DEF 14A of Vanda Pharmaceuticals Inc., Apr 25, 2025

DEF 14A of Vanda Pharmaceuticals Inc.

Filed Apr 25, 2025 · FY20240001628280-25-019987

Open on EDGAR

  1. What happens if a director nominee is unable to stand for election?

    What happens if a director nominee is unable to stand for election? If a nominee is unable to stand for election, our Board may either: •reduce the number of directors that serve on the Board; or •designate a substitute nominee. If our Board designates a substitute nominee, shares represented by proxies voted for the nominee who is unable to stand for election will be voted for the substitute nominee.

  2. ELECTION OF DIRECTORS

    ELECTION OF DIRECTORS Under our Amended and Restated Certificate of Incorporation, our Board is divided into three classes as nearly equal in size as possible. The members of each class are elected to serve a three-year term with the term of office of each of the three classes ending in successive years. Pursuant to the Bylaws, the Board has fixed the current number of directors at six. Stephen Ray Mitchell, M.D. and Tage Honoré, Ph.D., D.Sc. are the two Class I directors whose terms expire at the Annual Meeting. Stephen Ray Mitchell, M.D. and Tage Honoré, Ph.D., D.Sc. have been nominated for election by our Board to serve until the 2028 annual meeting of stockholders. If elected, each director will hold office until his successor is elected (or until his earlier death, resignation or removal). Directors are elected by a majority of the votes cast at the Annual Meeting. Pursuant to the Bylaws, a majority of votes cast means that the number of votes cast “FOR” a director’s election exceeds 50% of the votes cast with respect to that director’s election. For this purpose, votes cast shall exclude abstentions and broker non-votes. Because the election of directors is not a matter on which a bank, broker or other nominee is generally empowered to vote, broker non-votes are expected to exist in connection with this matter. Shares represented by signed proxy cards will be voted on Proposal 1 “FOR” the election of Stephen Ray Mitchell, M.D. and Tage Honoré, Ph.D., D.Sc. to the Board at the Annual Meeting, unless otherwise marked on the proxy card. If any Vanda director nominee is unable to serve or for good cause will not serve, shares represented by proxy will be voted for the election of a substitute nominee designated by our current Board, unless the Board chooses to reduce its size. Stephen Ray Mitchell, M.D. and Tage Honoré, Ph.D., D.Sc., Vanda’s director nominees, have agreed to serve as directors of the Board if elected. We have no reason to believe that either Stephen Ray Mitchell, M.D. or Tage Honoré, Ph.D., D.Sc. will be unable to serve if elected.

  3. Majority Vote Resignation Policy

    Majority Vote Resignation Policy Pursuant to our Amended and Restated Corporate Governance Guidelines, Stephen Ray Mitchell, M.D. and Tage Honoré, Ph.D., D.Sc. have each tendered an irrevocable, conditional resignation that will be effective only upon both (i) the failure to receive the required vote at the Annual Meeting for reelection and (ii) our Board’s acceptance of such resignation. If either Stephen Ray Mitchell, M.D. or Tage Honoré, Ph.D., D.Sc. fails to receive a majority of the vote cast for reelection, the Nominating/Corporate Governance Committee of our Board will act on an expedited basis to determine whether to accept such director’s resignation, and it will submit its recommendation for prompt consideration by our Board. The Nominating/Corporate Governance Committee and the Board may consider any factors they deem relevant in deciding whether to accept a director’s resignation.

  4. Nominees for Election as the Class I Directors at the Annual Meeting

    Nominees for Election as the Class I Directors at the Annual Meeting This year’s nominees for election to the Board as our Class I directors are standing for election to serve for a term of three years expiring at the 2028 annual meeting of stockholders. The age of the nominees as of the Record Date is set forth below.

  5. Nominees for Election as the Class I Directors at the Annual Meeting

    | Name | Age | Positions and Offices Held with Company | Director Since | | Stephen Ray Mitchell, M.D. | 73 | Director | 2020 | | Tage Honoré, Ph.D., D.Sc. | 74 | Director | 2023 |

  6. Nominees for Election as the Class I Directors at the Annual Meeting

    The following is additional information about the nominees as of the date of this Proxy Statement, including their business experience, public company director positions held currently or at any time during the last five years and the experiences, qualifications, attributes or skills that led the Nominating/Corporate Governance Committee and the Board to determine that the nominees should serve as two of our directors. Stephen Ray Mitchell, M.D. has served on the Board since February 2020. Dr. Mitchell currently serves as the Joseph Butenas Professor and Dean Emeritus for Medical Education at Georgetown University School of Medicine, a position he has held since August 2002. Prior to that, Dr. Mitchell served as Associate Dean for Clinical Curriculum at Georgetown University School of Medicine from 1998 to 2000 and as Senior Associate Dean for Academic Affairs from 2000 until 2002. Previously, Dr. Mitchell served as Program Director for Internal Medicine at Georgetown University School of Medicine from 1992 until 1997, and as Founding Program Director Med-Peds at Georgetown from 1995 until 1999. He served as a member of the Liaison Committee for Medical Education (the “LCME”), the national accrediting body for Medical Schools in the United States and Canada, between 2013 and 2019. Since 2018, he has held the role of Chair of the LCME, where he chaired the Standards subcommittee, and now serves as a member of the Governing Council of that body. Dr. Mitchell is a veteran of the United States Air Force and has served as author and invited external reviewer on Studies by the Institute of Medicine on Chronic Multi-symptoms illness in Gulf War veterans. Dr. Mitchell received his B.A. in Psychology and his M.D. from the University of North Carolina at Chapel Hill, and his Global Executive M.B.A. from The McDonough School of Business at Georgetown University. We believe that Dr. Mitchell’s qualifications to sit on the Board include his extensive experience in the medical field and leadership positions at leading medical institutions. Other public directorships held by Dr. Mitchell within the past five years: None. Tage Honoré, Ph.D., D.Sc., has served on the Board since March 2023. Dr. Honoré currently serves as President of Aestus Partners, LLC, a business advisory firm focused on the life sciences sector, where he has served since founding the firm in November 2004. Dr. Honoré is also currently serving as the Head of Pharmaceutical Development at Avicenna Biosciences, Inc., a private biotechnology company, where he has served since 2020. Previously, Dr. Honoré served in various executive positions and advisory roles with a number of public and private pharmaceutical and biotechnology companies, including Amarna Bio Inc., Avicenna Biosciences Inc., Alterna Therapeutics Inc., Mitochondria in Motion, Inc., MAA Laboratories, Inc., Dep-Xplora Aps, Zthera LLC, Aestus Therapeutics Inc., Purdue Pharma L.P., Novartis AG and Novo Nordisk A/S. Dr. Honoré also serves on the advisory boards of several pharmaceutical and life sciences companies and organizations including Neuropathix, Inc., Evrys Bio, LLC and the Charcot-Marie-Tooth Association. Dr. Honoré founded and was the President and CEO of Aestus Therapeutics Inc. from 2006 to 2015. Aestus Therapeutics Inc. filed a motion for bankruptcy under Chapter 7 of the U.S. Bankruptcy Code in the U.S. Bankruptcy Court, District of New Jersey (Trenton) on November 17, 2015. The trustee issued a final report in February 2019. Dr. Honoré received his Master of Science degree in Pharmaceutical Science, Doctor of Philosophy degree in Medicinal Chemistry and Doctor of Science degree in Neuropharmacology from the University of Copenhagen. We believe that Dr. Honoré’s qualifications to sit on the Board include his industry leadership experience and his well-established scientific expertise across a diverse range of therapeutic areas. Other public directorships held by Dr. Honoré within the past five years: None. YOUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE “FOR” THE ELECTION OF EACH OF STEPHEN RAY MITCHELL, M.D. AND TAGE HONORÉ, PH.D., D.SC.

  7. Continuing Directors Not Standing for Election

    Continuing Directors Not Standing for Election Certain information about those directors whose terms do not expire at the Annual Meeting is furnished below, including their business experience, public company director positions held currently or at any time during the last five years and the experiences, qualifications, attributes or skills that led the Nominating/Corporate Governance Committee and the Board to determine that the directors should serve as one of our directors. The age of each director as of the Record Date is set forth below.

