DEF 14A of Alkermes plc.
Filed Apr 15, 2024 · FY20230000950170-24-044420
Executive Compensation Highlights
| Pay-for-Performance | Align with Interests of our Shareholders | Balance Short- and Long-Term Incentives | Attract and Retain Key Talent | | We believe in a pay-for-performance approach that supports our business objectives and, as such, a significant portion of each named executive officer’s compensation is performance-based and at-risk | We provide an overall compensation package that rewards individual and Company performance against our corporate objectives to promote the creation and retention of value for the Company and its shareholders | We structure our executive compensation program to align with, and balance, the short- and long-term focus required for success in the biopharmaceutical industry | We seek to attract and retain a highly-skilled workforce by providing a total compensation package that is competitive with other employers who compete with us for talent |
2023 Compensation Program Highlights
2023 Compensation Program Highlights Our executive compensation program highlights include the following: ▪ Significant Portion of “At-Risk” Compensation: A significant portion of the target total direct compensation opportunity for our Chief Executive Officer (“CEO”) and other named executive officers is comprised of “at-risk” compensation in the form of annual cash performance pay opportunities and long-term equity incentive awards. See the sections entitled “Pay Mix – Significant Portion of Executive Compensation is “At-Risk”” on page 87 of this proxy statement, “Executive Compensation Philosophy and Objectives” on page 89 of this proxy statement and “Long-Term Equity Incentive Compensation—Annual Grant” on page 101 of this proxy statement. ▪ Performance-Vesting Equity Included in Annual Grants to All Named Executive Officers: In 2023, the Compensation Committee conditioned vesting of greater than 50% of the total target value of our CEO’s equity grant and approximately 25% of the total target value of the equity grants made to each of our other named executive officers, on achievement over a three-year performance period of financial and pipeline objectives aligned with our long-term business strategy and on relative total shareholder return over the same period. See the section entitled “Long-Term Equity Incentive Compensation—Annual Grant” on page 101 of this proxy statement. ▪ ESG and DIB Objectives Incorporated Into Short-Term Incentive Plans (“STIPs”): The Board and the Compensation Committee understand the importance of ESG and DIB considerations to the Company and its stakeholders and, in 2023, continued to incorporate corporate objectives related to ESG and DIB matters into the Company’s short-term incentive plan for our named executive officers. See the section entitled “2023 Corporate Objectives” on page 94 of this proxy statement. ▪ Double Trigger Change in Control Vesting: Starting in 2023, the Compensation Committee eliminated single trigger change in control vesting provisions in all equity awards granted to our named executive officers, replacing them with double trigger change in control vesting provisions. ▪ Strong Compensation Governance Attributes: Our executive compensation policies and practices are designed to reinforce our pay-for-performance philosophy, align with compensation-related governance best practices and further our compensation objectives. See the section entitled “Strong Compensation Governance Attributes” on page 86 of this proxy statement. 2023 Advisory Vote on 2022 Executive Compensation. At the 2023 Annual Meeting, shareholders supported our executive compensation program, with approximately 79% of the votes cast in favor of our say-on-pay proposal. Excluding the shares voted “against” this proposal by the shareholder that initiated a contested director election at our 2023 Annual Meeting and has since liquidated its shareholdings in the Company, the support level would have been approximately 87% of the votes cast on this proposal. As noted above under “Extensive Shareholder Engagement,” we value, and frequently solicit, shareholder feedback on our executive compensation programs, and shareholders have generally acknowledged the Board and Compensation Committee’s responsiveness and significant enhancements to our executive compensation programs in recent years.
How do proxies work and how will shares be voted?
How do proxies work and how will shares be voted? You may choose to designate another person as your ‘proxy’ to vote the shares you own on your behalf. If you designate someone as your proxy in a written document, that document is also called a ‘proxy’ or a ‘proxy card’. Any proxy that you designate must attend the Annual Meeting in person for your shares to be voted. Any proxy card that is properly executed and received by the Company will be voted in accordance with the instructions provided on the proxy card. Our Board is asking for your proxy to authorize the Company’s named proxy holders to vote your shares at the Annual Meeting in the manner you direct. We encourage you to promptly vote on each of the Company’s proposals to be voted on at the Annual Meeting. If you return a validly executed proxy card without indicating how your shares should be voted on one or more specific proposals to be voted on at the Annual Meeting and you do not revoke your proxy, your shares will be voted in accordance with the Board’s recommendations set forth in this proxy statement for each proposal for which you did not indicate a vote as follows: • Election of Directors: “FOR” the election of each of the Board Nominees; • Non-Binding, Advisory Vote on Executive Compensation: “FOR” the approval, in a non-binding, advisory vote, of the compensation of our named executive officers; • Non-Binding, Advisory Vote on Frequency of Advisory Vote on Executive Compensation: For the approval, in a non-binding, advisory vote, of the “1 YEAR” option for the frequency of future advisory votes on the compensation of our named executive officers; • Independent Auditor and Accounting Firm: “FOR” the ratification, in a non-binding vote, of the appointment of PwC as the independent auditor and accounting firm of the Company, and the authorization, in a binding vote, of the Audit and Risk Committee to set PwC’s remuneration; • Alkermes plc 2018 Stock Option and Incentive Plan, as amended: “FOR” the approval of the Alkermes plc 2018 Stock Option and Incentive Plan, as amended; • Board Authority to Allot and Issue Shares under Irish Law: “FOR” the renewal of the Board’s authority to allot and issue shares under Irish law; • Board Authority to Disapply Statutory Pre-Emption Rights under Irish Law: “FOR” the renewal of the Board’s authority to issue shares for cash without first offering those shares to existing shareholders pursuant to the statutory pre-emption rights that would otherwise apply under Irish law; and • As to any other matter that may properly come before the Annual Meeting, in the named proxy holders’ discretion. Shares represented by valid proxies received and not subsequently revoked before the Annual Meeting that do not specify instructions on any particular matter to be voted on at the Annual Meeting will be voted at the Annual Meeting in the manner set forth above with respect to such matter. You can revoke your proxy and change your vote as described in the section entitled “Can I change my vote after submitting my proxy?” on page 20 of this proxy statement. If your shares are held through a bank, broker or other nominee, please follow the instructions provided by such bank, broker or other nominee. Our Board is not aware of any matters that are expected to come before the Annual Meeting other than those described in this proxy statement. If any other matter is presented at the Annual Meeting upon which a vote may be properly taken, ordinary shares represented by all proxy cards received by the Company will be voted at the discretion of the named proxy holders as set forth on the proxy card.
Board Nominee Biographical Information
Board Nominee Biographical Information The following descriptions set forth additional information regarding the Board Nominees, each of whom contributes significantly to the diversity of specific experience, skills and characteristics of our Board.
Board Nominee Biographical Information
| Emily Peterson Alva | | | | Experience: Ms. Alva is an experienced financial, strategic and business advisor to founders, boards and leadership teams of notable companies globally. Over more than two decades, she has advised large public and private companies facing complex strategic decisions, and has led the resulting mergers and acquisitions (“M&A”) and transactions that followed. Ms. Alva previously served as an investment banker at Lazard, a global leader in financial and M&A advisory work, where she worked from 1997 to 2013, most recently as an M&A Partner. During her Lazard tenure and in the years since, Ms. Alva has worked with boards experiencing growth, transition or turmoil and led them through business, financial and strategic evaluations and complex transactions ranging from M&A, capital structure optimization, capital deployment and balance sheet management, capital raising, financial restructurings and turnarounds, asset and portfolio evaluations and business repositionings aligned with value creation and risk mitigation for stakeholders. Ms. Alva currently serves on the boards of directors of Amneal Pharmaceuticals, a public pharmaceutical company, and the Mission Society of New York City, a landmark nonprofit. Ms. Alva previously served on the board of directors of Robotic Research, LLC, a private autonomous technology company, from October 2021 to October 2023. Ms. Alva received a B.A. in Economics from Barnard College, Columbia University. Qualifications and Skills: Ms. Alva brings to our Board M&A expertise with unique experience leading complex transactions and evaluations for boards and leadership teams of companies. The Board benefits from her financial, business development, transactional and strategic expertise, her experience serving on public and private company boards and her experience and insights in a variety of corporate governance matters. | | INDEPENDENT Director since: May 2021* Committee Memberships: Financial Operating; Nominating and Corporate Governance Current Public Company Boards: Amneal Pharmaceuticals, Inc. (NYSE: AMRX) since May 2018 | | | *Ms. Alva was appointed to the Board in May 2021 in connection with an agreement entered into between the Company and Elliott Investment Management L.P. and its affiliates (“Elliott”) in December 2020. | |
Board Nominee Biographical Information
| Shane M. Cooke | | | | Experience: Mr. Cooke served as our President and as President of Alkermes Pharma Ireland Limited (“APIL”), a wholly-owned subsidiary of the Company, from September 2011 until his retirement in March 2018. He became a member of our Board upon his retirement. In addition, Mr. Cooke has been chairman of the board of directors of APIL since September 2011. Mr. Cooke served as Executive Vice President of Elan Corporation, plc (“Elan”) and Head of Elan Drug Technologies from May 2007 to September 16, 2011 and as the Chief Financial Officer of Elan from July 2001 until May 2011. Mr. Cooke served as a director of Elan from May 2005 to September 16, 2011. Prior to joining Elan, Mr. Cooke was Chief Executive of Pembroke Capital Limited, an aviation leasing company, and prior to that, he held a number of senior finance positions in the banking and aviation industries. Mr. Cooke previously served on the board of directors of UDG Healthcare plc, a then publicly-traded healthcare company, from February 2019 to August 2021. He is a chartered accountant. Qualifications and Skills: Mr. Cooke is an Irish citizen, resident in Ireland. His depth of experience in managing Irish corporate entities and his extensive network within the Irish business and finance community, as well as his familiarity with Irish policy and regulation, are highly beneficial to the Company as an Irish-incorporated entity. In addition to Mr. Cooke’s global experience in the pharmaceutical industry, he also has significant experience in business development and transactional activities. Mr. Cooke’s substantial experience as an executive in the biopharmaceutical industry, including having served as a chief financial officer and as a president of publicly-traded companies, brings strategic leadership attributes and expertise in operations, finance, and commercial management to our Board. | | INDEPENDENT Director since: March 2018 Committee Memberships: Audit and Risk Current Public Company Boards: Prothena Corporation plc (Nasdaq: PRTA) since 2012 Endo International plc (Nasdaq: ENDP) since 2014 | |
Board Nominee Biographical Information
| David A. Daglio, Jr. | | | | Experience: Mr. Daglio most recently served as a non-executive director of Mellon Investments Corporation, a global investment manager (“Mellon”), from 2019 to January 2020 and as Executive Vice President, Chief Investment Officer and Executive Director of Mellon from 2017 to 2019. He also served as Mellon’s head of Opportunistic Value Strategies. Since joining Mellon in 1998, Mr. Daglio worked with institutional clients and boards around the world, managed numerous investors and grew portfolio assets by more than five-fold, and helped to design, launch, and manage a unique equity investing approach. Prior to his investing career, Mr. Daglio was a management consultant at Deloitte and an engineer for The Dannon Company. He previously served as a director of The Boston Company and Mellon. Mr. Daglio also previously served on the board of directors of Total Brain Ltd., a publicly-traded neuroscience software company, from January 2020 to December 2022 prior to its acquisition by SonderMind Inc. Mr. Daglio earned a bachelor’s degree in mechanical engineering from Rensselaer Polytechnic Institute and a Master of Business Administration from New York University’s Stern School of Business. Qualifications and Skills: Mr. Daglio brings to our Board a seasoned institutional investment management perspective and strong management and leadership experience. The Board benefits from his experience in portfolio management, value creation, and transactional matters, and from his service on other boards of directors, including his prior service on the board of directors and remuneration committee of Total Brain Ltd. | | INDEPENDENT Director since: December 2020 Committee Memberships: Audit and Risk; Financial Operating Current Public Company Boards: None Appointed with support of shareholder Elliott | |
Board Nominee Biographical Information
| Richard B. Gaynor, M.D. | | | | Experience: Since May 2020, Dr. Gaynor has served as President, Chief of Research and Development at BioNTech US Inc. (f/k/a Neon Therapeutics, Inc. (“Neon”)), a wholly-owned subsidiary of BioNTech SE focused on the development of novel neoantigen-targeted T cell therapies. Dr. Gaynor had previously served as President of Research and Development at Neon since November 2016. Prior to joining Neon, Dr. Gaynor held roles in clinical development and medical affairs at Eli Lilly and Company (“Lilly”) from August 2002 to October 2016, including serving as Senior Vice President, Clinical Development and Medical Affairs of Lilly Oncology. During his time at Lilly, Dr. Gaynor chaired the Lilly Oncology Research and Development Committee and helped oversee various collaborations, including with General Electric, AstraZeneca, Merck and Bristol-Myers Squibb. Dr. Gaynor started his career in academia, initially serving on the faculty at UCLA School of Medicine, followed by eleven years at the University of Texas Southwestern Medical School, during which he spent time as the Chief of Hematology-Oncology and Director of the Simmons Cancer Center. Dr. Gaynor holds an M.D. from the University of Texas Southwestern Medical School and completed fellowship training in hematology-oncology at UCLA School of Medicine. Dr. Gaynor is on the editorial board of several scientific journals and has published extensively, including over 140 scientific articles. He previously served on the board of directors of Infinity Pharmaceuticals, Inc., a formerly publicly-traded biotechnology company, from March 2020 to March 2024. He currently serves on the board of directors of the Damon Runyon Cancer Research Foundation and on the scientific advisory committee of Stand Up to Cancer, each a not-for-profit organization. Dr. Gaynor is a licensed physician with board certifications in oncology and hematology. Qualifications and Skills: Dr. Gaynor brings to our Board a deep scientific and medical background, having practiced in academic medicine, conducted extensive scientific research and held leadership roles at various biopharmaceutical companies. The Board benefits from his technical expertise and business experience in research and development, drug development, clinical development and business development across multiple therapeutic areas and his insights from years as an academic and practicing physician. | | INDEPENDENT Director since: September 2019 Committee Memberships: Compensation (Chair) Current Public Company Boards: Zai Lab Limited (Nasdaq: ZLAB) since November 2021 | |
Board Nominee Biographical Information
| Cato T. Laurencin, M.D., Ph.D. | | | | Experience: Dr. Laurencin is the University Professor and Albert and Wilda Van Dusen Distinguished Endowed Professor of Orthopaedic Surgery at the University of Connecticut (“UConn”), where he also serves as Professor of Chemical and Biomolecular Engineering, Professor of Materials Science and Engineering and Professor of Biomedical Engineering. He has been a professor at UConn since 2008. Dr. Laurencin is a practicing surgeon and serves as the Chief Executive Officer of The Cato T. Laurencin Institute for Regenerative Engineering. Dr. Laurencin previously served as Vice President for Health Affairs and Dean of the School of Medicine at UConn. Dr. Laurencin is a pioneer in the field of regenerative engineering, and an expert in biomaterials science, stem cell technology and nanotechnology. He currently serves on the board of directors of MiMedx Group, Inc., a public company focused on advanced wound care and therapeutic biologics. Dr. Laurencin received his B.S.E. degree in chemical engineering from Princeton University, his Ph.D. in biochemical engineering and biotechnology from the Massachusetts Institute of Technology, and his M.D. from Harvard Medical School. Dr. Laurencin is NACD Directorship Certified®. Qualifications and Skills: Dr. Laurencin brings to our Board extensive experience across a wide range of medical and scientific disciplines, strong administrative skills, and a focus on public health that is consistent with the Company’s values and business strategy. The Board benefits from his vast medical and scientific knowledge, his leadership and administrative experience, his involvement in mentoring and other activities that promote diversity and excellence in science, and his dedication to social justice research and addressing health disparities. | | INDEPENDENT Director since: November 2021* Committee Memberships: Nominating and Corporate Governance Current Public Company Boards: MiMedx Group, Inc. (Nasdaq: MDXG) since November 2020 | | | * Dr. Laurencin was appointed to the Board in November 2021 in connection with an agreement between the Company and Sarissa Capital Offshore Master Fund LP (together with its affiliates and associates, “Sarissa”) in April 2021. | |
Board Nominee Biographical Information
| Nancy S. Lurker | | | | Experience: Ms. Lurker most recently served as Chief Executive Officer of EyePoint Pharmaceuticals, Inc. (“EyePoint”), a publicly traded specialty biopharmaceutical company, from September 2016 to July 2023, at which time she transitioned to her current role as Executive Vice Chair of EyePoint’s board of directors. She also served as President of EyePoint from September 2016 to January 2023. Prior to that, she served as President and Chief Executive Officer of PDI, Inc., a publicly traded healthcare commercialization company (now named Interpace Diagnostics Group, Inc.), from 2008 to 2015 and as Senior Vice President and Chief Marketing Officer of Novartis Pharmaceuticals Corporation from 2006 to 2007. Prior to that, Ms. Lurker held various executive and other senior roles at leading pharmaceutical companies, including ImpactRx, Inc., a privately held healthcare information company, Pharmacia Corporation (now a part of Pfizer, Inc.), and Bristol-Myers Squibb Company. In addition to EyePoint, Ms. Lurker currently serves on the boards of directors of Altasciences, LLC, a private contract research organization, and National Sanitation Foundation, a not-for-profit organization dedicated to improving human health through quality standards. Ms. Lurker previously served on the boards of directors of Aquestive Therapeutics, Inc., a publicly traded specialty pharmaceutical company, from 2018 to April 2022, the Cancer Treatment Centers of America from 2016 to 2020 and, at various times from 2004 to 2018, current and formerly publicly-traded companies X4 Pharmaceuticals, Inc., Auxilium Pharmaceuticals, Inc., Mallinckrodt plc, PDI, Inc., Elan Corporation, plc and ConjuChem Biotechnologies. Ms. Lurker received a B.S. in Biology from Seattle Pacific University and an M.B.A. from the University of Evansville. Qualifications and Skills: Ms. Lurker brings to our Board broad-ranging experience in the biopharmaceutical industry, including executive leadership, governance and strategic planning, and expertise in product development and commercialization, with a track record of successful U.S. and global product launches. The Board benefits from her extensive public company management and board leadership experience, industry knowledge and valuable insights with respect to strategy, operations and the development, launch and commercialization of pharmaceutical products. | | INDEPENDENT Director since: March 2024 Committee Memberships: None Current Public Company Boards: EyePoint Pharmaceuticals, Inc. (Nasdaq: EYPT) since September 2016 | |
