 2019 our Board of Directors authorized a program to repurchase up to $5.0 billion of our common stock (December 2019 Share Repurchase Program). Our December 2019 Share Repurchase Program does not have an expiration date. All share repurchases under our December 2019 Share Repurchase Program will be retired.
We returned approximately $4.4$5.9 billion to stockholders in 20182019 through share repurchases under our 2018March 2019 Share Repurchase Program and our 20162018 Share Repurchase Program, which was a program authorized by our Board of Directors in July 2016August 2018 to repurchase up to $5.0$3.5 billion of our common stock and whichthat was completed as of June 30, 2018.2019.
Other Notable Achievements in the Workplace and Community
AwardedThe approximately€1.8 billion of healthcare savings in Europe that we estimate was contributed by our threeanti-TNF biosimilars.
Being awarded, along with Ionis and our collaborators, the 2018Healy Center International Prix Galien as Best Biotechnology ProductPrize for SPINRAZA. The prestigious honor marksInnovation in ALS, which recognized our contributions to the seventh Prix Galiendiscovery and development of tofersen for SPINRAZA, following country recognitions in the U.S., Germany, Italy, Belgium-Luxembourg, the Netherlands and the U.K. The International Prix Galien is given every two years by Prix Galien International Committee members in recognitionpotential treatment of excellence in scientific innovation to improve human health.ALS with a confirmed SOD1 mutation.
Named the Biotechnology Industry Leadernumber one biotechnology company on the Dow Jones Sustainability World Index.Index for the fourth time.
Recognized as a corporate sustainability leader with Gold Class and Industry Mover Sustainability AwardsAward from RobecoSAM.
Continued commitment to operational carbon neutrality highlighted through the use of 100% renewable electricity globally.globally and financially supported carbon offset projects.
Our use of green chemistry processes and techniques to reduce our waste and energy consumption.
Committed to reduce carbon emissions by a targeted amount approved by the Science Based Target Initiative, to align ourselves with the global goal of limiting global temperature riseincrease to under two degrees Celsius.
Earned CDP scores of A,A-,A- and B in the areas of Supplier Engagement, Climate Change and Water, respectively.
Earned a perfect score of 100% on the Human Rights Campaign’s Corporate Equality Index (a national benchmarking tool on corporate policies and practices pertinent to LGBTQ employees) for the fifthsixth consecutive year and a perfect score of 100% on the Disability Equality Index for the third consecutive year.
Continued commitment to diversity and inclusion. As of December 31, 2018, 44%2019, 46% of Director-leveldirector-level positions and above were held by women.women, and, in the U.S., 26% were held by ethnic or racial minorities.
Over 3,2003,000 of our employees volunteered from 28over 30 countries during our annual Care Deeply Day.
Engaged 50,000+more than 54,000 students inhands-on learning to inspire their passion for science since the inception of Biogen’s Community Labs.
20182019 Executive Compensation Programs andPay-for-Performance Alignment
We believe our executive compensation programs are effectively designed and have worked well to implement apay-for-performance culture that is aligned with the interests of our stockholders. In 20182019 our executive compensation programs consisted of base salary, short- and long-term incentives and other benefits.
91% of our CEO’s and 84%85% of our other currently-employed NEOs’ 20182019 target compensation was performance-based andat-risk.
* | Reflects annual salary, target bonus and target grant value of the |
5 |
Executive Compensation Matters (continued) |
100% of our NEOs’ 20182019 annual long-term incentive (LTI) grants were performance-based andat-risk.
• 60% earned based on achievement of three-year adjustedNon-GAAP diluted earnings per share (EPS) and pipeline milestone performance goals over three-year performance period • 40% earned based on achievement of adjustedNon-GAAP free cash flows and revenues over threeone-year performance periods
• Earned based on stock price performance over |
Our 20182019 performance-based compensation payouts align with our commitment to strong performance.
In 20182019 we met or exceeded the vast majority of the corporateor company performance goals that we set at the beginning of the year for our incentive compensation plans. As a result, the payouts, as a percentage of target, for our 20182019 annual bonus plan and the portions of our PSUs and the majority of our MSUs that were eligible to be earned based on 20182019 performance were above target payout amounts, as described in further detail below.
20182019 Advisory Vote on Executive Compensation
At our |
| |
Our C&MD Committee is committed to continually reviewing our executive compensation programs on a proactive basis to ensure the ongoing alignment of such programs with the interests of our stockholders. | ||
In |
Specifically, under our 2018 LTI program, grants of PSUs replaced grants of cash-settled performance units (CSPUs), which we had granted in previous years. The key changes are as follows:
PSU awards are subject to three-year cliff vesting as compared to annual ratable vesting over three years (1/3 per year) for CSPU awards;
60% of PSU awards are earned over a three-year performance period based on the achievement of three-year cumulative performance goals for stock-settled PSU awards and 40% of PSU awards are earned over three annual performance periods based on the achievement of three sets of annual performance goals for cash-settled PSU awards as compared to 100% of CSPUs awards earned based upon one annual performance period for CSPU awards; and
60% of the PSU awards will be settled in stock and 40% of the PSU awards will be settled in cash as compared to 100% cash settlement for CSPU awards.
|
For additional information on our PSU awards, please see “Long-Term Incentives – 2018 PSUs” below.
Role of our C&MD Committee
Our C&MD Committee, which is composed of four independent directors, oversees and administers our executive compensation programs. In making executive compensation decisions, our C&MD Committee reviews a variety of factors and data, most importantly our performance and individual executives’executive performance, and considers the totality of compensation that may be paid.paid or the value of which that may be granted. In addition, our C&MD Committee administers our annual bonus plan and our equity plans, reviews business achievements relevant to payouts under our compensation plans, makes recommendations to our Board
of Directors with respect to compensation policies and practices as well as the compensation of our CEO and seeks to ensure that total compensation paid to our executive officers is fair, competitive and aligned with stockholder interests. Our C&MD Committee retains the right to hire outside advisors as needed to assist it in reviewing and revising our executive compensation programs.
The duties and responsibilities of our C&MD Committee are described on page 2018 and can be found in our C&MD Committee’s written charter adopted by our Board of Directors, which can be found on our website,www.biogen.com, under the “Corporate Governance” subsection of the “Investors” section of the website.
34 |
5 | Executive Compensation Matters (continued) |
Role of the Independent Compensation Consultant
Our C&MD Committee believes that independent advice is important in developing and overseeing our executive compensation programs. Frederic W. Cook & Co., Inc. (FW Cook) servedPearl Meyer is currently engaged as our C&MD Committee’s independent compensation consultant until June 2018 and advised our C&MD Committee regarding compensation decisions in 2018. FW Cook did not provide any other services to Biogen. Pearl Meyer & Partners LLC (Pearl Meyer) has served as our C&MD Committee’s independent compensation consultant since June 2018 and has advised our C&MD Committee regarding compensation decisions since that time.consultant. Pearl Meyer does not provide any other services to Biogen and engages in other matters as needed and as directed solely by our C&MD Committee. References in this CD&A to our independent compensation consultant refer to FW Cook for the period during which it was engaged and to Pearl Meyer thereafter.
Reporting directly to our C&MD Committee, our independent compensation consultantPearl Meyer provides guidance on trends in CEO, executive andnon-employee director compensation, the development of specific executive compensation programs and the composition of the Company’s compensation peer group. Additionally, our independent compensation consultantPearl Meyer prepares a report on CEO pay that compares each element of compensation to that of CEOs in comparable positions at companies in our peer group. Using this and other similar information, our C&MD Committee recommends, and our Board of Directors approves, the elements and target levels of our CEO’s compensation.
During 2018 the Company paid FW Cook and Pearl Meyer $123,275 and $47,666, respectively, in consulting fees directly related to these services. Our C&MD Committee assessed FW Cook’sassesses Pearl Meyer’s independence annually and, in accordance with applicable SEC and Nasdaq rules, confirmed in December 2017 that FW Cook’s work did not raise any conflicts of interest and that FW Cook remained independent under applicable rules. Our C&MD Committee assessed Pearl Meyer’s independence in connection with its engagement in June 2018 and, in accordance with applicable SEC and Nasdaq rules, confirmed in December 20182019 that Pearl Meyer’s work did not raise any conflicts of interest and that Pearl Meyer remains independent under applicable rules.
Role of our CEO
Each year our CEO provides an assessment of the performance of each executive officer, other than himself, during the prior year and recommends to our C&MD Committee the compensation to be paid or awarded to each executive. Our CEO’s recommendations are based on numerous factors, including:
To understand the external market competitiveness of the compensation for our executive officers, our CEO and our C&MD Committee review a report analyzing publicly-available information and surveys prepared by our internal
|
compensation group and reviewed by our independent compensation consultant.Pearl Meyer. The report compares the compensation of each executive officer, other than our CEO, to data available for comparable positions at companies in our peer group and, in certain circumstances, the broader market, by compensation
element (please see “External Market Competitiveness and Peer Group” below for further details). Our C&MD Committee considers all of the information presented, discusses the recommendations with our CEO and with our independent compensation consultantPearl Meyer and applies its judgment to determine the elements of compensation and target compensation levels for each executive officer other than the CEO.
Our CEO also provides a self-assessment of his achievements for the prior year. Our C&MD Committee reviews and considers this in analyzing the CEO’s performance, and in recommending the compensation of our CEO for approval by our Board of Directors, the compensation of our CEO.Directors. Our CEO does not participate in any deliberations regarding his own compensation.
Executive Compensation Philosophy and Objectives
Our executive compensation programs are designed to drive the creation of long-term stockholder value by delivering performance-based compensation that is competitive with our peer group in order to attract and retain extraordinary leaders who can perform at high levels and succeed in a demanding business environment. We aim to achieve this by designing programs that are:
• | Mission Focused and Business Driven. Our executive compensation programs support the relentless pursuit of delivering meaningful and innovative therapies to patients by providing our executives with incentives to achieve the near- and long-term objectives of our business. Substantially all of our |
• | Competitively Advantageous. We benchmark our executive compensation programs against a peer group of biotechnology and pharmaceutical companies that we believe are representative of the companies we primarily compete with for talent, balanced with factors such as business scope and size, including revenues and market capitalization, business focus and geographic scope of |
enable us to recruit, retain and motivate our leadership team to achieve their best for Biogen and our stockholders. |
35 |
5 | Executive Compensation Matters (continued) |
• | Performance Differentiated. We believe strongly inpay-for-performance and endeavor to significantly differentiate rewards by delivering the highest rewards to our best performers and lesser rewards to those who do not meet our performance expectations. |
• | Ownership Aligned. At Biogen, we believe every employee contributes to the success of the Company and, as such, every employee has a vested interest in the Company’s success. To reinforce this alignment with our stockholders, we strongly encourage stock ownership through our equity-based compensation programs. For members of our executive team, including our NEOs, who set and lead the future strategic direction of our Company, we ensure that a significant portion of their total pay opportunities are equity-based to maintain alignment between the interests of our executive officers and our stockholders. |
• | Flexible. We are committed to providing flexible benefits designed to allow our diverse global workforce to have reward opportunities that meet their varied needs so that they are inspired to perform their very best on behalf of patients and stockholders each day. |
External Market Competitiveness and Peer Group
We consider market practices and trends when determining executive compensation levels and compensation program designs at Biogen. We do not target a specific market percentile or simply replicate the market practice. Instead, we review external market practices as a reference point to assist us in providing programs designed to attract, retain and inspire extraordinary talent. Our C&MD Committee also uses a peer group and other market data to provide context for its executive compensation decision-making. Each year our independent compensation consultantPearl Meyer reviews the external market landscapedata and evaluates the composition of our peer group for appropriateness.
Our C&MD Committee reviews the information provided from internal sources as well as the information provided by our independent compensation consultantPearl Meyer to select our peer group based on comparable companies that approximate (1) our scope of business, including revenues and market capitalization, (2) our global geographical reach, (3) our research-based business with multiple marketed products and (4) a comparable pool of talent for which we compete.
The peer group used for determining our 20182019 compensation decisions consisted of the biotechnology and pharmaceutical
|
companies listed below, as we compete with companies in both of these sectors for executive talent.
Biotechnology Peers |
Alexion Pharmaceuticals, Inc. Amgen Inc. Celgene Gilead Sciences Inc. Vertex Pharmaceuticals
|
Pharmaceutical Peers |
AbbVie Inc. Allergan plc Bristol-Myers Squibb Company Eli Lilly and Company Merck & Co, Inc. Mylan N.V. Bausch Health Companies |
* | Bristol-Myers Squibb Company acquired Celgene Corporation in November 2019. |
For each of the companies in our peer group, wherewhen available, we analyze the company’s Compensation Discussion and Analysis and other data publicly filed during the prior year to identify the executives at such companies whose positions are comparable to those held by our executive officers. We then compile and analyze the data for each comparable position. Our competitive analysis includes the structure and design of the executive compensation programs as well as the targeted value of the compensation under these programs.
For our executive officers other than our CEO, we may supplement the data from our peer group with published compensation surveys where appropriate.surveys. For 2018,2019, consistent with past years, we used theWillisTowersWatson U.S. CDB Pharmaceutical and Health Sciences Executive Compensation Databasesurvey (which we refer to as the Willis Towers Watson survey). We chose the Willis Towers Watson survey because of the number of companies in our peer group that participate in it, the number of positions reported by the survey that continue to be comparable to our executive positions and the high standards under which we understand the survey is conducted (including data collection and analysis methodologies). All of the companies in our peer group are represented in a special cross-section of the Willis Towers Watson survey focused on our peer group, other than Bausch Health Companies (formally known as Valeant Pharmaceuticals Incorporated),Celgene Corporation, which did not participate in the survey.
36 |
5 | Executive Compensation Matters (continued) |
Our C&MD Committee determines the elements of compensation we provide to our executive officers. The elements of
our executive compensation programs and their objectives are as follows:
Element | Objective(s) | |||||
Base Salary | • | Provides a fixed level of compensation that is competitive with the external market and reflects each executive’s contributions, experience, skills, responsibilities and potential to contribute to our future success.
| ||||
Annual Bonus Plan | • | Aligns short-term compensation with the annual goals of the Company.
| ||||
• | Motivates and rewards the achievement of annual Company and individual performance goals that support short- and long-term value creation.
| |||||
Long-term Incentives | • | Aligns executives’ interests with the long-term interests of our stockholders by linking the value of awards to increases in our stock price.
| ||||
• | Motivates and rewards the achievement of stock price growth andpre-established
| |||||
• | Promotes executive retention and stock ownership and focuses executives on enhancing long-term stockholder value.
| |||||
Benefits | • | Promotes health and wellness.
| ||||
• | Provides financial protection in the event of disability or death.
| |||||
• | Providestax-beneficial ways for executives to save towards their retirement and encourages savings through competitive matches to executives’ retirement savings. |
Our C&MD Committee determines the general mix of the elements of our executive compensation programs. It does not target a specific mix of value for the compensation elements within these programs in either the program design or pay decisions. Rather, our C&MD Committee reviews the mix of compensation elements to ensure an appropriate level of performance-based compensation is apportioned to the short-term and even more to the long-term to ensure alignment with our business goals, performance and performance.stockholder interests.
Additionally, our C&MD Committee believes the greater the leadership responsibilities, the greater the potential impact an individual will have on Biogen’s future strategic direction. Therefore, for our executive officers, including our NEOs, additional emphasisa greater portion of their compensation is placed on performance-based, compensation, with a particular emphasis on LTI.
The 20182019 compensation mix for Mr. Vounatsos and our other NEOs was highly performance-based andat-risk; 91% of 20182019 compensation was performance-based for Mr. Vounatsos and 84%85% of 20182019 compensation was
|
performance-based for our other currently-employed NEOs, assuming target level achievement of applicable corporateCompany and individual performance goals and with LTI awards measured at target grant date
values, and excluding theone-time transition awards of RSUs granted to Dr. Ehlers, Ms. Alexander and Dr. McKenzie, as described in further detail below. values.
Performance Goals and Target Setting Process
Early each year, our C&MD Committee reviews and establishes the pay levels of each element of total compensation for our executive officers. Total compensation is comprised of base salary, annual bonus and LTI awards.
As part of this process, our C&MD Committee reviews the mix of compensation elements to ensure our performance-based compensation is appropriately apportioned appropriately and aligns with our business goals and performance. Our C&MD Committee also ensures that the performance metrics and goals are aligned with the annual business plan approved by our Board of Directors so there is full alignmentDirectors. In addition, the total compensation opportunity and mix of executive incentive goals with the goals that have been establishedcompensation elements for the year. Executiveour executive officers are also evaluated based on qualitative factors, such as individual, strategic and leadership achievements. TheOur CM&D Committee is aware of the risks associated with incentive compensation in general and specific factors, such as drug pricing, in particular, that may contribute to the achievement of particular performance metrics. Our CM&D Committee considers these risks carefully when determining compensation and believes that the use and weighting of bothmultiple metrics and the use of quantitative and qualitative metrics as well ascan mitigate these risks and create appropriate incentives to focus on achievement of the weighting of such metrics, effectively mitigates the impact of a single risk, such as dependence on drug pricing, pipelineCompany’s overall performance or market share, on overall compensation.goals.
5 |
Executive Compensation Matters (continued) |
A summary of the process our C&MD Committee follows in setting compensation is described below:
Target Setting
|
Monitoring & Tracking
• Our C&MD Committee closely monitors progress against the performance goals throughout the year and engages in dialogue with management on |
Results & Awards:
• Reviews and discusses the performance of our executive officers against their respective performance goals.
• Reviews and discusses the Company, team and individual performance of each executive officer, other than our CEO, as assessed by our CEO.
• Reviews and discusses our CEO’s recommended compensation levels for each executive officer, other than himself, in the context of such executive officer’s contributions to the Company and the other factors described above.
• Approves the final compensation for each executive officer other than our CEO, including base salary, annual bonus and LTI awards.
• Reviews CEO compensation and recommends | ||
• Our C&MD Committee and our CEO discuss potential goals for the upcoming year that are tied to the short- and longer-term strategic goals of the Company as well as individual goals for our executive officers.
• The annual business plan for the year is approved by our Board of Directors. As part of the approval process, our Board considers many factors relevant to our business, reputation and strategy, including pipeline and business development, pricing and patient access, market expectations and intellectual property risk.
• Our C&MD Committee ensures that the performance goals and targets under our compensation plans are aligned with the approved annual business plan.
• Payout levels for each performance goal are established by management and approved by our C&MD Committee.
• The performance goals are then applied to the compensation opportunities for our executive officers, including NEOs, so that there is full alignment of executive incentive goals with the goals that have been established for the year.