  8. Continuing Directors Not Standing for Election

    | Name | Age | Positions and Offices Held with Company | Director Since | | Richard W. Dugan | 83 | Lead Independent Director | 2005 | | Anne Sempowski Ward | 53 | Director | 2019 | | Mihael H. Polymeropoulos, M.D. | 65 | President, Chief Executive Officer and Chairman of the Board | 2003 | | Phaedra S. Chrousos | 45 | Director | 2019 |

  9. Class II Directors (Terms Expire in 2026)

    Class II Directors (Terms Expire in 2026) Richard W. Dugan has served on the Board since December 2005. Mr. Dugan served as a Partner with Ernst & Young, LLP from 1976 to September 2002, where he served in a variety of managing and senior partner positions, including Mid-Atlantic Area Senior Partner from 2001 to 2002, Mid-Atlantic Area Managing Partner from 1989 to 2001 and Pittsburgh Office Managing Partner from 1979 to 1989. Mr. Dugan retired from Ernst & Young, LLP in September 2002. Mr. Dugan previously served as a director of two publicly traded pharmaceutical companies, Middlebrook Pharmaceuticals, Inc. and Critical Therapeutics, Inc., and a privately owned pharmaceutical company, Xanthus Pharmaceuticals. Mr. Dugan holds a B.S.B.A. from Pennsylvania State University. We believe that Mr. Dugan’s qualifications to sit on the Board include his more than 25 years as a Partner with Ernst & Young, LLP, his long history with the Company, his status as a financial expert under The Sarbanes-Oxley Act of 2002 and his experience on other public company boards. Other public directorships held by Mr. Dugan within the past five years: None. Anne Sempowski Ward has served on the Board since October 2019. Ms. Ward currently serves as Chair at CURiO Brands, a consumer goods company that manufactures and sells personal care and home fragrance products. Previously, Ms. Ward served as the Chief Executive Officer of CURiO from January 2016 to July 2024 and of The Thymes, LLC from April 2012 until January 2016 when it merged with DPM Fragrance to become CURiO Brands. In July 2008, Ms. Ward co-founded The FORWARD Group, a consulting firm focused on growth strategies for mid-sized companies and key executives, and served as its Chief Executive Officer until April 2012. Previously, from October 2007 until July 2010, Ms. Ward was with Johnson Publishing Company, serving as the President and Chief Operating Officer of its Ebony, Jet and Fashion Fair Cosmetics business units. Prior to that, Ms. Ward served as an Assistant Vice President for The Coca-Cola Company from September 2006 until September 2007 and held various positions with Procter & Gamble between May 1994 and August 2006, most recently as Associate Marketing Director, Beauty. Ms. Ward currently also serves on the board of directors of SPS Commerce Inc. Ms. Ward holds a B.S. in Mechanical Engineering and Material Science from Duke University and an M.B.A. from Duke University’s Fuqua School of Business. We believe that Ms. Ward’s qualifications to sit on the Board include her executive experience with consumer goods companies and her extensive marketing and brand management for a number of companies across multiple sectors. Other public directorships held by Ms. Ward within the past five years: Spectrum Brand Holdings, Inc. (until August 2021) and SPS Commerce, Inc.

  10. Class III Directors (Terms Expire in 2027)

    Class III Directors (Terms Expire in 2027) Mihael H. Polymeropoulos, M.D. co-founded Vanda and has served as President, Chief Executive Officer and Chairman of the Board since June 2021, and as President, Chief Executive Officer and Director from May 2003 until June 2021. Prior to founding Vanda, Dr. Polymeropoulos was Vice President and Head of the Pharmacogenetics Department at Novartis AG (“Novartis”) from 1998 to 2003. Prior to his tenure at Novartis, he served as Chief of the Gene Mapping Section, Laboratory of Genetic Disease Research, National Human Genome Research Institute, from 1992 to 1998. Dr. Polymeropoulos is the co-founder of the Integrated Molecular Analysis of Genome Expression Consortium. Dr. Polymeropoulos holds a degree in Medicine from the University of Patras. We believe that Dr. Polymeropoulos’ qualifications to sit on the Board include his executive experience at Novartis, his expertise in the fields of psychiatry and pharmacogenetics, his extensive knowledge of central nervous system disorders and his long history with the Company. Other public directorships held by Dr. Polymeropoulos within the past five years: None. Phaedra S. Chrousos has served on the Board since October 2019. Ms. Chrousos currently serves as the Chief Operating Officer of Space Leasing International, a wholly owned subsidiary of the Libra Group, focused on owning and leasing aerospace assets. Ms. Chrousos previously served as the Chief Strategy Officer of the Libra Group, a diverse, international business group that is active in 35 countries and focused on six business areas: aviation, energy, hospitality, real estate, shipping and diversified investments, from November 2018 to March 2025, and as the Libra Group’s Chief Innovation Officer from October 2016 to October 2018. Prior to joining the Libra Group, Ms. Chrousos served as a political appointee for the Obama Administration from June 2014 to July 2016 in various roles, including as an Associate Administrator for the General Services Administration and Founding Commissioner of the Technology Transformation Service at the General Services Administration. Prior to entering public service, Ms. Chrousos co-founded HealthLeap, a health tech company that reimagined the way doctors and patients communicate. HealthLeap was acquired by Vitals.com 10 months after its launch. Ms. Chrousos served as HealthLeap’s President from September 2009 to December 2010 and as Vitals.com’s Vice President responsible for HealthLeap from December 2010 to November 2011. She also has several years of consulting experience with The Boston Consulting Group and The World Bank. Ms. Chrousos sits on several non-profit boards, including that of a maternal mental health foundation and The Beeck Center for Social Impact and Innovation at Georgetown University. Ms. Chrousos also sits on the advisory boards of several ventures and funds that sit at the intersection between technology and the government. Ms. Chrousos was twice named one of the Federal Government’s ‘50 Women in Technology’ by FedScoop and one of Greece’s ‘40 under 40’ by Fortune Magazine. Ms. Chrousos holds a B.A. from Georgetown University, an M.S.C. from The London School of Economics and Political Science, and an M.B.A. from Columbia Business School. We believe that Ms. Chrousos’ qualifications to sit on the Board include her consumer healthcare experience and entrepreneurship, extensive executive experience in a variety of industries and her leadership experience within the federal government. Other public directorships held by Ms. Chrousos within the past five years: None.

  11. CORPORATE GOVERNANCE

    CORPORATE GOVERNANCE

  12. Independence of the Board

    Independence of the Board As required under The Nasdaq Stock Market (“Nasdaq”) listing standards, a majority of the members of a listed company’s board of directors must qualify as “independent,” as affirmatively determined by the board of directors. Consistent with these regulations, after review of all relevant transactions or relationships between each director, or any of her or his family members, and the Company, its senior management and its independent registered public accounting firm, the Board has determined that each of Phaedra S. Chrousos, Richard W. Dugan, Tage Honoré, Stephen Ray Mitchell, and Anne Sempowski Ward are independent directors within the meaning of applicable federal securities law and Nasdaq listing standards.

  13. Information Regarding the Board and its Committees

    Information Regarding the Board and its Committees As required under Nasdaq listing standards, our independent directors meet in regularly scheduled executive sessions at which none of our officers or other employees are present. Mr. Dugan, our Lead Independent Director, presides over these executive sessions. The Board has an Audit Committee, a Compensation Committee and a Nominating/Corporate Governance Committee. The following table provides membership, as of December 31, 2024, and meeting information for each of the Board committees during 2024:

  14. Information Regarding the Board and its Committees

    | Committee | Chair | Members | Number of Committee Meetings in 2024 | | Audit Committee | Richard W. Dugan | Phaedra S. Chrousos Anne Sempowski Ward | 10 | | Compensation Committee | Anne Sempowski Ward | Richard W. Dugan Tage Honoré | 6 | | Nominating/Corporate Governance Committee | Phaedra S. Chrousos | Stephen Ray Mitchell Tage Honoré | 6 |

  15. Information Regarding the Board and its Committees

    Below is a description of each committee of the Board. The Board has determined that each member of the Audit, Compensation and Nominating/Corporate Governance Committees meets the applicable rules and regulations regarding “independence” and that each such member is free of any relationship that would interfere with her or his individual exercise of independent judgment with regard to the Company.