Board Nominee Biographical Information
| Brian P. McKeon | | | | Experience: Since 2014, Mr. McKeon has served as the Executive Vice President, Chief Financial Officer, and Treasurer of IDEXX Laboratories, Inc. (“IDEXX”), a public multinational corporation providing products and services in the veterinary, livestock and poultry, dairy and water testing markets. He leads IDEXX’s finance and investor relations functions and, since June 2019, has overseen IDEXX’s livestock, water and human diagnostics businesses. Mr. McKeon served on the board of directors of IDEXX from 2003 to 2013, including serving as Chair of its Audit Committee and as a member of its Compensation Committee. Prior to joining IDEXX, Mr. McKeon served as Executive Vice President and Chief Financial Officer of Iron Mountain Incorporated from 2007 to 2013 and as Executive Vice President and Chief Financial Officer of Timberland Company from 2000 to 2007. Prior to these roles, he held several finance and strategic planning roles at PepsiCo Inc., serving most recently as Vice President, Finance, at Pepsi-Cola, North America. Mr. McKeon previously served as a director of athenahealth, Inc. from September 2017 to February 2019. Mr. McKeon holds a bachelor’s degree in accounting from the University of Connecticut and an MBA with high distinction from Harvard University. Qualifications and Skills: Mr. McKeon brings to our Board strong financial and management expertise as well as public company executive and director leadership experience. The Board benefits from his experience in finance, strategic planning, corporate development and investor relations, and from his prior service on public company boards of directors, including as a member of audit and compensation committees. | | INDEPENDENT Director since: December 2020 Committee Memberships: Compensation; Financial Operating (Chair) Current Public Company Boards: None Appointed with support of shareholder Elliott | |
Board Nominee Biographical Information
| Richard F. Pops | | | | Experience: Prior to assuming his current positions, Mr. Pops served as Chief Executive Officer of Alkermes, Inc. from February 1991 to April 2007 and as Chief Executive Officer and President from September 2009 to September 2011. Mr. Pops serves on the board of directors of BIO and the Pharmaceutical Research and Manufacturers of America (“PhRMA”). He previously served on the boards of directors of Acceleron Pharma, Inc., a publicly-traded biopharmaceutical company, from 2004 to December 2019, Epizyme, Inc., a publicly-traded biopharmaceutical company, from 2008 to October 2020, and the National Health Council, a nonprofit organization, from 2016 to December 2019. Mr. Pops also previously served on the advisory board of Polaris Venture Partners and as a member of the Harvard Medical School Board of Fellows through June 2012. Qualifications and Skills: Mr. Pops’ qualifications for our Board include his leadership experience, business judgment and deep industry knowledge. As a senior executive of Alkermes, he provides in-depth knowledge of the Company derived from leading our day-to-day operations. His ongoing involvement as a board member of BIO and PhRMA brings to the organization extensive knowledge of the current state of the pharmaceutical industry and the policy issues impacting healthcare today. As a Co-Chair of BIO’s Regulatory Environment Committee, and a member of its Health Section Governing Board, and as a member of PhRMA’s FDA and Biomedical Research Committee, Mr. Pops is an influential industry leader on FDA regulatory policy issues, including recent Prescription Drug User Fee Act reauthorizations. Mr. Pops has also played a leadership role in the industry in identifying pathways to allow patient voices to be incorporated into the drug development and approval process, which is a fundamental principle on which we operate our business. | | Director since: September 2011 Leadership: Chairman Committee Memberships: Financial Operating Current Public Company Boards: Neurocrine Biosciences, Inc. (Nasdaq: NBIX) since 1998 | |
Board Nominee Biographical Information
| Nancy L. Snyderman, M.D. | | | | Experience: Dr. Snyderman is an oncologic surgeon and clinical researcher. She was a consulting professor at Stanford University Center for Innovation in Global Health from July 2019 to July 2022, served as Chief Medical Editor at NBC News from 2006 until 2015 and was a clinical professor of Otolaryngology at the University of Pennsylvania from August 2003 to December 2015. Dr. Snyderman was Senior Vice President Corporate Communications at Johnson & Johnson, a publicly-traded pharmaceutical company, from January 2003 to September 2006. She practiced as an Otolaryngologist at UC San Francisco and the California Pacific Medical Center from July 1994 to June 2003 and acted as Medical Editor for ABC News from 1987 until May 2003. Dr. Snyderman previously served on the board of directors of Future Health ESG Corp., a publicly-traded special purpose acquisition company, from September 2021 to March 2024. Dr. Snyderman is a Kellogg Fellow, a Fellow in the American College of Surgeons and co-founder of the Stanford University-NBC News Global Media Fellowship. During Dr. Snyderman’s tenure as a medical journalist at NBC News and ABC News, she received Emmy Awards, Edward R. Murrow Awards, a Columbia University DuPont Award, and a Gracie Award for her reporting. Dr. Snyderman attended medical school at the University of Nebraska and completed residencies in Pediatrics and Otolaryngology at the University of Pittsburgh. Qualifications and Skills: Dr. Snyderman’s experiences as a surgeon and clinical researcher, a veteran healthcare journalist, and an executive at a pharmaceutical company, as well as her roles in academia and as advisor to policy organizations, make her uniquely qualified for our Board. The Board benefits from her expert insight into the intersection of healthcare policy, public relations and journalism from the perspective of both a practitioner and an academic. | | INDEPENDENT Director since: May 2016 | | | Committee Memberships: Audit and Risk; Nominating and Corporate Governance (Chair) Current Public Company Boards: Axonics, Inc. (Nasdaq: AXNX) since April 2019 Lyra Therapeutics, Inc. (Nasdaq: LYRA) since October 2020 | |
Board Nominee Biographical Information
| Frank Anders “Andy” Wilson | | | | Experience: Mr. Wilson most recently served as Chief Financial Officer and Senior Vice President of PerkinElmer, Inc., a life sciences diagnostics, discovery and analytical solutions company, from 2009 to 2018, with responsibility for oversight of the organization’s growth strategy. Prior to PerkinElmer, Mr. Wilson held key business development and finance roles at Danaher Corporation, a global science and technology conglomerate, from 1997 to 2009, including the position of Corporate Vice President of Investor Relations. Earlier in his career, Mr. Wilson worked at AlliedSignal, Inc., now Honeywell International Inc., where he served as Vice President of Finance and Chief Financial Officer for the Commercial Avionics Systems division. Prior to that, Mr. Wilson’s work included financial and controllership positions of increasing responsibility at PepsiCo, Inc., as well as roles at E.F. Hutton and Company and KPMG Peat Marwick. He was previously a member of the board of directors of Sparton Corporation, a provider of complex and sophisticated electromechanical devices, from 2015 to early 2019, where he last served as chairman of the board. Mr. Wilson is a certified public accountant. Qualifications and Skills: Mr. Wilson’s financial expertise and decades of experience in strategic planning, investor relations and business development for global public companies provide valuable insight for our Board as the Company’s strategic priorities expand and evolve. His background as a chief financial officer and certified public accountant provides significant expertise to our Board in matters relating to finance, value creation and commercial growth. | | INDEPENDENT Director since: September 2019 Leadership: Lead Independent Director Committee Memberships: Audit and Risk (Chair); Financial Operating Current Public Company Boards: Cabot Corporation (NYSE: CBT) since September 2018 Novanta Inc. (Nasdaq: NOVT) since May 2021 | |
Board Nominee Biographical Information
| Christopher I. Wright, M.D., Ph.D. | | | | Experience: Since February 2023, Dr. Wright has served as Chief Medical Officer, Head of Translational Research at Ring Therapeutics (“Ring”), a company focused on revolutionizing gene therapy with its commensal virome platform. Prior to joining Ring, Dr. Wright served as Senior Vice President, Chief Medical Officer of AavantiBio, Inc., a company focused on development of precision gene therapies for the treatment of debilitating diseases, from May 2021 through its acquisition by Solid Biosciences Inc. in December 2022. From April 2019 to March 2021, Dr. Wright served as Senior Vice President, Chief Medical Officer of Cyclerion Therapeutics, Inc. (“Cyclerion”), a publicly-traded spin-off from Ironwood Pharmaceuticals, Inc. (“Ironwood”), where he led global development functions across therapeutic areas. From March 2017 to April 2019, Dr. Wright served as Senior Vice President, Chief Development Officer of Ironwood. Prior to that, Dr. Wright served as Senior Vice President, Chief Medical Officer of Axcella Health Inc. and Senior Vice President of Global Medicines Development and Affairs at Vertex Pharmaceuticals Incorporated, where he led global development functions across therapeutic areas. Dr. Wright was previously an Associate Professor of Neurology at Harvard Medical School and was a practicing neurologist at Brigham and Women’s Hospital for 20 years. He previously served as a Scientific Advisor for Cyclerion. Dr. Wright earned his A.B. in Biochemical Sciences from Harvard University, his M.D. in Medicine and Neuroscience from Harvard Medical School, his Ph.D. in Neuroanatomy from Vrije Universiteit and his MMSc. in Clinical Investigation from Harvard Medical School. Qualifications and Skills: Dr. Wright is a highly accomplished scientific and medical leader in the academic and biopharmaceutical communities with nearly three decades of drug development, clinical and medical research experience in diseases of the central nervous system. The Board benefits from his significant expertise in the field of neuroscience, his extensive service in executive leadership positions at publicly-traded companies overseeing global drug development functions across therapeutic areas, including regulatory affairs, clinical development and operations, pharmaceutical development, and securing approval of new therapies, and his background as a practicing neurologist. | | INDEPENDENT Director since: May 2022 Committee Memberships: Compensation; Nominating and Corporate Governance Current Public Company Boards: None | |
The Committees of the Board
In determining the members of the Compensation Committee, the Board considers whether the members qualify as “non-employee directors” as defined in Rule 16b-3 under the Exchange Act and as “outside directors” as defined in Section 162(m) of the Internal Revenue Code of 1986, as amended (the “Code”). Compensation Committee Interlocks and Insider Participation: The directors who served as members of the Compensation Committee during 2023 were Richard B. Gaynor, M.D., Brian P. McKeon, Nancy J. Wysenski and Christopher I. Wright, M.D., Ph.D., none of whom is currently, or ever has been, an officer or employee of the Company, or had any relationship that is required to be disclosed in this proxy statement as a transaction with a related party. During 2023, none of our executive officers served as a member of the board of directors or the compensation committee (or other board committee performing equivalent functions) of any entity that had one or more of its executive officers serving on our Compensation Committee or Board. Compensation Consultant Fees: The Compensation Committee engaged Aon’s Human Capital Solutions practice, a division of Aon plc (“Aon”), to provide consulting services in 2023 related to executive and non-employee director compensation. The aggregate Aon fees for such consulting services were approximately $328,000, a significant portion of which were related to the independent, publicly-traded company into which the Company separated its oncology business. In 2023, the Company also engaged Aon for additional compensation advisory services, including equity valuation, broad-based compensation planning and compensation and human resources-related surveys and assessments. The aggregate amount paid to Aon for these additional services in 2023 was approximately $371,000, a significant portion of which related to the independent, publicly-traded company into which the Company separated its oncology business. Aon maintains policies and practices to protect the independence of the executive compensation consultants engaged by the Compensation Committee. Limited Compensation Sub-Committee: The Compensation Committee has established procedures for the grant of equity awards, including grants of equity awards to eligible new employees. Effective December 2023, the Nominating and Corporate Governance Committee recommended, and the Board approved, the appointment of Richard B. Gaynor, M.D. as the sole member of the Limited Compensation Sub-Committee of the Board. Prior to that, former director Nancy J. Wysenski served as the sole member such sub-committee from June 2021 to December 2023. The Compensation Committee has delegated to such sub-committee the authority to make individual grants of equity awards, up to certain specified award values, to certain newly hired employees of the Company. The Limited Compensation Sub-Committee typically grants equity awards to eligible new hires on the first Wednesday following the first Monday of each month (or the first business day thereafter if such first Wednesday is a holiday), referred to as the “New Hire Grant Date”, for all equity-eligible new hires who began their employment the prior month. The Limited Compensation Sub-Committee’s current approval authority is for new hire employees whose job level is below the level of Senior Vice President and for equity awards of up to $550,000 in aggregate award value per individual. New hire grants that exceed the authority of the Limited Compensation Sub-Committee must be granted by the full Compensation Committee, either on the New Hire Grant Date or as soon as practicable thereafter. All actions taken by the Limited Compensation Sub-Committee in 2023 were by written consent. Key Contributor Award Committee: The Compensation Committee has established a Key Contributor Award Committee, consisting solely of the Company’s CEO, Richard F. Pops, and delegated to such committee the authority to make periodic grants of equity awards outside of the annual and new hire equity grant cycles of the Company to employees whose job level is below the level of Senior Vice President (such awards, “Key Contributor Awards”). The Compensation Committee also has established guidelines and procedures for grants of such Key Contributor Awards. Recipients of Key Contributor Awards are periodically selected by Mr. Pops, in consultation with other members of management and the Company’s human resources department. Key Contributor Awards are intended to reward and retain key contributors to critical Company programs. The Compensation Committee periodically reviews and confirms the Key Contributor Award Committee’s authority to continue to grant such Key Contributor Awards and the overall parameters of any proposed periodic grants of such awards, and receives detailed reports following each such grant.
Board Process for Evaluating and Recommending Director Nominees for Election
Board Process for Evaluating and Recommending Director Nominees for Election The Board is responsible for the nomination of directors for election to the Board. The Board delegates the evaluation and nomination of director nominees to the Nominating and Corporate Governance Committee, with the expectation that other members of the Board and management will be requested to take part in the process as appropriate. In evaluating and nominating director nominees, the Nominating and Corporate Governance Committee considers the diversity of specific experience, skills and characteristics (including, without limitation, areas of expertise, culture, age, race and ethnicity, viewpoints, tenure and gender) necessary for the optimal functioning of the Board over both the short and long term. Once a candidate has been identified, the Nominating and Corporate Governance Committee evaluates the candidate to confirm that the candidate meets all of the minimum director qualifications established by the Board and any additional qualifications, skills or characteristics that the Nominating and Corporate Governance Committee and the Board deem appropriate at such time and, based on the results of this evaluation, the Nominating and Corporate Governance Committee will decide whether to recommend such candidate to the Board for election. The Nominating and Corporate Governance Committee also recommends candidates for the Board’s appointment to the committees of the Board. The Board retains the ultimate authority to appoint directors to the Board, to recommend director nominees for election by the Company’s shareholders, to fill any vacancy on the Board and to appoint directors to the committees of the Board.
Procedure for Recommendations by Shareholders of Director Nominees
Procedure for Recommendations by Shareholders of Director Nominees The Nominating and Corporate Governance Committee will consider director candidates recommended by shareholders for nomination by the Board for election at an annual general meeting of shareholders. The Nominating and Corporate Governance Committee will evaluate such recommended director candidates using the same criteria that it uses to evaluate other candidates. A shareholder who wishes to recommend individuals for consideration by the Nominating and Corporate Governance Committee and the Board may do so only by delivering a written recommendation to our Company Secretary at Alkermes plc, Connaught House, 1 Burlington Road, Dublin 4, Ireland, D04 C5Y6, Attention: Company Secretary, with the director candidate’s name, biographical information and qualifications, and a document providing evidence of the director candidate’s willingness to serve if elected.
Procedure for Nomination by Shareholders of Director Nominees
Procedure for Nomination by Shareholders of Director Nominees The above procedure applies to recommendations by shareholders of director candidates to be nominated by the Board. Shareholders who instead desire to nominate on their own behalf one or more persons for election to the Board at an annual general meeting of shareholders must comply with the deadlines and other requirements set forth in our Articles of Association in respect of shareholder nominations, including the applicable notice, information and consent provisions. Pursuant to our Articles of Association, nominations by our shareholders of persons for election to the Board at our 2025 annual general meeting of shareholders must be received by our Company Secretary between October 17, 2024 and December 16, 2024; provided, however, that in the event that the date of our 2025 annual general meeting of shareholders is changed by more than 30 days from the first anniversary date of the Annual Meeting, notice must be delivered no earlier than 180 days prior to, nor later than 120 days prior to, our 2025 annual general meeting of shareholders or, if later, the 10th day following the day on which public announcement of the date of our 2025 annual general meeting of shareholders is first made. In addition to the applicable notice requirements under our Articles of Association described in the preceding paragraph, in order to comply with the SEC’s universal proxy rules, shareholders who desire to nominate one or more persons for election to the Board at our 2025 annual general meeting of shareholders must provide notice to the Company by the same deadline noted in the preceding paragraph and such notice must comply with the additional requirements of Rule 14a-19(b) under the Exchange Act.
Non-Employee Director Compensation Program
Non-Employee Director Compensation Program Our non-employee director compensation program is intended to be current, competitive and fair, and is designed to attract and retain optimal talent and expertise on our Board and provide compensation commensurate with the time and effort that our directors are required to devote to the Company given the size and complexity of our operations and the Board’s significant oversight and advisory responsibilities. The Compensation Committee is responsible for evaluating and recommending to the Board for its approval an annual non-employee director compensation program. In this context, the Compensation Committee annually reviews and evaluates, in consultation with its independent compensation consultant, recent trends in director compensation, related corporate governance best practices, and comparable market data, including data from the same peer group that the Compensation Committee uses for executive compensation purposes. The Compensation Committee makes its recommendations for non-employee director compensation to the Board based on such review and evaluation. The Board retains the ultimate authority to determine the form and amount of non-employee director compensation.
