DEF 14A of Vertex Pharmaceuticals Inc / Ma
Filed Apr 3, 2025 · FY20240000875320-25-000160
TABLE OF CONTENTS
| Grants of Plan-Based Awards During 2024 | 80 | | Outstanding Equity Awards at Fiscal Year-End for 2024 | 81 | | Option Exercises and Stock Vested for 2024 | 83 | | SUMMARY OF TERMINATION AND CHANGE OF CONTROL BENEFITS | 84 | | EMPLOYMENT CONTRACTS AND CHANGE OF CONTROL ARRANGEMENTS | 85 | | PAY RATIO | 87 | | PAY VERSUS PERFORMANCE | 88 | | SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT | 92 | | OTHER INFORMATION | 94 | | Other Matters | 94 | | Shareholder Proposals and Nominations for Director for the 2026 Annual Meeting | 94 | | Shareholder Communications to the Board | 95 | | Householding of Annual Meeting Materials | 95 | | Solicitation | 95 | | Forward-Looking Statements | 95 | | Equity Compensation Plan Information | 96 | | FREQUENTLY ASKED QUESTIONS REGARDING THE ANNUAL MEETING | 97 |
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| Shareholder-Recommended Director Candidates |
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The CGNC will consider director candidates recommended by shareholders using the same criteria for director selection described above under Director Criteria, Qualifications and Experience. Shareholders recommending candidates for consideration should submit any pertinent information regarding the candidate, including biographical information and a statement by the proposed candidate that the candidate is willing to serve if nominated and elected, by mail to our corporate secretary at our offices at 50 Northern Avenue, Boston, Massachusetts 02210. If a shareholder wishes to nominate a candidate to be considered for election as a director at the 2026 annual meeting of shareholders using the procedures set forth in our by-laws, the shareholder must follow the procedures described in our by-laws and summarized in the section titled Other Information—Shareholder Proposals and Nominations for Director for the 2026 Annual Meeting on page 94 of this proxy statement. If a shareholder wishes to solicit proxies for a shareholder nominee for election to our board at the 2026 annual meeting of shareholders pursuant to Rule 14a-19 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), the shareholder must follow the procedures set forth in Rule 14a-19 of the Exchange Act and our by-laws. Our by-laws provide for proxy access, a process that allows qualifying shareholders to nominate a director candidate for consideration at an annual meeting of shareholders and have such candidate be included in our proxy materials for the applicable shareholder meeting. The key elements of our proxy access by-law are as follows:
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| Provision | Requirement | | Ownership Threshold and Holding Period | Available to shareholders owning 3% or more of our voting shares continuously for at least 3 years. | | Number of Board Nominees | Total number of proxy access nominees is capped at the greater of 20% of the existing number of board seats (or the closest whole number below 20%) and two. | | Aggregation Limits | 20-shareholder limit on the number of shareholders who can aggregate their shares to satisfy the 3% ownership requirement. | | Proxy Fights | Proxy access nominees will not be included in the proxy materials if we receive notice that a shareholder intends to nominate a candidate who is not to be included in our proxy materials. | | Future Ineligibility | Proxy access nominees who fail to receive at least 10% of the votes cast “for” such nominee may not be re-nominated as a proxy access nominee for the next two annual meetings. |
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The above table is only a summary of our proxy access by-law and is qualified in its entirety by our by-laws.
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| Majority Votes Cast Standard |
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Our by-laws provide for a majority votes cast standard for uncontested elections of our directors. Under our by-laws, director nominees in an uncontested election who receive more votes cast “for” such director nominee than “against” such director nominee are elected. Our board’s policy is that any nominee for director in an uncontested election who receives a greater number of votes “against” than votes “for” the nominee’s election shall promptly tender their resignation to the chair of our board following certification of the shareholder vote. The CGNC will promptly consider the tendered resignation. Based on all factors it deems in its discretion to be relevant, the CGNC will recommend that our board either accept or reject the resignation and may recommend that the board adopt measures designed to address any issues perceived to underlie the election results. Our board will then act on the CGNC’s recommendation. We will promptly disclose our board’s decision, including, if applicable, the reasons for rejecting the tendered resignation. Any director whose resignation is being considered under this policy will not participate in the CGNC or board considerations, recommendations or actions with respect to the tendered resignation.
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| | Sangeeta Bhatia | | | | Age: 56 Director Since: 2015 | Board Committees: •Chair – Science and Technology Committee •Member – Corporate Governance and Nominating Committee | | | Experience: | | | Other Public Company Boards: •None | •John J. and Dorothy Wilson Professor of Health Sciences & Technology/Electrical Engineering & Computer Science at the Massachusetts Institute of Technology (“MIT”) since 2005; Director of the Marble Center for Cancer Nanomedicine at the Koch Institute for Integrative Cancer Research at MIT since 2016; Investigator of the Howard Hughes Medical Institute at MIT since 2008 •Co-Founder of Ropirio Therapeutics, a private biotechnology company focused on lymphatic medicine, since 2023 •Co-Founder of Amplifyer Bio, a private biotechnology company focused on oncology diagnostics, since 2023 •Co-Founder of Matrisome Bio, a private biotechnology company, since 2023 •Co-Founder of Port Therapeutics, a private company focused on thermal bioswitches in oncology, since 2022 •Co-Founder of Satellite Bio, a private company focused on developing satellite organs as living therapeutic solutions, since 2020 •Co-Founder of Glympse Bio, a private company focused on developing in vivo sensing technology dedicated to disease monitoring, from 2018 until it was acquired by Sunbird Bio, Inc. in August 2023 •Professor of bioengineering and medicine at the University of California at San Diego, from 1998 through 2005 •Member of the Department of Medicine at Brigham and Women’s Hospital and member of the Broad Institute •Holds a Sc.B. in biomedical engineering from Brown University, an S.M. and Ph.D. in Mechanical Engineering from MIT, and an M.D. from Harvard Medical School | | | | Key Skills and Qualifications: Dr. Bhatia is a leading academic scientist and medical researcher. Her extensive experience in the field of biomedical engineering and in-depth understanding on the use of advanced technologies in medical research provide valuable insights to our board of directors, including with respect to our key research and development initiatives. | |
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| | Lloyd Carney | | | | Age: 63 Director Since: 2019 | Board Committees: •Chair – Corporate Governance and Nominating Committee •Member – Audit and Finance Committee | | | Experience: | | | Other Public Company Boards: •Visa Inc. •Grid Dynamics Holdings Inc. | •Chief Executive Officer and Chairman, Carney Global Ventures, LLC, an early round investor, since March 2007 •Chief Acquisition Officer of Carney Technology Acquisition Corp. II, a special purpose acquisition corporation, from October 2020 until February 2023 •Chief Executive Officer of ChaSerg Technology Acquisition Corp., a technology acquisition company, from September 2018 until March 2020 •Chief Executive Officer and Director of Brocade Communications Systems Inc., a global supplier of networking hardware and software, from 2013 until it was acquired by Broadcom in 2017 •Chief Executive Officer of Xsigo Systems, a cloud-based infrastructure solutions provider, from 2008 until it was acquired by Oracle in 2012 •Chief Executive Officer and Chairman of Micromuse Inc., a software solutions provider for business and service assurance, from 2003 until it was acquired by IBM in 2006 •Previously held senior leadership roles at Juniper Networks, Inc., Nortel Networks Inc., and Bay Networks, Inc. •Member of the board of directors of Nuance Communications Inc., a publicly traded AI-enabled communication company, until it was acquired by Microsoft Corp in March 2022 •Ambassador/Special Investment Envoy for Technology Jamaica, since May 2023 •Chancellor for the University of Technology, Jamaica, a public university in Jamaica, since August 2022 •Holds a Bachelor of Science degree in Electrical Engineering Technology from Wentworth Institute of Technology, a Master of Science degree in Applied Business Management from Lesley College, a Honorary Doctorate degree in Engineering from Wentworth Institute of Technology and a Honorary Doctorate degree in Technology from University of Technology Jamaica | | | | Key Skills and Qualifications: Mr. Carney brings strong business judgment, honed through his time as a senior executive and board member of multiple global technology companies, to our board of directors. As Chief Executive Officer of multiple technology companies, Mr. Carney has extensive experience in operations, strategic planning, finance, information technology and cybersecurity, and risk management. | |
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| | Alan Garber | | | | Age: 69 Director Since: 2017 | Board Committees: •Member – Corporate Governance and Nominating Committee •Member – Science and Technology Committee | | | Experience: | | | Other Public Company Boards: •None | •President of Harvard University since August 2024 after serving as Interim President from January to August 2024; Provost of Harvard University and the Mallinckrodt Professor of Health Care Policy at Harvard Medical School, a Professor of Economics in the Faculty of Arts and Sciences, Professor of Public Policy in the Harvard Kennedy School of Government, and Professor in the Department of Health Policy and Management in the Harvard T.H. Chan School of Public Health, from September 2011 to August 2024 •Henry J. Kaiser Jr. Professor, a Professor of Medicine, and a Professor (by courtesy) of Economics, Health Research and Policy, and of Economics in the Graduate School of Business at Stanford University, from 1998 until 2011 •Member of the National Academy of Medicine, the American Society of Clinical Investigation, the Association of American Physicians, and the American Academy of Arts and Sciences •Member of the board of Directors of Exelixis, Inc., a genomics-based drug-discovery company, from January 2005 to May 2024 •Fellow of the American Association for the Advancement of Science, the American College of Physicians, and the Royal College of Physicians •Current Research Associate with the National Bureau of Economic Research and served for nineteen years as founding Director of its Health Care Program •Previously served as a member of the National Advisory Council on Aging at the National Institutes of Health, as a member of the Board of Health Advisers of the Congressional Budget Office, and as Chair of the Medicare Evidence Development and Coverage Advisory Committee at the Centers for Medicare and Medicaid Services •Holds an A.B. summa cum laude, an A.M. and a Ph.D., all in Economics, from Harvard University, and an M.D. with research honors from Stanford University | | | | Key Skills and Qualifications: Dr. Garber brings extensive leadership experience and knowledge regarding science, medicine, and the healthcare industry and in particular, healthcare economics, to our board of directors. His expertise in health care policy and as an advisor to government agencies provides our board with important insights and perspectives on the issues facing our company. | |
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| | Reshma Kewalramani | | | | Age: 52 Director Since: 2020 | Position: •Chief Executive Officer and President | | | Experience: | | | Other Public Company Boards: •None | •Chief Executive Officer and President of Vertex Pharmaceuticals Incorporated since April 2020 •Executive Vice President and Chief Medical Officer of Vertex from 2018 through March 2020 •Senior Vice President, Late Development of Vertex from 2017 until 2018 •Member of the Board of Directors of Ginkgo Bioworks Holdings, Inc., a publicly traded biotechnology company, from 2021 to 2024 •Served in roles of increasing responsibility at Amgen Inc. from 2004 to 2017, most recently as Vice President and Head of U.S. Medical Organization •Industry representative to the FDA’s Endocrine and Metabolic Drug Advisory Committee from 2014 through 2019 •Holds a B.A. from Boston University and an M.D. from Boston University School of Medicine; Dr. Kewalramani completed her internship and residency in Internal Medicine at the Massachusetts General Hospital and her fellowship in Nephrology at the Massachusetts General Hospital and Brigham and Women’s Hospital combined program •Dr. Kewalramani is an alumna of the Harvard Business School, having completed the General Management Program | | | | Key Skills and Qualifications: Dr. Kewalramani possesses strong leadership qualities, significant experience overseeing and scaling the operations of a global enterprise, deep expertise in drug development, and wide-ranging experience in policy matters, demonstrated through her services as a senior executive in the biotechnology sector. She is a physician-executive with extensive industry knowledge garnered through her scientific and medical roles and experience as a global senior leader across multiple disease areas and all stages of drug development. She provides our board of directors with in-depth knowledge of our company gained during her various senior management roles within Vertex and through the day-to-day leadership of our executives as CEO. | |
