DEF 14A
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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

 

SCHEDULE 14A

PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE

SECURITIES EXCHANGE ACT OF 1934

 

 

Filed by the Registrant  ☒                             Filed by a Party other than the Registrant  ☐

Check the appropriate box:

 

  Preliminary Proxy Statement
  Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
  Definitive Proxy Statement
  Definitive Additional Materials
  Soliciting Material Pursuant to §240.14a-12

BIOGEN INC.

(Name of Registrant as Specified In Its Charter)

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

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LOGO

 

 

 

 

 

    NOTICE OF    

 

 

2018 Annual Meeting of

Stockholders and Proxy Statement

 

 

 

 

 

        Tuesday, June 12, 2018

        9:00 a.m. Eastern Time

        To be held at our offices located at 225 Binney Street,

        Cambridge, Massachusetts 02142 and

        online at www.virtualshareholdermeeting.com/BIIB2018


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LOGO

 

   
 

Letter from our Chairman

 

 
   

April 27, 2018

To My Fellow Stockholders:

On behalf of the Board of Directors, I want to thank you for your investment in Biogen and for the confidence you put in this Board to oversee your interests in this business.

Biogen’s mission is clear: We are pioneers in neuroscience. We believe that no other disease area holds as much need or as much promise for medical breakthroughs with approximately one billion people affected by neurological disorders worldwide.

Our philosophy of Caring Deeply. Working Fearlessly. Changing Lives. informs our policies and business practices. We work to have an impact beyond our medicines as we strive to improve patient health outcomes, solve social and environmental challenges, cultivate a workplace that enables our employees to thrive, support local communities and inspire future generations of scientists.

The Board takes its role in overseeing Biogen’s long-term business strategy very seriously. In 2017 the Board stewarded a successful leadership succession plan with the transition to our new CEO, Michel Vounatsos, who has begun implementing our newly focused strategy as we continue to work toward our goal of broadening our leadership role in neuroscience.

We are proud of our accomplishments in 2017, including:

 

  Generating record revenues of $12.3 billion for the year, performing well across our multiple sclerosis portfolio and delivering one of the most impressive launches in the history of the biotech industry with SPINRAZA, the first and only approved treatment for spinal muscular atrophy.

 

  Continuing apace in the accrual of patients in all clinical programs, including our pivotal trials of aducanumab in Alzheimer’s disease.

 

  The addition of seven new clinical-stage programs across our core and emerging growth areas.

 

  Our perfect score of 100% on the Human Rights Campaign’s Corporate Equality Index (a national benchmarking tool on corporate policies and practices pertinent to LGBTQ employees) for the fourth consecutive year.

 

  Our continued commitment to operational carbon neutrality highlighted by the use of 100% renewable electricity globally.

 

  The dedication and commitment of the over 2,600 employees who volunteered from 26 countries in our annual Care Deeply Day.

 

  The engagement of 44,000+ students in hands-on learning to inspire their passion for science since the inception of Biogen’s Community Labs.

On behalf of the Board, I am pleased to invite you to attend our 2018 annual meeting of stockholders, which will be held at our offices located at 225 Binney Street, Cambridge, Massachusetts 02142 on Tuesday, June 12, 2018, beginning at 9:00 a.m. Eastern Time. For those who cannot attend in person, we are offering a virtual stockholder


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meeting in which you can view the meeting, submit questions and vote online at www.virtualshareholdermeeting.com/BIIB2018. You will need the 16-digit control number included with these proxy materials to attend the annual meeting virtually via the Internet. Stockholders who attend the annual meeting virtually via the Internet will have the opportunity to participate fully in the meeting on an equal basis with those who attend in person.

The following notice of our annual meeting of stockholders contains details of the business to be conducted at the meeting. Only stockholders of record at the close of business on April 17, 2018, will be entitled to notice of, and to vote at, the annual meeting.

On behalf of the Board of Directors, I thank you for your continued support and investment in Biogen.

Very truly yours,

 

LOGO

STELIOS PAPADOPOULOS

Chairman of the Board

On behalf of the Board of Directors of Biogen Inc.


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LOGO

 

   
 

Notice of 2018 Annual Meeting of Stockholders

 

 
   

 

Date:

Tuesday, June 12, 2018

 

Time:

9:00 a.m. Eastern Time

 

Place:

Biogen Inc. 225

Binney Street Cambridge,

Massachusetts 02142

 

Record Date:

April 17, 2018. Only Biogen stockholders of record at the close of business on the record date are entitled to receive notice of, and vote at, the annual meeting.

 

Items of Business:

1.   To elect the 11 nominees identified in the accompanying Proxy Statement to our Board of Directors to serve for a one-year term extending until the 2019 annual meeting of stockholders and their successors are duly elected and qualified.

 

  2.   To ratify the selection of PricewaterhouseCoopers LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2018.

 

  3.   To hold an advisory vote on executive compensation.

 

  4.   To consider and vote on a stockholder proposal requesting certain proxy access bylaw amendments, if properly presented at the annual meeting.

 

  5.   To consider and vote on a stockholder proposal requesting a report on the extent to which risks related to public concern over drug pricing strategies are integrated into incentive compensation arrangements, if properly presented at the annual meeting.

 

  6.   To transact such other business as may be properly brought before the annual meeting and any adjournments or postponements.

 

Virtual Meeting:

To participate in the annual meeting virtually via the Internet, please visit www.virtualshareholdermeeting.com/BIIB2018. You will need the 16-digit control number included on your Notice of Internet Availability of Proxy Materials, your proxy card or the instructions that accompanied your proxy materials. Stockholders will be able to vote and submit questions virtually via the Internet during the annual meeting.

 

Voting:

Your vote is extremely important regardless of the number of shares you own. Whether or not you expect to attend the annual meeting, we urge you to vote as promptly as possible by telephone or Internet or by signing, dating and returning a printed proxy card or voting instruction form, as applicable. If you attend the annual meeting, you may vote your shares during the annual meeting even if you previously voted your proxy. Please vote as soon as possible to ensure that your shares will be represented and counted at the annual meeting.

 

Important Notice Regarding the Availability of Proxy Materials for Annual Meeting of Stockholders

To Be Held on June 12, 2018:

The Notice of 2018 Annual Meeting of Stockholders, Proxy Statement and 2017 Annual Report on Form 10-K

are available at the following website: www.proxyvote.com.

By Order of Our Board of Directors,

 

 

LOGO

SUSAN H. ALEXANDER,

Secretary

225 Binney Street

Cambridge, Massachusetts 02142

April 27, 2018

This Notice and Proxy Statement are first being sent to stockholders on or about April 27, 2018. Our 2017 Annual Report on Form 10-K is being sent with this Notice and Proxy Statement.


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Proxy Statement Table of Contents

 

 

 

 

  Proxy Statement Summary    iii  

1

 

  General Information About the Meeting        1  
      
      
      
      
                  

2

 

  Corporate
Governance at
Biogen
 

    Corporate Governance Practices

     7  
   

    Director Independence

     7  
   

    Nominating Processes

     8  
   

    Annual Elections and Majority Voting

     9  
   

     Director Qualifications, Standards and Diversity

 

 

 

 

     9  

3

 

  Board of Directors  

     Proposal 1 – Election of Directors

     11  
   

    Committees and Meetings

     19  
   

    Director Compensation

     20  
   

    Retainers, Meeting Fees and Expenses

     20  
   

    Equity Awards

     20  
   

    10b5-1 Trading Plans

     21  
   

    Non-Employee Director Stock Ownership Guidelines

     21  
   

    2017 Director Compensation

     22  
   

    Director Equity Outstanding at 2017 Fiscal Year-End

     23  
   

    Board Risk Oversight

     23  
   

     Compensation Risk Assessment

 

     24  

4

 

  Audit Committee
Matters
 

Proposal 2 – Ratification of the Selection of Our Independent  Registered Public Accounting Firm

     25  
   

    Audit Committee Report

     26  
   

    Audit and Other Fees

     27  
   

    Policy on Pre-Approval of Audit and Non-Audit Services

     27  
      
      
      
                

 

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Proxy Statement Table of Contents (continued)

 

 

 

 

5

 

  Executive
Compensation
Matters
 

     Proposal 3 – Advisory Vote on Executive Compensation

     28  
   

    Compensation Discussion and Analysis

     29  
   

    Executive Summary

     30  
   

    Roles and Responsibilities

     35  
   

    Executive Compensation Philosophy and Objectives

     35  
   

    External Market Competitiveness and Peer Group

     36  
   

    Compensation Elements

     37  
   

    Compensation Mix

     37  
   

    Performance Goals and Target Setting Process

     38  
   

2017 and 2018 Hiring- and Transition-Related Compensation Decisions

     39  
   

    2017 Base Salary

     40  
   

    2017 Performance-Based Plans and Goal Setting

     40  
   

    Long-Term Incentives (LTI)

     46  
   

    Retirement Plans

     49  
   

    Other Benefits

     49  
   

    Post-Termination Compensation and Benefits

     49  
   

    Stock Ownership Guidelines

     49  
   

    Recoupment of Compensation

     50  
   

    Insider Trading, Hedging and Pledging Policy
     Prohibitions

     50  
   

    Tax-Deductibility of Compensation

     50  
   

    Compensation Committee Report

     50  
   

    Summary Compensation Table

     51  
   

    2017 Grants of Plan-Based Awards

     54  
   

    Outstanding Equity Awards at 2017 Fiscal Year-End

     55  
   

    2017 Option Exercises and Stock Vested

     56  
   

    2017 Non-Qualified Deferred Compensation

     57  
   

Potential Payments Upon Termination or Change in Control

     59  
       

    CEO Pay Ratio

 

    

 

63

 

 

 

6

 

  Stockholder
Proposals
 

     Proposal 4 – Stockholder Proposal Requesting Certain Proxy Access Bylaw Amendments

     64  
   

     Proposal 5 – Stockholder Proposal Requesting a Report on the Extent to Which Risks Related to Public Concern Over Drug Pricing Strategies are Integrated into Incentive Compensation Arrangements

     66  
      
              
7   Additional
Information
 

    Stock Ownership

     69  
   

    Section 16(a) Beneficial Ownership Reporting Compliance

     70  
   

    Certain Relationships and Related Person Transactions

     71  
   

    Equity Compensation Plan Information

     72  
   

    Miscellaneous

     73  
   

    Stockholder Proposals

     73  
   

    Other Stockholder Communications

     73  
   

    Incorporation by Reference

     73  
   

    Copies of Annual Meeting Materials

     73  
     

    Manner and Cost of Proxy Solicitation

 

    

 

73

 

 

 

  Appendix A — GAAP to Non-GAAP Reconciliation    A-1  

 

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Proxy Statement Summary

 

 

 

This summary highlights important information you will find in this Proxy Statement. As it is only a summary, please review the complete Proxy Statement before you vote.

 

   
 

Annual Meeting Information

 

 
   

 

DATE:    Tuesday, June 12, 2018
TIME:    9:00 a.m. Eastern Time
LOCATION:   

Biogen Inc.

225 Binney Street

Cambridge, Massachusetts 02142

RECORD DATE:

 

  

April 17, 2018

 

 

   
 

Voting Matters and Vote Recommendation

 

 
   

 

Voting Matter   

Board

Recommendation

  

Page Number

for more detail

Item 1—Election of Directors    FOR each nominee    11
Item 2—Ratification of the Selection of our Independent Registered Public Accounting Firm    FOR    25
Item 3—Advisory Vote on Executive Compensation    FOR    28
Item 4—Stockholder Proposal Requesting Certain Proxy Access Bylaw Amendments    AGAINST    64
Item 5—Stockholder Proposal Requesting a Report on the Extent to Which Risks Related to Public Concern Over Drug Pricing Strategies are Integrated into Incentive Compensation Arrangements    AGAINST    66

 

   
 

How to Vote

 

 
   

 

 

LOGO

 

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Proxy Statement Summary (continued)

 

 

 

 

   
 

Highlights of 2017 Company Performance

 

 
   

Our mission is clear: We are pioneers in neuroscience. We believe that no other disease area holds as much need or as much promise for medical breakthroughs with approximately one billion people affected by neurological disorders worldwide.

We are focused on discovering, developing and delivering worldwide innovative therapies for people living with serious neurological and neurodegenerative diseases, including in our core growth areas of multiple sclerosis (MS) and neuroimmunology, Alzheimer’s disease and dementia, movement disorders and neuromuscular disorders, including spinal muscular atrophy (SMA) and amyotrophic lateral sclerosis. We also plan to invest in emerging growth areas such as pain, ophthalmology, neuropsychiatry and acute neurology. In addition, we are employing innovative technologies to discover potential treatments for rare and genetic disorders, including new ways of treating diseases through gene therapy in the previously mentioned areas. We also manufacture and commercialize biosimilars of advanced biologics. For additional information, please see our 2017 Annual Report on Form 10-K.

 

LOGO

2017 Operating Performance Highlights

 

  Full year total revenues of $12.3 billion, a 7% increase versus the prior year or a 15% increase excluding hemophilia revenues*.

 

  We added seven clinical programs to our neuroscience pipeline in 2017, including BIIB098 (MMF prodrug) for MS, BIIB092 (anti-tau antibody) for both Alzheimer’s disease and progressive supranuclear palsy (PSP), BIIB076 (anti-tau antibody) for Alzheimer’s disease, BIIB080 (tau antisense oligonucleotide) for Alzheimer’s disease, BIIB093 (IV glibenclamide) for large hemispheric infarction and natalizumab for drug-resistant focal epilepsy.

 

  We successfully launched SPINRAZA, the first and only approved treatment for SMA, in one of the most exciting worldwide biotech launches of the year. As of December 31, 2017, there were approximately 3,200 patients on therapy across the post-marketing setting, the expanded access program and clinical trials.

 

  We were awarded, with our collaboration partner Ionis Pharmaceuticals Inc. (Ionis), the 2017 Prix Galien USA Award for Best Biotechnology Product for SPINRAZA.

 

  We announced a new focused and well-articulated strategy with the longer term goal of becoming the leader in neuroscience. We defined priorities designed to drive future growth, including maximizing the resilience of our core MS business, accelerating our progress in SMA and creating a leaner and simpler operating model. The goal of these priorities is to drive significant cash flow generation and invest those cash flows to create new sources of value beyond MS and SMA.

 

  Throughout 2017 we repurchased approximately 4.9 million shares of our common stock for a total value of $1.4 billion.

 

  During 2017 we appointed several new executives, each of whom has significant experience in the biopharmaceutical industry and is a leader in his or her functional area. These appointments included:

 

    Michel Vounatsos, Chief Executive Officer

 

    Jeffrey D. Capello, Executive Vice President and Chief Financial Officer

 

    Ginger Gregory, Executive Vice President and Chief Human Resources Officer

 

    Chirfi Guindo, Executive Vice President and Head of Global Marketing, Market Access and Customer Innovation.

 

* In Q1 2017 Biogen completed the spin-off of its global hemophilia business into a new company, known as Bioverativ Inc. The 15% increase in total revenues excludes all hemophilia revenues from 2016 through January 2017. Hemophilia revenues include ELOCTATE® and ALPROLIX® product revenues as well as royalty and contract manufacturing revenue related to Sobi.

 

-iv-   LOGO  


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Proxy Statement Summary (continued)

 

 

 

 

   
 

Corporate Governance Matters

 

 
   

We strive to maintain effective corporate governance practices to ensure that our company is managed for the long-term benefit of our stockholders. To that end, we continually review and refine our corporate governance policies, procedures and practices. See Part 2 – “Corporate Governance at Biogen” for more information.

Corporate Governance Highlights

 

Board and Board Committees  
  Number of Independent Director Nominees/Total Number of Director Nominees      10/11  
  Number of Female Director Nominees/Total Number of Director Nominees      3/11  
  Average Age of Directors Standing for Election (as of April 17, 2018)      63    
  All Board Committees Consist of Independent Directors      Yes  
  Risk Oversight by Full Board and Committees      Yes  
  Separate Risk Committee      Yes  
  Separate Chairman and CEO      Yes  
  Regular Executive Sessions of Independent Directors      Yes  
  Annual Board and Committee Self-Evaluations      Yes  
  Annual Independent Director Evaluation of CEO      Yes  
  Director Education and Orientation      Yes  
  Annual Equity Grant to Directors      Yes  
  Director - Stockholder Engagement Initiative      Yes  
Stockholder Rights, Accountability and Other Governance Practices  
  Annual Election of All Directors      Yes  
  Majority Voting for Directors and Resignation Policy      Yes  
  Proxy Access Bylaw (3% ownership, 3 years, nominees for up to 25% of our Board)      Yes  
  Annual Advisory Stockholder Vote on Executive Compensation      Yes  
  Stockholder Ability to Call Special Meetings (25% Threshold)      Yes  
  Stockholder Ability to Act by Written Consent      Yes  
  Stock Ownership Guidelines for Directors and Executives      Yes  
  Prohibition from Hedging and Pledging Securities or Otherwise Engaging in Derivative Transactions      Yes  
  Compensation Recovery in Equity and Annual Bonus Plans      Yes  
  Absence of a Stockholder Rights Plan (referred to as “Poison Pill”)      Yes  
  Strong Commitment to Environmental and Sustainability Matters      Yes  
  Board Oversight and Expanded Disclosure on Website Related to Corporate Political Contributions and Expenditures      Yes  

Director - Stockholder Engagement Initiative

We value the views of our stockholders and other stakeholders, and we solicit input throughout the year on topics such as business strategy, capital allocation, corporate governance, executive compensation, sustainability and corporate social responsibility initiatives. During fiscal 2017, independent members of our Board of Directors conducted outreach to certain stockholders to discuss a variety of issues, including business, corporate governance and compensation related matters.

 

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Proxy Statement Summary (continued)

 

 

 

   
 

Our Director Nominees

 

 
   

Proposal 1 — Election of Directors

You are being asked to vote on the election of the following 11 nominees for director. All directors are elected annually by the affirmative vote of a majority of votes cast. Detailed information about each director’s background, skill sets and areas of expertise can be found beginning on page 11.

 

            Committee Memberships*  

Other

Public Boards

Name, Occupation, and Experience   Age*   Independent   AC   CC   CGC   FC   RC   STC  

  Alexander J. Denner, Ph.D.

  Founding Partner, Sarissa Capital

  48   Yes           LOGO   LOGO           1

  Caroline D. Dorsa

  Retired Executive Vice President and Chief Financial Officer,

  Public Service Enterprise Group Incorporated

  58   Yes   LOGO   LOGO               LOGO       3

  Nancy L. Leaming

  Retired Chief Executive Officer and President, Tufts Health Plan

  70   Yes   LOGO               LOGO      

  Richard C. Mulligan, Ph.D.

  Mallinckrodt Professor of Genetics, Emeritus, Harvard Medical School and

  Portfolio Manager, Icahn Capital LP

  63   Yes       LOGO               LOGO  

  Robert W. Pangia

  Partner, Ivy Capital Partners, LLC

  66   Yes       LOGO       LOGO          

  Stelios Papadopoulos, Ph.D.

  Chairman, Biogen Inc., Chairman, Exelixis, Inc. and Chairman, Regulus

  Therapeutics Inc.

  69   Yes   LOGO           LOGO       LOGO   3

  Brian S. Posner

  Private Investor and President, Point Rider Group LLC

  56   Yes   LOGO       LOGO   LOGO           2

  Eric K. Rowinsky, M.D.

  President and Executive Chairman of RGenix, Inc.

  61   Yes       LOGO   LOGO           LOGO   2

  The Honorable Lynn Schenk, J.D.

  Attorney, Former Chief of Staff to the Governor of California and

  Former U.S. Congresswoman

  73   Yes       LOGO           LOGO       1

  Stephen A. Sherwin, M.D.

  Clinical Professor of Medicine, University of California, San

  Francisco and Advisor to Life Sciences Companies

  69   Yes               LOGO   LOGO   LOGO   2

  Michel Vounatsos

  Chief Executive Officer, Biogen Inc.

  56   No                          

* Age and Committee memberships are as of April 17, 2018.

 

AC:    Audit Committee   CGC:     Corporate Governance Committee   RC:      Risk Committee
CC:    Compensation and Management Development Committee   FC:        Finance Committee   STC:    Science and Technology Committee

 

Chair:   LOGO                              Member:   LOGO                      Financial Expert:   LOGO

 

-vi-   LOGO  


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Proxy Statement Summary (continued)

 

 

 

   
 

Our Auditors

 

 
   

Proposal 2 – Ratification of Independent Registered Public Accounting Firm

You are being asked to vote to ratify the selection of PricewaterhouseCoopers LLP as our independent registered public accounting firm for the year ending December 31, 2018. Detailed information about this proposal can be found beginning on page 25.

 

   
 

Executive Compensation Matters

 

 
   

Proposal 3 – Advisory Vote on Executive Compensation

Our Board of Directors recommends that stockholders vote to approve, on an advisory basis, the compensation paid to the Company’s named executive officers (NEOs) as described in this Proxy Statement (the “say-on-pay” vote). Detailed information about the compensation paid to our NEOs can be found beginning on page 28.

Our compensation programs embody a pay-for-performance philosophy that supports our business strategy and aligns executive interests with those of our stockholders. Highlights of our compensation programs for 2017 and our compensation best practices follow.

 

Pay-for-Performance

Short- and long-term incentive compensation rewards financial, strategic and operational performance and the accomplishment of goals that are set to support our long-range plans.

   

Approximately 91% of the target compensation for Michel Vounatsos, our CEO, was performance-based and at-risk in 2017.

   

Approximately 84% of the target compensation for our other current full-year active NEOs (other than Gregory F. Covino) who were employed for all of 2017 was performance-based and at-risk in 2017.

   
Other Compensation Best Practices

We provide competitive total pay opportunities after consideration of many factors, including comparative data from a carefully selected peer group.

   

An independent compensation consultant assists the Compensation and Management Development Committee in setting executive and non-employee director compensation.

   

Our compensation programs do not encourage unnecessary and excessive risk taking, and risk assessments are conducted annually.

   

Payments under our annual bonus plan are performance-based and capped.

   

Long-term incentive awards are performance-based and subject to multi-year vesting.

   

Stock option awards are granted at fair market value; we do not backdate or reprice stock option awards.

   

We maintain robust stock ownership guidelines for executive officers and directors.

   

Compensation may be recouped/clawed back under our equity and annual bonus plans.

   

A double-trigger is required for accelerated equity vesting upon change in control for all post-2014 employee grants.

   

In June 2009 we adopted a policy to eliminate excise tax gross ups for newly-hired executives.

   

 

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Proxy Statement Summary (continued)

 

 

 

   
 

Stockholder Proposals

 

 
   

Proposal 4 – Stockholder Proposal Requesting Certain Proxy Access Bylaw Amendments

Our Board of Directors recommends that stockholders vote against a stockholder proposal requesting certain amendments to our Fourth Amended and Restated Bylaws relating to proxy access to remove the limit on aggregating shares to meet the stockholding requirement and remove the limitation on renomination of persons based on votes in a prior year. Detailed information about this proposal can be found beginning on page 64.