Non-Employee Director Compensation Program
| Key Features of Non-Employee Director Compensation | | | ☑ | Program reviewed annually in comparison to peers and to align with best practices | | ☑ | Consists of a mix of cash and equity-based compensation | | ☑ | Directors subject to stock ownership guideline of 3x their annual retainer (other than CEO, with a guideline of 6x base salary) | | ☑ | Prohibition on hedging and pledging by directors under the Company’s Insider Trading Policy | | ☑ | General policy that no perquisites be provided to directors |
Equity Compensation
Equity Compensation Each non-employee director is also granted equity for their Board service, in the form of an annual award (the “Annual Grant”) that is typically granted to all continuing non-employee directors each year on the date of the Company’s annual general meeting of shareholders, following the election of directors at such meeting. Any newly appointed non-employee director who joins the Board after the annual general meeting of shareholders is granted a prorated portion of the Annual Grant, typically granted to such director proximate to the date of such director’s election to the Board, with the value of the award prorated based on the number of days remaining until the one-year anniversary of the Company’s prior annual general meeting of shareholders, divided by 365 (each such grant, a “Pro-Rata Annual Grant”). In addition, each newly appointed non-employee director is granted an initial award for joining the Board (each, a “New Director Grant”), typically granted to such director proximate to the date of such director’s election to the Board, with the award value equal to 1.5 times the approved award value of the Annual Grant. Vesting. Per our non-employee director equity grant procedures, Annual Grants and Pro-Rata Annual Grants vest in full on the one-year anniversary of the applicable grant date, and New Director Grants vest in three equal annual installments, commencing on the one-year anniversary of the applicable grant date. No changes to award values in 2023. Each year, prior to the Company’s annual general meeting of shareholders, the Compensation Committee recommends to the Board for its approval equity award values and terms for the Annual Grant and any New Director Grant for the coming year. In May 2023, following review of the target equity compensation value of $375,000 for the Annual Grant and $562,500 for the New Director Grant approved in 2022, and determination that such equity compensation values remained aligned to and competitive with the Company’s peer group, the Compensation Committee recommended to the Board that no changes be made to the non-employee director equity award values for the coming year and the Board subsequently approved this recommendation. Equity mix and share number calculation methodology. All grants to our non-employee directors in 2023 consisted of 50% restricted stock unit awards and 50% stock options, with the number of shares underlying each restricted stock unit award calculated by dividing the approved aggregate value of such awards by the closing price of the Company’s ordinary shares on the Nasdaq Global Select Market as of the close of trading on the applicable grant date (the “Grant Date Closing Share Price”), and the number of shares underlying each stock option calculated utilizing the Grant Date Closing Share Price and the Black-Scholes valuation model, in each case with the resulting share number rounded up to the nearest whole number of shares. Our non-employee directors are not granted any equity other than the Annual Grant (or Pro-Rata Annual Grant, as applicable) each year and a one-time New Director Grant upon joining the Board. For a description of our share ownership and holding guidelines applicable to our directors, see the section entitled “Share Ownership and Holding Guidelines” on page 108 of this proxy statement.
2023 Director Compensation Table
2023 Director Compensation Table Each of Emily Peterson Alva, Shane M. Cooke, David A. Daglio, Jr., Richard B. Gaynor, M.D., Cato T. Laurencin, M.D., Ph.D., Brian P. McKeon, Nancy L. Snyderman, M.D., Frank Anders Wilson and Christopher I. Wright, M.D., Ph.D. served as non-employee directors during all of 2023. Nancy J. Wysenski served as a non-employee director in 2023 until her retirement from the Board in December 2023. Nancy S. Lurker was appointed to the Board in March 2024, and as such did not receive any compensation in 2023 and is not included in the table below. Richard F. Pops, CEO and Chairman of the Board, was an employee during all of 2023. As an employee, Mr. Pops does not receive any cash or equity compensation for his Board service. The following table presents and summarizes the cash retainer fee amounts earned or paid to our non-employee directors for service during 2023, and the equity compensation granted to our non-employee directors in 2023:
2023 Director Compensation Table
| | Fees Earned or Paid in Cash | Stock Awards | Option Awards | Total | | Name | ($) | ($) | ($) | ($) | | (a) | (b)(1) | (c)(2)(4) | (d)(3)(5) | (h) | | Emily Peterson Alva | 94,000 | 187,510 | 187,530 | 469,040 | | Shane M. Cooke | 74,000 | 187,510 | 187,530 | 449,040 | | David A. Daglio, Jr. | 99,000 | 187,510 | 187,530 | 474,040 | | Richard B. Gaynor, M.D. | 89,652 | 187,510 | 187,530 | 464,692 | | Cato T. Laurencin, M.D., Ph.D. | 84,000 | 187,510 | 187,530 | 459,040 | | Brian P. McKeon | 107,000 | 187,510 | 187,530 | 482,040 | | Nancy L. Snyderman, M.D. | 107,000 | 187,510 | 187,530 | 482,040 | | Frank Anders Wilson | 111,609 | 187,510 | 187,530 | 486,649 | | Christopher I. Wright, M.D., Ph.D. | 88,076 | 187,510 | 187,530 | 463,116 | | Nancy J. Wysenski | 129,935 | 187,510 | 187,530 | 504,975 |
Notes to 2023 Director Compensation Table
Notes to 2023 Director Compensation Table (1) The amounts in column (b) represent fees earned by or paid to our non-employee directors for service during 2023, including annual cash retainer fees for service on the Board and additional cash retainer fees for service on a committee of the Board, for service as a chair of a committee or for service as Lead Independent Director of the Board. The annual cash retainer fees for Ms. Wysenski were prorated based on the date of her retirement from the Board. In addition, certain of the annual cash retainer fees for service as a committee member or in a leadership position were prorated, as applicable, based on each director’s respective date of appointment to, or resignation from, the relevant position. (2) The amounts in column (c) reflect the aggregate grant date fair value of restricted stock unit awards granted in 2023, excluding estimates of forfeitures, if any, as computed in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification Topic 718—Stock Compensation, or ASC 718. For information on the assumptions used to calculate the value of the restricted stock unit awards, refer to footnote 2 “Summary of Significant Accounting Policies” to our consolidated financial statements for the year ended December 31, 2023 included in our Annual Report under the heading “Share-Based Compensation”. These restricted stock unit awards vest in full on the one-year anniversary of the grant date. Additionally, in accordance with their terms, any unvested portion of these restricted stock unit awards granted to our non-employee directors in 2023 vests upon termination of a non-employee director’s service relationship with us. (3) The amounts in column (d) reflect the aggregate grant date fair value of stock options granted during 2023, as computed in accordance with ASC 718. For information on the assumptions used to calculate the value of the stock options, refer to footnote 2 “Summary of Significant Accounting Policies” to our consolidated financial statements for the year ended December 31, 2023 included in our Annual Report under the heading “Share-Based Compensation”. These stock options granted to non-employee directors in 2023 were granted under the 2018 Plan, vest in full on the one-year anniversary of the grant date and expire upon the earlier of ten years from the grant date or three years following termination of a director’s service relationship with the Company. Additionally, any unvested portion of these stock options shall vest upon termination of the director’s service relationship with the Company. There can be no assurance that these stock options will be exercised or that the value realized upon their exercise will equal their grant date fair value. (4) As of December 31, 2023, our non-employee directors who served on the Board during 2023 held outstanding restricted stock unit awards representing the following number of ordinary shares, as adjusted in connection with the separation of the Company’s oncology business in November 2023: Ms. Alva, 9,975 shares; Mr. Cooke, 6,104 shares; Mr. Daglio, 10,637 shares; Dr. Gaynor, 6,104 shares; Dr. Laurencin, 10,267 shares; Mr. McKeon, 10,637 shares; Dr. Snyderman, 6,104 shares; Mr. Wilson, 6,104 shares; Dr. Wright, 12,706 shares; and Ms. Wysenski, 0 shares. (5) As of December 31, 2023, our non-employee directors who served on the Board during 2023 held outstanding stock options representing the following number of ordinary shares, as adjusted in connection with the separation of the Company’s oncology business in November 2023: Ms. Alva, 65,112 shares; Mr. Cooke, 363,699 shares; Mr. Daglio, 72,092 shares; Dr. Gaynor, 140,039 shares; Dr. Laurencin, 52,006 shares; Mr. McKeon, 72,092 shares; Dr. Snyderman, 165,233 shares; Mr. Wilson, 140,039 shares; Dr. Wright, 43,627; and Ms. Wysenski, 184,613 shares. Corporate Responsibility and Sustainability We are committed to operating and growing our business in a sustainable and responsible manner, including in respect of our ESG impacts, and in a manner that promotes transparent governance and strong ethics. Our most recent Corporate Responsibility Report, published in September 2023, highlights: • our DIB strategy and initiatives, employee wellness programs and career development activities; • our investment in, and engagement with, the communities in which we work; and • our environmental, health and safety performance data and risk management and mitigation activities. The report is available on the Responsibility section of our website at www.alkermes.com. We actively engage with our stakeholders, including our shareholders, employees, customers, vendors, patients and caregivers, policy makers and members of our local communities, in order to understand the ESG matters of interest to them, guide our advocacy efforts and help inform our approach to the development and commercialization of our medicines. Feedback received from our stakeholders is communicated to our management team, the full Board and committees of the Board, as appropriate.
ALKERMES PLC 2018 STOCK OPTION AND INCENTIVE PLAN, AS AMENDED
ALKERMES PLC 2018 STOCK OPTION AND INCENTIVE PLAN, AS AMENDED
Overview
Overview Our Board is requesting shareholder approval of amendments to the current Alkermes plc 2018 Stock Option and Incentive Plan. We refer to the current Alkermes plc 2018 Stock Option and Incentive Plan as the “2018 Plan” and to the 2018 Plan, as it is proposed to be amended pursuant to this Proposal 5, as the “Amended 2018 Plan.” The proposed amendments would make the following material changes to the 2018 Plan: ▪ increase the number of ordinary shares authorized for issuance thereunder by 6,300,000 new ordinary shares (subject to adjustment for stock splits, stock dividends and similar events); ▪ increase the number of ordinary shares that may be awarded in the form of incentive stock options thereunder by 6,300,000 new ordinary shares (subject to adjustment for stock splits, stock dividends and similar events); and ▪ provide that, with respect to any awards granted on or after the date of the Annual Meeting and unless otherwise provided in the applicable award documentation, upon a Sale Event (as defined in the Amended 2018 Plan), (i) time-based awards will vest in full and performance-based awards will vest (as described in (ii) below) only if the surviving or acquiring corporation (or its parent company) does not assume, continue or substitute for such awards, and (ii) in the event of such acceleration, performance-based awards will vest at the greater of the target or actual level of performance and, further (iii) such acceleration will only be provided for any awards held by grantees whose service with us has not terminated prior to the Sale Event. Under the 2018 Plan as currently in effect, unless otherwise provided in the applicable award documentation, upon a Sale Event, the vesting of all time-based awards are accelerated in full and the vesting of all performance-based awards may be accelerated in the discretion of the Administrator (as defined below). The proposed Amended 2018 Plan is attached as Appendix A to this proxy statement and is incorporated herein by reference. If this Proposal 5 is approved by our shareholders, the Amended 2018 Plan will become effective as of the date of the Annual Meeting. In the event our shareholders do not approve this Proposal 5, the Amended 2018 Plan will not become effective and the 2018 Plan will continue to be effective in accordance with its current terms.
Why do we believe our shareholders should approve the Amended 2018 Plan (including the increased number of shares authorized for issuance thereunder)?
Why do we believe our shareholders should approve the Amended 2018 Plan (including the increased number of shares authorized for issuance thereunder)? 1. We believe the size of our share reserve increase request is reasonable. The size of our share reserve increase request for the Amended 2018 Plan is equal to 6,300,000 new ordinary shares (subject to adjustment for stock splits, stock dividends and similar events). We expect our request will provide us with sufficient ordinary shares to support approximately one to two years of equity awards at our current market value. Equity awards are key to our ability to attract, retain and incentivize employees who are integral to the successful development of our pipeline candidates, the commercialization of our products and the accomplishment of transformative business transactions. Our compensation philosophy with respect to equity awards is to target around the 50th percentile by value of our comparable peer group, as determined using the Black-Scholes option pricing model for stock options and market prices for restricted stock unit awards, with the opportunity to increase or decrease the value of equity awards from the 50th percentile based upon individual performance and other factors. If our request is not approved, we may not have sufficient ordinary shares to support our next round of annual equity awards at our current market value. 2. Equity awards are integral to our compensation program and to our success. Equity awards, similar to those typically offered by our competitors, have been, and we believe will continue to be, an integral component of our overall compensation program, enabling us to attract qualified and skilled employees and directors, retain our existing employees, including our experienced management team, and provide incentives for our employees to exert maximum efforts for our success, ultimately contributing to the creation of shareholder value. We have built, and continue to devote significant resources to further develop and enhance, a comprehensive cross-functional infrastructure designed to support product development from discovery through commercialization and lifecycle management. We have a portfolio of proprietary products that we manufacture, market and sell in the U.S. and we are currently developing a pipeline of potential new proprietary products. We also manufacture commercial products that incorporate our proprietary technologies under license that are owned and commercialized by other biopharmaceutical companies and for which we receive manufacturing and/or royalty revenues. We seek to attract, hire, develop, retain and motivate qualified and highly-skilled personnel with experience in areas such as R&D, including early discovery, translational medicine, formulation development and clinical trial operations capabilities; intellectual property prosecution, enforcement and defense; medical affairs; manufacturing operations; U.S. federal and state government affairs; sales and marketing; and market access, among other areas. Competition for such personnel in our industry and the geographic regions in which we operate is intense, with numerous companies also developing, launching or marketing products, including products against which our products directly compete. 3. We manage our equity award use carefully. We carefully and thoughtfully manage our equity award program, balancing attraction, retention and incentivization of our employees against dilution and burn rate considerations. As of the Record Date, our full dilution, which is calculated as (shares available for grant + shares subject to outstanding equity awards) / (shares outstanding + shares available for grant + shares subject to outstanding equity awards), is approximately 17.5%. The following two tables provide certain additional information regarding our equity incentive program and include awards granted under all of our equity incentive plans.
Why do we believe our shareholders should approve the Amended 2018 Plan (including the increased number of shares authorized for issuance thereunder)?
| | As of the Record Date | | Total number of ordinary shares subject to outstanding stock options | 19,159,162 | | Weighted-average exercise price of outstanding stock options | $31.96 | | Weighted-average remaining term of outstanding stock options | 6.36 years | | Total number of ordinary shares subject to outstanding full value awards(1) | 6,785,359 | | Total number of ordinary shares available for grant under the 2018 Plan(2) | 9,988,746 | | Total number of ordinary shares outstanding | 169,184,183 | | Per-share closing price of ordinary shares as reported on Nasdaq | $27.53 |
Why do we believe our shareholders should approve the Amended 2018 Plan (including the increased number of shares authorized for issuance thereunder)?
(1) Burn Rate is calculated as: (shares subject to stock options granted + shares subject to time-vesting full value awards granted + shares subject to performance-vesting full value awards vested)/weighted average ordinary shares outstanding. The share reserve under the 2018 Plan is reduced by 1.8 ordinary shares for each ordinary share issued pursuant to a full value award. The burn rate figures reported in this table are based on the terms of equity awards granted under our equity incentive plans on the date they were granted and, in the case of equity awards that were granted prior to the separation of the Company’s oncology business in November 2023, do not reflect subsequent adjustments that were made to such equity awards in connection with this separation in accordance with the provisions of the 2018 Plan. The following table sets forth our historic use of equity in 2023, 2022 and 2021:
Why do we believe our shareholders should approve the Amended 2018 Plan (including the increased number of shares authorized for issuance thereunder)?
| | Year | | | | | 2023 | 2022 | 2021 | | Stock options granted (1) | 3,479,898 | 3,164,468 | 4,001,529 | | Time-vesting full value awards granted (1) | 2,884,122 | 3,031,864 | 3,896,511 | | Performance-vesting full value awards vested | 252,375(2) | — | 177,946(3) | | Weighted average ordinary shares outstanding | 166,223,297 | 163,741,592 | 160,942,346 |
Why do we believe our shareholders should approve the Amended 2018 Plan (including the increased number of shares authorized for issuance thereunder)?
(1) The share numbers reported in this table reflect the actual number of shares underlying equity awards granted under our equity incentive plans on the date they were granted, and, in the case of equity awards that were granted prior to the separation of the Company’s oncology business in November 2023, do not reflect subsequent adjustments that were made to such equity awards in connection with this separation in accordance with the provisions of the 2018 Plan. (2) Consists of performance-vesting restricted stock unit awards that vested based on the Company’s achievements against the pipeline goals and financial goals to which the performance-vesting restricted stock unit awards granted in February 2021 to our employees at senior vice president level and above were subject. (3) Consists of performance-vesting restricted stock unit awards that vested based on the Company’s achievement of two of the three pipeline goals to which the performance-vesting restricted stock unit awards granted in February 2020 to our employees at senior vice president level and above were subject.
