Jazz Pharmaceuticals plc 10-K/A, filed Apr 23, 2021
Jazz Pharmaceuticals plc (JAZZ)
10-K/A
2021-04-23
For: 2020-12-31
View Original
Added on
April 08, 2026
About this 10-K/A
Jazz Pharmaceuticals plc filed this 10-K/A on April 23, 2021, covering the fiscal year ended December 31, 2020.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K/A
(Amendment No. 1)
(Mark One)
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the fiscal year ended December 31, 2020
or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
Commission File Number: 001-33500
(Exact name of registrant as specified in its charter)
(State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) |
011-353 -1 -634-7800
(Address, including zip code, and telephone number, including area code, of
registrant’s principal executive offices)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class |
Trading Symbol(s) |
Name of each exchange on which registered | ||
Ordinary shares, nominal value $0.0001 per share |
LLC | |||
Securities registered pursuant to Section 12(g) of the Act:
None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes
☒
No ☐
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes No
☐
☒
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes
☒
No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation Yes
S-T
during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☒
No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a
non-accelerated
filer, a smaller reporting company, or emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2
of the Exchange Act.☒ |
Accelerated filer ☐ | |
Non-accelerated filer ☐ |
Smaller reporting company | |
Emerging growth company |
||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☒
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes
☐
No The aggregate market value of the voting and 5,958,338,704 based upon the last sale price reported for the registrant’s ordinary shares on such date on The Nasdaq Global Select Market. The calculation of the aggregate market value of voting and
non-voting
common equity held by non-affiliates
of the registrant, as of June 30, 2020, the last business day of the registrant’s most recently completed second fiscal quarter, was approximately $non-voting
common equity excludes 1,454,458 ordinary shares of the registrant held by executive officers, directors and shareholders that the registrant concluded were affiliates of the registrant on that date. Exclusion of such shares should not be construed to indicate that any such person possesses the power, direct or indirect, to direct or cause the direction of the management or policies of the registrant or that such person is controlled by or under common control with the registrant. As of April 15, 2021, a total of 56,891,728 ordinary shares, nominal value $0.0001 per share, of the registrant were outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
EXPLANATORY NOTE
The registrant is filing this Amendment No. 1 to Annual Report on Form
10-K/A,
or this Amendment (also referred to herein as this report), to amend the Annual Report on Form 10-K
for the fiscal year ended December 31, 2020 (Commission File Number 001-33500),
or the 2020 Annual Report on Form 10-K,
as filed by the registrant with the Securities and Exchange Commission, or the SEC, on February 23, 2021. The principal purpose of this Amendment is to include in Part III the information that was to be incorporated by reference from the proxy statement for the registrant’s 2021 Annual General Meeting of Shareholders, as well as to update certain of the information included on the cover page of the 2020 Annual Report on Form 10-K
and in the list of exhibits included in Item 15 and the Exhibit Index of this report. This Amendment hereby amends the cover page, Part III, Items 10 through 14, and Part IV, Item 15 of the 2020 Annual Report on Form 10-K.
In addition, as required by Rule 12b-15
under the Securities Exchange Act of 1934, as amended, or the Exchange Act, new certifications by the registrant’s principal executive officer and principal financial officer are filed as exhibits to this Amendment. No attempt has been made in this Amendment to modify or update the other disclosures presented in the 2020 Annual Report on Form
10-K.
This Amendment does not reflect events occurring after the filing of the original report (i.e., those events occurring after February 23, 2021) or modify or update those disclosures that may be affected by subsequent events. Accordingly, this Amendment should be read in conjunction with the 2020 Annual Report on Form 10-K
and the registrant’s other filings with the SEC. In this report, unless otherwise indicated or the context otherwise requires, all references to “Jazz Pharmaceuticals,” “the registrant,” “the company,” “we,” “us,” and “our” refer to Jazz Pharmaceuticals plc and its consolidated subsidiaries. On January 18, 2012, the businesses of Jazz Pharmaceuticals, Inc. and Azur Pharma Public Limited Company, or Azur Pharma, were combined in a merger transaction, or the Azur Merger, in connection with which Azur Pharma was renamed Jazz Pharmaceuticals plc, and we became the parent company of and successor to Jazz Pharmaceuticals, Inc., with Jazz Pharmaceuticals, Inc. becoming our wholly owned subsidiary.
JAZZ PHARMACEUTICALS PLC
2020 ANNUAL REPORT ON FORM
10-K
Amendment No. 1
TABLE OF CONTENTS
Page |
||||||
| 2 | ||||||
Item 10. |
2 | |||||
Item 11. |
11 | |||||
Item 12. |
56 | |||||
Item 13. |
60 | |||||
Item 14. |
61 | |||||
| 62 | ||||||
Item 15. |
62 | |||||
| 74 | ||||||
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, which are subject to the “safe harbor” created by those sections. Forward-looking statements are based on our management’s beliefs and assumptions and on information currently available to our management. In some cases, you can identify forward-looking statements by terms such as “may,” “will,” “should,” “could,” “would,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “project,” “predict,” “propose,” “intend,” “continue,” “potential,” “possible,” “foreseeable,” “likely,” “unforeseen” and similar expressions intended to identify forward-looking statements. These statements involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance, time frames or achievements to be materially different from any future results, performance, time frames or achievements expressed or implied by the forward-looking statements. We discuss many of these risks, uncertainties and other factors in greater detail under the heading “Risk Factors” in Part I, Item 1A of our 2020 Annual Report on Form
10-K,
as filed with the SEC on February 23, 2021. Given these risks, uncertainties and other factors, you should not place undue reliance on these forward-looking statements. Also, these forward-looking statements represent our estimates and assumptions only as of the date of this filing. You should read this report completely and with the understanding that our actual future results may be materially different from what we expect. We hereby qualify our forward-looking statements by our cautionary statements. Except as required by law, we assume no obligation to update our forward-looking statements publicly, or to update the reasons that actual results could differ materially from those anticipated in these forward-looking statements, even if new information becomes available in the future. 1
PART III
Item 10. |
Directors, Executive Officers and Corporate Governance |
DIRECTORS AND EXECUTIVE OFFICERS
Our Board of Directors
Our board of directors is divided into three classes, designated Class I, Class II and Class III. The term of the Class I directors will expire on the date of our 2021 annual general meeting of shareholders; the term of the Class II directors will expire on the date of our 2022 annual general meeting of shareholders; and the term of the Class III directors will expire on the date of our 2023 annual general meeting of shareholders. At each annual general meeting of shareholders, successors to the directors whose terms expire at that annual general meeting are put forward for election for a three-year term.
The following is a brief biography of each member of our board of directors, including their respective ages as of April 23, 2021, with each biography including information regarding the specific experience, qualifications, attributes or skills that led the nominating and corporate governance committee and our board of directors to determine that each member of our board of directors should serve as a director.
Class I Directors Continuing in Office Until the 2021 Annual General Meeting
Peter Gray
non-profit
educational establishment. He served as Chairman of the board of directors of UDG Healthcare plc, an international provider of healthcare services, from February 2012 to September 2020. In September 2011, Mr. Gray retired from his position as Chief Executive Officer of ICON plc, a global provider of outsourced development services to the pharmaceutical, biotechnology and medical device industries, which he held since November 2002. At ICON plc, Mr. Gray previously served as Group Chief Operating Officer from June 2001 to November 2002 and Chief Financial Officer from June 1997 to June 2001. From November 1983 to November 1989, Mr. Gray served as senior financial officer at Elan Corporation plc, a pharmaceutical company. Mr. Gray holds a degree in law from Trinity College Dublin and qualified as a chartered accountant in 1981. Given his experience as Chief Executive Officer and Chief Financial Officer of ICON plc, Mr. Gray brings to our board of directors and audit committee over 30 years of experience in financial and operational management within the pharmaceutical industry. Kenneth W. O’Keefe
co-founded.
From November 2015 to January 2018, he was Chief Executive Officer, from January 2011 to November 2015, he was Managing Partner, and from 1997 to January 2011, he was Managing Director, of Beecken Petty O’Keefe & Company. He serves on the boards of several privately-held healthcare companies. He received a B.A. from Northwestern University and an M.B.A. from the University of Chicago. As a member of Beecken Petty O’Keefe & Company, Mr. O’Keefe brings to our board of directors significant expertise in accounting and financial matters and in analyzing and evaluating financial statements, as well as substantial experience managing private equity investments. He serves or has served on the audit committee of several companies in the healthcare industry. As the former chairperson and current member of our audit committee, Mr. O’Keefe brings to our board of directors detailed knowledge of our financial position and financial statements. 2
Elmar Schnee
1
, age 61, has served as a member of our board of directors since August 2014 and previously served as a director of Gentium S.p.A. (now a subsidiary of Jazz Pharmaceuticals plc) from May 2012 until April 2014. Mr. Schnee has served as Chairman of the boards of Santhera Pharmaceuticals Holding AG, a specialty pharmaceutical company, since April 2017, Calliditas Therapeutics AB, a specialty pharmaceutical company, since May 2019 and Genkyotex, a biopharmaceutical company, since November 2020. In addition, he serves on the boards of directors of several privately-held life sciences companies and, since January 2020, has been serving as Chairman of Advanz Pharma Corp., a global pharmaceutical company, which delisted from the Toronto Stock Exchange in March 2020. From June 2016 to December 2019, he served as a management advisor to MindMaze SA, a neuro-technology company, where he also served as Chief Operating Officer from June 2016 to April 2017. From November 2013 to August 2015, Mr. Schnee served as a non-executive
director of Cardiorentis Ltd., a biopharmaceutical company, where he served as Chairman and Chief Executive Officer from October 2011 until November 2013. From 2003 to 2011, Mr. Schnee held various positions in senior management at Merck KGaA, a global pharmaceutical and chemical group. In November 2005, Mr. Schnee was appointed as Deputy Member of the Executive Board responsible for the global pharmaceuticals business. In 2006, he was appointed as a member of the Executive Board and General Partner of Merck KGaA, with responsibility for global pharmaceutical activities, and served in this position until 2011. Prior to Merck KGaA, Mr. Schnee held senior positions in strategy, business development and marketing at UCB SA, Sanofi-Synthélabo SA, Migliara/Kaplan Associates, Inc. and Fisons Pharmaceuticals PLC. From June 2016 until May 2019, he served on the board of directors of Stallergenes-Greer plc. Mr. Schnee holds both a bachelor’s degree in marketing and a master’s degree in marketing and general management from the Swiss Institute of Business Administration in Zurich. With his experience as Chairman and Chief Executive Officer of Cardiorentis Ltd., his operational experience at Merck KGaA and other companies and his experience serving on the boards of directors of life sciences companies, including Gentium, Mr. Schnee brings to our board of directors significant experience in executive management, operational excellence and industry knowledge, having held diverse leadership positions at various global pharmaceutical companies. Mark D. Smith, M.D.
non-executive
director on the boards of directors of two publicly-held companies, Teladoc Health, Inc., a telemedicine and virtual healthcare company, and Phreesia, Inc., a healthcare software company. Dr. Smith also serves on the boards of directors of the Commonwealth Fund, a private health policy foundation, and the Institute for Health Care Improvement, an independent nonprofit organization. From 1996 to 2013, Dr. Smith was the founding President and Chief Executive Officer of the California HealthCare Foundation, an independent nonprofit philanthropy organization. From 1991 to 1996, he served as Executive Vice President at the Henry J. Kaiser Family Foundation. Dr. Smith received a B.A. from Harvard College, an M.D. from the University of North Carolina at Chapel Hill and an M.B.A. from The Wharton School at the University of Pennsylvania. Dr. Smith brings to our board of directors an impressive background that marries the worlds of active medical practice and business development. A practicing physician and professor, Dr. Smith also has experience working for a variety of health focused companies both public and private. Additionally, Dr. Smith allocates part of his time for nonprofit organizations and a health policy foundation. 1 |
On November 13, 2020, Mr. Schnee notified our board of directors of his intention to resign as a director of Jazz Pharmaceuticals. Mr. Schnee will not stand for re-election to our board of directors, when his term expires, at our 2021 annual general meeting of shareholders. |
3
Catherine A. Sohn, Pharm.D.
Class II Directors Continuing in Office Until the 2022 Annual General Meeting and Resigning Director
Paul L. Berns
2
2 |
On November 13, 2020, Mr. Berns notified our board of directors of his intention to resign as a director of Jazz Pharmaceuticals. Mr. Bern’s resignation will be effective as of or prior to our 2021 annual general meeting of shareholders. |
4
Jennifer E. Cook
non-executive
director on the boards of directors of two publicly-held biotechnology companies, Denali Therapeutics Inc. and BridgeBio Pharma, Inc. She also serves on the board of directors of two privately-held biotechnology companies, Ambys Medicines, Inc. and Gyroscope Therapeutics Limited. From January 2018 to June 2019, Ms. Cook was the Chief Executive Officer at GRAIL, Inc., a privately-held early cancer detection diagnostic company. Prior to that, Ms. Cook worked at Roche Pharmaceuticals/Genentech for 25 years, where she held a number of senior management positions covering the full lifecycle of product development and commercialization. From 2010 to 2013, she oversaw Genentech’s U.S. Immunology and Ophthalmology Business Unit, and from 2013 to 2016, she led Roche’s European commercial business. She also served as Roche’s Global Head of Clinical Operations throughout 2017. In 2016, Ms. Cook was recognized as Woman of the Year by the Healthcare Businesswoman’s Association. Ms. Cook received a B.A. in Human Biology and a M.S. in Biology from Stanford University and an M.B.A. from the Haas School of Business at University of California, Berkeley. Ms. Cook brings to our board over 30 years of biopharmaceutical experience with significant C-suite,
global product development and commercialization expertise, with a focus on transformative growth. Patrick G. Enright
co-led
the life sciences investment practice. Prior to Pequot, he was a Managing Member of the Delta Opportunity Fund at Diaz & Altschul Capital Management. Mr. Enright began his investment career at PaineWebber Development Corporation. Mr. Enright also has significant life sciences operations experience including senior executive positions at Valentis, Boehringer Mannheim (acquired by Roche) and Sandoz (now known as Novartis). Mr. Enright currently serves as the Chairman of the board of Aptinyx Inc., a clinical-stage biopharmaceutical company, as well as a board member of several private company boards. Selected prior public company board memberships include Aimmune Therapeutics, Inc (acquired by Nestlé Health Science in October 2020), Codexis, Inc., Corcept Therapeutics, Inc., Esperion Therapeutics, Inc., Horizon Pharma plc (currently Horizon Therapeutics plc) and Threshold Pharmaceuticals, Inc. Mr. Enright received a B.S. in Biological Sciences from Stanford University and an M.B.A. from the Wharton School of the University of Pennsylvania. Based on his experience as a venture capital investor focused on life sciences companies and his past work in the pharmaceutical industry, Mr. Enright brings to our board of directors over 30 years of operating experience and financial expertise in the life sciences industry. Seamus Mulligan
5
Norbert G. Riedel, Ph.D.
non-profit
organization, the Illinois Biotechnology Industry Organization. Dr. Riedel is also a member of the Austrian Academy of Sciences. Dr. Riedel is an Adjunct Professor at Boston University School of Medicine and an Adjunct Professor of Medicine at Northwestern University’s Feinberg School of Medicine. Dr. Riedel holds a Diploma in biochemistry and a Ph.D. in biochemistry from the University of Frankfurt. Dr. Riedel brings significant scientific, drug discovery and development, and commercial expertise to our board of directors with over 20 years of experience in the biotechnology and pharmaceutical industries. Class III Directors Continuing in Office Until the 2023 Annual General Meeting
Bruce C. Cozadd
,
co-founded
Jazz Pharmaceuticals, Inc. and has served as Chairman and Chief Executive Officer of Jazz Pharmaceuticals, Inc. since April 2009. From 2003 until 2009, he served as Jazz Pharmaceuticals, Inc.’s Executive Chairman and as a member of its board of directors. From 1991 until 2001, he held various positions with ALZA Corporation, a pharmaceutical company acquired by Johnson & Johnson, most recently as Executive Vice President and Chief Operating Officer, with responsibility for research and development, manufacturing and sales and marketing. Previously at ALZA Corporation, he held the roles of Chief Financial Officer and Vice President, Corporate Planning and Analysis. Mr. Cozadd serves on the board of Biotechnology Innovation Organization, a biotechnology trade association, where he serves on its Health Section Governing Board. He also serves on the boards of two non-profit
organizations, The Nueva School and SFJAZZ. Mr. Cozadd previously served on the boards of directors of Cerus Corporation from 2001 to January 2018 and Threshold Pharmaceuticals, Inc. from 2005 to August 2017. He received a B.S. from Yale University and an M.B.A. from the Stanford Graduate School of Business. As a co-founder
and our Chief Executive Officer of over 10 years, he brings to our board a deep and comprehensive knowledge of our business, as well as shareholder-focused insight into effectively executing the company’s strategy and business plans to maximize shareholder value. Heather Ann McSharry
,
non-executive
director on the boards of directors of several public and private companies, including CRH plc, an international building materials group and International Airlines Group, S.A. From 2006 to 2009, Ms. McSharry was Managing Director Ireland of Reckitt Benckiser, a multinational health, home and hygiene consumer products company. From 1989 to 2006, she held various positions at Boots Healthcare, a leading global consumer healthcare company, most recently as Managing Director of Boots Healthcare Ireland Limited. Ms. McSharry served on the boards of directors of the Bank of Ireland from 2007 to 2011, the Industrial Development Agency in Ireland from 2010 to 2014, Uniphar plc from 2019 to 2020 and Greencore Group plc from 2013 to 2021. Ms. McSharry holds a Bachelor of Commerce and a Master of Business Studies degree from University College Dublin. Ms. McSharry brings to our board of directors over 30 years of experience in multiple international industries, including healthcare, consumer goods and financial services, as well as expertise in crisis management, cybersecurity and privacy issues relevant to our business. 6
Anne O’Riordan
Rick E Winningham
,
spin-off
from Innoviva, Inc. in June 2014. Since February 2021, Mr. Winningham has also served as Chairman of Retrotope, Inc., a private biotechnology company focused on cell degeneration. From October 2001 to August 2014, Mr. Winningham served as Chief Executive Officer of Innoviva, Inc., where he also served as Chairman of the Board of Directors from April 2010 to October 2014. From 1997 to 2001, he served as President of Bristol-Myers Squibb Oncology/Immunology/Oncology Therapeutics Network and, from 2000 to 2001, as President of Global Marketing. Mr. Winningham is a member of Biotechnology Industry Organization’s board of directors and serves on the Health Section Governing Board Standing Committee on Reimbursement. He previously served as a member of the board of directors of OncoMed Pharmaceuticals, Inc. from June 2015 until the company’s merger with Mereo BioPharma Group plc in April 2019. He also served as a member of the board of directors of the California Healthcare Institute, or CHI, from November 2011 to March 2015 and served as its Chairman from January 2014 until CHI merged with Bay Area Bioscience Association to become the California Life Sciences Association, or CLSA, in March 2015. Mr. Winningham is on the board of directors of CLSA, and served as its Chairman from March 2015 until November 2015. Mr. Winningham holds an M.B.A. from Texas Christian University and a B.S. from Southern Illinois University. Mr. Winningham’s experience in senior management positions in the pharmaceutical industry provides significant industry knowledge and operational and management expertise to our board of directors. Committee Membership
The following table provides membership information for 2020 for each of the audit committee, compensation committee and nominating and corporate governance committee of our board of directors:
Name |
Audit |
Compensation |
Nominating and Corporate Governance | |||
| Paul L. Berns |
● |
|||||
| Patrick G. Enright |
● |
● |
||||
| Peter Gray |
C | |||||
| Heather Ann McSharry |
● |
C | ||||
| Kenneth W. O’Keefe |
● |
|||||
| Anne O’Riordan |
● |
|||||
| Norbert G. Riedel, Ph.D. |
C | |||||
| Elmar Schnee |
● | |||||
| Catherine A. Sohn, Pharm.D. |
● |
● | ||||
| Rick E Winningham |
● | |||||
C = committee chairperson = committee member
●
7
In 2020, the compensation committee’s name was changed to the “Compensation & Management Development Committee” to reflect the committee’s expanded role in reviewing our diversity, talent and culture strategy, including management development, diversity, equity and inclusion initiatives, talent planning and employee engagement. We refer to the Compensation & Management Development Committee in this report as the compensation committee.
Our Executive Officers
The following table provides information regarding our executive officers as of April 23, 2021.
Name |
Age |
Position | ||
| Bruce C. Cozadd |
57 | Chairman and Chief Executive Officer | ||
| Daniel N. Swisher, Jr. |
58 | President and Chief Operating Officer | ||
| Renée Galá |
49 | Executive Vice President and Chief Financial Officer | ||
| Robert Iannone, M.D., M.S.C.E |
54 | Executive Vice President, Research and Development and Chief Medical Officer | ||
| Kim Sablich |
52 | Executive Vice President and General Manager, North America | ||
| Finbar Larkin, Ph.D. |
63 | Senior Vice President, Technical Operations | ||
| Neena M. Patil |
46 | Chief Legal Officer and Senior Vice President, Legal and Corporate Affairs | ||
| Samantha Pearce |
55 | Senior Vice President, Europe and International | ||
| Patricia Carr |
50 | Vice President, Finance and Principal Accounting Officer | ||
Bruce C. Cozadd
.
Our Board of Directors
Daniel N. Swisher, Jr.