Proposal 5 – Requesting a Report on the Extent to Which Risks Related to Public Concern Over Drug Pricing Strategies are Integrated into Incentive Compensation Arrangements

Our Board of Directors recommends that stockholders vote against a stockholder proposal requesting that the Compensation and Management Development Committee of our Board of Directors report annually on the extent to which risks related to public concern over drug pricing strategies are integrated into our incentive compensation policies, plans and programs. Detailed information about this proposal can be found beginning on page 66.

 

   
 

Note about Forward-Looking Statements

 

 
   

This Proxy Statement contains forward-looking statements, including statements relating to: our strategy and plans; potential of our commercial business and pipeline programs; capital allocation and investment strategy; clinical trials and data readouts and presentations and anticipated benefits and potential of investments, collaborations and business development activities. These forward-looking statements may be accompanied by such words as “aim,” “anticipate,” “believe,” “could,” “estimate,” “expect,” “forecast,” “intend,” “may,” “plan,” “potential,” “possible,” “will” and other words and terms of similar meaning. You should not place undue reliance on these statements.

These statements involve risks and uncertainties that could cause actual results to differ materially from those reflected in such statements, including the risks and uncertainties that are described in the Risk Factors section of our most recent annual or quarterly report and in other reports we have filed with the Securities and Exchange Commission (SEC). These statements are based on our current beliefs and expectations and speak only as of the date of this Proxy Statement. We do not undertake any obligation to publicly update any forward-looking statements, whether as a result of new information, future developments or otherwise.

 

   
 

Note regarding Trademarks

 

 
   

SPINRAZA®, TECFIDERA®, TYSABRI® and ZINBRYTA® are registered trademarks of Biogen. ALPROLIX®, ELOCTATE®, HUMIRA® and other trademarks referenced in this report are the property of their respective owners.

 

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 1   General Information About the Meeting

 

 

 

Biogen Inc.

225 Binney Street

Cambridge, Massachusetts 02142

The Board of Directors of Biogen Inc. is soliciting your proxy to vote at our 2018 annual meeting of stockholders (Annual Meeting) to be held at 9:00 a.m. Eastern Time on Tuesday, June 12, 2018, for the purposes summarized in the accompanying Notice of 2018 Annual Meeting of Stockholders. Our 2017 Annual Report on Form 10-K is also available with this Proxy Statement.

References in this Proxy Statement to “Biogen” or the “Company,” “we,” “us” and “our” refer to Biogen Inc.

 

What is the purpose of the Annual Meeting?  

At the Annual Meeting, stockholders will vote upon the matters that are summarized in the formal meeting notice. This Proxy Statement contains important information for you to consider when deciding how to vote on the matters before the Annual Meeting.

 

Can I attend the Annual Meeting?  

We will be hosting the Annual Meeting at our offices at 225 Binney Street, Cambridge, Massachusetts 02142. For those who cannot attend in person, we are offering a virtual stockholder meeting in which you can view the meeting, submit questions and vote online at www.virtualshareholdermeeting.com/BIIB2018. You will need the 16-digit control number included with these proxy materials to attend the Annual Meeting virtually via the Internet. Stockholders who attend the Annual Meeting virtually via the Internet will have the opportunity to participate fully in the meeting on an equal basis with those who attend in person.

 

What do I need in order to be able to participate in the Annual Meeting virtually via the Internet?  

You will need the 16-digit control number included on your Notice of Internet Availability of Proxy Materials or your proxy card or voting instruction form in order to be able to virtually vote your shares or submit questions during the Annual Meeting. If you do not have your 16-digit control number and attend the meeting online, you will be able to listen to the meeting only — you will not be able to virtually vote or submit questions during the meeting.

 

Who can vote?  

Each share of our common stock that you own as of the close of business on the record date of April 17, 2018 (Record Date) entitles you to one vote on each matter to be voted upon at the Annual Meeting. As of the Record Date, 211,007,945 shares of our common stock were outstanding and entitled to vote. We are making this Proxy Statement and other Annual Meeting materials available on the Internet or, upon request, by sending printed versions of these materials on or about April 27, 2018, to all stockholders of record as of the Record Date. For ten days before the Annual Meeting, a list of stockholders entitled to vote will be available for inspection at our offices located at 225 Binney Street, Cambridge, Massachusetts 02142 and will also be available for examination during the Annual Meeting at www.virtualshareholdermeeting.com/BIIB2018. If you would like to review the list, please call our Investor Relations department at (781) 464-2442.

 

 

 

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What am I voting on at the Annual Meeting?  

Stockholders will be asked to vote on the following items at the Annual Meeting:

 

    The election to our Board of Directors of the 11 director nominees (Proposal 1);

 

    The ratification of the selection of PricewaterhouseCoopers LLP (PwC) as our independent registered public accounting firm for the fiscal year ending December 31, 2018 (Proposal 2);

 

    The advisory vote on executive compensation (Proposal 3);

 

    To consider and vote on a stockholder proposal requesting certain proxy access bylaw amendments, if properly presented (Proposal 4);

 

    To consider and vote on a stockholder proposal requesting a report on the extent to which risks related to public concern over drug pricing strategies are integrated into incentive compensation arrangements, if properly presented (Proposal 5); and

 

    The transaction of such other business as may be properly brought before the meeting and any adjournments or postponements.

 

What is the recommendation of our Board of Directors on each of the matters scheduled to be voted on at the Annual Meeting?  

Our Board of Directors recommends that you vote:

 

     FOR” each of the director nominees (Proposal 1);

 

     FOR” the ratification of the selection of PwC as our independent registered public accounting firm for the fiscal year ending December 31, 2018 (Proposal 2);

 

      On an advisory basis, “FOR” the approval of our executive compensation (Proposal 3);

 

      AGAINST” the approval of a stockholder proposal requesting certain proxy access bylaw amendments (Proposal 4); and

 

      AGAINST” the approval of a stockholder proposal requesting a report on the extent to which risks related to public concern over drug pricing strategies are integrated into incentive compensation arrangements (Proposal 5).

 

How do proxies work?  

Our Board of Directors is asking for your proxy authorizing the individuals named as proxies to vote your shares at the Annual Meeting in the manner you direct. You may abstain from voting on any matter. If you submit your proxy without specifying your voting instructions, we will vote your shares on the matters scheduled to be voted on at the Annual Meeting in accordance with our Board of Directors’ recommendations described above. As to any other matter that may properly come before the Annual Meeting or any adjournment or postponement, the individuals named as proxies will vote your shares at the Annual Meeting in accordance with their best judgment.

 

Shares represented by valid proxies received in time for the Annual Meeting and not revoked before the Annual Meeting will be voted at the Annual Meeting. You can revoke your proxy and change your vote in the manner described below (under the heading “Can I revoke or change my vote after I submit my proxy?”). If your shares are held through a bank, broker or other nominee, please follow the instructions that you were provided by your bank, broker or other nominee.

 

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 1   General Information About the Meeting (continued)

 

 

 

How do I vote and what are the voting deadlines?  

Stockholders of Record. If you are a stockholder of record, there are several ways for you to vote your shares.

 

LOGO        By Internet. You may vote at www.proxyvote.com, 24 hours a day, seven days a week. You will need the 16-digit control number included on your Notice of Internet Availability of Proxy Materials or, if you received a printed copy of the proxy materials, on your proxy card. Votes submitted through www.proxyvote.com must be received by 11:59 p.m. Eastern Time on June 11, 2018.

 

LOGO        By Telephone. You may vote using a touch-tone telephone by calling 1-800-690-6903, 24 hours a day, seven days a week. You will need the 16-digit control number included on your Notice of Internet Availability of Proxy Materials or, if you received a printed copy of the proxy materials, on your proxy card. Votes submitted by telephone must be received by 11:59 p.m. Eastern Time on June 11, 2018.

 

LOGO        By Mail. If you received printed proxy materials, you may submit your vote by completing, signing and dating each proxy card received and returning it in the prepaid envelope. Sign your name exactly as it appears on the proxy card. Proxy cards submitted by mail must be received no later than June 11, 2018, to be voted at the Annual Meeting.

 

LOGO        During the Annual Meeting. You may vote during the Annual Meeting by submitting a written ballot in person at the Annual Meeting. To obtain directions to attend the Annual Meeting, please contact our Investor Relations department at (781) 464-2442. We will pass out ballots at the Annual Meeting to anyone who wishes to vote in person.

 

You may also virtually vote during the Annual Meeting by going to www.virtualshareholdermeeting.com/BIIB2018. You will need the 16-digit control number included on your Notice of Internet Availability of Proxy Materials or, if you received a printed copy of the proxy materials, on your proxy card to be able to virtually vote.

 

If you vote via the Internet or by telephone before the Annual Meeting, your electronic vote authorizes the named proxies in the same manner as if you signed, dated and returned your proxy card. If you vote via the Internet or by telephone before the Annual Meeting, do not return your proxy card.

 

   

Beneficial Owners. If your shares are held in a brokerage account in your broker’s name, then you are the beneficial owner of shares held in “street name.” If you are a beneficial owner of your shares, you should have received a Notice of Internet Availability of Proxy Materials or voting instructions from the bank, broker or other nominee holding your shares. You should follow the instructions in the Notice of Internet Availability of Proxy Materials or voting instructions provided by your bank, broker or other nominee in order to instruct your bank, broker or other nominee on how to vote your shares. The availability of telephone and Internet voting will depend on the voting process of the bank, broker or other nominee. Shares held beneficially may not be voted during the Annual Meeting; instead a beneficial holder must instruct their bank, broker or other nominee in advance of the Annual Meeting.

 

 

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 1   General Information About the Meeting (continued)

 

 

 

 

Can I revoke or change my vote after I submit my proxy?  

Stockholders of Record. If you are a stockholder of record, you may revoke or change your vote at any time before the final vote at the Annual Meeting by:

 

    signing and returning a new proxy card with a later date, to be received no later than June 11, 2018;

 

    submitting a later-dated vote by telephone or via the Internet — only your latest telephone or Internet proxy received by 11:59 p.m. Eastern Time on June 11, 2018, will be counted;

 

    attending the Annual Meeting in person and voting in person or participating in the Annual Meeting virtually via the Internet and voting again; or

 

    delivering a written revocation to our Secretary at Biogen Inc., 225 Binney Street, Cambridge, Massachusetts 02142, to be received no later than June 11, 2018.

 

Only your latest vote, in whatever form, will be counted.

 

Beneficial Owners. If you are a beneficial owner of your shares, you must contact the bank, broker or other nominee holding your shares and follow their instructions for revoking or changing your vote.

 

Will my shares be counted if I do

not vote?

 

Stockholders of Record. If you are the stockholder of record and you do not vote before the Annual Meeting by proxy card, telephone or via the Internet, or during the Annual Meeting either in person or virtually via the Internet, your shares will not be voted at the Annual Meeting.

 

Beneficial Owners. If you are the beneficial owner of shares, your bank, broker or other nominee, as the record holder of the shares, is required to vote those shares in accordance with your instructions. If no voting instructions are provided, these record holders can vote your shares only on discretionary, or routine, matters and not on non-discretionary, or non-routine, matters. Uninstructed shares whose votes cannot be counted on non-routine matters result in what are commonly referred to as “broker non-votes.”

 

The proposal to ratify the selection of our independent registered public accounting firm is a routine matter and the other proposals are non-routine matters. If you do not give your broker voting instructions, your broker (1) will be entitled to vote your shares on the proposal to ratify the selection of our independent registered public accounting firm and (2) will not be entitled to vote your shares on the other proposals. We urge you to provide instructions to your bank, broker or other nominee so that your votes may be counted on all of these important matters.

 

You should vote your shares by telephone or by Internet according to the instructions provided by your bank, broker or other nominee or by signing, dating and returning a printed voting instruction form to your bank, broker or other nominee to ensure that your shares are voted on your behalf.

 

How many shares must be present to hold the Annual Meeting?  

A majority of our issued and outstanding shares of common stock as of the Record Date must be present at the Annual Meeting to hold the Annual Meeting and conduct business. This is called a quorum. Shares voted in the manner described above (under the heading “How do I vote and what are the voting deadlines?”) will be counted as present at the Annual Meeting. Shares that are present and entitled to vote on one or more of the matters to be voted upon are counted as present for establishing a quorum. If a quorum is not present, we expect that the Annual Meeting will be adjourned until we obtain a quorum.

 

 

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What vote is required to approve each proposal and how are votes counted?  

     Proposal 1: Election of Directors: Directors are elected by a majority vote of the votes cast in uncontested elections — that is, a director will be elected if more votes are cast for that director’s election than against that director — and by a plurality of votes cast in contested elections — that is, the directors receiving the highest number of “For” votes will be elected. Abstentions and broker non-votes, if any, are not counted for purposes of electing directors and will have no effect on the results of this vote.

 

   Proposal 2: Ratification of PwC: The affirmative vote of a majority of shares present in person or represented by proxy and having voting power at the Annual Meeting is required to ratify the selection of PwC as our independent registered public accounting firm for the fiscal year ending December 31, 2018. Abstentions will have the effect of votes against this proposal. Brokers generally have discretionary authority to vote on the ratification of the selection of our independent registered public accounting firm, thus we do not expect any broker non-votes on this proposal.

 

   Proposal 3: Advisory Vote on Executive Compensation: Because this proposal asks for a non-binding, advisory vote, there is no “required vote” that would constitute approval. We value the opinions expressed by our stockholders in this advisory vote, and the Compensation and Management Development Committee of our Board of Directors (sometimes referred to in this Proxy Statement as our “Compensation Committee”), which is responsible for overseeing and administering our executive compensation programs, will consider the outcome of this vote when designing our compensation programs and making future compensation decisions for our named executive officers. Abstentions and broker non-votes, if any, will not have any effect on the results of those deliberations.

 

   Proposal 4: Stockholder Proposal: Requesting Certain Proxy Access Bylaw Amendments: Because this proposal asks for a non-binding vote, there is no “required vote” that would constitute approval. We value the opinions expressed by our stockholders in this non-binding vote, and the outcome of this vote may cause our Board of Directors to reevaluate its recommendation concerning this proposal. Abstentions and broker non-votes, if any, will not have any effect on that determination.

 

   Proposal 5: Stockholder Proposal: Requesting a Report on the Extent to Which Risks Related to Public Concern Over Drug Pricing Strategies are Integrated into Incentive Compensation Arrangements: Because this proposal asks for a non-binding vote, there is no “required vote” that would constitute approval. We value the opinions expressed by our stockholders in this non-binding vote, and the outcome of this vote may cause our Board of Directors to reevaluate its recommendation concerning this proposal. Abstentions and broker non-votes, if any, will not have any effect on that determination.

 

Are there other matters to be voted on at the Annual Meeting?  

We do not know of any other matters that may come before the Annual Meeting. If any other matters are properly presented at the Annual Meeting, your proxy authorizes the individuals named as proxies to vote, or otherwise act, in accordance with their best judgment.

 

 

 

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 1   General Information About the Meeting (continued)

 

 

 

Why did I receive a one-page notice in the mail regarding the Internet availability of proxy materials instead of a full set of proxy materials?  

We have elected to provide access to our proxy materials on the Internet, consistent with the rules of the SEC. Accordingly, in most instances we are mailing a Notice of Internet Availability of Proxy Materials to our stockholders. You can access our proxy materials on the website referred to in the Notice of Internet Availability of Proxy Materials or you may request printed versions of our proxy materials for the Annual Meeting. In addition, you may request to receive proxy materials in printed form by mail or electronically by email on an ongoing basis.

 

What does it mean if I receive more than one notice regarding the Internet availability of proxy materials or more than one set of printed proxy materials?  

If you hold your shares in more than one account, you may receive a separate Notice of Internet Availability of Proxy Materials or a separate set of printed proxy materials, including a separate proxy card or voting instruction form, for each account. To ensure that all of your shares are voted, please vote by telephone or by Internet or sign, date and return a proxy card or voting instruction form for each account.

 

Where do I find the voting results of the Annual Meeting?  

We will publish the voting results of the Annual Meeting in a Current Report on Form 8-K filed with the SEC within four business days after the end of the Annual Meeting. You may request a copy of this Form 8-K by contacting Investor Relations, Biogen Inc., 225 Binney Street, Cambridge, Massachusetts 02142, (781) 464-2442. You will also be able to find a copy of this Form 8-K on the Internet through the SEC’s electronic data system, called EDGAR, at www.sec.gov or through the “Investors” section of our website, www.biogen.com.

 

Who should I call if I have any questions?  

If you have any questions or require any assistance with voting your shares, please contact the bank, broker or other nominee holding your shares, or our Investor Relations department at (781) 464-2442.

 

 

 

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 2   Corporate Governance at Biogen

 

 

 

Corporate Governance Practices

We strive to maintain effective corporate governance practices to ensure that our company is managed for the long-term benefit of our stockholders. We review our corporate governance principles and practices on a regular basis. A description of our corporate governance highlights is set forth in the “Proxy Statement Summary” above.

We believe that our Board’s primary functions are to appoint, evaluate and hold accountable management, as well as assuring optimal capital allocation and strategic decisions such that long-term stockholder value is maximized.

We believe part of effective corporate governance includes active engagement with our stockholders. We value the views of our stockholders and other stakeholders, and we communicate with them regularly and solicit input on a number of topics such as business strategy, capital allocation, corporate governance, executive compensation, sustainability and corporate social responsibility initiatives.

 

  Director – Stockholder Engagement Initiative. Our Corporate Governance Committee leads our Board’s efforts on director — stockholder engagement, and directs discussions with stockholders to the appropriate Board and committee members. During fiscal 2017, independent members of our Board of Directors conducted outreach to certain stockholders to discuss a variety of issues, including business, corporate governance and compensation related matters. We remain committed to investing time with our stockholders to increase transparency and better understand our stockholder base and their perspectives.

 

  Corporate Responsibility. Our passion for developing medicines that make a meaningful difference in patients’ lives is reflected in our commitment to our global impact: citizenship, environmental sustainability, diversity and inclusion and other key initiatives. Our Global Citizenship Report is posted on our website, www.biogen.com, under the “Science that matters” subsection of the “Global Impact” section of the website. We believe these efforts reflect the best interests of our patients, stakeholders and the communities in which we operate and serve. Our citizenship and sustainability commitments and performance have been recognized over the years, including the most recent acknowledgements noted in the executive summary section under Compensation Discussion and Analysis below.

Director Independence

Board of Directors

All of our directors and nominees for director, other than Michel Vounatsos, our Chief Executive Officer, satisfy the independence requirements of The Nasdaq Stock Market (Nasdaq).

Committees

 

  All members of the committees of our Board of Directors are independent directors, as defined by Nasdaq rules.

 

  All members of our Audit Committee meet the additional SEC and Nasdaq independence and experience requirements applicable specifically to audit committee members.

 

  All members of our Compensation Committee are non-employee directors within the meaning of the rules under Section 16 of the Securities Exchange Act of 1934, as amended (Exchange Act), and outside directors for purposes of Section 162(m) of the Internal Revenue Code, and our Board of Directors has affirmatively determined that the members of our Compensation Committee satisfy the additional independence requirements specifically applicable to compensation committee members.

Leadership Structure

We separate the roles of Chairman of the Board of Directors and Chief Executive Officer. Stelios Papadopoulos, an independent director, is Chairman of our Board. Among other responsibilities, our Chairman:

 

  presides at meetings of our Board of Directors, executive sessions of our independent directors and our annual meetings of stockholders;

 

  reviews and assists in setting the agenda and schedule for our Board of Directors meetings in collaboration with our Chief Executive Officer;

 

  advises the committee chairs in fulfilling their responsibilities to our Board of Directors;

 

  recommends to our Board of Directors the retention of any advisors who report directly to our Board of Directors;

 

  serves as a liaison for stockholder communications with our Board of Directors;

 

  leads the process of evaluating our Chief Executive Officer; and

 

  discharges such other responsibilities as our Board of Directors may assign from time to time.
 

 

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We believe that having an independent Chairman promotes a greater role for the independent directors in the oversight of the Company, including oversight of material risks facing the Company, encourages active participation by the independent directors in the work of our Board of Directors, enhances our Board of Directors’ role of representing stockholders’ interests and improves our Board of Directors’ ability to supervise and evaluate our Chief Executive Officer and other executive officers.

Nominating Processes

Our Corporate Governance Committee is responsible for identifying individuals qualified to become members of our Board of Directors and reviewing candidates recommended by stockholders. Stockholders may recommend nominees for consideration by our Corporate Governance Committee by submitting the names and supporting information to our Secretary, Biogen Inc., 225 Binney Street, Cambridge, Massachusetts 02142. Any such recommendation should include at a minimum the name(s) and address(es) of the stockholder(s) making the recommendation and appropriate biographical information for the proposed nominee(s). Candidates who are recommended by stockholders will be considered in the same manner as candidates from other sources. For all potential candidates, our Corporate Governance Committee will consider all factors it deems relevant, including at a minimum those listed below in the subsection titled “Director Qualifications, Standards and Diversity.” Director nominations are recommended by our Corporate Governance Committee to our Board of Directors and must be approved by a majority of independent directors.

In addition, our Fourth Amended and Restated Bylaws (Bylaws) contain provisions that address the process by which a stockholder may nominate an individual to stand for election to our Board of Directors at an annual meeting of stockholders.

 

  Stockholder Nominations Not for Inclusion in Company’s Proxy Statement. Our Bylaws permit stockholders to nominate directors for consideration at an annual meeting. To nominate a director for consideration at an annual meeting, a nominating stockholder must provide the information required by our Bylaws and give timely notice of the nomination to our Secretary in accordance with our Bylaws, and each nominee must meet the qualifications required by our Bylaws. To nominate a director for consideration at next year’s annual meeting, stockholders must provide the notice required by our Bylaws no later than March 14, 2019, and no earlier than February 12, 2019. However, if the date of the 2019 annual meeting of stockholders is more than 30 days before or
   

more than 60 days after the anniversary of the Annual Meeting, stockholders must provide the notice required by our Bylaws not earlier than the close of business on the 120th day before the 2019 annual meeting of stockholders and not later than the close of business on the later of (1) the 90th day prior to the 2019 annual meeting of stockholders and (2) the 10th day following the day on which public announcement of the date of the 2019 annual meeting of stockholders is first made.

 

  Stockholder Nominations Under Proxy Access Bylaw. In addition, our Bylaws provide that under certain circumstances, a stockholder or group of stockholders may include director candidates that they have nominated in our annual meeting proxy statement. These proxy access provisions of our Bylaws provide, among other things, that a stockholder or group of up to 20 stockholders seeking to include director candidates in our annual meeting proxy statement must own 3% or more of our outstanding common stock continuously for at least the previous 3 years.