Important Aspects of the Amended 2018 Plan Designed to Protect our Shareholders’ Interests
Important Aspects of the Amended 2018 Plan Designed to Protect our Shareholders’ Interests The Amended 2018 Plan contains certain provisions, including those set forth below, designed to protect our shareholders’ interests and to reflect corporate governance best practices. The descriptions of these provisions and of certain other features of the Amended 2018 Plan contained in this Proposal 5 are intended to be summaries only and are qualified in their entirety by the full text of the Amended 2018 Plan attached hereto as Appendix A. ▪ Shareholder approval is required for additional shares. The Amended 2018 Plan does not contain an annual “evergreen” provision. Thus, shareholder approval is required each time we desire to increase the share reserve, allowing our shareholders the ability to have a say on our equity compensation programs. ▪ Share counting provisions. The share reserve under the Amended 2018 Plan is reduced by one ordinary share for each ordinary share issued pursuant to a stock option or stock appreciation right and by 1.8 ordinary shares for each ordinary share issued pursuant to a full value award. This helps to ensure that management and the Compensation Committee are using the share reserve effectively and with regard to the value of each type of equity award. The Amended 2018 Plan also prohibits liberal share recycling, which means that shares tendered or held back upon exercise of a stock option or stock appreciation right or settlement of an award to cover the exercise price or tax withholding for such option, right or award are not added back to the number of shares available for issuance under the Amended 2018 Plan. ▪ Flexibility in designing equity compensation scheme. The Amended 2018 Plan allows us to provide a broad array of equity incentives, including traditional option grants, stock appreciation rights, restricted stock awards, restricted stock unit awards, cash-based awards and performance share awards. By providing this flexibility, we are positioned to quickly and effectively react to trends in compensation practices and continue to offer competitive compensation arrangements to attract and retain the talent necessary for the success of our business. ▪ No right to vote or receive dividends. Until shares are delivered in accordance with the Amended 2018 Plan, no right to vote or receive dividends or any other rights of a shareholder will exist with respect to shares to be issued in connection with equity awards. No option or SAR repricing. The Amended 2018 Plan explicitly prohibits repricing options and stock appreciation rights in any manner without shareholder approval, including cancelling awards in exchange for cash or for another award under the Amended 2018 Plan. Minimum 1-year vesting requirement. Under the Amended 2018 Plan, options and stock appreciation rights do not vest and become exercisable, and restricted stock awards and restricted stock unit awards do not vest, until at least one year from the grant date. ▪ Equity Clawback. Equity awards granted to our named executive officers under the Amended 2018 Plan are subject to our Clawback Policy and our Recoupment Policy, as in effect from time to time, current copies of which can be found on the Corporate Governance page of the Investors section of our website at www.alkermes.com. For additional details, see the section entitled “Clawback Policy and Recoupment Policy” on page 108 of this proxy statement.
Principal Features of the Amended 2018 Plan
Principal Features of the Amended 2018 Plan The material features of the Amended 2018 Plan are as described below. These descriptions are intended to be summaries only and are qualified in their entirety by the full text of the Amended 2018 Plan attached hereto as Appendix A. ▪ The Amended 2018 Plan will be administered by either the Compensation Committee or by a similar committee performing the functions of the Compensation Committee and which is comprised of not less than two independent, non-employee directors (in either case, the “Administrator”). The Administrator, in its discretion, may grant a variety of incentive awards based on our ordinary shares. The Administrator may delegate its authority and duties with respect to the granting of awards to a subcommittee of one or more members of the Board, subject to applicable law and certain limitations and guidelines set forth in the Amended Plan. ▪ The award of stock options (both incentive and non-qualified), stock appreciation rights, restricted stock unit awards, restricted stock awards, cash-based awards and performance share awards is permitted. ▪ For purposes of determining the number of our ordinary shares available for issuance under the Amended 2018 Plan, (a) the grant of any full value award (i.e., an award other than a stock option or stock appreciation right) is deemed as an award of 1.8 ordinary shares for each such ordinary share actually subject to the award and shall be treated similarly if added back to the number of shares available for issuance when forfeited or canceled under the Amended 2018 Plan, (b) the grant of a stock option or stock appreciation right is deemed as an award of one ordinary share for each such ordinary share actually subject to the award and shall be treated similarly if added back to the number of shares available for issuance when forfeited or canceled under the Amended 2018 Plan, (c) any Prior Plans Returning Share (as defined in the Amended 2018 Plan and described below) subject to a full value award shall be added to the number of shares available for issuance as 1.8 ordinary shares, and (d) any Prior Plans Returning Share subject to a stock option or stock appreciation right shall be added to the number of shares available for issuance as one ordinary share. The term “Prior Plans Returning Share” generally means any ordinary share underlying any outstanding award granted under the Alkermes plc 2011 Stock Option and Incentive Plan, as amended (the “2011 Plan”) or the Alkermes plc Amended and Restated 2008 Stock Option and Incentive Plan, as amended, in each case that, from and after May 20, 2020 (the date of the Company’s 2020 annual general meeting of shareholders), was or is forfeited, canceled, repurchased or otherwise terminated (other than by exercise). ▪ Our Board or the Administrator may at any time amend or discontinue the Amended 2018 Plan, and the Administrator may at any time amend or cancel any outstanding award for the purpose of satisfying changes in the law or for any other lawful purpose. However, except as otherwise provided in the applicable award certificate for a specific grant, no such action may adversely affect any rights under any outstanding award without the award holder’s consent. Additionally, no option or stock appreciation right may be repriced in any manner without shareholder approval. Amendments to the Amended 2018 Plan will be subject to approval by our shareholders to the extent required under the rules of any securities exchange or market system on which our ordinary shares are listed or any other applicable rules. Amendments shall also be subject to approval by our shareholders if and to the extent such approval is determined by the Administrator to be required by the Code in order to preserve the qualified status of incentive stock options. The maximum number of ordinary shares that may be issued under the Amended 2018 Plan is equal to the sum of the following (subject to adjustment for stock splits, stock dividends and similar events): (i) 49,197,405 ordinary shares (which includes 497,405 ordinary shares resulting from adjustments made in accordance with the terms of the 2018 Plan in connection with the separation of our oncology business in November 2023); (ii) 1,199,965 ordinary shares, which is the number of 2011 Plan Available Shares (as defined in the 2018 Amended Plan and described below); and (iii) the Prior Plans Returning Shares, as such shares become available from time to time. For purposes of this limitation, shares underlying any awards granted under the Amended 2018 Plan that are forfeited, canceled, repurchased or otherwise terminated (other than by exercise) will be added back to the number of shares available for issuance under the Amended 2018 Plan. Shares tendered or held back upon exercise of an option or stock appreciation right or settlement of an award to cover the exercise price or tax withholding for such option, right or award are not added back to the number of shares available for issuance under the Amended 2018 Plan. Shares purchased in the open market with proceeds from the exercise of options or stock appreciation rights will not be added to the number of shares available for issuance under the Amended 2018 Plan. In addition, in the event that a stock appreciation right is settled in shares, the gross number of shares subject to the stock appreciation right will be deducted from the number of shares available for issuance under the Amended 2018 Plan. The shares issued under the Amended 2018 Plan may be issued from treasury or otherwise. The term “2011 Plan Available Shares” generally means the 1,199,965 ordinary shares that remained available for grant under the 2011 Plan as of May 20, 2020 (the date of the Company’s 2020 annual general meeting of shareholders), which ordinary shares ceased to be available for grant under the 2011 Plan (and became available for issuance pursuant to Awards under the 2018 Plan) as of such date.
Parachute Payments
Parachute Payments The vesting of any portion of a stock option or other award that is accelerated due to the occurrence of a change in control may cause a portion of the payments with respect to such accelerated award to be treated as “parachute payments” as defined in the Code. Any such parachute payments may be non-deductible to us, in whole or in part, and may subject the recipient to a non-deductible 20% U.S. federal excise tax on all or a portion of such payments (in addition to other taxes ordinarily payable).
Aggregate Fees for 2023 and 2022
(1) Consists of fees for services related to the audit of our annual consolidated financial statements, the audit of discontinued operations related to the separation of our oncology business, statutory audits and review of our quarterly consolidated financial statements, including audit of our internal controls over financial reporting. Included in these amounts for 2023 and 2022 are expenses of $16,536 and $22,100, respectively. (2) Consists of audit-related fees associated with the separation of our oncology business and assurance services related to employee benefit plan audits. (3) Consists of fees for tax compliance and tax advisory services related to both our routine business operations and the separation of our oncology business. No expenses are included in these amounts for 2023 or 2022. Consists of fees for access to certain PwC online accounting resources. Ownership of the Company’s Ordinary Shares The following table and notes provide information about the beneficial ownership of our ordinary shares as of the Record Date by: • each of the Company’s current directors and nominees; • the Company’s CEO; • each of the Company’s other named executive officers, as set forth in the Summary Compensation Table on page 112 of this proxy statement; and • all of the Company’s current directors and executive officers as a group. According to SEC rules, the Company has included in the column entitled “Number of Issued Ordinary Shares” all shares over which the person has sole or shared voting or investment power, and in the column entitled “Number of Ordinary Shares Issuable” all shares that the person has the right to acquire within 60 days after the Record Date through the exercise of any stock option, vesting of any stock award or other right. All shares that a person has a right to acquire within 60 days of the Record Date are deemed outstanding for the purpose of computing the percentage beneficially owned by the person, but are not deemed outstanding for the purpose of computing the percentage beneficially owned by any other person. Unless otherwise indicated, each person has the sole power (except to the extent authority is shared by spouses) to invest and vote the shares listed opposite the person’s name. The Company’s inclusion of shares in this table as beneficially owned is not an admission of beneficial ownership of those shares by the person listed in the table. The business address of each of the Company’s current non-employee directors and nominees is c/o Alkermes, Connaught House, 1 Burlington Road, Dublin 4, Ireland, D04 C5Y6. The business address of each of the Company’s current executive officers is 900 Winter Street, Waltham, MA 02451.
Board Responsiveness – Enhancements to Compensation Practices
| Developed objective and measurable approach to the determination of STIP payouts | 2023 STIP. Enhanced STIP design to include objective, measurable, pre-determined objectives, including financial and commercial (45% weighting), pipeline (30% weighting), separation of oncology business (15% weighting), and corporate responsibility (10% weighting). For additional information on the 2023 STIP, see the section entitled “2023 STIP Design In Line with Shareholder Feedback” on page 94 of this proxy statement. |
Board Responsiveness – Enhancements to Compensation Practices
| Enhanced disclosure around determination of STIP payouts | Enhanced our Compensation Discussion and Analysis disclosure to indicate the manner in which our company performance against the Company’s annual corporate objectives and each of our named executive officers’ (other than the CEO) individual performance translated into annual STIP payouts for our named executive officers. | | Expanded use of performance-based equity | Structured our executive compensation to ensure that a majority of the total target value of our CEO’s annual equity grant consisted of performance-based restricted stock unit awards (“PRSUs”) and expanded use of PRSUs as part of the annual equity grants for all of our named executive officers. | | Double Trigger Change in Control Vesting | Since 2023, eliminated single trigger change in control vesting provisions in all equity awards granted to our named executive officers, replacing them with double trigger change in control vesting provisions. | | Tied long-term incentive plan (“LTIP”) metrics to shareholder value creation | 2023 LTIP. Incorporated three-year financial (50% weighting) and pipeline (50% weighting) performance goals that are distinct from the annual corporate objectives utilized in our 2023 STIP and that align with our long-term business strategy. Included a relative total shareholder return (“TSR”) modifier that may increase or decrease the total number of vested shares underlying the PRSUs by up to 25%. For additional information on the 2023 LTIP, see the section entitled “2023 LTIP—PRSU Design In Line with Shareholder Feedback” on page 101 of this proxy statement. | | Linked executive compensation to profitability | 2023 STIP. Included an annual operational efficiency target designed to incentivize progress in 2023 toward achievement of the Company’s long-term profitability targets. 2023 LTIP. Included long-term financial performance goal (50% weighting) tied to the Company’s long-term profitability targets. See Appendix B for information regarding the non-GAAP financial targets underlying this performance goal. For additional detail, see the sections entitled “2023 Corporate Objectives” beginning on page 94 of this proxy statement and “2023 LTIP—PRSU Design In Line with Shareholder Feedback” beginning on page 101 of this proxy statement. | | Incorporated ESG and DIB matters into the Company’s short-term compensation plan | 2023 STIP. Included two corporate responsibility objectives, one related to advancement of our ESG considerations and initiatives, with performance metrics focused on, among other things, environmental performance data collection and reporting, and the other related to DIB, with performance metrics focused on, among other things, evaluation of pay practices and diversity representation, education and awareness. For additional detail, see the section entitled “2023 Company Performance Assessment” beginning on page 95 of this proxy statement. | | Utilized a peer group that reflects our company profile | Updated our peer group to align with our Company profile, including to eliminate certain companies whose market capitalization was significantly higher than ours. For additional detail, see the section entitled “Peer Group Selection and Review Process” on page 90 of this proxy statement. | | Expanded scope of Clawback Policy Adopted new Recoupment Policy | In May 2021, we expanded our Clawback Policy to apply to certain cash-based incentive compensation in addition to equity-based incentive compensation. In September 2023, we adopted our Recoupment Policy, which complies with the recently adopted Rule 10D-1 under the Exchange Act and Nasdaq Listing Rule 5608. For additional detail, see the section entitled “Clawback Policy and Recoupment Policy” beginning on page 108 of this proxy statement. |
Focus on Pay for Performance; Alignment with Shareholder Interests
Focus on Pay for Performance; Alignment with Shareholder Interests We believe in a pay-for-performance approach to executive compensation that supports our business strategy and aligns the interests of our named executive officers with those of our shareholders and other stakeholders. Our executive compensation program is focused on total direct compensation opportunity utilizing a balance of compensation elements, including: ▪ Base Salary: The Compensation Committee determines base salaries for our named executive officers based on a variety of factors, including level of responsibility within the Company, experience and performance in the role, and the Compensation Committee’s competitive positioning philosophy. For information about 2023 base salaries for our named executive officers, see the section entitled “Base Salary” beginning on page 93 of this proxy statement. ▪ Short-Term Cash Incentive Compensation: The Compensation Committee designs annual incentives that incorporate near-term corporate objectives—including financial, operating, strategic, pipeline, and/or ESG-related objectives—that will meaningfully advance our corporate strategy and contribute to the creation of shareholder value. For information about the annual cash performance pay awarded to our named executive officers for 2023, see the section entitled “Annual Cash Performance Pay—Short-Term Incentive Plan” beginning on page 93 of this proxy statement. Long-Term Equity Incentive Compensation: The Compensation Committee annually considers the appropriate mix of performance-vesting and time-vesting equity awards to encourage our named executive officers to focus on the Company’s ongoing and future activities and, in this context, ensures that a meaningful portion of the annual equity grants made to our named executive officers is conditioned on achievement of long-term performance goals that are aligned with our corporate strategy and the creation of long-term value for the Company and its shareholders. For information about long-term equity awards granted to our named executive officers in 2023, see the section entitled “Long-Term Equity Incentive Compensation—Annual Grant” beginning on page 101 of this proxy statement.
Pay Mix – Significant Portion of Executive Compensation is “At-Risk”
Pay Mix – Significant Portion of Executive Compensation is “At-Risk” A significant portion of the total direct compensation opportunity for each of our named executive officers, including our CEO, is comprised of “at-risk” compensation in the form of annual cash performance pay opportunities and long-term equity awards which are either performance-vesting awards tied to achievement of pre-determined corporate objectives designed to drive value creation for our shareholders, or time-vesting awards that, in the case of stock options, have value only if our share price increases from the price on the grant date or, in the case of RSUs, have value that fluctuates based on our share price performance. The following chart represents the breakdown of 2023 total direct compensation for our CEO and the average breakdown for our other NEOs, and illustrates the predominance of long-term equity incentives, performance-based components, and compensation that is “at-risk” in our executive pay. Included in each chart are: (i) annual base salary for 2023; (ii) annual bonus award paid for 2023; and (iii) the approved target value of equity awards granted in 2023.
STIP and LTIP Designs Reflective of Shareholder Feedback
STIP and LTIP Designs Reflective of Shareholder Feedback Our Compensation Committee approved 2023 STIP and 2023 LTIP designs that include short-term and longer-term, respectively, measurable, performance-based pre-determined goals that aligned with shareholder feedback and the Company’s short-term and long-term business priorities, respectively.
STIP and LTIP Designs Reflective of Shareholder Feedback
| 2023 STIP (Annual Bonus) | 2023 LTIP (Performance-Based Equity) | | | | | | |
Annual Bonus Payouts Based on Pay-for-Performance Philosophy
Annual Bonus Payouts Based on Pay-for-Performance Philosophy 2023 was a year of significant achievements that furthered our short- and long-term objectives and supported long-term value creation for our shareholders. Our 2023 corporate objectives were set at a level that our Compensation Committee considered rigorous and attainable only with strong performance, and emphasized the Company’s strategic business priorities, including, among others, profitability, separation of the oncology business, advancement of our pipeline, commercial execution and progression of our DIB and ESG initiatives. In recognition of the Company’s strong performance in 2023, the Compensation Committee approved a Company performance payout percentage of 120% under the 2023 STIP and, after assessing the individual performance of each named executive officer (other than our CEO, whose annual cash performance pay opportunity was based entirely on the Company’s performance), the Compensation Committee approved 2023 STIP cash performance payouts for our named executive officers that ranged from 120% to 130% of their performance pay targets, as described in more detail below.
Equity Grants Conditioned on Performance
Equity Grants Conditioned on Performance The Compensation Committee conditioned greater than 50% of the total target value of our CEO’s 2023 annual equity grant and approximately 25% of the total target value of the 2023 annual equity grants made to each of our other named executive officers on the achievement over a three-year performance period of financial and pipeline objectives intended to increase shareholder value over the long-term and on relative total shareholder return over the same period to align executive compensation with shareholder experience. For additional detail regarding the equity grants made to our named executive officers in 2023, see the section entitled “Long-Term Equity Incentive Compensation—Annual Grant” beginning on page 101 of this proxy statement.
