DEF 14A of Supernus Pharmaceuticals, Inc.
Filed Apr 29, 2024 · FY20230001104659-24-054023
PROPOSAL 1 ELECTION OF DIRECTORS
PROPOSAL 1 ELECTION OF DIRECTORS In April 2012, our stockholders approved the Company’s Amended and Restated Certificate of Incorporation, which divided the Board of Directors into three classes, as nearly equal in number as possible with one class standing for election each year for a three-year term. The term of the Class I directors will expire at the 2025 Annual Meeting of Stockholders, the term of the Class II directors will expire at the 2026 Annual Meeting of Stockholders and the term of the Class III directors will expire at the 2024 Annual Meeting of Stockholders. At each Annual Meeting of Stockholders, the successors of the class of directors whose term expires shall be elected to hold office for a term expiring at the Annual Meeting of Stockholders to be held in the third year following the year of their election, with each director in each such class to hold office until his or her successor is duly elected and qualified. Our Board of Directors shall be not fewer than five and not more than 15 members. At our Annual Meeting, two directors are to be elected. The Board of Directors recommends that stockholders elect Georges Gemayel, Ph.D, and Bethany Sensenig to hold office until the 2027 Annual Meeting of Stockholders or until their respective successors have been elected and qualified. This slate of directors, recommended and approved by the Board of Directors, was determined following an assessment by the Board of Directors of the skill set and experience of such persons. Concerning the nominees named below, Dr. Gemayel was re-elected as a director at the Annual Meeting of Stockholders held on June 16, 2021 and Ms. Sensenig was appointed as a director by the Board of Directors as of August 17, 2023. The persons designated as proxies in the accompanying proxy card intend to vote “FOR” each such nominee, unless a contrary instruction is indicated on the proxy card. If for any reason the nominee should become unavailable for election, the persons designated as proxies in the proxy card may vote the proxy for the election of another person nominated as a substitute by the Board of Directors, if any person is so nominated. We have no reason to believe that the nominees will be unable or unwilling to serve if elected, and the nominees have expressed their intention to serve the entire term for which election is sought. The proxies cannot be voted for a greater number of persons than the number of nominees named, which is two nominees. The following table sets forth below the name, age, service dates and respective position with the Company of each member of our Board of Directors:
PROPOSAL 1 ELECTION OF DIRECTORS
| Name | Age | Director Since | Position | | Class I Directors (Term maturing in 2025) | | | | | Carrolee Barlow, M.D., Ph.D.(1)(4) | 60 | 2018 | Director | | Jack A. Khattar | 62 | 2005 | President, Chief Executive Officer and Secretary, Director | | Class II Directors (Term maturing in 2026): | | | | | Frederick M. Hudson(2)(3) | 78 | 2010 | Director | | Charles W. Newhall, III(3)(4) | 78 | 2005 | Director | | Class III Directors (Term maturing in 2024): | | | | | Georges Gemayel, Ph.D.(1)(2)(4) | 63 | 2015 | Director | | John M. Siebert, Ph.D.(1)(2)(3)(5) | 84 | 2011 | Director | | Bethany L. Sensenig(2) | 48 | 2023 | Director |
PROPOSAL 1 ELECTION OF DIRECTORS
(1) Member of Science Committee (2) Member of Audit Committee (3) Member of Compensation Committee (4) Member of Governance and Nominating Committee Dr. Siebert has announced that he will not be running for re-election and, accordingly, his term on the Board of Directors will expire at the 2024 Annual Meeting of Stockholders.
Biographical Information
Biographical Information The following is a brief biography of each nominee for election of director and a discussion of the specific experience, qualifications, attributes or skills that led the Board of Directors to select that director for nomination. Class III Directors With Term of Office Expiring in 2024: Bethany L. Sensenig has served as a member of our Board of Directors since August 2023. Ms. Sensenig is currently Chief Financial Officer of Radius Health, Inc., a commercial stage company focused on osteoporosis and bone heath, where her role is focused on corporate strategy, execution, and financial value creation. Most recently, she was Chief Financial Officer and Interim Chief Executive Officer of 9 Meters Biopharma, a clinical-stage biotechnology company. Prior to that, Ms. Sensenig was Chief Financial Officer and Head of U.S. Operations of Minovia Therapeutics, Ltd., a clinical-stage cell therapy company, where she played a critical leadership role in building the company’s business and financing strategy. She spent 13 years at Biogen Inc., a multinational biotechnology company, where she held several positions of increasing responsibility, the latest of which was Vice President of Finance and Commercial Operations. Ms. Sensenig has played key roles in numerous transactions and acquisition-related deals totaling over $2 billion across Biogen and Minovia and had direct P&L accountability at Biogen for upwards of $1 billion in annual revenue across 30 countries spanning the U.S., Asia-Pacific, Latin America and Europe. Earlier in her career, Ms. Sensenig held financial management and analyst roles at Merck & Co. Inc. and Nexus Technologies, Inc. Ms. Sensenig holds a Bachelor of Science in Accounting and Business Management from Montreat College, a Master of Business Administration from Western Carolina University and is a Certified Management Accountant. Ms. Sensenig’s substantial business and strategic financial leadership experience in the pharmaceutical and biotechnology sectors qualify her to serve as a director. Georges Gemayel, Ph.D., has served as a member of our Board of Directors since 2015. From February 2011 to December 2012, Dr. Gemayel served as Executive Chairman of Syndexa Pharmaceuticals Corp., a privately held drug development company. Prior to that, in 2010, Dr. Gemayel served as Executive Chairman of FoldRx until its acquisition by Pfizer. From June 2008 until November 2009, Dr. Gemayel served as President and Chief Executive Officer of Altus Pharmaceuticals, a publicly traded pharmaceutical company. From 2003 to 2008, he was Executive Vice President at Genzyme Corporation where he was responsible for Genzyme’s global therapeutics, transplant, renal and biosurgery businesses. From 2000 to 2003, Dr. Gemayel was employed as Vice President National Specialty Care for Hoffmann La-Roche, responsible for its U.S. business for dermatology, oncology, transplantation, hepatitis and HIV. Dr. Gemayel joined Hoffmann-La Roche in 1988 and served in various positions of increasing responsibility over his tenure there. Dr. Gemayel received his doctorate in pharmacy from St. Joseph University in Beirut, Lebanon and his Ph.D. in Pharmacology from Paris-Sud University in Paris. France. Dr. Gemayel currently serves as Chairman of the board of directors of Enterome Bioscience SA, and GlycoEra AG, both privately held companies, as well as serving as a director of Disc Medicine Inc., a publicly traded company, and of Flamingo Therapeutics, a privately held company. He was previously a director of Adolor Corporation, a publicly traded company, acquired by Cubist Pharmaceuticals. Inc., a director at Prosensa, acquired by Biomarin, a director at NPS, acquired by Shire, a director of Epitherapeutics, acquired by Gilead, a director of Raptor Pharmaceutical Corp., acquired by Horizon Pharma plc, the Chairman of Dimension Therapeutics, acquired by Ultragenyx, a director of Momenta Pharmaceuticals, a publicly traded company acquired by Johnson and Johnson, the Executive Chairman of Gemini Therapeutics, which merged with Disc Medicine Inc., the Chairman of Dynacure, which merged with Flamingo Therapeutics, and the Chairman of Vascular Magnetics and Oxthera AB, both privately owned companies. Dr. Gemayel’s substantial experience on the boards of directors of life science and healthcare companies and his over 25 years of experience in the pharmaceutical industry, including management and executive positions spanning the United States, Europe and the Middle East, qualify him to serve as a director. The Board of Directors recommends a vote “FOR” the election of the Class III nominees to the Board of Directors named above. Class III Director With Term of Office Expiring in 2024 Not Standing for Re-Election: John M. Siebert, Ph.D., has served as a member of our Board of Directors since 2011. Dr. Siebert is currently a member of the board of directors and Partner of Riverside Pharmaceuticals, a private company. From February 2018 to July 2020, Dr. Siebert was Acting Principal Executive Officer of Aradigm Corporation, a publicly traded respiratory pharmaceuticals development company. From November 2006 to February 2018, Dr. Siebert was a member of the Board of Directors, Audit Committee Compensation Committee of Aradigm Corporation. He was Chairman of the Board of Directors from June 2017 to February 2018. From May 2014 to November 2015, Dr. Siebert was Chief Executive Officer of Chase Pharmaceuticals, a company conducting clinical trials in Alzheimer’s disease. From 2010 to 2014, he was a Partner and Chief Operating Officer of New Rhein Healthcare Investors, LLC, a private equity group. From 2008 to 2010, Dr. Siebert was the founder and CEO of Compan Pharmaceuticals, a companion animal pharmaceutical company developing a drug to treat transitional cell carcinoma. From May 2003 to October 2008, Dr. Siebert was the Chairman and Chief Executive Officer of CyDex, Inc., a privately held specialty pharmaceutical company. From September 1995 to April 2003, he was President and Chief Executive Officer of CIMA Labs Inc., a publicly traded specialty pharmaceutical company. From July 1995 to September 1995 he was President and Chief Operating Officer of CIMA Labs. From 1992 to 1995, Dr. Siebert was Vice President, Technical Affairs at Dey Laboratories, Inc., a privately held pharmaceutical company. From 1988 to 1992, he headed R&D and Quality Control at a division of Bayer Corporation. Prior to that, Dr. Siebert was employed by E.R. Squibb & Sons, Inc., G.D. Searle & Co., Gillette and The Procter & Gamble Company. Dr. Siebert holds a B.S. in Chemistry from Illinois Benedictine University, an M.S. in Organic Chemistry from Wichita State University and a Ph.D. in Organic Chemistry from the University of Missouri. Dr. Siebert’s substantial operational and business experience with companies in the healthcare sector, combined with his scientific experience, qualify him to serve as a director. Class I Directors Continuing for Term of Office Expiring in 2025:
Biographical Information
Carrolee Barlow, M.D., Ph.D., has served as a member of our Board of Directors since 2018. Dr. Barlow is a renowned expert in neuroscience and neurodegeneration, rare diseases and clinical development of new therapies. Dr. Barlow serves as a strategic advisor and drug development consultant to several private and public biotechnology companies. Most recently, she was the Chief Medical Officer of EScape Bio, a position she held from January 2019 to August 2022. Prior to EScape, Dr. Barlow served as Chief Executive Officer of the Parkinson’s Institute and Clinical Center (Parkinson’s Institute), an independent nonprofit organization providing research, clinical trials and patient care for Parkinson’s and related disorders. There, she led all aspects of basic research, clinical research, and clinical care, as well as partnerships with biotech and pharmaceutical companies. She remained a member of the board of directors for the Parkinson’s Institute until 2019. Before joining the Parkinson’s Institute in 2014, Dr. Barlow served as a consultant and advisor to a variety of biotechnology companies addressing neurologic, psychiatric, metabolic and rare genetic diseases. She was acting Chief Medical Officer at Amicus Therapeutics leading the execution, analysis and regulatory interactions that resulted in the approval of the first small-molecule therapy for Fabry disease (migalastat). She also led efforts that resulted in the first proof-of-concept clinical studies in patients for two novel biologic programs for Pompe and Fabry diseases. Previously, Dr. Barlow was a co-founder, Chief Scientific Officer and Chief Medical Officer of BrainCells Inc., advancing new therapeutic approaches for neurological and psychiatric disease, and worked at Merck Research Laboratories as Director of Molecular Neuroscience and worldwide leader of the Stroke and Neurodegeneration therapeutic areas. Earlier in her career, Dr. Barlow was a professor at the Salk Institute for Biological Studies, where she was a pioneer in the nascent field of neurogenomics. Dr. Barlow served as a member of the board of directors of Orphazyme A/S, a publicly traded company, and on the scientific advisory boards of ReCode Therapeutics, Kainos Medicine, CIONIC, and Rune Biosciences, each a private company. Dr. Barlow received her M.D. from the University of Utah and completed her residency in internal medicine at The New York Hospital, Cornell Medical Center. She went on to earn a Ph.D. in molecular and developmental biology at the Karolinska Medical Nobel Institute in Stockholm, Sweden. Shortly thereafter, she joined the National Institutes of Health and completed specialty training in endocrinology and a postdoctoral fellowship in neurogenetics at the National Human Genome Research Institute. Dr. Barlow is an author of approximately 100 peer-reviewed research papers, review articles and book chapters, and is an inventor on numerous U.S. patents. Dr. Barlow’s extensive executive and pharmaceutical research experience with various neurological and psychiatric diseases qualifies her to serve as a director. Jack A. Khattar is the founder of our Company and has served as our President, Chief Executive Officer and Secretary and a Director since 2005. From 1999 to 2005, Mr. Khattar served in various positions during that time as a board member, President and Chief Executive Officer of Shire Laboratories Inc., the drug delivery subsidiary of Shire plc. From 1999 to 2004, he also served as a member of Shire plc’s executive committee. Prior to that, Mr. Khattar served as an executive officer and the Chairman of the management committee at CIMA Labs Inc. (CIMA), a drug delivery company where he was also responsible for business development, corporate alliances and strategic planning. Prior to joining CIMA in 1995, Mr. Khattar held several marketing and business development positions at Merck & Co., Novartis, Playtex and Kodak in various locations, including the United States, Europe and the Middle East. Mr. Khattar currently serves on the boards of directors of Navitor Pharmaceuticals, LLC a privately-held development stage biotechnology companies, and on the advisory board of New Rhein Healthcare, a private equity firm. Mr. Khattar also serves as Chairman of the board of directors of scPharmaceuticals and Cognition Therapeutics Inc., two publicly traded pharmaceutical companies. Mr. Khattar earned his degrees in Marketing with a BBA from American University of Beirut and an MBA from the Wharton School of the University of Pennsylvania. Mr. Khattar’s leadership, executive, managerial, business and pharmaceutical company experience, along with his more than 30 years of industry experience in the development and commercialization of pharmaceutical products and drug delivery technologies, qualify him to be a director. Class II Directors Continuing for Term of Office Expiring in 2026: Frederick M. Hudson has served as a member of our Board of Directors and chair of the Audit Committee since 2010. Mr. Hudson retired as a partner in the accounting firm of KPMG LLP in 2006 after a 37 year career with the firm. During Mr. Hudson’s career with KPMG, he was the partner in charge of the health care audit practice for the Washington - Baltimore business unit, and held leadership positions for serving the middle market practice and due diligence and mergers and acquisitions services. He was also a leader of the health care audit practice for the Mid-Atlantic area of KPMG, and served as national account lead partner and venture capital liaison partner. Mr. Hudson currently chairs the audit committee of the board of directors of scPharmaceuticals, Inc., a publicly traded pharmaceutical company. From 2014 to 2019, Mr. Hudson was on the board of directors of Aradigm Corporation, a publicly traded specialty pharmaceutical company, and was also chair of the audit committee and a member of several other board committees. He is a director of GBMC Healthcare, Inc. and its affiliate, Greater Baltimore Medical Center, serving as chair of the board from 2019-2022, and previously as chair of the finance committee and audit committee. He was previously on the board of directors and the audit committee chair of Educate, Inc., Woodhaven Holding Corp., Vicor Technologies, Inc., and Paradigm Management Services LLC; and as a member of the board of directors and the compliance committee of Maxim Healthcare Services, Inc. Mr. Hudson received a B.S. in Accounting from Loyola University Maryland and is a Certified Public Accountant (retired). Mr. Hudson’s extensive accounting and health care audit experience qualify him to serve as a director.
Biographical Information
Charles W. Newhall, III has served as a member of our Board of Directors since 2005 and was elected to serve as Chairman of the Board in August 2016. In 1977, Mr. Newhall co-founded New Enterprise Associates (NEA), a venture capital firm that focuses on the medical and life sciences and information technology industries, from which he retired effective December 31, 2012. To date, Mr. Newhall has served as a director of over approximately 60 venture-backed companies. In 1986, he founded the Mid-Atlantic Venture Capital Association (MAVA), which now has over 500 venture capital firms that are members, and is one of the most active regional venture associations in the country. He is Chairman Emeritus of MAVA. He served as an advisor to Greenspring Associates from 2012 to 2021. Before NEA, Mr. Newhall was a Vice President of T. Rowe Price. He served in Vietnam commanding an independent platoon including an initial reconnaissance of Hamburger Hill. His decorations include the Silver Star, Bronze Star V (1st OLC) and the Purple Heart. He earned an Honors Degree in English from the University of Pennsylvania and an MBA from Harvard Business School. Mr. Newhall’s substantial experience with companies in the healthcare sector and his venture capital, financial and business experience qualify him to serve as a director.