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| | Michel Lagarde | | | | Age: 51 Director Since: 2023 | Board Committees: •Member – Audit and Finance Committee | | | Experience: | | | Other Public Company Boards: •None | •Executive Vice President and Chief Operating Officer at Thermo Fisher Scientific Inc. (“Thermo Fisher”), a supplier of analytical instruments, life sciences solutions, specialty diagnostics, laboratory, pharmaceutical and biotechnology services, since January 2022; Thermo Fisher is a supplier to Vertex •Executive Vice President at Thermo Fisher from 2019 through 2021 •Senior Vice President and President, Pharma Services at Thermo Fisher from 2017 to 2019, joining Thermo Fisher as Senior Vice President, as a result of its acquisition of Patheon N.V., a pharma services company, in 2017 •President and Chief Operating Officer of Patheon N.V. from 2016 to 2017 •Managing Director of JLL Partners, a private equity firm focused on healthcare, from 2008 to 2016 •Holds a bachelor’s degree in business administration from European University in Antwerp and an executive master’s degree in finance and control from the University of Maastricht and University of Amsterdam | | | | Key Skills and Qualifications: Mr. Lagarde has deep experience across numerous segments of the health care industry and markets around the world, as well as a successful track record of growing and scaling profitable businesses. He brings to our board of directors strong leadership experience in biotechnology and pharmaceutical development and commercial manufacturing services, as well as financial expertise across several international markets. | |
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| | Jeffrey Leiden | | | | Age: 69 Director Since: 2009 | Position: •Executive Chairman | | | Experience: | | | Other Public Company Boards: •None | •Chief Executive Officer and President of Vertex Pharmaceuticals Incorporated from 2012 through March 2020 •Chairman of Board of Directors of Vertex since 2012; previously served as lead independent director from 2010 through 2011 •Managing Director at Clarus Ventures, a life sciences venture capital firm, from 2006 to 2012 •President and Chief Operating Officer of Abbott Laboratories, Pharmaceuticals Products Group and a member of the board of directors of Abbott Laboratories from 2001 to 2006 •Held several academic appointments from 1987 to 2000, including the Rawson Professor of Medicine and Pathology and Chief of Cardiology and Director of the Cardiovascular Research Institute at the University of Chicago, the Elkan R. Blout Professor of Biological Sciences at the Harvard School of Public Health, and Professor of Medicine at Harvard Medical School •Elected member of both the American Academy of Arts and Sciences and the Institute of Medicine of the National Academy of Sciences •Member of the board of directors of Quest Diagnostics Incorporated, a publicly traded medical diagnostics company, from 2014 to May 2019; member of the board of directors and non-executive Vice Chairman of Shire plc, a specialty biopharmaceutical company, from 2006 to 2012; Chairman of Revolution Healthcare Acquisition Corp., a special purpose acquisition corporation, from April 2021 to December 2022 •Dr. Leiden received his M.D., Ph.D. and B.A. degrees from the University of Chicago | | | | Key Skills and Qualifications: Dr. Leiden possesses strong leadership qualities, demonstrated through his service as a senior executive in the biotechnology and pharmaceutical industries and as a life sciences venture capitalist. He has extensive knowledge of the science underlying drug discovery and development through his experiences as a distinguished physician, scientist, and teacher. As our former CEO and as a former senior executive at Abbott Laboratories, he brings a global perspective to our business and public policy issues facing our company. He also provides our board of directors with in-depth knowledge of our company and our corporate strategy. | |
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| | Diana McKenzie | | | | Age: 60 Director Since: 2020 | Board Committees: •Member – Audit and Finance Committee •Member – Management Development and Compensation Committee | | | Experience: | | | Other Public Company Boards: •MetLife Inc. •agilon health, inc. | •Chief Information Officer of Workday, Inc., a cloud-based financial and human capital management software company, from 2016 until April 2019 •Held roles of increasing responsibility at Amgen Inc., a biotechnology company, for 12 years, most recently serving as Senior Vice President and Chief Information Officer •Held various leadership roles at Eli Lilly and Company, a pharmaceutical company, for 17 years, focused on drug development, reducing time to market and improving technology and security standards •Member of the board of directors of Change Healthcare, Inc., a publicly traded healthcare technology company, from August 2019 until it was acquired by United Health Group in October 2022 •Holds a Bachelor of Science degree in Computer Information Systems from Purdue University and completed the Information Technology Management Program at University of California, Los Angeles and the CERT Certification for Cybersecurity Oversight from Carnegie Mellon’s Software Engineering Institute | | | | Key Skills and Qualifications: Ms. McKenzie has corporate leadership experience and industry knowledge that make her a valuable contributor to our board of directors. Her service as an executive and innovator in the biotechnology and technology industries and as a member of the board of directors of public companies involved in healthcare issues provide her with multiple perspectives on our industry. Ms. McKenzie brings extensive experience growing, scaling, and transforming global businesses in the healthcare and software industries. In addition, Ms. McKenzie is a proven technology leader who brings extensive digital, technology, and cybersecurity knowledge and perspective based on nearly three decades of experience in the space. | |
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| | Bruce Sachs | | | | Age: 65 Director Since: 1998 | Position: •Lead Independent Director Board Committees: •Chair – Management Development and Compensation Committee •Member – Corporate Governance and Nominating Committee | | | Experience: | | | Other Public Company Boards: •None | •Partner Emeritus at Charles River Ventures (“CRV”), a venture capital firm; General Partner at CRV for more than 20 years, including more than 10 years as the Managing Partner •Executive Vice President and General Manager of Ascend Communications, Inc. from 1998 to 1999 •President and Chief Executive Officer of Stratus Computer, Inc. from 1997 until it was acquired by Ascend Communications in 1998 •Executive Vice President and General Manager of the Internet Telecom Business Group at Bay Networks, Inc. from 1995 to 1997 •President and Chief Executive Officer of Xylogics, Inc. from 1993 until it was acquired by Bay Networks in 1995 •Holds a B.S.E.E. in electrical engineering from Bucknell University, an M.E.E. in electrical engineering from Cornell University, and an M.B.A. from Northeastern University | | | | Key Skills and Qualifications: Mr. Sachs brings exceptionally strong business judgment to our board, honed through his experience developing business strategy as a senior executive and in venture capital. Mr. Sachs has an incomparable understanding of our business, gained through his service on the board of directors of the Company, and of the global business environment. In addition, Mr. Sachs has significant business leadership experience, financial expertise, and knowledge with respect to information technology and security, having served as a technology company CEO and as a board member of several computer networking companies. | |
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| | Jennifer Schneider | | | | Age: 50 Director Since: 2024 | Board Committees: •Member - Management Development and Compensation Committee | | | Experience: | | | Other Public Company Boards: •None | •Co-Founder and Chief Executive Officer of Homeward Health Inc., a company committed to rearchitecting the delivery of health and care in rural America in partnership with communities, since 2022 •President of Livongo Health, a biotechnology company, from December 2018 to October 2020, and served as the Chief Medical Officer from September 2015 to December 2018 •Served in multiple leadership roles at Castlight Health, Inc., a healthcare navigation company, from 2010 to 2015, most recently as Chief Medical Officer •Member of the board of directors at Revolution Healthcare Acquisition Corp., a special purpose acquisition company, from March 2021 to December 2022 •Member of the board of directors at Health Assurance Acquisition Corp., a special purpose acquisition company, from September 2020 until it liquidated in November 2022 •Holds a B.S. in Biology from the College of the Holy Cross, an M.D. from Johns Hopkins School of Medicine, and an M.S. in Health Services Research from Stanford University | | | | Key Skills and Qualifications: Dr. Schneider has deep knowledge and expertise in healthcare and technology. She has led or held senior leadership roles in multiple companies focused on delivering innovative solutions in healthcare management. At Livongo, Dr. Schneider led the company through the largest consumer digital health initial public offering in history as well as its merger with Teladoc Health, the industry’s largest ever merger. Dr. Schneider brings extensive experience as a practicing physician and as a leader building healthcare companies that use technology to provide access to clinical services. | |
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| | Nancy Thornberry | | | | Age: 68 Director Since: 2023 | Board Committees: •Member – Science and Technology Committee | | | Experience: | | | Other Public Company Boards: •Denali Therapeutics •Schrödinger Inc. | •Founder and Chief Executive Officer of Kallyope, Inc. (“Kallyope”), a private biotechnology company, from November 2015 to October 2021, and served as Chair of Research and Development through December 2023 •Self-employed as a consultant to companies in the biotechnology and pharmaceutical industries from August 2013 to October 2015 •Served in roles of increasing responsibility at Merck & Co., Inc., a pharmaceutical company, for more than 30 years, most recently as Senior Vice President and Franchise Head, Diabetes and Endocrinology •Holds a B.S. in Chemistry and Biology from Muhlenberg College | | | | Key Skills and Qualifications: Ms. Thornberry has over 30 years of experience in the pharmaceutical and biotechnology industries and her scientific leadership has spanned across drug discovery, research & development, and business development. She brings to our board of directors leadership experience in critical scientific roles that drove innovation at both public and private companies. Her industry experience, scientific acumen and strategic thinking brings great value to our board of directors. | |
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| | Suketu Upadhyay | | | | Age: 56 Director Since: 2022 | Board Committees: •Chair – Audit and Finance Committee •Member - Management Development and Compensation Committee | | | Experience: | | | Other Public Company Boards: •None | •Chief Financial Officer and Executive Vice President - Finance, Operations and Supply Chain of Zimmer Biomet, a leading global innovator and manufacturer of orthopedic solutions, since July 2019 •Senior Vice President, Global Financial Operations at Bristol-Myers Squibb from 2016 to June 2019 •Executive Vice President and Chief Financial Officer of Endo International from 2013 to 2016 •Previously served as interim Chief Financial Officer and Senior Vice President of Finance, Corporate Controller and Principal Accounting Officer of Becton Dickinson and Senior Vice President of Global Financial Planning and Analysis and Vice President and Chief Financial Officer of Becton Dickinson’s international business •Previously held a number of global finance and strategy roles across AstraZeneca and Johnson & Johnson, including Research and Development, Supply Chain, Commercial Operations and Business Development •Spent the early part of his career in public accounting with KPMG, earning his CPA designation and his CMA designation (each designation currently inactive) •Holds a Bachelor of Science in Finance from Albright College and an MBA from The Fuqua School of Business at Duke University | | | | Key Skills and Qualifications: Mr. Upadhyay has extensive experience in the health care industry in financial roles covering all major areas of a fully integrated life sciences business. His service as an executive in the pharmaceutical, hospital supply, and medical device industries provide him with multiple perspectives on our industry. His knowledge and expertise make him a valuable contributor to our board of directors and management. | |
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| Board Recommendation |
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In each of the director nominee biographies, we highlight the specific experience, qualifications, attributes, and skills that led the board of directors to conclude that the director nominee should serve on our board at this time.