• Our C&MD Committee also reviews base salaries, bonus and LTI planning ranges, plan designs, benefits and peer group and other broader market data. |
5 |
Executive Compensation Matters (continued) |
OurFor 2019 our Board of Directors reviewed the base salaries of chief executive officers in our peer group and considered Mr. Vounatsos’ compensation mix, capabilities, performance and future expected contributions. Mr. Vounatsos’ base salary was set at $1,300,000,$1.4 million, which positioned him below the market median when compared to the chief executive officers of our peer group.
Our C&MD Committee undertook a similar review when approving the base salaries for our other NEOs, which positioned them, on average, slightly below the market median compared to persons with comparable jobs within our peer group.
The annual base salary of each of our NEOs in 2018,2019, compared to 2017, was2018, is as follows:
Name | 2018 Salary | 2017 Salary | % Increase(1) | 2019 Salary | 2018 Salary | % Increase(1) | ||||||||||||||||||
M. Vounatsos | $ | 1,300,000 | $ | 1,100,000 | 18.2% | $ | 1,400,000 | $ | 1,300,000 | 7.7% | ||||||||||||||
J. Capello | $ | 750,000 | $ | 750,000 | n/a | $ | 787,500 | $ | 750,000 | 5.0% | ||||||||||||||
S. Alexander | $ | 775,398 | $ | 749,177 | 3.5% | |||||||||||||||||||
A. Sandrock | $ | 803,136 | $ | 764,891 | 5.0% | |||||||||||||||||||
C. Guindo | $ | 530,000 | $ | 500,000 | 6.0% | |||||||||||||||||||
M. Ehlers | $ | 834,094 | $ | 794,375 | 5.0% | $ | 884,140 | $ | 834,094 | 6.0% | ||||||||||||||
S. Alexander | $ | 749,177 | $ | 723,842 | 3.5% | |||||||||||||||||||
P. McKenzie | $ | 633,938 | $ | 603,750 | 5.0% |
(1) | Percentage increase reflects the annual merit increase and, in the case of Mr. Vounatsos, also includes a market adjustment. |
|
20182019 Performance-Based Plans and Goal Setting
Our executive compensation programs place a heavy emphasis on performance-based compensation.
We maintain a short-term incentive plan, known as our annual bonus plan, as well as an LTI plan.
Awards to our NEOs under our annual bonus plan have beenwere made under our 20082019 Performance-Based Management Incentive Plan, and awards under our LTI plan arewere granted under our 2017 Omnibus Equity Plan.
Awards made under our annual bonus plan are directly tied to the achievement of our corporateCompany performance goals, which are aligned with the Company’s short- and long-term strategic plans, as well as individual performance goals.
Awards made under our LTI plan are directly tied to the performance of the price of our common stock, which aligns
our executives’ long-term interests with the interests of our stockholders. A portion of our LTI awards are also tied to the Company’s financial performance, as described below under “Long-Term Incentives – 20182019 PSUs.”
In setting our annual goals under our short- and long-term incentive plans, in addition to our internal forecasts, we consider analysts’ projections for our performance and the performance of companies in our peer group, as well as broad economic and industry trends. We strive to establish challenging targets that result in payouts at or above target levels only when Company performance warrants it. Our C&MD Committee is responsible for reviewing and approving our annualmetrics, goals, targets and levels of payout (e.g., threshold, target and maximum) for our executive incentive compensation plans and awards and for reviewing and determining actual performance results at the end of the applicable performance period.
In setting and approving the corporate performance goals for our executive officers and for the Company under both the short- and long-term incentive plans, our C&MD Committee also considers the alignment of such goals to our business plan, the degree of difficulty of attainment and the potential for the goals to encourage inappropriate risk-taking. Our C&MD Committee has determined that the structures of our executive compensation programs do not put our patients, investors or the Company at any material risk.
Annual Bonus Plan
Our annual bonus plan is a cash incentive plan that rewards near-term financial, strategic and operational performance. Our C&MD Committee reviews the annual target bonus opportunities for each executive officer by position each year to ensure such opportunities remain competitive.
No significant changes were made in 2018 toIn connection with this review, the target annual bonus opportunities, as a percentage ofyear-end annual base salary, for any of our NEOs other than Mr.Messrs. Vounatsos whoseand Capello and Dr. Ehlers were each market adjusted as noted below. Dr. Sandrock’s target annual bonus opportunity was market adjusted and increased from 125% of base salary in 2017 to 140% of base salary in 2018.connection with his appointment as our Executive Vice President, Research & Development. In accordance with our policy, target annual bonus opportunities for all of our other NEOs in 20182019 were determined based on their positions as Executive Vice Presidents.
5 |
Executive Compensation Matters (continued) |
The target annual bonus opportunity as a percentage ofyear-end annual base salary for each of our NEOs in 20182019 compared to 20172018 was as follows:
Name | 2018 Target | 2017 Target | 2019 Target | 2018 Target | ||||||||||||||
M. Vounatsos | 140% | 125% | 150% | 140% | ||||||||||||||
J. Capello | 70% | 70% | 75% | 70% | ||||||||||||||
M. Ehlers | 70% | 70% | ||||||||||||||||
S. Alexander | 70% | 70% | 70% | 70% | ||||||||||||||
P. McKenzie | 70% | 70% | ||||||||||||||||
A. Sandrock(1) | 75% | 70% | ||||||||||||||||
C. Guindo | 70% | 70% | ||||||||||||||||
M. Ehlers(2) | 75% | 70% |
(1) | In connection with his appointment as our Executive Vice President, Research & Development, Dr. Sandrock’s 2019 annual bonus target was increased to 75% of base salary, effective as of October 1, 2019. From January 1, 2019 to September 30, 2019, his annual bonus target was 70% of base salary. Dr. Sandrock’s payout under our 2019 bonus plan was based on a prorated blend of such annual bonus targets. |
(2) | Dr. Ehlers voluntarily separated from the Company during 2019 and was ineligible for payouts under our 2019 annual bonus plan. |
20182019 Annual Bonus Plan Design
Awards for our NEOs under our 20182019 annual bonus plan were based on the achievement of Company performance goals and individual performance goals.
At the beginning of 2018,2019 our C&MD Committee set multiple Company performance goals for our 20182019 annual bonus plan and provided for a payout multiplier, which we refer to as the Company Multiplier, ranging from 0% to 150%, for. The Company Multiplier was applied to each Company goal based on the determination of the level of achievement of each goal and application of the weighting assigned to each goal which determinedto determine the total Company Multiplier applied to the bonus calculation.
The Company Multiplier ranged from 0% to 150% as follows:
Performance Multipliers | Below Threshold | Threshold | Target | Max | ||||
Company | 0% | 50% | 100% | 150% |
In addition, our 20182019 annual bonus plan payouts were also based on an assessment of each NEO’s individual
performance, taking into account his or her achievement ofpre-determined individual performance goals. Evaluating individual performance allows our C&MD Committee the discretion to increase or decrease each NEO’s bonus amount based on the NEO’s performance by applying an individual performance multiplier, ranging from 0% to 150%, which we refer to as the Individual Multiplier.
We determined the individual annual bonus payments for 20182019 using the following calculation:
Our 20182019 annual bonus plan provided that if the Company Multiplier was less than 50%, there would be no payout, regardless of individual performance, further strengtheningconsistent with ourpay-for-performance philosophy. Further, because the
Individual Multiplier and the Company Multiplier each have a maximum of 150%, the combined multiplier result for each NEO could not exceed 225%.
20182019 Company Performance Goals and Results
Company performance goals were established atin the startearly part of 20182019 with assigned weightings that reflected the Company’s focus on attaining both financial and strategic goals (pipeline performance, MS leadership, continued SMA launch excellence, biosimilars growth and enhancingexecuting strategic transactions that progress our strategic alliances)multi-franchise neuroscience portfolio).
The goals and weightings we selected reflect the importance of linking reward opportunities to both near-term results and our progress in achieving longer-term goals.
The strategic performance goals we selected in 20182019 were designed to measure the achievement of our annual strategic priorities relating to our commercial opportunities and pipeline progress. Our financial performance goals were based on the Company’s annual operating plan and long-range plan approved by our Board of Directors and with reference to analyst consensus for Biogen revenues andNon-GAAP diluted EPS based on the most current analyst reports at the time we set our targets.
40 |
5 | Executive Compensation Matters (continued) |
The following table presents our financial targets relative to analysts’ consensus for 2018:2019:
(1) Please see “2018“2019 Annual Bonus Plan Company Performance Targets and Results Table” below for more details.
(2) Wall Street figures reflect estimates made in January 20182019 for the Biogen fiscal year ending December 31, 2018.2019.
(3) ReflectsNon-GAAP diluted EPS.
2019 Annual Bonus Plan Company Performance Targets and Results Table
Set forth below is a summary of the Company performance goals and weightings that our C&MD Committee established for our 2019 annual bonus plan and the degree to which we attained these Company performance goals. As described below, the Company Multiplier for the 2019 Annual Bonus Plan was 136%, reflecting our strong performance relative to ourpre-established goals.
Performance Range | ||||||||||||||||||||||||
Company Goals
| Weight
| Threshold
| Target
| Max
| Results
| Company Multiplier
| ||||||||||||||||||
FINANCIAL PERFORMANCE | ||||||||||||||||||||||||
Revenues | 20 | % | $ | 13,045M | $ | 13,680M | $ | 14,315M | $ | 14,309M | (1) | 149.5 | % | |||||||||||
Non-GAAP diluted EPS | 20 | % | $ | 26.25 | $ | 28.50 | $ | 30.75 | $ | 30.90 | (1) | 150.0 | % | |||||||||||
MARKET PERFORMANCE | ||||||||||||||||||||||||
Achieve Global MS Market Share | 11.25 | % | | Specific market goals are not disclosed for competitive reasons |
| | Below Goal(2) |
| 99.8 | % | ||||||||||||||
MS Leader in Customer Trust and Value Survey and Launch Applications to Support the MS Community | 5 | % | | Specific market goals are not disclosed for competitive reasons |
| | Above Goal(2) |
| 125.0 | % | ||||||||||||||
Achieve Global SMA Market Share | 13.75 | % | | Specific market goals are not disclosed for competitive reasons |
| | Above Goal(2) |
| 150.0 | % | ||||||||||||||
Achieveanti-TNF Biosimilars Market Share | 5 | % | | Specific market goals are not disclosed for competitive reasons |
| | Met Goal(2) |
| 100.0 | % | ||||||||||||||
PIPELINE DEVELOPMENT | ||||||||||||||||||||||||
Build and Advance Total Pipeline | 15 | % | | Specific pipeline goals are not disclosed for competitive reasons |
| | Above Goal(3) |
| 150.0 | % | ||||||||||||||
COLLABORATION | ||||||||||||||||||||||||
Execute Strategic Transactions that Progress our Multi-Franchise Neuroscience Portfolio | 10 | % | | Specific strategic transactions goals are not disclosed for competitive reasons |
| | Met Goal(4) |
| 100.0 | % | ||||||||||||||
Company Multiplier |
| 136.0 | %* |
* | Numbers may not recalculate due to rounding. |
5 |
Executive Compensation Matters (continued) |
2018 Annual Bonus Plan Company Performance Targets and Results Table
Set forth below is a summary of the Company performance goals and weightings that our C&MD Committee established for our 2018 annual bonus plan and the degree to which we attained these Company performance goals. As described below, the Company Multiplier for the 2018 Annual Bonus Plan was 131%, reflecting the strong performance relative to ourpre-established goals.
Performance Range | ||||||||||||||||||||||||
Company Goals
| Weight
| Threshold
| Target
| Max
| Results
| Company Multiplier
| ||||||||||||||||||
FINANCIAL PERFORMANCE | ||||||||||||||||||||||||
Revenues | 20 | % | $ | 12,310M | $ | 12,780M | $ | 13,250M | $ | 13,363M | (1) | 150.0 | % | |||||||||||
Non-GAAP diluted EPS | 20 | % | $ | 23.47 | $ | 24.74 | $ | 26.01 | $ | 26.89 | (1) | 150.0 | % | |||||||||||
MARKET PERFORMANCE | ||||||||||||||||||||||||
Achieve Global MS Market Share | 15 | % | | Specific market goals are not disclosed for competitive reasons |
| | Below Goal(2) |
| 91.8 | % | ||||||||||||||
MS Leader in Customer Trust and Value Survey | 10 | % | | Specific market goals are not disclosed for competitive reasons |
| | Above Goal(2) |
| 125.0 | % | ||||||||||||||
Achieve Global SMA Market Share | 10 | % | | Specific market goals are not disclosed for competitive reasons |
| | Above Goal(2) |
| 134.9 | % | ||||||||||||||
PIPELINE DEVELOPMENT | ||||||||||||||||||||||||
Build and Advance Total Pipeline | 10 | % | | Specific pipeline goals are not disclosed for competitive reasons |
| | Above Goal(3) |
| 110.0 | % | ||||||||||||||
Achieve Aducanumab Phase 3 Enrollment | 5 | % | | Specific enrollment goals are not disclosed for competitive reasons |
| | Above Goal(4) |
| 105.0 | % | ||||||||||||||
COLLABORATION | ||||||||||||||||||||||||
Improve and Expand Key Strategic Alliances | 10 | % | | Specific strategic alliance goals are not disclosed for competitive reasons | | | Above Goal(5) |
| 150.0 | % | ||||||||||||||
Company Multiplier |
| 131.0 | %* |
|
Notes to 20182019 Annual Bonus Plan Company Performance Targets and Results Table
(1) | These financial measures were based on our publicly reported revenues of |
(2) | Achievement of market goals for MS was below goal, |
(3) | The Company continued to expand andre-shape its pipeline ofpre-clinical and clinical stage programs through the advancement of internal programs, external business development activities and exceeding expectations with respect to the level of confidence in and momentum of its clinical stage portfolio. Specific details are not disclosed for competitive reasons. |
(4) |
|
|
|
20182019 Individual Performance Goals and Results
The Individual Multiplier reflects each named executive officer’s overall individual performance rating that is determined as part of our performance assessment process. Unlike our formulaic calculation of corporate performance against Company performance goals in determining the Company Multiplier, each named executive officer’s Individual Multiplier, other than Mr. Vounatsos, is based on a subjective evaluation of his or her overall performance and consideration of the achievement of individual goals established at the beginning of the year. Goals may be both quantitative and qualitative. For 20182019 Mr. Vounatsos recommended to our C&MD Committee an Individual Multiplier for each named executive officercurrently-employed NEO other than himself based on his assessment of their individual contributions for the full year. Our C&MD Committee considered all of the information presented, discussed our CEO’s recommendations with him and its independent compensation consultantPearl Meyer and applied its judgment to determine the Individual Multiplier for each named executive officer.currently-employed NEO. Our Board of Directors determined Mr. Vounatsos’ Individual Multiplier based on its assessment of his performance.
In its evaluation, our C&MD Committee assigned Individual Multipliers to our named executive officers of between 115%110% and 140% based on the following accomplishments during 2018:2019:
Michel Vounatsos
Jeffrey D. Capello
Michael Ehlers
Susan H. Alexander
Paul F. McKenzie
5 |
Executive Compensation Matters (continued) |
Susan H. Alexander
Alfred W. Sandrock, Jr.
Chirfi Guindo
In addition, our C&MD Committee reviews on a qualitative basis each named executive officer’s other contributions to the Company and our business, leadership competencies and relative performance among all of our named executive officers.officers in determining Individual Multipliers.
20182019 Annual Bonus Plan Awards
Our C&MD Committee determined that the final bonus awards under our 20182019 annual bonus plan were as follows:
Name | Year-end Salary (A) x | Target Bonus% (B) x | Company Multiplier (C) x | Individual Multiplier (D) = | Bonus Award (E) | Year-end Salary (A) x | Target Bonus% (B) x | Company Multiplier (C) x | Individual Multiplier (D) = | Bonus Award (E) | |||||||||||||||||||||||||||||||||||
M. Vounatsos | $ | 1,300,000 | 140 | % | 131 | % | 140 | % | $ | 3,337,880 | $ | 1,400,000 | 150 | % | 136 | % | 136 | % | $ | 3,884,000 | |||||||||||||||||||||||||
J. Capello | $ | 750,000 | 70 | % | 131 | % | 115 | % | $ | 790,913 | $ | 787,500 | 75 | % | 136 | % | 110 | % | $ | 883,575 | |||||||||||||||||||||||||
M. Ehlers | $ | 834,094 | 70 | % | 131 | % | 120 | % | $ | 917,837 | |||||||||||||||||||||||||||||||||||
S. Alexander | $ | 749,177 | 70 | % | 131 | % | 125 | % | $ | 858,744 | $ | 775,398 | 70 | % | 136 | % | 140 | % | $ | 1,033,451 | |||||||||||||||||||||||||
A. Sandrock(1) | $ | 803,136 | 70 | % | 136 | % | 115 | % | $ | 893,038 | |||||||||||||||||||||||||||||||||||
P. McKenzie | $ | 633,938 | 70 | % | 131 | % | 135 | % | $ | 784,784 | |||||||||||||||||||||||||||||||||||
C. Guindo | $ | 530,000 | 70 | % | 136 | % | 140 | % | $ | 706,384 | |||||||||||||||||||||||||||||||||||
M. Ehlers(2) | $ | 884,140 | 75 | % | n/a | n/a | n/a |
Notes to the 2019 Annual Bonus Plan Awards Table
(1) | In connection with his appointment as our Executive Vice President, Research & Development, Dr. Sandrock’s 2019 annual bonus target was increased to 75% of base salary, effective as of October 1, 2019. From January 1, 2019 to September 30, 2019, his annual bonus target was 70% of base salary. Dr. Sandrock’s award under our 2019 annual bonus plan was based on a prorated blend of such annual bonus targets. |
(2) | Dr. Ehlers voluntarily separated from the Company during 2019 and was ineligible for payouts under our 2019 annual bonus plan. |
43 |
5 | Executive Compensation Matters (continued) |
Below is a summary of the types of annual LTI awards granted to our NEOs for 2019.
Terms | Performance Stock Units (PSUs) | Market Share Units (MSUs) | ||||
Proportion of Annual Target Value | 50% | 50% | ||||
Settlement | 60% stock settled | 40% cash settled | 100% stock settled | |||
Performance Period(s) | 3 years (2018-2020) | 1 year (each of 2018, 2019, 2020) | 1 year, 2 years, 3 years (from grant date) | |||
Metrics and Weighting | AdjustedNon-GAAP diluted EPS: 30%
Pipeline Milestone Performance: 30% | Adjusted Free Cash Flow: 28%
Revenues: 12% | Stock Price: 100% | |||
Threshold / Maximum Payout (% of Target Award) | 50% / 200% | 50% / 200% | 50% / 200% | |||
Vesting | 3-year Cliff Vesting | 3-year Cliff Vesting | Annual Ratable Vesting over 3 years (1/3 per year) | |||
Terms | Performance Stock Units (PSUs) | Market Share Units (MSUs) | ||||
Proportion of Annual Target Value | 50% | 50% | ||||
Settlement | 60% stock settled | 40% cash settled | 100% stock settled | |||
Performance Period(s) | 3 years (2019-2021) | 1 year (each of 2019, 2020, 2021) | 1 year, 2 years, 3 years (from grant date) | |||
Metrics and Weighting | AdjustedNon-GAAP diluted EPS: 30%
Pipeline Milestone Performance: 30% | Adjusted Free Cash Flow: 28%
Revenues: 12% | Stock Price: 100% | |||
Threshold / Maximum Payout (% of Target Award) | 50% / 200% | 50% / 200% | 50% / 200% | |||
Vesting | 3-year Cliff Vesting | 3-year Cliff Vesting | Annual Ratable Vesting over 3 years (1/3 per year) |
All annual LTI awards granted to our executivesexecutive officers are performance-based and designed to reward long-term Company performance.
