Biogen Inc PRE 14A, filed Apr 9, 2021
Biogen Inc. (BIIB)
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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 Rule 14a-6(e)(2)) | |
| ☐ | Definitive Proxy Statement | |
| ☐ | Definitive Additional Materials | |
| ☐ | Soliciting Material under §240.14a-12 | |
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):
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NOTICE OF |
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2021 Annual Meeting of
Stockholders and Proxy Statement
Wednesday, June 2, 2021
9:00 a.m. Eastern Time
To be held online at
www.virtualshareholdermeeting.com/BIIB2021
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PRELIMINARY PROXY STATEMENT—SUBJECT TO COMPLETION
DATED APRIL 9, 2021
| Letter from our Chairman
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April , 2021
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 place 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 address some of the most complex diseases. Today, as we continue to face the challenges posed by the global COVID-19 pandemic, the importance of developing and assuring access to therapies for patients in need is more evident than ever.
As I reflect on 2020 and consider the challenges we faced, both as a society and in our business, I am reminded of the importance of our mission – we are pioneers in neuroscience. We care deeply about making a difference, and we are passionate about our commitment to patients, our employees, the environment, the communities where we live and work and you, our stockholders. Our employees work every day knowing that thousands of people worldwide count on Biogen and our therapies to make a meaningful difference in their lives. But we don’t stop there. We work to have an impact beyond our medicines as we strive to improve patient health outcomes, address social and environmental challenges, cultivate a workplace that enables our employees to thrive, support local communities and inspire future generations of scientists. I am thankful for the drive and dedication of our employees and how they rose to meet the challenges of 2020.
In response to the COVID-19 pandemic, the Biogen Foundation donated $12.0 million to support COVID-19 relief efforts, assisting 82 organizations across 35 countries. The donations were focused on expanding testing options, easing the strain on medical systems and supporting access to necessities like food.
We are committed to Diversity, Equity and Inclusion (DE&I) across all aspects of our organization – from hiring, promotion and development practices, to clinical research and trials, to patient advocacy that helps us better serve our African American, Black, Latinx and other minority communities. We believe that having a diverse, equitable and inclusive workplace allows us to empower our global workforce, foster innovation and achieve better business results. In 2020 we enhanced our DE&I strategy and outlined actionable steps to deepen our commitment and build upon our strong foundation. This plan includes a four-part initiative to build our talent and leadership pipeline, improve health outcomes for the African American, Black, Latinx and other minority communities in the disease areas we treat and expand sourcing with minority-owned businesses.
We have a longstanding commitment to addressing key environmental and sustainability impacts and we aspire to be a catalyst for positive change. In September 2020 we launched Healthy Climate, Healthy Lives™, a $250.0 million, 20-year initiative to eliminate fossil fuels across our operations and collaborate with renowned institutions with the aim to improve health, especially for the world’s most vulnerable populations. We are the first Fortune 500 company to commit to become fossil fuel free across our operations by 2040.
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 stockholders, and remain committed to investing time with you to
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increase transparency and better understand your perspectives. During 2020 independent members of our Board met with several stockholders to discuss a variety of topics, including business strategy, capital allocation, corporate governance, executive compensation and our environmental, social and governance initiatives. We look forward to continuing these dialogues in 2021 and beyond.
Our Board believes ensuring diverse perspectives, including a mix of skills, experience and backgrounds, is key to representing the interests of stockholders effectively. This year we have nominated two new candidates to stand for election as directors at our 2021 annual meeting of stockholders.
We had a productive and successful 2020 despite the challenges we faced – including the entry of multiple TECFIDERA generic entrants in the U.S. market, in addition to the challenges we faced relating to the COVID-19 pandemic. As I write to you, we have submitted regulatory filings for aducanumab, the investigational treatment for early Alzheimer’s disease we are developing in collaboration with Eisai Co., Ltd., in the U.S., the European Union (E.U.) and Japan and we are ready to launch aducanumab in the U.S. If approved, aducanumab would become the first therapy to meaningfully change the course of Alzheimer’s disease.
We are proud of all of our other accomplishments in 2020, including:
| • | Generating revenue of $13.4 billion for the year while maintaining leadership in our core businesses in multiple sclerosis (MS) and spinal muscular atrophy. |
| • | Submission of regulatory filings for: |
| • | SB11, a proposed ranibizumab biosimilar referencing LUCENTIS, in the U.S. and the E.U., which we are developing in collaboration with Samsung Bioepis Co., Ltd.; and |
| • | VUMERITY (diroximel fumarate; DRF) in the E.U. |
| • | The addition or advancement of 12 clinical programs to our pipeline, in areas such as MS, amyotrophic lateral sclerosis, Parkinson’s disease and other movement disorders, depression and biosimilars. |
| • | The European Commission’s approval of a new intramuscular injection route of administration for PLEGRIDY (peginterferon beta-1a) for the treatment of relapsing-remitting MS. |
| • | Our collaborations with: |
| • | Sangamo Therapeutics, Inc. to develop and commercialize gene regulation therapies for the potential treatment of Alzheimer’s, Parkinson’s, neuromuscular and other neurological diseases; |
| • | Denali Therapeutics Inc. to co-develop and co-commercialize therapies for the potential treatment of Parkinson’s disease and neurodegenerative diseases; and |
| • | Sage Therapeutics, Inc. to jointly develop and commercialize BIIB125 (zuranolone) for the potential treatment of major depressive disorder and postpartum depression and BIIB124 (SAGE-324) for the potential treatment of essential tremor with potential in other neurological conditions such as epilepsy. |
| • | The approximately €2.4 billion of healthcare savings in Europe that we estimate was contributed by our three anti-tumor necrosis factor biosimilars. |
| • | Being named the number one biotechnology company on the Dow Jones Sustainability World Index for the fifth time and being recognized as a corporate sustainability leader with the Gold Class Sustainability Award from RobecoSAM. |
| • | Our use of green chemistry processes and techniques to reduce our waste and energy consumption. |
| • | 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 seventh consecutive year and our perfect score of 100% on the Disability Equality Index for the third consecutive year. |
| • | The engagement of more than 57,000 students in hands-on learning to inspire their passion for science since the inception of Biogen’s Community Labs in 2002 with priority focus on underrepresented students. |
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On behalf of the Board, I am pleased to invite you to attend our 2021 annual meeting of stockholders, which will be held on Wednesday, June 2, 2021, beginning at 9:00 a.m. Eastern Time. Due to the ongoing COVID-19 pandemic and to support the health and well-being of our employees and stockholders, this year’s annual meeting will be held in a virtual meeting format only. You may attend the meeting virtually via the Internet at www.virtualshareholdermeeting.com/BIIB2021, where you will be able to view the meeting, vote online and submit questions. You will need the 16-digit control number included on your Notice of Internet Availability of Proxy Materials or your proxy card or voting instruction form to attend the annual meeting virtually via the Internet. We plan to evaluate the format of future annual 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 9, 2021, will be entitled to notice of, and to vote at, the annual meeting.
It 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.
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PRELIMINARY PROXY STATEMENT—SUBJECT TO COMPLETION
DATED APRIL 9, 2021
| Notice of 2021 Annual Meeting of Stockholders
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| Date: |
Wednesday, June 2, 2021 |
| Time: |
9:00 a.m. Eastern Time |
| Place: |
Online only at www.virtualshareholdermeeting.com/BIIB2021 |
| Record Date: |
April 9, 2021. Only Biogen stockholders of record at the close of business on the record date are entitled to receive notice of, and vote at, the annual meeting. |
| Items of Business: |
1. | To elect the 13 nominees identified in the accompanying Proxy Statement to our Board of Directors to serve for a one-year term extending until our 2022 annual meeting of stockholders and their successors are duly elected and qualified. |
| 2. | To ratify the selection of PricewaterhouseCoopers LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2021. |
| 3. | To hold an advisory vote on executive compensation. |
| 4. | To approve an amendment to Biogen’s Amended and Restated Certificate of Incorporation, as amended, to add a federal forum selection provision. |
| 5. | To act on a stockholder proposal, if properly presented at the meeting, requesting that Biogen prepare a report on Biogen’s lobbying activities. |
| 6. | To act on a stockholder proposal, if properly presented at the meeting, requesting that Biogen prepare a report on Biogen’s gender pay gap. |
| 7. | 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 visit www.virtualshareholdermeeting.com/BIIB2021. You will need the 16-digit control number included on your Notice of Internet Availability of Proxy Materials or your proxy card or voting instruction form that accompanied your proxy materials. Stockholders will be able to vote and submit questions during the annual meeting. |
| You will not be able to attend the annual meeting in person. |
| 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 2, 2021:
The Notice of 2021 Annual Meeting of Stockholders, Proxy Statement and 2020 Annual Report on Form 10-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 , 2021
This Notice and Proxy Statement are first being sent to stockholders on or about April , 2021.
Our 2020 Annual Report on Form 10-K is being sent with this Notice and Proxy Statement.
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Corporate Governance at Biogen |
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Proxy Statement Table of Contents (continued) |
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Proxy Statement Table of Contents (continued) |
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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
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| DATE: | Wednesday, June 2, 2021 | |
| TIME: | 9:00 a.m. Eastern Time | |
| LOCATION: | Online only at www.virtualshareholdermeeting.com/BIIB2021
You will not be able to attend the annual meeting in person. | |
| RECORD DATE: |
April 9, 2021 |
| Voting Matters and Vote Recommendation
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| Voting Matter | Board Recommendation |
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| Item 1—Election of Directors | FOR each nominee | 11 | ||
| Item 2—Ratification of the Selection of our Independent Registered Public Accounting Firm | FOR | 28 | ||
| Item 3—Advisory Vote on Executive Compensation | FOR | 31 | ||
| Item 4—Approval of an Amendment to Our Amended and Restated Certificate of Incorporation, as Amended, to Add a Federal Forum Selection Provision | FOR | 68 | ||
| Item 5—Stockholder Proposal Requesting a Report on Our Lobbying Activities | AGAINST | 70 | ||
| Item 6—Stockholder Proposal Requesting a Report on Our Gender Pay Gap | AGAINST | 72 |
| How to Vote
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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.
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Proxy Statement Summary (continued) |
| Highlights of 2020 Company Performance
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We are a global biopharmaceutical company 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; Alzheimer’s disease and dementia; neuromuscular disorders, including spinal muscular atrophy (SMA) and amyotrophic lateral sclerosis (ALS); movement disorders, including Parkinson’s disease; ophthalmology; and neuropsychiatry. We are also focused on discovering, developing and delivering worldwide innovative therapies in our emerging growth areas of immunology; acute neurology; and neuropathic pain. In addition, we 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 2020 Annual Report on Form 10-K.
2020 Operating Performance Highlights
| • | Full year total revenue of $13.4 billion. |
| • | Submission of regulatory filings for: |
| • | aducanumab, the investigational treatment for early Alzheimer’s disease we are developing in collaboration with Eisai Co., Ltd. (Eisai), in the U.S., the European Union (E.U.) and Japan; |
| • | SB11, a proposed ranibizumab biosimilar referencing LUCENTIS, in the U.S. and the E.U., which we are developing in collaboration with Samsung Bioepis Co., Ltd. (Samsung Bioepis), our joint venture with Samsung BioLogics Co., Ltd. (Samsung BioLogics); and |
| • | VUMERITY (diroximel fumarate; DRF) in the E.U. |
| • | The addition or advancement of 12 clinical programs to our pipeline, including in MS, ALS, Parkinson’s disease and other movement disorders, depression and biosimilars. |
| • | The European Commission’s approval of a new intramuscular injection route of administration for PLEGRIDY (peginterferon beta-1a) for the treatment of relapsing-remitting MS. |
| • | Our collaborations with: |
| • | Sangamo Therapeutics, Inc. (Sangamo) to develop and commercialize gene regulation therapies for the potential treatment of Alzheimer’s, Parkinson’s, neuromuscular and other neurological diseases; |
| • | Denali Therapeutics Inc. (Denali) to co-develop and co-commercialize therapies for the potential treatment of Parkinson’s disease and neurodegenerative diseases; and |
| • | Sage Therapeutics, Inc. (Sage) to jointly develop and commercialize BIIB125 (zuranolone) for the potential treatment of major depressive disorder and postpartum depression and BIIB124 (SAGE-324) for the potential treatment of essential tremor with potential in other neurological conditions such as epilepsy. |
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Proxy Statement Summary (continued) |
| • | We continued to expand our biosimilars business, with over approximately 240,000 patients on our three anti-tumor necrosis factor (TNF) biosimilars in Europe as of December 31, 2020. We estimate that our anti-TNF biosimilars contributed approximately €2.4 billion of healthcare savings in 2020 across Europe. |
| • | Named the number one biotechnology company on the Dow Jones Sustainability World Index for the fifth time. |
| • | Repurchased approximately 22.4 million shares of our common stock at a total cost of approximately $6.7 billion. |
| Our Values
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Biogen Elements
Much like the periodic table of elements documents the building blocks of the universe around us, the Biogen Elements give shape to our company’s culture and are embedded into all our people processes, including performance management, rewards and recognition, 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.
As we remain focused on discovering, developing and delivering worldwide innovative therapies, we remain customer 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 an inclusive community, both internally and externally. We work in partnership to break down siloes and encourage diverse perspectives and backgrounds at all levels.
A pioneering spirit 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 and agile, 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 ourselves accountable for our work and results. We honor our commitments and we never compromise our integrity. We sustain an ethical environment of trust, honesty and transparency while ensuring appropriate confidentiality.
Climate and Health
We have a longstanding commitment to addressing key environmental and sustainability impacts and we aspire to be a catalyst for positive change. We have adopted strong corporate responsibility policies and work to reduce the operational impact on the environment resulting from our business, including carbon emissions and water use, and by increasing the environmental and social performance of our supply chain.
In September 2020 we announced Healthy Climate, Healthy Lives, a $250.0 million, 20-year initiative to eliminate fossil fuels across our operations and collaborate with renowned institutions with the aim to improve health, especially for the world’s most vulnerable populations. We are the first Fortune 500 company to commit to become fossil fuel free across our operations by 2040.
As part of this commitment, we utilize a science-based approach, demonstrated by establishing a climate target consistent with reductions required to keep warming to 1.5°C. Our Science Based Targets Initiative-approved commitment is to reduce absolute scopes 1 and 2 greenhouse gas emissions 55% by 2032 and 100% by 2040 from a 2019 base year. To achieve this goal, we embrace sustainable drug development, including green chemistry and reduced packaging, as an opportunity to improve our operations.
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Proxy Statement Summary (continued) |
Our 2020 accomplishments include:
| • | Launched Healthy Climate, Healthy Lives, an initiative that goes beyond net zero emissions with a goal of realizing zero emissions from our global operations by 2040. |
| • | Named the Biotechnology Industry Leader on the Dow Jones Sustainability World Index for the fifth time. |
| • | Recognized as a corporate sustainability leader with the Gold Class Sustainability Award from RobecoSAM. |
| • | Reduced total potable water usage by 10% and non-hazardous waste generated by 35%, each as compared to 2019. |
| • | Demonstrated our commitment by signing America Is All In and joining the World Business Council on Sustainable Development, the United Nations Global Compact, the World Economic Forum Alliance of CEO Climate Leaders, the EV100 (committing to a 100% electric vehicle fleet by 2025), Ceres BICEP, Biopharma Sustainability Roundtable and the Pharmaceutical Environmental Group, among others. |
Diversity, Equity and Inclusion
We believe that prejudice, racism and intolerance are unacceptable and that different perspectives and all forms of diversity make us stronger and help us succeed as a business. We are committed to Diversity, Equity and Inclusion (DE&I) across all aspects of our organization, including hiring, promotion, compensation and development practices. As of December 31, 2020, 28% of Biogen’s director-level and above positions were held by ethnic or racial minorities in the U.S. Our policies and practices are global, but the laws in many countries outside the U.S. do not permit us to collect ethnic or racial data on our employees. Globally, 48% of Biogen’s positions at director-level and above were held by women.
In 2020 we enhanced our DE&I strategy and outlined actionable steps to deepen our commitment and build upon a strong foundation. This four-part strategy aims to:
| • | Build a diverse talent and leadership pipeline |
| • | Build awareness and capability on how to drive DE&I throughout our organization |
| • | Help improve health outcomes in the disease areas we treat |
| • | Promote economic empowerment |
We plan to create even greater awareness and capability in our organization through leadership accountability and transparency. To establish and progress this strategy, we rely on a cross-company governing body of employees known as the Diversity, Equity & Inclusion Strategic Council.
We aim to increase diversity* in U.S. manager positions and above by 30% by the end of 2021. We have and will continue to disclose our EEO-1 (Equal Employment Opportunity) data as part of our effort to foster greater transparency.
We are honored to be recognized as a company of choice. We scored 100% on the 2020 Disability Equality Index, which measures our policies and practices related to disability inclusion, for the third consecutive year. Additionally, for the seventh 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.
| * | Percent of U.S. manager positions and above held by Black, African American and Latinx employees as well as Asian employees where underrepresented. |
Philosophy on Pay Equity
We are committed to ensuring that our employees receive equal pay for equal work. We establish components and ranges of compensation based on market and benchmark data. Within this context, we strive to pay all employees equitably within a reasonable range, taking into consideration factors such as role, function, market data, internal equity, job location, relevant experience and individual, business unit and company performance. In addition, 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 best on behalf of patients and stockholders each day.
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Proxy Statement Summary (continued) |
We have multiple initiatives to recognize, interrupt and prevent bias in hiring, performance management and compensation decisions and we provide resources to further develop managers and leaders to help them make equitable decisions about pay.
We regularly review our compensation practices and analyze the equity of compensation decisions, for individual employees and our workforce as a whole. If we identify employees with pay gaps, we review and take appropriate action to ensure fidelity between our stated philosophy and actions.