The number of stockholder-nominated candidates appearing in any annual meeting proxy statement can equal up to 25% of the number of directors then serving on our Board. If 25% is not a whole number, the maximum number of stockholder-nominated candidates would be the closest whole number below 25%, subject to a minimum of one. A nominee will be counted in determining whether the 25% maximum has been reached if the nominee was included in the proxy materials as a Board-nominated candidate, if we have received notice that such nominee has been nominated by a stockholder pursuant to our Bylaws, the nominee was submitted under the proxy access procedures and later withdrawn or the nominee was nominated in any of our three preceding annual meetings and is being recommended by our Board for reelection.

The nominating stockholder or group of stockholders also must deliver the information required by our Bylaws, and each nominee must meet the qualifications required by our Bylaws.

Requests to include stockholder-nominated candidates in our proxy materials for next year’s annual meeting must be received by our Secretary no earlier than November 28, 2018, and no later than December 28, 2018. However, if the 2019 annual meeting of stockholders is called for more than 30 days earlier or later than the anniversary of the Annual Meeting, requests to include stockholder-nominated candidates in our proxy materials for the 2019 annual meeting of stockholders

 

 

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 2   Corporate Governance at Biogen (continued)

 

 

 

must be received not later than (1) the 10th day after public announcement of the date of the 2019 annual meeting of stockholders or (2) the 60th day prior to the date we file our proxy statement in connection with the 2019 annual meeting of stockholders.

Annual Elections and Majority Voting

Our directors are elected annually to serve until the next annual meeting of stockholders and until their successors are duly elected and qualified. Our directors must be elected by a majority of votes cast in uncontested elections (meaning any election for which the number of directors nominated does not exceed the number of directors to be elected at such meeting), and by a plurality of votes cast in contested elections (meaning any election for which the number of directors nominated exceeds the number of directors to be elected at such meeting, regardless of whether such nominees were proposed by the Company or by stockholders). In addition, following their appointment or election by stockholders to our Board of Directors, directors must submit an irrevocable resignation that will be effective upon (1) the failure to receive the required number of votes for reelection at the next annual meeting of stockholders at which they face reelection and (2) acceptance of such resignation by our Board of Directors. If an incumbent director fails to receive the number of votes required for reelection, our Board of Directors (excluding the director in question) will, within 90 days after certification of the election results, decide whether to accept the director’s resignation taking into account such factors as it deems relevant. Such factors may include the stated reasons why stockholders voted against such director’s reelection, the qualifications of the director and whether accepting the resignation would cause us to fail to meet any applicable listing standards or would violate state law. Our Board of Directors will promptly disclose its decision in a filing with the SEC.

Director Qualifications, Standards and Diversity

 

  Board Composition. Our Board is committed to ensuring that it is well-equipped to oversee the Company’s business and effectively represent the interests of stockholders. Our Board regularly reviews its composition to ensure it includes directors with the experience, skills and diversity necessary for effective, independent Board oversight. Towards this end, our Board has recently initiated a process to add new directors with capabilities
   

that would be beneficial to the Company and stockholders.

 

  General Qualifications and Standards. Our Corporate Governance Principles provide that directors should possess the highest personal and professional ethics and integrity, understand and be aligned with our core values and be committed to representing the long-term interests of our stockholders. Our directors must also be inquisitive and objective and have practical wisdom and mature judgment.

 

  Diversity. In accordance with our Corporate Governance Principles, we endeavor to have a Board of Directors that collectively represents diverse experience at strategic and policy-making levels in business, government, education, healthcare, science and technology and the international arena, and collectively has knowledge and expertise in the functional areas of accounting and finance, risk management and compliance, strategic and business planning, corporate governance, human resources, marketing and commercial and research and development. Consistent with our Corporate Governance Principles, in selecting nominees to our Board of Directors, our Corporate Governance Committee considers the diversity of skills and experience that a potential nominee possesses and the extent to which such diversity would enhance the perspective, background, knowledge and experience of our Board of Directors as a whole. Our Board of Directors considers personal diversity, including gender, national origin, ethnic and racial diversity, as an additional benefit to our Board of Directors as a whole.

 

  Director Term and Resignation. Our Board of Directors does not believe that arbitrary term limits on directors’ service are appropriate, nor does it believe that directors should expect to be re-nominated. Our Corporate Governance Principles provide that directors should offer their resignation in the event of any significant change in personal circumstances, including a significant change in principal job responsibilities or any circumstances that may adversely affect their ability to effectively carry out their duties and responsibilities or in the case of a significant conflict of interest that cannot otherwise be resolved. Our directors are also expected to offer their resignation to our Board of Directors effective at the annual meeting of stockholders in the year of their 75th birthday.
 

 

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  Board and Committee Evaluations. Regular evaluations are an important determinant for continued tenure, and, to that end, our Board of Directors and its committees perform a self-evaluation on an annual basis. Our Corporate Governance Committee oversees the evaluations and reports the results to our Board.

 

  Director Orientation and Continuing Education. We provide orientation for new directors, and provide directors
   

with materials or briefing sessions on subjects that we believe will assist them in discharging their duties. We also make director education program information available to directors on a regular basis and encourage directors to attend director education programs and reimburse the costs of attending such programs.

 

 

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 3   Board of Directors

 

 

 

   
 

Proposal 1 – Election of Directors

 

 
   

Our Board of Directors currently consists of the following directors, all serving one-year terms extending until the Annual Meeting and until their successors are duly elected and qualified:

 

Alexander J. Denner    Robert W. Pangia    Lynn Schenk
Caroline D. Dorsa    Stelios Papadopoulos    Stephen A. Sherwin
Nancy L. Leaming    Brian S. Posner    Michel Vounatsos
Richard C. Mulligan    Eric K. Rowinsky   

All directors are standing for reelection to serve a one-year term extending until the 2019 annual meeting of stockholders and until their successors are duly elected and qualified, unless they resign or are removed. Our Board of Directors has nominated these 11 directors based on its carefully considered judgment that the experience, qualifications, attributes and skills of our nominees qualify them to serve on our Board of Directors. As described in detail below, our nominees have considerable professional and business expertise. We know of no reason why any nominee would be unable to accept nomination or election.

If any nominee is unable to serve on our Board of Directors, the shares represented by your proxy will be voted for the election of such other person as may be nominated by our Board of Directors. In addition, in compliance with all applicable state and federal laws and regulations, we will file an amended proxy statement and proxy card that, as applicable, (1) identifies the alternate nominee(s), (2) discloses that such nominees have consented to being named in the revised proxy statement and to serve if elected and (3) includes the disclosure required by Item 7 of Schedule 14A with respect to such nominees. All nominees have consented to be named in this Proxy Statement and to serve if elected.

Our Nominees for Director

(Information is as of April 17, 2018)

 

 

 

 Alexander J. Denner, Ph.D.

 

  Experience

Dr. Denner, 48, has served as one of our directors since 2009. Dr. Denner is a founding partner and Chief Investment Officer of Sarissa Capital Management LP, a registered investment advisor, which he founded in 2012. Sarissa Capital focuses on improving the strategies of companies to enhance stockholder value. From 2006 to 2011, Dr. Denner served as a Senior Managing Director at Icahn Capital. Prior to that, he served as a portfolio manager at Viking Global Investors, a private investment fund, and Morgan Stanley Investment Management, a global asset management firm. Dr. Denner is also a director of The Medicines Company, a biopharmaceutical company.

 

  Qualifications

Dr. Denner has significant experience overseeing the operations and research and development of healthcare companies and evaluating corporate governance matters. He also has extensive experience as an investor, particularly with respect to healthcare companies, and possesses broad healthcare industry knowledge.

 

  Biogen Committee Memberships

Corporate Governance (Chair)

Finance

 

  Other Current Public Company Boards

The Medicines Company

 

  Former Public Company Directorships Held in the Past Five Years

Ariad Pharmaceuticals, Inc. (Chair)

Bioverativ Inc.

Enzon Pharmaceuticals, Inc.

Vivus, Inc.

 

 

 

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 3   Board of Directors (continued)

 

 

 

 

 Caroline D. Dorsa

 

 

  Experience

Ms. Dorsa, 58, has served as one of our directors since 2010. Ms. Dorsa served as the Executive Vice President and Chief Financial Officer of Public Service Enterprise Group Incorporated, a diversified energy company, from April 2009 until her retirement in October 2015, and served on its Board of Directors from February 2003 to April 2009. From February 2008 to April 2009, she served as Senior Vice President, Global Human Health, Strategy and Integration at Merck & Co., Inc., a pharmaceutical company. From November 2007 to January 2008, Ms. Dorsa served as Senior Vice President and Chief Financial Officer of Gilead Sciences, Inc., a life sciences company. From February 2007 to November 2007, she served as Senior Vice President and Chief Financial Officer of Avaya, Inc., a telecommunications company. From 1987 to January 2007, Ms. Dorsa held various financial and operational positions at Merck & Co., Inc., including Vice President and Treasurer, Executive Director of U.S. Customer Marketing and Executive Director of U.S. Pricing and Strategic Planning. Ms. Dorsa also serves as a director of Illumina, Inc. and Intellia Therapeutics, Inc., both of which are biotechnology companies, and as a Trustee of the Goldman Sachs ETF Trust, the Goldman Sachs MLP and Energy Renaissance Fund and the Goldman Sachs MLP Income Opportunities Fund, investment funds within the Goldman Sachs Asset Management fund complex.

 

  Qualifications

Ms. Dorsa has significant financial and accounting expertise and a deep knowledge of the pharmaceutical industry. Her strategic perspective on the industry is particularly valuable to our Board of Directors as it oversees our growth initiatives and reviews both internal development projects and external opportunities.

 

  Biogen Committee Memberships

Audit (Chair)

Risk

 

  Other Current Public Company Boards

Illumina, Inc.

Intellia Therapeutics, Inc.

Goldman Sachs Investment Funds

 

  Former Public Company Directorships Held in the Past Five Years

None

 

 

 Nancy L. Leaming

 

  Experience

Ms. Leaming, 70, has served as one of our directors since 2008. Ms. Leaming has been an independent consultant since 2005. From 2003 to 2005, she served as the Chief Executive Officer and President of Tufts Health Plan, a provider of healthcare insurance. From 1986 to 2003, Ms. Leaming served in several executive positions at Tufts Health Plan, including President, Chief Operating Officer and Chief Financial Officer.

 

  Qualifications

Ms. Leaming has well-developed leadership skills and financial acumen and provides insights into the healthcare reimbursement and payer market, where she served for 20 years in senior operational, financial and managerial roles.

 

  Biogen Committee Memberships

Audit

Risk

 

  Other Current Public Company Boards

None

 

  Former Public Company Directorships Held in the Past Five Years

Edgewater Technology, Inc.

Hologic, Inc.

 

 

 

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 3   Board of Directors (continued)

 

 

 

 

 Richard C. Mulligan, Ph.D.

 

  Experience

Dr. Mulligan, 63, has served as one of our directors since 2009. Dr. Mulligan is currently the Mallinckrodt Professor of Genetics, Emeritus, at Harvard Medical School, after serving as the Mallinckrodt Professor of Genetics and Director of the Harvard Gene Therapy Initiative from 1996 to 2013. He also currently serves as a Portfolio Manager at Icahn Capital LP, a position held since March 2017. Prior to Harvard, Dr. Mulligan was a Professor of Molecular Biology at the Massachusetts Institute of Technology, a member of the Whitehead Institute for Biomedical Research and the Chief Scientific Officer of Somatix Therapy Corporation, a drug discovery and development company that he founded. Dr. Mulligan was a founding partner of Sarissa Capital Management LP, a registered investment advisor, from 2013 to 2016. Dr. Mulligan was named a MacArthur Foundation Fellow in 1981.

 

  Qualifications

Dr. Mulligan has scientific expertise in the areas of molecular biology, genetics, gene therapy and biotechnology, as well as extensive experience within the healthcare industry, including overseeing the operations and research and development of healthcare companies.

 

  Biogen Committee Memberships

Science and Technology (Chair)

Compensation and Management Development

 

  Other Current Public Company Boards

None

 

  Former Public Company Directorships Held in the Past Five Years

Enzon Pharmaceuticals, Inc.

 

 

 Robert W. Pangia

 

  Experience

Mr. Pangia, 66, served as a director of the Company from 1997 to 2003 during the period the Company was operated as IDEC Pharmaceuticals, and has served as a director since 2003 following IDEC’s merger with Biogen, Inc. Mr. Pangia has been a partner in Ivy Capital Partners, LLC, the general partner of Ivy Healthcare Capital, L.P., a private equity fund specializing in healthcare investments, since 2003. From 2011 to 2016 he was also the Chief Executive Officer of Ivy Sports Medicine, LLC, a medical device company. From October 2007 to October 2009, he also served as the Chief Executive Officer of Highlands Acquisition Corp., a special purpose acquisition company. From 1996 to 2003, Mr. Pangia was self-employed as an investment banker. From 1987 to 1996, he held various senior management positions at PaineWebber, a financial services company, including Executive Vice President and Director of Investment Banking for PaineWebber Incorporated of New York, a member of the Board of Directors of PaineWebber, Inc., Chairman of PaineWebber Properties, Inc. and a member of several of PaineWebber’s executive and operating committees.

 

  Qualifications

Mr. Pangia has significant financial acumen and breadth of expertise within the healthcare industry.

 

  Biogen Committee Memberships

Compensation and Management Development (Chair)

Finance

 

  Other Current Public Company Boards

None

 

  Former Public Company Directorships Held in the Past Five Years

None

 

 

 

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 3   Board of Directors (continued)

 

 

 

 

 Stelios Papadopoulos, Ph.D.

 

  Experience

Dr. Papadopoulos, 69, has served as one of our directors since 2008 and as our independent Chairman since June 2014. Dr. Papadopoulos also serves as the Chairman of Exelixis, Inc., a drug discovery and development company that he co-founded in 1994, and Regulus Therapeutics Inc., a biopharmaceutical company. Previously, he was an investment banker with Cowen & Co., LLC, a financial services company, focusing on the biotechnology and pharmaceutical sectors, from 2000 until his retirement as Vice Chairman in August 2006. Prior to joining Cowen & Co., Dr. Papadopoulos served for 13 years as an investment banker at PaineWebber, Inc., a financial services company, where he was most recently Chairman of PaineWebber Development Corp., a PaineWebber subsidiary focusing on biotechnology. Dr. Papadopoulos is also a director of BG Medicine, Inc., a diagnostics company focused on the development and commercialization of cardiovascular diagnostic tests.

 

  Qualifications

Having founded multiple life sciences companies and worked as an investment banker focused on the life sciences industry, Dr. Papadopoulos brings to our Board of Directors a firsthand understanding of the demands of establishing, growing and running life sciences businesses.

 

  Biogen Committee Memberships

Audit

Finance

Science and Technology

 

  Other Current Public Company Boards

BG Medicine, Inc.

Exelixis, Inc. (Chair)

Regulus Therapeutics, Inc. (Chair)

 

  Former Public Company Directorships Held in the Past Five Years

None

 

 

 Brian S. Posner

 

  Experience

Mr. Posner, 56, has served as one of our directors since 2008. Mr. Posner has been a private investor since March 2008 and is the President of Point Rider Group LLC, a consulting and advisory services firm serving predominantly the financial services industry, as well as institutional investors seeking to make control investments in that industry. From 2005 to March 2008, Mr. Posner served as the President, Chief Executive Officer and co-Chief Investment Officer of ClearBridge Advisors LLC, an asset management company and a wholly-owned subsidiary of Legg Mason. Prior to that, Mr. Posner co-founded Hygrove Partners LLC, a private investment fund, in 2000 and served as its Managing Partner for five years. He served as a portfolio manager and an analyst at Fidelity Investments, a financial services company, from 1987 to 1996 and, from 1997 to 1999, at Warburg Pincus Asset Management/Credit Suisse Asset Management where he also served as co-Chief Investment Officer and Director of Research. Mr. Posner also serves as a director of AQR Funds and Arch Capital Group Ltd., a specialty insurance and reinsurance provider.

 

  Qualifications

Given his substantial experience as a leading institutional investment manager and advisor, Mr. Posner brings a professional investor’s perspective and significant management and financial expertise that are valuable to our Board of Directors as it oversees our strategy for enhancing stockholder value.

 

  Biogen Committee Memberships

Finance (Chair)

Audit

Corporate Governance

 

  Other Current Public Company Boards

AQR Funds

Arch Capital Group Ltd.

 

  Former Public Company Directorships Held in the Past Five Years

BG Medicine, Inc.

Bioverativ Inc. (Chair)

 

 

 

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 3   Board of Directors (continued)

 

 

 

 

 Eric K. Rowinsky, M.D.

 

 

  Experience

Dr. Rowinsky, 61, has served as one of our directors since 2010. He has served as President of RGenix, Inc., a privately-held life sciences company, since November 2015 and as its Executive Chairman since December 2016. Since June 2016, Dr. Rowinsky has also been the Chief Scientific Officer of Clearpath Development Co., which rapidly advances development stage therapeutic assets to pre-defined human proof-of-concept milestones. From January 2012 to November 2015, Dr. Rowinsky was the Head of Research and Development and Chief Medical Officer of Stemline Therapeutics, Inc., a biotechnology company focusing on the discovery and development of therapeutics targeting cancer stem cells. Dr. Rowinsky is an Adjunct Professor of Medicine at New York University and has been an independent consultant since January 2010. Prior to that, he was the Chief Medical Officer of Primrose Therapeutics, Inc., a start-up biotechnology company focusing on the development of therapeutics for polycystic kidney disease, from August 2010 until its acquisition in September 2011. From 2005 to December 2009, he served as the Chief Medical Officer and Executive Vice President of ImClone Systems Incorporated, a life sciences company. From 1996 to 2004, Dr. Rowinsky held several positions at the Cancer Therapy & Research Center’s Institute for Drug Development, including Director of the Institute and Director of Clinical Research. During that time, he held the SBC Endowed Chair for Early Drug Development and Clinical Professor of Medicine at the University of Texas Health Science Center at San Antonio. From 1988 to 1996, Dr. Rowinsky was an Associate Professor of Oncology at the Johns Hopkins School of Medicine and on the staff of the Johns Hopkins Hospital. Dr. Rowinsky serves as a director of Fortress Biotech Inc., a biopharmaceutical company, and Verastem, Inc., a biopharmaceutical company.

 

  Qualifications

Dr. Rowinsky has extensive research and drug development experience and broad scientific and medical knowledge.

 

  Biogen Committee Memberships

Compensation and Management Development

Corporate Governance

Science and Technology

 

  Other Current Public Company Boards

Fortress Biotech Inc.

Verastem, Inc.

 

  Former Public Company Directorships Held in the Past Five Years

BIND Therapeutics, Inc.

Navidea Biopharmaceuticals, Inc.

 

 

 

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 3   Board of Directors (continued)

 

 

 

 

 Lynn Schenk, J.D.

 

  Experience

Ms. Schenk, 73, served as a director of the Company from 1995 to 2003 during the period the Company was operated as IDEC Pharmaceuticals, and has served as a director since 2003 following IDEC’s merger with Biogen, Inc. Ms. Schenk is an attorney and consultant in private practice with extensive public policy and business experience. She is also a member of the Board of Overseers of the Scripps Research Institute, a director of the California High Speed Rail Authority Board and a trustee of the University of California, San Diego Foundation. From 1999 to 2003, she served as Chief of Staff to the Governor of California, during which time she led the effort to create the Institutes for Science and Innovation at the University of California. She headed the State’s Executive Branch risk management team post 9/11 and during the California energy crisis. From 1993 to 1995, Ms. Schenk was a Member of the United States House of Representatives, representing San Diego, California and served on the House Energy & Commerce Committee with a special emphasis on biotechnology. From 1980 to 1983, she was the California Secretary of Business, Transportation and Housing during which time she formed the California Commission on Industrial Innovation. Ms. Schenk is a member of the Board of Directors of Sempra Energy, an energy services and development company, and serves on the Compensation Committee, the Executive Committee and is the Chair of the Environmental Health, Safety and Technology Committee. Ms. Schenk is also a National Association of Corporate Directors (NACD) Board Leadership Fellow, a member of the NACD Advisory Council on Risk Oversight and a Fellow of the UCLA Luskin School of Public Affairs. In 2017 Ms. Schenk was selected as an NACD Directorship 100 honoree.

 

  Qualifications

Ms. Schenk’s strong public policy, government, legal and private sector experience provides vital insights to our Board of Directors about significant issues affecting the highly regulated life sciences industry. She brings public sector operations and management expertise to our Board of Directors. She has demonstrated her commitment to boardroom excellence by completing the NACD’s comprehensive program of study for corporate directors. She supplements her skill sets through ongoing engagement with the director community and access to leading practices.

 

  Biogen Committee Memberships

Risk (Chair)

Compensation and Management Development

 

  Other Current Public Company Boards

Sempra Energy

 

  Former Public Company Directorships Held in the Past Five Years

None

 

 

 

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 3   Board of Directors (continued)

 

 

 

 

 Stephen A. Sherwin, M.D.

 

  Experience

Dr. Sherwin, 69, has served as one of our directors since 2010. Dr. Sherwin currently divides his time between advisory work in the life sciences industry and patient care and teaching in his specialty of medical oncology. He is a Clinical Professor of Medicine at the University of California, San Francisco and a volunteer Attending Physician in Hematology-Oncology at the Zuckerberg San Francisco General Hospital. Dr. Sherwin also currently serves as a venture partner with Third Rock Ventures, LLC. Dr. Sherwin previously served as the Chairman of Ceregene, Inc., a life sciences company that he co-founded, from 2001 until its acquisition by Sangamo Biosciences, Inc. in 2013. He was also a co-founder and chairman of Abgenix, Inc., an antibody company which was acquired by Amgen Inc. in 2006. From 1990 to October 2009, he served as the Chief Executive Officer of Cell Genesys, Inc., a life sciences company, and was its Chairman from 1994 until the company’s merger with BioSante Pharmaceuticals, Inc. (now Ani Pharmaceuticals, Inc.) in October 2009. Prior to that, he held various positions at Genentech, Inc., a life sciences company, most recently as Vice President, Clinical Research. Dr. Sherwin is a member of the Boards of Directors of Aduro Biotech, Inc. and Neurocrine Biosciences, Inc., both of which are clinical-stage life sciences companies.

 

  Qualifications

Dr. Sherwin has extensive knowledge of the life sciences industry and brings more than 30 years of experience in senior leadership positions at large and small publicly traded life sciences companies to our Board of Directors.

 

  Biogen Committee Memberships

Finance

Risk

Science and Technology

 

  Other Current Public Company Boards

Aduro Biotech, Inc.

Neurocrine Biosciences, Inc.

 

  Former Public Company Directorships Held in the Past Five Years

Biosante Pharmaceuticals, Inc.

Rigel Pharmaceuticals, Inc.

Verastem, Inc.

Vical, Inc.