Our executive annual LTI program for 20182019 consisted of PSUs and MSUs, with the annual LTI total target grant value of awards being split evenly between PSUs and MSUs. The PSUs we awardedgranted to executive officers are performance-based RSUs that are settled, as applicable, in cash and shares of our common stock. The MSUs we awardedgranted to executive officers are performance-based RSUs that are settled in shares of our common stock. The performance conditions applicable to these PSUs and MSUs are described in further detail below.
Our annual LTI target grant values are differentiateddetermined based on an executive’s individual performance, potential future contributions and market competitiveness, as well as other factors. In determining the annual LTI target grant value, our C&MD Committee reviews LTI awards of our peer group and, in certain circumstances, the broader market, and also reviews the total compensation of our executive officers against our peer group.group and, in certain circumstances, the broader market. In general, we have a heavier weighting in our executive compensation mix towards LTI awards.awards in order to better align executives with stockholders’ interests. On average, annual LTI target grant values for our NEOs position their total compensation at or around the median values of our peer group in cases where there are comparable positions at the peer companies.
|
We have an established annual LTI grant practice where LTI grants are made following the completion of our internal performance reviews of our executive officers as well as our external market review of equity practices of our peer group and the broader market, including the data from the Willis Towers Watson survey described above. Since 2004 we have made our annual LTI grants in February of each year following our annual earnings release.
We generally grant time-based RSUs in lieu of PSUs at the time an executive is hired if employment commences after June 30th. These grants are generally granted on the first trading day of the month following the date of hire. From time to time, we also grant time-based RSUs to recognize extraordinary contributions to the Company or for transition or retention purposes.
In 20182019 the annual LTI target grant values for our NEOs were as follows:
Name | Annual LTI Grant Value | |||
M. Vounatsos | $ | |||
J. Capello | ||||
| $ | |||
S. Alexander | $ 3,200,000 | |||
| $ | |||
C. Guindo | $ 3,500,000 | |||
M. Ehlers(1) | $ 4,300,000 |
Notes to the 20182019 Annual LTI Awards Table
(1) |
|
44 |
5 | Executive Compensation Matters (continued) |
|
The actual value that will be realized from PSU awards depends on the degree of achievement of performance goals, with 60% of the PSUs (based on the grant date target value) settled in shares of our common stock based upon achievement of cumulative three-year financial and pipeline metricsmilestone goals and the remaining 40% of the PSUs settled in cash based upon the achievement of two annual financial metrics that are determined at the beginning of each relevant year. The actual value that will be realized from MSU awards depends on our30-day average common stock price growth between the grant date and each of the dates such awards vest. Our common stock price is influenced by the Company’s performance as well as external market factors.
20182019 PSUs
PSUs comprised 50% of our executives’ target LTI for 2018.2019. PSUs are performance-based RSUs that have three-year cliff vesting in furtherance of the Company’s long-termpay-for-performance philosophy and to encourage employee retention. PSUs align executive compensation to Company goals through performance against a combination of financial and pipeline milestone performance metrics. The actual value (if any) of PSUs will not be realized by the NEOs until the three-year period ends and then only if the applicable performance goals are achieved.
For our 2019 PSU awards, 60% of the PSUs (based on the grant date target value) will be settled in shares of our common stock based on achievement of financial and pipeline performance goals over a three-year performance period (2019 to 2021) (the 2019 Stock-Settled PSUs) and continued employment through the vesting date. The remaining 40% of the PSUs will be settled in cash based on the achievement of threeone-year financial goals (2019, 2020 and 2021) (the 2019 Cash-Settled PSUs) and continued employment through the vesting date. Our 2019 PSU awards are scheduled to vest in February 2022.
For our 2019 PSU awards, the number of PSUs earned at the end of the three-year performance period will be determined as follows:
In designing our 2019 PSU LTI program, our C&MD Committee acknowledged the need to balance driving long-term performance and investing for the future with achieving key milestones along the way. Cash-based payments are primarily aligned with and reward more recent performance, while equity awards encourage our executives to continue to deliver results over a longer period of time and also serve as a retention tool. Our C&MD Committee determined that delivering a substantial portion of compensation in the form of equity awards with longer-term goals would further align our executive officers’ interests with those of Biogen’s stockholders in creating long-term stockholder value.
2018 PSUs
For our 2018 PSU awards, 60% of the PSUs (based on the grant date target value) will be settled in shares of our common stock based on achievement of financial and pipeline performance goals over a three-year performance period (2018 to 2020) (the 2018 Stock-Settled PSUs). The remaining 40% of the PSUs will be settled in cash based on the achievement of three sets ofone-year financial goals (2018, 2019 and 2020) (the 2018 Cash-Settled PSUs) and continued employment through the vesting date. Our 2018 PSU awards are scheduled to vest in February 2021.
For our 2018 PSU awards, the number of PSUs earned at the end of the three-year performance period will be determined as follows:
In designing our 2018 PSU LTI program, our C&MD Committee acknowledged the need to balance driving long-term performance and investing for the future with achieving key milestones along the way. Cash payments are primarily aligned with and reward more recent performance, while equity awards encourage our executives to continue to deliver results over a longer period of time and also serve as a retention tool. Accordingly, our C&MD Committee determined that moving compensation for our executive officers further away from cash and towards equity awards with longer-term goals would further align their interests with those of Biogen’s stockholders in creating long-term stockholder value.
5 |
Executive Compensation Matters (continued) |
20182019 PSU Awards Table
Set forth below is a summary of the performance metrics and weightings that our C&MD Committee established for our 20182019 PSU awards and the degree to which we achieved the performance goals for the 20182019 tranche of the 20182019 Cash-Settled PSUs. Based on the results outlined in the table below, the multiplier for the 2019 tranche of the 2019 Cash-Settled PSUs was 161%. We utilized the same performance metrics for the 2019 (i.e., second) tranche of the 2018 Cash-Settled PSUs and, therefore, the multiplier for the 2019 tranche of the 2018 Cash-Settled PSUs was 192%also 161%.
Percentage of PSU Award | Percentage of PSU Target | Performance Metrics | Performance Metrics Weight | Performance Period | Target Performance | Actual Performance | ||||||||||
Stock- Settled: 60% | 60% / 30% | Adjusted Non-GAAP diluted EPS Pipeline Milestone Performance | 30% 30% | | | Specific goals are not disclosed for competitive reasons | ||||||||||
Cash- Settled: 40% | 40% / 20% |
Adjusted Free Cash Flows
Revenues |
| 28%
12% |
|
2021 2019 2020
|
| $ Target set at beginning of beginning of 2021 $ 13.7B Target set at beginning of 2020 Target set at beginning of
| $ TBD
TBD
$
TBD |
Notes to the 20182019 PSU Awards Table
(1) | This financial measure was based on ourNon-GAAP free cash flows, as adjusted to |
(2) | This financial measure was based on our publicly reported revenues of |
The 20182019 Stock-Settled PSUs metrics were approved by our C&MD Committee with equal weighting assigned to each metric. The two metrics selected were the achievement of a cumulative three-year adjustedNon-GAAP diluted EPS and pipeline milestone performance, in each case, for the three-year period of 20182019 through 2020.2021.
The 20182019 Cash-Settled PSUs financial metrics are adjusted free cash flows and revenues. At the beginning of each year
during the performance period for our 20182019 Cash-Settled PSU awards,
our C&MD Committee will approve the targets for each of these financial metrics for such year. Our C&MD Committee decided that because of the nature of our business, in which operating metrics can potentially be impacted positively or negatively by events outside of the control of executives, the design of the PSU program would be based, in part, on the use of threeone-year financial goals.
We selected revenues as a performance measure to reinforce the importance of achieving and exceeding our revenue goal and to provide further incentive to achieve such goal.
5 |
Executive Compensation Matters (continued) |
revenue goal and to provide further incentive to achieve such goal and its tie to stockholder value creation through the longer-term vesting requirements associated with the goal. |
In order to further motivate our executives to drive the organization toward the achievement and potential over-achievement of these goals, we provide for a maximum payout opportunity of 200% for our 2018 PSU awards. Participants may ultimately earn between 0% and 200% of the target number of PSUs granted based on the degree of actual performance goal achievement, generally subject to continued service with the Company.
20182019 MSUs
MSUs comprised 50% of our executives’ target LTI for 2018.2019. MSUs are performance-based RSUs that are earned based on our common stock price performance from the date of grant to each of the three annual vesting dates. Each annual tranche is assessed against our stock price on the original grant date, such that the awards vesting in 2020, 2021 and 2022 will be assessed against the 2019 grant date stock price, thereby aligning long-term executive interests with those of our stockholders. On each vesting date, the performance multiplier is deriveddetermined based on the stock price growth measured from the grant date to such vesting date using the average closing stock price for the 30 calendar days following and including the grant date and 30 calendar days prior to and including such vesting date for MSUs granted in 2018.2019.
Participants may ultimately earn between 0% and 200% of the target number of MSUs awarded based on our actual stock performance. The maximum payout percentage of MSUs granted in 20182019 is consistent with those granted in 20172018 (200%). Once the performance multiplier is determined, it is applied to the target number of MSUs granted to each executive and can increase or decrease the overall number of MSUs earned based on our stock price performance.
MSU Illustration
The three-year service vesting period ties executive compensation directly to our common stock price performance, as both the MSUs earned and the value actually received in respect of MSUs are dependent on the performance of our common stock over the three-year vesting period. On each vesting date, the earned MSUs are settled in shares of our common stock. MSUs directly align long-term interests of our executives with stockholders, as the payout is directly tied to stock price performance.
The following table shows the vesting date, performance period and performance multiplier applied for MSUs vesting in 20182019 and 2019:2020:
Grant Date | Vesting Date | Performance Period | Performance Multiplier | |||||||
2/2019 | 2/2020 | 1 year | 92% | |||||||
2/2018 | 2/2020 | 2 years | 103% | |||||||
2/2019 | 1 year | 114% | ||||||||
2/2017 | 2/2020 | 3 years | 114% | |||||||
2/2019 | 2 years | 124% | ||||||||
| ||||||||||
2018One-Time Transition Awards
As part of our 2018 LTI program change and transition plan, our C&MD Committee decided to grantone-time transition awards in the form of time-based RSUs in February 2018 to certain executive officers, excluding Messrs. Vounatsos and Capello, which vest over atwo-year period, with 33% vesting on the first anniversary of the grant date and 67% vesting on the second anniversary of the grant date. These awards were intended to help mitigate the impact on executives’ compensation and cash flow disruption due to the program changes, including the change to the three-year cliff vesting schedule applied to the PSU awards discussed above compared to the annual installment vesting over three years that applied to the CSPUs that we previously granted.
In 2018 theone-time transition awards of RSUs for our NEOs were as follows:
| ||
| ||
| ||
| ||
| ||
| ||
We maintain a Supplemental Savings Plan (SSP), which is anon-qualified deferred compensation plan covering our executive officers and other eligible employees in the U.S. We offer the SSP as part of the retirement savings component of our benefits program. We designed the SSP to be competitive with thenon-qualified deferred compensation plans offered by companies in our peer group at that time. Details of the SSP are discussed under the heading “2018“2019Non-Qualified Deferred Compensation” below.
|
In addition to eligibility for the benefit programs generally provided to all employees, such as our employee stock purchase plan, 401(k) plan and medical, dental, vision, life and disability insurance, we provide certain supplemental benefits to our executives. These benefits include:
Life Insurance
All of our U.S. executives, including our NEOs, receive Company-paid term life insurance equal to three times their annual base salary, up to a maximum benefit amount. In 20182019 the maximum benefit amount for the CEO was $1.5 million and was $2.25 million for the other NEOs. Employees who are not executives receive Company-paid term life insurance equal to two times their annual base salary. The additional value of Company-provided life insurance for our executive officers reflects competitive practices and is consistent with our philosophy to provide
47 |
5 | Executive Compensation Matters (continued) |
appropriate levels of financial security for our employees based on their positions within the Company. The cost of Company-paid life insurance in excess of a $50,000 insurance level is taxable income to U.S. employees and is not grossed up by the Company.
Executive Physicals, Tax Preparation, Financial and Estate Planning
Our executive officers, other than our CEO, are eligible for reimbursement of expenses incurred for tax preparation and financial and estate planning services, as well as the purchase of tax preparation and financial planning software, subject to annual expense limits of $7,500 for Executive Vice Presidents. Such reimbursements are taxable income to our executives and are not grossed up.
All of our executive officers, including our CEO, are eligible for reimbursement for the cost of their executive physicals, subject to the annual expense limits noted above of $7,500 for our Executive Vice Presidents and CEO. This benefit provides our executives with additional flexibility to proactively manage their health and wellness.
Relocation Expenses
Under our Executive Relocation Policy, we will, in certain circumstances, provide relocation benefits when employees first join us.
Post-Termination Compensation and Benefits
We provide severance benefits to all of our executive officers if they aretheir employment is terminated without cause or in certain other
circumstances. The terms of these arrangements and the amounts payable under them are described below for each NEO under the heading “Potential Payments Upon Termination or Change in Control.” We provide these benefits because we believe that severance protection is necessary to help our executives maintain their focus on the best interests of the Company when providing advice to the Company and when making strategic decisions about a potential corporate transaction or change in control, and further encourages effective leadership in the closing and integration of significant transactions affecting the Company.
We maintain stock ownership guidelines for our executive officers to strengthen and reinforce the link our compensation programs create between our executives and our stockholders. A summary of our stock ownership guidelines is set forth below.
Level | Number of Shares Equal in Value to: | |
CEO | 6x base salary | |
Executive Vice Presidents | 3x base salary | |
Executive officers have five years from their initial appointment to meet thethis requirement. In the event the requirement is not met within that time, 100% of vested shares received in respect of LTI awards are required to be held until the requirement is satisfied. Only stock owned outright or otherwiseand underlying vested or earned performance-based shares is credited toward the stock ownership requirement. Shares underlying unvested or unearned performance-based shares are not included in the calculation. All of our executive officers currently meet the stock ownership requirement or are still within the five-year period to meet such requirement.
We may recover compensation from our employees, including our executive officers, who engage in detrimental or competitive activity. Detrimental activity includes any action or failure to act that constitutes financial malfeasance that is materially injurious to the Company, violates our Code of Business Conduct (Values in Action), results in a restatement of our earnings or financial results or results in a violation or breach of law or contract. Competitive activity includes any action or failure to act that violatesnon-disclosure,non-competition and/ornon-solicitation agreements. Our 20082019 Performance-Based Management Incentive Plan
allows for the forfeiture and/or repayment of cash-based awards, and our 2008 Omnibus Equity Plan and our 2017 Omnibus Equity Plan each allow for the cancellation of LTI awards in these circumstances as well as the forfeiture of stock or cash acquired upon vesting or sale of LTI awards. In addition, cashsign-on bonuses paid to our NEOs may be subject to repayment if the NEO voluntarily resigns from the Company or if his or her employment is terminated by the Company in certain circumstances.
Insider Trading, Hedging and Pledging Policy Prohibitions
We maintain a Global Insider Trading and Information Policy that prohibits our employees, officers, temporary staff and directors, members of their immediate family and family trusts (or similar entities) controlled by or benefitting such persons from, among other things, engaging in hedging or derivative or similar transactions with respect to the Company’s equity securities, including, purchases or sales of puts and calls, options, forward contracts, put and call
48 |
5 | Executive Compensation Matters (continued) |
collars, equity or performance swap or exchange fund agreements, or any similar agreements or arrangements, purchasing Company stock on margin, borrowing against any account in which Company securities are held, pledging Company securities as collateral for a loan or engaging in short sales of the Company’s securities. No categories of hedging transactions are specifically permitted by our Global Insider Trading and Information Policy and those that are specifically prohibited are noted above.
Tax-Deductibility of Compensation
Section 162(m) of the Internal Revenue Code generally limits the amount a company may deduct for compensation in excess of $1 million paid to certain “covered employees,” subject to certain transition relief applicable to certain arrangements in place as of November 2, 2017, and not materially modified after such date.
Our C&MD Committee regularly reviews the provisions of our plans and programs, works with its independent compensation consultant and reviews and considers,
among other things, the tax deductibility of compensation payments. Our C&MD Committee, however, believes that compensation programs that attract, retain and reward executive talent and achievement are necessary for our success and, therefore, are in the best interests of the
Company and our stockholders and that, in establishing the cash and equity incentive compensation programs for the Company’s executive officers, the potential deductibility of the compensation payable under such programs should only be one of a number of relevant factors taken into consideration. Consequently, our C&MD Committee may pay or provide, and has paid or provided, compensation that is not tax deductible in whole or in part.
The Compensation and Management Development Committee furnishes the following report:
The Compensation and Management Development Committee has reviewed and discussed the Compensation Discussion and Analysis with Biogen management. Based on this review and discussion, the Compensation and Management Development Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this Proxy Statement.
Submitted by,
Robert W. Pangia (Chair)
Richard C. Mulligan
Eric K. RowinskyBrian S. Posner
Lynn Schenk
5 |
Executive Compensation Matters (continued) |
The following table shows the compensation paid to or earned by our NEOs during the years ended December 31, 2018,2019, December 31, 2017,2018, and December 31, 2016,2017, for the year(s) in which they were a named executive officer.