Renée Galá
spin-out
from Innoviva, Inc. Ms. Galá joined Innoviva in 2006 and held various roles in the finance organization before leading the company’s spin-out
transaction. Prior to that, Ms. Galá served in various roles in global treasury, pharmaceutical sales and corporate strategy/business development at Eli Lilly and Company, from 2001 to 2006. Before joining Eli Lilly, Ms. Galá spent seven years in the energy industry in positions focused on corporate finance, project finance, and mergers and acquisitions. Ms. Galá serves on the board of directors of Gossamer Bio, Inc., a clinical-stage biopharmaceutical company, where she also chairs the audit committee, and Gyroscope Therapeutics, a clinical-stage gene therapy company, where she also chairs the audit committee. Ms. Galá previously served on the board of directors of Corcept Therapeutics Inc. from June 2016 to June 2019. Ms. Galá holds a B.S. in Mathematics from Vanderbilt University and an M.B.A. from Columbia Business School. 8
Robert Iannone, M.D., M.S.C.E.
has served
as our Chief Medical Officer since December 2019
. From April 2018 until May 2019, Dr. Iannone served as Head of Research and Development and Chief Medical Officer of Immunomedics, Inc., a biopharmaceutical company. Prior to that, from July 2014 to April 2018, Dr. Iannone served in the roles of Senior Vice President and Head of Immuno-oncology, Global Medicines Development and the Global Products Vice President at AstraZeneca plc, a global science-led
biopharmaceutical company. From 2004 to 2014, Dr. Iannone served in management roles at Merck Co., Inc., a global biopharmaceutical company, culminating in his role as Executive Director and Section Head of Oncology Clinical Development. From 2001 to 2004, he served as Assistant Professor of Pediatrics and from 2004 to 2012 as Adjunct Assistant Professor of Pediatrics at the University of Pennsylvania School of Medicine. Dr. Iannone has been serving on the board of directors of Jounce Therapeutics, Inc., a clinical-stage immunotherapy company, since January 2020 and on the Cancer Steering Committee of the Foundation for the National Institutes of Health since 2011. Dr. Iannone received a B.S. from The Catholic University of America, an M.D. from Yale University and an M.S.C.E. from University of Pennsylvania and completed his residency in Pediatrics and fellowship in Pediatric Hematology-Oncology at Johns Hopkins University. Kim Sablich
Finbar Larkin, Ph.D.
.
Neena M. Patil
Samantha Pearce
Patricia Carr
9
CERTAIN CORPORATE GOVERNANCE MATTERS
Audit Committee
We have a standing audit committee that is currently composed of five directors (Mr. Gray, Mr. Enright, Ms. McSharry, Mr. O’Keefe and Ms. O’Riordan). Our board of directors has determined that each of Mr. Gray, Mr. Enright, Ms. McSharry, Mr. O’Keefe and Ms. O’Riordan meets the independence requirements of Rule
10A-3
of the Exchange Act and the listing standards of The Nasdaq Stock Market LLC, or Nasdaq, with respect to audit committee members. Our board of directors has also determined that each of Mr. Gray, Mr. Enright, Ms. McSharry and Mr. O’Keefe qualifies as an “audit committee financial expert” within the meaning of SEC regulations. In making this determination, our board of directors considered the overall knowledge, experience and familiarity of each with accounting matters, analyzing and evaluating financial statements, and, in the case of Mr. O’Keefe, managing private equity investments, and, in the case of Mr. Enright, managing venture capital investments. Mr. Gray serves as chairperson of the audit committee. Code of Conduct
Our code of conduct applies to all of our employees, directors and officers, including our principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions, and those of our subsidiaries. The code of conduct is available on our website at www.jazzpharmaceuticals.com under the section entitled “About” under “Corporate Ethics.” We intend to satisfy the disclosure requirements under Item 5.05 of Form
8-K
regarding any amendment to, or waiver from, a provision of our code of conduct by posting such information on our website at the website address and location specified above. Director Nominations
No material changes have been made to the procedures by which shareholders may recommend nominees to our board of directors.
10
Item 11. |
Executive Compensation |
EXECUTIVE COMPENSATION
Compensation Discussion and Analysis
11
Executive Summary
Our Business
We are an innovative global biopharmaceutical company dedicated to developing and commercializing life-changing medicines that transform the lives of patients with serious diseases – often with limited or no options. We have a diverse portfolio of marketed medicines and novel product candidates, in early- to late-stage development, across key therapeutic areas. Our focus is in neuroscience, including sleep and movement disorders, and in oncology, including hematologic malignancies and solid tumors. We actively explore new options for patients, including novel compounds, small molecules, biologics and innovative delivery technologies.
Our strategy to create sustainable shareholder value is focused on:
| • | Strong commercial execution to drive diversified revenue growth and address unmet medical needs of our patients across our product portfolio; |
| • | Expanding and advancing our pipeline through internal and external patient-centric innovation to achieve a valuable product portfolio of durable, highly differentiated programs; |
| • | Continuing to build a flexible, efficient, and productive development engine for targeted therapeutic conditions to identify and progress early- and mid-stage assets; and |
| • | Investing in an efficient, scalable operating model and differentiated capabilities to enable growth; and unlock further value through indication expansion and global markets. |
In 2020, consistent with our strategy, we continued to focus on research and development activities within our neuroscience and oncology therapeutic areas, such as our expansion into solid tumors, and exploring and investing in adjacent therapeutic areas that could further diversify our portfolio. In addition, in February 2021, we announced that we entered into a definitive transaction agreement with GW Pharmaceuticals plc, or GW, pursuant to which, subject to the satisfaction or waiver of the conditions set forth in the definitive agreement, we would acquire GW.
We achieved these accomplishments despite the global impact of the
COVID-19
pandemic. In response to the COVID-19
pandemic, we developed a comprehensive response strategy including establishing cross-functional response teams and implementing business continuity plans to manage the impacts of the evolving effects of the COVID-19
pandemic on our employees, patients and our business. We support broad public health strategies designed to prevent the spread of COVID-19
and are focused on the health and welfare of our employees. Our People
The ; and (2) be a great place to work
COVID-19
pandemic forced us to change the way we work while maintaining our focus on the safety and well-being of our workforce and a culture that embodies our corporate purpose to innovate to transform the lives of patients and reflects our key goals: (1) live our core values of Integrity, Collaboration, Passion, Innovation, and Pursuit of Excellence
.
In response to
COVID-19,
we launched a new employee support framework focused on Care, Connection, Continuity and Consciousness, or our “4Cs”, to enable our employees to live into our values and support one another while delivering on our patient mission. Included in this framework were tools given the rise and complexity of emerging employee demands and needs – including more flexibility to address personal needs, a greater connection to understand the whole person and their lives, and more active support surrounding social injustice. For example, we provided productivity and collaboration tools and resources for employees working remotely, including training and toolkits to help leaders effectively lead and manage remote teams; increased flexibility within work schedules and leave programs to support employees caring for children and others; expanded employee assistance and mindfulness programs to help employees and their families manage anxiety, stress and overall wellbeing; and increased investment in resources focused on inclusion and belonging. We make diversity, equity and inclusion, or DEI, a priority because it is a key to unlocking the potential of our people and living our core values. Our DEI strategy includes: (1) building a more diverse workforce in terms of gender identity, race, ethnicity and sexual orientation and one that represents unique backgrounds, experiences, thoughts and talents; (2) investing in developing our diverse talent and driving equity; and (3) creating a culture of inclusion and belonging. We have established goals related to increasing all dimensions of diversity, including representation of women and people of color, particularly at the leadership level (i.e., employees at executive director and above).
While we are proud of what we have accomplished to date, we recognize there is still much to do. We remain committed to furthering our goals of providing a diverse, equitable and inclusive workplace that is supportive of all backgrounds, including among our broader leadership.
12
2020 Performance Highlights
Despite the challenges faced due to the
COVID-19
pandemic in 2020, we delivered record total revenues and made meaningful progress on our goal to significantly grow and diversify 2022 revenues from products launched since 2019, highlighted by the strong execution of our U.S. launches of both Zepzelca and Xywav. We meaningfully increased revenues, executed three product launches, advanced early- and late-stage clinical trials and added multiple new product candidates to our expanding pipeline, all of which exemplify our highly effective operational execution throughout 2020, while continuing our transformation as an innovative global biopharmaceutical company. Financial |
• | 2020 total revenues of $2,363.6 million increased 9% over 2019 | ||
| • | 2020 GAAP 3 net income of $238.6 million, or $4.22 per diluted share, compared to $523.4 million, or $9.09 per diluted share, for 2019 | |||
| • | 2020 non-GAAP adjusted net income of $704.0 million4 , or $12.46 per diluted share, compared to $885.2 million, or $15.38 per diluted share, for 2019 | |||
Commercial |
• | 2020 net sales of Xyrem of $1,741.8 million increased 6% over 2019 | ||
| • | In November 2020, we launched in the U.S. Xywav (formerly JZP-258), an oxybate product that contains 92% less sodium than Xyrem, for the treatment of cataplexy or excessive daytime sleepiness, or EDS, in narcolepsy patients seven years of age and older. Net product sales for Xywav were $15.3 million in the fourth quarter of 2020 | |||
| • | In July 2020, we launched in the U.S. Zepzelca for the treatment of adult patients with metastatic small cell lung cancer with disease progression on or after platinum-based chemotherapy. Net product sales for Zepzelca were $90.4 million in 2020 | |||
| • | Sunosi net product sales were $28.3 million in 2020 | |||
| • | 2020 net sales of Defitelio/defibrotide of $195.8 million increased 13% over 2019 | |||
| • | 2020 net product sales of Vyxeos were $121.1 million, in line with 2019 | |||
Research & Development |
• | In July 2020, Defitelio was approved by the Australian Therapeutic Goods Administration for the treatment of hepatic veno-occlusive disease. | ||
| • | In September 2020, the U.S. Food and Drug Administration, or FDA, granted Rare Pediatric Disease designation for JZP-458 for the treatment of pediatric acute lymphoblastic leukemia, or ALL, and prior to that, in October 2019, FDA granted Fast Track designation for JZP-458, a recombinant Erwinia asparaginase product candidate, for the treatment of pediatric and adult patients with ALL or lymphoblastic lymphoma, who are hypersensitive to E. coli-derived asparaginase products. We initiated the submission of our biologics license application, or BLA, to FDA for JZP-458 in December 2020 under the Real-Time Oncology Review pilot program, and we will be prepared to launch as early as mid-2021 to ensure that ALL patients have access to a reliable, high-quality recombinant product. | |||
| • | In October 2020, we announced positive top-line results from a Phase 3 clinical trial evaluating JZP-258 in adult patients with idiopathic hypersomnia, or IH, a chronic, neurological disorder that is characterized by EDS, prolonged nighttime sleep, long unrefreshing naps and sleep inertia and that currently has no approved therapies in the U.S. We completed the rolling submission of a supplemental new drug application, or sNDA, in February 2021, and if approved by FDA, in a timely manner, we expect a potential launch of JZP-258 in the fourth quarter of 2021. FDA granted Fast Track designation for JZP-258 for the treatment of IH in September 2020. | |||
3 |
U.S. generally accepted accounting principles (GAAP) |
4 |
2020 non-GAAP adjusted net income includes a $200.0 million upfront payment to PharmaMar, which was recorded as acquired IPR&D expense. Commencing in 2020, we no longer exclude upfront and milestone payments from non-GAAP adjusted net income (and the related per share measure). |
13
Corporate Development |
• | In September 2020, we entered into a new research collaboration agreement with Redx Pharma plc, or Redx, to discover and develop drug candidates for two cancer targets in the Ras/Raf/MAP kinase pathway. This research collaboration follows our previously announced purchase of Redx’s pre-clinical pan-Raf inhibitor program for the potential treatment of Raf and Ras mutant tumors in July 2019. | ||
| • | In October 2020, we entered into an asset purchase and exclusive license agreement with SpringWorks Therapeutics, Inc., or SpringWorks, under which we acquired SpringWorks’ FAAH inhibitor program, including an assignment of SpringWorks’ proprietary FAAH inhibitor PF-04457845, now named JZP-150. We expect to initiate a Phase 2 study of JZP-150 in late 2021. | |||
| • | In October 2020, we entered into an amendment and restatement of the original license agreement with Pharma Mar, S.A., or PharmaMar, which gave us our exclusive rights to develop and commercialize Zepzelca in Canada. | |||
Key Features of Our Executive Compensation Program
What We Do |
What We Don’t Do | |
| ✔ Design executive compensation to align pay with performance✔ Balance short-term and long-term incentive compensation, with the majority of executive compensation being “at-risk” ✔ Align annual performance bonus plan for CEO with that of other executives and non-sales employees, with 100% of CEO’s bonus based on such corporate performance goals as approved by the board of directors✔ Establish threshold and maximum levels of achievement for payouts under our annual performance bonus plan✔ Maintain executive share ownership guidelines✔ Provide “double-trigger” change in control benefits✔ Prohibit hedging and pledging by executive officers and directors✔ Have 100% independent directors on the compensation committee✔ Hire independent compensation consultant who reports directly to the compensation committee✔ Meet regularly in executive session without management present✔ Starting in 2021, grant performance-based equity awards as approximately 50% of each NEO’s target equity compensation |
✘ No excessive change in control or severance payments✘ No “single-trigger” cash or equity change in control benefits✘ No repricing of underwater stock options without prior shareholder approval✘ No excessive perquisites✘ No tax gross ups on severance or change in control benefits✘ No post-termination retirement or pension benefits that are not available to employees generally✘ No guaranteed bonuses or base salary increases | |
2020 Overview
Pay-for-Performance
A significant portion of target total direct compensation for our CEO and other NEOs is structured in the form of
“at-risk”
compensation, consisting of annual performance bonus and equity incentive awards, with the performance bonus payouts and equity award values dependent upon our company’s performance. This aligns our executives’ interests with those of our shareholders for near- and long-term performance. Despite adverse macroeconomic uncertainties and other conditions created by the COVID-19
pandemic that adversely affected our business in 2020, the compensation committee elected not to adjust the challenging performance goals set for our 2020 annual performance cash bonus plan. 14
The pie charts below show the various regular components of target total direct compensation for 2020 for our CEO and other NEOs. These components include the following: (i) annual base salary rate for 2020; (ii) annual target performance bonus opportunity for 2020; and (iii) the grant date fair value of equity awards granted in 2020. The pie charts exclude the
non-recurring
cash signing bonus Mses. Galá and Sablich each received in connection with their respective appointments in 2020; such bonuses are not considered part of the on-going
annual target total direct compensation opportunity. 
Compensation Philosophy and Objectives
Our executive compensation program is designed with the following objectives and philosophy:
| • | Attract, incentivize, reward and retain diverse, talented individuals with relevant experience in the life sciences industry through a competitive pay structure. |
| • | Deliver balanced total compensation packages to accomplish our business objectives and mission. target total direct compensation |
| • | Align pay with our performance. pre-determined levels of performance are achieved against annual corporate objectives approved by our board of directors at the beginning of the year. Likewise, our stock option awards will not provide realizable value and our restricted stock unit, or RSU, awards will not provide increased value unless there is an increase in the value of our shares, which benefits all shareholders. We also have executive share ownership guidelines to further support our ownership culture and align the interests of executive officers and shareholders. Further, starting in 2021, approximately 50% of each NEO’s target equity compensation will be in the form of performance-based equity awards, or PSUs. |
How We Determine Executive Compensation
Role of Our Compensation & Management Development Committee and Executive Officers
In 2020, the compensation committee’s name was changed to the “Compensation & Management Development Committee” to reflect the committee’s expanded role in reviewing our diversity, talent and culture strategy, including management development, diversity, equity and inclusion initiatives, talent planning and employee engagement. We refer to the Compensation & Management Development Committee in this report as the compensation committee. The compensation committee is (and was at all times during 2020) composed entirely of independent directors, as defined by Rule 5605(a)(2) of the Nasdaq listing standards. Our compensation committee meets as often as it determines necessary to carry out its duties and responsibilities through regularly scheduled meetings and, if necessary, special meetings. Our compensation committee also has the authority to take certain actions by written consent of all members. The agenda for each compensation committee meeting is usually developed by members of our human resources department and our CEO, with input from members of our legal department, and is reviewed and finalized with the chairperson of the compensation committee.
15
The compensation committee reviews and oversees our compensation policies, plans and programs and reviews and generally determines the compensation to be paid to the executive officers, including the NEOs. Either the compensation committee or the independent members of our board of directors, upon recommendation from the compensation committee, who receives input and advice from its independent compensation consultant, approve the compensation of our CEO. References in this Compensation Discussion and Analysis to our board of directors approving our CEO’s compensation are to the independent members of our board of directors.
In making other executive compensation determinations, the compensation committee considers recommendations from our CEO. In making his recommendations, our CEO receives input from our human resources department and from the individuals who manage or report directly to the other executive officers, and he reviews various sources of market compensation data provided by the independent compensation consultant to the compensation committee, as described below. While our CEO discusses his recommendations for the other executive officers with the compensation committee, he does not participate in the deliberations and recommendations to our board of directors concerning, or our board of directors’ determination of, his own compensation. Members of our human resources and legal departments also attend compensation committee meetings.
Below are the highlights of the annual cycle our compensation committee follows in reviewing and making decisions with respect to our executive compensation program.
Role of the Independent Compensation Consultant
The compensation committee engages an independent compensation consultant each year to provide a competitive compensation assessment with respect to the executive officers to assist the compensation committee in making annual compensation decisions. Since 2010, Radford, a business area within Aon plc, has been engaged by the compensation committee each year to provide peer company and industry compensation data, when requested, and to provide the compensation committee with advice regarding executive officers’ compensation, including base salaries, performance-based bonuses and long-term equity compensation, and similar advice regarding
non-employee
directors’ compensation. The compensation committee has also consulted with Radford to update the peer company and industry compensation data on an annual basis, address specific questions that arise as the committee fulfills their responsibilities as outlined in the compensation committee charter. The advisor provides support in addressing changes in trends and best practices for executive compensation, incentive and equity and/or other best practices that are requested by the compensation committee, in order to help inform the compensation committee’s decisions. Radford reports directly to the compensation committee, which maintains the authority to direct Radford’s work and engagement. As requested, and under the purview of the compensation committee, Radford may advise the human resources department on projects from time to time. Radford interacts with management to gain access to company information that is required to perform services and to understand the culture and policies of the organization. Radford attends compensation committee meetings, and the compensation committee and Radford meet in executive session with no members of management present, as needed, to address various compensation matters, including deliberations regarding our CEO’s compensation. 16
In assessing Radford’s independence from management in providing executive compensation services to the compensation committee, the compensation committee considered that Radford is only engaged by, takes direction from, and reports to, the compensation committee for such services and, accordingly, only the compensation committee has the right to terminate or replace Radford as its compensation consultant at any time. The compensation committee also analyzed whether the work of Radford as a compensation consultant with respect to executive and director compensation raised any conflict of interest, taking into consideration the following factors:
✔ |
the provision of other services to our company by Radford and its affiliates; | ✔ |
any business or personal relationship of the individual compensation advisors with any compensation committee member; | |||||
✔ |
the amount of fees we paid to Radford and its affiliates as a percentage of Radford’s total revenue; | ✔ |
Radford’s policies and procedures that are designed to prevent conflicts of interest; and | |||||
✔ |
any business or personal relationship of Radford or the individual compensation advisors employed by it with any executive officer of our company; | ✔ |
any ordinary shares of our company owned by Radford or the individual compensation advisors employed by it. | |||||
The compensation committee has determined, based on its analysis of the above factors, that the work of Radford and the individual compensation advisors employed by Radford as compensation consultants to our company has not created any conflict of interest.
Competitive Assessment of Compensation – Peer Companies and Market Data
Because we aim to attract and retain the most highly qualified executive officers in an extremely competitive market, the compensation committee believes that it is important when making its compensation decisions to be informed as to the current practices of comparable public companies with which we compete for top talent. To this end, the compensation committee reviews market data for each executive officer’s position, compiled by Radford as described below, including information relating to the mix and levels of compensation for executive officers in the life sciences industry, with a focus on target total direct compensation in line with the compensation committee’s holistic approach to executive compensation.
2020 Peer Group
| • | in the life sciences industry (specifically biotechnology and specialty bio/pharma companies) with commercial products on the market; |
| • | with revenues of approximately one-fourth (0.25x) to three times (3x) our then-projected revenue (resulting in a range of $500 million to $6.0 billion in revenues); |
| • | with market value of approximately one-fourth (0.25x) to four times (4x) our market capitalization at the time (resulting in a range of between $1.9 billion to $29.8 billion in market capitalization); and |
| • | primarily located in the U.S. with a secondary focus on companies that are headquartered in Europe. |
Based on these criteria, Radford recommended, and our compensation committee approved, that our peer group remain unmodified from 2019 to 2020. Accordingly, the peer group used for our 2020 compensation decisions consisted of the 16 companies listed in the table below. At the time the compensation committee approved the peer group, we were at the 66
th
percentile for trailing 12 months revenue and the 46th
percentile for market capitalization among the new peer group. The compensation committee considered this a reasonable balance and a good representation of companies that were of similar scope and complexity. 17
| Alexion Pharmaceuticals, Inc. | Exelixis, Inc. | Mallinckrodt plc | Sarepta Therapeutics, Inc. | |||
| Alkermes plc | Horizon Therapeutics plc | Nektar Therapeutics | Seagen Inc. (formerly Seattle Genetics) | |||
| BioMarin Pharmaceutical Inc. | Incyte Corporation | Neurocrine Biosciences, Inc. | United Therapeutics Corporation | |||
| Endo International plc | Ionis Pharmaceuticals, Inc. | Regeneron Pharmaceuticals, Inc. | Vertex Pharmaceuticals Incorporated | |||
2020 Market Data
Use of 2020 Market Data
company-to-company
Factors Used in Determining Executive Compensation
Our compensation committee sets the compensation of our executive officers at levels that the compensation committee determines to be competitive and appropriate for each NEO, using the compensation committee’s professional experience and judgment. The compensation committee’s pay decisions are not driven by a particular target level of compensation based on market data, and the compensation committee does not otherwise use a formulaic approach to setting executive pay. Instead, the compensation committee believes that executive pay decisions require consideration of multiple relevant factors, which may vary from year to year. The figure below reflects the factors the compensation committee considers in determining and approving the amount, form and mix of pay for our NEOs.