  16. Compensation of Directors

    Compensation of Directors Our Board initially adopted a non-employee director compensation program in connection with our initial public offering and subsequently amended and restated such policy in June 2017 and again in April 2022. In June 2024, our board further amended and restated our non-employee director compensation program, based on analysis performed by Willis Towers Watson of the non-employee director compensation programs of our peer group companies. The amended and restated non-employee director compensation program also changed the form of non-employee director equity compensation from a mix of stock options and Restricted Stock Units (“RSUs”) to all RSUs, consistent with the change that our Compensation Committee adopted in February of 2024 with respect to the equity compensation of our employees, including our executive officers. Under our non-employee director compensation program, our non-employee directors receive a combination of annual cash retainers and equity awards, in addition to the equity awards that they receive upon their initial election to the Board. The annual and initial equity awards consist of RSUs having a fixed grant date value, with the number of shares to be determined based on such value calculated in accordance with ASC 718. The table below sets forth the provisions of our current non-employee director compensation program.

  17. Compensation of Directors

    | Term | Compensation | | Annual Cash Retainer(1) | $50,000 | | Lead Independent Director/Chairman(1)(2) | Additional annual retainer of $30,000 | | Chair of Audit Committee(1) | Additional annual retainer of $25,000 | | Chair of Compensation Committee(1) | Additional annual retainer of $20,000 | | Chair of Nominating/Corporate Governance Committee(1) | Additional annual retainer of $15,000 | | Non-Chair Member of Audit Committee(1) | Additional annual retainer of $15,000 | | Non-Chair Member of Compensation Committee(1) | Additional annual retainer of $10,000 | | Non-Chair Member of Nominating/Corporate Governance Committee(1) | Additional annual retainer of $7,500 | | Initial Equity Grant(3) | RSUs with a fixed grant date value equal to $390,000 | | Annual Equity Grant(4) | RSUs with a fixed grant date value equal to $260,000, to be awarded following each annual meeting of stockholders |

  18. Compensation of Directors

    (1)All annual cash retainer fees are paid in four quarterly payments. (2)Only applicable if the Chairman is a non-employee director. (3)RSU award vests in four equal annual installments beginning on the first anniversary of the date of grant, provided the director has provided continuous service through each annual vesting date. (4)Each option and RSU award vests with respect to 100% of the underlying shares on the one-year anniversary of the date of grant, provided the director has provided continuous service through such date. RSU grants are subject to the terms of our Amended and Restated 2016 Equity Incentive Plan and the governing award agreement. Each RSU granted under our current non-employee director compensation program that is not fully vested will become fully vested upon a change in control of the Company or if the non-employee director’s service terminates due to death. We currently have a policy to reimburse our non-employee directors for travel, lodging and other reasonable expenses incurred in connection with their attendance at board and committee meetings.

  19. 2024 Director Compensation

    2024 Director Compensation The table below shows the compensation earned by each of our non-employee directors for the year ended December 31, 2024. Mihael H. Polymeropoulos, M.D., our President, Chief Executive Officer and Chairman of the Board, receives no additional compensation for his service on the Board. Please see the 2024 Summary Compensation Table for the compensation received by Dr. Polymeropoulos with respect to 2024.

  20. 2024 Director Compensation

    | Name | Fees Earned or Paid in Cash | RSU Awards(1) | Option Awards(1) | Total | | Richard W. Dugan | $111,868 | $112,499 | $112,497 | $336,864 | | Anne Sempowski Ward | 81,868 | 112,499 | 112,497 | 306,864 | | Phaedra S. Chrousos | 77,912 | 112,499 | 112,497 | 302,908 | | Stephen Ray Mitchell | 57,500 | 112,499 | 112,497 | 282,496 | | Tage Honoré | 60,037 | 112,499 | 112,497 | 285,033 |

  21. 2024 Director Compensation

    (1)Reflects the aggregate grant date fair value of RSUs or options granted during the fiscal year calculated in accordance with FASB ASC Topic 718. For a discussion of valuation assumptions, see Note 2 and Note 13 to our audited consolidated financial statements included in the Annual Report. Our directors will not realize the estimated value of these awards until the awards are vested or, with respect to option awards, exercised and the underlying shares are sold. The following table describes the RSUs and options that we have granted to our non-employee directors that were outstanding as of December 31, 2024:

  22. 2024 Director Compensation

    | Name | Aggregate Number of RSUs Outstanding | Aggregate Number of Options Outstanding | | Richard W. Dugan | 20,529(1) | 176,245(2) | | Anne Sempowski Ward | 20,529(1) | 151,245(3) | | Phaedra S. Chrousos | 21,887(1) | 163,869(4) | | Stephen Ray Mitchell | 20,529(1) | 128,121(5) | | Tage Honoré | 40,335(1) | 122,814(6) |

  23. 2024 Director Compensation

    (1)No shares underlying the RSU were vested as of December 31, 2024. (2)138,667 options were vested as of December 31, 2024. (3)113,667 options were vested as of December 31, 2024. (4)123,667 options were vested as of December 31, 2024.

  24. Compensation Program Philosophy

    Compensation Program Philosophy Vanda’s purpose is to work together for the common goal of developing and commercializing innovative therapies that address high unmet medical needs and improve the lives of patients. To successfully achieve this, our executive compensation program needs to attract, retain and motivate superior executive talent with the skills and experience to successfully execute our business strategy. Our executive compensation program is designed with the following principles in mind: •Pay for performance – Provide competitive incentives that reward the achievement of operational and financial performance goals that directly correlate to the enhancement of stockholder value; •Stockholder alignment – Align the interests of our executive officers with those of our stockholders by rewarding performance that meets or exceeds established goals and awarding compensation in the form of equity; and •Strategic alignment – Align our executive officers’ behaviors and compensation with the short- and long-term strategic goals and objectives approved by the Board. To achieve these objectives, a significant portion of each NEO’s compensation is tied to the achievement of corporate financial and operational goals, with long-term compensation delivered in the form of equity awards that vest over time. The majority of each NEO’s equity compensation has historically been delivered in the form of stock options, which are inherently performance-based, requiring the delivery of stock price appreciation following the grant date in order for the awards to have value, as well as RSUs. Beginning in February 2024, the Compensation Committee started granting all equity awards to our executives in the form of RSUs, in order to continue to align executives’ long-term incentives with the long-term interests of our stockholders. The RSUs are intended to enhance retention of executives through four-year vesting cycles and to provide executive officers with a long-term incentive to manage the Company from the perspective of an owner. We believe that our ‘working together for a common goal’ approach is reflected in our executive compensation framework, which we apply consistently across our executive officer team.

  25. Compensation Program Philosophy

    | Element and Purpose | Key Features | | Base Salary Attract and retain officers in a competitive environment and reward individual performance | •Fixed cash compensation •Reviewed annually •Base salary takes into account factors that may include, but are not limited to: responsibilities of the position, prior relevant qualifications, background and experiences, performance, and market data •Set with reference to the median of relevant market data | | Cash Incentive Awards Focus officers on achieving key clinical, regulatory, commercial, operational, strategic and/or financial objectives | •Variable cash compensation •Performance assessed over a one-year time horizon •Target opportunity set by role, ranging from 45% to 80% of salary •Maximum opportunity capped at 150% of target •Opportunities set with reference to the median of relevant market data •Quantitative and qualitative objectives are set annually •2024 objectives spanned five categories: Commercial Revenue (35%), Intellectual Property & Regulatory Innovation (10%), R&D and Commercial Support (40%), Business Development (10%), and People, Capabilities and Culture (5%) •Subject to clawback policy | | Equity Incentive Awards Align officers’ interests with those of our stockholders and retention | •Annual awards are typically granted in the first quarter in connection with the annual compensation review for the prior year and take into account factors that may include, but are not limited to: responsibilities of the position, prior relevant qualifications, background and experiences, performance, and market data •Set with reference to the median of relevant market data •Awards now granted solely as RSUs to enhance retention and to align executives’ long-term incentives with the long-term interests of our stockholders •RSUs vest in four equal annual installments subject to continuous service •Subject to clawback policy •Equity awards also granted on commencement of employment |

  26. Use of Independent Compensation Consultant

    Use of Independent Compensation Consultant Under the authority set forth in its charter, our Compensation Committee has engaged Willis Towers Watson, a consulting firm specializing in executive compensation, as its independent compensation consultant. In connection with our Compensation Committee’s 2024 NEO compensation decisions, Willis Towers Watson reviewed and advised on all principal aspects of our executive compensation program and performed the following services: •Provided recommendations regarding the composition of the Company’s peer group; •Conducted a competitive assessment of the Company’s then current executive compensation arrangements, including analyzing peer group proxy statements, compensation survey data, and other publicly available data; and •Reviewed and advised on total compensation, including base salaries, and short- and long-term incentives, including equity awards. The Compensation Committee has assessed the independence of Willis Towers Watson, the Compensation Committee’s compensation consultant, and concluded that no conflict of interest exists that would prevent Willis Towers Watson from serving as an independent consultant to the Compensation Committee.