To better understand our pay equity performance, we completed a global analysis in 2020, which was conducted by an external consultant who helped us analyze comparable roles to evaluate whether gender impacted compensation at Biogen. In the U.S., where the law permits the collection of race data, we also included race in the analysis, consistent with our commitment to racial equity. Overall, 85% of our global workforce was included in at least one analysis. Individuals not included in the analysis were either single-incumbent roles or in homogenous groups (by gender or by race), and therefore did not need to be analyzed.
We analyzed our employees’ pay relative to race, gender, geography, responsibilities, level, performance and a wide range of other criteria. The pay equity analysis showed that the compensation of 99.7% of those analyzed was equitable. For the remaining 0.3% (17 employees) we made appropriate adjustments. The robust analysis confirmed that fairness and equity are embedded in our compensation practices around the globe.
We will continue to regularly review our compensation philosophy, ensure employees understand the total compensation practices and provide training for managers and leaders to prevent bias during hiring, compensation decisions and performance management.
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 be a positive presence wherever we operate. Our newly refreshed Care Deeply Every Day program – an ongoing volunteer program through the whole year – provides every Biogen employee with eight hours of volunteer time for in-person and virtual volunteer opportunities. In 2020 347 employees from 8 countries logged 4,370 hours volunteering at different service projects, mostly virtual, in the communities where we live and work.
Many Biogen employees also participate in Employee Resource Networks, employee-led groups engaged in activities around a common interest. A newly created group, ourIMPACT, is focused on furthering our Healthy Climate, Healthy Lives initiative within Biogen and in our employees’ everyday home life. 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 Labs, 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 in hands-on biotechnology experiments and interact with scientists and other biotech professionals in a state-of-the-art laboratory classroom. Since its inception, our Community Labs have engaged more than 57,000 students in hands-on learning to inspire their passion for science with priority focus on underrepresented students.
In 2020, as a result of the ongoing COVID-19 pandemic, we brought our Community Lab science learning program together with the Lemelson-MIT Program at the Massachusetts Institute of Technology (MIT) to launch the new online Biogen-MIT Biotech in Action: Virtual Summer Lab. This virtual lab offered 400 Massachusetts and North Carolina high school students a first-hand experience in biotechnology and provided the opportunity to learn directly from, and be mentored by, leading scientists at Biogen and MIT. Most of the students were from low-income households and groups historically underrepresented in science, technology, engineering and math (STEM).
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Proxy Statement Summary (continued) |
We also worked with many leading institutions to bring scientific content and engaging experiences to students through an online hub called the Virtual Community Lab. Here students, parents and teachers around the world can access and experience free online resources, including tutorial videos of science experiments that can be done at home, plus other educational materials.
The Biogen Foundation
The Biogen Foundation is focused on two core areas: science education and strengthening our communities by supporting 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. To realize this goal, the Biogen Foundation principally supports nonprofit organizations that focus on four areas: providing access to hands-on science education, teacher development in science, college readiness and support and basic social needs (child hunger, poverty and social mobility).
Through December 31, 2020, the Biogen Foundation donated $18.9 million to organizations around the world. This included $12.0 million in grants to 82 organizations across 35 countries to support COVID-19 relief to expand testing options, ease the strain on medical systems and support access to necessities like food.
The Biogen Foundation also supported ongoing programs in science education and nutrition, and matched Biogen employee gifts to nonprofit organizations, up to $25,000 per employee, per year. From the $18.9 million donated by the Biogen Foundation in 2020, the employee matching gift program contributed $2.5 million to causes ranging from disease research to camps for children with serious illness’es to disaster relief efforts.
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.
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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 the anti-TNF biosimilars we sell provided healthcare savings of approximately €2.4 billion in 2020 in the markets where they are sold.
Year in Review Corporate Responsibility Report
For more information on our commitment to addressing environmental, social and governance aspects across our business, please see our report, Year in Review: Our Commitment to Corporate Responsibility, 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 employees, our patients, our stockholders and various other stakeholders, including the communities in which we operate and serve.
Furthermore, we are committed to transparent and clear disclosure of our policies and performance on a broad array of issues. Our Year in Review meets the Global Reporting Initiative framework and aligns with the Sustainability Accounting Standards Board, the Task Force on Climate-Related Financial Disclosures, the United Nations Global Compact and Sustainable Development Goals.
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| 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 |
|
12/13 |
| |
| Number of Female Director Nominees/Total Number of Director Nominees |
|
3/13 |
| |
| Number of Director Nominees of International Origin/Total Number of Director Nominees |
|
4/13 |
| |
| Number of Diverse Director Nominees/Total Number of Director Nominees |
|
5/13 |
| |
| Average Age of Directors Standing for Election (as of April 9, 2021) |
|
64 |
| |
| 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 for Non-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 Recoupment in Equity and Annual Bonus Plans |
|
Yes |
| |
| Comprehensive Code of Business Conduct and Corporate Governance Principles |
|
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 Diversity, Environmental and Sustainability Matters |
|
Yes |
| |
| Board Oversight and Disclosure on Website Related to Corporate Political Contributions and Expenditures |
|
Yes |
| |
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Proxy Statement Summary (continued) |
Director Stockholder Engagement Initiative
We value the views of our stockholders and other stakeholders, and we solicit input throughout the year. During 2020 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 and our environmental, social and governance initiatives.
| Our Director Nominees
|
||||
Proposal 1 — Election of Directors
You are being asked to vote on the election of the following 13 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
| |||||||||||
| Name, Occupation and Experience | Age* | Independent | AC | C&MDC** | CGC | |||||||
| Alexander J. Denner, Ph.D. Founding Partner and Chief Investment Officer, Sarissa Capital Management LP |
51 | Yes |
|
2 | ||||||||
| Caroline D. Dorsa Retired Executive Vice President and Chief Financial Officer, Public Service Enterprise Group Incorporated |
61 | Yes |
|
2 | ||||||||
| Maria C. Freire, Ph.D. President and Executive Director, Foundation for the National Institutes of Health |
66 | Yes | 2 | |||||||||
| William A. Hawkins Senior Advisor, EW Healthcare Partners |
67 | Yes |
|
3 | ||||||||
| William D. Jones President and Chief Executive Officer, CityLink Investment Corp. |
65 | Yes | 1 | |||||||||
| Nancy L. Leaming Retired Chief Executive Officer and President, Tufts Health Plan |
73 | Yes |
|
— | ||||||||
| Jesus B. Mantas Senior Managing Partner, IBM Global Services |
52 | Yes |
|
— | ||||||||
| Richard C. Mulligan, Ph.D. Mallinckrodt Professor of Genetics, Emeritus, Harvard Medical School and Head of SanaX and Executive Vice Chairman, Sana Biotechnology, Inc. |
66 | Yes |
|
1 | ||||||||
| Stelios Papadopoulos, Ph.D. Chairman, Biogen Inc., Chairman, Exelixis, Inc., Chairman, Regulus Therapeutics Inc. and Chairman Eucrates Biomedical Acquisition Corp. |
72 | Yes |
|
3 | ||||||||
| Brian S. Posner Private Investor and Founder and Managing Partner, Point Rider Group LLC |
59 | Yes |
|
2 | ||||||||
| Eric K. Rowinsky, M.D. President and Executive Chairman, RGenix, Inc. |
64 | Yes |
|
3 | ||||||||
| Stephen A. Sherwin, M.D. Clinical Professor of Medicine, University of California, San Francisco and Advisor to Life Sciences Companies |
72 | Yes |
|
1 | ||||||||
| Michel Vounatsos Chief Executive Officer, Biogen Inc. |
59 | No | 1 | |||||||||
* Age and Committee memberships are as of April 9, 2021. Dr. Freire and Mr. Jones are each new director nominees standing for election to our Board of Directors at the Annual Meeting.
** Robert W. Pangia is the Chair of our Compensation and Management Development Committee. Mr. Pangia is retiring from our Board of Directors, effective as of the Annual Meeting.
| AC: Audit Committee | C&MDC: Compensation and Management Development Committee | CGC: Corporate Governance Committee |
| Chair:
|
Member:
|
Financial Expert:
|
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|
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, 2021. Detailed information about this proposal can be found beginning on page 28.
| 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 31.
Our executive compensation programs embody a pay-for-performance philosophy that supports our business strategy and aligns executive interests with those of our stockholders. Highlights of our executive compensation programs for 2020 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 of pre-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 and at-risk in 2020, creating strong alignment with the interests of our stockholders. |
||
| Approximately 85% of the target compensation for our currently-employed NEOs (other than our CEO) was performance-based and at-risk in 2020, creating strong alignment with the interests of our stockholders. |
||
| 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 group and the broader market in which we compete for talent. |
||
| An independent compensation consultant assists the Compensation and Management Development Committee in evaluating and setting executive and non-employee director compensation. |
||
| We believe that our compensation programs do not encourage unnecessary and excessive risk taking, and risk assessments are conducted annually. |
||
| 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 periods that are designed to reward long-term performance. |
||
| While stock option awards are not currently part of our compensation programs, if granted, they would be granted at fair market value; we do not backdate or reprice stock option awards. |
||
| 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 executives and in March 2020 our two executives that remained eligible for this benefit voluntarily waived their rights to this benefit. Therefore, no executive officer is eligible to receive excise tax gross ups. |
||
| We do not offer additional special perquisites to our executive officers that are not offered to our broad employee base or senior management populations. |
||
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Proxy Statement Summary (continued) |
| Other Management Proposal
|
||||
Proposal 4 — Approve an Amendment to Our Amended and Restated Certificate of Incorporation, as Amended, to Add a Federal Forum Selection Provision
Our Board of Directors recommends that stockholders vote to approve an amendment to our Amended and Restated Certificate of Incorporation, as amended, to add a federal forum selection provision. Detailed information about this proposal can be found beginning on page 68.
| Stockholder Proposals
|
||||
Proposal 5 — Stockholder Proposal Requesting a Report on Our Lobbying Activities
Our Board of Directors recommends that stockholders vote against a stockholder proposal requesting a report on our lobbying activities. Detailed information about this proposal can be found beginning on page 70.
Proposal 6 — Stockholder Proposal Requesting a Report on Our Gender Pay Gap
Our Board of Directors recommends that stockholders vote against a stockholder proposal requesting a report on our gender pay gap. Detailed information about this proposal can be found beginning on page 72.
| 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; risks and uncertainties associated with drug development and commercialization; regulatory discussions, submissions, filings and approvals and the timing thereof; the potential benefits, safety and efficacy of our products and investigational therapies; and the anticipated benefits and potential of investments, collaborations and business development activities. 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
|
||||
PLEGRIDY®, SPINRAZA®, TECFIDERA®, TYSABRI®, VUMERITY® and ZINBRYTA® are registered trademarks of Biogen. Healthy Climate, Healthy Lives™ is a trademark of Biogen. LUCENTIS®, EYLEA® and other trademarks referenced in this Proxy Statement are the property of their respective owners.
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Table of Contents
| 1 |
|
Biogen Inc.
225 Binney Street
Cambridge, Massachusetts 02142
The Board of Directors of Biogen Inc. is soliciting your proxy to vote at our 2021 annual meeting of stockholders (Annual Meeting) to be held at 9:00 a.m. Eastern Time on Wednesday, June 2, 2021, for the purposes summarized in the accompanying Notice of 2021 Annual Meeting of Stockholders. Our 2020 Annual Report on Form 10-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 virtually via the Internet.
Any stockholder can listen to and participate in the Annual Meeting live via the Internet at www.virtualshareholdermeeting.com/BIIB2021. Stockholders may vote and submit questions while connected to the Annual Meeting via the Internet. You will need the 16-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.
You will not be able to attend the Annual Meeting in person.
| |
|
What do I need in order to be able to participate in the Annual Meeting virtually via the Internet? |
You will need the 16-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 your 16-digit control number, you will be able to listen to the meeting only — you will not be able to vote or submit questions during the meeting.
| |
|
Who can vote? |
Each share of our common stock that you own as of the close of business on the record date of April 9, 2021 (Record Date) entitles you to one vote on each matter to be voted upon at the Annual Meeting. As of the Record Date, [●] shares of our common stock were outstanding and entitled to vote. We are making this Proxy Statement and other Annual Meeting materials available on the Internet at www.proxyvote.com or, upon request, by sending printed versions of these materials on or about April , 2021, to all stockholders of record as of the Record Date. For ten days before the Annual Meeting, a list of stockholders entitled to vote will be available for inspection at our offices located at 225 Binney Street, Cambridge, Massachusetts 02142 and will also be available for examination during the Annual Meeting at www.virtualshareholdermeeting.com/BIIB2021. If you would like to review the list, please call our Investor Relations department at (781) 464-2442.
|
| 1 |
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Table of Contents
| 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 13 director nominees (Proposal 1);
• The ratification of the selection of PricewaterhouseCoopers LLP (PwC) as our independent registered public accounting firm for the fiscal year ending December 31, 2021 (Proposal 2);
• The advisory vote on executive compensation (Proposal 3);
• The approval of an amendment to our Amended and Restated Certificate of Incorporation, as amended, to add a federal forum selection provision (Proposal 4);
• To consider and vote on a stockholder proposal requesting a report on our lobbying activities, if properly presented (Proposal 5);
• To consider and vote on a stockholder proposal requesting a report on our gender pay gap, if properly presented (Proposal 6); 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, 2021 (Proposal 2);
• On an advisory basis, “FOR” the approval of our executive compensation (Proposal 3);
• “FOR” the approval of an amendment to our Amended and Restated Certificate of Incorporation, as amended, to add a federal forum selection provision (Proposal 4);
• “AGAINST” the approval of a stockholder proposal requesting a report on our lobbying activities, if properly presented (Proposal 5); and
• “AGAINST” the approval of a stockholder proposal requesting a report on our gender pay gap, if properly presented (Proposal 6).
| |
|
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 |
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|
Table of Contents
| 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.
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.
|
By Internet. You may vote at www.proxyvote.com, 24 hours a day, seven days a week. You will need the
16-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 through
www.proxyvote.com must be received by 11:59 p.m. Eastern Time on June 1, 2021.
By Telephone. You may vote using a touch-tone telephone by calling
1-800-690-6903, 24 hours a day, seven days a week. You will need the 16-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 1, 2021.
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 1, 2021, to be voted at the Annual Meeting.
During the Annual Meeting. You may vote during the Annual Meeting by going to www.virtualshareholdermeeting.com/BIIB2021. You will need the 16-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 to be able to vote during the Annual
Meeting.
| 3 |
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|
Table of Contents
| 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 1, 2021;
• 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 1, 2021, will be counted;
• participating in the Annual Meeting virtually via the Internet and voting again; or
• delivering a written revocation to our Secretary at Biogen Inc., 225 Binney Street, Cambridge, Massachusetts 02142, to be received no later than June 1, 2021.
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 virtually via the Internet, your shares will not be voted at 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 on non-discretionary, or non-routine, matters. Uninstructed shares whose votes cannot be counted on non-routine matters result in what are commonly referred to as “broker non-votes.”
The proposal to ratify the selection of our independent registered public accounting firm is a routine matter and the other proposals are non-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.
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| 4 |
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Table of Contents
| 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 broker non-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, 2021. Abstentions will have the effect of votes against this proposal. Brokers generally have discretionary authority to vote on the ratification of the selection of our independent registered public accounting firm, thus we do not expect any broker non-votes on this proposal.
• Proposal 3: Advisory Vote on Executive Compensation: Because this proposal asks for a non-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 broker non-votes, if any, will not have any effect on the results of those deliberations.
• Proposal 4: Approval of an Amendment to our Amended and Restated Certificate of Incorporation, as Amended, to Add a Federal Forum Selection Provision: The affirmative vote of a majority of shares issued and outstanding and entitled to vote on the proposal is required to approve the amendment to our Amended and Restated Certificate of Incorporation, as amended, to add a federal forum selection provision. Abstentions and broker non-votes will have the effect of votes against this proposal.
• Proposal 5: Stockholder Proposal: Requesting a Report on our Lobbying Activities: Because this proposal asks for a non-binding vote, there is no “required vote” that would constitute approval. We value the opinions expressed by our stockholders in this non-binding vote, and the outcome of this vote may cause our Board of Directors to reevaluate its recommendation concerning this proposal. Abstentions and broker non-votes, if any, will not have any effect on that determination.
• Proposal 6: Stockholder Proposal: Requesting a Report on our Gender Pay Gap: Because this proposal asks for a non-binding vote, there is no “required vote” that would constitute approval. We value the opinions expressed by our stockholders in this non-binding vote, and the outcome of this vote may cause our Board of Directors to reevaluate its recommendation concerning this proposal. Abstentions and broker non-votes, if any, will not have any effect on that determination.
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| 5 |
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Table of Contents
| 1 |
General Information About the Meeting (continued) |
|
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.
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Why did I receive a one-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.
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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 Form 8-K filed with the SEC within four business days after the end of the Annual Meeting. You may request a copy of this Form 8-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 Form 8-K on the Internet through the SEC’s electronic data system, called EDGAR, at www.sec.gov or on our website, www.biogen.com, under the “Financials” subsection of the “Investors” section of the website.
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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.
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Who do I contact if I experience technical difficulties trying to access or during the Annual Meeting? |
If you have technical difficulties when accessing the Annual Meeting, there will be technicians available to assist you. If you encounter any technical difficulties accessing the virtual meeting during the check-in or meeting time, please call the technical support number that will be posted on the Annual Meeting log-in page.