 

 

 

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 3   Board of Directors (continued)

 

 

 

 

 Michel Vounatsos

 

  Experience

Mr. Vounatsos, 56, has served as our Chief Executive Officer and one of our directors since January 2017. Prior to that, from April 2016 until his appointment as our Chief Executive Officer, he served as our Executive Vice President, Chief Commercial Officer. Prior to joining Biogen, Mr. Vounatsos spent 20 years at Merck & Co., Inc., a pharmaceutical company, where he most recently served as President, Primary Care, Customer Business Line and Merck Customer Centricity. In this role, he led Merck’s global primary care business unit, a role which encompassed Merck’s cardiology-metabolic, general medicine, women’s health and biosimilars groups and developed and instituted a strategic framework for enhancing the company’s relationships with key constituents, including the most significant providers, payers and retailers and the world’s largest governments. Mr. Vounatsos previously held leadership positions across Europe and in China for Merck. Prior to that, Mr. Vounatsos held management positions at Ciba-Geigy. Mr. Vounatsos received his C.S.C.T. certificate in Medicine from the Universite Victor Segalen, Bordeaux II, France, and his M.B.A. from the HEC School of Management in Paris.

 

  Qualifications

Mr. Vounatsos has significant knowledge and experience with respect to the biotechnology, healthcare and pharmaceutical industries, a comprehensive leadership background resulting from service as an executive in the pharmaceutical industry and studied medicine as part of his educational background.

 

  Biogen Committee Memberships

None

 

  Other Current Public Company Boards

None

 

  Former Public Company Directorships Held in the Past Five Years

None

 

 

 

OUR BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR THE ELECTION OF EACH DIRECTOR NOMINEE NAMED ABOVE.

 

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 3   Board of Directors (continued)

 

 

 

 

Committees and Meetings

Our Board of Directors met 16 times in 2017. Our Board of Directors also has six standing committees. The principal functions of each committee, the committee composition in 2017 and number of meetings held in 2017 are described in the table below. The Chair of each committee periodically reports to our Board of Directors on committee deliberations and decisions. Each committee’s charter is posted on our website, www.biogen.com, under the “Corporate Governance” subsection of the “Investors” section of the website. Also posted there are our Corporate Governance Principles, which, together with our committee charters, comprise our governance framework.

 

  Committee   Function   2017 Members  

Meetings

in 2017

 

Audit

 

Assists our Board of Directors in its oversight of:

   the integrity of our financial statements;

   our accounting and financial reporting processes;

   the independence, qualifications and performance of our independent registered public accounting firm;

   our global tax compliance and tax audit processes; and

   our internal audit and corporate compliance functions.

 

Our Audit Committee has the sole authority and direct responsibility for the appointment, compensation, retention, evaluation and oversight of the work of our independent registered public accounting firm.

 

Caroline D. Dorsa† (Chair)

Nancy L. Leaming†

Stelios Papadopoulos

Brian S. Posner†

    9  

Compensation and

Management

Development

 

Assists our Board of Directors with oversight of executive compensation and management development, including:

   recommending to our Board of Directors the compensation for our Chief Executive Officer and approving the compensation for our other executive officers;

   administration of our short- and long-term incentive plans;

   reviewing executive and senior management development programs; and

   recommending to our Board of Directors the compensation of our non-employee directors.

 

Robert W. Pangia (Chair)

Richard C. Mulligan

Eric K. Rowinsky

Lynn Schenk

    16  

Corporate

Governance

  Assists our Board of Directors in assuring sound corporate governance practices and identifying qualified nominees to our Board of Directors and its committees.  

Alexander J. Denner (Chair)

Brian S. Posner

Eric K. Rowinsky

    9  

Finance

  Assists our Board of Directors with oversight of our financial strategy, policies and practices.  

Brian S. Posner (Chair)

Alexander J. Denner

Robert W. Pangia

Stelios Papadopoulos

Stephen A. Sherwin

    3  

Risk

 

Assists our Board of Directors with oversight of management’s exercise of its responsibility to assess and manage risks associated with our business and operations.

 

For more information on our Board oversight of risks, please see “Board Risk Oversight” below.

 

Lynn Schenk (Chair)

Caroline D. Dorsa

Nancy L. Leaming

Stephen A. Sherwin

    5  

Science and

Technology

  Assists our Board of Directors with oversight of our key strategic decisions involving research and development matters and our intellectual property portfolio.  

Richard C. Mulligan (Chair)

Stelios Papadopoulos

Eric K. Rowinsky

Stephen A. Sherwin

    7  
Determined by our Board of Directors to be an audit committee financial expert.

 

  Attendance at Board and Committee Meetings. No director attended fewer than 75% of the total number of meetings of our Board of Directors and the committees on which he or she served during 2017.

 

  Executive Sessions. Under our Corporate Governance Principles, the independent directors of our full Board are required to meet without management present at least four times each year, and may also meet without management present at such other times as determined by our Chairman, or if requested by at least two other directors. In 2017 the independent directors of our full Board met without management present four times. Each committee of our Board also had numerous executive sessions throughout the year.

 

  Attendance at Stockholder Meeting. We expect all of our directors and director nominees to attend our annual meetings of stockholders. All of our directors attended our 2017 annual meeting of stockholders.

 

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 3   Board of Directors (continued)

 

 

 

 

Director Compensation

This section describes our compensation program for our non-employee directors and shows the compensation paid to or earned by our non-employee directors during 2017. Mr. Vounatsos, our Chief Executive Officer, receives no compensation for his service on our Board of Directors. George A. Scangos, Ph.D., our former Chief Executive Officer and a former member of our Board of Directors, received no compensation for his service on our Board from January 1, 2017 through January 6, 2017.

Retainers, Meeting Fees and Expenses

Effective July 1, 2017, our Board of Directors amended our non-employee director compensation program to increase the annual retainer for the independent Chairman of the Board from $50,000 to $75,000. The annual retainers and meeting fees for our non-employee directors were otherwise unchanged from 2016. The following table presents the annual retainers and meeting fees for all non-employee members of our Board of Directors in effect as of December 31, 2017:

 

  Annual Retainers            Meeting Fees        

  Annual Board Retainer

   $ 65,000     

Board of Directors Meetings (per meeting day):

  

  Annual Retainers (in addition to Annual Board Retainer):

 

 

     

In-person attendance

   $ 2,500  
     

 

 

Telephonic attendance

   $ 1,500  

  Independent Chairman of the Board

   $ 75,000     

Committee Meetings (per meeting)

   $ 1,500  

  Audit Committee Chair

   $ 25,000     

Attendance at Annual Science and Technology Committee Portfolio Review (per day)

  

 

 

$

 

 

1,500

 

 

 

  Compensation and Management
Development Committee Chair

   $ 20,000        

  Corporate Governance Committee Chair

   $ 15,000        

  Finance Committee Chair

   $ 15,000        

  Risk Committee Chair

   $ 15,000        

  Science and Technology Committee Chair

   $ 15,000        

  Audit Committee Member (other than Chair)

   $ 5,000                

 

Our non-employee directors are also eligible to be paid a fee of $1,000 for each full day of service to the Company other than in connection with meetings of our Board of Directors or its committees.

Our non-employee directors may defer all or part of their cash compensation under our Voluntary Board of Directors Savings Plan, which is similar to our Supplemental Savings Plan described in the narrative preceding the 2017 Non-Qualified Deferred Compensation Table in Part 5 – Executive Compensation Matters of this Proxy Statement, but without any Company matching contributions. If a non-employee director chooses to defer compensation under our Voluntary Board of Directors Savings Plan, his or her notional account under the plan will periodically be credited with amounts of deemed investment earnings as if the deferred compensation was actually invested in the notional investment(s) selected by the director or in a default investment if the director does not make a selection. These notional investment options include the mutual funds available under our 401(k) plan as well as a fixed rate option which earns a rate of return determined each year by the Company’s retirement committee. For 2017 non-employee

director contributions notionally invested in the fixed rate option, this rate of return was set at 5%. Contributions notionally invested in the fixed rate option continue to be credited with the rate of return that was in effect during the year of contribution.

Non-employee directors are also reimbursed for actual expenses incurred in attending meetings of our Board of Directors and any of its committees, as well as service to our Board of Directors or any of its committees that is unrelated to such meetings.

Equity Awards

Awards Under Our Non-Employee Directors Equity Plan

Our non-employee directors receive awards under our 2006 Non-Employee Directors Equity Plan (the Non-Employee Directors Equity Plan). The Non-Employee Directors Equity Plan was initially approved by our stockholders at our 2006 annual meeting of stockholders. In 2015 our stockholders approved an amendment to extend the term of the plan until June 10, 2025.

 

 

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 3   Board of Directors (continued)

 

 

 

General Provisions of the Non-Employee Directors Equity Plan

Non-employee directors receive an annual award under the Non-Employee Directors Equity Plan effective on the date of each annual meeting of stockholders (or a pro rata award upon election other than at an annual meeting of stockholders). Under the Non-Employee Directors Equity Plan, a maximum of 17,500 shares of our common stock (or 30,000 shares for the independent Chairman of the Board) may be granted to a non-employee director pursuant to such annual awards each calendar year. Annual awards vest on the one-year anniversary of the date of grant or over a longer period determined in the discretion of our Compensation Committee.

Awards to non-employee directors are recommended by our Compensation Committee and approved by our Board of Directors, with the independent Chairman recused from discussion and voting upon his awards.

Awards granted under the Non-Employee Directors Equity Plan are subject to accelerated vesting upon termination of a director’s service by reason of death, disability or retirement and upon a change in control (as such terms are defined in the Non-Employee Directors Equity Plan). In addition, non-employee director awards will become fully vested upon an involuntary termination of a director’s service within two years following certain mergers or other corporate transactions, as described in the Non-Employee Directors Equity Plan.

Awards During 2017

In June 2017 our Compensation Committee recommended, and our Board of Directors approved, annual awards with a grant date fair value of approximately $270,000 for each non-employee director and an additional annual award with a grant date fair value of approximately $175,000 for the independent Chairman. These annual awards were below the limits set forth in the Non-Employee Directors Equity Plan described above and were consistent with the awards made in 2016. The additional annual award for the independent Chairman had a higher grant date fair value than the additional annual award made in 2016 in recognition of Dr. Papadopoulos’ contributions to the Company as the independent Chairman. The June 2017 annual awards were made in the form of restricted stock units (RSUs) vesting in full on the first anniversary of the grant date, generally subject to the director’s continued service.

Periodically we review our compensation program for our non-employee directors in relation to those of the peer group used for compensation purposes (as described below in our Compensation Discussion and Analysis) to assess its competitiveness and appropriateness. While the grant date fair values of the equity awards granted in 2017 were above the median of our peer group, the annual retainer for our directors (after giving effect to the independent Chairman annual retainer increase effective July 1, 2017) was below the 25th percentile of that same peer group. Overall, the total compensation levels were market competitive. Our Compensation Committee and our Board of Directors believe that a somewhat heavier weighting towards equity awards than that of our peer group companies is appropriate because it further aligns the interests of our non-employee directors with those of our stockholders.

10b5-1 Trading Plans

Our directors must use pre-established trading plans to sell shares of our common stock. Trading plans may only be entered into during an open trading window and when the director is not in possession of material non-public information about the Company. We require a waiting period following the establishment of a trading plan before any trades may be executed. Our policy is designed to provide safeguards that will allow our directors to have an opportunity to realize the value intended by the Company in granting equity-based awards.

Non-Employee Director Stock Ownership Guidelines

We maintain the following stock ownership guidelines for our non-employee directors:

 

  Position   Stock Ownership Requirement(1)

  Independent

  Chairman

  Number of shares equal in value to 5x the total annual cash retainer for (i) the independent Chairman position and (ii) Board members

  Non-Employee

  Directors

  (excluding Chairman)

  Number of shares equal in value to 5x the annual cash retainer for Board members
(1) Each non-employee director has five years from the date of initial election or appointment to meet the stock ownership requirement. All of our non-employee directors currently meet the stock ownership requirement.
 

 

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 3   Board of Directors (continued)

 

 

 

2017 Director Compensation

 

  Name

  (a)

  

Fees

Earned or

Paid in

Cash(1)

(b)

    

Stock

Awards(2)

(c)

    

Change in Pension

Value and Nonqualified

Deferred Compensation

Earnings(3)

(d)

  

All Other

Compensation(4)

(e)

  

Total

(f)

 

  Alexander J. Denner

   $ 134,000      $ 269,479         $17,000    $ 420,479  

  Caroline D. Dorsa

   $ 147,500      $ 269,479            $ 416,979  

  Nancy L. Leaming

   $ 129,000      $ 269,479            $ 398,479  

  Richard C. Mulligan

   $ 151,000      $ 269,479            $ 420,479  

  Robert W. Pangia

   $ 151,500      $ 269,479      $61,782       $ 482,761  

  Stelios Papadopoulos

   $ 200,500      $ 444,448         $24,500    $ 669,448  

  Brian S. Posner

   $ 156,000      $ 269,479         $25,000    $ 450,479  

  Eric K. Rowinsky

   $ 149,500      $ 269,479            $ 418,979  

  Lynn Schenk

   $ 149,500      $ 269,479         $25,000    $ 443,979  

  Stephen A. Sherwin

   $ 124,500      $ 269,479         $25,000    $ 418,979  

Notes to the 2017 Director Compensation Table

(1) Includes $5,500 of fees received by each of Drs. Denner, Papadopoulos and Sherwin and Messrs. Pangia and Posner and $2,500 of fees received by each of Mses. Dorsa, Leaming and Schenk and Drs. Mulligan and Rowinsky in 2017 for fees earned in 2016. Also includes $1,500 of fees earned by each director in 2017 but which were paid in 2018.
(2) The amounts in column (c) represent the grant date fair value of RSU awards made in 2017 to non-employee directors under the Non-Employee Directors Equity Plan, as described in the narrative preceding this table. These RSUs are scheduled to vest in full and be settled in shares on the first anniversary of the grant date, generally subject to continued service. Grant date fair values were computed in accordance with Accounting Standards Codification (ASC) 718 and determined by multiplying the number of RSUs awarded by the fair market value of the Company’s common stock on the relevant grant date.
(3) The amounts in column (d) represent earnings under the Voluntary Board of Directors Savings Plan that are in excess of 120% of the average applicable federal long-term rate. The federal long-term rate for 2017 applied in this calculation is 3.26%, which was the federal long-term rate effective in January 2017 when the Fixed Rate Option (FRO) under this plan was established for 2017. Only Mr. Pangia has deferred compensation notionally invested in the FRO.
(4) The amounts in column (e) represent the amount of matching contributions made in 2017 by the Biogen Foundation on behalf of the director pursuant to the terms of a matching gift program offered by the Biogen Foundation to all U.S. employees and non-employee directors of Biogen. Under the matching gift program, the Biogen Foundation matches gifts to eligible U.S.-based non-profit organizations, in accordance with the Biogen Foundation’s guidelines, up to an annual maximum per donor amount of $25,000 per calendar year and up to a program total of $1.5 million per calendar year. The matching contributions made by the Biogen Foundation are not taxable income to the director, and the director may not take any tax deductions for such matching contributions.

 

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 3   Board of Directors (continued)

 

 

 

Director Equity Outstanding at 2017 Fiscal Year-End

The following table summarizes the equity awards that were outstanding as of December 31, 2017, for each of the non-employee directors serving during 2017.

 

     Option Awards(1)          Stock Awards(2)
  Name   

Number of

Securities

Underlying

Unexercised

Options

        

Number of  

Shares or Units  

of Stock That  

Have Not Vested  

  Alexander J. Denner

        1,055

  Caroline D. Dorsa

        1,055

  Nancy L. Leaming

        1,055

  Richard C. Mulligan

        1,055

  Robert W. Pangia

   11,946      1,055

  Stelios Papadopoulos

        1,740

  Brian S. Posner

        1,055

  Eric K. Rowinsky

        1,055

  Lynn Schenk

        1,055

  Stephen A. Sherwin

   12,278            1,055

Notes to the Director Equity Outstanding at 2017 Fiscal Year-End Table

(1) All stock option awards were granted to our non-employee directors with a ten-year term and vested in full on the first anniversary of the grant date. All outstanding stock options granted to non-employee directors were fully vested and exercisable as of December 31, 2017.
(2) Represents the number of RSUs awarded to non-employee directors in 2017 under the Non-Employee Directors Equity Plan, as described in the narrative preceding the “2017 Director Compensation” table above. These RSU awards are scheduled to vest in full and be settled in shares on the first anniversary of the grant date, generally subject to continued service.

 

 

Board Risk Oversight

Our Board of Directors believes that a fundamental part of risk management is understanding the risks that we face, monitoring these risks and adopting appropriate control and mitigation of these risks. As stated in our Corporate Governance Principles, our Board and its committees are responsible for “reviewing the Company’s significant risk exposures and steps taken by management to monitor and mitigate such exposure”. We also have a separate Risk Committee of our Board that assists our Board “in its oversight of management’s exercise of its responsibility to assess and manage risk associate with the Company’s business and operations.”

Our Board oversees the management of material risks facing the Company. Biogen is committed to fostering a company culture of risk-adjusted decision-making without constraining reasonable risk-taking and innovation. Our Board and its committees oversee our efforts to foster this culture. Our Board regularly receives information about our material strategic, operational, financial and compliance risks and management’s response to, and mitigation of, such risks. In addition, our risk management systems, including our risk assessment processes, internal control over financial reporting, compliance programs and internal and external auditing procedures, are designed to inform management and our Board about our material risks. As part of its risk oversight function, our Board and its committees review this framework, its operation and our strategies for generating long-term value for our stockholders to ensure that such strategies will not motivate management to take excessive risks.

In determining the allocation of risk oversight responsibilities, our Board and its committees generally oversee material risks within their identified areas of concern. Our Board and each of its committees meet regularly with management to ensure that management is exercising its responsibility to identify relevant risks and is adequately assessing, monitoring and taking appropriate action to mitigate risk. In the event a committee receives a report from members of management on areas of material risk to the Company, the Chair of the relevant committee reports on the discussion to the full Board of Directors at the next Board of Directors meeting. This enables our Board and its committees to coordinate their oversight of risk and identify risk interrelationships.

 

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 3   Board of Directors (continued)

 

 

 

Our independent Chairman of the Board promotes effective communication and consideration of matters presenting significant risks to the Company through his role in developing our Board’s meeting agendas, advising committee chairs, chairing meetings of the independent directors and facilitating communications between independent directors and our Chief Executive Officer.

A summary of the key areas of risk oversight responsibility of our Board and each of its committees is set forth below:

 

  Board or Committee    Area of Risk Oversight

  Board

  

   Corporate and commercial strategy and execution, pricing and reimbursement, competition and other material risks.

 

  Audit

  

   Financial, accounting, disclosure, corporate compliance, distributors, insurance, anti-bribery and anti-corruption matters and other risks reviewed in its oversight of the internal audit and corporate compliance functions.

 

  Compensation and

  Management

  Development

  

   Workforce matters, including harassment.

   Compensation policies and practices, including whether such policies and practices balance risk-taking and rewards in an appropriate manner as discussed further below.

 

  Corporate

  Governance

  

   Corporate governance and board succession, director independence, potential conflicts of interest and related party transactions involving directors and executive officers.

 

  Finance

  

   Financial, capital and credit risks.

 

  Risk

  

   The Company’s risk governance framework and infrastructure designed to identify, assess, manage and monitor the Company’s material risks.

   The risk management policies, guidelines and practices implemented by Company management.

   Allocation of risk oversight responsibilities to our Board and its committees.

   Information technology, cybersecurity, environmental, health and sustainability and other material risks not allocated to our Board or another committee.

   Material government and other investigations and litigation.

 

  Science and

  Technology

  

   Research and development activities, clinical development and drug safety and intellectual property.

   

Compensation Risk Assessment

The Compensation Discussion and Analysis (CD&A) section of this Proxy Statement describes our compensation policies, programs and practices for our named executive officers. Our goal-setting, performance assessment and compensation decision-making processes described in the CD&A apply to all employees. We offer a limited number of short-term cash incentive plans, with employees eligible for either our annual bonus plan or a sales incentive compensation plan. No employee is eligible to participate in more than one cash incentive plan at any time. Our annual bonus plan is consistently maintained for all participants globally, with the same Company performance goals, payout levels (as a percentage of target) and administrative provisions regardless of the participant’s job level, location or function in the Company. We also have a long-term incentive program that provides different forms of awards depending upon an employee’s level, but is otherwise consistent throughout the Company.

In the CD&A, we describe the risk-mitigation controls for our compensation programs. These controls include Compensation Committee review and approval of the design, goals and payouts under our annual bonus plan and long-term incentive program and each executive officer’s compensation (or, in the case of our Chief Executive Officer’s compensation, a recommendation of that compensation to our Board for its approval). In addition, we review the processes, controls and design of our sales incentive compensation plans. Based on our assessment, we believe that, through a combination of risk-mitigating features and incentives guided by relevant market practices and Company-wide goals, our compensation policies, programs and practices do not create risks that are reasonably likely to have a material adverse effect on the Company.

 

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 4   Audit Committee Matters

 

 

 

   
 

Proposal 2 – Ratification of the Selection of Our Independent Registered Public Accounting Firm

 

 
   

 

Our Audit Committee is directly responsible for the appointment, compensation, retention and oversight of the independent registered public accounting firm retained to audit our consolidated financial statements. Our Audit Committee has selected PwC as our independent registered public accounting firm for the fiscal year ending December 31, 2018. PwC has served as our independent registered public accounting firm since 2003.

In order to assure continuing auditor independence, our Audit Committee periodically considers whether there should be a rotation of the independent registered public accounting firm. Further, in conjunction with the rotation of the auditing firm’s lead engagement partner required by applicable SEC rules, our Audit Committee and its Chair has in the past been and in the future will be directly involved in the selection of PwC’s new lead engagement partner.

Our Audit Committee believes at this time that the continued retention of PwC to serve as our independent registered public accounting firm is in the best interest of Biogen and its stockholders.

Although stockholder approval of our Audit Committee’s selection of PwC is not required, our Board of Directors believes that it is a matter of good corporate practice to solicit stockholder ratification of this selection. If our stockholders do not ratify the selection of PwC as our independent registered public accounting firm, our Audit Committee will reconsider its selection. Even if the selection is ratified, our Audit Committee always has the ability to change the engagement of PwC if it considers that a change is in Biogen’s best interest. Representatives of PwC will participate in the Annual Meeting, have the opportunity to make a statement if they so desire and be available to respond to appropriate questions.

 

 

OUR BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR THE RATIFICATION OF

THE SELECTION OF PRICEWATERHOUSECOOPERS LLP AS OUR INDEPENDENT REGISTERED PUBLIC

ACCOUNTING FIRM FOR THE FISCAL YEAR ENDING DECEMBER 31, 2018.

 

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 4   Audit Committee Matters (continued)

 

 

 

 

Audit Committee Report

 

The Audit Committee’s role is to act on behalf of our Board of Directors in the oversight of Biogen’s financial reporting, internal control and audit functions. The roles and responsibilities of the Audit Committee are set forth in the written charter adopted by our Board of Directors, which is posted on our website, www.biogen.com, under the “Corporate Governance” subsection of the “Investors” section of the website. Management has primary responsibility for the financial statements and the reporting process, including the systems of internal control.