  27. Peer Group

    Peer Group The Compensation Committee annually selects a group of peer companies to understand the competitive positioning of executive compensation at Vanda relative to the market. Companies are selected to ensure they are relevant for executive compensation comparisons based on their science/business model (innovation and commercialization), revenue, market capitalization, and employee headcount. Given the fast-paced nature of our industry, the peer group is reviewed annually and adjusted as needed to ensure continued relevance. Based on analysis and recommendations from Willis Towers Watson in September 2023, the Compensation Committee considered the following parameters for life sciences companies when evaluating the Vanda compensation peer group for 2024:

  28. Peer Group

    | •Publicly traded life sciences company •Market capitalization between $175M - $1.1B •Revenue between $135M - $810M | •Research & Development expense > $50M •Headcount between 145 – 870 •Pipeline profile |

  29. Peer Group

    Informed by these parameters, one company was identified for removal, resulting in an aggregate peer group of 19 companies.

  30. Peer Group

    | 2024 Compensation Peer Group | Retained peer companies | | | | •ACADIA Pharmaceuticals •Agios Pharmaceuticals •Amarin Corporation •Amicus Therapeutics •Coherus BioSciences •Corcept Therapeutics •Eagle Pharmaceuticals •Enanta Pharmaceuticals •FibroGen •Intercept Pharmaceuticals | •Intra-Cellular Therapies •Ironwood Pharmaceuticals •Lexicon Pharmaceuticals •Omeros Corporation •Pacira BioSciences •PTC Therapeutics •Puma Biotechnology •Supernus Pharmaceuticals •Travere Therapeutics | | Former peer company/reason removed | •Clovis Oncology, which filed for bankruptcy | |

  31. Peer Group

    Based on analysis and recommendations from Willis Towers Watson in September 2024, the Compensation Committee considered the following parameters for life sciences companies when evaluating the Vanda compensation peer group for 2025:

  32. Peer Group

    | •Publicly traded life sciences company •Market capitalization between $155M - $945M •Revenue between $95M - $580M | •Research & Development expense > $50M •Headcount between 180 – 1,065 •Pipeline profile |

  33. Peer Group

    Informed by these parameters, three companies were identified for removal, and one additional company was identified for inclusion, resulting in an aggregate peer group of 17 companies. The one newly added company was deemed sufficiently relevant from both a size and operations standpoint, and its inclusion resulted in Vanda remaining ranked near the median and the 50th percentile in terms of revenue scope.

  34. Peer Group

    | 2025 Compensation Peer Group | Retained peer companies | | Newly added peer companies | | | •ACADIA Pharmaceuticals •Agios Pharmaceuticals •Amarin Corporation •Amicus Therapeutics •Coherus BioSciences •Corcept Therapeutics •Enanta Pharmaceuticals •FibroGen | •Intra-Cellular Therapies •Ironwood Pharmaceuticals •Lexicon Pharmaceuticals •Omeros Corporation •Pacira BioSciences •Puma Biotechnology •Supernus Pharmaceuticals •Travere Therapeuticals | •Sage Therapeutics | | Former peer companies/reason removed | •Intercept Pharmaceuticals, acquired, no longer listed •Eagle Pharmaceuticals, only meets one inclusion criterion •PTC Therapeutics, exceeds the market capitalization and revenue ranges | | |

  35. Grant Practices Specific to Stock Options

    Grant Practices Specific to Stock Options We do not currently grant stock options as part of our equity compensation programs. If stock options were to be granted in the future, the Company would not grant such options in anticipation of the release of material nonpublic information that is likely to result in changes to the price of our common stock. In addition, we generally do not grant stock options (i) during trading blackout periods established under our Insider Trading Policy, or (ii) at any time during the period beginning on the 16th day of the last month of each fiscal quarter and ending after the second full trading day following the release of the Company’s earnings news for that fiscal quarter. During fiscal year 2024, (i) none of our NEOs were awarded stock options with an effective grant date during any period beginning four business days before the filing or furnishing of a Form 10-Q, Form 10-K, or Form 8-K that disclosed material nonpublic information, and ending one business day after the filing or furnishing of such reports, and (ii) we did not time the disclosure of material nonpublic information for the purpose of affecting the value of executive compensation.

  36. Base Salary

    Base Salary Base salaries are set at a level we believe enables us to hire and retain individuals in a competitive environment, and rewards satisfactory individual performance and contribution to our overall business goals. The annual base salaries established for our executive officers are determined based on consideration of factors including, but not limited to, the responsibilities of the position, prior relevant qualifications, background and experiences, performance considerations, market considerations and other pertinent inputs. When referencing market data, the Compensation Committee considers an executive’s position relative to the median for comparable roles in our compensation peer group. Of note, Mr. Moran’s base salary was increased in 2024 to better align with the median of our peers. Based on these considerations and our compensation philosophy, and taking into account persistent inflation, the Compensation Committee approved the following increases for the 2024 base salaries, effective as of January 1, 2024, and for the 2025 base salaries, effective as of January 1, 2025:

  37. Cash Incentive Awards

    Cash Incentive Awards Annual cash incentive awards can be earned based upon the achievement of corporate and individual performance goals established by our Compensation Committee. These cash incentive awards are designed to focus our NEOs on achieving key clinical, regulatory, commercial, operational, strategic and/or financial objectives during the year. The target award, expressed as a percentage of salary, is reviewed annually by the Compensation Committee.

  38. Cash Incentive Awards

    | Named Executive Officer | 2023 Target Award % | 2024 Target Award % | 2025 Target Award % | | Mihael H. Polymeropoulos, M.D. | 80% | 80% | 80% | | Kevin Moran | 45% | 45% | 45% | | Gunther Birznieks | 45% | 45% | 45% | | Joakim Wijkstrom | 45% | 45% | 45% | | Timothy Williams | 45% | 45% | 45% |

  39. Cash Incentive Awards

    Following the conclusion of each fiscal year, our Compensation Committee evaluates the performance of each of our NEOs with respect to the attainment of their individual objectives as well as the Company’s corporate objectives to determine the amount of their cash incentive awards for the year. The actual amount awarded is determined at the discretion of our Compensation Committee based on the performance of the Company and each NEO. The Compensation Committee reserves the right to make subjective assessments of executive performance and to separately reward performance beyond established individual or corporate goals and targets, and to award a smaller or larger bonus or no bonus at all. The 2024 corporate objectives and relative weightings were approved by the Board and Compensation Committee and were used to assess the overall 2024 performance.