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| 6 |
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Table of Contents
Table of Contents
| 2 |
Corporate Governance at Biogen (continued) |
| 8 |
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Table of Contents
| 2 |
Corporate Governance at Biogen (continued) |
| 9 |
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Table of Contents
| 2 |
Corporate Governance at Biogen (continued) |
| 10 |
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Table of Contents
| 3 |
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Proposal 1 – Election of Directors
|
We are asking our stockholders to elect the 13 director nominees listed below to serve a one-year term extending until our 2022 annual meeting of stockholders and until their successors are duly elected and qualified, unless they resign or are removed:
| Alexander J. Denner | Nancy L. Leaming | Brian S. Posner | ||
| Caroline D. Dorsa | Jesus B. Mantas | Eric K. Rowinsky | ||
| Maria C. Freire | Richard C. Mulligan | Stephen A. Sherwin | ||
| William A. Hawkins | Stelios Papadopoulos | Michel Vounatsos | ||
| William D. Jones |
Our Board of Directors has nominated these 13 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 13 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
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|||||||||||||||||||||||||||||||||||||||
| General Management Experience
|
✓
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✓
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✓
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|
|
✓
|
|
|
✓
|
|
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✓
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|
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✓
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|
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✓
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|
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✓
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✓
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|
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✓
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|
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✓
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|
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✓
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| |||||||||||||
| Financial Experience
|
✓
|
|
|
✓
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|
|
✓
|
|
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✓
|
|
|
✓
|
|
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✓
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|
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✓
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✓
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✓
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|
✓
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|
✓
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| |||||||||||||||||||
| Audit Committee Financial Expertise
|
✓
|
|
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✓
|
|
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✓
|
|
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✓
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✓
|
|
|
✓
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|
|
✓
|
|
|
✓
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| ||||||||||||||||||||||||||||
| Mergers & Acquisitions Experience
|
✓
|
|
|
✓
|
|
|
|
|
|
✓
|
|
|
✓
|
|
|
✓
|
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✓
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✓
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✓
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✓
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✓
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✓
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| ||||||||||||||||
| Scientific Research Experience
|
✓
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|
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✓
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✓
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✓
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✓
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✓
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✓
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|||||||||||||||||||||||||||||||
| Drug Development Experience
|
✓
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✓
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✓
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✓
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✓
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✓
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✓
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| |||||||||||||||||||||||||||||||
| Commercial Experience
|
✓
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✓
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|
✓
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✓
|
|
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✓
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✓
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✓
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✓
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✓
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| ||||||||||||||||||||||
| International Business Experience
|
✓
|
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✓
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✓
|
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|
✓
|
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✓
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| ||||||||||||||||||||||||||||||||||
| Public Policy Experience
|
✓
|
|
|
✓
|
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✓
|
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✓
|
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✓
|
|
|
✓
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|
✓
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✓
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| ||||||||||||||||||||||||||||
| Operations Experience
|
✓
|
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✓
|
|
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|
✓
|
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✓
|
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✓
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✓
|
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✓
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✓
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✓
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|
|
✓
|
|
|
✓
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| ||||||||||||||||
| Environmental, Social, Governance (ESG) Experience
|
✓
|
|
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|
|
✓
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|
✓
|
|
|
✓
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|
|
|
|
|
✓ | ✓ | ✓ | ✓ | ✓
|
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✓
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| ||||||||||||||||||||||||
| Diversity
|
✓
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✓
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|
✓
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✓
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✓
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|||||||||||||||||||||||||||||||
| Other Public Company Board Service
|
✓
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✓
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✓
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✓
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✓
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✓
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✓
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✓
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✓
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✓
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✓
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✓ | ||||||||||||||||||
| 11 |
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Table of Contents
| 3 |
Board of Directors (continued) |
Our Nominees for Director
(Information is as of April 9, 2021)
| 12 |
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Table of Contents
| 3 |
Board of Directors (continued) |
| 13 |
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Table of Contents
| 3 |
Board of Directors (continued) |
| 14 |
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Table of Contents
| 3 |
Board of Directors (continued) |
| 15 |
|
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Table of Contents
| 3 |
Board of Directors (continued) |
| 16 |
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Table of Contents
| 3 |
Board of Directors (continued) |
| 17 |
|
|
Table of Contents
| 3 |
Board of Directors (continued) |
OUR BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR THE ELECTION OF EACH
DIRECTOR NOMINEE NAMED ABOVE.
| 18 |
|
|
Table of Contents
| 3 |
Board of Directors (continued) |
Our Board of Directors met 21 times in 2020. Our Board of Directors also has three standing committees. The principal functions of each committee, the committee composition in 2020 and the number of meetings held in 2020 are described in the table below. The Chair of each committee periodically reports to our Board of Directors on committee deliberations and decisions. The charter of each of our 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
|
2020 Members
|
Meetings in 2020
| |||
|
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 functions; • our financial strategy, policies and practices; • management’s exercise of its responsibility to assess and manage risks associated with our business and operations; and • 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.
|
Caroline D. Dorsa† (Chair) William A. Hawkins† Nancy L. Leaming† Stephen A. Sherwin† |
11 | |||
|
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 our non-employee directors.
|
Robert W. Pangia (Chair) Richard C. Mulligan Brian S. Posner Lynn Schenk* |
8 | |||
|
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 Eric K. Rowinsky
|
5 | |||
| † | Determined by our Board of Directors to be an audit committee financial expert. |
| * | Ms. Schenk retired from our Board of Directors, effective as of June 3, 2020. |
| • | 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 2020. |
| • | 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 2020 the independent directors of our full Board of Directors met without management present six times. Each committee of our Board of Directors also had numerous executive sessions throughout the year. |
| • | 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 2020 annual meeting of stockholders. |
| 19 |
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|
Table of Contents
Table of Contents
| 3 |
Board of Directors (continued) |
| 21 |
|
|
Table of Contents
| 3 |
Board of Directors (continued) |
| Name (a)
|
Fees (b) |
Stock Awards(1) (c)
|
Change in Pension Value and Nonqualified Deferred Compensation Earnings(2) (d)
|
All Other Compensation(3) (e)
|
Total (f)
|
|||||||||||
| Alexander J. Denner |
$ |
155,000 |
|
$ |
269,314 |
|
— |
$15,000 |
$ |
439,314 |
| |||||
| Caroline D. Dorsa |
$ |
155,000 |
|
$ |
269,314 |
|
— |
— |
$ |
424,314 |
| |||||
| William A. Hawkins |
$ |
140,000 |
|
$ |
269,314 |
|
— |
— |
$ |
409,314 |
| |||||
| Nancy L. Leaming |
$ |
140,000 |
|
$ |
269,314 |
|
— |
$28,500 |
$ |
437,814 |
| |||||
| Jesus B. Mantas |
$ |
140,000 |
|
$ |
269,314 |
|
— |
— |
$ |
409,314 |
| |||||
| Richard C. Mulligan |
$ |
140,000 |
|
$ |
269,314 |
|
— |
— |
$ |
409,314 |
| |||||
| Robert W. Pangia(4) |
$ |
155,000 |
|
$ |
269,314 |
|
$104,890 |
— |
$ |
529,204 |
| |||||
| Stelios Papadopoulos |
$ |
215,000 |
|
$ |
444,822 |
|
— |
$10,000 |
$ |
669,822 |
| |||||
| Brian S. Posner |
$ |
140,000 |
|
$ |
269,314 |
|
— |
$25,000 |
$ |
434,314 |
| |||||
| Eric K. Rowinsky |
$ |
140,000 |
|
$ |
269,314 |
|
— |
— |
$ |
409,314 |
| |||||
| Lynn Schenk(5) |
$ |
70,000 |
|
|
— |
|
— |
$25,000 |
$ |
95,000 |
| |||||
| Stephen A. Sherwin |
$ |
140,000 |
|
$ |
269,314 |
|
— |
— |
$ |
409,314 |
| |||||
Notes to the 2020 Director Compensation Table
| (1) | The amounts in column (c) represent the grant date fair value of RSU awards made in 2020 to non-employee directors under the Non-Employee Directors Equity Plan, as described in the narrative preceding this table. These RSUs are scheduled to vest in full and be settled in shares on the first anniversary of the grant date, generally subject to continued service. Grant date fair values were computed in accordance with Accounting Standards Codification (ASC) 718, excluding the effect of estimated forfeitures, and determined by multiplying the number of RSUs awarded by the fair market value of the Company’s common stock on the relevant grant date. |
| (2) | 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 2020 applied in this calculation is 1.61%, which was the federal long-term rate effective in January 2020 when the Fixed Rate Option (FRO) under this plan was established for 2020. Only Mr. Pangia had deferred compensation notionally invested in the FRO during 2020. |
| (3) | The amounts in column (e) represent the amount of matching contributions made in 2020 by the Biogen Foundation on behalf of the director pursuant to the terms of a matching gift program offered by the Biogen Foundation to all U.S. employees and non-employee directors of Biogen. Under the matching gift program, the Biogen Foundation matches gifts to eligible U.S.-based non-profit organizations, in accordance with the Biogen Foundation’s guidelines, up to an annual maximum per donor amount of $25,000 per calendar year and up to an aggregate program total of $1.5 million per calendar year. The matching contributions made by the Biogen Foundation are not taxable income to the director, and the director may not take any tax deductions for such matching contributions. The amount for Ms. Leaming includes a matching gift contribution of $3,500, which was made by the Biogen Foundation in 2020 for a gift made by Ms. Leaming in 2019. |
| (4) | Mr. Pangia is retiring from our Board of Directors, effective as of the Annual Meeting. |
| (5) | Ms. Schenk retired from our Board of Directors, effective as of June 3, 2020. In June 2020 the Company entered into a consulting agreement with Ms. Schenk after she retired from our Board of Directors. In 2020 Ms. Schenk earned $70,000 under the consulting agreement. |
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Table of Contents
| 3 |
Board of Directors (continued) |
Director Equity Outstanding at 2020 Fiscal Year-End
The following table summarizes the equity awards that were outstanding as of December 31, 2020, for each of the non-employee directors serving during 2020.
| Option Awards | Stock Awards(1) | ||||||||||||||
| Name
|
Number of
|
Number of Shares or Units of Stock That Have Not Vested
| |||||||||||||
| Alexander J. Denner |
— |
|
890 |
||||||||||||
| Caroline D. Dorsa |
— |
|
890 |
||||||||||||
| William A. Hawkins |
— |
|
890 |
||||||||||||
| Nancy L. Leaming |
— |
|
890 |
||||||||||||
| Jesus B. Mantas |
— |
|
890 |
||||||||||||
| Richard C. Mulligan |
— |
|
890 |
||||||||||||
| Robert W. Pangia |
— |
|
890 |
||||||||||||
| Stelios Papadopoulos |
— |
|
1,470 |
||||||||||||
| Brian S. Posner |
— |
|
890 |
||||||||||||
| Eric K. Rowinsky |
— |
|
890 |
||||||||||||
| Lynn Schenk(2) |
— |
|
— |
||||||||||||
| Stephen A. Sherwin |
— |
|
890 |
||||||||||||
Notes to the Director Equity Outstanding at 2020 Fiscal Year-End Table
| (1) | Represents the number of RSUs awarded to non-employee directors in 2020 under the Non-Employee Directors Equity Plan, as described in the narrative preceding the “2020 Director Compensation” table above. These RSU awards are scheduled to vest in full and be settled in shares on the first anniversary of the grant date, generally subject to continued service. |
| (2) | Ms. Schenk retired from our Board of Directors, effective as of June 3, 2020, and was not eligible for an award. |
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 risk framework and governance and management’s exercise of its responsibility to assess, monitor and manage the Company’s 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.
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Table of Contents
| 3 |
Board of Directors (continued) |
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 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. Except 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.
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.
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Board of Directors (continued) |
The C&MD Committee, working with its 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 versus non-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.
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STOCK OWNERSHIP
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 5, 2021 (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) | ||||||||||||||||
| 5% Stockholders |
||||||||||||||||||||
|
PRIMECAP Management Company(4) 177 East Colorado Boulevard 11th Floor Pasadena, CA 91105 |
|
15,822,066 |
|
|
— |
|
|
15,822,066 |
|
|
10.28 |
% | ||||||||
|
BlackRock, Inc.(5) 55 East 52nd Street New York, NY 10055 |
|
13,419,601 |
|
|
— |
|
|
13,419,601 |
|
|
8.7 |
% | ||||||||
|
The Vanguard Group(6) 100 Vanguard Boulevard Malvern, PA 19355
|
|
11,896,510 |
|
|
— |
|
|
11,896,510 |
|
|
7.73 |
% | ||||||||
| Named Executive Officers |
||||||||||||||||||||
| Michel Vounatsos |
|
53,072 |
|
— |
|
53,072 |
|
* |
||||||||||||
| Michael R. McDonnell |
|
— |
|
— |
|
— |
|
— |
||||||||||||
| Alfred W. Sandrock, Jr. |
|
17,841 |
|
— |
|
17,841 |
|
* |
||||||||||||
| Susan H. Alexander |
|
41,576 |
|
— |
|
41,576 |
|
* |
||||||||||||
| Chirfi Guindo |
|
6,006 |
|
— |
|
6,006 |
|
* |
||||||||||||
| Jeffrey D. Capello(7) |
|
3,118 |
|
— |
|
3,118 |
|
* |
||||||||||||
| Directors |
||||||||||||||||||||
| Alexander J. Denner(8) |
|
655,064 |
|
890 |
|
655,954 |
|
* |
||||||||||||
| Caroline D. Dorsa |
|
20,207 |
|
890 |
|
21,097 |
|
* |
||||||||||||
| Maria C. Freire |
|
— |
|
— |
|
— |
|
— |
||||||||||||
| William A. Hawkins |
|
1,115 |
|
890 |
|
2,045 |
|
* |
||||||||||||
| William D. Jones |
|
— |
|
— |
|
— |
|
— |
||||||||||||
| Nancy L. Leaming |
|
12,098 |
|
890 |
|
12,988 |
|
* |
||||||||||||
| Jesus B. Mantas |
|
2,053 |
|
890 |
|
2,943 |
|
* |
||||||||||||
| Richard C. Mulligan |
|
12,064 |
|
890 |
|
12,954 |
|
* |
||||||||||||
| Robert W. Pangia(9) |
|
19,742 |
|
890 |
|
20,632 |
|
* |
||||||||||||
| Stelios Papadopoulos(10) |
|
33,301 |
|
1,470 |
|
34,771 |
|
* |
||||||||||||
| Brian S. Posner |
|
6,870 |
|
890 |
|
7,760 |
|
* |
||||||||||||
| Eric K. Rowinsky |
|
16,179 |
|
890 |
|
17,069 |
|
* |
||||||||||||
| Stephen A. Sherwin |
|
15,438 |
|
890 |
|
16,328 |
|
* |
||||||||||||
|
Executive officers and directors as a group (21 persons)(11) |
|
926,695 |
|
10,370 |
|
937,065 |
|
* |
||||||||||||
| * | Represents beneficial ownership of less than 1% of our outstanding shares of common stock. |
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Stock Ownership (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 RSUs that will vest within 60 days of the Ownership Date. |
| (3) | The calculation of percentages is based upon 150,554,556 shares outstanding on the Ownership Date, plus for each of the individuals listed above the shares subject to RSUs exercisable within 60 days of the Ownership Date, as reflected in the column under the heading “Shares Subject to Options and Stock Units.” |
| (4) | Based solely on information as of December 31, 2020, contained in a Schedule 13G/A filed with the SEC by PRIMECAP Management Company on February 12, 2021, which also indicates that it has sole voting power over 15,443,182 shares and sole dispositive power over 15,822,066 shares. |
| (5) | Based solely on information as of December 31, 2020, contained in a Schedule 13G/A filed with the SEC by BlackRock, Inc. on January 29, 2021, which also indicates that it has sole voting power with respect to 11,672,922 shares and sole dispositive power with respect to 13,419,601 shares. |
| (6) | Based solely on information as of December 31, 2020, contained in a Schedule 13G/A filed with the SEC by The Vanguard Group on February 10, 2021, which also indicates that it has sole dispositive power with respect to 11,213,323 shares, shared voting power with respect to 259,934 shares and shared dispositive power with respect to 638,187 shares. |
| (7) | Mr. Capello ceased to be our Executive Vice President and Chief Financial Officer on August 15, 2020, and separated from the Company on September 15, 2020. |
| (8) | Includes 643,000 shares beneficially owned by funds and accounts managed by Sarissa Capital Management LP, a Delaware limited partnership (Sarissa Capital). Dr. Denner is the Chief Investment Officer of Sarissa Capital and ultimately controls the funds and accounts managed by Sarissa Capital. By virtue of the foregoing, Dr. Denner may be deemed to indirectly beneficially own (as that term is defined in Rule 13d-3 of the Exchange Act) the 643,000 shares that those entities beneficially own. Dr. Denner disclaims beneficial ownership of these shares except to the extent of any pecuniary interest therein. |
| (9) | Includes 16,000 shares beneficially owned by Robin Drive, LLC, of which Mr. Pangia’s wife is the Trustee. Mr. Pangia is retiring from our Board of Directors, effective as of the Annual Meeting. |
| (10) | Includes 28,206 shares held in limited liability companies of which Dr. Papadopoulos is the sole manager. |
| (11) | Includes 688,175 shares held indirectly through trusts, funds, defined benefit plans or limited liability companies. |
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| Proposal 2 – Ratification of the Selection of Our Independent Registered Public Accounting Firm
|
||||
OUR BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR THE RATIFICATION OF
THE SELECTION OF PRICEWATERHOUSECOOPERS LLP AS OUR INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM FOR THE FISCAL YEAR ENDING DECEMBER 31, 2021.