Compensation Program Design
Compensation Program Design We believe our executive compensation program is reasonable and appropriate because it is aligned with our business goals, research and development programs for future product development and our goal of delivering value to our stockholders. We rely on the expertise of our executive management team to drive overall company performance. The Compensation Committee believes that the design and operation of our CEO compensation program is appropriate given the impact the CEO has on the development of strategic programs designed to reach long-term goals, internal assets, and the achievement of Corporate Objectives. These components provide important future benefits for the Company and its stockholders. Our overall compensation program is designed to attract, retain and motivate key employees by providing competitive, equitable compensation, based on their performance, in the form of base salary plus short-term (cash bonus) and long-term incentives including equity awards with vesting tied to the achievement of defined performance goals. The Compensation Committee believes that the design of our executive compensation program, with its emphasis on reward for achievement of the key goals that comprise our annual and long-term business plan, does not create incentives for our executives to take excessive or unnecessary risks that could threaten the value of the Company or are reasonably likely to cause a material adverse effect on the Company. As discussed in greater detail under the heading “Compensation Discussion and Analysis — Role of Compensation Consultant,” the Compensation Committee’s independent compensation consultant the Human Capital Solutions practice of Aon plc (“Aon”) annually performs a risk assessment of our executive compensation programs.
Role of Compensation Consultant
Role of Compensation Consultant The Compensation Committee retains an independent compensation consulting firm to provide advisory services concerning our executive compensation programs. In 2023, Aon assisted the Compensation Committee by providing the following services: • Assisting in establishing a peer group of publicly-traded companies to help assess our executive compensation program; • Preparing a competitive comparison of peer groups and market data analysis, including data used for reviewing the compensation of our CEO, CFO, the other NEOs and other members of our executive management team; • Reviewing and advising on certain materials provided to the Compensation Committee for discussion and approval; • Participating in certain of the Compensation Committee’s meetings in 2023; • Assisting in the pay for performance assessment of the CEO’s performance relative to the CEO’s entire compensation package; • Assisting in the assessment of the Board of Directors compensation; and • Reporting on certain governance and regulatory trends. The members of the Aon team provide data and advice to the Compensation Committee, including with respect to the development of the pay for performance assessment of the CEO. Other than providing the information identified above, the Aon team does not provide any other services unless specifically requested by the Compensation Committee. Aon follows its internal guidelines and practices to guard against any conflict of interest and to ensure the objectivity of its advice. The Compensation Committee analyzed whether Aon was independent pursuant to SEC and Nasdaq listing rules and whether the work of Aon as a compensation consultant raised any conflict of interest. Based on its analysis, the Compensation Committee determined that Aon was independent and that the work of Aon and the individual compensation advisors employed by Aon does not create any conflict of interest.
Use of Peer Group Data
Use of Peer Group Data Our executive compensation program seeks to provide total compensation at pay levels of executives with similar roles at comparable companies when targeted levels of performance are achieved. Use of peer group survey data provided by Aon plays a significant role in the structure of the compensation program. It is an important input in setting base salaries and target levels for cash bonuses and equity awards and to establish target compensation levels that are market competitive in order to attract and retain talent. The Company participates in compensation surveys conducted by Aon each year. The Company has access to the resulting Aon reports, which are specific to the pharmaceutical and biotechnology industries and provide data on salaries, cash bonuses and equity awards for specific job functions. Aon’s input is a significant input for assessing our executive compensation program. With the guidance of Aon, the Compensation Committee determined the Peer Group for use and reference in 2023. The Compensation Committee used the peer data and the assistance of Aon to identify a reasonable reference point for base salaries, cash bonuses and equity awards. The Committee then analyzed overall company and individual executive performance to make final compensation decisions, which were recommended to the Board of Directors for approval (in the case of the CEO). The criteria the Committee used for selecting peers included: • Public commercial biopharmaceutical companies with a product on the market; • Market capitalization values generally between $500 million and $5 billion; • Companies with annual revenue generally between $200 million and $2 billion; and • Companies with 200-2,000 employees reflecting other organizations of similar scale and complexity. Using these criteria, the following companies were determined to comprise the Company’s peer group (the “Peer Group”):
Use of Peer Group Data
| Acadia Pharmaceuticals Inc. | Collegium Pharmaceutical, Inc. | Ironwood Pharmaceuticals, Inc. | | Agios Pharmaceuticals, Inc. | Corcept Therapeutics Incorporated | Ligand Pharmaceuticals Incorporated | | Alkermes Plc | Dynavax Technologies Corporation | Pacira Biosciences, Inc. | | Amicus Therapeutics, Inc. | Emergent Biosolutions Inc. | PTC Therapeutics, Inc. | | Amphastar Pharmaceuticals, Inc. | Halozyme Therapeutics, Inc. | Sarepta Therapeutics, Inc. | | Coherus BioSciences, Inc. | Insmed Incorporated | Vanda Pharmaceuticals Inc. |
Use of Peer Group Data
Compared to the Peer Group, for 2022, the Company was at the 69th percentile of revenues, 32nd percentile of market capitalization, 36th percentile for 1 year total shareholder return, and the 70th percentile of Peer Group headcount.
Elements of Executive Compensation
Elements of Executive Compensation The main components of our executive compensation program are: • Base salary; • Annual cash bonus; and Long-term incentives — equity awards in the form of options, restricted stock units (“RSUs”), and performance stock units (“PSUs”). The following discussion describes how each of these elements of compensation fit into our overall compensation objectives and describes how and why compensation decisions were made with respect to each element based on our year-end analysis of competitive market data and our annual review of Corporate Objectives and individual performance. Base Salaries Base salaries are paid in order to provide a fixed component of compensation for the CEO, CFO, other NEOs and other members of executive management. For 2023, on February 23, 2023, the Compensation Committee, based its assessment of performance, the CEO’s recommendation and comparison with data from the Aon report, reviewed the base salaries of the CEO and the CFO, other NEOs and the other executive officers. Each executive officer’s individual performance and tenure were also evaluated. For each of these executive officers, based on the CEO’s recommendation (other than with respect to the CEO) and the executive officer’s individual performance and contribution to the achievement of Corporate Objectives, the Compensation Committee approved an increase in the respective base salary from the 2022 level (other than with respect to the CEO) to be within a range that is competitive with salaries paid to comparable officers at companies in the Peer Group. With respect to the CEO, based on the foregoing, the Compensation Committee recommended the Board of Directors approve an increase of the CEO’s base salary from the 2022 level to be within a range that is competitive with salaries paid to comparable CEOs at companies in the Peer Group. The full Board of Directors reviewed the approved increase and approved an increase in the CEO’s base salary based on its review and the Compensation Committee’s recommendation. The table below sets forth our NEOs base salaries for 2022 and 2023.