In fulfilling its oversight responsibilities, the Audit Committee, among other things:

 

  reviewed and discussed with management the audited consolidated financial statements contained in Biogen’s 2017 Annual Report on Form 10-K;
  discussed with PwC, Biogen’s independent registered public accounting firm, the overall scope and plans for the audit;
  met with PwC, with and without management present, to discuss the results of its examination, management’s response to any significant findings, its observations of Biogen’s internal control, the overall quality of Biogen’s financial reporting, the selection, application and disclosure of critical accounting policies, new accounting developments and accounting-related disclosures, the key accounting judgments and assumptions made in preparing the financial statements and whether the financial statements would have materially changed had different judgments and assumptions been made and other pertinent items related to Biogen’s accounting, internal control and financial reporting;
  discussed with representatives of Biogen’s corporate internal audit staff their purpose, authority, audit plan and reports;
  reviewed and discussed with PwC the matters required to be discussed with the Audit Committee under generally accepted auditing standards (including Public Company Accounting Oversight Board — Auditing Standard No. 1301);
  discussed with PwC its independence from management and Biogen, including the written disclosures and letter concerning independence received from PwC under applicable requirements of the Public Company Accounting Oversight Board. The Audit Committee has determined that the provision of non-audit services to Biogen by PwC is compatible with its independence;
  provided oversight and advice to management in connection with Biogen’s system of internal control over financial reporting in response to the requirements set forth in Section 404 of the Sarbanes-Oxley Act of 2002 and related regulations. In connection with this oversight, the Audit Committee reviewed a report by management on the effectiveness of Biogen’s internal control over financial reporting; and
  reviewed PwC’s Report of Independent Registered Public Accounting Firm included in Biogen’s Annual Report on Form 10-K for the fiscal year ended December 31, 2017, related to its audit of the effectiveness of internal control over financial reporting.

In reliance on these reviews and discussions, the Audit Committee recommended to our Board of Directors that the audited consolidated financial statements be included in Biogen’s Annual Report on Form 10-K for the fiscal year ended December 31, 2017, for filing with the SEC.

The Audit Committee of our Board of Directors:

Caroline D. Dorsa (Chair)

Nancy L. Leaming

Stelios Papadopoulos

Brian S. Posner

 

 

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 4   Audit Committee Matters (continued)

 

 

 

 

 

Audit and Other Fees

 

The following table shows fees for professional audit services billed to us by PwC for the audit of our annual consolidated financial statements for the years ended December 31, 2017, and December 31, 2016, and fees billed to us by PwC for other services provided during 2017 and 2016:

 

Fees    2017      2016  

Audit fees

   $ 5,036,303      $ 4,359,989  

Audit-related fees

     281,188        2,661,994  

Tax fees*

     380,997        365,638  

All other fees

     7,110        7,110  

Total

   $ 5,705,598      $ 7,394,731  
* Includes tax compliance fees of $138,182 in 2017 and $137,746 in 2016.

Audit fees are fees for the audit of our 2017 and 2016 consolidated financial statements included in our Annual Reports on Form 10-K, reviews of our condensed consolidated financial statements included in our Quarterly Reports on Form 10-Q, review of the consolidated financial statements incorporated by reference into our outstanding registration statements and statutory audit fees in overseas jurisdictions. For 2017 compared to 2016, the increase in

audit fees was primarily due to audit services provided in connection with the review and implementation of the Tax Cuts and Jobs Act of 2017 (2017 Tax Act), which was signed into law on December 22, 2017, and resulted in significant changes to the U.S. corporate income tax system.

Audit-related fees are fees that principally relate to assurance and related services that are also performed by our independent registered public accounting firm. More specifically, these services include audits of employee benefit plan information, accounting consultations, due diligence and audits in connection with business development activity, internal control reviews and attest services related to financial reporting that are not required by statute or regulation. For 2017 compared to 2016, the decrease in audit-related fees was primarily due to audit-related services provided during 2016 in relation to the spin-off of our hemophilia business, Bioverativ Inc., as an independent publicly traded company on February 1, 2017.

Tax fees are fees for tax compliance and planning services.

All other fees are license fees for a web-based accounting research tool.

 

 

 

Policy on Pre-Approval of Audit and Non-Audit Services

 

Our Audit Committee has the sole authority to approve the scope of the audit and any audit-related services as well as all audit fees and terms. Our Audit Committee must pre-approve any audit and non-audit services provided by our independent registered public accounting firm. Our Audit Committee will not approve the engagement of the independent registered public accounting firm to perform any services that the independent registered public accounting firm would be prohibited from providing under applicable securities laws, Nasdaq requirements or Public Company Accounting Oversight Board rules. In assessing whether to approve the use of our independent registered public accounting firm to provide permitted non-audit services, our Audit Committee tries to minimize relationships that could appear to impair the objectivity of our independent registered public accounting firm. Our Audit Committee will approve permitted non-audit services by our independent registered public accounting firm only when it will be more effective or economical to have such services provided by our independent registered public accounting firm than by another firm.

Our Audit Committee annually reviews and pre-approves the audit, audit-related, tax and other permissible non-audit services that can be provided by the independent registered public accounting firm. After the annual review, any proposed services exceeding pre-set levels or amounts or additional services not previously approved requires separate pre-approval by our Audit Committee or the Chair of our Audit Committee. Any pre-approval decision made by the Chair of our Audit Committee is reported to our Audit Committee at the next regularly scheduled Audit Committee meeting. Our Chief Financial Officer and our Chief Accounting Officer can approve up to an additional $50,000 in the aggregate per calendar year for categories of services that our Audit Committee (or the Chair through its delegated authority) has pre-approved.

All of the services provided by PwC during 2017 and 2016 were pre-approved in accordance with this policy.

 

 

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 5  

 

Executive Compensation Matters

 

 

 

   
 

Proposal 3 – Advisory Vote on Executive Compensation

 

 
   

 

Our Compensation Discussion and Analysis, which appears below, describes our executive compensation programs and the compensation decisions that our Compensation Committee and our Board of Directors made with respect to the 2017 compensation of our named executive officers. As required pursuant to Section 14A of the Exchange Act, our Board of Directors is asking that stockholders cast a non-binding, advisory vote FOR the following resolution:

“RESOLVED, that the compensation paid to the Company’s named executive officers, as disclosed pursuant to Item 402 of Regulation S-K, including the Compensation Discussion and Analysis, compensation tables and narrative discussion, is hereby APPROVED.”

Our Board of Directors is asking that our stockholders support this proposal. Although the vote you are being asked to cast is non-binding, we value the views of our stockholders, and our Compensation Committee and our Board of Directors will consider the outcome of the vote when making future compensation decisions for our named executive officers.

As we describe in our Compensation Discussion and Analysis, our executive compensation programs embody a pay-for-performance philosophy that supports our business strategy and aligns the interests of our executives with those of our stockholders. In particular, our compensation programs reward financial, strategic and operational performance and the goals set under our plans support our long-range plans. In addition, to discourage excessive risk taking, we maintain policies for stock ownership and recoupment of compensation, we cap payments under our annual bonus plan and we require multi-year vesting of long-term incentive awards.

We will hold a non-binding, advisory vote of our stockholders on the compensation of our named executive officers every year until the next required stockholder vote on the frequency of such advisory vote. The next stockholder vote on the frequency of such advisory vote is expected to be held at the 2023 annual meeting of stockholders.

 

 

 

OUR BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR THE APPROVAL

OF THE RESOLUTION SET FORTH ABOVE.

 

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 5  

 

Executive Compensation Matters (continued)

 

 

 

 

 COMPENSATION DISCUSSION AND ANALYSIS

 

This Compensation Discussion and Analysis (CD&A) describes our compensation strategy, philosophy, policies and practices underlying our executive compensation programs for 2017. It also provides information regarding the manner and context in which compensation was earned by and awarded to our 2017 named executive officers listed below, whom we refer to collectively as “named executive officers” or “NEOs”.

 

Michel Vounatsos(1)

Chief Executive Officer

 

Jeffrey D. Capello(2)

Executive Vice President and Chief Financial Officer

 

Michael Ehlers, M.D., Ph.D.

Executive Vice President, Research and Development

 

Susan H. Alexander

Executive Vice President, Chief Legal Officer and Secretary

 

Paul F. McKenzie, Ph.D.

Executive Vice President, Pharmaceutical Operations & Technology

 

Gregory F. Covino(3)

Vice President, Finance and Chief Accounting Officer and Former Interim Principal Financial Officer

 

George A. Scangos, Ph.D.(1)

Former Chief Executive Officer

 

Paul J. Clancy(4)

Former Executive Vice President, Finance and Chief Financial Officer

 

Kenneth A. DiPietro(5)

Former Executive Vice President, Human Resources

(1) Effective January 6, 2017, Dr. Scangos ceased to be our Chief Executive Officer and Mr. Vounatsos was appointed as our Chief Executive Officer. From April 2016 until his appointment as our Chief Executive Officer, Mr. Vounatsos served as our Executive Vice President, Chief Commercial Officer.
(2) Mr. Capello was appointed as our Executive Vice President and Chief Financial Officer effective December 11, 2017.
(3) Mr. Covino served as our Interim Principal Financial Officer from July 1, 2017 to December 11, 2017.
(4) Mr. Clancy ceased to be our Executive Vice President, Finance and Chief Financial Officer effective July 1, 2017.
(5) Mr. DiPietro ceased to be our Executive Vice President, Human Resources effective May 26, 2017, and ceased to be employed by us effective September 30, 2017.

 

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Executive Compensation Matters (continued)

 

 

 

 

 

 Executive Summary

 

 

2017 Highlights

We had a productive and successful 2017. We generated record revenues of $12.3 billion for the year, performed well across our MS portfolio and successfully launched SPINRAZA worldwide, the first and only approved treatment for SMA.

We announced an updated strategic framework to drive long-term growth with the aim of maximizing the value of our core business while building our future growth engines. To that end, we are focused on the following strategic priorities:

 

  Maximizing the resilience of our core MS business;
  Accelerating efforts in SMA as a significant new growth opportunity;
  Developing and expanding our neuroscience portfolio;
  Focusing our capital allocation efforts to drive investment for future growth; and
  Creating a leaner and simpler operating model to streamline our operations and reallocate resources towards prioritized research and development and commercial value creation opportunities.

We added seven new clinical stage programs across our strategic core and emerging growth areas and had one of our most productive years for business development.

We provided value to our stockholders through the return of approximately $1.4 billion in capital through share repurchases and we continued our leading efforts in environmental, sustainability and diversity matters.

Our executive compensation programs for 2017 were aligned with stockholder interests as compensation earned under them was closely-linked to the achievement of our corporate performance goals.

We achieved or exceeded the vast majority of these corporate performance goals that we set at the beginning of the year under our incentive compensation plans and, accordingly, the payouts under these plans for 2017 were above target payout levels.

A brief summary of our 2017 business, financial and executive compensation highlights are as follows:

 

 

Financial Performance

The following chart provides a summary of our financial performance for 2017 compared to 2016:

 

 

LOGO

A reconciliation of our GAAP to Non-GAAP financial measures is provided in Appendix A to this Proxy Statement.

Product and Pipeline Developments

Approvals

 

  SPINRAZA
    In April 2017 SPINRAZA was approved for the treatment of 5q SMA in pediatric and adult patients by the European Commission (EC).
    In June 2017 SPINRAZA was approved in Canada for the treatment of 5q SMA.
    The Japanese Ministry of Health, Labor and Welfare approved SPINRAZA for the treatment of infantile SMA in July 2017 and for the treatment of pediatric and adult patients with SMA in September 2017.
    In August 2017 SPINRAZA was approved in Brazil for the treatment of SMA.
  In February 2017 the Committee for Medicinal Products for Human Use of the European Medicines Agency adopted a positive opinion to update the TYSABRI European Union (E.U.) label with pediatric information to remove the contraindication in pediatrics and to describe the results of the post-marketing meta-analysis of pediatric data.

 

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  In May 2017 FAMPYRA was approved for walking improvement in people with MS by the EC.
  In August 2017 IMRALDI, an adalimumab biosimilar referencing HUMIRA developed through our joint venture, Samsung Bioepis, was approved by the EC.

Clinical Trials

 

  In January 2017 we initiated a Phase 1 trial of BIIB076, an anti-tau monoclonal antibody, in healthy volunteers and participants with Alzheimer’s disease.
  In June 2017 we dosed our first patient in our Phase 2 study of BIIB092, an antibody targeting tau, for PSP.
  In July 2017 we completed enrollment in the Phase 1 study of BIIB054 in both healthy volunteers and patients with early onset Parkinson’s disease.
  In October 2017 we initiated the Phase 2b clinical trial AFFINITY, designed to evaluate opicinumab, anti-LINGO-1, as an investigational add-on therapy in people with relapsing MS.
  In October 2017 we initiated the Phase 2 OPUS study evaluating the efficacy, safety and tolerability of natalizumab, a4-integrin inhibitor, in drug-resistant focal epilepsy.

Business Development

 

  In January 2017 we entered into a settlement and license agreement with Forward Pharma A/S (Forward Pharma). Pursuant to this agreement, we obtained U.S. and rest of world licenses to Forward Pharma’s intellectual property, including Forward Pharma’s intellectual property related to TECFIDERA.
  In May 2017 we completed an asset purchase of the Phase 3-ready candidate BIIB093 (intravenous glibencamide) (formerly known as CIRARA) from Remedy Pharmaceuticals Inc. The target indication for BIIB093 is large hemispheric infarction, a severe form of ischemic stroke where brain swelling (cerebral edema) often leads to a disproportionately large share of stroke-related morbidity and mortality. The U.S. Food and Drug Administration (FDA) recently granted BIIB093 Orphan Drug Designation for severe cerebral edema in patients with acute ischemic stroke. The FDA has also granted BIIB093 Fast Track designation.
  In June 2017 we completed an exclusive license agreement with Bristol-Myers Squibb Company for BIIB092 (formerly known as BMS-986168), a Phase 2-ready experimental medicine with potential in Alzheimer’s disease and PSP. BIIB092 is an antibody targeting tau, the protein that forms the deposits, or tangles, in the brain associated with Alzheimer’s disease and other neurodegenerative tauopathies such as PSP.
  In October 2017 we entered into a new collaboration agreement with Eisai Co. Ltd. (Eisai) for the joint development and commercialization of aducanumab, our anti-amyloid beta antibody candidate for Alzheimer’s disease. Under this agreement, we will continue to lead the ongoing Phase 3 development of aducanumab and will remain responsible for 100% of development costs for aducanumab until April 2018. Eisai will then reimburse us for 15% of aducanumab development expenses for the period April 2018 through December 2018, and 45% thereafter. Upon commercialization, both companies will co-promote aducanumab with a region-based profit split.
  In October 2017 we amended the terms of our collaboration and license agreement with Neurimmune Subone AG (Neurimmune). Under the amended agreement, we made a $150.0 million payment to Neurimmune in exchange for a 15% reduction in royalty rates payable on products developed under the agreement, including on potential commercial sales of aducanumab. Our royalty rates payable on products developed under the agreement, including on potential commercial sales of aducanumab, will now range from the high single digits to low-teens.
  In November 2017 we entered into an exclusive license and collaboration agreement with Alkermes Pharma Ireland Limited, a subsidiary of Alkermes plc, for BIIB098 (formerly known as ALKS 8700), an oral monomethyl fumarate prodrug in Phase 3 development for the treatment of relapsing forms of MS.
  In December 2017 we entered into a new collaboration agreement with Ionis to identify new antisense oligonucleotide (ASO) drug candidates for the treatment of SMA. Under this agreement, we have the option to license therapies arising out of this collaboration and will be responsible for the development and commercialization of these therapies.

Capital Allocation

 

  In February 2017 we completed the spin-off of our hemophilia business, Bioverativ Inc., as an independent, publicly traded company.
  Returned approximately $1.4 billion to stockholders in 2017 through share repurchases.
  Announced a corporate restructuring program intended to streamline our operations and reallocate resources.

 

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Executive Compensation Matters (continued)

 

 

 

Leadership Team

At the core of what we do are our people and our leaders. As a result, our goal is to find top-tier talent with the skills necessary to imagine and lead us into the future. We advanced this goal in 2017 by appointing several new executives in key roles. These appointments included:

 

  Michel Vounatsos, Chief Executive Officer, formerly Executive Vice President, Chief Commercial Officer. Mr. Vounatsos joined us in April 2016 as our Executive Vice President, Chief Commercial Officer after a 20-year career with Merck and became our Chief Executive Officer in January 2017. While at Merck, he held leadership positions of increasing responsibility in Europe, China and the U.S., driving significant and consistent growth across multiple geographies. We believe that his significant knowledge and experience with respect to the biotechnology, healthcare and pharmaceutical industries, and his comprehensive leadership background, will guide Biogen in the next phase of its evolution.
  Jeffrey D. Capello, Executive Vice President and Chief Financial Officer. Mr. Capello joined us in December 2017 as our Executive Vice President and Chief Financial Officer, bringing 26 years of experience in finance. Most recently he was Executive Vice President and Chief Financial Officer of Beacon Health Options Inc. His previous experience includes founding and running his own company, Monomy Advisors, and serving as Chief Financial Officer of Ortho Clinical Diagnostics, Boston Scientific Corporation and PerkinElmer. Earlier in his career he was a partner in the Boston and Amsterdam offices of PwC. We believe that Mr. Capello’s strong public company financial experience will allow him to play a critical role as we aim to execute on our business strategy, pursue business development opportunities and build our pipeline.
  Ginger Gregory, Executive Vice President and Chief Human Resources Officer. Dr. Gregory joined us as our Executive Vice President, Chief Human Resources Officer in July 2017, bringing over 20 years of human resources experience to Biogen. She was most recently the Chief Human Resources Officer at Shire Pharmaceuticals. Prior to that, Dr. Gregory held executive-level human resources positions for several multinational companies across a variety of industries, including Dunkin’ Brands, where she served as Chief Human Resource Officer; Novartis, AG, where she was the division head of Human Resources for Novartis Vaccines and Diagnostics, Novartis Consumer Health and Novartis Institutes of BioMedical Research; and Novo Nordisk, where she served as Senior Vice President, Corporate People & Organization at the company’s headquarters in Copenhagen, Denmark. We believe that Dr. Gregory’s extensive experience in the biotechnology and pharmaceutical industries will be valuable as we endeavor to attract, develop and retain a talented, culturally diverse workforce to execute on our mission to transform neuroscience and the treatment of neurological diseases.
  Chirfi Guindo, Executive Vice President and Head of Global Marketing, Market Access and Customer Innovation. Mr. Guindo joined us as our Executive Vice President and Head of Global Marketing, Market Access and Customer Innovation in November 2017. Mr. Guindo brings 27 years of experience in the global pharmaceutical industry and has held several leadership positions at Merck (known as MSD outside Canada and the U.S.) in Canada, the U.S., France, Africa and the Netherlands. He has worked in several disciplines including Finance, Sales & Marketing, General Management and Global Strategy/Product Development in specialty, acute and hospital care. Most recently Mr. Guindo was President & Managing Director of Merck Canada. We believe that Mr. Guindo’s extensive experience in the global pharmaceutical industry will help us further our leadership in MS and SMA, plan for our Alzheimer’s disease franchise and pursue future pipeline opportunities.

Other Notable Achievements in the Workplace and Community

 

  Awarded, with our collaboration partner Ionis, the 2017 Prix Galien USA Award for Best Biotechnology Product for SPINRAZA.
  Continued commitment to operational carbon neutrality highlighted by the use of 100% renewable electricity globally.
  Committed to reduce carbon emissions by a targeted amount approved by the Science Based Target Initiative, to align ourselves with the global goal of limiting global temperature rise to under two degrees Celsius.
  Recognized as a corporate sustainability leader with naming to the CDP A List for both Climate Change and Water and receiving RobecoSAM Silver Class and Industry Mover distinctions.
  Earned a perfect score of 100% on the Human Rights Campaign’s Corporate Equality Index (a national benchmarking tool on corporate policies and practices pertinent to LGBTQ employees) for the fourth consecutive year.
  Over 2,600 employees volunteered from 26 countries in our annual Care Deeply Day.
  Engaged 44,000+ students in hands-on learning to inspire their passion for science since the inception of Biogen’s Community Labs.

 

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Total Stockholder Return

 

  Our one-, three- and five-year total stockholder return (TSR)* compared to our peer group and the Standard & Poor’s 500 (S&P 500) is set forth below.

 

 

LOGO

 

* TSR is a measure of performance over time that combines changes in share price and dividends paid to show the total return to the stockholder expressed as an annualized percentage.

2017 Executive Compensation Programs and Pay-for-Performance Alignment

We believe our executive compensation programs are effectively designed and have worked well to implement a pay-for-performance culture that is aligned with the interests of our stockholders. In 2017 our executive compensation programs consisted of base salary, short- and long-term incentives and other benefits.

91% of our CEO’s and 84% of our other current NEOs’ 2017 target compensation was performance-based and at-risk.

 

 

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  * Reflects annual salary, target bonus and grant date value of the 2017 annual long-term incentive awards. The CEO compensation mix reflects compensation for Mr. Vounatsos, who has served as our CEO since January 6, 2017. The NEO compensation mix excludes Dr. McKenzie’s one-time RSU award, as described in further detail below, as well as compensation for Dr. Scangos and Messrs. Capello, Clancy and DiPietro due to partial year employment with Biogen in 2017 and compensation for Mr. Covino, due to his change in roles during 2017.

 

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Our 2017 performance-based compensation payouts align with our commitment to strong performance.

In 2017 overall we achieved or exceeded the vast majority of the corporate performance goals that we set at the beginning of the year for our incentive compensation plans. As a result, the payouts, as a percentage of target, for our 2017 annual bonus plan, 2017 awarded cash-settled performance units (CSPUs) and 2017 awarded market stock units (MSUs) were above target payout amounts, as described in further detail below.

 

Annual Bonus Plan

130%*

 

Company Performance Multiplier

 

(The overall annual bonus plan multiplier for each NEO was further modified based on his/her individual performance multiplier)

 

Cash-Settled Performance Units

123%*

 

Performance multiplier for the CSPUs

during the 2017 performance period

 

(Earned units are subject to three-year

time vesting from the grant date)

 

Market Stock Units

126%*

 

Performance multiplier for the MSUs during the 2017 performance period

 

* Actual multiplier for applicable 2017 award based on corporate performance.

2017 Advisory Vote on Executive Compensation

At our 2017 annual meeting of stockholders, we continued to receive support for our executive compensation programs with approximately 97% of the votes cast for approval of our annual “say-on-pay” proposal. Our Compensation Committee viewed this as very positive support for our executive compensation programs and their alignment with long-term stockholder value creation and noted that the Company’s executive compensation programs have been effective in implementing the Company’s stated compensation philosophy and objectives.

Our Compensation Committee is committed to continually reviewing our executive compensation programs on a proactive basis to ensure the ongoing alignment of such programs with the interests of our stockholders.