18
2020 Advisory Vote on Executive Compensation and Shareholder Engagement
We hold a advisory vote on executive compensation annually. Accordingly, at our 2020 annual meeting, we provided shareholders with the opportunity to cast a
say-on-pay
non-binding
vote on a proposal regarding the compensation of our named executive officers for the year ended December 31, 2019. Of the votes cast, approximately 88% were voted in favor of the proposal. We were pleased with these results and believe it reflects our continuous efforts to engage with shareholders and solicit their feedback on our executive compensation program. The compensation committee reviewed the final vote results for the proposal and, given the significant level of shareholder support, concluded that our executive compensation program continues to provide a competitive pay-for-performance package that effectively incentivizes the NEOs and encourages long-term retention. Accordingly, the compensation committee and, with respect to our CEO’s compensation, our board of directors, determined not to make any significant changes to our 2020 executive compensation policies or decisions as a result of the vote. Our compensation committee and, with respect to our CEO’s compensation, our board of directors will continue to consider the outcome of our proposals and our shareholders’ views when making future compensation decisions for the NEOs.
say-on-pay
We also engage with our shareholders when they have topics of particular interest, which may include executive compensation related matters. Shareholder feedback is reported to our compensation committee (and our nominating and corporate governance committee, as applicable) throughout the year.
The following graphic describes our typical shareholder outreach and engagement cycle.
Although we determined not to make any significant changes to our 2020 executive compensation policies or decisions as a result of the advisory vote at our 2020 annual meeting, we have since implemented changes to our compensation program for closer alignment to our strategy and to address shareholder feedback, which includes:
say-on-pay
| • | Performance-Based Equity Awards. pay-for-performance |
19
| • | Caps on Annual Performance Bonus Payments pre-established financial and other strategic objectives as described in more detail on page 22 under the heading “2020 Performance Bonus Program.” |
Key Components and Design of the Executive Compensation Program
Total Direct Compensation
Our compensation program focuses on target total direct compensation, which consists of base salary, target performance bonus opportunity (which, together with base salary, we refer to as target total cash compensation), and long-term incentive awards (valued based on an approximation of grant date fair value).
We also offer our executive officers severance benefits upon certain types of involuntary terminations in connection with a change in control. The table below captioned “” describes key features of each primary component of our executive compensation program and explains why we provide the particular compensation component.
Components of Total Direct Compensation
The compensation committee takes a holistic approach to compensation and seeks to ensure that the aggregate level of pay, across all of the pay elements is meeting the company’s desired objectives for each executive officer. The compensation committee does not have any formal policies for allocating compensation among base salary, target performance bonus opportunity and long-term incentive awards. Instead, the compensation committee uses its experience and business judgment to establish a total compensation program for each NEO that is a mix of current, short-term and long-term incentive compensation, and cash and
non-cash
compensation, which it believes is appropriate to achieve the goals of our executive compensation program and our corporate goals. Because we believe it is important to our success to pursue long-term corporate objectives, to avoid excessive risk-taking, and to preserve our cash resources, the majority of the NEOs’ total direct compensation is comprised of philosophy.
“at-risk”
compensation, consisting of performance-based bonus opportunities and long-term incentive awards, which align the executive officers’ incentives with the interests of our shareholders. This allocation between “at-risk”
and fixed compensation is consistent with our pay-for-performance
20
Components of Total Direct Compensation
Component |
Key Features |
Purpose |
||||||||||
| Base Salary |
◆ Fixed level of cash compensation◆ No amount is contractually guaranteed◆ Amounts reviewed and determined annually, and are generally effective by March 1 each year |
◆ Provides fixed level of compensation that is competitive within our industry and reflective of the skills and experience required to be successful in fulfilling the role |
||||||||||
| Performance Bonus Award |
◆ Cash compensation under the performance bonus plan, which is “at-risk” because it is dependent upon achievement of pre-established corporate performance objectives◆ Target bonuses reviewed and determined annually◆ Actual bonuses paid shortly after the end of each year, based on the extent corporate goals are attained as determined by the compensation committee, and for executive officers other than our CEO, their individual contributions toward such achievements |
◆ Provides financial incentives to achieve key corporate objectives that are aligned with our business strategy◆ Rewards NEOs (other than our CEO) for extraordinary individual contributions to our corporate achievements |
||||||||||
| Long-Term Incentive Compensation |
◆ “At-risk” long-term incentives that realize value through sustained long-term appreciation of our share price◆ Awards reviewed and generally granted annually, early in the year, at time of hire or promotion◆ Stock options and RSUs generally vest over a 4-year period subject to executive officer’s continued service with us; stock option exercise price is set equal to fair market value on date of grant (i.e., closing price on Nasdaq Global Select Market)◆ Beginning in 2021, NEOs will receive 50% of their long-term incentive opportunity in the form of PSUs tied to multi-year strategic objectives and 50% in RSUs. |
◆ Fosters ownership culture◆ Links compensation to long-term success◆ Up until 2021, stock options were a key aspect of our pay-for-performance ◆ RSUs assist with managing dilution for our shareholders, while reinforcing the importance of shareholder value creation over time◆ Beginning in 2021, PSUs will align compensation earned to the achievement of multi-year strategic objectives and stock price performance versus peer companies.◆ Executive share ownership guidelines to further support our ownership culture and align the interests of executive officers and shareholders |
||||||||||
21
Other Benefits
Description of Compensation Arrangements–401(k) Plan
pre-tax
funds to pay for qualified healthcare expenses and qualified childcare expenses not reimbursed by insurance. We do not currently offer pension or other retirement benefits in the United States; outside the U.S. we offer pension or other retirement benefits that are consistent with local regulations. Severance Benefits upon Change in Control
Additional Compensation Information
Change in Control Plan
Potential Payments upon Termination or Change in Control
Amended and Restated Executive Change in Control and Severance Benefit Plan
Clawback Requirement
2020 Performance Bonus Program
The corporate objectives and relative weightings established by the board of directors for the 2020 performance bonus program that were communicated to the NEOs in early 2020 are described in the chart below. The revenue objective described below included strategically important, revenue-related stretch goals with the opportunity to earn up to an additional 17.5% bonus pool funding. Likewise, the adjusted net income objective included a stretch goal with the opportunity to earn up to an additional 2.5% bonus pool funding. For each of the five objectives, achievement can be between 0% and 200% based on company performance, including the identified stretch objectives for revenue and adjusted net income.
22
Following the end of the year, after adding together the resulting bonus pool funding percentages for the quantitative and qualitative objectives based on their relative weightings of 70% and 30%, respectively, and considering achievement of stretch goals, the compensation committee approved an overall bonus pool funding percentage of 127.3% of the target bonus pool for the 2020 plan year, as further described below.
The compensation committee did not set specific objectives for individual executive officers. Each executive officer is responsible for contributing to the corporate objectives, individually and as part of the leadership team, with each objective deemed to be important in determining the level of the company’s performance during the year. In approving individual bonus awards, the compensation committee considers the individual contribution towards the company’s achievement of the corporate objectives by each executive officer (other than our CEO). The actual bonus payments approved for each of the NEOs for 2020 are described below under “”
2020 Compensation Decisions for Our Named Executive Officers.
Individual bonus awards are determined in accordance with the following methodology:
Quantitative Objectives
Each of the three main quantitative objectives for 2020, or objectively measurable goals, had a total relative overall weighting of 70%, and is described in the table and accompanying footnotes below, including each objective’s weighting, actual results and performance multipliers, as well as the total bonus pool funding percentage resulting from the level of achievement of the quantitative objectives.
The compensation committee approved, at the start of the performance year, an algorithm with respect to each main quantitative objective (as well as the strategically important revenue-related stretch goals and the adjusted net income stretch goal discussed below) for calculating the bonus pool funding attributable to the extent of achievement for each such objective. The revenue objective, with a weighting of 35%, was split into an oxybate net sales objective weighted at 17.5% and a
non-oxybate
revenue objective weighted at 17.5%, as well as five related additional, or strategically important, stretch goals, each with its own individual weighting. The compensation committee set specific threshold and maximum levels of achievement for the revenue objective and the related stretch goals, which are described in the footnotes to the table below. The compensation committee also approved a stretch goal with its own individual weighting for the adjusted net income objective. For the quantitative product development objectives, the compensation committee established various objectively measurable target goals within these objectives but did not set a threshold performance level; rather, an overall achievement of between 0% and 200%, measured against the multiple targets as described in more detail below, was determined by the compensation committee and used to calculate the applicable bonus pool funding percentage attributable to the product development objectives. 23
Quantitative Objectives |
Weighting |
Actual Results |
Multiplier |
Bonus Pool Funding (3) | ||||||||||
1. |
Revenue Objective |
|||||||||||||
| • Achieve total oxybate net product sales in 2020 of $1,729 million (1) |
17.5% | Above target: net product sales of $1,757 million | 108% | 18.9% | ||||||||||
| • Achieve total revenue, excluding oxybate net product sales, in 2020 of $643 million (1) |
17.5% | Below target: total revenue excluding oxybate net product sales of $609 million(after giving effect to the adjustment identified in footnote (2)) |
73% (2) |
12.8% | ||||||||||
| • Stretch goal (4) |
3.5% | Between threshold and maximum | 73% | 2.6% | ||||||||||
| • Stretch goal (5) |
3.5% | Achieved | 100% | 3.5% | ||||||||||
| • Stretch goal (6) |
3.5% | Below threshold | 0% | 0% | ||||||||||
| • Stretch goal ³ (7) |
3.5% | Above target | 100% | 3.5% | ||||||||||
| • Stretch goal (8) |
3.5% | Below threshold | 0% | 0% | ||||||||||
| 2. | Adjusted Net Income Objective non-GAAP adjusted net income*(1) |
10% | Above target: non-GAAP adjusted net income* |
109% (9) |
10.9% | |||||||||
| • Stretch goal non-GAAP adjusted net income* in 2020 of $937 million |
2.5% | Below threshold | 0% | 0% | ||||||||||
| 3. | Product Development Objectives (10) |
25% | Achieved at 130% level (10) |
130% | 32.5% | |||||||||
| | ||||||||||||||
Total |
84.8% | |||||||||||||
| | ||||||||||||||
| | ||||||||||||||
Note: Amounts may not total due to rounding.
(1) |
If the specified threshold annual performance level was met (90% of target for the two components of the revenue objective and the adjusted net income objective), then a pre-established scaled performance multiplier (ranging from 50% to 150% for the two components of the revenue objective and 50% to 175% for the adjusted net income objective) would be used to calculate the applicable bonus pool funding percentage attributable to such quantitative objective. The performance multiplier would be zero if performance was below the threshold level, 50% if performance was at the threshold level, and then scaled for performance above 50% up to the applicable maximum level. The performance multiplier was capped for performance above the specified maximum performance level (110% of target for the two components of the revenue objective and 115% of target for the adjusted net income objective). |
(2) |
To calculate the threshold performance achievement level and performance multiplier, the reported non-oxybate revenue of $607 million was increased by approximately $2.2 million to adjust for changes in foreign currency exchange rates. |
24
(3) |
The percentages in this column represent, for each quantitative corporate objective, the weight of the quantitative objective multiplied by the performance multiplier that corresponds to the actual achievement of such quantitative objective. Due to rounding, the percentages in this column do not add precisely to the total. |
(4) |
With respect to the oxybate product revenue bottle growth stretch goal, the performance threshold was set at 2.8% bottle volume growth, below which no addition to the total bonus pool funding would be made. Between 2.8% and 4.3% bottle volume growth, the amount added to the total bonus pool funding percentage would increase from 0% to 3.5%. Actual achievement of 3.9% oxybate bottle volume growth for 2020 was above 2.8% resulting in 2.6% being added to the total bonus pool funding percentage. |
(5) |
Xywav was launched in the U.S. in November 2020. |
(6) |
With respect to the Sunosi worldwide net sales stretch goal, the threshold performance level was set at achievement of the budgeted Sunosi net sales. Exceeding the net sales budget by between 0% and 20% would have resulted in 0% to 3.5% (scaled linearly) being added to the total bonus pool funding percentage. This stretch goal was difficult to achieve from the outset given that Sunosi launched in the U.S. during 2019 and had not yet been approved in the EU at the start of 2020. The target assumed significant success in market access and product adoption with a new target audience of pulmonologists during 2020. The COVID-19 |
(7) |
With respect to the Zepzelca demand vial stretch goal, the threshold performance level was set at achievement of 20% above budgeted Zepzelca demand vials. Exceeding the demand vials budget by between 20% and 50% would have resulted in 0% to 3.5% (scaled linearly) being added to the total bonus pool funding percentage. This stretch goal was inherently difficult to achieve from the outset given that Zepzelca had not yet been approved at the start of 2020 and the prospect of a successful mid-year |
(8) |
With respect to the Vyxeos worldwide net sales stretch goal, threshold performance level was set at achievement of the budgeted net sales. Exceeding the net sales budget by between 0% and 20% would have resulted in 0% to 3.5% (scaled linearly) being added to the total bonus pool funding percentage. This stretch objective was inherently difficult to achieve given ongoing market dynamics such as competitive product launches that continued to impact the ability to achieve the budgeted growth in revenues. The COVID-19 |
(9) |
To calculate the threshold performance achievement level and performance multiplier, the reported non-GAAP post-tax non-GAAP |
(10) |
With respect to the product development objectives, the compensation committee determined that the actual achievement by the company was 130%, resulting in a performance multiplier of 130%, and therefore, a 32.5% bonus pool funding percentage, based on achievement with respect to the target goals as described below: |
Performance Category |
Target Goals and Results | |||
| Top Priority |
This performance category consisted of the following goals: (i) FDA approval of JZP-258 (Xywav) for the treatment of cataplexy and EDS in narcolepsy by the third quarter of 2020; (ii) achieving full enrollment in the JZP-258 Phase 3 clinical trial for the treatment of Idiopathic Hypersomnia, or IH, by the third quarter of 2020; (iii) FDA approval of lurbinectedin (Zepzelca) by the third quarter of 2020; (iv) develop molecule strategy for lurbinectedin; (v) enrollment of 51 patients in the JZP-458 Phase 2/3 program by the third quarter of 2020; and (vi) initiation of the BLA submission for JZP-458 before the end of the year. The compensation committee determined that we had met or significantly exceeded each of the performance goals for this category. |
25
| High Priority |
This performance category consisted of the following goals: (i) Initiation of a Phase 2 study for JZP-385 in Essential Tremor in the fourth quarter of 2020; and (ii) Initiation of a Phase 3 study for Sunosi in Major Depressive Disorder, or MDD, in the third quarter of 2020. The compensation committee determined that we did not meet either of the performance goals for this category. While the compensation committee noted that the JZP-385 goal was impacted by the COVID-19 pandemic and the company made a strategic decision not to initiate the Phase 3 study in MDD for Sunosi, the compensation committee did not adjust the performance goals or award any credit for failure to meet the performance goals in this category in light of these effects. | |||
| All Other Development |
This performance category consisted of the following goals: (i) Vyxeos phase 1b study completion; (ii) defibrotide prevention of Veno Occlusive Disease, or pVOD, phase 3 study interim analysis completion; (iii) defibrotide early development activities; and (iv) Pan-RAF inhibitor pre-clinical activities. The compensation committee determined that we had partially met our performance goals for other development programs. The compensation committee noted that performance in this category was impacted by the COVID-19 pandemic, but did not adjust the performance goals or otherwise take into account the impact of the COVID-19 pandemic in determining the extent to which we met our performance goals in this category. |
| With respect to the product development objectives, each of the three product related “top priority” goals – for JZP-258, lurbinectedin, and JZP-458 – carried a 20% weight. The two “high priority” goals – those relating to progress on JZP-385 and Sunosi – collectively carried a 20% weight. All other goals collectively carried a 20% weight. |
| In determining that the actual achievement by the company was 130% for the product development objective, the compensation committee employed a holistic analysis that took into account the compensation committee’s weighting of the product development objectives described above and the degree to which they were met as a whole against the backdrop of competing development priorities. The compensation committee determined that performance in the top priority category significantly exceeded the goals with achievement of 200% in this category and 25% performance in the high priority and other development categories. Combined, this resulted in company achievement of 130%. |
| * | Non-GAAP adjusted net income is a non-GAAP financial measure that both excludes certain items from our GAAP reported net income and includes certain tax-related adjustments as reconciled under “Reconciliations of Non-GAAP Financial Measures” below, except that solely for purposes of calculating the threshold performance achievement level and performance multiplier for 2020, non-GAAP adjusted net income included the additional adjustment as set forth in footnote (9) to this table. |
Qualitative Objectives
The qualitative corporate objectives approved by the board of directors fell into two categories: (1) progress on corporate development activities, with a relative weighting of 20%, and (2) a demonstrated commitment to and progress on certain organizational goals, with a relative weighting of 10%. Achievement of the qualitative objectives is inherently less objectively measurable than the quantitative objectives.
Corporate Development Objective
.
pre-clinical
transactions. The compensation committee weighed heavily our success in executing these transactions and their potential to meaningfully diversify our revenues starting in 2021 and add future revenue-generating products to our portfolio, our overall deal readiness, and our active and thoughtful corporate development process that led to the evaluation of several other opportunities during the year. The compensation committee determined that, as a whole, our achievement resulted in a multiplier of 150% and, therefore, a 30% bonus pool funding percentage for the 2020 corporate development objective. 26
Organizational Objective
sub-goals.
Because the sub-goals
are not objectively measurable, they were not assigned individual weightings. The multiplier applied to the organizational corporate objective ranged from 0% to 200%, based on the compensation committee’s determination of the extent to which the aggregate organizational corporate objective, including sub-goals,
were achieved, as a whole, during the year. The organizational corporate objective sub-goals
were: | • | strengthen organizational capabilities; |
| • | evolve operating culture for agility and scalability; |
| • | attract, develop and retain talent to deliver on our mission, strategy and values; and |
| • | maintain culture of compliance and adhering to our Code of Conduct, other policies and laws and regulations that apply to our business. |
In evaluating the organizational objective, the compensation committee determined that 2020 was an unprecedented year in navigating culture, talent, and employee engagement. It required agility, creativity, and innovation to refocus priorities to both navigate new employee needs and challenges as well as to support critical business requirements. We have made DEI commitments to maintain or increase representation levels, embed a culture of inclusivity through continued education and learning goals, and ensure equity within our key talent processes. Overall, the company had a significant year of progress despite pandemic circumstances. This achievement was in large part fueled by the success of the continued ability to evolve and upgrade capabilities in critical areas and ensure a productive and engaged workforce. After taking into consideration both our accomplishments and challenges with respect to these
sub-goals,
the compensation committee determined that as a whole, our overall achievement resulted in a multiplier of 125% and therefore, a 12.5% bonus pool funding percentage for the 2020 organizational objective. 2020 Compensation Decisions for Our Named Executive Officers
General Approach
In making compensation decisions for 2020, the compensation committee considered the factors discussed in “” above and the compensation committee’s specific compensation objectives for 2020. Our compensation committee did not use a formula or assign a particular weight to any one factor in determining each NEO’s target total direct compensation. Rather, our compensation committee’s determination of the target total direct compensation, mix of cash and equity and fixed and
Factors Used in Determining Executive Compensation
“at-risk”
pay opportunities was a subjective, individualized decision for each NEO. The compensation committee reviewed and considered each element of pay in the context of the overall target total direct compensation for each NEO. When the compensation committee made changes to one element of pay, those changes were made in the context of the levels of the other elements of pay, and the resulting target total direct compensation for each NEO. As a result, the 2020 pay decisions for each NEO are presented holistically in this section. The compensation committee also had access to market data with respect to target total cash compensation and target equity award grants. However, as described above, the compensation committee believes that over-reliance on benchmarking can result in compensation that is unrelated to the value delivered by our executive officers because compensation benchmarking does not take into account variations among actual roles with similar titles or the specific performance of our executive officers.
company-by-company
Summary of 2020 Compensation Decisions
Target Total Cash Compensation
Target Equity Compensation and Impact on Target Total Direct Compensation
27
Form and Mix of Equity Awards and Share Amount Determinations
90-day
average share price (as of December 31, 2019) to the grant date fair value of the award, which the compensation committee and, in the case of Mr. Cozadd, the board of directors, intended to deliver (dividing such value by the average share price, in the case of RSUs, and applying a Black-Scholes option pricing model calculation using the average share price, in the case of stock options). A 90-day
average share price was used, rather than a single day share price, in order to provide a more stabilized share value less susceptible to possible swings in the market. The exercise price of each stock option is equal to our closing share price on Nasdaq Global Select Market on the date of grant. The compensation committee understands that this process can result in the actual reported grant date value of an award being higher or lower than the intended value approved by the compensation committee, but has considered, in consultation with Radford, various approaches to granting equity awards, each of which have advantages and disadvantages, and determined that the process described above, which has been used historically by the compensation committee, is the most appropriate for the company at this time. The shares subject to the option awards vest over four years, with 25% vesting on the one-year
anniversary of the grant date and the remainder vesting in equal monthly installments thereafter over the remaining 36 months. The RSUs vest over four years in equal annual installments. On an annual basis, the compensation committee reviews market trends, including market peer use of performance-based vesting for equity awards, which are often favored by proxy advisory firms and certain institutional investors. For 2020, the compensation committee determined that equity awards vesting over time continued to be the most appropriate incentive structure for our executive officers to reward performance over time and achieve our retention objectives. Our time-based vesting schedules deliver retention incentives for the company over the long-term and, unlike awards that vest based on ”
pre-determined
operational or market goals, do not create incentives for inappropriate short-term risk-taking at the expense of realizing long-term value or the potential incentive for unethical conduct. In addition, we deliver a meaningful portion of compensation in the form of annual incentive compensation that is directly tied to, and incentivizes our executives to work towards, achievement of our key corporate goals. The key purposes served by time-vesting options and RSUs for 2020 are discussed above in the chart captioned “Components of Total Direct Compensation.
Individual NEO Compensation Decisions
Below are summaries, for each NEO individually, of the compensation committee’s decisions about 2020 target total direct compensation and the changes from each NEO’s 2019 target total direct compensation. As described above, when making the 2020 compensation decisions, the compensation committee focused primarily on the target total direct compensation for each NEO while considering the factors set forth in the section titled “” and the compensation committee’s specific compensation objectives for 2020. The footnotes to the tables also include the actual performance bonus paid to each of the NEOs for 2020 and how that actual bonus compared to each NEO’s target bonus.