Elements of Executive Compensation
Annual Cash Bonuses Annual cash bonuses are intended to reward individual performance by providing executive officers with an opportunity to receive additional cash compensation based primarily on the Company’s performance and, secondarily, for the executive officer’s achievement of individual goals. As described in greater detail below, performance is measured by the achievement of Corporate Objectives approved by the Board of Directors, and the assessment of the Compensation Committee, based on recommendations from the CEO, of how well the executive officer performed his or her role in contributing to stockholder value during the applicable year and achieved his or her individual goals. Target Setting Cash bonus targets, expressed as a percentage of base salary, for the CEO, CFO, the other NEOs and all other members of executive management, were set within a range that is competitive with cash bonuses paid to comparable officers at the companies in our Peer Group. While the CEO recommends each officer’s cash bonus target (other than for the CEO) to the Compensation Committee, the Compensation Committee has the discretion to adjust each officer’s target as it deems appropriate. Potential reasons for adjusting cash bonus targets include the impact of the officer’s position on the Company’s results and how the officer’s base salary, upon which the bonus is based, has increased historically. The length of time an officer has been in his or her current role and how the officer’s role fits within the hierarchy of the Company are also considered. None of the NEOs cash bonus targets as a percentage of their respective base salaries increased in 2023 as compared to 2022. Elements of Cash Bonus Each cash bonus target opportunity consists of two elements: (i) a Company performance element and (ii) an individual performance element (other than for the CEO whose cash bonus is based solely on Company performance elements). The targets and the relative weighting of objectives for the NEOs in 2023 were as follows:
Elements of Executive Compensation
| | Target Bonus as a % of Base Salary) | Weighting of Objectives | | | Name | | Company | Individual | | Jack A. Khattar | 75% | 100% | 0%(1) | | Timothy C. Dec | 45% | 60% | 40% | | Padmanabh P. Bhatt, Ph.D. | 35% | 60% | 40% | | Jonathan Rubin, M.D. | 40% | 60% | 40% | | Frank Mottola | 35% | 60% | 40% |
Elements of Executive Compensation
(1) The CEO’s performance is measured by reference to the overall performance of the Company, specifically the achievement of Corporate Objectives. Corporate Performance Goals Each year, we measure our annual corporate performance against our achievement of the key objectives and goals set forth in our annual business plan, which we refer to as our Corporate Objectives. The achievement of specified financial measures, such as annual operating income or revenue growth targets, are also considered to be important measures as a result of the growth and maturity of our company and our emergence as a long term, sustainably profitable business. In evaluating the overall performance of the Company, the Compensation Committee takes into account our strategic focus, which is to develop and commercialize products for the treatment of central nervous system (CNS) diseases. This strategy is anchored around the continued growth of our current commercial products and selective investments in our research and development pipeline, in-licensed technology and technology platforms which are designed to realize long-term growth for our Company. The strategy is also based on appropriate acquisitions of corporate assets. At the beginning of 2023, the CEO recommended, and the Compensation Committee and Board of Directors approved and assigned weights to certain Corporate Objectives for 2023 covering various key projects and financial goals including the following: • SPN-812 • Achieve specific objectives regarding manufacturing and supply of SPN-812 • Prepare and submit mechanism of action publications • SPN-817 • Initiate Phase 2a study in treatment resistant seizures • Initiate single and multiple-dose pharmacokinetics study • Prepare and plan for Phase 2b study • SPN-820/821 • Submit SPN-821 Investigational New Drug Application to U.S. Food and Drug Administration • Finalize two key toxicology animal study reports to support Phase 3 studies • Enroll 35% of target patient randomization in Phase IIb study • SPN-830 • Resubmit the New Drug Application in October Complete specific packaging and manufacturing objectives Complete specific development and product design and use activities • Financials • Achieve gross revenue and net revenue objectives • Achieve adjusted EBITDA objective • R&D Discovery Program • Complete pharmacology evaluations for New Chemical Entities (“NCEs”) • Synthesize API and complete pre-clinical and toxicity studies The cash bonus program has various payout levels depending on the Company’s performance measured against the Corporate Objectives. The payout of cash bonuses is primarily determined by the achievement of Corporate Objectives. For example, if 90% of our Corporate Objectives are achieved, 90% of the amount of each NEO’s cash bonus target attributable to the Corporate Objectives will be funded. The Board of Directors, based on the recommendation of the Compensation Committee and at its discretion, may adjust the payout levels. For 2023, the Corporate Objectives achievement level was determined by the Compensation Committee to be 108% of Corporate Objectives. Certain officers, specifically Messrs. Khattar and Bhatt, were also credited an additional 7% related to the significant progress in managing and resolving numerous generic cases related to Trokendi XR and Oxtellar XR. Please refer to the “Summary Compensation Table” for information concerning the actual bonuses paid to each of our NEOs for the year ended December 31, 2023. Long Term Incentives — Equity Incentive Awards Equity incentive awards have the potential to be a significant component of each executive officer’s compensation package, particularly, if the Company’s stock price appreciates. We emphasize equity incentive awards to motivate our executive officers to drive both the short-term and long-term performance of the Company. Each executive officer has a significant role in developing and executing on the Company’s strategy and delivering financial performance year-over-year. We believe the emphasis on and mix of equity awards appropriately aligns their interests with those of our stockholders. Equity Incentive Grant Mechanics and Timing The Compensation Committee approves all grants for equity incentives to NEOs (other than the CEO) and other employees. Awards granted to the CEO must be recommended by the Compensation Committee to the Board of Directors for approval. At least 75% of the independent directors of the Board of Directors must approve grants for equity incentives to the CEO. For annual awards, the grant date is the date during the first calendar quarter when the Compensation Committee and the full Board of Directors meet. The procedure for timing of equity grants minimizes the risk that awards are granted opportunistically for the benefit of employees. This date is established by the Compensation Committee and the full Board of Directors well in advance and typically falls in late February or early March. This first quarter grant date timing coincides with the Company’s calendar-year-based performance management cycle, allowing managers to deliver the equity awards close in time to performance appraisals. The Company believes this timing increases the impact of the awards by strengthening the link between pay and performance. Additional information regarding the timing of grants of equity awards is available under the heading “Executive Compensation — Policies and Practices Related to the Timing of Grants of Certain Equity Awards” The exercise price for all stock option awards to the CEO, the Board, and the executive officers is the fair market value of the Company’s Common Stock on the date the grant is approved by the Board of Directors. The fair market value of the Company’s Common Stock as of a particular date is defined as the closing price of the Company’s Common Stock on such date. Structure of Equity Award Compensation Program In order to determine the size of equity incentive awards to each executive during the annual grant process, the Compensation Committee reviews market data on how much equity similarly situated officers are receiving at companies in the Peer Group. This review focuses on how much equity and the mix of equity awards that should be granted to each officer in order to be competitive with equity awards provided to comparable officers at companies in the Peer Group for their performance. Options The Compensation Committee approves grants of stock options to provide a certain amount of equity to officers that will vest as long as the officer continues to serve at Supernus. These grants align the interests of our executive officers with those of our stockholders because the grants will only have value to the extent the market value of Supernus’ equity increases from the price per share on the date of grant. The exercise price of the stock options is equal to the closing price of the Company’s Common Stock on the date of the grant. Stock option awards for our executive officers were set within a range that is competitive with option awards granted to comparable officers at companies in the Peer Group for performance. Other considerations include the officer’s specific performance, how the officer’s role fits within the hierarchy of the organization, the impact of the officer’s position on the Company’s results, how the officer’s stock option awards have increased historically and how long an officer has been in his or her current role. The Compensation Committee has the discretion to adjust each officer’s award as it deems appropriate.