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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 2020. It also provides information regarding the compensation that was earned by and awarded to our 2020 named executive officers listed below, whom we refer to collectively as “named executive officers” or “NEOs.” Our named executive officers include our current executive officers listed below as well as Jeffrey D. Capello*, our former Executive Vice President and Chief Financial Officer.
|
Michel Vounatsos Chief Executive Officer |
|
Susan H. Alexander Executive Vice President, Chief Legal Officer and Secretary | |||||||||
|
Michael R. McDonnell* Executive Vice President and Chief Financial Officer |
|
Chirfi Guindo Executive Vice President, Global Product Strategy and Commercialization | |||||||||
|
Alfred W. Sandrock, Jr., M.D., Ph.D.** Executive Vice President, Research and Development |
| * | Mr. McDonnell was appointed as Executive Vice President and Chief Financial Officer effective August 15, 2020. Mr. Capello ceased to be our Executive Vice President and Chief Financial Officer on August 15, 2020, and separated from the Company on September 15, 2020. |
| ** | 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. |
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Executive Compensation Matters (continued) |
2020 Highlights
A brief summary of our 2020 business, financial and executive compensation highlights is as follows:
Financial Performance
The following chart provides a summary of our financial performance for 2020 compared to 2019:
A reconciliation of our GAAP to Non-GAAP financial measures is provided in Appendix A to this Proxy Statement.
Product and Pipeline Developments
The following provides a summary of our product and pipeline developments for 2020:
Applications for Marketing and Agency Actions
Aducanumab
| • | In July 2020 we completed the submission of a Biologics License Application (BLA) to the U.S. Food and Drug Administration (FDA) for the approval of aducanumab. In August 2020 the FDA accepted the BLA and granted Priority Review with a Prescription Drug User Fee Act (PDUFA) action date on March 7, 2021. In January 2021 the FDA extended the review period for the BLA for aducanumab by three months. The updated PDUFA action date is June 7, 2021. |
| • | In October 2020 the European Medicines Agency (EMA) accepted for review the Marketing Authorization Application (MAA) for aducanumab. |
| • | In December 2020 the Ministry of Health, Labor and Welfare accepted for review the Japanese New Drug Application for aducanumab. |
SB11 (referencing LUCENTIS)
| • | In October 2020 the EMA accepted for review the MAA for SB11, a proposed ranibizumab biosimilar referencing LUCENTIS, and in November 2020 the FDA accepted the BLA for SB11. Ranibizumab is an anti-VEGF (vascular endothelial growth factor) for retinal vascular disorders, which are a leading cause of blindness. |
MS
| • | In March 2020 we made a regulatory submission to the EMA for a subcutaneous (SC) formulation of TYSABRI (natalizumab). In June 2020 we submitted a Supplemental Biologics License Application for a SC formulation of natalizumab to the FDA. |
| • | In October 2020 the first patient in the Phase 1 study of BIIB107 (anti-VLA4) in MS was dosed. |
| • | In November 2020 we submitted a MAA for VUMERITY (diroximel fumarate; DRF) to the EMA. |
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| • | In December 2020 the European Commission approved a new intramuscular injection route of administration for PLEGRIDY (peginterferon beta-1a) for the treatment of relapsing-remitting MS. |
Clinical Trials
Alzheimer’s Disease and Dementia
| • | In March 2020 the first patient was dosed in the aducanumab re-dosing study, EMBARK, which is a global re-dosing clinical study designed to evaluate aducanumab in eligible Alzheimer’s disease patients who were actively enrolled in aducanumab studies (PRIME, EVOLVE, EMERGE and ENGAGE) in March 2019. |
| • | In September 2020 the first patient was dosed in the Phase 3 AHEAD 3-45 clinical study of BAN2401 (lecanemab), an anti-amyloid beta antibody, in individuals with preclinical Alzheimer’s disease who have intermediate or elevated levels of amyloid in their brains. We are collaborating with Eisai on the development of BAN2401. |
Neuromuscular Disorders
| • | In March 2020 the first patient was dosed in the global DEVOTE study, which is evaluating the safety, tolerability and potential for even greater efficacy of SPINRAZA when administered at a higher dose than currently approved for the treatment of SMA. |
| • | In September 2020 the first patient in a Phase 1 study of BIIB105 (ataxin-2 ASO), an antisense oligonucleotide (ASO) targeting ataxin-2 in ALS, was dosed. |
Movement Disorders
| • | In July 2020 the first patient in the Phase 1 study of BIIB101 (ION464), an ASO targeting alpha synuclein in multiple system atrophy, was dosed. |
Immunology
| • | In August 2020 the first patient was dosed in the Phase 3 program for dapirolizumab pegol (anti-CD40L) in patients with active systemic lupus erythematosus despite being treated by standard of care therapies. Dapirolizumab pegol is being developed in collaboration with UCB Pharma S.A. |
Biosimilars – Samsung Bioepis – Biogen’s Joint Venture with Samsung BioLogics
| • | In May 2020 Samsung Bioepis announced that the primary endpoints were met in the randomized, double-masked, Phase 3 trial comparing the efficacy, safety and immunogenicity of SB11 to the reference product (LUCENTIS). |
| • | In June 2020 Samsung Bioepis initiated a Phase 3 study for SB15, a proposed aflibercept biosimilar referencing EYLEA. EYLEA is widely used to treat ophthalmologic conditions such as neovascular (wet) age-related macular degeneration, macular edema following retinal vein occlusion, diabetic macular edema (DME) and diabetic retinopathy in patients with DME. |
Discontinued Programs
| • | In March 2020 we announced that the Phase 2 OPUS study investigating natalizumab as an adjunctive therapy in adults with drug-resistant focal epilepsy did not meet its primary endpoint. Safety data were in-line with the known safety profile of natalizumab. Based on these results, we discontinued development of natalizumab in drug-resistant focal epilepsy. |
| • | In October 2020 we announced that the Phase 2 AFFINITY study of opicinumab (anti-LINGO) in MS did not meet its primary or secondary endpoints. Based on these results, we discontinued development of opicinumab. |
Business Development
| • | In March 2020 we acquired BIIB118 (CK1 inhibitor), a novel CNS-penetrant small molecule inhibitor of casein kinase 1, for the potential treatment of patients with behavioral and neurological symptoms across various psychiatric and neurological diseases from Pfizer Inc. We are developing BIIB118 for the potential treatment of irregular sleep wake rhythm disorder in Parkinson’s disease and plan to develop BIIB118 for the potential treatment of sundowning in Alzheimer’s disease. |
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| • | In April 2020 we closed a collaboration and license agreement with Sangamo to develop and commercialize ST-501 for tauopathies, including Alzheimer’s disease; ST-502 for synucleinopathies, including Parkinson’s disease; a third neuromuscular disease target; and up to nine additional neurological disease targets to be identified and selected within a five-year period. The companies are leveraging Sangamo’s proprietary zinc finger protein technology delivered via adeno-associated virus to modulate the expression of key genes involved in neurological diseases. |
| • | In October 2020 we closed a collaboration and license agreement with Denali to co-develop and co-commercialize Denali’s small molecule inhibitors of leucine-rich repeat kinase 2 (LRRK2) for Parkinson’s disease. In addition to the LRRK2 program, we also have an exclusive option to license two preclinical programs from Denali’s Transport Vehicle platform, including its Antibody Transport Vehicle (ATV): ATV enabled anti-amyloid beta program and a second program utilizing its Transport Vehicle technology. Further, we have a right of first negotiation on two additional Transport Vehicle-enabled therapeutics, should Denali decide to seek a collaboration for such programs. |
| • | In December 2020 we closed a global collaboration and license agreement with Sage to jointly develop and commercialize BIIB125 (zuranolone) for the potential treatment of major depressive disorder and postpartum depression and BIIB124 (SAGE-324) for the potential treatment of essential tremor with potential in other neurological conditions such as epilepsy. |
Share Repurchase Activity
| • | In October 2020 our Board of Directors authorized a program to repurchase up to $5.0 billion of our common stock (2020 Share Repurchase Program). Our 2020 Share Repurchase Program does not have an expiration date. All share repurchases under our 2020 Share Repurchase Program will be retired. |
| • | We returned approximately $6.7 billion to stockholders in 2020 through share repurchases under our 2020 Share Repurchase Program, our March 2019 Share Repurchase Program, which was a program authorized by our Board of Directors in March 2019 to repurchase up to $5.0 billion of our common stock that was completed as of March 31, 2020, and our December 2019 Share Repurchase Program, which was a program authorized by our Board of Directors in December 2019 to repurchase up to $5.0 billion of our common stock that was completed as of September 30, 2020. |
Other Notable Achievements in the Workplace and Community
| • | In September 2020 we announced Healthy Climate, Healthy Lives, a $250.0 million, 20-year initiative to eliminate fossil fuels across our operations and collaborate with renowned institutions with the aim to improve health, especially for the world’s most vulnerable populations. We are the first Fortune 500 company to commit to become fossil fuel free across our operations by 2040. |
| • | The approximately €2.4 billion of healthcare savings in 2020 across Europe that we estimate was contributed by our three anti-TNF biosimilars. |
| • | Named the number one biotechnology company on the Dow Jones Sustainability World Index for the fifth time. |
| • | Launched our electric vehicle fleet program, expanding our battery electric vehicles to 12 and office chargers to 49 as of December 31, 2020. |
| • | Recognized as a corporate sustainability leader with the Gold Class Sustainability Award from RobecoSAM. |
| • | Used green chemistry processes and techniques to reduce our waste and energy consumption. |
| • | Committed to a climate target consistent with reductions required to keep warming to 1.5°C and joined the Business Ambition to 1.5°C. |
| • | Began engaging our employees and suppliers in the transition to a fossil fuel-free future with 100% renewable electricity targets for suppliers and sustainable benefit programs for employees. |
| • | 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 seventh consecutive year and a perfect score of 100% on the Disability Equality Index for the third consecutive year. |
| • | Continued our commitment to diversity, equity and inclusion. As of December 31, 2020, 48% of director-level positions and above were held by women, and, in the U.S., 28% were held by ethnic or racial minorities. |
| • | Launched an enhanced strategy with the aim to boost diversity* in U.S. manager positions and above by 30% by the end of 2021. |
| • | Engaged more than 57,000 students in hands-on learning to inspire their passion for science since the inception of Biogen’s Community Labs in 2002 with priority focus on underrepresented students. |
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| * | Percent of U.S. manager positions and above held by Black, African American and Latinx employees as well as Asian employees where underrepresented. |
2020 Executive Compensation Programs and Pay-for-Performance Alignment
We believe our executive compensation programs are effectively designed and have worked well to implement a pay-for-performance culture that is aligned with the interests of our stockholders. In 2020 our executive compensation programs consisted of base salary, short- and long-term incentives and other benefits.
91% of our CEO’s and 85% of our other currently-employed NEOs’ (other than our CEO) 2020 target compensation was performance-based and at-risk.
| * | Reflects annual salary, target bonus and target grant value of the 2020 annual long-term incentive awards. The NEO compensation mix excludes the one-time sign-on bonus paid to Mr. McDonnell in connection with his hire, as described in further detail below, as well as compensation for Mr. Capello due to his partial year employment with Biogen in 2020. |
100% of our NEOs’ 2020 annual long-term incentive (LTI) grants were performance-based and at-risk*
|
|
• 60% earned based on achievement of three-year pipeline milestone performance goals • 40% earned based on achievement of three one-year financial goals relating to Non-GAAP adjusted free cash flow and revenue
• Earned based on stock price performance over one-, two- and three-year periods
|
| * | Does not include sign-on LTI awards granted to Mr. McDonnell in connection with his hire in August 2020. |
Our 2020 performance-based compensation payouts align with our commitment to strong performance and accountability.
Our executive compensation program is structured to closely align with our business purpose and commitment to drive the creation of long-term stockholder value. Our C&MD Committee considered our achievements in 2020 as well as the challenges we faced and made adjustments to certain of the performance goals in our incentive compensation plans to take into account items that were not originally contemplated, or whose magnitude or timing were uncertain, when the performance goals were originally established. At the same time, our C&MD Committee believed it was important to hold the members of our Executive Committee, which includes all of our NEOs, accountable for the Company’s overall financial results and business performance compared to the original performance goals and decreased the payouts under certain of our incentive plans for our NEOs. As a result, the payouts for our NEOs, as a percentage of target, for our 2020 annual bonus plan and the portions of our PSUs and our MSUs that were eligible to be earned based on 2020 performance were below target payout amounts, as described in further detail below.
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Executive Compensation Matters (continued) |
We believe that our 2020 executive compensation program, including the adjustments made by our C&MD Committee, demonstrates our commitment to linking compensation to Company performance and strategy during a challenging year while holding our executive officers accountable.
2020 Advisory Vote on Executive Compensation
| At our 2020 annual meeting of stockholders, we continued to receive support for our executive compensation programs with approximately 83% of the votes cast for approval of our annual “say-on-pay” proposal. Our C&MD Committee viewed this as positive support for our executive compensation programs and their alignment with long-term stockholder value creation and determined that the Company’s executive compensation programs have been effective in implementing the Company’s stated compensation philosophy and objectives.
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 2020 our C&MD Committee reviewed our executive compensation programs in light of market data, the results from our “say-on-pay” proposal at last year’s annual meeting of stockholders and the Company’s performance. Our C&MD Committee was satisfied that our existing executive compensation programs further our pay-for-performance philosophy and, accordingly, did not recommend any significant changes to our executive compensation programs for 2020. | ||
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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 and aligns with our business goals and performance and the annual business plan approved by our Board of Directors. In addition, the total compensation opportunity and mix of compensation elements for our executive officers are evaluated based on qualitative factors, such as individual, strategic and leadership achievements. Our 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 goals. Our CM&D Committee considers these risks carefully when determining compensation and believes that the use and weighting of multiple metrics and the use of quantitative and qualitative metrics can mitigate these risks and create appropriate incentives to focus on achievement of the Company’s overall performance goals.
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A summary of the process our C&MD Committee follows in setting compensation is described below:
|
|
• Our C&MD Committee closely monitors progress against the performance goals throughout the year based on reports and analysis on progress towards milestones and other success measures, and engages in dialogue with management on the level of progress. |
• 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 the compensation of our CEO, including base salary, annual bonus and LTI awards, to our Board of Directors for approval. | ||
| • 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. |
Target Setting
Monitoring & Tracking
Results & Awards:
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2020 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 2020 annual bonus plan and the degree to which we attained these Company performance goals.
At the time our C&MD Committee established the Company performance goals in the beginning of the year, we did not know what impact, including the timing, that generic competition for TECFIDERA would have on our 2020 financial results as it was dependent on a number of factors beyond our control, including decisions in the patent infringement proceedings relating to TECFIDERA Orange-Book listed patents pursuant to the Drug Price Competition and Patent Term Restoration Act of 1984, commonly known as the Hatch-Waxman Act, in West Virginia and Delaware. Due to this uncertainty, our C&MD Committee exercised its discretion to make certain adjustments to the results to take into account items that were not originally contemplated, or whose magnitude or timing were uncertain, at the time the Company performance goals were originally determined. In particular, the entry of multiple TECFIDERA generic entrants in the U.S. with deeply discounted prices compared to TECFIDERA had real and negative impacts on our financial results.
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Our C&MD Committee believed these adjustments were appropriate because the items were beyond the control of management, were not contemplated and/or could not be quantified due to uncertainty regarding magnitude and timing when the Company performance goals were originally set. Our C&MD Committee also believed that adjustments were necessary to appropriately motivate and reward employees for their performance during a challenging year in which we continued to perform well despite the challenges that we faced.
Based on our overall performance, and following these adjustments, the Company Multiplier for the 2020 Annual Bonus Plan was 106%.