Name and Principal Position (a) | Year (b) | Salary (c) | Bonus(1) (d) | Stock Awards(2) (e) | Non-Equity Incentive Plan Compensation(3) (f) | Change in Pension Value and Nonqualified Deferred Compensation Earnings(4) (g) | All Other Compensation(5) (h) | Total (i) | Year (b) | Salary (c) | Bonus(1) (d) | Stock Awards(2) (e) | Non-Equity Incentive Plan Compensation(3) (f) | Change in Pension Value and Nonqualified Deferred Compensation Earnings(4) (g) | All Other Compensation(5) (h) | Total (i) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Michel Vounatsos(6) |
|
2018 |
|
$ |
1,276,923 |
|
|
— |
|
$ |
11,064,897 |
|
|
$3,337,880 |
|
|
$ 80,663 |
|
|
$408,283 |
|
$ |
16,168,646 |
|
|
2019 |
|
$ |
1,388,461 |
|
|
— |
|
$ |
12,352,030 |
|
|
$3,884,000 |
|
|
$ 85,667 |
|
|
$449,700 |
|
$ |
18,159,858 |
| ||||||||||||||||||||||||||||||||
Chief Executive Officer | 2017 | $ | 1,087,885 | — | $ | 9,868,540 | $2,502,500 | $ 18,881 | $186,567 | $ | 13,664,373 | 2018 | $ | 1,276,923 | — | $ | 11,064,897 | $3,337,880 | $ 80,663 | $408,283 | $ | 16,168,646 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2016 | $ | 519,231 | $ | 1,500,000 | $ | 3,151,199 | $ 447,799 | $ 1,598 | $181,568 | $ | 5,801,395 | 2017 | $ | 1,087,885 | — | $ | 9,868,540 | $2,502,500 | $ 18,881 | $186,567 | $ | 13,664,373 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Jeffrey D. Capello(7) |
|
2018 |
|
$ |
750,000 |
|
|
— |
|
$ |
2,889,224 |
|
|
$ 790,913 |
|
|
— |
|
|
$ 46,582 |
|
$ |
4,476,719 |
|
|
2019 |
|
$ |
783,173 |
|
|
— |
|
$ |
4,051,891 |
|
|
$ 883,575 |
|
|
— |
|
|
$ 95,450 |
|
$ |
5,814,089 |
| ||||||||||||||||||||||||||||||||
Executive Vice President | 2017 | $ | 28,846 | $ | 520,000 | — | — | — | $ 132 | $ | 548,978 | 2018 | $ | 750,000 | — | $ | 2,889,224 | $ 790,913 | — | $ 46,582 | $ | 4,476,719 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
and Chief Financial Officer | 2017 | $ | 28,846 | $ | 520,000 | — | — | — | $ 132 | $ | 548,978 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Michael D. Ehlers |
|
2018 |
|
$ |
829,511 |
|
|
— |
|
$ |
5,107,535 |
|
|
$ 917,837 |
|
|
$ 5,258 |
|
|
$186,510 |
|
$ |
7,046,651 |
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Executive Vice President, | 2017 | $ | 792,139 | — | $ | 3,157,338 | $1,012,034 | $ 1,799 | $101,671 | $ | 5,064,981 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Research & Development | 2016 | $ | 491,827 | $ | 1,170,177 | $ | 3,410,650 | $ 425,062 | $ 155 | $ 14,665 | $ | 5,512,536 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Susan H. Alexander |
|
2018 |
|
$ |
746,254 |
|
|
— |
|
$ |
4,359,590 |
|
|
$ 858,744 |
|
|
$188,056 |
|
|
$201,140 |
|
$ |
6,353,784 |
|
|
2019 |
|
$ |
772,373 |
|
|
— |
|
$ |
3,302,619 |
|
|
$1,033,451 |
|
|
$164,782 |
|
|
$181,785 |
|
$ |
5,455,010 |
| ||||||||||||||||||||||||||||||||
Executive Vice President, | 2017 | $ | 720,630 | — | $ | 3,157,338 | $ 856,305 | $148,961 | $178,008 | $ | 5,061,242 | 2018 | $ | 746,254 | — | $ | 4,359,590 | $ 858,744 | $188,056 | $201,140 | $ | 6,353,784 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Chief Legal Officer | 2016 | $ | 693,663 | — | $ | 2,337,051 | $ 589,514 | $133,726 | $171,114 | $ | 3,925,068 | 2017 | $ | 720,630 | — | $ | 3,157,338 | $ 856,305 | $148,961 | $178,008 | $ | 5,061,242 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
and Secretary | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Paul F. McKenzie |
|
2018 |
|
$ |
630,455 |
|
|
— |
|
$ |
4,083,884 |
|
|
$ 784,784 |
|
|
$ 12,367 |
|
|
$154,406 |
|
$ |
5,665,896 |
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Alfred W. Sandrock, Jr.(8) |
|
2019 |
|
$ |
798,723 |
|
|
— |
|
$ |
3,360,682 |
|
|
$ 893,038 |
|
|
$ 78,506 |
|
|
$181,616 |
|
$ |
5,312,565 |
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Executive Vice President, | 2017 | $ | 600,433 | — | $ | 3,514,451 | $ 796,648 | $ 2,471 | $101,254 | $ | 5,015,257 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Pharmaceutical Operations & Technology | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Research & Development | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Chirfi Guindo |
|
2019 |
|
$ |
526,539 |
|
|
— |
|
$ |
3,379,426 |
|
|
$ 706,384 |
|
|
— |
|
|
$ 82,173 |
|
$ |
4,694,522 |
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Executive Vice President, | �� | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Global Product Strategy and Commercialization | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Michael D. Ehlers(9) |
|
2019 |
|
$ |
708,338 |
|
|
— |
|
$ |
4,401,172 |
|
|
— |
|
|
$ 5,872 |
|
|
$172,602 |
|
$ |
5,287,984 |
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Former Executive Vice | 2018 | $ | 829,511 | — | $ | 5,107,535 | $ 917,837 | $ 5,258 | $186,510 | $ | 7,046,651 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
President Research & | 2017 | $ | 792,139 | — | $ | 3,157,338 | $1,012,034 | $ 1,799 | $101,671 | $ | 5,064,981 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Development |
Notes to the Summary Compensation Table
(1) | The |
(2) | The amounts in column (e) reflect the grant date fair value computed in accordance with ASC 718 for RSUs, MSUs, PSUs and |
2018 | 2017 | 2016 | 2019 | 2018 | 2017 | |||||||||||||||||||||||||||||||||||||||||||
Executive Officer | Target Payout | Maximum Payout | Target Payout | Maximum Payout | Target Payout | Maximum Payout | Target Payout | Maximum Payout | Target Payout | Maximum Payout | Target Payout | Maximum Payout | ||||||||||||||||||||||||||||||||||||
Mr. Vounatsos |
| $11,064,897 |
|
| $22,129,794 |
|
| $9,868,540 |
|
| $19,737,080 |
|
| $3,151,199 |
|
| $6,302,398 |
|
| $12,352,030 |
|
| $24,704,060 |
|
| $11,064,897 |
|
| $22,129,794 |
|
| $9,868,540 |
|
| $19,737,080 |
| ||||||||||||
Mr. Capello |
| $ 2,889,224 |
|
| $ 5,778,448 |
|
| — |
|
| — |
|
| — |
|
| — |
|
| $ 4,051,891 |
|
| $ 8,103,782 |
|
| $ 2,889,224 |
|
| $ 5,778,448 |
|
| — |
|
| — |
| ||||||||||||
Ms. Alexander |
| $ 3,302,619 |
|
| $ 6,605,238 |
|
| $ 3,078,822 |
|
| $ 6,157,644 |
|
| $3,157,338 |
|
| $ 6,314,676 |
| ||||||||||||||||||||||||||||||
Dr. Sandrock |
| $ 3,360,682 |
|
| $ 6,721,364 |
|
| — |
|
| — |
|
| — |
|
| — |
| ||||||||||||||||||||||||||||||
Mr. Guindo |
| $ 3,379,426 |
|
| $ 6,758,852 |
|
| — |
|
| — |
|
| — |
|
| — |
| ||||||||||||||||||||||||||||||
Dr. Ehlers |
| $ 3,608,292 |
|
| $ 7,216,584 |
|
| $3,157,338 |
|
| $ 6,314,676 |
|
| $2,540,438 |
|
| $5,080,876 |
|
| $ 4,401,172 |
|
| $ 8,802,344 |
|
| $ 3,608,292 |
|
| $ 7,216,584 |
|
| $3,157,338 |
|
| $ 6,314,676 |
| ||||||||||||
Ms. Alexander |
| $ 3,078,822 |
|
| $ 6,157,644 |
|
| $3,157,338 |
|
| $ 6,314,676 |
|
| $2,337,051 |
|
| $4,674,102 |
| ||||||||||||||||||||||||||||||
Dr. McKenzie |
| $ 2,883,856 |
|
| $ 5,767,712 |
|
| $2,713,851 |
|
| $ 5,427,702 |
|
| — |
|
| — |
|
5 |
Executive Compensation Matters (continued) |
(3) | The amounts in column (f) reflect actual bonuses paid under our annual bonus plan for the applicable year. |
(4) | The amounts in column (g) reflect earnings in the SSP that are in excess of 120% of the applicable federal long-term rate. The federal long-term rates applied in this calculation are |
(5) | The amounts in column (h) for |
Executive Officer | Company Matching Contribution to 401(k) Plan Account | Company Contribution to SSP Account | Personal Health and Financial Planning(8) | Value of Company- Paid Life Insurance Premiums | Relocation(9) | Company Matching Contribution to 401(k) Plan Account | Company Contribution to SSP Account | Personal Health and Financial Planning(10) | Value of Company- Paid Life Insurance Premiums | Relocation(11) | ||||||||||||||||||||||||||||||||||||||||
Mr. Vounatsos | $ | 16,500 | $ | 387,134 | $ | 3,594 | $ | 1,055 |
| — | $ | 16,800 | $ | 428,602 | $ | 3,243 | $ | 1,055 |
| — | ||||||||||||||||||||||||||||||
Mr. Capello | $ | 16,500 | $ | 28,500 |
| — | $ | 1,582 |
| — | $ | 16,800 | $ | 73,578 | $ | 3,490 | $ | 1,582 |
| — | ||||||||||||||||||||||||||||||
Ms. Alexander | $ | 16,800 | $ | 156,579 | $ | 6,825 | $ | 1,581 |
| — | ||||||||||||||||||||||||||||||||||||||||
Dr. Sandrock | $ | 16,800 | $ | 155,702 | $ | 7,500 | $ | 1,614 |
| — | ||||||||||||||||||||||||||||||||||||||||
Mr. Guindo | $ | 16,800 | $ | 50,514 |
| — | $ | 1,055 | $ | 13,804 | ||||||||||||||||||||||||||||||||||||||||
Dr. Ehlers | $ | 16,500 | $ | 168,428 |
| — | $ | 1,582 |
| — | $ | 16,118 | $ | 155,166 | — | $ | 1,318 | — | ||||||||||||||||||||||||||||||||
Ms. Alexander | $ | 16,500 | $ | 176,553 | $ | 6,560 | $ | 1,527 |
| — | ||||||||||||||||||||||||||||||||||||||||
Dr. McKenzie | $ | 16,500 | $ | 118,612 | $ | 5,179 | $ | 1,274 | $ | 12,841 |
(6) | Mr. Vounatsos joined Biogen as our Executive Vice President, Chief Commercial Officer effective April 18, 2016. Mr. Vounatsos was appointed our Chief Executive Officer and a member of our Board of Directors effective January 6, 2017. His base salary for 2017 was $1,100,000, of which he received a pro rata share from January 6, 2017 to December 31, 2017. From January 1, 2017 to January 5, 2017, he was paid at his prior rate of base salary ($750,000). |
(7) | Mr. Capello was appointed as our Executive Vice President and Chief Financial Officer effective December 11, 2017. His base salary for 2017 was $750,000, of which he received a pro rata share from December 11, 2017 to December 31, 2017. Mr. Capello was not eligible to participate in our 2017 annual bonus plan and was not granted any stock awards in 2017. |
(8) | Dr. Sandrock was appointed as our Executive Vice President, Research & Development, in addition to his responsibilities as Chief Medical Officer, effective October 1, 2019. His 2019 annual bonus target was increased to 75% of base salary, effective as of October 1, 2019. From January 1, 2019 to September 30, 2019, his annual bonus target was 70% of base salary as Chief Medical Officer. Dr. Sandrock’s payout under our 2019 bonus plan was based on a prorated blend of such annual bonus targets. Effective January 27, 2020, Dr. Sandrock ceased to serve as our Chief Medical Officer but remains employed as our Executive Vice President, Research & Development. |
(9) | Dr. Ehlers ceased to be our Executive Vice President, Research & Development effective October 11, 2019. His base salary for 2019 was $884,140, of which he received a pro rata share from January 1, 2019 to October 11, 2019. Dr. Ehlers was not eligible to receive a bonus under our 2019 annual bonus plan. |
(10) | Represents reimbursements of expenses relating to tax, financial and estate planning and executive physicals as described under the heading “Executive Physicals, Tax Preparation, Financial and Estate Planning” above. |
The amount for |
5 |
Executive Compensation Matters (continued) |
20182019 Grants of Plan-Based Awards
The following table shows additional information regarding all grants of plan-based awards made to our NEOs for the year ended December 31, 2018.2019.
Estimated Future Payouts Under Non-Equity Incentive Plan |
Estimated Future Payouts | All Other Stock Awards: Number of or Units | Grant Date Fair Value of Stock Awards(2) (j) | Estimated Future Payouts Under Non-Equity Incentive Plan |
Estimated Future Payouts | All Other Stock Awards: Number of or Units | Grant Date Fair Value of Stock Awards(2) (j) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Name (a) | Grant Date (b) | Notes | Threshold (c) | Target (d) | Maximum (e) | Threshold (f) | Target (g) | Maximum (h) | Grant Date (b) | Notes | Threshold (c) | Target (d) | Maximum (e) | Threshold (f) | Target (g) | Maximum (h) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Michel Vounatsos |
| 02/12/2018 | (3) |
| — |
| — |
| — |
| 9,080 |
| 18,160 |
| 36,320 |
| — | $ | 6,856,251 |
| 02/12/2019 |
| (3) |
| — |
|
| — |
|
| — |
| 9,393 | 18,785 | 37,570 | — | $ | 7,194,513 | ||||||||||||||||||||||||||||||||||||||||||||||||
| 02/12/2018 | (4) |
| — |
| — |
| — |
| 6,646 |
| 13,292 |
| 26,584 |
| — | $ | 4,208,646 |
| 02/12/2019 |
| (4) |
| — |
|
| — |
|
| — |
| 8,073 | 16,146 | 32,292 | — | $ | 5,157,517 | |||||||||||||||||||||||||||||||||||||||||||||||||
| 02/12/2018 | (5) | $ | 455,000 | $ | 1,820,000 | $ | 4,095,000 |
| — |
| — |
| — |
| — |
| — |
| 02/12/2019 |
| (5) | $ | 525,000 |
| $ | 2,100,000 |
| $ | 4,725,000 |
| — | — | — | — |
| — |
| ||||||||||||||||||||||||||||||||||||||||||||||||
Jeffrey D. Capello |
| 01/02/2018 | (3) |
| — |
| — |
| — |
| 2,245 |
| 4,490 |
| 8,980 |
| — | $ | 1,789,136 |
| 02/12/2019 |
| (3) |
| — |
|
| — |
|
| — |
| 3,130 | 6,260 | 12,520 | — | $ | 2,397,563 | ||||||||||||||||||||||||||||||||||||||||||||||||
| 01/02/2018 | (4) |
| — |
| — |
| — |
| 1,646 |
| 3,292 |
| 6,584 |
| — | $ | 1,100,088 |
| 02/12/2019 |
| (4) |
| — |
|
| — |
|
| — |
| 2,590 | 5,179 | 10,358 | — | $ | 1,654,328 | |||||||||||||||||||||||||||||||||||||||||||||||||
| 02/12/2018 | (5) | $ | 131,250 | $ | 525,000 | $ | 1,181,250 |
| — |
| — |
| — |
| — |
| — |
| 02/12/2019 |
| (5) | $ | 147,656 |
| $ | 590,625 |
| $ | 1,328,906 |
| — | — | — | — |
| — |
| ||||||||||||||||||||||||||||||||||||||||||||||||
Susan H. Alexander |
| 02/12/2019 |
| (3) |
| — |
|
| — |
|
| — |
| 2,505 | 5,010 | 10,020 | — | $ | 1,918,848 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 02/12/2019 |
| (4) |
| — |
|
| — |
|
| — |
| 2,166 | 4,332 | 8,664 | — | $ | 1,383,771 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 02/12/2019 |
| (5) | $ | 135,695 |
| $ | 542,779 |
| $ | 1,221,252 |
| — | — | — | — |
| — |
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Alfred W. Sandrock, Jr. |
| 02/12/2019 |
| (3) |
| — |
|
| — |
|
| — |
| 2,583 | 5,165 | 10,330 | — | $ | 1,978,189 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 02/12/2019 |
| (4) |
| — |
|
| — |
|
| — |
| 2,164 | 4,328 | 8,656 | — | $ | 1,382,493 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 02/12/2019 |
| (5) | $ | 142,749 |
| $ | 570,996 |
| $ | 1,284,742 |
| — | — | — | — |
| — |
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Chirfi Guindo |
| 02/12/2019 |
| (3) |
| — |
|
| — |
|
| — |
| 2,740 | 5,480 | 10,960 | — | $ | 2,098,831 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 02/12/2019 |
| (4) |
| — |
|
| — |
|
| — |
| 2,005 | 4,009 | 8,018 | — | $ | 1,280,595 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 02/12/2019 |
| (5) | $ | 92,750 |
| $ | 371,000 |
| $ | 834,750 |
| — | — | — | — |
| — |
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Michael D. Ehlers |
| 02/12/2018 | (3) |
| — |
| — |
| — |
| 2,960 |
| 5,920 |
| 11,840 |
| — | $ | 2,235,068 |
| 02/12/2019 |
| (3) |
| — |
|
| — |
|
| — |
| 3,365 | 6,730 | 13,460 | — | $ | 2,577,546 | ||||||||||||||||||||||||||||||||||||||||||||||||
| 02/12/2018 | (4) |
| — |
| — |
| — |
| 2,169 |
| 4,337 |
| 8,674 |
| — | $ | 1,373,224 |
| 02/12/2019 |
| (4) |
| — |
|
| — |
|
| — |
| 2,855 | 5,709 | 11,418 | — | $ | 1,823,626 | |||||||||||||||||||||||||||||||||||||||||||||||||
| 02/12/2018 | (5) | $ | 145,966 | $ | 583,866 | $ | 1,313,698 |
| — |
| — |
| — |
| — |
| — |
| 02/12/2019 |
| (5) | $ | 165,776 |
| $ | 663,105 |
| $ | 1,491,986 |
| — | — | — | — |
| — |
| ||||||||||||||||||||||||||||||||||||||||||||||||
| 02/12/2018 | (6) |
| — |
| — |
| — |
| — |
| — |
| — |
| 4,735 | $ | 1,499,243 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Susan H. Alexander |
| 02/12/2018 | (3) |
| — |
| — |
| — |
| 2,528 |
| 5,055 |
| 10,110 |
| — | $ | 1,908,558 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 02/12/2018 | (4) |
| — |
| — |
| — |
| 1,848 |
| 3,696 |
| 7,392 |
| — | $ | 1,170,264 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 02/12/2018 | (5) | $ | 131,106 | $ | 524,424 | $ | 1,179,954 |
| — |
| — |
| — |
| — |
| — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 02/12/2018 | (6) |
| — |
| — |
| — |
| — |
| — |
| — |
| 4,045 | $ | 1,280,768 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Paul F. McKenzie |
| 02/12/2018 | (3) |
| — |
| — |
| — |
| 2,368 |
| 4,735 |
| 9,470 |
| — | $ | 1,787,683 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 02/12/2018 | (4) |
| — |
| — |
| — |
| 1,731 |
| 3,462 |
| 6,924 |
| — | $ | 1,096,173 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 02/12/2018 | (5) | $ | 110,939 | $ | 443,757 | $ | 998,452 |
| — |
| — |
| — |
| — |
| — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 02/12/2018 | (6) |
| — |
| — |
| — |
| — |
| — |
| — |
| 3,790 | $ | 1,200,028 |
Notes to the 20182019 Grants of Plan-Based Awards Table
(1) | Reflects the potential future payouts of awards granted in |
(2) | Represents the grant date fair value of PSUs, MSUs and RSUs computed in accordance with ASC 718, excluding the effect of estimated forfeitures. The grant date fair value for MSU awards is estimated as of the date of grant using a lattice model with a Monte Carlo simulation based on the probable outcome of applicable performance conditions. The grant date fair value for |
(3) | These amounts relate to the annual grant of MSUs. MSU grants represent 50% of the annual LTI grant date target |
(4) | These amounts relate to the annual grant of PSUs. PSU grants represent 50% of the annual LTI grant date target |
(5) | These amounts relate to our |
5 |
Executive Compensation Matters (continued) |
base salary for Mr. Vounatsos, 75% of base salary for Mr. Capello and Dr. Ehlers and 70% of base salary for Ms. Alexander and Mr. Guindo. For Dr. Sandrock, the amounts reported are based on a prorated blend of his bonus targets for 2019, as described in further detail under the heading “Annual Bonus Plan” above. The amounts in column (c), (d) and (e) represent a payment if the Company Multiplier and the Individual Multiplier were each 50%, 100% and 150%, respectively. Actual amounts paid to each NEO under our |
|
Outstanding Equity Awards at 20182019 FiscalYear-End
The following table summarizes the equity awards that were outstanding as of December 31, 2018,2019, for each of our NEOs.