Factors Used in Determining Executive Compensation
28
Bruce C. Cozadd, Chairman and CEO
2019 Pay ($) |
2020 Pay ($) |
Change (%) | ||||||||
| Target Total Cash Compensation |
2,034,415 |
2,135,723 |
5.0% | |||||||
| Base Salary (1) |
1,020,000 | 1,050,600 | ||||||||
| Target Performance Bonus (2) |
1,014,415 | 1,085,123 | ||||||||
| Target Equity Compensation (3) |
12,381,420 |
10,091,856 |
(18.5%) | |||||||
| Options |
5,379,925 | 4,210,661 | ||||||||
| RSUs |
7,001,495 | 5,881,195 | ||||||||
| Target Total Direct Compensation (4) |
14,415,835 |
12,227,579 |
(15.2%) | |||||||
(1) |
Represents annual base salary rate for the applicable year. 2020 base salary became effective in March 2020. |
(2) |
The 2020 amount reflects a target performance bonus of 100% of base salary earned, unchanged from the target performance bonus percentage for 2019. The actual 2020 performance bonus paid was $1,381,400, reflecting 127.3% of the target performance bonus, based entirely on the overall 2020 bonus pool funding percentage of 127.3%. The compensation committee (with approval from the board of directors) determined that the overall 2020 bonus pool funding percentage of 127.3% was applicable to Mr. Cozadd, because, as CEO, Mr. Cozadd is responsible for the company meeting all of its objectives. |
(3) |
The target equity compensation delivered (as presented in the chart) reflects the fair value of the awards as of the grant date, in accordance with FASB Accounting Standards Codification Topic 718, Compensation—Stock Compensation |
(4) |
The compensation committee and board of directors designed Mr. Cozadd’s target total direct compensation to be competitive compared to the market data, appropriate from an internal equity perspective and more heavily weighted towards equity compensation, in line with our pay-for-performance |
29
Daniel N. Swisher, Jr., President and COO
2019 Pay ($) |
2020 Pay ($) |
Change (%) | ||||||||
| Target Total Cash Compensation |
1,108,750 |
1,189,558 |
7.3% | |||||||
| Base Salary (1) |
675,000 | 690,000 | ||||||||
| Target Performance Bonus (2) |
433,750 | 499,558 | ||||||||
| Target Equity Compensation (3) |
3,466,798 |
3,105,186 |
(10.4%) | |||||||
| Options |
1,506,379 | 1,295,588 | ||||||||
| RSUs |
1,960,419 | 1,809,598 | ||||||||
| Target Total Direct Compensation (4) |
4,575,548 |
4,294,744 |
(6.1%) | |||||||
(1) |
Represents annual base salary rate for the applicable year. 2020 base salary became effective March 2020. |
(2) |
The 2020 amount reflects a target performance bonus of 70% of base salary earned. The compensation committee increased Mr. Swisher’s target performance bonus percentage in consideration of the market data and impact of Mr. Swisher’s position. The actual 2020 performance bonus paid was $636,000, reflecting 127.3% of target performance bonus, based on the overall 2020 bonus pool funding percentage of 127.3%. The compensation committee determined that the overall 2020 bonus pool funding percentage of 127.3% was applicable to Mr. Swisher, given his overall responsibility for the key operating segments of the company. |
(3) |
The target equity compensation delivered (as presented in the chart) reflects the fair value of the awards as of the grant date, in accordance with ASC 718, as reported in the Grants of Plan-Based Awards Table. |
(4) |
The compensation committee designed Mr. Swisher’s target total direct compensation to be competitive compared to the market data, appropriate from an internal equity perspective and more heavily weighted towards equity compensation, in line with our pay-for-performance |
30
Renée Galá, Executive Vice President and CFO
2019 Pay ($)(1) |
2020 Pay ($) |
Change (%) |
||||||||
| Target Total Cash Compensation |
— | 891,539 |
— | |||||||
| Base Salary (2) |
— | 600,000 | ||||||||
| Target Performance Bonus (3) |
— | 266,539 | ||||||||
| Signing Bonus (4) |
— | 25,000 | ||||||||
| Target Equity Compensation (5) |
— | 3,198,880 |
— | |||||||
| Options |
— | 1,382,012 | ||||||||
| RSUs |
— | 1,816,868 | ||||||||
Target Total Direct Compensation (6) |
— | 4,090,419 |
— | |||||||
(1) |
We entered into an employment offer letter with Ms. Galá pursuant to which she agreed to serve as our Executive Vice President and CFO effective March 16, 2020. |
(2) |
Represents annual base salary rate for 2020. Ms. Galá’s actual salary earned was lower due to her joining the company in March 2020. |
(3) |
Reflects the target percentage of 55% of base salary earned for 2020, taking into account that Ms. Galá was not employed the entire year. The actual 2020 performance bonus paid was $405,000, reflecting 151.9% of target performance bonus, based on the overall 2020 bonus pool funding percentage of 127.3% and Ms. Galá’s significant individual contributions to such achievement. Specifically, the compensation committee considered Ms. Galá’s oversight of complex strategic matters and corporate priorities, such as planning and execution of our debt offering, development of our long-term strategy, her performance with respect to supporting the execution of corporate development priorities and her overall criticality to our business. |
(4) |
Represents the cash signing bonus Ms. Galá received in connection with her appointment as Executive Vice President and CFO. In determining the amount of the bonus, the compensation committee considered the inducement value in recruiting Ms. Galá to join the company. To the extent Ms. Galá had voluntarily resigned within one year of her employment start date, she would have been required to repay the full amount of the signing bonus on or within 30 days of the later of her resignation or termination date. |
(5) |
The target equity compensation delivered (as presented in the chart) reflects the fair value of the awards as of the grant date, in accordance with ASC 718, as reported in the Grants of Plan-Based Awards Table for 2020. |
(6) |
The compensation committee designed Ms. Galá’s target total direct compensation to be competitive compared to the market data, appropriate from an internal equity perspective and more heavily weighted towards equity compensation, in line with our pay-for-performance |
31
Robert Iannone, Executive Vice President, Research and Development and CMO
2019 Pay ($) |
2020 Pay ($) |
Change (%) | ||||||||
| Target Total Cash Compensation |
927,192 |
900,769 |
(2.8%) | |||||||
| Base Salary (1) |
550,000 | 575,000 | ||||||||
| Target Performance Bonus (2) |
172,192 | 325,769 | ||||||||
| Signing Bonus (4) |
205,000 | — | ||||||||
| Target Equity Compensation (3) |
2,922,079 |
2,096,001 |
(28.3%) | |||||||
| Options |
1,249,216 | 874,522 | ||||||||
| RSUs |
1,672,863 | 1,221,479 | ||||||||
| Target Total Direct Compensation (4) |
3,849,271 |
2,996,770 |
(22.1%) | |||||||
(1) |
Represents annual base salary rate for the applicable year. 2020 base salary became effective March 2020. |
(2) |
The 2020 amount reflects a target performance bonus of 55% of base salary earned. The actual 2020 performance bonus paid was $450,000, reflecting 138.1% of target performance bonus, based on the overall 2020 bonus pool funding percentage of 127.3% and Dr. Iannone’s individual contributions to achieving both our quantitative and qualitative objectives for 2020. The compensation committee also considered Dr. Iannone’s significant individual contributions to such achievement and outperformance of his research and development organization with respect to the corporate objectives. Dr. Iannone’s 2019 target performance bonus was lower due his joining the company mid-2019. The actual bonus paid to Dr. Iannone for 2019 was prorated to reflect his hire date of May 29, 2019. |
(3) |
The target equity compensation delivered (as presented in the chart) reflects the fair value of the awards as of the grant date, in accordance with ASC 718 as reported in the Grants of Plan-Based Awards Table. |
(4) |
The compensation committee designed Dr. Iannone’s target total direct compensation to be competitive compared to the market data, appropriate from an internal equity perspective and more heavily weighted towards equity compensation, in line with our pay-for-performance |
32
Kim Sablich, Executive Vice President and General Manager, North America
2019 Pay ($)(1) |
2020 Pay ($) |
Change (%) | ||||||
| Target Total Cash Compensation |
— | 1,030,337 |
— | |||||
| Base Salary (2) |
550,000 | |||||||
| Target Performance Bonus (3 ) |
180,337 | |||||||
| Signing Bonus (4) |
300,000 | |||||||
| Target Equity Compensation (5) |
— | 3,751,761 |
— | |||||
| Options |
1,616,987 | |||||||
| RSUs |
2,134,774 | |||||||
| Target Total Direct Compensation (6) |
— | 4,782,098 |
— | |||||
(1) |
In May 2020, we entered into an employment offer letter with Ms. Sablich pursuant to which she agreed to serve as our Executive Vice President and General Manager, North America effective June 1, 2020. |
(2) |
Represents annual base salary rate for 2020. Ms. Sablich’s actual salary earned was lower due to her joining the company mid-2020. |
(3) |
Reflects the target percentage of 55% of base salary earned for 2020, taking into account that Ms. Sablich was not employed the entire year. The actual 2020 performance bonus paid was $235,000, reflecting 130.3% of target performance bonus, based on the overall 2020 bonus pool funding percentage of 127.3% and Ms. Sablich’s individual contributions to such achievement of her commercial organization with respect to the corporate objectives. |
(4) |
Represents the cash signing bonus received by Ms. Sablich in 2020 in connection with her appointment as Executive Vice President and General Manager, North America. In determining the amount of the bonus, the compensation committee considered the inducement value in recruiting Ms. Sablich from her prior employer and compensatory value of cash and equity forfeited by Ms. Sablich in leaving her prior employer. To the extent Ms. Sablich voluntarily resigns within one year of her employment start date, she would be required to repay the full amount of the signing bonus on or within 30 days of the later of her resignation or termination date. |
(5) |
Target equity compensation dollar amounts represent the grant date fair value of each stock option and RSU award, as applicable, and have been calculated in accordance with ASC 718 as reported in the Grants of Plan-Based Awards Table for 2020. See the Grants of Plan-Based Awards Table for the number of shares subject to each award. |
(6) |
The compensation committee designed Ms. Sablich’s target total direct compensation to be competitive compared to the market data, appropriate from an internal equity perspective and more heavily weighted towards equity compensation, in line with our pay-for-performance |
33
Redesign of 2021 Long-Term Incentive Program
In connection with our transformation into an innovative biopharmaceutical company, line of sight to a set of longer-term value drivers and multi-year goals around our strategic pathway to success came into clearer focus. It was with this focus, along with feedback from shareholders that we determined that 2021 was the appropriate time to adopt a new long-term incentive award design that we believe sets the foundation for sustained high performance and shareholder returns and strongly aligns pay to achievement of our longer-term strategic objectives.
Starting in 2021, approximately 50% of each NEO’s aggregate annual equity compensation will be in the form of equity awards that vest based on achievement of performance goals. We expect the performance goals to include financial and operational objectives as well as a relative total shareholder return metric with an approximately three-year performance period. The compensation committee determined that it was in the best interests of the company and its shareholders to delay the 2021 performance share unit grants until the close of the transaction with GW announced in February 2021. Doing so will allow the compensation committee to select performance measures that reflect the combined company’s financial and strategic priorities across the new integrated leadership team, which will provide the leadership team with a unifying compensation strategy for the post-close organization.
Additional Compensation Information
Ownership Guidelines for Executive Officers
We maintain share ownership guidelines for our CEO and certain other employees who serve on our executive committee, including our NEOs. Under the guidelines, which were amended in May 2018, these individuals are expected to own a number of the company’s ordinary shares with a value equal to six times base salary (increased from three times base salary) for the company’s Chief Executive Officer, two times base salary (increased from one times base salary) for each other member of the company’s executive committee who is an officer for purposes of Section 16 of the Exchange Act, and one times base salary for each other member of the company’s executive committee. The guidelines provide that the officers are expected to establish the minimum ownership levels within five years of first becoming subject to the guidelines (and, with respect to the increased amounts established by the amended guidelines, by the last day of 2021 for officers who were subject to the guidelines as of January 1, 2018). Mr. Cozadd was in compliance with the guidelines as of March 31, 2021 with his actual ownership constituting approximately 32.5 times his base salary (based on the value of shares owned as of March 31, 2021, using a
90-day
trailing average price of $164.55 as of such date). Each of our other continuing NEOs has five years from the date of his or her appointment to comply with the guidelines. Shares that count toward satisfaction of these guidelines include: shares owned outright by the individual (including RSUs that have vested but not yet settled, net of taxes); shares retained after an option exercise or issuance under another type of equity award granted under the company’s equity incentive plans; shares retained after purchase under the ESPP; and shares held in trust for the benefit of the individual. The compensation committee has discretion to develop an alternative individual guideline or an alternative method of complying with the applicable individual guideline for an individual covered by the guidelines if compliance would place a significant hardship on such individual.
Change in Control Plan
Our compensation committee periodically reviews the terms of our change in control plan, including its “double-trigger” structure and benefits, against market data to ensure that the benefits we offer remain appropriate.
Only our executive officers who are employees of our U.S. affiliates are eligible to participate in the change in control plan, which includes all of our NEOs. Certain executive officers who are not employed by our U.S. affiliates receive comparable change in control benefits pursuant to their employment agreements. The compensation committee believes that the change in control benefits we provide are representative of market practice, both in terms of design and cost, and are sufficient to retain our current executive team and to recruit talented executive officers in the future. The terms of the change in control plan are described below under the heading “.”
Potential Payments upon Termination or Change in Control—Amended and Restated Executive Change in Control and Severance Benefit Plan
34
Equity Grant Timing and Equity Plan Information
Our equity incentive grant policy provides that all equity grants that are approved for executive officers will be granted on the second trading day following the filing date of our next quarterly or annual report filed under the Exchange Act that occurs after the date on which such grants are approved by our board of directors or compensation committee, as applicable. Accordingly, our equity incentive grant policy requires that grants to our executive officers, if any, be made shortly after we have released information about our financial performance to the public for the applicable annual or quarterly period, so that the market will have an opportunity to absorb the financial and other information included in our annual and periodic reports before such grants are awarded. As a result, the timing of equity awards is not coordinated in a manner that intentionally benefits our executive officers; rather, the policy is designed with the objective that the market price of our ordinary shares at the time of grant can generally be expected to reflect our then-current results and prospects.
We currently grant equity awards to the NEOs, including stock options and RSUs, under the 2011 Equity Incentive Plan, or the 2011 Plan. The 2011 Plan was adopted by Jazz Pharmaceuticals, Inc.’s board of directors and approved by Jazz Pharmaceuticals, Inc.’s stockholders in connection with their approval of the Azur Merger in December 2011 and was assumed by us upon the completion of the Azur Merger. Before the 2011 Plan was adopted, we granted stock options under our 2007 Equity Incentive Plan, or the 2007 Plan, which was adopted by Jazz Pharmaceuticals, Inc.’s board of directors and approved by Jazz Pharmaceuticals, Inc.’s stockholders in connection with Jazz Pharmaceuticals, Inc.’s initial public offering. Awards granted under the 2007 Plan continue to be governed by the terms of the 2007 Plan, but subsequent equity awards have been, and continue to be, awarded under the 2011 Plan. The 2011 Plan affords the compensation committee the flexibility to utilize a broad array of equity incentives and performance cash incentives in order to secure and retain the services of employees of our company and its subsidiaries and to provide long-term incentives that align the interests of employees with the interests of our shareholders.
Additional long-term equity incentives are provided through the ESPP. Pursuant to the ESPP, all eligible employees, including the NEOs, may allocate up to 15% of their base salary to purchase our stock at a 15% discount to the market price, subject to specified limits.
Accounting and Tax Considerations
Under ASC 718, the company is required to estimate and record an expense for each award of equity compensation (including stock options and RSUs) over the vesting period of the award. We record share-based compensation expense on an ongoing basis according to ASC 718. The compensation committee has considered, and may in the future consider, the grant of performance-based or other types of stock awards to executive officers in lieu of or in addition to stock option and time-based RSU grants in light of the accounting impact of ASC 718 and other considerations.
Under Section 162(m) of the Internal Revenue Code, or Section 162(m), compensation paid to each of the company’s “covered employees” that exceeds $1 million per taxable year is generally
non-deductible
for tax purposes unless the compensation qualifies for certain grandfathered exceptions (including the “performance-based compensation” exception) for certain compensation paid pursuant to a written binding contract in effect on November 2, 2017 and not materially modified on or after such date. Although the compensation committee will continue to consider tax implications as one factor in determining executive compensation, the compensation committee also looks at other factors in making its decisions and retains the flexibility to provide compensation for the company’s named executive officers in a manner consistent with the goals of the company’s executive compensation program and the best interests of the company and its stockholders, which may include providing for compensation that is not deductible by the company due to the deduction limit under Section 162(m). The compensation committee also retains the flexibility to modify compensation that was initially intended to be exempt from the deduction limit under Section 162(m) if it determines that such modifications are consistent with the company’s business needs.
35
Risk Assessment Concerning Compensation Practices and Policies
The compensation committee no less frequently than annually reviews the company’s compensation policies and practices to assess whether they encourage employees to take inappropriate risks. After reviewing each of the company’s compensation plans, and the checks and balances built into, and oversight of, each plan, in February 2020, the compensation committee determined that any risks arising from our compensation policies and practices for our employees are not reasonably likely to have a material adverse effect on our company as a whole. In addition, the compensation committee believes that the mix and design of the elements of executive compensation do not encourage management to assume excessive risks, and significant compensation decisions, as well as decisions concerning the compensation of the company’s executive officers, include subjective considerations by the compensation committee or the board of directors, which restrain the influence of formulae or objective factors on excessive risk-taking. Finally, the mix of short-term compensation (in the form of salary and annual bonus, if any), and long-term compensation (in the form of stock options and RSUs) also prevents undue focus on short-term results and helps align the interests of the company’s executive officers with the interests of our shareholders.
Reconciliations of
Non-GAAP
Financial Measures To supplement our financial results presented in accordance with U.S. generally accepted accounting principles (GAAP), we use certain
non-GAAP
(also referred to as non-GAAP
adjusted) financial measures in this Compensation Discussion and Analysis. In particular, we present non-GAAP
adjusted net income (and the related per share measure), which exclude from reported GAAP net income (and the related per share measure) certain items, as detailed in the reconciliation table that follows, adjust for the income tax effect of the non-GAAP
adjustments and the income tax benefit related to an intra-entity intellectual property asset transfer. We believe that each of these
non-GAAP
financial measures provides useful supplementary information to, and facilitates additional analysis by, investors and analysts. In particular, we believe that each of these non-GAAP
financial measures, when considered together with our financial information prepared in accordance with GAAP, can enhance investors’ and analysts’ ability to meaningfully compare our results from period to period, and to identify operating trends in our business. In addition, these non-GAAP
financial measures are regularly used by investors and analysts to model and track our financial performance. Our management also regularly uses these non-GAAP
financial measures internally to understand, manage and evaluate our business and to make operating decisions, and compensation of our executive officers is based in part on certain of these non-GAAP
financial measures, as discussed elsewhere in this Compensation Discussion and Analysis. Because these non-GAAP
financial measures are important internal measurements for our management, we also believe that these non-GAAP
financial measures are useful to investors and analysts since these measures allow for greater transparency with respect to key financial metrics we use in assessing our own operating performance and making operating decisions. These
non-GAAP
financial measures are not meant to be considered in isolation or as a substitute for comparable GAAP measures; should be read in conjunction with our consolidated financial statements prepared in accordance with GAAP; have no standardized meaning prescribed by GAAP; and are not prepared under any comprehensive set of accounting rules or principles. In addition, from time to time in the future there may be other items that we may exclude for purposes of our non-GAAP
financial measures; and we have ceased, and may in the future cease, to exclude items that we have historically excluded for purposes of our non-GAAP
financial measures. For example, commencing in 2020, we no longer exclude upfront and milestone payments from non-GAAP
adjusted net income (and the related per share measure). For purposes of comparability, non-GAAP
adjusted financial measures for the year ended December 31, 2019 have been updated to reflect this change. Accordingly, such payments are not excluded from our non-GAAP
financial measures for the years ended December 31, 2019 and 2020, as detailed in the reconciliation tables that follow. Likewise, we may determine to modify the nature of our adjustments to arrive at our non-GAAP
financial measures. Because of the non-standardized
definitions of non-GAAP
financial measures, the non-GAAP
financial measures as used by us in this Compensation Discussion and Analysis have limits in their usefulness to investors and may be calculated differently from, and therefore may not be directly comparable to, similarly titled measures used by other companies. 36
Reconciliations of GAAP reported net income to
non-GAAP
adjusted net income (and the related per share measures) for the 2019 and 2020 annual periods are as follows (in millions, except per share amounts): 2019 |
2020 |
|||||||
| GAAP reported net income |
$ |
523.4 |
$ |
238.6 |
||||
| Intangible asset amortization |
354.8 | 259.6 | ||||||
| Share-based compensation expense |
110.6 | 121.0 | ||||||
| Impairment charge (1) |
— | 136.1 | ||||||
| Acquired IPR&D asset acquisition (2) |
48.3 | — | ||||||
| Non-cash interest expense(3) |
46.4 | 56.7 | ||||||
| Loss on extinguishment of debt |
— | 4.5 | ||||||
| Income tax effect of above adjustments |
(85.9 | ) | (112.5 | ) | ||||
| Income tax benefit related to intra-entity intellectual property asset transfer |
(112.3 | ) | — | |||||
| Non-GAAP adjusted net income |
$ | 885.2 | $ | 704.0 | ||||
| GAAP reported net income per diluted share |
$ |
9.09 |
$ |
4.22 |
||||
| Non-GAAP adjusted net income per diluted share |
$ | 15.38 | $ | 12.46 | ||||
| Weighted-average ordinary shares used in diluted per share calculations |
57.6 |
56.5 |
||||||
Note: Amounts may not total due to rounding.