  40. 2024 Corporate Goals

    For purposes of measuring the levels of achievement for the 2024 goals, the quantitative objectives, consisting of net product sales for each of Fanapt®, HETLIOZ® and PONVORY®, which accounted for 35% of the total weighting, were measured using minimum revenue thresholds (90%), maximum revenue thresholds (110%) and midpoint targets. The determination of achievement for these quantitative commercial objectives resulted in an achievement level of 107% and a corresponding payout at 149% of target. The qualitative objectives, consisting of R&D and commercial support activities, business development, human resource activities and other goals, which accounted for 65% of the total weighting, were measured using a number of different criteria, including clinical study metrics, regulatory filing timelines, expansion of our patent portfolio, the commercialization of PONVORY®, tripling the size of the Fanapt® sales force, launching Fanapt® for bipolar I disorder, and securing key hires, among others, resulting in an overall achievement level of 116%. The combined measurement of achievement versus the 2024 corporate goals resulted in an overall award level equal to 127% of target for each of our NEOs. This award level compares to a 2023 award level of 137%, derived from 160% achievement of quantitative objectives and 114% achievement of qualitative objectives. In February 2025, based on the Company’s 2024 performance and the accomplishments of the Company and our NEOs during the year, our Compensation Committee awarded our NEOs the following cash incentive awards:

  41. Equity Incentive Compensation

    Equity Incentive Compensation Our Compensation Committee believes that equity compensation awards help align the interests of our NEOs with those of our stockholders. In awarding equity compensation, we seek to provide both an incentive to increase the value of the Company and our stock price in a sustainable, long-term manner, while enhancing the retention power of our executive compensation. Beginning in February 2024, the Compensation Committee started granting all equity awards to our executives in the form of RSUs in order to continue to align executives’ long-term incentives with the long-term interests of our stockholders. As with other components of compensation, our Compensation Committee generally considers multiple factors in determining the equity compensation of our executive team, including, but not limited to, the responsibilities of the position, prior relevant qualifications, background, experiences, performance considerations, market data, and other pertinent inputs. When referencing market data, the Compensation Committee considers an executive’s position relative to the median for comparable roles in our compensation peer group. Awards are generally made on two occasions: •Commencement of employment: Generally, we have granted equity awards to our NEOs upon commencement of their employment with the Company. The size of these initial equity awards is negotiated in connection with the NEO’s employment agreement and generally vest over a four year period. The intent of the initial grants is to create a meaningful opportunity to acquire a proprietary interest in the Company and to align the NEO’s interest with the long-term interests of our stockholders. •Annual compensation: The Compensation Committee also considers equity awards for our NEOs as part of their annual compensation package. These awards also vest over four years and help ensure a meaningful incentive to remain at Vanda and to enhance stockholder value sustainably over the long-term. Awards are determined as part of the annual compensation review, typically in February, informed by performance in the prior fiscal year and the factors noted above. In February 2025, our Compensation Committee granted RSU awards to our NEOs as set forth in the table below.

  42. Equity Incentive Compensation

    | | Granted in February 2025 (for 2024 Compensation) | | Named Executive Officer | Number of Shares Underlying RSU Awards | | Mihael H. Polymeropoulos, M.D. | 450,000 | | Kevin Moran | 125,000 | | Gunther Birznieks | 125,000 | | Joakim Wijkstrom | 125,000 | | Timothy Williams | 125,000 |

  43. Severance and Change-in-Control Benefits

    Severance and Change-in-Control Benefits Each of our NEOs has a provision in his employment agreement with the Company that provides for certain severance benefits in the event of termination without cause, as well as a provision in his employment agreement or plan-based equity award agreements that provides for the acceleration of certain of his then unvested options and RSUs in the event of termination without cause following a change-in-control of the Company. In addition, Dr. Polymeropoulos is entitled to certain tax benefits upon a change-in-control of the Company pursuant to a tax indemnity agreement he entered into with the Company in 2007 and amended in 2010. These severance and acceleration provisions are described in the “Employment Agreements” section below, and certain estimates of these severance and change-in-control benefits are provided in “Estimated Payments and Benefits Upon Termination” below. No material changes were made to these severance benefits in 2024.

  44. 2024 Summary Compensation Table

    2024 Summary Compensation Table The following table summarizes the compensation that we paid to our NEOs for the years ended December 31, 2024, 2023 and 2022. We refer to these executive officers in this Proxy Statement as our NEOs.

  45. 2024 Summary Compensation Table

    | Name and Principal Position | Year | Salary ($)(1) | Bonus ($) | Stock Awards ($)(2) | Option Awards ($)(2) | Non-Equity Incentive Plan Compensation ($)(3) | All Other Compensation ($)(4) | Total ($) | | Mihael H. Polymeropoulos, M.D. President, Chief Executive Officer and Chairman of the Board | 2024 | $933,000 | $— | $1,971,000 | $— | $947,928 | $44,313 | $3,896,241 | | | 2023 | 897,000 | — | 810,750 | 988,625 | 983,112 | 40,728 | 3,720,215 | | | 2022 | 815,140 | — | 1,306,400 | 1,451,340 | 658,633 | 37,897 | 4,269,410 | | Kevin Moran Senior Vice President, Chief Financial Officer and Treasurer | 2024 | 541,000 | — | 547,500 | — | 309,181 | 49,946 | 1,447,627 | | | 2023 | 477,000 | — | 230,535 | 278,613 | 294,071 | 44,465 | 1,324,684 | | | 2022 | 426,120 | — | 371,472 | 409,014 | 193,672 | 40,423 | 1,440,701 | | Gunther Birznieks Senior Vice President, Business Development | 2024 | 541,000 | — | 547,500 | — | 309,181 | 25,757 | 1,423,438 | | | 2023 | 520,000 | — | 230,535 | 278,613 | 320,580 | 23,280 | 1,373,008 | | | 2022 | 460,040 | — | 371,472 | 409,014 | 209,088 | 21,703 | 1,471,317 | | Joakim Wijkstrom Senior Vice President, Chief Marketing Officer | 2024 | 560,000 | — | 143,226 | — | 320,040 | 38,040 | 1,061,306 | | | 2023 | 560,000 | — | 230,535 | 278,613 | 252,000 | 34,330 | 1,355,478 | | | 2022 | 553,320 | — | 371,472 | 409,014 | 251,484 | 31,560 | 1,616,850 | | Timothy Williams Senior Vice President, General Counsel and Secretary | 2024 | 541,000 | — | 547,500 | — | 309,181 | 55,433 | 1,453,114 | | | 2023 | 520,000 | — | 230,535 | 278,613 | 320,580 | 50,074 | 1,399,802 | | | 2022 | 466,400 | — | 371,472 | 409,014 | 211,979 | 46,001 | 1,504,866 |

  46. 2024 Summary Compensation Table

    (1)The salary amount represents the salary earned from January 1 through December 31 of the applicable year. (2)Reflects the aggregate grant date fair value of stock awards and option awards granted with respect to the applicable year calculated in accordance with FASB ASC Topic 718. For a discussion of valuation assumptions, see Note 2 and Note 13 to our audited consolidated financial statements included in the Annual Report. Our NEOs will not realize the estimated value of these awards until these awards are vested and sold. (3)Represents amounts that were earned and accrued under our cash incentive bonus program for the applicable year that were paid in March of the following year. (4)Includes contributions made by the Company to match NEOs’ respective 401(k) elective plan contributions and amounts paid by the Company for group health and term life insurance premiums, disability premiums and parking expenses. For Dr. Polymeropoulos those respective amounts (i) for the year ended December 31, 2024 were: $10,350; $24,611; $1,884; $1,746; and $5,722. Amounts for the other NEOs were similar; variations related primarily to group health premiums.

  47. 2024 Grants of Plan-Based Awards

    2024 Grants of Plan-Based Awards The following table sets forth each plan-based award granted to the Company’s NEOs for the year ended December 31, 2024. The grants of RSU awards reported for 2024 include grants that occurred in February 2024 which related to compensation for the year ended December 31, 2023.

  48. 2024 Grants of Plan-Based Awards

    | | Estimated Future Payouts Under Non- Equity Incentive Plan Awards (1) | | | | All Other Stock Awards: Number of Shares of Stock or Units (#)(3) | Grant Date Fair Value of Stock and Option Awards ($)(4) | | Named Executive Officer | Grant Date | Threshold ($)(2) | Target ($) | Maximum ($) | | | | Mihael H. Polymeropoulos, M.D. | 2/16/2024 | — | $746,400 | $1,119,600 | 450,000 | $1,971,000 | | Kevin Moran | 2/16/2024 | — | 243,450 | 365,175 | 125,000 | 547,500 | | Gunther Birznieks | 2/16/2024 | — | 243,450 | 365,175 | 125,000 | 547,500 | | Joakim Wijkstrom | 2/16/2024 | — | 252,000 | 378,000 | 32,700 | 143,226 | | Timothy Williams | 2/16/2024 | — | 243,450 | 365,175 | 125,000 | 547,500 |

  49. 2024 Grants of Plan-Based Awards

    (1)Represents target cash bonuses under our 2024 cash incentive bonus program. (2)No threshold amount is included because the plan does not provide for a minimum non-zero payout amount. (3)Service-based RSU granted on February 16, 2024 vested with respect to 25% of the shares on March 1, 2025, with 25% of the shares vesting on March 1, 2026, 25% of the shares vesting on March 1, 2027 and 25% of the shares vesting on March 1, 2028, subject to continuous service through each vesting date. (4)Represents the fair value of each RSU as of the date it was granted in accordance with FASB ASC Topic 718. For a discussion of valuation assumptions, see Note 2 and Note 13 to our audited consolidated financial statements included in the Annual Report. These amounts do not represent the actual amounts paid to or realized by the NEO for these awards. All options and RSUs listed above may be subject to acceleration upon the occurrence of certain events per the terms of the NEO’s employment agreement as described under “Employment Agreements” below.

