2 0 2 1 A N N U A L R E P O R T
12780 EL CAMINO REAL
SAN DIEGO, CA 92130
(858) 617-7600
WWW.NEUROCRINE.COM
Neurocrine Biosciences has four commercial, FDA-approved treatments in the United
States and a robust pipeline with multiple mid-to-late-stage programs focused on
diseases and disorders across neurology, neuroendocrinology, and neuropsychiatry.
Neurocrine Biosciences is a neuroscience-focused, biopharmaceutical company with
a simple purpose: to relieve suffering for people with great needs, but few options. We
are dedicated to discovering and developing life-changing treatments for patients with
under-addressed neurological, neuroendocrine and neuropsychiatric disorders. The
company’s diverse portfolio includes FDA-approved treatments for tardive dyskinesia
(TD), Parkinson’s disease, endometriosis* and uterine fibroids*, as well as over a dozen
mid-to-late-stage clinical programs in multiple therapeutic areas. For three decades,
we have applied our unique insight into neuroscience and the interconnections between
brain and body systems to treat complex conditions. We relentlessly pursue medicines
to ease the burden of debilitating diseases and disorders, because you deserve brave
science. For more information, visit neurocrine.com, and follow the company on LinkedIn.
(*in collaboration with AbbVie)
Neurocrine Biosciences
Corporate Information
CORPORATE
MANAGEMENT
Kevin C. Gorman, Ph.D.
Chief Executive Officer
Matthew C. Abernethy
Chief Financial Officer
Eric Benevich
Chief Commercial Officer
David W. Boyer
Chief Corporate Affairs Officer
Julie S. Cooke
Chief Human Resources Officer
Kyle W. Gano, Ph.D.
Chief Business Development
and Strategy Officer
Darin M. Lippoldt, J.D.
Chief Legal Officer
Malcolm C. Lloyd-Smith
Chief Regulatory Officer
Jude Onyia, Ph. D.
Chief Scientific Officer
Eiry W. Roberts, M.D.
Chief Medical Officer
BOARD OF
DIRECTORS
William H. Rastetter, Ph.D.
Chairman of the Board,
Neurocrine Biosciences, Inc.
and Fate Therapeutics
Kevin C. Gorman, Ph.D.
Chief Executive Officer,
Neurocrine Biosciences, Inc.
Gary A. Lyons
Former President and Chief Executive
Officer, Neurocrine Biosciences, Inc.
Johanna Mercier
Chief Commercial Officer,
Gilead Sciences
George J. Morrow
Former Executive Vice President,
GlobalCommercial Operations,
Amgen Inc.
Leslie V. Norwalk
Former Acting Administrator
for the Centers for Medicare &
Medicaid Services
Richard F. Pops
Chairman of the Board
and Chief Executive Officer,
Alkermes plc
Shalini Sharp
Former Chief Financial Officer and
Executive Vice President
of Ultragenyx
Stephen A. Sherwin, M.D.
Former Chairman of the Board
and Chief Executive Officer,
Cell Genesys, Inc.
STOCKHOLDER
INFORMATION
Transfer Agent
American Stock Transfer
Auditors
Ernst & Young LLP
Corporate Counsel
Cooley LLP
Dear Fellow Shareholders,
Neurocrine Biosciences is turning 30 this year. As I look back, I am extremely proud of
We have strategically positioned Neurocrine Biosciences to efficiently and effectively
what we have accomplished during that time, most notably, the impact we’ve made
study multiple mechanisms of action against one disease while researching one
on the lives of patients living with movement disorders like tardive dyskinesia (TD) and
compound across multiple indications. Given the nature of our field, we know not
Parkinson’s disease. The success of INGREZZA has allowed us to reinvest in our company
everything is going to work. When we do not initially succeed, we learn. And when
and develop a neurology-focused pipeline that features 12 mid-to-late-stage
we are ultimately successful, we make a profound impact on patient lives. It is a
programs. With this set of clinical assets and others to follow, we have a tremendous
tremendous privilege, and a responsibility we do not take lightly. It is also the
opportunity to bring even more treatments to patients who need better options.
opportunity that inspires and energizes us every day.
This broad pipeline of novel assets is key to the next chapter in Neurocrine Biosciences’
Importantly, Neurocrine Biosciences is delivering for our patients, shareholders, and
history. Each asset has the potential to address serious neurological-related disorders
the communities in which we live and work, simultaneously. Our recently published
and we expect Phase 2 and registrational study data readouts on a number of
2022 Corporate Sustainability Report highlights the environmental, social and
these unique compounds throughout this year and into next. We are advancing
governance (ESG) issues most relevant to our business and how we are making
investigational compounds in areas like schizophrenia and major depressive disorder,
a positive impact in all three areas. In particular, accelerating our efforts in relation
where our medicines could be used together with available treatment options to
to diversity, equity, and inclusion remains a priority. In 2021 we were very pleased to
further improve patient outcomes. In some cases, we are developing medicines in
announce the appointment of Ms. Johanna Mercier to our Board of Directors, bringing
areas like congenital adrenal hyperplasia and essential tremor where there have
the percentage of women on our Board to 33%. We also hired the company’s first
been no new treatment options for over 50 years. And in other disorders, we are
Director of Diversity, Equity and Inclusion, and rolled out unconscious bias training
advancing programs to address specific rare pediatric epilepsies and dyskinetic
to all employees. We continue to partner with a number of STEM organizations to
cerebral palsy, areas where even today, there are no approved treatment options
promote diversity in the life sciences community. We are honored and humbled to
for patients. We are excited about the potential of Neurocrine Biosciences’ pipeline,
have been named to a number of “Best Places to Work” lists in 2021 in recognition
and what it can mean to the lives of patients around the world.
of these initiatives, and others, and as a testament to our winning culture rooted in
At the same time, we are proud of the essential role INGREZZA continues to play in
strong ethics and teamwork.
addressing TD. INGREZZA continues to be the most prescribed and preferred treatment
Upon reflection on the last 30 years, I wish I could say the company has evolved
option for these patients and, despite the challenging impact of the pandemic on
exactly as contemplated in our original business plan, but the truth is, progress is
patients, prescribers, offices and clinics, more patients were treated with INGREZZA in
not always linear. It is our ability to take new challenges in stride that has shaped
2021 than ever before. With roughly 85% of the TD patient population still undiagnosed
our corporate character and established Neurocrine Biosciences as an innovative
or not treated at all, we are just beginning to scratch the surface of INGREZZA’s full
leader in the biopharmaceutical industry. With strong commercial momentum and
potential. Our strong conviction in the long-term opportunity for INGREZZA is
a talented team advancing our pipeline, I am optimistic about the opportunities
evidenced by the commercial investments we are making to improve diagnosis
ahead of us for the next 30 years and beyond.
and treatment rates in 2022 and beyond.
We remain committed to taking on some of the world’s toughest health problems
and neurological-focused drug development, because we are confident in our
balanced pipeline, long-term approach, and judicious investment strategy.
Sincerely,
Kevin C. Gorman, PH.D.
Chief Executive Officer
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
(Amendment No. )
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
Neurocrine Biosciences, Inc.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
☒ No fee required.
☐ Fee paid previously with preliminary materials.
☐ Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rules 14a-6(i)(1) and 0-11.
NEUROCRINE BIOSCIENCES, INC.
12780 El Camino Real
San Diego, CA 92130
Notice of Annual Meeting of Stockholders
To Be Held on May 18, 2022
TO THE STOCKHOLDERS:
NOTICE IS HEREBY GIVEN that the 2022 Annual Meeting of Stockholders of Neurocrine Biosciences, Inc., a Delaware
corporation (the “Company”), will be held on May 18, 2022, at 10:30 a.m., local time, at the Company’s corporate headquarters
located at 12780 El Camino Real, San Diego, California 92130, for the following purposes as more fully described in the Proxy
Statement accompanying this Notice:
1.
2.
3.
4.
5.
6.
The election of the three nominees for Class II Directors named herein to the Board of Directors to serve for a term of
three years;
An advisory vote on the compensation paid to the Company’s named executive officers;
To approve an amendment and restatement of the Company’s 2020 Equity Incentive Plan;
To approve an amendment and restatement of the Company’s 2018 Employee Stock Purchase Plan;
The ratification of the appointment of Ernst & Young LLP as the Company’s independent registered public accounting
firm for the fiscal year ending December 31, 2022; and
To transact such other business as may properly come before the Annual Meeting of Stockholders or any continuation,
adjournment or postponement thereof.
Only stockholders of record at the close of business on March 21, 2022 are entitled to receive notice of and to vote at the
Annual Meeting of Stockholders.
All stockholders are normally invited to attend the Annual Meeting of Stockholders in person. However, due to the COVID-19
pandemic, and our current COVID-19 policies, we strongly urge our stockholders not to attend the Annual Meeting in person this
year and to instead submit proxy votes. Our Annual Meeting this year will be purely functional in format to comply with the relevant
legal requirements. There will be no presentations or exhibitions. No refreshments will be provided, and any Board members or
officers attending the meeting will not meet with stockholders individually. Your vote is important. Whether or not you plan to
attend the Annual Meeting, we hope you will vote as soon as possible. You may vote over the Internet, as well as by telephone or by
mailing a proxy or voting instruction form. Please review the instructions on each of your voting options described in these proxy
materials. Stockholders attending the Annual Meeting may vote in person even if they have returned a proxy.
By Order of the Board of Directors,
Darin Lippoldt
Chief Legal Officer and Corporate Secretary
San Diego, California
April 7, 2022
Important Notice Regarding the Availability of Proxy Materials for the Stockholders’
Meeting to be Held on May 18, 2022 at 10:30 a.m. Local Time at
12780 El Camino Real, San Diego, California 92130.
The proxy statement and annual report to stockholders are available at
www.proxyvote.com. Please have the control number on your proxy card available.
This summary highlights information that is described in more detail elsewhere in this proxy statement. This summary does
not contain all the information you should consider before you vote, and you should read the entire proxy statement carefully
before voting.
PROXY SUMMARY
General Information
Annual Meeting of Stockholders
Meeting Date
May 18, 2022
Time
Place
10:30 a.m. Local Time
12780 El Camino Real, San Diego, California 92130
Record Date
March 21, 2022
How to Vote
Your vote is very important. Whether or not you plan to attend the Annual Meeting, we hope you will vote as soon as
possible. You may vote in the following ways:
Telephone: Call 1-800-690-6903 from any touch-tone telephone to transmit your voting instructions up until
11:59 P.M. Eastern Time the day before the meeting date. Have your proxy card in hand when you call and then
follow the instructions. Easy-to-follow voice prompts allow you to submit your proxy and confirm your instructions
have been properly recorded.
Internet: Visit www.proxyvote.com to transmit your voting instructions and for electronic delivery of information via
the Internet up until 11:59 P.M. Eastern Time the day before the meeting date. As with telephone voting, you can
confirm that your instructions have been properly recorded.
Mail: Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to
Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717.
Stockholders may also vote in person at the Annual Meeting; however, based on the evolving COVID-19 pandemic we
strongly urge our stockholders not to attend the Annual Meeting in person this year and to instead submit proxy votes using one of
the methods above.
Matters to be Voted on
Matter
Board of Directors
Recommendation
Page Reference for
More Information
Proposal One: Elect Class II Directors
FOR all nominees
Proposal Two: Advisory vote on executive
compensation
Proposal Three: Approve an amendment and
restatement of the Company’s 2020 Equity Incentive
Plan
Proposal Four: Approve an amendment and
restatement of the Company’s 2018 Employee Stock
Purchase Plan
Proposal Five: Ratify Ernst & Young LLP as
independent registered public accounting firm
1
FOR
FOR
FOR
FOR
18
20
21
34
40
12780 El Camino Real
San Diego, California 92130
PROXY STATEMENT
This Proxy is solicited on behalf of Neurocrine Biosciences, Inc., a Delaware corporation (the “Company” or “Neurocrine
Biosciences”), for use at its 2022 Annual Meeting of Stockholders (the “Annual Meeting”) to be held on May 18, 2022 beginning
at 10:30 a.m., local time, or at any continuations, postponements or adjournments thereof for the purposes set forth in this proxy
statement and the accompanying Notice of Annual Meeting of Stockholders. The Annual Meeting will be held at the Company’s
corporate headquarters, located at 12780 El Camino Real, San Diego, California 92130. The Company’s phone number is
(858) 617-7600.
Why did I receive these proxy materials?
ABOUT THE ANNUAL MEETING
The Company has sent you these proxy materials because the Board of Directors of the Company is soliciting your proxy to
vote at the Annual Meeting, including at any adjournments or postponements of the Annual Meeting.
We intend to mail these proxy materials on or about April 7, 2022 to all stockholders of record entitled to vote at the Annual
Meeting.
What is the purpose of the Annual Meeting?
At the Annual Meeting, stockholders will act upon the matters outlined in these proxy materials, including the election of the
three nominees for Class II Directors named herein, an advisory vote on the compensation paid to the Company’s named executive
officers, approval of an amendment and restatement of the Company’s 2020 Equity Incentive Plan, approval of an amendment and
restatement of the Company’s 2018 Employee Stock Purchase Plan; and ratification of the appointment of Ernst & Young LLP as
the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2022.
Who can attend the Annual Meeting?
All stockholders of record at the close of business on March 21, 2022 (the “Record Date”), or their duly appointed proxies,
may attend the Annual Meeting. If you attend, please note that you may be asked to present valid picture identification, such as a
driver’s license or passport. Cameras, recording devices and other electronic devices will not be permitted at the Annual Meeting.
Please also note that if you hold your shares in “street name” (that is, through a broker or other nominee), you will need to bring a
copy of a brokerage statement reflecting your stock ownership as of the record date and check in at the registration desk at the
Annual Meeting.
Who is entitled to vote at the Annual Meeting?
Stockholders of record at the close of business on the Record Date are entitled to receive notice of and to participate in the
Annual Meeting. At the close of business on the Record Date, 95,509,161 shares of the Company’s common stock, $0.001 par
value per share, were issued and outstanding. If you were a stockholder of record on that date, you will be entitled to vote all of
the shares that you held on that date at the Annual Meeting, or any continuations, postponements or adjournments of the Annual
Meeting.
Each outstanding share of the Company’s common stock will be entitled to one vote on each proposal considered at the
Annual Meeting.
2
What constitutes a quorum? What are broker non-votes? What are advisory votes?
The presence at the Annual Meeting, in person or by proxy, of the holders of a majority of the aggregate voting power of the
common stock outstanding on the Record Date will constitute a quorum, permitting the Company to conduct its business at the
Annual Meeting. As of the Record Date, 95,509,161 shares of common stock, representing the same number of votes, were
outstanding. Thus, the presence of the holders of common stock representing at least 47,754,581 shares will be required to establish
a quorum. The presence of a quorum will be determined by the Inspector of Elections (the “Inspector”).
Proxies received but marked as abstentions, as well as “broker non-votes,” will be included in the calculation of the number
of shares considered to be present at the Annual Meeting. Broker non-votes occur when a holder of shares in “street name” does
not give instructions to the broker or nominee holding the shares as to how to vote on “non-routine” matters. Under the rules and
interpretations of the New York Stock Exchange (the “NYSE”), “non-routine” matters are matters that may substantively affect the
rights or privileges of stockholders, such as mergers, stockholder proposals and elections of directors, even if not contested. In
addition, as required by Section 957 of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, advisory votes
on executive compensation are non-routine matters for which brokers do not have discretionary authority to vote shares held by
account holders. Only ratification of our independent registered public accounting firm under Proposal Three is considered a
routine matter.
The vote on Proposal Two is advisory. The approval or the disapproval of Proposal Two will not be binding on the Company
or the Board of Directors and will not create or imply any change to the fiduciary duties of the Board of Directors. However, the
Company and the Board of Directors will consider the results of the advisory vote on Proposal Two in making future decisions
about compensation of the Company’s named executive officers.
How do I vote my shares in person at the Annual Meeting?
You may vote your shares held in your name as the stockholder of record in person at the Annual Meeting. You may vote
your shares held beneficially in street name in person at the Annual Meeting only if you obtain a legal proxy from the broker, bank,
trustee, or nominee that holds your shares giving you the right to vote the shares. Even if you plan to attend the Annual Meeting,
we recommend that you also submit your proxy or voting instructions as described below so that your vote will be counted if you
later decide not to attend the Annual Meeting.
How can I vote my shares without attending the Annual Meeting?
Whether you hold shares directly as the stockholder of record or beneficially in street name, you are encouraged to direct
how your shares are voted without attending the Annual Meeting. If you are a stockholder of record, you are encouraged to vote by
proxy. You can vote by proxy over the Internet, by mail or by telephone pursuant to instructions provided on the enclosed proxy
card. If you hold shares beneficially in street name, you may also vote by proxy over the Internet or you can also vote by telephone
or mail by following the voting instruction form provided to you by your broker, bank, trustee, or nominee. The deadline for voting
by telephone or electronically is 11:59 p.m., Eastern Time, on May 17, 2022.
Who will bear the cost of soliciting votes for the Annual Meeting?
To the extent such costs are incurred, the cost of solicitation of proxies will be borne by the Company. The Company will
reimburse expenses incurred by brokerage firms and other persons representing beneficial owners of shares in forwarding
solicitation material to beneficial owners. To assist in soliciting proxies (votes), the Company has retained the professional proxy
solicitation firm Alliance Advisors, LLC, at an approximate cost of $20,000. Proxies also may be solicited by certain of the
Company’s directors, officers and regular employees, without additional compensation, personally, by telephone or by other
appropriate means.
Can I change my vote after I return my proxy?
Yes. Even after you have submitted your proxy, you may change your vote at any time before the proxy is exercised by filing
with the Corporate Secretary of the Company either a notice of revocation or a duly executed proxy bearing a later date. Your
proxy will also be revoked if you attend the Annual Meeting and vote in person; however, we are strongly discouraging in person
attendance at the Annual Meeting this year as described above.
3
What does it mean if I receive more than one set of proxy materials?
If you receive more than one set of proxy materials, your common stock is registered in more than one name or are registered
in different accounts. Please complete a proxy for each separate set of proxy materials that you receive to ensure that all of
your shares are voted.
What are the Board of Directors’ recommendations?
Unless you give other instructions on your proxy, the persons named as proxy holders on the proxy will vote in accordance
with the recommendations of the Board of Directors. The Board of Directors’ recommendation is set forth together with the
description of each item in this proxy statement. In summary, the Board of Directors unanimously recommends a vote:
Š
Š
Š
Š
Š
for election of the three nominees for Class II Directors named herein (see Proposal One);
for an advisory vote on the compensation paid to the Company’s named executive officers (see Proposal Two);
for approval of an amendment and restatement of the Company’s 2020 Equity Incentive Plan (see Proposal Three);
for approval of an amendment and restatement of the Company’s 2018 Employee Stock Purchase Plan (see Proposal
Four); and
for ratification of the appointment of Ernst & Young LLP as the Company’s independent registered public accounting
firm for the fiscal year ending December 31, 2022 (see Proposal Five).
With respect to any other matter that properly comes before the meeting, the proxy holders will vote as recommended by the
Board of Directors or, if no recommendation is given, in their own discretion.
What vote is required to approve each item?
Election of Directors. The affirmative vote of a plurality of the votes cast at the Annual Meeting is required for the election
of directors. A properly executed proxy marked “WITHHOLD AUTHORITY” with respect to the election of one or more directors
will not be voted with respect to the director or directors indicated, although it will be counted for purposes of determining whether
there is a quorum.
Other Items. For each other item, the affirmative vote of the holders of a majority of the shares represented in person or by
proxy and entitled to vote on the item will be required for approval. A properly executed proxy marked “ABSTAIN” with respect
to any such matter will not be voted, although it will be counted for purposes of determining the number of shares represented in
person or by proxy at the Annual Meeting. Accordingly, an abstention will have the effect of a negative vote for each item. If you
hold your shares in “street name” through a broker or other nominee, your broker or nominee will not be permitted to exercise
voting discretion with respect to each of the matters to be acted upon, other than Proposal Five. Thus, if you do not give your
broker or nominee specific instructions, your shares will not be voted on and will not be counted for any other matter to be acted
upon, other than Proposal Five. Shares represented by such “broker non-votes” will, however, be counted in determining whether
there is a quorum.
Who counts the votes?
Votes cast by proxy or in person at the Annual Meeting will be tabulated by the Inspector.
How can I find out the results of the voting at the Annual Meeting?
Preliminary voting results will be announced at the Annual Meeting. In addition, final voting results will be published in a
current report on Form 8-K that we expect to file with the SEC within four business days after the Annual Meeting. If final voting
results are not available to us in time to file a Form 8-K within four business days after the meeting, we intend to file a Form 8-K to
publish preliminary results and, within four business days after the final results are known to us, file an amended Form 8-K to
publish the final results.
What proxy materials are available on the internet?
The proxy statement and annual report to stockholders are available under the “Investors” tab on our corporate website at
www.neurocrine.com, and at www.proxyvote.com. However, you can only vote your shares at www.proxyvote.com. Please have
the control number on your proxy card available.
4
Who are the principal stockholders, and how much stock does management own?
STOCK OWNERSHIP
The following table sets forth the beneficial ownership of the Company’s common stock as of March 15, 2022 by (i) each of
the executive officers named in the table under the heading “Summary Compensation Table,” (ii) each current director, (iii) all
current directors and executive officers as a group and (iv) all persons known to the Company to be the beneficial owners of more
than 5% of the Company’s common stock. The table is based upon information supplied by our executive officers, directors and
principal stockholders and a review of Schedules 13D and 13G, if any, filed with the SEC. A total of 95,509,161 shares of the
Company’s common stock were issued and outstanding as of March 15, 2022.
Name and Address of Beneficial Owner (1)
Number of
Shares of
Common
Stock
Acquirable
Within
60 Days (3)
Total Number
of Shares of
Common
Stock
Beneficially
Owned (4)
Number of
Shares of
Common Stock
Owned (2)
Percent
Ownership
BlackRock, Inc. (5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
11,476,545
— 11,476,545
12.0%
55 East 52nd Street, New York, NY 10055
The Vanguard Group (6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
8,787,991
— 8,787,991
100 Vanguard Blvd., Malvern, PA 19355
Janus Henderson Group plc (7)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
7,445,839
— 7,445,839
201 Bishopsgate EC2M 3AE, United Kingdom
Kevin C. Gorman, Ph.D. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Matthew C. Abernethy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Eric Benevich. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Jude Onyia, Ph.D. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Eiry W. Roberts, M.D.
William H. Rastetter, Ph.D.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gary A. Lyons . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Johanna Mercier . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
George J. Morrow . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Leslie V. Norwalk . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Richard F. Pops . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Shalini Sharp . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Stephen A. Sherwin, M.D.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
All current executive officers and directors as a group (18 persons) . . . . .
462,844
20,204
20,515
—
24,860
24,750
208,697
—
—
—
29,512
—
25,055
1,005,502
969,296
166,699
309,834
404
169,407
168,115
136,615
13,824
106,615
27,448
136,615
19,347
121,615
3,297,323
1,432,140
186,903
330,349
404
194,267
192,865
345,312
13,824
106,615
27,448
166,127
19,347
146,670
4,302,825
9.2%
7.8%
1.5%
*
*
*
*
*
*
*
*
*
*
*
*
4.4%
*
(1)
(2)
(3)
(4)
(5)
(6)
(7)
Represents beneficial ownership of less than one percent (1%) of the outstanding shares of the Company’s common stock as of March 15, 2022.
The address of each beneficial owner named is c/o Neurocrine Biosciences, Inc., 12780 El Camino Real, San Diego, CA 92130, unless otherwise indicated.
Represents shares of common stock owned, excluding shares of common stock subject to stock options that are listed under the heading “Number of Shares
of Common Stock Acquirable Within 60 Days,” by the named parties as of March 15, 2022.
Shares of common stock subject to stock options currently exercisable or exercisable within 60 days of March 15, 2022, regardless of exercise price, are
deemed to be outstanding for computing the percentage ownership of the person holding such options and the percentage ownership of any group of which
the holder is a member, but are not deemed outstanding for computing the percentage of any other person.
Beneficial ownership is determined in accordance with the rules of the SEC and generally includes voting or investment power with respect to securities.
Except as indicated by footnote, and subject to community property laws where applicable, the Company believes that the persons named in the table have
sole voting and investment power with respect to all shares of common stock shown as beneficially owned by them.
Based on Amendment No. 10 to Schedule 13G filed by BlackRock, Inc. (“BlackRock”) on January 27, 2022, reporting ownership as of December 31,
2021. According to such filing, BlackRock beneficially owns 11,476,545 shares of common stock and sole voting power as to 10,973,740 shares of
common stock. Various persons have the right to receive or the power to direct the receipt of dividends from, or the proceeds from the sale of shares of the
common stock held by BlackRock. No one person’s interest in the common stock held by BlackRock is more than five percent of the Company’s total
outstanding common stock.
Based on Amendment No. 6 to Schedule 13G filed by The Vanguard Group, Inc. (“Vanguard Group”) on February 10, 2022, reporting ownership as of
December 31, 2021. According to such filing, Vanguard Group beneficially owns 8,787,991 shares of common stock and sole voting power as to 0 shares
of common stock. Various persons have the right to receive or the power to direct the receipt of dividends from, or the proceeds from the sale of shares of
the common stock held by Vanguard Group. No one other person’s interest in the common stock held by Vanguard Group is more than five percent of the
Company’s total outstanding common stock.
Based on Amendment No. 5 to Schedule 13G filed by Janus Henderson Group plc (“Janus”) on February 10, 2022, reporting ownership as of
December 31, 2021. According to such filing, Janus beneficially owns 7,445,839 shares of common stock and sole voting power as to 0 shares of common
stock. These securities are owned by various institutional investors for which Janus has a controlling ownership interest. As a result of its role as an
investment adviser or sub-adviser to such institutional investors, for the purposes of the reporting requirements of the Exchange Act, Janus is deemed to be
a beneficial owner of such securities; however, Janus expressly disclaims that it is, in fact, the beneficial owner of such securities.
5
General
BOARD OF DIRECTORS AND COMMITTEES
The Company’s bylaws, as amended, provide that the Board of Directors is comprised of nine directors. The Company’s
Certificate of Incorporation provides that the Board of Directors is divided into three classes. There are currently three directors in
Class I (William H. Rastetter, Ph.D., George J. Morrow, and Leslie V. Norwalk), three directors in Class II (Richard F. Pops,
Shalini Sharp, and Stephen A. Sherwin, M.D.), and three directors in Class III (Kevin C. Gorman, Ph.D., Gary A. Lyons, and
Johanna Mercier). With the exception of Kevin C. Gorman, Ph.D., who is the Chief Executive Officer of the Company, all current
members of the Board of Directors meet the definition of “independent director” under the Nasdaq Stock Market qualification
standards.
The directors in Class I hold office until the 2024 Annual Meeting of Stockholders, the directors in Class II hold office until
the 2022 Annual Meeting of Stockholders, and the directors in Class III hold office until the 2023 Annual Meeting of Stockholders
(or, in each case, until their earlier resignation, removal from office, or death). After each such election, the directors in each such
case will then serve in succeeding terms of three years and until a successor is duly elected and qualified. Officers of the Company
serve at the discretion of the Board of Directors. There are no family relationships among the Company’s directors and executive
officers.
The term of office for directors Richard F. Pops, Shalini Sharp, and Stephen A. Sherwin, M.D. will expire at the 2022 Annual
Meeting of Stockholders.
Director Biographies of Class II Directors Nominated for Reelection at the 2022 Annual Meeting of Stockholders
Richard F. Pops has served on the Board of Directors since April 1998. Mr. Pops is the Chairman and Chief Executive
Officer of Alkermes, Inc. He joined Alkermes as Chief Executive Officer in February 1991. Under his leadership, Alkermes has
grown from a privately held research-based company with 25 employees to an international, publicly traded pharmaceutical
company with more than 1,200 employees. In addition to Alkermes, he currently serves on the Board of Directors of the
Biotechnology Innovation Organization (BIO) and the Pharmaceutical Research and Manufacturers of America (PhRMA).
Previously, Mr. Pops served on the Board of Directors of Epizyme, Inc., a biotechnology company focused on epigenetics. He
holds a B.A. in Economics from Stanford University.
The continued service of Mr. Pops to the Company’s Board of Directors is based on his leadership experience and track
record for growing companies, his strength in business strategy and his financial acumen and capital markets experience. In
addition, Mr. Pops is recognized for his service to the biopharmaceutical industry as a member of the Boards of the Biotechnology
Industry Organization and the Pharmaceutical Research and Manufacturers of America. His breadth and range of industry
experience from operations and strategy is a significant contribution to the Board of Directors.
Shalini Sharp has served on the Board of Directors since February 2020. She also serves on the Board of Directors of Mirati
Therapeutics, Sutro Biopharma, Precision Biosciences, Organon & Co., and TB Alliance. Previously, Ms. Sharp served on the
Board of Directors of Array Biopharma, prior to its acquisition by Pfizer, as well as on the Board of Directors of Panacea
Acquisition Corp., prior to its merger with Nuvation Bio. Ms. Sharp has held the positions of Chief Financial Officer and Executive
Vice President at Ultragenyx, a biopharmaceutical company committed to bringing to patients novel products for the treatment of
serious rare and ultra-rare genetic diseases, and Chief Financial Officer at Agenus Inc., a clinical-stage immuno-oncology company
focused on the discovery and development of therapies that engage the body’s immune system to fight cancer. She served on the
Board of Directors of Agenus for several years after her departure. Ms. Sharp previously served in strategic planning and as chief
of staff to the Chairman of the Board of Directors at Elan Pharmaceuticals during the company’s restructuring. Ms. Sharp has also
served as a management consultant at McKinsey & Company and an investment banker at Goldman Sachs, specializing in
healthcare at both companies. She holds a B.A., magna cum laude, and an M.B.A. from Harvard University.
The continued service of Ms. Sharp to the Company’s Board of Directors is based on her extensive experience as a chief
financial officer of a public company, her financial acumen, and her management and leadership skills. Ms. Sharp will not seek
re-election to the Board of Directors of Precision Biosciences and her board service will cease at the end of its term at Precision
Biosciences’ 2022 annual meeting of stockholders.
Stephen A. Sherwin, M.D. has served on the Board of Directors since April 1999. Dr. Sherwin currently divides his time
between advisory work in the life science industry and patient care and teaching in his specialty of medical oncology. He is a
6
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 currently serves on the Board of Directors of Biogen and
the BioPlus Special Purpose Acquisition Corporation. He is a Venture Partner with Third Rock Ventures and a member of the
Scientific Steering Committee of the Parker Institute for Cancer Immunotherapy. Previously Dr. Sherwin was Chairman and Chief
Executive Officer of Cell Genesys, a cancer immunotherapy company, from 1990 until the company’s merger in 2009 with
BioSante Pharmaceuticals (now ANI Pharmaceuticals). He was also a Co-founder and Chairman of Abgenix, an antibody company
which was acquired by Amgen in 2006, and co-founder and chairman of Ceregene, a gene therapy company which was acquired by
Sangamo Biosciences in 2013. From 1983 to 1990, Dr. Sherwin held various positions in clinical research at Genentech, most
recently that of Vice President. Prior to 1983, he was on the staff of the National Cancer Institute. In addition, Dr. Sherwin
previously served on the board of directors of Aduro Biotech, Neon Therapeutics, as well as the Biotechnology Industry
Organization from 2001 to 2014 and as its chairman from 2009 to 2011, and was a member of the President’s Council of Advisors
in Science and Technology (PCAST) Working Group on Drug Development from 2011 to 2013. Dr. Sherwin holds a B.A. in
biology summa cum laude from Yale University and an M.D. from Harvard Medical School, is board-certified in internal medicine
and medical oncology, and is a Fellow of the American College of Physicians.
The continued service of Dr. Sherwin for election to the Company’s Board of Directors is based on his experience and
credentials in the biotechnology industry as the former Chief Executive Officer of Cell Genesys, Inc., the former chairman and
co-founder of Abgenix, Inc., the chairman and co-founder of Ceregene, Inc., and his positions at Genentech, Inc. and the National
Cancer Institute. Dr. Sherwin is also currently Chairman Emeritus of the Biotechnology Industry Organization. In addition to his
biotechnology credentials, Dr. Sherwin’s medical expertise in internal medicine and medical oncology provides a unique
contribution to the Board of Directors.
Director Biographies of Class I and Class III Directors not Nominated for Reelection at the 2022 Annual Meeting of
Stockholders
William H. Rastetter, Ph.D. has served on the Board of Directors since February 2010 and as Chairman of the Board of
Directors since May 2011. Currently, he serves as the Chairman of the Board of Directors for Fate Therapeutics, a publicly traded
company focused on cellular therapies, as well as for Daré Bioscience, Inc. (previously known as Cerulean Pharma Inc.), a publicly
traded company focused on women’s healthcare. Dr. Rastetter also serves on the Board of Directors for Regulus Therapeutics Inc.,
a publicly traded company focused on RNA-based therapeutics. Dr. Rastetter previously served on the board of Grail, Inc., a
private company developing deep sequencing approaches for disease diagnosis, with an initial focus on the early diagnosis of
cancer. Dr. Rastetter serves as an advisor to Illumina Ventures, and is the Chairman of San Diego Squared, a nonprofit focused on
STEM awareness and education for students in underserved communities. Dr. Rastetter was a partner in the venture capital firm,
Venrock, from 2006 through early 2013 and was Executive Chairman of Biogen Idec, Inc. from 2003 to 2005. Earlier, he served as
Chairman and Chief Executive Officer of IDEC Pharmaceuticals Corporation until its merger with Biogen in 2003; he joined IDEC
Corporation as its Chief Executive Officer at the company’s founding in 1986. From 1984 to 1986, Dr. Rastetter was Director of
Corporate Ventures at Genentech, where from 1982 to 1984 he held scientific positions. He held a series of faculty positions
including Associate Professor at the Massachusetts Institute of Technology (“MIT”) from 1975 to 1982. Dr. Rastetter has an S.B.
degree in Chemistry from MIT and received M.A. and doctorate degrees in Chemistry from Harvard University.
The continued service of Dr. Rastetter on the Company’s Board of Directors is based on Dr. Rastetter’s scientific and
technical expertise combined with his business experience in leading rapidly growing companies in the life science industry. The
Company’s continued growth is dependent on scientific and technical advances, and the Board of Directors believes that
Dr. Rastetter offers both strategic and technical insight into the risks and opportunities associated with our business. In addition,
Dr. Rastetter’s board and executive leadership experience at other life science companies provides valuable strategic and
governance insight to the Board of Directors as a whole.
George J. Morrow has served on the Board of Directors since October 2015. Mr. Morrow served as Executive Vice
President, Global Commercial Operations at Amgen Inc., a global biotechnology company, from 2003 until his retirement in 2011.
He joined Amgen in 2001 as Executive Vice President, Worldwide Sales and Marketing. His responsibilities included oversight of
all commercial functions for Amgen’s broad spectrum of products in more than 50 countries worldwide, and the introduction of
multiple new products into global markets. From 1992 to 2001, Mr. Morrow held executive management and commercial positions
within several subsidiaries of Glaxo Wellcome, including Group Vice President for Commercial Operations (U.S.), Managing
Director (U.K.), and most recently as President and Chief Executive Officer of Glaxo Wellcome, Inc. (U.S.). Mr. Morrow currently
serves on the Board of Directors of Align Technology, Inc., a global medical device company. He has previously served on the
boards of Vical, Inc., Otonomy, Inc., Glaxo Wellcome, Inc., Human Genome Sciences, Inc., Safeway, Inc., National Commerce
Bank, the John Hopkins School of Public Health, and the Duke University Fuqua School of Business. Mr. Morrow holds a B.S. in
7
Chemistry from Southampton College, Long Island University, an M.S. in Biochemistry from Bryn Mawr College and an M.B.A.
from Duke University.
The continued service of Mr. Morrow on the Company’s Board of Directors is based on his extensive commercialization
experience at Amgen, his broad executive experience at GlaxoSmithKline Inc., and his years of experience in corporate governance
as a board member of several publicly traded companies. Mr. Morrow’s board experience, leadership experience and
commercialization expertise prove valuable strategic insights to the Board of Directors.
Leslie V. Norwalk has served on the Board of Directors since September 2019. Since 2007, Ms. Norwalk has served as
Strategic Counsel to healthcare companies at Epstein Becker Green, EBG Advisors and National Health Advisors. Ms. Norwalk
advises several private equity firms on healthcare matters. She serves as a director of Centene, Inc., NuVasive, Inc., Modivcare
(formerly Providence Service Corporation), and Arvinas, Inc., all publicly traded companies, as well as several privately held
healthcare companies. Ms. Norwalk previously served on the Board of Directors of Endologix, Magellan Health, and Press Ganey.
Ms. Norwalk began her career in the public sector as The White House Special Assistant to the Office of Presidential Personnel
under the first Bush administration, following which, she practiced law at the Washington, D.C. office of Epstein Becker Green,
P.C. From 2001 to 2007 she served in several roles at the Centers for Medicare & Medicaid Services (CMS) under the George W.
Bush administration, including serving as Deputy Administrator, and Counselor and Policy Advisor, before assuming the role of
Acting Administrator. Ms. Norwalk holds a J.D. from the George Mason University School of Law and a B.A. in Economics and
International Relations from Wellesley College.
Ms. Norwalk appreciates the concern held by some stockholders that she may be overboarded. Her intention is to address that
concern by reducing the number of boards on which she serves during this proxy season. Despite the overboarding concern, the
Company believes Ms. Norwalk is able to devote sufficient time and attention to her duties and to fulfill her responsibilities. In
particular, other than occasional consulting work, Ms. Norwalk devotes all of her professional time to corporate board activities.
The continued service of Ms. Norwalk to the Company’s Board of Directors is based on her deep knowledge of, and experience
with, the healthcare industry and government regulations, as well as corporate governance and risk management. Such knowledge
and experience provides valuable guidance and insight to the Board of Directors.
Kevin C. Gorman, Ph.D. has been employed with the Company since 1993. He was appointed President and Chief Executive
Officer in January 2008 after having served as Executive Vice President and Chief Operating Officer since September 2006 and
prior to that, as Executive Vice President and Chief Business Officer and Senior Vice President of Business Development. He
currently serves as Chief Executive Officer and has served on the Board of Directors since January 2008. Dr. Gorman also serves
as a director of Xencor, Inc. a clinical stage biopharmaceutical company. From 1990 until 1993, Dr. Gorman was a principal of
Avalon Medical Partners, L.P. where he was responsible for the early stage founding of the Company and several other
biotechnology companies such as Onyx Pharmaceuticals, Inc., Metra Biosystems, Inc., Idun Pharmaceuticals, Inc. and ARIAD
Pharmaceuticals, Inc. Dr. Gorman received his Ph.D. in immunology and M.B.A. in Finance from the University of California,
Los Angeles and did further post-doctoral training at The Rockefeller University.
The continued service of Dr. Gorman on the Company’s Board of Directors is based on the fact that as Chief Executive
Officer of the Company, Dr. Gorman has extensive knowledge of our commercial products and our product candidates, our
employees and the industry in which we operate. Dr. Gorman has also demonstrated exceptional leadership skills, sound business
judgment and a strong commitment to the Company.
Gary A. Lyons has served on the Board of Directors since joining Neurocrine Biosciences in February 1993. Mr. Lyons
served as the President and Chief Executive Officer of the Company from February 1993 through January 2008. Prior to joining
the Company, Mr. Lyons held a number of senior management positions at Genentech, Inc., including Vice President of Business
Development and Vice President of Sales. Mr. Lyons is currently the Chairman of the Board of Directors of Rigel Pharmaceuticals,
Inc., a biotechnology company focused on developing drugs for the treatment of inflammatory/autoimmune and metabolic
diseases, and Travere Therapeutics, an ultra-orphan disease commercial-stage company. Mr. Lyons is a member of the Board of
Directors of Brickell Biotech, Inc., a biotechnology company focused on debilitating skin diseases, and Eledon Pharmaceuticals,
Inc. (formerly Novus Therapeutics), a biotechnology company focused on immunology therapeutics. Mr. Lyons was previously a
director of Facet Biotech Corporation. Mr. Lyons holds a B.S. in Marine Biology from the University of New Hampshire and an
M.B.A. from Northwestern University’s J.L. Kellogg Graduate School of Management.
The continued service of Mr. Lyons on the Company’s Board of Directors is based on Mr. Lyons’ extensive business
development and corporate governance experience and, as the Company’s former Chief Executive Officer, his in-depth
8
understanding of the Company’s product candidates, management and culture. With this history with the Company and
management, Mr. Lyons brings a unique perspective and point of view to the Company’s Board of Directors.
Johanna Mercier has served on the Board of Directors since April 2021. Ms. Mercier is the Chief Commercial Officer of
Gilead Sciences, with responsibility for the global commercialization of Gilead’s medicines across virology, liver and oncology
franchises. Ms. Mercier is actively engaged with the policy and advocacy community to ensure affordability and access to the
company’s medicines in both the developed and resource-limited countries. She is a staunch advocate for diversity and inclusion
and is the executive sponsor for the Women@Gilead employee resource group. Ms. Mercier joined Gilead in 2019 after 25 years at
Bristol Myers Squibb, where she served in a number of executive leadership positions, gaining broad experience across
geographies and in all aspects of the commercial business. Ms. Mercier holds a B.S. in Biology from the University of Montreal
and an M.B.A. from Concordia University. She is a member of the board of the University of Southern California’s Leonard D.
Schaeffer Center for Health Policy and Economics. Ms. Mercier is also a member of World 50.
The continued service of Ms. Mercier on the Company’s Board of Directors is based on Ms. Mercier’s extensive
commercialization experience at both Gilead Sciences and Bristol Myers Squibb, as well as her executive leadership experience
across geographies and in all aspects of the commercial business.
9
General
CORPORATE GOVERNANCE
We have long believed that good corporate governance is important to ensure that Neurocrine Biosciences is managed for the
long-term benefit of its stockholders. We periodically review our corporate governance policies and practices. The Board of
Directors has adopted Corporate Governance Guidelines which describe our corporate governance practices and address
corporate governance issues such as Board composition, responsibilities and director qualifications. These guidelines are
available at www.neurocrine.com.
Corporate Governance Best Practices
We are committed to maintaining strong corporate governance practices that promote the long-term interests of the Company
and our stockholders and help strengthen the oversight functions of our management and Board of Directors. Additional
information about our corporate governance policies and practices, including our committee charters, Corporate Governance
Guidelines, Code of Business Conduct and Ethics, Comprehensive Compliance Program, 2022 Corporate Sustainability Report,
and Policy for Recoupment of Incentive Compensation, can be found on our website, www.neurocrine.com. Additionally, for more
information on our commitment to corporate social responsibility and stewardship, including environmental sustainability,
diversity and inclusion and other key initiatives, please see our ESG Report, which is posted on our website referenced above under
the “Corporate Sustainability” section of the website. We believe these efforts reflect the best interests of our patients, our
stockholders and the communities in which we operate and serve. The information posted on or accessible through our website is
not incorporated into this proxy statement.
We believe that our strong corporate governance practices empower our independent directors to exercise effective oversight
of our business generally and our management team specifically, including the performance of our Chief Executive Officer.
The following table highlights some of our key corporate governance practices:
Corporate Governance Best Practices
Director resignation policy for directors receiving
less than majority support
Stockholder ability to call special meetings
Director overboarding policy
Stockholder action by written consent
Diverse Board and policies emphasizing diversity in
all new director searches
No poison pill in force
Separate Chairman and CEO
Clawback policy
All directors attended at least 75% of Board and
relevant committee meetings
New director orientation and continuing director
education
Code of Business Conduct and Ethics
Executive sessions of independent directors held at
every regular Board meeting
Annual board and committee assessment
Active stockholder engagement
What is the Board’s leadership structure?
It is the Company’s policy to separate the roles of Chief Executive Officer and Chairman of the Board. This separation
recognizes the independent roles of the Board of Directors, Chairman of the Board and Chief Executive Officer. The Board of
Directors sets Company strategy and provides oversight and accountability for the Chief Executive Officer and Company
management. The Chairman of the Board presides over the Board of Directors and provides guidance to the Chief Executive
Officer. The Chief Executive Officer and the balance of the Board of Directors set Company goals with the Chief Executive
Officer providing leadership and day to day oversight in furtherance of those goals. The Company believes that separation of the
Board of Directors and Company leadership reinforces the independence of the Board of Directors in its oversight of the business
and affairs of the Company, and creates an environment that is more conducive to objective evaluation and oversight of
management’s performance, increasing management accountability and improving the ability of the Board of Directors to monitor
whether management’s actions are in the best interests of the Company and its stockholders.
10
Are the members of the Board independent?
The Board of Directors annually reviews the independence of each of the directors. With the exception of Kevin C.
Gorman, Ph.D., who is the Chief Executive Officer of Neurocrine Biosciences, all current members of the Board of Directors meet
the definition of “independent director” under the Nasdaq Stock Market qualification standards.
How often did the Board meet during fiscal 2021?
The Board of Directors held a total of thirteen meetings during 2021. For 2021, the Board of Directors had an Audit
Committee, a Compensation Committee, and a Nominating/Corporate Governance Committee. Charters for each of these
committees have been established and approved by the Board of Directors and current copies of the charters for each of the
committees have been posted on the Company’s website at www.neurocrine.com. During 2021, no director attended fewer than
75% of the aggregate of the total meetings of the Board of Directors and no director attended fewer than 75% of the total number
of meetings held by any committee of the Board of Directors on which such director served.
What are the various committees of the Board and which directors are on those committees?
Committee Composition
AUDIT
COMMITTEE
COMPENSATION
COMMITTEE
NOMINATING/CORPORATE
GOVERNANCE COMMITTEE
William H. Rastetter, Ph.D. (Board Chair)
Kevin C. Gorman, Ph.D.
Gary A. Lyons
Johanna Mercier
George J. Morrow
Leslie V. Norwalk
Richard F. Pops
Shalini Sharp
Stephen A. Sherwin, M.D.