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| For all of the above reasons, our board of directors unanimously recommends that you vote FOR each of the nominees. |
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We are committed to good corporate governance and integrity in our business dealings. Our governance practices are documented in our Statement of Corporate Governance Principles, which addresses the role and composition of our board of directors and the functioning of the board and its committees. You can find our governance documents, including our Statement of Corporate Governance Principles, charters for each committee of the board, and our Code of Conduct, on our website www.vrtx.com under “Investors—Corporate Governance—Governance Documents.”
Public Policy and Engagement
| Non-Employee Director Compensation Program |
Public Policy and Engagement
| 2024 Director Compensation |
Public Policy and Engagement
| Director(1) | Fees Earned or Paid in Cash | Stock Awards(2) | Option Awards(2) | All Other Compensation | Total | | Sangeeta N. Bhatia | $135,000 | $400,110 | $— | $15,000(3) | $550,110 | | Lloyd Carney | $139,073 | $400,110 | $— | $25,000(3) | $564,183 | | Alan Garber | $121,854 | $— | $400,008 | $— | $521,862 | | Terrence C. Kearney(4) | $47,287 | $— | $400,008 | $14,971(5) | $462,266 | | Michel Lagarde | $113,516 | $— | $400,008 | $25,000(3) | $538,524 | | Diana McKenzie | $129,354 | $400,110 | $— | $20,500(3) | $549,964 | | Bruce I. Sachs(6) | $178,179 | $— | $400,008 | $25,000(3) | $603,187 | | Jennifer Schneider(7) | $70,776 | $400,093 | $— | $25,000(3) | $495,869 | | Nancy Thornberry | $109,011 | $200,255 | $200,004 | $10,000(3) | $519,270 | | Suketu Upadhyay | $137,864 | $400,110 | $— | $25,000(3) | $562,974 |
Acute Pain
| What We Do | What We Don’t Do | | Caps on incentive awards | Excessive executive perquisites | | Multiple performance metrics | Supplemental pension benefits for executives | | Range of awards; not all or nothing | Single-trigger vesting in connection with a change-in-control for equity awards | | Compensation recoupment (clawback) policy | Hedging or pledging or speculative transactions in our securities by directors and executive officers | | Balance of short- and long-term incentives (through annual cash bonuses and equity awards) | Re-pricing of stock options without shareholder approval | | Executive and Non-Employee Director Stock Ownership Guidelines | Allow payment of dividends on unvested performance shares or units | | Independent compensation consultant | 280G gross-ups (payments to offset excise taxes) in existing agreements | | Annual risk review | | | Pay-for-performance sensitivity and emphasis | | | Robust shareholder outreach | |
Role of Compensation Consultant
Role of Compensation Consultant The MDCC (i) is directly responsible for the appointment and oversight of its compensation consultants, (ii) has the authority to determine the fees that we pay for services provided by such compensation consultants, and (iii) prior to engaging any compensation consultant, considers applicable factors potentially affecting the independence of the compensation consultant, including the factors set forth in Nasdaq Marketplace Rule 5605(d)(3). Annually, the MDCC engages an independent compensation consultant to conduct an analysis of our compensation program as a whole, as well as all elements of our executive officer compensation program compared to similar elements paid to similarly situated executives at companies in our Peer Group (as defined below) and to provide a written report and presentation of findings at the meeting of the MDCC that occurs in the summer each year. The compensation consultant also provides guidance on other matters that may arise from time to time and participates in regular discussions with the MDCC Chair, as requested. In 2024, the MDCC continued its engagement with Pearl Meyer as its independent compensation consultant. Pearl Meyer is compensated by the company for advice provided at the direction of the MDCC. The MDCC reviews Pearl Meyer’s independence in accordance with applicable Nasdaq and SEC rules. Based on this review, and other factors considered by the MDCC, the MDCC determined that Pearl Meyer’s work did not raise a conflict of interest.
Use of Peer Group Companies
Use of Peer Group Companies In order to conduct a thorough assessment about the competitiveness of the elements of executive compensation that we provide to our NEOs, the MDCC and our board of directors consider information about the compensation practices of a representative group of companies with whom we compete for executive talent (our “Peer Group”). We conduct a detailed analysis to select companies for this Peer Group on the basis of similarity and complexity of business model. While revenue and industry are common peer selection criteria, we also use a mix of quantitative and qualitative factors in order to establish our peers for this purpose, including the following:
Use of Peer Group Companies
| Factor Considered | What We Look For | | Similar industry | Biotechnology or pharmaceutical industry | | Importance of medicines to patients and society | Transformative medicines for serious diseases; therapeutics for unmet needs | | Recognized focus on innovation | Breakthrough Therapy designations, priority review and/or other markers indicating unmet need | | Global operations | Significant operations both within and outside the U.S. | | Commercial operations | Marketing and selling approved medicines | | Significant R&D investment | Greater than $2.2B or 25% of revenue | | Number of employees | Greater than 2,000 employees | | Market capitalization and significance to broader economy | Market cap at least ¼ our size and/or inclusion in S&P 500 or Nasdaq 100 | | Labor market competitor | Companies we compete with for executive talent | | Companies that use Vertex as a peer | Inclusion of Vertex in proxy reported peer group |
Use of Peer Group Companies
It is unlikely that companies will meet all of the factors listed above; therefore we look for companies meeting a majority of the criteria, although we place greater weight on companies focused on innovation and the importance of medicines to patients and society as we believe these are the key drivers of our business model. On a regular basis, we review and revise the list of companies with the goal of maintaining a group of comparators comprised of at least twelve companies. As a result of this analysis, and on the basis of the criteria listed above, the MDCC approved the following comparator companies for 2024, which were the same comparator companies used since 2022, except for the removal of Seagen Inc. due to its acquisition by Pfizer in 2023.
Use of Peer Group Companies
| 2024 Peer Group | | | AbbVie Inc. | Eli Lilly and Company | | Alnylam Pharmaceuticals | Gilead Sciences, Inc. | | Amgen, Inc. | Incyte Corporation | | Biogen, Inc. | Jazz Pharmaceuticals plc | | BioMarin Pharmaceuticals, Inc. | Moderna, Inc. | | Bristol-Myers Squibb Company | Regeneron Pharmaceuticals, Inc. |
Use of Peer Group Companies
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Properties of Peer Group
Properties of Peer Group We believe, based on our discussions with major shareholders, that the Peer Group identified by the MDCC is consistent with our shareholders’ views of our relevant peers in the biotechnology industry. In addition, the Peer Group companies have many of the business model characteristics that we seek in comparator companies as set forth in the following table.
Properties of Peer Group
| Company Information | | R&D Expense(1) | | Operational Focus | | Innovative and Importance of Medicines | | | Uses Vertex as Peer | Market Position | | | | | | | | | Orphan/ Unmet Clinical Need | Approvals: Breakthrough Therapy and Regenerative Medicine Advanced Therapies(2) | Approvals (Last 14 Years): Innovative Drugs and Regenerative Medicine Therapies(3) | | | | | Company | Industry | $ (millions) | % of Revenue | Global | Commercial | | | | | Nasdaq 100 | S&P 500 | | AbbVie | Biotech | $15,548 | 28% | | | | 7 | 9 | | | | | Alnylam | Biotech | $1,126 | 50% | | | | 3 | 2 | | | | | Amgen | Biotech | $5,964 | 18% | | | | 4 | 10 | | | | | Biogen | Biotech | $2,489 | 26% | | | | 1 | 9 | | | | | BioMarin | Biotech | $747 | 26% | | | | 2 | 5 | | | | | Bristol-Myers | Pharma | $24,532 | 51% | | | | 16 | 17 | | | | | Eli Lilly | Pharma | $14,271 | 32% | | | | 6 | 14 | | | | | Gilead | Biotech | $14,750 | 51% | | | | 6 | 10 | | | | | Incyte | Biotech | $2,637 | 62% | | | | 2 | 6 | | | | | Jazz | Pharma | $1,521 | 37% | | | | 1 | 5 | | | | | Moderna | Biotech | $4,543 | 140% | | | | — | 1 | | | | | Regeneron | Biotech | $5,424 | 38% | | | | 9 | 8 | | | | | Vertex | Biotech | $8,259 | 75% | | | | 9 | 7 | | | |
Properties of Peer Group
(1)R&D Expense (including certain expenses related to intangible assets) and R&D Expense as a % of Revenue reflect the trailing data for the most recent four quarters as of December 31, 2024 per the S&P Capital IQ database. (2)Per the Center for Drug Evaluation and Research (“CDER”) Breakthrough Therapy Approvals report, which lists approvals for breakthrough therapy designated drugs and the Center for Biologics Evaluation and Research (“CBER”) Regenerative Medicine Advanced Therapy Approvals report, which lists approvals for breakthrough therapy designated regenerative medicines. (3)Innovative drugs and regenerative therapies in the last fourteen years include: VIEKIRA PAK, IMBRUVICA, VENCLEXTA, ORILISSA, MAVYRET, RINVOQ, SKYRIZI, QULIPTA and EPKINLY (AbbVie), ONPATTRO and GIVLAARI (Alnylam), AIMOVIG, BLINCYTO, XGEVA, PROLIA, KYPROLIS, PARSABIV, EVENITY, TEZSPIRE, LUMAKRAS, and IMDELLTRA (Amgen), TECFIDERA, ALPROLIX, SPINRAZA, ELOCTATE, VUMERITY, ADUHELM, LEQEMBI, SKYCLARYS and QALSODY (Biogen), BRINEURA, PALYNZIQ, VIMIZIM, VOXZOGO and ROCTAVIAN (BioMarin), ABECMA, BREYANZI, SOTYKTU, CAMZYOS, ZESPOSIA, ONUREG, REBLOZYL, INREBIC, IDHIFA, EVOTAZ, OPDIVO, POMALYST, ELIQUIS, YERVOY, OPDUALAG, COBENFY, and KRAZATI (Bristol-Myers), CYRAMZA, EMGALITY, JARDIANCE, OLUMIANT, PORTRAZZA, RETEVMO, REYVOW, TALTZ, VERZENIO, MOUNJARO, JAYPIRCA, OMVOH, EBGLYSS, and KISUNLA (Eli Lilly), YESCARTA, SOVALDI, HARVONI, VEMLIDY, CAYSTON, ZYDELIG, BIKTARVY, VEKLURY, SUNLENCA, and LIVDELZI (Gilead), JAKAFI, OLUMIANT, PEMAZYRE, RUXOLITINIB, ZYNYZ, and NIKTIMVO (Incyte), VYXEOS, DEFITELIO, ZEPZELCA, RYLAZE, and ZIIHERA (Jazz), SPIKEVAX (Moderna), and DUPIXENT, LIBTAYO, PRALUENT, EYLEA, ZALTRAP, INMAZEB, EVKEEZA, and VEOPOZ (Regeneron). We do not solely benchmark to a particular level of compensation relative to compensation levels at the Peer Group companies, but rather assess compensation levels after considerable deliberation about where each executive should fall in comparison with executives with similar responsibilities at the Peer Group companies. The MDCC looks at Peer Group information to confirm that our compensation levels are competitive with those of the Peer Group companies and consistent with our compensation philosophy. In addition, the MDCC reviews broader industry specific executive compensation surveys published by AON/Radford, Mercer SIRS, and Willis Towers Watson, but does not make any material compensation decisions based on any particular company participants in such surveys.