  50. Outstanding Equity Awards at 2024 Year-End

    Outstanding Equity Awards at 2024 Year-End The following table sets forth information regarding each unexercised option and unvested RSUs held by each of our NEOs as of December 31, 2024.

  51. Outstanding Equity Awards at 2024 Year-End

    | | | Option Awards | | | | Stock awards | | | Named Executive Officer | Date of Grant | Number of Securities Underlying Unexercised Options (#) Exercisable | Number of Securities Underlying Unexercised Options (#) Unexercisable | Option Exercise Price ($) | Option Expiration Date | Number of Shares or Units of Stock That Have Not Vested (#) | Market Value of Shares or Units of Stock That Have Not Vested ($)(1) | | Mihael H. Polymeropoulos, M.D. | 2/12/2016 | 175,000 | — | 7.94 | 2/11/2026 | | | | | 3/1/2017 | 275,000 | — | 14.50 | 2/28/2027 | | | | | 2/28/2018 | 140,000 | — | 18.85 | 2/27/2028 | | | | | 2/27/2019 | 140,000 | — | 20.62 | 2/26/2029 | | | | | 2/26/2020 | 140,000 | —(2) | 11.32 | 2/25/2030 | | | | | 2/24/2021 | 263,538 | 11,462(2) | 20.28 | 2/23/2031 | | | | | 2/28/2022 | 194,789 | 80,211(2) | 11.36 | 2/27/2032 | | | | | 2/16/2023 | 126,040 | 148,960(2) | 7.05 | 2/15/2033 | | | | | 2/24/2021 | | | | | 28,750(3) | 137,713 | | | 2/28/2022 | | | | | 57,500(4) | 275,425 | | | 2/16/2023 | | | | | 86,250(5) | 413,138 | | | 2/16/2024 | | | | | 450,000(6) | 2,155,500 | | Kevin Moran | 2/12/2016 | 6,750 | — | 7.94 | 2/11/2026 | | | | | 7/27/2020 | 90,000 | —(2) | 10.83 | 7/26/2030 | | | | | 2/24/2021 | 74,269 | 3,231(2) | 20.28 | 2/23/2031 | | | | | 2/28/2022 | 54,895 | 22,605(2) | 11.36 | 2/27/2032 | | | | | 2/16/2023 | 35,520 | 41,980(2) | 7.05 | 2/15/2033 | | | | | 2/24/2021 | | | | | 8,175(3) | 39,158 | | | 2/28/2022 | | | | | 16,350(4) | 78,317 | | | 2/16/2023 | | | | | 24,525(5) | 117,475 |

  52. Outstanding Equity Awards at 2024 Year-End

    | | | Option Awards | | | | Stock awards | | | Named Executive Officer | Date of Grant | Number of Securities Underlying Unexercised Options (#) Exercisable | Number of Securities Underlying Unexercised Options (#) Unexercisable | Option Exercise Price ($) | Option Expiration Date | Number of Shares or Units of Stock That Have Not Vested (#) | Market Value of Shares or Units of Stock That Have Not Vested ($)(1) | | | 2/16/2024 | | | | | 125,000(6) | 598,750 | | Gunther Birznieks | 2/12/2016 | 61,250 | — | 7.94 | 2/11/2026 | | | | | 3/1/2017 | 70,000 | — | 14.50 | 2/28/2027 | | | | | 2/28/2018 | 70,000 | — | 18.85 | 2/27/2028 | | | | | 2/27/2019 | 70,000 | — | 20.62 | 2/26/2029 | | | | | 2/26/2020 | 70,000 | —(2) | 11.32 | 2/25/2030 | | | | | 2/24/2021 | 74,269 | 3,231(2) | 20.28 | 2/23/2031 | | | | | 2/28/2022 | 54,895 | 22,605(2) | 11.36 | 2/27/2032 | | | | | 2/16/2023 | 35,520 | 41,980(2) | 7.05 | 2/15/2033 | | | | | 2/24/2021 | | | | | 8,175(3) | 39,158 | | | 2/28/2022 | | | | | 16,350(4) | 78,317 | | | 2/16/2023 | | | | | 24,525(5) | 117,475 | | | 2/16/2024 | | | | | 125,000(6) | 598,750 | | Joakim Wijkstrom | 8/19/2019 | 90,000 | — | 15.33 | 8/18/2029 | | | | | 2/26/2020 | 70,000 | —(2) | 11.32 | 2/25/2030 | | | | | 2/24/2021 | 58,649 | 2,551(2) | 20.28 | 2/23/2031 | | | | | 2/28/2022 | 54,895 | 22,605(2) | 11.36 | 2/27/2032 | | | | | 2/16/2023 | 35,520 | 41,980(2) | 7.05 | 2/15/2033 | | | | | 2/24/2021 | | | | | 6,450(3) | 30,896 | | | 2/28/2022 | | | | | 16,350(4) | 78,317 | | | 2/16/2023 | | | | | 24,525(5) | 117,475 | | | 2/16/2024 | | | | | 32,700(6) | 156,633 | | Timothy Williams | 8/13/2018 | 90,000 | — | 21.45 | 8/12/2028 | | | | | 2/27/2019 | 70,000 | — | 20.62 | 2/26/2029 | | | | | 2/26/2020 | 70,000 | —(2) | 11.32 | 2/25/2030 | | | | | 2/24/2021 | 74,269 | 3,231(2) | 20.28 | 2/23/2031 | | | | | 2/28/2022 | 54,895 | 22,605(2) | 11.36 | 2/27/2032 | | | | | 2/16/2023 | 35,520 | 41,980(2) | 7.05 | 2/15/2033 | | | | | 2/24/2021 | | | | | 8,175(3) | 39,158 | | | 2/28/2022 | | | | | 16,350(4) | 78,317 | | | 2/16/2023 | | | | | 24,525(5) | 117,475 | | | 2/16/2024 | | | | | 125,000(6) | 598,750 |

  53. Outstanding Equity Awards at 2024 Year-End

    (1)Based on a per share price of $4.79, which was the closing price per share of our common stock on the last trading day of the 2024 fiscal year (December 31, 2024). (2)Option vests with respect to 25% of the underlying shares when the NEO completes 12 months of continuous service following the date of grant, with the balance vesting in equal monthly installments over the next 36 months of continuous service thereafter. (3)Service-based RSU that vested with respect to 25% of the shares on March 1, 2022, 25% of the shares on March 1, 2023, 25% of the shares on March 1, 2024 and 25% of the shares on March 1, 2025, subject to continuous service through the vesting date. (4)Service-based RSU that vested with respect to 25% of the shares on March 1, 2023, 25% of the shares on March 1, 2024 and 25% of the shares on March 1, 2025, with 25% of the shares vesting on March 1, 2026, subject to continuous service through the vesting date. (5)Service-based RSU that vested with respect to 25% of the shares on March 1, 2024 and 25% of the shares on March 1, 2025, with 25% of the shares vesting on March 1, 2026 and 25% of the shares vesting on March 1, 2027, subject to continuous service through the vesting date. (6)Service-based RSU that vested with respect to 25% of the shares on March 1, 2025 with 25% of the shares vesting on March 1, 2026, 25% of the shares vesting on March 1, 2027 and 25% of the shares vesting on March 1, 2028, subject to continuous service through the vesting date. All options and RSUs listed above may be subject to acceleration upon the occurrence of certain events per the terms of the NEO’s employment agreement as described under “Employment Agreements” below. On February 18, 2025, we granted service-based RSUs related to compensation for the year ended December 31, 2024 to Dr. Polymeropoulos in the amount of 450,000 and Messrs. Moran, Birznieks, Wijkstrom and Williams in the amount of 125,000 shares each. Each of the grants to Dr. Polymeropoulos and Messrs. Moran, Birznieks, Wijkstrom and Williams will vest with respect to 25% of the shares on March 1, 2026, 25% of the shares on March 1, 2027, 25% of the shares on March 1, 2028 and 25% of the shares on March 1, 2029. These grants are not listed in the table above as of December 31, 2024.

