alks-10ka_20201231.htm
Alkermes plc. 0001520262 true --12-31 FY 0001520262 2020-01-01 2020-12-31 iso4217:USD 0001520262 2020-06-30 xbrli:shares 0001520262 2021-04-23

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-K/A

(Amendment No. 1)

 

(Mark One)

 

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

for the fiscal year ended December 31, 2020

OR

 

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                    to                         

 

Commission file number: 001-35299

ALKERMES PUBLIC LIMITED COMPANY

(Exact name of registrant as specified in its charter)

 

 

 

 

Ireland

(State or other jurisdiction of incorporation or organization)

 

98-1007018

(I.R.S. Employer Identification No.)

Connaught House

1 Burlington Road

Dublin 4, Ireland
(Address of principal executive offices)

 

D04 C5Y6

(Zip code)

 

 

+353-1-772-8000

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

 

Trading Symbol(s)

 

Name of each exchange on which registered

Ordinary shares, $0.01 par value

 

ALKS

 

Nasdaq Global Select Market

 

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well‑known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes   No 

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act. Yes   No 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes   No 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S‑T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes   No 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non‑accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b‑2 of the Exchange Act.

 

Large Accelerated Filer

 

                  Accelerated Filer

Non-Accelerated Filer

 

Smaller Reporting Company

 

 

Emerging Growth Company

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b‑2 of the Act). Yes   No 

The aggregate market value of the registrant’s ordinary shares held by non‑affiliates of the registrant (without admitting that any person whose shares are not included in such calculation is an affiliate) computed by reference to the price at which the ordinary shares were last sold as of the last business day of the registrant’s most recently completed second fiscal quarter was $3,057,878,108.

As of April 23, 2021, 160,451,949 ordinary shares were outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

None.

 


Table of Contents

 

 

EXPLANATORY NOTE

 

This Amendment No. 1 to Annual Report on Form 10-K/A (this “Amendment”), amends the Annual Report on Form 10-K for the fiscal year ended December 31, 2020 (Commission File Number 001-35299), as filed by the Registrant with the U.S. Securities and Exchange Commission (the “SEC”) on February 11, 2021 (the “2020 Annual Report”). The principal purpose of this Amendment is to amend Part III to include the information that was intended to be incorporated by reference from the Registrant’s definitive proxy statement for its 2021 annual general meeting of shareholders (the “2021 Annual Meeting”), and to update certain of the information included on the cover page of the 2020 Annual Report and in the list of exhibits included in Item 15 and the Exhibit Index of this Amendment. This Amendment hereby amends the cover page, Part III (Items 10 through 14) and Part IV (Item 15) of the 2020 Annual Report. In addition, as required by Rule 12b-15 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), new certifications by the Registrant’s principal executive officer and principal financial officer are filed as exhibits to this Amendment.

 

No attempt has been made in this Amendment to modify or update the other disclosures presented in the 2020 Annual Report. This Amendment does not reflect events occurring after the filing of the 2020 Annual Report (i.e., those events occurring after February 11, 2021) or modify or update those disclosures that may be affected by subsequent events. Accordingly, this Amendment should be read in conjunction with the 2020 Annual Report and the registrant’s other filings with the SEC.

 

 

 

 

 

 

 

 


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ALKERMES PLC AND

SUBSIDIARIES

 

Amendment No.1 TO

ANNUAL REPORT ON FORM 10‑K

FOR THE YEAR ENDED DECEMBER 31, 2020

 

INDEX

 

 

 

 

 

 

 

 

 

 

 

PART III

 

 

 

 

Item 10.

 

Directors, Executive Officers and Corporate Governance

 

4

Item 11.

 

Executive Compensation

 

11

Item 12.

 

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

 

48

Item 13.

 

Certain Relationships and Related Transactions, and Director Independence

 

51

Item 14.

 

Principal Accounting Fees and Services

 

52

PART IV

 

 

 

 

Item 15.

 

Exhibits and Financial Statement Schedules

 

53

SIGNATURES

 

61

 

 

 

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Cautionary Note Concerning Forward-Looking Statements

This Amendment contains and incorporates by reference “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Exchange Act. In some cases, these statements can be identified by the use of forward-looking terminology such as “may,” “will,” “could,” “should,” “would,” “expect,” “anticipate,” “continue,” “believe,” “plan,” “estimate,” “intend,” or other similar words.

Actual results, performance, time frames or achievements might differ materially from those expressed or implied by these forward-looking statements because these forward-looking statements are subject to risks, assumptions and uncertainties. These risks, assumptions and uncertainties, and other material risks to our business are discussed in “Part I, Item 1A—Risk Factors” in our 2020 Annual Report.  In light of these risks, assumptions and uncertainties, the forward-looking events discussed in this Amendment might not occur. You are cautioned not to place undue reliance on the forward-looking statements in this Amendment, which speak only as of the date of this Amendment. All subsequent written and oral forward-looking statements concerning the matters addressed in this Amendment and attributable to us or any person acting on our behalf are expressly qualified in their entirety by the cautionary statements contained or referred to in this section. Except as required by applicable law or regulation, we do not undertake any obligation to update publicly or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

Note Regarding Company and Product References

Alkermes plc is a fully-integrated, global biopharmaceutical company that applies its scientific expertise and proprietary technologies to research, develop and commercialize, both with partners and on its own, pharmaceutical products that are designed to address unmet medical needs of patients in major therapeutic areas. Alkermes has a diversified portfolio of marketed products focused on central nervous system disorders such as addiction and schizophrenia and a pipeline of product candidates in the fields of neuroscience and oncology. Headquartered in Dublin, Ireland, Alkermes has a research and development (“R&D”) center in Waltham, Massachusetts; an R&D and manufacturing facility in Athlone, Ireland; and a manufacturing facility in Wilmington, Ohio. Use of terms such as “us,” “we,” “our,” “Alkermes” or the “Company” in this Amendment is meant to refer to Alkermes plc and its consolidated subsidiaries. Except as otherwise suggested by the context, (a) references to “products” or “our products” in this Amendment include our marketed products, marketed products using our proprietary technologies, our product candidates and product candidates using our proprietary technologies and (b) references to the “biopharmaceutical industry” in this Amendment are intended to include reference to the “biotechnology industry” and/or the “pharmaceutical industry”.

Note Regarding Trademarks

We are the owner of various United States (“U.S.”) federal trademark registrations (“®”) and other trademarks (“TM”), including ALKERMES®, ARISTADA®, ARISTADA INITIO®, LYBALVITM and VIVITROL®. Other trademarks, trade names and service marks appearing in this Amendment are the property of their respective owners. Solely for convenience, the trademarks and trade names in this Amendment are referred to without the ® and TM symbols, but such references should not be construed as any indicator that their respective owners will not assert, to the fullest extent under applicable law, their rights thereto.

 

 

 

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PART III

Item 10. Directors, Executive Officers and Corporate Governance

Board of Directors

Director Biographical Information

The following is a brief biography of each member of the Company’s Board of Directors (the “Board”), including their respective ages as of the date of this Amendment, with each biography including information regarding the specific qualifications and skills that led the Nominating and Corporate Governance Committee of the Board and the Board to determine that each member of the Board should serve as a director.

David W. Anstice AO

Age: 72

Director since: September 2011

Current Public Company Boards: None

Experience: Mr. Anstice served as Executive Vice President of Merck & Co., Inc. (“Merck”) from 2006 until his retirement in 2008, with responsibility for enterprise strategy and implementation. During separate parts of this period he served as acting President, Global Human Health and as President of Merck’s business in Japan. Prior to that, Mr. Anstice served as President of Merck from 2003 to 2006, with responsibility for Merck’s Asia Pacific businesses. In his 34 years with Merck, he held a variety of positions including President, U.S. Human Health; President, Human Health, the Americas; President, U.S./Canada; and President, Human Health, Europe. He reported to the Chief Executive Officer of Merck from 1994 until his retirement in 2008. Mr. Anstice currently serves as a non-executive director of NeuClone Pharmaceuticals Ltd., an unlisted clinical-stage biopharmaceutical company based in Australia. Mr. Anstice previously served as a non-executive director of CSL Limited, a global biopharmaceutical company, from September 2008 until October 2018. Mr. Anstice is also a member of the board of the University of Sydney USA Foundation, and an Adjunct Professor at the University of Sydney Business School.

Qualifications and Skills: Mr. Anstice’s lengthy service with Merck, which included oversight of, and responsibility for, all aspects of pharmaceutical drug development and commercialization in the U.S. and in many countries outside the U.S., provides our Board with broad global research-based pharmaceutical industry experience. Mr. Anstice’s prior leadership positions in industry organizations, including as a board and executive committee member of the Biotechnology Innovation Organization (“BIO”) for approximately ten years and as a former Chairman of the National Pharmaceutical Council, augment his pharmaceutical management, industry knowledge and organizational expertise with knowledge of public policy issues involving pharmaceutical care. Mr. Anstice also has expertise in the areas of strategic planning, risk management and corporate governance.

 

Robert A. Breyer

Age: 77

Director since: September 2011*

Current Public Company Boards: None

*Mr. Breyer has announced his retirement from the Board effective as of the close of the 2021 Annual Meeting.

Experience: Mr. Breyer served as President of Alkermes, Inc. from July 1994 until his retirement in December 2001 and as Chief Operating Officer from July 1994 to February 2001. Prior to joining Alkermes, Inc., Mr. Breyer was an executive and held various positions in the global pharmaceutical and medical device industries, including general manager of Eli Lilly Benelux S.A and Eli Lilly Italia S.p.A. Mr. Breyer also served on the board of directors of Lentigen, Inc., a privately held, diversified biology company, from 2007 to 2009.

Qualifications and Skills: Mr. Breyer’s experience as an executive in the global pharmaceutical and medical device industries provides management and operational skills to our Board. Mr. Breyer has experience with managing the overall financial performance of pharmaceutical and medical device units and in pharmaceutical manufacturing and sales and marketing operations in multiple locations in the U.S. and Europe. As a former executive at Alkermes, Inc., Mr. Breyer also has first-hand knowledge of our technology, manufacturing operations, research and development and management team.

 

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Shane M. Cooke

Age: 58

Director since: March 2018

Current Public Company Boards: Prothena Corporation plc (since 2012); Endo International plc (since 2014); UDG Healthcare plc (since February 2019)

 

Experience: Mr. Cooke served as our President and as President of Alkermes Pharma Ireland Limited (“APIL”), a wholly-owned subsidiary of the Company, from September 2011 until his retirement in March 2018. He became a member of our Board upon his retirement. In addition, Mr. Cooke has been chairman of the board of directors of APIL since September 2011. Mr. Cooke served as Executive Vice President of Elan Corporation, plc (“Elan”) and Head of Elan Drug Technologies from May 2007 to September 16, 2011 and as the Chief Financial Officer of Elan from July 2001 until May 2011. Mr. Cooke served as a director of Elan from May 2005 to September 16, 2011. Prior to joining Elan, Mr. Cooke was Chief Executive of Pembroke Capital Limited, an aviation leasing company, and prior to that, he held a number of senior finance positions in the banking and aviation industries. He is a chartered accountant.

Qualifications and Skills: Mr. Cooke is an Irish citizen, resident in Ireland. His depth of experience in managing Irish corporate entities and his extensive network within the Irish business and finance community, as well as his familiarity with Irish policy and regulation, are highly beneficial to the Company as an Irish-incorporated entity. In addition to Mr. Cooke’s global experience in the pharmaceutical industry, he also has significant experience in business development and transactional activities. Mr. Cooke’s substantial experience as an executive in the biopharmaceutical industry, including having served as a chief financial officer and as a president of publicly-traded companies, brings strategic leadership attributes and expertise in operations, finance, and commercial management to our Board.

 

David A. Daglio, Jr.

Age: 54

Director since: December 2020

Current Public Company Boards: Total Brain Ltd. (since January 2020)

 

Experience: Mr. Daglio most recently served as a non-executive director of Mellon Investments Corporation (“Mellon”), a global investment manager, from 2019 to January 2020 and as Executive Vice President, Chief Investment Officer and Executive Director of Mellon from 2017 to 2019. He also served as Mellon’s head of Opportunistic Value Strategies. Since joining Mellon in 1998, Mr. Daglio worked with institutional clients and boards around the world, managed numerous investors and grew portfolio assets by more than five-fold, and helped to design, launch, and manage a unique equity investing approach.  Prior to his investing career, Mr. Daglio was a management consultant at Deloitte and an engineer for The Dannon Company. Mr. Daglio previously served as a director of The Boston Company and Mellon and currently serves as a director of Total Brain Ltd., an Australian publicly-traded company. Mr. Daglio earned a bachelor’s degree in mechanical engineering from Rensselaer Polytechnic Institute and a Master of Business Administration from New York University’s Stern School of Business.

Qualifications and Skills: Mr. Daglio brings to our Board a seasoned institutional investment management perspective and strong management and leadership experience. The Board benefits from his experience in portfolio management, value creation, and transactional matters, and from his service on other boards of directors, including his current service on the Board and remuneration committee of Total Brain Ltd.

 

Wendy L. Dixon, Ph.D.

Age: 65

Director since: September 2011

Current Public Company Boards: Incyte Corporation (since 2010); bluebird bio, Inc. (since 2013); Arvinas, Inc. (since June 2020)

Experience: Dr. Dixon has extensive experience in the pharmaceutical and biotechnology industries, combining a technical background with experience in drug development, regulatory affairs and marketing, and has directed the launch and growth of more than twenty pharmaceutical products. Dr. Dixon was Chief Marketing Officer and President, Global Marketing for Bristol-Myers Squibb and served on its Executive Committee from 2001 to 2009. She was Senior Vice President, Marketing at Merck from 1996 to 2001 and, prior to that, held executive management positions at West Pharmaceuticals, Osteotech and Centocor and various positions in marketing, regulatory affairs, project management and as a biochemist at SmithKline and French (now GlaxoSmithKline). Dr. Dixon was formerly on the boards of directors of then-public companies Ardea Biosciences, Inc., Dentsply International and Furiex Pharmaceuticals during various periods from 2005 to 2014, and more recently on the boards of directors of public companies Orexigen Therapeutics, Inc. from 2010 to January 2016, Sesen Bio, Inc. (formerly Eleven Biotherapeutics, Inc.) from 2014 to February 2020 and Voyager Therapeutics, Inc. from January 2017 to January 2021. She is also the principal of Great Meadow Consultancy. She was a Senior Advisor to The Monitor Group, now Deloitte, from 2010 to 2012.

Qualifications and Skills: Dr. Dixon brings to our Board a depth of experience in the global marketing of pharmaceutical products across a broad variety of disease states. Dr. Dixon has a strong technical background, direct experience in product development and regulatory affairs, and has successfully built and grown commercial organizations in the U.S. and Europe, all of which provide valuable insight to our Board regarding the development and commercialization of pharmaceutical products. Dr. Dixon’s additional qualifications include her deep industry knowledge and her reputation as a strategic thinker with a focus on execution, as well as the ability to provide direction regarding improvements to the interface between research and development and marketing. Dr. Dixon’s service on other company boards of directors provides experience relevant to good corporate governance practices.

