Celgene (CELG) DEFA14A Additional proxy soliciting materials

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14A

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Securities Exchange Act of 1934

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CELGENE CORPORATION

(Name of Registrant as Specified In Its Charter)

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

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Additional 2014 Proxy Materials

Celgene (NASDAQ:  CELG)

Forward Looking Statements

and Non-GAAP Financial Information

2

This presentation contains forward-looking statements, which are generally statements that are not

historical

facts.

Forward-looking

statements

can

be

identified

by

the

words

“expects,”

“anticipates,”

“believes,”

“intends,”

“estimates,”

“plans,”

“will,”

“outlook”

and similar expressions. Forward-looking

statements are based on management’s current plans, estimates, assumptions and projections, and

speak only as of the date they are made. We undertake no obligation to update any forward-looking

statement in light of new information or future events, except as otherwise required by law. Forward-

looking statements involve inherent risks and uncertainties, most of which are difficult to predict and

are

generally

beyond

our

control.

Actual

results

or

outcomes

may

differ

materially

from

those

implied

by the forward-looking statements as a result of the impact of a number of factors, many of which are

discussed in more detail in our Annual Report on Form 10-K and our other reports filed with the

Securities and Exchange Commission.

In

addition

to

financial

information

prepared

in

accordance

with

U.S.

GAAP,

this

presentation

also

contains adjusted financial measures that we believe provide investors and management with

supplemental information relating to operating performance and trends that facilitate comparisons

between

periods

and

with

respect

to

projected

information.

These

adjusted

measures

are

non-GAAP

and

should

be

considered

in

addition

to,

but

not

as

a

substitute

for,

the

information

prepared

in

accordance

with

U.S.

GAAP.

We

typically

exclude

certain

GAAP

items

that

management

does

not

believe

affect

our

basic

operations

and

that

do

not

meet

the

GAAP

definition

of

unusual

or

non-

recurring items. Other companies may define these measures in different ways. Further information

relevant to the interpretation of adjusted financial measures, and reconciliations of these adjusted

financial measures to the most comparable GAAP measures, may be found in the Reconciliation

Tables

at

the

end

of

this

presentation

and

on

Celgene’s

website

at

www.Celgene.com

in

the “Investor

Relations”

section.

Agenda

•

Celgene Overview

•

Proposal to Amend the 2008 Equity Plan

•

Stockholder Proposal on Disclosure of Political Activity

3

We Are a Leading Global Biopharmaceutical Company

4

•

Operations in >50

countries

•

Sales in >70 countries

•

Manufacturing facilities

in US and EU

•

Key research facilities

in NJ, CA, MA & Spain

•

~5,000 employees

globally

Global, Fully

Integrated

Portfolio of

Leading Products

•

Expertise in

hematology, oncology,

and immunology

•

Diverse technology

platforms

•

Rich pipeline

–

30 programs in

preclinical development

–

22 treatments in

clinical trials

–

30 pivotal / phase III

programs underway

Unique R&D

Capability

We Have a Strong 5-Year Financial Track Record

5

Notes:

1)

Net

Product

Sales

adjusted

for

2008-2011,

2)

CAGR

calculated

using

2008

to

2013.

*For

purposes

of

this calculation,

cash includes cash and cash equivalents and marketable securities available for sale.

Net

Product

Sales

1

($B)

Adjusted EPS ($)

48.4%

23.4%

5.1%

23.2%

R&D

SG&A

COGS

Adjusted Margins

$2.6

$3.5

$4.7

$5.4

$6.4

2009

2010

2011

2012

2013

~25%

CAGR

$2.08

$2.79

$3.79

$4.91

$5.96

2009

2010

2011

2012

2013

~31%

CAGR

2

41.0%

26.0%

25.4%

8.0%

2

2009

2010

2011

2012

2013

Our Performance Has Led to Significant Value Creation

CELG

NBI

BTK

COMP

SPX

1-year

115%

66%

51%

38%

30%

3-year

186%

144%

80%

57%

47%

5-year

206%

225%

260%

165%

105%

10-year

1406%

227%

376%

108%

66%

6

Note:  Periods are for calendar year; amounts based on quoted market prices and excludes reinvestment

of dividends.