Role of the Independent Compensation Consultant
Role of the Independent Compensation Consultant For 2023, the Compensation Committee engaged Aon as its independent compensation consultant (the “Compensation Consultant”) to review market data and various incentive programs and to provide assistance in establishing our cash and equity-based compensation targets and awards, based, in large part, upon a peer group identification and assessment, and upon an analysis of the retention value of equity awards. The Compensation Committee considered whether the work of the Compensation Consultant caused any conflict of interest and concluded that there was no conflict. The Compensation Committee, in its sole authority, has the right to hire or terminate its outside compensation consultants. Aon was the only compensation consultant engaged by the Compensation Committee for 2023.
Competitive Assessment of Compensation – Peer Companies and Market Data
Competitive Assessment of Compensation – Peer Companies and Market Data We seek to attract and retain highly-qualified executive officers in an extremely competitive market. The Compensation Committee believes that it is important, when making compensation decisions, to be informed as to the current practices of comparable public companies with which we compete for executive talent.
Market Data
Market Data At the direction of the Compensation Committee, the Compensation Consultant periodically conducts peer group analyses to enable the Compensation Committee to compare our executive compensation program as a whole, and also the pay of individual executives, to that of the companies in our peer group. The Compensation Consultant also includes data from a broader survey group of public commercial-stage biopharmaceutical companies within a relevant revenue range in each of its analyses. The Compensation Consultant collects such data from public SEC filings and the Radford Global Life Sciences Survey, and applies a proprietary methodology to the data to construct a benchmark for comparison.
Peer Group Selection and Review Process
Peer Group Selection and Review Process The Compensation Committee reviews the composition of our peer group at least annually and revises the group as needed to account for changes in our business and in the businesses of the companies in our peer group. As a fully-integrated, global biopharmaceutical company, we have built, and continue to devote significant resources to further develop and enhance, a comprehensive cross-functional organization designed to support product development from discovery through commercialization and lifecycle management. As part of this effort, we invest significantly in R&D, including early discovery, translational medicine, formulation and clinical development capabilities; intellectual property prosecution, enforcement and defense; medical affairs; manufacturing operations; U.S. federal and state government affairs; sales and marketing; and market access, among other areas. There are a limited number of companies who are similar to us in terms of the diversity and complexity of our business. As such, the companies with which we compete directly for executive talent are not always similar to us in size, revenue or market capitalization. When developing the recommended lists of peer group companies to be used in connection with our 2023 compensation decisions for our named executive officers, the Compensation Consultant considered a mix of quantitative and qualitative factors, including the factors listed in the table immediately below.
Peer Group Selection and Review Process
| Factor Considered | What We Look For | | Similar industry | Biotechnology or pharmaceutical industry (GICS codes 352010 or 352020) | | Commercial | Companies who market and sell commercial biopharmaceutical medicines | | R&D expenditure as percentage of revenue | Significant investment in R&D to develop and advance products from discovery through to regulatory approval and commercialization | | Revenue | Revenue of approximately 0.3 times to 3.0 times our then-projected revenue, resulting in a revenue range of $400 million to $4 billion as of July 2022 | | Market capitalization | Market capitalization of approximately 0.3 times to 3.0 times our then-current market value, resulting in a market capitalization range of $1.7 billion to $15 billion, based on our 30-day average market capitalization as of July 22, 2022 | | Number of employees | Employee headcount of approximately 0.3 times to 3.0 times our then-current headcount, resulting in a range of 800 to 7,000 employees as of July 2022 | | Geography/market competition | Companies with which we compete directly for executive talent, including those in geographic proximity to our sites of operation | | Alkermes in peer group | Inclusion of Alkermes in a company’s peer group, as reported in the company’s proxy statement from the prior year |
2023 Peer Group
2023 Peer Group In September 2022, when selecting our peer group for 2023, the Compensation Committee targeted a group of 10 to 20 peers. Since few companies align with us on all of the factors considered, the Compensation Committee included in our peer group companies meeting a majority of the quantitative and qualitative criteria described above, with a greater weight placed on companies with a similar business model to ours––namely, those that market and sell commercial biopharmaceutical products, generate substantial revenue from such commercial activities and invest significantly in R&D and manufacturing—and with less of a focus placed on market capitalization. In this context, the Compensation Committee excluded from our peer group those biopharmaceutical companies with business models that are dissimilar to ours, such as those that focus on over-the-counter and generic pharmaceuticals, medical diagnostics or veterinary pharmaceuticals, as we do not compete for senior executive talent with these companies and including them within our peer group could disadvantage us in attracting and retaining leadership talent. Following this review, the Compensation Committee determined that the Company was well-positioned in its then-current peer group and approved incremental refinements to the Company’s peer group to result in the final peer group used in making compensation decisions for 2023, as set forth in the table below under “2023 Peer Group”. In the second half of 2023, the Compensation Committee again reviewed the Company’s peer group and made incremental refinements in preparation for 2024 compensation decisions, as set forth in the table below under “2024 Peer Group”.
Use of Peer Group Data
Use of Peer Group Data At the direction of the Compensation Committee, the Compensation Consultant analyzes our peer group and other market data to prepare its executive compensation reports and recommendations each year. The table below shows the timing of the Compensation Committee’s decision-making with respect to compensation for each of our named executive officers.
Use of Peer Group Data
| December | Set performance pay targets and performance pay ranges for upcoming year | | January | Review and adjust salaries for current year Determine prior year cash performance pay awards | | February | Determine target equity award values and equity award mix for current year Determine performance and any resulting vesting under completed long-term incentive plan(s) |
Use of Peer Group Data
The Compensation Committee generally targets around the 50th percentile of the peer group for all elements of pay for our named executive officers. However, the comparative data provided by the Compensation Consultant is just one of many factors that the Compensation Committee takes into consideration in determining executive compensation. As discussed in detail in this CD&A, the Compensation Committee increases or decreases the variable elements of pay from the 50th percentile based upon actual individual and Company performance and other considerations.
Executive Compensation Program Design and Key Elements
Executive Compensation Program Design and Key Elements The Compensation Committee establishes the total compensation opportunity for each named executive officer. The Compensation Committee believes that a mix of fixed, short-term and long-term incentive compensation, and of cash and equity-based compensation, is appropriate to achieve our executive compensation program goals and corporate objectives. To align the named executive officers’ incentives with the interests of our shareholders and our business priorities, a significant portion of the compensation opportunity for our named executive officers is variable compensation, comprised of annual cash performance pay opportunities and long-term equity awards. The table below describes the key elements of our 2023 executive compensation program.
Executive Compensation Program Design and Key Elements
| | | Purpose | Time Period | Payment Form | % of 2023 Total Compensation* | | | Base Salary (page 93) | ▪ Provide a fixed level of compensation that is competitive within our industry and geographic locations to attract and retain executives | Annual | Cash | | | | Annual Cash Performance Pay (page 93) | ▪ Align executive officers with business strategy and motivates them to achieve short-term corporate objectives ▪ Reward executive officers based on performance against pre-determined targets during the year | Annual | Cash | | | | Long-Term Equity Incentives (page 101) | ▪ Appropriately reward, recognize and retain key executive officers ▪ Align interests of executive officers with the Company’s long-term business strategy and the creation of shareholder value ▪ Provide executive officers with the opportunity to share in the future value of the Company that they are responsible for creating | Annual vesting over four years | Time-Vesting Options | | | | | | | Time-Vesting RSUs | | | | | ▪ Align executive compensation with specific milestones expected to drive value for our shareholders | Three-year performance period | Performance-Vesting RSUs | |
Base Salary
Base Salary In January 2023, the Compensation Committee reviewed and adjusted the base salaries of our named executive officers for 2023. In determining base salary adjustments, the Compensation Committee considered a number of factors, including peer group market data, the competitive market for executive talent in our industry and the geographic regions in which we operate, individual named executive officer responsibilities within the Company, the Compensation Committee’s competitive positioning philosophy and, for those named executive officers other than Mr. Pops, the recommendations of Mr. Pops regarding their respective performance assessments. Based on this review, the Compensation Committee determined that each named executive officer should receive an increase of approximately 3.0% in their base salary for 2023, with the exceptions of Messrs. Brown and Jackson, who the Compensation Committee determined should receive an increase of approximately 4.5% and 8.3%, respectively, to align their respective base salaries closer to the 50th percentile of the base salaries of executives in similar positions at our peer group companies. As such, the following were the approved base salaries for each of our named executive officers for 2023. There were no adjustments to the below base salaries of our named executive officers during 2023.
Annual Cash Performance Pay – Short-Term Incentive Plan (STIP)
Annual Cash Performance Pay – Short-Term Incentive Plan (STIP) Each of our named executive officers is eligible to receive an annual cash performance pay award, the amount of which is determined by the Compensation Committee based on pre-determined performance pay targets and performance pay ranges for each named executive officer. The Compensation Committee works with management and the Board to set annual corporate objectives—including financial, operating, pipeline, strategic and ESG-related objectives—on which the Board believes the Company should focus during the year to achieve its strategic goals. Annual cash performance payouts are based upon the Company’s performance against these annual corporate objectives and, for executive officers other than the CEO, their individual performance in contributing to the achievement of the Company’s annual corporate objectives.
2023 STIP Design In Line with Shareholder Feedback
2023 STIP Design In Line with Shareholder Feedback We design our STIPs to incentivize employees to accomplish annual goals that will meaningfully advance our corporate strategy and create shareholder value. For both our employees and shareholders, the Compensation Committee recognizes the importance of establishing objective, measurable goals and metrics. In designing the 2023 STIP, the Compensation Committee:
2023 STIP Design In Line with Shareholder Feedback
| ● | established pre-determined objective quantitative and qualitative metrics to assess performance against each of the Company’s 2023 corporate objectives (see the section entitled “2023 Company Performance Assessment” beginning on page 95 of this proxy statement); | | | ● | assigned relative percentage weightings (as set forth below) for each category of objectives, reflecting the Compensation Committee’s assessment of their relative importance in contributing to the Company’s overall business strategy and to shareholder value creation; and | | | ● | assigned relative percentage weightings for corporate and individual performance for each named executive officer for use in the determination of their annual cash performance pay as follows: | | | | | |
2023 Company Performance – Overall Assessment and Company Payout Percentage
2023 Company Performance – Overall Assessment and Company Payout Percentage Overall Assessment. In January 2024, the Compensation Committee considered the Company’s achievements against its 2023 corporate objectives, including its success in the Janssen arbitration (royalties from the INVEGA products contributed approximately $486 million in royalty-related revenue from Janssen in 2023) and its favorable settlement of the VIVITROL patent litigation; and the relative weightings of the four categories of objectives, and determined an overall Company performance assessment of ‘EXCEEDED’. Company Performance Payout Percentage. Company performance serves as a significant factor (together with individual performance for named executive officers other than the CEO) in the Compensation Committee’s determination of individual cash performance payouts for our named executive officers. Taking into account the Company’s performance in 2023 as described above, the Compensation Committee approved a payout percentage of 120% of target performance pay for all employees, including our named executive officers (the “Company Performance Payout Percentage”). In January 2023, the Compensation Committee established pre-determined payout ranges for each overall assessment level. The Company Performance Payout Percentage of 120% represents the midpoint of the pre-determined payout range for an overall assessment level of ‘EXCEEDED’ (110% to 130%). For our CEO, the performance payout is 100% based on Company performance. • For our named executive officers other than the CEO, the Company Performance Payout Percentage was subject to upward or downward adjustment based on each named executive officer’s individual performance, as described in detail below.
2023 Cash Performance Payouts
2023 Cash Performance Payouts
Performance Payout for CEO
Performance Payout for CEO In January 2024, in determining Mr. Pops’ 2023 cash performance payout, the Compensation Committee considered the Company’s 2023 performance, including its share price performance, and awarded Mr. Pops a performance payout equal to 120% of his performance pay target, consistent with the Company Performance Payout Percentage as described above.
Performance Payouts for Named Executive Officers Other than the CEO
Performance Payouts for Named Executive Officers Other than the CEO In January 2024, in determining the cash performance payouts for each of the named executive officers other than the CEO, the Compensation Committee considered overall Company performance, including performance against the 2023 corporate objectives (and the corresponding Company Performance Payout Percentage), the individual performance of each named executive officer (other than Mr. Pops) as set forth above, the performance pay targets and performance pay ranges for each named executive officer set by the Compensation Committee in December 2022, data from the Compensation Consultant regarding cash performance pay for peer group executive officers, comparable market data for experienced executive officers in the biopharmaceutical industry and the recommendations of Mr. Pops with respect to cash performance payouts for each named executive officer other than himself. In consideration of the foregoing, the Compensation Committee approved the following 2023 cash performance payout amounts for each of our named executive officers:
Performance Payouts for Named Executive Officers Other than the CEO
| Named Executive Officer | 2023 Performance Payout Amount | 2023 Target Performance Pay as a % of Base Salary | 2023 Actual Performance Pay as a % of Base Salary | 2023 Actual Performance Pay as a % of Target Performance Pay | | Richard F. Pops | $1,414,764 | 100% | 120% | 120% | | Iain M. Brown | $359,375 | 50% | 62% | 125% | | David J. Gaffin | $498,420 | 60% | 78% | 130% | | Craig C. Hopkinson, M.D. | $514,080 | 60% | 72% | 120% | | Blair C. Jackson | $507,000 | 60% | 78% | 130% |
Long-Term Equity Incentive Compensation—Annual Grant
Long-Term Equity Incentive Compensation—Annual Grant We utilize long-term equity awards to align executive compensation and performance, incentivize the advancement of our critical business objectives, promote the creation of long-term shareholder value, and reward, incentivize and retain our employees. Consistent with this approach, a significant portion of our named executive officers’ total annual compensation is in the form of long-term equity awards. The Compensation Committee annually considers the appropriate mix of equity awards for our named executive officers. Since 2020, the Compensation Committee has incorporated PRSUs into the annual equity grants awarded to all employees at senior vice president level and above, including each of our named executive officers, to further enhance the link between pay and performance and align the interests of management with those of our shareholders.
2023 Equity Mix – Performance Awards for all Named Executive Officers
2023 Equity Mix – Performance Awards for all Named Executive Officers In February 2023, the Compensation Committee granted the following mix of performance-vesting and time-vesting equity awards to each of our named executive officers as part of our 2023 annual equity grant:
2023 Equity Mix – Performance Awards for all Named Executive Officers
| ● | for our CEO, approximately 51% of his total target equity award value was in the form of PRSUs that vest, if earned, following a three-year performance period, with his remaining target equity award value comprised of time-vesting stock options that vest in four equal annual installments commencing on the first anniversary of the grant date; and | | ● | for our other named executive officers, approximately 25% of their total target equity award value was in the form of PRSUs that vest, if earned, following a three-year performance period, with their remaining target equity award value comprised of approximately 25% time-vesting restricted stock unit awards (“RSUs”) and approximately 50% time-vesting stock options, all of which vest over four equal annual installments commencing on the first anniversary of the grant date. |
2023 LTIP – PRSU Design In Line with Shareholder Feedback
2023 LTIP – PRSU Design In Line with Shareholder Feedback In February 2023, the Compensation Committee adopted the 2023 LTIP to incentivize our senior-level executives to achieve long-term performance goals designed to drive value for our shareholders, and to provide our executives with the opportunity to share in the value they are responsible for creating. The Compensation Committee incorporated the following features into the 2023 LTIP:
2023 LTIP – PRSU Design In Line with Shareholder Feedback
| ● | PRSUs subject to multiple objective, performance-based goals, with relative percentage weightings assigned based on their criticality to the Company’s business strategy and value creation; | | ● | a three-year performance period for achievement of each of the performance goals, with no vesting opportunity until after the end of the performance period; and | | ● | a relative TSR modifier tied to share price performance compared to the Nasdaq Biotechnology Index (also known as the IBB Index) over the three-year performance period. |
Performance goals and relative weightings aligned with strategic focus
Performance goals and relative weightings aligned with strategic focus In establishing the 2023 LTIP performance goals and relative weightings, the Compensation Committee identified goals over the upcoming three-year period tied to the Company’s corporate strategy that it believed would be appropriately rigorous and challenging for the Company. Specifically, in the 2023 LTIP, the Compensation Committee incorporated the following goals, the achievement of which would require continued cost management, strong commercial and R&D performance and a high level of effort and execution by our named executive officers: Three distinct pipeline performance goals (50% weighting) related to the advancement and expansion of our development pipeline, with specified threshold, target and stretch performance opportunities based on the number of goals that are achieved during the performance period; and • A financial performance goal (50% weighting) reflecting the Company’s publicly announced profitability targets for FY 2025 of NGNI margin and earnings before interest, tax, depreciation and amortization (“EBITDA”) margin (see Appendix B for information regarding these non-GAAP financial targets), with a stretch performance opportunity for achievement that significantly exceeds the targets. We have not disclosed the specific performance goals and targeted levels of achievement, as they are confidential, and disclosure prior to the end of the performance period could lead to competitive harm.
Distinct from STIP performance objectives
Distinct from STIP performance objectives The Compensation Committee deliberately differentiated the multi-year goals in the 2023 LTIP from the annual objectives utilized in the 2023 STIP to focus our named executive officers on achievement of distinct critical measures of short-term and long-term strategic importance, all of which are designed to drive value for our shareholders.
Vesting and TSR Modifier
Vesting and TSR Modifier The 2023 LTIP PRSUs vest based on the Compensation Committee’s determination, following the end of the three-year performance period, of the level of achievement of each of the performance goals, with corresponding payouts ranging from 0% to 150% of the target number of shares based on the level of achievement. To align executive compensation with shareholder experience, the number of vested shares is subject to upward or downward adjustment based on the Company’s relative TSR (compared to the Nasdaq Biotechnology Index) over the three-year performance period, the impact of which is to increase or decrease the total number of vested shares underlying the PRSUs by up to 25%. Measuring our share price performance relative to an index serves to mitigate any impacts, positive or negative, that affect the biotechnology industry and/or share price performance more broadly and that are outside the control of our named executive officers.