= Chair
= Member
The Company’s Audit Committee is comprised entirely of directors who meet the independence requirements set forth in
Nasdaq Stock Market Rule 5605(c)(2)(A). Information regarding the functions performed by the committee, its membership, and
the number of meetings held during the fiscal year is set forth in the “Report of the Audit Committee,” included in this proxy
statement. The members of the Audit Committee for 2021 were Richard F. Pops, Shalini Sharp, and Stephen A. Sherwin, M.D.,
with Ms. Sharp serving as the Audit Committee Chair. The Board of Directors has determined that Mr. Pops, Ms. Sharp, and
Dr. Sherwin are “audit committee financial experts” within the meaning of item 407(d)(5) of SEC Regulation S-K. This committee
met six times during 2021.
The Company’s Compensation Committee consists of directors George J. Morrow, Richard F. Pops, and Shalini Sharp, with
Mr. Pops serving as the Compensation Committee Chair. The Compensation Committee reviews and recommends to the Board of
Directors the compensation of executive officers and other employees of the Company. Under its charter, the Compensation
Committee may form, and delegate authority to, subcommittees as appropriate. Each of the current members of the Compensation
Committee is an “independent director” as defined by Nasdaq Stock Market Rule 5605(a)(2). This committee met nine times
during 2021. Please also refer to “Role of the Compensation Committee” section under the section titled “Compensation
Discussion and Analysis” for additional information regarding the role of the Compensation Committee.
The Company’s Nominating/Corporate Governance Committee consists of directors Stephen A. Sherwin, M.D., Johanna
Mercier, George J. Morrow, and Leslie V. Norwalk, with Ms. Norwalk serving as the Nominating/Corporate Governance
Committee Chair. Dr. Sherwin, Ms. Mercier, Mr. Morrow, and Ms. Norwalk are all “independent directors” as defined by Nasdaq
Stock Market Rule 5605(a)(2). The Nominating/Corporate Governance Committee is responsible for recommending nominees for
11
election to the Board of Directors, developing and implementing policies and practices relating to corporate governance, and
providing oversight with respect to the following matters: ESG matters, supply chain risk, quality systems and drug safety. The
Nominating/Corporate Governance Committee also administers the Company’s Code of Business Conduct and Ethics (the
“Code”), which applies to all of the Company’s officers, directors and employees, and is available on the Company’s website
at www.neurocrine.com. If we make any substantive amendments to the Code or grant any waiver from a provision of the Code to
any executive officer or director, we will promptly disclose the nature of the amendment or waiver on our website or in a current
report on Form 8-K. The functions of this committee also include consideration of the composition of the Board of Directors and
recommendation of individuals for election as directors of the Company. The Nominating/Corporate Governance Committee will
consider nominees recommended by stockholders, provided such nominations are made pursuant to the Company’s bylaws and
applicable law. This committee met five times during 2021.
Although Mr. Rastetter is not a member of any Board Committee, as Board Chair he generally attends each Board committee
meeting.
Compensation Committee interlocks and insider participation
During 2021, the Compensation Committee consisted of George J. Morrow, Richard F. Pops, and Shalini Sharp. No
interlocking relationship existed between any member of the Compensation Committee and any member of any other company’s
Board of Directors or compensation committee.
What is our director nomination process?
In selecting non-incumbent candidates and reviewing the qualifications of incumbent candidates for the Board of Directors,
the Nominating/Corporate Governance Committee considers the Company’s corporate governance principles, which include the
following:
(cid:129)
(cid:129)
(cid:129)
(cid:129)
Directors should possess the highest ethics, integrity and values, and be committed to representing the long-term
interest of the stockholders. They also must have experience they can draw upon to help direct the business strategies
of the Company together with sound judgment. They must be actively engaged in the pursuit of information relevant to
the Company’s business and must constructively engage their fellow Board members and management in dialogue and
the decision-making process.
Directors must be willing to devote sufficient time to carrying out their duties and responsibilities effectively, and
should be committed to serve on the Board of Directors for an extended period of time.
Directors should notify the Chairman of the Board and Chairman of the Nominating/Corporate Governance Committee
in the event of any significant change in their employment responsibilities or affiliations. Director nominees should
meet the Director Qualification requirements set forth in the Company’s Corporate Governance Guidelines.
In evaluating director nominees, the Nominating/Corporate Governance Committee considers the following factors:
personal and professional integrity, ethics and values including any potential conflicts of interest; experience in
corporate management and the biopharmaceutical industry, such as serving as an officer or former officer of a publicly
held company; gender and ethnic diversity; experience as a board member of another publicly held company; and
additionally, for nominees seeking re-election, meeting attendance, gender and ethnic diversity, and participation and
compliance with Company policies.
It is the Company’s policy to have a diversity of skills, professional experience, education, associations, achievements,
training, points of view and individual qualities and attributes represented on the Board of Directors. The Nominating/Corporate
Governance Committee considers the diversity of the Board of Directors, including self-identified diversity characteristics, when
assessing board composition and evaluating candidates for election or re-election to the Board of Directors.
The Nominating/Corporate Governance Committee’s goal is to assemble a Board of Directors that brings to the Company a
variety of perspectives and skills derived from high quality business and professional experience.
12
The Board Diversity Matrix, below, provides the diversity statistics for our Board of Directors.
Board Diversity Matrix (as of March 15, 2022)
Total Number of Directors
Part I: Gender Identity
Directors
Part II: Demographic Background
Asian
White
Female Male
9
3
1
2
6
0
6
In addition to the foregoing, the Nominating/Corporate Governance Committee Charter and Corporate Governance
Guidelines set forth minimum criteria for director nominees. The Nominating/Corporate Governance Committee may also consider
such other facts as it may deem are in the best interests of the Company and its stockholders. The Nominating/Corporate
Governance Committee does believe that several members of the Board of Directors meet the criteria for an “audit committee
financial expert” as defined by SEC rules. We believe that all of our directors should have a reputation for honesty, integrity and
highest ethical standards, and should demonstrate business acumen, an ability to exercise sound judgment and a commitment to
serve the Company.
Board Self-Assessment
The Nominating/Corporate Governance Committee ensures that each member of the Board, the Committees, and the Chair of
the Board are assessed annually aimed at enhancing effectiveness. Directors complete a number of different evaluations in order to
provide performance feedback and suggestions for improved effectiveness or contributions. The assessments are done by way of a
questionnaire conducted by our external corporate counsel, Cooley LLP. The assessments are treated on a confidential basis, with
the results tallied on an anonymous basis for review. The results of the evaluation are analyzed by Cooley LLP, our Chief Legal
Officer, the Nominating/Corporate Governance Committee, and the Board, who decide whether any changes are needed to the
Board’s processes, procedures, composition or Committee structure. The evaluation carried out in 2021 indicated that all
individuals and groups were effectively fulfilling their responsibilities.
Board Education
The Board recognizes the importance of ongoing director education. In order to facilitate the Board’s educational
development, the Board regularly meets with management and are given periodic presentations on our business and recent business
developments. When the Board meets in person, Members of the Board also attend dinners on the evening before regularly
scheduled Board meetings. Generally, at these dinners the Board meets with senior decision-makers within the Company or outside
experts in order to enhance the Board’s understanding of our business and affairs. In addition, on an annual basis an external expert
meets with the Nominating/Corporate Governance Committee to discuss best practices and new developments relating to corporate
governance and the operation of public company boards. The Company also provides funding for members of the Board of
Directors to attend outside director continuing education programs sponsored by educational and other institutions.
Identification and Evaluation of Nominees for Director
The Nominating/Corporate Governance Committee identifies nominees for director by first evaluating the current members
of the Board of Directors willing to continue in service. Current members with qualifications and skills that are consistent with the
Nominating/Corporate Governance Committee’s criteria for service and who are willing to continue are considered for
re-nomination, balancing the value of continuity of service by existing members of the Board of Directors with that of obtaining
members who would offer a new perspective. If any member of the Board of Directors does not wish to continue in service, or if
the Board of Directors decides not to re-nominate a member for re-election, the Nominating/Corporate Governance Committee
identifies the desired skills and experience of a new nominee in light of the criteria above. The Nominating/Corporate Governance
Committee generally polls the Board of Directors and members of management for their recommendations and may also seek input
from third-party search firms. The Nominating/Corporate Governance Committee may also seek input from industry experts or
analysts. The Nominating/Corporate Governance Committee reviews the qualifications, experience and background of the
candidates. Final candidates are then interviewed by the Company’s independent directors and executive management. In making
its determinations, the Nominating/Corporate Governance Committee evaluates each individual in the context of the Company’s
13
Board of Directors as a whole, with the objective of assembling a group that can best perpetuate the success of the Company and
represent stockholder interests through the exercise of sound judgment. After review and deliberation of all feedback and data, the
Nominating/Corporate Governance Committee makes its recommendation to the Board of Directors.
We have not received director candidate recommendations from the Company’s stockholders and do not have a formal policy
regarding consideration of such recommendations. However, any recommendations received from stockholders will be evaluated
in the same manner that potential nominees suggested by members of our Board of Directors, management or other parties are
evaluated. Accordingly, our Board of Directors believes a formal policy regarding consideration of such recommendations is
unnecessary.
What is our process for stockholder communications with the Board of Directors?
Stockholders of the Company wishing to communicate with the Company’s Board of Directors or an individual director may
send a written communication to the Board of Directors or such director c/o Neurocrine Biosciences, Inc., 12780 El Camino Real,
San Diego, CA 92130, Attn: Corporate Secretary. Each communication must set forth:
(cid:129)
(cid:129)
the name and address of the Company stockholder on whose behalf the communication is sent; and
the number of Company shares that are beneficially owned by such stockholder as of the date of the communication.
Each stockholder communication will be reviewed by the Company’s Corporate Secretary to determine whether it is
appropriate for presentation to the Board or such director. Examples of inappropriate communications include advertisements,
solicitations or hostile communications.
Communications determined by the Corporate Secretary to be appropriate for presentation to the Board or such director will
be submitted to the Board or such director on a periodic basis.
What is the Board’s role in risk oversight?
While the Board of Directors has ultimate oversight responsibility for the risk management process, it has delegated portions
of this responsibility to various committees. The Board of Directors and its committees oversee risk throughout the business with
focus on financial risk, legal/compliance risk, scientific/clinical development risk, and strategic risk. The Audit Committee focuses
on major financial risk exposures and the steps our management has taken to monitor and control these exposures. The Audit
Committee also has oversight of risk related to data privacy, technology and information and cyber security, including (i) the
potential impact of those exposures on the Company’s business, financial results, operations and reputation, (ii) the steps
management has taken to monitor and mitigate such exposures, (iii) the Company’s information governance policies and programs
and (iv) major legislative and regulatory developments that could materially impact the Company’s privacy and data security risk
exposure. The Nominating/Corporate Governance Committee and Audit Committee each focus on legal/compliance risk with the
Nominating/Corporate Governance Committee taking the lead on the governance and management process and compliance
oversight with respect to the following matters: ESG, supply chain risk, quality systems and drug safety. The Audit Committee
takes the lead on SEC reporting and compliance. The Compensation Committee addresses compensation policies and practices as
they relate to risk management practices and risk-taking incentives. The participation of the full Board of Directors in setting the
Company’s business strategy incorporates assessment of scientific and strategic risks for the Company overall.
How do the Company’s compensation policies and practices relate to risk management practices and risk-taking incentives?
During 2021, the Compensation Committee conducted an assessment of how the Company’s compensation policies and
practices relate to risk management practices and risk-taking incentives. As part of the process, the Compensation Committee
engaged the services of an external, independent compensation consulting firm to conduct an independent risk assessment. Based
on this assessment, the Compensation Committee concluded that the Company’s compensation policies and practices are consistent
with industry practices for similar biopharmaceutical companies and do not create risks that are reasonably likely to have a
material adverse effect on the Company.
What is our policy regarding Board member attendance at the Company’s Annual Meeting?
The Company does not have a formal policy regarding attendance by members of the Board of Directors at the Annual
Meeting. Directors Dr. Gorman and Mr. Rastetter attended the 2021 Annual Meeting of Stockholders.
14
REPORT OF THE AUDIT COMMITTEE
The following Report of the Audit Committee does not constitute soliciting material and should not be deemed filed or
incorporated by reference into any other Company filing under the Securities Act of 1933, as amended, or the Securities Exchange
Act of 1934, as amended, except to the extent the Company specifically incorporates this Report by reference therein.
The Audit Committee oversees the Company’s financial reporting process on behalf of the Board of Directors. Management
has the primary responsibility for the Company’s financial statements and the reporting process, including the Company’s systems
of internal controls. In fulfilling its oversight responsibilities, the Audit Committee has reviewed and discussed with management
the Company’s audited financial statements as of and for the year ended December 31, 2021, including a discussion of the quality,
not just the acceptability, of the accounting principles, the reasonableness of significant judgments and the clarity of disclosures in
the financial statements.
The Audit Committee also has reviewed and discussed the Company’s audited financial statements as of and for the year
ended December 31, 2021 with the Company’s independent registered public accounting firm, who are responsible for expressing
an opinion on the conformity of those audited financial statements with accounting principles generally accepted in the United
States, as well as their judgments as to the quality, not just the acceptability, of the Company’s accounting principles and such
other matters as are required to be discussed with the Audit Committee under the applicable requirements of the Public Company
Accounting Oversight Board (United States) (the “PCAOB”) and the Securities and Exchange Commission. The independent
registered public accounting firm also is responsible for performing an independent audit of the Company’s internal control over
financial reporting in accordance with the auditing standards of the PCAOB. In addition, the Audit Committee has discussed the
independent registered public accounting firm’s independence from management and the Company, including the matters in the
written disclosures and the letter from the independent registered public accounting firm required by applicable requirements of the
PCAOB and considered the compatibility of non-audit services with the auditors’ independence.
The Audit Committee discussed with the Company’s independent registered public accounting firm the overall scope and
plans for their audits. The Audit Committee meets with the independent registered public accounting firm, with and without
management present, to discuss the results of their examinations, their evaluations of the Company’s internal controls, and the
overall quality of the Company’s financial reporting.
In reliance on the reviews and discussions referred to above, the Audit Committee recommended to the Board of Directors
that the audited financial statements be included in the Company’s Annual Report on Form 10-K for the year ended December 31,
2021, for filing with the Securities and Exchange Commission. The Audit Committee and the Board of Directors are also seeking
stockholder ratification of the selection of the Company’s independent registered public accounting firm for the year ending
December 31, 2022.
Respectfully submitted by:
AUDIT COMMITTEE
Shalini Sharp
Stephen A. Sherwin, M.D.
Richard F. Pops
15
Principal accounting fees and services
The aggregate fees billed to the Company by Ernst & Young LLP, the Company’s independent registered public accounting
firm, for the indicated services for each of the last two fiscal years were as follows:
Audit fees (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Audit related fees (2) . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Tax fees (3)
$
1,027,217
—
432,769
$
1,073,760
—
500,176
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
1,459,986
$
1,573,936
2021
2020
(1)
(2)
(3)
Audit fees consist of fees for professional services performed by Ernst & Young LLP for the integrated audit of the Company’s annual financial statements
and internal control over financial reporting and review of financial statements included in the Company’s 10-Q filings and services that are normally
provided in connection with statutory and regulatory filings or engagements.
Audit related fees consist of fees for assurance and related services performed by Ernst & Young LLP that are reasonably related to the performance of the
audit or review of the Company’s financial statements.
Tax fees consist of fees for professional services performed by Ernst & Young LLP with respect to tax compliance, tax advice and tax planning. Total
includes approximately $100,000 for tax compliance in both 2021 and 2020.
The Audit Committee has considered whether the provision of non-audit services is compatible with maintaining the
independence of Ernst & Young LLP and has concluded that the provision of such services is compatible with maintaining the
independence of that firm. All of the services rendered by Ernst & Young LLP were pre-approved by the Audit Committee in
accordance with the Audit Committee pre-approval policy described below.
Audit Committee policy regarding pre-approval of audit and permissible non-audit services of our independent registered public
accounting firm
The Company’s Audit Committee has established a policy that all audit and permissible non-audit services provided by the
Company’s independent registered public accounting firm will be pre-approved by the Audit Committee. These services may
include audit services, audit related services, tax services and other services. The Audit Committee considers whether the provision
of each non-audit service is compatible with maintaining the independence of the Company’s registered public accounting firm.
Pre-approval is detailed as to the particular service or category of services and is generally subject to a specific budget. The
Company’s independent registered public accounting firm and management are required to periodically (at least quarterly) report
to the Audit Committee regarding the extent of services provided by the independent registered public accounting firm in
accordance with this pre-approval, and the fees for the services performed to date.
16
COMPENSATION COMMITTEE REPORT
The following Report of the Committee does not constitute soliciting material and should not be deemed filed or incorporated
by reference into any other Company filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934,
as amended, except to the extent the Company specifically incorporates this Report by reference therein.
The Compensation Committee of the Company has reviewed and discussed the Compensation Discussion and Analysis
required by Item 402(b) of Regulation S-K with management and, based on such review and discussions, the Compensation
Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this proxy
statement.
Respectfully submitted by:
COMPENSATION COMMITTEE
George J. Morrow
Richard F. Pops
Shalini Sharp
17
PROPOSAL ONE: ELECTION OF DIRECTORS
The Company’s bylaws, as amended, provide that the Board of Directors is comprised of nine directors. The Company’s
Certificate of Incorporation provides that the Board of Directors is divided into three classes. There are currently three directors in
Class I (William H. Rastetter, Ph.D., George J. Morrow, and Leslie V. Norwalk), three directors in Class II (Richard F. Pops,
Shalini Sharp, and Stephen A. Sherwin, M.D.), and three directors in Class III (Kevin C. Gorman, Ph.D., Gary A. Lyons, and
Johanna Mercier). With the exception of Kevin C. Gorman, Ph.D., who is the Chief Executive Officer of Neurocrine Biosciences,
all current members of the Board of Directors meet the definition of “independent director” under the Nasdaq Stock Market
qualification standards.
The directors in Class I hold office until the 2024 Annual Meeting of Stockholders, the directors in Class II hold office until
the 2022 Annual Meeting of Stockholders and the directors in Class III hold office until the 2023 Annual Meeting of Stockholders
(or, in each case, until their earlier resignation, removal from office, or death). After each such election, the elected directors will
then serve in succeeding terms of three years and until a successor is duly elected and qualified. Officers of the Company serve at
the discretion of the Board of Directors. There are no family relationships among the Company’s directors and executive officers.
The term of office for directors Richard F. Pops, Shalini Sharp and Stephen A. Sherwin, M.D. will expire at the 2022 Annual
Meeting of Stockholders.
Nominees for Election at the Annual Meeting
All of the nominees (Richard F. Pops, Shalini Sharp and Stephen A. Sherwin, M.D.) are currently Class II directors of the
Company. Information about the nominees is set forth below:
Name of Director
Richard F. Pops (1) (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Shalini Sharp (1) (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Stephen A. Sherwin, M.D. (1) (3) . . . . . . . . . . . . . . . . . . . .
59
47
73
Director
Director
Director
Age
Position in the Company
Director
Since
1998
2020
2019
Who are the remaining Directors that are not up for election this year?
The Class I and III directors will remain in office after the 2022 Annual Meeting of Stockholders. The names and certain
other current information about the directors whose terms of office continue after the Annual Meeting are set forth below:
Age
Position in the Company
Director
Since
Name of Director
William H. Rastetter, Ph.D.
. . . . . . . . . . . .
Gary A. Lyons . . . . . . . . . . . . . . . . . . . . . .
Johanna Mercier (3) . . . . . . . . . . . . . . . . . .
George J. Morrow (2) (3) . . . . . . . . . . . . . .
Leslie V. Norwalk (3) . . . . . . . . . . . . . . . . .
73
70
52
70
56
Chairman of the Board
Director
Director
Director
Director
Kevin C. Gorman, Ph.D.
. . . . . . . . . . . . . .
64 Chief Executive Officer
and Director
2010
1993
2021
2015
2019
2008
(1)
(2)
(3)
Member of the Audit Committee.
Member of the Compensation Committee.
Member of the Nominating/Corporate Governance Committee.
18
Vote Required
The nominees receiving the highest number of affirmative votes of the shares present in person or represented by proxy at the
2022 Annual Meeting of Stockholders and entitled to vote on the election of directors will be elected to the Board of Directors.
Votes withheld from any director are counted for purposes of determining the presence or absence of a quorum, but have no
other legal effect under Delaware law.
Unless otherwise instructed, the proxy holders will vote the proxies received by them for the Company’s Class II nominees
named above. If any of the Company’s nominees is unable or declines to serve as a director at the time of the Annual Meeting, the
proxies will be voted for any nominee who is designated by the present Board of Directors to fill the vacancy. It is not expected
that any of the Company’s nominees will be unable or will decline to serve as a director. The Board of Directors unanimously
recommends that stockholders vote “FOR” the Class II nominees named above.
19
PROPOSAL TWO: ADVISORY VOTE ON
COMPENSATION PAID TO THE COMPANY’S NAMED EXECUTIVE OFFICERS
General
At the 2017 Annual Meeting of Stockholders, the Board of Directors, as a matter of good corporate governance,
recommended that the stockholders approve an advisory vote on Named Executive Officer compensation (“say-on-pay”) on an
annual basis. Approximately 94% of the stockholder votes cast at the 2017 Annual Meeting of Stockholders were for the
Company’s recommendation, and in response the Company holds an annual say-on-pay vote. This annual vote is not intended to
address any specific compensation item, but rather the overall compensation of the Company’s Named Executive Officers and the
philosophy, policies and practices described in this proxy statement.
Summary of the Company’s Executive Compensation Philosophy
The Compensation Committee of the Board of Directors bases its executive compensation decisions on a number of
objectives which include aligning management incentives with interests of stockholders, providing competitive compensation,
appropriately balancing compensation risk in the context of the Company’s business strategy and meeting evolving compensation
governance standards. The philosophy of the Compensation Committee in establishing the Company’s compensation policy for
executive officers as well as all other employees is to:
(cid:129)
(cid:129)
(cid:129)
(cid:129)
align compensation plans with both short-term and long-term goals and objectives of the Company and stockholder
interests;
attract and retain highly skilled individuals by offering compensation that compares favorably to other employers who
are competing for available employees;
incentivize employees through a mix of base salary, bonus amounts based on achievement of defined corporate and
personal goals and long-term equity awards to generate returns for stockholders; and
pay for performance by ensuring that an ever-increasing percentage of an individual’s compensation is performance-
based as they progress to higher levels within the Company.
As discussed below in the Compensation Discussion and Analysis, we believe we have adopted a compensation philosophy
that provides strong alignment between executive pay and performance based on strategic goals designed to provide both near-term
and long-term growth in stockholder value. The historical approval rates, on an advisory basis, for the Company’s executive
compensation program have been over 96% for each of the 2019, 2020 and 2021 Annual Meetings of Stockholders. The
Compensation Committee and our Board of Directors believe that this level of approval of our executive compensation program is
indicative of our stockholders’ strong support of our compensation philosophy and goals as well as the overall administration of
executive compensation by the Compensation Committee and the Board of Directors.
You are being asked to approve on an advisory basis, the compensation paid to the Company’s Named Executive Officers as
set forth in the Compensation Discussion and Analysis, Summary Compensation Table and related notes and narrative set forth
herein. This vote is not intended to address any specific compensation item, but rather the overall compensation of the Company’s
Named Executive Officers and the philosophy, policies and practices described in this proxy statement.
Vote Required
The say-on-pay vote is advisory and therefore not binding on the Company, the Compensation Committee or the Board of
Directors. However, we value the opinions of our stockholders and will review and will continue to consider the outcome of this
advisory vote when making future compensation decisions for our Named Executive Officers and will evaluate whether any
actions are necessary to address the stockholders’ concerns. Approval of this advisory vote requires the affirmative vote of the
majority of shares represented in person or by proxy and entitled to vote on the item. The Board of Directors unanimously
recommends voting “FOR” approval of the Company’s Named Executive Officers compensation.
20
PROPOSAL THREE: APPROVAL OF AN AMENDMENT AND
RESTATEMENT OF THE 2020 EQUITY INCENTIVE PLAN
We are asking our stockholders to approve an amendment and restatement of the Neurocrine Biosciences, Inc. 2020 Equity
Incentive Plan (the “2020 Plan”) at the Annual Meeting. We refer to such amendment and restatement of the 2020 Plan in this
proxy statement as the “Amended 2020 Plan”.
The Amended 2020 Plan contains the following material changes from the 2020 Plan:
(cid:129)
(cid:129)
(cid:129)
(cid:129)
The aggregate number of shares of our common stock that may be issued under the 2020 Plan has been increased by
5,900,000 shares under the Amended 2020 Plan, subject to adjustment for certain changes in our capitalization.
The aggregate maximum number of shares of our common stock that may be issued pursuant to the exercise of
incentive stock options under the 2020 Plan has been increased by 5,900,000 shares under the Amended 2020 Plan,
subject to adjustment for certain changes in our capitalization.
The Amended 2020 Plan contains a “fungible share counting” structure, whereby the number of shares of our common
stock available for issuance under the Amended 2020 Plan will be reduced by: (i) one share for each share issued
pursuant to an “appreciation award” (which is a stock option or a stock appreciation right with respect to which the
exercise or strike price is at least 100% of the fair market value of our common stock on the date of grant) granted
under the Amended 2020 Plan; and (ii) 2.13 shares for each share issued pursuant to a “full value award” (which is a
stock award that is not an appreciation award) granted under the Amended 2020 Plan on or after May 18, 2022. As part
of such fungible share counting structure, the number of shares of our common stock available for issuance under the
Amended 2020 Plan will be increased by: (i) one share for each share subject to an appreciation award that becomes
available again for issuance under the terms of the Amended 2020 Plan; and (ii) 2.13 shares for each share subject to a
full value award that becomes available again for issuance under the terms of the Amended 2020 Plan on or after
May 18, 2022. The 2020 Plan does not contain a fungible share counting structure.
Under the 2020 Plan, the aggregate number of shares of our common stock that may be issued pursuant to full value
awards will not exceed 50% of the total number of shares of our common stock issuable under the 2020 Plan. Under
the Amended 2020 Plan, such limit has been eliminated.
Why We Are Asking Our Stockholders to Approve the Amended 2020 Plan
We are seeking stockholder approval of the Amended 2020 Plan to increase the number of shares available for the grant of
stock options, restricted stock unit awards and other awards to our employees, directors and consultants, which will enable us to
have a competitive equity incentive program to compete with our peer group for key talent.
Approval of the Amended 2020 Plan by our stockholders will allow us to continue to grant stock options, restricted stock unit
awards and other awards at levels determined appropriate by the Board of Directors or Compensation Committee. The Amended
2020 Plan will also allow us to continue to utilize a broad array of equity incentives in order to secure and retain the services of our
employees, directors and consultants, and to provide long-term incentives that align the interests of our employees, directors and
consultants with the interests of our stockholders.
Requested Shares
If this Proposal Three is approved by our stockholders, then subject to adjustment for certain changes in our capitalization, an
additional 5,900,000 shares of our common stock will be available for issuance under the Amended 2020 Plan.
Stockholder Approval
If this Proposal Three is approved by our stockholders, the Amended 2020 Plan will become effective as of the date of the
Annual Meeting. In the event that our stockholders do not approve this Proposal Three, the Amended 2020 Plan will not become
effective and the 2020 Plan will continue in its current form.
21
Why You Should Vote to Approve the Amended 2020 Plan
Equity Awards Are an Important Part of Our Compensation Philosophy
The Board of Directors believes that the grant of equity awards is a key element underlying our ability to attract, retain and
motivate our employees, directors and consultants because of the strong competition for highly trained and experienced individuals
among biopharmaceutical companies. Therefore, the Board of Directors believes that the Amended 2020 Plan is in the best
interests of our business and our stockholders and unanimously recommends a vote in favor of this Proposal Three.
The Amended 2020 Plan will allow us to continue to utilize equity awards as long-term incentives to secure and retain the
services of our employees, directors and consultants, consistent with our compensation philosophy and common compensation
practice for our industry. To date, equity awards have been a key aspect of our program to attract and retain key employees,
directors and consultants. We believe the use of equity awards strongly aligns the interests of our employees with those of our
stockholders by placing a considerable proportion of our employees’ total compensation “at risk” because it is contingent on the
appreciation in value of our common stock. In addition, we believe equity awards encourage employee ownership of our common
stock and promote retention through the reward of long-term Company performance.
We Carefully Manage the Use of Equity Awards and Dilution is Reasonable
Our compensation philosophy reflects broad-based eligibility for equity awards, and we grant awards to substantially all of
our employees. However, we recognize that equity awards dilute existing stockholders, and, therefore, we are mindful to
responsibly manage the growth of our equity compensation program. We are committed to effectively monitoring our equity
compensation share reserve, including our “burn rate,” to ensure that we maximize stockholders’ value by granting the appropriate
number of equity awards necessary to attract, reward, and retain employees, directors and consultants.
The following table provides detailed information regarding our burn rate and the activity related to our equity incentive
plans for fiscal years 2021, 2020 and 2019.
Total number of shares of common stock subject to stock options granted
Total number of shares of common stock subject to full value awards
granted
Weighted-average number of shares of common stock outstanding
Burn Rate (1)
Fiscal Year
2021
Fiscal Year
2020
Fiscal Year
2019
1,800,000
1,300,000
1,416,000
1,400,000
94,600,000
900,000
93,100,000
707,000
91,600,000
3.38%
2.36%
2.32%
(1)
Burn Rate is calculated as (shares subject to stock options granted + shares subject to full value awards granted)/weighted average common stock
outstanding.
Overhang
The following table provides certain information regarding our use of equity awards.
Total number of shares of common stock subject to outstanding stock options
Weighted-average exercise price of outstanding stock options
Weighted-average remaining term of outstanding stock options
Total number of shares of common stock subject to outstanding full value awards
Total number of shares of common stock available for grant under the 2020 Plan (1)
Total number of shares of common stock available for grant under the Neurocrine Biosciences,
Inc. Inducement Plan (1)
Total number of shares of common stock subject to outstanding stock options and outstanding full
value awards
Total number of shares of common stock outstanding
Per-share closing price of common stock as reported on Nasdaq Global Select Market
As of March 21, 2022
(Record Date)
9,515,295
$77.32
7.06 years
3,080,582
2,286,887
55,182
12,595,877
95,509,161
$94.16
(1)
As of the Record Date, there were no shares of common stock available for grant under any of our equity incentive plans, other than the 2020 Plan and the
Neurocrine Biosciences, Inc. Inducement Plan (as described in this table).
22
The Size of Our Share Reserve Increase Request Is Reasonable
If this Proposal Three is approved by our stockholders, then subject to adjustment for certain changes in our capitalization,
we will have 5,900,000 new shares available for grant after the Annual Meeting, and absent any unforeseen circumstances, we
anticipate returning to stockholders for additional shares in 2023.
The Amended 2020 Plan Combines Compensation and Governance Best Practices
The Amended 2020 Plan includes provisions that are designed to protect our stockholders’ interests and to reflect corporate
governance best practices, including:
(cid:129)
(cid:129)
(cid:129)
(cid:129)
(cid:129)
(cid:129)
(cid:129)
Stockholder approval is required for additional shares. The Amended 2020 Plan does not contain an annual
“evergreen” provision. The Amended 2020 Plan authorizes a fixed number of shares, so that stockholder approval is
required to issue any additional shares.
No discounted stock options or stock appreciation rights. All stock options and stock appreciation rights granted under
the Amended 2020 Plan must have an exercise price equal to or greater than the fair market value of our common stock
on the date the stock option or stock appreciation right is granted.
Limit on non-employee director compensation. The aggregate value of all compensation granted or paid by us to any
individual for service as a non-employee director with respect to any period commencing on the date of the annual
stockholders meeting for a particular year and ending on the date of the annual stockholders meeting for the next
subsequent year (such period, the “annual period”), including awards granted under the Amended 2020 Plan and cash
fees paid to such non-employee director, will not exceed $1,250,000 in total value. In addition, the aggregate value of
any equity award(s) granted by us to any individual for service as a non-employee director upon or in connection with
his or her initial election or appointment to the Board of Directors will not exceed $2,000,000 in total value (such that
the aggregate compensation granted or paid to any individual for service as a non-employee director with respect to an
annual period in which such individual is first appointed or elected to the Board of Directors will not exceed
$3,250,000 in total value). For purposes of these limitations, the value of any equity awards is calculated based on the
grant date fair value of such awards for financial reporting purposes.
Awards subject to forfeiture/clawback. Awards granted under the Amended 2020 Plan will be subject to recoupment in
accordance with the Neurocrine Biosciences, Inc. Policy for Recoupment of Incentive Compensation and any other
clawback policy that we are required to adopt pursuant to the listing standards of any national securities exchange or
association on which our securities are listed or as is otherwise required by the Dodd-Frank Wall Street Reform and
Consumer Protection Act or other applicable law, and any other clawback policy that the Company adopts. In addition,
the Board may impose other clawback, recovery or recoupment provisions in an award agreement, including a
reacquisition right in respect of previously acquired shares or other cash or property upon the occurrence of cause.
Restrictions on dividends. The Amended 2020 Plan provides that dividends or dividend equivalents may not be paid or
credited to any awards granted under the Amended 2020 Plan.
No liberal change in control definition. The change in control definition in the Amended 2020 Plan is not a “liberal”
definition. A change in control transaction must actually occur in order for the change in control provisions in the
Amended 2020 Plan to be triggered.
No liberal share counting provisions. The following shares will not become available again for issuance under the
Amended 2020 Plan: (i) any shares that are reacquired or withheld (or not issued) by us to satisfy the exercise or
purchase price of an award; (ii) any shares that are reacquired or withheld (or not issued) by us to satisfy a tax
withholding obligation in connection with an award; (iii) any shares repurchased by us on the open market with the
proceeds of the exercise or purchase price of an award; and (iv) in the event that a stock appreciation right is settled in
shares, the gross number of shares subject to such award.
(cid:129) Material amendments require stockholder approval. Consistent with Nasdaq rules, the Amended 2020 Plan requires
stockholder approval of any material revisions to the Amended 2020 Plan. In addition, certain other amendments to the
Amended 2020 Plan require stockholder approval.
23
Vote Required
At the Annual Meeting, the stockholders are being asked to approve an amendment and restatement of the Company’s 2020
Equity Incentive Plan. The affirmative vote of the holders of a majority of the shares represented in person or by proxy at the
Annual Meeting and entitled to vote on the item will be required to approve the amendment and restatement of the Company’s
2020 Equity Incentive Plan. The Board of Directors unanimously recommends voting “FOR” the approval of an amendment
and restatement of the Company’s 2020 Equity Incentive Plan.
Summary of the Amended 2020 Plan
The material features of the Amended 2020 Plan are described below. The following description of the Amended 2020 Plan
is a summary only and is qualified in its entirety by reference to the complete text of the Amended 2020 Plan. Stockholders are
urged to read the actual text of the Amended 2020 Plan in its entirety, which is attached hereto as Appendix A.
Purpose
The Amended 2020 Plan is designed to secure and retain the services of our employees, non-employee directors and
consultants, to provide incentives for such persons to exert maximum efforts for the success of the Company and our affiliates, and
to provide a means by which such persons may be given an opportunity to benefit from increases in the value of our common
stock. The Amended 2020 Plan is also designed to align employees’ interests with stockholder interests.
Types of Awards
The terms of the Amended 2020 Plan provide for the grant of incentive stock options, nonstatutory stock options, stock
appreciation rights, restricted stock awards, restricted stock unit awards, performance awards, and other awards.
Shares Available for Awards
Subject to adjustment for certain changes in our capitalization, the aggregate number of shares of our common stock that may
be issued under the Amended 2020 Plan will not exceed the sum of: (i) the number of shares that remained available for the grant
of new awards under the Neurocrine Biosciences, Inc. 2011 Equity Incentive Plan (the “2011 Plan”) as of immediately following
the effective date of the 2020 Plan; (ii) 3,300,000 shares that were approved at our 2020 annual meeting of stockholders; (iii) an
additional 5,900,000 shares that are subject to approval by our stockholders under this Proposal Three; and (iv) the Prior Plan’s
Returning Shares (as defined below), as such shares become available from time to time.
The “Prior Plan’s Returning Shares” are shares of our common stock subject to outstanding awards granted under the 2011
Plan (referred to as the “Prior Plan” in this Proposal Three) that following the effective date of the 2020 Plan: (i) are not issued
because such award or any portion thereof expires or otherwise terminates without all of the shares covered by such award having
been issued; (ii) are not issued because such award or any portion thereof is settled in cash; or (iii) are forfeited back to or
repurchased by us because of the failure to meet a contingency or condition required for the vesting of such shares.
The following actions will not result in an issuance of shares of our common stock under the Amended 2020 Plan and
accordingly will not reduce the number of shares of our common stock available for issuance under the Amended 2020 Plan: (i) the
expiration or termination of any portion of an award granted under the Amended 2020 Plan without the shares covered by such
portion of the award having been issued; or (ii) the settlement of any portion of an award granted under the Amended 2020 Plan in
cash.
If any shares of our common stock issued pursuant to an award granted under the Amended 2020 Plan are forfeited back to or
repurchased by us because of the failure to meet a contingency or condition required for the vesting of such shares, then such
shares will become available again for issuance under the Amended 2020 Plan (such shares, the “Amended 2020 Plan Returning
Shares”).
The following shares of our common stock will not become available again for issuance under the Amended 2020 Plan:
(i) any shares that are reacquired or withheld (or not issued) by us to satisfy the exercise or purchase price of an award granted
under the Amended 2020 Plan or the Prior Plan (including any shares subject to such award that are not delivered because such
award is exercised through a reduction of shares subject to such award); (ii) any shares that are reacquired or withheld (or not
issued) by us to satisfy a tax withholding obligation in connection with an award granted under the Amended 2020 Plan or the Prior
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Plan; (iii) any shares repurchased by us on the open market with the proceeds of the exercise or purchase price of an award granted
under the Amended 2020 Plan or the Prior Plan; and (iv) in the event that a stock appreciation right granted under the Amended
2020 Plan or the Prior Plan is settled in shares, the gross number of shares subject to such award.
The number of shares of our common stock available for issuance under the Amended 2020 Plan will be reduced by: (i) one
share for each share issued pursuant to an appreciation award granted under the Amended 2020 Plan; and (ii) 2.13 shares for each
share issued pursuant to a full value award granted under the Amended 2020 Plan on or after May 18, 2022.
The number of shares of our common stock available for issuance under the Amended 2020 Plan will be increased by: (i) one
share for each Prior Plan’s Returning Share or Amended 2020 Plan Returning Share subject to an appreciation award; and (ii) 2.13
shares for each Prior Plan’s Returning Share or Amended 2020 Plan Returning Share subject to a full value award that returns to
the Amended 2020 Plan on or after May 18, 2022.
Eligibility
Under the terms of the Amended 2020 Plan, all of our (including our affiliates’) employees, non-employee directors and
consultants are eligible to participate in the Amended 2020 Plan and may receive all types of awards other than incentive stock
options. Incentive stock options may be granted under the Amended 2020 Plan only to our (including our affiliates’) employees.
Generally, we do not provide equity grants to consultants.
As of March 21, 2022, we (including our affiliates) had approximately 1,125 employees, eight non-employee directors, and
approximately 14 consultants.
Administration
The Amended 2020 Plan will be administered by our Board of Directors, which may in turn delegate some or all of the
administration of the Amended 2020 Plan to a committee or committees composed of members of the Board of Directors. Our
Board of Directors has delegated concurrent authority to administer the Amended 2020 Plan to our Compensation Committee, but
may, at any time, revest in itself some or all of the power delegated to our Compensation Committee. Our Board of Directors and
Compensation Committee are each considered to be a Plan Administrator for purposes of this Proposal Three.
Subject to the terms of the Amended 2020 Plan, the Plan Administrator may determine the recipients, the types of awards to
be granted, the number of shares of our common stock subject to or the cash value of awards, and the terms and conditions of
awards granted under the Amended 2020 Plan, including the period of their exercisability and vesting. The Plan Administrator also
has the authority to provide for accelerated exercisability and vesting of awards. Subject to the limitations set forth below, the Plan
Administrator also determines the fair market value applicable to an award and the exercise or strike price of stock options and
stock appreciation rights granted under the Amended 2020 Plan.
The Plan Administrator may also delegate to one or more executive officers the authority to designate employees who are not
executive officers to be recipients of certain awards and the number of shares of our common stock subject to such awards. Under
any such delegation, the Plan Administrator will specify the total number of shares of our common stock that may be subject to the
awards granted by such executive officer. The executive officer may not grant an award to himself or herself.
Repricing; Cancellation and Re-Grant of Stock Options or Stock Appreciation Rights
Under the Amended 2020 Plan, except in connection with a corporate transaction or a change in control or an adjustment for
certain changes in our capitalization, or unless our stockholders have approved such an action within 12 months prior to such an
event, the Plan Administrator does not have the authority to reprice any outstanding stock option or stock appreciation right by
(1) reducing the exercise or strike price of the stock option or stock appreciation right or (2) canceling any outstanding stock option
or stock appreciation right that has an exercise or strike price greater than the then-current fair market value of our common stock
in exchange for cash or other awards.
Dividends and Dividend Equivalents
The Amended 2020 Plan provides that dividends or dividend equivalents may not be paid or credited to any awards granted
under the Amended 2020 Plan.
Limit on Non-Employee Director Compensation
The aggregate value of all compensation granted or paid by us to any individual for service as a non-employee director with
respect to any period commencing on the date of the annual stockholders meeting for a particular year and ending on the date of
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the annual stockholders meeting for the next subsequent year (such period, the “annual period”), including awards granted under
the Amended 2020 Plan and cash fees paid to such non-employee director, will not exceed $1,250,000 in total value. In addition,
the aggregate value of any equity award(s) granted by us to any individual for service as a non-employee director upon or in
connection with his or her initial election or appointment to the Board of Directors will not exceed $2,000,000 in total value (such
that the aggregate compensation granted or paid by us to any individual for service as a non-employee director with respect to an
annual period in which such individual is first appointed or elected to the Board of Directors will not exceed $3,250,000 in total
value). For purposes of these limitations, the value of any equity awards is calculated based on the grant date fair value of such
awards for financial reporting purposes.
Stock Options
Stock options may be granted under the Amended 2020 Plan pursuant to stock option agreements. The Amended 2020 Plan
permits the grant of stock options that are intended to qualify as incentive stock options, or ISOs, and nonstatutory stock options, or
NSOs.
The exercise price of a stock option granted under the Amended 2020 Plan may not be less than 100% of the fair market
value of the common stock subject to the stock option on the date of grant and, in some cases (see “—Limitations on Incentive
Stock Options” below), may not be less than 110% of such fair market value.
The term of stock options granted under the Amended 2020 Plan may not exceed ten years from the date of grant and, in
some cases (see “—Limitations on Incentive Stock Options” below), may not exceed five years from the date of grant. Except as
otherwise provided in a participant’s stock option agreement or other written agreement with us or one of our affiliates, if a
participant’s service relationship with us or any of our affiliates (referred to in this Proposal Three as “continuous service”)
terminates (other than for cause (as defined in the Amended 2020 Plan) or the participant’s death or disability (as defined in the
Amended 2020 Plan)), the participant may exercise any vested stock options for up to three months following the participant’s
termination of continuous service. Except as otherwise provided in a participant’s stock option agreement or other written
agreement with us or one of our affiliates, if a participant’s continuous service terminates due to the participant’s disability, the
participant may exercise any vested stock options for up to 12 months following the participant’s termination due to the
participant’s disability. Except as otherwise provided in a participant’s stock option agreement or other written agreement with us
or one of our affiliates, if a participant’s continuous service terminates due to the participant’s death (or the participant dies within
a specified period following termination of continuous service), the participant’s beneficiary may exercise any vested stock options
for up to 18 months following the participant’s death. Except as explicitly provided otherwise in a participant’s stock option
agreement or other written agreement with us or one of our affiliates, if a participant’s continuous service is terminated for cause,
all stock options held by the participant will terminate upon the participant’s termination of continuous service and the participant
will be prohibited from exercising any stock option from and after such termination date. Except as otherwise provided in a
participant’s stock option agreement or other written agreement with us or one of our affiliates, the term of a stock option may be
extended if a participant’s continuous service terminates for any reason other than for cause and, at any time during the applicable
post-termination exercise period, the exercise of the stock option would be prohibited by applicable laws or the sale of any
common stock received upon such exercise would violate our insider trading policy. In no event, however, may a stock option be
exercised after its original expiration date.
In addition, the current form of stock option agreement for employees under the Amended 2020 Plan provides that if an
employee’s continuous service terminates due to the employee’s retirement (as defined in the employee’s stock option agreement
and described below), the employee’s stock option will become fully vested as of the date of such retirement, and the employee
may exercise such stock option for up to 12 months following such retirement. For purposes of the foregoing, “retirement”
generally means a termination of an employee’s continuous service upon or after the employee has reached age 60 with at least five
years of continuous service, provided that the employee complies with any other requirements in the Company’s then-current
policy regarding retirement.
Acceptable forms of consideration for the purchase of our common stock pursuant to the exercise of a stock option under the
Amended 2020 Plan will be determined by the Plan Administrator and may include payment: (i) by cash, check, bank draft or
money order payable to us; (ii) pursuant to a program developed under Regulation T as promulgated by the Federal Reserve Board;
(iii) by delivery to us of shares of our common stock (either by actual delivery or attestation); (iv) by a net exercise arrangement
(for NSOs only); or (v) in other legal consideration approved by the Plan Administrator.
Stock options granted under the Amended 2020 Plan may become exercisable in cumulative increments, or “vest,” as
determined by the Plan Administrator at the rate specified in the stock option agreement. Shares covered by different stock options
granted under the Amended 2020 Plan may be subject to different vesting schedules as the Plan Administrator may determine.