Explanation of Adjustments and Certain Line Items:
(1) |
Impairment charge related to our decision to stop enrollment in its Phase 3 clinical study of defibrotide for pVOD due to a determination by an Independent Data Monitoring Committee that it was highly unlikely that the study will reach its primary endpoint. |
(2) |
Relates to the acquisition of Cavion, Inc. in the year ended December 31, 2019. |
(3) |
Non-cash interest expense associated with debt discount and debt issuance costs. |
37
SUMMARY COMPENSATION TABLE
Summary of Compensation
The following table sets forth certain summary information for the years indicated with respect to the compensation earned by the NEOs during fiscal years 2020, 2019 and 2018, as applicable.
Name and Principal Position |
Year |
Salary ($)(1) |
Bonus ($)(2) |
Stock Awards ($)(3) |
Option Awards ($)(4) |
Non-Equity Incentive Plan Compensation ($)(5) |
All Other Compensation ($)(6) |
Total ($) | ||||||||||||||||||||||||||||||||
| Bruce C. Cozadd (7) |
2020 | 1,085,123 | — | 5,881,195 | 4,210,661 | 1,381,400 | 14,921 | 12,573,300 | ||||||||||||||||||||||||||||||||
| Chairman and CEO |
2019 | 1,014,415 | — | 7,001,495 | 5,379,925 | 1,304,500 | 13,302 | 14,713,637 | ||||||||||||||||||||||||||||||||
| 2018 | 979,285 | — | 5,204,786 | 4,265,610 | 980,300 | 13,152 | 11,443,133 | |||||||||||||||||||||||||||||||||
| Daniel N. Swisher, Jr. |
2020 | 713,654 | — | 1,809,598 | 1,295,588 | 636,000 | 16,247 | 4,471,087 | ||||||||||||||||||||||||||||||||
| President and COO |
2019 | 667,308 | — | 1,960,419 | 1,506,379 | 560,000 | 13,302 | 4,707,407 | ||||||||||||||||||||||||||||||||
| 2018 | 608,173 | 125,000 | 2,532,058 | 2,075,162 | 400,000 | 12,948 | 5,753,341 | |||||||||||||||||||||||||||||||||
| Renée Galá (8) |
2020 | 484,616 | 25,000 | 1,816,868 | 1,382,012 | 405,000 | 9,904 | 4,123,400 | ||||||||||||||||||||||||||||||||
| Executive Vice President and CFO |
||||||||||||||||||||||||||||||||||||||||
| Robert Ianonne (9) |
2020 | 592,308 | — | 1,221,479 | 874,522 | 450,000 | 11,172 | 3,149,481 | ||||||||||||||||||||||||||||||||
| Executive Vice President, |
2019 | 313,077 | 205,000 | 1,672,863 | 1,249,216 | 245,000 | 8,405 | 3,693,560 | ||||||||||||||||||||||||||||||||
| Research and Development and Chief Medical Officer |
||||||||||||||||||||||||||||||||||||||||
| Kim Sablich (10) |
2020 | 327,885 | 300,000 | 2,134,774 | 1,616,987 | 235,000 | 6,598 | 4,621,245 | ||||||||||||||||||||||||||||||||
| Executive Vice President and |
||||||||||||||||||||||||||||||||||||||||
| General Manager, North America |
|
|||||||||||||||||||||||||||||||||||||||
Note: Amounts may not total due to rounding.
(1) |
The dollar amounts in this column represent base salary earned during the indicated fiscal year. 2020 base salary rates were effective March, 2020. For more information on salaries in 2020, see “ Compensation Discussion and Analysis—2020 Compensation Decisions for Our Named Executive Officers—Individual NEO Compensation Decisions |
(2) |
The dollar amounts in this column represent cash signing bonuses paid to Mr. Swisher in 2018, Dr. Iannone in 2019, and each of Ms. Galá and Ms. Sablich in 2020. |
(3) |
The dollar amounts in this column reflect the aggregate grant date fair value of all RSU awards granted during the indicated fiscal year computed in accordance with ASC 718, excluding the effect of estimated forfeitures. The grant date fair value of each RSU award is measured based on the closing price of our ordinary shares on the date of grant. These amounts do not necessarily correspond to the actual value recognized or that may be recognized by the NEOs. |
(4) |
The dollar amounts in this column reflect the aggregate grant date fair value of all stock option awards granted during the indicated fiscal year. These amounts have been calculated in accordance with ASC 718, using the Black-Scholes option-pricing model and excluding the effect of estimated forfeitures. Assumptions used in the calculation of these amounts are included in the notes to our audited consolidated financial statements included in the company’s 2020 Annual Report on Form 10-K. These amounts do not necessarily correspond to the actual value recognized or that may be recognized by the NEOs. |
(5) |
The dollar amounts in this column represent the cash bonus awarded under the performance bonus plan for the indicated fiscal year. For more information on the cash bonus awards for 2020, see “ Compensation Discussion and Analysis—2020 Performance Bonus Program” and “Compensation Discussion and Analysis—2020 Compensation Decisions for Our Named Executive Officers |
(6) |
The dollar amounts in this column for 2020 include group term life insurance premiums paid, matching contributions under the 401(k) Plan and a payment associated with an annual conference. |
(7) |
Mr. Cozadd served as our interim principal financial officer from October 25, 2019 until Ms. Galá was appointed to serve as our CFO and assumed the duties and responsibilities of principal financial officer from Mr. Cozadd as of March 16, 2020. |
(8) |
Ms. Galá was appointed our Executive Vice President and CFO as of March 16, 2020. |
(9) |
Dr. Iannone was appointed our Executive Vice President, Research and Development as of May 29, 2019. |
(10) |
Ms. Sablich was appointed our Executive Vice President and General Manager, North America as of June 1, 2020. |
38
Grants of Plan-Based Awards
The following table shows, for the fiscal year ended December 31, 2020, certain information regarding grants of plan-based awards to the NEOs.
GRANTS OF PLAN-BASED AWARDS IN FISCAL 2020
Name |
Award Type |
Grant Date |
Approval Date |
Estimated Possible Payouts Under Non- Equity Incentive Plan Awards Target ($)(1) |
All Other Stock Awards: Number of Shares of Stock or Units (#)(2) |
All Other Option Awards: Number of Securities Underlying Options (#)(2) |
Exercise or Base Price of Option Awards ($/Sh)(3) |
Grant Date Fair Value of Stock and Option Awards ($)(4) | ||||||||||
| Bruce C. Cozadd |
Annual Cash | — | — | 1,085,123 | — | — | — | — | ||||||||||
| Annual Option | 2/27/2020 | 2/11/2020 | — | — | 130,000 | 113.10 | 4,210,661 | |||||||||||
| Annual RSU | 2/27/2020 | 2/11/2020 | — | 52,000 | — | — | 5,881,195 | |||||||||||
| Daniel N. Swisher, Jr. |
Annual Cash | — | — | 499,558 | — | — | — | — | ||||||||||
| Annual Option | 2/27/2020 | 2/11/2020 | — | — | 40,000 | 113.10 | 1,295,588 | |||||||||||
| Annual RSU | 2/27/2020 | 2/11/2020 | — | 16,000 | — | — | 1,809,598 | |||||||||||
| Renée Galá |
Annual Cash | — | — | 266,539 | — | — | — | — | ||||||||||
| Initial Option | 5/7/2020 | 4/29/2020 | — | — | 41,500 | 109.45 | 1,382,012 | |||||||||||
| Initial RSU | 5/7/2020 | 4/29/2020 | — | 16,600 | — | — | 1,816,868 | |||||||||||
| Robert Iannone, M.D., M.S.C.E |
Annual Cash | — | — | 325,769 | — | — | — | — | ||||||||||
| Annual Option | 2/27/2020 | 2/11/2020 | — | — | 27,000 | 113.10 | 874,522 | |||||||||||
| Annual RSU | 2/27/2020 | 2/11/2020 | — | 10,800 | — | — | 1,221,479 | |||||||||||
| Kim Sablich |
Annual Cash | — | — | 180,337 | — | — | — | — | ||||||||||
| Initial Option | 8/6/2020 | 7/29/2020 | — | — | 42,000 | 127.07 | 1,616,987 | |||||||||||
| Initial RSU | 8/6/2020 | 7/29/2020 | — | 16,800 | — | — | 2,134,774 | |||||||||||
(1) |
This column sets forth the target bonus amount for each NEO for the year ended December 31, 2020 under the performance bonus plan. There are no thresholds or maximum bonus amounts for each individual officer established under the performance bonus plan. Target bonuses were set as a percentage of each NEO’s base salary earned for the fiscal year ended December 31, 2020 and were 100% for Mr. Cozadd, 70% for Mr. Swisher, and 55% for each of Ms. Galá, Dr. Iannone and Ms. Sablich. The dollar value of the actual bonus award earned for the year ended December 31, 2020 for each NEO is set forth in the Summary Compensation Table above. As such, the amounts set forth in this column do not represent either additional or actual compensation earned by the NEOs for the year ended December 31, 2020. For a description of the performance bonus plan, see “ Compensation Discussion and Analysis—2020 Performance Bonus Program |
(2) |
Annual stock options and RSU awards were granted under the 2011 Plan. Each of the annual stock option awards listed in the table above vest or vested as to 25% of the ordinary shares underlying the stock options upon the one year anniversary of the grant date and vest as to the remainder of the shares in 36 equal monthly installments thereafter. Each of the annual RSU awards vest in four equal annual installments on the anniversary of the vesting commencement date of March 5, 2020. In March 2020, Ms. Galá was appointed as Executive Vice President and CFO and in June 2020, Ms. Sablich was appointed as Executive Vice President and General Manager, North America, in connection with which they each received new hire grants of stock option and RSU awards, which were granted under the 2011 Plan. The initial stock option awards granted to Ms. Galá and Ms. Sablich vest as to 25% of the ordinary shares underlying the stock options upon the one year anniversary of their respective hire dates of March 16, 2020 for Ms. Galá and June 1, 2020 for Ms. Sablich and vest as to the remainder of the shares in 36 equal monthly installments thereafter. Each of the initial RSU awards granted to Ms. Galá and Ms. Sablich vest in four equal annual installments on the anniversary of the vesting commencement date of April 5, 2020 for Ms. Galá and June 5, 2020 for Ms. Sablich. As a general matter, the vested portion of stock options granted to the NEOs will expire three months after each NEO’s last day of service, subject to extension upon certain termination situations, such as death or disability, and RSUs will cease vesting upon each NEO’s last day of service. Stock option and RSU awards are subject to potential vesting acceleration as described below under the headings “ Description of Compensation Arrangements—Equity Compensation Arrangements—2011 Equity Incentive Plan Potential Payments upon Termination or Change in Control—Amended and Restated Executive Change in Control Plan and Severance Benefit Plan Description of Compensation Arrangements—Equity Compensation Arrangements—2011 Equity Incentive Plan |
39
(3) |
Stock options were granted with an exercise price equal to 100% of the fair market value on the date of grant which was $113.10 per share for the February 27, 2020 annual grants, $109.45 per share for the May 7, 2020 new hire grant to Ms. Galá, and $127.07 per share for the August 6, 2020 new hire grant to Ms. Sablich. |
(4) |
The dollar amounts in this column represent the grant date fair value of each stock option and RSU award, as applicable, granted to the NEOs in 2020. These amounts have been calculated in accordance with ASC 718. The grant date fair value of each stock option is calculated using the Black-Scholes option-pricing model and excluding the effect of estimated forfeitures. Assumptions used in the calculation of these amounts are included in the notes to our audited consolidated financial statements included in the company’s 2020 Annual Report on Form 10-K. The grant date fair value of each RSU award is measured based on the closing price of our ordinary shares on the date of grant. |
Description of Compensation Arrangements
Executive Employment and Severance Agreements
We do not have employment agreements currently in effect with any of our NEOs. Like other employees, executive officers are eligible for annual salary increases, participation in the performance bonus plan and discretionary equity grants. We have employment agreements in effect with certain employees based outside of the United States.
From time to time, we have provided an offer letter in connection with the commencement of employment of an executive officer based in the United States, which describes such executive officer’s initial terms of employment. For example, in February 2020, we provided an offer letter to Ms. Galá that included her initial base salary and a hiring bonus of $25,000 payable in connection with commencement of her employment, and in April 2020, we provided an offer letter to Ms. Sablich that included her initial base salary and a hiring bonus of $300,000 payable in connection with commencement of her employment. The employment of Ms. Galá and Ms. Sablich, as is the case for all of our employees based in the United States, is
at-will
and not governed by the terms of their offer letters. We do not have agreements currently in effect with any of our NEOs entitling such individuals to severance benefits (other than in connection with a change in control pursuant to our change in control plan described below). Amended and Restated Executive Change in Control and Severance Benefit Plan
Each of the current NEOs is a participant in the change in control plan, a description of which is included below under the heading “.”
Potential Payments upon Termination or Change in Control—Amended and Restated Executive Change in Control and Severance Benefit Plan
Equity Compensation Arrangements
Since the Azur Merger, we have granted stock options and RSU awards to employees, including the NEOs, under the 2011 Plan. From the initial public offering of Jazz Pharmaceuticals, Inc. until the Azur Merger, we granted stock options to our employees, including some of the NEOs, under the 2007 Plan. For more information on our current equity compensation program and decisions regarding the grants of equity awards in 2020 for our NEOs, see “” above. The following is a brief summary of the material terms of each of our equity compensation plans.
Compensation Discussion and Analysis—2020 Compensation Decisions for Our Named Executive Officers
2011 Equity Incentive Plan
The following is a brief summary of the material terms of the 2011 Plan, as amended and restated.
Types of Awards.
Corporate Transactions.
| • | arrange for assumption, continuation, or substitution of a stock award by a surviving or acquiring corporation (or its parent company); |
40
| • | arrange for the assignment of any reacquisition or repurchase rights applicable to any shares issued pursuant to a stock award to the surviving or acquiring corporation (or its parent company); |
| • | accelerate the vesting, in whole or in part, and exercisability of a stock award and provide for its termination if it is not exercised at or prior to the corporate transaction; |
| • | arrange for the lapse of any reacquisition or repurchase rights applicable to any shares issued pursuant to a stock award; |
| • | cancel or arrange for the cancellation of a stock award, to the extent not vested or exercised prior to the effective time of the corporate transaction, in exchange for such cash consideration, if any, as the board of directors may consider appropriate; or |
| • | make a payment equal to the excess, if any, of (a) the value of the property that the participant would have received upon the exercise of the stock award over (b) any exercise price payable in connection with such exercise. |
Our board of directors need not take the same action for each stock award or with regard to all participants.
For purposes of the 2011 Plan, a “corporate transaction” generally means (i) a sale or disposition of all or substantially all our assets or a sale or disposition of at least 90% of our outstanding securities; (ii) a merger, consolidation or similar transaction after which we are not the surviving corporation; or (iii) a merger, consolidation or similar transaction after which we are the surviving corporation but our ordinary shares are converted or exchanged into other property.
Change in Control.
For purposes of the 2011 Plan and the forms of stock option agreement and RSU award agreement issued thereunder, a “change in control” generally means (i) a person or group acquires ownership of more than 30% of the combined voting power of our outstanding securities (other than directly from our company); (ii) certain compromises or arrangements sanctioned by the Irish courts, certain schemes, contracts or offers that have become binding on all of our shareholders, certain takeover bids, certain offers or reverse takeover transactions or a reorganization, merger, statutory share exchange, consolidation or similar transaction involving us, and (A) after which our shareholders do not own more than 50% of the combined voting power of the surviving entity or its parent in substantially the same proportion as their ownership of our outstanding voting securities immediately before the transaction, (B) a person or group acquires ownership of more than 30% of the combined voting power of the surviving entity or its parent, or (C) at least a majority of the members of the board of directors of the parent (or the surviving entity, if there is no parent) following such transaction are not incumbent board members (as defined in (v) below) at the time our board of directors approves the transaction; (iii) our shareholders or our board of directors approves a complete dissolution or liquidation of our company, or a complete dissolution or liquidation of our company otherwise occurs (except for a liquidation into a parent company); (iv) a sale, lease, exclusive license or other disposition of all or substantially all of our assets, other than to certain entities; or (v) individuals who were members of our board of directors on the date of adoption of the 2011 Plan (or members of our board of directors approved or recommended by a majority vote of such members still in office), referred to as “incumbent board members,” cease to constitute at least a majority of our board of directors.
An “involuntary termination without cause” generally means that a participant’s service relationship with us is terminated for any reason other than for the following reasons (and not upon a participant’s death or disability): (i) participant’s commission of any felony or crime involving fraud, dishonesty or moral turpitude under the laws of the United States or any state thereof (with respect to Irish participants, the participant’s conviction for any criminal offense (other than an offense under any road traffic legislation in Ireland, the United Kingdom or elsewhere for which a fine or
non-custodial
penalty is imposed) or any offense under any regulation or legislation relating to insider dealing, fraud or dishonesty); (ii) participant’s attempted commission of or participation in a fraud or act of dishonesty against us; (iii) participant’s intentional, material violation of any contract or agreement with us or of any statutory duty owed to us; (iv) participant’s unauthorized use or disclosure of our confidential information or trade secrets; or (v) participant’s gross misconduct. 2007 Equity Incentive Plan
The following is a brief summary of the material terms of the 2007 Plan.
41
Types of Awards.
non-employee
directors, and consultants. Incentive stock options were granted only to employees, including executive officers. Since the Azur Merger, all of the new grants under the 2007 Plan were granted to non-employee
directors, vest ratably over service periods of one to three years and expire no more than 10 years after the date of grant. Corporate Transactions.
| • | arrange for assumption, continuation, or substitution of a stock award by a surviving or acquiring corporation (or its parent company); |
| • | arrange for the assignment of any reacquisition or repurchase rights applicable to any shares issued pursuant to a stock award to the surviving or acquiring corporation (or its parent company); |
| • | accelerate the vesting and exercisability of a stock award and provide for its termination if it is not exercised at or prior to the corporate transaction; |
| • | arrange for the lapse of any reacquisition or repurchase rights applicable to any shares issued pursuant to a stock award; |
| • | cancel or arrange for the cancellation of a stock award, to the extent not vested or exercised prior to the effective time of the corporate transaction, in exchange for such cash consideration as the board of directors may consider appropriate; or |
| • | make a payment equal to the excess, if any, of (a) the value of the property that the participant would have received upon the exercise of the stock award over (b) any exercise price payable in connection with such exercise. |
The board of directors need not take the same action for each stock award or with respect to all participants. For purposes of the 2007 Plan, a “corporate transaction” generally means (i) a sale or disposition of all or substantially all our assets or a sale or disposition of at least 90% of our outstanding securities; (ii) a merger, consolidation or similar transaction after which we are not the surviving corporation; or (iii) a merger, consolidation or similar transaction after which we are the surviving corporation but our ordinary shares are converted or exchanged into other property.
Change in Control.
The term “involuntary termination without cause” has a similar meaning as under the 2011 Plan, as described above.
42
2007 Employee Stock Purchase Plan
Additional long-term equity incentives are provided through the ESPP. The ESPP is intended to qualify as an “employee stock purchase plan” within the meaning of section 423 of the Internal Revenue Code, or the Code. Under the ESPP, all of our regular employees and employees of any of our parent or subsidiary companies designated by the board of directors as eligible to participate may participate and may contribute, normally through payroll deductions, up to 15% of their earnings up to a total of $15,000 per purchase period for the purchase of our ordinary shares under the ESPP. The ESPP is currently offered to our regular employees in Ireland, Canada and the United States, including the NEOs. The ESPP is implemented through a series of offerings of purchase rights to eligible employees. Under the ESPP, we may specify offerings with a duration of not more than 27 months, and may specify shorter purchase periods within each offering. Each offering will have one or more purchase dates on which our ordinary shares will be purchased for employees participating in the offering. Unless otherwise determined by the board of directors, ordinary shares are purchased for accounts of employees participating in the ESPP at a price per share equal to the lower of (a) 85% of the fair market value of an ordinary share on the first date of an offering or (b) 85% of the fair market value of an ordinary share on the date of purchase.
Performance Bonus Plan
We maintain a performance bonus plan to reward executive officers and other employees for successful achievement of company-wide performance objectives and individual contributions toward those objectives on an annual basis. More information regarding the performance bonus plan is provided above under the headings “” and “.”
Compensation Discussion and Analysis—2020 Performance Bonus Program
Compensation Discussion and Analysis—2020 Compensation Decisions for Our Named Executive Officers
401(k) Plan
Our employees based in the United States are eligible to participate in the 401(k) Plan. The 401(k) Plan is intended to qualify as a
tax-qualified
plan under section 401 of the Code. Employee contributions are held and invested by the 401(k) Plan’s trustee. The 401(k) Plan provides that each participant may contribute a portion of his or her pre-tax
compensation, up to a statutory annual limit, which was $19,500 for employees under age 50, and $26,000 for employees age 50 and over in 2020. The 401(k) Plan also permits us to make discretionary contributions and matching contributions, subject to established limits and a vesting schedule. In 2013, we began making discretionary matching contributions, which for 2020, consisted of a match of 50% of up to the first 6% of eligible compensation contributed by each employee toward his or her 401(k) plan. Additional Benefits
The NEOs are eligible to participate in our benefit plans generally available to all employees, as described in “.”
Compensation Discussion and Analysis—Key Components and Design of the Executive Compensation Program
Pension Benefits
Other than with respect to
tax-qualified
defined contribution plans such as the 401(k) Plan, the NEOs do not participate in any plan that provides for retirement payments and benefits, or payments and benefits that will be provided primarily following retirement. Nonqualified Deferred Compensation
During the year ended December 31, 2020, the NEOs did not contribute to, or earn any amounts with respect to, any defined contribution or other plan sponsored by us that provides for the deferral of compensation on a basis that is not
tax-qualified.