 

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Richard B. Gaynor, M.D.

Age: 71

Director since: September 2019

Current Public Company Boards: Infinity Pharmaceuticals, Inc. (since March 2020)

Experience: Since May 2020, Dr. Gaynor has served as President, Chief of Research and Development at BioNTech US Inc. (f/k/a Neon Therapeutics, Inc. (“Neon”)), a wholly-owned subsidiary of BioNTech SE focused on the development of novel neoantigen-targeted T cell therapies. Dr. Gaynor had previously served as President of Research and Development at Neon since November 2016. Prior to joining Neon, Dr. Gaynor held roles in clinical development and medical affairs at Eli Lilly and Company (“Lilly”) from August 2002 to October 2016, including serving as Senior Vice President, Clinical Development and Medical Affairs of Lilly Oncology. During his time at Lilly, Dr. Gaynor chaired the Lilly Oncology Research and Development Committee and helped oversee various collaborations, including with General Electric, AstraZeneca, Merck and Bristol-Myers Squibb. Dr. Gaynor started his career in academia, initially serving on the faculty at UCLA School of Medicine, followed by eleven years at the University of Texas Southwestern Medical School, during which he spent time as the Chief of Hematology-Oncology and Director of the Simmons Cancer Center. Dr. Gaynor holds an M.D. from the University of Texas Southwestern Medical School and completed fellowship training in hematology-oncology at UCLA School of Medicine. Dr. Gaynor is on the editorial board of several scientific journals and has published extensively, including over 140 scientific articles. He serves on the board of directors of the Damon Runyon Cancer Research Foundation and sits on several committees for the American Association of Cancer Research and other leading cancer organizations. Dr. Gaynor is a licensed physician with board certifications in oncology and hematology.

Qualifications and Skills: Dr. Gaynor brings to our Board a deep background in the field of oncology, having practiced in academic medicine, conducted extensive scientific research and held leadership roles at companies focusing in the field of oncology. The Board benefits from his technical expertise in oncology research and development, clinical development and business development and his insights from years as an academic and practicing physician.

 

Brian P. McKeon

Age: 59

Director since: December 2020

Current Public Company Boards: None

Experience: Since 2014, Mr. McKeon has served as the Executive Vice President, Chief Financial Officer, and Treasurer of IDEXX Laboratories, Inc. (“IDEXX”), a public multinational corporation providing products and services in the veterinary, livestock and poultry, dairy and water testing markets. He leads IDEXX’s finance, corporate development and strategy, and investor relations functions and, since June 2019, has overseen IDEXX’s livestock, water and human diagnostics businesses. Mr. McKeon served on the board of directors of IDEXX from 2003 to 2013, including serving as Chair of its Audit Committee and as a member of its Compensation Committee. Prior to joining IDEXX, Mr. McKeon served as Executive Vice President and Chief Financial Officer of Iron Mountain Incorporated from 2007 to 2013 and as Executive Vice President and Chief Financial Officer of Timberland Company from 2000 to 2007. Prior to these roles, he held several finance and strategic planning roles at PepsiCo Inc., serving most recently as Vice President, Finance, at Pepsi-Cola, North America. Mr. McKeon previously served as a director of athenahealth, Inc. from September 2017 to February 2019. Mr. McKeon holds a bachelor’s degree in accounting from the University of Connecticut and an MBA with high distinction from Harvard University.

Qualifications and Skills: Mr. McKeon brings to our Board strong financial and management expertise as well as public company executive and director leadership experience. The Board benefits from his experience in finance, strategic planning, corporate development and investor relations, and from his prior service on public company boards of directors, including as a member of audit and compensation committees.

 

Paul J. Mitchell

Age: 68

Director since: September 2011*

Current Public Company Boards: None

*Mr. Mitchell has announced his retirement from the Board effective as of the close of the 2021 Annual Meeting.

Experience: Mr. Mitchell served as the Chief Financial Officer and Treasurer of Kenet, Inc. from April 2002 until January 2009. Prior to joining Kenet, Mr. Mitchell was the Chief Financial Officer and Treasurer of Kopin Corporation from April 1985 through September 1998 and served in a consulting role as Kopin’s Director of Strategic Planning from September 1998 through June 2001. Prior to joining Kopin, Mr. Mitchell worked for the international accounting firm of Touche Ross & Co. from 1975 to 1984. Mr. Mitchell is President of Mitchell Financial Group and a member of the boards of directors of several private companies, including Informatics in Context, Inc., as well as several nonprofit organizations. Mr. Mitchell was previously a certified public accountant.

Qualifications and Skills: Mr. Mitchell’s background as the chief financial officer of several companies, including a publicly-traded company, and as a former certified public accountant, provides expertise to our Board in the areas of financial reporting, treasury, financing, executive compensation and compliance with securities obligations. His business judgment is relied upon by our Board when contemplating a variety of organizational and strategic issues.

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Richard F. Pops

Age: 59

Director since: September 2011

Current Public Company Boards: Neurocrine Biosciences, Inc. (since 1998)

Experience: Prior to assuming his current positions, Mr. Pops served as Chief Executive Officer of Alkermes, Inc. from February 1991 to April 2007 and as Chief Executive Officer and President from September 2009 to September 2011. Mr. Pops serves on the board of directors of BIO and the Pharmaceutical Research and Manufacturers of America (“PhRMA”). He previously served on the boards of directors of Acceleron Pharma, Inc., a publicly-traded biopharmaceutical company, from 2004 to December 2019, Epizyme, Inc., a publicly-traded biopharmaceutical company, from 2008 to October 2020, and the National Health Council, a nonprofit organization, from 2016 to December 2019. Mr. Pops also previously served on the advisory board of Polaris Venture Partners and as a member of the Harvard Medical School Board of Fellows through June 2012.

Qualifications and Skills: Mr. Pops’ qualifications for our Board include his leadership experience, business judgment and deep industry knowledge. As a senior executive of Alkermes for over 25 years, he provides in-depth knowledge of the Company derived from leading our day-to-day operations. His ongoing involvement as a board member of BIO and PhRMA, brings to the organization extensive knowledge of the current state of the pharmaceutical industry and the policy issues impacting healthcare today. As a Co-Chair of BIO’s Regulatory Environment Committee, and a member of its Health Section Governing Board, and as a member of PhRMA’s FDA and Biomedical Research Committee, Mr. Pops is an influential industry leader on U.S. Food and Drug Administration (“FDA”) regulatory policy issues, including recent Prescription Drug User Fee Act reauthorizations. Mr. Pops has also played a leadership role in the industry in identifying pathways to allow patient voices to be incorporated into the drug development and approval process, which is a fundamental principle on which we operate our business.

 

Nancy L. Snyderman, M.D.

Age: 69

Director since: May 2016

Current Public Company Boards: Axonics Modulation Technologies, Inc. (since April 2019); Lyra Therapeutics, Inc. (since October 2020)

 

Experience: Dr. Snyderman is a board-certified otolaryngologist and is currently a consulting professor at Stanford University Center for Innovation in Global Health. She served as Chief Medical Editor at NBC News from 2006 until 2015 and was a clinical professor of otolaryngology at the University of Pennsylvania from August 2003 to December 2015. Dr. Snyderman was Senior Vice President Corporate Communications at Johnson & Johnson, a publicly-traded pharmaceutical company, from January 2003 to September 2006. She practiced as an otolaryngologist at California Pacific Medical Center from July 1994 to June 2003, and acted as Medical Editor for ABC News from 1987 until May 2003. Dr. Snyderman is a fellow in the American College of Surgeons. She previously served on the board of directors of the Fair Food Network, a nonprofit organization dedicated to the growth of community health and wealth through food. During Dr. Snyderman’s tenure as a medical journalist at NBC News and ABC News, she received Emmy Awards, Edward R. Murrow Awards, a Columbia University DuPont Award, and a Gracie Award for her reporting. Dr. Snyderman attended medical school at the University of Nebraska and completed residencies in pediatrics and otolaryngology at the University of Pittsburgh.

Qualifications and Skills: Dr. Snyderman’s experiences as a veteran healthcare journalist, a practicing physician, and an executive at a pharmaceutical company, as well as her roles in academia and as advisor to policy organizations, make her uniquely qualified for our Board. The Board benefits from her expert insight into the intersection of healthcare policy, public relations, and journalism from the perspective of both a practitioner and an academic.

 

Frank Anders “Andy” Wilson

Age: 62

Director since: September 2019

Current Public Company Boards: Cabot Corporation (since September 2018)*

*Mr. Wilson is nominated for election to the board of directors of Novanta Inc., subject to shareholder approval at its annual and special shareholder meeting to be held in May 2021.

Experience: Mr. Wilson most recently served as Chief Financial Officer and Senior Vice President of PerkinElmer, Inc., a life sciences diagnostics, discovery and analytical solutions company, from 2009 to 2018, with responsibility for oversight of the organization’s growth strategy. Prior to PerkinElmer, Mr. Wilson held key business development and finance roles at Danaher Corporation, a global science and technology conglomerate, from 1997 to 2009, including the position of Corporate Vice President of Investor Relations. Earlier in his career, Mr. Wilson worked at AlliedSignal, Inc., now Honeywell International Inc., where he served as Vice President of Finance and Chief Financial Officer for the Commercial Avionics Systems division. Prior to that, Mr. Wilson’s work included financial and controllership positions of increasing responsibility at PepsiCo, Inc., as well as roles at E.F. Hutton and Company and KPMG Peat Marwick. He was previously a member of the board of directors of Sparton Corporation, a provider of complex and sophisticated electromechanical devices, from 2015 to early 2019, where he last served as chairman of the board. Mr. Wilson is a certified public accountant.

Qualifications and Skills: Mr. Wilson’s financial expertise and decades of experience in strategic planning, investor relations and business development for global public companies provide valuable insight for our Board as the Company’s strategic priorities expand and evolve. His background as a chief financial officer and certified public accountant provide significant expertise to our Board in matters relating to finance, value creation and commercial growth.

 

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Nancy J. Wysenski

Age: 63

Director since: May 2013

Current Public Company Boards: Provention Bio, Inc. (since May 2020); Cytokinetics, Inc. (since November 2020)

 

Experience: Ms. Wysenski served as the Executive Vice President and Chief Commercial Officer of Vertex Pharmaceuticals Incorporated (“Vertex”) from December 2009 through June 2012. Prior to joining Vertex, Ms. Wysenski held the position of Chief Operating Officer of Endo Pharmaceuticals plc (“Endo”), a specialty pharmaceutical company, where she led sales, marketing, commercial operations, supply chain management, human resources and various business development initiatives. Prior to her role at Endo, Ms. Wysenski participated in the establishment of EMD Pharmaceuticals, Inc., where she held various leadership positions, including the role of President and Chief Executive Officer from 2001 to 2006 and Vice President of Commercial from 1999 to 2001. From 1984 to 1998, Ms. Wysenski held several sales-focused roles at major pharmaceutical companies, including Vice President of Field Sales for Astra Merck, Inc. Ms. Wysenski formerly served as a director for Reata Pharmaceuticals, Inc., now a publicly-traded biopharmaceutical company, and more recently served as a director for Inovio Pharmaceuticals, Inc., a publicly-traded biopharmaceutical company, from March 2015 to May 2017, Tetraphase Pharmaceuticals, Inc., formerly a publicly-traded biopharmaceutical company, from March 2014 to July 2020, and Dova Pharmaceuticals Inc., formerly a publicly-traded biopharmaceutical company, from June 2018 to November 2019. She is a founder of the Research Triangle Park chapter of the Healthcare Business Women’s Association and served on the Nominating Committee and National Advisory Board of the Healthcare Businesswomen’s Association.

Qualifications and Skills: Ms. Wysenski is a proven leader who brings to our Board extensive experience building and leading life sciences companies. Ms. Wysenski’s background includes executive management roles with responsibility over key operational and product commercialization functions, including substantial direct experience in sales, marketing, commercial operations, supply chain management, human resources and various business development initiatives. Her experience, leadership skills and knowledge of the life sciences industry provide valuable insight to our Board with respect to the launch and commercialization of pharmaceutical products.

 

Executive Officers

The following table sets forth our executive officers, their ages and the position held by each such person as of the date of this Amendment, and the biographical descriptions that follow set forth additional information regarding each executive officer, including such officer’s business experience that is most relevant to his current position(s). Each of our executive officers is employed by Alkermes, Inc., our U.S. operating subsidiary.

 

 

 

 

 

Name

Age

 

Position

Iain M. Brown

52

 

Senior Vice President, Chief Financial Officer

David J. Gaffin

49

 

Senior Vice President, Chief Legal Officer and Chief Compliance Officer*

Craig C. Hopkinson, M.D.

53

 

Executive Vice President, Research and Development and Chief Medical Officer

Blair C. Jackson

48

 

Executive Vice President, Chief Operating Officer

Michael J. Landine

67

 

Senior Vice President, Corporate Development and Chief Risk Officer

C. Todd Nichols

52

 

Senior Vice President, Chief Commercial Officer

Richard F. Pops

59

 

Chief Executive Officer and Chairman of the Board

*  Mr. Gaffin also serves as Secretary of the Company.

Information about the number of our ordinary shares beneficially owned by our executive officers, directly and indirectly, appears in the section entitled “Ownership of the Company’s Ordinary Shares” beginning on page 48 of this Amendment.

Executive Officer Biographical Information

 

Richard F. Pops

Chief Executive Officer and Chairman of the Board

Appointment to Current Position(s): September 2011

Experience: Prior to assuming his current positions, Mr. Pops served as Chief Executive Officer of Alkermes, Inc. from February 1991 to April 2007 and as Chief Executive Officer and President from September 2009 to September 2011. Mr. Pops currently serves on the boards of directors of Neurocrine Biosciences, Inc., a publicly-traded biotechnology company, BIO and PhRMA. He previously served on the boards of directors of Acceleron Pharma, Inc., a publicly-traded biotechnology company, from 2004 to December 2019, Epizyme, Inc., a publicly-traded biotechnology company, from 2008 to October 2020, and the National Health Council, a nonprofit organization, from 2016 to December 2019. Mr. Pops also previously served on the advisory board of Polaris Venture Partners and as a member of the Harvard Medical School Board of Fellows through June 2012.

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Iain M. Brown

Senior Vice President, Chief Financial Officer

Appointment to Current Position(s): January 2021

Experience: Prior to assuming his current position, Mr. Brown served as our Senior Vice President, Finance and Chief Accounting Officer from May 2016 to January 2021 and as Vice President, Finance and Chief Accounting Officer from May 2015 to May 2016. From September 16, 2011 to May 2015, Mr. Brown was our Vice President, Finance. From June 2006 to September 16, 2011, Mr. Brown served as Vice President, Finance of Alkermes, Inc. From March 2005 to June 2006, Mr. Brown served as Director of Finance of Alkermes, Inc. From July 2004 to March 2005, Mr. Brown served as Director of Financial Planning and Analysis of Alkermes, Inc. Mr. Brown joined Alkermes, Inc. in June 2003 as Associate Director of Financial Planning and Analysis. Prior to joining Alkermes, Inc., Mr. Brown was Vice President of Finance, North America at Serono, Inc.