  54. 2024 Stock Vested

    2024 Stock Vested The following table shows the number of shares acquired upon stock award vesting for each NEO during the year ended December 31, 2024. These amounts do not represent the actual amounts realized by the NEO for these awards.

  55. 2024 Stock Vested

    | Named Executive Officer | Stock Awards | | | | Number of Shares Acquired on Vesting (#) | Value Realized on Vesting ($)(1) | | Mihael H. Polymeropoulos, M.D. | 101,250 | $466,763 | | Kevin Moran | 32,025 | 154,443 | | Gunther Birznieks | 32,025 | 147,635 | | Joakim Wijkstrom | 30,300 | 139,683 | | Timothy Williams | 32,025 | 147,635 |

  56. 2024 Stock Vested

    (1)The value realized on vesting is based on the closing price per share of our common stock on the vesting date. These amounts do not represent the actual amounts realized by the NEO for these awards.

  57. Estimated Payments and Benefits Upon Termination

    | Name and Principal Position | Executive benefits and payments upon termination | Voluntary resignation not for good reason | Voluntary resignation for good reason | Termination by company not for cause | Termination by company for cause | Voluntary resignation for good reason or termination by company not for cause in connection with or following change in control | | Mihael H. Polymeropoulos, M.D., President, Chief Executive Officer and Chairman of the Board | Compensation: | | | | | | | | Base salary | $— | $933,000(2) | $933,000(2) | $— | $933,000(2) | | | Highest target cash incentive bonus awarded | — | 746,400(3) | 746,400(3) | — | 746,400(3) | | | Stock options and RSUs unvested and accelerated | — | — | —(4) | — | 2,981,775(5) | | | Benefits and perquisites: | | | | | | | | Health care | — | 30,414(6) | 30,414(6) | — | 30,414(6) | | | Tax indemnity payment (1) | — | — | — | — | — | | | Total: | $— | $1,709,814 | $1,709,814 | $— | $4,691,589 | | Kevin Moran, Senior Vice President, Chief Financial Officer and Treasurer | Compensation: | | | | | | | | Base salary | $— | $541,000(2) | $541,000(2) | $— | $541,000(2) | | | Target cash incentive bonus | — | 243,450(7) | 243,450(7) | — | 243,450(7) | | | Stock options and RSUs unvested and accelerated | — | —(4) | —(4) | — | 833,700(5) | | | Total: | $— | $784,450 | $784,450 | $— | $1,618,150 | | Gunther Birznieks Senior Vice President, Business Development | Compensation: | | | | | | | | Base salary | $— | $541,000(2) | $541,000(2) | $— | $541,000(2) | | | Target cash incentive bonus | — | 243,450(7) | 243,450(7) | — | 243,450(7) | | | Stock options and RSUs unvested and accelerated | — | —(4) | —(4) | — | 833,700(5) | | | Total: | $— | $784,450 | $784,450 | $— | $1,618,150 | | Joakim Wijkstrom Senior Vice President, Chief Marketing Officer | Compensation: | | | | | | | | Base salary | $— | $560,000(2) | $560,000(2) | $— | $560,000(2) | | | Target cash incentive bonus | — | 252,000(7) | 252,000(7) | — | 252,000(7) | | | Stock options and RSUs unvested and accelerated | — | —(4) | —(4) | — | 383,320(5) | | | Total: | $— | $812,000 | $812,000 | $— | $1,195,320 | | Timothy Williams, Senior Vice President, General Counsel and Secretary | Compensation: | | | | | | | | Base salary | $— | $541,000(2) | $541,000(2) | $— | $541,000(2) | | | Target cash incentive bonus | — | 243,450(7) | 243,450(7) | — | 243,450(7) | | | Stock options and RSUs unvested and accelerated | — | —(4) | —(4) | — | 833,700(5) | | | Total: | $— | $784,450 | $784,450 | $— | $1,618,150 |

  58. Pay Ratio Disclosure

    Pay Ratio Disclosure As required by the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank Act”) and applicable SEC rules, we are providing the following information about the relationship of the annual total compensation of our employees and the annual total compensation of Mihael H. Polymeropoulos, M.D., our Chief Executive Officer: For our fiscal year ended December 31, 2024: •The median of the annual total compensation of all employees (other than our CEO) was $186,541; and •The annual total compensation of our CEO, as reported in the 2024 Summary Compensation Table included elsewhere in this Proxy Statement, was 3,896,241. Based on this information the ratio of the annual total compensation of Dr. Polymeropoulos to the median of the annual total compensation of our employees was 20.9:1. The above ratio is appropriately viewed as an estimate. To identify the median of the annual compensation of our employees, we reviewed the base salary and the bonus and long-term incentive compensation targets of our U.S. employees who were employed as of December 31, 2024. As permitted by SEC rules, we excluded from our analysis all 13 of our employees who resided in Germany and the UK on December 31, 2024, which represented less than 5% of our employee population as a whole on such date. Our employee population on December 31, 2024, prior to taking into consideration this exclusion, consisted of approximately 368 individuals. Our employee population on December 31, 2024, after taking into consideration this exclusion, consisted of approximately 355 individuals. Once we identified our “median employee,” using the methodology described above, we determined that employee’s annual total compensation in accordance with the requirements of Item 402(c)(2)(x) of Regulation S-K for purposes of calculating the required pay ratio.

  59. Pay Versus Performance

    Pay Versus Performance As required by Section 953(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act, and Item 402(v) of Regulation S-K, we are providing the following information about the relationship between executive compensation actually paid (CAP), as calculated per SEC disclosure rules, and certain financial performance measures with respect to the Company. Compensation actually paid, as calculated per SEC disclosure rules, differs from the total compensation reported in the Summary Compensation Table in the applicable year due to the impact of changes in our stock price as well as the achievement of the underlying vesting conditions with respect to our equity awards, while compensation reported in the Summary Compensation Table calculates equity awards based on the grant date fair value of such equity awards and does not include any adjustments for failure to achieve the underlying vesting conditions or changes in our stock price. In addition, the Summary Compensation Table total for a given year captures compensation with respect to equity awards granted during such year, while the compensation actually paid captures compensation associated with fluctuations in the value of prior year equity grants. For further information concerning the Company’s variable pay-for-performance philosophy and how the Company aligns executive compensation with the Company’s performance, refer to Compensation Discussion and Analysis.

  60. Pay Versus Performance

    | Year | Summary Compensation Table Total for Principal Executive Officer (PEO)(1)(2) | Compensation Actually Paid to PEO(3) | Average Summary Compensation Table Total for Non-PEO NEOs(1)(2) | Average Compensation Actually Paid to Non-PEO NEOs(3) | Value of Initial Fixed $100 Investment Based On: | | Net Income (Loss) (millions)(6) | Total Net Product Sales (millions)(7) | | | | | | | Total Stockholder Return(4) | Peer Group Total Stockholder Return(5) | | | | 2024 | $3,896,241 | $4,344,635 | $1,346,371 | $1,465,190 | $29 | $110 | $(18.9) | $198.8 | | 2023 | 3,720,215 | 1,783,986 | 1,363,243 | 788,310 | 26 | 113 | 2.5 | 192.6 | | 2022 | 4,269,410 | 859,606 | 1,508,434 | 340,324 | 45 | 109 | 6.3 | 254.4 | | 2021 | 6,194,157 | 5,604,622 | 1,963,831 | 2,037,543 | 96 | 127 | 33.2 | 268.7 | | 2020 | 2,913,420 | 2,059,581 | 1,148,247 | 567,718 | 80 | 126 | 23.3 | 248.2 |