Properties of Peer Group
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Properties of Peer Group
Due to the low representation of the Chief Operating Officer role within the Peer Group, Pearl Meyer supplemented the Peer Group with broader life science industry companies for purposes of analyzing competitive compensation for this role. Pearl Meyer reviewed companies within the broader life sciences industry and included all companies with a chief operating officer or similar role and greater than $2 billion revenues and greater than $10 billion market capitalization. The MDCC reviewed the compensation practices for the following broader life science industry companies when considering compensation for Mr. Arbuckle:
Properties of Peer Group
| Peer Group Companies | Life Science Companies | | Abbvie Inc. | Charles River Laboratories Int’l, Inc. | | Amgen, Inc. | DexCom, Inc. | | Jazz Pharmaceuticals plc | Hologic, Inc. | | | ResMed, Inc. | | | Thermo Fisher Scientific Inc. | | | United Therapeutics Corp. |
Properties of Peer Group
| Elements of Annual Compensation |
Properties of Peer Group
Our practice is to target total direct compensation including base salary, target annual cash incentives, and target long-term incentive awards at market competitive levels depending upon the NEO’s responsibilities, expertise, and experience. At superior levels of performance, we aim for the design of our executive compensation program to result in actual total direct compensation at or above the seventy-fifth percentile of peer executive compensation. Each year we review the mix of elements of our executive compensation program to ensure they are appropriately designed in light of our goals to align the program with our business strategy, the competitive environment and our shareholders’ interests. Our executive compensation program emphasizes a mix of long-term equity compensation awards to incentivize and reward those individuals who make the greatest contribution to company performance over time. For our NEOs, this means compensation is primarily in the form of equity and directly tied to changes in shareholder value over time. For our 2024 equity grants, we maintained our mix of equity awards, including PSUs and time-based RSUs.
Performance-Based Value-Based Program
| Compensation Element | Performance Link | | Annual Cash Bonus | •Annual bonus dependent on both company and individual performance factors | | Equity Awards | •Grant date value of equity awards based on target award values by level with differentiation for individual performance •Value of shares granted based on target set by MDCC and Board, adjusted for individual performance ranging from 0% for below target individual performance, 100% at target performance, and up to 150% for above target individual performance | | PSU Awards | •50% of PSUs with range of shares earned 0% to 200% of target based on one year financial metrics (to the extent earned, vesting in equal installments over a three-year period) •50% of PSUs with range of shares earned 0% to 200% of target based on three-year non-financial metrics (to the extent earned, cliff-vesting after three years) | | Time-Based RSUs | •Value of awards increases or decreases based on stock price over the three-year vesting period •We consider our time-vesting RSU awards to be performance-based awards because the target number of RSUs awarded may be adjusted based on the corresponding executive’s individual performance for the relevant performance period prior to grant as well as the resulting value dependent upon increases or decreases in our stock price over the three-year vesting period |
Performance-Based Value-Based Program
More specifically: •PSU Awards. Our CEO and executive vice presidents (“EVPs”) receive 50% of their annual equity compensation in the form of PSUs. 50% of the number of PSUs are eligible to vest based on the achievement of financial goals and the remaining 50% of the number of PSUs are eligible to vest based on the achievement of non-financial goals. The financial PSUs, if earned, vest in annual installments over a three-year period measured from the date of grant, and the non-financial PSUs, if earned, cliff vest after three years. The potential shares earned pursuant to these PSU awards range from 0% to 200% of the target number of shares, with the number of shares actually issued determined by the achievement of the financial and non-financial performance goals. The MDCC selected revenue and clinical development milestones as the performance goals applicable to the PSUs because the MDCC determined that these milestones are important, measurable metrics, the achievement of which would indicate successful execution toward our short- and long-term strategic objectives and build considerable shareholder value. •Time-based RSUs. Our CEO and EVPs receive 50% of their annual equity compensation in the form of time-based RSUs that vest over a three-year period measured from the date of grant. With 50% of the annual long-term incentive award at risk pending successful execution of our financial and strategic objectives through the grant of PSUs, we believe that it is important to have the remaining half of the annual long-term equity award focused on retaining our key executive talent. As a result, we believe time-based RSUs encourage retention and focus on long-term value creation thereby aligning the interests of the holders of these awards with the interests of our shareholders.
Performance-Based Value-Based Program
Rather than awarding standard annual merit increases, the MDCC recommends base salaries for our executive officers based on multiple factors, including an annual competitive market analysis on a position-by-position basis. The MDCC reviews a comparison of each executive’s prior year base salary to salaries reported for executives with similar responsibilities at Peer Group companies (as supplemented for Mr. Arbuckle, as described above). The MDCC does not solely benchmark to a particular level of compensation relative to compensation levels at the Peer Group companies. Instead, the MDCC’s judgment about where each executive should fall in comparison with executives with similar responsibilities at the Peer Group companies takes into account the executive’s general level of experience and capability, the significance of the executive’s job responsibilities to the achievement of our business strategy and company goals, and general performance over time, including demonstration of corporate values. On the basis of that information, including a review of compensation at Peer Group companies, and taking into consideration the executive’s base salary for the previous year or years, the MDCC approves an appropriate base salary for each executive officer other than the CEO and recommends an appropriate base salary for the CEO, subject to final approval by our independent directors. As a result, executive base salaries may be held constant from year to year as was the case last year when we disclosed that all named executive officer base salaries were maintained.
Performance-Based Value-Based Program
During the 2024 annual review of base salaries, the MDCC recommended salary increases for Dr. Kewalramani, Dr. Altshuler, Mr. Arbuckle, Dr. Tatsis and Mr. Wagner, which reflect each individual executive’s past and expected future contributions, performance, experience, specific responsibilities relative to peer benchmarks, and competitive positioning within the Peer Group companies. The resulting increases vary based on the MDCC’s review of these factors. For example, the three executive base salary increases of approximately 15% reflects the MDCC’s thoughtful approach of reviewing and determining appropriate base salaries on an annual basis, rather than implementing standard annual merit increases. The MDCC’s recommended increases recognize the contributions of each executive to the company’s success and provide competitive market adjustments.
Annual Performance Ratings
Annual Performance Ratings
Annual Performance Ratings
| | | RESULTS EVALUATION | | | | | | | RESULTS - Not Building | RESULTS - Building | RESULTS - Strong | RESULTS - Leading | | | Exemplary Demonstration | Not Possible | Strong | Leading | Leading Exemplary | | | Living the Values | Not Building | Building | Strong | Leading | | | Inconsistent Demonstration | Not Building | Not Building | Building | Not Possible |
Annual Performance Ratings
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Annual Performance Ratings
The 2024 results-based rating recommendation for each NEO, other than our CEO, is the combined result of the MDCC members’ own observations and a review of the executive’s role in the accomplishment of the corporate goals and recommendations regarding the executive, the latter of which is provided to the MDCC by our CEO and is made on the basis of her independent assessment of each executive officer’s performance. The MDCC, Dr. Kewalramani and Dr. Leiden discussed each recommendation at length, on both an individual and comparative basis. Upon completion of these discussions, the MDCC determined and approved the results-based rating for each executive. The final results-based ratings reflect the recommendations of Dr. Kewalramani and Dr. Leiden, the opinions of MDCC members (based on the executive’s contributions and the MDCC members’ interactions with the executive), as well as other factors. The MDCC gave Dr. Kewalramani’s recommendations greater weight when determining the behaviors-based rating than when determining the results-based rating, as the behaviors-based rating is pertinent to the executive’s daily interactions in carrying out their duties. Furthermore, the MDCC believes that, in her role as CEO, Dr. Kewalramani had greater visibility than the MDCC members into the quality of these interactions. Taking into account all of the factors raised in the discussion and the assigned individual performance rating, the MDCC assigns an individual performance factor for each NEO within the ranges set forth below that, along with the annual corporate performance factor, determined each NEO’s annual bonus. While the individual ratings are not 100% objective, we view them as critical factors indicative of management success and crucial to achieving the more objective goals discussed above. The results-based and behaviors-based evaluations for our CEO are based on a similar assessment of individual performance by our MDCC and the independent directors. Individual performance can significantly affect an executive officer’s cash and equity compensation.
2024 Actual Individual Ratings for Named Executive Officers
| Reshma Kewalramani CEO and President | 2024 Rating: | Leading Exemplary | | | 2024 Salary: | $1,600,000 | | | 2024 Bonus: | $4,941,600 | | | LTI Equity Grants (Feb 2025): | $17,145,000 |
2024 Actual Individual Ratings for Named Executive Officers
| Charles F. Wagner, Jr. EVP, Chief Financial Officer | 2024 Rating: | Leading Exemplary | | | 2024 Salary: | $950,000 | | | 2024 Bonus: | $1,821,150 | | | LTI Equity Grants (Feb 2025): | $6,000,000 |
2024 Actual Individual Ratings for Named Executive Officers
| David M. Altshuler | 2024 Rating: | Strong | | EVP, Chief Scientific Officer | 2024 Salary: | $950,000 | | | 2024 Bonus: | $1,456,920 | | | LTI Equity Grants (Feb 2025): | $4,800,000 |
2024 Actual Individual Ratings for Named Executive Officers
| Stuart A. Arbuckle | 2024 Rating: | Leading Exemplary | | EVP, Chief Operating Officer | 2024 Salary: | $1,000,000 | | | 2024 Bonus: | $2,130,000 | | | LTI Equity Grants (Feb 2025): | $7,125,000 |
2024 Actual Individual Ratings for Named Executive Officers
| Ourania “Nia” Tatsis | 2024 Rating: | Leading Exemplary | | EVP, Chief Regulatory and Quality Officer | 2024 Salary: | $750,000 | | | 2024 Bonus: | $1,341,900 | | | LTI Equity Grants (Feb 2025): | $5,600,000 |
2024 Actual Individual Ratings for Named Executive Officers
| Annual Cash Bonus |
2024 Actual Individual Ratings for Named Executive Officers
| Target Cash Bonus | | | x | Performance Factors | | | = | Cash Bonus | | Base Salary | × | Individual Incentive Target (expressed as a percentage of base salary) | × | Company Performance Factor (expressed as a percentage of the target bonus) | × | Individual Performance Factor (expressed as a percentage of the target bonus) | = | Annual Cash Bonus Award | | | | 90%-150% based on role | | 0%-150% | | 0-150% | | |
2024 Actual Individual Ratings for Named Executive Officers
| Name | 2024 Base Salary | Individual Incentive Target | | 2024 Target Bonus | Company Performance Factor | Individual Performance Factor | | 2024 Performance Cash Bonus | | Reshma Kewalramani | $1,600,000x | 150% | = | $2,400,000x | 142%x | 145% | = | $4,941,600 | | Charles F. Wagner, Jr. | $950,000x | 90% | = | $855,000x | 142%x | 150% | = | $1,821,150 | | David M. Altshuler | $950,000x | 90% | = | $855,000x | 142%x | 120% | = | $1,456,920 | | Stuart A. Arbuckle | $1,000,000x | 100% | = | $1,000,000x | 142%x | 150% | = | $2,130,000 | | Nia Tatsis | $750,000x | 90% | = | $675,000x | 142%x | 140% | = | $1,341,900 |
2024 Actual Individual Ratings for Named Executive Officers
| Annual Equity Awards |
Value-Based Guidelines for Annual NEO Equity Grants
Value-Based Guidelines for Annual NEO Equity Grants Under our compensation program, equity awards for our CEO and EVPs are calculated by multiplying the individual’s target equity award by his or her performance rating-based equity modifier based on a performance-specific multiplier range, as outlined below. This performance-specific multiplier range increases the performance sensitivity of the program by adding the flexibility to adjust the equity modifier to reflect individual performance and expected contributions, further aligning the interests of our CEO and EVPs with the interests of our shareholders. The target value, available individual ratings and corresponding performance rating-based equity modifier ranges for our executive officers are set forth in the table below.