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The Plan Administrator may impose limitations on the transferability of stock options granted under the Amended 2020 Plan
in its discretion. Generally, a participant may not transfer a stock option granted under the Amended 2020 Plan other than by will
or the laws of descent and distribution or, subject to approval by the Plan Administrator, pursuant to a domestic relations order.
However, the Plan Administrator may permit transfer of a stock option in a manner that is not prohibited by applicable tax and
securities laws. Options may not be transferred to a third party financial institution for value.
Limitations on Incentive Stock Options
In accordance with current federal tax laws, the aggregate fair market value, determined at the time of grant, of shares of our
common stock with respect to ISOs that are exercisable for the first time by a participant during any calendar year under all of our
stock plans may not exceed $100,000. The stock options or portions of stock options that exceed this limit or otherwise fail to
qualify as ISOs are treated as NSOs. No ISO may be granted to any person who, at the time of grant, owns or is deemed to own
stock possessing more than 10% of our total combined voting power unless the following conditions are satisfied:
(cid:129)
(cid:129)
the exercise price of the ISO must be at least 110% of the fair market value of the common stock subject to the ISO on
the date of grant; and
the term of the ISO must not exceed five years from the date of grant.
Subject to adjustment for certain changes in our capitalization, the aggregate maximum number of shares of our common
stock that may be issued pursuant to the exercise of ISOs under the Amended 2020 Plan is 23,900,000 shares.
Stock Appreciation Rights
Stock appreciation rights may be granted under the Amended 2020 Plan pursuant to stock appreciation right agreements.
Each stock appreciation right is denominated in common stock share equivalents. The strike price of each stock appreciation right
will be determined by the Plan Administrator, but will in no event be less than 100% of the fair market value of the common stock
subject to the stock appreciation right on the date of grant. The term of stock appreciation rights granted under the Amended 2020
Plan may not exceed ten years from the date of grant. The Plan Administrator may also impose restrictions or conditions upon the
vesting of stock appreciation rights that it deems appropriate. The appreciation distribution payable upon exercise of a stock
appreciation right may be paid in shares of our common stock, in cash, in a combination of cash and stock, or in any other form of
consideration determined by the Plan Administrator and set forth in the stock appreciation right agreement. Stock appreciation
rights will be subject to the same conditions upon termination of continuous service and restrictions on transfer as stock options
under the Amended 2020 Plan.
Restricted Stock Awards
Restricted stock awards may be granted under the Amended 2020 Plan pursuant to restricted stock award agreements. A
restricted stock award may be granted in consideration for cash, check, bank draft or money order payable to us, the participant’s
services performed for us, or any other form of legal consideration acceptable to the Plan Administrator. Shares of our common
stock acquired under a restricted stock award may be subject to forfeiture to or repurchase by us in accordance with a vesting
schedule to be determined by the Plan Administrator. Rights to acquire shares of our common stock under a restricted stock award
may be transferred only upon such terms and conditions as are set forth in the restricted stock award agreement. Upon a
participant’s termination of continuous service for any reason, any shares subject to restricted stock awards held by the participant
that have not vested as of such termination date may be forfeited to or repurchased by us.
Restricted Stock Unit Awards
Restricted stock unit awards may be granted under the Amended 2020 Plan pursuant to restricted stock unit award
agreements. Payment of any purchase price may be made in any form of legal consideration acceptable to the Plan Administrator.
A restricted stock unit award may be settled by the delivery of shares of our common stock, in cash, in a combination of cash and
stock, or in any other form of consideration determined by the Plan Administrator and set forth in the restricted stock unit award
agreement. Restricted stock unit awards may be subject to vesting in accordance with a vesting schedule to be determined by the
Plan Administrator. Except as otherwise provided in a participant’s restricted stock unit award agreement or other written
agreement with us, restricted stock units that have not vested will be forfeited upon the participant’s termination of continuous
service for any reason.
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Performance Awards
The Amended 2020 Plan allows us to grant performance awards. A performance award is an award that may vest or may be
exercised, or that may become earned and paid, contingent upon the attainment of certain performance goals during a performance
period. A performance award may require the completion of a specified period of continuous service. The length of any
performance period, the performance goals to be achieved during the performance period, and the measure of whether and to what
degree such performance goals have been attained will be determined by the Plan Administrator in its discretion. In addition, to the
extent permitted by applicable law and the applicable award agreement, the Plan Administrator may determine that cash may be
used in payment of performance awards.
Performance goals under the Amended 2020 Plan will be based on any one or more of the following performance criteria:
(1) earnings (including earnings per share and net earnings, in either case before or after any or all of: interest, taxes, depreciation
and amortization, legal settlements or other income (expense), or stock-based compensation, other non-cash expenses and changes
in deferred revenue); (2) total stockholder return; (3) return on equity or average stockholder’s equity; (4) return on assets,
investment, or capital employed; (5) stock price; (6) margin (including gross margin); (7) income (before or after taxes); (8)
operating income; (9) operating income after taxes; (10) pre-tax profit; (11) operating cash flow; (12) sales, prescriptions, or
revenue targets; (13) increases in revenue or product revenue; (14) expenses and cost reduction goals; (15) improvement in or
attainment of working capital levels; (16) economic value added (or an equivalent metric); (17) market share; (18) cash flow;
(19) cash flow per share; (20) cash burn; (21) share price performance; (22) debt reduction; (23) implementation or completion of
projects or processes (including, without limitation, discovery of a pre-clinical drug candidate, recommendation of a drug candidate
to enter a clinical trial, clinical trial initiation, clinical trial enrollment and dates, clinical trial results, regulatory filing submissions,
regulatory filing acceptances, regulatory or advisory committee interactions, regulatory approvals, presentation of studies and
launch of commercial plans, compliance programs or education campaigns); (24) customer satisfaction; (25) stockholders’ equity;
(26) capital expenditures; (27) debt levels; (28) financings; (29) operating profit or net operating profit; (30) workforce diversity;
(31) growth of net income or operating income; (32) billings; (33) employee hiring; (34) funds from operations; (35) budget
management; (36) strategic partnerships or transactions (including acquisitions, joint ventures or licensing transactions); (37)
engagement of thought leaders and patient advocacy groups; (38) enhancement of intellectual property portfolio, filing of patent
applications and granting of patents; (39) litigation preparation and management; and (40) any other measure of performance
selected by the Plan Administrator.
Performance goals may be based on a Company-wide basis, with respect to one or more business units, divisions, affiliates or
business segments, and in either absolute terms or relative to the performance of one or more comparable companies or the
performance of one or more relevant indices. Unless specified otherwise by the Plan Administrator (i) in the award agreement at
the time the award is granted or (ii) in such other document setting forth the performance goals at the time the performance goals
are established, the Plan Administrator will appropriately make adjustments in the method of calculating the attainment of the
performance goals for a performance period as follows: (1) to exclude restructuring and/or other nonrecurring charges; (2) to
exclude exchange rate effects, as applicable, for non-U.S. dollar denominated performance goals; (3) to exclude the effects of
changes to generally accepted accounting principles; (4) to exclude the effects of any statutory adjustments to corporate tax rates;
(5) to exclude the effects of items that are “unusual” in nature or occur “infrequently” as determined under generally accepted
accounting principles; (6) to exclude the dilutive effects of acquisitions or joint ventures; (7) to assume that any business divested
by us achieved performance objectives at targeted levels during the balance of a performance period following such divestiture;
(8) to exclude the effect of any change in the outstanding shares of our common stock by reason of any stock dividend or split,
stock repurchase, reorganization, recapitalization, merger, consolidation, spin-off, combination or exchange of shares or other
similar corporate change, or any distributions to common stockholders other than regular cash dividends; (9) to exclude the effects
of stock based compensation and the award of bonuses under our bonus plans; (10) to exclude costs incurred in connection with
potential acquisitions or divestitures that are required to be expensed under generally accepted accounting principles; (11) to
exclude the goodwill and intangible asset impairment charges that are required to be recorded under generally accepted accounting
principles; and (12) to exclude the effects of the timing of acceptance for review and/or approval of submissions to the U.S. Food
and Drug Administration or any other regulatory body.
In addition, the Plan Administrator retains the discretion to define the manner of calculating the performance criteria it
selects to use for a performance period and to reduce or eliminate the compensation or economic benefit due upon the attainment of
any performance goal.
Other Awards
Other forms of awards valued in whole or in part by reference to, or otherwise based on, our common stock may be granted
either alone or in addition to other awards under the Amended 2020 Plan. Subject to the terms of the Amended 2020 Plan, the Plan
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Administrator will have sole and complete authority to determine the persons to whom and the time or times at which such other
awards will be granted, the number of shares of our common stock to be granted and all other terms and conditions of such other
awards.
Clawback Policy
Awards granted under the Amended 2020 Plan will be subject to recoupment in accordance with the Neurocrine Biosciences,
Inc. Policy for Recoupment of Incentive Compensation and any other clawback policy that we are required to adopt pursuant to the
listing standards of any national securities exchange or association on which our securities are listed or as is otherwise required by
the Dodd-Frank Wall Street Reform and Consumer Protection Act or other applicable law, and any other clawback policy that the
Company adopts. In addition, the Board may impose other clawback, recovery or recoupment provisions in an award agreement,
including a reacquisition right in respect of previously acquired shares or other cash or property upon the occurrence of cause.
Changes to Capital Structure
In the event of certain capitalization adjustments, the Plan Administrator will appropriately and proportionately adjust: (i) the
class(es) and maximum number of shares of our common stock subject to the Amended 2020 Plan; (ii) the class(es) and maximum
number of shares of our common stock that may be issued pursuant to the exercise of ISOs; and (iii) the class(es) and number of
shares of our common stock and the exercise, strike or purchase price per share of our common stock subject to outstanding
awards.
Corporate Transaction and Change in Control
The following applies to each outstanding award under the Amended 2020 Plan in the event of a corporate transaction (as
defined in the Amended 2020 Plan and described below) or a change in control (as defined in the Amended 2020 Plan and
described below), unless provided otherwise in the applicable award agreement, in any other written agreement between a
participant and the Company or an affiliate, or in any director compensation policy of the Company. For purposes of this Proposal
Three, the term “Transaction” will mean such corporate transaction or change in control.
In the event of a Transaction, any awards outstanding under the Amended 2020 Plan may be assumed, continued or
substituted for by any surviving or acquiring corporation (or its parent company) (such entity, the “acquiring entity”), and any
reacquisition or repurchase rights held by us with respect to the award may be assigned to the acquiring entity. If the acquiring
entity does not assume, continue or substitute for such awards, then (i) with respect to any such awards that are held by participants
who are employees or non-employee directors and, in each case, whose continuous service has not terminated prior to the effective
time of the Transaction (such participants, the “current employee and director participants”), the vesting (and exercisability, if
applicable) of such awards will be accelerated in full (and with respect to any such awards that are subject to performance-based
vesting conditions or requirements, vesting will be deemed to be satisfied at the greater of (x) the target level of performance or
(y) the actual level of performance measured in accordance with the applicable performance goals as of the date of the Transaction)
to a date prior to the effective time of the Transaction (contingent upon the effectiveness of the Transaction), and such awards will
terminate if not exercised (if applicable) at or prior to the effective time of the Transaction, and any reacquisition or repurchase
rights held by us with respect to such awards will lapse (contingent upon the effectiveness of the Transaction), and (ii) any such
awards that are held by persons other than current employee and director participants will terminate if not exercised (if applicable)
at or prior to the effective time of the Transaction, except that any reacquisition or repurchase rights held by us with respect to such
awards will not terminate and may continue to be exercised notwithstanding the Transaction.
In the event an award will terminate if not exercised at or prior to the effective time of a Transaction, the Plan Administrator
may provide that the holder of such award may not exercise such award but instead will receive a payment equal in value to the
excess, if any, of (i) the value of the property the participant would have received upon the exercise of the award, over (ii) any
exercise price payable by such holder in connection with such exercise.
Except as otherwise provided in the applicable award agreement, in any other written agreement between a participant and
the Company or an affiliate, or in any director compensation policy of the Company, in the event that an employee or director’s
continuous service is involuntarily terminated without cause (including any such termination due to such employee or director’s
death or disability) upon or within 12 months following the effective time of a Transaction, the vesting (and exercisability, if
applicable) of any assumed awards (as defined in the Amended 2020 Plan and described below) held by such employee or director
as of the date of such termination will be accelerated in full (and with respect to any such awards that are subject to performance-
based vesting conditions or requirements, vesting will be deemed to be satisfied at the greater of (x) the target level of performance
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or (y) the actual level of performance measured in accordance with the applicable performance goals as of the date of such
termination), effective as of the date of such termination. For purposes of the foregoing, an “assumed award” generally means any
outstanding award under the Amended 2020 Plan that was assumed or continued, or any outstanding similar award that was
granted in substitution for an award under the Amended 2020 Plan, in each case by the acquiring entity in connection with the
applicable Transaction.
Under the Amended 2020 Plan, a “corporate transaction” generally means the consummation of any one or more of the
following events: (1) a sale or other disposition of all or substantially all of our assets; (2) a sale or other disposition of at least 90%
of our outstanding securities; (3) a merger, consolidation or similar transaction where we do not survive the transaction; or (4) a
merger, consolidation or similar transaction where we do survive the transaction but the shares of our common stock outstanding
immediately before such transaction are converted or exchanged into other property by virtue of the transaction.
Under the Amended 2020 Plan, a “change in control” generally means the occurrence of any one or more of the following
events: (1) the acquisition by any person, entity or group of our securities representing more than 50% of the combined voting
power of our then outstanding securities, other than by virtue of a merger, consolidation, or similar transaction; (2) a merger,
consolidation or similar transaction in which our stockholders immediately before such transaction do not own, directly or
indirectly, more than 50% of the combined voting power of the surviving entity (or the parent of the surviving entity) in
substantially the same proportions as their ownership immediately prior to such transaction; (3) our stockholders approve or our
Board of Directors approves our complete dissolution or liquidation, or our complete dissolution or liquidation otherwise occurs;
(4) a sale, lease, exclusive license or other disposition of all or substantially all of our assets, other than to an entity, more than 50%
of the combined voting power of which is owned by our stockholders in substantially the same proportions as their ownership of
our outstanding voting securities immediately prior to such transaction; or (5) when a majority of our Board of Directors becomes
comprised of individuals who were not serving on our Board of Directors on the date the 2020 Plan was adopted by our
Compensation Committee (the “incumbent Board of Directors”), or whose nomination, appointment, or election was not approved
by a majority of the incumbent Board of Directors still in office.
Plan Amendments and Termination
The Plan Administrator will have the authority to amend or terminate the Amended 2020 Plan at any time. However, except
as otherwise provided in the Amended 2020 Plan, no amendment or termination of the Amended 2020 Plan may materially impair
a participant’s rights under his or her outstanding awards without the participant’s consent. We will obtain stockholder approval of
any amendment to the Amended 2020 Plan as required by applicable law and listing requirements. Unless terminated sooner by the
Plan Administrator, the Amended 2020 Plan will automatically terminate on March 15, 2030, which is the day before the tenth
anniversary of the date the 2020 Plan was adopted by our Compensation Committee.
U.S. Federal Income Tax Consequences
The following is a summary of the principal United States federal income tax consequences to participants and us with
respect to participation in the Amended 2020 Plan. This summary is not intended to be exhaustive and does not discuss the income
tax laws of any local, state or foreign jurisdiction in which a participant may reside. The information is based upon current federal
income tax rules and therefore is subject to change when those rules change. Because the tax consequences to any participant may
depend on his or her particular situation, each participant should consult the participant’s tax adviser regarding the federal, state,
local and other tax consequences of the grant or exercise of an award or the disposition of stock acquired under the Amended 2020
Plan. The Amended 2020 Plan is not qualified under the provisions of Section 401(a) of the Internal Revenue Code of 1986, as
amended (the “Internal Revenue Code”), and is not subject to any of the provisions of the Employee Retirement Income Security
Act of 1974, as amended (“ERISA”). Our ability to realize the benefit of any tax deductions described below depends on our
generation of taxable income as well as the requirement of reasonableness and the satisfaction of our tax reporting obligations.
Nonstatutory Stock Options
Generally, there is no taxation upon the grant of an NSO if the stock option is granted with an exercise price equal to the fair
market value of the underlying stock on the grant date. Upon exercise, a participant will recognize ordinary income equal to the
excess, if any, of the fair market value of the underlying stock on the date of exercise of the stock option over the exercise price. If
the participant is employed by us or one of our affiliates, that income will be subject to withholding taxes. The participant’s tax
basis in those shares will be equal to his or her fair market value on the date of exercise of the stock option, and the participant’s
capital gain holding period for those shares will begin on that date.
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Subject to the requirement of reasonableness, the provisions of Section 162(m) of the Internal Revenue Code, and the
satisfaction of a tax reporting obligation, we will generally be entitled to a tax deduction equal to the taxable ordinary income
realized by the participant.
Incentive Stock Options
The Amended 2020 Plan provides for the grant of stock options that are intended to qualify as “incentive stock options,” as
defined in Section 422 of the Internal Revenue Code. Under the Internal Revenue Code, a participant generally is not subject to
ordinary income tax upon the grant or exercise of an ISO. If the participant holds a share received upon exercise of an ISO for
more than two years from the date the stock option was granted and more than one year from the date the stock option was
exercised, which is referred to as the required holding period, the difference, if any, between the amount realized on a sale or other
taxable disposition of that share and the participant’s tax basis in that share will be long-term capital gain or loss.
If, however, a participant disposes of a share acquired upon exercise of an ISO before the end of the required holding period,
which is referred to as a disqualifying disposition, the participant generally will recognize ordinary income in the year of the
disqualifying disposition equal to the excess, if any, of the fair market value of the share on the date of exercise of the stock option
over the exercise price. However, if the sales proceeds are less than the fair market value of the share on the date of exercise of the
stock option, the amount of ordinary income recognized by the participant will not exceed the gain, if any, realized on the sale. If
the amount realized on a disqualifying disposition exceeds the fair market value of the share on the date of exercise of the stock
option, that excess will be short-term or long-term capital gain, depending on whether the holding period for the share exceeds one
year.
For purposes of the alternative minimum tax, the amount by which the fair market value of a share of stock acquired upon
exercise of an ISO exceeds the exercise price of the stock option generally will be an adjustment included in the participant’s
alternative minimum taxable income for the year in which the stock option is exercised. If, however, there is a disqualifying
disposition of the share in the year in which the stock option is exercised, there will be no adjustment for alternative minimum tax
purposes with respect to that share. In computing alternative minimum taxable income, the tax basis of a share acquired upon
exercise of an ISO is increased by the amount of the adjustment taken into account with respect to that share for alternative
minimum tax purposes in the year the stock option is exercised.
We are not allowed a tax deduction with respect to the grant or exercise of an ISO or the disposition of a share acquired upon
exercise of an ISO after the required holding period. If there is a disqualifying disposition of a share, however, we will generally be
entitled to a tax deduction equal to the taxable ordinary income realized by the participant, subject to the requirement of
reasonableness, the provisions of Section 162(m) of the Internal Revenue Code, and provided that either the employee includes that
amount in income or we timely satisfy our reporting requirements with respect to that amount.
Restricted Stock Awards
Generally, the recipient of a restricted stock award will recognize ordinary income at the time the stock is received equal to
the excess, if any, of the fair market value of the stock received over any amount paid by the recipient in exchange for the stock. If,
however, the stock is not vested when it is received (for example, if the employee is required to work for a period of time in order
to have the right to sell the stock), the recipient generally will not recognize income until the stock becomes vested, at which time
the recipient will recognize ordinary income equal to the excess, if any, of the fair market value of the stock on the date it becomes
vested over any amount paid by the recipient in exchange for the stock. A recipient may, however, file an election with the Internal
Revenue Service, within 30 days following his or her receipt of the restricted stock award, to recognize ordinary income, as of the
date the recipient receives the restricted stock award, equal to the excess, if any, of the fair market value of the stock on the date the
restricted stock award is granted over any amount paid by the recipient for the stock.
The recipient’s basis for the determination of gain or loss upon the subsequent disposition of shares acquired from a
restricted stock award will be the amount paid for such shares plus any ordinary income recognized either when the stock is
received or when the stock becomes vested.
Subject to the requirement of reasonableness, the provisions of Section 162(m) of the Internal Revenue Code, and the
satisfaction of a tax reporting obligation, we will generally be entitled to a tax deduction equal to the taxable ordinary income
realized by the recipient of the restricted stock award.
31
Restricted Stock Unit Awards
Generally, the recipient of a restricted stock unit award structured to comply with the requirements of Section 409A of the
Internal Revenue Code or an exception to Section 409A of the Internal Revenue Code will recognize ordinary income at the time
the stock is delivered equal to the excess, if any, of the fair market value of the stock received over any amount paid by the
recipient in exchange for the stock. To comply with the requirements of Section 409A of the Internal Revenue Code, the stock
subject to a restricted stock unit award may generally only be delivered upon one of the following events: a fixed calendar date (or
dates), separation from service, death, disability or a change in control. If delivery occurs on another date, unless the restricted
stock unit award otherwise complies with or qualifies for an exception to the requirements of Section 409A of the Internal Revenue
Code (including delivery upon achievement of a performance goal), in addition to the tax treatment described above, the recipient
will owe an additional 20% federal tax and interest on any taxes owed.
The recipient’s basis for the determination of gain or loss upon the subsequent disposition of shares acquired from a
restricted stock unit award will be the amount paid for such shares plus any ordinary income recognized when the stock is
delivered.
Subject to the requirement of reasonableness, the provisions of Section 162(m) of the Internal Revenue Code, and the
satisfaction of a tax reporting obligation, we will generally be entitled to a tax deduction equal to the taxable ordinary income
realized by the recipient of the restricted stock unit award.
Stock Appreciation Rights
Generally, if a stock appreciation right is granted with an exercise price equal to the fair market value of the underlying stock
on the grant date, the recipient will recognize ordinary income equal to the fair market value of the stock or cash received upon
such exercise.
Subject to the requirement of reasonableness, the provisions of Section 162(m) of the Internal Revenue Code, and the
satisfaction of a tax reporting obligation, we will generally be entitled to a tax deduction equal to the taxable ordinary income
realized by the recipient of the stock appreciation right.
Section 162(m) Limitations
Under Section 162(m) of the Internal Revenue Code, compensation paid to any publicly held corporation’s “covered
employees” that exceeds $1 million per taxable year for any covered employee is generally non-deductible. Awards granted under
the Amended 2020 Plan will be subject to the deduction limit under Section 162(m) of the Internal Revenue Code and will not be
eligible to qualify for the performance-based compensation exception under Section 162(m) of the Internal Revenue Code pursuant
to the transition relief provided by the Tax Cuts and Jobs Act. For further information regarding the deduction limit under
Section 162(m) of the Internal Revenue Code and such transition relief, please see the section entitled “Compensation Discussion
and Analysis—Tax Considerations—Internal Revenue Code Section 162(m).”
32
New Plan Benefits under Amended 2020 Plan
The following table sets forth certain information regarding future benefits under the Amended 2020 Plan.
Name and Position
Kevin C. Gorman, Ph.D.
Chief Executive Officer
Matthew C. Abernethy
Chief Financial Officer
Eric Benevich
Chief Commercial Officer
Jude Onyia, Ph.D.
Chief Scientific Officer
Eiry W. Roberts, M.D.
Chief Medical Officer
All current executive officers as a group
All current directors who are not executive officers as a group
All current employees, including current officers who are not executive officers, as a group
Number of
Shares
(1)
(1)
(1)
(1)
(1)
(1)
(1)
(1)
(1)
Awards granted under the Amended 2020 Plan to our executive officers, other employees, and non-employee directors are discretionary and are not subject
to set benefits or amounts under the terms of the Amended 2020 Plan, and the Board of Directors and the Compensation Committee have not granted any
awards under the Amended 2020 Plan that are subject to stockholder approval of this Proposal Three. Accordingly, the benefits or amounts that will be
received by or allocated to our executive officers, other employees, and non-employee directors under the Amended 2020 Plan are not determinable.
Plan Benefits under 2020 Plan
The following table sets forth, for each of the individuals and various groups indicated, the total number of shares of our
common stock subject to awards that have been granted (even if not currently outstanding) under the 2020 Plan as of March 21, 2022.
Name and Position
Kevin C. Gorman, Ph.D.
Chief Executive Officer
Matthew C. Abernethy
Chief Financial Officer
Eric Benevich
Chief Commercial Officer
Jude Onyia, Ph.D.
Chief Scientific Officer
Eiry W. Roberts, M.D.
Chief Medical Officer
All current executive officers as a group
All current directors who are not executive officers as a group
Each nominee for election as a director:
Richard F. Pops
Shalini Sharp
Stephen A. Sherwin, M.D.
Each associate of any executive officers, current directors or director nominees
Each other person who received or is to receive 5% of purchase rights
Number of
Shares
373,232
155,472
148,492
178,174
175,163
1,676,611
87,844
8,833
8,833
8,833
—
—
All current employees, including all current officers who are not executive officers, as a group
4,739,239
OUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS
A VOTE “FOR” PROPOSAL THREE
33
PROPOSAL FOUR: APPROVAL OF AN AMENDMENT AND
RESTATEMENT OF THE 2018 EMPLOYEE STOCK PURCHASE PLAN
We are asking our stockholders to approve an amendment and restatement of the Neurocrine Biosciences, Inc. 2018
Employee Stock Purchase Plan (the “ESPP”) at the Annual Meeting. We refer to such amendment and restatement of the ESPP in
this proxy statement as the “Amended ESPP”.
The Amended ESPP contains the following material change from the ESPP:
(cid:129)
The aggregate number of shares of our common stock that may be issued under the ESPP has been increased by
600,000 shares under the Amended ESPP, subject to adjustment for certain changes in our capitalization.
Approval of the Amended ESPP will allow us to continue to provide our employees with the opportunity to acquire an
ownership interest in the Company through their participation in the Amended ESPP, thereby encouraging them to remain in our
service and more closely aligning their interests with those of our stockholders.
If this Proposal Four is approved by our stockholders, then subject to adjustment for certain changes in our capitalization, an
additional 600,000 shares of our common stock will be available for issuance under the Amended ESPP. As of March 21, 2022, a
total of 24,849 shares of our common stock remained available for issuance under the ESPP. We do not maintain any other
employee stock purchase plans. As of March 21, 2022, a total of 95,509,161 shares of our common stock were outstanding.
If this Proposal Four is approved by our stockholders, the Amended ESPP will become effective as of the date of the Annual
Meeting. In the event that our stockholders do not approve this Proposal Four, the Amended ESPP will not become effective and
the ESPP will continue in its current form.
Summary of the Amended ESPP
The material features of the Amended ESPP are described below. The following description of the Amended ESPP is a
summary only and is qualified in its entirety by reference to the complete text of the Amended ESPP. Stockholders are urged to
read the actual text of the Amended ESPP in its entirety, which is attached hereto as Appendix B.
Purpose
The purpose of the Amended ESPP is to provide a means by which our employees may be given an opportunity to purchase
shares of our common stock, to assist us in retaining the services of our employees, to secure and retain the services of new
employees and to provide incentives for such persons to exert maximum efforts for our success. The rights to purchase common
stock granted under the Amended ESPP are intended to qualify as options issued under an “employee stock purchase plan” as that
term is defined in Section 423(b) of the Internal Revenue Code.
Administration
The Board of Directors has the power to administer the Amended ESPP and may also delegate administration of the
Amended ESPP to a committee comprised of one or more members of the Board of Directors. The Board of Directors has
delegated administration of the Amended ESPP to the Compensation Committee, but may, at any time, revest in itself some or all
of the powers previously delegated to the Compensation Committee. The Board of Directors and the Compensation Committee are
each considered to be a Plan Administrator for purposes of this Proposal Four. The Plan Administrator has the final power to
construe and interpret both the Amended ESPP and the rights granted under it. The Plan Administrator has the power, subject to
the provisions of the Amended ESPP, to determine when and how rights to purchase our common stock will be granted, the
provisions of each offering of such rights (which need not be identical), and whether employees of any of our parent or subsidiary
companies will be eligible to participate in the Amended ESPP.
Stock Subject to Amended ESPP
Subject to adjustment for certain changes in our capitalization, the maximum number of shares of our common stock that
may be issued under the Amended ESPP is 900,000 shares, which is equal to the sum of (i) 300,000 shares that were approved at
our 2018 annual meeting of stockholders and (ii) an additional 600,000 shares that are subject to approval by our stockholders
under this Proposal Four. If any rights granted under the Amended ESPP terminate without being exercised in full, the shares of
34
common stock not purchased under such rights again become available for issuance under the Amended ESPP. The shares of
common stock issuable under the Amended ESPP will be shares of authorized but unissued or reacquired common stock, including
shares repurchased by us on the open market.
Offerings
The Amended ESPP will be implemented by offerings of rights to purchase our common stock to all eligible employees. The
Plan Administrator will determine the duration of each offering period, provided that in no event may an offering period exceed
27 months. The Plan Administrator may establish separate offerings which vary in terms (although not inconsistent with the
provisions of the Amended ESPP or the requirements of applicable laws). Each offering period will have one or more purchase
dates, as determined by the Plan Administrator prior to the commencement of the offering period. The Plan Administrator has the
authority to alter the terms of an offering prior to the commencement of the offering period, including the duration of subsequent
offering periods. When an eligible employee elects to join an offering period, he or she is granted a right to purchase shares of our
common stock on each purchase date within the offering period. On the purchase date, all contributions collected from the
participant are automatically applied to the purchase of our common stock, subject to certain limitations (which are described
further below under “Eligibility”).
The Plan Administrator has the discretion to structure an offering so that if the fair market value of our common stock on the
first trading day of a new purchase period within the offering period is less than or equal to the fair market value of our common
stock on the first day of the offering period, then that offering will terminate immediately as of that first trading day, and the
participants in such terminated offering will be automatically enrolled in a new offering beginning on the first trading day of such
new purchase period.
Eligibility
Any individual who is employed by us (or by any of our parent or subsidiary companies if such company is designated by the
Plan Administrator as eligible to participate in the Amended ESPP) may participate in offerings under the Amended ESPP,
provided such individual has been employed by us (or our parent or subsidiary, if applicable) for such continuous period preceding
the first day of the offering period as the Plan Administrator may require, but in no event may the required period of continuous
employment be equal to or greater than two years. In addition, the Plan Administrator may provide that an employee will not be
eligible to be granted purchase rights under the Amended ESPP unless such employee is customarily employed for more than
20 hours per week and five months per calendar year. The Plan Administrator may also provide in any offering that certain of our
employees who are “highly compensated” as defined in the Internal Revenue Code are not eligible to participate in the Amended
ESPP.
No employee will be eligible to participate in the Amended ESPP if, immediately after the grant of purchase rights, the
employee would own, directly or indirectly, stock possessing 5% or more of the total combined voting power or value of all classes
of our stock or of any of our parent or subsidiary companies, including any stock which such employee may purchase under all
outstanding purchase rights and options. In addition, no employee may purchase more than $25,000 worth of our common stock
(determined based on the fair market value of the shares at the time such rights are granted) under all our employee stock purchase
plans and any employee stock purchase plans of our parent or subsidiary companies for each calendar year during which such
rights are outstanding.
As of March 21, 2022, we had approximately 1,125 employees.
Participation in the Amended ESPP
An eligible employee may enroll in the Amended ESPP by delivering to us, prior to the date selected by the Plan
Administrator as the beginning of an offering period, an agreement authorizing contributions which may not exceed the maximum
amount specified by the Plan Administrator, but in any case which may not exceed 15% of such employee’s earnings during the
offering period. Each participant will be granted a separate purchase right for each offering in which he or she participates. Unless
an employee’s participation is discontinued, his or her purchase right will be exercised automatically at the end of each purchase
period at the applicable purchase price.
Purchase Price
The purchase price per share at which shares of our common stock are sold on each purchase date during an offering period
will not be less than the lower of (i) 85% of the fair market value of a share of our common stock on the first day of the offering
period or (ii) 85% of the fair market value of a share of our common stock on the purchase date.
35
As of March 21, 2022, the closing price of our common stock as reported on the Nasdaq Global Select Market was $94.16
per share.
Payment of Purchase Price; Payroll Deductions
The purchase of shares during an offering period generally will be funded by a participant’s payroll deductions accumulated
during the offering period. A participant may change his or her rate of contributions, as determined by the Plan Administrator in
the offering. All contributions made for a participant are credited to his or her account under the Amended ESPP and deposited
with our general funds.
Purchase Limits
In connection with each offering made under the Amended ESPP, the Plan Administrator may specify (i) a maximum
number of shares of our common stock that may be purchased by any participant pursuant to such offering, (ii) a maximum number
of shares of our common stock that may be purchased by any participant on any purchase date pursuant to such offering, (iii) a
maximum aggregate number of shares of our common stock that may be purchased by all participants pursuant to such offering,
and/or (iv) a maximum aggregate number of shares of our common stock that may be purchased by all participants on any purchase
date pursuant to such offering. If the aggregate purchase of shares of our common stock issuable upon exercise of purchase rights
granted under such offering would exceed any such maximum aggregate number, then the Plan Administrator will make a pro rata
allocation of available shares in a uniform and equitable manner.
Withdrawal
Participants may withdraw from a given offering by delivering a withdrawal form to us and terminating their contributions.
Such withdrawal may be elected at any time prior to the end of an offering, except as otherwise provided by the Plan
Administrator. Upon such withdrawal, we will distribute to the employee his or her accumulated but unused contributions without
interest, and such employee’s right to participate in that offering will terminate. However, an employee’s withdrawal from an
offering does not affect such employee’s eligibility to participate in subsequent offerings under the Amended ESPP.
Termination of Employment
A participant’s rights under any offering under the Amended ESPP will terminate immediately if the participant either (i) is
no longer employed by us or any of our parent or subsidiary companies (subject to any post-employment participation period
required by law) or (ii) is otherwise no longer eligible to participate. In such event, we will distribute to the participant his or her
accumulated but unused contributions without interest.
Restrictions on Transfer
Rights granted under the Amended ESPP are not transferable except by will, by the laws of descent and distribution, or if
permitted by us, by a beneficiary designation. During a participant’s lifetime, such rights may only be exercised by the participant.
Changes in Capitalization
In the event of certain changes in our capitalization, the Plan Administrator will appropriately adjust: (i) the class(es) and
maximum number of securities subject to the Amended ESPP; (ii) the class(es) and number of securities subject to, and the
purchase price applicable to outstanding purchase rights; and (iii) the class(es) and number of securities that are the subject of any
purchase limits under each ongoing offering.
Effect of Certain Corporate Transactions
In the event of a corporate transaction (as defined in the Amended ESPP and described below), (i) any surviving or acquiring
corporation (or its parent company) may assume or continue outstanding purchase rights granted under the Amended ESPP or may
substitute similar rights (including a right to acquire the same consideration paid to the stockholders in the corporate transaction)
for such outstanding purchase rights, or (ii) if any surviving or acquiring corporation (or its parent company) does not assume or
continue such outstanding purchase rights or does not substitute similar rights for such outstanding purchase rights, then the
participants’ accumulated contributions will be used to purchase shares of our common stock within ten business days prior to the
corporate transaction under such purchase rights, and such purchase rights will terminate immediately after such purchase.
36
For purposes of the Amended ESPP, a corporate transaction generally will be deemed to occur in the event of the
consummation of: (i) a sale or other disposition of all or substantially all of our consolidated assets; (ii) a sale or other disposition
of at least 90% of our outstanding securities; (iii) a merger, consolidation or similar transaction following which we are not the
surviving corporation; or (iv) a merger, consolidation or similar transaction following which we are the surviving corporation but
the shares of our common stock outstanding immediately prior to such transaction are converted or exchanged into other property
by virtue of such transaction.
Duration, Amendment and Termination
The Plan Administrator may amend or terminate the Amended ESPP at any time. However, except in regard to certain
capitalization adjustments, any such amendment must be approved by our stockholders if such approval is required by applicable
law or listing requirements.
Any outstanding purchase rights granted before an amendment or termination of the Amended ESPP will not be materially
impaired by any such amendment or termination, except (i) with the consent of the employee to whom such purchase rights were
granted, (ii) as necessary to comply with applicable laws, listing requirements or governmental regulations (including Section 423
of the Internal Revenue Code), or (iii) as necessary to obtain or maintain favorable tax, listing or regulatory treatment.
Notwithstanding anything in the Amended ESPP or any offering to the contrary, the Plan Administrator will be entitled to:
(i) establish the exchange ratio applicable to amounts withheld in a currency other than U.S. dollars; (ii) permit contributions in
excess of the amount designated by a participant in order to adjust for mistakes in the processing of properly completed
contribution elections; (iii) establish reasonable waiting and adjustment periods and/or accounting and crediting procedures to
ensure that amounts applied toward the purchase of our common stock for each participant properly correspond with amounts
withheld from the participant’s contributions; (iv) amend any outstanding purchase rights or clarify any ambiguities regarding the
terms of any offering to enable such purchase rights to qualify under and/or comply with Section 423 of the Internal Revenue
Code; and (v) establish other limitations or procedures as the Plan Administrator determines in its sole discretion advisable that are
consistent with the Amended ESPP. Any such actions by the Plan Administrator will not be considered to alter or impair any
purchase rights granted under an offering as they are part of the initial terms of each offering and the purchase rights granted under
each offering.
Federal Income Tax Information
The following is a summary of the principal United States federal income taxation consequences to participants and us with
respect to participation in the Amended ESPP. This summary is not intended to be exhaustive and does not discuss the income tax
laws of any local, state or foreign jurisdiction in which a participant may reside. The information is based upon current federal
income tax rules and therefore is subject to change when those rules change. Because the tax consequences to any participant may
depend on his or her particular situation, each participant should consult the participant’s tax adviser regarding the federal, state,
local, and other tax consequences of the grant or exercise of a purchase right or the sale or other disposition of common stock
acquired under the Amended ESPP. The Amended ESPP is not qualified under the provisions of Section 401(a) of the Internal
Revenue Code and is not subject to any of the provisions of ERISA.
Rights granted under the Amended ESPP are intended to qualify for favorable federal income tax treatment associated with
rights granted under an employee stock purchase plan which qualifies under the provisions of Section 423 of the Internal Revenue
Code.
A participant will be taxed on amounts withheld for the purchase of shares of our common stock as if such amounts were
actually received. Otherwise, no income will be taxable to a participant as a result of the granting or exercise of a purchase right
until a sale or other disposition of the acquired shares. The taxation upon such sale or other disposition will depend upon the
holding period of the acquired shares.
If the shares are sold or otherwise disposed of more than two years after the beginning of the offering period and more than
one year after the shares are transferred to the participant, then the lesser of the following will be treated as ordinary income: (i) the
excess of the fair market value of the shares at the time of such sale or other disposition over the purchase price; or (ii) the excess
of the fair market value of the shares as of the beginning of the offering period over the purchase price (determined as of the
beginning of the offering period). Any further gain or any loss will be taxed as a long-term capital gain or loss.
If the shares are sold or otherwise disposed of before the expiration of either of the holding periods described above, then the
excess of the fair market value of the shares on the purchase date over the purchase price will be treated as ordinary income at the
37
time of such sale or other disposition. The balance of any gain will be treated as capital gain. Even if the shares are later sold or
otherwise disposed of for less than its fair market value on the purchase date, the same amount of ordinary income is attributed to
the participant, and a capital loss is recognized equal to the difference between the sales price and the fair market value of the
shares on such purchase date. Any capital gain or loss will be short-term or long-term, depending on how long the shares have been
held.
There are no federal income tax consequences to us by reason of the grant or exercise of rights under the Amended ESPP.
We are entitled to a deduction to the extent amounts are taxed as ordinary income to a participant for shares sold or otherwise
disposed of before the expiration of the holding periods described above (subject to the requirement of reasonableness and the
satisfaction of tax reporting obligations).
New Plan Benefits under Amended ESPP
Participation in the Amended ESPP is voluntary and each eligible employee will make his or her own decision regarding
whether and to what extent to participate in the Amended ESPP. In addition, the Board of Directors and the Compensation
Committee have not granted any purchase rights under the Amended ESPP that are subject to stockholder approval of this Proposal
Four. Accordingly, the benefits or amounts that will be received by or allocated to our executive officers and other employees
under the Amended ESPP are not determinable. Our non-employee directors will not be eligible to participate in the Amended
ESPP.
Plan Benefits under ESPP
The following table sets forth, for each of the individuals and various groups indicated, the total number of shares of our
common stock that have been purchased under the ESPP as of March 21, 2022.
Name and Position
Kevin C. Gorman, Ph.D.
Chief Executive Officer
Matthew C. Abernethy
Chief Financial Officer
Eric Benevich
Chief Commercial Officer
Jude Onyia, Ph.D.
Chief Scientific Officer
Eiry W. Roberts, M.D.
Chief Medical Officer
All current executive officers as a group
All current directors who are not executive officers as a group
Each nominee for election as a director:
Richard F. Pops
Shalini Sharp
Stephen A. Sherwin, M.D.
Each associate of any executive officers, current directors or director nominees
Each other person who received or is to receive 5% of purchase rights
Number of
Shares
—
701
1,102
—
1,185
6,868
—
—
—
—
—
—
All current employees, including all current officers who are not executive officers, as a group
236,925
Vote Required
At the Annual Meeting, the stockholders are being asked to approve an amendment and restatement of the Company’s 2018
Employee Stock Purchase Plan. The affirmative vote of the holders of a majority of the shares represented in person or by proxy at
the Annual Meeting and entitled to vote on the item will be required to approve the amendment and restatement of the Company’s
2018 Employee Stock Purchase Plan. The Board of Directors unanimously recommends voting “FOR” the approval of an
amendment and restatement of the Company’s 2018 Employee Stock Purchase Plan.
38
The following table sets forth information regarding all of the Company’s equity compensation plans as of December 31,
EQUITY COMPENSATION PLANS
2021:
Plan Category
Number of
Securities to be
Issued upon
Exercise of
Outstanding
Options, Warrants
and Rights
(a)
Weighted Average
Exercise Price of
Outstanding
Options, Warrants
and Rights
(b) (3)
Number of Securities
Remaining Available
for Future Issuance
Under Equity
Compensation Plans
(Excluding
Securities Reflected
in Column a)
(c)
Equity compensation plans approved by security holders (1) . . . . . . . . . .
Equity compensation plans not approved by security holders (2) . . . . . . .
9,898,576
171,223
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
10,069,799
$76.64
$64.48
$76.38
5,443,996
55,182
5,499,178
(1)
(2)
(3)
The number of securities remaining available for future issuance under equity compensation plans approved by security holders as of December 31, 2021
are from the 2020 Plan and the ESPP. The shares available for issuance under the 2020 Plan may be issued in the form of incentive stock options,
nonstatutory stock options, stock appreciation rights, restricted stock awards, restricted stock unit awards, performance awards, and other awards, subject to
limitations set forth in the 2020 Plan. The ESPP had 73,189 shares remaining available for future issuance, which are included under column (c).
Consists of stock options and restricted stock unit awards that were issued to certain employees under the Neurocrine Biosciences, Inc. Inducement Plan,
which was not approved by security holders. These stock option grants have a four-year vesting period and the restricted stock unit awards generally have
vesting periods of three to four years.
The weighted average exercise price excludes restricted stock unit awards, which have no exercise price.
39
PROPOSAL FIVE: RATIFICATION OF APPOINTMENT OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
General
The Audit Committee has selected Ernst & Young LLP to audit the financial statements of the Company for the current fiscal
year ending December 31, 2022. Ernst & Young LLP has audited the Company’s financial statements since 1992. Representatives
of Ernst & Young LLP are expected to be present at the Annual Meeting, will have the opportunity to make a statement if they so
desire, and are expected to be available to respond to appropriate questions.
Stockholders are not required to ratify the selection of Ernst & Young LLP as the Company’s independent registered public
accounting firm. However, the Audit Committee is submitting the selection of Ernst & Young LLP to the stockholders for
ratification as a matter of good corporate practice. If the stockholders fail to ratify the selection, the Audit Committee will
reconsider whether or not to retain that firm. Even if the selection is ratified, the Audit Committee in their discretion may direct the
selection of a different independent registered public accounting firm at any time during the year if they determine that such a
change would be in the best interests of the Company and its stockholders.
Vote Required
The affirmative vote of the holders of a majority of the shares represented in person or by proxy at the Annual Meeting and
entitled to vote on the item will be required to approve and ratify the Audit Committee’s selection of Ernst & Young LLP. The
Board of Directors unanimously recommends voting “FOR” approval and ratification of such selection. In the event of a
negative vote on such ratification, the Audit Committee will reconsider its selection.
40
EXECUTIVE OFFICERS
The following table sets forth information regarding our executive officers and other management team members as of the
Record Date:
Name
Age
Position
Kevin C. Gorman, Ph.D.
. . . . . . . . . . . . . . . . . . . . . .
Matthew C. Abernethy . . . . . . . . . . . . . . . . . . . . . . . .
Eric Benevich . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
David W. Boyer . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Julie S. Cooke. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Kyle W. Gano, Ph.D. . . . . . . . . . . . . . . . . . . . . . . . . .
Darin M. Lippoldt
. . . . . . . . . . . . . . . . . . . . . . . . . . .
Malcolm C. Lloyd-Smith . . . . . . . . . . . . . . . . . . . . . .
Jude Onyia, Ph.D.
. . . . . . . . . . . . . . . . . . . . . . . . . . .
Eiry W. Roberts, M.D. . . . . . . . . . . . . . . . . . . . . . . . .
64 Chief Executive Officer and Director
42 Chief Financial Officer
56 Chief Commercial Officer
43 Chief Corporate Affairs Officer
56 Chief Human Resources Officer
49 Chief Business Development and Strategy Officer
56 Chief Legal Officer and Corporate Secretary
66 Chief Regulatory Officer
58 Chief Scientific Officer
58 Chief Medical Officer
See above for biographical information concerning Kevin C. Gorman, Ph.D.