43
Outstanding Equity Awards at Fiscal
Year-End
The following table sets forth, for the fiscal year ended December 31, 2020, certain information regarding outstanding equity awards at fiscal
year-end
for the NEOs. OUTSTANDING EQUITY AWARDS AT 2020 FISCAL
YEAR-END
TABLE | Name |
Option Awards |
Stock Awards | |||||||||||||||||||||||||||||||||
| Number of Securities Underlying Unexercised Options (#) Exercisable |
Number of Securities Underlying Unexercised Options (#)(1) Unexercisable |
Option Exercise Price ($) |
Option Expiration Date (2) |
Number of Shares or Units of Stock That Have Not Vested (#)(3) |
Market Value of Shares or Units of Stock That Have Not Vested ($)(4) | ||||||||||||||||||||||||||||||
| Bruce C. Cozadd |
— | 130,000 | (6) |
113.10 | 2/26/2030 | 52,000 (10) |
8,582,600 | ||||||||||||||||||||||||||||
| 57,291 | 67,709 | (7) |
140.03 | 2/27/2029 | 37,500 (11) |
6,189,375 | |||||||||||||||||||||||||||||
| 63,593 | 28,907 | (8) |
140.67 | 2/29/2028 | 18,500 (12) |
3,053,425 | |||||||||||||||||||||||||||||
| 81,093 | 5,407 | (9) |
136.18 | 3/1/2027 | 8,650 (13) |
1,427,683 | |||||||||||||||||||||||||||||
| 77,500 | — | 123.36 | 2/24/2026 | — | — | ||||||||||||||||||||||||||||||
| 72,500 | — | 175.19 | 2/25/2025 | — | — | ||||||||||||||||||||||||||||||
| 48,784 | (5) |
— | 166.62 | 2/26/2024 | — | — | |||||||||||||||||||||||||||||
| 73,961 | (5) |
— | 59.13 | 3/4/2023 | — | — | |||||||||||||||||||||||||||||
| 109,284 | (5) |
— | 46.83 | 8/8/2022 | — | — | |||||||||||||||||||||||||||||
| Daniel N. Swisher, Jr. |
— | 40,000 | (6) |
113.10 | 2/26/2030 | 16,000 (11) |
2,640,800 | ||||||||||||||||||||||||||||
| 16,041 | 18,959 | (7) |
140.03 | 2/27/2029 | 10,500 (12) |
1,733,025 | |||||||||||||||||||||||||||||
| 32,812 | 12,188 | (14) |
140.67 | 2/29/2028 | 9,000 (15) |
1,485,450 | |||||||||||||||||||||||||||||
| Renée Galá |
— | 41,500 | (16) |
109.45 | 5/6/2030 | 16,600 (17) |
2,739,830 | ||||||||||||||||||||||||||||
| Robert Iannone, M.D., M.S.C.E |
— | 27,000 | (6) |
113.10 | 2/26/2030 | 10,800 (11) |
1,782,540 | ||||||||||||||||||||||||||||
| 12,072 | 18,428 | (18) |
137.12 | 8/7/2029 | 9,150 (19) |
1,510,208 | |||||||||||||||||||||||||||||
| Kim Sablich |
— | 42,000 | (20) |
127.07 | 8/5/2030 | 16,800 (21) |
2,772,840 | ||||||||||||||||||||||||||||
(1) |
In addition to the specific vesting schedule for each stock award, each unvested stock award is subject to the general terms of the 2011 Plan or 2007 Plan, as applicable, including the potential for future vesting acceleration described above under the heading “ Description of Compensation Arrangements—Equity Compensation Arrangements Potential Payments upon Termination or Change in Control—Amended and Restated Executive Change in Control and Severance Benefit Plan |
(2) |
As a general matter, stock options granted to NEOs expire on the day before the tenth anniversary of their grant date, or earlier in the event of an NEO’s termination of service. In the event of an NEO’s termination of service, stock options generally expire three months after such termination of service, subject to extension under limited circumstances such as if the sale of shares during such time was prohibited by our insider trading policy or if exercise would result in violation of securities registration requirements. For more information, see description under the heading “ Potential Payments upon Termination or Change in Control—Equity Compensation Plans |
(3) |
Each award listed in this column represents an RSU award that vests in four equal annual installments on the anniversary of the applicable vesting commencement date. |
(4) |
The market values of the RSU awards that have not vested are calculated by multiplying the number of shares underlying the RSU awards shown in the table by $165.05, the closing price of our ordinary shares on December 31, 2020. |
(5) |
The number of shares reported reflects the transfer of beneficial ownership of a portion of the indicated stock option awards in 2015 to Mr. Cozadd’s former spouse pursuant to a domestic relations order. |
(6) |
The unexercisable shares subject to this stock option award as of December 31, 2020 vested with respect to 25% of the shares underlying the stock option on February 27, 2021, and the remainder vests monthly from March 27, 2021 to February 27, 2024. |
(7) |
The unexercisable shares subject to this stock option award as of December 31, 2020 vest monthly from January 28, 2021 to February 28, 2023. |
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(8) |
The unexercisable shares subject to this stock option award as of December 31, 2020 vest monthly from January 1, 2021 to March 1, 2022. |
(9) |
The unexercisable shares subject to this stock option award as of December 31, 2020 vest monthly from January 2, 2021 to March 2, 2021. |
(10) |
RSUs awarded on February 27, 2020, vesting in equal annual installments over four years measured from the vesting commencement date of March 5, 2020. |
(11) |
RSUs awarded on February 28, 2019, vesting in equal annual installments over four years measured from the vesting commencement date of March 5, 2019. |
(12) |
RSUs awarded on March 1, 2018, vesting in equal annual installments over four years measured from the vesting commencement date of March 5, 2018. |
(13) |
RSUs awarded on March 2, 2017, vesting in equal annual installments over four years measured from the vesting commencement date of March 5, 2017. |
(14) |
The unexercisable shares subject to this stock option award as of December 31, 2020 vest monthly from January 3, 2021 to January 3, 2022. |
(15) |
RSUs awarded on March 1, 2018, vesting in equal annual installments over four years measured from the vesting commencement date of January 3, 2018. |
(16) |
The unexercisable shares subject to this stock option award as of December 31, 2020 vested with respect to 25% of the shares underlying the stock option on March 16, 2021, and the remainder vests monthly from April 16, 2021 to March 16, 2024. |
(17) |
RSUs awarded on May 7, 2020, vesting in equal annual installments over four years measured from the vesting commencement date of April 5, 2020. |
(18) |
The unexercisable shares subject to this stock option award as of December 31, 2020 vest monthly from January 29, 2020 to May 29, 2023. |
(19) |
RSUs awarded on August 8, 2019, vesting in equal annual installments over four years measured from the vesting commencement date of June 5, 2019. |
(20) |
The unexercisable shares subject to this stock option award as of December 31, 2020 vest with respect to 25% of the ordinary shares underlying the stock option on June 1, 2021, and the remainder vest monthly from July 1, 2021 to June 1, 2024. |
(21) |
RSUs awarded on August 6, 2020, vesting in equal annual installments over four years measured from the vesting commencement date of June 5, 2020. |
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Option Exercises and Stock Vested
The following table provides information on RSUs vested and stock options exercised, including the number of shares acquired upon exercise and the value realized, determined as described below, for the NEOs in the year ended December 31, 2020.
| Name |
Option Awards |
Stock Awards | |||||||||||||||||||||||
| Number of Shares Acquired on Exercise (#) |
Value Realized on Exercise ($)(1) |
Number of Shares Acquired on Vesting (#) |
Value Realized on Vesting ($)(2) | ||||||||||||||||||||||
| Bruce C. Cozadd |
6,895 | 823,125 | 38,150 | 4,770,984 | |||||||||||||||||||||
| Daniel N. Swisher, Jr. |
— | — | 8,000 | 1,093,154 | |||||||||||||||||||||
| Renée Galá |
— | — | — | — | |||||||||||||||||||||
| Robert Iannone, M.D., M.S.C.E |
— | — | 3,050 | 367,982 | |||||||||||||||||||||
| Kim Sablich |
— | — | — | — | |||||||||||||||||||||
(1) |
The value realized on exercise is based on the difference between the closing price of our ordinary shares on the date of exercise and the applicable exercise price of those options, and does not represent actual amounts received by the NEOs as a result of the option exercises. |
(2) |
The value realized on vesting is based on the number of shares underlying the RSUs that vested and the closing price of our ordinary shares on the vesting date. |
Potential Payments upon Termination or Change in Control
Amended and Restated Executive Change in Control and Severance Benefit Plan
The change in control plan provides that, in the event that an executive’s employment terminates due to an involuntary termination without cause or a constructive termination, in each case upon or within 12 months following a change in control (as such terms are defined in the change in control plan and described generally below), and assuming all of the other conditions of the change in control plan are met, each executive who is a participant in the change in control plan (including each of our NEOs) would be entitled to the following benefits under the change in control plan:
| • | A single, lump sum cash severance payment equal to the sum of: (i) the applicable base salary described below, multiplied by the applicable percentage set forth below; plus plus |
º |
The “applicable base salary” is the higher of the executive’s base salary in effect (i) on the date of termination (without giving effect to any reduction in base salary that would constitute grounds for a constructive termination) or (ii) immediately prior to the change in control, without giving effect to any voluntary pay reduction taken by the executive during the 12 months preceding the date of termination or the change in control. |
º |
The “applicable percentage” is 200% for our CEO, executive chairman or president, 150% for senior vice presidents and above and 100% for vice presidents. |
º |
The “applicable bonus percentage” is the greater of (i) the highest amount of any annual bonus paid to the executive for either of the last two calendar years prior to (A) the date of termination or (B) the change in control, in each case expressed as a percentage of the executive’s base salary for the applicable year, and (ii) the higher of the executive’s target bonus for the calendar year in which (A) the termination occurs or (B) the change in control occurs, in each case expressed as a percentage of the executive’s base salary for such year. |
| • | Full payment of all of the applicable COBRA premiums for any health, dental or vision plan sponsored by us for a period of up to (i) 24 months for our CEO, executive chairman or president, (ii) 18 months for executive vice presidents and senior vice presidents, and (iii) 12 months for vice presidents, provided that the executive timely elects continued coverage. |
| • | Acceleration in full of the vesting and exercisability, as applicable, of outstanding stock options and other equity awards held by the executive. |
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The following key terms are defined in the change in control plan:
| • | A “change in control” generally means: (i) a person or group acquires ownership of more than 30% of the combined voting power of our outstanding securities (other than directly from our company); (ii) certain compromises or arrangements sanctioned by the Irish courts, certain schemes, contracts or offers that have become binding on all of our shareholders, certain takeover bids, certain offers or reverse takeover transactions, or a reorganization, merger, statutory share exchange, consolidation or similar transaction involving us, after which our shareholders do not own more than 50% of the combined voting power of the surviving entity or its parent in substantially the same proportion as their ownership of our outstanding voting securities immediately before the transaction, or a person or group acquires ownership of more than 30% of the combined voting power of the surviving entity or its parent, or at least a majority of the members of the board of directors of the parent (or the surviving entity, if there is no parent) following such transaction are not incumbent board members (as defined in (v) below) at the time our board of directors approves the transaction; (iii) our shareholders or our board of directors approves a complete dissolution or liquidation of our company, or a complete dissolution or liquidation of our company otherwise occurs (except for a liquidation into a parent company); (iv) a sale, lease, exclusive license or other disposition of all or substantially all of our assets, other than to certain entities; or (v) individuals who were members of our board of directors as of February 10, 2016 (or members of our board of directors approved or recommended by a majority vote of such members still in office), referred to as “incumbent board members,” cease to constitute at least a majority of the board of directors. |
| • | An “involuntary termination without cause” generally means an executive’s employment is terminated for any reason other than for the following reasons: (i) the executive’s unauthorized use or disclosure of confidential information or trade secrets which causes material harm to us; (ii) the executive’s material breach of any agreement with us (or the executive’s material violation of any statutory duty owed to us) after an opportunity to cure; (iii) the executive’s material failure to comply with our written policies or rules after an opportunity to cure; (iv) the executive’s conviction or plea of guilty or no contest to any crime involving fraud, dishonesty or moral turpitude; (v) the executive’s gross misconduct; (vi) the executive’s continued failure to perform his or her assigned duties after notification; or (vii) the executive’s failure to reasonably cooperate in good faith with any governmental or internal investigation of us or our directors, officers or employees. An “involuntary termination without cause” also includes an executive’s termination of employment due to death or disability. |
| • | A “constructive termination” generally means an executive resigns employment after any of the following actions are taken or events occur without the executive’s written consent: (i) one or more reductions in the executive’s base salary that results in a total reduction in the executive’s base salary, as in effect immediately prior to the change in control or any higher base salary in effect following the change in control, by more than 10%; (ii) a relocation of the executive’s principal place of employment that increases the executive’s one-way commute by more than 35 miles; (iii) a substantial reduction in the executive’s authority, duties or responsibilities that are in effect immediately prior to the change in control, provided that if the executive holds the same position but the size of the executive’s employing entity or business unit has decreased significantly or our company or the executive’s employing entity ceases to be a publicly-traded corporation, the executive’s authority, duties and responsibilities will be considered to be substantially reduced; (iv) a reduction in the executive’s title; or (v) a substantial increase in executive’s required business travel as compared with the executive’s required business travel prior to the change in control. |
We benefit by requiring the executive to execute an effective general waiver and release of claims in order to be eligible to receive benefits under the change in control plan. All other benefits (such as life insurance, disability coverage and 401(k) Plan eligibility) will terminate as of the executive’s termination date.
The change in control plan does not provide for the gross up of any excise taxes imposed by section 4999 of the Code. If any of the severance benefits payable under the change in control plan would constitute a “parachute payment” within the meaning of section 280G of the Code, subject to the excise tax imposed by section 4999 of the Code, the change in control plan provides for a best
after-tax
analysis with respect to such payments, under which the executive will receive whichever of the following two alternative forms of payment would result in executive’s receipt, on an after-tax
basis, of the greater amount of the transaction payment notwithstanding that all or some portion of the transaction payment may be subject to the excise tax: (i) payment in full of the entire amount of the transaction payment, or (ii) payment of only a part of the transaction payment so that the executive receives the largest payment possible without the imposition of the excise tax. The executive would not receive benefits under the change in control plan in certain circumstances, including if (i) the executive voluntarily terminates employment with us to accept employment with another entity that is controlled, directly or indirectly, by us or is otherwise affiliated with us; (ii) the executive does not confirm in writing that he or she is subject to agreements with us relating to proprietary and confidential information and our code of conduct; or (iii) the executive does not return all company property. In addition, benefits would be terminated under the change in control plan if the executive willfully breaches his or her agreements with us relating to proprietary and confidential information or our code of conduct.
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The structure and amount of benefits provided under the change in control plan are intended to balance our goals of attracting and retaining highly qualified individuals, providing the appropriate incentive for such individuals to perform in the best interests of our shareholders and maintaining responsible pay practices. Our compensation committee periodically reviews market data to gain a general understanding of the change in control benefits offered by our competitors and reviews the benefits offered under the change in control plan against such market data to ensure that the benefits under the change in control plan remain appropriate.
Equity Compensation Plans
The 2011 Plan and 2007 Plan and award agreements thereunder provide for potential vesting acceleration upon an executive’s termination in connection with a change in control and, at the discretion of the board of directors, upon certain change in control events, as further described above under the heading “.” In addition, under the terms of the 2011 Plan and 2007 Plan and the option award agreements thereunder, the vested portion of stock options granted to the NEOs will generally expire three months after the applicable NEO’s termination of service, subject to extension under limited circumstances such as if the sale of shares during such time was prohibited by our insider trading policy or if exercise would result in violation of securities registration requirements. We refer to the period following the NEO’s termination during which he or she can continue to exercise his or her vested stock options as the post-termination exercise period. However, in termination situations involving the death or disability of an NEO, the post-termination exercise period is generally extended up to 12 months in connection with a termination due to disability and up to 18 months in connection with a termination due to death. As the value of such extended post-termination exercise periods is not quantifiable, such value is not included in the table below.
Description of Compensation Arrangements—Equity Compensation Arrangements
Potential Payments upon Termination or Change in Control Table
The following table estimates the potential severance payments and benefits under the change in control plan to which the NEOs would have been entitled in connection with specified termination events, calculated as if each NEO’s employment had terminated as of December 31, 2020. In addition, the table sets forth the amounts to which the NEOs would have been entitled under the 2011 Plan and 2007 Plan if, upon a corporate transaction or change in control transaction, the board of directors had exercised its discretion to accelerate the vesting and exercisability of stock options and the vesting of RSU awards, and such event had occurred on December 31, 2020.
There are no other agreements, arrangements or plans that entitle any NEOs to severance, perquisites or other benefits upon termination of employment or a change in control. For purposes of the table below, we have assumed that none of the potential severance benefits payable under the change in control plan would be subject to the excise tax imposed by section 4999 of the Code and therefore would not be reduced in accordance with the terms of the change in control plan.
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL
AS OF DECEMBER 31, 2020
Name |
Benefit |
Involuntary Termination Without Cause or Constructive Termination in Connection with a Change of Control($)(1) |
2011 Plan and 2007 Plan—Certain Corporate Transactions($)(2) |
|||||||
| Bruce C. Cozadd |
Lump Sum Cash Severance Payment | 5,253,000 | — | |||||||
| COBRA Payments | 80,106 | — | ||||||||
| Vesting Acceleration (3) |
28,561,503 | 28,561,503 | ||||||||
| |
|
|
|
|||||||
Benefit Total |
33,894,609 | 28,561,503 | ||||||||
| |
|
|
|
|||||||
| Daniel N. Swisher, Jr. |
Lump Sum Cash Severance Payment | 2,829,000 | — | |||||||
| COBRA Payments | 80,106 | — | ||||||||
| Vesting Acceleration (3) |
8,708,769 | 8,708,769 | ||||||||
| |
|
|
|
|||||||
Benefit Total |
11,617,875 | 8,708,769 | ||||||||
| |
|
|
|
|||||||
| Renée Galá |
Lump Sum Cash Severance Payment | 1,642,500 | — | |||||||
| COBRA Payments | 60,079 | — | ||||||||
| Vesting Acceleration (3) |
5,047,228 | 5,047,228 | ||||||||
| |
|
|
|
|||||||
Benefit Total |
6,749,807 | 5,047,228 | ||||||||
| |
|
|
|
|||||||
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Name |
Benefit |
Involuntary Termination Without Cause or Constructive Termination in Connection with a Change of Control($)(1) |
2011 Plan and 2007 Plan—Certain Corporate Transactions($)(2) |
|||||||
| Robert Iannone, M.D., M.S.C.E |
Lump Sum Cash Severance Payment | 1,653,125 | — | |||||||
| COBRA Payments | 57,168 | — | ||||||||
| Vesting Acceleration (3) |
5,210,090 | 5,210,090 | ||||||||
| |
|
|
|
|||||||
Benefit Total |
6,920,383 | 5,210,090 | ||||||||
| |
|
|
|
|||||||
| Kim Sablich |
Lump Sum Cash Severance Payment | 1,455,208 | — | |||||||
| COBRA Payments | 57,168 | — | ||||||||
| Vesting Acceleration (3) |
4,367,998 | 4,367,998 | ||||||||
| |
|
|
|
|||||||
Benefit Total |
5,880,374 | 4,367,998 | ||||||||
| |
|
|
|
|||||||
(1) |
These benefits would be payable under the change in control plan if the involuntary termination without cause or constructive termination occurred upon or within 12 months following a change in control and assuming such termination took place on December 31, 2020. The forms of stock option and RSU agreements under the 2011 Plan and the 2007 Plan provide for the same vesting acceleration benefit as shown here under the change in control plan, and therefore no separate vesting acceleration benefit is listed. Pursuant to the change in control plan, an involuntary termination without cause also includes an individual’s death or disability. |
(2) |
These benefits would be payable under the 2011 Plan and the 2007 Plan if, upon a corporate transaction event, the board of directors exercised its discretion to accelerate the vesting and exercisability of outstanding stock options and RSU awards, assuming the vesting acceleration took place on December 31, 2020. For a description of the potential vesting acceleration provisions in the 2011 Plan and the 2007 Plan, see “Description of Compensation Arrangements—Equity Compensation Arrangements” above. |
(3) |
The value of stock option and RSU award vesting acceleration is based on the closing price of $165.05 per ordinary share on December 31, 2020, minus, in the case of stock options, the exercise price of the unvested stock option shares subject to acceleration. |
Pay Ratio Disclosure
Under SEC rules, we are required to calculate and disclose the annual total compensation of our median employee, as well as the ratio of the annual total compensation of our median employee as compared to the annual total compensation of our CEO, or our CEO pay ratio. Consistent with the process adopted for 2019, to identify our median employee for 2020, we used the following methodology:
| • | To determine our total population of employees, we included all full-time, part-time, regular and temporary employees as of October 1, 2020. |
| • | To identify our median employee from our employee population, we calculated the annual target amount of each employee’s 2020 base salary (using a reasonable estimate of the hours worked and no overtime for hourly employees) and bonus or commission, as applicable, and added the estimated value of all equity awards granted during 2020. For purposes of base salaries, bonuses and commissions, we used an estimate based on the rates in effect on October 1, 2020. To estimate the value of stock options, we multiplied the number of shares subject to each stock option by the estimated per share Black-Scholes value based on assumptions disclosed in our 2020 Annual Report on Form 10-K, and to estimate the value of other equity awards, we used the same methodology we use for reporting the value of equity awards granted to our NEOs in our Summary Compensation Table. |
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| • | In making this determination, we annualized the base salaries, bonuses and commissions of employees who were employed by us for less than the entire calendar year. |
| • | Compensation paid in foreign currencies was converted to U.S. dollars based on the average daily exchange rates for the year to date period ending on October 1, 2020. |
Using this approach, we determined our median employee and then calculated the annual total compensation of this employee for 2020 in accordance with the requirements of the Summary Compensation Table.
For 2020, the median of the annual total compensation of our employees (other than our CEO) was $234,935.46 and the annual total compensation of our CEO, as reported in our Summary Compensation Table, was $12,573,300. Based on this information, the ratio of the annual total compensation of our CEO to the median of the annual total compensation of all employees was 54 to 1.
The CEO pay ratio above represents our reasonable estimate calculated in a manner consistent with SEC rules and applicable guidance. SEC rules and guidance provide significant flexibility in how companies identify the median employee, and each company may use a different methodology and make different assumptions particular to that company. As a result, and as explained by the SEC when it adopted these rules, in considering the pay ratio disclosure, shareholders should keep in mind that the rule was not designed to facilitate comparisons of pay ratios among different companies, even companies within the same industry, but rather to allow shareholders to better understand and assess each particular company’s compensation practices and pay ratio disclosures.