 

David J. Gaffin

Senior Vice President, Chief Legal Officer and Chief Compliance Officer; Secretary of Alkermes plc

Appointment to Current Position(s): March 2018

Experience: Prior to assuming his current positions, Mr. Gaffin served as Senior Vice President and Chief Legal Officer of Alkermes, Inc. and Secretary of the Company from December 2017 to March 2018. Mr. Gaffin served as Senior Vice President and Chief Legal Officer of Alkermes, Inc. from May 2016 to December 2017. Mr. Gaffin served as Vice President, U.S. General Counsel of Alkermes, Inc., from January 2014 to May 2016. Mr. Gaffin served as Vice President, Deputy General Counsel of Alkermes, Inc. from October 2011 to January 2014, and prior to that in roles of increasing responsibility since joining Alkermes, Inc. in 2005. Prior to joining the company, Mr. Gaffin held the role of Assistant General Counsel at Biogen Inc., where he provided legal counsel on product-related matters and collaboration and licensing transactions.

 

Craig C. Hopkinson, M.D.

Executive Vice President, Research and Development and Chief Medical Officer

Appointment to Current Position(s): January 2020

Experience: Prior to assuming his current positions, Dr. Hopkinson was our Chief Medical Officer, and Senior Vice President of Medicines Development and Medical Affairs of Alkermes, Inc. from February 2018 to January 2020, and Chief Medical Officer and Senior Vice President of Clinical Development and Medical Affairs of Alkermes, Inc. from May 2017 to February 2018. Prior to joining the Company, Dr. Hopkinson served as Senior Vice President of Clinical Development and Head of Global Medical Affairs at Vertex Pharmaceuticals Incorporated, a global biopharmaceutical company, from July 2014 until May 2017. Prior to that, Dr. Hopkinson held various executive management positions at Eisai Pharmaceuticals, including President Eisai Value Maximization Systems from January 2013 to July 2014 and President and Chief Medical Officer of the Frontier Product Creation Unit from October 2011 to December 2012. Dr. Hopkinson has extensive experience in research and development, medical affairs, and interactions with the FDA.

 

Blair C. Jackson

Executive Vice President, Chief Operating Officer

Appointment to Current Position(s): January 2021

Experience: Prior to assuming his current position, Mr. Jackson served as Senior Vice President, Corporate Planning of Alkermes, Inc. from July 2018 to January 2021, responsible for our business development and alliance management, business planning, new product planning, data analytics and market research and corporate operations functions. From May 2016 to July 2018, Mr. Jackson served as Senior Vice President, Business Development of Alkermes, Inc. From 2006 to May 2016, Mr. Jackson served as Vice President, Business Development of Alkermes, Inc. Prior to that, Mr. Jackson held various scientific and corporate roles within Alkermes, Inc. since joining the company in 1999. Mr. Jackson is a member of the board of directors of Synchronicity Pharma, Inc., a private clinical-stage biopharmaceutical company.

 

Michael J. Landine

Senior Vice President, Corporate Development and Chief Risk Officer

Appointment to Current Position(s): March 2018

Experience: Prior to assuming his current positions, from September 2011 to March 2018, Mr. Landine served as Senior Vice President, Corporate Development of Alkermes, Inc. From May 2007 to September 16, 2011, Mr. Landine served as Senior Vice President, Corporate Development of Alkermes, Inc. From March 1999 until May 2007, Mr. Landine served as Vice President, Corporate Development of Alkermes, Inc. From March 1988 until June 1998, he was Chief Financial Officer and Treasurer of Alkermes, Inc. Mr. Landine was formerly a member of the board of directors of Kopin Corporation, a publicly traded manufacturer of components for electronic products, ECI Biotech, a privately held protein sensor company, and GTC Biotherapeutics, Inc., a publicly traded biotechnology company. Mr. Landine was previously a Certified Public Accountant.

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C. Todd Nichols

Senior Vice President, Chief Commercial Officer

Appointment to Current Position(s): May 2020

 

Experience: Prior to assuming his current position, Mr. Nichols served as Senior Vice President, Sales and Marketing of Alkermes, Inc. from May 2019 to May 2020. Prior to joining Alkermes, Inc., Mr. Nichols served as Vice President of Sales and Marketing, Inflammation and Immunology at Celgene Corporation, a global biopharmaceutical company, from 2018 to 2019 and as Vice President of Sales and Field Operations, Neurology and Hemophilia at Biogen, Inc., a global biopharmaceutical company, from 2014 to 2017. Prior to that, Mr. Nichols worked for Merck & Co., Inc. (“Merck”), serving as Vice President and Head of the US Vaccines Business Unit from 2011 to 2014 and as National Sales Leader, Specialty Commercial Operations-Women’s Health Care from 2009 to 2011. Prior to that, Mr. Nichols held a variety of positions at Schering-Plough Corporation (acquired by Merck in 2009), including Area Vice President, Sales and Regional Sales Director.

There are no family relationships among any of our directors or executive officers.

Certain Corporate Governance Matters

Audit and Risk Committee of the Board

The Audit and Risk Committee of the Board (the “Audit and Risk Committee”) is currently comprised of four members: Paul J. Mitchell (Chair), Robert A. Breyer, Nancy L. Snyderman, M.D. and Frank Anders Wilson, each of whom is independent as defined in Rule 5605(a)(2) and 5605(c)(2) of the Nasdaq listing standards and the applicable requirements of the Exchange Act. In compliance with the Sarbanes-Oxley Act of 2002, the Board has determined based on available facts and circumstances that each of Messrs. Breyer, Mitchell and Wilson is an “audit committee financial expert” as defined by the SEC. 

Code of Business Conduct and Ethics

The Company has a Code of Business Conduct and Ethics that applies to all of the Company’s directors, employees and officers, including its principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions. This Code of Business Conduct and Ethics meets the requirements of a “code of ethics” (as defined in the regulations promulgated under the Securities Act and the Exchange Act) and a “code of conduct” (as defined in the applicable rules and regulations of the Nasdaq Stock Market (the “Nasdaq Rules”)). A current copy of this Code of Business Conduct and Ethics is available on the Corporate Governance page of the Investors section of our website at www.alkermes.com. We intend to disclose any amendments to our Code of Business Conduct and Ethics, or any waivers of its requirements, on our website. A copy of our Code of Business Conduct and Ethics may also be obtained, free of charge, from the Company upon request directed to: Alkermes plc, Attention: Investor Relations, Connaught House, 1 Burlington Road, Dublin 4, Ireland, D04 C5Y6.

Members of the Board shall act at all times in accordance with the requirements of the Company’s Code of Business Conduct and Ethics, which is applicable to each director in connection with his or her activities relating to the Company. This obligation shall at all times include, without limitation, adherence to the Company’s policies with respect to conflicts of interest, confidentiality, protection of the Company’s assets, ethical conduct in business dealings and respect for, and compliance with, applicable law. Any request for a waiver of any of the requirements of the Code of Business Conduct and Ethics with respect to any individual director or any executive officer shall be reported to the Board and subject to its approval.

Procedure for Recommendation by Shareholders of Director Nominees

No material changes have been made to the procedures by which shareholders may recommend nominees to our Board.

Delinquent Section 16(a) Reports

Section 16(a) of the Exchange Act requires the Company’s directors and executive officers, and persons who beneficially own more than 10% of our ordinary shares, to file with the SEC initial reports of ownership and reports of changes in ownership of our ordinary shares. To the Company’s knowledge, all such reports were timely filed during 2020, except that, due to technical difficulties, one report on Form 4 for Mr. Anstice relating to three reportable transactions resulting from a broker-assisted cashless exercise of a stock option was inadvertently filed late.

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Item 11. Executive Compensation

Compensation Discussion and Analysis

This section discusses our executive compensation policies and arrangements as they relate to the following individuals to whom we refer as our “named executive officers” for 2020:

 

Named Executive Officer

Position

Richard F. Pops

Chief Executive Officer and Chairman of the Board

James M. Frates(1)

Former Senior Vice President, Chief Financial Officer

Craig C. Hopkinson, M.D.

Executive Vice President, Research and Development and Chief Medical Officer

David J. Gaffin

Senior Vice President, Chief Legal Officer, Chief Compliance Officer and Secretary

Michael J. Landine

Senior Vice President, Corporate Development and Chief Risk Officer

 

(1)

Mr. Frates terminated his employment with the Company in January 2021.

Executive Summary

Business Overview

We are a fully-integrated, global biopharmaceutical company that applies our scientific expertise and proprietary technologies to research, develop, manufacture and commercialize, both with partners and on our own, pharmaceutical products that are designed to address unmet medical needs of patients in major therapeutic areas.

We are currently developing a pipeline of potential new proprietary products in the fields of neuroscience and oncology. We manufacture and commercialize VIVITROL® for the treatment of alcohol dependence and opioid dependence, ARISTADA® for the treatment of schizophrenia, and ARISTADA INITIO® for initiation onto ARISTADA for the treatment of schizophrenia, and we are preparing for the potential launch of LYBALVITM for the treatment of schizophrenia and bipolar I disorder, which, pending FDA approval, we intend to manufacture and commercialize. We also manufacture commercial products, incorporating our proprietary technologies under license, that are owned and commercialized by other biopharmaceutical companies and for which we receive manufacturing and/or royalty revenues. Headquartered in Dublin, Ireland, we have a research and development (“R&D”) center in Waltham, Massachusetts; an R&D and manufacturing facility in Athlone, Ireland; and a manufacturing facility in Wilmington, Ohio.

 

COVID-19 Impact and Response

The COVID-19 pandemic has profoundly impacted our employees, their families, the economies and communities in which we live and work, and the patients that our medicines are designed to serve. Following the emergence of the pandemic in early 2020, we quickly adapted our business practices to support employee health, safety and wellness, and to support uninterrupted supply of, and patient and provider access to, our development products for people enrolled in our clinical studies and our marketed products for people living with opioid dependence, alcohol dependence and schizophrenia. We adopted work from home and virtual engagement policies for employees who could do their jobs remotely, instituted new health and safety protocols for employees performing essential tasks in our manufacturing facilities, and expanded our injection site network to facilitate patient access to our marketed products. We also expanded our corporate giving programs to support nonprofit organizations focused on pandemic-related needs.

The COVID-19 pandemic significantly and negatively impacted healthcare providers, patients and caregivers involved in the treatment of opioid and alcohol dependence in the U.S. Many addiction treatment provider healthcare practices closed, access to detoxification services decreased, and social distancing and other restrictions decreased patients’ desire to seek care and ability to engage with healthcare providers. Initiation and continuation of treatment with VIVITROL (naltrexone for extended-release injectable suspension), our intramuscular injectable product for the treatment of opioid and alcohol dependence, require in-person interactions with healthcare providers. As a result, the severe disruptions caused by the pandemic significantly and negatively impacted VIVITROL sales in 2020.

2020 Financial and Commercial Highlights

We achieved net loss according to generally accepted accounting principles in the U.S. (“GAAP”) of approximately $111 million and non-GAAP net income of approximately $69 million, reaching the high end of our non-GAAP net income guidance issued in February 2020, prior to the widespread implementation of restrictions related to COVID-19. See the section entitled “GAAP to Non-GAAP Reconciliation” on page 34 of this Amendment for a reconciliation of this GAAP to non-GAAP financial measure.

We increased ARISTADA unit sales by approximately 27% year-over-year, and exceeded the high end of ARISTADA annual net sales guidance issued in February 2020 by approximately $6 million.

We announced a Value Enhancement Plan and long-term profitability targets that reflect our commitment to creating long-term value for our stakeholders.

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We rapidly adapted our commercial model in response to the COVID-19 pandemic, expanding our network of injection site locations for patients using our products and implementing new digital technologies and ways of engaging with healthcare providers, both remotely and in-person, to support uninterrupted access to VIVITROL and ARISTADA for people living with addiction and schizophrenia.

2020 Pipeline Highlights

We had a successful Advisory Committee meeting for LYBALVI (olanzapine/samidorphan), our oral antipsychotic product candidate for schizophrenia and bipolar I disorder, with the FDA’s joint advisory committee voting that samidorphan meaningfully mitigated olanzapine-associated weight gain (16 yes, 1 no) and that the safety profile of LYBALVI had been adequately characterized (13 yes, 3 no, 1 abstention).

We significantly expanded our oncology clinical trial site network, activating more than 50 new sites in the ARTISTRY development program for nemvaleukin alfa, our product candidate in immuno-oncology, and advanced into phase 2 in our ARTISTRY-1 and ARTISTRY-2 studies.

We nominated a new candidate for development, ALKS 1140, a novel selective histone deacetylase (“HDAC”) inhibitor candidate, with potential application in a number of neuropsychiatric indications.

2020 Corporate and ESG Highlights

We further strengthened our Board by appointing two new independent directors who bring investment management perspective and strong financial and operational expertise to the Board.

We expanded our diversity, inclusion and belonging efforts and launched three employee resource groups – Pride@Work, an LGBTQ+ and ally network; Mosaic, a multicultural network; and Women Inspired Network (WIN), a women’s network.

We published our 3rd Corporate Responsibility Report, in which we demonstrated significant waste, energy, carbon and water performance improvements.

We advanced our advocacy efforts on behalf of patients and secured new federal and state funding for use with medications for the treatment of alcohol dependence, opioid dependence and serious mental illness.

Through our COVID-19 Relief Fund, we awarded grants to 10 nonprofit organizations to assist in their work to address COVID-19-related needs for people living with addiction, serious mental illness or cancer.

Shareholder Engagement and Board Responsiveness

Our management team and our Board are committed to executive compensation practices that support the Company’s strategic objectives and align with the interests of our shareholders. We participate in investor conferences throughout the year and regularly engage with our shareholders through open dialogue and direct communication on a variety of topics of interest. In particular, since our say-on-pay vote in 2019, we have engaged in a multi-year effort to respond to shareholder concerns around our executive compensation program. The following highlights the key phases of those efforts.

Shareholder Outreach Prior to 2020 Annual General Meeting – Spring 2020. In 2020, during the period following the filing of our proxy statement until the date of our annual general meeting of shareholders in May 2020, we proactively engaged with a number of our larger institutional shareholders to seek support for proposals to be voted upon at our upcoming annual general meeting of shareholders, and discussed, among other topics of interest to them, the significant changes that our Compensation Committee of the Board (the “Compensation Committee”) made to our 2020 executive compensation program. Overall, these changes were very well received. While many of our shareholders commended the Board’s responsiveness to shareholder feedback and acknowledged that our 2020 executive compensation program had addressed their previously stated concerns, a few shareholders noted that the say-on-pay vote in 2020 was to be in respect of our 2019 executive compensation program (and not our 2020 executive compensation program) and, in that context, expressed concern with the performance component of our Chief Executive Officer’s (“CEO”) 2019 equity award—which would vest on the achievement of a 50% increase of our share price for 30 consecutive days—given the lack of inclusion of a relative metric against which to assess such share price movement.

2020 Say-on-Pay Advisory Vote on 2019 Executive Compensation. Our shareholders are provided the opportunity, on an annual basis, to cast an advisory vote on our executive compensation program. The Compensation Committee takes the results of this vote into account when making determinations regarding the compensation of the Company’s named executive officers.