How Sizes of 2023 Annual Equity Grant Awards Were Determined
How Sizes of 2023 Annual Equity Grant Awards Were Determined The Compensation Committee grants all equity awards to our named executive officers based on an aggregate target dollar value for each award.
Determination of 2023 Target Award Values
| Named Executive Officer | Time-Vesting Stock Options* | Time-Vesting Restricted Stock Unit Awards* | Performance-Vesting Restricted Stock Unit Awards* | | Richard F. Pops | $4,676,462 | $— | $4,867,338 | | Iain M. Brown | $1,250,000 | $625,000 | $625,000 | | David J. Gaffin | $1,650,000 | $825,000 | $825,000 | | Craig C. Hopkinson, M.D. | $1,650,000 | $825,000 | $825,000 | | Blair C. Jackson | $1,875,000 | $937,500 | $937,500 |
Conversion into Share Amounts
| Named Executive Officer | Time-Vesting Stock Options* | Time-Vesting Restricted Stock Unit Awards* | Performance-Vesting Restricted Stock Unit Awards* | | Richard F. Pops | 284,873 | — | 177,900 | | Iain M. Brown | 91,375 | 22,844 | 22,844 | | David J. Gaffin | 120,615 | 30,154 | 30,154 | | Craig C. Hopkinson, M.D. | 120,615 | 30,154 | 30,154 | | Blair C. Jackson | 137,062 | 34,266 | 34,266 |
Conversion into Share Amounts
* The number of shares underlying the equity grants reported in this table reflect the actual number of shares awarded on the date of grant and do not reflect subsequent adjustments that were made to such equity grants in connection with the separation of the Company’s oncology business in November 2023, in accordance with the provisions of the 2018 Plan. For additional information about these equity awards granted to our named executive officers in 2023, see the 2023 Grants of Plan-Based Awards table on page 114 of this proxy statement. These awards are subject to early vesting in certain circumstances as described in the 2018 Plan and in the section entitled “Potential Payments upon Termination or Change in Control” beginning on page 121 of this proxy statement. No other equity awards were granted to our named executive officers in 2023.
2021 LTIP – Achievements and Payout
2021 LTIP – Achievements and Payout
LTIP Design
LTIP Design In February 2021, the Compensation Committee granted PRSUs (the “2021 PRSUs”) to all employees at senior vice president level and above, including each of our named executive officers. As shown in the below chart, the 2021 PRSUs were eligible to vest based on the achievement of pre-determined financial, commercial and pipeline goals over a three-year performance period, and were subject to a relative TSR modifier tied to relative share price performance (compared to the Nasdaq Biotechnology Index) over the same period. The TSR modifier could increase or decrease the total number of vested shares underlying the 2021 PRSUs by up to 25%. The performance period for the 2021 PRSUs ended on December 31, 2023.
Overall Payout
Overall Payout In February 2024, the Compensation Committee assessed the Company’s performance against each of the pre-determined performance goals set forth in the 2021 LTIP over the three-year performance period and, based on Company performance, determined a payout of 76% of the total target number of shares underlying the 2021 PRSUs. After application of the relative TSR modifier set forth in the 2021 LTIP, the Compensation Committee determined an overall payout equal to 95% of the total target number of shares underlying the 2021 PRSUs.
Overall Payout
| 2021 PRSUs | % Weighting | Achievement Level | Total Vested (as % of goal category) | Total Vested (as % of all PRSUs) | | Pipeline Goals | 40% weighting | 2 of 3 goals achieved | 100% of metric weighting | 40% | | Commercial Goals | 20% weighting | Below threshold performance | None | 0% | | Financial Goals | 40% weighting | 1 of 2 goals achieved, with strong overall performance | 90% of metric weighting | 36% | | Payout (% of Target) | | | | 76% | | | | | | x | | Relative TSR Modifier | +/- 25% multiplier | 82nd percentile of Nasdaq Biotechnology Index | + 25% | 1.25x | | Actual Payout (% of Target) | | | | 95% |
Overall Payout
Details of the determinations in respect of the pipeline, commercial and financial performance goals, and the calculation of payouts under the 2021 LTIP, are set forth below.
Commercial Goal Determination (20% weighting)
Commercial Goal Determination (20% weighting) The Compensation Committee determined that the Company did not achieve the commercial goals underlying the 2021 PRSUs. The COVID-19 pandemic, later than anticipated approval and launch dates for LYBALVI, and prolonged negotiations with major commercial plans, each as detailed below, made the Company’s ability to achieve the commercial goals markedly more difficult. Notwithstanding these factors, the Compensation Committee did not adjust in any manner the commercial goals or payouts under the 2021 LTIP. The commercial goals underlying the 2021 PRSUs consisted of (1) a combined compound annual growth rate goal for ARISTADA and VIVITROL over the three-year performance period (15% weighting) with pre-specified threshold, target and stretch growth rates, and (2) a unit sales goal for LYBALVI over the performance period (5% weighting) with pre-specified threshold, target and stretch performance amounts. While ARISTADA’s compound annual growth rate of approximately 12% over the three-year performance period exceeded the target level of achievement, the combined compound annual growth rate for ARISTADA and VIVITROL over the performance period was approximately 8%, which fell below the threshold performance target for this commercial goal, resulting in no payout for this portion of the 2021 PRSUs. ARISTADA and VIVITROL were significantly and negatively impacted during the performance period by the impacts of the COVID-19 pandemic, as they are physician-administered products and the myriad of COVID-19 restrictions implemented during the performance period resulted in widespread interruptions and closures of businesses, including healthcare systems that serve people living with addiction and serious mental illness. The Company did not meet the unit sales goal for LYBALVI during the performance period. This was due, in part, to later than anticipated LYBALVI approval and launch dates, and the decision, after prolonged negotiations with payers, to delay contracting with major commercial plans in order to maintain beneficial sales margins. This strategy limited unit sales of LYBALVI (as these major commercial plans, without a contract in place, restricted patient access to the medication), but resulted in strong net sales performance over the three-year performance period. ❖
TSR Modifier Calculation (+/- 25%)
| 2021 PRSUs | Performance Period | Comparator Index | At or Below 25th Percentile | Between 25th and 75th Percentile | At or Above 75th Percentile | | Relative TSR Modifier | Jan. 1, 2021 to Dec. 31, 2023 | Nasdaq Biotechnology Index | Reduced by 25% | Reduced / Increased by 1% for every percent that the Company falls below / above 50th percentile | Increased by 25% | | Company Percentile Compared to Nasdaq Biotechnology Index: 82nd | | | Resulting Modifier = Increase total vested shares by 25% | | |
2022 LTIP – Modified Performance Conditions Based on Changed Company Circumstances
2022 LTIP – Modified Performance Conditions Based on Changed Company Circumstances In February 2022, the Compensation Committee granted PRSUs (the “2022 PRSUs”) to all employees at senior vice president level and above, including each of our named executive officers. Vesting of the 2022 PRSUs is conditioned upon the achievement of specified goals over a three-year performance period, subject to a relative TSR modifier tied to relative share price performance (compared to the Nasdaq Biotechnology Index) over the three-year performance period. The 2022 PRSUs are not eligible to vest until after the three-year performance period ends on December 31, 2024.
2022 LTIP Performance Goals
2022 LTIP Performance Goals Included in the 2022 LTIP performance goals adopted in February 2022 were: ▪ Commercial goals related to sales of the Company’s proprietary commercial products (30% weighting); ▪ Two distinct pipeline goals—the first related to nemvaleukin alfa, our lead oncology candidate at the time (15% weighting) and which has since been included in the oncology assets separated into a new, independent, publicly-traded company, and the second related to advancement of ALKS 2680, one of the Company’s early-stage development candidates (15% weighting); and ▪ A financial goal reflecting the Company’s then-operative long-term profitability target for FY 2024 of NGNI margin in the range of 15% to 20% of total revenues (40% weighting). See Appendix B for information regarding this non-GAAP financial target. In accordance with the terms of the 2022 LTIP, the Compensation Committee has the ability to adjust the 2022 LTIP, including the performance goals set forth therein, in the event of a change in the Company’s circumstances during the performance period.
Post-Termination Compensation and Benefits
Post-Termination Compensation and Benefits We have a program in place under which each of our named executive officers receives severance benefits if such named executive officer is terminated without “cause” (as defined in each executive officer’s employment agreement with the Company) or resigns for “good reason” (e.g., a material diminution in their responsibilities, authority, powers, functions, duties or compensation or a material change in the geographic location at which such executive officer must perform their employment), subject to signing a general release of claims. Additionally, each named executive officer receives severance benefits if, within a period of time following a corporate transaction or a change in control, such executive officer is terminated without “cause” or resigns for “good reason.” The terms of, and the amounts payable under, these arrangements are described in more detail below under “Potential Payments upon Termination or Change in Control”. We provide these severance arrangements because we believe that, in a competitive market for talent, severance arrangements are necessary to attract and retain high quality executives. In addition, the change in control benefit allows and incentivizes executives to maintain their focus on our business during a period when they otherwise might be distracted.
Equity Grant Timing
Equity Grant Timing In accordance with our annual equity grant procedures, annual equity grants to employees, including grants to executive officers, are typically granted on a date that is after the announcement of the Company’s year-end financial results and after the Company’s window to trade in Company securities has reopened (generally upon the close of the second trading day following the announcement of such financial results). As a result, the timing of our annual equity award grant is not coordinated in a manner that intentionally benefits our executive officers. Our Compensation Committee may also approve equity grants at other times during the year, in connection with significant personnel events, such as for new hires and in connection with promotions. New hire and promotion equity grants are typically granted on the first Wednesday following the first Monday (or the first business day thereafter if such Wednesday is a holiday for which Nasdaq is closed) of each month. For information about non-employee director equity compensation, see the discussion in the section entitled “Non-Employee Director Compensation Program—Equity Compensation” on page 48 of this proxy statement. For additional information about our equity compensation plans, see the section entitled “Equity Compensation Plan Information” on page 129 of this proxy statement.
Summary Compensation Table
Summary Compensation Table The following table presents and summarizes the compensation paid to, or earned by, our named executive officers for 2023, 2022 and 2021:
Summary Compensation Table
| Name and Principal Position | Year | Salary ($) | Bonus ($) | Stock Awards ($) | Option Awards ($) | Non-Equity Incentive Plan Compensation ($) | Change in Pension Value and Nonqualified Deferred Compensation Earnings ($) | All Other Compensation ($) | Total ($) | | (a) | (b) | (c) | (d) | (e)(1) | (f)(2) | (g)(3) | (h) | (i)(4) | (j) | | Richard F. Pops | 2023 | 1,178,970 | — | 2,897,991 | 3,933,841 | 1,414,764 | — | 16,500 | 9,442,066 | | Chairman and Chief Executive Officer | 2022 | 1,144,631 | — | 4,157,121 | 3,852,539 | 1,144,631 | — | 15,250 | 10,314,172 | | | 2021 | 1,105,923 | — | 3,101,695 | 3,463,250 | 1,161,220 | — | 14,500 | 8,846,588 | | Iain M. Brown | 2023 | 575,000 | — | 997,141 | 1,261,808 | 359,375 | — | 16,500 | 3,209,824 | | Senior Vice President, Chief Financial Officer | 2022 | 550,000 | — | 1,160,755 | 1,284,189 | 302,500 | — | 15,250 | 3,312,694 | | | 2021 | 500,000 | — | 933,373 | 1,151,296 | 287,500 | — | 14,500 | 2,886,669 | | David J. Gaffin | 2023 | 639,000 | — | 1,316,222 | 1,665,586 | 498,420 | — | 16,500 | 4,135,728 | | Executive Vice President, Chief Legal Officer, | 2022 | 614,201 | — | 1,533,595 | 1,682,506 | 446,400 | — | 15,250 | 4,291,952 | | Chief Compliance Officer and Secretary | 2021 | 586,250 | — | 975,790 | 1,203,632 | 337,094 | — | 14,500 | 3,117,266 | | Craig C. Hopkinson, M.D. | 2023 | 714,000 | — | 1,316,222 | 1,665,586 | 514,080 | — | 16,500 | 4,226,388 | | Executive Vice President, Research and | 2022 | 693,000 | — | 1,625,016 | 1,797,854 | 415,800 | — | 15,250 | 4,546,920 | | Development and Chief Medical Officer | 2021 | 670,000 | — | 1,612,178 | 1,988,600 | 442,200 | — | 14,500 | 4,727,478 | | Blair C. Jackson | 2023 | 650,000 | — | 1,495,711 | 1,892,704 | 507,000 | — | 16,500 | 4,561,915 | | Executive Vice President, Chief Operating | 2022 | 600,000 | — | 1,625,016 | 1,797,854 | 432,000 | — | 15,250 | 4,470,120 | | Officer and Chief Risk Officer | 2021 | 540,000 | — | 1,272,775 | 1,569,949 | 372,600 | — | 14,500 | 3,769,824 |
2023 Grants of Plan-Based Awards Table
2023 Grants of Plan-Based Awards Table The following table presents information on all grants of plan-based awards made in 2023 to our named executive officers. The number of shares or units, exercise prices and/or grant date fair values reported in the following table reflect the terms of the awards and their respective valuations on the date they were granted, and do not reflect subsequent adjustments that were made in connection with the separation of our oncology business in November 2023, in accordance with the provisions of the 2018 Plan.
2023 Grants of Plan-Based Awards Table
| | | | Estimated Future Payouts Under Non-Equity Incentive Plan Awards | | | Estimated Future Payouts Under Equity Incentive Plan Awards | | | All Other Stock Awards: Number of | All Other Option Awards: Number of Securities | Exercise or Base Price of | Grant Date Fair Value of Stock and | | Name | Grant Date | Grant Action Date | Threshold ($) | Target ($) | Maximum ($) | Threshold (#) | Target (#) | Maximum (#) | Shares or Units (#) | Underlying Options (#) | Option Awards ($/Sh) | Option Awards ($) | | (a) | (b) | (b)(1) | (c) | (d)(2) | (e)(2) | (f) | (g)(3) | (h)(3) | (i)(4) | (j)(5) | (k) | (l)(6) | | Richard F. Pops | 2/23/2023 | 2/15/2023 | — | — | — | — | — | — | — | 284,873 | 27.36 | 3,933,841 | | | 2/23/2023 | 2/15/2023 | — | — | — | — | 177,900 | 333,562 | — | — | — | 2,897,991 | | | N/A | N/A | — | 1,178,970 | 2,357,940 | — | — | — | — | — | — | — | | Iain M. Brown | 2/23/2023 | 2/15/2023 | — | — | — | — | — | — | 22,844 | — | — | 625,012 | | | 2/23/2023 | 2/15/2023 | — | — | — | — | — | — | — | 91,375 | 27.36 | 1,261,808 | | | 2/23/2023 | 2/15/2023 | — | — | — | — | 22,844 | 42,832 | — | — | — | 372,129 | | | N/A | N/A | — | 287,500 | 575,000 | — | — | — | — | — | — | — | | David J. Gaffin | 2/23/2023 | 2/15/2023 | — | — | — | — | — | — | 30,154 | — | — | 825,013 | | | 2/23/2023 | 2/15/2023 | — | — | — | — | — | — | — | 120,615 | 27.36 | 1,665,586 | | | 2/23/2023 | 2/15/2023 | — | — | — | — | 30,154 | 56,538 | — | — | — | 491,209 | | | N/A | N/A | — | 383,400 | 766,800 | — | — | — | — | — | — | — | | Craig C. Hopkinson, M.D. | 2/23/2023 | 2/15/2023 | — | — | — | — | — | — | 30,154 | — | — | 825,013 | | | 2/23/2023 | 2/15/2023 | — | — | — | — | — | — | — | 120,615 | 27.36 | 1,665,586 | | | 2/23/2023 | 2/15/2023 | — | — | — | — | 30,154 | 56,538 | — | — | — | 491,209 | | | N/A | N/A | — | 428,400 | 856,800 | — | — | — | — | — | — | — | | Blair C. Jackson | 2/23/2023 | 2/15/2023 | — | — | — | — | — | — | 34,266 | — | — | 937,518 | | | 2/23/2023 | 2/15/2023 | — | — | — | — | — | — | — | 137,062 | 27.36 | 1,892,704 | | | 2/23/2023 | 2/15/2023 | — | — | — | — | 34,266 | 64,248 | — | — | — | 558,193 | | | N/A | N/A | — | 390,000 | 780,000 | — | — | — | — | — | — | — |
Notes to 2023 Grants of Plan-Based Awards Table
Notes to 2023 Grants of Plan-Based Awards Table (1) The Grant Action Date represents the date on which the Compensation Committee took action to grant the applicable award. (2) Represents the target and maximum amounts that could have been earned by each named executive officer under the 2023 Performance Pay Plan for the performance period of January 1, 2023 to December 31, 2023. The cash performance pay range for Mr. Pops was 0% to 200% of base salary with a target cash performance pay of 100% of base salary. The cash performance pay range for Dr. Hopkinson and Messrs. Gaffin and Jackson was 0% to 120% of base salary with a target cash performance pay of 60% of base salary. The cash performance pay range for Mr. Brown was 0% to 100% of base salary with a target cash performance pay of 50% of base salary. There are no other applicable estimated future payouts under non-equity incentive plan awards for our named executive officers under the 2023 Performance Pay Plan. For more information, see the discussion in the section entitled “Annual Cash Performance Pay – Short-Term Incentive Plan” beginning on page 93 of this proxy statement, and see the Summary Compensation Table on page 112 of this proxy statement for the actual cash performance pay amounts paid to our named executive officers for performance during 2023. Represents the target and maximum payouts for the 2023 PRSUs granted under the 2018 Plan that, in order to vest, require achievement of certain financial and pipeline performance conditions over a three-year performance period and are subject to a relative TSR modifier at the end of the same performance period. For additional detail, see the section entitled “Long-Term Equity Incentive Compensation—Annual Grant” beginning on page 101 of this proxy statement. No dividend equivalents are paid on unvested restricted stock unit awards. Represents time-vesting restricted stock unit awards granted under the 2018 Plan, which vest in four equal annual installments commencing on the first anniversary of the grant date. No dividend equivalents are paid on unvested restricted stock unit awards. (5) Represents time-vesting stock options granted under the 2018 Plan, which vest in four equal annual installments commencing on the first anniversary of the grant date. Certain of the stock options qualify as incentive stock options under Section 422 of the Code. (6) Represents the estimated grant date fair value of stock options and restricted stock unit awards granted to the named executive officers during 2023 computed in accordance with ASC 718. Assumptions used in the calculation of the fair value of option awards and stock awards granted by us during 2023 are included in footnote 2 “Summary of Significant Accounting Policies” to our consolidated financial statements for the year ended December 31, 2023 included in our Annual Report under the heading “Share-Based Compensation”. There can be no assurance that the stock options will be exercised (in which case no value will be realized by the optionee) or that the value realized upon exercise or settlement of a restricted stock unit award will equal the grant date fair value.
