AUDIT COMMITTEE REPORT(1)
The Audit Committee has reviewed and discussed the audited consolidated financial statements for the fiscal year ended December 31, 2020, with management and our independent registered public accounting firm, PricewaterhouseCoopers LLP. The Audit Committee has discussed with PricewaterhouseCoopers LLP the matters required to be discussed by Statement on Auditing Standards No. 61, as amended (AICPA, Professional Standards, Vol. 1. AU Section 380), as adopted by the PCAOB in Rule 3200T and the Commission. The Audit Committee has also received the written disclosures and the letter from PricewaterhouseCoopers LLP required by applicable requirements of the PCAOB regarding PricewaterhouseCoopers LLP’s communication with the Audit Committee concerning independence, and has discussed with PricewaterhouseCoopers LLP the firm’s independence. Based on the foregoing, the Audit Committee recommended to the Board of Directors that the audited consolidated financial statements be included in our Form 10-K for the fiscal year ended December 31, 2020, for filing with the Securities and Exchange Commission.
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Aerie Pharmaceuticals, Inc.
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Audit Committee
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David W. Gryska, Chair
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Richard Croarkin
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Julie McHugh
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(1)The material in this report is not “soliciting material,” is not deemed “filed” with the SEC and is not to be incorporated by reference in any filing we make under either the Securities Act of 1933, as amended, whether made before or after the date hereof and irrespective of any general incorporation language in any such filing.
Nominating and Corporate Governance Committee
The members of our Nominating and Corporate Governance Committee are Mr. du Toit, Dr. Cagle, Dr. McDonnell and Ms. McHugh. Mr. du Toit serves as chair of the Nominating and Corporate Governance Committee. The Nominating and Corporate Governance Committee held five meetings during the year ended December 31, 2020. Of the five meetings held during such period, two meetings were held in person and three meetings were held telephonically or via video teleconference. In addition to such meetings, during the year ended December 31, 2020, the members of the Nominating and Corporate Governance Committee engaged in periodic informal discussion amongst themselves regarding the responsibilities of the Nominating and Corporate Governance Committee.
Our Board has determined that all members of our Nominating and Corporate Governance Committee are independent as independence is currently defined in Section 5605 of the NASDAQ listing standards. The Nominating and Corporate Governance Committee operates under a written charter that satisfies the applicable standards of NASDAQ and which is available on our website at www.aeriepharma.com. The inclusion of our website address here and elsewhere in this proxy statement does not incorporate by reference the information on our website into this proxy statement.
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Aerie Pharmaceuticals, Inc.
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2021 | Proxy Statement
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NOMINATING AND CORPORATE GOVERNANCE COMMITTEE
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KEY FUNCTIONS &
RESPONSIBILITIES
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Chair:
Mechiel (Michael) M. du Toit
Other Members:
Gerald D. Cagle, Ph.D.
Peter J. McDonnell, M.D.
Julie McHugh
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•Identifying, considering and nominating candidates to serve on our Board;
•developing and recommending the minimum qualifications for service on our Board;
•overseeing the evaluation of the Board and management on an annual basis;
•considering nominations by stockholders of candidates for election to the Board;
•reviewing annually the independence of the non-employee directors and members of the independent committees of the Board;
•review the composition of the Board as a whole and recommend to the Board, if necessary, any measures to be taken so that the Board contains at least the minimum number of independent directors as may be required by applicable SEC and NASDAQ rules and reflects the balance of knowledge, experience, skills, expertise, integrity, ability to make analytical inquiries and diversity as a whole that the Nominating and Corporate Governance Committee deems appropriate;
•make recommendations to the Board regarding the chairperson, membership, size and composition of each standing committee of the Board and make recommendations to the Board regarding individual directors to fill any committee vacancies;
•review the suitability for continued service as a director of each Board member when his or her term expires and recommend to the Board whether such director should be re-nominated for re-election;
•periodically review the size of the Board and recommend to the Board any appropriate changes;
•review any proposed changes to our certificate of incorporation, by-laws and other corporate governance documents, and make recommendations to the Board with respect to any such changes;
•oversee compliance with, and consider any requests for waivers under, our corporate governance guidelines, our code of business conduct and ethics and other documents and policies constituting our corporate governance framework and report on any waiver of our code of business conduct and ethics to the Board (provided that any waiver of our code of business and ethics with respect to our executive officers or any director may only be granted by the full Board);
•oversee ESG strategy and policies and review our operations with senior management to assess our progress in realizing these values;
•developing the overall framework for the annual self-evaluation conducted by the Board and each of its committees;
•reviewing the adequacy of its charter, our corporate governance guidelines and our code of business conduct and ethics on an annual basis and recommending to our Board any changes to our corporate governance guidelines and code of business conduct and ethics deemed appropriate;
•considering questions of possible conflicts of interest of directors as such questions arise with regard to outside directorship commitments; and
•considering whether a director has sufficient time available to continue to perform all Board and committee responsibilities and duties effectively, taking into account, among other factors, service as a director on other public company boards.