However, notwithstanding the attainment of these performance goals and the strength of management’s performance, our C&MD Committee believed it was important to hold the members of our Executive Committee, which includes all of our NEOs, accountable for the Company’s overall financial results and business performance compared to the original performance. As a result, our C&MD Committee exercised its discretion and decreased the Company Multiplier for the members of our Executive Committee, including all of our NEOs, by 11%, which resulted in a Company Multiplier for our NEOs of 95%.
| Performance Range | ||||||||||||||||||||||||
| Company Goals
|
Weight
|
Threshold
|
Target
|
Max
|
Results
|
Company Multiplier
|
||||||||||||||||||
| FINANCIAL PERFORMANCE |
||||||||||||||||||||||||
| Revenue |
20 | % | $ | 13,280M | $ | 14,102M | $ | 14,923M | $ | 13,952M | (1) | 90.9 | % | |||||||||||
| Non-GAAP diluted EPS |
20 | % | $ | 29.26 | $ | 32.37 | $ | 35.48 | $ | 33.30 | (1) | 114.9 | % | |||||||||||
| MARKET PERFORMANCE |
||||||||||||||||||||||||
| Achieve Global MS Market Share |
7.5 | % | |
Specific market goals are not disclosed for competitive reasons |
|
|
Above Goal(2) |
|
116.5 | % | ||||||||||||||
| MS Leader in Customer Trust and Value Survey |
2.5 | % | |
Specific market goals are not disclosed for competitive reasons |
|
|
Above Goal(3) |
|
150.0 | % | ||||||||||||||
| Achieve Global SMA Market Share |
10 | % | |
Specific market goals are not disclosed for competitive reasons |
|
|
Goal Not Met(3) |
|
0 | % | ||||||||||||||
| Prepare for Alzheimer’s Disease Leadership |
15 | % | |
Specific market goals are not disclosed for competitive reasons |
|
|
Above Goal(3) |
|
115.0 | % | ||||||||||||||
| Achieve anti-TNF Biosimilars Market Share |
2.5 | % | |
Specific market goals are not disclosed for competitive reasons |
|
|
Below Goal(3) |
|
96.0 | % | ||||||||||||||
| PIPELINE DEVELOPMENT |
||||||||||||||||||||||||
| Build and Advance Total Pipeline |
15 | % | |
Specific pipeline goals are not disclosed for competitive reasons |
|
|
Above Goal(4) |
|
140.0 | % | ||||||||||||||
| COLLABORATION |
||||||||||||||||||||||||
| Execute Strategic Transactions that Progress our Multi-Franchise Neuroscience Portfolio and/or Optimize Capital Allocation |
7.5 | % | |
Specific strategic transactions goals are not disclosed for competitive reasons |
|
|
Above Goal(5) |
|
150.0 | % | ||||||||||||||
| Company Multiplier |
|
106.0 | %* | |||||||||||||||||||||
| Adjusted Company Multiplier for NEOs |
|
95.0 | %*(6) | |||||||||||||||||||||
| * | Numbers may not recalculate due to rounding. |
Notes to 2020 Annual Bonus Plan Company Performance Targets and Results Table
| (1) | These financial measures were based on our publicly reported revenue of $13,445 million and our publicly announced Non-GAAP diluted EPS of $33.70, as adjusted as follows: for purposes of our 2020 annual bonus plan, revenue was adjusted to neutralize the effects of foreign exchange rate fluctuations and exclude the adverse impact of multiple TECFIDERA generic entrants that entered the U.S. market in 2020. Non-GAAP diluted EPS was further adjusted to subtract $2.62 related to share repurchases in 2020 under our 2020 Share Repurchase Program, our December 2019 Share Repurchase Program and our March 2019 Share Repurchase Program and $0.28 related to the delay in the payment of a milestone payment related to the potential approval of aducanumab, partially offset |
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| by the addition of $2.50 to exclude the adverse impact of multiple TECFIDERA generic entrants that entered the U.S. market in 2020. These items were either not originally contemplated or their magnitude or timing was uncertain at the time the Company performance goals were originally established. |
| (2) | Our market goal for MS was adjusted to exclude the adverse impact of multiple TECFIDERA generic entrants that entered the U.S. market in 2020, which was not originally contemplated at the time the Company performance goals were determined. Specific details are not disclosed for competitive reasons. |
| (3) | Our achievement of MS leader and preparation for Alzheimer’s disease leadership were above goals, achievement of market goals for biosimilars was below goal and we did not meet our market goals for SMA. Specific details are not disclosed for competitive reasons. |
| (4) | The Company continued to expand and re-shape its pipeline of pre-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. |
| (5) | We exceeded our key strategic alliance and business development goal. Specific details are not disclosed for competitive reasons. |
| (6) | Notwithstanding the attainment of these performance goals and the strength of management’s performance, our C&MD Committee believed it was important to hold the members of our Executive Committee, which includes all of our NEOs, accountable for the Company’s overall financial results and business performance compared to the original performance. As a result, our C&MD Committee exercised its discretion and decreased the Company Multiplier for the members of our Executive Committee, including all of our NEOs, by 11%, which resulted in a Company Multiplier for our NEOs of 95%. |
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2020 Annual Bonus Plan Awards
Our C&MD Committee determined that the final bonus awards under our 2020 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) |
|||||||||||||||
| M. Vounatsos |
$ | 1,500,000 | 150 | % | 95 | % | 120 | % | $ | 2,565,000 | ||||||||||
| M. McDonnell(1) |
$ | 850,000 | 75 | % | 95 | % | 115 | % | $ | 263,322 | ||||||||||
| A. Sandrock |
$ | 901,680 | 75 | % | 95 | % | 112 | % | $ | 719,541 | ||||||||||
| S. Alexander |
$ | 814,168 | 70 | % | 95 | % | 112 | % | $ | 606,392 | ||||||||||
| C. Guindo |
$ | 567,100 | 70 | % | 95 | % | 140 | % | $ | 527,970 | ||||||||||
| J. Capello(2) |
$ | 811,125 | 75 | % | n/a | n/a | n/a | |||||||||||||
Notes to the 2020 Annual Bonus Plan Awards Table
| (1) | Mr. McDonnell was appointed as our Executive Vice President and Chief Financial Officer effective August 15, 2020. Mr. McDonnell’s award under our 2020 Annual Bonus Plan was based on his prorated salary for 2020. |
| (2) | Mr. Capello ceased to be employed by the Company during 2020 and, as a result, was ineligible for a payout under our 2020 annual bonus plan. |
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Below is a summary of the types of annual LTI awards granted to our NEOs for 2020.*
| 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 (2020-2022) |
1 year (each of 2020, 2021, 2022) |
1 year, 2 years, 3 years (from grant date) | |||
| Metrics and Weighting |
Pipeline Milestone Performance: 60% | Adjusted Free Cash Flow: 28%
Revenue: 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) | |||
* Does not include the sign-on LTI awards granted to Mr. McDonnell in connection with his hire.
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2020 PSU Awards Table
Set forth below is a summary of the performance metrics and weightings that our C&MD Committee established for our 2020 PSU awards and the degree to which we achieved the performance goals for the 2020 tranche of the 2020 Cash-Settled PSUs.
At the time our C&MD Committee established the performance goals for the 2020 tranche of the 2020 Cash-Settled PSUs in the beginning of the year, we did not know what impact, including the timing, that generic competition for TECFIDERA would have on our 2020 financial results as it was dependent on a number of factors beyond our control, including decisions in the patent infringement proceedings relating to TECFIDERA Orange-Book listed patents pursuant to the Hatch-Waxman Act in West Virginia and Delaware. Due to this uncertainty, our C&MD Committee exercised its discretion to make certain adjustments to the results to take into account items that were not originally contemplated, or whose magnitude or timing were uncertain, at the time the performance goals for the 2020 tranche of the 2020 Cash-Settled PSUs were originally determined. In particular, the entry of multiple TECFIDERA generic entrants in the U.S. with deeply discounted prices compared to TECFIDERA had real and negative impacts on our financial results.
Our C&MD Committee believed these adjustments were appropriate because the items were beyond the control of management, were not contemplated and/or could not be quantified due to uncertainty regarding magnitude and timing when the performance goals for the 2020 tranche of the 2020 Cash-Settled PSUs were originally set. Our C&MD Committee also believed that adjustments were necessary to appropriately motivate and reward employees for their performance during a challenging year in which we continued to perform well despite the challenges that we faced.
Based on our overall performance, and following these adjustments, the multiplier for the 2020 tranche of the 2020 Cash-Settled PSUs was 100%.
However, notwithstanding the attainment of these performance metrics and the strength of management’s performance, our C&MD Committee believed it was important to hold the members of our Executive Committee, which includes all of our NEOs, accountable for the Company’s overall financial results and business performance. As a result, our C&MD Committee exercised its discretion and decreased the multiplier for the 2020 tranche of the 2020 Cash-Settled PSUs for the members of our Executive Committee, including all of our NEOs, by 10%, which resulted in a multiplier for our NEOs of 90%.
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We utilized the same performance metrics for the 2020 (i.e., second) tranche of the 2019 Cash-Settled PSUs and the 2020 (i.e., third) tranche of the 2018 Cash-Settled PSUs and, therefore, the multiplier for the 2020 tranche of the 2019 Cash-Settled PSUs and the 2018 Cash-Settled PSUs for the NEOs was also 90% for our NEOs.
| Percentage of PSU Award |
Percentage of PSU Target Value / Total LTI Target Value |
Performance Metrics | Performance Metrics Weight |
Performance Period |
Target Performance | Actual Performance | ||||||||||
| Stock- Settled: 60% |
60% / 30% | Pipeline Milestone Performance | 60% | 2020-2022 | Specific goals are not disclosed for competitive reasons | |||||||||||
| Cash- Settled: 40% |
40% / 20% |
Adjusted Free Cash Flow
Revenue |
|
28%
12% |
|
|
2020 2021
2022
2020 2021
2022 |
|
$ 6.3B Target set at beginning of 2021 Target set at beginning of 2022 $ 14.1B Target set at beginning of 2021 Target set at beginning of 2022 |
$ 6.3B(1) TBD
TBD
$ 13.9B(2)
TBD | ||||||
Notes to the 2020 PSU Awards Table
| (1) | This financial measure was based on our Non-GAAP free cash flow, as adjusted to exclude the adverse impact of multiple TECFIDERA generic entrants that entered the U.S. market in 2020, the addition of $177.0 million related to a one-time license payment from a contract manufacturing customer and $52.0 million related to share repurchases in 2020 under our 2020 Share Repurchase Program, our December 2019 Share Repurchase Program and our March 2019 Share Repurchase Program. These items were either not originally contemplated or their magnitude or timing was uncertain at the time the Company performance goals were originally established. |
| (2) | This financial measure was based on our publicly reported revenue of $13.4 billion, as adjusted to neutralize the effects of foreign exchange rate fluctuations and exclude the adverse impact of multiple TECFIDERA generic entrants that entered the U.S. market in 2020. |
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2018 PSU Award Payout
Set forth below is a summary of the performance metrics and weightings that our C&MD Committee established for our 2018 PSU awards and the degree to which we achieved the performance goals for the 2018 Stock-Settled PSUs and the 2018 Cash-Settled PSUs.
2018 Stock-Settled PSUs
| Performance Target | ||||||||||||||||||||||||||
| Performance Metrics | Performance Period |
Threshold | Target | Max | Results | Weight | Payout | |||||||||||||||||||
| Adjusted Non-GAAP diluted EPS |
2018-2020 | $ | 26.98 | $ | 28.11 | $ | 29.76 | $30.79(1) | 30 | % | 200.0 | % | ||||||||||||||
| Pipeline Milestone Performance |
2018-2020 | |
Specific goals are not disclosed for competitive reasons |
|
Met Goal(2) |
30 | % | 100.0 | % | |||||||||||||||||
| 2018 Stock-Settled PSU Multiplier |
|
150.0 | % | |||||||||||||||||||||||
Notes to the 2018 Stock-Settled PSUs Table
| (1) | These financial measures were based on our publicly announced Non-GAAP diluted EPS of $33.70, as adjusted as follows: the addition of $0.80 to exclude the impact of business development transactions and $2.09 to exclude the adverse impact of multiple TECFIDERA generic entrants that entered the U.S. market in 2020, partially offset by the subtraction of $5.80 to exclude the impact of share repurchases. These items were either not originally contemplated or their magnitude or timing was uncertain at the time the Company performance goals were originally established. |
| (2) | The Company continued to expand and re-shape its pipeline of pre-clinical and clinical stage programs through the advancement of internal programs, external business development activities and meeting expectations with respect to the level of confidence in and momentum of its clinical stage portfolio. Specific details are not disclosed for competitive reasons. |
2018 Cash-Settled PSUs
| Performance Target | ||||||||||||||||||||||||||
| Performance Metrics | Performance Period |
Threshold | Target | Max | Results | Weight | Multiplier | |||||||||||||||||||
| Adjusted Free Cash Flow |
2018 | $ | 2.7B | $ | 2.9B | $ | 3.3B | $4.0B(1) | 28 | % | 200.0 | % | ||||||||||||||
| Revenue |
2018 | $ | 12.3B | $ | 12.8B | $ | 13.5B | $13.4B(2) | 12 | % | 172.6 | % | ||||||||||||||
| 2018 Tranche of 2018 Cash-Settled PSU Multiplier |
|
192.0 | %* | |||||||||||||||||||||||
| Adjusted Free Cash Flow |
2019 | $ | 4.9B | $ | 5.5B | $ | 6.3B | $6.0B(3)(3) | 28 | % | 165.9 | % | ||||||||||||||
| Revenue |
2019 | $ | 13.0B | $ | 13.7B | $ | 14.6B | $14.4B(4) | 12 | % | 149.5 | % | ||||||||||||||
| 2019 Tranche of 2018 Cash-Settled PSU Multiplier |
|
161.0 | %* | |||||||||||||||||||||||
| Adjusted Free Cash Flow |
2020 | $ | 5.7B | $ | 6.3B | $ | 7.0B | $6.3B(5) | 28 | % | 104.5 | % | ||||||||||||||
| Revenue |
2020 | $ | 13.3B | $ | 14.1B | $ | 15.0B | $13.9B(6) | 12 | % | 90.9 | % | ||||||||||||||
| 2020 Tranche of 2018 Cash-Settled PSU Multiplier |
|
100.0 | % | |||||||||||||||||||||||
| Adjusted 2020 Tranche of 2018 Cash-Settled PSU Multiplier for NEOs |
|
90.0 | %*(7) | |||||||||||||||||||||||
* Numbers may not recalculate due to rounding.
Notes to the 2018 Cash-Settled PSUs Table
| (1) | This financial measure was based on our Non-GAAP free cash flow, as adjusted to add back $256.0 million to reflect the cash impact of additional research and development expense recognized in 2018 resulting from our 2018 agreement with Ionis Pharmaceuticals, Inc. to develop novel ASO drug candidates for a broad range of neurological diseases, $16.0 million to neutralize the unfavorable cash impact of the worldwide withdrawal of ZINBRYTA and $33.0 million related to higher than originally contemplated stock repurchases in 2018, partially offset by the subtraction of $235.0 million to reflect tax payments made in connection with tax reform, as these charges were not originally contemplated at the time these performance goals were determined. |
| (2) | This financial measure was based on our publicly reported revenue of $13.5 billion, as adjusted to neutralize the effects of foreign exchange rate fluctuations. |
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| (3) | This financial measure was based on our Non-GAAP free cash flow, as adjusted to subtract $170.0 million for the decline in operating taxes due to the change in the Company’s tax profile, $58.0 million for cost savings due to the termination of certain clinical programs in 2019 and $78.0 million to remove the favorable impact of the launch delay of rituximab biosimilars, partially offset by the addition of $33.0 million to reflect the impact of our acquisition of Nightstar Therapeutics plc and $50.0 million related to higher than originally contemplated stock repurchases in 2019, as none of these items were originally contemplated at the time these performance goals were determined. |
| (4) | This financial measure was based on our publicly reported revenue of $14.4 billion, as adjusted to neutralize the effects of foreign exchange rate fluctuations. |
| (5) | This financial measure was based on our Non-GAAP free cash flow, as adjusted to exclude the adverse impact of multiple TECFIDERA generic entrants that entered the U.S. market in 2020, the addition of $177.0 million related to a one-time license payment from a contract manufacturing customer and $52.0 million related to share repurchases in 2020 under our 2020 Share Repurchase Program, our December 2019 Share Repurchase Program and our March 2019 Share Repurchase Program. These items were either not originally contemplated or their magnitude or timing was uncertain at the time the Company performance goals were originally established. |