Matthew C. Abernethy was appointed Chief Financial Officer in November 2017 and is responsible for leading corporate
finance activities and commercial supply chain operations, as well as information technology, facilities, operations, and investor
relations functions at Neurocrine Biosciences. Mr. Abernethy has nearly 20 years of experience in the financial sector and investor
relations with expertise in the healthcare industry. He joined Neurocrine Biosciences from Zimmer Biomet, where he held various
positions from February 2009 to November 2017, including most recently, Vice President, Investor Relations and Treasurer and
Vice President of Finance for the Americas and Global Product Engines. He began his career with KPMG LLP and is a certified
public accountant (inactive). Mr. Abernethy earned his B.S. in Accounting and Business Administration from Grace College and
an MBA from the University of Chicago.
Eric Benevich was appointed Chief Commercial Officer in May 2015 and is responsible for all aspects of commercial
development, marketing and sales of the Neurocrine Biosciences product portfolio. Previously, Mr. Benevich was at Avanir
Pharmaceuticals, Inc., from 2005 to 2015, serving most recently as Vice President of Marketing where he was responsible for
NUEDEXTA ® and commercialization of their CNS pipeline. Mr. Benevich has nearly 30 years of experience in the
pharmaceutical industry and previously served in various positions of increasing responsibility at Peninsula Pharmaceuticals Inc.,
Amgen and AstraZeneca in the sales and marketing of drugs such as Enbrel®, Epogen® and Prilosec®. Mr. Benevich has a BBA in
International Business from Washington State University.
David W. Boyer was appointed Chief Corporate Affairs Officer in September 2019 and is responsible for patient advocacy
and engagement, corporate communications, government relations, and public policy at Neurocrine Biosciences. Mr. Boyer brings
nearly 20 years of experience in public affairs, specializing in the life sciences and biopharmaceutical sectors. He joins Neurocrine
Biosciences from nine years at BGR Group, where he served as a Principal and the Head of the Health & Lifesciences Practice,
leading the firm’s healthcare advocacy, policy and strategy development, and strategic consulting team. During his tenure at the
BGR Group, Mr. Boyer led public policy, advocacy, and strategic communications initiatives for a wide range of healthcare
clients. Prior to joining the BGR Group, Mr. Boyer served as Special Assistant to the President for Legislative Affairs under
President George W. Bush, Assistant Commissioner for Legislation at the U.S. Food and Drug Administration, and Special
Assistant to the Secretary at the U.S. Department of Health and Human Services. In addition to his public service, Mr. Boyer held
senior advocacy positions at the Biotechnology Innovation Organization (BIO) and the Pharmaceutical Research and
Manufacturers of America (PhRMA). Mr. Boyer holds a B.A. in Government from Georgetown University.
Julie S. Cooke was appointed Chief Human Resources Officer in September 2017. She joined Neurocrine Biosciences from
the Sanford Burnham Prebys Medical Research Institute where she served as Senior Vice President for Human Resources and was
a member of the executive management team. Previously, Ms. Cooke held multiple positions at Life Technologies, including being
the human resource partner to the Chief Operating Officer, Division Presidents and Global Function Leads. Prior to Life
Technologies, she ran human resources and was a member of the executive management team at SGX Pharmaceuticals. Ms. Cooke
began her career at PepsiCo., The Pepsi Bottling Group, and Gateway, where she held positions of increasing responsibility in
human resources. She holds a Bachelor of Arts in Economics from Colorado College.
Kyle W. Gano, Ph.D. was appointed Chief Business Development Officer in 2011, and Chief Business Development and
Strategy Officer in 2020, and is responsible for all business and corporate development activities, including the management of
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ongoing collaborations with AbbVie, Mitsubishi Tanabe Pharma, BIAL, Takeda, Voyager Therapeutics, Xenon Pharmaceuticals,
Idorsia Pharmaceuticals Ltd., and Heptares Therapeutics Limited. From 2001 to 2011, Dr. Gano held several positions of
increasing responsibility at Neurocrine Biosciences spanning marketing analytics to business development. Dr. Gano received his
B.S. in Chemistry from the University of Oregon, B.S. in Biochemistry from the University of Washington, and his Ph.D. in
Organic Chemistry and M.B.A. in Finance from the University of California, Los Angeles.
Darin M. Lippoldt was appointed Chief Legal Officer and Corporate Secretary in October 2014 and has oversight of all
corporate legal, intellectual property, and corporate compliance matters. Prior to joining Neurocrine Biosciences, Mr. Lippoldt
served as Executive Vice President, General Counsel, Chief Compliance Officer and Corporate Secretary of Volcano Corporation,
a company he joined in 2010. Prior to Volcano, Mr. Lippoldt served as Associate General Counsel at Amylin Pharmaceuticals, Inc.
He previously practiced corporate and securities law with the law firms of Fulbright & Jaworski LLP and Matthews and
Branscomb, P.C. Mr. Lippoldt received a B.B.A. in Finance, an M.A. in International Relations and a J.D. from St. Mary’s
University.
Malcolm C. Lloyd-Smith was appointed Chief Regulatory Officer in September 2014 and is responsible for regulatory affairs
and quality assurance. Prior to joining Neurocrine Biosciences, Mr. Lloyd-Smith served at Cadence Pharmaceuticals, Inc. as Senior
Vice President, Regulatory Affairs, Quality and Clinical from August 2012 to September 2014, and previously as Senior Vice
President, Regulatory Affairs and Quality Assurance from August 2008. Mr. Lloyd-Smith served as Vice President and Head of
Global Regulatory Affairs for Elan Pharmaceuticals, Inc. from September 2003 to August 2008, after having served in the United
Kingdom as its Vice President, International Regulatory Affairs from March 2002 to August 2003. Previously, Mr. Lloyd-Smith
served in various positions of increasing responsibility with DuPont Pharmaceuticals in Germany, Switzerland, USA and UK.
Mr. Lloyd-Smith holds a B.Sc. in Pharmacology from the University of Leeds and a M.Sc. in Pharmacological Biochemistry from
Hatfield Polytechnic.
Jude Onyia, Ph.D. Jude Onyia, Ph.D., was appointed Chief Scientific Officer in November 2021 and leads the drug
discovery and non-clinical development teams responsible for bolstering and advancing the company’s pipeline of therapeutic
candidates. A scientist with more than 25 years of experience in the pharmaceutical industry, Dr. Onyia is the former Vice
President of Biotechnology Discovery Research at Eli Lilly and Company. At Lilly, Dr. Onyia contributed to the discovery and/or
advancement of more than 60 clinical candidates across multiple therapeutic areas, which led to seven approved medicines. He also
was responsible for more than 50 pre-candidate programs across multiple therapeutic areas. Dr. Onyia holds a B.S. in Forest
Biology from the State University of New York, as well as a Ph.D. in Cell and Molecular Biology from the SUNY Health Science
Center at Syracuse.
Eiry W. Roberts, M.D. was appointed Chief Medical Officer in January 2018 and is responsible for all clinical development
and medical affairs activities at Neurocrine Biosciences. Dr. Roberts has over 25 years of research and development experience in
the pharmaceutical industry across all phases of drug development from research through commercialization in multiple
therapeutic areas, including neuroscience, inflammation, oncology and metabolic diseases. She joined Neurocrine Biosciences
from Eli Lilly and Company where she had worked since May 1991. During her tenure at Lilly, Dr. Roberts held various positions
of increasing responsibility, including Vice President, Clinical Pharmacology/Managing Director of Chorus, a position she held
from October 2014 until December 2017, and Vice President of Research and Development, BioMedicines Business Unit.
Dr. Roberts is a physician who trained in pharmacology and medicine in the United Kingdom, qualifying from the University of
London in 1987. Her post-graduate clinical training was in clinical pharmacology and cardiology at St. Bartholomew’s Hospital
and the Royal London Hospital. Dr. Roberts also serves as a director of Amicus Therapeutics, a clinical-stage biopharmaceutical
company focused on rare diseases.
42
COMPENSATION DISCUSSION AND ANALYSIS
This Compensation Discussion and Analysis describes Neurocrine Biosciences’ executive officer compensation program for
2021 and certain elements of our 2022 program. It provides qualitative information on the factors relevant to these decisions and
the manner in which compensation is awarded to the following individuals who are our Named Executive Officers (“NEOs”) for
2021:
Kevin C. Gorman, Ph.D., Chief Executive Officer
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(cid:129) Matthew C. Abernethy, Chief Financial Officer
Eric Benevich, Chief Commercial Officer
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Jude Onyia, Ph.D., Chief Scientific Officer (1)
(cid:129)
Eiry W. Roberts, M.D., Chief Medical Officer
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(1)
Dr. Onyia joined the Company as our Chief Scientific Officer on November 29, 2021.
Executive Summary
Business Overview
We are a neuroscience-focused, biopharmaceutical company with a simple purpose: to relieve suffering for people with great
needs, but few options. For three decades, we have applied our unique insight into neuroscience to advance medicines for
neurological, endocrine and psychiatric disorders. Our efforts have resulted in United States Food and Drug Administration
(“FDA”) approved treatments for tardive dyskinesia, Parkinson’s disease, endometriosis* and uterine fibroids* and a diversified
portfolio of investigational therapies with the potential to address unmet clinical needs of patients worldwide living with
neurological, endocrine and psychiatric disorders. Our business strategy includes commercializing our product portfolio, advancing
life-changing discoveries in neurology, neuroendocrinology and neuropsychiatry, discovering novel medicines to address unmet
patient needs, and acquiring rights to commercial products and drug development candidates. (*in collaboration with AbbVie Inc.
(“AbbVie”))
We have marketed INGREZZA® (valbenazine) in the United States since May 2017 as the first FDA-approved drug for the
treatment of tardive dyskinesia, and we launched ONGENTYS® (opicapone) in the United States in September 2020 as an
FDA-approved add-on treatment to levodopa/carbidopa in patients with Parkinson’s disease experiencing motor fluctuations.
INGREZZA net product sales, which represents the significant majority of our total net product sales, totaled approximately
$1.1 billion in 2021.
In addition to our marketed products:
Š We have 12 clinical development programs currently in mid-to-late-stage studies, with several registrational and Phase 2
study readouts over the next two years. Our diverse pipeline features novel mechanisms to treat intractable diseases
focused on neurology, neuroendocrinology and neuropsychiatry.
Š We receive royalties at tiered percentage rates on any net sales of ORILISSA® and ORIAHNN® from our collaboration
partner, AbbVie. AbbVie launched ORILISSA in the United States in August 2018 and launched ORIAHNN in the United
States in June 2020.
2021 Corporate Performance Highlights
We delivered strong performance in 2021, as demonstrated by the following achievements and developments:
Š
INGREZZA net product sales for 2021 increased $88.8 million, or 8.9%, to approximately $1.1 billion.
Š Completed a strategic collaboration with Heptares Therapeutics Limited (“Sosei Heptares”) to expand our clinical
psychiatry pipeline.
Š Reported positive top-line registrational data of valbenazine for the treatment of chorea in Huntington’s Disease.
Š Our collaboration partner, Mitsubishi Tanabe, reported positive top-line registrational data of valbenazine in the J-Kinect
study and submitted a marketing authorization application in Japan.
43
Š We advanced and increased the size of our clinical development pipeline by starting 9 mid-to-late-stage studies in 2021,
bringing our total to 12 programs currently in mid-to-late-stage studies.
The global COVID-19 pandemic has dramatically changed the ways in which we live and interact with one another. While
we adapt to this new shared reality, our mission remains unchanged: to relieve suffering for people with great needs, but few
options. The global COVID-19 pandemic impacted our business in 2021 by making it more challenging for our patients, as well as
our representatives, to access prescribers’ offices. It has also increased the difficulty of enrolling patients in our clinical trials, as
certain clinical trial sites were subject to closures and other challenging restrictions. As further described below, despite this
impact, we did not modify the executive officer compensation program for 2021. Most hospitals, community mental health
facilities, physicians’ offices, pharmacies and other healthcare facilities have relaxed their policies that limited access of patients
and our employees to such facilities and limited the ability of patients, pharmacies and prescribers to interact with each other.
However, we anticipate these policies may change from time to time as communities or regions grapple with outbreaks. The
ultimate impact of the COVID-19 pandemic, including any lasting effects on our revenue and the way we conduct our business, is
highly uncertain and subject to continued change. We recognize that the COVID-19 pandemic will continue to present unique
challenges for us throughout 2022.
Committee Actions in Connection with Say-on-Pay Vote
The Compensation Committee of the Board of Directors (the “Committee”) is committed to ensuring that our executive
officer compensation program is effective and aligned with our stockholders’ interests and concerns. Accordingly, critical
components of our Committee’s process continue to be (1) reviewing emerging compensation “best practices” in the United States,
with a focus toward companies of similar size, as measured by market capitalization and revenues, (2) soliciting advice from our
Committee’s independent compensation consultant and (3) listening and responding to feedback from our stockholders via our
annual say-on-pay vote and through our stockholder outreach efforts.
In 2021, we sought a say-on-pay advisory vote from our stockholders regarding our executive officer compensation program.
Each year, the Committee considers the results of the advisory vote as it completes its annual review of each pay element and the
compensation provided to our NEOs and other executive officers.
2021 Say-on-Pay Voting Results
Given the significant level of stockholder support, the Committee concluded that:
✓ executive officer compensation program continues to align executive officer pay with
stockholder interests;
✓ our executive officer compensation program provides competitive pay that encourages
retention and effectively incentivizes performance of talented NEOs and executive
officers;
✓ no significant changes to the structure of our programs are necessary; and
✓ the Committee will continue to consider the outcome of our say-on-pay votes and our
stockholders’ views when making future compensation decisions for the NEOs and
executive officers.
96%
In 2021, we received 96% of votes
cast in support of our 2021
executive officer compensation
program, and in the last five years,
we have received over 97% (on
average) of votes cast in support of
our executive compensation
programs.
During 2021, we continued our stockholder engagement efforts in order to solicit feedback on a variety of topics, including
environmental, social, governance (ESG) and executive compensation practices. We contacted stockholders representing over 68%
of outstanding stock and spoke with all stockholders that wanted to provide us with feedback. Overall, stockholders have expressed
strong support for our ESG and executive compensation practices. We are pleased with our say-on-pay advisory vote results and
stockholder feedback, and we will continue to engage with our stockholders to ensure alignment between our executive officer
compensation program and our stockholders’ interests.
Pay for Performance/At-Risk Pay
Our executive officer compensation program is designed to reward achievement of the specific strategic goals that we believe
will advance our business strategy and create long-term value for our stockholders. Consistent with our goal of attracting,
44
motivating and retaining a high-caliber executive team, our executive officer compensation program is designed to pay for
performance. We utilize compensation elements that meaningfully align our NEOs’ interests with those of our stockholders to
create long-term value. As such, a significant portion of our Chief Executive Officer’s and other executive officers’ compensation
is “at-risk,” performance-based compensation, in the form of long-term equity awards that have performance-based vesting criteria
or only have value to the executive officer if the Company’s stock price increases, and annual cash incentives that are only earned
if we achieve pre-established corporate goals.
With respect to long-term equity awards, the Committee annually considers the appropriate mix of equity awards. The
Committee believes that combining performance-based vesting equity awards with time-based vesting equity awards appropriately
promotes a focus on delivering sustainable long-term value to our stockholders, while also supporting the long-term retention of
our executive officers.
The graphics below illustrate the elements of our Chief Executive Officer’s compensation mix for 2021 and the aggregate
compensation mix for 2021 for the other NEOs as a group (excluding Dr. Onyia, who commenced employment with us in
November 2021). The percentages in the chart below reflect the actual cash incentives paid and the grant-date value of equity
awards, in each case as reported in our 2021 Summary Compensation Table.
CEO 2021 Compensation Mix*
Annual Cash
Incentive
All Other NEOs 2021 Compensation Mix*
Annual Cash
Incentive
Short-Term 10
3%
%
7%
Base
Salary
16%
RSUs
25%
PRSUs
r m 8 9 %
e
g - T
n
L o
43%
Options
Short-Term 1
5%
6%
1
%
15%
RSUs
31%
PRSUs
Base
Salary
r m 9 0 %
e
g - T
n
o
L
49%
Options
79%
At-Risk
77%
At-Risk
*
Numbers do not sum due to rounding.
45
Our Compensation Practices
Below are key elements of our executive officer compensation program, as well as problematic pay practices that we avoid:
WHAT WE DO
WHAT WE DON’T DO
✘ Provide guaranteed bonuses or base salary increases
✘ Allow for the repricing of stock options without
stockholder approval
✘ Pay dividends or dividend equivalents on unearned
shares
✘ Permit hedging or other forms of speculative
transactions by employees or directors
✘ Permit pledging by employees or directors
✘ Provide single-trigger change in control benefits
✘ Include gross-ups in new executive employment
agreements or change-in-control arrangements
✘ Provide excessive perquisites to our executive officers
✘ Provide retirement or pension benefits to our executive
officers that are not available to employees generally
✓ Heavily weight our executive officer compensation
toward “at risk,” performance-based compensation
✓ Balance short-term and long-term incentive
compensation
✓ Use multi-year vesting for all executive officer equity
awards
✓ Grant performance-based equity awards annually in the
form of PRSUs
✓ Have an incentive compensation recoupment or clawback
policy for performance-based cash and equity incentives
✓ Structure our executive officer compensation program to
minimize inappropriate risk-taking and encourage
appropriate risk-taking
✓ Cap annual cash incentives at a maximum payout amount
✓ Select peer companies that we compete with for
executive officer talent, have a similar business and are
of similar size as us, and review their pay practices
✓ Solicit advice from the Committee’s independent
compensation consultant
✓ Have meaningful equity ownership guidelines for
executive officers
✓ Hold annual say-on-pay advisory vote
Role of the Compensation Committee
As discussed in greater detail below, the Committee takes into consideration a peer group, survey data and advice from an
independent compensation consultant when setting the compensation philosophy and compensation structure for the Company. The
Committee’s complete roles and responsibilities are set forth in a written charter, which was adopted by the Board of Directors and
is available at www.neurocrine.com. Some of the significant roles and responsibilities of the Committee include reviewing,
revising, and approving:
(cid:129)
(cid:129)
(cid:129)
(cid:129)
(cid:129)
(cid:129)
(cid:129)
(cid:129)
(cid:129)
the compensation philosophy of the Company;
the corporate goals and objectives relating to the compensation of the Company’s employees, including executive
officers, and evaluating the performance of the Company, and its executive officers, in light of these corporate goals
and objectives;
compensation for all executive officers, including perquisite benefits, if any;
all promotions to executive officer positions and the hiring of all new executive officers, including employment
agreements;
recommendations to the full Board of Directors regarding all director compensation by taking into consideration peer
group data and advice from an independent compensation consultant;
guidelines for salaries, merit salary increases, cash incentive payments, stock-based grants and performance-based
stock grants for all non-executive officer employees of the Company;
equity and incentive plans, including amendments or modifications to such equity and incentive plans;
equity ownership guidelines for executive officers and directors; and
the Compensation Discussion and Analysis to be included in the Company’s annual proxy statement.
46
In addition, the Committee also has the following oversight responsibilities:
(cid:129)
(cid:129)
(cid:129)
(cid:129)
(cid:129)
overseeing the development, implementation and effectiveness of the Company’s policies and strategies with respect to
human capital and talent management, including diversity and inclusion initiatives;
administering the Company’s equity and incentive plans and employee benefit plans;
reviewing and taking into consideration stockholder feedback regarding compensation matters, including our annual
say-on-pay vote;
retaining independent compensation consultants and advisors when appropriate to advise the Committee on
compensation policies and plans; and
complying with requirements established by the SEC, assessing the risks arising from the Company’s compensation
policies and taking any actions required as a result thereof.
Compensation Philosophy
We believe that in order to create value for our stockholders, it is critical to attract, motivate and retain key executive officer
talent by providing competitive compensation packages. Accordingly, we design our executive officer compensation program to:
ATTRACT, DEVELOP &
RETAIN
executive officers with the skills and
expertise to execute our business plans
within the highly competitive life sciences
industry
MOTIVATE & REWARD
MAXIMIZE
executives fairly over time for actions
consistent with creating long-term
stockholder value
stockholder value via an appropriate blend
of short-term and long-term incentives
Our compensation philosophy for executive officers provides that cash compensation should be structured such that at least
one-third of each executive officer’s target total cash compensation, consisting of base salary and target cash incentives, is at risk
and dependent upon the Company’s achievement of specific corporate goals that drive stockholder value. Starting in 2020, 50% of
our Chief Executive Officer’s target total cash compensation is at risk under our annual cash incentive plan. Long-term equity
compensation for executive officers is generally a combination of performance-based and time-based vesting equity awards, and is
designed to motivate executive officers to increase long-term stockholder value and to reward and retain key employees.
Overall Compensation Determination Process
The implementation of the compensation philosophy is carried out under the supervision of the Committee. The Committee
uses the services of an independent compensation consultant who is retained by, and reports directly to, the Committee.
Management, under guidelines and procedures approved by the Committee, determines the compensation of our non-executive
officer employees.
In the early part of each year, the Committee deliberates and makes decisions regarding the base salary, target cash incentives
and long-term equity award components of compensation to be awarded to our executive officers, including our Chief Executive
Officer, for the new fiscal year, as well as performance-based compensation payouts for the prior fiscal year. In setting
compensation for our other NEOs, the Committee solicits the input of our Chief Executive Officer, who recommends to the
Committee the base salary, target cash incentives and long-term equity award components of compensation to be awarded to our
NEOs for the new fiscal year, as well as performance-based compensation payouts for the prior fiscal year. The Committee
remains solely responsible for making the final decisions on compensation for all of our NEOs. Our NEOs, including our Chief
Executive Officer, are not present during discussions of their respective compensation packages nor do they participate in
approving any portion of their own or other NEO compensation packages.
The Committee considers a variety of factors, as described below, which may vary from year to year, to set the compensation
of our NEOs at levels that the Committee considers to be competitive and appropriate for each NEO, using the Committee’s
professional experience and judgment:
✓ Company performance
✓ Market data from the independent compensation consultant
✓ Individual performance
✓ Retention risk
✓ Independent compensation consultant recommendations
47
✓ Chief Executive Officer’s recommendations (other than for himself), based on direct knowledge of NEO performance and
his extensive industry experience
✓ Internal pay equity among individuals and positions
✓ Criticality and scope of job function
✓ Total targeted and historical compensation
✓ Any other factors the Committee determines appropriate
In addition, during the first quarter of the year, Company-wide performance goals for the then current year are finalized by
the Committee and the Board of Directors, and progress toward these goals is reviewed at meetings throughout the year. Later in
the year, the Committee reviews the Company’s compensation philosophy, policies and procedures. Committee meetings in the
fourth quarter of the year generally focus on Company goal achievement, selection of the peer group for the following year and
executive officer performance.
Compensation Consultant
The Committee uses the services of an independent compensation consultant who is retained by, and reports directly to, the
Committee to provide the Committee with an additional external perspective with respect to its evaluation of relevant market and
industry practices. The Committee continued to engage Aon’s Human Capital Solutions practice, a division of Aon plc (“Aon”), a
third-party compensation consultant, to assist the Committee in establishing 2021 and 2022 overall compensation levels. Aon
conducted analyses and provided advice on, among other things, the appropriate peer group, executive officer compensation and
compensation trends in the life sciences industry.
In weighing its recommendations for executive officer compensation for the fiscal year 2021, the Committee directed Aon to
advise the Committee on both best practices and peer practices when designing and modifying our executive officer compensation
program in order to achieve our objectives. As part of its duties, Aon provided the Committee with the following services with
respect to 2021 compensation decisions:
(cid:129)
(cid:129)
(cid:129)
(cid:129)
(cid:129)
(cid:129)
(cid:129)
(cid:129)
carried out a comprehensive review of our peer group for use in making 2021 executive officer compensation
decisions;
provided compensation data for the peer group and relevant executive officer pay survey data and an analysis of the
compensation of the Company’s executive officers as compared to this market data;
provided a competitive assessment of, and comparison to, incentive design and executive officer pay program structure
based on peer group data;
conducted a comprehensive pay for performance assessment;
provided recommendations regarding the annual cash incentive and long-term equity incentive program design for
2021;
assisted the Committee with the design of 2021 pay programs consistent with the Company’s business strategy and pay
philosophy;
provided background information and data for 2021 adjustments to the Company’s executive officer compensation
program consistent with good governance practices and the Company’s objectives; and
prepared an analysis of the Board of Directors’ 2021 compensation program.
The Committee annually assesses whether the work of Aon as a compensation consultant has raised any conflict of interest,
taking into consideration the following factors: (i) the provision of other services, if any, to the Company by Aon; (ii) the amount
of fees the Company paid to Aon as a percentage of the firm’s total revenue; (iii) Aon’s policies and procedures that are designed
to prevent conflicts of interest; (iv) any business or personal relationship of Aon or the individual compensation advisors employed
by the firm with an executive officer of the Company; (v) any business or personal relationship of the individual compensation
advisors with any member of the Committee; and (vi) any stock of the Company owned by Aon or the individual compensation
advisors employed by the firm. The Committee has determined, based on its analysis of the above factors, that the work of Aon and
the individual compensation advisors employed by Aon as compensation consultants to the Company have not created any conflict
of interest.
Competitive Assessment of Compensation—Peer Group and Market Data
2021 Peer Group. In September 2020, when developing a proposed list of our peer group companies to be used in connection
with making compensation decisions for 2021, Aon selected primarily recently commercial biopharmaceutical companies or late-
stage high valuation pre-commercial companies with revenues generally between $200 million and $2.5 billion, market
48
capitalization between $3.5 billion and $30 billion and employee headcount up to 3,000, reflecting our then-current revenue,
market capitalization and headcount.
Based on these criteria, Aon recommended, and our Committee approved, the following peer group for 2021:
ACADIA Pharmaceuticals, Inc.
Alnylam Pharmaceuticals, Inc.
bluebird bio, Inc.
Incyte Corporation
Nektar Therapeutics
Ultragenyx Pharmaceutical Inc.
Alexion Pharmaceuticals, Inc.
BeiGene, Ltd.
Exelixis, Inc.
Ionis Pharmaceuticals, Inc.
Sarepta Therapeutics, Inc.
United Therapeutics Corporation
Alkermes plc
BioMarin Pharmaceuticals, Inc.
Horizon Therapeutics plc
Jazz Pharmaceuticals plc
Seattle Genetics, Inc.
The 2021 peer group reflects the following changes from our 2020 peer group, all of which were recommended by Aon and
approved by our Committee: (i) the removal of Sage Therapeutics, Inc., which no longer met the criteria above; and (ii) the
addition of Horizon Therapeutics plc, which met the criteria above. At the time of approval of our 2021 peer group, our Company
was approximately in the 57th percentile of the peer group for market capitalization and in the 50th percentile of the peer group for
revenue.
2021 Market Data. In early 2021, Aon completed an assessment of executive officer compensation based on the 2021 peer
group to inform the Committee’s determinations of executive officer compensation for 2021. The data for this assessment was
compiled from multiple sources, including: (i) the 2021 peer group companies’ publicly disclosed information, or public peer data;
and (ii) data from public biotechnology and pharmaceutical companies in the 2020 Radford Global Life Sciences Survey that had a
market capitalization between $3.5 billion and $30 billion, or the general survey data. The components of this data were based on
the availability of sufficient comparative data for an executive officer’s position. The public peer data and general survey data,
collectively referred to in this proxy statement together as market data, were reviewed by the Committee, with the assistance of
Aon, and used as one reference point, in addition to other factors, in setting our executive officers’ compensation for 2021.
Use of 2021 Market Data. The Committee generally reviews target total direct compensation, comprising both target cash
compensation and equity compensation, against the market data described above primarily to ensure that our executive officer
compensation program as a whole is positioned competitively to attract and retain the highest caliber executive officers and that the
total direct compensation opportunity for the executive officer group is aligned with our corporate objectives and strategic needs.
The Committee does not have a specific target compensation level for the NEOs; rather, the Committee reviews a range of market
data reference points (generally at the 25th, 50th and 75th percentiles of the market data) with respect to target total direct
compensation, target total cash compensation (including both base salary and the target annual cash incentive) and equity
compensation (valued based on an approximation of grant date fair value). In making compensation determinations, the Committee
considers the market data, along with the other factors described above under “Overall Compensation Determination Process.”
Components of Executive Compensation
The Committee considers each executive officer’s performance, contributions to Company goals, responsibilities,
experience, qualifications, and where in the competitive range the executive officer’s compensation compares to the Company’s
peer group when determining the appropriate compensation for each executive officer. The Committee considers each component
of compensation independently and each component in the context of each executive officer’s total compensation. Compensation
for our NEOs currently consists of three key elements that are designed to reward performance in a simple and straightforward
manner: base salaries, annual performance-based cash incentives and long-term equity awards, which generally include restricted
stock units, or RSUs, and stock options, which both vest based on continued service over time, and performance-based restricted
stock units, or PRSUs, which vest upon achievement of key corporate goals that we believe will create stockholder value. The
purpose and key characteristics of each of these elements are summarized below.
Compensation Element
Base Salary
Purpose of This Element
Key Characteristics
Designed to compensate
competitively at levels necessary
to attract and retain qualified
executive officers in the life
sciences industry; generally based
on the scope of each executive
officer’s responsibilities, as well
Fixed cash compensation where
year-to-year adjustments to each
executive officer’s base salary are
based upon sustained superior
performance, changes in the
general level of base salaries of
persons in comparable positions
49
as his/her qualifications, breadth
of experience, performance record
and depth of applicable functional
expertise; established and adjusted
to be appropriate as compared to
the applicable market data,
enabling the Company to attract,
motivate, reward and retain highly
skilled executive officers; gives
executive officers a degree of
certainty in light of having a
majority of their compensation at
risk.
Motivates executive officers to
achieve our short-term strategic
plan and milestones that are
designed to drive long-term
growth and performance while
providing flexibility to respond to
opportunities and changing market
conditions.
Annual Cash Incentives
Long-Term Equity
Incentives (RSUs)
Motivates executive officers to
achieve our business objectives by
tying compensation to the
performance of our common stock
over the long term; creates an
ownership culture; motivates our
executive officers to remain with
the Company by mitigating swings
in incentive values during periods
when market volatility impacts our
50
within our industry, and any
average merit salary increase for
such year for all employees of the
Company established by the
Committee, as well as other
factors the Committee judges to be
pertinent during an assessment
period.
In making base salary decisions,
the Committee exercises its
judgment to determine the
appropriate weight to be given to
each of these factors. Although
adjustments may also be made
during the year for special
circumstances, no mid-year
adjustments have been made in the
past five years.
Annual cash award opportunity
based on corporate performance
compared to pre-established
corporate goals with
pre-established target and
maximum payout opportunities for
each executive officer.
The cash incentive program,
including corporate goals and
target payouts, are reviewed and
approved by the Committee
annually and may include
individual performance targets for
each executive officer. The
corporate goals are prepared in an
interactive process between
management and the Committee
based on the Company’s business
plan and budget for the year. Cash
incentive payments are linked to
the attainment of overall corporate
goals and the individual
performance of each executive
officer, or other factors the
Committee determines
appropriate.
RSUs generally vest on an annual
basis, ratably over four years
subject to executive officer’s
continued service; the ultimate
value realized varies with our
common stock price.
Long-Term Equity
Incentives (Stock Options)
Long-Term Equity
Incentives (PRSUs)
Other Compensation
stock price; directly motivates an
executive officer to maximize
long-term stockholder value and
serve as an effective tool for
incentivizing and retaining those
executive officers who are most
responsible for influencing
stockholder value.
Motivates executive officers to
achieve our business objectives by
tying incentives to the
appreciation of our common stock
over the long-term and creates an
ownership culture.
Creates a strong link to the
Company’s long-term
performance, creates an ownership
culture and closely aligns the
interests of our executive officers
with those of our stockholders
because the value that the grants
deliver is directly dependent on
our performance goal attainment.
Provides benefits that promote
employee health and welfare,
which assists in attracting and
retaining our executive officers;
certain additional benefits reflect
market standards and are
reasonable and necessary to attract
and/or retain each of our executive
officers and allow the executive
officers to realize the full benefit
of the other elements of
compensation we provide.
51
Stock options with an exercise
price equal to the fair market value
on the date of grant generally
vesting monthly over four years
subject to executive officer’s
continued service; the ultimate
realizable value, if any, depends
on the appreciation of our
common stock price from the date
of grant. The Committee views
stock options as performance-
based compensation, as stock
options provide a return to our
executive officers only if the
market price of our common
shares appreciates over the stock
option term.
PRSUs only vest upon
achievement of objectively
measurable performance goals tied
to our business strategy that focus
executive officers on achieving
these long-term Company
performance goals and increasing
stockholder value.
Executive officers are eligible to
participate in the Company’s
employee benefit plans on the
same terms as all other full-time
employees. These plans include
medical, dental and life insurance
and eligibility to participate in the
Company’s employee stock
purchase plan. Additional benefits
include disability insurance
premiums, an annual physical
examination and financial
planning services.
The terms of the Company’s
401(k) Savings Plan (the “401(k)
Plan”) provide for executive
officer and broad-based employee
participation on the same general
terms. Under the 401(k) Plan, all
Company employees are eligible
Severance and Change in Control
Benefits
to receive basic matching
contributions from the Company
that vest annually over three years
from date of hire.
Serves our retention objectives by
helping our executive officers
maintain continued focus and
dedication to their responsibilities
to maximize stockholder value,
including in the event of a
transaction that could result in a
change in control of the Company.
Provides protection in the event of
a termination of employment
under specified circumstances,
including following a change in
control of the Company as
described below under “Potential
Payments Upon Termination or
Change-in-Control.”
Compensation components for
executive officers in the event of a
termination by the Company
without cause or termination by
the executive officer due to
constructive termination within six
months after the consummation of
a change in control include
payments for annual base salary, a
cash compensation payment, cash
compensation for the value of all
outstanding stock awards, limited
Company-paid health insurance
benefits, and any accrued vacation
and any accrued benefits under
any plans of the Company in
which the executive officer is a
participant. Eligibility for these
benefits requires a signed release
agreement by the executive
officer.
Certain individuals whose offer
letters were first entered into or
amended in or before 2007 are
entitled to tax gross-ups in the
event of certain levels of payments
they may receive upon a change in
control. We have not entered into
any new change in control
gross-ups for executive officers
since 2007, nor does the Company
intend to enter into any new
agreements containing such
gross-ups. Accordingly,
Dr. Gorman’s employment
agreement is the only one of our
NEOs whose agreement does
provide for such tax gross-ups.
52
2021 and Early 2022 Named Executive Officer Compensation Decisions
2021 Base Salaries
In February 2021, our Committee approved the 2021 base salaries for the NEOs (other than Dr. Onyia, who commenced
employment with us in November 2021) as set forth in the table below. In making these 2021 decisions, the Committee considered
the Company’s performance in 2020, market data for each individual NEO’s position, as well as the individual’s historical salary
levels (if applicable), our then-current budget for employee salary adjustments, anticipated role and responsibilities for the coming
year, along with the other factors described under “Overall Compensation Determination Process” set forth above. Specifically, the
Committee determined that the increases reflected in the table below were appropriate due to (i) the Company’s performance in
2020, (ii) the adjustments made to our peer group for 2021, which resulted in shifts in median salaries for similarly situated
executives, (iii) retention of our NEOs and (iv) our NEOs’ experience, job criticality and performance. Although the Committee
does not have a specific target compensation level for each NEO, the NEOs’ salaries are generally within the 25th to 50th
percentiles of the market data.
Named Executive Officer
Kevin C. Gorman, Ph.D.
Matthew C. Abernethy
Eric Benevich
Jude Onyia, Ph.D.
Eiry W. Roberts, M.D.
2021
Base Salary
$825,000
$588,800
$534,900
$575,000
$604,700
%
Change
from 2020 Base
Salary
6.5%
8.0%
7.0%
N/A
5.0%
Dr. Onyia joined the Company in November 2021 with a base salary rate of $575,000. In determining Dr. Onyia’s base
salary, the Committee considered peer group data for similarly situated executives, internal pay equity among our executive
officers, and the criticality and scope of his job function.
New Hire Inducement Advance. Dr. Onyia received a one-time cash inducement advance in the amount of $175,000, which
will be deemed earned when Dr. Onyia completes two full years of employment with the Company. The inducement advance is
repayable in full to the Company in the case of a voluntary resignation or termination for cause within two years of Dr. Onyia’s
employment commencement date.
2021 Annual Cash Incentives
In February 2021, the Committee approved the 2021 target bonus opportunities as a percentage of base salary for the NEOs
(other than Dr. Onyia, who commenced employment with us in November 2021) as set forth in the table below. After considering
market data for each NEO’s position, no changes were made to the target bonus opportunities of our NEOs who were employed
with us in 2020. In connection with Dr Onyia’s hiring in November 2021, the Committee approved his target bonus percentage
after considering both peer group data for similarly situated executives and internal pay equity among our executive officers.
Executive Officer
Chief Executive Officer
All Other Executive Officers
2021 Target
Bonus
(% of
Base
Salary)
100%
50%
In January 2021, the Committee approved the corporate goals described below for our 2021 annual cash incentive plan. Our
corporate goals are directly aligned with our specific strategic goals that we believe will create long-term stockholder value,
including achieving a net revenue target from sales of INGREZZA, advancing our clinical development programs, expanding our
clinical pipeline, maximizing the value of valbenazine, hiring a new Chief Scientific Officer, and certain other corporate and
financial goals. The Committee did not assign specific relative weightings to the corporate goals for 2021. The maximum bonus
payout for each NEO was capped at 150% of their target bonus opportunity. Over a series of meetings conducted between
November 2021 and January 2022, the Committee engaged in a robust dialogue with management, the Board Chair and other
Board members (including at Board meetings), and its independent compensation consultant to evaluate the accomplishments and
53
performance of the Company relative to the goals. The Committee did not factor into its evaluation the impact the Covid-19
pandemic had on the Company’s goal achievement. Although specific weightings were not assigned to the corporate goals, the
Committee did discuss the relative importance of each of these goals to our stockholders and ultimately determined that the
INGREZZA net revenue goal, the advancement of our clinical pipeline, and the addition of new compounds to our research and
development pipeline via the license and collaboration agreement with Sosei Heptares were the more impactful goals for
stockholders. After these discussions, the Committee conservatively determined our 2021 corporate goal achievement at 85%.
Corporate Goal
Target
Overall
Achievement
Achieve INGREZZA Net Revenue
Target
Expand valbenazine Portfolio
Advance crinecerfont Program
Expand/Advance Clinical Pipeline
Achieve INGREZZA net revenue between $1.1B and $1.2B
$1.1B
Successful completion of Phase 3 HD trial
Initiate registrational studies in ATS and CPD
FDA acceptance of Fast Track Application
Meet enrollment goals for program
Advance multiple Phase 2/3 clinical programs
Achieved
Achieved
Achieved
Not Met
Achieved
In-license one additional compound
Overachieved
Financial/Operational
Stay on budgeted guidance for non-GAAP operating expense
Implement long-term tax, campus and capital structure
General Business & People
Hire a Chief Scientific Officer
Implement new hybrid work strategy
Overall Achievement:
Achieved
Achieved
Achieved
Achieved
85%
Notwithstanding the Committee’s determination of our 2021 corporate goal achievement at 85%, the Committee had discretion
to eliminate any NEO’s bonus or to reduce or increase the amount of any NEO’s bonus payout amount. In January 2022, the
Committee exercised its discretion to increase or decrease the bonus payout amount for each NEO (other than Dr. Gorman) because of
their individual performance contributing to achievement of our corporate goals, while continuing to navigate the extraordinary
circumstances resulting from the COVID-19 pandemic. Specifically, the Committee recognized (1) Mr. Abernethy for his overall
leadership in helping the Company achieve its goals and for leading the efforts to successfully achieve our non-GAAP operating
expense budgets and implementing long-term tax, campus and capital structure plans, (2) Dr. Roberts for advancing or initiating our
12 clinical development programs in mid-to-late-stage studies, as well as her contributions to the Company’s strategic collaboration
with Sosei Heptares, and (3) Dr. Onyia for quickly making a more substantial impact than was anticipated in his short time with the
Company. After making these determinations, the Committee approved the bonus payout amounts set forth in the table below.
Named Executive Officer
Kevin C. Gorman, Ph.D.
Matthew C. Abernethy
Eric Benevich
Jude Onyia, Ph.D. (1)
Eiry W. Roberts, M.D.
2021 Target Bonus
2021 Actual Bonus Paid
% of Base
Salary
100 % $
50 % $
50 % $
50 % $
50 % $
$
825,000
294,400
267,450
26,170
302,350
% of Target
Bonus
85 %
90 %
80 %
100 %
90 %
$
701,250
264,960
213,960
26,170
272,115
$
$
$
$
$
(1)
Dr. Onyia’s bonus was pro-rated due to his commencement of employment with us in November 2021.
54
2022 Base Salary and Annual Cash Incentive Decisions
In January 2022, after considering the same factors described under “2021 Base Salary Decisions” and “Overall
Compensation Determination Process” above, our Committee reviewed and determined the 2022 base salaries and target bonus
percentages for each of the NEOs as set forth in the table below. The target bonus percentages for our NEOs remained the same.
Named Executive Officer
Kevin C. Gorman, Ph.D.
Matthew C. Abernethy
Eric Benevich
Jude Onyia, Ph.D.
Eiry W. Roberts, M.D.
2021 Long-Term Equity Awards
2022
Base Salary
$
$
$
$
$
860,000
618,240
556,296
575,000
631,912
2022 Target
Percentage of
Base Salary
100
50
50
50
50
%
%
%
%
%
2021 Equity Award Mix. In February 2021, the Committee granted long-term equity awards to our NEOs (other than
Dr. Onyia, who commenced employment with us in November 2021) in the form of stock options, RSUs and PRSUs after
determining that these three types of equity awards continued to provide the appropriate balance of long-term and performance-
based incentives for our executive officers. The Committee altered the allocation of equity awards in 2021 to decrease the amount
of RSUs and increase the amount of PRSUs in order to place more emphasis on performance-based incentives that further align our
NEOs’ financial interests with those of our stockholders. The aggregate value of each NEO’s long-term equity awards was
generally allocated 50% to stock options, 15% to RSUs and 35% to PRSUs.
2021 Equity Award Vesting Criteria. The Committee determined that the February 2021 equity grants vest as follows: (i) the
stock options vest in equal monthly installments over a four-year period; (ii) the RSUs vest in equal annual installments over a
four-year period; and (iii) the PRSUs vest on the date, or dates, that the Committee determines achievement of two underlying
performance goals, each of which must occur before March 31, 2023. The goals underlying the PRSUs target certain clinical and
regulatory outcomes involving two of our development programs which we believe will drive stockholder value within the
27-month performance period commencing on January 1, 2021 and ending on March 31, 2023. The actual number of units subject
to the PRSUs will be determined based on the level of achievement of such goals, with minimum, target and maximum levels
specified in the Grants of Plan-Based Awards During the Fiscal Year Ended December 31, 2021 table.
New Hire Awards. In connection with his commencement of employment, on November 29, 2021, Dr. Onyia received (i) an
initial stock option grant with a Black-Scholes value of $4,500,000, 25% of which will vest on the first anniversary of the grant
date, and the remainder of which will vest in equal monthly installments thereafter over three years, (ii) a new hire grant of RSUs
with a value of $1,500,000 which vests in equal annual installments over four years, (iii) a new hire grant of PRSUs with a target
value of $500,000, or the 2020 PRSUs, and (iv) a new hire grant of PRSUs with a target value of $1,000,000, or the 2021 PRSUs.
The 2020 PRSUs, which share the same terms as the PRSUs awarded to our other NEOs in February 2020, will vest on the date, or
dates, that the Committee determines achievement of two underlying performance goals related to (i) the commercialization of
INGREZZA and (ii) the advancement and enhancement of our product candidate pipeline, each of which must occur within the
three-year performance period commencing on January 1, 2020 and ending on December 31, 2022. The 2021 PRSUs, which share
the same terms as the PRSUs awarded to our other NEOs in February 2021, will vest as described above. The Committee and
Board of Directors structures the vesting schedules for new hire awards in a manner that serves as an effective tool for
incentivizing and retaining our NEOs.
2022 Long-Term Equity Awards
2022 Equity Award Mix. In January 2022, the Committee granted long-term equity awards to our NEOs in the form of stock
options, RSUs and PRSUs after determining that these three types of equity awards continue to provide the appropriate balance of
long-term and performance-based incentives for our executive officers. The Committee decreased the overall value of the awards
provided to the NEOs and continued to place emphasis on performance-based incentive to align our NEO’s financial interests with
those of our stockholders. The Committee generally targeted allocating the aggregate value of each NEO’s long-term equity
awards to approximately 50-60% stock options, 15-20% RSUs and 20-35% to PRSUs, primarily based on each NEO’s expected
impact on the PRSUs.
55
2022 Equity Award Vesting Criteria. The Committee determined that the February 2022 stock option and RSU grants will be
subject to the same general vesting schedules as the February 2021 stock option and RSU grants as described above. The PRSUs
will vest on the date, or dates, that the Committee determines achievement of two underlying performance goals, each of which
must occur by December 31, 2024. Such goals relate to specific metrics related to regulatory milestones and the advancement of
certain clinical programs which we believe will drive stockholder value within the 36-month performance period commencing on
January 1, 2022 and ending on December 31, 2024. The actual number of units subject to the PRSUs will be determined based on
the level of achievement of such goals, with minimum, target and maximum levels specified.
Retirement Benefits
The Company’s matching contribution to the 401(k) Plan for 2021 was 100% of eligible participant contributions, subject to
applicable federal limits. Our NEOs are eligible for these benefits on the same basis as our other employees. The Company made
no additional discretionary contributions to the 401(k) Plan in 2021.