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Compensation Committee
The members of our Compensation Committee are Dr. McGraw, Dr. Cagle, Mr. Croarkin and Dr. McDonnell. Dr. McGraw serves as chair of the Compensation Committee. The Compensation Committee held eleven meetings and acted by written consent once during the year ended December 31, 2020. Of the eleven meetings held during such period, three meetings were held in person and eight meetings were held telephonically or via video teleconference. All members of our Compensation Committee are independent pursuant to the definition contained in Section 5605 of the NASDAQ listing standards and qualify as outside directors under Section 162(m) of the Internal Revenue Code of 1986, as amended (the “Code”). The Compensation Committee operates under a written charter that satisfies the applicable standards of NASDAQ and is available on our website at www.aeriepharma.com. The inclusion of our website address here and elsewhere in this proxy statement does not incorporate by reference the information on our website into this proxy statement.
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COMPENSATION
COMMITTEE
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KEY FUNCTIONS &
RESPONSIBILITIES
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Chair:
Benjamin F. McGraw, III, Pharm.D.
Other Members:
Gerald D. Cagle, Ph.D.
Richard Croarkin
Peter J. McDonnell, M.D.
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•Approving the compensation and other terms of employment of our Chief Executive Officer, which are then reviewed and ratified by our Board;
•approving or recommending to our Board the compensation and other terms of employment of our executive officers (other than our Chief Executive Officer);
•approving annually the corporate goals and objectives relevant to the compensation of our Chief Executive Officer and assessing at least annually our Chief Executive Officer’s performance against these goals and objectives;
•reviewing annually our compensation strategy, including base salary, incentive compensation and equity-based grants, as well as adoption, modification or termination of this compensation;
•evaluating at least annually and recommending to our Board the type and amount of compensation to be paid or awarded to non-employee Board members;
•reviewing the competitiveness of our executive compensation programs and evaluating the effectiveness of our compensation policy and strategy in achieving expected benefits to us;
•approving the terms of any employment agreements, severance arrangements, change in control protections and any other compensatory arrangements for our executive officers;
•overseeing the Company’s strategy and policies related to human capital management, including with respect to matters such as diversity and inclusion; talent and development; health and safety; and compensation and benefits; and
•reviewing the adequacy of our Compensation Committee charter on an annual basis.
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As part of its process for approving or recommending to the Board the compensation for our senior executives, the Compensation Committee reviews and considers the recommendations made by our Chief Executive Officer, other than for the chief executive officer.
In fulfilling its responsibilities, the Compensation Committee may delegate any or all of its responsibilities to a subcommittee of the Compensation Committee, but only to the extent consistent with our amended and restated certificate of incorporation, amended and restated by-laws, Section 162(m) of the Code, NASDAQ rules and other applicable law.