Elements of Executive Compensation
On February 23, 2023, the Board of Directors approved, upon recommendation from the Compensation Committee, a grant of 280,000 stock options to Mr. Khattar. The Compensation Committee also approved the following grants of stock options: 40,000 to Mr. Dec, 20,000 to Dr. Bhatt, 20,000 to Dr. Rubin, and 30,000 to Mr. Mottola. For additional information regarding the (i) value of these awards, see “Executive Compensation — Grants of Plan-Based Awards,” and (ii) the timing of the grants of these awards, see “Executive Compensation — Policies and Practices Related to the Timing of Grants of Certain Equity Awards.” In determining the actual amounts of each executive officer’s stock option award, the Compensation Committee and Board of Directors considered the recommendations of the CEO and each executive’s individual performance. In the case of Mr. Khattar, the Board of Directors considered the benefit to stockholders of his performance and the recommendations of the Compensation Committee. All stock options vest over four years in four equal installments of 25% each on the first four anniversaries of the date of grant assuming the individual’s continued service during the vesting period. Performance Share Units Our Board of Directors and Compensation Committee include Performance Share Units in the mix of equity awards to the Company’s CEO, other NEOs and other executive officers to increase the relative weighting of performance-based compensation and to tie a more significant portion of total executive officer compensation to the achievement of performance goals that we believe drive the fundamentals of our business. Accordingly, all NEOs and other executive officers, in addition to receiving a grant of stock options and restricted stock units, received a portion of their equity award in the form of performance share units. Consistent with our emphasis on aligning pay for performance, each executive’s awarded performance share units vest upon the achievement of specific individual performance objectives, which are designed to support the long-term performance of the Company. Each of the performance share units have an objective that must be achieved within a defined performance period that must expire after no more than ten years. In connection with the foregoing, on February 23, 2023, Mr. Khattar received a grant of 140,000 performance share units, Mr. Dec received a grant of 10,000 performance share units, Dr. Bhatt received a grant of 5,000 performance share units, and Dr. Rubin and Mr. Mottola each received grants of 7,500 performance share units. Mr. Khattar’s grant of performance share units was increased in 2023 as compared to 2022 because the Committee believes this increase in equity tied to the achievement of performance goals will provide increased focus on Company performance and drive the fundamentals of the Company’s business. On June 12, 2023, the Compensation Committee, based on a recommendation from the CEO, established individual performance objectives for each executive and determined that the achievement of each objective would result in the vesting of a specified portion of the performance share units. With respect to Mr. Khattar: Deliver specified growth rate in net sales, excluding Trokendi XR and Oxtellar XR, in 2024 as compared to 2023; • Develop a new product and complete Phase 1 PK study with data in 2024; • Submit IND for a new NCE in 2025; • File new patent applications for certain products by 2029; and • Provide specific strategic analysis and recommendations to the Board. • With respect to Mr. Dec: • Develop a detailed 3-year capital structure plan to fund future growth initiatives and potential M&A activities by the third quarter of 2023; and execute one financing transaction by the end of 2024; • Develop a 2-year digital transformation plan and initiate at least one project by mid-2024; and • Achieve an Audit Report with no material weaknesses in Internal Controls for the years 2023 and 2024. • With respect to Dr. Rubin: • Phase IIb topline data from SPN-820 prior to December 1, 2024; • SPN-817 P203 topline data prior to December 1, 2025; and • Develop specific new product and complete Phase I PK study with data in 2024. • With respect to Dr. Bhatt: • Filing of a new patent application on NCEs that are derivatives of certain molecules by June 30, 2025. • Issuance of a new patent for drug substance manufacture of derivative of certain molecule by March 31, 2026. • File a new patent application to provide additional protection for certain products by December 31, 2029. • With respect to Mr. Mottola: • No back orders in 2023 and 2024 due to quality assurance or quality control delays; and • Manage IT through 2025 such that any cyber-attack results in the system up and running within a specified period and with no disruption to the network and business continuity. Restricted Stock Units The Company’s restricted stock units (“RSU”) awards vest in four equal installments of 25% each on the first four anniversaries of the date of grant provided the NEO continues to serve at Supernus on each such anniversary date. The Board of Directors believes that providing NEOs (other than the CEO) a mix of time-vesting and performance-vesting equity awards based on pre-established goals achieves a balance in our equity-based compensation program and further aligns the interests of such officer and our stockholders through the RSU award’s retention value. In connection with the foregoing, on February 23, 2023, Mr. Dec received a grant of 10,000 RSUs, each of Dr. Rubin and Dr. Bhatt received grants of 5,000 RSUs, and Mr. Mottola received a grant of 7,500 RSUs. Other benefits Our executive officers are eligible to participate in all of our employee benefit plans, such as medical, dental, vision, group life insurance, disability insurance, Employee Stock Purchase Plan (“ESPP”) and our 401(k) plan, in each case on the same basis and subject to the same terms as our other employees. The Company makes a safe harbor match to the 401(k) Plan for all participants. There were no special benefits or perquisites provided to any executive officer in 2023. The Company does not maintain a pension program or a deferred compensation plan for executives or for any other employees, other than the Supernus Supplemental Executive Retirement Plan (SERP), which was established for the benefit of Jack Khattar for the sole purpose of receiving funds from a Shire (the former parent of the predecessor of the Company) SERP and providing a continuing deferral program under the Supernus SERP. No additional contributions have been made to the account by Supernus or by Mr. Khattar personally since the Supernus SERP was established.
Summary Compensation Table
Summary Compensation Table The following table shows the compensation earned by our CEO and other NEOs during the fiscal years ended December 31, 2023, December 31, 2022 and December 31, 2021.
Summary Compensation Table
| Name and Principal Position | Year | Salary ($) | Stock Awards ($)(1) | Option Awards ($)(2) | Non-Equity Incentive Plan Compensation ($)(3) | All Other Compensation ($)(4) | Total ($) | | Jack A. Khattar Chief Executive Officer, President & Secretary | 2023 | 963,000 | 4,760,000 | 6,675,200 | 830,588 | 49,305 | 13,278,093 | | | 2022 | 913,500 | 3,616,250 | 4,767,500 | 685,125 | 30,342 | 10,012,717 | | | 2021 | 870,000 | 2,941,400 | 3,399,779 | 887,400 | 18,142 | 8,116,721 | | Timothy C. Dec(5) Senior Vice President, Chief Financial Officer | 2023 | 453,800 | 726,000 | 953,600 | 210,588 | 39,639 | 2,383,597 | | | 2022 | 412,500 | 151,190 | 476,750 | 178,200 | 44,730 | 1,263,370 | | | 2021 | 135,096 | — | 1,238,685 | 72,300 | 7,454 | 1,453,535 | | Jonathan Rubin, MD(6) Senior Vice President, Chief Medical Officer Research and Development | 2023 | 440,000 | 448,000 | 476,800 | 184,448 | 38,081 | 1,587,329 | | | 2022 | 412,000 | 183,390 | 476,750 | 149,291 | 33,357 | 1,254,788 | | | 2021 | 385,000 | 45,675 | 424,972 | 143,700 | 29,002 | 1,028,349 | | Padmanabh P. Bhatt, Ph.D. Senior Vice President, Intellectual Property, Chief Scientific Officer | 2023 | 427,700 | 363,000 | 476,800 | 163,165 | 37,546 | 1,468,211 | | | 2022 | 415,200 | 183,390 | 343,260 | 140,973 | 37,963 | 1,120,759 | | | 2021 | 403,100 | 45,675 | 288,981 | 158,900 | 36,608 | 933,265 | | Frank Mottola Senior Vice President, Quality GMP Operations, Information Technology and Regulatory Affairs | 2023 | 352,700 | 544,500 | 715,200 | 129,361 | 44,418 | 1,786,179 | | | 2022 | 342,400 | 183,390 | 343,260 | 109,080 | 39,393 | 1,029,939 |
Summary Compensation Table
(1) Our CEO will only realize compensation to the extent performance share units vest depending upon the level of achievement of specified performance goals. Each of our other NEOs will only realize compensation to the extent performance share units vest depending upon the level of achievement of specified performance goals. For information regarding assumptions underlying the valuation of equity awards, see Note 9 to our consolidated financial statements included in our Annual Report to Stockholders. (2) Our NEOs will only realize compensation to the extent the market price of our common stock at date of exercise is greater than the exercise price of such stock options. For information regarding assumptions underlying the valuation of equity awards, see Note 9 to our consolidated financial statements included in our Annual Report to Stockholders. (3) Amounts represent annual performance bonus compensation earned for the years ended December 31, 2023, 2022 and 2021 based on pre-established performance objectives. Annual performance bonus compensation for 2023, 2022 and 2021 was paid in early 2024, early 2023 and early 2022, respectively. Amounts include (i) the premium amounts paid by us for life insurance and short-term and long-term disability coverage for each NEO, (ii) the employer matching contributions made on behalf of each NEO to our 401(k) plan and (iii) the compensation expense related to participation in the Company’s ESPP for Drs. Bhat and Rubin and Messrs. Dec and Mottola. Mr. Khattar’s other compensation also includes the value of certain expenses incurred in connection with Mr. Khattar’s participation in the Company’s President’s Club award program for certain of the Company’s sales professionals, which was valued at $18,794 for fiscal year 2023. Dr. Bhatt’s other compensation also includes a reimbursement for certain membership fees of $50 in the fiscal year 2023. Dr. Rubin’s and Mr. Mottola’s other compensation for fiscal year 2023 also includes a reimbursement for certain membership fees of $170 and $180, respectively. In addition, Dr. Rubin’s other compensation for fiscal year 2023 includes a grossed-up tenure award of $584 received in the fiscal year 2023. Mr. Dec joined the Company as Senior Vice President and Chief Financial Officer effective on August 23, 2021. (6) Dr. Rubin began serving as the Company’s Senior Vice President, Chief Medical Officer, Research and Development effective on January 1, 2021 and previously served as the Company’s Senior Vice President, Clinical Research and Medical Affairs since February 2020.
Pension Benefits
Pension Benefits Our NEOs did not participate in or have account balances in any qualified or nonqualified defined benefit plans sponsored by us. Our Board of Directors or Compensation Committee may elect to adopt qualified or nonqualified benefit plans in the future if it determines that doing so is in the best interest of our shareholders.