Value-Based Guidelines for Annual NEO Equity Grants
| | Target value | Performance Rating-Based Equity Modifiers | | | | | | | | Not Building | Building | Strong | Leading | Leading Exemplary | | CEO | $13,500,000 | —% | 50% - 86.5% | 86.5% - 113.5% | 100% - 127% | 113.5% - 127% | | COO | $4,750,000 | —% | 50% - 80% | 80% - 120% | 100% - 150% | 120% - 150% | | EVP (excluding the COO) | $4,000,000 | —% | 50% - 80% | 80% - 120% | 100% - 150% | 120% - 150% |
Value-Based Guidelines for Annual NEO Equity Grants
The CEO equity modifier range is narrower relative to the COO and EVP ranges in order to reflect the tighter distribution of equity award values among the peer CEO comparators. Based on a comparative analysis of our Peer Group companies, as supplemented to address Mr. Arbuckle’s COO role, the MDCC maintained the target equity value for Dr. Kewalramani, Mr. Arbuckle and our other EVPs of $13.5 million, $4.75 million and $4.0 million, respectively. The mid-point of the performance factor range for Leading and highest performance factor for Leading Exemplary performance were selected based on award values approximating the 75th and mid upper quartile percentiles, respectively, of executives at our Peer Group companies. The number of shares granted pursuant to the time-vested RSU award and PSU award was based on the fair value of our common stock on the date of grant (with the number of shares subject to PSUs determined at target). As previously announced, Mr. Wagner’s target equity value will increase to $4,750,000 when he assumes the role of our Chief Operating Officer on July 1, 2025.
February 2025 Grants Based on 2024 Performance
February 2025 Grants Based on 2024 Performance In February 2025, the MDCC approved individual performance factors and equity awards for each of the NEOs other than our CEO, as set forth in the table below. For our CEO, upon the MDCC’s recommendation, our independent directors approved the individual performance factor and equity award for our CEO as set forth in the table below.
February 2025 Grants Based on 2024 Performance
| Name | Individual Performance Rating | Performance Rating-Based Equity Modifier | Performance- Based RSU (50%) | Time-based RSU (50%) | Total Equity Value | | Reshma Kewalramani | Leading Exemplary | 127% | $8,572,500 | $8,572,500 | $17,145,000 | | Charles F. Wagner, Jr. | Leading Exemplary | 150% | $3,000,000 | $3,000,000 | $6,000,000 | | David M. Altshuler | Strong | 120% | $2,400,000 | $2,400,000 | $4,800,000 | | Stuart A. Arbuckle | Leading Exemplary | 150% | $3,562,500 | $3,562,500 | $7,125,000 | | Nia Tatsis | Leading Exemplary | 140% | $2,800,000 | $2,800,000 | $5,600,000 |
Performance Units Results Table
Performance Units Results Table We annually grant one-year financial-based PSU awards and three-year non-financial based PSU awards. We believe the combination of the one-year financial and three-year non-financial PSUs provides an appropriate balance of near- and long-term incentives for our management team. Our near-term objective of growing our revenues complements our long-term strategic objectives to progress our clinical portfolio and obtain approvals for additional transformative medicines for serious diseases. The performance goal for the 2024 financial-based PSU was established in February 2024 based on 2024 net product revenues using budgeted foreign currency rates. The final performance multipliers for our 2024 financial-based PSU awards were determined by the MDCC and applied to the target units granted to determine the actual units earned and eligible to vest with a payout of 200% in February 2025. The following chart shows the pre-established financial goals and the actual results for the financial-based PSU awards granted in 2024:
Performance Units Results Table
| Award Year | Company Goal | Below Threshold | Threshold | Target | Max | Results | | | | | 0% Payout | 50% Payout | 100% Payout | 200% Payout | Product Revenue | Payout | | 2024 | 2024 Net Product Revenues(1) | <$10.315 billion | $10.315 billion | $10.465 to $10.565 billion | >$10.715 billion | $10.75 billion | 200% |
Performance Units Results Table
(1)Reflects certain pre-established foreign exchange-related adjustments, and excludes product revenue from certain markets. Consistent with our philosophy of aligning compensation with performance, for 2024, a year in which we substantially exceeded our net product revenue expectations, the payout on our one-year financial PSU awards achieved the maximum level. The performance goals for the 2022 non-financial PSUs were established in February 2022 and our performance against these goals was determined in the first quarter of 2025. There were three non-financial goals and achievement of one goal would have resulted in a 50% payout, achievement of two goals would have resulted in a 100% payout and achievement of three goals would have resulted in a payout of 200%.
Performance Units Results Table
| | | | Payout | | 2022 | CF Portfolio Milestone - Complete regulatory submissions in US and EU for vanzacaftor triple | Achieved | 200% | | | Deliver at least two completed proof of concepts in non-CF programs, at least one of which is in cell and gene therapies to the extent not already counted for other proof-of-concept performance milestones; programs may be in-licensed or acquired | Achieved | | | | Submit a non-cystic fibrosis product candidate or a non-small-molecule cystic fibrosis candidate for regulatory approval | Achieved | |
Performance Units Results Table
The final performance multipliers for our 2022 non-financial PSUs were determined by the MDCC and applied to the target units granted to determine the actual units earned and eligible to vest with a payout of 200% in February 2025. Performance achievement for the 2023, 2024 and 2025 non-financial based PSU awards will be determined in the first quarter of 2026, 2027 and 2028, respectively, based on performance over the relevant three-year performance period. The non-financial goals contained in our three-year PSU awards for 2023, 2024 and 2025 are based on multiple clinical milestones, and are not disclosed for competitive reasons and because the relevant performance periods are ongoing. In 2025, we added a fourth non-financial milestone to the PSU award related to manufacturing excellence.
Performance Units Results Table
| Other Compensation Arrangements |
Employment Agreements and Post-Termination Compensation and Benefits
Employment Agreements and Post-Termination Compensation and Benefits The initial compensation terms for newly hired members of our executive team are the result of negotiations between us, in consultation with the MDCC and our board of directors, and the executive being hired. In general, each newly hired executive team member enters into an employment agreement and a change of control agreement and is granted an equity award, and in some cases a cash sign-on bonus, reimbursement of moving expenses, and other benefits. We also enter into employment and change of control agreements with EVPs who are promoted to our executive team, on the basis of standard terms and conditions that have been recommended by our MDCC and approved by our board for such circumstances. We have entered into agreements providing for severance and change of control payments with each EVP on our executive team because we believe that they are a fair and effective way to allow our executives to maintain focus on our business in the face of market and other volatility in our industry. In general, each employment arrangement provides for cash severance and continuation of certain employee benefits in the event that an executive’s employment is terminated by us without cause or is terminated by the executive for good reason. We use a “double trigger” with respect to benefits that are to be provided in connection with a change of control. A change of control does not itself trigger benefits; rather, benefits are paid only if the employment of the executive is terminated by us other than for cause, death or disability, or by the executive for good reason, during a specified period before or after a change of control. We believe a “double trigger” benefit maximizes shareholder value because it prevents a windfall to executives in the event of a change of control in which the executive retains significant responsibility as defined in their individual agreement, while still providing our executives appropriate incentives to cooperate in negotiating any change of control transaction that may put their jobs at risk. We offer a company-wide program that provides for accelerated vesting of equity awards held by qualified retirement-eligible participants who retire (our “Career Employment Provision”). Equity awards granted, including those granted to our NEOs, contain a retirement vesting provision, under which a “qualified” participant who retires under the terms of the provision will receive accelerated vesting of an additional number of shares underlying the award. In 2024, the MDCC assessed our Career Employment Provision to review peer practices, ensure alignment with our philosophy of rewarding and incentivizing long-term service with the Company as well as to provide a competitive advantage to attract talent with significant industry experience and expertise. As a result of the review, the MDCC amended the Career Employment Provision effective for any newly hired employees on or after January 1, 2025. Under the legacy Career Employment Provision, equity awards granted, including those granted to our NEOs, contain a retirement vesting provision, under which a “legacy qualified” participant who retires under the terms of the provision will receive accelerated vesting of an additional number of shares underlying the award, equal to the sum of (x) 50% plus 10% for each year of service in excess of five full years of service multiplied by (y) the number of unvested shares subject to the award. A “legacy qualified” participant is a participant (1) who is at least age 55 and who was most recently hired before January 1, 2025, (2) has completed at least five full years of service, (3) whose age plus full years of service is 65 or greater, and (4) who has completed a mandatory transitional period of employment with the company following notice of their planned termination of service. Under the amended Career Employment Provision, equity awards granted contain a retirement vesting provision under which a “qualified” participant who retires under the terms of the provision will receive full accelerated vesting of all shares underlying the award. A “qualified” participant is a participant (1) who is at least age 55 and who was most recently hired on or after January 1, 2025, (2) has completed at least ten full years of service, and (3) who has completed a mandatory transitional period of employment with the company following notice of their planned termination of service. The Career Employment provision amendments are effective as of January 1, 2025, and apply to future grants of equity awards. The applicable provisions will be based on the employee’s most recent hire date. Currently all NEOs were hired prior to January 1, 2025, therefore they meet the definition of a “legacy qualified” participant with eligibility for the partial vesting acceleration benefit once meeting the age, service and transitional period requirements of the provision. Mr. Arbuckle has met the age and service requirements under the definition of a “legacy qualified” participant. In connection with his retirement on July 1, 2025, the MDCC considered Mr. Arbuckle as eligible for the retirement vesting provisions of his equity awards. In addition to the benefits that only accrue in connection with a change of control, our agreements with our executive officers provide benefits if we terminate their employment with us without cause or they terminate their employment with us for good reason, as such terms are defined in the applicable agreement with the executive officer. A further discussion of the terms and projected payments under each of our agreements with our NEOs is set forth below under the heading Employment Contracts and Change of Control Arrangements.
Equity Grant Practices
Equity Grant Practices Our MDCC and board of directors generally determines annual equity grants at its meeting each February when it evaluates individual performance for the year. This meeting may occur prior to the company’s release of earnings and filing of its Annual Report on Form 10-K. In such cases, the annual equity awards will be granted on the second full trading day following the company’s release of earnings. This is generally the same date that the company’s trading window opens. For all value-based equity grants, we convert value to shares on the date of grant using the average of the high and low price for the common stock on the day the equity grant is awarded. The MDCC and board thus ensure that the market has had time to adjust to earnings news before the value used to convert to shares has been set. Newly hired employees, including executive officers, are sometimes granted equity awards effective on the first day of employment. The employees’ start dates are scheduled without regard to anticipated earnings or other major announcements by the company. As a matter of practice, the MDCC and board do not take material non-public information into account when determining the timing and terms of equity awards, and the company has not timed the disclosure of material non-public information for the purpose of affecting the value of executive compensation. We do not currently grant options to our employees, including our executive officers.