| (6) | This financial measure was based on our publicly reported revenue of $13.4 billion, as adjusted to neutralize the effects of foreign exchange rate fluctuations and exclude the adverse impact of multiple TECFIDERA generic entrants that entered the U.S. market in 2020. |
| (7) | Notwithstanding the attainment of these performance metrics and the strength of management’s performance, our C&MD Committee believed it was important to hold the members of our Executive Committee, which includes all of our NEOs, accountable for the Company’s overall financial results and business performance. As a result, our C&MD Committee exercised its discretion and decreased the multiplier for the 2018 tranche of the 2020 Cash-Settled PSUs for the members of our Executive Committee, including all of our NEOs, by 10%, which resulted in a multiplier for our NEOs of 90%. |
2018 PSUs Payout
The final payouts under our 2018 Stock-Settled PSUs and 2018 Cash-Settled PSUs were as follows:
| Name | Target 2018 Stock- Settled PSU Award at Grant (#) |
Actual 2018 Stock-Settled PSU Award Earned (#) |
Target 2018 Cash-Settled PSU Award at Grant ($) |
Actual 2018 Cash-Settled PSU Award Earned ($) |
||||||||||||
| M. Vounatsos |
10,895 | 16,343 | $ | 2,300,000 | $ | 2,912,816 | ||||||||||
| M. McDonnell |
— | — | — | — | ||||||||||||
| A. Sandrock |
2,485 | 3,728 | $ | 525,000 | $ | 665,229 | ||||||||||
| S. Alexander |
3,030 | 4,545 | $ | 640,000 | $ | 809,617 | ||||||||||
| C. Guindo |
— | — | — | — | ||||||||||||
| J. Capello |
— | — | — | — | ||||||||||||
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The following table shows the compensation paid to or earned by our NEOs during the years ended December 31, 2020, December 31, 2019, and December 31, 2018, 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) |
||||||||||||||||||||||||
| Michel Vounatsos |
2020 | $ | 1,488,462 | — | $ | 13,887,064 | $2,565,000 | $ 264,358 | $ 454,945 | $ | 18,659,829 | |||||||||||||||||||||
| Chief Executive Officer |
2019 | $ | 1,388,461 | — | $ | 12,352,030 | $3,884,000 | $ 85,667 | $ 449,700 | $ | 18,159,858 | |||||||||||||||||||||
| 2018 | $ | 1,276,923 | — | $ | 11,064,897 | $3,337,880 | $ 80,663 | $ 408,283 | $ | 16,168,646 | ||||||||||||||||||||||
|
Michael R. McDonnell(6) |
|
2020 |
|
$ |
294,231 |
|
$ |
1,000,000 |
|
$ |
5,012,308 |
|
|
$ 263,322 |
|
|
— |
|
|
$ 5,696 |
|
$ |
6,575,557 |
| ||||||||
| Executive Vice President and Chief Financial Officer | ||||||||||||||||||||||||||||||||
|
Alfred W. Sandrock, Jr. |
|
2020 |
|
$ |
890,310 |
|
|
— |
|
$ |
4,331,654 |
|
|
$ 719,541 |
|
|
$ 138,444 |
|
|
$ 147,020 |
|
$ |
6,226,969 |
| ||||||||
| Executive Vice President, |
2019 | $ | 798,723 | — | $ | 3,360,682 | $ 893,038 | $ 78,506 | $ 181,616 | $ | 5,312,565 | |||||||||||||||||||||
| Research & Development |
||||||||||||||||||||||||||||||||
|
Susan H. Alexander |
|
2020 |
|
$ |
809,695 |
|
|
— |
|
$ |
3,583,281 |
|
|
$ 606,392 |
|
|
$ 311,416 |
|
|
$ 159,261 |
|
$ |
5,470,045 |
| ||||||||
| Executive Vice President, |
2019 | $ | 772,373 | — | $ | 3,302,619 | $1,033,451 | $ 164,782 | $ 181,785 | $ | 5,455,010 | |||||||||||||||||||||
| Chief Legal Officer |
2018 | $ | 746,254 | — | $ | 4,359,590 | $ 858,744 | $ 188,056 | $ 201,140 | $ | 6,353,784 | |||||||||||||||||||||
| And Secretary |
||||||||||||||||||||||||||||||||
|
Chirfi Guindo |
|
2020 |
|
$ |
562,819 |
|
|
— |
|
$ |
3,961,285 |
|
|
$ 527,970 |
|
|
— |
|
|
$ 80,721 |
|
$ |
5,132,795 |
| ||||||||
| Executive Vice President, |
2019 | $ | 526,539 | — | $ | 3,379,426 | $ 706,384 | — | $ 82,173 | $ | 4,694,522 | |||||||||||||||||||||
| Global Product Strategy and Commercialization | ||||||||||||||||||||||||||||||||
|
Jeffrey D. Capello(7) |
|
2020 |
|
$ |
671,132 |
|
|
— |
|
$ |
3,901,503 |
|
|
— |
|
|
— |
|
|
$4,648,876 |
|
$ |
9,221,511 |
| ||||||||
| Former Executive Vice |
2019 | $ | 783,173 | — | $ | 4,051,891 | $ 883,575 | — | $ 95,450 | $ | 5,814,089 | |||||||||||||||||||||
| President and Chief |
2018 | $ | 750,000 | — | $ | 2,889,224 | $ 790,913 | — | $ 46,582 | $ | 4,476,719 | |||||||||||||||||||||
| Financial Officer |
||||||||||||||||||||||||||||||||
Notes to the Summary Compensation Table
| (1) | The amount in column (d) reflects a sign-on bonus paid to Mr. McDonnell in connection with his hire. All other cash bonuses, which were based on achievement of performance goals under our annual bonus plan, are disclosed in column (f). |
| (2) | The amounts in column (e) reflect the grant date fair value, computed in accordance with ASC 718, for RSUs, MSUs and PSUs granted during 2020, 2019 and 2018, as applicable, excluding the effect of estimated forfeitures. The cash portion of PSUs are included in the year when the applicable performance goals are set and the fair value of the PSUs is determinable. The 2020 amounts include one-third of the 2020 Cash-Settled PSUs, one-third of the 2019 Cash-Settled PSUs and one-third of the 2018 Cash-Settled PSUs, which are the tranches of the awards for which performance goals were set in 2020 relating to the 2020 performance period. The 2020 amounts also include a one-time hire award of RSUs granted to Mr. McDonnell as described under the heading “2020 Hiring-Related Compensation Decisions—Arrangements with Mr. McDonnell.” The 2019 amounts include one-third of the 2019 Cash-Settled PSUs and one-third of the 2018 Cash-Settled PSUs, which are the tranches of the awards for which performance goals were set in 2019 relating to the 2019 performance period. The 2018 amounts include one-third of the 2018 Cash-Settled PSUs, which is the tranche of the award for which performance goals were set in 2018 relating to the 2018 performance period. The 2018 amounts also include one-time transition awards of RSUs granted to Dr. Sandrock and Ms. Alexander. The grant date fair value for MSU awards are 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 PSU and RSU awards was determined by multiplying the number of shares subject to the award (assuming target performance for such PSUs) by the closing price of the Company’s common stock on the grant date. The assumptions used to calculate the grant date fair value of stock awards are included in footnote 15 of our 2020 Annual Report on Form 10-K. The table below shows the target and maximum payouts possible for the 2020, 2019 and 2018 MSU and PSU awards based on the grant date fair value assuming target and maximum payout levels. |
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| 2020 | 2019 | 2018 | ||||||||||||||||||||||
| Executive Officer | Target Payout |
Maximum Payout |
Target Payout |
Maximum Payout |
Target Payout |
Maximum Payout |
||||||||||||||||||
| Mr. Vounatsos |
|
$13,887,064 |
|
|
$27,774,128 |
|
|
$12,352,030 |
|
|
$24,704,060 |
|
|
$11,064,897 |
|
|
$22,129,794 |
| ||||||
| Mr. McDonnell |
|
$ 2,761,719 |
|
|
$ 5,523,437 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
| ||||||
| Dr. Sandrock |
|
$ 4,331,654 |
|
|
$ 8,663,308 |
|
|
$ 3,360,682 |
|
|
$ 6,721,364 |
|
|
— |
|
|
— |
| ||||||
| Ms. Alexander |
|
$ 3,583,281 |
|
|
$ 7,166,562 |
|
|
$ 3,302,619 |
|
|
$ 6,605,238 |
|
|
$ 3,078,822 |
|
|
$ 6,157,644 |
| ||||||
| Mr. Guindo |
|
$ 3,961,285 |
|
|
$ 7,992,570 |
|
|
$ 3,379,426 |
|
|
$ 6,758,852 |
|
|
— |
|
|
— |
| ||||||
| Mr. Capello |
|
$ 3,901,503 |
|
|
$ 7,803,006 |
|
|
$ 4,051,891 |
|
|
$ 8,103,782 |
|
|
$ 2,889,224 |
|
|
$ 5,778,448 |
| ||||||
| (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 1.61%, 3.73% and 3.06% for 2020, 2019 and 2018, respectively. The SSP is described under the heading “2020 Non-Qualified Deferred Compensation” below. |
| (5) | The amounts in column (h) for 2020 reflect the following: |
| 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 |
Severance(9) | |||||||||||||||
| Mr. Vounatsos |
$ |
17,100 |
|
$ |
433,320 |
|
$ |
3,470 |
|
$ |
1,055 |
|
|
— |
| |||||
| Mr. McDonnell |
|
— |
|
|
— |
|
$ |
5,037 |
|
$ |
659 |
|
|
— |
| |||||
| Dr. Sandrock |
$ |
17,100 |
|
$ |
120,725 |
|
$ |
7,500 |
|
$ |
1,695 |
|
|
— |
| |||||
| Ms. Alexander |
$ |
17,100 |
|
$ |
134,365 |
|
$ |
6,160 |
|
$ |
1,636 |
|
|
— |
| |||||
| Mr. Guindo |
$ |
17,100 |
|
$ |
58,453 |
|
$ |
4,050 |
|
$ |
1,118 |
|
|
— |
| |||||
| Mr. Capello |
$ | 17,100 | $ | 72,806 | $ | 3,540 | $ | 1,662 | $ | 4,553,768 | ||||||||||
| (6) | Mr. McDonnell was appointed as our Executive Vice President and Chief Financial Officer effective August 15, 2020. His base salary and annual bonus for 2020 were prorated for the period of the year during which he was employed by the Company. |
| (7) | Mr. Capello ceased to be our Executive Vice President and Chief Financial Officer on August 15, 2020, and separated from the Company on September 15, 2020. Mr. Capello’s base salary was prorated for the period of the year during which he was employed by the Company. Mr. Capello was not eligible to receive a bonus under our 2020 annual bonus plan and, in connection with his termination of employment, all of his then unvested RSUs, MSUs and PSUs were forfeited. |
| (8) | 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. |
| (9) | Mr. Capello ceased to be our Executive Vice President and Chief Financial Officer on August 15, 2020, and separated from the Company on September 15, 2020. The Company provided him the severance benefits required under our executive severance policy for Executive Vice Presidents, which consisted of (a) a lump sum cash payment of $1,892,625 (16 months of base salary and target bonus), (b) continuation of certain subsidized medical, dental and vision benefits until the earlier of (1) December 31, 2021, or (2) the date on which he becomes eligible to receive benefits through another employer, and (c) up to 12 months of executive-level outplacement services at a cost of up to $32,000. In addition, in recognition of Mr. Capello’s contributions to the Company and to facilitate a successful transition to Mr. McDonnell, our C&MD Committee waived the requirement that Mr. Capello repay 35% of his cash sign-on bonus and approved an additional cash payment to him of $2,600,000. The cost of the continuation of certain subsidized medical, dental and vision benefits equaled (assuming the benefits continue until December 31, 2021) is $29,143 and also included the employer portion of premiums for the period April 1, 2021 through September 30, 2021, pursuant to the American Rescue Plan Act of 2021. |
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Table of Contents
| 6 |
Executive Compensation Matters (continued) |
2020 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, 2020.
| 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) | ||||||||||||||||||||||||||
| Michel Vounatsos |
|
02/12/2020 |
|
(3) |
|
— |
|
|
— |
|
|
— |
|
9,420 |
18,840 |
37,680 |
— |
$ |
7,669,882 |
|||||||||||||||
|
|
02/12/2020 |
|
(4) |
|
— |
|
|
— |
|
|
— |
|
9,370 |
18,740 |
37,480 |
— |
$ |
6,217,182 |
||||||||||||||||
|
|
02/12/2020 |
|
(5) |
$ |
562,500 |
|
$ |
2,250,000 |
|
$ |
5,062,500 |
|
— |
— |
— |
— |
|
— |
| |||||||||||||||
| Michael R. McDonnell |
|
09/01/2020 |
|
(3) |
|
— |
|
|
— |
|
|
— |
|
4,023 |
8,045 |
16,090 |
— |
$ |
2,761,719 |
|||||||||||||||
|
|
09/01/2020 |
|
(5) |
|
$ 60,257 |
|
|
$ 241,027 |
|
|
$ 542,312 |
|
— |
— |
— |
— |
|
— |
| |||||||||||||||
|
|
09/01/2020 |
|
(6) |
|
— |
|
|
— |
|
|
— |
|
— |
— |
— |
8,045 |
|
$2,250,589 |
||||||||||||||||
| Alfred W. Sandrock, Jr. |
|
02/12/2020 |
|
(3) |
|
— |
|
|
— |
|
|
— |
|
3,015 |
6,030 |
12,060 |
— |
$ |
2,454,888 |
|||||||||||||||
|
|
02/12/2020 |
|
(4) |
|
— |
|
|
— |
|
|
— |
|
2,829 |
5,657 |
11,314 |
— |
$ |
1,876,766 |
||||||||||||||||
|
|
02/12/2020 |
|
(5) |
$ |
169,065 |
|
$ |
676,260 |
|
$ |
1,521,585 |
|
— |
— |
— |
— |
|
— |
| |||||||||||||||
| Susan H. Alexander |
|
02/12/2020 |
|
(3) |
|
— |
|
|
— |
|
|
— |
|
2,413 |
4,825 |
9,650 |
— |
$ |
1,964,292 |
|||||||||||||||
|
|
02/12/2020 |
|
(4) |
|
— |
|
|
— |
|
|
— |
|
2,440 |
4,880 |
9,760 |
— |
$ |
1,618,989 |
||||||||||||||||
|
|
02/12/2020 |
|
(5) |
$ |
142,479 |
|
$ |
569,918 |
|
$ |
1,282,315 |
|
— |
— |
— |
— |
|
— |
| |||||||||||||||
| Chirfi Guindo |
|
02/12/2020 |
|
(3) |
|
— |
|
|
— |
|
|
— |
|
2,863 |
5,725 |
11,450 |
— |
$ |
2,330,685 |
|||||||||||||||
|
|
02/12/2020 |
|
(4) |
|
— |
|
|
— |
|
|
— |
|
2,458 |
4,915 |
9,830 |
— |
$ |
1,630,600 |
||||||||||||||||
|
|
02/12/2020 |
|
(5) |
$ |
99,243 |
|
$ |
396,970 |
|
$ |
893,183 |
|
— |
— |
— |
— |
|
— |
| |||||||||||||||
| Jeffrey D. Capello(7) |
|
02/12/2020 |
|
(3) |
|
— |
|
|
— |
|
|
— |
|
2,638 |
5,275 |
10,550 |
— |
$ |
2,147,488 |
|||||||||||||||
|
|
02/12/2020 |
|
(4) |
|
— |
|
|
— |
|
|
— |
|
2,644 |
5,287 |
10,574 |
— |
$ |
1,754,015 |
||||||||||||||||
|
|
02/12/2020 |
|
(5) |
$ |
152,086 |
|
$ |
608,344 |
|
$ |
1,368,773 |
|
— |
— |
— |
— |
|
— |
| |||||||||||||||
Notes to the 2020 Grants of Plan-Based Awards Table
| (1) | Reflects the potential future payouts of awards granted in 2020 under our 2020 annual bonus plan and our LTI program for each NEO as of the respective grant dates. |
| (2) | Represents the grant date fair value of PSUs, MSUs and RSUs, as applicable, 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. In addition to the grant date fair value of the 2020 Stock-Settled PSUs, for all NEOs other than Mr. McDonnell, the grant date fair value for PSU awards is determined by multiplying the number of shares subject to the award (assuming target performance) by the closing price of our common stock on the grant date. The grant date value of one-third of the 2020 Cash-Settled PSUs, one third of the 2019 Cash-Settled PSUs and one-third of the 2018 Cash-Settled PSUs are included in 2020, which are the tranches of the awards for which performance goals were set relating to the 2020 performance period and the fair value was determinable in 2020. The grant date fair value of the remaining tranches of the 2019 and 2020 Cash-Settled PSUs will be included, as applicable, in the compensation tables for 2021 and 2022, the years when performance goals will be set with respect to such performance periods and fair value will be determinable. The assumptions used to calculate the grant date fair value of stock awards are included in footnote 15 of our 2020 Annual Report on Form 10-K. The maximum payouts for these awards are included in the footnotes following the Summary Compensation Table above. |
| (3) | These amounts relate to the annual grant of MSUs. These are performance-based RSUs tied to the growth in our stock price between the grant date and each of three annual vesting dates. The number of MSUs earned is determined on each vesting date. Columns (f), (g) and (h) represent the number of MSUs that can be earned based on performance at the threshold level of 50%, target level of 100% and the maximum level of 200%, respectively. To the extent earned, the award becomes eligible to vest ratably over three years, generally subject to continued service, as described in further detail under the heading “Long-Term Incentives” above. |
| (4) | These amounts relate to the annual grant of PSUs. The PSUs have three-year cliff vesting. The amounts shown include the 2020 Stock-Settled PSUs, one-third of the 2018 Cash-Settled PSUs, one-third of the 2019 Cash-Settled PSUs and one-third of the 2020 Cash-Settled PSUs, which are the tranches of the awards for which performance goals were set in 2020 relating to the 2020 performance period and the fair value was determinable in 2020. The remaining tranches of the 2019 and 2020 Cash-Settled PSUs will be included, as applicable, in the compensation tables for 2021 and 2022, the years when performance goals will be set with respect to such performance periods and fair value will be determinable. Columns (f), (g) and (h) represent the number of 2020 Stock-Settled PSUs and the 2020 tranche of the 2018, 2019 and 2020 Cash-Settled PSUs that can be earned if the Company Multiplier were 50%, 100% and 200%, respectively. For additional information on our PSU awards, please see “Long-Term Incentives” above. |
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Table of Contents
| 6 |
Executive Compensation Matters (continued) |
| (5) | These amounts relate to our 2020 annual bonus plan. The amounts shown in column (d) represent the 2020 target payout amount based on the target percentage applied to each NEO’s base salary as of December 31, 2020. For 2020 the bonus targets were 150% of base salary for Mr. Vounatsos, 75% of base salary for Messrs. McDonnell and Capello and Dr. Sandrock and 70% of base salary for Ms. Alexander and Mr. Guindo. For Mr. McDonnell, the amounts reported are based on a prorated bonus target for 2020 based on his August 15, 2020, hire date, 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 2020 annual bonus plan are included in the “Non-Equity Incentive Plan Compensation” column of the Summary Compensation Table above. |
| (6) | These amounts relate to a one-time grant of time-based RSUs for Mr. McDonnell, as described in further detail in the CD&A above under the heading “2020 Hiring-Related Compensation Decisions—Arrangements with Mr. McDonnell.” |
| (7) | Mr. Capello separated from the Company on September 15, 2020. As a result of his termination of employment, Mr. Capello forfeited all then unvested RSUs, MSUs and PSUs that were held by him and was not eligible to receive a bonus for 2020 under our 2020 annual bonus plan. |
Outstanding Equity Awards at 2020 Fiscal Year-End
The following table summarizes the equity awards that were outstanding as of December 31, 2020, for each of our NEOs.