Grants of Plan-Based Awards
Grants of Plan-Based Awards During fiscal year ended December 31, 2023, CEO and other NEOs participated in our performance-based cash incentive plan and our equity award program in which each officer was eligible for the awards set forth in the following table. The following table also sets forth information regarding cash and equity awards granted to our CEO and other NEOs during the year ended December 31, 2023.
Grants of Plan-Based Awards
Grants of Plan-Based Awards
Grants of Plan-Based Awards
| | | Estimated Future Payouts Under Non-Equity Incentive Plan Awards | | | Estimated Future Payouts Under Equity Incentive Plan Awards | | | Exercise or Base Price of Option Awards ($/Sh)(2) | Grant Date Fair Value of Stock and Option Awards ($)(3) | | Name | Grant Date | Threshold ($) | Target ($)(1) | Maximum ($) | Threshold (#) | Target (#) | Maximum (#) | | | | Jack A. Khattar | 2/23/2023 | — | 722,250 | 722,250 | — | — | — | — | — | | | 2/23/2023 | — | — | — | — | 280,000 | 280,000 | 38.60 | 6,675,200 | | | 6/12/2023(4) | — | — | — | — | 140,000 | 140,000 | — | 4,760,000 | | Timothy C. Dec | 2/23/2023 | — | 204,210 | 204,210 | — | — | — | — | — | | | 2/23/2023 | — | — | — | — | 40,000 | 40,000 | 38.60 | 953,600 | | | 2/23/2023 | — | — | — | — | 10,000 | 10,000 | — | 386,000 | | | 6/12/2023(4) | — | — | — | — | 10,000 | 10,000 | — | 340,000 | | Jonathan Rubin, MD | 2/23/2023 | — | 176,000 | 176,000 | — | — | — | — | — | | | 2/23/2023 | — | — | — | — | 20,000 | 20,000 | 38.60 | 476,800 | | | 2/23/2023 | — | — | — | — | 5,000 | 5,000 | — | 193,000 | | | 6/12/2023(4) | — | — | — | — | 7,500 | 7,500 | — | 255,000 | | Padmanabh P. Bhatt, Ph.D. | 2/23/2023 | — | 149,695 | 149,695 | — | — | — | — | — | | | 2/23/2023 | — | — | — | — | 20,000 | 20,000 | 38.60 | 476,800 | | | 2/23/2023 | — | — | — | — | 5,000 | 5,000 | — | 193,000 | | | 6/12/2023(4) | — | — | — | — | 5,000 | 5,000 | — | 170,000 | | Frank Mottola | 2/23/2023 | — | 123,445 | 123,445 | — | — | — | — | — | | | 2/23/2023 | — | — | — | — | 30,000 | 30,000 | 38.60 | 715,200 | | | 2/23/2023 | — | — | — | — | 7,500 | 7,500 | — | 289,500 | | | 6/12/2023(4) | — | — | — | — | 7,500 | 7,500 | — | 255,000 |
Grants of Plan-Based Awards
Future payout amounts are based on the target bonus percentage recommended by the Compensation Committee and approved by the Board of Directors on February 23, 2023. (2) Amounts represent the closing market price of our common stock on the date of the grant. (3) Amounts reflect the aggregate grant date fair value of the awards calculated in accordance with ASC 718. The performance metric for this tranche of the performance share unit grant was approved by the Compensation Committee on June 12, 2023.
Outstanding Equity Awards at Fiscal Year-End
Outstanding Equity Awards at Fiscal Year-End The table below sets forth certain information regarding the outstanding equity awards held by our NEOs as of December 31, 2023.
Outstanding Equity Awards at Fiscal Year-End
| | Options Awards(1) | | | | Stock Awards | | | | | Name | Number of Securities Underlying Unexercised Options (#) Exercisable | Number of Securities Underlying Unexercised Options (#) Unexercisable | Option Exercise Price ($)(2) | Option Expiration Date | Number of Shares or Units of Stock That Have Not Vested(1) | Market Value of Shares or Units of Stock That Have Not Vested ($)(3) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights that Have Not Vested (#)(4) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights that Have Not Vested ($)(3) | | Jack A. Khattar | 25,037 | — | 9.56 | 1/23/2024 | | | 20,000 | 578,800 | | | 250,000 | — | 9.13 | 3/3/2025 | | | 68,750 | 1,989,625 | | | 255,000 | — | 12.98 | 3/1/2026 | | | 105,000 | 3,038,700 | | | 325,000 | — | 25.30 | 2/24/2027 | | | | | | | 250,000 | — | 39.40 | 2/14/2028 | | | | | | | 300,000 | — | 36.75 | 2/22/2029 | | | | | | | 210,938 | 70,312 | 23.99 | 2/21/2030 | | | | | | | 100,000 | 100,000 | 29.61 | 2/19/2031 | | | | | | | 62,500 | 187,500 | 32.20 | 2/22/2032 | | | | | | | — | 280,000 | 38.60 | 2/23/2033 | | | | | | Timothy C. Dec | 42,500 | 42,500 | 25.09 | 8/23/2031 | | | 6,000 | 173,640 | | | 6,250 | 18,750 | 32.20 | 2/22/2032 | 1,500 | 43,140 | | | | | — | 40,000 | 38.60 | 2/23/2033 | 10,000 | 289,400 | | | | Jonathan Rubin, MD | 11,250 | 3,750 | 23.99 | 2/21/2030 | 2,250 | 65,115 | 2,400 | 69,456 | | | 12,500 | 12,500 | 29.61 | 2/19/2031 | 5,000 | 144,700 | 7,500 | 217,050 | | | 6,250 | 18,750 | 32.20 | 2/22/2032 | | | | | | | — | 20,000 | 38.60 | 2/23/2033 | | | | | | Padmanabh P. Bhatt, Ph.D. | 5,000 | — | 9.13 | 3/3/2025 | 2,250 | 65,115 | 1,500 | 43,410 | | | 40,000 | — | 12.98 | 3/1/2026 | 5,000 | 144,700 | 2,500 | 72,350 | | | 40,000 | — | 25.30 | 2/24/2027 | | | | | | | 30,000 | — | 39.40 | 2/14/2028 | | | | | | | 35,000 | — | 36.75 | 2/22/2029 | | | | | | | 26,250 | 8,750 | 23.99 | 2/21/2030 | | | | | | | 8,500 | 8,500 | 29.61 | 2/19/2031 | | | | | | | 4,500 | 13,500 | 32.20 | 2/22/2032 | | | | | | | — | 20,000 | 38.60 | 2/23/2033 | | | | | | Frank Mottola | 15,000 | — | 9.13 | 3/3/2025 | 2,250 | 65,115 | 3,000 | 86,820 | | | 14,000 | — | 12.98 | 3/1/2026 | 7,500 | 217,050 | 7,500 | 217,050 | | | 15,000 | — | 25.30 | 2/24/2027 | | | | | | | 10,000 | — | 39.40 | 2/14/2028 | | | | | | | 14,000 | — | 36.75 | 2/22/2029 | | | | | | | 16,500 | 5,500 | 23.99 | 2/21/2030 | | | | | | | 8,500 | 8,500 | 29.61 | 2/19/2031 | | | | | | | 4,500 | 13,500 | 32.20 | 2/22/2032 | | | | | | | — | 30,000 | 38.60 | 2/23/2033 | | | | |
Outstanding Equity Awards at Fiscal Year-End
All stock options and grants of restricted stock units vest over four years in four equal installments of 25% each on the first four anniversaries of the date of grant. Equals the closing market price of our common stock on the date of grant. (3) Based on the closing market price of our common stock on December 29, 2023. (4) All performance share units vest, if at all, upon the achievement of specific individual performance objectives, which are designed to support the long-term performance of the Company.