At our annual general meeting of shareholders held in May 2020, approximately 70% of the votes cast were voted in favor of our say-on-pay proposal in respect of our 2019 executive compensation, representing a significant improvement from our 2019 say-on-pay results, but not a full return to our desired level of support.

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Shareholder Outreach After 2020 Say-on-Pay Advisory Vote – Summer/Fall 2020. In the summer and fall of 2020, we continued to conduct extensive “offseason” engagement activities to further understand our shareholders’ perspectives on our executive compensation program and corporate governance. We conducted outreach to holders of over 75% of our outstanding ordinary shares and held meetings with holders of over 65% of our outstanding ordinary shares and with ISS and Glass Lewis. David Anstice, our Lead Independent Director and Chair of our Compensation Committee, and members of management participated in these meetings. Feedback received during these meetings was then communicated to our Compensation Committee and to our full Board, and discussed with management as appropriate.  

Board Responsiveness and Enhancements to Compensation

After careful consideration of the feedback received during our engagement efforts, and taking into account the evolving needs of our business, the Compensation Committee implemented the following changes to our executive compensation program to enhance its performance-based nature and alignment with the interests of our shareholders:

 

Shareholder Feedback

Actions We Took in Response

Incorporate multiple objective, performance-based elements, including relative total shareholder return (“TSR”), into the long-term incentive plan (“LTIP”) on a consistent basis

CEO’s 2019 performance-based award tied to single condition (increase in the Company’s share price) and lacks relative comparator against which to assess performance

Incorporate the Value Enhancement Plan into the 2021 LTIP

2020 LTIP. In February 2020, the Compensation Committee redesigned our LTIP and conditioned vesting of greater than 50% of the total target value of our CEO’s annual equity grant and, for the first time, 25% of the total target value of the annual equity grants to our other named executive officers, on the achievement of multiple measurable commercial and pipeline performance objectives over a three-year performance period, and added a relative TSR modifier over the three-year period which may increase or decrease the total number of vested shares underlying the awards by up to 25%. For additional detail, see the discussion in the section entitled “Responsiveness to Shareholder Feedback—2020 Long-Term Incentive Plan (LTIP)” on page 29 of this Amendment.

2021 LTIP. In February 2021, the Compensation Committee continued to condition vesting of greater than 50% of the total target value of our CEO’s annual equity grant and 25% of the total target value of the annual equity grants to our other named executive officers on the achievement of multiple measurable financial, commercial and pipeline performance-based conditions over a three-year performance period and subject to a relative TSR modifier. Included as part of these performance conditions are the 2023 profitability targets (non-GAAP net income margin equal to 25% of the Company’s total revenues; EBITDA margin of 20% of the Company’s total revenues) that form part of the Company’s Value Enhancement Plan announced in December 2020. See the section entitled “Non-GAAP Financial Targets” on page 34 of this Amendment for information regarding these non-GAAP financial targets.

Continue to revisit your peer group to ensure it reflects your company profile

Each year, the Compensation Committee reviews and revises our peer group, as needed, to reflect our then-current company profile. In September 2020, the Compensation Committee revised our peer group as a result of such review. In doing so, the Compensation Committee worked closely with our independent compensation consultant to identify additional companies that met one or more objective criteria relevant to our current profile. As part of this process, the Compensation Committee eliminated certain companies whose market capitalization was significantly higher than ours and added certain companies whose market capitalization was lower than ours. For additional detail on the changes made to our peer group, see the discussion in the section entitled “Peer Group Selection and Review Process” on page 18 of this Amendment.  

Develop an objective and measurable approach to the determination of short-term incentive plan (“STIP”) payouts

2020 STIP. In February 2020, the Compensation Committee incorporated into the Company’s 2020 STIP pre-defined objective metrics to assess the Company’s performance against its 2020 objectives, categorized the objectives by type (commercial, pipeline, and corporate social responsibility) and added percentage weightings to the corporate objectives by type to reflect their relative importance in contributing to the Company’s overall business strategy and shareholder value creation. For additional detail, see the discussion in the section entitled “Responsiveness to Shareholder Feedback—New STIP Design in 2020” on page 22 of this Amendment.

2021 STIP. In February 2021, the Compensation Committee retained the same enhanced objectivity and weighting in its design of the Company’s 2021 STIP and added a specific corporate objective and related metrics to incentivize progress toward the achievement of the 2023 and 2024 profitability targets set forth in the Company’s Value Enhancement Plan.

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Shareholder Feedback

Actions We Took in Response

Incorporate additional Environmental, Social and Governance (“ESG”) goals into the STIP

2020 STIP. The Company’s 2020 STIP included corporate objectives related to ESG matters, with performance metrics related to human capital development, employee engagement and incorporation of ESG considerations into the operation of our business. For additional detail, see the discussion in the section entitled “Responsiveness to Shareholder Feedback— New STIP Design in 2020” on page 22 of this Amendment.

2021 STIP. The Company’s 2021 STIP also includes corporate objectives related to ESG matters, with performance metrics related to human capital development, diversity and inclusion and our corporate responsibility and sustainability strategy.

Enhance disclosure around the Compensation Committee’s determination of STIP payouts

As reflected in this Compensation Discussion & Analysis, we enhanced our disclosure to more clearly indicate the manner in which our, and our named executive officers’, performance against our 2020 corporate objectives translated into STIP payouts for our named executive officers, including disclosure of the percentage weighting applied to each objective type (commercial, pipeline, and corporate social responsibility) of our STIP, and continued disclosure of individual performance considerations.

Stakeholders are welcome to reach out to our Investor Relations team at investor_relations@alkermes.com with any suggestions, comments or inquiries. Feedback on compensation matters will be reported to our Compensation Committee throughout the year. Shareholder proposals, nominations and other notifications required under the Irish Companies Act 2014, as amended (the “Companies Act”) or our Articles of Association should not be sent to this e-mail address, but rather should be delivered as set forth in our definitive proxy statement, our Articles of Association and in the Companies Act.

 

Executive Compensation Program Highlights

Our executive compensation program is focused on attracting, retaining and motivating experienced and well-qualified executive officers to advance our critical business objectives and promote the creation of shareholder value over the long-term.

Strong Compensation Governance Attributes

Our policies and practices are designed to enhance governance of our executive compensation program and to further our compensation objectives. These policies and practices include:

 

Key Features of Our Executive Compensation Program

Alignment of pay with performance

No guaranteed bonuses or base salary increases

Majority of executive compensation is “at-risk”

No tax gross-ups on severance or change in control benefits for individuals hired after 2009

Share ownership and holding guidelines

No repricing of underwater stock options without prior shareholder approval

Use of equity awards with performance-based vesting

No excessive perquisites

Minimum vesting requirements for equity awards

Prohibition of hedging and pledging by executive officers and directors

Clawback policy

Annual advisory vote on executive compensation

Focus on Pay for Performance and Alignment of Executive Compensation Program with Business Strategy

We believe in a pay-for-performance approach to compensation that supports our business strategy and aligns the interests of our named executive officers with those of our shareholders and other stakeholders. The focus of our compensation program is on total direct compensation opportunity utilizing a balance of compensation elements—base salary, short-term cash incentive compensation and long-term equity incentive compensation.

Competitive Benchmarked Pay to Attract, Retain and Motivate Executive Officers

When making compensation decisions, the Compensation Committee uses data from comparable public companies within our industry with whom we compete for top talent. The Compensation Committee reviews and makes adjustments to the composition of our peer group at least annually to account for changes in both our business and the businesses of the companies in our peer group.

Revised 2020 Peer Group

In September 2019, in light of significant changes to our market capitalization during 2018 and 2019, and taking into account feedback received from our shareholder engagement efforts, the Compensation Committee approved a new peer group for its use in making executive compensation decisions for 2020.

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Short-Term Cash Compensation: Pay for Performance

The Compensation Committee works with management to set annual performance objectives—including financial, operating, strategic and/or ESG-related—on which it believes our executive officers should focus during the year in order to achieve our short- and long-term business and strategic goals, and it monitors and reviews progress against these objectives during and after each year.

Objectivity and Transparency in Performance Metrics in 2020 and 2021

In response to shareholder feedback, the Compensation Committee has increasingly incorporated objective metrics and relative weightings into its assessment of Company performance against its annual corporate objectives, as set forth in the following table. For additional information, see the section entitled “Short-Term Incentive Plan (STIP) – Annual Cash Performance Pay” beginning on page 21 of this Amendment.

 

STIP Features

2018

2019

2020

2021

Pre-defined annual corporate objectives

Post-hoc application of objective metrics for assessment of corporate objectives

 

Pre-defined objective metrics for assessment of corporate objectives

 

 

Pre-defined numerical weighting assigned to corporate objectives by type

 

 

Pre-defined numerical weighting assigned to Company vs. individual performance

 

 

Enhanced disclosure of individual performance assessments

 

 

Long-Term Equity Compensation: Equity Mix Aligned with Strategic Focus and Creation of Shareholder Value

The Compensation Committee annually considers the appropriate mix of equity awards and has historically balanced the use of performance-vesting equity awards with time-vesting equity awards, as appropriate, to motivate employees to focus on the Company’s ongoing and future activities, key drivers of business success and share price appreciation.

The Compensation Committee conditions compensation on the achievement of financial and operating metrics, such as the achievement of certain financial, commercial or development milestones, when it determines that such metrics fall primarily within the control of our executive management and when compensation can be structured around such metrics such that it neither encourages excessive risk-taking nor discourages innovative and important development activities aligned with our business strategy.

Performance Conditions Included in Equity Grants to all Named Executive Officers in 2020

In response to shareholder feedback, the Compensation Committee has increasingly utilized performance-vesting awards in the equity mix for the Company’s executives. In February 2020, the Compensation Committee incorporated commercial and pipeline performance conditions into greater than 50% of the total target value of our CEO’s annual equity grant and, for the first time, 25% of the total target value of the annual equity grant to each of our officers at senior vice president level and above (including our named executive officers), in the form of performance-vesting restricted stock unit awards (“PRSUs”) with a three-year performance period, and added to such awards a relative TSR modifier tied to share price performance over the three-year period. For additional details of these grants, see the section entitled “2020 Equity Incentive Mix –Increased Focus on Performance Conditions” on page 29 of this Amendment.

In February 2021, the Compensation Committee maintained the same equity mix for the Company’s executives, conditioning greater than 50% and 25% of the total target value of the annual equity grant to our CEO and our other senior officers, respectively, on achievement of financial, commercial and pipeline objectives over a three-year performance period and subject to a relative TSR modifier.  

LTIP Features

2018

2019

2020

2021

Performance-vesting equity awards for CEO

 

Absolute share price-based performance condition

 

 

 

Relative total shareholder return-based performance condition

 

 

Performance-vesting equity awards for named executive officers other than CEO

 

 

 

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CEO Pay for Performance Alignment

The Compensation Committee seeks to tie executive pay to Company performance, including share price performance, through its grant of long-term equity awards and through annual performance cash bonus award opportunities. The chart below shows alignment between the CEO’s target total direct compensation and our share price for the years 2018 through 2020. Target total direct compensation for each year is calculated using base salary, the actual annual bonus compensation paid and the aggregate grant date fair value of equity awards granted as reported in the Summary Compensation Table in accordance with FASB Accounting Standards Codification Topic 718, Compensation—Stock Compensation (“ASC 718”).

 

 

Significant Portion of “At-Risk” Compensation

A significant portion of the total direct compensation opportunity for each of our named executive officers is comprised of “at-risk” compensation in the form of cash performance pay opportunities and long-term equity awards tied to the achievement of pre-defined corporate objectives designed to drive value creation for our shareholders.

The following chart represents the breakdown of 2020 total direct compensation for our CEO and illustrates the predominance of long-term equity incentives, performance-based components, and compensation that is “at-risk” in our CEO’s pay. Included in the chart are: (i) annual base salary for 2020; (ii) annual bonus award paid for 2020; and (iii) the approved target value of equity awards granted in 2020.

 

 

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Detailed Discussion and Analysis

Executive Compensation Philosophy and Objectives

Our executive compensation program is focused on attracting, retaining and motivating experienced and well-qualified executive officers who will meaningfully contribute to achievement of our critical business objectives, including human capital development, research and product development, manufacturing, commercialization and operational efforts. We structure our executive compensation based on scope of job responsibility, external peer comparisons, individual performance, and our overall Company performance.

The Compensation Committee established our executive compensation program with the following objectives:

 

MARKET COMPETITIVENESS AND RETENTION

Attract and retain a highly skilled work force by providing a compensation package that is competitive with other employers who compete with us for talent

BALANCE OF SHORT- AND LONG-TERM INCENTIVES

Balance the short-term and long-term focus required for success in the biopharmaceutical industry

ALIGNMENT OF PAY AND PERFORMANCE

Structure an increasing proportion of an individual’s compensation as performance-based

ALIGNMENT WITH SHAREHOLDER INTERESTS

Provide an overall compensation package that rewards individual and Company performance against our corporate objectives as a means to promote the creation and retention of value for us and our shareholders

How Target Compensation is Determined for our Named Executive Officers

Role of the Compensation Committee

The Compensation Committee reviews, oversees and administers our compensation policies, plans and programs, and reviews and determines the compensation to be paid to our executive officers, including our named executive officers. To assist in this work, the Compensation Committee engaged the services of an independent compensation consultant, the role of which we discuss in greater detail in the following section. The Compensation Committee’s full set of roles and responsibilities are set forth in the Compensation Committee’s written charter adopted by the Board, which is available on the Corporate Governance page of the Investors section of our website at www.alkermes.com.

Role of the Independent Compensation Consultant

A factor considered by the Compensation Committee in determining executive compensation is the high demand for well-qualified personnel in our industry. Given such demand, the Compensation Committee strives to maintain compensation levels that are competitive with the compensation of other executives in the industry. The Compensation Committee engaged Radford, an Aon Hewitt Company, as its independent compensation consultant (“Radford” or the “Compensation Consultant”) to review market data and various incentive programs and to provide assistance in establishing our cash and equity-based compensation targets and awards based, in large part, upon a peer group identification and assessment that Radford was retained to conduct, and upon an analysis of the retention value of equity awards. Radford took direction from, and provided reports to, our Senior Vice President of Human Resources and our Vice President of Compensation, Performance and Engagement, who acted on behalf, and at the direction, of the Compensation Committee. Radford did not provide us with any services other than the services requested by the Compensation Committee. The Compensation Committee considered whether the work of Radford as a compensation consultant has caused any conflict of interest and concluded that there was no conflict. The Compensation Committee, in its sole authority, has the right to hire or terminate outside compensation consultants. Radford was the only compensation consultant engaged by the Compensation Committee in 2020.

Competitive Assessment of Compensation – Peer Companies and Market Data

We seek to attract and retain highly qualified executive officers in an extremely competitive market. The Compensation Committee believes that it is important, when making its compensation decisions, to be informed as to the current practices of comparable public companies with which we compete for top executive talent.