| Stock Awards | ||||||||||||||||||||||
| Equity Incentive Plan Awards |
||||||||||||||||||||||
| (a) | Grant (b) |
Notes |
Number (c) |
Market That Have (d) |
Number (e) |
Market (f) |
||||||||||||||||
| Michel Vounatsos |
|
2/12/2018 |
|
(2) |
|
— |
|
|
— |
|
|
6,056 |
|
$ |
1,482,872 |
| ||||||
|
|
2/12/2018 |
|
(3) |
|
27,028 |
|
$ |
6,618,076 |
|
|
— |
|
|
— |
| |||||||
|
|
2/12/2019 |
|
(2) |
|
— |
|
|
— |
|
|
12,524 |
|
$ |
3,066,627 |
| |||||||
|
|
2/12/2019 |
|
(3) |
|
6,222 |
|
$ |
1,523,519 |
|
|
13,827 |
|
$ |
3,385,679 |
| |||||||
|
|
2/12/2020 |
|
(2) |
|
— |
|
|
— |
|
|
18,840 |
|
$ |
4,613,162 |
| |||||||
|
|
2/12/2020 |
|
(3) |
|
2,237 |
|
$ |
547,752 |
|
|
16,355 |
|
$ |
4,004,685 |
| |||||||
| Michael R. McDonnell |
|
9/1/2020 |
|
(2) |
|
— |
|
|
— |
|
|
8,045 |
|
$ |
1,969,899 |
| ||||||
|
|
9/1/2020 |
|
(4) |
|
8,045 |
|
$ |
1,969,889 |
|
|
— |
|
|
— |
| |||||||
| Alfred W. Sandrock, Jr. |
|
2/12/2018 |
|
(2) |
|
— |
|
|
— |
|
|
1,383 |
|
$ |
338,641 |
| ||||||
|
|
2/12/2018 |
|
(3) |
|
6,168 |
|
$ |
1,510,296 |
|
|
— |
|
|
— |
| |||||||
|
|
2/12/2019 |
|
(2) |
|
— |
|
|
— |
|
|
3,444 |
|
$ |
843,298 |
| |||||||
|
|
2/12/2019 |
|
(3) |
|
1,709 |
|
$ |
418,466 |
|
|
3,803 |
|
$ |
931,203 |
| |||||||
|
|
2/12/2020 |
|
(2) |
|
— |
|
|
— |
|
|
6,030 |
|
$ |
1,476,506 |
| |||||||
|
|
2/12/2020 |
|
(3) |
|
716 |
|
$ |
175,320 |
|
|
5,230 |
|
$ |
1,280,618 |
| |||||||
| Susan H. Alexander |
|
2/12/2018 |
|
(2) |
|
— |
|
|
— |
|
|
1,687 |
|
$ |
413,079 |
| ||||||
|
|
2/12/2018 |
|
(3) |
|
7,515 |
|
$ |
1,840,123 |
|
|
— |
|
|
— |
| |||||||
|
|
2/12/2019 |
|
(2) |
|
— |
|
|
— |
|
|
3,341 |
|
$ |
818,077 |
| |||||||
|
|
2/12/2019 |
|
(3) |
|
1,659 |
|
$ |
406,223 |
|
|
3,688 |
|
$ |
903,044 |
| |||||||
|
|
2/12/2020 |
|
(2) |
|
— |
|
|
— |
|
|
4,825 |
|
$ |
1,181,450 |
| |||||||
|
|
2/12/2020 |
|
(3) |
|
572 |
|
$ |
140,060 |
|
|
4,189 |
|
$ |
1,025,719 |
| |||||||
| Chirfi Guindo |
|
2/12/2019 |
|
(2) |
|
— |
|
|
— |
|
|
3,654 |
|
$ |
894,718 |
| ||||||
|
|
2/12/2019 |
|
(3) |
|
1,817 |
|
$ |
444,911 |
|
|
4,032 |
|
$ |
987,276 |
| |||||||
|
|
2/12/2020 |
|
(2) |
|
— |
|
|
— |
|
|
5,725 |
|
$ |
1,401,824 |
| |||||||
|
|
2/12/2020 |
|
(3) |
|
680 |
|
$ |
166,505 |
|
|
4,974 |
|
$ |
1,217,934 |
| |||||||
| Jeffrey D. Capello |
|
— |
|
— |
|
— |
|
|
— |
|
|
— |
|
|
— |
| ||||||
Notes to the Outstanding Equity Awards at 2020 Fiscal Year End Table
| (1) | The market value of awards is based on the closing price of our stock on December 31, 2020 ($244.86), as reported on Nasdaq. |
| (2) | MSUs were granted in 2020, 2019 and 2018. These are performance-based RSUs earned based on the growth in our stock price between the dates of grant and vesting. Earned MSUs are eligible to vest in equal annual installments on each of the first three anniversaries of the grant date, generally subject to continued employment through the applicable vesting date. The number and value shown in columns (e) and (f), respectively, reflect target performance results for MSUs based on the estimated performance at year-end in each case. |
| (3) | PSUs were granted in 2020, 2019 and 2018. The PSUs, to the extent earned, cliff vest on the third anniversary of the date of grant, generally subject to continued employment through the vesting date. 60% of the PSUs (based on the grant date target value) will be settled in shares of our common stock and performance is based upon achievement of cumulative three-year pipeline goals for the 2020 award and cumulative three-year financial and pipeline goals for the 2019 and 2018 awards. The remaining 40% of the PSUs will |
| 61 |
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Table of Contents
| 6 |
Executive Compensation Matters (continued) |
| be settled in cash and performance is based upon the achievement of three annual financial goals determined at the beginning of each relevant year. The number and value shown in columns (c) and (d), respectively, reflect the number of 2020 Cash-Settled PSUs, 2019 Cash-Settled PSUs and 2018 Cash-Settled and Stock-Settled PSUs that were earned based on our achievement of the performance goals, but that will not vest until February 12, 2023, February 12, 2022, and February 12, 2021, respectively. The number and value shown in columns (e) and (f), respectively, reflect the remaining portion of the PSUs granted in 2020 and 2019 (including the 2021 and 2022 tranches of the 2020 Cash-Settled PSUs and the 2021 tranche of the 2019 Cash-Settled PSUs) assuming target performance results. For additional information on our PSU awards, please see “Long-Term Incentive” above. |
| (4) | RSU awards for Mr. McDonnell reflect RSUs granted on September 1, 2020, in connection with his hiring. |
2020 Option Exercises and Stock Vested
Our executive officers must use pre-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 material non-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, 2020.
| Stock Awards | |||||||||||||||
| Name | Number of Shares Acquired on Vesting(1) |
Value Realized on Vesting(2) | |||||||||||||
| Michel Vounatsos |
|
23,986 |
$ |
7,754,636 |
|||||||||||
| Michael R. McDonnell |
|
— |
|
— |
|||||||||||
| Alfred W. Sandrock, Jr. |
|
8,215 |
$ |
2,674,660 |
|||||||||||
| Susan H. Alexander |
|
9,807 |
$ |
3,188,471 |
|||||||||||
| Chirfi Guindo |
|
2,945 |
$ |
864,954 |
|||||||||||
| Jeffrey D. Capello |
|
3,221 |
$ |
1,019,748 |
|||||||||||
Notes to the 2020 Option Exercises and Stock Vested Table
| (1) | Cash-settled performance units (CSPUs) that were granted in 2017 were settled in cash for Mr. Vounatsos, Dr. Sandrock and Ms. Alexander. The number of actual shares of our common stock acquired on vesting of MSUs and RSUs in 2020, after shares were withheld to pay the minimum withholding of taxes, was as follows: |
| Net Shares Acquired(3) | |||||
| Mr. Vounatsos |
|
9,796 |
|||
| Mr. McDonnell |
|
— |
|||
| Dr. Sandrock |
|
3,990 |
|||
| Ms. Alexander |
|
4,596 |
|||
| Mr. Guindo |
|
1,879 |
|||
| Mr. Capello |
|
2,201 |
|||
| (2) | The value realized for MSUs and RSUs was 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 the 30-day average closing price of the common stock of the Company through the vesting date. |
| (3) | MSUs and RSUs were settled in shares of our common stock. CSPUs were settled in cash. |
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Executive Compensation Matters (continued) |
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, 2020. The account balances as of year-end include all contributions and interest amounts earned by our NEOs through the end of 2020 plus the SSP contributions that the Company made in early 2021 based on earnings in the last quarter of 2020.
| 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(5) |
$3,193,708 |
$433,320 |
$518,977 |
— |
$11,835,075 | |||||
| Michael R. McDonnell |
— |
— |
— |
— |
— | |||||
| Alfred W. Sandrock, Jr. |
$ 223,260 |
$120,725 |
$235,734 |
— |
$ 4,279,898 | |||||
| Susan H. Alexander |
$1,000,194 |
$134,365 |
$548,853 |
— |
$10,406,185 | |||||
| Chirfi Guindo |
$ 677,671 |
$ 58,453 |
$233,703 |
— |
$ 1,833,959 | |||||
| Jeffrey D. Capello |
— |
$ 72,806 |
$ 480 |
— |
$ 167,923 | |||||
Notes to the 2020 Non-Qualified Deferred Compensation Table
| (1) | The amounts in this column are also included, in part, in columns (c) and/or (f) of the Summary Compensation Table and represent deferral of salary and deferral of payments under our 2020 annual bonus plan, respectively. |
| (2) | The amounts in this column are also included in column (h) of the Summary Compensation Table for 2020 as Company contributions to the SSP. |
| (3) | Earnings in excess of 120% of the applicable federal long-term rate are reported in column (g) of the Summary Compensation Table for 2020 for Mr. Vounatsos ($264,358), Dr. Sandrock ($138,444) and Ms. Alexander ($311,416). |
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Executive Compensation Matters (continued) |
| (4) | The following table lists the compensation deferrals during 2019 and 2018 by the NEOs, as reported, where applicable, in the proxy statement for our 2020 and 2019 annual meetings of stockholders: |
| Amounts Previously Reported as Deferred |
||||||||
| Name | 2019 | 2018 | ||||||
| Mr. Vounatsos |
$ |
1,765,018 |
|
$ |
3,071,852 |
| ||
| Dr. Sandrock |
$ |
245,492 |
|
|
— |
| ||
| Ms. Alexander |
$ |
838,564 |
|
$ |
826,451 |
| ||
| Mr. Guindo |
$ |
618,828 |
|
|
— |
| ||
| Mr. Capello |
|
— |
|
|
— |
| ||
| 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. |
| (5) | On February 12, 2021, cash-settled PSUs that were elected as deferred by Mr. Vounatsos became vested and credited to the SSP. The earned amount was $891,328. |
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Executive Compensation Matters (continued) |
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| 6 |
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, 2020, for all NEOs except for Mr. Capello who separated from the Company during 2020. The calculations use the closing price of our common stock as reported by Nasdaq on December 31, 2020, which was $244.86 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) | ||||||||||||
| Michel Vounatsos(4) |
|||||||||||||||
| Severance |
|
— |
$ |
5,625,000 |
$ |
7,500,000 |
|||||||||
| Performance-based RSUs |
|
— |
|
— |
$ |
23,217,461 |
|||||||||
| Medical, Dental and Vision |
|
— |
$ |
29,532 |
$ |
39,376 |
|||||||||
|
Outplacement(5) |
|
— |
$ |
32,000 |
$ |
32,000 |
|||||||||
| Total |
|
— |
|
$ |
5,686,532 |
|
$ |
30,788,837 |
| ||||||
| Michael R. McDonnell |
|||||||||||||||
| Severance |
|
— |
$ |
1,487,500 |
$ |
2,975,000 |
|||||||||
| Performance-based RSUs |
|
— |
|
— |
$ |
1,761,269 |
|||||||||
| Time-based RSUs |
|
— |
|
— |
$ |
1,969,899 |
|||||||||
| Medical, Dental and Vision |
|
— |
$ |
19,656 |
$ |
39,312 |
|||||||||
|
Outplacement(5) |
|
— |
$ |
32,000 |
$ |
32,000 |
|||||||||
| Total |
|
— |
|
$ |
1,539,156 |
|
$ |
6,777,480 |
| ||||||
| Alfred W. Sandrock, Jr. |
|||||||||||||||
| Severance |
|
— |
$ |
2,761,396 |
$ |
3,155,881 |
|||||||||
| Performance-based RSUs |
$ |
6,380,053 |
$ |
6,380,053 |
$ |
6,380,053 |
|||||||||
| Medical, Dental and Vision |
|
— |
$ |
24,943 |
$ |
28,506 |
|||||||||
|
Outplacement(5) |
|
— |
$ |
32,000 |
$ |
32,000 |
|||||||||
| Total |
$ |
6,380,053 |
|
$ |
9,198,392 |
|
$ |
9,596,440 |
| ||||||
| Susan H. Alexander |
|||||||||||||||
| Severance |
|
— |
$ |
2,422,150 |
$ |
2,768,172 |
|||||||||
| Performance-based RSUs |
$ |
5,576,815 |
$ |
5,576,815 |
$ |
6,196,461 |
|||||||||
| Medical, Dental and Vision |
|
— |
$ |
24,921 |
$ |
28,481 |
|||||||||
|
Outplacement(5) |
|
— |
$ |
32,000 |
$ |
32,000 |
|||||||||
|
Total |
$ |
5,576,815 |
|
$ |
8,055,886 |
|
$ |
9,025,114 |
| ||||||
| Chirfi Guindo |
|||||||||||||||
| Severance |
|
— |
$ |
1,446,105 |
$ |
1,928,140 |
|||||||||
| Performance-based RSUs |
|
— |
|
— |
$ |
4,575,719 |
|||||||||
| Medical, Dental and Vision |
|
— |
$ |
30,269 |
$ |
40,359 |
|||||||||
|
Outplacement(5) |
|
— |
$ |
32,000 |
$ |
32,000 |
|||||||||
| Total |
|
— |
|
$ |
1,508,374 |
|
$ |
6,576,218 |
| ||||||
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 our LTI program will vest in full and all unearned performance-based equity awards will remain outstanding and eligible to vest based on actual performance. The value of such accelerated awards for all NEOs would be the same amount as shown in column (d) for such NEO (based on actual performance estimated as of December 31, 2020). |
| (2) | Dr. Sandrock and Ms. Alexander were eligible for potential payments upon retirement at December 31, 2020. Based on years of service, Dr. Sandrock and Ms. Alexander were eligible for accelerated vesting on 100% and 90%, respectively, of their outstanding equity awards as of December 31, 2020. Any unvested PSU and MSU awards would, subject to the achievement of any applicable performance goals, remain outstanding and eligible to be earned and vest in accordance with the terms of such awards based on actual performance as to 100% for Dr. Sandrock and 90% for Ms. Alexander of the earned PSUs or MSUs, as applicable. The amount listed in column (b) is the estimated value of 100% of all unvested awards held by Dr. Sandrock and 90% of all unvested awards held by Ms. Alexander, based on actual performance estimated as of December 31, 2020, for unearned performance-based awards. |
| (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, where applicable, on actual performance estimated as of December 31, 2020. |
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Executive Compensation Matters (continued) |
| (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. |
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 offering affordable benefits and programs that meet the diverse needs of our employees.
We believe strongly in pay-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. We determined our median employee as of December 31, 2020, based on a consistently applied compensation measure defined as the sum of base salary, target bonus and LTI target value. We annualized pay for employees who commenced employment during 2020.
Our median employee is a full-time employee based in the U.S. In December 2020, when we determined the median employee, approximately 61% of our workforce was based in the U.S. with the remaining approximately 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. 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 2020 was $18,659,829. The annual total compensation of the median employee, as determined in accordance with the SEC’s rules, for 2020 was $155,378. 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 120 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.
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|
| Proposal 4 – Approve an Amendment to Biogen’s Amended and Restated Certificate of Incorporation, as Amended, to Add a Federal Forum Selection Provision
|
||||
Currently, our Amended and Restated Certificate of Incorporation, as amended (the Certificate of Incorporation), does not include a federal forum selection provision. In response to a decision in the Delaware Supreme Court validating federal forum selection provisions, our Board of Directors reviewed the provision from a legal and policy perspective. In light of this Delaware Supreme Court decision, our Board of Directors has determined that it is in the best interests of our company and our stockholders to seek to include a federal forum selection provision in our Certificate of Incorporation.
We are seeking stockholder approval to amend Article XII of our Certificate of Incorporation to provide that, unless we consent in writing to the selection of an alternative forum, the federal district courts of the United States shall be the exclusive forum for the resolution of any complaint asserting a cause of action arising under the Securities Act of 1933, as amended. In other words, we are seeking to include a federal forum selection provision.
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Other Management Proposal (continued) |
OUR BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR THE APPROVAL OF AN AMENDMENT TO BIOGEN’S AMENDED AND RESTATED CERTIFICATE OF INCORPORATION, AS AMENDED, TO ADD A FEDERAL FORUM SELECTION PROVISION
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| 8 |
|
| Proposal 5 – Stockholder Proposal Requesting a Report on Biogen’s Lobbying Activities
|
||||
Mr. James McRitchie and Ms. Myra K. Young (whom we sometimes refer to as the Proposal 5 Proponents) have notified us that they intend to submit the following proposal for consideration at the Annual Meeting. The Proposal 5 Proponents have indicated that they beneficially own 25 shares of our common stock. We will provide their address promptly upon a stockholder’s oral or written request. The Proposal 5 Proponents are responsible for the content of the proposal, for which we and our Board of Directors accept no responsibility. The proposal will be voted on at the Annual Meeting if the Proposal 5 Proponents, or a qualified representative, is present at the Annual Meeting and submits the proposal for a vote. Our statement in opposition follows the proposal.
OUR BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE AGAINST THE APPROVAL OF THIS STOCKHOLDER PROPOSAL.
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Stockholder Proposals (continued) |
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| 8 |
Stockholder Proposals (continued) |
| Proposal 6 – Stockholder Proposal Requesting a Report on Biogen’s Gender Pay Gap
|
||||
Proxy Impact (whom we sometimes refer to as the Proposal 6 Proponent) has notified us that it intends to submit the following proposal for consideration at the Annual Meeting. Proxy Impact has represented that it is authorized by owners of 50 shares of our common stock to submit this proposal. We will provide the Proposal 6 Proponent’s address promptly upon a stockholder’s oral or written request. The Proposal 6 Proponent is responsible for the content of the proposal, for which we and our Board accept no responsibility. The proposal will be voted on at the Annual Meeting if the Proposal 6 Proponent, or a qualified representative, is present at the Annual Meeting and submits the proposal for a vote. Our statement in opposition follows the proposal.
OUR BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE AGAINST
THE APPROVAL OF THIS STOCKHOLDER PROPOSAL.
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Stockholder Proposals (continued) |
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|
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; |
| • | for non-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.
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 a non-executive position outside of the Research & Development organization who received approximately $220,000 in total compensation in 2020. Consistent with our Related Person Transaction Policy as described above, our Corporate Governance Committee reviewed this matter.