In 2017 we reviewed the external landscape, the results from our “say-on-pay” proposal at last year’s annual meeting of stockholders and the results of our current compensation programs. Our Compensation Committee was satisfied that our existing compensation programs further our pay-for-performance philosophy, and, accordingly, did not recommend any significant changes to our executive compensation programs for 2017.

 

 

 

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Roles and Responsibilities

Role of our Compensation Committee

Our Compensation Committee, which is composed of four independent directors, oversees and administers our executive compensation programs. In making executive compensation decisions, our Compensation Committee considers a variety of factors and data, most importantly our performance and individual executives’ performance, and takes into account the totality of compensation that may be paid. In addition, our Compensation Committee administers our annual bonus plan and our equity plans, reviews business achievements relevant to compensation levels, makes recommendations to our Board of Directors with respect to compensation policies and practices as well as the compensation of our CEO and seeks to ensure that total compensation paid to our executive officers is fair and aligned with stockholder interests. Our Compensation Committee retains the right to hire outside advisors as needed to assist it in reviewing and revising our executive compensation programs.

The duties and responsibilities of our Compensation Committee are described on page 19 and can be found in our Compensation Committee’s written charter adopted by our Board of Directors, which can be found on our website, www.biogen.com, under the “Corporate Governance” subsection of the “Investors” section of the website.

Role of the Independent Compensation Consultant

Our Compensation Committee believes that independent advice is important in developing Biogen’s executive compensation programs. Frederic W. Cook & Co., Inc. (FW Cook) is currently engaged as our Compensation Committee’s independent compensation consultant. FW Cook does not provide any other services to Biogen.

Reporting directly to our Compensation Committee, FW Cook provides guidance on trends in CEO, executive and non-employee director compensation, the development of specific executive compensation programs and the composition of the Company’s compensation peer group. Additionally, FW Cook prepares a report on CEO pay that compares each element of compensation to that of CEOs in comparable positions at companies in our peer group. Using this and other similar information, our Compensation Committee recommends, and our Board of Directors approves, the elements and target levels of our CEO’s compensation. FW Cook also engages in other matters as needed and as directed solely by our Compensation Committee.

During 2017 the Company paid FW Cook $250,989 in consulting fees directly related to these services. Our Compensation Committee assesses FW Cook’s independence annually and, in accordance with applicable SEC and Nasdaq rules, confirmed in December 2017 that FW Cook’s work did not raise any conflicts of interest and that FW Cook remains independent under applicable rules.

Role of our CEO

Each year our CEO provides an assessment of the performance of each executive officer, other than himself, during the prior year and recommends to our Compensation Committee the compensation to be awarded to each executive. Our CEO’s recommendations are based on numerous factors including:

 

  Company, team and individual performance;
  potential for future contributions;
  leadership competencies;
  external market competitiveness;
  internal pay comparisons; and
  other factors deemed relevant.

To understand the external market competitiveness of the compensation for our executive officers, our CEO and our Compensation Committee review a report analyzing publicly-available information and surveys prepared by our internal compensation group and reviewed by FW Cook. The report compares the compensation of each executive officer, other than our CEO, to data for comparable positions at companies in our peer group, by compensation element (see “External Market Competitiveness and Peer Group” below for further details). Our Compensation Committee considers all of the information presented, discusses the recommendations with our CEO and with FW Cook and applies its judgment to determine the elements of compensation and target compensation levels for each executive officer other than the CEO.

Our CEO also provides a self-assessment of his achievements for the prior year. Our Compensation Committee reviews and considers this in analyzing the CEO’s performance, and in recommending for approval by our Board of Directors, the compensation of our CEO. Our CEO does not participate in any deliberations regarding his own compensation.

Executive Compensation Philosophy and Objectives

Our executive compensation programs are designed to drive the creation of long-term stockholder value by deliver-

 

 

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ing performance-based compensation that is competitive with our peer group in order to attract and retain extraordinary leaders who can perform at high levels and succeed in a demanding business environment. We aim to achieve this by designing programs that are:

 

  Mission Focused and Business Driven. Our executive compensation programs support the relentless pursuit of delivering meaningful and innovative therapies to patients by providing our executives with incentives to achieve the near- and long-term objectives of our business. Substantially all of our executive incentive compensation programs are tied directly, and meaningfully, to Company performance. Our objective is to emphasize the importance of achieving short-term goals while building and sustaining a foundation for long-term success.
  Competitively Advantageous. We benchmark our executive compensation programs against a peer group of biotechnology and pharmaceutical companies that we believe are representative of the companies we primarily compete with for talent, balanced with factors such as business scope and size, including revenues and market capitalization, business focus and geographic scope of operations. We consider peer group practices as one of many factors to be taken into account in developing programs that we believe are most meaningful to our leaders and the Company, and which enable us to recruit, retain and motivate our leadership team to achieve their best for Biogen and our stockholders.
  Performance Differentiated. We believe strongly in pay-for-performance and endeavor to significantly differentiate rewards by delivering the highest rewards to our best performers and little or no rewards to those who do not perform at pre-established levels.
  Ownership Aligned. At Biogen, we believe every employee contributes to the success of the Company and, as such, every employee has a vested interest in the Company’s success. To reinforce this alignment with our stockholders, we strongly encourage stock ownership through our equity-based compensation programs. For members of our executive team, including our NEOs, who set and lead the future strategic direction of our Company, we ensure that a significant portion of their total pay opportunities are equity-based to maintain alignment between the interests of our executive officers and our stockholders.
  Flexible. We are committed to providing flexible benefits designed to allow our diverse global workforce to have reward opportunities that meet their varied needs so that they are inspired to perform their very best on behalf of patients and stockholders each day.

External Market Competitiveness and Peer Group

Market practices are one of the considerations taken into account when determining executive compensation levels and compensation program designs at Biogen. We do not target a specific market percentile or simply replicate the market practice. Instead, we review external market practices as a reference point to assist us in providing programs designed to attract, retain and inspire extraordinary talent. Our Compensation Committee also uses a peer group to provide context for its executive compensation decision-making. Each year our independent compensation consultant reviews the external market landscape and evaluates the composition of our peer group for appropriateness.

Our Compensation Committee reviews the information provided from internal sources as well as the information provided by our independent compensation consultant to select our peer group based on comparable companies that approximate (1) our scope of business, including revenues and market capitalization, (2) our global geographical reach, (3) our research-based business with multiple marketed products and (4) a comparable pool of talent for which we compete.

The peer group for determining our February 2017 compensation decisions consisted of biotechnology and pharmaceutical companies, as we compete with companies in both of these sectors for executive talent.

 

  Biotechnology Peers

    Alexion Pharmaceuticals, Inc.

    Amgen Inc.

    Celgene Corporation

    Gilead Sciences Inc.

    Vertex Pharmaceuticals International, Inc.

 

  Pharmaceutical Peers

    AbbVie Inc.

    Allergan plc

    Bristol-Myers Squibb Company

    Eli Lilly and Company

    Endo Health Solutions

    Merck & Co, Inc.

    Mylan N.V.

    Valeant Pharmaceuticals Incorporated

For each of the companies in our peer group, where available, we analyze the company’s Compensation Discussion and Analysis and other data publicly filed during the prior year to identify the executives at such companies whose positions are comparable to those held by our executive officers. We then compile and analyze the data for each

 

 

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comparable position. Our competitive analysis includes the structure and design of the compensation programs as well as the targeted value of the compensation under these programs.

For our executive officers other than our CEO, we may supplement the data for our peer group with published compensation surveys where appropriate. For 2017, consistent with past years, we used the Willis Towers Watson U.S. CDB Pharmaceutical and Health Sciences Executive Compensation Database survey (which we refer to as the Willis Towers Watson survey). We chose this survey because of the number of companies in our peer group that participate in it, the number of positions reported by the survey that continue to be comparable to our executive positions and the high standards under which we understand the survey is conducted (including data collection and analysis methodologies). All of the companies in our peer group are represented in a special cross-section of the survey focused on our peer group, other than Valeant Pharmaceuticals Incorporated, which did not participate in the survey.

Compensation Elements

Our Compensation Committee determines the elements of compensation we provide to our executive officers. The elements of our executive compensation programs and their objectives are as follows:

 

    Element        Objective(s)    

  Base

  Salary

    

Provides a fixed level of compensation that is competitive with the external market and reflects each executive’s contributions, experience, responsibilities and potential to contribute to our future success.

 

 

  Annual

  Bonus

  Plan

    

Aligns short-term compensation with the annual goals of the Company.

 

 
    

Motivates and rewards the achievement of annual Company and individual goals that support short- and long-term value creation.

 

 

Long-term Incentives

    

Aligns executives’ interests with the long-term interests of our stockholders by linking the value of awards to increases in our stock price.

 

 
    

Motivates and rewards the achievement of stock price growth and pre-established corporate performance goals.

 

 
    

Promotes executive retention and stock ownership, and focuses executives on enhancing stockholder value.

 

 

  Benefits

    

Promotes health and wellness.

 

 
    

Provides financial protection in the event of disability or death.

 

 
      

Provides tax-beneficial ways for executives to save towards their retirement, and encourages savings through competitive matches to executives’ retirement savings.

 

   

Compensation Mix

Our Compensation Committee determines the general mix of the elements of our executive compensation programs. It does not target a specific mix of value for the compensation elements within these programs in either the program design or pay decisions. Rather, our Compensation Committee reviews the compensation mix to ensure an appropriate level of performance-based compensation is apportioned to the short-term and even more to the long-term to ensure alignment with our business goals and performance.

Additionally, our Compensation Committee believes the greater the leadership responsibilities, the greater the potential impact an individual will have on Biogen’s future strategic direction. Therefore, for our executive officers, including our NEOs, additional emphasis is placed on performance-based compensation, with a particular emphasis on long-term incentives (LTI).

The 2017 compensation mix for Mr. Vounatsos and our other NEOs was highly performance-based and at-risk; 91% of 2017 compensation was performance-based for Mr. Vounatsos and 84% of 2017 compensation was performance-based for our other current NEOs (other than Messrs. Capello and Covino), assuming target level achievement of applicable corporate performance goals and with LTI awards measured at target grant date values, and excluding Dr. McKenzie’s one-time RSU award, as described in further detail below.

 

 

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Performance Goals and Target Setting Process

Early each year, our Compensation Committee reviews and establishes the pay levels of each element of total compensation for our executive officers. Total compensation is comprised of base salary, annual bonus and LTI awards. A summary of the process our Compensation Committee follows in setting compensation is described below:

 

LOGO Target Setting

 

 

LOGO

 

LOGO Monitoring & Tracking

 

    Our Compensation Committee closely monitors the progress against the performance goals throughout the year and engages in dialogue with management on such progress.

 

 

LOGO Results & Awards:
Compensation Committee Actions

 

 

    Reviews and certifies the annual Company results against the pre-established goals for our incentive compensation plans.

 

    Reviews and discusses the performance of our executive officers against their respective performance goals, including our CEO.

 

    Reviews and discusses the Company, team and individual performance of each executive officer as assessed by our CEO.

 

    Reviews and discusses our CEO’s recommended compensation levels for each executive officer other than himself in the context of such executive officer’s contributions to the Company and the other factors described above.

 

    Approves the final compensation for each NEO other than our CEO, including base salary, bonus and LTI awards.

 

    Reviews CEO compensation and recommends to our Board of Directors for approval the compensation of our CEO, including base salary, bonus and LTI awards.

    Our Compensation Committee and our CEO discuss potential goals for the upcoming year that are tied to the short- and longer-term strategic goals of the Company.

 

    Our Compensation Committee and our CEO discuss potential goals for the upcoming year that are tied to the short- and longer-term strategic goals of the Company as well as individual goals for our executive officers.

 

    The annual business plan for the year is approved by our Board of Directors, and performance goals and targets are aligned with the business plan.

 

    Payout levels for each performance goal are established by management and approved by our Compensation Committee.

 

    The performance goals are then applied to our executive officers, including NEOs, so that there is full alignment of executive incentive goals with the goals that have been established for the year.

 

    Our Compensation Committee also reviews base salaries, bonus and LTI planning ranges, plan designs, benefits and peer group data.

   

 

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2017 and 2018 Hiring- and Transition-Related Compensation Decisions

 

Arrangement with Mr. Vounatsos

In connection with Mr. Vounatsos’ appointment as our Chief Executive Officer effective as of January 6, 2017, our Compensation Committee approved, in December 2016, as part of the employment agreement he entered into with us, an increase in his annual base salary to $1.1 million and a target bonus of 125% of his annual base salary under our annual bonus plan, in each case, effective upon his appointment as our Chief Executive Officer on January 6, 2017. In addition, on February 15, 2017, he received a LTI award of CSPUs with a grant date fair value of $4,999,754 and a LTI award of MSUs with a grant date fair value of $4,868,786. The terms of the CSPUs and MSUs granted to Mr. Vounatsos are described below under the heading “Long-Term Incentives (LTI)” and the payments that Mr. Vounatsos would be eligible to receive under his employment agreement in connection with certain terminations of employment are described in further detail under the heading “Potential Payments Upon Termination or Change in Control” below. Our Compensation Committee approved these terms after reviewing peer group data provided by FW Cook.

Arrangement with Mr. Capello

In November 2017 we appointed Mr. Capello as our Executive Vice President and Chief Financial Officer, effective as of December 11, 2017.

In determining the annual and long-term compensation for Mr. Capello, our Compensation Committee followed the same compensation philosophy and objectives described in this CD&A and also took into consideration the value of compensation that Mr. Capello would have been eligible to earn had he remained employed by his prior employer. After considering the compensation opportunities that Mr. Capello would be required to forfeit in order to join us, and in order to incentivize him to do so, our Compensation Committee granted Mr. Capello a one-time cash sign-on bonus of $520,000. Our Compensation Committee also approved an annual base salary for Mr. Capello of $750,000 and, beginning in 2018, a target bonus of 70% of his annual base salary under our annual bonus plan.

Mr. Capello’s one-time cash sign-on bonus is subject to repayment to the Company in the event Mr. Capello voluntarily terminates his employment or his employment is terminated by us for cause (as defined in our 2017 Omnibus Equity Plan) or for misconduct or poor performance, as determined by us in good faith, as follows: 100% of his cash sign-on bonus is subject to repayment if such termination

occurs within the first year of his employment, 70% of his cash sign-on bonus is subject to repayment if such termination occurs within the second year of his employment and 35% of his cash sign-on bonus is subject to repayment if such termination occurs within the third year of his employment, in each case, net of applicable tax withholdings.

In connection with Mr. Capello’s appointment, our Compensation Committee also granted him a LTI award in January 2018, which consisted of performance stock units (PSUs) and MSUs with an aggregate grant date target value of $3.0 million. The terms of the PSUs and MSUs awards granted to Mr. Capello are described below under the heading “Long-Term Incentives (LTI).” Because of this grant, Mr. Capello was not eligible to receive an annual LTI award in 2018.

Arrangement with Dr. McKenzie

In February 2016 Dr. McKenzie was appointed as our Senior Vice President for Global Biologics Manufacturing & Technical Operations. As part of his appointment, Dr. McKenzie was eligible to earn a one-time LTI award of RSUs that were contingent upon his achievement of at least a “solid” performance rating for 2016. This RSU award was intended to represent a portion of the compensation that Dr. McKenzie would have been eligible to receive had he remained with his prior employer. In March 2017, based upon his 2016 performance rating, Dr. McKenzie was granted RSUs with a grant date fair value of $800,600. These RSUs vest in three equal annual installments beginning on the first anniversary of the date of grant, subject to Dr. McKenzie’s continued employment.

Dr. Scangos’ Arrangements

On January 6, 2017, Dr. Scangos ceased to be our Chief Executive Officer (which was considered a termination without cause under his employment agreement) and the Company paid him the severance benefits payable under his employment agreement, consisting of a lump sum cash payment in the amount of $7.2 million (two times his annual base salary and target annual bonus), a prorated bonus payment of $44,877 for the period January 1, 2017 through January 6, 2017, which was based on actual Company performance and deemed 100% individual performance (as provided under his employment agreement) and continuation of certain subsidized medical, dental and vision benefits until July 1, 2018. Dr. Scangos was also entitled to receive up to nine months of executive-level outplacement services at our cost; however, Dr. Scangos did not utilize these services. In addition, pursuant to the terms of his

 

 

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employment agreement, all of his outstanding MSUs, CSPUs and stock options continue to vest as if he had remained employed by the Company for the duration of the respective award’s vesting period and all awards that require exercise by him remain exercisable until the earlier of January 7, 2020 or their respective expiration date.

Mr. Clancy’s Arrangements

Mr. Clancy voluntarily separated from the Company on July 1, 2017 and did not receive any severance benefits in connection with his separation. Mr. Clancy’s outstanding LTI awards were eligible for retirement vesting with either accelerated or continued vesting, as applicable, pursuant to the retirement provision under our 2008 Omnibus Equity Plan.

Mr. DiPietro’s Arrangements

On May 26, 2017, Mr. DiPietro ceased to be our Executive Vice President, Human Resources and ceased to be employed by us effective September 30, 2017. We provided him the severance benefits required under our executive severance policy for Executive Vice Presidents, which consisted of a lump sum payment of $2,019,413 (21 months of base salary and target bonus) and continuation of certain subsidized medical, dental and vision benefits until the earlier of (1) January 31, 2019 or (2) the date on which he becomes eligible to receive benefits through another employer. In addition, our Compensation Committee agreed to permit the continued vesting of one-third of his outstanding LTI awards scheduled to vest on February 15, 2018, February 22, 2018, and February 23, 2018. Mr. DiPietro was also eligible to receive up to 12 months of executive-level outplacement services at our cost; however, Mr.  DiPietro did not utilize these services.

2017 Base Salary

In determining Mr. Vounatsos’ base salary as our CEO, our Board of Directors reviewed the base salaries of comparable chief executive officers in our peer group and considered Mr. Vounatsos’ compensation mix, capabilities, performance and future expected contributions. Based on its review, Mr. Vounatsos’ base salary was set at $1,100,000, which positioned him below the 25th percentile when compared to the chief executive officers of our peer group.

Our Compensation Committee undertook a similar review when approving the base salaries for our other NEOs, which positioned them, on average, slightly below the market median compared to persons with comparable jobs within our peer group.

The annual base salary of each of our NEOs in 2017 compared to 2016 was as follows:

 

 

    Name

  

 

2016 Salary

    

 

2017 Salary

    

 

% Increase(1)

   

    M. Vounatsos

   $ 750,000      $ 1,100,000      46.7%  

    J. Capello(2)

     n/a      $ 750,000      n/a  

    M. Ehlers

   $ 775,000      $ 794,375      2.5%  

    S. Alexander

   $ 696,002      $ 723,842      4.0%  

    P. McKenzie

   $ 575,000      $ 603,750      5.0%  

    G. Covino

   $ 375,315      $ 386,574      3.0%  

    G. Scangos(3)

   $ 1,500,000      $ 1,500,000      —    

    P. Clancy

   $ 860,470      $ 890,586      3.5%  

    K. DiPietro

   $ 655,840      $ 678,794      3.5%    
(1) Percentage increase reflects the annual merit increase for all NEOs other than for Mr. Vounatsos and, in the case of Mr. Vounatsos, represents an increase as a result of his appointment as our CEO.
(2) Mr. Capello was hired in 2017. The initial determination of his base salary took into account the Company’s peer group data.
(3) Due to the fact that Dr. Scangos’ employment terminated in January 2017 his base salary was not considered for an increase for 2017.

2017 Performance-Based Plans and Goal Setting

Our executive compensation programs place a heavy emphasis on performance-based compensation.

We maintain a short-term incentive plan, known as our annual bonus plan, as well as a LTI plan.

Awards to our NEOs under our annual bonus plan are made under our 2008 Performance-Based Management Incentive Plan, and awards under our LTI plan are granted under our 2017 Omnibus Equity Plan.

Awards made under our annual bonus plan are directly tied to the achievement of our corporate performance goals, which are aligned with the Company’s short- and long-term strategic plans, as well as individual performance goals.

Awards made under our LTI plan are directly tied to the performance of the price of our common stock, which align our executives’ long-term interests with the interests of our stockholders. Some of our LTIs are also tied to the Company’s financial performance, as described below under “2017 CSPU Company Performance Targets and Results Table.”

In setting our annual goals under our short- and long-term incentive plans, in addition to our internal forecasts, we consider analysts’ projections for our performance and the performance of companies in our peer group, as well as broad economic and industry trends. We strive to establish challenging targets that result in payouts at or above target

 

 

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levels only when Company performance warrants it. Our Compensation Committee is responsible for reviewing and approving our annual goals, targets and levels of payout (e.g., threshold, target and maximum) for our executive incentive compensation plans and for reviewing and determining actual performance results at the end of the applicable performance period.

In setting and approving the corporate performance goals for our executive officers and for the Company under both the short- and long-term incentive plans, our Compensation Committee also considers the alignment of such goals to our business plan, the degree of difficulty of attainment and the potential for the goals to encourage inappropriate risk-taking. Our Compensation Committee has determined that the structures of our executive compensation programs do not put our patients, investors or the Company at any material risk.

Annual Bonus Plan

Our annual bonus plan is a cash incentive plan that rewards near-term financial, strategic and operational performance. Our Compensation Committee reviews our annual target bonus opportunities by job level each year to ensure such opportunities are competitive.

No changes were made in 2017 to the target annual bonus opportunities, as a percentage of year-end annual base salary, for any of our NEOs other than Mr. Vounatsos, whose target annual bonus opportunity was increased in connection with his appointment as our CEO in January 2017. In accordance with our policy, target annual bonus opportunities for all of our other NEOs in 2017 were determined based on their positions as Executive Vice Presidents and, in the case of Mr. Covino, based on his position as Vice President and Chief Accounting Officer.

The target annual bonus opportunity as a percentage of year-end annual base salary for each of our NEOs in 2017 was as follows:

 

 

  Name

  

 

2017 Target %

 

  M. Vounatsos

     125%  

  J. Capello(1)

     70%  

  M. Ehlers

     70%  

  S. Alexander

     70%  

  P. McKenzie

     70%  

  G. Covino

     35%  

  G. Scangos(2)

     140%  

  P. Clancy(3)

     70%  

  K. DiPietro(3)

     70%  
(1) Amount represents the target annual bonus opportunity for Mr. Capello. Based on his hire date, Mr. Capello was ineligible for payout under our 2017 annual bonus plan.
(2) Dr. Scangos ceased to be our Chief Executive Officer in January 2017, and received a prorated annual bonus payment pursuant to the severance provision of his employment agreement, as described in “2017 and 2018 Hiring- and Transition-Related Compensation Decisions—Dr. Scangos Arrangements” above, based on actual Company performance and assuming 100% individual performance.
(3) Messrs. Clancy and DiPietro each ceased to be employed by the Company during 2017 and were ineligible for payouts under our 2017 annual bonus plan.

2017 Annual Bonus Plan Design

Awards for our NEOs under our 2017 annual bonus plan were based on the achievement of Company performance goals and individual performance goals.