Market Data. At the direction of the Compensation Committee, the Compensation Consultant periodically conducts peer group analyses to enable the Compensation Committee to compare our executive compensation program as a whole, and also the pay of individual executives, to that of the companies in our peer group. The Compensation Consultant also includes data from a broader survey group of public commercial-stage biopharmaceutical companies within a relevant revenue range in each of its analyses. The Compensation Consultant collects such data from public SEC filings of such companies and the Radford Global Life Sciences Survey, and applies a proprietary methodology to the data to construct a benchmark for compensation comparison purposes.

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Peer Group Selection and Review Process. The Compensation Committee reviews and makes adjustments to the composition of our peer group at least annually to account for changes in both our business and the businesses of the companies in our peer group.

As a fully-integrated, global biopharmaceutical company, we have built, and continue to devote significant resources to further develop and enhance, a comprehensive cross-functional organization designed to support product development from discovery through commercialization and lifecycle management. This investment includes, but is not limited to, investment in the following areas: R&D, including early discovery, translational medicine, formulation and clinical development capabilities; intellectual property prosecution, enforcement and defense; medical affairs; manufacturing operations; U.S. federal and state government affairs; sales and marketing; and market access, including managed markets, patient access services, and institutional sales.

There are a limited number of companies who are similar to us in terms of the diversity and complexity of our business. As such, the companies with which we compete directly for executive talent are not always similar to us in size, revenue or market capitalization. As a result, when developing the recommended lists of peer group companies to be used in connection with our compensation decisions for our named executive officers in 2020 and 2021, the Compensation Consultant considered a mix of quantitative and qualitative factors, including the factors listed in the following table.

 

Factor Considered

What We Look For

Similar industry

Biotechnology or pharmaceutical industry (GICS codes 352010 or 352020)

Commercial operations

Companies who market and sell commercial biopharmaceutical medicines

R&D expenditure as percentage of revenue

Significant investment in R&D to develop and advance products from discovery through to regulatory approval and commercialization

Revenue

Revenue of approximately 0.3 times to 3 times our then-projected revenue, resulting in a range of $350 million to $3 billion as of September 2019 and September 2020

Market capitalization

Market capitalization of approximately 0.3 times to 3 times our market value at the time; or, in times of particular share price volatility, companies with thirty (30)-day average market value between 0.3 and 3 times our average value for the same period, resulting in a lower market capitalization range of $1 billion to $9 billion as of September 2020 (as compared to a range of $1.2 billion to $11 billion as of September 2019)

Number of employees

Employee headcount of approximately 0.3 times to 3 times our then- current headcount, resulting in a range of 850 to 7,500 employees as of September 2019 and 2020

Geography / market competition

Companies with whom we compete directly for executive talent, including those in geographic proximity to our sites of operation

Companies that use Alkermes as a peer

Inclusion of Alkermes in a company’s peer group, as reported in its proxy statement from the prior year

2020 and 2021 Peer Groups

When selecting our 2020 and 2021 peer groups, the Compensation Committee targeted a group of 10 to 20 peers. Since few companies align with us on all of the factors listed above, the Compensation Committee considered, and included in our peer groups, those companies meeting a majority of our qualitative and quantitative criteria, with a greater weight placed on companies with a similar business model to ours––namely, those that market and sell commercial biopharmaceutical products, generate substantial revenue from such commercial activities and invest significantly in R&D and manufacturing—and with less of a focus placed on market capitalization, as the Compensation Committee believes that revenue is a better indicator of the complexity of a company’s business model in our industry. In this context, the Compensation Committee excluded from our peer groups those biopharmaceutical companies with business models that are dissimilar to ours, such as those that focus on over-the-counter and generic pharmaceuticals, medical diagnostics or veterinary pharmaceuticals, as we do not compete for senior executive talent with these companies and including them within our peer group could disadvantage us in attracting and retaining leadership talent.

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In light of significant changes to our market capitalization during 2018, 2019 and 2020, and taking into account feedback received from our shareholder engagement efforts, the Compensation Consultant recommended, and the Compensation Committee approved, the following refinements to our peer group to align with our evolving company profile:

 

Acadia Pharmaceuticals Inc.

Alexion Pharmaceuticals, Inc.

Alnylam Pharmaceuticals, Inc.

Biogen Inc.

BioMarin Pharmaceutical Inc.

Endo International plc

Incyte Corporation

Ionis Pharmaceuticals, Inc.

Jazz Pharmaceuticals plc

Nektar Therapeutics

Neurocrine Biosciences, Inc.

Regeneron Pharmaceuticals

Seagen Inc.**

United Therapeutics Corporation

Vertex Pharmaceuticals Incorporated

Removed:

-Alnylam Pharmaceuticals, Inc.  

-Biogen Inc.

-Regeneron Pharmaceuticals

-Vertex Pharmaceuticals Incorporated

 

Added:

+Emergent BioSolutions Inc.

+Exelixis, Inc.

+Horizon Therapeutics plc

Acadia Pharmaceuticals Inc.

Alexion Pharmaceuticals, Inc.

BioMarin Pharmaceutical Inc.

Emergent BioSolutions Inc.

Endo International plc

Exelixis, Inc.

Horizon Therapeutics plc

Incyte Corporation

Ionis Pharmaceuticals, Inc.

Jazz Pharmaceuticals plc

Nektar Therapeutics

Neurocrine Biosciences, Inc.

Seagen Inc.

United Therapeutics Corporation

 

Removed:

-Alexion Pharmaceuticals, Inc.  

-BioMarin Pharmaceutical Inc.

 

 

 

 

Added:

+bluebird bio, Inc.

+Ironwood Pharmaceuticals, Inc.

+Sage Therapeutics, Inc.

+Sarepta Therapeutics, Inc.

Acadia Pharmaceuticals Inc.

bluebird bio, Inc.

Emergent BioSolutions Inc.

Endo International plc

Exelixis, Inc.

Horizon Therapeutics plc

Incyte Corporation

Ionis Pharmaceuticals, Inc.

Ironwood Pharmaceuticals, Inc.

Jazz Pharmaceuticals plc

Nektar Therapeutics

Neurocrine Biosciences, Inc.

Sage Therapeutics, Inc.

Sarepta Therapeutics, Inc.

Seagen Inc.

United Therapeutics Corporation

 

*All companies in our 2020 peer group included us in their self-selected peer groups, as disclosed in their respective 2020 proxy statements.

** Seagen Inc. was formerly known as Seattle Genetics, Inc.

 

Use of Peer Group Data

The Compensation Consultant uses our peer group data and other market data to prepare its executive compensation review for the Compensation Committee each year. The below table shows the timing of the Compensation Committee’s decision-making with respect to compensation for each of our named executive officers, in each instance utilizing the Compensation Consultant’s executive compensation review:

 

December

Set performance pay targets and performance pay ranges for the upcoming year

January

Review and adjust salaries for the current year

Determine performance pay cash awards for the prior year

February

Determine target equity award values

The Compensation Committee generally targets around the 50th percentile for all elements of pay for our named executive officers; however, the comparative data provided by the Compensation Consultant is just one of many factors that the Compensation Committee takes into consideration in determining executive compensation, and the Compensation Committee increases or decreases the variable elements of pay from the 50th percentile based upon actual individual and company performance and a number of other considerations, as discussed in detail in this “Compensation Discussion and Analysis” section of this Amendment.

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Executive Compensation Program Design and Key Elements

The Compensation Committee uses its judgment to establish a compensation opportunity for each named executive officer that is a mix of fixed, short-term and long-term incentive compensation, and cash and non-cash compensation, that it believes appropriate to achieve our executive compensation program goals and our corporate objectives. A significant portion of the target total direct compensation opportunity for our named executive officers is comprised of “at-risk” compensation in the form of cash performance pay opportunities and long-term equity awards in order to align the named executive officers’ incentives with the interests of our shareholders and our corporate goals.

The table below explains the key features and purpose of each element of our executive compensation program utilized by the Compensation Committee to structure overall compensation that can reward both short- and long-term performance of the individual and our Company and foster retention of high-performing executives. As set forth below, the Compensation Committee incorporated each of these elements into its compensation decisions for 2020.

 

 

 

Element

Key Features

 

Purpose

 

Base Salary

Fixed cash compensation to recognize the executive’s day-to-day responsibilities

 

Provides a fixed level of compensation that is competitive within our industry and geographic area of our site locations

No amount is guaranteed

Reviewed and adjusted annually after the conclusion of the previous year

Annual Cash Performance Pay (STIP)

Variable cash compensation awarded after the conclusion of the previous year based on Company performance against pre-determined corporate objectives and individual contributions to such performance during the prior year

 

 

 

Aligns executive officers with business strategy and motivates them to achieve short-term corporate objectives

Enables us to reward executive officers who contribute to achievement of performance targets

No guaranteed amount

Determined annually

Restricted stock unit awards (or performance-vesting restricted stock unit awards)

 

Value and mix determined annually

Appropriately reward and retain key employees

The number of shares underlying stock options is determined using an approved value and the Black-Scholes stock option pricing model

The number of shares underlying stock awards is determined using an approved value and the then-current price of the Company’s ordinary shares

Align interests of executives with the Company’s long-term business strategy and creation of shareholder value

Restricted stock unit awards, including performance-based awards, do not vest, and stock options do not become exercisable, until one year from the date of grant at the earliest

No guaranteed amount

Provide executives with the opportunity to share in the future value they are responsible for creating

Time-Vesting

Stock Options

Time-vesting equity awards typically vest in equal annual installments over a four-year period

Restricted stock awards and restricted stock unit awards with a time-based restriction are required to have at least a three-year restriction period, although after twelve months, vesting can occur incrementally over such three-year period

Performance-vesting equity awards align executive compensation with specific milestones expected to drive value for our shareholders

Performance-Vesting

Performance-vesting equity awards that vest upon the achievement of key performance milestones

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Base Salary

In January 2020, the Compensation Committee reviewed and adjusted the base salaries of our executive officers. In determining such base salary adjustments, the Compensation Committee considered a number of factors, such as cost-of-living indices, market data for our peer group, achievement of our 2019 corporate objectives (as described in detail in our proxy statement filed in 2020), individual contributions to the achievement of our 2019 corporate objectives, the Compensation Committee’s competitive positioning philosophy and, for those executive officers other than Mr. Pops, the recommendation of Mr. Pops.

Based on this review, the Compensation Committee determined that, consistent with market practices, each named executive officer should receive an increase of approximately 3.5% in his base salary for 2020, with the exception of Dr. Hopkinson, for whom the Compensation Committee recommended an increase of 4.7% in acknowledgement of his January 2020 promotion to the position of Executive Vice President and increased responsibilities within the Company, and to approximate the median base salary of executives in similar positions at companies in our peer group. The following are the base salaries of each of our named executive officers for 2020:

 

Named Executive Officer

2019 Base Salary

2020 Base Salary

Approximate Percentage Increase

Richard F. Pops

$1,037,400

$1,073,712

3.5%

James M. Frates

$556,000

$575,460

3.5%

Craig C. Hopkinson, M.D.

$621,000

$650,000

4.7%

David J. Gaffin

$550,000

$569,250

3.5%

Michael J. Landine

$499,000

$516,465

3.5%

There were no other adjustments to the base salaries of our named executive officers during 2020.

Short-Term Incentive Plan (STIP) – Annual Cash Performance Pay

The Compensation Committee works with management to set annual performance objectives—including financial, operating, strategic and/or ESG-related—on which it believes our executive officers, including our named executive officers, should focus during the year in order to achieve our short-term business and strategic goals, which are an integral part of our long-term strategy. The Board and the Compensation Committee monitor and review progress against these objectives during and after the conclusion of each year. These annual corporate objectives form the basis of our reporting officer performance pay plan, our STIP that the Compensation Committee approves each year to incentivize our reporting officers to achieve the strongest possible performance against our corporate objectives.

Under the reporting officer performance pay plan, each executive officer is eligible to receive an annual cash performance pay award, the amount of which is determined by the Compensation Committee following the end of the performance period based on the Company’s performance against its corporate objectives and, for named executive officers other than the CEO, the contributions of each named executive officer to the achievement of our corporate objectives. For more detail, see the discussion in the section entitled “2020 Cash Performance Payouts” on page 29 of this Amendment.

2020 Corporate Objectives

In December 2019, the Compensation Committee endorsed, and the Board subsequently approved, nine corporate objectives to measure the performance of our Company and our reporting officers (including our named executive officers) in 2020. The 2020 corporate objectives, set forth in the table beginning on page 23 of this Amendment, were designed to focus our employees’ efforts around short-term activities that we believe are important to our business and to the creation of shareholder value, and include: sales and commercial goals; research, development and clinical goals; financial goals; manufacturing, supply and quality goals; regulatory goals; policy and patient advocacy goals; and organizational human capital development and sustainability goals. The Compensation Committee believes that the goals were challenging and that achieving them would require continued strong commercial, R&D and organizational performance, and a high level of effort and execution by our named executive officers.

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Responsiveness to Shareholder Feedback—New STIP Design in 2020

In response to shareholder feedback, the Compensation Committee made significant changes to our 2020 STIP design to further enhance the methodology utilized to assess overall Company performance and individual performance against the 2020 corporate objectives and to determine an overall cash performance award for each reporting officer, including our named executive officers. Specifically, the Compensation Committee:

 

pre-defined and approved objective quantitative and qualitative metrics to assess the Company’s performance in 2020 against each of the 2020 corporate objectives (see the table entitled “2020 Corporate Objectives: Performance Assessment” beginning on page 23 of this Amendment);

 

 

 

categorized the 2020 corporate objectives into three “Goal Types” and assigned percentage weightings for each of the three Goal Types (Financial and Commercial; Pipeline; and Corporate Social Responsibility), reflecting the Compensation Committee’s assessment of each Goal Type’s relative importance in contributing to the Company’s overall business strategy and to shareholder value creation; and

approved relative percentage weightings of corporate and individual performance for the CEO and for other executive officers, including our named executive officers, for use in the determination of their annual cash performance pay, as follows:

 

CEO

100% Company Performance

 

 

Other NEOs

75% Company Performance; 25% Individual Performance

 

2020 STIP - Cash Performance Targets and Pay Ranges

The Compensation Committee annually reviews and approves individual performance pay targets and performance pay ranges for each of our named executive officers, taking into consideration comparable competitive market data and targeting performance around the 50th percentile of such market data.

In December 2019, the Compensation Committee determined that the performance pay targets and performance pay ranges for the 2020 performance period should remain at the same levels as the targets and pay ranges for the 2019 performance period for all named executive officers, with the exception of Dr. Hopkinson for whom the Compensation Committee approved a performance pay target increase from 50% to 60%, and a corresponding increased performance pay range of 0 to 120%, in acknowledgement of his January 2020 promotion to the position of Executive Vice President and increased responsibilities within the Company. The approved target performance payouts and target performance pay ranges for each of our named executive officers for 2020 are set forth in the following table.

 

Named Executive Officer

2020 Target Performance Pay Range as % of Base Salary

2020 Target Performance Pay as % of Base Salary

Richard F. Pops

0% to 200%

100%

James M. Frates

0% to 100%

50%

Craig C. Hopkinson, M.D.