Option Awards | Stock Awards | Stock Awards | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity Incentive Plan Awards | Equity Incentive Plan Awards | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Grant (b) | Notes |
Number of Securities Underlying Unexercised | Option Exercise Price (e) | Option Expiration Date (f) | Number of Shares or Units of Stock That Have Not Vested (g) | Market Value of Shares or Units of Stock That Have Not Vested (h) | Number of Unearned Shares or Units That Have Not Vested (i) | Market Value of Unearned Shares or Units That Have Not Vested(1) (j) | |||||||||||||||||||||||||||||||||||||||||||||||||||
(a) | Exercisable (c) | Unexercisable (d) | Grant (b) | Notes | Number (g) | Market That (h) | Number (i) | Market (j) | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Michel Vounatsos |
| 5/2/2016 |
| (2) | — | — |
| — |
|
| — |
|
| 2,320 |
| $ | 698,134 |
|
| — |
|
| — |
|
| 2/15/2017 |
| (2) |
| 7,145 |
| $ | 2,120,136 |
|
| — |
|
| — |
| ||||||||||||||||||||
| 5/2/2016 |
| (3) | — | — |
| — |
|
| — |
|
| — |
|
| — |
|
| 3,252 |
| $ | 978,592 |
|
| 2/15/2017 |
| (3) |
| — |
|
| — |
|
| 8,504 |
| $ | 2,523,392 |
| |||||||||||||||||||||
| 2/15/2017 |
| (2) | — | — |
| — |
|
| — |
|
| 14,080 |
| $ | 4,236,954 |
|
| — |
|
| — |
|
| 2/12/2018 |
| (3) |
| — |
|
| — |
|
| 24,216 |
| $ | 7,185,614 |
| |||||||||||||||||||||
| 2/15/2017 |
| (3) | — | — |
| — |
|
| — |
|
| — |
|
| — |
|
| 17,002 |
| $ | 5,116,242 |
|
| 2/12/2018 |
| (4) |
| 8,461 |
| $ | 2,510,633 |
|
| 13,366 |
| $ | 3,966,093 |
| |||||||||||||||||||||
| 2/12/2018 |
| (3) | — | — |
| — |
|
| — |
|
| — |
|
| — |
|
| 36,320 |
| $ | 10,929,414 |
|
| 2/12/2019 |
| (3) |
| — |
|
| — |
|
| 18,785 |
| $ | 5,574,073 |
| |||||||||||||||||||||
| 2/12/2018 |
| (4) | — | — |
| — |
|
| — |
|
| 4,602 |
| $ | 1,384,834 |
|
| 15,763 |
| $ | 4,743,402 |
|
| 2/12/2019 |
| (4) |
| 3,991 |
| $ | 1,184,249 |
|
| 16,306 |
| $ | 4,838,479 |
| |||||||||||||||||||||
Jeffrey D. Capello |
| 1/2/2018 |
| (3) | — | — |
| — |
|
| — |
|
| — |
|
| — |
|
| 4,490 |
| $ | 1,351,131 |
|
| 1/2/2018 |
| (3) |
| — |
|
| — |
|
| 2,994 |
| $ | 888,410 |
| ||||||||||||||||||||
| 1/2/2018 |
| (4) | — | — |
| — |
|
| — |
|
| 1,146 |
| $ | 344,854 |
|
| 3,893 |
| $ | 1,171,482 |
| |||||||||||||||||||||||||||||||||||||
Michael D. Ehlers |
| 6/1/2016 |
| (2) | — | — |
| — |
|
| — |
|
| 1,821 |
| $ | 547,975 |
|
| — |
|
| — |
| ||||||||||||||||||||||||||||||||||||
| 6/1/2016 |
| (3) | — | — |
| — |
|
| — |
|
| — |
|
| — |
|
| 2,502 |
| $ | 752,902 |
| |||||||||||||||||||||||||||||||||||||
| 6/1/2016 |
| (5) | — | — |
| — |
|
| — |
|
| 1,036 |
| $ | 311,753 |
|
| — |
|
| — |
| |||||||||||||||||||||||||||||||||||||
| 2/15/2017 |
| (2) | — | — |
| — |
|
| — |
|
| 4,504 |
| $ | 1,355,344 |
|
| — |
|
| — |
| |||||||||||||||||||||||||||||||||||||
| 2/15/2017 |
| (3) | — | — |
| — |
|
| — |
|
| — |
|
| — |
|
| 5,442 |
| $ | 1,637,607 |
| |||||||||||||||||||||||||||||||||||||
| 2/12/2018 |
| (3) | — | — |
| — |
|
| — |
|
| — |
|
| — |
|
| 11,840 |
| $ | 3,562,893 |
|
| 1/2/2018 |
| (4) |
| 2,109 |
| $ | 625,804 |
|
| 3,295 |
| $ | 977,725 |
| |||||||||||||||||||||
| 2/12/2018 |
| (4) | — | — |
| — |
|
| — |
|
| 1,501 |
| $ | 451,681 |
|
| 5,143 |
| $ | 1,547,632 |
|
| 2/12/2019 |
| (3) |
| — |
|
| — |
|
| 6,260 |
| $ | 1,857,530 |
| |||||||||||||||||||||
| 2/12/2018 |
| (5) | — | — |
| — |
|
| — |
|
| 4,735 |
| $ | 1,424,856 |
|
| — |
|
| — |
|
| 2/12/2019 |
| (4) |
| 1,330 |
| $ | 394,651 |
|
| 5,434 |
| $ | 1,612,431 |
| |||||||||||||||||||||
Susan H. Alexander |
| 2/24/2009 |
| (6) |
| 6,395 |
|
| — |
|
| $48.52 |
|
| 2/23/2019 |
|
| — |
|
| — |
|
| — |
|
| — |
|
| 2/15/2017 |
| (2) |
| 2,287 |
| $ | 678,622 |
|
| — |
|
| — |
| ||||||||||||||||
| 2/22/2016 |
| (2) | — | — |
| — |
|
| — |
|
| 1,806 |
| $ | 543,462 |
|
| — |
|
| — |
|
| 2/15/2017 |
| (3) |
| — |
|
| — |
|
| 2,724 |
| $ | 808,293 |
| |||||||||||||||||||||
| 2/22/2016 |
| (3) | — | — |
| — |
|
| — |
|
| — |
|
| — |
|
| 2,482 |
| $ | 746,883 |
|
| 2/12/2018 |
| (3) |
| — |
|
| — |
|
| 6,742 |
| $ | 2,000,554 |
| |||||||||||||||||||||
| 2/15/2017 |
| (2) | — | — |
| — |
|
| — |
|
| 4,504 |
| $ | 1,355,344 |
|
| — |
|
| — |
|
| 2/12/2018 |
| (4) |
| 2,351 |
| $ | 697,612 |
|
| 3,718 |
| $ | 1,103,242 |
| |||||||||||||||||||||
| 2/15/2017 |
| (3) | — | — |
| — |
|
| — |
|
| — |
|
| — |
|
| 5,442 |
| $ | 1,637,607 |
|
| 2/12/2018 |
| (5) |
| 2,697 |
| $ | 800,281 |
|
| — |
|
| — |
| |||||||||||||||||||||
| 2/12/2018 |
| (3) | — | — |
| — |
|
| — |
|
| — |
|
| — |
|
| 10,110 |
| $ | 3,042,301 |
|
| 2/12/2019 |
| (3) |
| — |
|
| — |
|
| 5,010 |
| $ | 1,486,617 |
| |||||||||||||||||||||
| 2/12/2018 |
| (4) | — | — |
| — |
|
| — |
|
| 1,279 |
| $ | 384,877 |
|
| 4,384 |
| $ | 1,319,233 |
|
| 2/12/2019 |
| (4) |
| 1,064 |
| $ | 315,721 |
|
| 4,349 |
| $ | 1,290,479 |
| |||||||||||||||||||||
| 2/12/2018 |
| (5) | — | — |
| — |
|
| — |
|
| 4,045 |
| $ | 1,217,221 |
|
| — |
|
| — |
| |||||||||||||||||||||||||||||||||||||
Paul F. McKenzie |
| 3/1/2016 |
| (2) | — | — |
| — |
|
| — |
|
| 616 |
| $ | 185,367 |
|
| — |
|
| — |
| ||||||||||||||||||||||||||||||||||||
Alfred W. Sandrock, Jr. |
| 2/15/2017 |
| (2) |
| 1,786 |
| $ | 529,960 |
|
| — |
|
| — |
| ||||||||||||||||||||||||||||||||||||||||||||
| 3/1/2016 |
| (3) | — | — |
| — |
|
| — |
|
| — |
|
| — |
|
| 848 |
| $ | 255,180 |
|
| 2/15/2017 |
| (3) |
| — |
|
| — |
|
| 2,128 |
| $ | 631,441 |
| |||||||||||||||||||||
| 2/15/2017 |
| (2) | — | — |
| — |
|
| — |
|
| 3,875 |
| $ | 1,166,065 |
|
| — |
|
| — |
|
| 2/12/2018 |
| (3) |
| — |
|
| — |
|
| 5,528 |
| $ | 1,640,323 |
| |||||||||||||||||||||
| 2/15/2017 |
| (3) | — | — |
| — |
|
| — |
|
| — |
|
| — |
|
| 4,674 |
| $ | 1,406,500 |
|
| 2/12/2018 |
| (4) |
| 1,931 |
| $ | 572,986 |
|
| 3,051 |
| $ | 905,323 |
| |||||||||||||||||||||
| 3/1/2017 |
| (5) | — | — |
| — |
|
| — |
|
| 1,820 |
| $ | 547,674 |
|
| — |
|
| — |
|
| 2/12/2018 |
| (5) |
| 2,211 |
| $ | 656,070 |
|
| — |
|
| — |
| |||||||||||||||||||||
| 2/12/2018 |
| (3) | — | — |
| — |
|
| — |
|
| — |
|
| — |
|
| 9,470 |
| $ | 2,849,712 |
|
| 2/12/2019 |
| (3) |
| — |
|
| — |
|
| 5,165 |
| $ | 1,532,610 |
| |||||||||||||||||||||
| 2/12/2018 |
| (4) | — | — |
| — |
|
| — |
|
| 1,194 |
| $ | 359,298 |
|
| 4,108 |
| $ | 1,236,179 |
|
| 2/12/2019 |
| (4) |
| 1,096 |
| $ | 325,216 |
|
| 4,484 |
| $ | 1,330,537 |
| |||||||||||||||||||||
Chirfi Guindo |
| 12/1/2017 |
| (3) |
| — |
|
| — |
|
| 587 |
| $ | 174,181 |
| ||||||||||||||||||||||||||||||||||||||||||||
| 2/12/2018 |
| (5) | — | — |
| — |
|
| — |
|
| 3,790 |
| $ | 1,140,487 |
|
| — |
|
| — |
|
| 12/1/2017 |
| (5) |
| 784 |
| $ | 232,636 |
|
| — |
|
| — |
| |||||||||||||||||||||
| 2/12/2019 |
| (3) |
| — |
|
| — |
|
| 5,480 |
| $ | 1,626,080 |
| |||||||||||||||||||||||||||||||||||||||||||||
| 2/12/2019 |
| (4) |
| 1,166 |
| $ | 345,987 |
|
| 4,756 |
| $ | 1,411,248 |
|
Notes to the Outstanding Equity Awards at 20182019 Fiscal Year End Table
(1) | The market value of awards is based on the closing price of our stock on December 31, |
(2) | CSPUs were granted in |
(3) | MSUs were granted in 2019, 2018 |
|
(4) | PSUs were granted in 2019 and 2018. The PSUs are subject to three-year cliff vesting. In addition, 60% of the PSUs (based on the grant date target value) will be settled in shares of our common stock and performance will be based upon achievement of cumulative three-year financial and pipeline goals. The remaining 40% of the PSUs will be settled in cash and performance will be based upon the achievement of three annual financial goals determined at the beginning of each relevant year. The number and value shown in |
53 |
5 | Executive Compensation Matters (continued) |
columns (g) and (h), respectively, reflect the number of 2019 Cash-Settled PSUs and 2018 Cash-Settled PSUs that were earned based on our achievement of the annual performance goals for the |
(5) | RSUs were granted in 2018 |
|
20182019 Option Exercises and Stock Vested
Our executive officers must usepre-established trading plans to sell shares of our common stock. Trading plans may only be entered into during an open trading window and when the executive is not in possession of materialnon-public information about the Company, and we require a waiting period following the establishment of a trading plan before any trades may be executed. Our policy is designed to provide safeguards while allowing our executives an opportunity to realize the value intended by the Company in granting equity-based LTI awards.
Our NEOs are also subject to the stock ownership guidelines described above under the heading “Stock Ownership Guidelines.”
The following table shows information regarding the exercise of stock options and the vesting of stock awards for each NEO during the year ended December 31, 2018. None of the NEOs exercised stock options during the year ended December 31, 2018.2019.
Stock Awards | Option Awards | Stock Awards | |||||||||||||||||||||||||||||||||||||||||||
Name | Number of Shares Acquired on Vesting(1) | Value Realized on Vesting(2)(3) | Number of Shares Acquired on Exercise(1) | Value Realized upon Exercise(2) | Number of Shares Acquired on Vesting(1) | Value Realized on Vesting(3) | |||||||||||||||||||||||||||||||||||||||
Michel Vounatsos |
| 16,294 | $ | 5,013,149 |
| — |
| — |
| 22,902 | $ | 7,122,764 | |||||||||||||||||||||||||||||||||
Jeffrey D. Capello |
| — |
| — |
| — |
| — |
| 1,331 | $ | 405,542 | |||||||||||||||||||||||||||||||||
Susan H. Alexander |
| 6,395 | $ | 1,770,200 |
| 10,640 | $ | 3,469,029 | |||||||||||||||||||||||||||||||||||||
Alfred W. Sandrock, Jr. |
| — |
| — |
| 13,143 | $ | 4,258,808 | |||||||||||||||||||||||||||||||||||||
Chirfi Guindo |
| — |
| — |
| 1,326 | $ | 397,548 | |||||||||||||||||||||||||||||||||||||
Michael D. Ehlers |
| 8,115 | $ | 2,471,489 |
| — |
| — |
| 11,713 | $ | 3,404,982 | |||||||||||||||||||||||||||||||||
Susan H. Alexander |
| 9,111 | $ | 2,844,100 | |||||||||||||||||||||||||||||||||||||||||
Paul F. McKenzie |
| 5,419 | $ | 1,672,605 |
Notes to the 20182019 Option Exercises and Stock Vested Table
(1) | CSPUs were settled in cash for all of our NEOs. The number of actual shares of our common stock acquired on vesting with respect to MSUs, RSUs and |
Net Shares Acquired(4) | |||||
Mr. Vounatsos |
| 8,028 | |||
Mr. Capello |
| 917 | |||
Ms. Alexander | 7,132 | ||||
Dr. Sandrock | 5,761 | ||||
Mr. Guindo | 935 | ||||
Dr. Ehlers |
| ||||
|
| ||||
|
|
(2) |
|
The value realized for MSUs and RSUs are calculated by multiplying the closing price of a share of our common stock on the vesting date by the total number of shares that vested on such date. The value realized for CSPUs is calculated using the30-day average closing price of the common stock of the Company through the vesting date. |
|
(4) | MSUs, RSUs and |
54 |
5 | Executive Compensation Matters (continued) |
20182019Non-Qualified Deferred Compensation
The SSP covers our executive officers and other eligible employees in the U.S. Employees whose base salary and annual cash incentives for the year exceed a specified Internal Revenue ServicesService’s limit ($275,000280,000 in 2018)2019) receive a Company-paid restoration match on the portion of their base salary, annual bonus and cash payments in respect of CSPUs and PSUs, as applicable, that exceeds this limit; the restoration match equals 6% of this excess compensation. The restoration match feature is intended to provide the amount of matching employer contributions that the participant would otherwise have been eligible to receive under our 401(k) plan but for the $275,000$280,000 limit imposed by Section Section��401(a)(17) of the Internal Revenue Code. In addition, eligible employees may make voluntary contributions of up to 80% of their base salary and 100% of their annual bonus and cash payments in respect of CSPUs and PSUs, as applicable, to the SSP, and thereby defer income taxes on such amounts until distribution is made from the SSP. The Company does not match participants’ voluntary contributions to the SSP. The SSP provides for immediate vesting of the restoration match consistent with our immediate vesting of the Company match provided under our 401(k) plan.