Emphasis on Long-term Value Creation and Mitigation of Short-term Risk Taking
Emphasis on Long-term Value Creation and Mitigation of Short-term Risk Taking Our board believes that a key element of its risk oversight responsibilities is ensuring that our executive compensation program encourages the implementation of our corporate strategy of investing in scientific innovation to create transformative medicines for people with serious diseases and discourages decisions focused on creating short-term financial gains at the expense of long-term value creation. The board reviews our business performance, focusing on financial metrics and non-financial metrics, as well as other strategic factors including talent acquisition and development to ensure our leaders are focusing on long-term growth in a manner aligned with our values. Our MDCC reviews the performance of our executive officers using the above metrics. It also oversees the design of our executive compensation programs to ensure that our executive compensation program does not incentivize our executive officers, either individually or as a group, to make excessively risky business decisions that could maximize short-term results at the expense of long-term value. The independent directors who serve on the MDCC are informed of our most significant risks, including those associated with R&D of new medicines, competition, and the pricing of our medicines. Our MDCC, in consultation with its independent compensation consultant, ensures that our executive compensation programs are aligned with our long-term strategy and do not incentivize overly risky behavior.
Emphasis on Long-term Value Creation and Mitigation of Short-term Risk Taking
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Summary Compensation Table
Summary Compensation Table The following table provides summary information concerning the compensation for each of our NEOs for 2024, 2023, and 2022.
Summary Compensation Table
| Name and Principal Position | Year | Salary | Bonus | Stock Awards (1) | Non-Equity Incentive Plan Compensation | All Other Compensation | Total | | Reshma Kewalramani | 2024 | $1,541,154 | $— | $15,002,202 | $4,941,600 | $53,712 | $21,538,668 | | CEO and President | 2023 | $1,500,000 | $— | $15,001,894 | $4,050,000 | $42,547 | $20,594,441 | | | 2022 | $1,396,154 | $— | $10,640,784 | $3,784,500 | $43,059 | $15,864,497 | | Charles F. Wagner, Jr. | 2024 | $876,443 | $— | $5,250,328 | $1,821,150 | $51,519 | $7,999,440 | | EVP & Chief Financial Officer | 2023 | $825,000 | $— | $5,250,552 | $1,256,063 | $40,136 | $7,371,751 | | | 2022 | $793,269 | $— | $3,750,197 | $1,239,315 | $28,830 | $5,811,611 | | David M. Altshuler | 2024 | $876,443 | $— | $5,250,328 | $1,456,920 | $53,787 | $7,637,478 | | EVP & Chief Scientific Officer | 2023 | $825,000 | $— | $4,375,089 | $1,299,375 | $41,636 | $6,541,100 | | | 2022 | $810,577 | $— | $4,500,090 | $1,172,325 | $42,137 | $6,525,129 | | Stuart A. Arbuckle | 2024 | $941,154 | $— | $6,234,857 | $2,130,000 | $77,452 | $9,383,463 | | EVP & Chief Operating Officer | 2023 | $900,000 | $— | $6,234,712 | $1,822,500 | $41,737 | $8,998,949 | | | 2022 | $900,000 | $— | $12,294,259 | $1,761,750 | $43,097 | $14,999,106 | | Nia Tatsis | 2024 | $691,154 | $— | $5,250,328 | $1,341,900 | $50,934 | $7,334,316 | | EVP & Chief Regulatory and Quality Officer | | | | | | | |
Summary Compensation Table
(1)Pursuant to applicable SEC rules, the grant-date fair values of the equity awards granted in February 2024 for 2023 performance are included in 2024 compensation. Also included in 2022 compensation is the grant-date fair value of a one-time equity awards granted in December 2022 to Mr. Arbuckle. The equity awards granted in February 2025 to Dr. Kewalramani, Mr. Wagner, Dr. Altshuler, Mr. Arbuckle and Dr. Tatsis for 2024 performance are discussed in the Compensation Discussion and Analysis section and are not reflected in the Summary Compensation Table above.
Grants of Plan-Based Awards During 2024
Grants of Plan-Based Awards During 2024 The following table provides information with respect to grants of awards to each of our NEOs during 2024. Pursuant to SEC rules, (i) the threshold, target and maximum amounts payable pursuant to our 2024 annual cash bonus program are set forth in columns under “Estimated Possible Payouts under Non-Equity Incentive Plan Awards,” (ii) the threshold, target, and maximum number of shares that could vest pursuant to PSUs granted in 2024 are set forth in columns under “Estimated Future Payouts under Equity Incentive Plan Awards,” and (iii) the number of shares granted pursuant to other RSU awards in 2024 is set forth under “All Other Stock Awards: Number of Shares of Stock or Units.”
Grants of Plan-Based Awards During 2024
| | | Estimated Possible Payouts Under Non-Equity Incentive Plan Awards | | | Estimated Future Payouts Under Equity Incentive Plan Awards (shares) | | | All Other Stock Awards: Number of Shares of Stock or Units (#) | Grant-Date Fair Value of Stock and Option Awards ($) | | Name | Grant Date | Threshold ($) | Target ($) | Maximum ($) | Threshold (#) | Target (#) | Maximum (#) | | | | Reshma Kewalramani(1) | | $— | $2,400,000 | $5,400,000 | | | | | | | (2a) | 2/7/2024 | | | | — | 10,164 | 20,328 | | $4,286,464 | | (2b) | 2/7/2024 | | | | — | 10,164 | 20,328 | | $2,143,232 | | (3) | 2/7/2024 | | | | | | | 20,327 | $8,572,506 | | Charles F. Wagner, Jr.(1) | | $— | $855,000 | $1,923,750 | | | | | | | (2a) | 2/7/2024 | | | | — | 3,557 | 7,114 | | $1,500,094 | | (2b) | 2/7/2024 | | | | — | 3,557 | 7,114 | | $750,047 | | (3) | 2/7/2024 | | | | | | | 7,114 | $3,000,187 | | David M. Altshuler(1) | | $— | $855,000 | $1,923,750 | | | | | | | (2a) | 2/7/2024 | | | | — | 3,557 | 7,114 | | $1,500,094 | | (2b) | 2/7/2024 | | | | — | 3,557 | 7,114 | | $750,047 | | (3) | 2/7/2024 | | | | | | | 7,114 | $3,000,187 | | Stuart A. Arbuckle(1) | | $— | $1,000,000 | $2,250,000 | | | | | | | (2a) | 2/7/2024 | | | | — | 4,224 | 8,448 | | $1,781,388 | | (2b) | 2/7/2024 | | | | — | 4,224 | 8,448 | | $890,694 | | (3) | 2/7/2024 | | | | | | | 8,448 | $3,562,775 | | Nia Tatsis(1) | | $— | $675,000 | $1,518,750 | | | | | | | (2a) | 2/7/2024 | | | | — | 3,557 | 7,114 | | $1,500,094 | | (2b) | 2/7/2024 | | | | — | 3,557 | 7,114 | | $750,047 | | (3) | 2/7/2024 | | | | | | | 7,114 | $3,000,187 |
Grants of Plan-Based Awards During 2024
(1)Annual Cash Bonus. The amounts in the “Estimated Possible Payouts Under Non-Equity Incentive Plan Awards” column represent the minimum threshold, target and maximum amounts that our NEOs were eligible to earn pursuant to our 2024 annual cash bonus program. Actual amounts paid to each of the NEOs under this program for 2024 performance are set forth in the Summary Compensation Table above. (2)PSU. The amounts in the “Estimated Future Payouts Under Equity Incentive Plan Awards” column represent the minimum threshold, target and maximum number of shares that could be earned and vest pursuant to PSUs granted in 2024. Pursuant to U.S. GAAP, the grant date value of the financial PSU awards (2a) was based on 100% of the fair value of the target shares and the grant date value of the non-financial PSU awards (2b) was based on a fair value of 50% of the target shares in 2024. These awards vest if, and only if, performance objectives are achieved, as described in the footnotes to the table Outstanding Equity Awards at Fiscal Year-End for 2024 below. (3)Time-Based RSUs. The amounts in the “All Other Stock Awards: Number of Shares of Stock or Units” column represent the number of time-based RSUs granted to the NEOs in 2024, which generally vest annually over three years.
Narrative Disclosure to Summary Compensation Table and Grants of Plan-Based Awards Table
Narrative Disclosure to Summary Compensation Table and Grants of Plan-Based Awards Table Each NEO has entered into an employment agreement with the company, which provides the executives the right to participate in all of the company’s compensation and benefits plans and equity programs, as described in Compensation Discussion & Analysis.