In addition, pursuant to its charter, the Compensation Committee has the sole authority to retain compensation consultants to assist in its evaluation of executive and director compensation. At the beginning of the 2020 fiscal year, the Compensation Committee continued its engagement with Pearl Meyer & Partners LLC (“Pearl Meyer”) as its independent compensation advisor.
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In the second quarter of the fiscal year 2020, the Compensation Committee engaged ClearBridge Compensation Group (“ClearBridge”) as its independent compensation advisor for the remainder of the fiscal year ended December 31, 2020.
Compensation Committee Interlocks and Insider Participation
Dr. McGraw, Dr. Cagle, Mr. Croarkin or Dr. McDonnell served on our Compensation Committee during the fiscal year ended December 31, 2020. None of Dr. McGraw, Dr. Cagle, Mr. Croarkin or Dr. McDonnell have ever been an officer or employee of the Company. None of our executive officers served as a member of the board of directors or compensation committee of any other entity that has one or more of its officers serving on our Board or Compensation Committee during the fiscal year ended December 31, 2020. No member of our Compensation Committee had any relationship with the Company or any of its subsidiaries during fiscal year 2020 pursuant to which disclosure would be required under applicable SEC rules pertaining to the disclosure of transactions with related persons.
Board Leadership
Our Board selects a chair based on what it believes is in the best interests of the Company and our stockholders. The Board does not have a fixed policy on whether the role of chair and chief executive officer should be separate or combined, and if it is to be separate, whether the chair should be selected from the independent directors or should be an employee of the Company.
Dr. Anido, our Chief Executive Officer, currently serves as chair of our Board. Our Board believes that this leadership structure is presently appropriate for the Company given Dr. Anido’s extensive experience with and knowledge of the pharmaceutical industry and his ability to effectively identify strategic priorities for the Company. Furthermore, our Board believes that Dr. Anido’s combined role of chief executive officer and chair promotes effective execution of strategic goals and facilitates information flow between management and our Board. Dr. Anido chairs all Board meetings, except for executive sessions at which only independent directors are present. Our corporate governance guidelines require that whenever the chair of the Board is also the chief executive officer or is otherwise a director who does not qualify as an independent director that the independent directors of the Board elect from among themselves a lead independent director. When and as required pursuant to our corporate governance guidelines, a lead independent director is to be elected at least once annually following the nomination of an independent director as a lead independent director nominee by our Nominating and Corporate Governance Committee and the election, by a majority vote of the Board’s independent directors, of such nominee or another independent director of the Board.
Dr. McGraw currently serves as the lead independent director. The primary responsibilities of the lead independent director are set forth in our corporate governance guidelines and include, among other things: providing leadership and service as temporary chair or chief executive officer in the event of the inability of the current chair or chief executive officer to fulfill his or her role due to crisis or other circumstances and acting as a liaison between the independent directors and the chair when and as necessary. Additionally, the lead independent director, pursuant to the corporate governance guidelines, may assist Dr. Anido in setting Board meeting agendas and may call meetings of the independent directors of the Board when and as determined to be necessary or appropriate. Our Board believes that this leadership structure is presently appropriate because it allows Dr. Anido to set the overall direction of the Company and provide day-to-day leadership of management while having the benefit of counsel and guidance from the lead independent director. In addition, as a policy of the Board, other independent directors are from time to time requested to oversee executive sessions at which only independent directors are present. Our Board believes this policy contributes to the active participation of each independent director in the leadership function of the Board.
Risk Oversight
Risk assessment and oversight are an integral part of our governance and management processes. Our Board encourages management to promote a culture that incorporates risk management into the Company’s corporate strategy and day-to-day business operations. Management discusses strategic and operational risks at regular management meetings, and conducts specific strategic planning and review sessions during the year that include a focused discussion and analysis of the risks facing the Company. Throughout the year, senior management reviews these risks with the Board at regular Board meetings as part of management presentations that focus on particular business functions, operations or strategies and presents the steps taken by management to mitigate or eliminate such risks.