Notional SSP accounts are maintained for each participant. Accounts include employee and employer contributions and reflect the performance of notional investments selected by the employee or a default investment if the employee does not make a selection. These notional investment options
include the mutual funds offered under our 401(k) plan as well as a fixed rate option which earns a rate of return determined each year by the Company’s retirement committee. For contributions to the SSP fixed rate option in 2018,2019, this rate of return was set at 5%. Contributions to the fixed rate option continue to earn interest at the rate of return that was in effect during the year of contribution. The excess of the interest rate paid on the fixed rate option above 120% of the applicable federal long-term rate (compounded quarterly) earned by our NEOs during 20182019 is shown in the Summary Compensation Table. We fund the SSP liabilities through corporate-owned life insurance (COLI), which we purchase with the written consent of SSP participants, and investments in mutual funds. We believe that the COLI policies and mutual funds will be sufficient to cover plan liabilities through the projected payout date so the plan will not require direct funding by the Company. Upon enrollment in the SSP, a participant must elect when and how distributions will be made from the participant’s account. Distributions can be made upon termination of the participant’s employment, either in a lump sum or up to 15 annual installments, or at a specified future date while the participant is still employed (an“in-service” distribution), either in a lump sum or up to 5 annual installments. Further, upon enrollment, a participant must also elect a distribution method upon death or a change in control of the Company, which can either be a lump sum payment or, if different, the method selected for payment upon termination of employment.
The following table shows a summary of all contributions to, earnings on and distributions received from the SSP for each of our NEOs for the year ended December 31, 2018.2019. The account balances as ofyear-end include all contributions and interest amounts earned by our NEOs through the end of 20182019 plus the SSP contributions that the Company made in early 20192020 based on earnings in the last quarter of 2018.2019.
Name | Executive Contributions in Last Fiscal Year(1) | Company Contributions in Last Fiscal Year(2) | Aggregate Earnings in Last Fiscal Year(3) | Aggregate Distributions in Last Fiscal Year | Aggregate Year-End(4) | |||||||||||||
Michel Vounatsos | $ | 3,071,852 |
| $ | 387,134 |
| $ | 205,737 |
| — | $ | 5,160,044 |
| |||||
Jeffrey D. Capello |
| — |
| $ | 28,500 |
| $ | 60 |
| — | $ | 28,560 |
| |||||
Michael D. Ehlers | $ | 552,463 |
| $ | 168,428 |
| $ | (80,992 | ) | — | $ | 1,270,192 |
| |||||
Susan H. Alexander | $ | 826,451 |
| $ | 176,553 |
| $ | 392,167 |
| — | $ | 7,259,032 |
| |||||
Paul F. McKenzie | $ | 860,425 |
| $ | 118,612 |
| $ | 2,629 |
| — | $ | 1,320,342 |
|
|
Name | Executive Contributions in Last Fiscal Year(1) | Company Contributions in Last Fiscal Year(2) | Aggregate Earnings in Last Fiscal Year(3) | Aggregate Distributions in Last Fiscal Year | Aggregate Year-End(4) | |||||
Michel Vounatsos | $1,765,018 | $428,602 | $332,637 | — | $7,696,687 | |||||
Jeffrey D. Capello | — | $ 73,578 | $ 1,153 | — | $ 98,705 | |||||
Susan H. Alexander | $ 838,564 | $156,579 | $465,550 | — | $8,726,654 | |||||
Alfred W. Sandrock, Jr. | $ 245,492 | $155,702 | $204,918 | — | $3,704,327 | |||||
Chirfi Guindo | $ 618,828 | $ 50,514 | $ 93,830 | — | $ 866,924 | |||||
Michael D. Ehlers | $ 487,853 | $155,166 | $309,949 | — | $2,216,743 |
Notes to the 20182019Non-Qualified Deferred Compensation Table
(1) | The amounts in this column are also included, in part, in columns (c), (e) and/or (f) of the Summary Compensation Table and represent deferral of salary, deferral of payments under our |
(2) | The amounts in this column are also included in column (h) of the Summary Compensation Table for |
55 |
5 | Executive Compensation Matters (continued) |
(3) | Earnings in excess of 120% of the applicable federal long-term rate are reported in column (g) of the Summary Compensation Table for |
(4) | The following table lists the compensation deferrals during 2018 and 2017 by the NEOs, as reported, where applicable, in the proxy statement for our 2019 and 2018 |
Amounts Previously Reported as Deferred | Amounts Previously Reported as Deferred | |||||||||||||||
Name | 2017 | 2016 | 2018 | 2017 | ||||||||||||
Mr. Vounatsos | $ | 1,025,867 |
| $ | 300,000 |
| $ | 3,071,852 |
| $ | 1,025,867 |
| ||||
Mr. Capello |
| — |
|
| — |
|
| — |
|
| — |
| ||||
Ms. Alexander | $ | 826,451 |
| $ | 573,897 |
| ||||||||||
Dr. Ehlers | $ | 365,160 |
| $ | 116,250 |
| $ | 552,463 |
| $ | 365,160 |
| ||||
Ms. Alexander | $ | 573,897 |
| $ | 259,816 |
| ||||||||||
Dr. McKenzie | $ | 221,128 |
|
| — |
|
This column also includes Company contributions and compensation earned and deferred in prior years, which was disclosed in our prior proxy statements where applicable, together with earnings on these amounts. |
Potential Payments Upon Termination or Change in Control
Executive Severance Policy
Definition of Key Terms Relating to our Executive Severance Policy
Our executive severance policy and benefits refer to certain key terms. These terms are defined in our 2017 Omnibus Equity Plan.
Executive Vice President Arrangements
Each of our NEOs, other than Mr. Vounatsos, were covered by our executive severance policy in 20182019 under which they were eligible to receive the following benefits if certain events occurred during 2018:2019:
|
The payment of these severance benefits is conditioned upon execution of an irrevocable release in favor of the Company.
The executive severance policy does not pay severance upon a termination for cause, voluntary resignation, retirement or death or disability.
In any case where severance is payable under our executive severance policy, our NEOs would also receive continuation of medical, dental and vision insurance benefits until the earlier of the last date of the severance period or the date the executive becomes eligible to participate in another employer’s medical, dental and vision insurance plans. NEOs would also be provided up to 12 months of executive-level outplacement services at our cost.
Annual Bonus Plan
Our annual bonus plan provides for a prorated target bonus payment upon a termination of employment due to the death or disability of the participant. As our annual bonus plan provides for payment of a full bonus to any participant remaining employed on the last day of the plan year, annual bonus amounts are not included in the Potential Post- TerminationPost-Termination Payments Table below.
|
Mr. Vounatsos’ Arrangements
We entered into an employment agreement with Mr. Vounatsos effective January 6, 2017, with2017. The agreement had an initial term endingthat ended on December 31, 2019, at which timeand now the term automatically extends for additional12-month periods until the agreement is otherwise terminated in accordance with its terms.
Under Mr. Vounatsos’ employment agreement, if his employment is terminated by the Company without cause or if he terminates his employment for good reason (referred to
56 |
5 | Executive Compensation Matters (continued) |
in his employment agreement as an involuntary employment action), then he would be entitled to a lump sum payment of cash severance in the amount of one andone-half times his annual base salary and target annual bonus. If, however, such termination of employment occurs within two years following a corporate transaction or a corporate change in control (CIC), then he would be entitled to a lump sum payment of cash severance in the amount of two times his annual base salary and target annual bonus. Mr. Vounatsos would also receive continuation of medical, dental and vision benefits until the earlier of 18 months (24 months if within 2 years of a CIC) following the date his employment terminates or the date upon which he becomes eligible to receive substantially comparable benefits through another employer. In addition, he would be entitled to receive a pro rata portion of his annual cash bonus for the year that such termination occurs based on actual performance or, in the event the termination occurs within two years following a CIC, a pro rata portion of his target annual bonus. Mr. Vounatsos would also be provided executive-level outplacement services for a12-month period following the termination date at our cost. The payment of Mr. Vounatsos’ severance benefits is conditioned upon execution of general release in favor of the Company.
Dr. Ehlers’ Arrangements
Dr. Ehlers voluntarily separated from the Company on October 11, 2019, and did not receive any severance benefits in connection with his separation.
Excise Tax Provisions
Before June 2009 we maintained an excise taxgross-up policy for all of our executives, including certain of our NEOs. Under this policy, if payments to these executive officers in the event of a corporate transaction or corporate change in control were subject to the excise tax under Internal Revenue Code Section 4999, we would pay the executive officer an additional amount that equals the amount of the excise tax, plus the income and other payroll taxes arising from our payment of the excise tax amount (280G taxgross-up), so that the executive officer realized the full intended benefit.
In June 2009 we changed our excise taxgross-up policy so that newly-hired executives are not eligible for any 280G taxgross-up but may elect to have severance payments reduced to an amount that will not be subject to excise tax.
Consistent with this policy, as Ms. Alexander wasand Dr. Sandrock were already eligible for this benefit prior to June 2009, she remainsthey each remained eligible for a 280G tax gross up. No other NEOup as of December 31, 2019. In March 2020 Ms. Alexander and Dr. Sandrock each voluntarily waived their rights to this benefit. As a result, no executive officer is currently eligible for this benefit.
Awards Under Equity Plans
Under the provisions of our 2008 Omnibus Equity Plan and our 2017 Omnibus Equity Plan, unless otherwise determined by our C&MD Committee at the time of grant, awards will vest or become exercisable in full immediately prior to an involuntary employment action that occurs within two years following a corporate change in control (i.e., upon a “double trigger”).
In the event of a corporate transaction, we can either cause the surviving corporation to assume all equity awards or accelerate their vesting and exercisability immediately before the corporate transaction. If the equity awards are assumed and an executive officer’s employment is terminated in an involuntary employment action within two years following the corporate transaction, the equity awards that are assumed will become fully vested and, if applicable, exercisable. Under our equity plans, any assumed awards that become vested will remain exercisable through the earlier of 12 months from the termination date or the original option expiration date.
If the holder of an equity award retires, which is defined under our equity plans as leaving the employment of Biogen after reaching age 55 with 10 consecutive years of service, each then outstanding time-based equity award or earned performance-based equity award not yet vested or exercisable will become immediately vested or exercisable upon such termination at a rate of 50% of the shares unvested at the time of retirement plus an additional 10% of the shares for each full year of service beyond 10 years of service (and performance-based awards would remain eligible to vest based on actual performance). Options vested under these provisions remain exercisable for 36 months from retirement or until the original option expiration date, if sooner. Upon a termination of employment due to death or disability, all unvested time-based equity awards and earned performance-based equity awards vest in full and all unearned performance-based equity awards remain eligible to vest based on actual performance.
5 |
Executive Compensation Matters (continued) |
Potential Post-Termination Payments Table
The following table summarizes the potential payments to each NEO under various termination events. The table assumes that the event occurred on December 31, 2018,2019, for all NEOs.NEOs except for Dr. Ehlers who voluntarily separated from the Company during 2019. The calculations use the closing price of our common stock as reported by Nasdaq on December 31, 2018,2019, which was $300.92$296.73 per share.
Name and Payment Elements(1) (a) | Retirement(2) (b) | Qualifying Termination of Employment Not Following a Corporate Transaction or Change in Control (c)(3) | Qualifying Termination of Employment Following a Corporate Transaction or Change in Control (d)(3) | Retirement(2) (b) | Qualifying Termination of Employment Not Following a Corporate Transaction or Change in Control (c)(3) | Qualifying Termination of Employment Following a Corporate Transaction or Change in Control (d)(3) | ||||||||||||||||||||||||
Michel Vounatsos(4) | ||||||||||||||||||||||||||||||
Severance |
| — | $ | 4,680,000 | $ | 6,240,000 |
| — | $ | 5,250,000 | $ | 7,000,000 | ||||||||||||||||||
Performance-based RSUs |
| — |
| — | $ | 20,523,378 |
| — |
| — | $ | 24,819,853 | ||||||||||||||||||
Medical, Dental and Vision |
| — | $ | 29,709 | $ | 39,613 |
| — | $ | 29,510 | $ | 39,346 | ||||||||||||||||||
Outplacement(5) |
| — | $ | 32,000 | $ | 32,000 |
| — | $ | 32,000 | $ | 32,000 | ||||||||||||||||||
Total |
| — | $ | 4,741,709 | $ | 26,834,991 |
| — | $ | 5,311,510 | $ | 31,891,199 | ||||||||||||||||||
Jeffrey D. Capello | ||||||||||||||||||||||||||||||
Severance |
| — | $ | 1,487,500 | $ | 2,550,000 |
| — | $ | 1,837,500 | $ | 2,756,250 | ||||||||||||||||||
Performance-based RSUs |
| — | $ | 2,736,395 |
| — |
| — | $ | 6,083,847 | ||||||||||||||||||||
Medical, Dental and Vision |
| — | $ | 22,611 | $ | 38,761 |
| — | $ | 25,176 | $ | 37,764 | ||||||||||||||||||
Outplacement(5) |
| — | $ | 32,000 | $ | 32,000 |
| — | $ | 32,000 | $ | 32,000 | ||||||||||||||||||
Total |
| — | $ | 1,542,111 | $ | 5,357,156 |
| — | $ | 1,894,676 | $ | 8,909,861 | ||||||||||||||||||
Michael D. Ehlers | ||||||||||||||||||||||||||||||
Severance |
| — | $ | 1,890,613 | $ | 2,835,920 | ||||||||||||||||||||||||
Performance-based RSUs |
| — |
| — | $ | 7,240,328 | ||||||||||||||||||||||||
Time-based RSUs |
| — |
| — | $ | 1,736,609 | ||||||||||||||||||||||||
Medical, Dental and Vision |
| — | $ | 25,574 | $ | 38,361 | ||||||||||||||||||||||||
Outplacement(5) |
| — | $ | 32,000 | $ | 32,000 | ||||||||||||||||||||||||
Total |
| — | $ | 1,948,187 | $ | 11,883,218 | ||||||||||||||||||||||||
Susan H. Alexander | ||||||||||||||||||||||||||||||
Severance |
| — | $ | 2,228,802 | $ | 2,547,202 |
| — | $ | 2,306,810 | $ | 2,636,354 | ||||||||||||||||||
Performance-based RSUs | $ | 4,671,689 | $ | 4,671,689 | $ | 6,673,841 | $ | 5,539,598 | $ | 5,539,598 | $ | 6,924,498 | ||||||||||||||||||
Time-based RSUs | $ | 852,055 | $ | 852,055 | $ | 1,217,221 | $ | 640,225 | $ | 640,225 | $ | 800,281 | ||||||||||||||||||
Medical, Dental and Vision |
| — | $ | 23,544 | $ | 26,908 |
| — | $ | 23,997 | $ | 27,425 | ||||||||||||||||||
Outplacement(5) |
| — | $ | 32,000 | $ | 32,000 |
| — | $ | 32,000 | $ | 32,000 | ||||||||||||||||||
280G TaxGross-Up(6) |
| — |
| — |
| — |
| — |
| — |
| — | ||||||||||||||||||
Total | $ | 5,523,744 | $ | 7,808,090 | $ | 10,497,172 | $ | 6,179,823 | $ | 8,542,630 | $ | 10,420,558 | ||||||||||||||||||
Paul F. McKenzie | ||||||||||||||||||||||||||||||
Alfred W. Sandrock, Jr. | ||||||||||||||||||||||||||||||
Severance |
| — | $ | 2,459,603 | $ | 2,810,974 | ||||||||||||||||||||||||
Performance-based RSUs | $ | 6,262,311 | $ | 6,262,311 | $ | 6,262,311 | ||||||||||||||||||||||||
Time-based RSUs | $ | 656,070 | $ | 656,070 | $ | 656,070 | ||||||||||||||||||||||||
Medical, Dental and Vision |
| — | $ | 24,906 | $ | 28,464 | ||||||||||||||||||||||||
Outplacement(5) |
| — | $ | 32,000 | $ | 32,000 | ||||||||||||||||||||||||
280G TaxGross-Up(6) |
| — |
| — |
| — | ||||||||||||||||||||||||
Total | $ | 6,918,381 | $ | 9,434,890 | $ | 9,789,819 | ||||||||||||||||||||||||
Chirfi Guindo | ||||||||||||||||||||||||||||||
Severance |
| — | $ | 1,436,926 | $ | 2,155,389 |
| — | $ | 1,201,333 | $ | 1,802,000 | ||||||||||||||||||
Performance-based RSUs |
| — |
| — | $ | 5,463,914 |
| — |
| — | $ | 3,415,203 | ||||||||||||||||||
Time-based RSUs |
| — |
| — | $ | 1,688,161 |
| — |
| — | $ | 232,636 | ||||||||||||||||||
Medical, Dental and Vision |
| — | $ | 26,183 | $ | 39,274 |
| — | $ | 25,739 | $ | 38,608 | ||||||||||||||||||
Outplacement(5) |
| — | $ | 32,000 | $ | 32,000 |
| — | $ | 32,000 | $ | 32,000 | ||||||||||||||||||
Total |
| — | $ | 1,495,109 | $ | 9,378,738 |
| — | $ | 1,259,072 | $ | 5,520,447 |
Notes to the Potential Post-Termination Payments Table
(1) | In the event of an executive’s death or disability, all outstanding time-based equity awards and earned performance-based equity awards under |
(2) | Ms. Alexander |
58 |
5 | Executive Compensation Matters (continued) |
(3) | The amounts listed in column (c) and column (d) for Performance-based RSUs for the applicable named executive officers includes the value of applicable unvested awards based on actual performance estimated as of December 31, |
(4) | Pursuant to his employment agreement, upon an involuntary termination by the Company without cause or involuntary employment action not following a corporate transaction or CIC, Mr. Vounatsos is eligible to receive a lump sum payment within 60 days |
|
of such termination consisting of the pro rata portion of the target bonus for the year of termination and an amount equal to the sum of the annual base salary rate and target bonus in effect at the time of termination multiplied by a factor of 1.5, continuation of medical, dental and vision insurance for up to 18 months and up to 12 months of executive outplacement services. Upon an involuntary termination by the Company without cause or an involuntary employment action following a corporate transaction or CIC, Mr. Vounatsos is eligible to receive a lump sum payment within 60 days consisting of the pro rata portion of the target bonus for the year of termination and an amount equal to the sum of the annual base salary rate and target bonus in effect at the time of termination multiplied by a factor of 2.0, continuation of medical, dental and vision insurance for up to 24 months and up to 12 months of outplacement services. |
(5) | The named executive officers are provided outplacement services at a cost of up to $32,000 for the Executive Vice President level. |
(6) |
|
We believe executive pay must be internally consistent and equitable to motivate our employees to create stockholder value, and we are committed to internal pay equity. As discussed earlier in this Proxy Statement, our compensation programs are designed to drive the creation of long-term stockholder value by delivering performance-based compensation. We invest in our employees at all levels in the Company by rewarding performance that balances risk and reward, empowering professional growth and development and by offering affordable benefits and programs that meet the diverse needs of our employees.