On January 5, 2021, we entered into an exclusive license agreement (the License Agreement) with Sana. Dr. Mulligan currently serves as the Head of SanaX, the research arm of Sana, and Executive Vice Chairman of Sana. Under the License Agreement, we granted Sana an exclusive sublicense (except as to Biogen) of certain riboswitch-based technology licensed to us by Baylor College of Medicine (the Baylor Technology). We have a non-exclusive license to any improvements made by Sana to the Baylor Technology for use by us in our core and emerging growth areas (the Biogen Field). We have a right of first refusal should Sana decide to seek a collaboration for any program in the Biogen Field. Sana will pay us a royalty in the low single digits on net sales of any products developed under the License Agreement (the Sana Products) and will share half of the patent maintenance costs related to the Baylor Technology. The License Agreement will continue until the later of (a) such time as all of Sana’s payment obligations related to all Sana Products expire and (b) the expiration of the royalty terms, as defined in the License Agreement, for all Sana Products. Consistent with our Related Person Transaction Policy as described above, our Corporate Governance Committee reviewed this matter.
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| 9 |
Additional Information (continued) |
EQUITY COMPENSATION PLAN INFORMATION
The following table provides information as of December 31, 2020, about:
| • | the number of shares of common stock subject to issuance upon vesting of RSUs, MSUs and PSUs under plans adopted and assumed by us (assuming target performance); and |
| • | the number of shares of common stock available for future issuance under our active plans: our 2017 Omnibus Equity Plan, our Non-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 (b) |
Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (excluding securities reflected in column(a))(1) (c) | |||
| Equity compensation plans approved by stockholders
|
1,492,565
|
—
|
18,100,439
| |||
| Equity compensation plans not approved by stockholders
|
—
|
—
|
—
| |||
| Total
|
1,492,565
|
—
|
18,100,439
| |||
| (1) | Of these shares, (a) 12,116,477 remain available for future issuance under our 2017 Omnibus Equity Plan, (b) 665,955 remain available for future issuance under our Non-Employee Directors Equity Plan and (c) 5,318,007 remain available under our 2015 Employee Stock Purchase Plan. In addition to shares issuable upon the exercise of options or rights, the shares under our 2017 Omnibus Equity Plan and our Non-Employee Directors Equity Plan may also be issued other than upon such exercise. |
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| 2021 PROXY STATEMENT
|
GAAP to Non-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 | ||||||||||
| December 31, 2020 |
December 31, 2019 | |||||||||
| GAAP earnings per share – Diluted |
|
$24.80 |
|
$31.42 |
||||||
| Adjustments to GAAP net income attributable to Biogen Inc. (as detailed below) |
|
8.90 |
|
2.15 |
||||||
| Non-GAAP earnings per share – Diluted |
|
$33.70 |
|
$33.57 |
||||||
| For the Twelve Months Ended | ||||||||||
| December 31, 2020* |
December 31, 2019 | |||||||||
| GAAP net income attributable to Biogen Inc. |
|
$4,000.6 |
|
$5,888.5 |
||||||
| Adjustments: |
||||||||||
| Acquisition and divestiture related costs: |
||||||||||
| Amortization of acquired intangible assetsA |
|
464.8 |
|
489.9 |
||||||
| Acquired in-process research and development |
|
75.0 |
|
— |
||||||
| (Gain) loss on fair value remeasurement of contingent considerationA |
|
(86.3 |
) |
|
(63.7 |
) | ||||
| Loss on divestiture of Hillerød, Denmark manufacturing operationsB |
|
(92.5 |
) |
|
55.3 |
|||||
| Net distribution to noncontrolling interests |
|
0.3 |
|
|
— |
| ||||
| Stock option expense |
|
— |
|
|
26.2 |
| ||||
| Acquisition-related transaction and integration costs |
|
19.5 |
|
|
27.9 |
| ||||
| Accelerated share-based compensation expense |
|
— |
|
|
6.7 |
| ||||
| Subtotal: Acquisition and divestiture related costs |
|
380.8 |
|
|
542.3 |
| ||||
| Restructuring, business transformation and other cost saving initiatives: |
||||||||||
| 2017 corporate strategy implementation |
|
— |
|
|
3.5 |
| ||||
| Restructuring charges |
|
— |
|
|
1.5 |
| ||||
| Other cost saving initiatives |
|
2.8 |
|
|
— |
| ||||
| Subtotal: Restructuring, business transformation and other cost saving initiatives |
|
2.8 |
|
|
5.0 |
| ||||
| (Gain) loss on equity security investments |
|
(693.9) |
|
|
(200.2) |
| ||||
| Sangamo upfront payment and premium paid on the purchase of Sangamo common stockC |
|
208.2 |
|
|
— |
| ||||
| Denali upfront payment and premium paid on the purchase of Denali common stockD |
|
601.3 |
|
|
— |
| ||||
| Sage upfront payment and premium paid on the purchase of Sage common stockE |
|
1,084.0 |
|
|
— |
| ||||
| Premium paid on early debt redemption |
|
9.4 |
|
|
— |
| ||||
| Valuation allowance associated with deferred tax assetsF |
|
90.3 |
|
|
— |
| ||||
| Income tax effect related to reconciling items |
|
(287.9) |
|
|
31.3 |
| ||||
| Swiss tax reformG |
|
— |
|
|
(54.3) |
| ||||
| Amortization included in Equity in loss of investee, net of tax |
|
40.0 |
|
|
78.2 |
| ||||
| Non-GAAP net income attributable to Biogen Inc. |
|
$5,435.6 |
|
$6,290.8 |
||||||
| * | Beginning in the third quarter of 2020 material upfront payments associated with significant collaboration and licensing arrangements are excluded from Non-GAAP R&D expense in order to better reflect the Company’s core operating performance. Full year Non-GAAP results reflect this change as the $125.0 million upfront payment related to the collaboration with Sangamo Therapeutics, Inc. in the second quarter of 2020 has been excluded from Non-GAAP R&D expense. |
| A-1 |
|
|
Table of Contents
| 2021 PROXY STATEMENT
|
Appendix A (continued)
Free Cash Flow Reconciliation
(unaudited, $ in millions)
| For the Twelve Months Ended | |||||
| December 31, 2020 | |||||
| Net cash provided by operating activities |
|
$ 4,229.8 |
|||
| Net cash used in investing activities |
|
(608.6) |
| ||
| Net cash used in financing activities |
|
(5,272.7) |
| ||
| Net increase (decrease) in cash and cash equivalents |
$ |
(1,651.5) |
| ||
| Net cash provided by operating activities |
|
$ 4,229.8 |
|||
| Purchases of property, plant and equipment (Capital Expenditures) |
|
(424.8) |
| ||
| Free Cash Flow^ |
|
$ 3,805.0 |
|||
| ^ | Free cash flow is defined as net cash flow from operations less capital expenditures. |
| A | Amortization and impairment of acquired intangible assets for the twelve months ended December 31, 2020, reflects the impact of the impairment charges related to timrepigene emparvovec (BIIB111), which was obtained as part of the Nightstar Therapeutics plc acquisition, and cinpanemab (BIIB054) as well as a $19.3 million impairment charge related to one of our in-process research and development (IPR&D) intangible assets. During the fourth quarter of 2020 we experienced third-party manufacturing delays for BIIB111 and determined that forecasted costs associated with advancing the program through development and commercialization will exceed our original estimates. We reassessed the fair value of the program based on these changes in assumptions and determined that the program was partially impaired. We recognized an impairment charge of approximately $115.0 million during the fourth quarter of 2020. |
| In February 2021 we announced that we discontinued development of BIIB054 in Parkinson’s disease as our Phase 2 SPARK study did not meet its primary or secondary endpoints. Although we made this determination in February 2021, it was based on conditions that existed as of December 31, 2020. As a result, we recognized an impairment charge of approximately $75.4 million during the fourth quarter of 2020 to reduce the fair value of the related IPR&D intangible asset to zero. We also adjusted the value of our contingent consideration obligation related to BIIB054 resulting in a gain of $51.0 million in the fourth quarter of 2020. |
| Amortization and impairment of acquired intangible assets for the twelve months ended December 31, 2019, reflects the impact of a $215.9 million impairment charge related to certain IPR&D assets associated with the Phase 2b study of BG00011 (STX-100) for the potential treatment of idiopathic pulmonary fibrosis, which was discontinued during the third quarter of 2019. We also adjusted the value of our contingent consideration obligations related to BG00011 resulting in a gain of $61.2 million in the third quarter. |
| B | 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. Upon the closing of this transaction, we received approximately $881.9 million in cash, which may be adjusted based on other contractual terms, which are discussed below. |
| 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 a pre-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, an investigational treatment for Alzheimer’s disease, resulting in a reduction in the pre-tax loss on divestiture from $95.5 million to $55.3 million. |
| During the fourth quarter of 2020 we reduced our estimate of the fair value of the adverse commitment by approximately $62.0 million based on our current manufacturing forecasts. Additionally, we recorded a reduction to our pre-tax loss of approximately $30.5 million due to a refund of interest paid associated with a tax matter. As of December 31, 2020, the cumulative loss on the divestiture of the Hillerød, Denmark manufacturing operations was $33.2 million. |
| 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. Consistent with our assessment as of the transaction date, 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. |
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Appendix A (continued)
| C | In February 2020 we entered into a collaboration and license agreement with Sangamo Therapeutics, Inc. (Sangamo) to develop and commercialize ST-501 for tauopathies, including Alzheimer’s disease; ST-502 for synucleinopathies, including Parkinson’s disease; a third neuromuscular disease target; and up to nine additional neurological disease targets to be identified and selected within a five-year period. In connection with the closing of this transaction in April 2020 we purchased $225.0 million of Sangamo common stock, or approximately 24 million shares at $9.21 per share, which are subject to transfer restrictions. We recorded an asset in investments and other assets in our condensed consolidated balance sheets to reflect the initial fair value of the Sangamo common stock acquired and a charge of approximately $83.2 million to research and development expense in our condensed consolidated statements of income to reflect the premium paid for the Sangamo common stock. We also made an upfront payment of $125.0 million that was recorded as research and development expense. |
| D | In August 2020 we entered into a collaboration and license agreement with Denali Therapeutics Inc. (Denali) to co-develop and co-commercialize Denali’s small molecule inhibitors of leucine-rich kinase 2 (LRRK2) for Parkinson’s disease. As part of this collaboration, we purchased approximately $465.0 million of Denali common stock in September 2020, or approximately 13 million shares at $34.94 per share, which are subject to transfer restrictions. We recorded an asset in investments and other assets in our condensed consolidated balance sheets to reflect the initial fair value of the Denali common stock acquired and a charge of approximately $41.3 million to research and development expense in our condensed consolidated statements of income to reflect the premium paid for the Denali common stock. We also made an upfront payment of $560.0 million that was recorded as research and development expense. |
| E | In November 2020 we entered into a global collaboration and license agreement with Sage Therapeutics, Inc. (Sage) to jointly develop and commercialize BIIB125 (zuranolone) for the potential treatment of major depressive disorder, postpartum depression and other psychiatric disorders and BIIB124 (SAGE-324) for the potential treatment of essential tremor and other neurological disorders. In connection of the closing of this transaction in December 2020 we purchased $650.0 million of Sage common stock, or approximately 6.2 million shares at $104.14 per share, which are subject to transfer restrictions. We recorded an asset in investments and other assets in our consolidated balance sheets to reflect the initial fair value of the Sage common stock acquired and a charge of approximately $209.0 million to research and development expense in our consolidated statements of income to reflect the premium paid for the Sage common stock. We also made an upfront payment of $875.0 million that was recorded as research and development expense. |
| F | Income tax expense for the twelve months ended December 31, 2020, included $90.3 million in income tax expense related to a net valuation allowance against certain deferred tax assets, due to the decisions of the U.S. District Court of the Northern District of West Virginia and the U.S. District Court of the District of Delaware that the asserted claims of our U.S. patent No. 8,399,514, which cover the treatment of multiple sclerosis with 480 mg of dimethyl fumarate per day as provided for in our TECFIDERA label, are invalid. |
| G | During the third quarter of 2019 a new taxing regime in the country and certain cantons of Switzerland was enacted, which we refer to as Swiss Tax Reform. As a result of the impact of Swiss Tax Reform, we recorded an income tax benefit of approximately $54.3 million resulting from a remeasurement of our deferred tax assets and liabilities in the twelve months ended December 31, 2019. |
Use of Non-GAAP Financial Measures
We supplement our GAAP consolidated financial statements and GAAP financial measures with other financial measures, such as adjusted net income, adjusted diluted earnings per share and free cash flow, which is defined as net cash flow from operations less capital expenditure. We believe that these and other Non-GAAP financial measures provide additional insight into the ongoing economics of our business and reflect how we manage our business internally, set operational goals and form the basis of our management incentive programs. Non-GAAP financial measures are in addition to, not a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP.
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. Acquisitions, divestitures and significant collaboration and licensing arrangements
We exclude transaction, integration and certain other costs related to the acquisition and divestiture of businesses, the acquisitions of assets, significant collaboration and licensing arrangements and items associated with the initial consolidation or deconsolidation of variable interest entities. These adjustments include, but are not limited to, upfront payments in significant collaborations and licensing arrangements, charges for in-process research and development and certain milestones, the amortization and impairment of intangible assets, charges or credits from the fair value remeasurement of our contingent consideration obligations and losses on assets and liabilities held for sale.
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2. 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 research and development 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.
3. (Gain) loss on equity security investments
We 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.
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 to Non-GAAP net income attributable to Biogen Inc. and earnings per share – diluted.
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Certificate of Amendment of Amended and Restated Certificate of Incorporation, as amended
CERTIFICATE OF AMENDMENT
TO THE
CERTIFICATE OF INCORPORATION
OF
BIOGEN INC.
Pursuant to Section 242 of the General
Corporation Law of the State of Delaware
Biogen Inc. (hereinafter referred to as the “Corporation”), a corporation duly organized and existing under the Delaware General Corporation Law (the “DGCL”), does hereby certify as follows:
FIRST: That at a meeting of the Board of Directors of the Corporation on April 7, 2021, resolutions were duly adopted setting forth a proposed amendment to Article XII of the Certificate of Incorporation of said corporation, declaring said amendment to be advisable and directing that the proposed amendment be considered at the next annual meeting of the stockholders. As amended pursuant to such resolutions, Article XII of the Certificate of Incorporation shall be as follows:
ARTICLE XII
(a) Exclusive Forum. Unless the Board of Directors or one of its committees otherwise consents to the selection of an alternate forum, the Court of Chancery of the State of Delaware shall, to the fullest extent permitted by law, be the sole and exclusive forum for (i) any derivative action brought on behalf of the Corporation and (ii) any direct action brought by a stockholder against the Corporation or any of its directors or officers alleging a violation of the Delaware General Corporation Law, the corporation’s certificate of incorporation or bylaws or breach of fiduciary duties or other violation of Delaware decisional law relating to the internal affairs of the corporation; in each case excluding actions in which the Court of Chancery of the State of Delaware concludes that an indispensable party is not subject to the jurisdiction of the Delaware courts and can be subject to the jurisdiction of another court within the United States.
(b) Federal Forum. Unless the Corporation consents in writing to the selection of an alternative forum, the federal district courts of the United States shall be the exclusive forum for the resolution of any complaint asserting a cause of action arising under the Securities Act of 1933, as amended. Any person or entity purchasing or otherwise acquiring any interest in any security of the Corporation shall be deemed to have notice of and consented to this provision.
SECOND: The foregoing amendment was duly adopted in accordance with Section 242 of the DGCL.
THIRD: The effective date of the amendment shall be June , 2021.
IN WITNESS WHEREOF, the Corporation has caused this Certificate of Amendment to be duly executed in its name this day of June, 2021.
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BIOGEN INC. 225 BINNEY STREET CAMBRIDGE, MA 02142 VOTE BY INTERNET Before The Meeting - Go to www.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 to www.virtualshareholdermeeting.com/BIIB2021 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: D48340-P53535 KEEP THIS PORTION FOR YOUR RECORDS THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. DETACH AND RETURN THIS PORTION ONLY BIOGEN INC. The Board recommends a vote FOR the following proposals: 1. Election of Directors. To elect the thirteen director nominees numbered 1a through 1m to serve for a one-year term extending until the 2022 annual meeting of stockholders and their successors are duly elected and qualified Abstain Against For 1a. Alexander J. Denner 1b. Caroline D. Dorsa 1c. Maria C. Freire 1d. William A. Hawkins 1e. William D. Jones 1f. Nancy L. Leaming 1g. Jesus B. Mantas 1h. Richard C. Mulligan 1i. Stelios Papadopoulos 1j. Brian S. Posner 1k. Eric K. Rowinsky 1l. Stephen A. Sherwin 1m. Michel Vounatsos 2. To ratify the selection of PricewaterhouseCoopers LLP as Biogen Inc.’s independent registered public accounting firm for the fiscal year ending December 31, 2021. 3. Say on Pay - To approve an advisory vote on executive compensation. 4. To approve an amendment to Biogen’s Amended and Restated Certificate of Incorporation, as amended, to add a federal forum selection provision. The Board recommends a vote AGAINST the following proposals: 5. Stockholder proposal requesting a report on Biogen’s lobbying activities. 6. Stockholder proposal requesting a report on Biogen’s gender pay gap. 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
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Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting: The 2021 Notice and Proxy Statement and 2020 Annual Report with Form 10-K are available at: www.proxyvote.com. D48341-P53535 BIOGEN INC. Annual Meeting of Stockholders June 2, 2021, 9:00 a.m. Eastern Time This proxy is solicited by the Board of Directors The undersigned hereby appoints Michel Vounatsos, Michael R. McDonnell 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 2021 Annual Meeting, and with full power of substitution in each of them to appear, represent and vote all shares of common stock of Biogen Inc. which the undersigned would be entitled to vote at the 2021 Annual Meeting of Stockholders, to be held online at www.virtualshareholdermeeting.com/BIIB2021 on Wednesday, June 2, 2021, at 9:00 a.m. Eastern Time, and at any adjournment or postponement thereof. 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, FOR Proposals 2, 3 and 4 and AGAINST Proposals 5 and 6. 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