Narrative Disclosure to Summary Compensation Table and Grants of Plan-Based Awards Table
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Narrative Disclosure to Summary Compensation Table and Grants of Plan-Based Awards Table
The following table provides information with respect to outstanding equity awards held by each of our NEOs on December 31, 2024, based on the closing price of $402.70 per share of our common stock on December 31, 2024:
Narrative Disclosure to Summary Compensation Table and Grants of Plan-Based Awards Table
| | Option Awards | | | | Stock Awards | | | | | Name | Number of Securities Underlying Unexercised Options Exercisable (shares) | Number of Securities Underlying Unexercised Options Unexercisable (shares) | Option Exercise Price (per share) | Option Expiration Date (1) | Number of Shares or Units of Stock That Have Not Vested (shares) | Market Value of Shares or Units of Stock That Have Not Vested | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (shares) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested | | Reshma Kewalramani | Time-based RSU | | | | | | | | | | | | | | 9,706(2) | $3,908,606 | | | | | | | | | 17,982(3) | $7,241,351 | | | | | | | | | 20,327(4) | $8,185,683 | | | | | Performance-based RSU | | | | | | | | | | | | | | 9,706(5) | $3,908,606 | | | | | | | | | 17,982(6) | $7,241,351 | | | | | | | | | 29,118(7) | $11,725,819 | | | | | | | | | 20,328(8) | $8,186,086 | | | | | | | | | | | 26,972(9) | $10,861,624 | | | | | | | | | 20,328(10) | $8,186,086 | | Charles F. Wagner, Jr. | Time-based RSU | | | | | | | | | | | | | | 3,421(2) | $1,377,637 | | | | | | | | | 6,294(3) | $2,534,594 | | | | | | | | | 7,114(4) | $2,864,808 | | | | | Performance-based RSU | | | | | | | | | | | | | | 3,422(5) | $1,378,039 | | | | | | | | | 6,294(6) | $2,534,594 | | | | | | | | | 10,262(7) | $4,132,507 | | | | | | | | | 7,114(8) | $2,864,808 | | | | | | | | | | | 9,440(9) | $3,801,488 | | | | | | | | | 7,114(10) | $2,864,808 | | | Stock Options | | | | | | | | | | 9,532 | 0 | $189.38 | 4/9/2029 | | | | | | David M. Altshuler | Time-based RSU | | | | | | | | | | | | | | 4,105(2) | $1,653,084 | | | | | | | | | 5,244(3) | $2,111,759 | | | | | | | | | 7,114(4) | $2,864,808 | | | | | Performance-based RSU | | | | | | | | | | | | | | 4,106(5) | $1,653,486 | | | | | | | | | 5,244(6) | $2,111,759 | | | | | | | | | 12,314(7) | $4,958,848 | | | | | | | | | 7,114(8) | $2,864,808 | | | | | | | | | | | 7,866(9) | $3,167,638 | | | | | | | | | 7,114(10) | $2,864,808 |
Narrative Disclosure to Summary Compensation Table and Grants of Plan-Based Awards Table
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Narrative Disclosure to Summary Compensation Table and Grants of Plan-Based Awards Table
| | Option Awards | | | | Stock Awards | | | | | Name | Number of Securities Underlying Unexercised Options Exercisable (shares) | Number of Securities Underlying Unexercised Options Unexercisable (shares) | Option Exercise Price (per share) | Option Expiration Date (1) | Number of Shares or Units of Stock That Have Not Vested (shares) | Market Value of Shares or Units of Stock That Have Not Vested | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (shares) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested | | Stuart A. Arbuckle | Time-based RSU | | | | | | | | | | | | | | 4,875(2) | $1,963,163 | | | | | | | | | 7,473(3) | $3,009,377 | | | | | | | | | 8,448(4) | $3,402,010 | | | | | | | | | 12,753(11) | $5,135,633 | | | | | Performance-based RSU | | | | | | | | | | | | | | 4,876(5) | $1,963,565 | | | | | | | | | 7,474(6) | $3,009,780 | | | | | | | | | 14,624(7) | $5,889,085 | | | | | | | | | 8,448(8) | $3,402,010 | | | | | | | | | | | 11,210(9) | $4,514,267 | | | | | | | | | 8,448(10) | $3,402,010 | | | | | | | | | 37,622(12) | $15,150,379 | | Nia Tatsis | | | | | | | | | | | Time-based RSU | | | | 3,421(2) | $1,377,637 | | | | | | | | | 5,244(3) | $2,111,759 | | | | | | | | | 7,114(4) | $2,864,808 | | | | | Performance-based RSU | | | | | | | | | | | | | | 3,422(5) | $1,378,039 | | | | | | | | | 5,244(6) | $2,111,759 | | | | | | | | | 10,262(7) | $4,132,507 | | | | | | | | | 7,114(8) | $2,864,808 | | | | | | | | | | | 7,866(9) | $3,167,638 | | | | | | | | | 7,114(10) | $2,864,808 | | | Stock Options | | | | | | | | | | 2,854 | 0 | $155.57 | 2/5/2028 | | | | | | | 6,145 | 0 | $187.53 | 2/5/2029 | | | | |
Narrative Disclosure to Summary Compensation Table and Grants of Plan-Based Awards Table
(1)The option expiration dates listed above reflect the final expiration date for each of the listed options. If the NEO’s service with us is terminated, the options would expire, subject to certain exceptions, 90 days after the termination of service. (2)These time-based RSU awards, which were granted on February 1, 2022, vest in three annual installments. The shares listed on the table above represent the third annual installment, which vested on February 24, 2025. (3)These time-based RSU awards, which were granted on February 1, 2023, vest in three annual installments. The shares listed on the table above represent the second and third annual installments, which vested on February 10, 2025 and are scheduled to vest February 10, 2026, respectively. (4)These time-based RSU awards, which were granted on February 7, 2024, vest in three annual installments. The shares listed on the table above represent the three annual installments, the first of which vested on February 17, 2025, and are scheduled to vest in two remaining annual installments on February 17, 2026 and 2027. (5)This PSU award was based on the achievement of one-year financial performance metrics tied to our net product revenue for medicines for the treatment of CF during 2022, with vesting of the earned shares in three equal installments on each of February 24, 2023, 2024 and 2025. In February 2023, our MDCC certified as to the level of performance at 200% of the number of target shares. The shares listed on the table above represent the final installment of the earned shares, which vested on February 24, 2025. (6)This PSU award was based on the achievement of one-year financial performance metrics tied to our net product revenue for medicines for the treatment of CF during 2023, with vesting of the earned shares in three equal installments on each of February 10, 2024, 2025 and 2026. In February 2024, our MDCC certified as to the level of performance at 200% of the number of target shares. The shares listed on the table above represent the second and third installments of earned shares, which vested on February 10, 2025 and are scheduled to vest on February 10, 2026, respectively. (7)This PSU award is based on the achievement of three-year non-financial performance metrics, which were established by the MDCC on January 24, 2022. The performance conditions associated with the awards consist of multiple clinical and research milestones, with a payout range of zero to 200%. In February 2025, our MDCC certified as to the level of performance at 200% of the number of target shares, with the number of shares reported above reflected as such. The earned shares vested on February 26, 2025.
Narrative Disclosure to Summary Compensation Table and Grants of Plan-Based Awards Table
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Narrative Disclosure to Summary Compensation Table and Grants of Plan-Based Awards Table
Option Exercises and Stock Vested for 2024 (8)This PSU award was based on the achievement of one-year financial performance metrics, which were established by the MDCC on February 6, 2024, and are tied to our net product revenue during 2024, with vesting of the earned shares generally occurring in three equal installments scheduled for each of February 17, 2025, 2026 and 2027. In February 2025, our MDCC certified as to the level of performance at 200% of the number of target shares, with the number of shares reported above reflected as such. (9)This PSU award is based on the achievement of three-year non-financial performance metrics, which were established by the MDCC on February 1, 2023, with the number and value of shares reported assuming maximum performance (200%). The performance conditions associated with the awards consist of multiple clinical and research milestones, with a payout range of zero to 200%. The specific clinical and research milestones are not disclosed for competitive reasons. Performance against these goals will be certified by our MDCC in early 2026. (10)This PSU award is based on the achievement of three-year non-financial performance metrics, which were established by the MDCC on February 6, 2024, with the number of shares reported assuming maximum performance (200%). The performance conditions associated with the awards consist of multiple clinical and research milestones, with a payout range of zero to 200%. The specific clinical and research milestones are not disclosed for competitive reasons. Performance against these goals will be certified by our MDCC in early 2027. (11)This special, one-time time-based RSU award was granted to Mr. Arbuckle in December 2022 and will cliff vest on July 1, 2025. (12)This special, one-time PSU award was awarded to Mr. Arbuckle in December 2022. The number of shares reported assumes maximum performance (200%). The performance conditions associated with the awards consist of multiple commercial milestones, with a payout range of zero to 200%. The specific commercial milestones are not disclosed for competitive reasons. Performance against these goals will be certified by our MDCC on or before July 2025.
Option Exercises and Stock Vested for 2024
Option Exercises and Stock Vested for 2024 The following table sets forth the value realized by our NEOs from options to purchase common stock exercised by the NEOs during 2024 and shares of stock that vested during 2024. The value realized per share for options is based on the difference between the exercise price and the fair market value of the shares of common stock on the date the options were exercised. The value realized on vesting of stock awards is based on the fair market value of the shares of common stock on the vesting date. Options to purchase common stock are no longer provided as an element of our executive compensation program.
Option Exercises and Stock Vested for 2024
| | Option Awards | | Stock Awards | | | Name | Number of Shares Acquired on Exercise | Value Realized on Exercise | Number of Shares Acquired on Vesting | Value Realized on Vesting | | Reshma Kewalramani | 1,565 | $421,721 | 71,263 | $30,294,626 | | Charles F. Wagner, Jr. | — | $— | 26,699 | $11,345,933 | | David M. Altshuler | — | $— | 27,019 | $11,493,590 | | Stuart A. Arbuckle | — | $— | 33,499 | $14,246,333 | | Nia Tatsis | — | $— | 28,364 | $12,049,255 |
Option Exercises and Stock Vested for 2024
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PAY RATIO
PAY RATIO Under the Dodd-Frank Wall Street Reform and Consumer Protection Act, the SEC requires annual disclosure of the ratio of the annual total compensation of our CEO to that of our median employee. In 2024, Dr. Kewalramani’s annual total compensation, as reported in the Summary Compensation Table, was $21,538,668 and the median of the annual total compensation of all employees of the company (other than our Chief Executive Officer) was $245,708. The ratio of annual total compensation for Dr. Kewalramani to that of our median employee’s annual total compensation was approximately 88:1. Due to growth in our employee population, we identified a new median employee as of October 1, 2024 using target total annual compensation in 2024. Our measure of compensation for identifying the median employee was consistently applied to all employees (converting all non-USD currencies into USD based on 12-month foreign exchange rates for the 12-month period ending October 1, 2024) and includes: •Base salary •Target cash bonus •Target long-term equity awards The methodology included all 6,062 company employees across 24 countries as of October 1, 2024. This pay ratio is a reasonable estimate calculated in a manner consistent with SEC rules based on our payroll and employment records and the methodology described above. Because the SEC rules for identifying the median compensated employee and calculating the pay ratio based on that employee’s annual total compensation allow companies to adopt a variety of methodologies, to apply certain exclusions, and to make reasonable estimates and assumptions that reflect their compensation practices, the pay ratio reported by other companies may not be comparable to the pay ratio reported above, as other companies may have different employment and compensation practices and may utilize different methodologies, exclusions, estimates and assumptions in calculating their own pay ratios.
PAY RATIO
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PAY RATIO
Pursuant to Item 402(v) of Regulation S-K, we are presenting information that describes the relationship between compensation actually paid, as computed under the rules prescribed by Item 402(v), to our NEOs and certain financial performance measures for the company’s five most recently completed fiscal years. For more information about our executive compensation program, refer to the Compensation Discussion and Analysis section of this proxy statement starting on page 51.
PAY RATIO
| Year | Summary Compensation Table Total for CEO(1) | Summary Compensation Table Total for CEO(2) | Compensation Actually Paid to CEO(1)(3) | Compensation Actually Paid to CEO(2)(4) | Average Summary Compensation Table Total for Non-CEO NEOs(5) | Average Compensation Actually Paid to Non-CEO NEOs(6) | Total Shareholder Return (Value of Initial Fixed $100 Investment) | | Net Income (Loss)(9) | | Net Product Revenue(10) | | | | | | | | | | VRTX TSR(7) | NBI TSR(8) | | | | | | 2024 | $21,538,668 | N/A | $43,611,733 | N/A | $8,088,674 | $18,370,307 | $183.92 | $118.20 | $(0.5) | Billion | $11.0 | Billion | | 2023 | $20,594,441 | N/A | $44,202,174 | N/A | $7,376,771 | $18,104,165 | $185.84 | $118.87 | $3.6 | Billion | $9.9 | Billion | | 2022 | $15,864,497 | N/A | $29,529,089 | N/A | $8,982,257 | $18,263,330 | $131.89 | $113.65 | $3.3 | Billion | $8.9 | Billion | | 2021 | $15,198,856 | N/A | $18,341,489 | N/A | $7,193,835 | $8,969,051 | $100.30 | $126.45 | $2.3 | Billion | $7.6 | Billion | | 2020 | $9,111,359 | $16,473,245 | $12,172,454 | $31,319,824 | $6,697,408 | $10,584,384 | $107.94 | $126.42 | $2.7 | Billion | $6.2 | Billion |
PAY RATIO
(1)This column reflects the amounts reported in the “Total” column of the Summary Compensation Table for Reshma Kewalramani, our CEO for a portion of 2020 (effective April 1, 2020), and for 2021, 2022, 2023 and 2024. (2)This column reflects the amounts reported in the “Total” column of the Summary Compensation Table for Jeffrey Leiden, our CEO for a portion of 2020 (until April 1, 2020). (3)The amounts in this column reflect the Compensation Actually Paid for Reshma Kewalramani, our CEO for a portion of 2020 (effective April 1, 2020), and for 2021, 2022, 2023 and 2024. The amounts in the following table reflect the adjustments (additions/deductions) to the Summary Compensation Table Total to determine Compensation Actually Paid. Adjustments (additions/deductions) are not listed for Pension/Non-Qualified Deferred Compensation because we do not offer these plans.