At the beginning of 2017, our Compensation Committee set multiple Company performance goals for our 2017 annual bonus plan and provided for a payout multiplier, which we refer to as the Company Multiplier, ranging from 0% to 150%, for each Company goal based on the determination of the level of achievement of each goal and application of the weighting previously assigned to each goal, which determined the Company Multiplier applied to the bonus calculation.

The Company Multiplier ranged from 0% to 150% as follows:

 

  Performance

  Multipliers

  

Below

Threshold

   Threshold    Target    Max

  Company

   0%    50%    100%    150%

In addition, our 2017 annual bonus plan payouts were also based on an assessment of each NEO’s individual performance as compared to his or her individual performance goals. Our executive officers’ individual performance goals were discussed with and subject to our Compensation Committee’s approval. Our CEO’s individual goals were also approved by our Compensation Committee with input from the Chairman and the other independent directors. Evaluating individual performance allows our Compensation Committee the discretion to increase or decrease each NEO’s bonus amount based on the NEO’s individual performance by applying an individual performance multiplier, ranging from 0% to 150%, which we refer to as the Individual Multiplier.

 

 

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We determined the individual annual bonus payments for 2017 using the following calculation:

 

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Our 2017 annual bonus plan provided that if the Company Multiplier was less than 50%, there would be no payout, regardless of individual performance. Further, because the Individual Multiplier and the Company Multiplier each have a maximum of 150%, the combined multiplier result for each NEO could not exceed 225%.

2017 Company Performance Goals and Results

Company performance goals were established at the start of 2017 with assigned weightings that reflected the Company’s focus on attaining both financial and strategic goals (pipeline performance, MS leadership, SMA launch excellence and enhancing our strategic alliances).

The goals and weightings we selected reflect the importance of linking reward opportunities to both near-term results and our progress in achieving longer-term goals.

The strategic goals we selected in 2017 were designed to measure the achievement of our annual strategic priorities relating to our commercial opportunities and pipeline progress. Our financial performance goals were based on the Company’s annual operating plan and long-range plan approved by our Board of Directors and with reference to analyst consensus for Biogen revenues and Non-GAAP

diluted earnings per share (EPS) based on the most current analyst reports at the time we set our targets.

The following table presents our financial targets relative to analysts’ consensus for 2017:

 

 

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(1) See “2017 Annual Bonus Plan Company Performance Targets and Results Table” below for more details.

(2) Wall Street figures reflect estimates made in December 2016 for the Biogen fiscal year ending December 31, 2017.

(3) Reflects Non-GAAP Diluted EPS.

 

 

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2017 Annual Bonus Plan Company Performance Targets and Results Table

Set forth below is a summary of the Company performance goals and weightings that our Compensation Committee established for our 2017 annual bonus plan and the degree to which we attained these Company performance goals. As described below, the Company Multiplier for the 2017 Annual Bonus Plan was 130%.

 

           Performance Range                

  Company Goals

 

  

Weight

 

   

Threshold

 

    

Target

 

    

Max

 

    

Results

 

    

Company
Multiplier

 

 

FINANCIAL PERFORMANCE

                

Non-GAAP diluted EPS

     20   $ 19.64      $ 21.70      $ 23.76      $ 23.19 (1)       123.0

Revenues

     20   $ 10,687M      $ 11,495M      $ 12,303M      $ 12,201M  (1)       136.1

MARKET PERFORMANCE

          

Achieve U.S. SMA Market Share and Obtain SMA Approvals in E.U. and Certain Other Markets

     10    

Specific market goals

are not disclosed for

competitive reasons

 

 

 

    

Above

Goal(2)

 

 

     131.3

Achieve Global MS Market Share

     10    

Specific market goals

are not disclosed for

competitive reasons

 

 

 

    

Below

Goal(2)

 

 

     96.5

MS Leader in Customer Trust and Value Survey

     5    

Specific market goals

are not disclosed for

competitive reasons

 

 

 

    

Goal

Met

 

 

     100.0

Establish Three Outcome-based Innovative contracts

     5     1        3        5        5        150.0

PIPELINE DEVELOPMENT

          

Build and Advance Total Pipeline

     10    
Specific pipeline goals are not
disclosed for competitive reasons
 
 
    

Above

Goal(3)

 

 

     143.0

Achieve Aducanumab Phase 3 Enrollment

     10    
Specific enrollment goals are
not disclosed for competitive reasons
 
 
    

Above

Goal(4)

 

 

     132.0

COLLABORATION

          

Improve Key Strategic Alliances

     10    

Specific strategic
alliance goals are not
disclosed for competitive reasons
 
 
 
    

Above

Goal(5)

 

 

     150.0

Company Multiplier

 

     130.0 %* 
* Numbers may not recalculate due to rounding.

Notes to 2017 Annual Bonus Plan Company Performance Targets and Results Table

(1) These financial measures were based on our publicly reported revenues of $12,274 million and our publicly announced Non-GAAP diluted EPS of $21.81, as adjusted as follows: for purposes of our 2017 annual bonus plan, revenues were adjusted to neutralize the effects of foreign exchange rate fluctuations and Non-GAAP diluted EPS was adjusted to add back $1.08 to reflect the impact of additional research and development expense recognized in 2017 resulting from increased business development activity and $0.29 to neutralize the unfavorable impact of the ZINBRYTA Article 20 Procedure, as these charges were not originally contemplated at the time the Company performance goals were determined.
(2) Achievement of market goals for SMA and MS were above and below goals, respectively. Specific details are not disclosed for competitive reasons.
(3) The Company continued to expand and re-shape its pipeline of pre-clinical and clinical stage programs through the advancement of internal programs, external business development activities and exceeding expectations with respect to the level of confidence in and momentum of its clinical stage portfolio. Specific details are not disclosed for competitive reasons.
(4) Aducanumab Phase 3 clinical trial patient enrollment was above goal. Specific details are not disclosed for competitive reasons.
(5) Key strategic alliance activities were above goal. Specific details are not disclosed for competitive reasons.

 

2017 Individual Performance Goals and Results

The Individual Multiplier reflects each named executive officer’s overall individual performance rating as part of our performance assessment process. Unlike our formulaic calculation of corporate performance versus Company per-

formance goals in determining the Company Multiplier, each named executive officer’s Individual Multiplier is based on a subjective evaluation of his or her overall performance and consideration of the achievement of individual goals established at the beginning of the year. For 2017, Mr. Vounatsos recommended to our Compensation Committee an

 

 

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Individual Multiplier for each current named executive officer other than himself based on his assessment of their individual contributions for the full year. Our Compensation Committee considered all of the information presented, discussed our CEO’s recommendations with him and its independent compensation consultant and applied its judgment to determine the Individual Multiplier for each current named executive officer. Our Board of Directors determined Mr. Vounatsos’ Individual Multiplier based on its assessment of his performance.

In its evaluation, our Compensation Committee assigned Individual Multipliers to our current named executive officers of between 130% and 145% based on the following accomplishments during 2017:

Michel Vounatsos

 

  Contributed to the achievement of record revenues of $12.3 billion for the year ended December 31, 2017.
  Identified and took steps to create a leaner and simpler operating model to streamline our operations and reallocate resources towards prioritized research and development and commercial value creation opportunities, including the approval of a corporate restructuring program in October 2017.
  Clarified and focused corporate strategy.
  Made progress in defining and beginning to build a culture of excellence that values a tighter focus on priorities, faster decision making, enhanced accountability and improved teamwork.
  Recruited outstanding members of our senior management team, including Dr. Gregory and Messrs. Capello and Guindo.
  Excelled in leading the Company in setting and achieving its financial goals and business development goals.
  Contributed significantly to the successful launch of SPINRAZA worldwide.

Michael Ehlers

 

  Significantly improved our Research and Development organization structure, key processes and productivity.
  Exceeded portfolio value and clinical development goals.
  Added new capabilities and talent to our Research and Development organization.
  Excelled in leadership of our Research and Development organization.
  Added substantial value to our business development activities.
  Contributed to excellent interactions with investors leading to transparent and trusted dialogue.

Susan H. Alexander

 

  Supported our Board, the CEO and executive team transition and SEC disclosure requirements.
  Led our initiative to create a leaner and simpler operating model to streamline our operations and reallocate resources towards prioritized research and development and commercial value creation opportunities, including the approval of a corporate restructuring program in October 2017.
  Strengthened the intellectual property rights of our key assets, including our settlement and license agreement with Forward Pharma, pursuant to which we obtained U.S. and rest of world licenses to Forward Pharma’s intellectual property, including Forward Pharma’s intellectual property related to TECFIDERA.
  Excelled in leadership of our Legal and Compliance teams while at the same time taking on leadership of our Corporate Services organization.
  Contributed significantly and excellently on strategy and general business issues affecting the Company.

Paul F. McKenzie

 

  Excelled in management of our large and complex manufacturing organization.
  Maintained excellence in manufacturing plant quality.
  Contributed significantly to the successful launch of SPINRAZA worldwide.
  Contributed significantly and excellently on strategy and general business issues affecting the Company.
  Enhanced discipline and rigor with respect to decision making in our Pharmaceutical Operations & Technology organization.
  Exhibited outstanding leadership, fostering a culture of continuous improvement and cost-consciousness.

Gregory F. Covino

 

  Provided excellent leadership and support across our Finance organization following the departure of Mr. Clancy as our CFO in July 2017, including acting as our Interim Principal Financial Officer.
  Supported the effective transition of Mr. Capello as our CFO.
  Helped lead the Company in achieving its financial goals and performance.
  Contributed significantly and excellently on strategy and general business issues affecting the Company.
  Added substantial value to our business development activities.
 

 

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In addition, our Compensation Committee reviews on a qualitative basis each named executive officer’s other contributions that are not covered by the individual performance

goals, leadership competencies and relative performance among our named executive officers.

 

 

2017 Annual Bonus Plan Awards

Our Compensation Committee determined that the final bonus awards under our 2017 annual bonus plan were as follows:

 

  Name   

Year-end

Salary

(A) x

    

Target

Bonus%

(B) x

   

Company
Multiplier

(C) x

   

Individual

Multiplier

(D) =

   

Bonus

Award

(E)

 

  M. Vounatsos

   $ 1,100,000        125     130     140   $ 2,502,500  

  J. Capello(1)

   $ 750,000        70     n/a       n/a       n/a  

  M. Ehlers

   $ 794,375        70     130     140   $ 1,012,034  

  S. Alexander

   $ 723,842        70     130     130   $ 856,305  

  P. McKenzie

   $ 603,750        70     130     145   $ 796,648  

  G. Covino

   $ 386,574        35     130     140   $ 246,248  

  G. Scangos(2)

   $ 1,500,000        140     n/a       n/a       n/a  

  P. Clancy(2)

   $ 890,586        70     n/a       n/a       n/a  

  K. DiPietro(2)

   $ 678,794        70     n/a       n/a       n/a  

Notes to the 2017 Annual Bonus Plan Awards Table

 

(1) Based on his hire date, Mr. Capello was ineligible for a payout under our 2017 annual bonus plan.
(2) Dr. Scangos received a prorated annual bonus payment pursuant to the severance provision of his employment agreement, as described in “2017 and 2018 Hiring- and Transition-Related Compensation Decisions—Dr. Scangos’ Arrangements” above, based on actual Company performance and assuming an Individual Multiplier of 100%. Messrs. Clancy and DiPietro ceased to be employed by the Company during 2017 and were ineligible for payout under our 2017 annual bonus plan.

 

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Long-Term Incentives (LTI)

All annual LTI awards granted to our executives are performance-based and are designed to reward long-term Company performance.

Our executive LTI program for 2017 consisted primarily of CSPUs and MSUs. The CSPUs we awarded to executive officers are performance-based RSUs that may be settled in cash, or, in the discretion of our Compensation Committee, shares of our common stock. The MSUs we awarded to executive officers are performance-based RSUs that are settled in shares of our common stock. The performance conditions applicable to these CSPUs and MSUs are described in further detail below. As used in this Proxy Statement, references to RSUs include CSPUs and MSUs. The annual LTI awards are equally weighted between CSPUs and MSUs, based on grant date values.

We also generally award time-based RSUs in lieu of CSPUs at the time an executive is hired if employment commences after June 30th, as the performance period for CSPUs would be substantially in progress as of such time, and from time to time we grant time-based RSUs to recognize extraordinary contributions to the Company or in connection with new hires, as we did for Dr. McKenzie in 2017, or to recognize extraordinary contributions to the Company.

Our LTI planning range is reviewed each year. Our LTI grant values are differentiated based on an executive’s individual performance, potential future contributions and market competitiveness, as well as other factors. In determining the LTI planning range, our Compensation Committee reviews our LTI planning ranges against target LTI awards of our peer group and also reviews the overall total compensation of our executive officers against our peer group due to our heavier weighting in executive compensation mix towards LTI awards. No changes to our LTI planning range were made in 2017 as we believe that the current range positions us competitively against our peer group and allows for individual LTI award differentiation. On average, annual LTI grant values for our NEOs (excluding Mr. Capello who joined in 2017 after the annual awards were granted and Mr. Covino based on his position) position their overall compensation at or around the median values of our peer group in cases where there are comparable positions at the peer companies.

We have an established annual LTI grant practice where LTI grants are made following the completion of our internal performance reviews of our executive officers as well as our external market review of equity practices of our peer group, including the data from the Willis Towers Watson survey described above. Since 2004, we have made our annual LTI

grants in February of each year following our annual earnings release. Other grants, such as those made in connection with a new hire, are generally granted on the first trading day of the month following the date of hire.

In 2017, the annual LTI grant date values for our NEOs were as follows:

 

  Name   

LTI Grant

Date Value

    

  M. Vounatsos

   $10,000,000   

  J. Capello(1)

   n/a   

  M. Ehlers

   $  3,200,000   

  S. Alexander

   $  3,200,000   

  P. McKenzie(2)

   $  2,750,000   

  G. Covino

   $     300,000   

  G. Scangos(3)

   n/a   

  P. Clancy(3)

   $  3,000,000   

  K. DiPietro(3)

   $  2,500,000     

Notes to the 2017 Annual LTI Awards Table

 

(1) Mr. Capello joined Biogen after the annual LTI awards were granted. Mr. Capello received a new hire grant in January 2018, which consisted of PSUs and MSUs with an aggregate grant date target value of $3.0 million. Because of this grant, he was not eligible to receive an annual LTI award in 2018. With respect to the PSUs, 60% (based on the grant date target value) will be settled in shares of our common stock and performance will be based upon achievement of cumulative three-year financial and pipeline metrics. The remaining 40% of the PSUs will be settled in cash and performance will be based upon the achievement of three annual financial metrics to be determined at the beginning of each relevant year. Please see “2018 LTI Program” below for additional information.

 

(2) In addition to the annual LTI award, Dr. McKenzie received a one-time award of RSUs. Please see “2017 and 2018 Hiring- and Transition-Related Compensation Decisions—Arrangements with Dr. McKenzie” above for a discussion of this additional LTI award.

 

(3) Dr. Scangos and Messrs. Clancy and DiPietro ceased to be employed by the Company during 2017. Based on his departure date, Dr. Scangos was not eligible for a 2017 grant. Mr. Clancy’s CSPU and MSU grants were subject to either accelerated or continued vesting, as applicable, pursuant to the retirement provision under our 2008 Omnibus Equity Plan. Mr. DiPietro forfeited the majority of his 2017 grant in connection with the termination of his employment. Please see “2017 and 2018 Hiring- and Transition-Related Compensation Decisions” above for additional information.

The actual value that will be realized from CSPU awards depends on the degree of achievement of performance goals (revenues and adjusted free cash flow) applicable to each grant and the 30-day average closing stock price on each of the dates such awards vest. The actual value that will be realized from MSU awards depends on our 30-day

 

 

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average common stock price growth between the grant date and each of the dates such awards vest. Our common stock price is influenced by the Company’s performance as well as external market factors.

2017 CSPUs

CSPUs are performance-based RSUs that are subject to a one-year performance period and three-year service-based vesting. Our 2017 CSPU awards are earned and eligible to vest based upon the achievement of an equal weighting of revenues and adjusted free cash flow results when compared to pre-established performance goals set at the start of the performance period by our Compensation Committee.

 

  Revenues was selected as in past years, and is the same financial measure utilized in the determination of the 2017 annual cash bonuses. We selected revenues as a performance measure to reinforce the importance of achieving and exceeding our revenue goal and to provide further incentive to achieve such goal.
  We also selected an adjusted free cash flow performance measure, similar to past years, because our Compensation Committee views free cash flow as a critical measure to align the interests of management with those of our stockholders as it reflects the net cash flows available to the Company to pursue opportunities that enhance stockholder value. We believe that long-term cash flow generation of our Company best reflects the intrinsic value of our enterprise. As such, a cash flow performance goal encourages management to optimize capital expenditures, invest prudently in high return projects and optimize working capital.

In order to further motivate our executives to drive the organization toward the achievement of these goals, we provide for a maximum payout of 200%. Participants may ultimately earn between 0% and 200% of the target number of CSPUs granted based on the degree of actual performance goal achievement. Earned CSPUs are subject to service-based vesting, with one-third of the earned CSPUs vesting on each of the first three anniversaries of the grant date, generally subject to continued service with the Company.

 

 

2017 CSPU Company Performance Targets and Results Table

The following table shows the pre-established corporate performance goals and the actual results that determined the percentage of target CSPUs earned for 2017:

 

  Company Goals (1)   

Weight

%

  Target Performance Range         Payout    
     Threshold    Target    Max    Results     

  Revenue

   50%   $10,687M    $11,495M    $12,604M    $12,201M    136.1%  

  Adjusted Free Cash Flow

   50%   $3,671M    $4,110M    $4,714M    $4,285M    109.6%  

  CSPU Performance Multiplier

        123.0%*    
* Numbers may not recalculate due to rounding.

Notes to 2017 CSPU Company Performance Targets and Results Table

(1) See “Notes to 2017 Annual Bonus Plan Performance Company Targets and Results Table” above for definitions and adjustments related to revenue goals and results.

(2) Final 2017 adjusted free cash flow was adjusted to remove (a) the net of tax impact of $366.0 million of operating charges in excess of $100.0 million recognized in relation to upfront and developmental milestones and other expenses associated with our agreements to exclusively license BIIB092 and BIIB098 and entering into a new collaboration agreement with Ionis to identify new ASO drug candidates for the treatment of SMA and (b) the net of tax impact of $61.0 million related to the Article 20 Procedure of ZINBRYTA and resulting impairment of ZINBRYTA related assets.

 

The 2017 CSPUs are also subject to stock price performance, in that the value actually received in respect of CSPUs is dependent on the performance of our common stock, and are subject to service-based vesting over three years from the grant date, in furtherance of the Company’s long-term pay-for-performance philosophy and to encourage employee retention.

Once vested, the CSPUs are generally converted into and settled in cash, based on the 30-day average closing price of our common stock prior to and including the date on which they vest, except that, with respect to equity awards made to the executive officers, our Compensation Committee may, in its discretion, settle such awards in shares of our common stock or in cash.

 

 

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CSPU Illustration:

 

 

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2017 MSUs

MSUs are performance-based RSUs that are earned based on the growth of our common stock price from the date of grant to each of the three annual vesting dates. On each vesting date, the performance multiplier is derived based on the stock price growth measured from the grant date to such vesting date using the average closing stock price for the 30 calendar days prior to and including the grant date and such vesting date. The performance multiplier for MSUs awarded prior to 2014 continues to be calculated using a 60-day average closing stock price and vesting occurs over 4 annual installments.

Participants may ultimately earn between 0% and 200% of the target number of MSUs awarded based on actual stock performance. The maximum payout percentage of MSUs available to be awarded in 2017 is consistent with the 2017 CSPUs (200%). Once the performance multiplier is determined, it is applied to the target number of MSUs granted to each executive and can increase or decrease the overall number of MSUs earned based on stock price performance. For grants made prior to 2014, the maximum payout continues to be 150%.

MSU Illustration:

 

 

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The three-year (or four year, for pre-2014 MSUs) service vesting period ties executive compensation directly to our common stock price performance, as both the units earned

and the value actually received in respect of MSUs is dependent on the performance of our common stock. On each vesting date, the earned MSUs are settled in shares of our common stock.

The following table shows the vesting date, performance period and performance multiplier applied for MSUs vesting in 2017 and 2018:

 

  Grant Date   

Vest

Date

  

Performance

Period

    

Performance

Multiplier

 

  2/2017

   2/2018      1 year        126%  

  2/2016

   2/2018      2 years        132%  
   2/2017      1 year        111%  

  2/2015

   2/2018      3 years        88%  
   2/2017      2 years        75%  

  2/2014

   2/2017      3 years        92%  

  2/2013

   2/2017      4 years        150%  

2018 LTI Program

Although we believe our executive compensation programs are effectively designed and have worked well to implement a pay-for-performance culture aligned with the interests of our stockholders, our Compensation Committee decided to make certain enhancements to the design of our 2018 LTI program to reinforce focus on long-term performance. Specifically, under our 2018 LTI program, grants of PSUs have replaced CSPUs. The PSUs will have three-year cliff vesting. In addition, 60% of the PSUs (based on the grant date target value) will be settled in shares of our common stock and performance will be based upon achievement of cumulative three-year financial and pipeline metrics. The remaining 40% of the PSUs will be settled in cash and performance will be based upon the achievement of three annual financial metrics to be determined at the beginning of each relevant year.

As part of our 2018 LTI program, our Compensation Committee also decided to grant one-time special transition awards in the form of RSUs to certain eligible executive officers. These awards were granted in February 2018 to executive officers, excluding the CEO, and will vest over a two-year period, with 33% vesting on the first anniversary of the grant date and 67% vesting on the second anniversary of the grant date. Our Compensation Committee decided to grant these awards in acknowledgement of the change to the three-year cliff vesting schedule discussed above compared to the three-year installment vesting that previously applied to CSPUs.

 

 

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Retirement Plans

We maintain a Supplemental Savings Plan (SSP), which is a non-qualified deferred compensation plan covering our executive officers and other eligible employees in the U.S. We offer the SSP as part of the retirement savings component of our benefits program. We designed the SSP to be competitive with the non-qualified deferred compensation plans offered by companies in our peer group. Details of the SSP are discussed under the heading “2017 Non-Qualified Deferred Compensation” below.

Other Benefits

In addition to eligibility for the benefit programs generally provided to all employees, such as our employee stock purchase plan, 401(k) plan and medical, dental, vision, life and disability insurance, we provide certain supplemental benefits to our executives. These benefits include:

Life Insurance

All of our U.S. executives, including our NEOs, receive Company-paid term life insurance equal to three times their annual base salary, up to a maximum benefit of $1.5 million. Employees who are not executives receive Company-paid term life insurance equal to two times their annual base salary. The additional value of Company-provided life insurance for our executive officers reflects competitive practices and is consistent with our philosophy to provide appropriate levels of financial security for our employees based on their positions within the Company. The cost of Company-paid life insurance in excess of a $50,000 insurance level is taxable income to U.S. employees and is not grossed up by the Company.