CELG:  Celgene

NBI:  NASDAQ Biotech Index

BTK:  NYSE ARCA Biotech Index

COMP:  NASDAQ Composite

SPX:  S&P 500

Celgene Performance Relative to Key Indices

Recent Operational Achievements Are Expected

to Sustain Our Growth Profile Through 2017

7

$13-$14

$6.4

$8.5-$9.5

~$15

$5.96

$9-$9.50

Adjusted EPS ($)

Key Operational Achievements

Launched

2

New

Products

POMALYST

®

/IMNOVID

®

for

3  -line+

multiple myeloma in the U.S. and Europe

OTEZLA

®

for psoriatic arthritis in the U.S.

Received key label expansions

REVLIMID

®

approvals

for

non-del

5(q)

MDS in Europe and mantle cell lymphoma

in the U.S.

ABRAXANE

®

approvals

in

the

U.S.

for

pancreatic and non-small cell lung cancers

and in Europe for pancreatic cancer

Achieved >10 positive phase III data

readouts

with

POMALYST

®

,

OTEZLA

®

,

REVLIMID

®

and

ABRAXANE

®

Advanced pipeline:

>30 pivotal / phase III programs underway

22 treatments in over 100 clinical trials in

over 50 diseases

2013

2015E

2017E

Net Product Sales ($B)

~21%

CAGR

2013

2015E

2017E

rd

~26%

CAGR

Our Equity Plan Is a Critical Tool

to Delivering on Our 2017 Financial Targets

The primary purpose of the Plan is to enable us to attract, retain, and motivate key

employees who are important to our success by aligning their interests with those of

our stockholders.

–

Approximately 5% of equity awards are granted to NEO’s and Directors

–

Employees at all levels are eligible to participate in the plan

–

Approximately 60% of granted equity awards are options vs. the peer average of 23%

–

Stock options represent a minimum of 50% of the total equity awarded in the Equity Choice program

–

Stock

options

are

intended

to

align

our

broad

employee

base

with

the

performance

of

the

stock

–

High performing employees are eligible to receive additional incentive equity awards

–

Performance-based equity grants are part of the Long-term Incentive Plan (LTIP) and are granted to senior

executives as part of their compensation packages

–

We are building a global Inflammation & Immunology franchise that is a significant portion of the 2017 financial

targets and is expected to contribute to growth beyond 2017

–

We

are

hiring

thought

leaders

and

innovators

in

key

functions

in

our

existing

Hematology

Oncology

franchise

who are critical to our long-term success

–

The value of future broad-based equity grants are planned to be reduced post-split (provided stockholders

approve

Proposal

Three

to

amend

the

Certificate

of

Incorporation

and

split

the

stock)

–

In

the

Equity

Choice

program,

the

option

to

RSU

conversion

ratio

changed

to

4:1

from

3:1

in

2013

8

Our Plan has broad participation across the employee base

Our Plan is more option centric relative to our peer group

Our Plan is critical in retaining employees who provide the greatest value creation

Our Plan is essential in attracting top talent in a highly competitive marketplace

Our Plan is evolving to further minimize dilution

The Plan Has Several Stockholder-Friendly Features

The Plan has several features designed to protect stockholder interests

and promote effective corporate governance, including:

9

The

Plan

is

administered

by

the

Compensation

Committee

comprised

solely

of

independent directors

Stock options have a term set by the Compensation Committee up to a maximum of ten

years

The

exercise

price

of

a

stock

option

cannot

be

granted

below

the

fair

market value of a

share of common stock on the date of grant

Re-pricing of stock options is not permitted without prior stockholder approval

A minimum

three-year

vesting

period

is

required

for

all

full-value

awards,

including

time-vested and performance-vested awards, subject to limited exceptions

Grants of awards to eligible employees in any given year are subject to certain limits