Officer Equity Ownership Guidelines
Since 2014, we have maintained equity ownership guidelines for our executive officers. The Committee amended these
guidelines in November 2018 to increase the guideline for our Chief Executive Officer from three to six times his base salary. The
equity ownership guidelines are designed to further align the interests of the executive officers with those of our stockholders by
ensuring that our executive officers have a meaningful financial stake in the Company’s long-term success. The equity ownership
guidelines establish a minimum equity ownership level by position, with such values determined based on the value of our
common stock owned by such persons as of certain measurement dates. All shares directly or beneficially owned by the executive
officer, including the net exercisable value of outstanding vested stock options (where the market price of our common stock
exceeds the strike price of such option) are included in determining the value of equity owned under our equity ownership
guidelines. The equity ownership requirements are as follows:
Chief Executive Officer
6 times base salary
All other executive officers
1 times base salary
New executive officers are granted a five-year period to reach the equity ownership requirements set forth in the guidelines
and are expected to make annual progress toward the equity ownership requirements during this five-year period. When an
executive officer does not meet the equity ownership requirements set forth in the guidelines, he/she is restricted from selling any
held shares until such requirements are met. Additionally, should an executive officer who does not meet the equity ownership
requirements choose to exercise a stock option or vest in any RSUs, he or she is required to retain all shares acquired through those
transactions, aside from any shares necessary to fulfill such transaction related tax obligations, until full compliance with the equity
ownership guidelines is attained.
Annual compliance with the equity ownership guidelines is assessed during the first quarter of each year. As of March 15,
2022, each of our executive officers is in compliance with the equity ownership guidelines.
Equity Trading Policies and Procedures
The Company has policies and procedures in place that prohibit direct or indirect participation by employees and directors of
the Company in transactions involving trading activities in Company common stock which by their aggressive or speculative
nature may give rise to an appearance of impropriety. Such prohibited activities would include the purchase of put or call options,
or the writing of such options as well as short sales, hedging transactions such as “cashless” collars, forward sales, equity swaps
and other related arrangement which may indirectly involve short-sale and any other transactions designed for profit from short-
term movement in the Company’s stock price. In addition, no officer, director or employee of the Company may margin, or make
any offer to margin, any Company common stock, including without limitation, borrowing against such stock, at any time.
To the Company’s knowledge, there were no transactions involving hedging, pledging or margining Company common stock
during 2021, nor were there any such transactions as of the Record Date.
The Company also requires directors and executive officers to complete all equity related open-market purchase and sale
transactions via a 10b5-1 plan. The 10b5-1 plans typically cover, among other transactions, direct sales and purchases of Company
56
stock, as well as same-day-sales related to option exercises and sales of stock for tax payments upon the vesting of RSUs. All
10b5-1 plans are required to have a waiting period from the election date to the date of the first transaction. Additionally, Company
policy restricts the executive officers from amending a 10b5-1 trading plan.
Compensation Recoupment Policy
In February 2017, we adopted a clawback policy, even though the SEC has not yet issued final rules implementing the Dodd-
Frank Wall Street Reform and Consumer Protection Act requirement. Our policy currently provides that, in the event that (i) we
are required to prepare an accounting restatement for any fiscal quarter or year due to our material noncompliance with any
financial reporting requirement and (ii) it is determined that misconduct contributed to the noncompliance that resulted in the
obligation to restate our financial statements, we may take action to recover from any officer whose misconduct contributed to the
noncompliance which resulted in the obligation to restate our financial statements, the incentive compensation, including cash and
equity, that was paid or vested to such officer during the twelve-month period preceding the restatement obligation. We will also
comply with the requirements of the Dodd-Frank Wall Street Reform and Consumer Protection Act and will modify our policy, if
necessary, once the SEC adopts final regulations on the subject.
Tax Considerations
Internal Revenue Code Section 162(m)
Under Section 162(m) of the Internal Revenue Code (“Section 162(m)”), compensation paid to each of the Company’s
“covered employees” that exceeds $1 million per taxable year is generally non-deductible unless the compensation qualifies for
certain grandfathered exceptions (including the “performance-based compensation” exception) for certain compensation paid
pursuant to a written binding contract in effect on November 2, 2017 and not materially modified on or after such date.
Although the Committee will continue to consider tax implications as one factor in determining executive officer
compensation, the Committee also looks at other factors in making its decisions and retains the flexibility to provide compensation
for the Company’s NEOs in a manner consistent with the goals of the Company’s executive officer compensation program and the
best interests of the Company and its stockholders, which may include providing for compensation that is not deductible by the
Company due to the deduction limit under Section 162(m). The Committee also retains the flexibility to modify compensation that
was initially intended to be exempt from the deduction limit under Section 162(m) if it determines that such modifications are
consistent with the Company’s business needs.
Internal Revenue Code Section 409A
Section 409A governs deferred compensation arrangements. The Committee structures our deferred compensation programs
with the assistance of our external counsel to be exempt from, or compliant with, Section 409A.
Accounting Considerations
The Company accounts for equity compensation paid to our employees under the FASB ASC Topic 718, which requires us
to estimate and record an expense over the service period of the equity award. Our cash compensation is recorded as an expense at
the time the obligation is incurred. The accounting impact of our compensation programs are one of many factors that the
Committee considers in determining the structure and size of our executive officer compensation programs.
Risk Analysis of Our Compensation Program
Our Committee has reviewed our compensation policies as generally applicable to our employees and believes that our
policies do not encourage excessive or inappropriate risk taking and that the level of risk that they do encourage is not reasonably
likely to have a material adverse effect on the Company. As part of its assessment, the Committee considered, among other factors,
the allocation of compensation among base salary and short- and long-term compensation, our approach to establishing Company-
wide and individual financial, operational and other performance targets, our bonus structure of payouts at multiple levels of
performance (including maximum payout caps and payments for performance below target levels) and the nature of our key
performance metrics. We believe these practices encourage our employees to focus on sustained, long-term Company growth,
which we believe will ultimately contribute to the creation of stockholder value.
57
EXECUTIVE COMPENSATION AND OTHER INFORMATION
Summary Compensation Table The following table sets forth the compensation paid by the Company for the fiscal years
ended December 31, 2019, 2020 and 2021 to the NEOs named below.
Summary Compensation Table
Year
Salary
($)(2)
Bonus
($)(2)
Option
Awards
($)(3)
Stock
Awards
($)(4)
All
Other
Compensation
($)(5)
Name and Principal Position (1)
Kevin C. Gorman, Ph.D. . . . . .
Chief Executive Officer
2019 $ 725,000 $ 667,000 $ 6,000,525 $ 2,000,071
2020 $ 775,000 $ 542,500 $ 7,124,633 $ 5,375,188
2021 $ 825,000 $ 701,250 $ 6,093,752 $ 6,406,366
Matthew C. Abernethy . . . . . .
Chief Financial Officer
2019 $ 495,600 $ 284,970 $ 3,750,345 $ 1,250,035
2020 $ 545,200 $ 190,820 $ 2,999,869 $ 2,500,266
2021 $ 588,800 $ 264,960 $ 2,625,019 $ 2,375,068
Eric Benevich . . . . . . . . . . . . .
Chief Commercial Officer
2019 $ 467,200 $ 280,320 $ 3,750,345 $ 1,250,035
2020 $ 499,900 $ 199,960 $ 2,999,869 $ 3,000,257
2021 $ 534,900 $ 213,960 $ 2,625,019 $ 2,375,068
Jude Onyia, Ph.D. . . . . . . . . . .
Chief Scientific Officer
Eiry W. Roberts, M.D.
. . . . . .
Chief Medical Officer
2021 $
52,340 $
26,170 $ 4,500,035 $ 3,000,136
2019 $ 538,200 $ 309,465 $ 3,000,285 $ 1,000,076
2020 $ 575,900 $ 215,963 $ 2,624,855 $ 2,375,242
2021 $ 604,700 $ 272,115 $ 2,625,019 $ 2,875,113
$
$
$
$
$
$
$
$
$
$
$
$
$
58,230
63,311
55,044
42,170
45,021
53,003
45,547
48,974
56,139
2,949
51,889
56,073
48,649
Total ($)
9,450,826
$
$ 13,880,632
$ 14,081,412
$
$
$
$
$
$
$
$
$
$
5,823,120
6,281,176
5,906,850
5,793,447
6,748,960
5,805,086
7,581,630
4,899,915
5,848,033
6,425,596
(1)
(2)
(3)
(4)
(5)
The titles and capacities set forth in the table above are as of December 31, 2021. Dr. Onyia joined the Company as Chief Scientific Officer in November
2021. Dr. Onyia’s employment contract, including the terms of his salary, bonus and equity awards, is described below under the section titled “Agreements
with Named Executive Officers.”
Salary and bonus figures represent amounts earned during each respective fiscal year, regardless of whether part or all of such amounts were paid in
subsequent fiscal year(s). Bonuses are awarded pursuant to a bonus program.
The amounts shown are the full grant date fair value in accordance with Accounting Standards Codification 718-10, Compensation—Stock Compensation
(ASC 718). The assumptions used to calculate the grant date fair value of stock awards are set forth under Note 8 of the Notes to the Consolidated Financial
Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021 filed with the SEC on February 11, 2022. The
grant date fair values of option awards for 2019, 2020 and 2021 (other than Dr. Onyia’s 2021 new hire award) are based on per share Black-Scholes values
of $45.00, $48.90, and $53.52, respectively. Dr. Onyia’s new hire option awards are based on per share Black-Scholes value of $37.45.
Stock awards consist of RSUs and PRSUs and may be subject to deferred delivery arrangements. The amounts shown are the full grant date fair value in
accordance with Accounting Standards Codification 718-10, Compensation—Stock Compensation (ASC 718). The assumptions used to calculate the grant
date fair value of stock awards are set forth under Note 8 of the Notes to the Consolidated Financial Statements included in the Company’s Annual Report on
Form 10-K for the year ended December 31, 2021 filed with the SEC on February 11, 2022. The fair values of RSUs granted in 2019, 2020 and 2021 are
based on the Company’s closing market price per share on the grant date, which was $81.05 for all 2019 grants, $102.90 for all 2020 grants, and $117.63 for
all 2021 grants (other than Dr. Onyia’s new hire grant, for which it was $84.74).
Includes all other compensation as described in the table below.
58
All Other Compensation Table
Name
Kevin C. Gorman, Ph.D.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Matthew C. Abernethy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Eric Benevich.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
401(k)
Employer
Match
Insurance
Premiums
(1)
Total
Other
Year
2019 $ 16,800 $ 41,430 $58,230
2020 $ 17,100 $ 46,211 $63,311
2021 $ 17,100 $ 37,944 $55,044
2019 $ 16,800 $ 25,370 $42,170
2020 $ 17,100 $ 27,921 $45,021
2021 $ 17,100 $ 35,903 $53,003
2019 $ 16,800 $ 28,747 $45,547
2020 $ 16,800 $ 32,174 $48,974
2021 $ 16,800 $ 39,339 $56,139
Jude Onyia, Ph.D.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2021 $ — $
2,949 $ 2,949
Eiry W. Roberts, M.D. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2019 $ 16,800 $ 35,089 $51,889
2020 $ 17,100 $ 38,973 $56,073
2021 $ 17,100 $ 31,549 $48,649
(1)
The amounts in this column represent the costs for medical insurance for Company-wide plans, as well as disability insurance premiums and related tax
gross-up amounts.
Grants of Plan-Based Awards During the Fiscal Year Ended December 31, 2021
The following table sets forth certain information regarding plan based awards granted by the Company during the year
ended December 31, 2021 to the NEOs below:
Estimated Future Payouts Under PRSU Awards (1)
Name
Kevin C. Gorman, Ph.D.
. . .
Matthew C. Abernethy.
. . . .
Eric Benevich.
. . . . . . . . . . .
Grant
Date
2/8/2021
2/8/2021 (1)
2/8/2021
2/8/2021
2/8/2021 (1)
2/8/2021
2/8/2021
2/8/2021 (1)
2/8/2021
Jude Onyia, Ph.D.
. . . . . . . . 11/29/2021
Eiry W. Roberts, M.D. . . . . .
11/29/2021 (1)(4)
11/29/2021 (4)
11/29/2021
2/8/2021
2/8/2021
2/8/2021
Minimum (#) Target (#) Upside (#) Maximum (#)
27,896
37,193
—
46,491
8,502
12,752
—
17,003
8,502
12,752
—
17,003
7,868
4,131
11,801
5,901
—
7,082
15,735
9,442
12,752
17,003
—
21,254
All Other
Stock Awards:
Number of
Shares of
Stock or Units
(#)(2)
All Other
Option Awards:
Number of
Securities
Underlying
Options (#)(2)
Exercise
Price of
Option
Awards
($/Sh)(2)
Grant Date
Fair
Value (3)
17,269
7,439
7,439
17,702
7,439
$
$
113,863 $
— $ 2,031,353
— $ 4,375,013
117.63 $ 6,093,752
$
$
49,049 $
875,050
— $
— $ 1,500,018
117.63 $ 2,625,019
$
$
49,049 $
— $
875,050
— $ 1,500,018
117.63 $ 2,625,019
$
$
$
120,169 $
— $ 1,500,068
— $ 1,000,017
500,051
— $
84.74 $ 4,500,035
$
$
49,049 $
— $
875,050
— $ 2,000,063
117.63 $ 2,625,019
(1)
(2)
Represents the number of shares that may be earned under the PRSUs granted to NEOs in 2021 under the Company’s 2020 Plan. The PRSUs will vest on the
date, or dates, that the Committee determines achievement of two underlying performance goals, each of which must occur before March 31, 2023. Such
goals relate to specific metrics related to the advancement of certain clinical programs which we believe will drive stockholder value within the 27-month
performance period commencing on January 1, 2021 and ending on March 31, 2023. The actual number of units subject to the PRSUs will be determined
based on the level of achievement of such goals, with minimum, target and maximum levels specified.
All options, RSUs and PRSUs were granted and approved on the same date with option awards having an exercise price equal to the closing market price of
the Company’s common stock on the date of grant. All option awards are time-based awards, which vest monthly, on a pro-rata basis, over four years and
have an option term of ten years. These restricted stock units vest annually, on a pro-rata basis, over a four-year period.
59
(3)
(4)
Reflects the grant date per share Black-Scholes value of $53.52 for option awards and the grant date per share value of $117.63 for RSUs, each granted on
February 8, 2021 (other than with respect to Dr. Onyia’s new hire equity awards) which was calculated in accordance with ASC 718. The grant date per
share Black-Scholes value for Dr. Onyia’s new hire option awards and restricted stock units was $37.45 and $84.74, respectively.
Represents additional PRSU grants made to Dr. Onyia, which grant was made on November 29, 2021 and was made to align with the PRSU grant that was
made to the other executive officers in February 2021 and February 2020. The performance criteria for such 2021 grant remains the same as outlined in
(1) above. The performance criteria for such 2020 grant remains the same as the February 2020 PRSU grant in that such PRSUs vest upon: achievement of
two underlying performance goals, each of which must occur before December 31, 2022. Such goals relate to specific metrics related to (i) the
commercialization of INGREZZA and (ii) the advancement and enhancement of our product candidate pipeline, each within the three-year performance
period commencing on January 1, 2020 and ending on December 31, 2022. The actual number of units subject to the PRSUs will be determined based on
level of achievement of such goals, with minimum, target, upside and maximum levels specified.
Agreements with Named Executive Officers
Kevin C. Gorman, Ph.D. has an employment contract that provides that: (i) Dr. Gorman will serve as the Company’s
Executive Vice President and Chief Operating Officer commencing on August 1, 2007 at an initial annual salary of $400,000,
subject to annual adjustment by the Board of Directors (subsequent to entering into the employment contract, Dr. Gorman became
Chief Executive Officer and his annual base salary for 2021 is $825,000); (ii) the agreement terminates upon death, disability,
termination by the Company with or without cause, constructive termination or voluntary resignation; (iii) Dr. Gorman is eligible
for a discretionary annual bonus as determined by the Board of Directors, based upon achieving certain performance criteria; and
(iv) each year starting in 2007 and continuing for the term of the agreement, Dr. Gorman will be eligible to receive equity awards
with the number of shares, vesting terms, and exercise price as shall be determined by the Board of Directors.
Matthew C. Abernethy has an employment contract that provides that: (i) Mr. Abernethy will be entitled to receive an initial
base salary of $420,000 per year, which was his base salary for 2018, subject to future adjustments (Mr. Abernethy’s annual base
salary for 2021 is $588,800); (ii) the agreement terminates upon death, disability, termination by the Company with or without
cause, constructive termination or voluntary resignation; (iii) Mr. Abernethy is eligible for a discretionary annual bonus as
determined by the Board of Directors, based upon achieving certain performance criteria; (iv) Mr. Abernethy is eligible to receive
equity awards with the number of shares, vesting terms, and exercise price as shall be determined by the Board of Directors;
(v) Mr. Abernethy received a one-time cash inducement advance in the amount of $180,000, which was deemed earned in 2020 as
Mr. Abernethy completed two full years of employment with the Company; and (vi) Mr. Abernethy received relocation benefits,
including a one-time cash relocation advance in the amount of $140,000.
Eric Benevich has an employment contract that provides that: (i) Mr. Benevich will serve as the Company’s Chief
Commercial Officer commencing on May 26, 2015 at an initial annual salary of $365,000, subject to annual adjustment by the
Board of Directors (Mr. Benevich’s annual base salary for 2021 is $534,900); (ii) the agreement terminates upon death, disability,
termination by the Company with or without cause, constructive termination or voluntary resignation; (iii) Mr. Benevich is eligible
for a discretionary annual bonus as determined by the Board of Directors, based upon achieving certain performance criteria; and
(iv) Mr. Benevich is eligible to receive stock option awards with the equity awards with the number of shares, vesting terms, and
exercise price as shall be determined by the Board of Directors.
Jude Onyia, Ph.D. has an employment contract that provides that: (i) Dr. Onyia will serve as the Company’s Chief Scientific
Officer commencing on November 29,2021 at an initial annual salary of $575,000, subject to annual adjustment by the Board of
Directors; (ii) the agreement terminates upon death, disability, termination by the Company with or without cause, constructive
termination or voluntary resignation; (iii) Dr. Onyia is eligible for a discretionary annual bonus as determined by the Board of
Directors, based upon achieving certain performance criteria; (iv) Dr. Onyia is eligible to receive stock option awards with the
equity awards with the number of shares, vesting terms, and exercise price as shall be determined by the Board of Directors; and
(v) Dr. Onyia received a one-time cash inducement advance in the amount of $175,000, which will be deemed earned when
Dr. Onyia completes two full years of employment with the Company
Eiry W. Roberts, M.D. has an employment contract that provides that: (i) Dr. Roberts will serve as the Company’s Chief
Medical Officer commencing on January 8, 2018 at an initial annual salary of $520,000, subject to annual adjustment by the Board
of Directors (Dr. Roberts’ annual base salary for 2021 is $604,700); (ii) the agreement terminates upon death, disability,
termination by the Company with or without cause, constructive termination or voluntary resignation; (iii) Dr. Roberts is eligible
for a discretionary annual bonus as determined by the Board of Directors, based upon achieving certain performance criteria;
(iv) Dr. Roberts is eligible to receive stock option awards with the equity awards with the number of shares, vesting terms, and
exercise price as shall be determined by the Board of Directors; (v) Dr. Roberts received a one-time cash inducement advance in
the amount of $225,000, which was deemed earned in early 2021 when Dr. Roberts completed two full years of employment with
the Company; and (vi) Dr. Roberts received relocation benefits, including a one-time cash relocation advance in the amount of
$220,000.
60
Outstanding Equity Awards at Fiscal Year-End. The following table sets forth the outstanding equity awards held by the NEOs at
December 31, 2021.
Option Awards
Stock Awards
Name
Kevin C. Gorman, Ph.D. . . .
Matthew C. Abernethy . . . .
Eric Benevich. . . . . . . . . . . .
Award
Grant and
Commencement
of Vesting Date
Number of
Securities
Underlying
Unexercised
Options (#)
Exercisable
Number of
Securities
Underlying
Unexercised
Options (#)
Unexercisable
Equity
Incentive
Plan
Awards:
Number of
Securities
Underlying
Unexercised
Unearned
Options (#)
Option
Exercise
Price
($)
Option
Expiration
Date
1/16/2014
2/3/2015
2/5/2016
2/6/2017
2/5/2018
2/7/2019
2/6/2020
2/8/2021
12/1/2017
2/7/2019
2/6/2020
2/8/2021
6/1/2015
2/5/2016
2/6/2017
2/5/2018
2/7/2019
2/6/2020
2/8/2021
167,858
146,105
109,100
207,400
99,858
94,453
66,778
23,721
45,000
59,033
28,117
10,219
56,223
20,605
76,800
33,302
59,033
28,117
10,219
—
—
—
—
4,342
38,892
78,920
90,142
—
24,308
33,230
38,830
—
—
—
1,448
24,308
33,230
38,830
— $
— $
— $
— $
— $
— $
— $
— $
— $
— $
— $
— $
— $
— $
— $
— $
— $
— $
— $
19.59
32.99
35.99
43.24
81.49
81.05
102.90
117.63
73.60
81.05
102.90
117.63
41.78
35.99
43.24
81.49
81.05
102.90
117.63
1/16/2024 (2)
2/3/2025 (2)
2/5/2026 (2)
2/6/2027 (2)
2/5/2028 (2)
2/7/2029 (2)
2/6/2030 (2)
2/8/2031 (2)
12/1/2027 (1)
2/7/2029 (2)
2/6/2030 (2)
2/8/2031 (2)
6/1/2025 (1)
2/5/2026 (2)
2/6/2027 (2)
2/5/2028 (2)
2/7/2029 (2)
2/6/2030 (2)
2/8/2031 (2)
Equity
Incentive
Plan
Awards:
Market or
Payout
Value of
Unearned
Shares,
Units or
Other
Rights
That
Have Not
Vested
($)
—
—
—
—
—
—
2,483,217
3,167,728
—
—
1,241,693
1,086,088
—
—
—
—
1,655,534
1,086,088
Number
of
Shares
or Units
of
Stock
That
Have
Not
Vested
(#)
Market
Value of
Shares
or Units
of Stock
That
Have Not
Vested
($)
—
—
—
—
—
—
—
—
4,600 (3)
391,782
12,339 (3) 1,050,913
46,467 (4) 1,474,378
54,462 (5) 1,470,801
—
7,712 (3)
21,869 (4)
20,191 (5)
—
656,831
620,889
633,580
—
—
1,538 (3)
7,712 (3)
26,728 (4)
20,191 (5)
—
—
130,991
656,831
620,889
633,580
Jude Onyia, Ph.D. . . . . . . . .
11/29/2021
—
120,169
— $
84.74 11/29/2031 (2)
35,404 (6) 1,507,679
1,507,679
Eiry W. Roberts, M.D . . . . .
1/8/2018
2/7/2019
2/6/2020
2/8/2021
63,542
47,227
24,602
10,219
1,458
19,446
29,076
38,830
— $
— $
— $
— $
77.81
81.05
102.90
117.63
1/8/2028 (1)
2/7/2029 (2)
2/6/2030 (2)
2/8/2031 (2)
5,000 (3)
6,170 (3)
20,957 (4)
24,442 (5)
425,850
525,499
543,214
633,580
—
—
1,241,693
1,448,146
(1) Vests monthly over four years, subject to an initial one-year “cliff.”
(2) Vests monthly over four years.
(3) Vests annually over four years.
(4)
Consists of 29,156 PRSUs for Dr. Gorman, 19,438 for Mr. Benevich, and 14,579 each for Mr. Abernethy and Dr. Roberts. Represents the number of shares that
may be earned under the PRSUs granted to NEOs in 2020 under the Company’s 2011 Plan. The PRSUs vest upon achievement of two underlying performance
goals, each of which must occur before December 31, 2022 (the 2020 PRSU Performance Goals). The 2020 PRSU Performance Goals relate to specific metrics
related to (i) the commercialization of INGREZZA and (ii) the advancement and enhancement of our product candidate pipeline, each within the three-year
performance period commencing on January 1, 2020 and ending on December 31, 2022. The actual number of units subject to the PRSUs will be determined based
on the level of achievement of such goals, with minimum, target, upside and maximum levels specified. Additionally, Dr. Gorman held 17,311 RSUs, Dr. Roberts
held 6,378 RSUs and each of Mr. Abernethy and Mr. Benevich held 7,290 RSUs. These RSUs are time-based and vest annually, on a pro-rata basis over four years.
Consists of 37,193 PRSUs for Dr. Gorman, 17,003 for Dr. Roberts, and 12,752 each for Mr. Benevich and Mr. Abernethy. Represents the number of shares that
may be earned under the PRSUs granted to NEOs in 2021 under the Company’s 2020 Plan. The PRSUs will vest on the date, or dates, that the Committee
determines achievement of two underlying performance goals, each of which must occur before March 31, 2023 (the 2021 PRSU Performance Goals). The 2021
PRSU Performance Goals relate to specific metrics related to the advancement of certain clinical programs which we believe will drive stockholder value within
the 27-month performance period commencing on January 1, 2021 and ending on March 31, 2023. The actual number of units subject to the PRSUs will be
determined based on the level of achievement of such goals, with minimum, target and maximum levels specified. Additionally, Dr. Gorman held 17,269 RSUs
and each of Mr. Abernethy, Mr. Benevich and Dr. Roberts held 7,439 RSUs. These RSUs are time-based and vest annually, on a pro-rata basis over four years.
Consists of 17,702 PRSUs for Dr. Onyia received upon hire to align him with the PRSU grants made to the other executive officers in both January 2020 and
2021: 5,901 of which will vest in accordance with the 2020 PRSU Performance Goals set forth in the 2020 PRSU grants made to the Company’s executive
officers and 11,801 of which will vest in accordance with the 2021 PRSU Performance Goals set forth in the 2021 PRSU grants made to the Company’s
executive officers. The actual number of units subject to the PRSUs will be determined based on the level of achievement of such goals, with minimum,
target, upside and maximum levels specified (as applicable). Additionally, Dr. Onyia held 17,702 RSUs. These RSUs are time-based and vest annually, on a
pro-rata basis over four years.
(5)
(6)
61
Option Exercises and Stock Vested During the Year. The following table sets forth the options exercised and stock awards that
vested during fiscal 2021 along with their respective values at December 31, 2021 for the NEOs:
Option Exercises and Stock Vested Table
Option Awards (1)
Stock Awards (2)
Number of
Shares
Acquired on
Exercise (#)
Value
Realized on
Exercise ($) (3)
Number of
Shares
Acquired on
Vesting (#)
Value
Realized on
Vesting ($) (4)
Name
Kevin C. Gorman, Ph.D.
. . . . . . . . . . . . . . . . . . . . . . . . .
Matthew C. Abernethy . . . . . . . . . . . . . . . . . . . . . . . . . . .
Eric Benevich.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Jude Onyia, Ph.D.
Eiry W. Roberts, M.D. . . . . . . . . . . . . . . . . . . . . . . . . . . .
308,250 $
— $
3,777 $
— $
— $
31,306,080
—
295,525
—
—
24,789 $
9,410 $
10,473 $
— $
10,211 $
2,909,077
991,774
1,229,648
—
1,173,320
(1)
(2)
(3)
(4)
Information relates to stock option exercises during 2021.
Information relates to RSUs that vested during 2021.
Calculated by multiplying the number of shares acquired upon exercise of stock options by the difference between the exercise price and the market price of
the Company’s common stock at the time of exercise.
Calculated by multiplying the number of shares acquired upon vesting of RSUs by the average price of shares sold for purposes of satisfying federal and
state income tax liabilities.
Potential Payments Upon Termination or Change-in-Control. The following tables set forth the potential severance benefits
payable to the NEOs in the event of a termination prior to or following a change in control, assuming such event occurred on
December 31, 2021:
Potential Payment Upon Termination Table*
Name
Salary (1)
Bonus (2)
Accrued
Compensation (3)
Stock
Awards (4)
Medical (5)
Total
Kevin C. Gorman, Ph.D.
Matthew C. Abernethy . . . . . . . . $
. . . . . . . . . . . . . . $
Eric Benevich.
Jude Onyia, Ph.D.
. . . . . . . . . . . $
Eiry W. Roberts, M.D. . . . . . . . . $
. . . . . . $ 1,031,250 $ 1,031,250 $
294,400 $
588,800 $
267,450 $
534,900 $
287,500 $
575,000 $
302,350 $
604,700 $
99,158 $ 3,337,128 $
779,550 $
70,770 $
915,870 $
64,290 $
5,532 $
390,873 $
60,667 $ 1,107,405 $
47,430 $ 5,546,216
35,904 $ 1,769,424
39,348 $ 1,821,858
35,388 $ 1,294,293
31,560 $ 2,106,682
Reflects a termination without cause or due to a constructive termination, or deemed termination, prior to a change in control.
Based on salary as of December 31, 2021.
Based on bonus targets established by the Board of Directors for 2021.
Accrued compensation is comprised of vacation pay earned and unpaid as of December 31, 2021.
The amounts in this column represent the intrinsic value of ‘in-the money’ unvested options and RSUs as of December 31, 2021 that would vest in
accordance with the executive officers’ employment agreements. Values were derived using the closing price of the Company’s common stock on
December 31, 2021 of $85.17.
Medical is comprised primarily of health insurance premiums for the period specified in each executive officer’s employment contract.
Name
Severance (1)
Bonus (2)
Accrued
Compensation (3)
Stock
Awards (4)
Medical (5)
Total (6)
Potential Payment Upon Change-in-Control Table*
Kevin C. Gorman, Ph.D.
Matthew C. Abernethy . . . . . . $
. . . . . . . . . . . . $
Eric Benevich.
Jude Onyia, Ph.D.. . . . . . . . . . $
Eiry W. Roberts, M.D. . . . . . . $
. . . . $ 1,650,000 $ 1,650,000 $
441,600 $
401,175 $
431,250 $
453,525 $
883,200 $
802,350 $
862,500 $
907,050 $
99,158 $ 10,215,032 $
4,339,231 $
70,770 $
4,889,392 $
64,290 $
3,067,031 $
5,532 $
4,908,831 $
60,667 $
75,888 $ 13,690,078
5,788,657
53,856 $
6,216,229
59,022 $
4,419,395
53,082 $
6,377,413
47,340 $
Reflects benefits to be provided upon a termination without cause, or due to a constructive termination, within a specified time following a
change-in-control.
Based on salary as of December 31, 2021.
Based on bonus targets established by the Board of Directors for 2021.
Accrued compensation is comprised of vacation pay earned and unpaid as of December 31, 2021.
The amounts in this column represent the intrinsic value of ‘in-the money’ unvested options and RSUs as of December 31, 2021 that would vest in
accordance with the executive officers’ employment agreements. Values were derived using the closing price of the Company’s common stock on
December 31, 2021 of $85.17. See the discussion that follows these tables for a description of the applicable vesting provisions.
Medical is comprised primarily of health insurance premiums for the period specified in each executive officer’s employment contract.
The totals shown here do not take into account the application of any “best-after-tax” provision that may apply if an executive officer’s payments would
otherwise be subject to the excise tax provisions of Section 280G of the Internal Revenue Code.
62
*
(1)
(2)
(3)
(4)
(5)
*
(1)
(2)
(3)
(4)
(5)
(6)
Potential Payment Upon Termination by Disability Table*
Name
Salary (1)
Bonus (2)
Accrued
Compensation (3)
Stock
Awards (4)
Medical (5)
Total
Kevin C. Gorman, Ph.D.
Matthew C. Abernethy . . . . . . . . $
. . . . . . . . . . . . . . $
Eric Benevich.
. . . . . . . . . . . $
Jude Onyia, Ph.D.
Eiry W. Roberts, M.D. . . . . . . . . $
. . . . . . $ 1,031,250 $ 1,031,250 $
294,400 $
588,800 $
267,450 $
534,900 $
287,500 $
575,000 $
302,350 $
604,700 $
99,158 $ 3,337,128 $
779,550 $
70,770 $
915,870 $
64,290 $
390,873 $
5,532 $
60,667 $ 1,107,405 $
47,430 $ 5,546,216
35,904 $ 1,769,424
39,348 $ 1,821,858
35,388 $ 1,294,293
31,560 $ 2,106,682
*
(1)
(2)
(3)
(4)
(5)
Reflects a termination due to disability.
Based on salary as of December 31, 2021.
Based on bonus targets established by the Board of Directors for 2021.
Accrued compensation is comprised of vacation pay earned and unpaid as of December 31, 2021.
The amounts in this column represent the intrinsic value of ‘in-the money’ unvested options and RSUs as of December 31, 2021 that would vest in
accordance with the executive officers’ employment agreements. Values were derived using the closing price of the Company’s common stock on
December 31, 2021 of $85.17.
Medical is comprised primarily of health insurance premiums for the period specified in each executive officer’s employment contract.
Potential Payment Upon Termination by Death Table*
Name
Bonus (1)
Accrued
Compensation (2)
Stock
Awards (3)
Total
Kevin C. Gorman, Ph.D.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 825,000 $
Matthew C. Abernethy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 294,400 $
Eric Benevich.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 267,450 $
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 287,500 $
Jude Onyia, Ph.D.
Eiry W. Roberts, M.D. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 302,350 $
99,158 $ 3,337,128 $ 4,261,286
779,550 $ 1,144,720
70,770 $
64,290 $
915,870 $ 1,247,610
683,905
390,873 $
5,532 $
60,667 $ 1,107,405 $ 1,470,422
*
(1)
(2)
(3)
Reflects a termination due to death.
Based on bonus targets established by the Board of Directors for 2021.
Accrued compensation is comprised of vacation pay earned and unpaid as of December 31, 2021.
The amounts in this column represent the intrinsic value of ‘in-the money’ unvested options and RSUs as of December 31, 2021 that would vest in
accordance with the executive officers’ employment agreements. Values were derived using the closing price of the Company’s common stock on
December 31, 2021 of $85.17.
The following is a description of the arrangements under which the NEOs may be entitled to potential payments upon a
termination without cause or resignation due to a constructive termination (including following a change-in-control) or upon
disability or death. Resignation due to constructive termination may include an executive’s resignation following one or more of
the following material adverse changes in the nature of such executive’s employment, as specified in the agreement, which is not
cured following notification:
(cid:129)
(cid:129)
a significant reduction in the executive or the executive supervisor’s duties or responsibilities,
a material reduction in base salary,
(cid:129) material relocation, or
(cid:129) material breach of the executive’s employment agreement.
Dr. Gorman is entitled to 1.25 times the amount of his annual base salary and target annual bonus to be paid equally over
15 months, an acceleration of unvested shares that would have vested over the 15 continuous months after the date of termination,
and payment of COBRA benefits to continue then-current coverage for a period of 15 months following termination in the event
that the Company terminates his employment without cause, or he resigns due to a constructive termination. In the event of such
termination within six months after the consummation of a change in control, Dr. Gorman is entitled to 2 times the amount of his
annual base salary and annual target bonus to be paid in one lump sum, a cash amount equal to the value of all unvested stock
awards and all vested and outstanding stock awards, and payment of COBRA benefits to continue then-current coverage for a
period of 24 months following termination. In addition, the Company has agreed to reimburse Dr. Gorman for the increase in
federal and state income taxes payable by him by reason of the benefits provided in connection with such a termination in
connection with a change in control if the total payment exceeds 2.99 times his base amount by more than 15%. In the event of
63
termination due to disability, Dr. Gorman is entitled to 15 months of base salary paid semi-monthly over 15 months, a lump sum
amount equal to his target annual bonus multiplied by a fraction the numerator of which is the number of full months of
employment by Dr. Gorman in the fiscal year and the denominator of which is 12, an acceleration of unvested shares that would
have vested over the 15 continuous months after the date of termination, and payment of COBRA benefits to continue then-current
coverage for a period of 15 months following termination. In the event of a termination due to Dr. Gorman’s death, his
beneficiaries or estate, would be entitled to an acceleration of unvested shares that would have vested over the 15 continuous
months after the date of termination, a lump sum amount equal to his target annual bonus multiplied by a fraction the numerator of
which is the number of full months of employment by Dr. Gorman in the fiscal year and the denominator of which is 12 and any
accrued and unpaid compensation on the date of termination.
Mr. Abernethy is entitled to 1.0 times the amount of his annual base salary and target annual bonus to be paid equally over
12 months, an acceleration of unvested shares that would have vested over the 12 continuous months after the date of termination,
and payment of COBRA benefits to continue then-current coverage for a period of 12 months following termination in the event
that the Company terminates his employment without cause, or he resigns due to a constructive termination. In the event of such
termination within six months after the consummation of a change in control, Mr. Abernethy is entitled to 1.5 times the amount of
his annual base salary and annual target bonus to be paid in one lump sum, a cash amount equal to the value of all unvested stock
awards and all vested and outstanding stock awards, and payment of COBRA benefits to continue then-current coverage for a
period of 18 months following termination; provided, however, in the event such payment to Mr. Abernethy after a change in
control is subject to a “best-after-tax” provision. The best-after-tax provision provides that if the change in control payment due to
Mr. Abernethy would be subject to the excise tax provisions of Section 280G of the Internal Revenue Code, the Company may
reduce the change in control payments to Mr. Abernethy if, after all applicable taxes, the final payments would be larger than if the
change in control payments were not reduced and therefor subject to an excise tax. In the event of termination due to disability,
Mr. Abernethy is entitled to 12 months of base salary paid semi-monthly over 12 months, a lump sum amount equal to his target
annual bonus multiplied by a fraction the numerator of which is the number of full months of employment by Mr. Abernethy in the
fiscal year and the denominator of which is 12, an acceleration of unvested shares that would have vested over the 12 continuous
months after the date of termination, and payment of COBRA benefits to continue then-current coverage for a period of 12 months
following termination. In the event of a termination due to Mr. Abernethy’s death, his beneficiaries or estate, would be entitled to
an acceleration of unvested shares that would have vested over the 12 continuous months after the date of termination, a lump sum
amount equal to his target annual bonus multiplied by a fraction the numerator of which is the number of full months of
employment by Mr. Abernethy in the fiscal year and the denominator of which is 12 and any accrued and unpaid compensation on
the date of termination.
Mr. Benevich is entitled to 1.0 times the amount of his annual base salary and target annual bonus to be paid equally over
12 months, an acceleration of unvested shares that would have vested over the 12 continuous months after the date of termination,
and payment of COBRA benefits to continue then-current coverage for a period of 12 months following termination in the event
that the Company terminates his employment without cause, or he resigns due to a constructive termination. In the event of such
termination within six months after the consummation of a change in control, Mr. Benevich is entitled to 1.5 times the amount of
his annual base salary and annual target bonus to be paid in one lump sum, a cash amount equal to the value of all unvested stock
awards and all vested and outstanding stock awards, and payment of COBRA benefits to continue then-current coverage for a
period of 18 months following termination; provided, however, in the event such payment to Mr. Benevich after a change in
control is subject to a “best-after-tax” provision. The best-after-tax provision provides that if the change in control payment due to
Mr. Benevich would be subject to the excise tax provisions of Section 280G of the Internal Revenue Code, the Company may
reduce the change in control payments to Mr. Benevich if, after all applicable taxes, the final payments would be larger than if the
change in control payments were not reduced and therefor subject to an excise tax. In the event of termination due to disability,
Mr. Benevich is entitled to 12 months of base salary paid semi-monthly over 12 months, a lump sum amount equal to his target
annual bonus multiplied by a fraction the numerator of which is the number of full months of employment by Mr. Benevich in the
fiscal year and the denominator of which is 12, an acceleration of unvested shares that would have vested over the 12 continuous
months after the date of termination, and payment of COBRA benefits to continue then-current coverage for a period of 12 months
following termination. In the event of a termination due to Mr. Benevich’s death, his beneficiaries or estate, would be entitled to an
acceleration of unvested shares that would have vested over the 12 continuous months after the date of termination, a lump sum
amount equal to his target annual bonus multiplied by a fraction the numerator of which is the number of full months of
employment by Mr. Benevich in the fiscal year and the denominator of which is 12 and any accrued and unpaid compensation on
the date of termination.
Dr. Onyia is entitled to 1.0 times the amount of his annual base salary and target annual bonus to be paid equally over
12 months, an acceleration of unvested shares that would have vested over the 12 continuous months after the date of termination,
and payment of COBRA benefits to continue then-current coverage for a period of 12 months following termination in the event
64
that the Company terminates his employment without cause, or he resigns due to a constructive termination. In the event of such
termination within six months after the consummation of a change in control, Dr. Onyia is entitled to 1.5 times the amount of his
annual base salary and annual target bonus to be paid in one lump sum, a cash amount equal to the value of all unvested stock
awards and all vested and outstanding stock awards, and payment of COBRA benefits to continue then-current coverage for a
period of 18 months following termination; provided, however, in the event such payment to Dr. Onyia after a change in control is
subject to a “best-after-tax” provision. The best-after-tax provision provides that if the change in control payment due to Dr. Onyia
would be subject to the excise tax provisions of Section 280G of the Internal Revenue Code, the Company may reduce the change
in control payments to Dr. Onyia if, after all applicable taxes, the final payments would be larger than if the change in control
payments were not reduced and therefor subject to an excise tax. In the event of termination due to disability, Dr. Onyia is entitled
to 12 months of base salary paid semi-monthly over 12 months, a lump sum amount equal to his target annual bonus multiplied by
a fraction the numerator of which is the number of full months of employment by Dr. Onyia in the fiscal year and the denominator
of which is 12, an acceleration of unvested shares that would have vested over the 12 continuous months after the date of
termination, and payment of COBRA benefits to continue then-current coverage for a period of 12 months following termination.
In the event of a termination due to Dr. Onyia’s death, his beneficiaries or estate, would be entitled to an acceleration of
unvested shares that would have vested over the 12 continuous months after the date of termination, a lump sum amount equal to
his target annual bonus multiplied by a fraction the numerator of which is the number of full months of employment by Dr. Onyia
in the fiscal year and the denominator of which is 12 and any accrued and unpaid compensation on the date of termination.
Dr. Roberts is entitled to 1.0 times the amount of her annual base salary and target annual bonus to be paid equally over
12 months, an acceleration of unvested shares that would have vested over the 12 continuous months after the date of termination,
and payment of COBRA benefits to continue then-current coverage for a period of 12 months following termination in the event
that the Company terminates her employment without cause, or she resigns due to a constructive termination. In the event of such
termination within six months after the consummation of a change in control, Dr. Roberts is entitled to 1.5 times the amount of her
annual base salary and annual target bonus to be paid in one lump sum, a cash amount equal to the value of all unvested stock
awards and all vested and outstanding stock awards, and payment of COBRA benefits to continue then-current coverage for a
period of 18 months following termination; provided, however, in the event such payment to Dr. Roberts after a change in control
is subject to a “best-after-tax” provision. The best-after-tax provision provides that if the change in control payment due to
Dr. Roberts would be subject to the excise tax provisions of Section 280G of the Internal Revenue Code, the Company may reduce
the change in control payments to Dr. Roberts if, after all applicable taxes, the final payments would be larger than if the change in
control payments were not reduced and therefor subject to an excise tax. In the event of termination due to disability, Dr. Roberts is
entitled to 12 months of base salary paid semi-monthly over 12 months, a lump sum amount equal to her target annual bonus
multiplied by a fraction the numerator of which is the number of full months of employment by Dr. Roberts in the fiscal year and
the denominator of which is 12, an acceleration of unvested shares that would have vested over the 12 continuous months after the
date of termination, and payment of COBRA benefits to continue then-current coverage for a period of 12 months following
termination. In the event of a termination due to Dr. Roberts’s death, her beneficiaries or estate, would be entitled to an
acceleration of unvested shares that would have vested over the 12 continuous months after the date of termination, a lump sum
amount equal to her target annual bonus multiplied by a fraction the numerator of which is the number of full months of
employment by Dr. Roberts in the fiscal year and the denominator of which is 12 and any accrued and unpaid compensation on the
date of termination.
65
CEO PAY RATIO
Under SEC rules, we are required to calculate and disclose the annual total compensation of our median employee, as well as
the ratio of the annual total compensation of our median employee as compared to the annual total compensation of our CEO,
Kevin C. Gorman, Ph.D. (“CEO Pay Ratio”). To identify our median employee, we used the following methodology:
(cid:129)
(cid:129)
(cid:129)
To determine our total population of employees, we included all full-time and part-time as of December 31, 2021.
To identify our median employee from our employee population, we calculated the aggregate amount of each
employee’s fiscal 2021 base salary (using a reasonable estimate of the hours worked and overtime actually paid during
fiscal 2021 for hourly employees and actual salary paid for our remaining employees) and bonuses attributable to fiscal
2021 performance and the grant date fair value of equity awards granted in fiscal 2021 using the same methodology we
use for estimating the value of the equity awards granted to our named executive officers and reported in our Summary
Compensation Table.
In making this determination, we annualized the base salary and target bonus compensation of employees who were
employed by us for less than the entire fiscal year.
For fiscal 2021, the median of the annual total compensation of our employees (other than our CEO) was $276,598 and the
annual total compensation of our CEO, as reported in the Summary Compensation Table included in this Proxy Statement, was
$14,081,412. Based on this information, the ratio of the annual total compensation of our CEO to the median of the annual total
compensation of all employees was approximately 51 to 1.
The CEO Pay Ratio above represents our reasonable estimate calculated in a manner consistent with SEC rules and
applicable guidance. SEC rules and guidance provide significant flexibility in how companies identify the median employee, and
each company may use a different methodology and make different assumptions particular to that company. As a result, and as
explained by the SEC when it adopted these rules, in considering the pay ratio disclosure, stockholders should keep in mind that
the rule was not designed to facilitate comparisons of pay ratios among different companies, even companies within the same
industry, but rather to allow stockholders to better understand and assess each particular company’s compensation practices and
pay ratio disclosures. Neither the Compensation Committee nor our management used our CEO Pay Ratio measure in making
compensation decisions.