0% to 120%

60%

David J. Gaffin

0% to 100%

50%

Michael J. Landine

0% to 100%

50%

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2020 STIP - Company Performance Assessment

The Compensation Committee’s evaluation of our performance against the 2020 corporate objectives serves as the starting point for determining cash performance pay under our STIP. During 2020, management reported regularly to the Compensation Committee and the Board on the Company’s performance against its 2020 corporate objectives, which was negatively affected by the impact of the evolving COVID-19 pandemic.

Impacts of the COVID-19 Pandemic on the Business

The COVID-19 pandemic significantly and negatively impacted healthcare providers, patients and caregivers involved in the treatment of opioid and alcohol dependence in the U.S. Many addiction treatment provider healthcare practices closed, access to detoxification services decreased, and social distancing and other restrictions decreased patients’ desire to seek care and ability to engage with healthcare providers. Initiation and continuation of treatment with VIVITROL (naltrexone for extended-release injectable suspension), our intramuscular injectable product for the treatment of opioid and alcohol dependence, require in-person interactions with healthcare providers. The severe disruptions caused by the pandemic significantly and negatively impacted sales of VIVITROL in 2020.

No Changes to 2020 Corporate Objectives or Metrics Used to Assess Performance

Despite the impacts of the COVID-19 pandemic on the Company’s ability to achieve certain of its corporate objectives, as described in the table below, the Compensation Committee elected not to adjust the Company’s 2020 corporate objectives or the pre-determined metrics used to assess the Company’s performance against such objectives.

2020 Corporate Objectives: Performance Assessment

The following table provides details of the Compensation Committee’s assessment of the Company’s performance against each of the 2020 corporate objectives, as reviewed with the full Board:

 

Corporate

Objective

Metrics Used to Assess Performance

Accomplishments

Assessment

Financial and Commercial Goals: 45% weighting

Achieve financial guidance for non-GAAP net income

 

 

Achievement of non-GAAP net income (NGNI)* of between $40-$70 million, as was set forth in the first issuance of financial guidance in February 2020 (which was established prior to the proliferation of COVID-19 and related restrictions)

+  Achieved this objective by achieving NGNI* of approximately $69 million, toward the high end of the NGNI range set forth in our first issuance of financial guidance in February 2020, despite the impact of COVID-19 on the business.

    This was achieved through responsive, dynamic and thoughtful management of the business and expenses in response to evolving COVID-19 challenges and impacts on our product revenues.

* See the section entitled “GAAP to Non-GAAP Reconciliation” on page 34 of this Amendment for reconciliation of this GAAP to non-GAAP financial measure.

Achieved

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Corporate

Objective

Metrics Used to Assess Performance

Accomplishments

Assessment

Grow use of VIVITROL and ARISTADA among appropriate patients

     Achieve VIVITROL and ARISTADA annual net sales of $347 million and $227 million, respectively.

     Increase in:

(a) the number of prescribers writing prescriptions for VIVITROL and ARISTADA, as compared to 2019; and

(b) the number of prescriptions of VIVITROL and ARISTADA written by prescribers, as compared to 2019, in each case for clinically appropriate patients

   Achieved ARISTADA annual net sales of ~$241 million, exceeding the annual net sales goal by ~$14 million.

   Achieved units sold, patient-, and prescriber-based metrics for ARISTADA, each as compared to 2019:  

   Increased unit sales of ARISTADA by ~27%.

   Increased the number of patients on ARISTADA by ~31%, as measured by months of therapy (MOT).

   Increased the number of prescribers writing ARISTADA prescriptions by ~14%.

   Did not achieve VIVITROL annual net sales goal.

   Overall, did not achieve units sold, patient- and prescriber-based metrics for VIVITROL, likely due to the impacts of COVID-19 on healthcare provider practices and patient access to addiction treatment services, each as compared to 2019:  

    Units sales of VIVITROL decreased by ~9%.

    Number of patients on VIVITROL decreased by ~7%, as measured by MOT.

   Slight increase of ~3% in the number of accounts writing VIVITROL prescriptions.

Mitigating Factors

    The COVID-19 pandemic significantly impacted the addiction treatment infrastructure (including healthcare providers, patients and healthcare facilities), including large-scale disruption in the healthcare system for opioid and alcohol dependence treatment with VIVITROL, and net sales of VIVITROL were severely curtailed beginning in April 2020.

     Prior to the onset of the pandemic, VIVITROL was on track to meet its annual net sales goal, with net sales of ~$79 million in Q1 of 2020, exceeding the estimate of ~$77 million for the quarter.

    Our commercial team quickly shifted from in-person to virtual interactions, expanded the provider networks and locators for administration of our injectable medicines, and developed new digital technologies for engaging with healthcare providers, thereby significantly lessening the negative impact on VIVITROL annual net sales.

Did not achieve

Execute cross-functional pre-launch plans for LYBALVI

 

  Execution of disease state education program

  Generation and submission of publications

  Completion of training material development

  Identification of potential 2021 hires

   Achieved the LYBALVI pre-launch metrics:

   Developed disease state educational website which had greater than 150,000 visits, and delivered more than 20 disease state symposiums, the majority of which were rapidly transitioned to be conducted virtually due to the COVID-19 pandemic.

   Doubled unaided product awareness.

   Created launch capabilities and training materials with flexibility to be used virtually and incorporated optionality into launch plan based on the FDA’s final approved labeling.

   Strong execution across scientific communications plan, medical field team readiness and health economics and outcomes research (“HEOR”) strategy, including HEOR and pivotal data manuscript publications, presentations to payers and presentations at scientific congresses.

   Developed 2021 hiring strategy, including diversity recruiting strategy, for launch expansion hires.

Achieved

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Corporate

Objective

Metrics Used to Assess Performance

Accomplishments

Assessment

Manufacture commercial products and clinical trial material to meet the Company’s goals of quality, quantity, reliability and efficiency

  Ensure clinical drug product is ready for distribution to clinical study site at time of scheduled dosing

  Meet commercial product demand from customers

  Meet LYBALVI commercial product needs at the time of FDA approval and launch

  No critical findings from regulatory authority (FDA, U.S. Environmental Protection Agency (“EPA”), U.S. Drug Enforcement Administration (“DEA”)) inspections and audits of the Company’s manufacturing facilities

   Clinical drug product was in inventory ready for distribution to clinical study sites at the time of scheduled patient dosing 98.6% of the time.

   Met customer demand for commercial product at a fulfilment rate of 99.9%.

   FDA requested additional information related to the manufacture of LYBALVI as part of a complete response letter (“CRL”) issued in respect of the LYBALVI new drug application (“NDA”).

   FDA, HPRA, DEA, EPA regulatory inspections with no critical findings; HPRA, the Irish Health Products Regulatory Authority, conducted a virtual GMP audit of our Athlone facility in July 2020 as part of its routine inspection program and identified deficiencies, which have since been successfully addressed.

Mitigating Factors

    Uncertainty in the ongoing operations and continued reliability of supply chain partners, including raw material vendors and downstream supply chain partners.

    Implementation of COVID-19 physical distancing and other protocols throughout manufacturing facilities and clinical and commercial supply chain.

Did not achieve

Pipeline Goals: 35% weighting

Execute the nemvaleukin alfa clinical development plans, including monotherapy and combination studies

Activation of at least 45 new clinical trial sites for nemvaleukin alfa ARTISTRY-1 and ARTISTRY-2 clinical studies

+  Exceeded this goal by activating more than 50 new clinical trial sites for nemvaleukin alfa ARTISTRY-1 and ARTISTRY-2 clinical studies in the face of enormous global disruptions to clinical trial research caused by the COVID-19 pandemic.

 

Exceeded

Obtain FDA approval of the NDA for LYBALVI

 

 

Receipt of FDA approval of LYBALVI for the treatment of schizophrenia and the treatment of bipolar I disorder

 

   Did not achieve due to receipt of a CRL for LYBALVI in which FDA requested additional information related to the manufacture of LYBALVI as the basis for non-approval. The CRL did not raise any clinical or non-clinical issues.

Mitigating Factors

     COVID-19 negatively impacted FDA’s review of LYBALVI. FDA relied on remote records review instead of on-site Pre-Approval Inspection. We believe the remote records review hindered our ability to address FDA concerns in real-time as they arose and to understand any unresolved FDA concerns with the LYBALVI manufacturing process.  

     Advisory Committee meeting for LYBALVI was successful, with the FDA’s joint advisory committee voting that samidorphan meaningfully mitigated olanzapine-associated weight gain (16 yes, 1 no) and that the safety profile of LYBALVI had been adequately characterized (13 yes, 3 no, 1 abstention). 

Did not achieve

Nominate at least one new candidate for clinical development

Nomination of new candidate for clinical development pursuant to Alkermes’ nomination processes

   Achieved this objective by nominating ALKS 1140, the first candidate to emerge from our HDAC inhibitor platform, in December 2020.

Achieved

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Corporate

Objective

Metrics Used to Assess Performance

Accomplishments

Assessment

Corporate Social Responsibility Goals: 20% weighting

Engage with patient advocacy and public policy stakeholders to improve the treatment systems for severe mental illness and addiction

 

 

 

  Appropriately engage in concerted efforts to (a) maintain federal funding available for use with VIVITROL, and (b) secure new, and maintain existing, state appropriations for VIVITROL

  Advance policies to increase access to (i) VIVITROL for appropriate persons with alcohol dependence or opioid dependence, and (ii) ARISTADA for appropriate patients with schizophrenia, in each case in clinically indicated settings of care

+  Exceeded this objective. U.S. federal and state funding available for use with long-acting injectable (“LAI”) medications for the treatment of substance use disorders (“SUD”) and serious mental illness (“SMI”) increased significantly, even in the face of severe political disruptions, caused in part by the COVID-19 pandemic, the partisan U.S. political landscape and the November 2020 elections. In addition, Alkermes worked alone and in concert with other stakeholders to advance policies that promote increased access to LAI medications for the treatment of SUD and SMI.

    Federal Policy Highlights in 2020 included expansion of, and/or increased funding for, SUD and SMI treatment grant programs available for use with LAIs (including Comprehensive Opioid Recovery Centers, targeted capacity expansion grants and residential substance abuse programs), expansion of Veterans Administration’s training on alcohol use disorder (“AUD”) and the advancement of legislation relating to Medicaid coverage for our products.

    State Policy Highlights in 2020 included the existence of over 900 initiatives with funding available for use with SUD medication assisted therapy (“MAT”), including the expansion of MAT programs in a number of states, and legislation allowing for Medicaid coverage of pharmacist administration of LAIs in multiple states.

Exceeded

Continue to adapt and strengthen the company’s organizational infrastructure and capabilities to meet the needs of the Company’s business while maintaining its corporate values

Develop strong organizational talent, based on an annual assessment of talent at the Vice President level and higher, which will also be focused on ensuring succession plans for key roles. This assessment will be reviewed annually by the Nominating and Corporate Governance Committee

  Maintain positive ratings in respect of company culture and values, as assessed, in part, based on the results of an employee engagement survey in comparison to benchmark data from other comparable life sciences companies

+  Conducted organizational talent review, including an assessment of talent in each function from a performance, leadership potential and retention perspective and detailed cross-functional discussions of organizational talent and succession planning.

   Discussed the organizational talent review methodology, results and next steps with the Nominating and Corporate Governance Committee.

   2020 company-wide employee engagement survey results demonstrated high performance in comparison to biotechnology industry benchmarks and improvement in employee engagement metrics relative to 2018 employee engagement survey, despite challenges in workplace environments due to the COVID-19 pandemic, including a significant portion of the workface working remotely.

Achieved

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Corporate

Objective

Metrics Used to Assess Performance

Accomplishments

Assessment

(Cont.)

Continued integration of ESG considerations—including energy, carbon, water and waste reductions; EHSS excellence; human capital development; and community support and involvement—into the operation of the Company’s business, and publication of a 2020 Corporate Social Responsibility Report, or equivalent document, detailing such integration

   Published our third Corporate Responsibility Report in July 2020, highlighting our investment in, and engagement with, the communities in which we work, our health, safety and environmental accomplishments, and our employee wellness and career development activities, including actions taken in response to the COVID-19 pandemic.

   Expanded our diversity and inclusion efforts:

   Our Diversity, Inclusion & Belonging Steering Committee spearheaded company-wide diversity education and training, sponsored recognition events and developed an approach to incorporate diversity considerations when recruiting candidates for open positions. This Committee also organized opportunities for discussion and outreach in response to social justice movements, including Black Lives Matter protests in 2020.

  Launched our first three employee resource groups—Pride@Work, Mosaic Network and Women Inspired Network (WIN)—voluntary, employee-led groups based on shared identities and/or interests with a common purpose of supporting and enhancing the inclusiveness of our company culture, building community, providing opportunities for professional development and networking, and having a positive impact on the business.

   Responded rapidly to the COVID-19 pandemic to protect the health and safety of our employees and ensure healthcare providers and patients had uninterrupted access to our medicines.

   Implemented a comprehensive crisis response strategy, creating a Core Crisis Management Team and sub-teams comprised of persons from across the company, to address the various risks and challenges that the pandemic presented, and continues to present, to the company’s business, employees, and stakeholders.

 

Exceeded

Company Performance Payout Percentage

The Compensation Committee considered the range of accomplishments (three objectives were not met, four were achieved and three were exceeded), and the weightings of the three goal types, and determined an overall Company performance assessment of ‘ACHIEVED’.

Company performance serves as a significant factor, together with individual performance for named executive officers other than the CEO, in the Compensation Committee’s determination of individual cash performance payouts for our named executive officers. The Compensation Committee determined the Company performance assessment of ‘ACHIEVED’ to correspond to a payout of approximately 85% of target performance pay (the “Company Performance Payout Percentage”). For named executive officers other than the CEO, this Company Performance Payout Percentage was subject to upward or downward adjustment based on the executive officer’s individual performance.

Increased Company Performance Payout Percentage for Non-Executive Employees

For our non-executive employees, the Company Performance Payout Percentage is used as one factor in determining overall cash performance pay for each employee, subject to upward or downward adjustment based on each such employee’s individual performance. In recognition of the significant efforts of our non-executive employees to mitigate the impacts of the COVID-19 pandemic on the business, including those highlighted in the chart above, and the contribution of these efforts to the overall performance of the Company during 2020, the Compensation Committee approved an increase to the Company Performance Payout Percentage for use in determining the cash performance pay for all non-executive employees.

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2020 Individual Performance Assessments

Each named executive officer was responsible for contributing to the achievement of the Company’s 2020 corporate objectives, individually and as part of the leadership team, and to overall management and success of the business.

Individual Performance for Named Executive Officers other than Mr. Pops

In January 2021, Mr. Pops presented to the Compensation Committee, and the Compensation Committee considered, an assessment of the individual performance during 2020 of each of the named executive officers (other than Mr. Pops) still employed by the Company at such time, including an assessment of each named executive officer’s overall leadership of his respective organization and the contributions of each named executive officer to the business and the achievement of the Company’s corporate objectives. Specifically, the Compensation Committee considered the following contributions:

 

NEO

 

Individual Performance Contributions

 

Craig C. Hopkinson, M.D.