Neither the compensation committee nor our management used our CEO pay ratio measure in making compensation decisions.
DIRECTOR COMPENSATION
Non-Employee
Director Compensation Policy Pursuant to our
non-employee
director compensation policy, or director compensation policy, each non-employee
director was entitled to receive the following cash compensation for board services, as applicable, for 2020: | • | a $60,000 annual retainer for service as a member of our board of directors (paid quarterly); |
| • | a supplemental $50,000 annual retainer for service as the Lead Independent Director (paid quarterly); |
| • | a supplemental annual retainer for the chairs of the following board committees in the following amounts: $25,000 for the chairperson of the audit committee, $22,500 for the chairperson of the compensation committee, $20,000 for the chairperson of the nominating and corporate governance committee and $22,500 for the chairperson of the transaction committee (each paid quarterly); and |
| • | a supplemental annual retainer for each member of the following board committees other than the chairs, in the following amounts: $15,000 for service as a member of the audit committee, $12,500 for service as a member of the compensation committee, $10,000 for service as a member of the nominating and corporate governance committee and $12,500 for service as a member of the transaction committee (each paid quarterly). |
Our director compensation policy was originally approved by our board of directors in May 2013 and has been amended as follows: in August 2013 to, among other things, provide for cash retainers for the chairperson and members of the transaction committee; in May 2014 to provide for compensation to our Lead Independent Director and revise the number of initial and continuing equity grants; in October 2014 to provide for a tax equalization payment on any Irish tax that may be paid on company reimbursement of reasonable travel, lodging and meal expenses related to service on the board of directors; in April 2015 to revise the number of initial and continuing equity grants; in May 2016 to increase the annual retainer for service as a member of our board of directors, increase the annual retainer for service as our Lead Independent Director and revise the number of initial and continuing RSU awards; in May 2018 to replace the fixed number of initial and continuing option and RSU awards with a specified grant date dollar value; and in July 2020 to revise the vesting schedule for continuing option grants and provide an annual limit on compensation payable to a director.
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The director compensation policy currently provides for the automatic grant of equity awards to our
non-employee
directors over the period of their service on our board of directors. Any individual who first becomes a non-employee
director is automatically granted the following: (a) an initial option to purchase ordinary shares that vests with respect to one-third
of the shares on the first anniversary of the date of such individual’s election or appointment to the board of directors, and, with respect to the balance, in a series of 24 successive equal monthly installments thereafter and (b) an initial RSU award that vests in equal annual installments over three years from the date of such individual’s election or appointment to the board of directors, subject in each case to the non-employee
director’s continuous service through such dates. The grant date value of the initial option together with the initial RSU award is equal to approximately $600,000, with generally 50% of the value delivered as an initial option and 50% of the value delivered as an initial RSU award, using the applicable ratio of stock option grants to RSUs that is approved by the compensation committee on an annual basis, with the actual share amounts for the initial option and initial RSU award to be determined by applying the value methodology used by the compensation committee for determining equity grants for employees generally. If a non-employee
director does not stand for reelection at an annual general meeting of our shareholders in the year in which his or her term expires or otherwise resigns effective at an annual general meeting of our shareholders and, in either case, the non-employee
director’s continuous service terminates at such meeting, then effective as of the date of such meeting, any unvested portion of the initial option award will become vested and exercisable, and any unvested portion of the initial RSU award will become vested, in each case with respect to the portion of the award that would have vested through the anniversary of the award’s vesting commencement date in the year of that meeting. Under the current director compensation policy, each continuing
non-employee
director will automatically be granted the following continuing grants in connection with each annual general meeting: (a) a continuing option to purchase ordinary shares that vests in full on the first anniversary of the annual general meeting of our shareholders in the year the option is granted and (b) a continuing RSU award that vests in full on the first anniversary of the date of the annual general meeting of our shareholders with respect to which the RSU award is granted, subject in each case to the non-employee
director’s continuous service through such dates. The grant date value of the continuing option together with the continuing RSU award is equal to approximately $400,000, with generally 50% of the value delivered as a continuing option and 50% of the value delivered as a continuing RSU award, using the applicable ratio of stock option grants to RSUs that is approved by the compensation committee on an annual basis, with the actual share amounts for the continuing option and continuing RSU award to be determined by applying the value methodology used by the compensation committee for determining equity grants for employees generally. If a director is elected or appointed as a director for the first time other than at an annual general meeting, in order to receive automatic continuing grants, the director must have first joined the board at least four calendar months before the date of the applicable annual general meeting. If a director is elected or appointed as a director for the first time at an annual general meeting, the director will not receive automatic continuing grants for such meeting. If a non-employee
director does not stand for reelection at an annual general meeting of our shareholders in the year in which his or her term expires or otherwise resigns effective at an annual general meeting of our shareholders and, in either case, the non-employee
director’s continuous service terminates at such meeting, then effective as of the date of such meeting, any unvested portion of the continuing option award will become vested and exercisable in full and any unvested portion of a continuing RSU award will become vested in full. In any case, the aggregate value of all compensation granted or paid, as applicable, to any non-employee
director with respect to any period commencing on the date of the annual general meeting of our shareholders for a particular year and ending on the day immediately prior to the date of the annual general meeting of our shareholders for the subsequent year, including equity awards granted and cash fees paid by us to the non-employee
director, will not exceed (i) $750,000 in total value or (ii) in the event such non-employee
director is first appointed or elected to the board during that same period, $1,350,000 in total value. The automatic initial and continuing options and RSU awards are granted under the Amended and Restated 2007
Non-Employee
Directors Stock Award Plan, or 2007 Directors Plan. The grant date of these equity awards is the second trading day following the filing date of our next quarterly or annual report filed under the Exchange Act that occurs after the date the director first joined our board of directors (with respect to the automatic initial option and RSU awards) or the date of our annual general meeting (with respect to the automatic continuing option and RSU awards). The other terms and conditions applicable to equity awards made to our .”
non-employee
directors are included below under the heading “Equity Compensation Plans
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In addition, our
non-employee
directors are reimbursed for travel and other reasonable expenses incurred in attending board or committee meetings, as are our employees who serve as directors. If any reimbursement payment is subject to tax imposed by the Irish Revenue Commissioners, each non-employee
director is also entitled to a tax equalization payment in order to allow them to retain the full reimbursement payment. There were no such tax equalization payments made to any of our non-employer
director with respect to any reimbursement payments in 2019. Directors Continuing Education
In furtherance of our ongoing commitment to the continuing education of our directors, our nominating and corporate governance committee adopted a policy for the reimbursement of director continuing education in February 2013, as amended in February 2014. Under this policy, we will pay or reimburse each director for enrollment fees and reasonable expenses incurred in connection with attending and participating each year in one director continuing education program and in one healthcare industry continuing education program, each sponsored by an outside provider.
Directors Deferred Compensation Plan
In May 2007, the Jazz Pharmaceuticals, Inc. board of directors adopted the Directors Deferred Compensation Plan, which was amended and restated in August 2010. The Directors Deferred Compensation Plan, as amended and restated, is referred to in this report as the Directors Deferred Plan. We continued and assumed the Directors Deferred Plan in connection with the Azur Merger. The Directors Deferred Plan allowed each
non-employee
director to elect to defer receipt of all or a portion of his or her annual retainer fees to a future date or dates. Amounts deferred under the Directors Deferred Plan were credited as our ordinary shares to a phantom stock account, and the number of shares credited was based on the amount of the retainer fees deferred divided by the market value of our ordinary shares on the first trading day of the first open window period following the date the retainer fees were deemed earned. On the tenth business day following the day of separation from the board of directors or the occurrence of a change in control, or as soon thereafter as practical once the non-employee
director has provided the necessary information for electronic deposit of the deferred shares, each non-employee
director was entitled to receive (or to commence receiving, depending upon whether the director had elected to receive distributions from his or her phantom stock account in a lump sum or in installments over time) a distribution from his or her phantom stock account in our ordinary shares. Since the closing of the Azur Merger we had not permitted our
non-employee
directors to defer any annual retainer fees under the Directors Deferred Plan. On October 31, 2019, our board of directors approved the termination of the Directors Deferred Plan, and all outstanding phantom stock was distributed to each applicable non-employee
director in November 2020. Ownership Guidelines for Directors
We maintain share ownership guidelines for
our non-employee directors,
originally adopted in February 2013 and amended in May 2018. Under the guidelines, giving effect to an amendment in May 2018, each non-employee
director is expected to own a number of the company’s ordinary shares with a value equal to five times his or her annual cash retainer (increased from three times the annual cash retainer prior to May 2018). The guidelines provide that the individuals subject to the guidelines are expected to establish the minimum ownership levels within five years of first becoming subject to the guidelines (and, with respect to the amended guidelines in May 2018, by the last day of 2021 for individuals subject to the guidelines as of January 1, 2018). As of March 31, 2021, each non-employee director
was in compliance with his or her share ownership requirement under the applicable guidelines, except for Ms. O’Riordan who joined our board of directors in February 2019 and, accordingly, has five years from her appointment, or until 2024, to comply with the guidelines, and Ms. Cook and Dr. Smith who joined our board of directors in December 2020 and, accordingly, have five years from their appointment, or until 2025, to comply with the guidelines. Equity Compensation Plans
The 2007 Directors Plan, which was initially adopted by the Jazz Pharmaceuticals, Inc. board of directors and approved by the Jazz Pharmaceuticals, Inc. stockholders in connection with its initial public offering, was continued and assumed by us upon the consummation of the Azur Merger. The automatic initial and continuing stock awards under our director compensation policy described above are granted under the 2007 Directors Plan.
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With respect to options granted under the 2007 Directors Plan and 2007 Plan, if a
non-employee
director’s service relationship with us or any of our affiliates, whether as a non-employee
director or subsequently as our employee, director or consultant or that of any of our affiliates, ceases for any reason other than disability or death, or, with respect to options granted under the 2007 Directors Plan only, after any 12-month
period following a change in control, the optionee may exercise any vested options for a period of three months following the cessation of service. If such optionee’s service relationship with us, or any of our affiliates, ceases due to disability or death (or an optionee dies within a certain period following cessation of service), the optionee or a beneficiary may exercise the option for a period of 12 months in the event of disability, and 18 months in the event of death. With respect to options granted under the 2007 Directors Plan, if such optionee’s service terminates within 12 months following a specified change in control transaction, the optionee may exercise any vested portion of the option for a period of 12 months following the effective date of such a transaction. The option term may be extended in the event that exercise of the option following termination of service is prohibited by applicable securities laws. In no event, however, may an option be exercised beyond the expiration of its term. With respect to RSU awards granted under the 2007 Directors Plan and 2007 Plan, if a
non-employee
director’s service relationship with us or any of our affiliates, whether as a non-employee
director or subsequently as our employee, director or consultant or that of any of our affiliates, ceases for any reason, any RSU awards that were unvested as of the date of such termination will be forfeited. In the event of certain significant corporate transactions (which generally have a meaning similar to “corporate transaction” under the 2011 Plan), all outstanding awards under the 2007 Directors Plan may be assumed, continued or substituted for by any surviving or acquiring entity (or its parent company). If the surviving or acquiring entity (or its parent company) elects not to assume, continue or substitute for such awards, then (a) with respect to any such awards that are held by participants then performing services for us or our affiliates, the vesting and exercisability of such awards will be accelerated in full and such awards will be terminated if not exercised (if applicable) prior to the effective date of the corporate transaction and (b) all other outstanding awards will terminate if not exercised prior to the effective date of the corporate transaction. The board of directors may also provide that the holder of an outstanding award not assumed in the corporate transaction will surrender such award in exchange for a payment equal to the excess of (i) the value of the property that the holder would have received upon exercise of the award, over (ii) the exercise price otherwise payable in connection with the exercise. In addition, the vesting and exercisability of awards under the 2007 Directors Plan held by
non-employee
directors who are either required to resign their position as a condition of a specified change in control transaction (which generally has a similar meaning as a “change in control” under the 2011 Plan) or are removed from their position in connection with such a change in control will be accelerated in full. The treatment of outstanding options and RSU awards under the 2007 Plan in the event of certain significant corporate transactions or a specified change in control transaction is described above under the heading “.”
Executive Compensation—Description of Compensation Arrangements—Equity Compensation Arrangements—2007 Equity Incentive Plan
2020 Equity Grants
In accordance with our
non-employee
director compensation policy described above, we made automatic continuing grants to each of our non-employee
directors as a result of their continuing on the board of directors through our annual general meeting in July 2020, which continuing grants were comprised of an option to purchase 6,765 ordinary shares and an RSU award covering 2,705 ordinary shares. All options and RSUs granted to non-employee
directors during 2020 were granted under the 2007 Directors Plan. 53
Director Compensation Table
The following table sets forth certain information with respect to the compensation of all of our
non-employee
directors for the fiscal year ended December 31, 2020. Mr. Cozadd, our Chairman and CEO, is not listed in the following table because he is our employee. Mr. Cozadd’s compensation is described under “.” Mr. Cozadd received no additional compensation for serving on our board of directors in 2020.
Executive Compensation
DIRECTOR COMPENSATION FOR FISCAL 2020
Name |
Fees Earned Or Paid in Cash ($)(1) |
Stock Awards ($)(2)(4) |
Option Awards ($)(3)(4) |
All Other Compensation ($) |
Total ($) | ||||||||||||||||||||
| Paul L. Berns |
72,500 | 343,724 | 260,450 | — | 676,675 | ||||||||||||||||||||
| Jennifer Cook (5) |
5,000 | — | — | — | 5,000 | ||||||||||||||||||||
| Patrick G. Enright |
87,500 | 343,724 | 260,450 | — | 691,675 | ||||||||||||||||||||
| Peter Gray |
97,500 | 343,724 | 260,450 | — | 701,675 | ||||||||||||||||||||
| Heather Ann McSharry |
107,500 | 343,724 | 260,450 | — | 711,675 | ||||||||||||||||||||
| Seamus Mulligan |
82,500 | 343,724 | 260,450 | — | 686,675 | ||||||||||||||||||||
| Kenneth W. O’Keefe |
75,000 | 343,724 | 260,450 | — | 679,175 | ||||||||||||||||||||
| Anne O’Riordan |
75,000 | 343,724 | 260,450 | — | 679,175 | ||||||||||||||||||||
| Norbert G. Riedel, Ph.D. |
95,000 | 343,724 | 260,450 | — | 699,175 | ||||||||||||||||||||
| Elmar Schnee |
82,500 | 343,724 | 260,450 | — | 686,675 | ||||||||||||||||||||
| Mark D. Smith, M.D. (5) |
5,000 | — | — | — | 5,000 | ||||||||||||||||||||
| Catherine A. Sohn, Pharm.D. |
82,500 | 343,724 | 260,450 | — | 686,675 | ||||||||||||||||||||
| Rick E Winningham |
120,000 | 343,724 | 260,450 | — | 724,175 | ||||||||||||||||||||
Note: Amounts may not total due to rounding.
(1) |
The dollar amounts in this column represent each non-employee director’s actual annual cash retainer earned for board services in 2020, which is equal to the aggregate of his or her annual retainer of $60,000 plus his or her annual retainers for service on one or more board committees, and for Mr. Winningham, for service as Lead Independent Director. Each non-employee director’s total fees were earned and payable in four quarterly installments subject to the non-employee director’s continuous service at the end of each quarter. Fees paid to each of Mses. McSharry and O’Riordan and Messrs. Gray, Mulligan and Schnee were paid in Euro. The conversion to U.S. dollars was calculated based on the average exchange rate for each quarter as reported by the OANDA Corporation. |
(2) |
The dollar amounts in this column reflect the aggregate grant date fair value of RSU awards computed in accordance with ASC 718. The grant date fair value of each RSU award is measured based on the closing price of our ordinary shares on the date of grant. These amounts do not necessarily correspond to the actual value recognized or that may be recognized by the non-employee directors. |
(3) |
The aggregate number of shares subject to outstanding stock options and RSU awards held by the non-employee directors listed in the table above as of December 31, 2020 was as follows: 37,850 shares subject to outstanding stock options and 2,705 shares subject to outstanding RSUs for each of Messrs. Berns and Mulligan; 15,305 shares subject to outstanding stock options and 2,705 shares subject to outstanding RSUs for Mr. Enright; 28,850 shares subject to outstanding stock options and 2,705 shares subject to outstanding RSUs for each of Dr. Sohn and Mr. Winningham; 33,350 shares subject to outstanding stock options and 2,705 shares subject to outstanding RSUs for Mr. O’Keefe; 36,850 shares subject to outstanding stock options and 2,705 shares subject to outstanding RSUs for each of Ms. McSharry, Mr. Gray and Dr. Riedel; 30,550 shares subject to outstanding stock options and 2,705 shares subject to outstanding RSUs for Mr. Schnee; and 18,670 shares subject to outstanding stock options and 4,598 shares subject to outstanding RSUs for Ms. O’Riordan. There were no shares subject to outstanding stock options or shares subject to outstanding RSUs for Ms. Cook and Dr. Smith as of December 31, 2020. |
(4) |
The dollar amounts in this column represent the aggregate grant date fair value of each stock option award granted to our non-employee directors in 2020. These amounts have been calculated in accordance with ASC 718, using the Black-Scholes option-pricing model and excluding the effect of estimated forfeitures. Assumptions used in the calculation of these amounts are included in the notes to our audited consolidated financial statements included in the company’s 2020 Annual Report on Form 10-K. These amounts do not necessarily correspond to the actual value recognized or that may be recognized by the non-employee directors. |
(5) |
Ms. Cook and Dr. Smith joined our board of directors effective December 1, 2020. |
54
Compensation Committee Report
(1)
The compensation committee has reviewed and discussed with management the Compensation Discussion and Analysis contained herein. Based on this review and discussion, the compensation committee has recommended to the board of directors that the Compensation Discussion and Analysis be included in our proxy statement for the 2021 annual general meeting of shareholders and be included in the company’s Annual Report on Form
10-K
we filed with the SEC for the fiscal year ended December 31, 2020. | Respectfully submitted, |
| The Compensation Committee of the Board of Directors |
| Dr. Norbert G. Riedel, Ph.D. (Chair) |
| Mr. Paul L. Berns |
| Mr. Patrick G. Enright |
| Dr. Catherine A. Sohn, Pharm.D. |
(1) |
The material in this report is not “soliciting material,” is not deemed “filed” with the Commission and is not to be incorporated by reference in any filing of the registrant under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, whether made before or after the date hereof and irrespective of any general incorporation language in any such filing. |
Compensation Committee Interlocks and Insider Participation
During 2020, our compensation committee was composed of four directors: Messrs. Berns and Enright, Dr. Riedel and Dr. Sohn. During 2020, none of the members of our compensation committee was at any time our officer or employee. None of our executive officers serve, or in the past fiscal year served, as a member of the board of directors or the compensation committee of any entity that has one or more of its executive officers serving on our board of directors or compensation committee.
Compensation Consultant Fees
Since 2010, Radford has been engaged by the compensation committee each year to provide peer company and industry compensation data and provide the compensation committee with advice regarding executive officers’ compensation, including base salaries, performance-based bonuses and long-term equity incentives, advice regarding directors’ compensation as well as other matters under the compensation committee’s charter. In 2020, the cost of Radford’s consulting services directly related to compensation committee support was approximately $330,678. In addition, in 2020, our human resources department participated in various human resources and compensation surveys and obtained general benchmarking survey data from Radford at a cost of approximately $15,310.
Management also engaged with Aon plc affiliates of Radford, for various insurance-related products and services, covering health and benefits, pension-related services, other insurance brokerage services and risk services to the business. The aggregate Aon revenue from these additional services in 2020 (not related to Radford’s compensation committee consulting services) was approximately $360,292. Although the compensation committee was aware of the nature of the services performed by Aon affiliates and the
non-executive
employee compensation survey data provided by Radford, the compensation committee did not review and approve such services, surveys and insurance premiums and policies, as those were reviewed and approved by management in the ordinary course of business. Aon maintains certain policies and practices to protect the independence of the executive compensation consultants engaged by the compensation committee. In particular, Radford provides an annual update to the compensation committee on the financial relationship between Aon and the company, and provides written assurances that, within Aon, the Radford consultants who perform executive compensation services for the compensation committee have compensation determined separately from Aon’s other lines of business and from the other services it provides to the company. These safeguards were designed to help ensure that the compensation committee’s executive compensation consultants continued to fulfill their role in providing independent, objective advice.