In addition to the information above, in order to reflect our employee compensation practices, we have also calculated the
annual base salary of our median employee while taking only annual base salary into account, as well as the ratio of the base salary
of our CEO as compared to the annual base salary of such median employee. In calculating the annual base salary of our median
employee, we used the applicable methodology listed above. For fiscal 2020, the median of the annual base salary of our
employees (other than our CEO) was $151,162, and the annual base salary of our CEO, as reported in the Summary Compensation
Table included in this Proxy Statement, was $825,000. Based on this information, the ratio of the annual base salary of our CEO to
the median of the annual base salary of all employees (other than the CEO) was approximately 5 to 1. Neither the Compensation
Committee nor our management used this ratio to make compensation decisions.
66
Non-Employee Director Compensation Philosophy
DIRECTORS COMPENSATION SUMMARY
Our non-employee director compensation philosophy is based on the following guiding principles:
(cid:129)
(cid:129)
Aligning the long-term interests of stockholders and directors; and
Compensating directors appropriately and adequately for their time, effort and experience.
The elements of director compensation consist of annual cash retainers and equity awards, as well as customary and usual
expense reimbursement in attending Board or committee meetings. In an effort to align the long-term interests of our stockholders
and non-employee directors, the mix of cash and equity compensation has historically been, and is currently, weighted more
heavily to equity. The equity compensation has historically taken the form of stock options, which we believe motivates the
non-employee directors to help us achieve our business objectives by tying incentives to the appreciation of our common stock
over the long term.
The Board and the Company’s stockholders have approved certain annual limits on compensation to be paid to the
Company’s non-employee directors. Our 2020 Equity Incentive Plan provides that the aggregate value of all compensation granted
or paid by us to any individual for service as a non-employee director with respect to any period commencing on the date of the
annual stockholders meeting for a particular year and ending on the date of the annual stockholders meeting for the next
subsequent year (such period, the “annual period”), including awards granted under our 2020 Equity Incentive Plan and cash fees
paid to such non-employee director, will not exceed $1,250,000 in total value. In addition, the aggregate value of any equity
award(s) granted by us to any individual for service as a non-employee director upon or in connection with his or her initial
election or appointment to the Board of Directors will not exceed $2,000,000 in total value (such that the aggregate compensation
granted or paid by us to any individual for service as a non-employee director with respect to an annual period in which such
individual is first appointed or elected to the Board of Directors will not exceed $3,250,000 in total value). For purposes of these
limitations, the value of any equity awards is calculated based on the grant date fair value of such awards for financial reporting
purposes.
Our Compensation Committee regularly assesses, on at least an annual basis, our non-employee director compensation
program in consultation with its independent compensation consultant, who provides analysis and input on prevailing market
practices, and recommends any changes to the program to our Board, who ultimately approves non-employee director
compensation. On at least an annual basis, qualified experts in the field of non-employee director compensation also deliver a
presentation to the Compensation Committee about recent developments and best practices related to non-employee director
compensation.
The 2021 compensation for the Company’s non-employee directors was recommended by the Compensation Committee to
the Board following the review of a report from Aon, its independent compensation consultant during 2021, which contained an
analysis of prevailing market practices regarding levels and types of non-employee director compensation, including the
non-employee director compensation practices of our peer group, which is described in the “Compensation Discussion and
Analysis” section of this proxy statement, and a comparative assessment of our non-employee director compensation to such peers
and market practices. In 2020, the Compensation Committee also received a presentation from Aon about recent developments and
best practices related to non-employee directors to inform its analysis of, and recommendations regarding, non-employee director
compensation.
In formulating its recommendations to the Board for 2021, the Compensation Committee did not engage in benchmarking or
targeting compensation to a specific level of the peer group data provided by Aon, but rather used the peer data as a reference point
in making non-employee director compensation recommendations. The Compensation Committee determined that the equity
awards granted to non-employee directors should consist of stock options rather than time-vesting RSU grants. It is the
Compensation Committee’s view that stock options are inherently performance oriented and align the interests of the
non-employee directors with those of our stockholders, as the non-employee director realizes no value from stock options unless
and until the Company’s stock price increases. Ultimately, the Board set 2021 non-employee director compensation in the forms
and amounts it determined to be appropriate using its professional experience and judgment, after careful review of the Aon
analysis and the Compensation Committee’s recommendations. Our director compensation for fiscal 2021 is described below.
67
Non-Employee Director Compensation for Fiscal 2021
For 2021, directors who are not employees of the Company earned a $60,000 annual cash retainer. The Company provided
the Chair of the Board, William H. Rastetter, an additional $35,000, making his total annual cash retainer $95,000. In addition to
the cash compensation set forth above, the Chair of the Audit Committee earned an additional $25,000 annual cash retainer, the
Chair of the Compensation Committee earned an additional $20,000 annual cash retainer, and the Chair of the Nominating/
Corporate Governance Committee earned an additional $15,000 annual cash retainer. Each other director who was a member of the
Audit Committee, the Compensation Committee, the Nominating/Corporate Governance Committee earned an additional annual
cash retainer of $12,000, $12,000, and $7,500, respectively, for each Committee on which she or he served.
Additionally, for 2021, each non-employee director received a grant of a nonstatutory stock option to purchase 8,833 shares
of the Company’s common stock, representing an approximate value of $400,000 on the date of the 2021 Annual Meeting of
Stockholders. The options granted to non-employee directors have exercise prices equal to the closing price of the Company’s
common stock on the date of the grant, are subject to a ten-year term and vest monthly over the one-year period following the date
of grant. Non-employee directors are reimbursed for expenses incurred in connection with performing their duties as directors of
the Company.
Upon her appointment to the board in April 2021, Johanna Mercier received a grant of a nonstatutory stock option to
purchase 17,180 shares of the Company’s common stock, representing an approximate value of $800,000. Such option had an
exercise price equal to the closing price of the Company’s common stock on the date of grant, a ten-year maximum term and vests
monthly over the three-year period following the date of grant.
The following table sets forth the compensation earned for the fiscal year ended December 31, 2021 by the directors of the
Company named below:
Name
Director Compensation Table
Fees Earned
or Paid in
Cash (1)
Option
Awards (2)
Kevin C. Gorman, Ph.D. (3)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
William H. Rastetter, Ph.D. (4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Gary A. Lyons (5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Johanna Mercier (6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
George J. Morrow (7) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Leslie V. Norwalk (8)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Richard F. Pops (9)
Shalini Sharp (10)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Stephen A. Sherwin, M.D. (11) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
— $
95,000 $
60,000 $
48,000 $
79,500 $
75,000 $
92,000 $
88,464 $
88,036 $
— $
400,003 $
400,003 $
1,200,026 $
400,003 $
400,003 $
400,003 $
400,003 $
400,003 $
Total
—
495,003
460,003
1,248,026
479,503
475,003
492,003
488,467
488,039
(3)
(1)
(2)
Amounts in this column reflect compensation earned in 2021.
The amounts shown represent the full grant date fair value of option awards granted in 2020 as determined pursuant to ASC 718. The assumptions used to
calculate the value of such awards are set forth under Note 8 of the Notes to the Consolidated Financial Statements included in the Company’s Annual
Report on Form 10-K for the year ended December 31, 2021. The grant date fair values of all option awards are based on a per share Black-Scholes value of
$45.28 (other than Ms. Mercier’s initial grant, for which it was $46.57).
During 2021, Dr. Gorman was an employee of the Company, and as such, did not receive any compensation for service on the Board of Directors. As of
December 31, 2021, Dr. Gorman had outstanding options to purchase 1,127,569 shares of common stock, and 117,868 outstanding RSUs and PRSUs.
As of December 31, 2021, Dr. Rastetter had outstanding options to purchase 168,851 shares of common stock.
As of December 31, 2021, Mr. Lyons had outstanding options to purchase 137,351 shares of common stock.
Ms. Mercier was appointed to the board in April 2021. As of December 31, 2021, Ms. Mercier had outstanding options to purchase 26,013 shares of
common stock.
As of December 31, 2021, Mr. Morrow had outstanding options to purchase 107,351 shares of common stock.
(7)
As of December 31, 2021, Ms. Norwalk had outstanding options to purchase 29,851 shares of common stock.
(8)
(9)
As of December 31, 2021, Mr. Pops had outstanding options to purchase 137,351 shares of common stock.
(10) As of December 31, 2021, Ms. Sharp had outstanding options to purchase 23,833 shares of common stock.
(11) As of December 31, 2021, Dr. Sherwin had outstanding options to purchase 137,351 shares of common stock.
(4)
(5)
(6)
68
Board Equity Ownership Guidelines
The Board of Directors has adopted equity ownership guidelines for our non-employee directors, which are designed to
further align the interests of the non-employee directors with those of our stockholders by ensuring that our non-employee directors
have a significant financial stake in the Company’s long-term success. The equity ownership guidelines establish a minimum
equity ownership equal to three times the cash retainer paid to the non-employee director, with such values determined based on
the value of our common stock owned by such persons as of certain measurement dates. All shares directly or beneficially owned
by the non-employee director, including the net exercisable value of outstanding vested stock options (where the market price of
our common stock exceeds the strike price of such option) are included in determining the value of equity owned under our equity
ownership guidelines. New non-employee directors are granted a five-year period to reach the equity ownership requirements set
forth in the guidelines and are expected to make annual progress toward the equity ownership requirements during this five-year
period. When a non-employee director does not meet the equity ownership requirements set forth in the guidelines, he/she is
restricted from selling any held shares until such requirements are met. Additionally, should non-employee director who does not
meet the equity ownership requirements choose to exercise a stock option or vest in any RSUs, he or she is required to retain all
shares acquired through those transactions, aside from any shares necessary to fulfill such transaction related tax obligations, until
full compliance with the equity ownership guidelines is attained.
Annual compliance with the equity ownership guidelines is assessed during the first quarter of each year. As of March 15,
2022, each of our non-employee directors was in compliance with the equity ownership guidelines.
Additional Information
Executive officers of the Company serve at the discretion of the Board of Directors. There are no family relationships among
any of the directors, executive officers or key employees of the Company. None of our directors or executive officers has been
involved in any of the legal proceedings specified in Item 401(f) of Regulation S-K in the past 10 years.
Review, Approval or Ratification of Related Person Transactions
RELATED PERSON TRANSACTIONS
In accordance with the Company’s Audit Committee Charter, the Company’s Audit Committee is responsible for reviewing
and approving the terms and conditions of all related person transactions. In connection with its review, approval or ratification of
related person transactions, the Company’s Audit Committee takes into account all relevant available facts and circumstances in
determining whether such transaction is in the best interests of the Company and its stockholders. Any transaction that would
disqualify a director from meeting the “independent director” standard as defined under the Nasdaq Stock Market rules requires
review by the Company’s Audit Committee prior to entering into such transaction. For all other related person transactions, the
Company reviews all agreements and payments for related person transactions and based on this review, a report is made to the
Company’s Audit Committee quarterly disclosing all related person transactions during that quarter, if any. All related person
transactions shall be disclosed in the Company’s applicable filings with the SEC as required under SEC rules.
There were no related person transactions during fiscal 2021.
OTHER MATTERS
As of the date of this proxy statement, the Company knows of no other matters to be submitted to the stockholders at the
Annual Meeting. If any other matters properly come before the Annual Meeting, it is the intention of the persons named in the
proxy to vote the shares they represent as the Board of Directors may recommend.
ADDITIONAL INFORMATION
“Householding” of Proxy Materials. The SEC has adopted rules that permit companies and intermediaries such as brokers
to satisfy delivery requirements for proxy statements with respect to two or more stockholders sharing the same address by
delivering a single set of proxy materials addressed to those stockholders. This process, which is commonly referred to as
“householding,” potentially provides extra convenience for stockholders and cost savings for companies. The Company, as well as
certain brokers, household proxy materials, unless contrary instructions have been received from the affected stockholders. Once
you have received notice from your broker or us that they or we will be householding materials to your address, householding will
continue until you are notified otherwise or until you revoke your consent. If, at any time, you no longer wish to participate in
69
householding and would prefer to receive a separate set of proxy materials, please notify your broker if your shares are held in a
brokerage account or us if you hold registered shares. If you hold registered shares, you may direct your written request to the
Company’s Corporate Secretary at 12780 El Camino Real, San Diego, California 92130 or contact the Company’s Corporate
Secretary at 858-617-7600.
Advance Notice Procedures. To be considered for inclusion in next year’s proxy materials, a stockholder must submit his,
her or its proposal or director nomination in writing by December 6, 2022 which is the date that is 120 days prior to the first
anniversary of the mailing date of this proxy statement, to the Company’s Corporate Secretary at 12780 El Camino Real,
San Diego, California 92130. Any proposal must comply with the requirements as to form and substance established by the SEC
for such proposal to be included in our proxy statement. Stockholders are also advised to review our bylaws, which contain
additional requirements about advance notice of stockholder proposals and director nominations. In addition to satisfying the
foregoing requirements and the additional requirements under our bylaws, to comply with the universal proxy rules (once
effective), stockholders who intend to solicit proxies in support of director nominees other than the Company’s nominees must
provide notice that sets forth the information required by Rule 14a-19 under the Exchange Act no later than March 19, 2023.
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This proxy statement and other materials we are sending you or that are available on our website in connection with the
Annual Meeting contain “forward-looking statements” as defined under federal securities laws. Many of these statements can be
identified by the use of terminology such as “believes,” “expects,” “intends,” “anticipates,” “plans,” “may,” “will,” “projects,”
“continues,” “estimates,” “potential,” “opportunity” or the negative versions of these terms and other similar expressions. These
forward-looking statements may be found in the sections of this proxy statement titled “Proxy Overview,” “Compensation
Discussion and Analysis,” and other sections of this proxy statement. These forward-looking statements are based on our current
expectations and assumptions, and are subject to risks and uncertainties that could cause our actual results or experience and the
timing of events to differ significantly from the forward-looking statements. Factors that could cause or contribute to these
differences include those discussed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021, as filed
with the SEC on February 11, 2022 under “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and
Results of Operations” and elsewhere in the Annual Report. You should carefully consider that information before voting.
You should not place undue reliance on these statements, which speak only as of the date that they were made. These
cautionary statements should be considered in connection with any written or oral forward-looking statements that we may make in
the future. We do not undertake any obligation to release publicly any revisions to these forward-looking statements to reflect later
events or circumstances or to reflect the occurrence of unanticipated events.
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Appendix A
NEUROCRINE BIOSCIENCES, INC.
2020 EQUITY INCENTIVE PLAN
ADOPTED BY THE COMPENSATION COMMITTEE: MARCH 16, 2020
APPROVED BY THE STOCKHOLDERS: MAY 19, 2020
AMENDED AND RESTATED BY THE COMPENSATION COMMITTEE: MARCH 14, 2022
APPROVED BY THE STOCKHOLDERS:
, 2022
TERMINATION DATE: MARCH 15, 2030
TABLE OF CONTENTS
SHARES SUBJECT TO THE PLAN.
ELIGIBILITY AND LIMITATIONS.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1. GENERAL.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4. OPTIONS AND STOCK APPRECIATION RIGHTS.
AWARDS OTHER THAN OPTIONS AND STOCK APPRECIATION RIGHTS.
. . . . . . . . . . . . . . . . .
5.
. . . . . .
ADJUSTMENTS UPON CHANGES IN COMMON STOCK; OTHER CORPORATE EVENTS.
6.
ADMINISTRATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
7.
TAX WITHHOLDING. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
8.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
9. MISCELLANEOUS.
10. COVENANTS OF THE COMPANY.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
11. ADDITIONAL RULES FOR AWARDS SUBJECT TO SECTION 409A. . . . . . . . . . . . . . . . . . . . . . . .
12. SEVERABILITY.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
13. TERMINATION OF THE PLAN. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
14. DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
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1. GENERAL.
(a) Successor to and Continuation of Prior Plan. The Plan is the successor to and continuation of the
Prior Plan. As of the day immediately following the Effective Date: (i) no additional awards may be granted
under the Prior Plan; (ii) the Prior Plan’s Available Reserve, plus any Prior Plan’s Returning Shares (as such
shares become available from time to time), will become available for issuance pursuant to Awards granted
under this Plan; and (iii) all Prior Plan Awards will remain subject to the terms of the Prior Plan (except that any
Prior Plan’s Returning Shares will become available for issuance pursuant to Awards granted under this Plan).
All Awards granted under this Plan will be subject to the terms of this Plan.
(b) Plan Purpose. The Company, by means of the Plan, seeks to secure and retain the services of
Employees, Directors and Consultants, to provide incentives for such persons to exert maximum efforts for the
success of the Company and any Affiliate, and to provide a means by which such persons may be given an
opportunity to benefit from increases in value of the Common Stock through the granting of Awards.
(c) Available Awards. The Plan provides for the grant of the following Awards: (i) Incentive Stock
Options; (ii) Nonstatutory Stock Options; (iii) SARs; (iv) Restricted Stock Awards; (v) RSU Awards;
(vi) Performance Awards; and (vii) Other Awards.
(d) Adoption Date. The Plan will come into existence on the Adoption Date. No Award may be granted
under the Plan prior to the Adoption Date. Any Award granted prior to the Effective Date is contingent upon
timely receipt of stockholder approval to the extent required under applicable tax, securities and regulatory rules,
and satisfaction of any other compliance requirements.
2. SHARES SUBJECT TO THE PLAN.
(a) Share Reserve.
(i) Subject to Section 2(a)(iii), any adjustment in accordance with Section 2(b), and any adjustment as
necessary to implement any Capitalization Adjustment, the aggregate number of shares of Common Stock that
may be issued pursuant to Awards will not exceed the sum of: (i) the Prior Plan’s Available Reserve; (ii) an
additional 3,300,000 shares that were approved at the Annual Meeting in 2020; (iii) an additional 5,900,000
shares that were approved at the Annual Meeting in 2022; and (iv) the number of Prior Plan’s Returning Shares,
if any, as such shares become available from time to time.
(ii) Subject to Section 2(b), the number of shares of Common Stock available for issuance under the
Plan will be reduced by: (A) one share for each share of Common Stock issued pursuant to an Appreciation
Award granted under the Plan; (B) one share for each share of Common Stock issued pursuant to a Full Value
Award granted under the Plan prior to May 18, 2022; and (C) 2.13 shares for each share of Common Stock
issued pursuant to a Full Value Award granted under the Plan on or after May 18, 2022.
(iii) Subject to Section 2(b), the number of shares of Common Stock available for issuance under the
Plan will be increased by: (A) one share for each Prior Plan’s Returning Share or 2020 Plan Returning Share (as
defined in Section 2(b)(iii)(1)) subject to an Appreciation Award; (B) one share for each Prior Plan’s Returning
Share or 2020 Plan Returning Share subject to a Full Value Award that returns to the Plan prior to May 18, 2022;
and (C) 2.13 shares for each Prior Plan’s Returning Share or 2020 Plan Returning Share subject to a Full Value
Award that returns to the Plan on or after May 18, 2022.
(b) Share Reserve Operation.
(i) Limit Applies to Shares Issued Pursuant to Awards. For clarity, the Share Reserve is a limit on
the number of shares of Common Stock that may be issued pursuant to Awards and does not limit the granting of
Awards, except that the Company will keep available at all times the number of shares of Common Stock
reasonably required to satisfy its obligations to issue shares pursuant to such Awards. Shares may be issued in
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connection with a merger or acquisition as permitted by, as applicable, Nasdaq Listing Rule 5635(c), NYSE
Listed Company Manual Section 303A.08, NYSE American Company Guide Section 711 or other applicable
rule, and such issuance will not reduce the number of shares available for issuance under the Plan.
(ii) Actions that Will Not Constitute Issuance of Shares and Will Not Reduce Share Reserve. The
following actions will not result in an issuance of shares of Common Stock under the Plan and accordingly will
not reduce the number of shares of Common Stock subject to the Share Reserve and available for issuance under
the Plan: (1) the expiration or termination of any portion of an Award without the shares covered by such portion
of the Award having been issued; and (2) the settlement of any portion of an Award in cash (i.e., the Participant
receives cash rather than shares of Common Stock).
(iii) Reversion of Shares to the Share Reserve.
(1) Shares Available for Subsequent Issuance. If any shares of Common Stock issued pursuant
to an Award are forfeited back to or repurchased by the Company because of the failure to meet a contingency or
condition required for the vesting of such shares, then such shares will revert to the Share Reserve and become
available again for issuance under the Plan (such shares, the “2020 Plan Returning Shares”).
(2) Shares Not Available for Subsequent Issuance. The following shares of Common Stock will
not become available again for issuance under the Plan: (i) any shares that are reacquired or withheld (or not
issued) by the Company to satisfy the exercise, strike or purchase price of an Award or a Prior Plan Award
(including any shares subject to such award that are not delivered because such award is exercised through a
reduction of shares subject to such award (i.e., “net exercised”)); (ii) any shares that are reacquired or withheld
(or not issued) by the Company to satisfy a tax withholding obligation in connection with an Award or a Prior
Plan Award; (iii) any shares repurchased by the Company on the open market with the proceeds of the exercise,
strike or purchase price of an Award or a Prior Plan Award; and (iv) in the event that a Stock Appreciation Right
granted under the Plan or a stock appreciation right granted under the Prior Plan is settled in shares of Common
Stock, the gross number of shares of Common Stock subject to such award.
3. ELIGIBILITY AND LIMITATIONS.
(a) Eligible Award Recipients. Subject to the terms of the Plan, Employees, Directors and Consultants are
eligible to receive Awards.
(b) Specific Award Limitations.
(i) Limitations on Incentive Stock Option Recipients. Incentive Stock Options may be granted only
to Employees of the Company or a “parent corporation” or “subsidiary corporation” thereof (as such terms are
defined in Sections 424(e) and (f) of the Code).
(ii) Incentive Stock Option $100,000 Limitation. To the extent that the aggregate Fair Market Value
(determined at the time of grant) with respect to which Incentive Stock Options are exercisable for the first time
by any Participant during any calendar year (under all plans of the Company and any Affiliates) exceeds
$100,000 (or such other limit established in the Code) or otherwise does not comply with the rules governing
Incentive Stock Options, the Options or portions thereof that exceed such limit (according to the order in which
they were granted) or otherwise do not comply with such rules will be treated as Nonstatutory Stock Options,
notwithstanding any contrary provision of the applicable Option Agreement(s).
(iii) Limitations on Incentive Stock Options Granted to Ten Percent Stockholders. A Ten Percent
Stockholder may not be granted an Incentive Stock Option unless (1) the exercise price of such Option is at least
110% of the Fair Market Value on the date of grant of such Option and (2) such Option is not exercisable after
the expiration of five years from the date of grant of such Option.
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(iv) Limitations on Nonstatutory Stock Options and SARs. Nonstatutory Stock Options and SARs
may not be granted to Employees, Directors and Consultants who are providing Continuous Service only to any
“parent” of the Company (as such term is defined in Rule 405) unless the stock underlying such Awards is
treated as “service recipient stock” under Section 409A because such Awards are granted pursuant to a corporate
transaction (such as a spin off transaction) or unless such Awards otherwise comply with the distribution
requirements of Section 409A.
(c) Aggregate Incentive Stock Option Limit. Notwithstanding anything to the contrary in Section 2(a)
and subject to any adjustment as necessary to implement any Capitalization Adjustment, the aggregate maximum
number of shares of Common Stock that may be issued pursuant to the exercise of Incentive Stock Options is
23,900,000 shares.
(d) Non-Employee Director Compensation Limit. The aggregate value of all compensation granted or
paid, as applicable, by the Company to any individual for service as a Non-Employee Director with respect to
any period commencing on the date of the Annual Meeting for a particular year and ending on the date of the
Annual Meeting for the next subsequent year (the “Annual Period”), including Awards granted and cash fees
paid by the Company to such Non-Employee Director, will not exceed $1,250,000 in total value. In addition, the
aggregate value of any equity award(s) granted under the Plan or otherwise by the Company to any individual for
service as a Non-Employee Director upon or in connection with his or her initial election or appointment to the
Board will not exceed $2,000,000 in total value; for the avoidance of doubt, the aggregate compensation granted
or paid, as applicable, by the Company to any individual for service as a Non-Employee Director with respect to
an Annual Period in which such individual is first appointed or elected to the Board will not exceed the sum of
the two preceding limitations in this Section 3(d). The value of any equity awards, for purposes of the limitations
described in this Section 3(d), will be calculated based on the grant date fair value of such equity awards for
financial reporting purposes. The limitations in this Section 3(d) will apply beginning with the Annual Period in
which the Annual Meeting in 2020 occurs.
4. OPTIONS AND STOCK APPRECIATION RIGHTS.
Each Option and SAR will have such terms and conditions as determined by the Board. Each Option will
be designated in writing as an Incentive Stock Option or Nonstatutory Stock Option at the time of grant;
provided, however, that if an Option is not so designated, then such Option will be a Nonstatutory Stock Option,
and the shares purchased upon exercise of each type of Option will be separately accounted for. Each SAR will
be denominated in shares of Common Stock equivalents. The terms and conditions of separate Options and SARs
need not be identical; provided, however, that each Option Agreement and SAR Agreement will conform
(through incorporation of the provisions hereof by reference in the Award Agreement or otherwise) to the
substance of each of the following provisions:
(a) Term. Subject to Section 3(b) regarding Ten Percent Stockholders, no Option or SAR will be
exercisable after the expiration of ten years from the date of grant of such Award or such shorter period specified
in the Award Agreement.
(b) Exercise or Strike Price. Subject to Section 3(b) regarding Ten Percent Stockholders, the exercise or
strike price of each Option or SAR will not be less than 100% of the Fair Market Value on the date of grant of
such Award. Notwithstanding the foregoing, an Option or SAR may be granted with an exercise or strike price
lower than 100% of the Fair Market Value on the date of grant of such Award if such Award is granted pursuant
to an assumption of or substitution for another option or stock appreciation right pursuant to a Transaction and in
a manner consistent with the provisions of Sections 409A and, if applicable, 424(a) of the Code.
(c) Exercise Procedure and Payment of Exercise Price for Options. In order to exercise an Option, the
Participant must provide notice of exercise to the Plan Administrator in accordance with the procedures specified
in the Option Agreement or otherwise provided by the Company. The Board has the authority to grant Options
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that do not permit all of the following methods of payment (or otherwise restrict the ability to use certain
methods) and to grant Options that require the consent of the Company to utilize a particular method of payment.
The exercise price of an Option may be paid, to the extent permitted by Applicable Law and as determined by the
Board, by one or more of the following methods of payment to the extent set forth in the Option Agreement:
(i) by cash or check, bank draft or money order payable to the Company;
(ii) pursuant to a “cashless exercise” program developed under Regulation T as promulgated by the
Federal Reserve Board that, prior to the issuance of the Common Stock subject to the Option, results in either the
receipt of cash (or check) by the Company or the receipt of irrevocable instructions to pay the exercise price to
the Company from the sales proceeds;
(iii) by delivery to the Company (either by actual delivery or attestation) of shares of Common Stock
that are already owned by the Participant free and clear of any liens, claims, encumbrances or security interests,
with a Fair Market Value on the date of exercise that does not exceed the exercise price, provided that (1) the
Common Stock is publicly traded at the time of exercise, (2) any remaining balance of the exercise price not
satisfied by such delivery is paid by the Participant in cash or other permitted form of payment, (3) such delivery
would not violate any Applicable Law or agreement restricting the redemption of the Common Stock, (4) any
certificated shares are endorsed or accompanied by an executed assignment separate from certificate, and
(5) such shares have been held by the Participant for any minimum period necessary to avoid adverse accounting
treatment as a result of such delivery;
(iv) if the Option is a Nonstatutory Stock Option, by a “net exercise” arrangement pursuant to which
the Company will reduce the number of shares of Common Stock issuable upon exercise by the largest whole
number of shares with a Fair Market Value on the date of exercise that does not exceed the exercise price,
provided that (1) such shares used to pay the exercise price will not be exercisable thereafter and (2) any
remaining balance of the exercise price not satisfied by such net exercise is paid by the Participant in cash or
other permitted form of payment; or
(v) in any other form of consideration that may be acceptable to the Board and permissible under
Applicable Law.
(d) Exercise Procedure and Payment of Appreciation Distribution for SARs. In order to exercise a
SAR, the Participant must provide notice of exercise to the Plan Administrator in accordance with the procedures
specified in the SAR Agreement or otherwise provided by the Company. The appreciation distribution payable to
a Participant upon the exercise of a SAR will not be greater than an amount equal to the excess of (i) the
aggregate Fair Market Value on the date of exercise of a number of shares of Common Stock equal to the number
of Common Stock equivalents that are vested and being exercised under such SAR, over (ii) the strike price of
such SAR. Such appreciation distribution may be paid to the Participant in the form of Common Stock or cash
(or any combination of Common Stock and cash) or in any other form of payment, as determined by the Board
and specified in the SAR Agreement.
(e) Transferability. Options and SARs may not be transferred to third party financial institutions for value.
The Board may impose such additional limitations on the transferability of an Option or SAR as it determines. In
the absence of any such determination by the Board, the following restrictions on the transferability of Options
and SARs will apply, provided that except as explicitly provided herein, neither an Option nor a SAR may be
transferred for consideration and provided, further, that if an Option is an Incentive Stock Option, such Option
may be deemed to be a Nonstatutory Stock Option as a result of such transfer:
(i) Restrictions on Transfer. An Option or SAR will not be transferable, except by will or by the laws
of descent and distribution, and will be exercisable during the lifetime of the Participant only by the Participant;
provided, however, that the Board may permit transfer of an Option or SAR in a manner that is not prohibited by
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applicable tax and securities laws upon the Participant’s request, including to a trust if the Participant is
considered to be the sole beneficial owner of such trust (as determined under Section 671 of the Code and
applicable state law) while such Option or SAR is held in such trust, provided that the Participant and the trustee
enter into a transfer and other agreements required by the Company.
(ii) Domestic Relations Orders. Notwithstanding the foregoing, subject to the execution of transfer
documentation in a format acceptable to the Company and subject to the approval of the Board or a duly
authorized Officer, an Option or SAR may be transferred pursuant to a domestic relations order.
(f) Vesting. The Board may impose such restrictions on or conditions to the vesting and/or exercisability of
an Option or SAR as determined by the Board. Except as otherwise provided in the Award Agreement or other
written agreement between a Participant and the Company or an Affiliate, vesting of Options and SARs will
cease upon termination of the Participant’s Continuous Service.
(g) Termination of Continuous Service for Cause. Except as explicitly otherwise provided in the Award
Agreement or other written agreement between a Participant and the Company or an Affiliate, if a Participant’s
Continuous Service is terminated for Cause, the Participant’s Options and SARs will terminate and be forfeited
immediately upon such termination of Continuous Service, the Participant will be prohibited from exercising any
portion (including any vested portion) of such Awards on and after the date of such termination of Continuous
Service, and the Participant will have no further right, title or interest in the forfeited Award, the shares of
Common Stock subject to the forfeited Award, or any consideration in respect of the forfeited Award.
(h) Post-Termination Exercise Period Following Termination of Continuous Service for Reasons
Other than for Cause. Except as otherwise provided in the Award Agreement or other written agreement
between a Participant and the Company or an Affiliate, subject to Section 4(i), if a Participant’s Continuous
Service terminates for any reason other than for Cause, the Participant may exercise his or her Option or SAR to
the extent vested, but only within the following period of time or, if applicable, such other period of time
provided in the Award Agreement or other written agreement between a Participant and the Company or an
Affiliate; provided, however, that in no event may such Award be exercised after the expiration of its maximum
term (as set forth in Section 4(a)):
(i) three months following the date of such termination if such termination is a termination without
Cause (other than any termination due to the Participant’s Disability or death);
(ii) 12 months following the date of such termination if such termination is due to the Participant’s
Disability;
(iii) 18 months following the date of such termination if such termination is due to the Participant’s
death; or
(iv) 18 months following the date of the Participant’s death if such death occurs following the date of
such termination but during the period such Award is otherwise exercisable (as provided in (i) or (ii) above).
Following the date of such termination or death, as applicable, to the extent the Participant does not exercise such
Award within the applicable Post-Termination Exercise Period (or, if earlier, prior to the expiration of the
maximum term of such Award), such unexercised portion of the Award will terminate, and the Participant will
have no further right, title or interest in the terminated Award, the shares of Common Stock subject to the
terminated Award, or any consideration in respect of the terminated Award.
(i) Restrictions on Exercise; Extension of Exercisability. A Participant may not exercise an Option or
SAR at any time that the issuance of shares of Common Stock upon such exercise would violate Applicable Law.
Except as otherwise provided in the Award Agreement or other written agreement between a Participant and the
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Company or an Affiliate, if a Participant’s Continuous Service terminates for any reason other than for Cause
and, at any time during the applicable Post-Termination Exercise Period: (i) the exercise of the Participant’s
Option or SAR would be prohibited solely because the issuance of shares of Common Stock upon such exercise
would violate Applicable Law; or (ii) the immediate sale of any shares of Common Stock issued upon such
exercise would violate the Company’s Trading Policy, then the applicable Post-Termination Exercise Period will
be extended to the last day of the calendar month that commences following the date the Award would otherwise
expire, with an additional extension of the exercise period to the last day of the next calendar month to apply if
any of the foregoing restrictions apply at any time during such extended exercise period, generally without
limitation as to the maximum permitted number of extensions; provided, however, that in no event may such
Award be exercised after the expiration of its maximum term (as set forth in Section 4(a)).
(j) Non-Exempt Employees. No Option or SAR, whether or not vested, granted to an Employee who is a
non-exempt employee for purposes of the Fair Labor Standards Act of 1938, as amended, will be first exercisable
for any shares of Common Stock until at least six months following the date of grant of such Award.
Notwithstanding the foregoing, in accordance with the provisions of the Worker Economic Opportunity Act, any
vested portion of such Award may be exercised earlier than six months following the date of grant of such Award
in the event of (i) such Participant’s death or Disability, (ii) a Transaction in which such Award is not assumed,
continued or substituted, (iii) a Change in Control, or (iv) such Participant’s retirement (as such term may be
defined in the Award Agreement or another applicable agreement or, in the absence of any such definition, in
accordance with the Company’s then current employment policies and guidelines). This Section 4(j) is intended
to operate so that any income derived by a non-exempt employee in connection with the exercise or vesting of an
Option or SAR will be exempt from his or her regular rate of pay.
(k) Whole Shares. Options and SARs may be exercised only with respect to whole shares of Common
Stock or their equivalents.
5. AWARDS OTHER THAN OPTIONS AND STOCK APPRECIATION RIGHTS.
(a) Restricted Stock Awards and RSU Awards. Each Restricted Stock Award and RSU Award will have
such terms and conditions as determined by the Board. The terms and conditions of separate Restricted Stock
Awards and RSU Awards need not be identical; provided, however, that each Restricted Stock Award Agreement
and RSU Award Agreement will conform (through incorporation of the provisions hereof by reference in the
Award Agreement or otherwise) to the substance of each of the following provisions:
(i) Form of Award.
(1) Restricted Stock Awards. To the extent consistent with the Company’s Bylaws, at the
Board’s election, shares of Common Stock subject to a Restricted Stock Award may be (i) held in book entry
form subject to the Company’s instructions until such shares become vested or any other restrictions lapse, or
(ii) evidenced by a certificate, which certificate will be held in such form and manner as determined by the
Board. Unless otherwise determined by the Board, a Participant will have voting and other rights as a stockholder
of the Company with respect to any shares subject to a Restricted Stock Award.
(2) RSU Awards. A RSU Award represents a Participant’s right to be issued on a future date the
number of shares of Common Stock that is equal to the number of restricted stock units subject to the RSU
Award. As a holder of a RSU Award, a Participant is an unsecured creditor of the Company with respect to the
Company’s unfunded obligation, if any, to issue shares of Common Stock in settlement of such Award and
nothing contained in the Plan or any RSU Award Agreement, and no action taken pursuant to its provisions, will
create or be construed to create a trust of any kind or a fiduciary relationship between a Participant and the
Company or an Affiliate or any other person. A Participant will not have voting or any other rights as a
stockholder of the Company with respect to a RSU Award (unless and until shares are actually issued in
settlement of a vested RSU Award).
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(ii) Consideration.
(1) Restricted Stock Awards. A Restricted Stock Award may be granted in consideration for
(A) cash or check, bank draft or money order payable to the Company, (B) past services to the Company or an
Affiliate, or (C) any other form of consideration (including future services) as the Board may determine and
permissible under Applicable Law.
(2) RSU Awards. Unless otherwise determined by the Board at the time of grant, a RSU Award
will be granted in consideration for the Participant’s services to the Company or an Affiliate, such that the
Participant will not be required to make any payment to the Company (other than such services) with respect to
the grant or vesting of the RSU Award, or the issuance of any shares of Common Stock pursuant to the RSU
Award. If, at the time of grant, the Board determines that any consideration must be paid by the Participant (in a
form other than the Participant’s services to the Company or an Affiliate) upon the issuance of any shares of
Common Stock in settlement of the RSU Award, such consideration may be paid in any form of consideration as
the Board may determine and permissible under Applicable Law.
(iii) Vesting. The Board may impose such restrictions on or conditions to the vesting of a Restricted
Stock Award or RSU Award as determined by the Board. Except as otherwise provided in the Award Agreement
or other written agreement between a Participant and the Company or an Affiliate, vesting of Restricted Stock
Awards and RSU Awards will cease upon termination of the Participant’s Continuous Service.
(iv) Termination of Continuous Service. Except as otherwise provided in the Award Agreement or
other written agreement between a Participant and the Company or an Affiliate, if a Participant’s Continuous
Service terminates for any reason, (1) the Company may receive through a forfeiture condition or a repurchase
right any or all of the shares of Common Stock held by the Participant under his or her Restricted Stock Award
that have not vested as of the date of such termination as set forth in the Restricted Stock Award Agreement, and
(2) any portion of the Participant’s RSU Award that has not vested will be forfeited upon such termination and
the Participant will have no further right, title or interest in the RSU Award, the shares of Common Stock
issuable pursuant to the RSU Award, or any consideration in respect of the RSU Award.
(v) Settlement of RSU Awards. A RSU Award may be settled by the issuance of shares of Common
Stock or cash (or any combination thereof) or in any other form of payment, as determined by the Board and
specified in the RSU Award Agreement. At the time of grant, the Board may determine to impose such
restrictions or conditions that delay such delivery to a date following the vesting of the RSU Award.
(b) Performance Awards. With respect to any Performance Award, the length of any Performance Period,
the Performance Goals to be achieved during the Performance Period, the other terms and conditions of such
Award, and the measure of whether and to what degree such Performance Goals have been attained will be
determined by the Board. In addition, to the extent permitted by Applicable Law and set forth in the applicable
Award Agreement, the Board may determine that cash or other property may be used in payment of Performance
Awards. Performance Awards that are settled in cash or other property are not required to be valued in whole or
in part by reference to, or otherwise based on, the Common Stock.
(c) Other Awards. Other forms of Awards valued in whole or in part by reference to, or otherwise based
on, Common Stock may be granted either alone or in addition to Awards provided for under Section 4 and the
preceding provisions of this Section 5. Subject to the provisions of the Plan, the Board will have sole and
complete discretion to determine the persons to whom and the time or times at which such Other Awards will be
granted, the number of shares of Common Stock (or the cash equivalent thereof) to be granted pursuant to such
Other Awards, and all other terms and conditions of such Other Awards.
6. ADJUSTMENTS UPON CHANGES IN COMMON STOCK; OTHER CORPORATE EVENTS.
(a) Capitalization Adjustments. In the event of a Capitalization Adjustment, the Board will appropriately
and proportionately adjust: (i) the class(es) and maximum number of shares of Common Stock subject to the Plan
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pursuant to Section 2(a); (ii) the class(es) and maximum number of shares of Common Stock that may be issued
pursuant to the exercise of Incentive Stock Options pursuant to Section 3(c); and (iii) the class(es) and number of
shares of Common Stock and the exercise, strike or purchase price of Common Stock subject to outstanding
Awards. The Board will make such adjustments, and its determination will be final, binding and conclusive.
Notwithstanding the foregoing, no fractional shares or rights for fractional shares of Common Stock will be
created in order to implement any Capitalization Adjustment. The Board will determine an appropriate
equivalent benefit, if any, for any fractional shares or rights to fractional shares that may be created by the
adjustments referred to in the preceding provisions of this Section 6(a).
(b) Dissolution or Liquidation. Except as otherwise provided in the Award Agreement or other written
agreement between a Participant and the Company or an Affiliate, in the event of a dissolution or liquidation of
the Company, all outstanding Awards (other than Awards consisting of vested and outstanding shares of
Common Stock not subject to a forfeiture condition or the Company’s right of repurchase) will terminate
immediately prior to the completion of such dissolution or liquidation, and the shares of Common Stock subject
to a forfeiture condition or the Company’s right of repurchase may be reacquired or repurchased by the Company
notwithstanding the fact that the holder of such Award is providing Continuous Service.
(c) Transaction. In the event of a Transaction, the provisions of this Section 6(c) will apply to each
outstanding Award unless otherwise provided in the instrument evidencing the Award, in any other written
agreement between a Participant and the Company or an Affiliate, or in any director compensation policy of the
Company.
(i) Awards May Be Assumed. In the event of a Transaction, the Acquiring Entity may assume or
continue any or all outstanding Awards or may substitute similar awards for any or all outstanding Awards
(including but not limited to, awards to acquire the same consideration paid to the stockholders of the Company
pursuant to the Transaction), and any reacquisition or repurchase rights held by the Company in respect of
Common Stock issued pursuant to outstanding Awards may be assigned by the Company to the Acquiring Entity.
For clarity, in the event of a Transaction, the Acquiring Entity may choose to assume or continue only a portion
of an outstanding Award, to substitute a similar award for only a portion of an outstanding Award, or to assume
or continue, or substitute similar awards for, the outstanding Awards held by some, but not all, Participants. The
terms of any assumption, continuation or substitution will be set by the Board.
(ii) Awards Held by Current Employee and Director Participants. In the event of a Transaction in
which the Acquiring Entity does not assume or continue outstanding Awards or substitute similar awards for
outstanding Awards, then with respect to any such Awards that have not been assumed, continued or substituted
and that are held by Participants who are Employees or Directors and, in each case, whose Continuous Service
has not terminated prior to the effective time of the Transaction (referred to as the “Current Employee and
Director Participants”), the vesting (and exercisability, if applicable) of such Awards will be accelerated in full
(and with respect to any such Awards that are subject to performance-based vesting conditions or requirements,
vesting will be deemed to be satisfied at the greater of (x) the target level of performance or (y) the actual level of
performance measured in accordance with the applicable performance goals as of the date of the Transaction) to
a date prior to the effective time of such Transaction (contingent upon the effectiveness of the Transaction) as the
Board determines (or, if the Board does not determine such a date, to the date that is 15 days prior to the effective
time of the Transaction), and such Awards will terminate if not exercised (if applicable) at or prior to the
effective time of the Transaction, and any reacquisition or repurchase rights held by the Company with respect to
such Awards will lapse (contingent upon the effectiveness of the Transaction). With respect to the vesting of
Awards that will accelerate upon the occurrence of a Transaction pursuant to this Section 6(c)(ii) and are settled
in the form of a cash payment, such cash payment will be made no later than 30 days following the occurrence of
the Transaction.
(iii) Awards Held by Persons other than Current Participants. In the event of a Transaction in
which the Acquiring Entity does not assume or continue outstanding Awards or substitute similar awards for
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outstanding Awards, then with respect to Awards that have not been assumed, continued or substituted and that
are held by persons other than Current Employee and Director Participants, such Awards will terminate if not
exercised (if applicable) at or prior to the effective time of the Transaction; provided, however, that any
reacquisition or repurchase rights held by the Company with respect to such Awards will not terminate and may
continue to be exercised notwithstanding the Transaction.
(iv) Payment for Awards in Lieu of Exercise. Notwithstanding the foregoing, in the event an Award
will terminate if not exercised at or prior to the effective time of a Transaction, the Board may provide that the
holder of such Award may not exercise such Award but will receive a payment, in such form as may be
determined by the Board, equal in value, at the effective time, to the excess, if any, of (1) the value of the
property the Participant would have received upon the exercise of the Award, over (2) any exercise price payable
by such holder in connection with such exercise.
(d) Involuntary Termination Upon or Following a Transaction. Except as otherwise provided in the
Award Agreement, in any other written agreement between a Participant and the Company or an Affiliate, or in
any director compensation policy of the Company, in the event that an Employee or Director’s Continuous
Service is involuntarily terminated without Cause (including any such termination due to such Employee or
Director’s death or Disability) upon or within 12 months following the effective time of a Transaction, the
vesting (and exercisability, if applicable) of any Assumed Awards (as defined in this Section 6(d)) held by such
Employee or Director as of the date of such termination will be accelerated in full (and with respect to any such
Awards that are subject to performance-based vesting conditions or requirements, vesting will be deemed to be
satisfied at the greater of (x) the target level of performance or (y) the actual level of performance measured in
accordance with the applicable performance goals as of the date of such termination), effective as of the date of
such termination. For purposes of this Section 6(d), an “Assumed Award” means any outstanding Award that
was assumed or continued, or any outstanding similar award that was granted in substitution for an Award, in
each case by the Acquiring Entity in connection with the applicable Transaction.
(e) Appointment of Stockholder Representative. As a condition to the receipt of an Award, a Participant
will be deemed to have agreed that the Award will be subject to the terms of any agreement governing a
Transaction involving the Company, including, without limitation, a provision for the appointment of a
stockholder representative that is authorized to act on the Participant’s behalf with respect to any escrow,
indemnities and any contingent consideration.
(f) No Restriction on Right to Undertake Transactions. The grant of any Award and the issuance of
shares of Common Stock pursuant to any Award does not affect or restrict in any way the right or power of the
Company or the stockholders of the Company to make or authorize any adjustment, recapitalization,
reorganization or other change in the Company’s capital structure or its business, any merger or consolidation of
the Company, any issue of stock or of options, rights or options to purchase stock or of bonds, debentures,
preferred or prior preference stocks whose rights are superior to or affect the Common Stock or the rights thereof
or which are convertible into or exchangeable for Common Stock, or the dissolution or liquidation of the
Company, or any sale or transfer of all or any part of its assets or business, or any other corporate act or
proceeding, whether of a similar character or otherwise.