Option Exercises and Stock Vested
Option Exercises and Stock Vested
Option Exercises 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 ($) | | Jack A. Khattar | 74,963 | 2,337,727 | 111,250 | 3,727,687 | | Timothy C. Dec | — | — | 7,500 | 239,605 | | Jonathan Rubin, MD | — | — | 2,850 | 103,633 | | Padmanabh P. Bhatt, Ph.D. | 5,000 | 153,930 | 5,500 | 191,175 | | Frank Mottola | 2,000 | 37,776 | 2,250 | 87,037 |
Potential Payments upon Termination or Change in Control
Potential Payments upon Termination or Change in Control Assuming Mr. Khattar’s employment is terminated without cause or he resigns for good reason, or he resigns for good reason after a change of control, each such term as defined in Mr. Khattar’s employment agreement, on December 31, 2023, the estimated values of payments and benefits to Mr. Khattar are set forth in the following table. Assuming Messrs. Dec’s or Mottola’s or Dr. Rubin’s respective employment is terminated without cause or any of them resigns for good reason, or resigns for good reason after a change of control, each such term as defined in the Executive Retention Agreement, the estimated values of payments and benefits to these executives on December 31, 2023, are set forth in the following table. In addition, the following table also sets forth the amount payable upon a restructuring of Supernus that results in the elimination of Dr. Bhatt’s position assuming the restructuring occurred on December 31, 2023.
Potential Payments upon Termination or Change in Control
| Name | Benefit | Termination Upon a Restructuring | Termination Without Cause or Resignation for Good Reason | Resignation for Good Reason After a Change of Control | | Jack A. Khattar | Base salary continuation | $1,444,500 | $1,444,500 | $1,444,500 | | | Bonus(1) | $685,125 | $685,125 | $685,125 | | | Continuation of benefits(2) | $30,548 | $30,548 | $30,548 | | | Total | | $2,160,173 | $2,160,173 | | Timothy C. Dec | Base salary continuation | $453,800 | $453,800 | $453,800 | | | Bonus(3) | $109,080 | $109,080 | $109,080 | | | Continuation of benefits(4) | $28,845 | $28,845 | $28,845 | | | Total | | $591,725 | $591,725 | | Jonathan Rubin, MD | Base salary continuation | $440,000 | $440,000 | $440,000 | | | Bonus(3) | $149,291 | $149,291 | $149,291 | | | Continuation of benefits(4) | $20,365 | $20,365 | $20,365 | | | Total | | $609,656 | $609,656 | | Padmanabh P. Bhatt, Ph.D. | Severance | $213,850 | | |
Potential Payments upon Termination or Change in Control
| Name | Benefit | Termination Upon a Restructuring | Termination Without Cause or Resignation for Good Reason | Resignation for Good Reason After a Change of Control | | Frank Mottola | Base salary continuation | $352,700 | $352,700 | $352,700 | | | Bonus(3) | $116,246 | $116,246 | $116,246 | | | Continuation of benefits(4) | $30,253 | $30,253 | $30,253 | | | Total | | $499,199 | $499,199 |
Potential Payments upon Termination or Change in Control
Amount shown for bonus in connection with a change in control represents the bonus payment Mr. Khattar would have earned under his employment agreement based on the assumption that his employment terminated as of the last day of fiscal year 2023. The amount set forth in the table reflects the bonus paid to Mr. Khattar during 2023 under our annual cash incentive plan, which pertained to the 2022 fiscal year. (2) Amounts shown for continuation of benefits represent estimates for the continuation of COBRA insurance benefits afforded to Mr. Khattar and eligible family members in accordance with his employment agreement. (3) Amounts shown for bonus in connection with the Executive Retention Agreement represent the bonus payment to the executive based on a lump-sum payment equal to the most recent annual bonus received by the executive. The amount set forth in the table reflects the bonus paid to each executive during 2023 under our annual cash incentive plan, which pertained to the 2022 fiscal year. (4) Amounts shown for continuation of benefits represent estimates for the continuation of COBRA insurance benefits afforded to the executive officer and eligible family members in accordance with the Executive Retention Agreement.
CEO Pay Ratio
CEO Pay Ratio Pursuant to Section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act and Item 402(u) of Regulation S-K, we are required to disclose the ratio of our principal executive officer to the annual total compensation of our median employee. During fiscal year 2023, the principal executive officer of Supernus was our President and Chief Executive Officer, Jack Khattar. For 2023, the annual total compensation of Mr. Khattar, as disclosed in the Summary Compensation Table, was $13,278,093, and for our median employee was $165,817, resulting in a pay ratio of approximately 80:1. In accordance with Item 402(u) of Regulation S-K, with the assistance of Aon we identified the median employee as of December 31, 2023 by (i) aggregating for each applicable employee (A) annual base salary, (B) the target bonus and commissions and (C) the estimated grant date fair value of equity granted in 2023, and (ii) ranking this compensation measure for our employees from lowest to highest. This calculation was performed for all employees of Supernus, excluding Mr. Khattar. The pay ratio reported above is a reasonable estimate calculated in a manner consistent with SEC rules based on our internal records and the methodology described above. The SEC rules for identifying the median compensated employee and calculating the pay ratio based on that employee’s annual total compensation allow companies to adopt a variety of methodologies, to apply certain exclusions, and to make reasonable estimates and assumptions that reflect their employee populations and compensation practices. Therefore, the pay ratio reported by other companies may not be comparable to the pay ratio reported above, as other companies have different employee populations and compensation practices and may utilize different methodologies, exclusions, estimates, and assumptions in calculating their own pay ratios.
PAY VERSUS PERFORMANCE
PAY VERSUS PERFORMANCE In accordance with rules adopted by the Securities and Exchange Commission pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, we provide the following disclosure regarding executive compensation for our principal executive officer (“PEO”) and our NEOs other than our PEO (“Non-PEO NEOs”) and Company performance for the fiscal years listed below. The Compensation Committee did not consider the pay versus performance disclosure below in making its pay decisions for any of the years shown.
PAY VERSUS PERFORMANCE
| Year | Summary Compensation Table Total for Jack Khattar(1) ($) | Compensation Actually Paid to Jack Khattar(1)(2)(3) ($) | Average Summary Compensation Table Total for Non-PEO NEOs(1) ($) | Average Compensation Actually Paid to Non-PEO NEOs(1)(2)(3) ($) | Value of Initial Fixed $100 Investment based on:(4) | | Net Income ($ Millions) | Gross Product Sales ($ Millions)(5) | | | | | | | Total Shareholder Return (“TSR”) ($) | Peer Group TSR ($) | | | | (a) | (b) | (c) | (d) | (e) | (f) | (g) | (h) | (i) | | 2023 | 13,278,093 | 13,491,498 | 1,806,329 | 1,691,851 | 122.01 | 118.87 | 1.3 | 1,071 | | 2022 | 10,012,717 | 11,056,323 | 1,167,214 | 1,433,071 | 150.38 | 113.65 | 60.7 | 1,181 | | 2021 | 8,116,721 | 7,914,950 | 979,005 | 601,468 | 122.93 | 126.45 | 53.4 | 1,021 | | 2020 | 6,669,046 | 6,134,966 | 1,204,624 | 939,602 | 106.07 | 126.42 | 127.0 | 951 |
PAY VERSUS PERFORMANCE
1. Jack Khattar was our PEO for each year presented. The individuals comprising the Non-PEO NEOs for each year presented are listed below.
PAY VERSUS PERFORMANCE
| 2020 | 2021 | 2022-2023 | | James P. Kelly | Timothy C. Dec | Timothy C. Dec | | Stefan K.F. Schwabe, M.D., Ph.D. | Jonathan Rubin, MD | Jonathan Rubin, MD | | Padmanabh P. Bhatt, Ph.D. | Padmanabh P. Bhatt, Ph.D. | Padmanabh P. Bhatt, Ph.D. | | Gregory S. Patrick | Tami Martin, R.N., Esq. | Frank Mottola | | Tami Martin, R.N., Esq. | James P. Kelly | — |
PAY VERSUS PERFORMANCE
2. The amounts shown for Compensation Actually Paid have been calculated in accordance with Item 402(v) of Regulation S-K and do not reflect compensation actually earned, realized, or received by the Company’s NEOs. These amounts reflect the Summary Compensation Table Total with certain adjustments as described in footnote 3 below. 3. Compensation Actually Paid reflects the exclusions and inclusions of certain amounts for the PEO and the Non-PEO NEOs as set forth below. Equity values are calculated in accordance with FASB ASC Topic 718. Amounts in the Exclusion of Stock Awards and Option Awards column are the totals from the Stock Awards and Option Awards columns set forth in the Summary Compensation Table. Amounts in the Inclusion of Equity Values column are set forth in the table further below.