Executive Physicals, Tax Preparation, Financial and Estate Planning

Our executive officers, other than our CEO, are eligible for reimbursement of expenses incurred for tax preparation and financial and estate planning services, as well as the purchase of tax preparation and financial planning software, subject to annual expense limits of $7,500 for executive vice presidents and $4,500 for vice presidents. Such reimbursements are taxable income to our executives and are not grossed up.

All of our executive officers, including our CEO, are eligible for reimbursement for the cost of their executive physicals, subject to the annual expense limits noted above of $7,500

for our executive vice presidents and CEO and $4,500 for vice presidents. This benefit provides our executives with additional flexibility to proactively manage their health and wellness.

Relocation Expenses

Under our Executive Relocation Policy, we will, in certain circumstances, provide relocation benefits when executives first join us.

Post-Termination Compensation and Benefits

We provide severance benefits to all of our executive officers if they are terminated without cause or in certain circumstances. The terms of these arrangements and the amounts payable under them are described below for each NEO under the heading “Potential Payments Upon Termination or Change in Control.” We provide these benefits because we believe that severance protection is necessary to help our executives maintain their focus on the best interests of the Company when providing advice to the Company and making strategic decisions about a potential corporate transaction or change in control, and encourages effective leadership in the closing and integration of significant transactions affecting the Company.

Stock Ownership Guidelines

We maintain stock ownership guidelines for our executive officers to strengthen and reinforce the link our compensation programs create between our executives and our stockholders. A summary of our stock ownership guidelines is set forth below.

 

  Level   

Number of Shares  

Equal in Value to:  

  CEO

   6x salary

  EVP

   3x salary

  Chief Accounting Officer

   1x salary

Executive officers have five years from their initial appointment to meet the requirement. In the event the requirement is not met within that time, 100% of vested shares received in respect of LTI awards are required to be held until the requirement is satisfied. Only stock owned outright or otherwise vested or earned performance-based shares is credited toward the stock ownership requirement. Shares underlying unvested RSUs are not included in the calculation. All of our executive officers currently meet the stock ownership requirement or are still within the five-year period to meet such requirement.

 

 

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Recoupment of Compensation

We may recover compensation from our employees, including our executive officers, who engage in detrimental or competitive activity. Detrimental activity includes any action or failure to act that constitutes financial malfeasance that is materially injurious to the Company, violates our Code of Business Conduct (Values in Action), results in a restatement of our earnings or financial results or results in a violation or breach of law or contract. Competitive activity includes any action or failure to act that violates non-disclosure, non-competition and/or non-solicitation agreements. Our 2008 Performance-Based Management Incentive Plan allows for the forfeiture and/or repayment of cash-based awards and our 2008 Omnibus Equity Plan and our 2017 Omnibus Equity Plan each allow for the cancellation of LTI awards in these circumstances. In addition, cash sign-on bonuses paid to our NEOs may be subject to repayment if the NEO voluntarily resigns from the Company or if his or her employment is terminated by the Company in certain circumstances.

Insider Trading, Hedging and Pledging Policy Prohibitions

We maintain a Global Insider Trading Policy that prohibits our employees and directors from, among other things, engaging in hedging or derivative transactions with respect to the Company’s equity securities, purchasing Company stock on margin, pledging Company securities as collateral for a loan or engaging in short sales of the Company’s securities.

Tax-Deductibility of Compensation

Section 162(m) of the Internal Revenue Code (Section 162(m)) limits the amount a company may deduct for compensation in excess of $1 million paid to certain “covered employees”. For taxable years ending December 31, 2017, and earlier, “covered employees” generally referred to the chief executive officer and the next three highly compensated executive officers (excluding the chief financial officer). However, for these taxable years this limitation did not apply to compensation meeting the definition of qualifying performance-based compensation.

The exemption from Section 162(m)’s deduction limitation for qualifying performance-based compensation has been repealed by recent legislation, effective for taxable years

beginning after December 31, 2017, such that compensation paid to covered employees in excess of $1 million will not be deductible unless it qualifies for transition relief applicable to certain arrangements in place as of November 2, 2017. In addition, for taxable years beginning after December 31, 2017, “covered employee” generally has been expanded to include a company’s chief financial officer. In addition, each individual who is a covered employee for any taxable year beginning after December 31, 2016 will remain a covered employee for all future years.

Management regularly reviews the provisions of our plans and programs, monitors legal developments and works with our Compensation Committee and its independent compensation consultant to review and consider Section 162(m) tax deductibility of compensation payments. Our Compensation Committee, however, believes that compensation programs that attract, retain and reward executive talent and achievement are necessary for our success and, therefore, are in the best interests of the Company and our stockholders and that, in establishing the cash and equity incentive compensation programs for the Company’s executive officers, the potential deductibility of the compensation payable under such programs should only be one of a number of relevant factors taken into consideration. Consequently, our Compensation Committee may pay or provide, and has paid or provided, compensation in excess of $1.0 million that is not exempt from the deduction limitations under Section 162(m).

Compensation Committee Report

The Compensation Committee furnishes the following report:

The Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis with Biogen management. Based on this review and discussion, the Compensation Committee recommended to our Board of Directors that the Compensation Discussion and Analysis be included in this Proxy Statement.

Submitted by,

Robert W. Pangia (Chair)

Richard C. Mulligan

Eric K. Rowinsky

Lynn Schenk

 

 

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Summary Compensation Table

The following table shows the compensation paid to or earned by our NEOs during the years ended December 31, 2017, December 31, 2016, and December 31, 2015, for the year(s) in which they were a named executive officer.

 

 Name and Principal Position

                         (a)

 

Year

(b)

   

Salary

(c)

   

Bonus(1)

(d)

   

Stock

Awards(2)

(e)

   

Non-Equity

Incentive Plan

Compensation(3)

(f)

   

Change in

Pension

Value and

Nonqualified

Deferred

Compensation

Earnings(4)

(g)

   

All Other

Compensation(5)

(h)

   

Total

(i)

 

 

 Michel Vounatsos(6)

 

 

 

 

2017

 

 

 

 

$

 

1,087,885

 

 

 

 

 

 

 

 

 

 

$

 

9,868,540

 

 

 

 

$

 

2,502,500

 

 

 

 

$

 

18,881

 

 

 

 

$

 

186,567

 

 

 

 

$

 

13,664,373

 

 

 Chief Executive Officer

    2016     $ 519,231     $ 1,500,000     $ 3,151,199     $ 447,799     $ 1,598     $ 181,568     $ 5,801,395  

 

 Jeffrey D. Capello(7)

 

 

 

 

2017

 

 

 

 

$

 

28,846

 

 

 

 

$

 

520,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

 

132

 

 

 

 

$

 

548,978

 

 

 Executive Vice President

 and Chief Financial Officer

                                                               

 

 Michael D. Ehlers

 

 

 

 

2017

 

 

 

 

$

 

792,139

 

 

 

 

 

 

 

 

 

 

$

 

3,157,338

 

 

 

 

$

 

1,012,034

 

 

 

 

$

 

1,799

 

 

 

 

$

 

101,671

 

 

 

 

$

 

5,064,981

 

 

 Executive Vice President,

    2016     $ 491,827     $ 1,170,177     $ 3,410,650     $ 425,062     $ 155     $ 14,665     $ 5,512,536  

 Research & Development

                                                               

 

 Susan H. Alexander

 

 

 

 

2017

 

 

 

 

$

 

720,630

 

 

        $ 3,157,338     $ 856,305     $ 148,961     $ 178,008     $ 5,061,242  

 Executive Vice President,

    2016     $ 693,663           $ 2,337,051     $ 589,514     $ 133,726     $ 171,114     $ 3,925,068  

 Chief Legal Officer

    2015     $ 697,721           $ 2,795,055     $ 266,069     $ 112,406     $ 296,052     $ 4,167,303  

 and Secretary

                                                               

 

 Paul F. McKenzie

 

 

 

 

2017

 

 

 

 

$

 

600,433

 

 

 

 

 

 

 

 

 

 

$

 

3,514,451

 

 

 

 

$

 

796,648

 

 

 

 

$

 

2,471

 

 

 

 

$

 

101,254

 

 

 

 

$

 

5,015,257

 

 

 Executive Vice President,

               

 Pharmaceutical

 Operations & Technology

                                                               

 

 Gregory F. Covino(8)

 

 

 

 

2017

 

 

 

 

$

 

385,275

 

 

 

 

 

 

 

 

 

 

$

 

297,750

 

 

 

 

$

 

246,248

 

 

 

 

$

 

22,787

 

 

 

 

$

 

43,470

 

 

 

 

$

 

995,530

 

 

 Vice President, Finance and

 Chief Accounting Officer

 and Former Interim

 Principal Financial Officer

                                                               

 

 George A. Scangos(9)

 

 

 

 

2017

 

 

 

 

$

 

60,065

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

 

159,968

 

 

 

 

$

 

7,255,796

 

 

 

 

$

 

7,475,829

 

 

 Former Chief Executive

    2016     $ 1,500,000           $ 13,007,653     $ 2,541,000     $ 221,642     $ 463,493     $ 17,733,788  

 Officer

    2015     $ 1,538,462           $ 13,015,232     $ 1,181,250     $ 184,724     $ 954,718     $ 16,874,386  

 

 Paul J. Clancy(10)

 

 

 

 

2017

 

 

 

 

$

 

458,945

 

 

 

 

 

 

 

 

 

 

$

 

2,961,929

 

 

 

 

 

 

 

 

 

 

$

 

61,983

 

 

 

 

$

 

168,361

 

 

 

 

$

 

3,651,218

 

 

 Former Executive Vice

    2016     $ 844,600           $ 3,556,773     $ 728,818     $ 55,376     $ 199,635     $ 5,385,202  

 President, Finance and

    2015     $ 747,498           $ 2,543,374     $ 284,655     $ 45,960     $ 332,115     $ 3,953,602  

 Chief Financial Officer

                                                               

 

 Kenneth A. DiPietro(11)

 

 

 

 

2017

 

 

 

 

$

 

568,319

 

 

 

 

 

 

 

 

 

 

$

 

2,467,730

 

 

 

 

 

 

 

 

 

 

$

 

149

 

 

 

 

$

 

2,187,069

 

 

 

 

$

 

5,223,267

 

 

 Former Executive Vice

    2016     $ 652,581           $ 2,539,625     $ 555,496     $ 18,011     $ 174,714     $ 3,940,427  

 President, Human

    2015     $ 648,023           $ 2,795,055     $ 247,117     $ 12,081     $ 287,621     $ 3,989,897  

 Resources

                                                               

Notes to the Summary Compensation Table

 

(1) The amounts in column (d) reflect sign-on bonuses paid to Mr. Vounatsos, Mr. Capello and Dr. Ehlers at the time of hire. All other cash bonuses, which were based on achievement of performance criteria under our annual bonus plan, are disclosed in column (f).
(2)

The amounts in column (e) reflect the grant date fair value computed in accordance with ASC 718 for RSUs, MSUs and CSPUs granted during 2017, 2016 and 2015, as applicable, excluding the effect of estimated forfeitures. The 2017 amounts for Dr. McKenzie represent grants of MSUs, CSPUs and RSUs, as described in more detail in the CD&A above, and the 2016 amounts for Dr. Ehlers represent grants of MSUs, CSPUs and RSUs as described in “Executive Compensation Matters—Compensation Discussion and Analysis—2016 and 2017 Hiring- and Transition-Related Compensation Decisions—Arrangements with Mr. Vounatsos and Dr. Ehlers” in our 2017 proxy statement. The amounts for all other NEOs for 2017 and, as applicable, for 2016 and 2015 represent grants of MSUs and CSPUs. The awards granted before February 1, 2017, were subsequently adjusted pursuant to the anti-dilution provisions of such awards in connection with the spin-off of our hemophilia business on February 1, 2017. The amounts reported in this column were not impacted by such anti-dilution adjustments. The grant date fair value for MSU awards are estimated as of the date of grant using a lattice model with a Monte Carlo simulation, based on the probable outcome of applicable performance conditions, on the date of grant. Assumptions used in this calculation are included on page F-46 in footnote 16 of our 2017 Annual Report on Form 10-K. The grant date fair value for CSPU and RSU awards was determined by multiplying the number of shares subject to the award (assuming target performance for CSPUs) by the closing price of the Company’s common stock on the grant date. The table below shows the

 

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  target and maximum payouts possible for the 2017, 2016 and 2015 MSU and CSPU awards based on the value at the date of grant and the target and maximum payout levels.

 

     2017      2016      2015  
  Executive Officer   

Target

Payout

    

Maximum

Payout

    

Target

Payout

    

Maximum

Payout

    

Target

Payout

    

Maximum

Payout

 

  Mr. Vounatsos

   $ 9,868,540      $ 19,737,080      $ 3,151,199      $ 6,302,398                

  Mr. Capello

                                         

  Dr. Ehlers

   $ 3,157,338      $ 6,314,676      $ 2,540,438      $ 5,080,876                

  Ms. Alexander

   $ 3,157,338      $ 6,314,676      $ 2,337,051      $ 4,674,102      $ 2,795,055      $ 5,590,110  

  Dr. McKenzie

   $ 2,713,851      $ 5,427,702                              

  Mr. Covino

   $ 297,750      $ 595,500                              

  Dr. Scangos

                 $ 13,007,653      $ 26,015,306      $ 13,015,232      $ 26,030,464  

  Mr. Clancy

   $ 2,961,929      $ 5,923,858      $ 3,556,773      $ 7,113,546      $ 2,543,374      $ 5,086,749  

  Mr. DiPietro

   $ 2,467,730      $ 4,935,460      $ 2,539,625      $ 5,079,250      $ 2,795,055      $ 5,590,110  
(3) The amounts in column (f) reflect actual bonuses paid under our annual bonus plan for the applicable year.
(4) The amounts in column (g) reflect earnings in the SSP that are in excess of 120% of the applicable federal long-term rate. The federal long-term rates applied in this calculation are 3.26%, 3.14% and 3.16% for 2017, 2016 and 2015, respectively. A description of the SSP is described under the heading “2017 Non-Qualified Deferred Compensation” below.
(5) The amounts in column (h) for 2017 reflect the following:

 

  Executive Officer   

Company

Matching

Contribution

to 401(k)

Plan

Account (12)

    

Company

Contribution

to SSP

Account

    

Personal

Health and

Financial

Planning(13)

    

Value of

Company-

Paid Life

Insurance

Premiums

     Relocation(14)      Recognition
Award
(15)
     Severance  

  Mr. Vounatsos

   $ 17,931      $ 113,911             $ 1,055      $ 53,670                

  Mr. Capello

                        $ 132                       

  Dr. Ehlers

   $ 16,200      $ 83,889             $ 1,582                       

  Ms. Alexander

   $ 16,200      $ 149,649      $ 10,690      $ 1,469                       

  Dr. McKenzie

   $ 16,200      $ 51,107      $ 11,524      $ 1,213      $ 21,210                

  Mr. Covino

   $ 16,200      $ 25,645             $ 792             $ 833         

  Dr. Scangos

   $ 3,604                    $ 88                    $ 7,252,104 (16) 

  Mr. Clancy

   $ 13,500      $ 151,179      $ 2,759      $ 923                       

  Mr. DiPietro

   $ 9,818      $ 133,511             $ 577                    $ 2,043,163 (17) 
(6) Mr. Vounatsos joined Biogen as our Executive Vice President, Chief Commercial Officer effective April 18, 2016. Mr. Vounatsos was appointed our Chief Executive Officer and a member of our Board of Directors effective January 6, 2017. His base salary for 2017 was $1,100,000, of which he received a pro rata share from January 6, 2017 to December 31, 2017. From January 1, 2017 to January 5, 2017, he was paid at his prior rate of base salary ($750,000).
(7) Mr. Capello was appointed as our Executive Vice President and Chief Financial Officer effective December 11, 2017. His base salary for 2017 was $750,000, of which he received a pro rata share from December 11, 2017 to December 31, 2017. Mr. Capello was not eligible to participate in our 2017 annual bonus plan and was not granted any stock awards in 2017.
(8) Mr. Covino was appointed as our Interim Principal Financial Officer on July 1, 2017, and served in this role until December 11, 2017.
(9) Dr. Scangos ceased to be our Chief Executive Officer effective January 6, 2017. His base salary for 2017 was $1,500,000, of which he received a pro rata share from January 1, 2017 to January 6, 2017. Dr. Scangos was not granted any stock awards in 2017.
(10) Mr. Clancy ceased to be our Executive Vice President, Finance and Chief Financial Officer effective July 1, 2017. His base salary for 2017 was $890,586, of which he received a pro rata share from January 1, 2017 to July 1, 2017. Mr. Clancy was not eligible to receive a bonus under our 2017 annual bonus plan.
(11) Mr. DiPietro ceased to be our Executive Vice President, Human Resources effective May 26, 2017, and ceased to be employed by us effective September 30, 2017. His base salary for 2017 was $678,794, of which he received a pro rata share from January 1, 2017 to September 30, 2017. Mr. DiPietro was not eligible to receive a bonus under our 2017 annual bonus plan.
(12) The amount for Mr. Vounatsos includes a Company 401(k) match of $1,731 paid in 2017 for benefit year 2016 in connection with an administrative correction.
(13)

Represents reimbursements of expenses relating to tax, financial and estate planning and executive physicals as described under the heading “Executive Physicals, Tax Preparation, Financial and Estate Planning” above. The amount for Ms. Alexander includes the

 

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  2017 benefit of $5,720 and reimbursement during 2017 of the 2016 benefit of $4,970. The amount for Dr. McKenzie includes the 2017 benefit of $7,500 and reimbursement during 2017 of the 2016 benefit of $4,024. The amount for Mr. Clancy includes the reimbursement during 2017 of the 2016 benefit of $2,759.
(14) The amounts for Mr. Vounatsos and Dr. McKenzie reflect relocation benefits under the Company’s Executive Relocation Policy and include tax gross-ups of $25,889 and $2,672, respectively.
(15) The amount for Mr. Covino reflects an employee service recognition award and related $333 tax gross-up.
(16) On January 6, 2017, Dr. Scangos ceased to be our Chief Executive Officer and the Company paid him the severance benefits payable under his employment agreement, which consisted of (a) a lump sum cash payment in the amount of $7.2 million (two times his annual base salary and target annual bonus), (b) a prorated annual bonus payment for the period January 1, 2017 through January 6, 2017, based on actual Company performance and assuming individual performance of 100% and (c) continuation of certain subsidized medical, dental and vision benefits until July 1, 2018. The amount of the prorated annual bonus equaled $44,877 and the cost of the continuation of certain subsidized medical, dental and vision benefits equaled $7,227. In addition, Dr. Scangos was eligible to receive nine months of executive-level outplacement services at our cost equaling $28,000; however, Dr. Scangos did not utilize this benefit.
(17) On May 26, 2017, Mr. DiPietro ceased to be our Executive Vice President, Human Resources and ceased to be employed by us effective September 30, 2017. The Company provided him the severance benefits required under our executive severance policy for Executive Vice Presidents, which consisted of (a) a lump sum cash payment of $2,019,413 (21 months of base salary and target bonus) (b) continuation of certain subsidized medical, dental and vision benefits until the earlier of (1) January 31, 2019, or (2) the date on which he becomes eligible to receive benefits through another employer. In addition, our Compensation Committee agreed to permit continued vesting of one-third of his outstanding LTI awards scheduled to vest on February 15, 2018, February 22, 2018, and February 23, 2018, as if he had remained employed by the Company through February 2018. The cost of the continuation of certain subsidized medical, dental and vision benefits equaled (assuming the benefits continue until January 31, 2019) $23,750. Mr. DiPietro was eligible to receive up to 12 months of executive-level outplacement services at our cost equaling $32,000; however, Mr. DiPietro did not utilize this benefit.

 

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2017 Grants of Plan-Based Awards

The following table shows additional information regarding all grants of plan-based awards made to our NEOs for the year ended December 31, 2017.

 

             

Estimated Future Payouts Under

Non-Equity Incentive Plan

Awards (1)

         

 

Estimated Future Payouts

Under Equity Incentive Plan

Awards (#)(1)

   

All

Other

Stock

Awards:

Number

of

Shares

or Units

(#)(i)

 

Grant Date

Fair Value

of Stock

Awards(2)

(j)

 

Name

(a)

 

Grant Date

(b)

    Notes  

Threshold

(c)

   

Target

(d)

   

Maximum

(e)

         

Threshold

(f)

   

Target

(g)

   

Maximum

(h)

     

Michel Vounatsos

    02/15/2017     (3)                         6,375       12,750       25,500       $ 4,868,786  
    02/15/2017     (4)                         8,543       17,085       34,170       $ 4,999,754  
    02/15/2017     (5)   $ 343,750     $ 1,375,000     $ 3,093,750                                    

Jeffrey D. Capello

                                                           

Michael D. Ehlers

    02/15/2017     (3)                         2,040       4,080       8,160       $ 1,558,060  
    02/15/2017     (4)                         2,733       5,465       10,930         $1,599,278  
      02/15/2017     (5)     $139,016       $556,063       $1,251,141                                    

Susan H. Alexander

    02/15/2017     (3)                         2,040       4,080       8,160       $ 1,558,060  
    02/15/2017     (4)                         2,733       5,465       10,930         $1,599,278  
      02/15/2017     (5)     $126,672       $506,689       $1,140,051                                    

Paul F. McKenzie

    02/15/2017     (3)                         1,753       3,505       7,010       $ 1,338,443  
    02/15/2017     (4)                         2,350       4,700       9,400         $1,375,408  
    02/15/2017     (5)     $105,656       $422,625       $950,906                              
      03/01/2017     (6)                                               2,730   $ 800,600  

Gregory F. Covino

    02/15/2017     (3)                         193       385       770       $ 147,040  
    02/15/2017     (4)                         258       515       1,030       $ 150,710  
      02/15/2017     (5)     $33,825       $135,301       $304,427                                    

George A. Scangos

                                                           

Paul J. Clancy

    02/15/2017     (3)                         1,913       3,825       7,650       $ 1,460,686  
      02/15/2017     (4)                               2,565       5,130       10,260       $ 1,501,243  

Kenneth A. DiPietro(7)

    02/15/2017     (3)                         1,595       3,190       6,380         $1,218,157  
      02/15/2017     (4)                               2,135       4,270       8,540       $ 1,249,573  

Notes to the 2017 Grants of Plan-Based Awards Table

 

(1) Reflects the potential future payouts of awards granted in 2017 under our 2017 annual bonus plan and our LTI program for each NEO as of the respective grant dates.
(2) Represents the grant date fair value of CSPUs, MSUs and RSUs, computed in accordance with ASC 718, excluding the effect of estimated forfeitures. The grant date fair value for MSU awards are estimated as of the date of grant using a lattice model with a Monte Carlo simulation based on the probable outcome of applicable performance conditions. Assumptions used in this calculation are included on page F-46 in footnote 16 of our 2017 Annual Report on Form 10-K. The grant date fair value for both CSPU