7. ADMINISTRATION.
(a) Administration by Board. The Board will administer the Plan unless and until the Board delegates
administration of the Plan to a Committee or Committees, as provided in Section 7(c).
(b) Powers of Board. The Board will have the power, subject to, and within the limitations of, the express
provisions of the Plan:
(i) To determine from time to time: (1) which of the persons eligible under the Plan will be granted
Awards; (2) when and how each Award will be granted; (3) what type or combination of types of Award will be
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granted; (4) the provisions of each Award (which need not be identical), including the time or times when a
person will be permitted to receive an issuance of Common Stock or other payment pursuant to an Award; (5) the
number of shares of Common Stock or cash equivalent with respect to which an Award will be granted to each
such person; and (6) the Fair Market Value applicable to an Award.
(ii) To construe and interpret the Plan and Awards granted under it, and to establish, amend and revoke
rules and regulations for its administration. The Board, in the exercise of this power, may correct any defect,
omission or inconsistency in the Plan or in any Award Agreement, in a manner and to the extent it deems
necessary or expedient to make the Plan or Awards fully effective.
(iii) To settle all controversies regarding the Plan and Awards granted under it.
(iv) To accelerate the time at which an Award may first be exercised or the time during which an
Award or any part thereof will vest, notwithstanding the provisions in the Award Agreement stating the time at
which it may first be exercised or the time during which it will vest.
(v) To prohibit the exercise of any Option, SAR or other exercisable Award during a period of up to 30
days prior to the consummation of any pending stock dividend, stock split, combination or exchange of shares,
merger, consolidation or other distribution (other than normal cash dividends) of Company assets to
stockholders, or any other change affecting the shares of Common Stock or the share price of the Common
Stock, including any Transaction, for reasons of administrative convenience.
(vi) To suspend or terminate the Plan at any time. Suspension or termination of the Plan will not
Materially Impair a Participant’s rights under any Award granted while the Plan is in effect unless (1) the
Company requests the consent of the affected Participant, and (2) such Participant consents in writing.
(vii) To amend the Plan in any respect the Board deems necessary or advisable; provided, however, that
stockholder approval will be required for any such amendment to the extent required by Applicable Law. Except
as provided above, a Participant’s rights under any Award granted before any amendment of the Plan will not be
Materially Impaired by any such amendment unless (1) the Company requests the consent of the affected
Participant, and (2) such Participant consents in writing.
(viii) To submit any amendment to the Plan for stockholder approval.
(ix) To approve forms of Award Agreements for use under the Plan and to amend the terms of any one
or more Awards, including, but not limited to, amendments to provide terms more favorable to the Participant
than previously provided in the Award Agreement, subject to any specified limits in the Plan that are not subject
to Board discretion; provided, however, that a Participant’s rights under any Award will not be Materially
Impaired by any such amendment unless (1) the Company requests the consent of the affected Participant, and
(2) such Participant consents in writing.
(x) Generally, to exercise such powers and to perform such acts as the Board deems necessary or
expedient to promote the best interests of the Company and that are not in conflict with the provisions of the Plan
or Awards.
(xi) To adopt such procedures and sub-plans as are necessary or appropriate to permit and facilitate
participation in the Plan by, or take advantage of specific tax treatment for Awards granted to, Employees,
Directors or Consultants who are foreign nationals or employed outside the United States (provided that Board
approval will not be necessary for immaterial modifications to the Plan or any Award Agreement to ensure or
facilitate compliance with the laws of the relevant foreign jurisdiction).
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(c) Delegation to Committee.
(i) General. The Board may delegate some or all of the administration of the Plan to a Committee or
Committees. If administration of the Plan is delegated to a Committee, the Committee will have, in connection
with the administration of the Plan, the powers theretofore possessed by the Board that have been delegated to
the Committee, including the power to delegate to another Committee or a subcommittee of the Committee any
of the administrative powers the Committee is authorized to exercise (and references in this Plan to the Board
will thereafter be to the Committee or subcommittee, as applicable), subject, however, to such resolutions, not
inconsistent with the provisions of the Plan, as may be adopted from time to time by the Board. Each Committee
may retain the authority to concurrently administer the Plan with any Committee or subcommittee to which it has
delegated its authority hereunder and may, at any time, revest in such Committee some or all of the powers
previously delegated. The Board may retain the authority to concurrently administer the Plan with any
Committee and may, at any time, revest in the Board some or all of the powers previously delegated.
(ii) Rule 16b-3 Compliance. To the extent an Award is intended to qualify for the exemption from
Section 16(b) of the Exchange Act that is available under Rule 16b-3 of the Exchange Act, the Award will be
granted by the Board or a Committee that consists solely of two or more Non-Employee Directors, as determined
under Rule 16b-3(b)(3) of the Exchange Act, and thereafter any action establishing or modifying the terms of the
Award will be approved by the Board or a Committee meeting such requirements to the extent necessary for such
exemption to remain available.
(d) Effect of Board’s Decision. All determinations, interpretations and constructions made by the Board or
any Committee in good faith will not be subject to review by any person and will be final, binding and conclusive
on all persons.
(e) Cancellation and Re-Grant of Awards. Except in connection with a Transaction, as provided in
Section 6(a) relating to Capitalization Adjustments, or unless the stockholders of the Company have approved
such an action within 12 months prior to such an event, neither the Board nor any Committee will have the
authority to: (i) reduce the exercise or strike price of any outstanding Option or SAR; or (ii) cancel any
outstanding Option or SAR that has an exercise or strike price greater than the then-current Fair Market Value in
exchange for cash or other Awards under the Plan.
(f) Delegation to an Officer. The Board or any Committee may delegate to one or more Officers the authority to
do one or both of the following: (i) designate Employees who are not Officers to be recipients of Options and SARs
(and, to the extent permitted by Applicable Law, other types of Awards) and, to the extent permitted by Applicable
Law, the terms thereof; and (ii) determine the number of shares of Common Stock to be subject to such Awards
granted to such Employees; provided, however, that the resolutions or charter adopted by the Board or any Committee
evidencing such delegation will specify the total number of shares of Common Stock that may be subject to the
Awards granted by such Officer and that such Officer may not grant an Award to himself or herself. Any such Awards
will be granted on the applicable form of Award Agreement most recently approved for use by the Board or the
Committee, unless otherwise provided in the resolutions approving the delegation authority. Notwithstanding anything
to the contrary herein, neither the Board nor any Committee may delegate to an Officer who is acting solely in the
capacity of an Officer (and not also as a Director) the authority to determine the Fair Market Value.
8. TAX WITHHOLDING.
(a) Withholding Authorization. As a condition to acceptance of any Award, a Participant authorizes
withholding from payroll and any other amounts payable to such Participant, and otherwise agrees to make
adequate provision for, any sums required to satisfy any U.S. federal, state, local and/or foreign tax or social
insurance contribution withholding obligations of the Company or an Affiliate, if any, which arise in connection
with the exercise, vesting or settlement of such Award, as applicable. Accordingly, a Participant may not be able
to exercise an Award even though the Award is vested, and the Company will have no obligation to issue shares
of Common Stock subject to an Award, unless and until such withholding obligations are satisfied.
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(b) Satisfaction of Withholding Obligations. To the extent permitted by the terms of an Award
Agreement, the Company may, in its sole discretion, satisfy any U.S. federal, state, local and/or foreign tax or
social insurance contribution withholding obligations relating to an Award by any of the following means or by a
combination of such means: (i) causing the Participant to tender a cash payment; (ii) withholding shares of
Common Stock from the shares of Common Stock issued or otherwise issuable to the Participant in connection
with the Award; (iii) withholding cash from an Award settled in cash; (iv) withholding payment from any
amounts otherwise payable to the Participant; (v) by allowing a Participant to effectuate a “cashless exercise”
pursuant to a program developed under Regulation T as promulgated by the Federal Reserve Board; or (vi) by
such other method as may be set forth in the Award Agreement.
(c) No Obligation to Notify or Minimize Taxes; No Liability to Claims. Except as required by
Applicable Law, the Company has no duty or obligation to any Participant to advise such Participant as to the
time or manner of exercising an Award. Furthermore, the Company has no duty or obligation to warn or
otherwise advise such Participant of a pending termination or expiration of an Award or a possible period in
which the Award may not be exercised. The Company has no duty or obligation to minimize the tax
consequences of an Award to any Participant and will not be liable to any Participant for any adverse tax
consequences to such Participant in connection with an Award. As a condition to accepting an Award, each
Participant (i) agrees to not make any claim against the Company, or any of its Officers, Directors, Employees or
Affiliates related to tax liabilities arising from such Award or other Company compensation and
(ii) acknowledges that such Participant was advised to consult with his or her own personal tax, financial and
other legal advisors regarding the tax consequences of the Award and has either done so or knowingly and
voluntarily declined to do so. Additionally, each Participant acknowledges that any Option or SAR is exempt
from Section 409A only if the exercise or strike price of such Option or SAR is at least equal to the “fair market
value” of the Common Stock on the date of grant of such Option or SAR as determined by the Internal Revenue
Service and there is no other impermissible deferral of compensation associated with the Award. Additionally, as
a condition to accepting an Option or SAR, each Participant agrees to not make any claim against the Company,
or any of its Officers, Directors, Employees or Affiliates in the event that the Internal Revenue Service asserts
that the exercise or strike price of such Option or SAR is less than the “fair market value” of the Common Stock
on the date of grant of such Option or SAR as subsequently determined by the Internal Revenue Service.
(d) Withholding Indemnification. As a condition to accepting an Award, in the event that the amount of
the Company’s and/or its Affiliate’s withholding obligations in connection with such Award was greater than the
amount actually withheld by the Company and/or its Affiliates, each Participant agrees to indemnify and hold the
Company and/or its Affiliates harmless from any failure by the Company and/or its Affiliates to withhold the
proper amount.
9. MISCELLANEOUS.
(a) Dividends and Dividend Equivalents. Dividends or dividend equivalents may not be paid or credited
to any Awards.
(b) Source of Shares. The stock issuable under the Plan will be shares of authorized but unissued or
reacquired Common Stock, including shares repurchased by the Company on the open market or otherwise.
(c) Use of Proceeds from Sales of Common Stock. Proceeds from the sale of shares of Common Stock
pursuant to Awards will constitute general funds of the Company.
(d) Corporate Action Constituting Grant of Awards. Corporate action constituting a grant by the
Company of an Award to any Participant will be deemed completed as of the date of such corporate action,
unless otherwise determined by the Board, regardless of when the instrument, certificate, or letter evidencing the
Award is communicated to, or actually received or accepted by, the Participant. In the event that the corporate
records (e.g., Board consents, resolutions or minutes) documenting the corporate action approving the grant
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contain terms (e.g., exercise price, vesting schedule or number of shares) that are inconsistent with those in the
Award Agreement or related grant documents as a result of a clerical error in the Award Agreement or related
grant documents, the corporate records will control and the Participant will have no legally binding right to the
incorrect term in the Award Agreement or related grant documents.
(e) Stockholder Rights. No Participant will be deemed to be the holder of, or to have any of the rights of a
holder with respect to, any shares of Common Stock subject to an Award unless and until (i) such Participant has
satisfied all requirements for exercise of the Award pursuant to its terms, if applicable, and (ii) the issuance of the
Common Stock subject to such Award is reflected in the records of the Company.
(f) No Employment or Other Service Rights. Nothing in the Plan, any Award Agreement or any other
instrument executed thereunder or in connection with any Award granted pursuant thereto will confer upon any
Participant any right to continue to serve the Company or an Affiliate in the capacity in effect at the time the
Award was granted or affect the right of the Company or an Affiliate to terminate at will and without regard to
any future vesting opportunity that a Participant may have with respect to any Award (i) the employment of an
Employee with or without notice and with or without cause, (ii) the service of a Consultant pursuant to the terms
of such Consultant’s agreement with the Company or an Affiliate, or (iii) the service of a Director pursuant to the
Bylaws of the Company or an Affiliate, and any applicable provisions of the corporate law of the state or foreign
jurisdiction in which the Company or the Affiliate is incorporated, as the case may be. Further, nothing in the
Plan, any Award Agreement or any other instrument executed thereunder or in connection with any Award will
constitute any promise or commitment by the Company or an Affiliate regarding the fact or nature of future
positions, future work assignments, future compensation or any other term or condition of employment or service
or confer any right or benefit under the Award or the Plan unless such right or benefit has specifically accrued
under the terms of the Award Agreement and/or Plan.
(g) Change in Time Commitment. In the event a Participant’s regular level of time commitment in the
performance of his or her services for the Company or any Affiliate is reduced (for example, and without
limitation, if the Participant is an Employee and has a change in status from a full-time Employee to a part-time
Employee or takes an extended leave of absence) after the date of grant of any Award to the Participant, the
Board may determine, to the extent permitted by Applicable Law, to (i) make a corresponding reduction in the
number of shares or cash amount subject to any portion of such Award that is scheduled to vest or become
payable after the date of such change in time commitment, and (ii) in lieu of or in combination with such a
reduction, extend the vesting or payment schedule applicable to such Award. In the event of any such reduction,
the Participant will have no right with respect to any portion of the Award that is so reduced or extended.
(h) Execution of Additional Documents. As a condition to accepting an Award, the Participant agrees to
execute any additional documents or instruments necessary or desirable, as determined in the Plan
Administrator’s sole discretion, to carry out the purposes or intent of the Award, or facilitate compliance with
securities and/or other regulatory requirements, in each case at the Plan Administrator’s request.
(i) Electronic Delivery and Participation. Any reference herein or in an Award Agreement to a “written”
agreement or document will include any agreement or document delivered electronically, filed publicly at
www.sec.gov (or any successor website thereto) or posted on the Company’s intranet (or other shared electronic
medium controlled by the Company to which the Participant has access). By accepting any Award, the
Participant consents to receive documents by electronic delivery and to participate in the Plan through any
on-line electronic system established and maintained by the Plan Administrator or another third party selected by
the Plan Administrator. The form of delivery of any Common Stock (e.g., a stock certificate or electronic entry
evidencing such shares) will be determined by the Company.
(j) Clawback/Recovery. All Awards granted under the Plan will be subject to recoupment in accordance
with any clawback policy that the Company is required to adopt pursuant to the listing standards of any national
securities exchange or association on which the Company’s securities are listed or as is otherwise required by the
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Dodd-Frank Wall Street Reform and Consumer Protection Act or other Applicable Law, and any other clawback
policy that the Company adopts. In addition, the Board may impose such other clawback, recovery or
recoupment provisions in an Award Agreement as the Board determines necessary or appropriate, including but
not limited to a reacquisition right in respect of previously acquired shares of Common Stock or other cash or
property upon the occurrence of Cause. No recovery of compensation under such a clawback policy will be an
event giving rise to a Participant’s right to voluntary terminate employment upon a “resignation for good
reason,” or for a “constructive termination” or any similar term under any plan of or agreement with the
Company.
(k) Securities Law Compliance. A Participant will not be issued any shares in respect of an Award unless
either (i) the shares are registered under the Securities Act or (ii) the Company has determined that such issuance
would be exempt from the registration requirements of the Securities Act. Each Award also must comply with
other Applicable Law governing the Award, and a Participant will not receive such shares if the Company
determines that such receipt would not be in material compliance with Applicable Law.
(l) Transfer or Assignment of Awards; Issued Shares. Except as expressly provided in the Plan or an
Award Agreement, Awards may not be transferred or assigned by the Participant. After the vested shares subject
to an Award have been issued, or in the case of Restricted Stock and similar awards, after the issued shares have
vested, the holder of such shares is free to assign, hypothecate, donate, encumber or otherwise dispose of any
interest in such shares provided that any such actions are in compliance with the provisions herein, the terms of
the Trading Policy and Applicable Law.
(m) Effect on Other Employee Benefit Plans. The value of any Award, as determined upon grant, vesting
or settlement, will not be included as compensation, earnings, salaries, or other similar terms used when
calculating any Participant’s benefits under any employee benefit plan sponsored by the Company or any
Affiliate, except as such plan otherwise expressly provides. The Company expressly reserves its rights to amend,
modify, or terminate any of the Company’s or any Affiliate’s employee benefit plans.
(n) Deferrals. To the extent permitted by Applicable Law, the Board, in its sole discretion, may determine
that the delivery of Common Stock or the payment of cash, upon the exercise, vesting or settlement of all or a
portion of any Award may be deferred and may also establish programs and procedures for deferral elections to
be made by Participants. Deferrals by will be made in accordance with the requirements of Section 409A.
(o) Section 409A. Unless otherwise expressly provided for in an Award Agreement, the Plan and each
Award Agreement will be interpreted to the greatest extent possible in a manner that makes the Plan and the
Awards granted hereunder exempt from Section 409A, and, to the extent not so exempt, in compliance with the
requirements of Section 409A. If the Board determines that any Award granted hereunder is not exempt from and
is therefore subject to Section 409A, the Award Agreement evidencing such Award will incorporate the terms
and conditions necessary to avoid the consequences specified in Section 409A(a)(1) of the Code, and to the
extent an Award Agreement is silent on terms necessary for compliance, such terms are hereby incorporated by
reference into the Award Agreement. Notwithstanding anything to the contrary in this Plan (and unless the
Award Agreement specifically provides otherwise), if the shares of Common Stock are publicly traded, and if a
Participant holding an Award that constitutes “deferred compensation” under Section 409A is a “specified
employee” for purposes of Section 409A, no distribution or payment of any amount that is due because of a
“separation from service” (as defined in Section 409A without regard to alternative definitions thereunder) will
be issued or paid before the date that is six months and one day following the date of such Participant’s
“separation from service” or, if earlier, the date of the Participant’s death, unless such distribution or payment
may be made in a manner that complies with Section 409A, and any amounts so deferred will be paid in a lump
sum on the day after such six month period elapses, with the balance paid thereafter on the original schedule.
(p) Choice of Law. This Plan and any controversy arising out of or relating to this Plan will be governed
by, and construed in accordance with, the internal laws of the State of California, without regard to conflict of
law principles that would result in any application of any law other than the law of the State of California.
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10. COVENANTS OF THE COMPANY.
(a) Compliance with Law. The Company will seek to obtain from each regulatory commission or agency,
as may be deemed to be necessary, having jurisdiction over the Plan such authority as may be required to grant
Awards and to issue and sell shares of Common Stock upon exercise or vesting of the Awards; provided,
however, that this undertaking will not require the Company to register under the Securities Act the Plan, any
Award or any Common Stock issued or issuable pursuant to any such Award. If, after reasonable efforts and at a
reasonable cost, the Company is unable to obtain from any such regulatory commission or agency the authority
that counsel for the Company deems necessary or advisable for the lawful issuance and sale of Common Stock
under the Plan, the Company will be relieved from any liability for failure to issue and sell Common Stock upon
exercise or vesting of such Awards unless and until such authority is obtained. A Participant is not eligible for the
grant of an Award or the subsequent issuance of Common Stock pursuant to the Award if such grant or issuance
would be in violation of any Applicable Law.
11. ADDITIONAL RULES FOR AWARDS SUBJECT TO SECTION 409A.
(a) Application. Unless the provisions of this Section 11 are expressly superseded by the provisions in an
Award Agreement, the provisions of this Section 11 will apply and will supersede anything to the contrary set
forth in the Award Agreement for a Non-Exempt Award.
(b) Non-Exempt Awards Subject to Non-Exempt Severance Arrangements. To the extent a
Non-Exempt Award is subject to Section 409A due to application of a Non-Exempt Severance Arrangement, the
following provisions of this Section 11(b) will apply.
(i) If the Non-Exempt Award vests in the ordinary course during the Participant’s Continuous Service
in accordance with the vesting schedule set forth in the Award Agreement, and does not accelerate vesting under
the terms of a Non-Exempt Severance Arrangement, in no event will the shares be issued in respect of such
Non-Exempt Award any later than the later of: (i) December 31st of the calendar year that includes the applicable
vesting date; or (ii) the 60th day that follows the applicable vesting date.
(ii) If vesting of the Non-Exempt Award accelerates under the terms of a Non-Exempt Severance
Arrangement in connection with the Participant’s Separation from Service, and such vesting acceleration
provisions were in effect as of the date of grant of the Non-Exempt Award and, therefore, are part of the terms of
such Non-Exempt Award as of the date of grant, then the shares will be earlier issued in settlement of such
Non-Exempt Award upon the Participant’s Separation from Service in accordance with the terms of the
Non-Exempt Severance Arrangement, but in no event later than the 60th day that follows the date of the
Participant’s Separation from Service. However, if at the time the shares would otherwise be issued the
Participant is subject to the distribution limitations contained in Section 409A applicable to “specified
employees,” as defined in Section 409A(a)(2)(B)(i) of the Code, such shares will not be issued before the date
that is six months following the date of such Participant’s Separation from Service, or, if earlier, the date of the
Participant’s death that occurs within such six month period.
(iii) If vesting of a Non-Exempt Award accelerates under the terms of a Non-Exempt Severance
Arrangement in connection with a Participant’s Separation from Service, and such vesting acceleration
provisions were not in effect as of the date of grant of the Non-Exempt Award and, therefore, are not a part of the
terms of such Non-Exempt Award on the date of grant, then such acceleration of vesting of the Non-Exempt
Award will not accelerate the issuance date of the shares, but the shares will instead be issued on the same
schedule as set forth in the Grant Notice as if they had vested in the ordinary course during the Participant’s
Continuous Service, notwithstanding the vesting acceleration of the Non-Exempt Award. Such issuance schedule
is intended to satisfy the requirements of payment on a specified date or pursuant to a fixed schedule, as provided
under Treasury Regulations Section 1.409A-3(a)(4).
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(c) Treatment of Non-Exempt Awards Upon a Transaction for Employees and Consultants. The
provisions of this Section 11(c) will apply and will supersede anything to the contrary set forth in the Plan with
respect to the permitted treatment of any Non-Exempt Award in connection with a Transaction if the Participant
was either an Employee or Consultant upon the applicable date of grant of the Non-Exempt Award.
(i) Vested Non-Exempt Awards. The following provisions will apply to any Vested Non-Exempt
Award in connection with a Transaction:
(1) If the Transaction is also a Section 409A Change in Control, then the Acquiring Entity may
not assume, continue or substitute the Vested Non-Exempt Award. Upon the Section 409A Change in Control,
the settlement of the Vested Non-Exempt Award will automatically be accelerated and the shares will be
immediately issued in respect of the Vested Non-Exempt Award. Alternatively, the Company may instead
provide that the Participant will receive a cash settlement equal to the Fair Market Value of the shares that would
otherwise be issued to the Participant upon the Section 409A Change in Control.
(2) If the Transaction is not also a Section 409A Change in Control, then the Acquiring Entity
must either assume, continue or substitute each Vested Non-Exempt Award. The shares to be issued in respect of
the Vested Non-Exempt Award will be issued to the Participant by the Acquiring Entity on the same schedule
that the shares would have been issued to the Participant if the Transaction had not occurred. In the Acquiring
Entity’s discretion, in lieu of an issuance of shares, the Acquiring Entity may instead substitute a cash payment
on each applicable issuance date, equal to the Fair Market Value of the shares that would otherwise be issued to
the Participant on such issuance dates, with the determination of the Fair Market Value of the shares made on the
date of the Transaction.
(ii) Unvested Non-Exempt Awards. The following provisions will apply to any Unvested
Non-Exempt Award unless otherwise determined by the Board pursuant to Section 11(e).
(1) In the event of a Transaction, the Acquiring Entity will assume, continue or substitute any
Unvested Non-Exempt Award. Unless otherwise determined by the Board, any Unvested Non-Exempt Award
will remain subject to the same vesting and forfeiture restrictions that were applicable to the Award prior to the
Transaction. The shares to be issued in respect of any Unvested Non-Exempt Award will be issued to the
Participant by the Acquiring Entity on the same schedule that the shares would have been issued to the
Participant if the Transaction had not occurred. In the Acquiring Entity’s discretion, in lieu of an issuance of
shares, the Acquiring Entity may instead substitute a cash payment on each applicable issuance date, equal to the
Fair Market Value of the shares that would otherwise be issued to the Participant on such issuance dates, with the
determination of Fair Market Value of the shares made on the date of the Transaction.
(2) If the Acquiring Entity will not assume, substitute or continue any Unvested Non-Exempt
Award in connection with a Transaction, then such Award will automatically terminate and be forfeited upon the
Transaction with no consideration payable to any Participant in respect of such forfeited Unvested Non-Exempt
Award. Notwithstanding the foregoing, to the extent permitted and in compliance with the requirements of
Section 409A, the Board may in its discretion determine to elect to accelerate the vesting and settlement of the
Unvested Non-Exempt Award upon the Transaction, or instead substitute a cash payment equal to the Fair
Market Value of such shares that would otherwise be issued to the Participant, as further provided in
Section 11(e)(ii). In the absence of such discretionary election by the Board, any Unvested Non-Exempt Award
will be forfeited without payment of any consideration to the affected Participants if the Acquiring Entity will not
assume, substitute or continue the Unvested Non-Exempt Awards in connection with the Transaction.
(3) The foregoing treatment will apply with respect to all Unvested Non-Exempt Awards upon
any Transaction, and regardless of whether or not such Transaction is also a Section 409A Change in Control.
(d) Treatment of Non-Exempt Awards Upon a Transaction for Non-Employee Directors. The
following provisions of this Section 11(d) will apply and will supersede anything to the contrary that may be set
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forth in the Plan with respect to the permitted treatment of a Non-Exempt Director Award in connection with a
Transaction.
(i) If the Transaction is also a Section 409A Change in Control, then the Acquiring Entity may not
assume, continue or substitute the Non-Exempt Director Award. Upon the Section 409A Change in Control, the
vesting and settlement of any Non-Exempt Director Award will automatically be accelerated and the shares will
be immediately issued to the Participant in respect of the Non-Exempt Director Award. Alternatively, the
Company may provide that the Participant will instead receive a cash settlement equal to the Fair Market Value
of the shares that would otherwise be issued to the Participant upon the Section 409A Change in Control pursuant
to the preceding provision.
(ii) If the Transaction is not also a Section 409A Change in Control, then the Acquiring Entity must
either assume, continue or substitute the Non-Exempt Director Award. Unless otherwise determined by the
Board, the Non-Exempt Director Award will remain subject to the same vesting and forfeiture restrictions that
were applicable to the Award prior to the Transaction. The shares to be issued in respect of the Non-Exempt
Director Award will be issued to the Participant by the Acquiring Entity on the same schedule that the shares
would have been issued to the Participant if the Transaction had not occurred. In the Acquiring Entity’s
discretion, in lieu of an issuance of shares, the Acquiring Entity may instead substitute a cash payment on each
applicable issuance date, equal to the Fair Market Value of the shares that would otherwise be issued to the
Participant on such issuance dates, with the determination of Fair Market Value made on the date of the
Transaction.
(e) If the RSU Award is a Non-Exempt Award, then the provisions in this Section 11(e) will apply and
supersede anything to the contrary that may be set forth in the Plan or the Award Agreement with respect to the
permitted treatment of such Non-Exempt Award:
(i) Any exercise by the Board of discretion to accelerate the vesting of a Non-Exempt Award will not
result in any acceleration of the scheduled issuance dates for the shares in respect of the Non-Exempt Award
unless earlier issuance of the shares upon the applicable vesting dates would be in compliance with the
requirements of Section 409A.
(ii) The Company explicitly reserves the right to earlier settle any Non-Exempt Award to the extent
permitted and in compliance with the requirements of Section 409A, including pursuant to any of the exemptions
available in Treasury Regulations Section 1.409A-3(j)(4)(ix).
(iii) To the extent the terms of any Non-Exempt Award provide that it will be settled upon a
Transaction, to the extent it is required for compliance with the requirements of Section 409A, the Transaction
event triggering settlement must also constitute a Section 409A Change in Control. To the extent the terms of a
Non-Exempt Award provide that it will be settled upon a termination of employment or termination of
Continuous Service, to the extent it is required for compliance with the requirements of Section 409A, the
termination event triggering settlement must also constitute a Separation from Service. However, if at the time
the shares would otherwise be issued to a Participant in connection with a “separation from service” such
Participant is subject to the distribution limitations contained in Section 409A applicable to “specified
employees,” as defined in Section 409A(a)(2)(B)(i) of the Code, such shares will not be issued before the date
that is six months following the date of the Participant’s Separation from Service, or, if earlier, the date of the
Participant’s death that occurs within such six month period.
(iv) The provisions in this Section 11(e) for delivery of the shares in respect of the settlement of a RSU
Award that is a Non-Exempt Award are intended to comply with the requirements of Section 409A so that the
delivery of the shares to the Participant in respect of such Non-Exempt Award will not trigger the additional tax
imposed under Section 409A, and any ambiguities herein will be so interpreted.
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12. SEVERABILITY.
If all or any part of the Plan or any Award Agreement is declared by any court or governmental authority to
be unlawful or invalid, such unlawfulness or invalidity will not invalidate any portion of the Plan or such Award
Agreement not declared to be unlawful or invalid. Any Section of the Plan or any Award Agreement (or part of
such a Section) so declared to be unlawful or invalid will, if possible, be construed in a manner which will give
effect to the terms of such Section or part of a Section to the fullest extent possible while remaining lawful and
valid.
13. TERMINATION OF THE PLAN.
The Board may suspend or terminate the Plan at any time. Unless terminated sooner by the Board, the Plan
will automatically terminate on the day before the tenth anniversary of the earlier of: (i) the Adoption Date; or
(ii) the Effective Date. No Awards may be granted under the Plan while the Plan is suspended or after it is
terminated.
14. DEFINITIONS.
As used in the Plan, the following definitions apply to the capitalized terms indicated below:
(a) “Acquiring Entity” means the surviving or acquiring corporation (or the surviving or acquiring
corporation’s parent company) in connection with a Transaction.
(b) “Adoption Date” means the date the Plan is first approved by the Compensation Committee.
(c) “Affiliate” means, at the time of determination, any “parent” or “subsidiary” of the Company as such
terms are defined in Rule 405 promulgated under the Securities Act. The Board may determine the time or times
at which “parent” or “subsidiary” status is determined within the foregoing definition.
(d) “Annual Meeting” means the first meeting of the Company’s stockholders held each calendar year at
which Directors are selected.
(e) “Applicable Law” means any applicable securities, federal, state, foreign, material local or municipal or
other law, statute, constitution, principle of common law, resolution, ordinance, code, edict, decree, rule, listing
rule, regulation, judicial decision, ruling or requirement issued, enacted, adopted, promulgated, implemented or
otherwise put into effect by or under the authority of any Governmental Body (including under the authority of
any applicable self-regulating organization such as the Nasdaq Stock Market, New York Stock Exchange, or the
Financial Industry Regulatory Authority).
(f) “Appreciation Award” means (i) a stock option or stock appreciation right granted under the Prior Plan
or (ii) an Option or SAR, in each case with respect to which the exercise or strike price is at least 100% of the
Fair Market Value of the Common Stock subject to the stock option or stock appreciation right, or Option or
SAR, as applicable, on the date of grant.
(g) “Award” means any right to receive Common Stock, cash or other property granted under the Plan
(including an Incentive Stock Option, a Nonstatutory Stock Option, a SAR, a Restricted Stock Award, a RSU
Award, a Performance Award or any Other Award).
(h) “Award Agreement” means a written agreement between the Company and a Participant evidencing the
terms and conditions of an Award. The Award Agreement generally consists of the Grant Notice and the
agreement containing the written summary of the general terms and conditions applicable to the Award and
which is provided to a Participant along with the Grant Notice.
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(i) “Board” means the Board of Directors of the Company (or its designee). Any decision or determination
made by the Board will be a decision or determination that is made in the sole discretion of the Board (or its
designee), and such decision or determination will be final and binding on all Participants.
(j) “Capitalization Adjustment” means any change that is made in, or other events that occur with respect
to, the Common Stock subject to the Plan or subject to any Award after the Adoption Date without the receipt of
consideration by the Company through merger, consolidation, reorganization, recapitalization, reincorporation,
stock dividend, dividend in property other than cash, large nonrecurring cash dividend, stock split, reverse stock
split, liquidating dividend, combination of shares, exchange of shares, change in corporate structure or any
similar equity restructuring transaction, as that term is used in Statement of Financial Accounting Standards
Board Accounting Standards Codification Topic 718 (or any successor thereto). Notwithstanding the foregoing,
the conversion of any convertible securities of the Company will not be treated as a Capitalization Adjustment.
(k) “Cause” has the meaning ascribed to such term in any written agreement between the Participant and
the Company or an Affiliate defining such term and, in the absence of such agreement, such term means, with
respect to a Participant, the occurrence of any of the following events: (i) such Participant’s commission of any
crime involving fraud, dishonesty or moral turpitude; (ii) such Participant’s attempted commission of, or
participation in, a fraud or act of dishonesty against the Company or an Affiliate that results in (or might have
reasonably resulted in) material harm to the business of the Company or an Affiliate; (iii) such Participant’s
intentional, material violation of any contract or agreement between such Participant and the Company or an
Affiliate, or of any statutory duty such Participant owes to the Company or an Affiliate; or (iv) such Participant’s
conduct that constitutes gross insubordination, incompetence or habitual neglect of duties and that results in (or
might have reasonably resulted in) material harm to the business of the Company or an Affiliate; provided,
however, that the action or conduct described in clauses (iii) and (iv) above will constitute “Cause” only if such
action or conduct continues after the Company has provided such Participant with written notice thereof and not
less than five business days to cure the same. The determination that a termination of the Participant’s
Continuous Service is either for Cause or without Cause will be made by the Board with respect to Participants
who are Officers and by the Chief Executive Officer of the Company with respect to Participants who are not
Officers. Any determination by the Company that the Continuous Service of a Participant was terminated with or
without Cause for the purposes of outstanding Awards held by such Participant will have no effect upon any
determination of the rights or obligations of the Company or such Participant for any other purpose.
(l) “Change in Control” or “Change of Control” means the occurrence, in a single transaction or in a
series of related transactions, of any one or more of the following events; provided, however, to the extent
necessary to avoid adverse personal income tax consequences to the Participant in connection with an Award,
such transaction also constitutes a Section 409A Change in Control:
(i) any Exchange Act Person becomes the Owner, directly or indirectly, of securities of the Company
representing more than 50% of the combined voting power of the Company’s then outstanding securities other
than by virtue of a merger, consolidation or similar transaction. Notwithstanding the foregoing, a Change in
Control will not be deemed to occur (A) on account of the acquisition of securities of the Company directly from
the Company, (B) on account of the acquisition of securities of the Company by an investor, any affiliate thereof
or any other Exchange Act Person that acquires the Company’s securities in a transaction or series of related
transactions the primary purpose of which is to obtain financing for the Company through the issuance of equity
securities, or (C) solely because the level of Ownership held by any Exchange Act Person (the “Subject Person”)
exceeds the designated percentage threshold of the outstanding voting securities as a result of a repurchase or
other acquisition of voting securities by the Company reducing the number of shares outstanding, provided that if
a Change in Control would occur (but for the operation of this sentence) as a result of the acquisition of voting
securities by the Company, and after such share acquisition, the Subject Person becomes the Owner of any
additional voting securities that, assuming the repurchase or other acquisition had not occurred, increases the
percentage of the then outstanding voting securities Owned by the Subject Person over the designated percentage
threshold, then a Change in Control will be deemed to occur;
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(ii) there is consummated a merger, consolidation or similar transaction involving (directly or
indirectly) the Company and, immediately after the consummation of such merger, consolidation or similar
transaction, the stockholders of the Company immediately prior thereto do not Own, directly or indirectly, either
(A) outstanding voting securities representing more than 50% of the combined outstanding voting power of the
surviving Entity in such merger, consolidation or similar transaction or (B) more than 50% of the combined
outstanding voting power of the parent of the surviving Entity in such merger, consolidation or similar
transaction, in each case in substantially the same proportions as their Ownership of the outstanding voting
securities of the Company immediately prior to such transaction;
(iii) the stockholders of the Company approve or the Board approves a plan of complete dissolution or
liquidation of the Company, or a complete dissolution or liquidation of the Company shall otherwise occur,
except for a liquidation into a parent corporation;
(iv) there is consummated a sale, lease, exclusive license or other disposition of all or substantially all
of the consolidated assets of the Company and its Subsidiaries, other than a sale, lease, license or other
disposition of all or substantially all of the consolidated assets of the Company and its Subsidiaries to an Entity,
more than 50% of the combined voting power of the voting securities of which are Owned by stockholders of the
Company in substantially the same proportions as their Ownership of the outstanding voting securities of the
Company immediately prior to such sale, lease, license or other disposition; or
(v) individuals who, on the date the Plan is adopted by the Compensation Committee, are members of
the Board (the “Incumbent Board”) cease for any reason to constitute at least a majority of the members of the
Board; provided, however, that if the appointment or election (or nomination for election) of any new Board
member was approved or recommended by a majority vote of the members of the Incumbent Board then still in
office, such new member will, for purposes of this Plan, be considered as a member of the Incumbent Board.
Notwithstanding the foregoing or any other provision of this Plan, (A) the term Change in Control will not
include a sale of assets, merger or other transaction effected exclusively for the purpose of changing the domicile
of the Company, and (B) the definition of Change in Control (or any analogous term) in an individual written
agreement between the Company or any Affiliate and the Participant will supersede the foregoing definition with
respect to Awards subject to such agreement; provided, however, that (1) if no definition of Change in Control
(or any analogous term) is set forth in such an individual written agreement, the foregoing definition will apply;
and (2) no Change in Control (or any analogous term) will be deemed to occur with respect to Awards subject to
such an individual written agreement without a requirement that the Change in Control (or any analogous term)
actually occur.
(m) “Code” means the Internal Revenue Code of 1986, as amended, including any applicable regulations
and guidance thereunder.
(n) “Committee” means the Compensation Committee and any other committee of Directors to whom
authority has been delegated by the Board or Compensation Committee in accordance with the Plan.
(o) “Common Stock” means the common stock of the Company.
(p) “Company” means Neurocrine Biosciences, Inc., a Delaware corporation.
(q) “Compensation Committee” means the Compensation Committee of the Board.
(r) “Consultant” means any person, including an advisor, who is (i) engaged by the Company or an
Affiliate to render consulting or advisory services and is compensated for such services, or (ii) serving as a
member of the board of directors of an Affiliate and is compensated for such services. However, service solely as
a Director, or payment of a fee for such service, will not cause a Director to be considered a “Consultant” for
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purposes of the Plan. Notwithstanding the foregoing, a person is treated as a Consultant under this Plan only if a
Form S-8 Registration Statement under the Securities Act is available to register either the offer or the sale of the
Company’s securities to such person.
(s) “Continuous Service” means that the Participant’s service with the Company or an Affiliate, whether as
an Employee, Director or Consultant, is not interrupted or terminated. A change in the capacity in which the
Participant renders service to the Company or an Affiliate as an Employee, Director or Consultant or a change in
the Entity for which the Participant renders such service, provided that there is no interruption or termination of
the Participant’s service with the Company or an Affiliate, will not terminate a Participant’s Continuous Service;
provided, however, that if the Entity for which a Participant is rendering services ceases to qualify as an Affiliate,
as determined by the Board, such Participant’s Continuous Service will be considered to have terminated on the
date such Entity ceases to qualify as an Affiliate. For example, a change in status from an Employee of the
Company to a Consultant of an Affiliate or to a Director will not constitute an interruption of Continuous
Service. To the extent permitted by law, the Board or the Chief Executive Officer of the Company, in that party’s
sole discretion, may determine whether Continuous Service will be considered interrupted in the case of (i) any
leave of absence approved by the Board or Chief Executive Officer, including sick leave, military leave or any
other personal leave, or (ii) transfers between the Company, an Affiliate, or their successors. Notwithstanding the
foregoing, a leave of absence will be treated as Continuous Service for purposes of vesting in an Award only to
such extent as may be provided in the Company’s leave of absence policy, in the written terms of any leave of
absence agreement or policy applicable to the Participant, or as otherwise required by law. In addition, to the
extent required for exemption from or compliance with Section 409A, the determination of whether there has
been a termination of Continuous Service will be made, and such term will be construed, in a manner that is
consistent with the definition of “separation from service” as defined under Treasury Regulation
Section 1.409A-1(h) (without regard to any alternative definition thereunder).
(t) “Corporate Transaction” means the consummation, in a single transaction or in a series of related
transactions, of any one or more of the following events:
(i) a sale or other disposition of all or substantially all, as determined by the Board, of the consolidated
assets of the Company and its Subsidiaries;
(ii) a sale or other disposition of at least 90% of the outstanding securities of the Company;
(iii) a merger, consolidation or similar transaction following which the Company is not the surviving
corporation; or
(iv) a merger, consolidation or similar transaction following which the Company is the surviving
corporation but the shares of Common Stock outstanding immediately preceding the merger, consolidation or
similar transaction are converted or exchanged by virtue of the merger, consolidation or similar transaction into
other property, whether in the form of securities, cash or otherwise.
(u) “determine” or “determined” means as determined by the Board or the Committee (or its designee) in
its sole discretion.
(v) “Director” means a member of the Board of Directors of the Company.
(w) “Disability” means, with respect to a Participant, such Participant is unable to engage in any substantial
gainful activity by reason of any medically determinable physical or mental impairment which can be expected to
result in death or which has lasted or can be expected to last for a continuous period of not less than 12 months,
as provided in Section 22(e)(3) of the Code, and will be determined by the Board on the basis of such medical
evidence as the Board deems warranted under the circumstances.
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(x) “Effective Date” means the date of the Annual Meeting in 2020, provided this Plan is approved by the
Company’s stockholders at such meeting.
(y) “Employee” means any person employed by the Company or an Affiliate. However, service solely as a
Director, or payment of a fee for such services, will not cause a Director to be considered an “Employee” for
purposes of the Plan.
(z) “Employer” means the Company or the Affiliate of the Company that employs the Participant.
(aa) “Entity” means a corporation, partnership, limited liability company or other entity.
(bb) “Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and
regulations promulgated thereunder.
(cc) “Exchange Act Person” means any natural person, Entity or “group” (within the meaning of
Section 13(d) or 14(d) of the Exchange Act), except that “Exchange Act Person” will not include (i) the
Company or any Subsidiary, (ii) any employee benefit plan of the Company or any Subsidiary or any trustee or
other fiduciary holding securities under an employee benefit plan of the Company or any Subsidiary, (iii) an
underwriter temporarily holding securities pursuant to a registered public offering of such securities, (iv) an
Entity Owned, directly or indirectly, by the stockholders of the Company in substantially the same proportions as
their Ownership of stock of the Company, or (v) any natural person, Entity or “group” (within the meaning of
Section 13(d) or 14(d) of the Exchange Act) that, as of the Effective Date, is the Owner, directly or indirectly, of
securities of the Company representing more than 50% of the combined voting power of the Company’s then
outstanding securities.
(dd) “Fair Market Value” means, as of any date, unless otherwise determined by the Board, the value of
the Common Stock (as determined on a per share or aggregate basis, as applicable) determined as follows:
(i) If the Common Stock is listed on any established stock exchange or traded on any established
market, the Fair Market Value will be the closing sales price for such stock as quoted on such exchange or
market (or the exchange or market with the greatest volume of trading in the Common Stock) on the date of
determination, as reported in a source the Board deems reliable.
(ii) If there is no closing sales price for the Common Stock on the date of determination, then the Fair
Market Value will be the closing sales price on the last preceding date for which such quotation exists.
(iii) In the absence of such exchange or market for the Common Stock, or if otherwise determined by
the Board, the Fair Market Value will be determined by the Board in good faith and in a manner that complies
with Sections 409A and 422 of the Code.
(ee) “Full Value Award” means (i) a stock award granted under the Prior Plan or (ii) an Award, in each
case that is not an Appreciation Award.
(ff) “Governmental Body” means any: (i) nation, state, commonwealth, province, territory, county,
municipality, district or other jurisdiction of any nature; (ii) federal, state, local, municipal, foreign or other
government; (iii) governmental or regulatory body, or quasi-governmental body of any nature (including any
governmental division, department, administrative agency or bureau, commission, authority, instrumentality,
official, ministry, fund, foundation, center, organization, unit, body or Entity and any court or other tribunal, and
for the avoidance of doubt, any tax authority) or other body exercising similar powers or authority; or (iv) self-
regulatory organization (including the Nasdaq Stock Market, New York Stock Exchange, and the Financial
Industry Regulatory Authority).
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(gg) “Grant Notice” means the notice provided to a Participant that he or she has been granted an Award
and which includes the name of the Participant, the type of Award, the date of grant of the Award, number of
shares of Common Stock subject to the Award or potential cash payment right, (if any), the vesting schedule for
the Award (if any) and other key terms applicable to the Award.
(hh) “Incentive Stock Option” means an option granted pursuant to Section 4 that is intended to be, and
qualifies as, an “incentive stock option” within the meaning of Section 422 of the Code.
(ii) “Materially Impair” means that a Participant’s rights under an Award will be materially adversely
affected by a suspension or termination of the Plan, an amendment of the Plan, or an amendment to the terms of
the Award, as applicable. For purposes of the Plan, a Participant’s rights under an Award will not be deemed to
have been Materially Impaired by any of the foregoing actions if the Board, in its sole discretion, determines that
such action, taken as a whole, does not materially impair the Participant’s rights under the Award. For example,
an amendment to the terms of an Award in order to do any of the following, or that results in any of the
following, will not be deemed to Materially Impair the Participant’s rights under the Award: (i) an imposition of
reasonable restrictions on the minimum number of shares subject to an Option that may be exercised; (ii) to
maintain the qualified status of the Award as an Incentive Stock Option under Section 422 of the Code; (iii) a
change in the terms of an Incentive Stock Option in a manner that disqualifies, impairs or otherwise affects the
qualified status of the Award as an Incentive Stock Option under Section 422 of the Code; (iv) to clarify the
manner of exemption from, or to bring the Award into compliance with or qualify it for an exemption from,
Section 409A; or (v) to comply with other Applicable Laws.