55
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
EQUITY COMPENSATION PLAN INFORMATION
The following table provides certain information as of December 31, 2020 with respect to all of our compensation plans in effect on that date under which our equity securities are authorized for issuance:
Plan Category (1) |
Number of securities to be issued upon exercise of outstanding options, warrants and rights (a) |
Weighted-average exercise price of outstanding options, warrants and rights (b) |
Number of securities remaining available for issuance under equity compensation plans (excluding securities reflected in column (a)) (c) |
|||||||||
| Equity compensation plans approved by security holders: |
||||||||||||
| Amended and Restated 2011 Equity Incentive Plan (2011 Plan) |
6,783,446 | $ | 130.28 (2) |
14,259,503 (3) |
||||||||
| 2007 Equity Incentive Plan (2007 Plan) |
4,500 | $ | 46.83 (4) |
— (4) |
||||||||
| 2007 Employee Stock Purchase Plan (ESPP) |
— | — | 2,599,693 (5) |
|||||||||
| Amended and Restated 2007 Non-Employee Directors Stock Award Plan (2007 Directors Plan) |
368,973 | $ | 134.98 (6) |
519,727 (7) |
||||||||
Equity compensation plans not approved by security holders |
— |
— |
— |
|||||||||
| |
|
|
|
|||||||||
| Total |
7,156,919 | 17,378,923 | ||||||||||
(1) |
Each of the equity compensation plans set forth in this table was originally adopted by Jazz Pharmaceuticals, Inc. and assumed and adopted by us in connection with the Azur Merger. In addition, each option that was outstanding under Jazz Pharmaceuticals, Inc.’s equity compensation plans was converted into an option to acquire, on substantially the same terms and conditions as were applicable under such option before the Azur Merger, the number of our ordinary shares equal to the number of shares of Jazz Pharmaceuticals, Inc.’s common stock subject to such option immediately prior to the Azur Merger, at an exercise price per ordinary share equal to the exercise price per share of Jazz Pharmaceuticals, Inc.’s common stock otherwise purchasable pursuant to such option, and each other equity award that was outstanding under Jazz Pharmaceuticals, Inc.’s equity compensation plans was converted into a right to receive, on substantially the same terms and conditions as were applicable under such equity award before the Azur Merger, the number of our ordinary shares equal to the number of shares of Jazz Pharmaceuticals, Inc.’s common stock subject to such equity award immediately prior to the Azur Merger. Other than with respect to the Directors Deferred Plan, each of the equity compensation plans set forth in this table was approved by Jazz Pharmaceuticals, Inc.’s stockholders. |
(2) |
The number of securities to be issued upon exercise of outstanding options and rights (column (a)) includes shares subject to RSU awards granted under the 2011 Plan, which RSU awards do not carry an exercise price. Accordingly, the weighted average exercise price of outstanding options and rights (column (b)) excludes the RSU awards. The weighted-average exercise price excluding such outstanding RSUs is $130.28. |
(3) |
As of December 31, 2020, an aggregate of up to 29,538,836 of our ordinary shares were authorized for issuance under the 2011 Plan, of which 14,259,503 shares remained available for future issuance. The number of ordinary shares reserved for issuance under the 2011 Plan includes up to 3,335,255 ordinary shares subject to stock awards that were originally granted under the 2007 Plan and the 2003 Equity Incentive Plan that may become available for issuance under the 2011 Plan pursuant to the terms of the 2011 Plan and the 2007 Plan. In addition, the number of shares reserved for issuance under the 2011 Plan automatically increases on January 1 of each year for a period of ten years, starting on January 1, 2013 and continuing through January 1, 2022, by the least of (a) 4.5% of the total number of ordinary shares outstanding on December 31 of the preceding calendar year, (b) 5,000,000 ordinary shares, or (c) such lesser number of ordinary shares as determined by our board of directors. On January 1, 2021, the number of shares authorized for issuance under the 2011 Plan increased by 2,526,437 shares pursuant to this automatic share increase provision. |
(4) |
The 2007 Plan expired in April 2017. Only stock options remain outstanding under the 2007 Plan. |
(5) |
As of December 31, 2020, an aggregate of 5,263,137 ordinary shares were authorized for issuance under the ESPP, of which 2,599,693 shares remained available for future issuance, and up to a maximum of 175,000 ordinary shares may be purchased in the current purchase period. The number of shares reserved for issuance under the ESPP automatically increases on January 1 of each year for a period of ten years, starting on January 1, 2013 and continuing through January 1, 2022, by the least of (a) 1.5% of the total number of our ordinary shares outstanding on December 31 of the preceding calendar year, (b) 1,000,000 ordinary shares, or (c) such lesser amount as may be approved by our board of directors. On January 1, 2021, the number of shares authorized for issuance under the 2011 Plan increased by 842,145 shares pursuant to this automatic share increase provision. |
56
(6) |
The number of securities to be issued upon exercise of outstanding options and rights (column (a)) includes shares subject to RSU awards granted under the 2007 Directors Plan, which RSU awards do not carry an exercise price. Accordingly, the weighted average exercise price of outstanding options and rights (column (b)) excludes the grant of RSU awards. The weighted-average exercise price excluding such outstanding RSUs is $134.98. |
(7) |
As of December 31, 2020, an aggregate of 1,403,938 ordinary shares were authorized for issuance under the 2007 Directors Plan, of which 519,727 shares remained available for future issuance. |
57
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the ownership of our ordinary shares as of March 31, 2021 (except as noted) by: (i) each director; (ii) each of our NEOs identified in Item 11 of this report; (iii) all of our executive officers and directors as a group; and (iv) all those known by us to be beneficial owners of more than five percent of our ordinary shares.
| Name and Address of Beneficial Owner (1) |
Beneficial Ownership (2) |
|||||||
Number of Shares |
Percentage of Total |
|||||||
| 5% Shareholders: |
||||||||
| BlackRock, Inc. (3) |
6,395,173 | 11.2% | ||||||
| 55 East 52nd Street |
||||||||
| New York, NY 10055 |
||||||||
| The Vanguard Group (4) |
4,877,893 | 8.6% | ||||||
| 100 Vanguard Blvd. |
||||||||
| Malvern, PA 19355 |
||||||||
| Renaissance Technologies LLC (5) |
3,099,050 | 5.4% | ||||||
| 800 Third Avenue |
||||||||
| New York, NY 10022 |
||||||||
| FMR LLC (6) |
2,927,121 | 5.1% | ||||||
| 245 Summer Street. |
||||||||
| Boston, MA 02210 |
||||||||
| Named Executive Officers and Directors: |
||||||||
| Bruce C. Cozadd (7) |
1,022,728 | 1.8% | ||||||
| Daniel N. Swisher, Jr. (8) |
83,724 | * | ||||||
| Renée Galá (9) |
16,401 | * | ||||||
| Robert Iannone, M.D., M.S.C.E (10) |
28,047 | * | ||||||
| Kim Sablich (11) |
— | * | ||||||
| Paul L. Berns (12) |
38,120 | * | ||||||
| Jennifer E. Cook (13) |
— | * | ||||||
| Patrick G. Enright (14) |
26,203 | * | ||||||
| Peter Gray (15) |
39,400 | * | ||||||
| Heather Ann McSharry (16) |
37,713 | * | ||||||
| Seamus Mulligan (17) |
1,183,873 | 2.1% | ||||||
| Kenneth W. O’Keefe (18) |
35,743 | * | ||||||
| Anne O‘Riordan (19) |
13,944 | * | ||||||
| Norbert G. Riedel, Ph.D. (20) |
36,839 | * | ||||||
| Elmar Schnee (21) |
30,982 | * | ||||||
| Mark D. Smith, M.D. (22) |
— | * | ||||||
| Catherine A. Sohn, Pharm.D. (23) |
30,002 | * | ||||||
| Rick E Winningham (24) |
25,578 | * | ||||||
| All directors and executive officers as a group (22 persons) (25) |
2,741,956 | 4.7% | ||||||
| * | Less than 1%. |
(1) |
Unless otherwise provided in the table above or in the notes below, the address for each of the beneficial owners listed is c/o Fifth Floor, Waterloo Exchange, Waterloo Road, Dublin 4, Ireland. |
(2) |
This table is based upon information supplied by officers and directors as well as Schedules 13G or 13G/A filed with the SEC by beneficial owners of more than five percent of our ordinary shares. Unless otherwise indicated in the footnotes to this table and subject to community property laws where applicable, we believe that each of the shareholders named in this table has sole voting and investment power with respect to the ordinary shares indicated as beneficially owned. Applicable percentages are based on 56,872,803 ordinary shares outstanding on March 31, 2021, adjusted as required by rules promulgated by the SEC. The number of shares beneficially owned includes ordinary shares issuable pursuant to the exercise of stock options that are exercisable and RSUs that will vest within 60 days of March 31, 2021. Shares issuable pursuant to the exercise of stock options that are exercisable and RSUs that will vest within 60 days of March 31, 2021 are deemed to be outstanding and beneficially owned by the person to whom such shares are issuable for the purpose of computing the percentage ownership of that person, but they are not treated as outstanding for the purpose of computing the percentage ownership of any other person. |
58
(3) |
This information is based on a Schedule 13G/A filed with the SEC on February 5, 2021 by BlackRock, Inc., or BlackRock. According to the Schedule 13G/A, as of December 31, 2020, BlackRock has sole power to vote or direct the vote of 5,878,981 ordinary shares and sole power to dispose or direct the disposition of 6,395,173 ordinary shares. The Schedule 13G/A also indicates that BlackRock is acting as a parent holding company for a number of entities that beneficially owned the ordinary shares being reported. The Schedule 13G/A provides information only as of December 31, 2020 and, consequently, the beneficial ownership of the above-mentioned entity may have changed between December 31, 2020 and March 31, 2021. |
(4) |
This information is based on a Schedule 13G/A filed with the SEC on February 10, 2021 by The Vanguard Group, or Vanguard. According to the Schedule 13G/A, as of December 31, 2020, Vanguard has shared power to vote or direct the vote of 51,993 ordinary shares, sole power to dispose or direct the disposition of 4,748,290 ordinary shares, and shared power to dispose or direct the disposition of 129,603 shares. The Schedule 13G/A provides information only as of December 31, 2020 and, consequently, the beneficial ownership of the above-mentioned entity may have changed between December 31, 2020 and March 31, 2021. |
(5) |
This information is based on a Schedule 13G/A filed with the SEC on February 11, 2021 by Renaissance Technologies, LLC, or Renaissance, on behalf of itself and Renaissance Technologies Holdings Corporation, or RTHC. According to the Schedule 13G/A, as of December 31, 2020, Renaissance has sole power to vote or direct the vote of 3,099,050 ordinary shares and sole power to dispose or the direct the disposition of 3,099,050 ordinary shares. Of these shares, RTHC, as a result of its majority ownership of Renaissance, is the beneficial owner of 3,099,050 ordinary shares, with sole power to vote or direct the vote of 3,099,050 ordinary shares and sole power to dispose or direct the disposition of 3,099,050 ordinary shares. The Schedule 13G/A provides information only as of December 31, 2020 and, consequently, the beneficial ownership of the above-mentioned entities may have changed between December 31, 2020 and March 31, 2021. |
(6) |
This information is based on a Schedule 13G filed with the SEC on February 8, 2021 by FMR, LLC, or FMR. According to the Schedule 13G, as of December 31, 2020, FMR has sole power to vote or direct the vote of 580,941 ordinary shares and sole power to dispose or the direct the disposition of 2,927,121 ordinary shares. The Schedule 13G provides information only as of December 31, 2020 and, consequently, the beneficial ownership of the above-mentioned entity may have changed between December 31, 2020 and March 31, 2021. |
(7) |
Includes 809,062 ordinary shares Mr. Cozadd has the right to acquire pursuant to options exercisable within 60 days of March 31, 2021. |
(8) |
Includes 68,958 ordinary shares Mr. Swisher has the right to acquire pursuant to options exercisable within 60 days of March 31, 2021. |
(9) |
Includes 12,104 ordinary shares Ms. Galá has the right to acquire pursuant to options exercisable and 4,150 shares Ms. Galá is expected to receive pursuant to RSUs scheduled to vest, in each case within 60 days of March 31, 2021. Ms. Galá was appointed our Executive Vice President and Chief Financial Officer as of March 2020. |
(10) |
Includes 23,687 ordinary shares Dr. Iannone has the right to acquire pursuant to options exercisable within 60 days of March 31, 2021. |
(11) |
Ms. Sablich was appointed our Executive Vice President and General Manager, North America, as of June 2020. |
(12) |
Includes 31,085 ordinary shares Mr. Berns has the right to acquire pursuant to options exercisable within 60 days of March 31, 2021. |
(13) |
Ms. Cook joined our board of directors effective December 1, 2020. |
(14) |
Includes 8,540 ordinary shares Mr. Enright has the right to acquire pursuant to options exercisable within 60 days of March 31, 2021. |
(15) |
Includes 30,085 ordinary shares Mr. Gray has the right to acquire pursuant to options exercisable within 60 days of March 31, 2021. |
(16) |
Includes 30,085 ordinary shares Ms. McSharry has the right to acquire pursuant to options exercisable within 60 days of March 31, 2021. |
(17) |
Includes 31,085 ordinary shares Mr. Mulligan has the right to acquire pursuant to options exercisable within 60 days of March 31, 2021. |
(18) |
Includes 26,585 ordinary shares Mr. O’Keefe has the right to acquire pursuant to options exercisable within 60 days of March 31, 2021. |
(19) |
Includes 10,130 ordinary shares Ms. O’Riordan has the right to acquire pursuant to options exercisable within 60 days of March 31, 2021. |
(20) |
Includes 30,085 ordinary shares Dr. Riedel has the right to acquire pursuant to options exercisable within 60 days of March 31, 2021. |
(21) |
Includes 23,785 ordinary shares Mr. Schnee has the right to acquire pursuant to options exercisable within 60 days of March 31, 2021. |
(22) |
Dr. Smith joined our board of directors effective December 1, 2020. |
(23) |
Includes 22,085 ordinary shares Dr. Sohn has the right to acquire pursuant to options exercisable within 60 days of March 31, 2021. |
(24) |
Includes 22,085 ordinary shares Mr. Winningham has the right to acquire pursuant to options exercisable within 60 days of March 31, 2021. |
59
(25) |
Includes 1,261,410 ordinary shares that our executive officers and non-employee directors have the right to acquire pursuant to options exercisable within 60 days of March 31, 2020 and 4,150 ordinary shares that our executive officers and non-employee directors are expected to receive pursuant to RSUs scheduled to vest within 60 days of March 31, 2021. See footnotes (7) through (24) above. |
Item 13. |
Certain Relationships and Related Transactions, and Director Independence |
Policy and Procedures for Review of Related Party Transactions
We have adopted a Related Party Transaction Policy that sets forth our procedures for the identification, review, consideration and approval or ratification of “related-person transactions.” For purposes of our policy, a “related-person transaction” is a transaction, arrangement or relationship (or any series of similar transactions, arrangements or relationships) in which we are, were or will be a participant, and the amount involved exceeds $120,000, and any “related person” had, has or will have a direct or indirect material interest (other than solely as a result of being a director or a beneficial owner of less than 10% of any class of a company’s voting securities). Transactions involving compensation for services provided to us as an employee or director are not covered by this policy. A “related person” is any executive officer, director or beneficial owner of more than 5% of any class of our voting securities, including any of their immediate family members and any entity owned or controlled by such persons.
Under the policy, if a transaction has been identified as a related-person transaction (including any transaction that was not a related-person transaction when originally consummated or any transaction that was not initially identified as a related-person transaction prior to consummation), our management must present information regarding the related-person transaction to our audit committee (or, if audit committee approval would be inappropriate, to another independent body of our board of directors) for review, consideration and approval or ratification. The presentation must include a description of, among other things, the material facts, the interests, direct and indirect, of the related person(s), the benefits to us of the transaction and whether the transaction is on terms that are comparable to the terms available to or from, as the case may be, an unrelated third party or to or from employees generally. Under the policy, we will, on an annual basis, collect information that our Chief Legal Officer, or CLO, deems reasonably necessary from each director, executive officer and (to the extent feasible) significant shareholder to enable us to identify any existing or potential related-person transactions and to effectuate the terms of the policy. In addition, under our code of conduct, our employees and directors have an affirmative responsibility to disclose any transaction or relationship that reasonably could be expected to give rise to a conflict of interest to our CLO, or, if the employee is an executive officer, to our board of directors. In considering related-person transactions, our audit committee (or other independent body of our board of directors) will take into account the relevant available facts and circumstances including, but not limited to, the risks, costs and benefits to us, the terms of the transaction, the availability of other sources for comparable services or products and, if applicable, the impact on a director’s independence in the event that the related person is a director, immediate family member of a director or an entity with which a director is affiliated.
The policy requires that, in determining whether to approve, ratify or reject a related-person transaction, our audit committee (or other independent body of our board of directors) must consider, in light of known circumstances, whether the transaction is in, or is not inconsistent with, our best interests and those of our shareholders, as our audit committee (or other independent body of our board of directors) determines in the good faith exercise of its discretion.
Transactions with Related Persons; Indemnification
Transactions with Related Persons.
Indemnification
60
Director Independence
As required under the Nasdaq listing standards, a majority of the members of a listed company’s board of directors must qualify as “independent,” as affirmatively determined by the board of directors. Our board of directors consults with counsel to ensure that the board’s determinations are consistent with relevant securities and other laws and regulations regarding the definition of “independent,” including those set forth in the applicable Nasdaq listing standards, as in effect from time to time. Consistent with these considerations, after review of all relevant transactions or relationships between each director, or any of his or her family members, and our company, our senior management and our independent registered public accounting firm, the board of directors affirmatively determined that all of our current directors are independent directors within the meaning of the applicable Nasdaq listing standards, except that Mr. Cozadd, our Chairman and CEO, is not independent by virtue of his employment with our company. In addition, our board of directors has determined that each member of the audit committee, compensation committee and nominating and corporate governance committee meets the applicable Nasdaq and SEC rules and regulations regarding “independence” and that each member is free of any relationship that would impair his or her individual exercise of independent judgment with regard to the company.
Item 14. |
Principal Accountant Fees and Services |
Independent Registered Public Accounting Firm Fees and Services
In connection with the audit of our 2020 financial statements, we entered into an engagement agreement with KPMG, Dublin, or KPMG, which sets forth the terms under which KPMG performed audit and tax services for the company.
The following table represents aggregate fees billed to us for the years ended December 31, 2020 and 2019 by KPMG, our independent registered public accounting firm (in thousands):
Year Ended December 31, | ||||||||||
2020 |
2019 | |||||||||
| Audit Fees |
$ | 2,075 | $ | 2,483 | ||||||
| Audit-Related Fees |
115 | 92 | ||||||||
| Tax Fees |
1,137 | 1,169 | ||||||||
| Tax compliance services |
916 |
1,098 |
||||||||
| Tax advisory services |
221 |
71 |
||||||||
| All Other Fees |
3 | 3 | ||||||||
| |
|
|||||||||
| Total Fees |
$ | 3,330 | $ | 3,746 | ||||||
Audit Fees
Audit-Related Fees
Tax Fees
All Other Fees
All of the services and fees described above were approved by our audit committee.
As shown in the table above, less than 7% of the total fees that KPMG billed us for in 2020 were for services other than audit, audit-related and tax compliance services.
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Pre-Approval
Policies and Procedures Our audit committee has a policy and procedures for the basis before the independent auditor is engaged to provide each service. The
pre-approval
of audit and non-audit
services rendered by our independent registered public accounting firm. Our policy generally requires the pre-approval
of specified services in the defined categories of audit services, audit-related services, and tax services up to specified amounts. Pre-approval
may also be given as part of the audit committee’s approval of the scope of the engagement of the independent auditor or on an individual explicit case-by-case
pre-approval
of services may be delegated to one or more of the audit committee’s members, but the decision must be reported to the full audit committee at its next scheduled meeting. Our audit committee determined that the rendering of the services other than audit services by our independent registered public accounting firm is compatible with maintaining the principal accountant’s independence.
PART IV
Item 15. |
Exhibits and Financial Statement Schedules |
(a) The following documents are filed as part of the registrant’s 2020 Annual Report on Form
10-K
filed with the SEC on February 23, 2021: 1. |
Index to Financial Statements: |
See Index to Consolidated Financial Statements in Item 8 of the 2020 Annual Report on Form
10-K.
2. |
Index to Financial Statement Schedules: |
The following financial statement schedule of Jazz Pharmaceuticals plc was filed as part of the Annual Report on
Form 10-K
on page F-45
thereof and should be read in conjunction with the consolidated financial statements of Jazz Pharmaceuticals plc. Schedule II: Valuation and Qualifying Accounts
All other schedules were omitted because they are not applicable, not required under the instructions, or the requested information is shown in the consolidated financial statements or related notes thereto.
(b) Exhibits—The following exhibits are included herein or incorporated herein by reference.
62
63
64
65
66
67
68
69
70
71
72
| 101.LAB |
Inline XBRL Taxonomy Extension Labels Linkbase Document (incorporated herein by reference to Exhibit 101.LAB in Jazz Pharmaceutical plc’s Annual Report on Form 10-K (File No. 001-33500) for | |
| 101.PRE |
Inline XBRL Taxonomy Extension Presentation Linkbase Document (incorporated herein by reference to Exhibit 101.PRE in Jazz Pharmaceutical plc’s Annual Report on Form 10-K (File No. 001-33500) for | |
| 104.1 |
Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) (incorporated herein by reference to Exhibit 104 in Jazz Pharmaceutical plc’s Annual Report on Form 10-K (File No. 001-33500) for | |
| 104.2 |
Cover Page Interactive Data File (formatted as Inline XBRL). | |
| + | Indicates management contract or compensatory plan. |
| † | Confidential treatment has been granted for portions of this exhibit. Omitted portions have been filed separately with the Securities and Exchange Commission. |
| ‡ | Certain portions of this exhibit have been omitted pursuant to Item 601(b)(2) of Regulation S-K. |
| * | The certification attached as Exhibit 32.1 accompanies this Annual Report on Form 10-K pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, and shall not be deemed “filed” by the Registrant for purposes of Section 18 of the Securities Exchange Act of 1934, as amended. |
73
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this Amendment No. 1 to its Annual Report on Form
10-K/A
to be signed on its behalf by the undersigned, thereunto duly authorized. | Date: April 23, 2021 | Jazz Pharmaceuticals public limited company | |||
| (Registrant) | ||||
| /S/ BRUCE C. COZADD | ||||
| Bruce C. Cozadd Chairman, Chief Executive Officer and Director (Principal Executive Officer and Duly Authorized Representative) | ||||
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EXHIBIT 31.3
CERTIFICATION
I, Bruce C. Cozadd, certify that:
| 1. | I have reviewed this Amendment No. 1 to the annual report on Form 10-K/A of Jazz Pharmaceuticals public limited company; |
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; and |
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report. |
| Date: April 23, 2021 | By: | /s/ Bruce C. Cozadd | ||
| Bruce C. Cozadd Chairman, Chief Executive Officer and Director (Principal Executive Officer) |
EXHIBIT 31.4
CERTIFICATION
I, Renée Galá, certify that:
| 1. | I have reviewed this Amendment No. 1 to the annual report on Form 10-K/A of Jazz Pharmaceuticals public limited company; |
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; and |
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report. |
| Date: April 23, 2021 | By: | /s/ Renée Galá | ||
| Renée Galá Executive Vice President and Chief Financial Officer (Principal Financial Officer) |