Narrative Disclosure to Summary Compensation Table and 2023 Grants of Plan-Based Awards Table
Narrative Disclosure to Summary Compensation Table and 2023 Grants of Plan-Based Awards Table Employment Agreements. Each of our named executive officers has entered into a written employment agreement with us that provides for payment of base salary, eligibility for cash incentive compensation, participation in incentive compensation plans and employee benefit programs and potential severance benefits. For additional information regarding the base salaries, annual cash performance and long-term equity opportunities for our named executive officers, see the section entitled “Executive Compensation—Compensation Discussion and Analysis” beginning on page 82 of this proxy statement. For additional information regarding severance benefits provided under the employment agreements for our named executive officers, see the section entitled “Potential Payments upon Termination or Change in Control” beginning on page 121 of this proxy statement. Base Salaries. For information regarding 2023 base salaries for our named executive officers, see the section entitled “Base Salary” on page 93 of this proxy statement. Annual Cash Performance Pay Awards. Under our reporting officer performance pay plans, our named executive officers are eligible to receive an annual cash performance pay award based on the Company’s performance against its corporate objectives and, for named executive officers other than the CEO, the contributions of each named executive officer to the achievement of our corporate objectives and such named executive officer’s individual performance. For additional information regarding 2023 annual cash performance pay awarded to our named executive officers, see the section entitled “Annual Cash Performance Pay – Short-Term Incentive Plan” beginning on page 93 of this proxy statement. Equity Awards. Our 2018 Plan provides for the grant of stock options and stock awards to our eligible named executive officers, employees, non-employee directors and consultants. In 2023, we granted to our named executive officers time-vesting stock options and time-vesting restricted stock unit awards that vest in four equal annual installments commencing on the first anniversary of the grant date; we also granted performance-vesting restricted stock unit awards that, in order to vest, require achievement of certain financial and pipeline performance goals that are in line with our long-term business strategy over a three-year performance period and are subject to a relative TSR modifier at the end of the performance period. For additional information regarding our 2018 Plan, see Proposal 5 beginning on page 58 of this proxy statement and the summaries that follow, and for additional information regarding the equity awards granted to our named executive officers in 2023, see the 2023 Grants of Plan-Based Awards table and related footnotes above and the section entitled “Long-Term Equity Incentive Compensation—Annual Grant” beginning on page 101 of this proxy statement. No Option or SAR Repricing. Our 2018 Plan explicitly prohibits repricing of options and stock appreciation rights in any manner without shareholder approval, including cancelling awards in exchange for cash or another award under the 2018 Plan, and we did not engage in any repricings during the year ended December 31, 2023. Adjustments to Outstanding Equity Awards. In August 2023, in anticipation of the planned separation of the Company’s oncology business into a new, independent, publicly-traded company later in 2023, the Compensation Committee approved a modification to the pipeline goals underlying the 2022 PRSUs granted pursuant to the 2022 LTIP, as described in the section entitled “2022 LTIP—Modified Performance Conditions Based on Changed Company Circumstances” on page 107 of this proxy statement, to become effective upon completion of the separation of the oncology business (which occurred in November 2023). In accordance with ASC 718, such modification did not result in any incremental fair value attributable to the 2022 PRSUs. In November 2023, in connection with the completion of the separation of the Company’s oncology business, and in accordance with the provisions of the Company’s equity compensation plans and the terms of that certain employee matters agreement, dated as of November 13, 2023, as amended, by and between the Company and Mural Oncology plc (the “Employee Matters Agreement”), all outstanding stock options, RSUs and PRSUs, including those held by our named executive officers, were adjusted (an equitable adjustment) in order to preserve the intrinsic value of such awards immediately before and immediately after the effective date of the separation based upon the terms, methodology and conversion ratios set forth in the Employee Matters Agreement. In accordance with ASC 718, such adjustments did not result in any incremental fair value attributable to the outstanding equity awards held by Alkermes employees, including our named executive officers. The outstanding awards otherwise retained their original terms and conditions, except in the case of the performance conditions underlying certain performance-based awards, which were modified as described in this proxy statement to reflect the separation. In February 2024, the Compensation Committee determined that the Company partially achieved the financial performance goal underlying the 2021 PRSUs granted pursuant to the 2021 LTIP. This determination resulted in a deemed accounting modification in accordance with ASC 718 and incremental fair value attributable to the 2021 PRSUs, which amount will be reflected in the Company’s financial results for 2024. In February 2024, in light of the Company’s significantly changed circumstances since adoption of the 2022 LTIP, the Compensation Committee approved a modification to the financial goal underlying the 2022 PRSUs granted pursuant to the 2022 LTIP to make such goal more difficult to achieve, as described in the section entitled “2022 LTIP—Modified Performance Conditions Based on Changed Company Circumstances” on page 107 of this proxy statement. In accordance with ASC 718, such modification did not result in any incremental fair value attributable to the 2022 PRSUs. Other Compensatory Arrangements. See the section entitled “Additional Compensation Information” beginning on page 108 of this proxy statement for a description of other compensatory arrangements and policies applicable to our named executive officers, including our Share Ownership and Holding Guidelines, our Clawback Policy, our Recoupment Policy and our retirement and other benefits.
Outstanding Equity Awards at 2023 Year End
Outstanding Equity Awards at 2023 Year End The following table presents the outstanding equity awards held by each of our named executive officers as of December 31, 2023. The number of shares or units and/or the exercise prices for the equity awards reported in the following table reflect the subsequent adjustments that were made to such awards in connection with the separation of our oncology business in November 2023, in accordance with the provisions of the 2018 Plan.
Outstanding Equity Awards at 2023 Year End
| | Option Awards | | | | | Stock Awards | | | | | Name | Number of Securities Underlying Unexercised Options (#) Exercisable | Number of Securities Underlying Unexercised Options (#) Unexercisable | Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#) | Option Exercise Price ($) | Option Expiration Date | Number of Shares or Units of Stock That Have Not Vested (#) | Market Value of Shares or Units of Stock That Have Not Vested ($) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($) | | (a) | (b)(1) | (c) | (d) | (e) | (f)(2) | (g)(3) | (h)(13) | (i) | (j)(13) | | Richard F. Pops | — | — | — | — | — | — | — | 218,551(9) | 6,062,605 | | | — | — | — | — | — | — | — | 167,661(10) | 4,650,916 | | | — | — | — | — | — | — | — | 136,093(11) | 3,775,220 | | | 234,599 | — | — | 46.24 | 3/3/2024 | — | — | — | — | | | 203,999 | — | — | 69.83 | 2/26/2025 | — | — | — | — | | | 305,999 | — | — | 31.64 | 2/28/2026 | — | — | — | — | | | 203,999 | — | — | 53.50 | 2/17/2027 | — | — | — | — | | | 300,899 | — | — | 65.94 | 2/16/2028 | — | — | — | — | | | 123,419 | — | 389,844(12) | 31.93 | 2/21/2029 | — | — | — | — | | | 274,225 | 91,409 | — | 20.03 | 2/20/2030 | — | — | — | — | | | 174,515 | 174,515 | — | 19.34 | 2/22/2031 | — | — | — | — | | | 76,256 | 228,768 | — | 24.59 | 2/18/2032 | — | — | — | — | | | — | 290,570 | — | 26.82 | 2/23/2033 | — | — | — | — | | Iain M. Brown | — | — | — | — | — | 4,680(4) | 129,823 | — | — | | | — | — | — | — | — | 14,217(5) | 394,380 | — | — | | | — | — | — | — | — | 19,064(6) | 528,835 | — | — | | | — | — | — | — | — | 23,300(8) | 646,342 | — | — | | | — | — | — | — | — | — | — | 27,012(9) | 749,313 | | | — | — | — | — | — | — | — | 21,605(10) | 599,323 | | | — | — | — | — | — | — | — | 17,475(11) | 484,757 | | | 25,499 | — | — | 46.24 | 3/3/2024 | — | — | — | — | | | 18,104 | — | — | 69.83 | 2/26/2025 | — | — | — | — | | | 36,719 | — | — | 31.64 | 2/28/2026 | — | — | — | — | | | 40,799 | — | — | 53.50 | 2/17/2027 | — | — | — | — | | | 38,759 | — | — | 65.94 | 2/16/2028 | — | — | — | — | | | 75,989 | — | — | 31.93 | 2/21/2029 | — | — | — | — | | | 58,715 | 19,572 | — | 20.03 | 2/20/2030 | — | — | — | — | | | 58,014 | 58,014 | — | 19.34 | 2/22/2031 | — | — | — | — | | | 25,418 | 76,256 | — | 24.59 | 2/18/2032 | — | — | — | — | | | — | 93,202 | — | 26.82 | 2/23/2033 | — | — | — | — |
Outstanding Equity Awards at 2023 Year End
| | Option Awards | | | | | Stock Awards | | | | | Name | Number of Securities Underlying Unexercised Options (#) Exercisable | Number of Securities Underlying Unexercised Options (#) Unexercisable | Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#) | Option Exercise Price ($) | Option Expiration Date | Number of Shares or Units of Stock That Have Not Vested (#) | Market Value of Shares or Units of Stock That Have Not Vested ($) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($) | | (a) | (b)(1) | (c) | (d) | (e) | (f)(2) | (g)(3) | (h)(13) | (i) | (j)(13) | | David J. Gaffin | — | — | — | — | — | 7,177(4) | 199,090 | — | — | | | — | — | — | — | — | 14,863(5) | 412,300 | — | — | | | — | — | — | — | — | 19,064(6) | 528,835 | — | — | | | — | — | — | — | — | 6,043(7) | 167,633 | — | — | | | — | — | — | — | — | 30,757(8) | 853,199 | — | — | | | — | — | — | — | — | — | — | 28,240(9) | 783,378 | | | — | — | — | — | — | — | — | 21,605(10) | 599,323 | | | — | — | — | — | — | — | — | 6,847(10) | 189,936 | | | — | — | — | — | — | — | — | 23,067(11) | 639,879 | | | 25,499 | — | — | 46.24 | 3/3/2024 | — | — | — | — | | | 18,104 | — | — | 69.83 | 2/26/2025 | — | — | — | — | | | 36,719 | — | — | 31.64 | 2/28/2026 | — | — | — | — | | | 40,799 | — | — | 53.50 | 2/17/2027 | — | — | — | — | | | 55,589 | — | — | 65.94 | 2/16/2028 | — | — | — | — | | | 108,833 | — | — | 31.93 | 2/21/2029 | — | — | — | — | | | 90,030 | 30,010 | — | 20.03 | 2/20/2030 | — | — | — | — | | | 60,651 | 60,652 | — | 19.34 | 2/22/2031 | — | — | — | — | | | 25,418 | 76,256 | — | 24.59 | 2/18/2032 | — | — | — | — | | | 7,347 | 22,041 | — | 24.82 | 8/3/2032 | — | — | — | — | | | — | 123,027 | — | 26.82 | 2/23/2033 | — | — | — | — | | Craig C. Hopkinson, M.D. | — | — | — | — | — | 10,297(4) | 285,639 | — | — | | | — | — | — | — | — | 24,557(5) | 681,211 | — | — | | | — | — | — | — | — | 26,690(6) | 740,381 | — | — | | | — | — | — | — | — | 30,757(8) | 853,199 | — | — | | | — | — | — | — | — | — | — | 46,658(9) | 1,294,293 | | | — | — | — | — | — | — | — | 30,248(10) | 839,080 | | | — | — | — | — | — | — | — | 23,067(11) | 639,879 | | | 81,599 | — | — | 58.40 | 6/6/2027 | — | — | — | — | | | 55,589 | — | — | 65.94 | 2/16/2028 | — | — | — | — | | | 108,833 | — | — | 31.93 | 2/21/2029 | — | — | — | — | | | 129,174 | 43,058 | — | 20.03 | 2/20/2030 | — | — | — | — | | | 100,206 | 100,207 | — | 19.34 | 2/22/2031 | — | — | — | — | | | 35,586 | 106,758 | — | 24.59 | 2/18/2032 | — | — | — | — | | | — | 123,027 | — | 26.82 | 2/23/2033 | — | — | — | — | | Blair C. Jackson | — | — | — | — | — | 4,680(4) | 129,823 | — | — | | | — | — | — | — | — | 19,387(5) | 537,795 | — | — | | | — | — | — | — | — | 26,690(6) | 740,381 | — | — | | | — | — | — | — | — | 34,951(8) | 969,541 | — | — | | | — | — | — | — | — | — | — | 36,835(9) | 1,021,803 | | | — | — | — | — | — | — | — | 30,248(10) | 839,080 | | | — | — | — | — | — | — | — | 26,212(11) | 727,121 | | | 30,599 | — | — | 46.24 | 3/3/2024 | — | — | — | — | | | 23,969 | — | — | 69.83 | 2/26/2025 | — | — | — | — | | | 45,899 | — | — | 31.64 | 2/28/2026 | — | — | — | — | | | 35,699 | — | — | 53.50 | 2/17/2027 | — | — | — | — | | | 38,759 | — | — | 65.94 | 2/16/2028 | — | — | — | — | | | 75,989 | — | — | 31.93 | 2/21/2029 | — | — | — | — | | | 58,715 | 19,572 | — | 20.03 | 2/20/2030 | — | — | — | — | | | 79,110 | 79,111 | — | 19.34 | 2/22/2031 | — | — | — | — | | | 35,586 | 106,758 | — | 24.59 | 2/18/2032 | — | — | — | — | | | — | 139,803 | — | 26.82 | 2/23/2033 | — | — | — | — |
Notes to Outstanding Equity Awards Table
Notes to Outstanding Equity Awards Table The grant date of all stock options is ten years prior to the option expiration date (column (f)). With the exception of the amounts in column (d), all stock options vest in four equal annual installments, commencing on the first anniversary of the grant date. Stock options granted in 2018 or earlier were granted under the 2011 Plan. Stock options granted in 2019 or later were granted under the 2018 Plan. (2) Stock options expire ten years from the grant date. (3) Time-vesting restricted stock unit awards vest in four equal annual installments, commencing on the first anniversary of the grant date. No dividend equivalents are paid on restricted stock unit awards. In the event that an individual’s employment or other service relationship with us is terminated for any reason, except in the event of death, permanent disability or a Sale Event (as defined in the stock plan under which the award was granted), time-vesting restricted stock unit awards are forfeited on the date of termination. (4) Time-vesting restricted stock unit awards granted on February 20, 2020 under the 2018 Plan. (5) Time-vesting restricted stock unit awards granted on February 22, 2021 under the 2018 Plan. (6) Time-vesting restricted stock unit awards granted on February 18, 2022 under the 2018 Plan. (7) Time-vesting restricted stock unit awards granted on August 3, 2022 under the 2018 Plan. (8) Time-vesting restricted stock unit awards granted on February 23, 2023 under the 2018 Plan. (9) Performance-vesting restricted stock unit awards granted on February 22, 2021 under the 2018 Plan that, in order to vest, required achievement of certain financial, commercial and pipeline performance conditions over a three-year performance period ending on December 31, 2023 and were subject to a relative TSR modifier at the end of the performance period. For additional detail, see the discussion in the section entitled “2021 LTIP – Achievements and Payout” beginning on page 104 of this proxy statement. The amounts shown in column (i) represent the actual number of shares that vested on February 8, 2024. Such shares were earned based on achievement at target level of the pipeline performance conditions underlying the performance-vesting restricted stock unit awards (resulting in vesting of 40% of the total award), achievement below target of the financial performance conditions underlying the performance-vesting restricted stock unit awards (resulting in vesting of 36% of the total award) and no achievement of the commercial performance conditions underlying the performance-vesting restricted stock unit awards (resulting in no vesting for this portion of the award), and application of the relative TSR modifier included in the 2021 LTIP (resulting in vesting of an additional 25% of the total vested PRSUs under the award). No dividend equivalents are paid on restricted stock unit awards. In the event that an individual’s employment or other service relationship with the Company is terminated for any reason, except in the event of death, permanent disability or a Sale Event (as defined in the stock plan under which the award was granted), performance-vesting restricted stock unit awards are forfeited on the date of termination. Performance-vesting restricted stock unit awards granted on February 22, 2022 or August 3, 2022 under the 2018 Plan that, in order to vest, require achievement of certain financial, commercial and pipeline performance conditions over a three-year performance period ending on December 31, 2024 and that are subject to a relative TSR modifier at the end of the performance period. For additional detail, see the discussion in the section entitled “Long-Term Equity Incentive Compensation—Annual Grant” beginning on page 101 of the Company’s 2023 definitive proxy statement filed on May 25, 2023. As of December 31, 2023, none of the performance criteria underlying these performance-vesting restricted stock unit awards had been achieved. As such, the amounts shown reflect threshold achievement under the commercial performance condition portion of the restricted stock unit awards and target achievement under the financial and pipeline performance condition portions of the restricted stock unit awards (as there is no threshold earning opportunity for such portions of the awards). No dividend equivalents are paid on restricted stock unit awards. In the event that an individual’s employment or other service relationship with the Company is terminated for any reason, except in the event of death, permanent disability or a Sale Event (as defined in the stock plan under which the award was granted), performance-vesting restricted stock unit awards are forfeited on the date of termination. Performance-vesting restricted stock unit awards granted on February 23, 2023 under the 2018 Plan that, in order to vest, require achievement of certain financial and pipeline performance conditions over a three-year performance period ending on December 31, 2025 and that are subject to a relative TSR modifier at the end of the performance period. For additional detail, see the discussion in the section entitled “Long-Term Equity Incentive Compensation—Annual Grant” beginning on page 101 of this proxy statement. As of December 31, 2023, none of the performance criteria underlying these performance-vesting restricted stock unit awards had been achieved. As such, the amounts shown reflect threshold achievement under the pipeline performance condition portion of the restricted stock unit awards and target achievement of the financial performance condition portion of the restricted stock unit awards (as there is no threshold earning opportunity for such portion of the award). No dividend equivalents are paid on restricted stock unit awards. In the event that an individual’s employment or other service relationship with the Company is terminated for any reason, except in the event of death, permanent disability or a Sale Event (as defined in the stock plan under which the award was granted), performance-vesting restricted stock unit awards are forfeited on the date of termination. (12) Performance- and time-vesting stock options granted under the 2018 Plan that, in order to vest, require the achievement of a greater than 50% increase in the Company’s share price from their grant date value for 30 consecutive trading days, and once that performance condition is met, remain subject to time-based vesting in four equal annual installments commencing on the first anniversary of the grant date. Though the time-vesting condition of these stock options was met in full on February 21, 2023, the fourth anniversary of the grant date, these options will not vest and become exercisable until the share price performance condition is met. Market value is based on the closing price of our ordinary shares on December 29, 2023 as reported by Nasdaq, which was $27.74.