“Double-trigger”

requirements, upon certain limited termination events, must be met to

accelerate vesting of equity awards granted on or after July 1, 2011 in the event of a

change in control

We Are Requesting 9 Million Additional Shares

for the Equity Plan

10

Stockholders

are

being

asked

to

approve

an

amendment

to

our

2008

Stock

Incentive Plan that includes the following key modifications:

Total

Stock Options Outstanding, all plans (1)

40,525,585

Full-Value Awards Outstanding, all plans

5,061,794

Shares Available for Awards, all plans (2)

13,953,023

Dilution and Burn Rate:

1)

As of April 21, 2014, the range of the exercise prices of stock options outstanding under all of our equity compensation plans was

$12.59 to $171.94, with a weighted-average exercise price of $82.03.  The closing price of a share of our Common Stock on such

date was $143.83.  The weighted-average remaining contractual life of stock options outstanding under all of our equity

compensation plans as of April 21, 2014 was 7.0 years.

2)

Represents

shares

of

our

Common

Stock

reserved

for

future

awards

under

all

of

our

equity

compensation

plans

as

of

April

21,

2014.

Existing Stock Options Outstanding & Shares Available for Grant

Increase the current share reserve by 9,000,000 shares (pre-split) of our Common Stock

Extend the term of the Plan by one-year to April 16, 2024

Including the additional shares requested, the maximum dilution from our equity compensation

program would be 14.6% of our market value on a fully-diluted basis

If in-the-money stock options with life of 3 years or less had been exercised, dilution would drop to

approximately 13.9% of our market value on a fully-diluted basis

Over the past three years, we have granted an average of 3.37% of the outstanding stock per year

(using the ISS methodology for option equivalents)

Our Strong Performance Has Created a Significant

Overhang with In-the-Money Options

Year Granted

(Calendar Year)

Options

Outstanding

Options

Exercisable

Weighted Avg.

Exercise Price

Weighted Avg.

Contractual Term

(in years)

Options Held by

Current NEO’s

2013

9,287,455

445,727

$132.48

9.17

441,825

2012

8,180,393

2,016,717

$72.91

8.08

397,694

2011

7,078,393

3,000,829

$59.27

7.02

230,658

2010

4,893,561

3,705,439

$57.40

6.00

405,392

2009

2,546,394

2,546,394

$48.21

4.98

112,942

2008

2,586,478

2,586,478

$62.75

4.00

121,852

2007

1,489,401

1,489,401

$62.25

3.10

108,581

2006

159,234

159,234

$43.93

2.16

0

2005

1,584,618

1,584,618

$28.27

1.44

372,200

2004

293,508

293,508

$14.68

0.36

0

Total

38,099,435

17,828,345

$77.72

6.84

2,191,144

11

Outstanding Stock Option Awards at Record Date

•

Celgene employees have a history of holding onto their awards, creating a pool of

exercisable options that are significantly in-the-money

Proposal Six:  Stockholder Proposal for Increased

Disclosure on Political Contributions

American Federation of State, County and Municipal Employees, AFL-CIO,

(AFSCME) submitted Proposal Six requesting the Board to authorize the

preparation of an annual report disclosing:

1.

Company policy and procedures governing lobbying, both direct and indirect, and grassroots lobbying

communications

2.

Payments by Celgene used for (a) direct or indirect lobbying or (b) grassroots lobbying

communications,

in

each

case

including

the

amount

of

the

payment

and

the

recipient

3.

Celgene’s membership in and payments to any tax-exempt organization that writes and endorses

model legislation

4.

Description of management’s decision making process and the Board’s oversight for making

payments described in sections 2 and 3 above 

12

We

Recommend

Voting

Against

Proposal

Six

Our Board believes that this proposal is unnecessary and would not serve the

interests of Celgene stockholders because our Company already makes

extensive disclosures about our lobbying activities and the additional

information requested by this proposal would be burdensome without providing

meaningful additional information.