    Strong overall leadership of our research and development, clinical development, medical affairs and regulatory organizations

+   Contributed significantly to the achievement of our pipeline corporate objectives in 2020, including:

–    Significant expansion and advancement of the nemvaleukin alfa development program, despite the broad impacts of the COVID-19 pandemic on global clinical research activities, including initiation of more than 50 new sites, increased patient enrollment across the ARTISTRY-1 and ARTISTRY-2 clinical trials and advancement of each of ARTISTRY-1 and ARTISTRY-2 into their phase 2 expansion stages; and

–    Nomination of ALKS 1140, a new drug candidate with potential application in neuropsychiatric disorders

   Supported activities related to the LYBALVI NDA, including execution of a successful FDA advisory committee meeting, acceptance for publication of pivotal data manuscripts and prompt resubmission to the FDA of the NDA and supplemental information following receipt of a CRL and subsequent records requests related to the manufacturing of LYBALVI

David J. Gaffin

 

    Strong overall leadership of our legal-IP and compliance organizations

+   Contributed significantly to the achievement of our financial, commercial, pipeline and corporate social responsibility corporate objectives in 2020, including:

–    Management of VIVITROL paragraph IV litigation and other legal proceedings;

–    Legal assistance to address complete response letter and supplemental records requests related to the NDA for LYBALVI;

–    Support of, and analysis relating to, our advancement of legislation relating to Medicaid coverage for our products;

–    Involvement in the development of the Company’s strategic Value Enhancement Plan and related communications; and

–    Co-executive sponsor of Mosaic, our newly formed multicultural employee resource group

    Led extensive shareholder engagement outreach and preparedness efforts and collaborated with the Compensation Committee and Nominating and Corporate Governance Committee to formulate and communicate substantive actions in response to shareholder feedback received, including:

–    Re-design of the Company’s short-term and long-term incentive compensation plans;

–    Updates to the Company’s corporate governance practices and policies; and

–    Board refreshment efforts and new director onboarding activities

Michael J. Landine

    Strong overall leadership of our corporate development, information technology and public affairs organizations

    Contributed to the achievement of certain of our financial objectives in 2020 despite the significant impact of the COVID-19 pandemic on our topline, including integral involvement in achieving enterprise-wide expense savings to budget, resulting in the Company’s reaching the high end of its pre-pandemic full year 2020 guidance for non-GAAP net income

    Involved in strategic development of the Company’s Value Enhancement Plan

Based on this information, the Compensation Committee determined the cash performance payout for each of Dr. Hopkinson and Mr. Gaffin should be slightly higher than the Company Performance Payout Percentage and maintained the cash performance payout for Mr. Landine at the same level as the Company Performance Payout Percentage.

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2020 Cash Performance Payouts

In January 2021, the Compensation Committee—considering overall 2020 Company performance against the 2020 corporate objectives (and the corresponding Company Performance Payout Percentage), the individual performance of each of our named executive officers (other than Mr. Pops), the target cash performance pay and cash performance pay range set by the Compensation Committee in December 2019 for each executive officer, data from the Compensation Consultant regarding cash performance pay for executive officers of our peer group companies, comparable market data for experienced executive officers in the biopharmaceutical industry and the recommendations of Mr. Pops with respect to cash performance pay amounts for each named executive officer (other than Mr. Pops)—approved the following 2020 STIP cash performance payout amounts for each of our named executive officers still employed by the Company at such time:

Named Executive Officer

2020 Performance Payout Amount

 

 

2020 Target Performance Pay as a % of Base Salary

 

 

2020 Actual Performance Pay as a % of Base Salary

 

 

2020 Actual Performance Pay as a % of Target Performance Pay

 

Richard F. Pops

$

912,655

 

 

 

100

%

 

 

85

%

 

 

85

%

James M. Frates*

 

 

 

 

50

%

 

 

 

 

 

 

Craig C. Hopkinson, M.D.

$

351,000

 

 

 

60

%

 

 

54

%

 

 

90

%

David J. Gaffin

$

256,163

 

 

 

50

%

 

 

45

%

 

 

90

%

Michael J. Landine

$

219,498

 

 

 

50

%

 

 

43

%

 

 

85

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

*Mr. Frates terminated his employment with the Company in January 2021 and was therefore not eligible to receive a performance payout for 2020.

Long-Term Equity Incentives

We utilize long-term equity awards to align executive compensation and performance, incentivize the advancement of our critical business objectives, promote the creation of shareholder value over the long-term, and reward and retain key employees. Consistent with this approach, a significant portion of our named executive officers’ annual compensation is in the form of long-term equity awards.

2020 Equity Incentive Mix – Increased Focus on Performance Conditions

The Compensation Committee annually considers the appropriate mix of equity awards for our named executive officers and incorporates performance-based equity awards when it determines that such awards would not promote excessive risk taking that could adversely impact the Company or its research, development or commercialization of pharmaceutical products.

Responsiveness to Shareholder Feedback – 2020 Long-Term Incentive Plan (LTIP)

In its design of the 2020 LTIP, the Compensation Committee considered feedback from shareholders and proxy advisory firms with respect to long-term equity incentive plan design, the Company’s prior year performance (including our share price performance), ongoing and future strategic focus, and market practices with respect to equity mix. In February 2020, the Compensation Committee approved significant changes to our LTIP for 2020 to further align pay and performance, including the incorporation of performance-vesting restricted stock unit awards tied to a broad spectrum of strategically important Company activities and the grant of such awards to all of our employees that hold positions at senior vice president level and above. Specifically, the Compensation Committee:

 

for the first time, broadened the mix of equity in the annual grant to our named executives officers to include PRSUs that vest based on the achievement of specified commercial and development goals over a three-year performance period, and that are subject to a TSR modifier tied to relative share price performance (as compared to the Nasdaq Biotechnology Index) over the three-year performance period; this TSR modifier may increase or decrease the total number of vested shares underlying the PRSUs by up to 25%;

 

 

continued to apply performance conditions to greater than 50% of the total target value of our CEO’s 2020 annual equity grant (in the form of the PRSUs discussed above), with his remaining target equity award value consisting of time-vesting stock options that vest over four years in annual installments commencing on the first anniversary of the February 2020 grant date; and

 

for the first time, added performance conditions to 25% of the total target value of the 2020 annual equity grant to each of our named executive officers other than the CEO (in the form of the PRSUs discussed above), with their remaining 75% in target equity award value consisting of a mix of time-vesting stock options and time-vesting restricted stock unit awards, all of which vest over four years in annual installments commencing on the first anniversary of the February 2020 grant date.

 

 

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* Percentages listed in graphic are approximate.

2020 PRSU Design

The below chart shows the design of the 2020 PRSUs granted in February 2020 to each of our employees that hold positions at senior vice president level and above.

How Sizes of Awards Were Determined in 2020

Determination of Target Aggregate Values. The Compensation Committee grants all awards to our named executive officers based on an aggregate target dollar value for each award. In February 2020, in determining the target aggregate dollar value of the equity awards to be granted to each of our named executive officers for 2020, the Compensation Committee took into consideration comparable peer group equity award value data provided by the Compensation Consultant (see “2020 and 2021 Peer Groups” on page 18 of this Amendment for a discussion of our revised peer group) and targeted the 50th percentile of such peer group for the CEO and the 50th to 75th percentile of such peer group for the other named executive officers based on the criticality of the executive’s skill set and expected future contributions, the overall equity position of each executive and the retentive value of such overall equity position given our significant share price decline. The Compensation Committee also took into account the importance of retaining a consistent and cohesive management team to continue to execute on the Company’s medium- and long-term business strategy and to create shareholder value.

For named executive officers other than Mr. Pops, the Compensation Committee also considered Mr. Pops’ recommendations with respect to equity award values based on his assessment of the criticality of each named executive officer’s skill set and expected future contributions to achievement of the Company’s long-term objectives.

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For named executive officers other than Mr. Pops, the Compensation Committee also considered Mr. Pops’ recommendations with respect to equity award values based on his assessment of the criticality of each named executive officer’s skill set and expected future contributions to achievement of the Company’s long-term objectives.

Conversion into Share Amounts. The Compensation Committee converts the target aggregate dollar value of each award into a number of ordinary shares using per share value based on the closing price of our ordinary shares on the Nasdaq Global Select Market on the date of grant and, for awards of stock options, the Black-Scholes valuation model. Based upon the factors and methodology discussed above, the Compensation Committee granted the following awards to each of our named executive officers for 2020:

 

Named Executive Officer

 

Time-Vesting Stock Options

 

 

Time-Vesting Restricted Stock Unit Awards

 

 

Performance-Vesting Restricted Stock Unit Awards

 

Richard F. Pops

 

 

358,466

 

 

 

 

 

 

217,817

 

James M. Frates

 

 

102,337

 

 

 

24,474

 

 

 

24,474

 

Craig C. Hopkinson, M.D.

 

 

168,856

 

 

 

40,382

 

 

 

40,382

 

David J. Gaffin

 

 

117,688

 

 

 

28,145

 

 

 

28,145

 

Michael J. Landine

 

 

89,545

 

 

 

21,415

 

 

 

21,415

 

The equity awards granted to our named executive officers in 2020 are subject to early vesting in certain instances as described in the Alkermes plc 2018 Stock Option and Incentive Plan, as amended (the “2018 Plan”) and below in the section entitled “Potential Payments upon Termination or Change in Control” beginning on page 42 of this Amendment.

Additional Compensation Information

Share Ownership and Holding Guidelines

Our Board members and “officers” (as such term is defined in Section 16a-1(f) of the Exchange Act) are subject to our minimum share ownership and holding guidelines (our “Share Ownership and Holding Guidelines”). These guidelines are designed to align the interests of our Board members and officers with those of our shareholders by ensuring that our Board members and officers have a meaningful financial stake in our long-term success. These guidelines establish minimum required levels of share ownership value by position as set forth below:

 

 

 

 

Position

 

Required Share Ownership Value

CEO

 

6.0 times base salary

Board Members*

 

3.0 times annual Board member cash retainer

Other Officers*

 

1.0 times base salary

 

* First measurement date is the date that is at least five (5) full years from the date of election to the Board or appointment as an officer, as applicable.

For purposes of determining the value of shares owned by a Board member or officer under our Share Ownership and Holding Guidelines, we include the value of all shares directly or beneficially owned by such Board member or reporting officer and the amount by which the market value of any vested but unexercised stock option held by such individual exceeds the strike price of such stock option. We assess compliance with these guidelines annually and use the closing share price on the first business day of each year in our determination.

Our Share Ownership and Holding Guidelines require that each named executive officer retain 50% of the ordinary shares that he or she acquires upon the vesting of restricted stock unit awards and/or the exercise of stock options (net of tax liability and any amounts used to pay exercise price, as applicable) until such named executive officer meets our required levels of share ownership value.

Compliance with the Share Ownership and Holding Guidelines is monitored by the Nominating and Corporate Governance Committee. The Nominating and Corporate Governance Committee has determined that Mr. Pops and all directors and reporting

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officers subject to the guidelines are in compliance with the applicable share ownership and holding guidelines. A current copy of our Share Ownership and Holding Guidelines can be found on the Corporate Governance page of the Investors section of our website at www.alkermes.com.

Clawback Policy

Our named executive officers are subject to our Clawback Policy, under which, in the event that the Board determines that (a) a named executive officer engaged in fraud or intentional misconduct that requires a material restatement of our financial results, and (b) such fraud or intentional misconduct resulted in an incorrect determination that an incentive compensation performance goal had been achieved, then (c) the Board may take appropriate action to recoup from such named executive officer any equity incentive compensation that the Board determines had been paid to such named executive officer as a result of such incorrect determination during the three-year period preceding the filing of such material restatement of our financial results. A current copy of our Clawback Policy can be found on the Corporate Governance page of the Investors section of our website at www.alkermes.com.

Retirement Benefits

The terms of our 401(k) Savings Plan (“401k Plan”) provide for broad-based participation by our executive officers and employees resident in the U.S. Under the 401k Plan, all of our U.S. employees are eligible to receive matching contributions from us. Our matching contribution for the 401k Plan for 2020 was as follows: dollar for dollar on each participant’s eligible compensation up to a maximum of 5% of such compensation, subject to applicable U.S. federal limits.

Other Benefits

Executive officers are eligible to participate in our medical, dental and life insurance employee benefit plans on the same terms as all other employees. We may also provide relocation expense reimbursement, which is negotiated on an individual basis with employees, including executive officers, in a manner consistent with our internal guidelines.

Executive officers are also entitled to certain benefits upon death or disability. Under our flexible benefits program, our executive officers receive long-term disability coverage that will pay up to 65% of their base salary, up to a monthly maximum of $27,500, during disability, and, in cases of catastrophic disability, a supplemental amount based on their base salary. Also, under our flexible benefits program, we provide life insurance coverage for all of our eligible U.S. employees, including the named executive officers, equal to two times base salary, with a maximum of $500,000 in coverage paid by us. In addition, all U.S. employees, including the named executive officers, are eligible to participate in optional supplemental life insurance up to a maximum of $500,000.

Post-Termination Compensation and Benefits

We have a program in place under which each of our executive officers receives severance benefits if such executive officer is terminated without “cause” (as defined in each executive officer’s employment agreement with the Company) or resigns for “good reason” (e.g., a material diminution in his or her responsibilities, authority, powers, functions, duties or compensation or a material change in the geographic location at which such executive officer must perform his or her employment), subject to signing a general release of claims. Additionally, each named executive officer receives severance benefits if, within a period of time following a corporate transaction or a change in control, such executive officer is terminated without “cause” or resigns for “good reason.” The terms of, and the amounts payable under, these arrangements are described in more detail below under “Potential Payments upon Termination or Change in Control.” We provide these severance arrangements because we believe that, in a competitive market for talent, severance arrangements are necessary to attract and retain high quality executives. In addition, the change in control benefit allows and incentivizes executives to maintain their focus on our business during a period when they otherwise might be distracted.

Tax and Accounting Considerations

Under Section 162(m) of the Internal Revenue Code of 1986, as amended (the “Code”), compensation paid to each of the Company’s “covered employees” that exceeds $1 million per taxable year is generally non-deductible unless the compensation qualifies for certain grandfathered exceptions (including the “performance-based compensation” exception) for certain compensation paid pursuant to a written binding contract in effect on November 2, 2017 and not materially modified on or after such date.

Although the Compensation Committee will continue to consider tax implications as one factor in determining executive compensation, the Compensation Committee also looks at other factors in making its decisions and retains the flexibility to provide compensation for the Company’s named executive officers in a manner consistent with the goals of the Company’s executive compensation program and the best interests of the Company and its shareholders, which may include providing for compensation that is not deductible by the Company due to the deduction limit under Section 162(m) of the Code (“Section 162(m)”). The Compensation Committee also retains the flexibility to modify compensation that was initially intended to be exempt from the deduction limit under Section 162(m) if it determines that such modifications are consistent with the Company’s business needs.

Under ASC 718, the Company is required to estimate and record an expense for each award of equity compensation over the vesting period of the award. We record share-based compensation expense on an ongoing basis in accordance with ASC 718.