(jj) “Non-Employee Director” means a Director who either (i) is not a current employee or officer of the
Company or an Affiliate, does not receive compensation, either directly or indirectly, from the Company or an
Affiliate for services rendered as a consultant or in any capacity other than as a Director (except for an amount as
to which disclosure would not be required under Item 404(a) of Regulation S-K promulgated pursuant to the
Securities Act (“Regulation S-K”)), does not possess an interest in any other transaction for which disclosure
would be required under Item 404(a) of Regulation S-K, and is not engaged in a business relationship for which
disclosure would be required pursuant to Item 404(b) of Regulation S-K, or (ii) is otherwise considered a
“non-employee director” for purposes of Rule 16b-3.
(kk) “Non-Exempt Award” means any Award that is subject to, and not exempt from, Section 409A,
including as the result of (i) a deferral of the issuance of the shares subject to the Award which is elected by the
Participant or imposed by the Company, or (ii) the terms of any Non-Exempt Severance Agreement.
(ll) “Non-Exempt Director Award” means a Non-Exempt Award granted to a Participant who was a
Director but not an Employee on the applicable grant date.
(mm) “Non-Exempt Severance Arrangement” means a severance arrangement or other agreement
between the Participant and the Company or an Affiliate that provides for acceleration of vesting of an Award
and issuance of the shares in respect of such Award upon the Participant’s termination of employment or
separation from service (as such term is defined in Section 409A(a)(2)(A)(i) of the Code (and without regard to
any alternative definition thereunder) (“Separation from Service”) and such severance benefit does not satisfy
the requirements for an exemption from application of Section 409A provided under Treasury Regulations
Section 1.409A-1(b)(4), 1.409A-1(b)(9) or otherwise.
(nn) “Nonstatutory Stock Option” means any option granted pursuant to Section 4 that does not qualify as
an Incentive Stock Option.
(oo) “Officer” means a person who is an officer of the Company within the meaning of Section 16 of the
Exchange Act.
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(pp) “Option” means an Incentive Stock Option or a Nonstatutory Stock Option to purchase shares of
Common Stock which is granted pursuant to the terms and conditions of Section 4.
(qq) “Option Agreement” means a written agreement between the Company and a Participant evidencing
the terms and conditions of an Option grant. The Option Agreement includes the Grant Notice for the Option and
the agreement containing the written summary of the general terms and conditions applicable to the Option and
which is provided to a Participant along with the Grant Notice. Each Option Agreement will be subject to the
terms and conditions of the Plan.
(rr) “Other Award” means an award based in whole or in part by reference to the Common Stock which is
granted pursuant to the terms and conditions of Section 5(c).
(ss) “Other Award Agreement” means a written agreement between the Company and a Participant
evidencing the terms and conditions of an Other Award grant. Each Other Award Agreement will be subject to
the terms and conditions of the Plan.
(tt) “Own,” “Owned,” “Owner,” or “Ownership” means that a person or Entity will be deemed to “Own,”
to have “Owned,” to be the “Owner” of, or to have acquired “Ownership” of securities if such person or Entity,
directly or indirectly, through any contract, arrangement, understanding, relationship or otherwise, has or shares
voting power, which includes the power to vote or to direct the voting, with respect to such securities.
(uu) “Participant” means an Employee, Director or Consultant to whom an Award is granted pursuant to
the Plan or, if applicable, such other person who holds an outstanding Award.
(vv) “Performance Award” means an Award that may vest or may be exercised, or that may become
earned and paid, contingent upon the attainment during a Performance Period of certain Performance Goals and
which is granted pursuant to the terms and conditions of Section 5(b) and such terms as approved by the Board.
(ww) “Performance Criteria” means the one or more criteria that the Board will select for purposes of
establishing the Performance Goals for a Performance Period. The Performance Criteria that will be used to
establish such Performance Goals may be based on any one of, or combination of, the following, as determined
by the Board: (1) earnings (including earnings per share and net earnings, in either case before or after any or all
of: interest, taxes, depreciation and amortization, legal settlements or other income (expense), or stock-based
compensation, other non-cash expenses and changes in deferred revenue); (2) total stockholder return; (3) return
on equity or average stockholder’s equity; (4) return on assets, investment, or capital employed; (5) stock price;
(6) margin (including gross margin); (7) income (before or after taxes); (8) operating income; (9) operating
income after taxes; (10) pre-tax profit; (11) operating cash flow; (12) sales, prescriptions, or revenue targets;
(13) increases in revenue or product revenue; (14) expenses and cost reduction goals; (15) improvement in or
attainment of working capital levels; (16) economic value added (or an equivalent metric); (17) market share;
(18) cash flow; (19) cash flow per share; (20) cash burn; (21) share price performance; (22) debt reduction;
(23) implementation or completion of projects or processes (including, without limitation, discovery of a
pre-clinical drug candidate, recommendation of a drug candidate to enter a clinical trial, clinical trial initiation,
clinical trial enrollment and dates, clinical trial results, regulatory filing submissions, regulatory filing
acceptances, regulatory or advisory committee interactions, regulatory approvals, presentation of studies and
launch of commercial plans, compliance programs or education campaigns); (24) customer satisfaction;
(25) stockholders’ equity; (26) capital expenditures; (27) debt levels; (28) financings; (29) operating profit or net
operating profit; (30) workforce diversity; (31) growth of net income or operating income; (32) billings;
(33) employee hiring; (34) funds from operations; (35) budget management; (36) strategic partnerships or
transactions (including acquisitions, joint ventures or licensing transactions); (37) engagement of thought leaders
and patient advocacy groups; (38) enhancement of intellectual property portfolio, filing of patent applications
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and granting of patents; (39) litigation preparation and management; and (40) any other measure of performance
selected by the Board.
(xx) “Performance Goals” means, for a Performance Period, the one or more goals established by the
Board for the Performance Period based upon the Performance Criteria. Performance Goals may be based on a
Company-wide basis, with respect to one or more business units, divisions, Affiliates, or business segments, and
in either absolute terms or relative to the performance of one or more comparable companies or the performance
of one or more relevant indices. Unless specified otherwise by the Board (i) in the Award Agreement at the time
the Award is granted or (ii) in such other document setting forth the Performance Goals at the time the
Performance Goals are established, the Board will appropriately make adjustments in the method of calculating
the attainment of the Performance Goals for a Performance Period as follows: (1) to exclude restructuring and/or
other nonrecurring charges; (2) to exclude exchange rate effects, as applicable, for non-U.S. dollar denominated
Performance Goals; (3) to exclude the effects of changes to generally accepted accounting principles; (4) to
exclude the effects of any statutory adjustments to corporate tax rates; (5) to exclude the effects of items that are
“unusual” in nature or occur “infrequently” as determined under generally accepted accounting principles; (6) to
exclude the dilutive effects of acquisitions or joint ventures; (7) to assume that any business divested by the
Company achieved performance objectives at targeted levels during the balance of a Performance Period
following such divestiture; (8) to exclude the effect of any change in the outstanding shares of common stock of
the Company by reason of any stock dividend or split, stock repurchase, reorganization, recapitalization, merger,
consolidation, spin-off, combination or exchange of shares or other similar corporate change, or any distributions
to common stockholders other than regular cash dividends; (9) to exclude the effects of stock based
compensation and the award of bonuses under the Company’s bonus plans; (10) to exclude costs incurred in
connection with potential acquisitions or divestitures that are required to be expensed under generally accepted
accounting principles; (11) to exclude the goodwill and intangible asset impairment charges that are required to
be recorded under generally accepted accounting principles; and (12) to exclude the effects of the timing of
acceptance for review and/or approval of submissions to the U.S. Food and Drug Administration or any other
regulatory body. In addition, the Board retains the discretion to define the manner of calculating the Performance
Criteria it selects to use for a Performance Period and to reduce or eliminate the compensation or economic
benefit due upon the attainment of any Performance Goal. Partial attainment of any Performance Goal may result
in payment or vesting corresponding to the degree of attainment as specified in the applicable Award Agreement
or the written terms of a Performance Award.
(yy) “Performance Period” means the period of time selected by the Board over which the attainment of
one or more Performance Goals will be measured for the purpose of determining a Participant’s right to vesting
or exercise of, or any payment under, an Award. Performance Periods may be of varying and overlapping
duration, at the sole discretion of the Board.
(zz) “Plan” means this Neurocrine Biosciences, Inc. 2020 Equity Incentive Plan.
(aaa) “Plan Administrator” means the person, persons, and/or third-party administrator designated by the
Company to administer the day to day operations of the Plan and the Company’s other equity incentive
programs.
(bbb) “Post-Termination Exercise Period” means the period following termination of a Participant’s
Continuous Service within which an Option or SAR is exercisable, as specified in Section 4(h).
(ccc) “Prior Plan” means the Neurocrine Biosciences, Inc. 2011 Equity Incentive Plan.
(ddd) “Prior Plan Award” means an award granted under the Prior Plan that is outstanding as of the
Effective Date.
(eee) “Prior Plan’s Available Reserve” means the number of shares available for the grant of new awards
under the Prior Plan as of immediately following the Effective Date.
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(fff) “Prior Plan’s Returning Shares” means shares of Common Stock subject to a Prior Plan Award that
following the Effective Date: (i) are not issued because such Prior Plan Award or any portion thereof expires or
otherwise terminates without all of the shares covered by such Prior Plan Award having been issued; (ii) are not
issued because such Prior Plan Award or any portion thereof is settled in cash; or (iii) are forfeited back to or
repurchased by the Company because of the failure to meet a contingency or condition required for the vesting of
such shares.
(ggg) “Prospectus” means the document containing the Plan information specified in Section 10(a) of the
Securities Act.
(hhh) “Restricted Stock Award” means an Award of shares of Common Stock which is granted pursuant to
the terms and conditions of Section 5(a).
(iii) “Restricted Stock Award Agreement” means a written agreement between the Company and a
Participant evidencing the terms and conditions of a Restricted Stock Award grant. The Restricted Stock Award
Agreement includes the Grant Notice for the Restricted Stock Award and the agreement containing the written
summary of the general terms and conditions applicable to the Restricted Stock Award and which is provided to
a Participant along with the Grant Notice. Each Restricted Stock Award Agreement will be subject to the terms
and conditions of the Plan.
(jjj) “RSU Award” means an Award of restricted stock units representing the right to receive an issuance
of shares of Common Stock which is granted pursuant to the terms and conditions of Section 5(a).
(kkk) “RSU Award Agreement” means a written agreement between the Company and a Participant
evidencing the terms and conditions of a RSU Award grant. The RSU Award Agreement includes the Grant
Notice for the RSU Award and the agreement containing the written summary of the general terms and
conditions applicable to the RSU Award and which is provided to a Participant along with the Grant Notice. Each
RSU Award Agreement will be subject to the terms and conditions of the Plan.
(lll) “Rule 16b-3” means Rule 16b-3 promulgated under the Exchange Act or any successor to Rule 16b-3,
as in effect from time to time.
(mmm) “Rule 405” means Rule 405 promulgated under the Securities Act.
(nnn) “Section 409A” means Section 409A of the Code and the regulations and other guidance thereunder.
(ooo) “Section 409A Change in Control” means a change in the ownership or effective control of the
Company, or in the ownership of a substantial portion of the Company’s assets, as provided in
Section 409A(a)(2)(A)(v) of the Code and Treasury Regulations Section 1.409A-3(i)(5) (without regard to any
alternative definition thereunder).
(ppp) “Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations
promulgated thereunder.
(qqq) “Share Reserve” means the number of shares of Common Stock available for issuance under the
Plan as set forth in Section 2(a)(i).
(rrr) “SAR” or “Stock Appreciation Right” means a right to receive the appreciation on Common Stock
which is granted pursuant to the terms and conditions of Section 4.
(sss) “SAR Agreement” means a written agreement between the Company and a Participant evidencing the
terms and conditions of a SAR grant. The SAR Agreement includes the Grant Notice for the SAR and the
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agreement containing the written summary of the general terms and conditions applicable to the SAR and which
is provided to a Participant along with the Grant Notice. Each SAR Agreement will be subject to the terms and
conditions of the Plan.
(ttt) “Subsidiary” means, with respect to the Company, (i) any corporation of which more than 50% of the
outstanding capital stock having ordinary voting power to elect a majority of the board of directors of such
corporation (irrespective of whether, at the time, stock of any other class or classes of such corporation will have
or might have voting power by reason of the happening of any contingency) is at the time, directly or indirectly,
Owned by the Company, and (ii) any partnership, limited liability company or other entity in which the Company
has a direct or indirect interest (whether in the form of voting or participation in profits or capital contribution) of
more than 50%.
(uuu) “Ten Percent Stockholder” means a person who Owns (or is deemed to Own pursuant to
Section 424(d) of the Code) stock possessing more than 10% of the total combined voting power of all classes of
stock of the Company or any Affiliate.
(vvv) “Trading Policy” means the Company’s policy permitting certain individuals to sell Company shares
only during certain “window” periods and/or otherwise restricts the ability of certain individuals to transfer or
encumber Company shares, as in effect from time to time.
(www) “Transaction” means a Corporate Transaction or a Change in Control.
(xxx) “Unvested Non-Exempt Award” means the portion of any Non-Exempt Award that had not vested in
accordance with its terms upon or prior to the date of any Transaction.
(yyy) “Vested Non-Exempt Award” means the portion of any Non-Exempt Award that had vested in
accordance with its terms upon or prior to the date of a Transaction.
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NEUROCRINE BIOSCIENCES, INC.
2018 EMPLOYEE STOCK PURCHASE PLAN
ADOPTED BY THE BOARD OF DIRECTORS: FEBRUARY 6, 2018
APPROVED BY THE STOCKHOLDERS: MAY 24, 2018
AMENDED AND RESTATED BY THE COMPENSATION COMMITTEE: MARCH 14, 2022
APPROVED BY THE STOCKHOLDERS:
, 2022
Appendix B
1. GENERAL; PURPOSE.
(a) The Plan provides a means by which Eligible Employees of the Company and certain designated
Related Corporations may be given an opportunity to purchase shares of Common Stock. The Plan permits the
Company to grant a series of Purchase Rights to Eligible Employees under an Employee Stock Purchase Plan.
(b) The Company, by means of the Plan, seeks to retain the services of such Employees, to secure and
retain the services of new Employees and to provide incentives for such persons to exert maximum efforts for the
success of the Company and its Related Corporations.
2. ADMINISTRATION.
(a) The Board will administer the Plan. The Board may delegate administration of the Plan to a Committee
or Committees, as provided in Section 2(c).
(b) The Board will have the power, subject to, and within the limitations of, the express provisions of the
Plan:
(i) To determine when and how Purchase Rights will be granted and the provisions of each Offering
(which need not be identical).
(ii) To designate from time to time which Related Corporations will be eligible to participate in the
Plan.
(iii) To construe and interpret the Plan and Purchase Rights, and to establish, amend and revoke rules
and regulations for the administration of the Plan. The Board, in the exercise of this power, may correct any
defect, omission or inconsistency in the Plan, in a manner and to the extent it deems necessary or expedient to
make the Plan fully effective.
(iv) To settle all controversies regarding the Plan and Purchase Rights.
(v) To amend the Plan at any time as provided in Section 12.
(vi) To suspend or terminate the Plan at any time as provided in Section 12.
(vii) Generally, to exercise such powers and to perform such acts as it deems necessary or expedient to
promote the best interests of the Company and its Related Corporations and to carry out the intent that the Plan
be treated as an Employee Stock Purchase Plan.
(viii) To adopt such procedures and sub-plans as are necessary or appropriate to permit participation in
the Plan by Employees who are foreign nationals or employed outside the United States.
(c) The Board may delegate some or all of the administration of the Plan to a Committee or Committees. If
administration is delegated to a Committee, the Committee will have, in connection with the administration of
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the Plan, the powers theretofore possessed by the Board that have been delegated to the Committee, including the
power to delegate to a subcommittee any of the administrative powers the Committee is authorized to exercise
(and references to the Board in this Plan and in any applicable Offering Document will thereafter be to the
Committee or subcommittee), subject, however, to such resolutions, not inconsistent with the provisions of the
Plan, as may be adopted from time to time by the Board. The Board may retain the authority to concurrently
administer the Plan with the Committee and may, at any time, revest in the Board some or all of the powers
previously delegated. Whether or not the Board has delegated administration of the Plan to a Committee, the
Board will have the final power to determine all questions of policy and expediency that may arise in the
administration of the Plan.
(d) All determinations, interpretations and constructions made by the Board in good faith will not be
subject to review by any person and will be final, binding and conclusive on all persons.
3. SHARES OF COMMON STOCK SUBJECT TO THE PLAN.
(a) Subject to Section 11(a) relating to Capitalization Adjustments, the aggregate number of shares of
Common Stock that may be issued under the Plan will not exceed nine hundred thousand (900,000) shares, which
number is the sum of (i) three hundred thousand (300,000) shares that were approved at the Annual Meeting in
2018 and (ii) six hundred thousand (600,000) shares that were approved at the Annual Meeting in 2022.
(b) If any Purchase Right terminates without having been exercised in full, the shares of Common Stock
not purchased under such Purchase Right will again become available for issuance under the Plan.
(c) The stock issuable under the Plan will be shares of authorized but unissued or reacquired Common
Stock, including shares repurchased by the Company on the open market.
4. GRANT OF PURCHASE RIGHTS; OFFERING.
(a) The Board may from time to time grant or provide for the grant of Purchase Rights to Eligible
Employees under an Offering (consisting of one or more Purchase Periods) on an Offering Date or Offering
Dates selected by the Board. Each Offering will be in such form and will contain such terms and conditions as
the Board will deem appropriate and will comply with the requirement of Section 423(b)(5) of the Code that all
Employees granted Purchase Rights will have the same rights and privileges. The terms and conditions of an
Offering will be incorporated by reference into the Plan and treated as part of the Plan. The provisions of separate
Offerings need not be identical, but each Offering will include (through incorporation of the provisions of this
Plan by reference in the document comprising the Offering or otherwise) the period during which the Offering
will be effective, which period will not exceed twenty-seven (27) months beginning with the Offering Date, and
the substance of the provisions contained in Sections 5 through 8, inclusive.
(b) If a Participant has more than one Purchase Right outstanding under the Plan, unless he or she
otherwise indicates in forms delivered to the Company: (i) each form will apply to all of his or her Purchase
Rights under the Plan, and (ii) a Purchase Right with a lower exercise price (or an earlier-granted Purchase Right,
if different Purchase Rights have identical exercise prices) will be exercised to the fullest possible extent before a
Purchase Right with a higher exercise price (or a later-granted Purchase Right if different Purchase Rights have
identical exercise prices) will be exercised.
(c) The Board will have the discretion to structure an Offering so that if the Fair Market Value of a share of
Common Stock on the first Trading Day of a new Purchase Period within that Offering is less than or equal to the
Fair Market Value of a share of Common Stock on the Offering Date for that Offering, then (i) that Offering will
terminate immediately as of that first Trading Day, and (ii) the Participants in such terminated Offering will be
automatically enrolled in a new Offering beginning on the first Trading Day of such new Purchase Period.
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5. ELIGIBILITY.
(a) Purchase Rights may be granted only to Employees of the Company or, as the Board may designate in
accordance with Section 2(b), to Employees of a Related Corporation. Except as provided in Section 5(b), an
Employee will not be eligible to be granted Purchase Rights unless, on the Offering Date, the Employee has been
in the employ of the Company or the Related Corporation, as the case may be, for such continuous period
preceding such Offering Date as the Board may require, but in no event will the required period of continuous
employment be equal to or greater than two (2) years. In addition, the Board may provide that no Employee will
be eligible to be granted Purchase Rights unless, on the Offering Date, such Employee’s customary employment
with the Company or the Related Corporation is more than twenty (20) hours per week and more than five
(5) months per calendar year or such other criteria as the Board may determine consistent with Section 423 of the
Code.
(b) The Board may provide that each person who, during the course of an Offering, first becomes an
Eligible Employee will, on a date or dates specified in the Offering which coincides with the day on which such
person becomes an Eligible Employee or which occurs thereafter, receive a Purchase Right under that Offering,
which Purchase Right will thereafter be deemed to be a part of that Offering. Such Purchase Right will have the
same characteristics as any Purchase Rights originally granted under that Offering, as described herein, except
that:
(i) the date on which such Purchase Right is granted will be the “Offering Date” of such Purchase
Right for all purposes, including determination of the exercise price of such Purchase Right;
(ii) the period of the Offering with respect to such Purchase Right will begin on its Offering Date and
end coincident with the end of such Offering; and
(iii) the Board may provide that if such person first becomes an Eligible Employee within a specified
period of time before the end of the Offering, he or she will not receive any Purchase Right under that Offering.
(c) No Employee will be eligible for the grant of any Purchase Rights if, immediately after any such
Purchase Rights are granted, such Employee owns stock possessing five percent (5%) or more of the total
combined voting power or value of all classes of stock of the Company or of any Related Corporation. For
purposes of this Section 5(c), the rules of Section 424(d) of the Code will apply in determining the stock
ownership of any Employee, and stock which such Employee may purchase under all outstanding Purchase
Rights and options will be treated as stock owned by such Employee.
(d) As specified by Section 423(b)(8) of the Code, an Eligible Employee may be granted Purchase Rights
only if such Purchase Rights, together with any other rights granted under all Employee Stock Purchase Plans of
the Company and any Related Corporations, do not permit such Eligible Employee’s rights to purchase stock of
the Company or any Related Corporation to accrue at a rate which exceeds twenty-five thousand dollars
($25,000) of Fair Market Value of such stock (determined at the time such rights are granted, and which, with
respect to the Plan, will be determined as of their respective Offering Dates) for each calendar year in which such
rights are outstanding at any time.
(e) Officers of the Company and any designated Related Corporation, if they are otherwise Eligible
Employees, will be eligible to participate in Offerings under the Plan. Notwithstanding the foregoing, the Board
may provide in an Offering that Employees who are highly compensated Employees within the meaning of
Section 423(b)(4)(D) of the Code will not be eligible to participate.
6. PURCHASE RIGHTS; PURCHASE PRICE.
(a) On each Offering Date, each Eligible Employee, pursuant to an Offering made under the Plan, will be
granted a Purchase Right to purchase up to that number of shares of Common Stock purchasable either with a
B-3
percentage or with a maximum dollar amount, as designated by the Board, but in either case not exceeding
fifteen percent (15%) of such Employee’s earnings (as defined by the Board in each Offering) during the period
that begins on the Offering Date (or such later date as the Board determines for a particular Offering) and ends on
the date stated in the Offering, which date will be no later than the end of the Offering.
(b) The Board will establish one (1) or more Purchase Dates during an Offering on which Purchase Rights
granted pursuant to that Offering will be exercised and shares of Common Stock will be purchased in accordance
with such Offering.
(c) In connection with each Offering made under the Plan, the Board may specify (i) a maximum number
of shares of Common Stock that may be purchased by any Participant pursuant to such Offering, (ii) a maximum
number of shares of Common Stock that may be purchased by any Participant on any Purchase Date pursuant to
such Offering, (iii) a maximum aggregate number of shares of Common Stock that may be purchased by all
Participants pursuant to such Offering, and/or (iv) a maximum aggregate number of shares of Common Stock
that may be purchased by all Participants on any Purchase Date pursuant to such Offering. If the aggregate
purchase of shares of Common Stock issuable upon exercise of Purchase Rights granted under such Offering
would exceed any such maximum aggregate number, then, in the absence of any Board action otherwise, a pro
rata (based on each Participant’s accumulated Contributions) allocation of the shares of Common Stock available
will be made in as nearly a uniform manner as will be practicable and equitable.
(d) The purchase price of shares of Common Stock acquired pursuant to Purchase Rights will be not less
than the lesser of:
(i) an amount equal to eighty-five percent (85%) of the Fair Market Value of the shares of Common
Stock on the Offering Date; or
(ii) an amount equal to eighty-five percent (85%) of the Fair Market Value of the shares of Common
Stock on the applicable Purchase Date.
7. PARTICIPATION; WITHDRAWAL; TERMINATION.
(a) An Eligible Employee may elect to authorize payroll deductions as the means of making Contributions
by completing and delivering to the Company, within the time specified in the Offering, an enrollment form
provided by the Company. The enrollment form will specify the amount of Contributions not to exceed the
maximum amount specified by the Board. Each Participant’s Contributions will be credited to a bookkeeping
account for such Participant under the Plan and will be deposited with the general funds of the Company except
where applicable law requires that Contributions be deposited with a third party. To the extent provided in the
Offering, a Participant may begin such Contributions on or after the Offering Date. To the extent provided in the
Offering, a Participant may thereafter decrease (including to zero) or increase his or her Contributions. To the
extent specifically provided in the Offering, in addition to or instead of making Contributions by payroll
deductions, a Participant may make Contributions through payment by cash or check prior to a Purchase Date.
(b) During an Offering, a Participant may cease making Contributions and withdraw from the Offering by
delivering to the Company a withdrawal form provided by the Company. The Company may impose a deadline
before a Purchase Date for withdrawing. Upon such withdrawal, such Participant’s Purchase Right in that
Offering will immediately terminate and the Company will distribute to such Participant all of his or her
accumulated but unused Contributions without interest. A Participant’s withdrawal from an Offering will have no
effect upon his or her eligibility to participate in any other Offerings under the Plan, but such Participant will be
required to deliver a new enrollment form to participate in subsequent Offerings.
(c) Purchase Rights granted pursuant to any Offering under the Plan will terminate immediately if the
Participant either (i) is no longer an Employee for any reason or for no reason (subject to any post-employment
participation period required by law) or (ii) is otherwise no longer eligible to participate. The Company will
distribute to such individual all of his or her accumulated but unused Contributions without interest.
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(d) Purchase Rights will not be transferable by a Participant except by will, by the laws of descent and
distribution, or, if permitted by the Company, by a beneficiary designation as described in Section 10. During a
Participant’s lifetime, Purchase Rights will be exercisable only by such Participant.
(e) Unless otherwise specified in an Offering, the Company will have no obligation to pay interest on
Contributions.
8. EXERCISE OF PURCHASE RIGHTS.
(a) On each Purchase Date, each Participant’s accumulated Contributions will be applied to the purchase of
shares of Common Stock, up to the maximum number of shares of Common Stock permitted by the Plan and the
applicable Offering, at the purchase price specified in the Offering. No fractional shares will be issued upon the
exercise of Purchase Rights unless specifically provided for in the Offering.
(b) Unless otherwise provided in the Offering, if any amount of accumulated Contributions remains in a
Participant’s account after the purchase of shares of Common Stock and such remaining amount is less than the
amount required to purchase one share of Common Stock on the final Purchase Date of an Offering, then such
remaining amount will be held in such Participant’s account for the purchase of shares of Common Stock under
the next Offering under the Plan, unless such Participant withdraws from or is not eligible to participate in such
next Offering, in which case such amount will be distributed to such Participant after the final Purchase Date
without interest. If the amount of Contributions remaining in a Participant’s account after the purchase of shares
of Common Stock is at least equal to the amount required to purchase one (1) whole share of Common Stock on
the final Purchase Date of an Offering, then such remaining amount will be distributed in full to such Participant
after the final Purchase Date of such Offering without interest.
(c) No Purchase Rights may be exercised to any extent unless the shares of Common Stock to be issued
upon such exercise under the Plan are covered by an effective registration statement pursuant to the Securities
Act and the Plan is in material compliance with all applicable federal, state, foreign and other securities and other
laws applicable to the Plan. If, on a Purchase Date, the shares of Common Stock are not so registered or the Plan
is not in such compliance, no Purchase Rights will be exercised on such Purchase Date, and the Purchase Date
will be delayed until the shares of Common Stock are subject to such an effective registration statement and the
Plan is in such compliance, except that the Purchase Date will not be delayed more than twelve (12) months and
the Purchase Date will in no event be more than twenty-seven (27) months from the Offering Date. If, on the
Purchase Date, as delayed to the maximum extent permissible, the shares of Common Stock are not so registered
or the Plan is not in such compliance, no Purchase Rights will be exercised and all accumulated but unused
Contributions will be distributed to the Participants without interest.
9. COVENANTS OF THE COMPANY.
The Company will seek to obtain from each federal, state, foreign or other regulatory commission or
agency having jurisdiction over the Plan such authority as may be required to grant Purchase Rights and issue
and sell shares of Common Stock thereunder. If, after commercially reasonable efforts, the Company is unable to
obtain the authority that counsel for the Company deems necessary for the grant of Purchase Rights or the lawful
issuance and sale of Common Stock under the Plan, and at a commercially reasonable cost, the Company will be
relieved from any liability for failure to grant Purchase Rights and/or to issue and sell Common Stock upon
exercise of such Purchase Rights.
10. DESIGNATION OF BENEFICIARY.
(a) The Company may, but is not obligated to, permit a Participant to submit a form designating a
beneficiary who will receive any shares of Common Stock and/or Contributions from the Participant’s account
under the Plan if the Participant dies before such shares and/or Contributions are delivered to the Participant. The
Company may, but is not obligated to, permit the Participant to change such designation of beneficiary. Any such
designation and/or change must be on a form approved by the Company.
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(b) If a Participant dies, and in the absence of a valid beneficiary designation, the Company will deliver
any shares of Common Stock and/or Contributions to the executor or administrator of the estate of the
Participant. If no executor or administrator has been appointed (to the knowledge of the Company), the
Company, in its sole discretion, may deliver such shares of Common Stock and/or Contributions to the
Participant’s spouse, dependents or relatives, or if no spouse, dependent or relative is known to the Company,
then to such other person as the Company may designate.
11. ADJUSTMENTS UPON CHANGES IN COMMON STOCK; CORPORATE TRANSACTIONS.
(a) In the event of a Capitalization Adjustment, the Board will appropriately and proportionately adjust:
(i) the class(es) and maximum number of securities subject to the Plan pursuant to Section 3(a); (ii) the class(es)
and number of securities subject to, and the purchase price applicable to outstanding Offerings and Purchase
Rights; and (iii) the class(es) and number of securities that are the subject of the purchase limits under each
ongoing Offering. The Board will make these adjustments, and its determination will be final, binding and
conclusive.
(b) In the event of a Corporate Transaction, (i) any surviving or acquiring corporation (or its parent
company) may assume or continue outstanding Purchase Rights or may substitute similar rights (including a right
to acquire the same consideration paid to the stockholders in the Corporate Transaction) for outstanding Purchase
Rights, or (ii) if any surviving or acquiring corporation (or its parent company) does not assume or continue
outstanding Purchase Rights or does not substitute similar rights for outstanding Purchase Rights, then the
Participants’ accumulated Contributions will be used to purchase shares of Common Stock within ten
(10) business days prior to the Corporate Transaction under such Purchase Rights, and such Purchase Rights will
terminate immediately after such purchase.
12. AMENDMENT, SUSPENSION OR TERMINATION OF THE PLAN.
(a) The Board may amend the Plan at any time in any respect the Board deems necessary or advisable.
However, except as provided in Section 11(a) relating to Capitalization Adjustments, stockholder approval will
be required for any amendment of the Plan for which stockholder approval is required by applicable law or
listing requirements.
(b) The Board may suspend or terminate the Plan at any time. No Purchase Rights may be granted under
the Plan while the Plan is suspended or after it is terminated.
(c) Any benefits, privileges, entitlements and obligations under any outstanding Purchase Rights granted
before an amendment, suspension or termination of the Plan will not be materially impaired by any such
amendment, suspension or termination except (i) with the consent of the person to whom such Purchase Rights
were granted, (ii) as necessary to comply with any laws, listing requirements, or governmental regulations
(including, without limitation, the provisions of Section 423 of the Code and the regulations and other
interpretive guidance issued thereunder relating to Employee Stock Purchase Plans) including, without limitation,
any such regulations or other guidance that may be issued or amended after the Adoption Date, or (iii) as
necessary to obtain or maintain favorable tax, listing, or regulatory treatment. To be clear, the Board may amend
outstanding Purchase Rights without a Participant’s consent if such amendment is necessary to ensure that the
Purchase Right and/or the Plan complies with the requirements of Section 423 of the Code.
Notwithstanding anything in the Plan or any Offering Document to the contrary, the Board will be entitled
to: (i) establish the exchange ratio applicable to amounts withheld in a currency other than U.S. dollars;
(ii) permit Contributions in excess of the amount designated by a Participant in order to adjust for mistakes in the
Company’s processing of properly completed Contribution elections; (iii) establish reasonable waiting and
adjustment periods and/or accounting and crediting procedures to ensure that amounts applied toward the
purchase of Common Stock for each Participant properly correspond with amounts withheld from the
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Participant’s Contributions; (iv) amend any outstanding Purchase Rights or clarify any ambiguities regarding the
terms of any Offering to enable the Purchase Rights to qualify under and/or comply with Section 423 of the
Code; and (v) establish other limitations or procedures as the Board determines in its sole discretion advisable
that are consistent with the Plan. The actions of the Board pursuant to this paragraph will not be considered to
alter or impair any Purchase Rights granted under an Offering as they are part of the initial terms of each
Offering and the Purchase Rights granted under each Offering.
13. EFFECTIVE DATE OF PLAN.
The Plan will become effective on the Effective Date. No Purchase Rights will be exercised unless and
until the Plan has been approved by the stockholders of the Company, which approval must be within 12 months
before or after the date the Plan is adopted (or if required under Section 12(a), materially amended) by the Board.
14. MISCELLANEOUS PROVISIONS.
(a) Proceeds from the sale of shares of Common Stock pursuant to Purchase Rights will constitute general
funds of the Company.
(b) A Participant will not be deemed to be the holder of, or to have any of the rights of a holder with
respect to, shares of Common Stock subject to Purchase Rights unless and until the Participant’s shares of
Common Stock acquired upon exercise of Purchase Rights are recorded in the books of the Company (or its
transfer agent).
(c) The Plan and Offering do not constitute an employment contract. Nothing in the Plan or in the Offering
will in any way alter the at will nature of a Participant’s employment or be deemed to create in any way
whatsoever any obligation on the part of any Participant to continue in the employ of the Company or a Related
Corporation, or on the part of the Company or a Related Corporation to continue the employment of a
Participant.
(d) The provisions of the Plan will be governed by the laws of the State of Delaware without resort to that
state’s conflicts of laws rules.
15. DEFINITIONS.
As used in the Plan, the following definitions will apply to the capitalized terms indicated below:
(a) “Adoption Date” means February 6, 2018, which is the date the Plan was adopted by the Board.
(b) “Annual Meeting” means the first meeting of the Company’s stockholders held each calendar year at
which Directors are selected.
(c) “Board” means the Board of Directors of the Company.
(d) “Capitalization Adjustment” means any change that is made in, or other events that occur with respect
to, the Common Stock subject to the Plan or subject to any Purchase Right after the Adoption Date without the
receipt of consideration by the Company through merger, consolidation, reorganization, recapitalization,
reincorporation, stock dividend, dividend in property other than cash, large nonrecurring cash dividend, stock
split, reverse stock split, liquidating dividend, combination of shares, exchange of shares, change in corporate
structure or other similar equity restructuring transaction, as that term is used in Statement of Financial
Accounting Standards Board Accounting Standards Codification Topic 718 (or any successor thereto).
Notwithstanding the foregoing, the conversion of any convertible securities of the Company will not be treated as
a Capitalization Adjustment.
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(e) “Code” means the Internal Revenue Code of 1986, as amended, including any applicable regulations
and guidance thereunder.
(f) “Committee” means a committee of one (1) or more members of the Board to whom authority has been
delegated by the Board in accordance with Section 2(c).
(g) “Common Stock” means the common stock of the Company.
(h) “Company” means Neurocrine Biosciences, Inc., a Delaware corporation.
(i) “Contributions” means the payroll deductions and other additional payments specifically provided for
in the Offering that a Participant contributes to fund the exercise of a Purchase Right. A Participant may make
additional payments into his or her account if specifically provided for in the Offering, and then only if the
Participant has not already had the maximum permitted amount withheld during the Offering through payroll
deductions.
(j) “Corporate Transaction” means the consummation, in a single transaction or in a series of related
transactions, of any one or more of the following events:
(i) a sale or other disposition of all or substantially all, as determined by the Board in its sole discretion,
of the consolidated assets of the Company and its Subsidiaries;
(ii) a sale or other disposition of at least ninety percent (90%) of the outstanding securities of the
Company;
(iii) a merger, consolidation or similar transaction following which the Company is not the surviving
corporation; or
(iv) a merger, consolidation or similar transaction following which the Company is the surviving
corporation but the shares of Common Stock outstanding immediately preceding the merger, consolidation or
similar transaction are converted or exchanged by virtue of the merger, consolidation or similar transaction into
other property, whether in the form of securities, cash or otherwise.
(k) “Director” means a member of the Board.
(l) “Effective Date” means the effective date of this Plan document, which is the date of the Annual
Meeting in 2018, provided that this Plan is approved by the Company’s stockholders at such meeting.
(m) “Eligible Employee” means an Employee who meets the requirements set forth in the document(s)
governing the Offering for eligibility to participate in the Offering, provided that such Employee also meets the
requirements for eligibility to participate set forth in the Plan.
(n) “Employee” means any person, including an Officer or Director, who is “employed” for purposes of
Section 423(b)(4) of the Code by the Company or a Related Corporation. However, service solely as a Director,
or payment of a fee for such services, will not cause a Director to be considered an “Employee” for purposes of
the Plan.
(o) “Employee Stock Purchase Plan” means a plan that grants Purchase Rights intended to be options
issued under an “employee stock purchase plan,” as that term is defined in Section 423(b) of the Code.
(p) “Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations
promulgated thereunder.
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(q) “Fair Market Value” means, as of any date, the value of the Common Stock determined as follows:
(i) If the Common Stock is listed on any established stock exchange or traded on any established
market, the Fair Market Value of a share of Common Stock will be, unless otherwise determined by the Board,
the closing sales price for such stock as quoted on such exchange or market (or the exchange or market with the
greatest volume of trading in the Common Stock) on the date of determination, as reported in a source the Board
deems reliable.
(ii) Unless otherwise provided by the Board, if there is no closing sales price for the Common Stock on
the date of determination, then the Fair Market Value will be the closing sales price on the last preceding date for
which such quotation exists.
(iii) In the absence of such markets for the Common Stock, the Fair Market Value will be determined
by the Board in good faith in compliance with applicable laws and in a manner that complies with Section 409A
of the Code.
(r) “Offering” means the grant to Eligible Employees of Purchase Rights, with the exercise of those
Purchase Rights automatically occurring at the end of one or more Purchase Periods. The terms and conditions of
an Offering will generally be set forth in the “Offering Document” approved by the Board for that Offering.
(s) “Offering Date” means a date selected by the Board for an Offering to commence.
(t) “Officer” means a person who is an officer of the Company or a Related Corporation within the
meaning of Section 16 of the Exchange Act.
(u) “Participant” means an Eligible Employee who holds an outstanding Purchase Right.
(v) “Plan” means this Neurocrine Biosciences, Inc. 2018 Employee Stock Purchase Plan.
(w) “Purchase Date” means one or more dates during an Offering selected by the Board on which
Purchase Rights will be exercised and on which purchases of shares of Common Stock will be carried out in
accordance with such Offering.
(x) “Purchase Period” means a period of time specified within an Offering, generally beginning on the
Offering Date or on the first Trading Day following a Purchase Date and ending on a Purchase Date. An Offering
may consist of one or more Purchase Periods.
(y) “Purchase Right” means an option to purchase shares of Common Stock granted pursuant to the Plan.
(z) “Related Corporation” means any “parent corporation” or “subsidiary corporation” of the Company
whether now or subsequently established, as those terms are defined in Sections 424(e) and (f), respectively, of
the Code.
(aa) “Securities Act” means the Securities Act of 1933, as amended.
(bb) “Subsidiary” means, with respect to the Company, (i) any corporation of which more than fifty
percent (50%) of the outstanding capital stock having ordinary voting power to elect a majority of the board of
directors of such corporation (irrespective of whether, at the time, stock of any other class or classes of such
corporation will have or might have voting power by reason of the happening of any contingency) is at the time,
directly or indirectly, Owned by the Company, and (ii) any partnership, limited liability company or other entity
in which the Company has a direct or indirect interest (whether in the form of voting or participation in profits or
capital contribution) of more than fifty percent (50%). For purposes of the foregoing clause (i), the Company will
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be deemed to “Own” or have “Owned” such securities if the Company, directly or indirectly, through any
contract, arrangement, understanding, relationship or otherwise, has or shares voting power, which includes the
power to vote or to direct the voting, with respect to such securities.
(cc) “Trading Day” means any day on which the exchange(s) or market(s) on which shares of Common
Stock are listed (including, but not limited to, the NYSE, the Nasdaq Global Select Market, the Nasdaq Global
Market, the Nasdaq Capital Market or any successors thereto) is open for trading.
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NEUROCRINE BIOSCIENCES, INC.
12780 EL CAMINO REAL
SAN DIEGO, CA 92130
VOTE BY INTERNET - www.proxyvote.com or scan the QR Barcode above
Use the Internet to transmit your voting instructions and for electronic delivery of information up until
11:59 P.M. Eastern Time the day before the meeting date. Have your proxy card in hand when you access the
web site and follow the instructions to obtain your records and to create an electronic voting instruction form.
ELECTRONIC DELIVERY OF FUTURE PROXY MATERIALS
If you would like to reduce the costs incurred by Neurocrine Biosciences, Inc. in mailing stockholder
communications, you can consent to receiving all future proxy statements, proxy cards and annual reports
electronically via e-mail or the Internet. To sign up for electronic delivery, please follow the instructions above
to vote using the Internet and, when prompted, indicate that you agree to receive or access stockholder
communications electronically in future years.
VOTE BY PHONE - 1-800-690-6903
Use any touch-tone telephone to transmit your voting instructions up until 11:59 P.M. Eastern Time the day
before the meeting date. Have your proxy card in hand when you call and then follow the instructions.
VOTE BY MAIL
Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to
Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717.
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
KEEP THIS PORTION FOR YOUR RECORDS
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DETACH AND RETURN THIS PORTION ONLY
D80539-P68930
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
NEUROCRINE BIOSCIENCES, INC.
The Board of Directors recommends that you vote
FOR ALL of the following Directors:
For
All
Withhold
All
For All
Except
To withhold authority to vote for any individual
nominee(s), mark “For All Except” and write the
number(s) of the nominee(s) on the line below.
1. Election of Directors
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Nominees:
01) Richard F. Pops
02) Shalini Sharp
03) Stephen A. Sherwin, M.D.
The Board of Directors recommends you vote FOR proposals 2, 3, 4 and 5:
2.
Advisory vote to approve the compensation paid to the Company’s named executive officers;
3.
To approve an amendment and restatement of the Company’s 2020 Equity Incentive Plan;
4.
To approve an amendment and restatement of the Company’s 2018 Employee Stock Purchase Plan; and
5.
To ratify the appointment of Ernst & Young LLP as the Company’s independent registered public accounting firm for the fiscal year ending
December 31, 2022.
NOTE: Company to transact such other business as may properly come before the Annual Meeting or any continuation, adjournment or postponement
thereof. All stockholders are normally invited to attend the Annual Meeting of Stockholders in person. However, due to the COVID-19 pandemic, and our
current COVID-19 policies, we strongly urge our stockholders not to attend the Annual Meeting in person this year and to instead submit proxy votes.
For Against Abstain
☐
☐
☐
☐
☐
☐
☐
☐
☐
☐
☐
☐
Please sign exactly as your name(s) appear(s) hereon. When signing as attorney, executor, administrator, or other fiduciary, please give full title as such.
Joint owners should each sign personally. All holders must sign. If a corporation or partnership, please sign in full corporate or partnership name by
authorized officer.
Signature [PLEASE SIGN WITHIN BOX]
Date
Signature (Joint Owners)
Date
Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting:
The Proxy Statement and Annual Report are available at www.proxyvote.com.
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D80540-P68930
This Proxy is solicited on behalf of the Board of Directors
NEUROCRINE BIOSCIENCES, INC.
2022 ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 18, 2022
The undersigned stockholder of NEUROCRINE BIOSCIENCES, INC., a Delaware corporation, hereby acknowledges
receipt of the Notice of Annual Meeting of Stockholders and Proxy Statement, each dated April 7, 2022, and hereby
appoints Kevin C. Gorman, Ph.D. and Matthew C. Abernethy, and either of them, proxies and attorneys-in-fact, with full
power to either of substitution, on behalf and in the name of the undersigned, to represent the undersigned at the 2022
Annual Meeting of Stockholders of NEUROCRINE BIOSCIENCES, INC. to be held on May 18, 2022 at 10:30 a.m. local
time, at the Company’s corporate headquarters located at 12780 El Camino Real, San Diego, California 92130, and at any
continuation, adjournment or postponement thereof, and to vote all shares of Common Stock which the undersigned would
be entitled to vote, if then and there personally present, on the matters set forth on the reverse side.
THIS PROXY WILL BE VOTED AS DIRECTED OR, IF NO CONTRARY DIRECTION IS INDICATED, WILL BE VOTED
FOR THE ELECTION OF THE THREE NOMINEES FOR DIRECTOR NAMED IN THE PROXY STATEMENT, FOR THE
ADVISORY VOTE ON THE COMPENSATION PAID TO THE COMPANY’S NAMED EXECUTIVE OFFICERS, FOR
APPROVAL OF AN AMENDMENT AND RESTATEMENT OF THE COMPANY’S 2020 EQUITY INCENTIVE PLAN, FOR
APPROVAL OF AN AMENDMENT AND RESTATEMENT OF THE COMPANY’S 2018 EMPLOYEE STOCK PURCHASE
PLAN, FOR RATIFICATION OF THE APPOINTMENT OF ERNST & YOUNG LLP AS THE COMPANY’S INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM, AND TO TRANSACT SUCH OTHER BUSINESS AS MAY PROPERLY
COME BEFORE THE ANNUAL MEETING OR ANY CONTINUATION, ADJOURNMENT OR POSTPONEMENT THEREOF.
Continued and to be signed on reverse side