PAY RATIO
| Year | Summary Compensation Table Total | Amounts Deducted from Grant Date Value of Annual Equity | Amounts Added for the Fair Value of Awards Granted During Fiscal Year | Amounts Added for Awards Granted & Vested During Fiscal Year | Amounts Added/ Deducted for Awards that Vested During Fiscal Year | Amounts Added/ Deducted for the Change in Fair Value of Awards Outstanding at Fiscal Year End(a) | Compensation Actually Paid | | 2024 | $21,538,668 | $(15,002,202) | $24,557,854 | $— | $1,298,423 | $11,218,990 | $43,611,733 | | 2023 | $20,594,441 | $(15,001,894) | $24,692,933 | $— | $272,767 | $13,643,927 | $44,202,174 | | 2022 | $15,864,497 | $(10,640,784) | $16,817,103 | $— | $768,712 | $6,719,561 | $29,529,089 | | 2021 | $15,198,856 | $(10,924,599) | $14,344,492 | $— | $(659,323) | $382,063 | $18,341,489 | | 2020 | $9,111,359 | $(5,250,411) | $6,587,268 | $— | $345,685 | $1,378,553 | $12,172,454 |
PAY RATIO
(a)Pursuant to applicable SEC rules, the fair values at the end of each fiscal year for the financial PSU awards were valued at 200% as of December 31, 2024, 2023, 2022, 2021, 2020 and 2019; and, the non-financial PSU award for 2020 was valued at 200%, 50% and 50% as of December 31, 2022, 2021 and 2020, respectively; the non-financial PSU award for 2021 was valued at 100%, 50% and 50% as of December 31, 2023, 2022 and 2021, respectively; the non-financial PSU award for 2022 was valued at 200%, 50% and 0% as of December 31, 2024, 2023 and 2022, respectively; the non-financial PSU award for 2023 was valued at 100% and 50% as of December 31, 2024 and 2023, respectively; the non-financial PSU award for 2024 was valued at 200% as of December 31, 2024. (4)The amounts in this column reflect the Compensation Actually Paid for Jeffrey Leiden, our CEO for a portion of 2020 (until April 1, 2020). The amounts in the following table reflect the adjustments (additions/deductions) to the Summary Compensation Table Total to determine Compensation Actually Paid. Adjustments (additions/deductions) are not listed for Pension/Non-Qualified Deferred Compensation because we do not offer these plans.
PAY RATIO
| Year | Summary Compensation Table Total | Amounts Deducted from Grant Date Value of Annual Equity | Amounts Added for the Fair Value of Awards Granted During Fiscal Year | Amounts Added for Awards Granted & Vested During Fiscal Year | Amounts Added/ Deducted for Awards that Vested During Fiscal Year | Amounts Added/ Deducted for the Change in Fair Value of Awards Outstanding at Fiscal Year End(a) | Compensation Actually Paid | | 2020 | $16,473,245 | $(13,335,168) | $9,294,661 | $7,362,423 | $5,724,395 | $5,800,268 | $31,319,824 |
PAY RATIO
(a)Pursuant to applicable SEC rules, the fair values at the end of each fiscal year for the financial PSU awards were valued at 200% as of December 31, 2020 and 2019; and, the non-financial PSU award for 2017 was valued at 200% as of December 31, 2019; the non-financial PSU award for 2018 was valued at 200% and 100% as of December 31, 2020 and 2019, respectively; the non-financial PSU award for 2019 was valued at 100% and 50% as of December 31, 2020 and 2019, respectively; the non-financial PSU award for 2020 was valued at 50% as of December 31, 2020.
PAY RATIO
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PAY RATIO
(5)This column reflects the average of the amounts reported in the “Total” column of the Summary Compensation Table for our NEOs as a group (excluding our CEO or CEOs, in the case of 2020) for each of the periods presented. The NEOs included for purposes of computing the amounts in this column were as follows: for 2024, Mr. Wagner, Dr. Altshuler, Mr. Arbuckle, and Dr. Tatsis; for 2023 and 2022, Mr. Wagner, Dr. Altshuler, Mr. Arbuckle, and Dr. Leiden; for 2021, Mr. Wagner, Mr. Arbuckle, Dr. Leiden, and Dr. Tatsis; and for 2020, Mr. Wagner, Dr. Altshuler, Mr. Arbuckle, and Michael Parini. (6)This column reflects the average of the Compensation Actually Paid for our NEOs as a group (excluding our CEO or CEOs, in the case of 2020) for each of the periods presented. The amounts in the following table reflect the adjustments to the Summary Compensation Table Total to determine Compensation Actually Paid. The NEOs included for purposes of computing the amounts in this column are listed in footnote (5) above. Adjustments (additions/deductions) are not listed for Pension/Non-Qualified Deferred Compensation because we do not offer these plans.
PAY RATIO
| Year | Summary Compensation Table Total | Amounts Deducted from Grant Date Value of Annual Equity | Amounts Added for the Fair Value of Awards Granted During Fiscal Year | Amounts Added for Awards Granted & Vested During Fiscal Year | Amounts Added/ Deducted for Awards that Vested During Fiscal Year | Amounts Added/ Deducted for the Change in Fair Value of Awards Outstanding at Fiscal Year End(a) | Compensation Actually Paid | | 2024 | $8,088,674 | $(5,496,460) | $8,997,325 | $— | $526,590 | $6,254,178 | $18,370,307 | | 2023 | $7,376,771 | $(5,590,153) | $8,606,944 | $812,533 | $236,286 | $6,661,784 | $18,104,165 | | 2022 | $8,982,257 | $(7,261,199) | $9,489,852 | $1,062,531 | $538,093 | $5,451,796 | $18,263,330 | | 2021 | $7,193,835 | $(5,687,759) | $6,319,320 | $1,125,037 | $(778,741) | $797,359 | $8,969,051 | | 2020 | $6,697,408 | $(4,812,998) | $6,038,487 | $— | $1,048,920 | $1,612,567 | $10,584,384 |
PAY RATIO
(a)Pursuant to applicable SEC rules, the fair values at the end of each fiscal year for the financial PSU awards were valued at 200% as of December 31, 2024, 2023, 2022, 2021, 2020 and 2019; and, the non-financial PSU award for 2017 was valued at 200% as of December 31, 2019; the non-financial PSU award for 2018 was valued at 200% and 100% as of December 31, 2020 and 2019, respectively; the non-financial PSU award for 2019 was valued at 200%, 100% and 50% as of December 31, 2021, 2020 and 2019; the non-financial PSU award for 2020 was valued at 200%, 50% and 50% as of December 31, 2022, 2021 and 2020; the non-financial PSU award for 2021 was valued at 100%, 50% and 50% as of December 31, 2023, 2022 and 2021, respectively; the non-financial PSU award for 2022 was valued at 200%, 50% and 0% as of December 31, 2024, 2023 and 2022, respectively; the non-financial PSU award for 2023 was valued at 100% and 50% as of December 31, 2024 and 2023, respectively; the non-financial PSU award for 2024 was valued at 200% as of December 31, 2024. (7)This column represents our cumulative total shareholder return (“TSR”) under SEC rules from December 31, 2019, the last trading day before the start of 2020, through the last trading day for the applicable fiscal year in the table. TSR is calculated by dividing the sum of the cumulative amount of dividends for the measurement period, assuming dividend reinvestment, and the difference between our share price at the end and the beginning of the measurement period by our share price at the beginning of the measurement period. (8)This column represents the TSR of the NBI, our selected peer group, which is the same peer group used for purposes of Item 201(e) of Regulation S-K from December 31, 2019, the last trading day before the start of 2020, through the last trading day for the applicable fiscal year in the table, assuming reinvestment of dividends and weighted according to the respective companies’ stock market capitalization at the beginning of each period for which a return is indicated. (9)This column reflects net income (loss) as reported for each year in our Annual Report on Form 10-K. In 2024, we had a net loss of $536 million, which reflected our strong operating results offset by $4.4 billion of AIPR&D expense related to the Alpine acquisition. (10)This column reflects net product revenue as reported for each year in our Annual Report on Form 10-K. For purposes of the table above, we have selected net product revenue as the financial performance measure representing the most important financial performance measure used to link executive compensation actually paid to our financial performance in the most recently completed fiscal year. Please see the Compensation Discussion and Analysis section beginning on page 51 of this proxy statement for additional information.
PAY RATIO
| VERTEX PHARMACEUTICALS INCORPORATED - 2025 Proxy Statement | 89 |
Compensation Actually Paid vs TSR (and TSR vs Peer Group TSR)
Compensation Actually Paid vs TSR (and TSR vs Peer Group TSR)
Compensation Actually Paid vs TSR (and TSR vs Peer Group TSR)
| | CEO CAP | | Avg. NEO CAP | | Co. TSR | | Peer TSR |
Compensation Actually Paid vs TSR (and TSR vs Peer Group TSR)
(1)2020 Compensation Actually Paid represented here reflects 2020 compensation of Reshma Kewalramani, our current CEO, and excludes 2020 compensation paid to Jeffrey Leiden, our former CEO.
Compensation Actually Paid vs Net Income (Loss)
Compensation Actually Paid vs Net Income (Loss)
Compensation Actually Paid vs Net Income (Loss)
| | CEO CAP | | Avg. NEO CAP | | Net Income (Loss) |
Compensation Actually Paid vs Net Income (Loss)
(1)2020 Compensation Actually Paid represented here reflects 2020 compensation of Reshma Kewalramani, our current CEO, and excludes 2020 compensation paid to Jeffrey Leiden, our former CEO. (2)As discussed in (9) above, our net loss in 2024 was primarily related to our acquisition of Alpine.
Compensation Actually Paid vs Net Income (Loss)
| 90 | VERTEX PHARMACEUTICALS INCORPORATED - 2025 Proxy Statement |
Compensation Actually Paid vs Net Product Revenue
Compensation Actually Paid vs Net Product Revenue
Compensation Actually Paid vs Net Product Revenue
| | CEO CAP | | Avg. NEO CAP | | Net Product Revenue |
Compensation Actually Paid vs Net Product Revenue
(1)2020 Compensation Actually Paid represented here reflects 2020 compensation of Reshma Kewalramani, our current CEO, and excludes 2020 compensation paid to Jeffrey Leiden, our former CEO.
List of Performance Measures
| Performance Measures Used to Link Executive Compensation Actually Paid to Company Performance for the Most Recently Completed Fiscal Year | | Net Product Revenue | | Pipeline Progression(1) | | Adjusted Non-GAAP EBITDA(2) |
Proposal No. 1: Election of Directors
Proposal No. 1: Election of Directors To be elected, the number of votes cast “FOR” each director nominee must exceed the number of votes cast “AGAINST” that nominee. Abstentions will have no effect on the results of this vote. Our Corporate Governance Principles contain procedures to be followed in the event that one or more directors do not receive a majority of the votes cast “FOR” their election.