We believe strongly inpay-for-performance, and all of our employees are eligible to participate in our annual bonus plan, our LTI programs and our benefit plans. Our annual bonus plan is consistently maintained for all participants globally, with the same Company performance goals, payout levels (as a percentage of target) and administrative provisions regardless of the participant’s job level, location or function in the Company. We also have a long-term incentive program that provides different forms of awards depending upon an employee’s level but is otherwise consistent throughout the Company.
The following is a reasonable estimate, prepared under applicable SEC rules, of the ratio of the annual total compensation of our CEO to the median of the annual total compensation of our other employees. Under SEC rules, we used the sameWe determined our median employee as we usedof December 31, 2019, based on a consistently applied compensation measure defined as the sum of base salary, target bonus and LTI target value. We annualized pay for our 2017 pay ratio because we reasonably believe there have been no changes to our employee populationemployees who commenced employment during 2019 or compensation programs that would result in a significant change to our pay ratio disclosure. The methodology used to identify our median employee for our 2017 pay ratio is described in our 2018 proxy statement.who worked part-time during 2019.
Our median employee is a full-time employee based in the U.S. In October 2017,December 2019, when we determined the median employee, approximately 59%61% of our workforce was based in the U.S. with the remaining approximately 41%39% of our workforce based in the rest of the world. In addition, approximately 98% of our workforce was full-time.
For our median employee, annual total compensation was calculated in accordance with the SEC’s rules for the Summary Compensation Table, including salary, bonus, LTI grant date fair value and value of certain benefits provided, including relocation benefits.provided. For our CEO, annual total compensation is equal to the amount included in the “Total” column of the Summary Compensation Table, and our CEO’s annual total compensation for 20182019 was $16,168,646.$18,159,858. The annual total compensation of the median employee, as determined in accordance with the SEC’s rules, for 20182019 was $170,521, including base salary, annual bonus, LTI grant value, and certain benefits includingone-time relocation benefit.$159,721. Based on the foregoing, our estimate of the ratio of the annual total compensation of our CEO to the median of the annual total compensation of our other employees was 95114 to 1. This pay ratio is a reasonable estimate calculated in a manner consistent with SEC rules based on our payroll and employment records and the methodology described above. Given the different methodologies, estimates, assumptions and exclusions that other public companies use to determine an estimate of their pay ratio, the estimated ratio reported above should not be used as a basis for comparison between companies.
6 |
|
The following table and accompanying notes provide information about the beneficial ownership of our common stock by:
each stockholder known by us to be the beneficial owner of more than 5% of our common stock;
each of our named executive officers;
each of our directors and nominees for director; and
all of our directors and executive officers as a group.
Except as otherwise noted, the persons identified have sole voting and investment power with respect to the shares of our common stock beneficially owned. Beneficial ownership is determined in accordance with the rules of the SEC and includes voting and investment power with respect to the shares. Except as otherwise noted, the information below is as of April 19, 20196, 2020 (Ownership Date).
Unless otherwise indicated in the footnotes, the address of each of the individuals named below is: c/o Biogen Inc., 225 Binney Street, Cambridge, Massachusetts 02142.
Name | Shares Owned(1) | Shares Subject to Options and Stock Units(2) | Total Number of Shares Beneficially Owned(1) | Percentage of Outstanding Shares(3) | Shares Owned(1) | Shares Subject to Options and Stock Units(2) | Total Number of Shares Beneficially Owned(1) | Percentage of Outstanding Shares(3) | ||||||||||||||||||||||||||||
5% Stockholders | ||||||||||||||||||||||||||||||||||||
BlackRock Inc.(4) 55 East 52nd Street New York, NY 10055
|
|
16,568,963 |
|
|
— |
|
|
16,568,963 |
|
|
8.2 |
% |
|
15,658,641 |
|
|
— |
|
|
15,658,641 |
|
|
8.7 |
% | ||||||||||||
The Vanguard Group(5) 100 Vanguard Boulevard Malvern, PA 19355
|
|
15,170,607 |
|
|
— |
|
|
15,170,607 |
|
|
7.52 |
% | ||||||||||||||||||||||||
PRIMECAP Management Company(6) 177 East Colorado Boulevard 11th Floor Pasadena, CA 91105
|
|
14,727,267 |
|
|
— |
|
|
14,727,267 |
|
|
7.31 |
% | ||||||||||||||||||||||||
PRIMECAP Management Company(5) 177 East Colorado Boulevard 11th Floor Pasadena, CA 91105
|
|
15,189,481 |
|
|
— |
|
|
15,189,481 |
|
|
8.42 |
% | ||||||||||||||||||||||||
The Vanguard Group(6) 100 Vanguard Boulevard Malvern, PA 19355
|
|
13,870,538 |
|
|
— |
|
|
13,870,538 |
|
|
7.68 |
% | ||||||||||||||||||||||||
Named Executive Officers | ||||||||||||||||||||||||||||||||||||
Michel Vounatsos |
| 16,657 |
|
| 3,252 |
|
| 19,909 |
|
| * |
|
| 31,711 |
| — |
| 31,711 |
| * | ||||||||||||||||
Jeffrey D. Capello |
| 917 |
|
| — |
|
| 917 |
|
| * |
|
| 3,118 |
| — |
| 3,118 |
| * | ||||||||||||||||
Susan H. Alexander |
| 36,572 |
| — |
| 36,572 |
| * | ||||||||||||||||||||||||||||
Alfred W. Sandrock, Jr. |
| 14,567 |
| — |
| 14,567 |
| * | ||||||||||||||||||||||||||||
Chirfi Guindo |
| 3,871 |
| — |
| 3,871 |
| * | ||||||||||||||||||||||||||||
Michael Ehlers(7) |
| 6,824 |
|
| 3,538 |
|
| 10,362 |
|
| * |
|
| 8,026 |
| — |
| 8,026 |
| * | ||||||||||||||||
Susan H. Alexander |
| 31,976 |
|
| — |
|
| 31,976 |
|
| * |
| ||||||||||||||||||||||||
Paul F. McKenzie |
| 6,407 |
|
| — |
|
| 6,407 |
|
| * |
| ||||||||||||||||||||||||
Directors | ||||||||||||||||||||||||||||||||||||
John R Chiminski |
| — |
|
| — |
|
| — |
|
| — |
| ||||||||||||||||||||||||
Alexander J. Denner(8) |
| 534,687 |
|
| 880 |
|
| 535,567 |
|
| * |
|
| 653,909 |
| 1,155 |
| 655,064 |
| * | ||||||||||||||||
Caroline D. Dorsa |
| 18,172 |
|
| 880 |
|
| 19,052 |
|
| * |
|
| 19,052 |
| 1,155 |
| 20,207 |
| * | ||||||||||||||||
William A. Hawkins |
| — |
|
| — |
|
| — |
|
| — |
|
| — |
| 1,155 |
| 1,155 |
| * | ||||||||||||||||
Nancy L. Leaming |
| 10,063 |
|
| 880 |
|
| 10,943 |
|
| * |
|
| 10,943 |
| 1,155 |
| 12,098 |
| * | ||||||||||||||||
Jesus B. Mantas |
| — |
|
| — |
|
| — |
|
| — |
|
| — |
| 1,155 |
| 1,155 |
| * | ||||||||||||||||
Richard C. Mulligan |
| 10,029 |
|
| 880 |
|
| 10,909 |
|
| * |
|
| 10,909 |
| 1,155 |
| 12,064 |
| * | ||||||||||||||||
Robert W. Pangia |
| 17,707 |
|
| 880 |
|
| 18,587 |
|
| * |
|
| 18,587 |
| 1,155 |
| 19,742 |
| * | ||||||||||||||||
Stelios Papadopoulos(9) |
| 29,946 |
|
| 1,450 |
|
| 31,396 |
|
| * |
|
| 31,396 |
| 1,905 |
| 33,301 |
| * | ||||||||||||||||
Brian S. Posner |
| 6,015 |
|
| 880 |
|
| 6,895 |
|
| * |
|
| 5,840 |
| 1,155 |
| 6,995 |
| * | ||||||||||||||||
Eric K. Rowinsky |
| 14,144 |
|
| 880 |
|
| 15,024 |
|
| * |
|
| 15,024 |
| 1,155 |
| 16,179 |
| * | ||||||||||||||||
Lynn Schenk(10) |
| 10,097 |
|
| 880 |
|
| 10,977 |
|
| * |
|
| 10,977 |
| 1,155 |
| 12,132 |
| * | ||||||||||||||||
Stephen A. Sherwin |
| 4,284 |
|
| 13,158 |
|
| 17,442 |
|
| * |
|
| 14,283 |
| 1,155 |
| 15,438 |
| * | ||||||||||||||||
Executive officers and directors as a group (23 persons)(7)(11) |
| 731,239 |
|
| 28,438 |
|
| 759,677 |
|
| * |
| ||||||||||||||||||||||||
Executive officers and directors as a group (20 persons)(11) |
| 889,364 |
| 14,610 |
| 903,974 |
| * |
* | Represents beneficial ownership of less than 1% of our outstanding shares of common stock. |
6 |
Additional Information (continued) |
(1) | The shares described as “owned” are shares of our common stock directly or indirectly owned by each listed person, rounded up to the nearest whole share. |
(2) | Includes |
(3) | The calculation of percentages is based upon |
(4) | Based solely on information as of December 31, |
(5) | Based solely on information as of December 31, |
(6) | Based solely on information as of December 31, 2019, contained in a Schedule 13G/A filed with the SEC by The Vanguard Group on February |
|
(7) |
|
(8) | Includes |
(9) | Includes 28,206 shares held in limited liability companies of which Dr. Papadopoulos is the sole manager. |
(10) | Includes |
(11) | Includes |
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Exchange Act requires our executive officers, directors and greater than 10% stockholders to file initial reports of ownership and changes of ownership of our common stock. As a practical matter, we assist our directors and executive officers by monitoring transactions and completing and filing Section 16 forms on their behalf. Based solely on information provided to us by our directors and executive officers, we believe that during 2018 all such parties complied with all applicable filing requirements.
6 |
Additional Information (continued) |
CERTAIN RELATIONSHIPS AND RELATED PERSON TRANSACTIONS
Our Code of Business Conduct (Values in Action), Corporate Governance Principles, Related Person Transaction Policy and Conflict of Interest Policy set forth our policies and procedures for the review and approval of transactions with related persons, including transactions that would be required to be disclosed in this Proxy Statement in accordance with SEC rules.
In circumstances where one of our directors or executive officers, or a family member, has a direct or indirect material interest in a transaction involving Biogen, our Corporate Governance Committee must review and approve all such proposed transactions or courses of dealing. In determining whether to approve or ratify a transaction with a related person, among the factors our Corporate Governance Committee may consider (as applicable) are:
the business reasons for entering into the transaction;
the size of the transaction and the nature of the related person’s interest in the transaction;
whether the transaction terms are as favorable to us as they would be to an unaffiliated third party;
whether the transaction terms are more favorable to the related person than they would be to an unaffiliated third party;
the availability of alternative sources for comparable products, services or other benefits;
whether the transaction would impair the independence or judgment of the related person in the performance of his or her duties to us;
fornon-employee directors, whether the transaction would be consistent with Nasdaq’s requirements for independent directors;
whether the transaction is consistent with our Conflict of Interest Policy, which prohibits related persons and others from having a financial interest in any competitor, customer, vendor or supplier of ours;
the related person’s role in arranging the transaction;
the potential for the transaction to be viewed as representing or leading to an actual or apparent conflict of interest; and
any other factors that our Corporate Governance Committee deems appropriate.
Our Code of Business Conduct, which sets forth legal and ethical guidelines for all of our directors and employees, states that directors, executive officers and employees must avoid relationships or activities that might impair their ability to make objective and fair decisions while acting in their Company roles. There
Other than as noted below, there are no relationships or transactions with related persons that are required to be disclosed in this Proxy Statement under SEC rules.
Dr. Sandrock has a daughter employed by us in anon-executive position outside of the Research & Development organization who received less than $170,000 in total compensation in 2019. Consistent with our Related Person Transaction Policy as described above, our Corporate Governance Committee reviewed this matter.
6 |
Additional Information (continued) |
EQUITY COMPENSATION PLAN INFORMATION
The following table provides information as of December 31, 2018,2019, about:
the number of shares of common stock subject to issuance upon exercise of outstanding options and vesting of RSUs, MSUs and PSUs under plans adopted and assumed by us;
the weighted-average exercise price of outstanding options under plans adopted and assumed by us; and
the number of shares of common stock available for future issuance under our active plans: our 2017 Omnibus Equity Plan, ourNon-Employee Directors Equity Plan and our 2015 Employee Stock Purchase Plan.
Plan Category | Number of Securities to be Issued Upon Exercise of Outstanding Options and Rights (a) | Weighted-average Exercise Price of Outstanding Options and Rights(1) (b) | Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (excluding securities reflected in column(a))(2) (c) | Number of Securities to be Issued Upon Exercise of Outstanding Options and Rights (a) | Weighted-average Exercise Price of Outstanding Options and Rights(1) (b) | Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (excluding securities reflected in column(a))(2) (c) | ||||||
Equity compensation plans approved by stockholders
| 1,308,264
| $ 53.82
| 20,564,534
| 1,350,671
| $ 58.46
| 19,632,158
| ||||||
Equity compensation plans not approved by stockholders
| —
| —
| —
| —
| —
| —
| ||||||
Total
| 1,308,264
| $ 53.82
| 20,564,534
| 1,350,671
| $ 58.46
| 19,632,158
|
(1) | The weighted-average exercise price includes all outstanding stock options but does not include RSUs, MSUs or PSUs, which do not have an exercise price. |
(2) | Of these shares, (a) |
6 |
Additional Information (continued) |
Stockholder proposals submitted pursuant to Exchange Act Rule14a-8 and intended to be presented at our 20202021 annual meeting of stockholders must be received by our Secretary no later than December 30, 2019,21, 2020, to be eligible for inclusion in our proxy statement and form of proxy relating to that meeting.
A stockholder proposal submitted outside the processes of Rule14a-8 and not for inclusion in our proxy statement for the 2020 annual meeting of stockholders will be ineligible for presentation at the meeting unless the stockholder gives timely notice of the proposal in writing to our Secretary at our principal executive offices and otherwise complies with the provisions of our Bylaws. To be timely, our Bylaws provide that we must have received the stockholder’s notice no later than March 21, 2020,5, 2021, and no earlier than February 20, 2020.3, 2021. However, if the date of the 20202021 annual meeting of stockholders is more than 30 days before or more than 60 days after the first anniversary of the Annual Meeting, we must receive the stockholder’s notice not earlier than the close of business on the 120th day before the 20202021 annual meeting of stockholders and not later than the close of business on the later of (1) the 90th day before the 20202021 annual meeting of stockholders and (2) the 10th day following the day on which public announcement of the date of the 20202021 annual meeting of stockholders is first made.
All stockholder proposals for our 20202021 annual meeting of stockholders should be sent to our Secretary, Biogen Inc., 225 Binney Street, Cambridge, Massachusetts 02142.
Other Stockholder Communications
Generally, stockholders who have questions or concerns should contact our Investor Relations department at (781)464-2442. However, stockholders who wish to communicate directly with our Board of Directors, or any individual director, should direct questions in writing to our Secretary, Biogen Inc., 225 Binney Street, Cambridge, Massachusetts 02142. Communications addressed in this manner will be forwarded directly to our Board of Directors or named individual director(s).
Notwithstanding anything to the contrary set forth in any of our previous filings under the securities laws that might incorporate future filings, including this Proxy Statement, in whole or in part, the Compensation Committee Report, the Audit Committee Report, the content ofwww.biogen.com, including the charters of the committees of our Board of Directors, Corporate Governance Principles, Related Person Transaction Policy, Conflicts of Interest Policy, Code of Business Conduct and Bylaws, included or referenced in this Proxy Statement shall not be incorporated by reference into any such filings.
Copies of Annual Meeting Materials
Some banks, brokers and other nominee record holders may be participating in the practice of householding proxy statements and annual reports. This means that, unless you have instructed otherwise, only one copy of this Proxy Statement, Annual Report or Notice of Internet Availability of Proxy Materials, as applicable, may have been sent to multiple stockholders in your household.We will promptly deliver a separate copy of any of these documents without charge to you if you write or call Investor Relations, Biogen Inc., 225 Binney Street, Cambridge, Massachusetts 02142,(781) 464-2442464-2442..If you want to receive separate copies of our proxy statement, annual report or Notice of Internet Availability of Proxy Materials, as applicable, in the future, or if you are receiving multiple copies and would like to receive only one copy for your household, you should contact your bank, broker or other nominee record holder, or you may contact us at the above address or phone number.
Manner and Cost of Proxy Solicitation
Biogen pays the cost of soliciting proxies. In addition to solicitation by mail, our directors, officers and employees may contact you in person, by telephone or by email or other electronic means. None of our directors, officers or employees will receive additional compensation for soliciting you. We will reimburse brokerage houses, banks, custodians and other nominees and fiduciaries forout-of-pocket expenses incurred in forwarding our proxy solicitation materials to, and obtaining instructions relating to such materials from, beneficial owners of our common stock. Georgeson LLC, New York, New York, has been retained to assist us in the solicitation of proxies at a fee estimated not to exceed $11,000.
|
GAAP toNon-GAAP Reconciliation
Diluted Earnings Per Share and Net Income Attributable to Biogen Inc.