2023 Options Exercised and Stock Vested
2023 Options Exercised and Stock Vested The following table presents information regarding option exercises and vesting of restricted stock unit awards for each named executive officer during 2023:
2023 Options Exercised and Stock Vested
| | Option Awards | | Stock Awards | | | Name | Number of Shares Acquired on Exercise (#) | Value Realized on Exercise ($) | Number of Shares Acquired on Vesting (#) | Value Realized on Vesting ($) | | (a) | (b) | (c) | (d) | (e) | | Richard F. Pops | — | — | 152,113 | 4,260,092 | | Iain M. Brown | — | — | 32,674 | 913,628 | | David J. Gaffin | — | — | 44,869 | 1,254,356 | | Craig C. Hopkinson, M.D. | — | — | 59,925 | 1,676,421 | | Blair C. Jackson | — | — | 37,701 | 1,053,976 |
2023 Pension Benefits
2023 Pension Benefits None of our named executive officers participate in, or have account balances in, qualified or non-qualified defined benefit plans sponsored by us.
2023 Nonqualified Deferred Compensation
2023 Nonqualified Deferred Compensation None of our named executive officers participate in, or have account balances in, non-qualified defined benefit plans or defined contribution plans maintained by us.
Potential Payments upon Termination or Change in Control
Potential Payments upon Termination or Change in Control Termination. If, during the term of a named executive officer’s employment agreement with us, we terminate such named executive officer’s employment without “cause” or such named executive officer terminates their employment for “good reason” (e.g., a material diminution in their responsibilities, authority, powers, functions, duties or compensation or a material change in the geographic location at which they must perform their employment) and such named executive officer thereafter signs a general release of claims, we will provide severance, as follows: to Mr. Pops, over a twenty-four-month period, we will pay an amount equal to two times the sum of (i) current base salary, plus (ii) the average of the annual cash incentive compensation received for the two immediately preceding years, and will provide for continued participation in our health benefit plans during such twenty-four-month period; and to Messrs. Brown, Gaffin, Jackson and Dr. Hopkinson, over a twelve-month period, we will pay an amount equal to the sum of (i) current base salary, plus (ii) the average of the annual cash incentive compensation received for the two immediately preceding years, and will provide for continued participation in our health benefit plans during such twelve-month period. Change in Control. Under the employment agreements with our named executive officers, if, during the two-year period following a change in control, the employment of such named executive officer is terminated without “cause” or if such named executive officer terminates their employment for “good reason,” such executive officer shall be paid a pro-rata amount of their base salary for the year in which their termination occurs and a pro-rata annual cash incentive compensation (based upon the average of such executive officer’s annual cash incentive compensation for the prior two years) for the year in which the termination occurs. Additionally, such executive officer will receive a lump sum payment equal to: for Mr. Pops, two times; and for Messrs. Brown, Gaffin, Jackson and Dr. Hopkinson, one and one-half times, the sum of their then-base salary (or the base salary in effect at the time of the change in control, if higher), plus an amount equal to the average of the annual cash incentive compensation they received for the two immediately preceding years. Messrs. Pops, Brown, Gaffin and Jackson and Dr. Hopkinson would also be entitled to continued participation in our health benefit plans: for Mr. Pops, for a period of two years following the date of termination; and for Messrs. Brown, Gaffin, Jackson and Dr. Hopkinson, for a period of eighteen months following the date of termination. These change in control payments are expressly in lieu of, and supersede, those severance payments and benefits otherwise payable if such executive officer is terminated without “cause” or if such executive officer terminates their employment for good reason, provided that such termination occurs within two years after the occurrence of the first event constituting a change in control and that such first event occurs during the period of employment of the named executive officer. Messrs. Pops and Jackson are also entitled to a “gross-up payment” equal to the excise tax imposed upon the severance payment made in the event of a change in control, if any payment or benefit to the executive, whether pursuant to the employment agreement or otherwise, is considered an “excess parachute payment” and subject to an excise tax under the Code. In 2009, we discontinued providing such gross-up payments to newly hired employees. Messrs. Brown, Gaffin and Dr. Hopkinson are not entitled to a gross-up payment in the event of a change in control. Under the terms of our 2018 Plan, the Administrator has the authority to determine the conditions under which any award under such plan will become exercisable in the event of a change in control (referred to as a Sale Event in the 2018 Plan) at the time of grant of such award. Upon a change in control, except to the extent the Administrator may otherwise specify, all then-outstanding stock options become vested and exercisable, all then-outstanding time-vesting stock awards become vested, and all then-outstanding performance-vesting restricted stock unit awards may become vested and nonforfeitable in the Administrator’s discretion. Starting with equity awards granted in 2023, the vesting of such awards granted to our named executive officers will only accelerate if, within a two-year period following a corporate transaction or a change in control, a named executive officer is terminated without “cause” or resigns for “good reason.”
Required Tabular Disclosure of Pay Versus Performance
Required Tabular Disclosure of Pay Versus Performance The amounts set forth below under the headings “Compensation Actually Paid to PEO” and “Average Compensation Actually Paid to Non-PEO NEOs” have been calculated in a manner consistent with Item 402(v) of Regulation S-K. Use of the term “compensation actually paid” is required by the SEC’s rules and, as a result of the calculation methodology required by the SEC, such amounts differ from compensation actually earned, realized or received by the individuals and the compensation decisions described in our Compensation Discussion and Analysis beginning on page 82 of this proxy statement.
Required Tabular Disclosure of Pay Versus Performance
| | Summary | Compensation | Average Summary Compensation | Average Compensation Actually | Value of Initial Fixed $ 100 Investment Based on:(3) | | | | | Year | Compensation Table Total for PEO(1) ($) | Actually Paid to PEO(1)(2) ($) | Table Total for Non-PEO NEOs(1) ($) | Paid to Non-PEO NEOs(1)(2) ($) | TSR ($) | Peer Group TSR ($) | GAAP Net Income (Loss) ($ Millions) | Non-GAAP Net Income(4) ($ Millions) | | (a) | (b) | (c) | (d) | (e) | (f) | (g) | (h) | (i) | | 2023 | 9,442,066 | 8,983,892 | 4,033,464 | 4,190,097 | 138.19 | 118.87 | 355.8 | 243.7 | | 2022 | 10,314,172 | 8,321,591 | 4,155,421 | 4,206,760 | 128.09 | 113.65 | (158.3) | 57.9 | | 2021 | 8,846,588 | 11,225,263 | 2,942,671 | 2,882,217 | 114.02 | 126.45 | (48.2) | 129.1 | | 2020 | 8,041,702 | 6,883,292 | 2,882,616 | 2,656,656 | 97.79 | 126.42 | (110.9) | 68.6 |
Required Tabular Disclosure of Pay Versus Performance
(1) Richard F. Pops was our PEO for each year presented. The individuals comprising the non-PEO NEOs for each year presented are listed below.
Required Tabular Disclosure of Pay Versus Performance
| 2020 | 2021 | 2022 | 2023 | | James M. Frates | Iain M. Brown | Iain M. Brown | Iain M. Brown | | David J. Gaffin | James M. Frates | David J. Gaffin | David J. Gaffin | | Craig C. Hopkinson, M.D. | David J. Gaffin | Craig C. Hopkinson, M.D. | Craig C. Hopkinson, M.D. | | Michael J. Landine | Craig C. Hopkinson, M.D. | Blair C. Jackson | Blair C. Jackson | | | Blair C. Jackson | | |
Required Tabular Disclosure of Pay Versus Performance
(2) For 2023, the amounts shown reflect the exclusion and inclusion of those certain amounts for the PEO and the non-PEO NEOs shown in the following tables. Equity values are calculated in accordance with ASC 718. Amounts shown in each of the Exclusion of Stock Awards and Option Awards columns are equal to the total amounts from the Stock Awards and Option Awards columns set forth in the Summary Compensation Table on page 112 of this proxy statement. See the section entitled “Pay Versus Performance” on page 130 of the proxy statement for the 2023 Annual Meeting for the adjustments made to determine compensation actually paid amounts for prior years.
Required Tabular Disclosure of Pay Versus Performance
| Year | Summary Compensation Table Total for PEO ($) | Exclusion of Stock Awards and Option Awards for PEO ($) | Inclusion of Equity Values for PEO ($) | Compensation Actually Paid to PEO ($) | | 2023 | 9,442,066 | (6,831,832) | 6,373,658 | 8,983,892 |
Required Tabular Disclosure of Pay Versus Performance
| Year | Average Summary Compensation Table Total for Non-PEO NEOs ($) | Average Exclusion of Stock Awards and Option Awards for Non-PEO NEOs ($) | Average Inclusion of Equity Values for Non-PEO NEOs ($) | Average Compensation Actually Paid to Non-PEO NEOs ($) | | 2023 | 4,033,464 | (2,902,745) | 3,059,378 | 4,190,097 |
Required Tabular Disclosure of Pay Versus Performance
The amounts shown in the Inclusion of Equity Values column in each of the above tables are derived from the following amounts:
Required Tabular Disclosure of Pay Versus Performance
| Year | Year-End Fair Value of Equity Awards Granted During Year That Remained Unvested as of Last Day of Year for PEO ($) | Change in Fair Value from Last Day of Prior Year to Last Day of Year of Unvested Equity Awards for PEO ($) | Change in Fair Value from Last Day of Prior Year to Vesting Date of Unvested Equity Awards that Vested During Year for PEO ($) | Fair Value at Last Day of Prior Year of Equity Awards Forfeited During Year for PEO ($) | Total - Inclusion of Equity Values for PEO ($) | | 2023 | 3,934,846 | 2,022,849 | 415,963 | — | 6,373,658 |
Required Tabular Disclosure of Pay Versus Performance
| Year | Average Year-End Fair Value of Equity Awards Granted During Year That Remained Unvested as of Last Day of Year for Non-PEO NEOs ($) | Average Change in Fair Value from Last Day of Prior Year to Last Day of Year of Unvested Equity Awards for Non-PEO NEOs ($) | Average Change in Fair Value from Last Day of Prior Year to Vesting Date of Unvested Equity Awards that Vested During Year for Non-PEO NEOs ($) | Average Fair Value at Last Day of Prior Year of Equity Awards Forfeited During Year for Non-PEO NEOs ($) | Total - Average Inclusion of Equity Values for Non-PEO NEOs ($) | | 2023 | 2,453,179 | 437,482 | 168,717 | — | 3,059,378 |
Required Tabular Disclosure of Pay Versus Performance
(3) The peer group TSR shown in this table utilizes the Nasdaq Biotechnology Index (also known as the IBB Index), which we also utilize in the stock performance graph required by Item 201(e) of Regulation S-K included in our Annual Report. The comparison assumes $100 was invested in the Company and in the Nasdaq Biotechnology Index, respectively, for the period starting December 31, 2019 through the end of the year shown. Historical share price performance is not necessarily indicative of future share price performance. (4) We determined non-GAAP net income to be the most important financial performance measure used to link Company performance to compensation actually paid to our PEO and non-PEO NEOs in 2023. This financial performance measure may not have been the most important financial performance measure for certain prior years shown and we may determine a different financial performance measure to be the most important financial performance measure in future years. See Appendix B for information regarding this non-GAAP financial measure.
Required Disclosure of the Relationship Between Compensation Actually Paid and Financial Performance Measures
Required Disclosure of the Relationship Between Compensation Actually Paid and Financial Performance Measures As required by Item 402(v) of Regulation S-K, we are providing the following graphs to illustrate the relationship between the pay and performance figures that are included in the pay versus performance tabular disclosure above. In addition, the first graph below further illustrates the relationship between our TSR and that of the Nasdaq Biotechnology Index. As noted above, “compensation actually paid” for purposes of the tabular disclosure and the following graphs were calculated in accordance with SEC rules and do not fully represent the actual final amount of compensation earned by or actually paid to our NEOs during the applicable years. Pay Ratio For 2023, the annual total compensation for our CEO, including the value of employer paid health care benefits, as discussed below, was $9,460,555 and for our median employee was $218,453 (also including the value of employer paid health care benefits), resulting in a pay ratio of approximately 43 to 1. The annual total compensation for our CEO in this pay ratio disclosure differs from the annual total compensation amounts reflected in the Summary Compensation Table on page 112 of this proxy statement because we included the value of employer paid health care benefits (estimated for our CEO and eligible dependents at $18,489) in order to produce a more representative disclosure of our employees’ compensation. We also added the value of employer paid health care benefits to the median compensated employee’s compensation for purposes of this pay ratio disclosure. The annual total compensation for our median compensated employee does not represent an average of the compensation paid to our employees, but rather it is the compensation paid to the particular employee identified as our median employee. We identified the median employee for 2023 by (i) aggregating for each applicable employee (A) base salary as of October 1, 2023 (or wages multiplied by annual work schedule, for hourly employees), (B) the target bonus for 2023 and (C) the estimated fair value of any equity awards granted during 2023, and (ii) ranking this annual compensation measure for our employees from lowest to highest. This methodology resulted in the identification of a new hire as the median employee; because of this anomalous compensation characteristic in this employee’s compensation, we identified the next closest employee to the median who was not a new hire and whose compensation was viewed by us as more representative of our general compensation practices. This calculation was performed for 2,277 individuals, excluding our CEO, who were employed by us on October 1, 2023, whether employed on a full-time or part-time basis. In order to present a more accurate representation of comparative annual compensation, we annualized compensation for any permanent employees that were only employed for part of 2023, and converted amounts paid in a currency other than U.S. dollars to U.S. dollars based on the average year-to-date exchange rate on September 29, 2023. No employees located in jurisdictions outside of the U.S. were excluded from the calculation under the regulation’s de minimis exemption. This ratio is a reasonable estimate calculated in a manner consistent with Item 402(u) of Regulation S-K (the “Rule”). In light of the numerous different methodologies, assumptions, adjustments and estimates that companies may apply in compliance with the Rule, this information should not be used as a basis for comparison between different companies. Certain Relationships and Related Person Transactions
Procedure for Recommendations by Shareholders of Director Nominees
Procedure for Recommendations by Shareholders of Director Nominees The Nominating and Corporate Governance Committee will consider director candidates recommended by shareholders for nomination by the Board for election at an annual general meeting of shareholders. A shareholder who wishes to recommend individuals for consideration by the Nominating and Corporate Governance Committee and the Board may do so only by delivering a written recommendation to our Company Secretary at Alkermes plc, Connaught House, 1 Burlington Road, Dublin 4, Ireland, D04 C5Y6, Attention: Company Secretary, with the director candidate’s name, biographical information and qualifications, and a document providing evidence of the director candidate’s willingness to serve if elected.
Procedure for Nomination by Shareholders of Director Nominees
Procedure for Nomination by Shareholders of Director Nominees The above procedure applies to recommendations by shareholders of director candidates to be nominated by the Board. Shareholders who instead desire to nominate on their own behalf one or more persons for election to the Board at an annual general meeting of shareholders must comply with the deadlines and other requirements set forth in the Company’s Articles of Association in respect of shareholder nominations, including the applicable notice, information and consent provisions. Pursuant to our Articles of Association, nominations by our shareholders of persons for election to the Board at our 2025 annual general meeting of shareholders must be received by our Company Secretary between October 17, 2024 and December 16, 2024; provided, however, that in the event that the date of our 2025 annual general meeting of shareholders is changed by more than 30 days from the first anniversary date of the Annual Meeting, notice must be delivered no earlier than 180 days prior to, nor later than 120 days prior to, our 2025 annual general meeting of shareholders or, if later, the 10th day following the day on which public announcement of the date of our 2025 annual general meeting of shareholders is first made. In addition to the applicable notice requirements under our Articles of Association described in the preceding paragraph, in order to comply with the SEC’s universal proxy rules, shareholders who desire to nominate one or more persons for election to the Board at our 2025 annual general meeting of shareholders must provide notice to the Company by the same deadline noted in the preceding paragraph and such notice must comply with the additional requirements of Rule 14a-19(b) under the Exchange Act.