  61. Pay Versus Performance

    (1)Dr. Polymeropoulos (our President, Chief Executive Officer and Chairman of the Board) served as the Company’s principal executive officer for the entirety of 2024, 2023, 2022, 2021, and 2020 and the Company’s other NEOs for the applicable years were as follows: –2020: James P. Kelly; Kevin Moran; Timothy Williams; Aranthan “AJ” Jones II; and Joakim Wijkstrom. (2)Amounts reported in this column represent (i) the total compensation reported in the Summary Compensation Table for Dr. Polymeropoulos and (ii) the average of the total compensation reported in the Summary Compensation Table for the applicable year for the Company’s NEOs reported for such year other than Dr. Polymeropoulos. (3)To calculate compensation actually paid, adjustments were made to the amounts reported in the Summary Compensation Table for the applicable year. A reconciliation of the adjustments for Dr. Polymeropoulos and for the average of the other NEOs is set forth following the footnotes to this table. (4)Pursuant to rules of the SEC, the comparison assumes $100 was invested on December 31, 2019 in our common stock. Historic stock price performance is not necessarily indicative of future stock price performance. (5)Pursuant to the rules of the SEC, the comparison assumes $100 was invested on December 31, 2019 in our total shareholder return (TSR) peer group. The TSR peer group consists of the iShares Biotechnology Index (IBB). This is the same industry index used in our stock performance graph in our Annual Report on Form 10-K. (6)The dollar amounts reported represent the amount of net income reflected in the Company’s audited financial statements for the applicable year. (7)The performance measures set forth in the table are based on the total net product sales of the three product categories that currently comprise our commercial portfolio: (i) Fanapt® oral tablets for the treatment of schizophrenia, (ii) HETLIOZ® capsules for the treatment of Non-24-Hour Sleep-Wake Disorder (Non-24) and HETLIOZ® capsules and oral suspension (HETLIOZ LQ®) for the treatment of nighttime sleep disturbances in SMS and (iii) PONVORY® for the treatment of relapsing forms of multiple sclerosis (MS), to include clinically isolated syndrome, relapsing-remitting disease and active secondary progressive disease, in adults. Given the importance of Fanapt®, HETLIOZ® and PONVORY® to our business, as discussed further above, the Company has determined that total net product sales, which includes Fanapt®, HETLIOZ® and PONVORY® net product sales, is the financial performance measure that, in the Company’s assessment, represents the most important performance measures used by the Company to link compensation actually paid to the Company’s NEOs to Company performance. Reconciliation of Compensation Actually Paid Adjustments

  62. Pay Versus Performance

    | Year | Summary Compensation Table Total | (Minus) Grant Date Fair Value of Stock Option and Stock Awards Granted in Fiscal Year | Plus Fair Value at Fiscal Year-End of Outstanding and Unvested Stock Option and Stock Awards Granted in Fiscal Year | Plus/(Minus) Change in Fair Value of Outstanding and Unvested Stock Option and Stock Awards Granted in Prior Fiscal Years | Plus Fair Value at Vesting of Stock Option and Stock Awards Granted in Fiscal Year that Vested During Fiscal Year | Plus/(Minus) Change in Fair Value as of Vesting Date of Stock Option and Stock Awards Granted in Prior Years for which Applicable Vesting Conditions Were Satisfied During Fiscal Year | (Minus) Fair Value as of Prior Fiscal Year-End of Stock Option and Stock Awards Granted in Prior Fiscal Years that Failed to Meet Applicable Vesting Conditions During Fiscal Year | Equals Compensation Actually Paid | | | ($)(1) | ($)(2) | ($)(3) | ($)(4) | ($)(5) | ($)(6) | ($)(7) | ($) | | Dr. Mihael H. Polymeropoulos | | | | | | | | | | 2024 | $3,896,241 | $(1,971,000) | $2,155,500 | $150,953 | $— | $112,941 | $— | $4,344,635 | | 2023 | 3,720,215 | (1,799,375) | 1,035,913 | (923,158) | — | (249,609) | — | 1,783,986 | | 2022 | 4,269,410 | (2,757,740) | 1,733,481 | (1,730,772) | — | (654,773) | — | 859,606 | | 2021 | 6,194,157 | (4,792,295) | 3,260,927 | 351,870 | — | 589,963 | — | 5,604,622 | | 2020 | 2,913,420 | (1,475,030) | 1,618,926 | (475,772) | — | (521,963) | — | 2,059,581 | | Average Other NEOs | | | | | | | | | | 2024 | $1,346,371 | $(446,432) | $488,221 | $42,512 | $— | $34,518 | $— | $1,465,190 | | 2023 | 1,363,243 | (509,148) | 293,167 | (273,247) | — | (85,705) | — | 788,310 | | 2022 | 1,508,434 | (780,486) | 490,676 | (616,032) | — | (262,268) | — | 340,324 | | 2021 | 1,963,831 | (1,285,018) | 874,904 | 187,328 | — | 296,498 | — | 2,037,543 | | 2020 | 1,148,247 | (594,285) | 676,702 | (181,510) | — | (157,953) | (323,483) | 567,718 |

  63. Pay Versus Performance

    (1)Represents Total Compensation as reported in the Summary Compensation Table for the indicated fiscal year. With respect to the Average Other NEOs, amounts shown represent averages of the other NEOs. (2)Represents the grant date fair value of the stock option and stock awards granted during the indicated fiscal year, computed in accordance with the methodology used for financial reporting purposes. (3)Represents the fair value as of the indicated fiscal year-end of the outstanding and unvested stock option and stock awards granted during such fiscal year, computed in accordance with the methodology used for financial reporting purposes. (4)Represents the change in fair value during the indicated fiscal year of the outstanding and unvested stock option and stock awards held by the applicable NEO as of the last day of the indicated fiscal year, computed in accordance with the methodology used for financial reporting purposes. (5)Represents the fair value at vesting of the stock option and stock awards that were granted and vested during the indicated fiscal year, computed in accordance with the methodology used for financial reporting purposes. (6)Represents the change in fair value, measured from the prior fiscal year-end to the vesting date, of each stock option and stock award that was granted in a prior fiscal year and which vested during the indicated fiscal year, computed in accordance with the methodology used for financial reporting purposes. (7)Represents the fair value as of the last day of the prior fiscal year of the stock option and stock awards that were granted in a prior fiscal year and which failed to meet the applicable vesting conditions in the indicated fiscal year, computed in accordance with the methodology used for financial reporting purposes. Tabular List of Financial Performance Measures As described in greater detail in Compensation Discussion and Analysis, the Company’s executive compensation program reflects a variable pay-for-performance philosophy. The metrics that the Company uses for both our long-term and short-term incentive awards are selected based on an objective of incentivizing our NEOs to increase the value of our enterprise for our stockholders. The most important financial performance measure used by the Company to link executive compensation actually paid to the Company’s NEOs, for the most recently completed fiscal year, to the Company’s performance is total net product sales, which includes Fanapt®, HETLIOZ® and PONVORY® net product sales. Relationship Between Pay and Performance As described in more detail in the section Compensation Discussion and Analysis, the Company’s executive compensation program reflects a variable pay-for-performance philosophy. While the Company utilizes key performance measures to align executive compensation with Company performance, the Company generally seeks to incentivize long-term performance, and therefore does not specifically align the Company’s performance measures with compensation that is actually paid (as computed in accordance with Item 402(v) of Regulation S-K) for a particular year. We believe the compensation actually paid in each of the years reported above and over the four-year cumulative period are reflective of the leverage of our executive compensation program towards variable pay elements as the compensation actually paid fluctuated year-over-year, primarily due to the result of our stock performance and our varying levels of achievement against pre-established performance goals under our incentive programs. As such, the CEO and non-CEO “compensation actually paid” each year were aligned with our TSR performance and increased when our TSR performance increased but declined when our TSR performance declined. In accordance with Item 402(v) of Regulation S-K, the Company is providing the following graphics of the relationships related to information presented in the Pay versus Performance table. These charts show, for the past four years, the relationship of the Company’s TSR relative to its peers as well as the relationship between the CEO and non-CEO compensation actually paid and (i) the Company’s TSR; (ii) the Company’s net income; and (iii) the Company’s total net product sales, which includes Fanapt®, HETLIOZ® and PONVORY® net product sales.