(unaudited, $ in millions, except per share amounts)
For the Twelve Months Ended | For the Twelve Months Ended | |||||||||||||||||||
December 31, 2018 | December 31, 2017 | December 31, 2019 | December 31, 2018 | |||||||||||||||||
GAAP earnings per share – Diluted |
| $21.58 |
| $11.92 |
| $31.42 |
| $21.58 | ||||||||||||
Adjustments to GAAP net income attributable to Biogen Inc. (as detailed below) |
| 4.62 |
| 9.89 |
| 2.15 |
| 4.62 | ||||||||||||
Non-GAAP earnings per share – Diluted |
| $26.20 |
| $21.81 |
| $33.57 |
| $26.20 |
For the Twelve Months Ended | ||||||||||
December 31, 2018 | December 31, 2017(1) | |||||||||
GAAP net income attributable to Biogen Inc. |
| $4,430.7 |
| $2,539.1 | ||||||
Adjustments: | ||||||||||
Amortization of acquired intangible assetsA, B |
| 747.3 |
| 814.7 | ||||||
Acquiredin-process research and development |
| 112.5 |
| 120.0 | ||||||
Research and developmentC |
| 10.0 |
| — | ||||||
(Gain) loss on fair value remeasurement of contingent considerationD |
| (12.3) |
|
| 62.7 |
| ||||
Premium paid on purchase of Ionis common stockE |
| 162.1 |
|
| — |
| ||||
(Gain) loss on equity security investments |
| (128.0) |
|
| — |
| ||||
Net distribution to noncontrolling interestsF |
| 43.7 |
|
| 132.4 |
| ||||
Restructuring, business transformation and other cost saving initiatives: | ||||||||||
2017 corporate strategy implementationG |
| 10.9 |
|
| 18.5 |
| ||||
Restructuring chargesG |
| 12.0 |
|
| 0.9 |
| ||||
Hemophilia business separation costs |
| — |
|
| 19.2 |
| ||||
Income tax effect related to reconciling items |
| (146.6) |
|
| (235.7) |
| ||||
Elimination of deferred tax assetH |
| 10.6 |
|
| — |
| ||||
Tax reformI |
| 124.9 |
|
| 1,173.6 |
| ||||
Non-GAAP net income attributable to Biogen Inc. |
| $5,377.8 |
| $4,645.4 |
For the Twelve Months Ended | ||||||||||
December 31, 2019 | December 31, 2018 | |||||||||
GAAP net income attributable to Biogen Inc. |
| $5,888.5 |
| $4,430.7 | ||||||
Adjustments: | ||||||||||
Acquisition and divestiture related costs: | ||||||||||
Amortization of acquired intangible assetsA |
| 489.9 |
| 747.3 | ||||||
Acquiredin-process research and development |
| — |
| 112.5 | ||||||
Research and development |
| — |
| 10.0 | ||||||
(Gain) loss on fair value remeasurement of contingent considerationB |
| (63.7 | ) |
| (12.3 | ) | ||||
Loss on divestiture of Hillerød, Denmark manufacturing operationsC |
| 55.3 |
|
| — |
| ||||
Net distribution to noncontrolling interestsD |
| — |
|
| 43.7 |
| ||||
Stock option expenseE |
| 26.2 |
|
| — |
| ||||
Acquisition-related transaction and integration costs |
| 27.9 |
|
| — |
| ||||
Accelerated share-based compensation expense |
| 6.7 |
|
| — |
| ||||
Subtotal: Acquisition and divestiture related costs |
| 542.3 |
|
| 901.2 |
| ||||
Restructuring, business transformation and other cost saving initiatives: | ||||||||||
2017 corporate strategy implementationF |
| 3.5 |
|
| 10.9 |
| ||||
Restructuring chargesF |
| 1.5 |
|
| 12.0 |
| ||||
Subtotal: Restructuring, business transformation and other cost saving initiatives |
| 5.0 |
|
| 22.9 |
| ||||
Premium paid on purchase of Ionis common stockG |
| — |
|
| 162.1 |
| ||||
(Gain) loss on equity security investments |
| (200.2) |
|
| (128.0) |
| ||||
Income tax effect related to reconciling items |
| 31.3 |
|
| (146.6) |
| ||||
Elimination of deferred tax asset |
| — |
|
| 10.6 |
| ||||
U.S. tax reformH |
| — |
|
| 124.9 |
| ||||
Swiss tax reformI |
| (54.3) |
|
| — |
| ||||
Amortization included in Equity in loss of investee, net of taxJ |
| 78.2 |
|
| — |
| ||||
Non-GAAP net income attributable to Biogen Inc. |
| $6,290.8 |
| $5,377.8 |
A-1 |
2020 PROXY STATEMENT |
Appendix A(continued)
Free Cash Flow Reconciliation
(unaudited, $ in millions)
For the Twelve Months Ended | |||||
December 31,
| |||||
Net cash flows provided by operating activities |
| $ | |||
Purchases of property, plant and equipment (Capital Expenditures) |
|
|
| ||
Contingent consideration related to Fumapharm AG acquisition |
|
|
| ||
Free Cash Flow |
| $ |
|
Amortization and impairment of acquired intangible assets for the twelve months ended December 31, 2018, includes the impact of impairment charges related to certain IPR&D assets associated with our vixotrigine (BIIB074) program totaling $189.3 million that were recognized during the third quarter of 2018. During the third quarter of 2018 we completed a Phase 2b study of vixotrigine for the potential treatment of painful lumbosacral radiculopathy (PLSR). The study did not meet its primary or secondary efficacy endpoints and we discontinued development of vixotrigine for the potential treatment of PLSR. As a result, we recognized an impairment charge of approximately $60.0 million during the third quarter of 2018 to reduce the fair value of the IPR&D intangible asset to zero. In addition, we delayed the initiation of the Phase 3 studies of vixotrigine for the potential treatment of trigeminal neuralgia (TGN) as we awaited the outcome of ongoing interactions with the U.S. Food and Drug Administration (FDA) regarding the design of the Phase 3 studies, a more detailed review of the data from the Phase 2b study of vixotrigine for the potential treatment of PLSR and insights from the Phase 2 study of vixotrigine for the potential treatment of small fiber neuropathy. We reassessed the fair value of the TGN program using reduced expected lifetime revenues, higher expected clinical development costs and a lower cumulative probability of success. As a result of that reassessment, we recognized an impairment charge of $129.3 million during the third quarter of 2018 to reduce the fair value of the TGN IPR&D intangible asset to $41.8 million. |
In January 2017 we entered into a settlement and license agreement among Biogen Swiss Manufacturing GmbH, Biogen International Holding Ltd., Forward Pharma A/S (Forward Pharma) and certain related parties, which was effective as of February 1, 2017. Pursuant to this |
|
Appendix A(continued)
agreement, we obtained U.S. and rest of world licenses to Forward Pharma’s intellectual property, including Forward Pharma’s intellectual property related to TECFIDERA. In exchange, we paid Forward Pharma $1.25 billion in cash, of which $795.2 million was recognized |
We |
In March 2017 the U.S. intellectual property dispute was decided in our favor. Forward Pharma appealed to the U.S. Court of Appeals for the Federal Circuit. We evaluated the recoverability of the U.S. asset acquired from Forward Pharma and recorded a $328.2 million impairment charge in the first quarter of 2017 to adjust the carrying value of the acquired U.S. asset to fair value reflecting the impact of the developments in the U.S. legal dispute and continued to amortize the remaining net book value of the U.S. intangible asset in our consolidated statements of income utilizing an economic consumption model. The U.S. Court of Appeals for the Federal Circuit upheld the U.S. Patent and Trademark Office’s March 2017 ruling and in January 2019 denied Forward Pharma’s petition for rehearing. We evaluated the recoverability of the U.S. asset based upon these most recent developments and recorded a $176.8 million impairment charge in the fourth quarter of 2018 to reduce the remaining net book value of the U.S. asset to zero. |
We have an intellectual property dispute with Forward Pharma in the European Union concerning intellectual property related to TECFIDERA. |
In March 2018 the European Patent Office (EPO) revoked Forward Pharma’s European Patent No. 2 801 355. Forward Pharma has filed an appeal to the Technical Boards of Appeal of the EPO and the appeal is pending. Based upon our assessment of this ruling, we continue to amortize the remaining net book value of the rest of world intangible asset in our consolidated statements of income utilizing an economic consumption model. The remaining net book value of the TECFIDERA rest of world intangible asset as of December 31, 2019, was $36.1 million. |
|
A-2 |
|
Appendix A(continued)
acquired intangible assets. This decrease was primarily due to lower amortization subsequent to the impairment |
B |
|
(Gain) loss on fair value remeasurement of contingent consideration for the twelve months ended December 31, 2018, |
|
|
|
In the third quarter of 2018 we decided to delay the initiation of the Phase 3 studies of vixotrigine for the potential treatment of TGN. As a result of that decision, we adjusted the value of our contingent consideration obligations related to the TGN program to reflect the lower cumulative probabilities of success |
In |
C | In August 2019 we completed the sale of all of the outstanding shares of our subsidiary that owned our biologics manufacturing operations in Hillerød, Denmark to FUJIFILM Corporation (FUJIFILM). Upon the closing of this transaction, we received approximately $881.9 million in cash, which may be adjusted based on contractual terms, which are discussed below. We determined that the operations disposed of in this transaction did not meet the criteria to be classified as discontinued operations under the applicable guidance. |
As part of this transaction, we have provided FUJIFILM with certain minimum batch production commitment guarantees. There is a risk that the minimum contractual batch production commitments will not be met. Based upon current estimates we expect to incur an adverse commitment obligation of approximately $74.0 million associated with such guarantees. We may adjust this estimate based upon changes in business conditions, which may result in the increase or reduction of this adverse commitment obligation in subsequent periods. We also may be obligated to indemnify FUJIFILM for liabilities that existed relating to certain business activities incurred prior to the closing of this transaction. |
In addition, we may earn certain contingent payments based on future manufacturing activities at the Hillerød facility. For the disposition of a business, our policy is to recognize contingent consideration when the consideration is realizable. We currently believe the probability of earning these payments is remote and therefore we did not include these contingent payments in our calculation of the fair value of the operations. |
As part of this transaction, we entered into certain manufacturing services agreements with FUJIFILM pursuant to which FUJIFILM will use the Hillerød facility to produce commercial products for us, such as TYSABRI, as well as other third-party products. |
In connection with this transaction we recognized a total net loss of approximately $164.4 million in our consolidated statements of income. This loss included apre-tax loss of $95.5 million, which was recorded in loss on divestiture of Hillerød, Denmark manufacturing operations. The loss recognized was based on exchange rates and business conditions on the closing date of this transaction, and included costs to sell our Hillerød, Denmark manufacturing operations of approximately $11.2 million and our estimate of the fair value of an adverse commitment of approximately $114.0 million associated with the guarantee of future minimum batch production at the Hillerød facility. The value of this adverse commitment was determined using a probability-weighted estimate of future manufacturing activity. We also recorded a tax expense of $68.9 million related to this transaction. During the fourth quarter of 2019 we recorded a $40.2 million reduction in our estimate of the future minimum batch commitment utilizing our current manufacturing forecast, which reflects the impact of forecasted batches of aducanumab, our investigational treatment for early Alzheimer’s disease, resulting in a reduction in thepre-tax loss on divestiture from $95.5 million to $55.3 million. |
D | Net distribution to noncontrolling interests reflects the $50.0 million payment to Neurimmune SubOne AG (Neurimmune), net of Neurimmune’s tax, to further reduce the previously negotiated royalty rates payable on products developed under our amended collaboration and license agreement with Neurimmune, including royalties payable on potential commercial sales of aducanumab, by an additional 5%. |
E | Stock option expense reflects the accelerated vesting of stock options previously granted to Nightstar Therapeutics plc (NST) employees as a result of our acquisition of NST in the second quarter of 2019. |
F | 2017 corporate strategy implementation and restructuring charges are related to our efforts to create a leaner and simpler operating model. |
A-3 |
2020 PROXY STATEMENT |
Appendix A(continued)
G | In June 2018 we closed a |
|
|
Appendix A(continued)
|
|
|
|
H |
|
The Tax Cuts and Jobs Act of 2017 (2017 Tax Act) resulted in significant changes to the U.S. corporate income tax system. These changes include a federal statutory rate reduction from 35% to 21%, the elimination or reduction of certain domestic deductions and credits and limitations on the deductibility of interest expense and executive compensation. The 2017 Tax Act also transitions international taxation from a worldwide system to a modified territorial system, |
|
|
Tax reform amounts for the twelve months ended December 31, 2018, |
I |
|
J | Amortization included in equity in loss of investee, net of tax reflects the amortization of the differences between the fair value of our investment in Samsung Bioepis Co., Ltd. and the carrying value of our interest in the underlying net assets of the investee. These basis differences are amortized over their economic life. |
Use ofNon-GAAP Financial Measures
We supplement our consolidated financial statements presented on a GAAP basis by providing additional measures which may be considered“Non-GAAP” financial measures under applicable SEC rules. We believe that the disclosure of theseNon-GAAP financial measures provides additional insight into the ongoing economics of our business and reflects how we manage our business internally, set operational goals and form the basis of our management incentive programs. TheseNon-GAAP financial measures are not in accordance with generally accepted accounting principles in the United States and should not be viewed in isolation or as a substitute for reported, or GAAP, net income attributable to Biogen Inc., diluted earnings per share and net cash flows provided by operating activities.
Our“Non-GAAP net income attributable to Biogen Inc.” and“Non-GAAP earnings per share – Diluted” financial measures exclude the following items from “GAAP net income attributable to Biogen Inc.” and “GAAP earnings per share – Diluted”:
1. Purchase accounting, merger-relatedAcquisition and other adjustmentsdivestiture related costs
We exclude transaction, integration and certain other costs related to the acquisition and divestiture of businesses. We exclude certain purchase accounting related items associated with the acquisition of businesses, assets and amounts in relation to the consolidation or deconsolidation of variable interest entities for which we are the primary beneficiary.entities. These adjustments include, but are not limited to, charges for IPR&D and certain milestones, the amortization and impairment of intangible assets, and charges or credits from the fair value remeasurement of our contingent consideration obligations.
|
Appendix A(continued)
obligations and losses on assets and liabilities held for sale.
2. Hemophilia business separation costs
We have excluded costs that are directly associated with the set up andspin-off of our hemophilia business on February 1, 2017. These costs represent incremental third-party costs attributable solely to hemophiliaspin-off and set up activities.
3. Restructuring, business transformation and other cost saving initiatives
We exclude costs associated with our execution of certain strategies and initiatives to streamline operations, achieve targeted cost reductions, rationalize manufacturing facilities or refocus R&D activities. These costs may include employee separation costs, retention bonuses, facility closing and exit costs, asset impairment charges or additional depreciation when the expected useful life of certain assets have been shortened due to changes in anticipated usage and other costs or credits that management believes do not have a direct correlation to our ongoing or future business operations.
A-4 |
2020 PROXY STATEMENT |
Appendix A(continued)
4.3. (Gain) loss on equity security investments
Effective January 2018 weWe exclude unrealized and realized gains and losses and discounts or premiums on our equity security investments as we do not believe that these components of income or expense have a direct correlation to our ongoing or future business operations.
5.4. Other items
We evaluate other items of income and expense on an individual basis and consider both the quantitative and qualitative aspects of the item, including (i) its size and nature, (ii) whether or not it relates to our ongoing business operations and (iii) whether or not we expect it to occur as part of our normal business on a regular basis. We also include an adjustment to reflect the related tax effect of all reconciling items within our reconciliation of our GAAP toNon-GAAP net income attributable to Biogen Inc. and diluted earnings per share.share – diluted.
“Free Cash Flow” is defined as net cash flows provided by operating activities less purchases of property, plant and equipment and contingent consideration related to our acquisition of Fumapharm AG as disclosed in our 2018 Annual Report on Form10-K.AG.
BIOGEN INC.
225 BINNEY STREET
CAMBRIDGE, MA 02142
VOTE BY INTERNET
BIOGEN INC. | VOTE BY INTERNET Before The Meeting- Go towww.proxyvote.com Use the Internet to transmit your voting instructions and for electronic delivery of information up until 11:59 P.M. Eastern Time the day before the meeting date. Have your proxy card in hand when you access the web site and follow the instructions to obtain your records and to create an electronic voting instruction form. During The Meeting - Go towww.virtualshareholdermeeting.com/ You may attend the Meeting via the Internet and vote during the Meeting. Have the information that is printed in the box marked by the arrow available and follow the instructions. VOTE BY PHONE -1-800-690-6903 Use any touch-tone telephone to transmit your voting instructions up until 11:59 P.M. Eastern Time the day before the meeting date. Have your proxy card in hand when you call and then follow the instructions. VOTE BY MAIL Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717. |
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: | |||
D11962-P36723 | KEEP THIS PORTION FOR YOUR RECORDS | ||
| |||
|
DETACH AND RETURN THIS PORTION ONLY
BIOGEN INC. | |||||||||||||||||||||||||||||||||||
The Board recommends a voteFOR the following proposals: | |||||||||||||||||||||||||||||||||||
1. | Election of Directors. To elect the twelve director nominees numbered 1a through 1l to serve for a one-year term extending until the 2021 annual meeting of stockholders and their successors are duly elected and qualified. | ||||||||||||||||||||||||||||||||||
For | Against | Abstain | |||||||||||||||||||||||||||||||||
1a. | Alexander J. Denner | ☐ | ☐ | ☐ | |||||||||||||||||||||||||||||||
1b. | Caroline D. Dorsa | ☐ | ☐ | ☐ | |||||||||||||||||||||||||||||||
1c. | William A. Hawkins | ☐ | ☐ | ☐ | |||||||||||||||||||||||||||||||
1d. | Nancy L. Leaming | ☐ | ☐ | ☐ | |||||||||||||||||||||||||||||||
1e. | Jesus B. Mantas | ☐ | ☐ | ☐ | |||||||||||||||||||||||||||||||
1f. | Richard C. Mulligan | ☐ | ☐ | ☐ | |||||||||||||||||||||||||||||||
1g. | Robert W. Pangia | ☐ | ☐ | ☐ | |||||||||||||||||||||||||||||||
1h. | Stelios Papadopoulos | ☐ | ☐ | ☐ | |||||||||||||||||||||||||||||||
1i. | Brian S. Posner | ☐ | ☐ | ☐ |
|
| |||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||
|
|
For | Against | Abstain | ||||||||||||||||||||||||||||
1j. Eric K. Rowinsky | ☐ | ☐ | ☐ | |||||||||||||||||||||||||||
1k. Stephen A. Sherwin | ☐ | ☐ | ☐ | |||||||||||||||||||||||||||
1l. Michel Vounatsos | ☐ | ☐ | ☐ | |||||||||||||||||||||||||||
2. | To ratify the selection of PricewaterhouseCoopers LLP as Biogen Inc.'s independent registered public accounting firm |
|
|
| ||||||||||||||||||||||||||
|
|
|
|
| ||||||||||||||||||||||||||
Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting:fiscal year ending December 31, 2020.
The 2019 Notice and Proxy Statement and 2018 Annual Report with Form10-K are available Say on Pay - To approve an advisory vote on executive compensation.
at:www.proxyvote.com.
— — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — —
E76109-P22124
Please sign exactly as your name(s) appear(s) hereon. When signing as attorney, executor, administrator, or other fiduciary, please give full title as such. Joint owners should each sign personally. All holders must sign. If a corporation or partnership, please sign in full corporate or partnership name by authorized officer.
Signature [PLEASE SIGN WITHIN BOX] | Date |
Signature (Joint Owners) | Date |
Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting:
The 2020 Notice and Proxy Statement and 2019 Annual Report with Form 10-K are available
at:www.proxyvote.com.
D11963-P36723
BIOGEN INC. Annual Meeting of Stockholders June
| ||||||||
The undersigned hereby appoints Michel Vounatsos, Jeffrey D. Capello and Susan H. Alexander, and each of them (with full power to act alone), as proxies of the undersigned with all the powers the undersigned would possess if present during the | ||||||||
The shares represented by this proxy will be voted as directed herein. If no direction is indicated, such shares will be voted FOR the election of all of the director nominees listed in Proposal 1 and FOR Proposals 2 and 3. As to any other matter that may be properly brought before the meeting or any adjournment or postponement thereof, proxy holders will vote in accordance with their best judgment. | ||||||||
Continued and to be signed on reverse side | ||||||||