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Equity Grant Timing

Annual employee equity grants, including grants to executive officers, are made after the announcement of the Company’s year-end results and after the Company’s window to trade in Company securities has reopened (generally 48 hours after the announcement of such results). New hire equity grants are typically granted on the first Wednesday following the first Monday (or the first business day thereafter if such day is a holiday for which Nasdaq is closed) of each month. For information about non-employee director equity compensation, see the discussion in the section entitled “Non-Employee Director Compensation Program—Equity Compensation” on page 45 of this Amendment. For additional information about our equity compensation plans, see the section entitled “Equity Compensation Plan Information” on page 48 of this Amendment.

Risk Assessment Concerning Compensation Practices and Policies

The Compensation Committee, at the direction of the Board, reviewed our 2020 compensation policies and practices and concluded that these policies and practices, as structured, are not reasonably likely to have a material adverse effect on the Company.

Specifically, our compensation programs contain many features that mitigate the likelihood of inducing excessive risk-taking behavior. These features include:

 

a balance of fixed cash compensation and variable cash and equity compensation, with variable compensation tied both to short- and long-term objectives and the long-term value of our share price;

 

Compensation Committee discretion in determining incentive program payouts and equity awards;

 

limits on payouts under our annual performance incentive plans;

 

share ownership and holding guidelines applicable to our directors and executive officers;

 

application of a clawback policy and the anti-hedging and anti-pledging provisions in our Insider Trading Policy; and

 

mandatory training on our policies that educate our employees on appropriate behaviors and the consequences of taking inappropriate actions.

The Compensation Committee also asked the Compensation Consultant to do a specific risk assessment of the Company’s 2020 cash and equity incentive plans and the Compensation Consultant determined there to be a low risk level under each of the factors assessed.

Report of the Compensation Committee

The following report of the Compensation Committee shall not be deemed to be “soliciting material” or to be “filed” with the Securities and Exchange Commission, nor shall this report be incorporated by reference into any filing made by the Company under the Securities Act or the Exchange Act.

The Compensation Committee of the Board, which is comprised solely of (i) independent directors within the meaning of applicable Nasdaq Rules, (ii) outside directors within the meaning of Section 162 of the Code, and (iii) non-employee directors within the meaning of Rule 16b-3 under the Exchange Act, has reviewed and discussed with management the Compensation Discussion and Analysis section of this Amendment for 2020. In reliance on the reviews and discussions referred to above, the Compensation Committee has approved the Compensation Discussion and Analysis, and the Board has approved the Compensation Discussion and Analysis for inclusion in this Amendment.

Respectfully submitted by the Compensation Committee,

David W. Anstice AO (Chair)

Richard B. Gaynor, M.D.

Paul J. Mitchell

Nancy J. Wysenski

Compensation Committee Interlocks and Insider Participation

The directors who served as members of the Compensation Committee during 2020 were David W. Anstice AO (Chair), Richard B. Gaynor, M.D., Paul J. Mitchell and Nancy J. Wysenski, none of whom is currently, or ever has been, an officer or employee of our Company, or had any relationship that is required to be disclosed in this Amendment as a transaction with a related party. During 2020, none of our executive officers served as a member of the board of directors or the compensation committee (or other board committee performing equivalent functions) of any entity that had one or more of its executive officers serving on our Compensation Committee or our Board.

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GAAP to Non-GAAP Reconciliation

This Amendment includes information about non-GAAP net income, a financial measure that is not prepared in accordance with GAAP. This non-GAAP measure is not based on any standardized methodology prescribed by GAAP and is not necessarily comparable to similar measures presented by other companies. Non-GAAP net income adjusts for certain one-time and non-cash charges by excluding from GAAP results: share-based compensation expense; amortization; depreciation; non-cash net interest expense; certain other one-time or non-cash items; and the income tax effect of these reconciling items.

The Company’s management and board of directors utilize this non-GAAP financial measure to evaluate the Company’s performance. The Company provides this non-GAAP measure of the Company’s performance to investors because management believes that this non-GAAP financial measure, when viewed with the Company’s results under GAAP and the accompanying reconciliations, is useful in identifying underlying trends in ongoing operations. However, non-GAAP net income is not a measure of financial performance under GAAP and, accordingly, should not be considered as an alternative to GAAP measures as an indicator of operating performance. Further, non-GAAP net income should not be considered a measure of the Company’s liquidity.

A reconciliation of GAAP net loss to non-GAAP net income, as provided in this Amendment is as follows:

 

Condensed Consolidated Statements of Operations - GAAP

 

Year Ended

 

(In thousands)

 

December 31, 2020

 

Net Loss — GAAP

 

$

(110,861

)

Adjustments:

 

 

 

 

Share-based compensation expense

 

 

90,161

 

Depreciation expense

 

 

42,402

 

Amortization expense

 

 

39,452

 

Income tax effect related to reconciling items

 

 

10,092

 

Non-cash net interest expense

 

 

666

 

Change in the fair value of contingent consideration

 

 

(3,945

)

Acquisition of IPR&D

 

 

674

 

Non-GAAP Net Income

 

$

68,641

 

 

Non-GAAP Financial Targets

This Amendment includes information about certain non-GAAP financial targets, including non-GAAP net income margin (non-GAAP net income/total revenues) and EBITDA margin (EBITDA/total revenues). These non-GAAP financial measures are not prepared in accordance with GAAP, are not based on any standardized methodology prescribed by GAAP and are not necessarily comparable to similar measures presented by other companies. Non-GAAP net income adjusts for certain one-time and non-cash charges by excluding from GAAP results: share-based compensation expense; amortization; depreciation; non-cash net interest expense; certain other one-time or non-cash items; and the income tax effect of these reconciling items. EBITDA is calculated as earnings before interest, taxation, depreciation and amortization.

 

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Table of Contents

 

Executive Compensation Tables

Summary Compensation Table

The following table presents and summarizes the compensation paid to, or earned by, our named executive officers for 2020, 2019 and 2018:

 

Name and Principal Position

 

Year

 

Salary ($)

 

 

Bonus ($)

 

 

Stock

Awards ($)

 

 

Option

Awards ($)

 

 

Non-Equity

Incentive Plan

Compensation

($)

 

 

Change in

Pension Value

and Nonqualified

Deferred

Compensation

Earnings ($)

 

 

All Other

Compensation

($)

 

 

Total ($)

 

 

(a)

 

(b)

 

(c)

 

 

(d)

 

 

(e)(2)

 

 

(f)(3)

 

 

(g)(4)

 

 

(h)

 

 

(i)(5)

 

 

(j)

 

 

Richard F. Pops

 

2020

 

 

1,073,712

 

 

 

 

 

 

2,551,714

 

 

 

3,489,121

 

 

 

912,655

 

 

 

 

 

 

14,500

 

 

 

8,041,702

 

 

Chairman and Chief Executive Officer

 

2019

 

 

1,037,400

 

 

 

 

 

 

4,221,072

 

 

 

8,384,675

 

 

 

980,000

 

 

 

 

 

 

14,000

 

 

 

14,637,147

 

 

 

 

2018

 

 

1,002,316

 

 

 

 

 

 

4,876,350

 

 

 

10,010,722

 

 

 

1,152,664

 

 

 

 

 

 

13,750

 

 

 

17,055,802

 

 

James M. Frates(1)

 

2020

 

 

575,460

 

 

 

 

 

 

786,717

 

 

 

996,096

 

 

 

 

 

 

 

 

 

14,500

 

 

 

2,372,772

 

 

Former Senior Vice President, Chief Financial Officer

 

2019

 

 

556,000

 

 

 

 

 

 

758,881

 

 

 

1,475,360

 

 

 

278,000

 

 

 

 

 

 

14,000

 

 

 

3,082,241

 

 

 

 

2018

 

 

536,732

 

 

 

 

 

 

908,010

 

 

 

1,849,438

 

 

 

309,000

 

 

 

 

 

 

13,750

 

 

 

3,616,930

 

 

Craig C. Hopkinson, M.D.

 

2020

 

 

650,000

 

 

 

 

 

 

1,298,079

 

 

 

1,643,556

 

 

 

351,000

 

 

 

 

 

 

14,500

 

 

 

3,957,135

 

 

Executive Vice President, Research and

 

2019

 

 

621,000

 

 

 

 

 

 

895,675

 

 

 

1,737,537

 

 

 

388,125

 

 

 

 

 

 

14,000

 

 

 

3,656,337

 

 

Development and Chief Medical Officer

 

2018

 

 

600,000

 

 

 

 

 

 

908,010

 

 

 

1,849,438

 

 

 

420,000

 

 

 

 

 

 

13,750

 

 

 

3,791,198

 

 

David J. Gaffin

 

2020

 

 

569,250

 

 

 

 

 

 

904,709

 

 

 

1,145,513

 

 

 

256,163

 

 

 

 

 

 

14,500

 

 

 

2,890,136

 

 

Senior Vice President, Chief Legal Officer,

 

2019

 

 

550,000

 

 

 

 

 

 

895,675

 

 

 

1,737,537

 

 

 

343,750

 

 

 

 

 

 

14,000

 

 

 

3,540,962

 

 

Chief Compliance Officer and Secretary

 

2018

 

 

500,000

 

 

 

 

 

 

908,010

 

 

 

1,849,438

 

 

 

325,000

 

 

 

 

 

 

13,750

 

 

 

3,596,198

 

 

Michael J. Landine

 

2020

 

 

516,465

 

 

 

 

 

 

688,373

 

 

 

871,585

 

 

 

219,498

 

 

 

 

 

 

14,500

 

 

 

2,310,421

 

 

Senior Vice President, Corporate Development and Chief Risk Officer

 

2019

 

 

499,000

 

 

 

 

 

 

758,881

 

 

 

1,475,360

 

 

 

249,500

 

 

 

 

 

 

14,000

 

 

 

2,996,741

 

 

 

Notes to Summary Compensation Table

 

(1)

Mr. Frates terminated his employment with the Company in January 2021.

 

(2)

The amounts in column (e) reflect the aggregate grant date fair value of stock awards granted during 2020, 2019 and 2018, as indicated, computed in accordance with ASC 718. The weighted average grant date fair values of stock awards granted during these years are included in footnote 14 “Share-Based Compensation” to our consolidated financial statements for the year ended December 31, 2020 included in our 2020 Annual Report.

Included in the stock awards granted to the named executive officers in 2020 are PRSUs that, in order to vest, require achievement of certain commercial and pipeline performance conditions over a three-year performance period and are subject to a TSR modifier at the end of the performance period. For additional detail, see the discussion in the section entitled “Long-Term Equity Incentives” beginning on page 29 of this Amendment. The grant date fair value of these performance-vesting restricted stock unit awards was determined in accordance with ASC 718 based upon the then-probable outcome of the performance conditions underlying such awards and, because of the market condition component of the awards, was computed using a Monte Carlo simulation. Assuming on the date of grant that the highest level of performance would be achieved, the fair value of such PRSUs calculated in accordance with ASC 718 was $9,568,973, $1,075,173, $1,774,032, $1,236,445 and $940,788 for Messrs. Pops and Frates, Dr. Hopkinson and Messrs. Gaffin and Landine, respectively.

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(3)

The amounts in column (f) reflect the aggregate grant date fair value of option awards granted during 2020, 2019 and 2018, as indicated, computed in accordance with ASC 718. The assumptions used in the calculation of the fair value of option awards granted by us during these periods are included in footnote 2 “Summary of Significant Accounting Policies” to our consolidated financial statements for the year ended December 31, 2020 included in our 2020 Annual Report under the heading “Share-Based Compensation”. For additional details regarding the equity granted to our named executive officers in 2020, see the discussion in the section entitled “Long-Term Equity Incentives” beginning on page 29 of this Amendment. Included in the option awards granted to Mr. Pops during 2019 are (i) 382,200 time- and performance-vesting stock options that, in order to vest, require a greater than 50% increase in the Company’s share price from their grant date value for 30 consecutive trading days and, once that performance condition is met, remain subject to time-based vesting in equal annual installments over four years commencing on the first anniversary of the grant date, which had a grant date fair value computed using a Monte Carlo simulation model in accordance with ASC 718 of $6,414,272 and (ii) 121,000 time-vesting stock options that vest in equal annual installments over four years commencing on the first anniversary of the grant date, which had a grant date fair value computed using a Black-Scholes model in accordance with ASC 718 of $1,970,403.

 

(4)

The amounts in column (g) reflect the cash awards paid to our named executive officers for services performed during 2020, 2019 and 2018, as indicated, pursuant to the Alkermes plc Affiliated Company 2020 Reporting Officer Performance Pay Plan (the “2020 Performance Pay Plan”), the Alkermes plc Affiliated Company Fiscal Year 2019 Reporting Officer Performance Pay Plan and the Alkermes plc Affiliated Company Fiscal Year 2018 Reporting Officer Performance Pay Plan, respectively. The cash award amounts paid to our named executive officers for services in 2020 as compared to their target cash awards for 2020 reflect 85% of target for Messrs. Pops and Landine and 90% of target for Dr. Hopkinson and Mr. Gaffin. Mr. Frates terminated his employment with the Company in January 2021 and was therefore not eligible to receive a performance payout for 2020.

 

(5)

The amounts in column (i) reflect the Company’s match on contributions made by the named executive officers to our 401k Plan.

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2020 Grants of Plan-Based Awards Table

The following table presents information on all grants of plan-based awards made in 2020 to our named executive officers:

 

 

 

 

 

Estimated Future Payouts Under

Non-Equity Incentive Plan Awards

 

 

Estimated Future Payouts Under

Equity Incentive Plan Awards

 

 

All Other Stock Awards: Number of Shares

 

 

All Other Option Awards: Number of Securities Underlying

 

 

Exercise or Base Price of Option

 

 

Grant Date Fair Value of Stock and Option

 

Name

 

Grant

Date

 

Threshold

($)

 

 

Target

($)

 

 

Maximum

($)

 

 

Threshold

(#)

 

 

Target

(#)

 

 

Maximum

(#)

 

 

or Units

(#)

 

 

Options

(#)

 

 

Awards

($/Sh)

 

 

Awards

($)

 

(a)

 

(b)

 

(c)

 

 

(d)(1)

 

 

(e)(1)

 

 

(f)

 

 

(g)(2)

 

 

(h)(2)

 

 

(i)(3)

 

 

(j)(4)

 

 

(k)

 

 

(l)(5)

 

Richard F. Pops

 

2/20/2020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

358,466

 

 

 

20.43

 

 

 

3,489,121

 

 

 

2/20/2020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

217,817

 

 

 

408,407

 

 

 

 

 

 

 

 

 

 

 

 

2,551,714

 

 

 

N/A

 

 

 

 

 

1,073,712

 

 

 

2,147,424

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

James M. Frates

 

2/20/2020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

24,474

 

 

 

 

 

 

 

 

 

500,004

 

 

 

2/20/2020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

102,337

 

 

 

20.43

 

 

 

996,096

 

 

 

2/20/2020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

24,474

 

 

 

45,889

 

 

 

 

 

 

 

 

 

 

 

 

286,713

 

 

 

N/A