PAY VERSUS PERFORMANCE
| Year | Summary Compensation Table Total for Jack Khattar ($) | Exclusion of Stock Awards and Option Awards for Jack Khattar ($) | Inclusion of Equity Values for Jack Khattar ($) | Compensation Actually Paid to Jack Khattar ($) | | 2023 | 13,278,093 | (11,435,200) | 11,648,605 | 13,491,498 |
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 | 1,806,329 | (1,175,975) | 1,061,497 | 1,691,851 |
PAY VERSUS PERFORMANCE
The amounts in the Inclusion of Equity Values in the tables above are derived from the amounts set forth in the following tables:
PAY VERSUS PERFORMANCE
| Year | Year-End Fair Value of Equity Awards Granted During Year That Remained Unvested as of Last Day of Year for Jack Khattar ($) | Change in Fair Value from Last Day of Prior Year to Last Day of Year of Unvested Equity Awards for Jack Khattar ($) | Vesting-Date Fair Value of Equity Awards Granted During Year that Vested During Year for Jack Khattar ($) | Change in Fair Value from Last Day of Prior Year to Vesting Date of Unvested Equity Awards that Vested During Year for Jack Khattar ($) | Fair Value at Last Day of Prior Year of Equity Awards Forfeited During Year for Jack Khattar ($) | Total − Inclusion of Equity Values for Jack Khattar ($) | | 2023 | 6,566,381 | 1,956,489 | 1,012,900 | 2,112,835 | — | 11,648,605 |
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 Vesting-Date Fair Value of Equity Awards Granted During Year that Vested During Year 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 | 708,219 | 346,240 | — | 21,753 | (14,715) | 1,061,497 |
PAY VERSUS PERFORMANCE
4. The Peer Group TSR set forth in this table utilizes the Nasdaq Biotechnology Index, which we also utilize in the stock performance graph required by Item 201(e) of Regulation S-K included in our Annual Report for the year ended December 31, 2023. The comparison assumes $100 was invested for the period starting December 31, 2019, through the end of the listed year in the Company and in the Nasdaq Biotechnology Index, respectively. Historical stock performance is not necessarily indicative of future stock performance. Cumulative TSR is calculated by dividing (i) the sum of (a) the cumulative amount of any dividends for the measurement period and (b) the change in the company’s share price during the measurement period by (ii) the share price at the beginning of the measurement period. This assumes dividend reinvestment. 5. We determined Gross Product Sales 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 and 2022. This performance measure may not have been the most important financial performance measure for years prior and we may determine a different financial performance measure to be the most important financial performance measure in future years.
Relationship Between PEO and Non-PEO NEO Compensation Actually Paid and Company Total Shareholder Return (“TSR”)
Relationship Between PEO and Non-PEO NEO Compensation Actually Paid and Company Total Shareholder Return (“TSR”) The following chart sets forth the relationship between Compensation Actually Paid to our PEO, the average of Compensation Actually Paid to our Non-PEO NEOs, the Company’s cumulative TSR over the four most recently completed fiscal years, and the Nasdaq Biotechnology Index TSR over the same period.
PEO and Average Non-PEO NEO Compensation Actually Paid Versus TSR
PEO and Average Non-PEO NEO Compensation Actually Paid Versus TSR
Relationship Between PEO and Non-PEO NEO Compensation Actually Paid and Net Income
Relationship Between PEO and Non-PEO NEO Compensation Actually Paid and Net Income The following chart sets forth the relationship between Compensation Actually Paid to our PEO, the average of Compensation Actually Paid to our Non-PEO NEOs, and our Net Income during the four most recently completed fiscal years.
PEO and Average Non-PEO NEO Compensation Actually Paid Versus Net Income
PEO and Average Non-PEO NEO Compensation Actually Paid Versus Net Income Net Income included in the preceding chart is calculated in accordance with GAAP (Generally Accepted Accounting Principles). During 2021, 2022 and 2023, the Company accrued amortization expenses for intangible assets of $30.0 million, $82.6 million and $82.4 million, respectively. The level of amortization of intangible assets increased during 2021 and increased further in 2022 primarily due to the amortization of definitive-lived intangible assets acquired in the US WorldMeds and Adamas acquisitions.
Relationship Between PEO and Non-PEO NEO Compensation Actually Paid and Gross Product Sales
Relationship Between PEO and Non-PEO NEO Compensation Actually Paid and Gross Product Sales The following chart sets forth the relationship between Compensation Actually Paid to our PEO, the average of Compensation Actually Paid to our Non-PEO NEOs, and our Gross Product Sales during the four most recently completed fiscal years.
PEO and Average Non-PEO NEO Compensation Actually Paid Versus Gross Product Sales
PEO and Average Non-PEO NEO Compensation Actually Paid Versus Gross Product Sales
DIRECTOR COMPENSATION
DIRECTOR COMPENSATION The elements of director compensation consist of annual cash retainers and equity awards, as well as customary and usual expense reimbursement in attending Board of Director or committee meetings. In an effort to align the long-term interests of our stockholders and non-employee directors, the mix of cash and equity compensation has historically been, and is currently, weighted more heavily to equity. The equity compensation has historically taken the form of stock options, which we believe motivates the non-employee directors to help us achieve our business objectives by tying incentives to the appreciation of our common stock over the long term. Our Compensation Committee regularly assesses our non-employee director compensation program in consultation with Aon, its independent compensation consultant, who provides analysis and input on prevailing market practices and recommends any changes to the program to our Board of Directors, which ultimately approves non-employee director compensation. The 2023 director compensation structure was recommended by the Compensation Committee and approved by the Board of Directors following the review of peer practices from Aon. The 2023 director compensation structure did not change from the 2022 director compensation structure. Under our director compensation structure for 2023, non-chairman members of the Board of Directors received an annual retainer of $50,000 and the Chairman of the Board received an additional $35,000, paid annually. The chairman and members of the Company’s standing committees received the following retainers for their committee service:
DIRECTOR COMPENSATION
| Committee | Chairman ($) | Member ($) | | Audit Committee | 25,000 | 12,500 | | Compensation Committee | 20,000 | 10,000 | | Governance and Nominating Committee | 12,000 | 6,000 | | Science Committee | 20,000 | 10,000 |
DIRECTOR COMPENSATION
Our employee director receives no compensation for serving as a director. The following table sets forth a summary of the compensation we paid to each non-employee director in 2023.
DIRECTOR COMPENSATION
| Name | Fees Earned or Paid in Cash ($) | Stock Awards ($)(1) | Option Awards ($)(1) | Total ($) | | Georges Gemayel | 78,500(2) | 150,000 | 150,017 | 378,517 | | Frederick M. Hudson | 85,000(3) | 150,000 | 150,017 | 385,017 | | Charles W. Newhall, III | 107,000(4) | 150,000 | 150,017 | 407,017 | | John M. Siebert, Ph.D. | 92,500(5) | 150,000 | 150,017 | 392,517 | | Carrolee Barlow, M.D., Ph.D. | 76,000(6) | 150,000 | 150,017 | 376,017 | | Bethany L. Sensenig | 62,500(7) | — | 451,893 | 514,393 |
DIRECTOR COMPENSATION
(1) Amounts represent the grant date fair value of our common stock calculated in accordance with ASC 718. The grant date of each stock and option award was February 23, 2023, except with respect to Ms. Sensenig who was not yet serving on the Board on such date and whose option award has a grant date of August 17, 2023. (2) Dr. Gemayel received a $50,000 annual Board retainer and $12,500 for his service as a member of the Audit Committee, $10,000 for his service as a member of the Science Committee, and $6,000 for his service as a member of the Governance and Nominating Committee. Mr. Hudson received a $50,000 annual Board retainer, $25,000 for service as Chairman of the Audit Committee, and $10,000 for his service as a member of the Compensation Committee. Mr. Newhall received a $50,000 annual Board retainer, a $35,000 retainer for his service as Chairman of the Board, $12,000 for his service as Chairman of the Governance and Nominating Committee, and $10,000 for his service as a member of the Compensation Committee. Dr. Siebert received a $50,000 annual Board retainer, $20,000 for his service as Chairman of the Compensation Committee, $12,500 for his service as a member of the Audit Committee, and $10,000 for his service as a member of the Science Committee. (6) Dr. Barlow received a $50,000 annual Board retainer, $20,000 for her service as Chairman of the Science Committee, and $6,000 for her service as a member of the Governance and Nominating Committee. (7) Ms. Sensenig received a $50,000 annual Board retainer and $12,500 for her service as a member of the Audit Committee.