–

Our

annual

“Celgene

Responsibility

Report”

includes

a

“Public

Policy”

section

–

A description of our policies and practices regarding public policy activities and the reporting of

those activities to the Board’s Nominating, Governance, and Compliance Committee

–

A detailed description of our policies and practices concerning political contributions, lobbying

activities, and our memberships in trade associations

–

A link

to

quarterly

reports

of

our

federal

lobbying

activity

and

biannual

contribution

reports

–

A list of the Company’s trade association memberships

–

A description and report of the Celgene PAC, which is updated biannually to report all political

contribution amounts and recipients

13

We are a member of several trade associations and industry groups that occasionally may be

involved in lobbying activities and use a portion of the membership dues to fund such activities. 

Celgene does not specifically direct how these funds are used and may not agree with all positions

supported by these organizations.  As a result, disclosure of Celgene’s dues to these organizations

could misrepresent Celgene’s position and advocacy on certain legislative issues.

Our website contains extensive information regarding our public policy advocacy and political

participation:

Conclusion

•

We are a leading biopharmaceutical company with an exceptional track

record of value creation resulting in strong stock price outperformance

•

Based on operational achievements we expect to sustain our growth profile

through 2017 and beyond

•

Our Equity Plan is a critical component in our ability to attract and retain key

employees responsible for delivering on our long-term financial targets

•

Our

strong

performance

and

employee

confidence

in

the

future

has

resulted

in an overhang of in-the-money options that may penalize the Company in

certain dilution and stockholder valuation transfer models

•

We recommend stockholders VOTE FOR Proposal Four to amend our Stock

Incentive Plan

•

We believe Stockholder Proposal Six is unnecessary as we provide

significant

disclosure on our lobbying activities and the additional information requested

by this proposal would not provide meaningful additional information. 

•

We recommend stockholders VOTE AGAINST Proposal Six

14

Additional 2014 Proxy Materials

Celgene (NASDAQ:  CELG)

Reconciliation Tables

16

Reconciliation Tables

17

Explanation of adjustments:

(1)

Exclude sales related to non-core former Pharmion Corp., or Pharmion, and Abraxis BioScience Inc., or Abraxis products to be divested.

(2)

Exclude the estimated impact of activities arising from the acquisition of Abraxis that are not related to core nab technology and

  were divested in 2011, including other miscellaneous revenues, cost of goods sold (excluding amortization of acquired intangible assets), operating

  expenses and other costs related to such activities.  Exclude the net (benefit) cost of activities arising from the acquisition of Pharmion that

  are planned to be exited.

(3)

Exclude acquisition-related inventory step-up adjustments to fair value which were expensed for Abraxis in 2011 and 2010 and Pharmion in 2009 and 2008.

(4)

Exclude the Company's share of EntreMed, Inc. THALOMID royalties and equity losses.

(5)

Exclude upfront payments for research and development collaboration arrangements and purchases of intellectual property for unapproved products.

(6)

Exclude in-process research and development, or IPR&D, impairments.

(7)

Exclude the purchase of VIDAZA royalty obligations related to unapproved forms.

(8)

Exclude pricing settlement with the Patented Medicine Prices Review Board of Canada related to sales of THALOMID.

(9)

Exclude acquisition related charges and restructuring, including changes in the fair value of contingent consideration, related to the acquisitions of

   Gloucester, Abraxis and Avila.

(10)

Exclude the IPR&D write-off related to the acquisition of Pharmion Corp. in 2008.

(11)

Exclude impairment of royalty receivable asset that was received in 2011 as partial consideration in the sale of the non-core assets obtained by Celgene in the

  acquisition of Abraxis.

(12)

Net income tax adjustments reflect the estimated tax effect of the above adjustments and the impact of certain other non-operating tax adjustments,

  including one-time effects of changes in tax law, acquisition related matters, adjustments to the amount of unrecognized tax benefits and deferred

  taxes on unremitted foreign earnings.

Celgene Corporation and Subsidiaries

Reconciliation of GAAP to Adjusted Net Income

ROIC Calculation

18

Important Notice Regarding the Availability of Proxy Materials for the

Annual Meeting of Stockholders to be held on June 18, 2014:

The Proxy Statement, a sample of the form of proxy card sent or given to stockholders by Celgene

Corporation, and the Annual Report to Stockholders are available athttp://www.proxyvote.comor on the

Investor Relations page of Celgene Corporation’s website atwww.celgene.com.