Our Board does not have a standing risk management committee, but rather administers this oversight function directly through our Board as a whole, as well as through various standing committees of our Board that address risks inherent in their respective areas of oversight. In particular, our Board is responsible for monitoring and assessing strategic risk exposure, and our Audit
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Committee is responsible for overseeing our significant financial and operational risk exposures and the steps our management has taken to monitor and control these exposures.
The Audit Committee also monitors compliance with legal and regulatory requirements and considers and approves or disapproves any related-persons transactions. Our Nominating and Corporate Governance Committee monitors the effectiveness of our corporate governance guidelines and our code of business conduct and ethics. Our Compensation Committee assesses and monitors whether any of our compensation policies and programs has the potential to encourage excessive risk-taking.
Code of Business Conduct and Ethics
We are committed to the highest standard of honest and ethical behavior and integrity in carrying out our business activities. We have adopted a code of business conduct and ethics that applies to all of our employees, officers and directors, including those officers responsible for financial reporting, and sets forth the same expectation for our suppliers, contractors and agents. The code of business conduct and ethics is available on our website at www.aeriepharma.com. In the event of an amendment to, or a waiver from, a provision of our code of business conduct and ethics that applies to our principal executive officer, principal financial officer, principal accounting officer, or persons performing similar functions, we intend to satisfy applicable disclosure requirements by posting such information on our website at the Internet address set forth above. The inclusion of our website address here and elsewhere in this proxy statement does not incorporate by reference the information on our website into this proxy statement.
Stockholder Communications with Our Board of Directors
Stockholders wishing to communicate directly with our Board may send correspondence to Richard J. Rubino, Secretary, c/o Aerie Pharmaceuticals, Inc., 4301 Emperor Boulevard, Suite 400, Durham, North Carolina 27703. Stockholders may also visit our website at www.aeriepharma.com and select “Contact Us” to communicate online with us.
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Aerie Pharmaceuticals, Inc.
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Environmental, Social and Governance and Human Capital
ESG
We are dedicated to the principles of environmental stewardship, social responsibility, good corporate governance and human capital. We consider these ESG principles to be among our most important values and therefore integrate them in our ongoing and strategic activities. We believe incorporating these values and practices into our operations not only improves our performance but also creates a sustainable and growth-oriented culture that benefits our employees, our customers and our investors. Our Nominating and Corporate Governance Committee of the Board of Directors regularly reviews our operations with senior management to assess our progress in realizing these values. With our Board of Directors’ leadership, we plan on continuing to evaluate our ESG practices and to integrate sustainability into our business.
We recognize our responsibility to be environmentally conscious and to contribute to the global effort of tackling climate change, moving toward a low-carbon economy and expanding the use of renewable energy. Renewable energy is an important part of our commitment to sustainability, and where feasible we operate our manufacturing facilities using renewable energy. At our Athlone manufacturing plant in Ireland we purchase 100% of our electricity from renewable sources and the electric supply is 100% carbon neutral.
We employ green processes, materials, practices, equipment and technologies where feasible throughout our operations to foster conservation and reduce waste. We minimize energy consumption using various power-saving technologies designed to consume electrical power only when needed. The majority of our office space in the U.S. is Leadership in Energy and Environmental Design (“LEED”) certified, and both our manufacturing plant in Athlone, Ireland, and our implant manufacturing facility in Durham, North Carolina, were built from end-to-end with sustainability and good manufacturing practices in mind. We have also instituted environmentally conscious programs into the work environment for our employees by implementing recycling and composting programs, offering water dispensers to reduce plastic bottle waste, and providing electric automobile charging stations in our employee parking areas, as examples. In 2020, we recycled 63% of the non-hazardous waste produced at our Athlone manufacturing plant. Through these programs and continuous improvement, we strive to reduce our waste while maximizing the proportion that may be recycled. Looking to the future, we plan to continue to further enhance our sustainability posture through detailed monitoring and management of our energy, water and waste management practices.
From a social responsibility perspective, as an ophthalmic pharmaceutical company, we are focused on the needs of patients, physicians and the communities we serve, including supporting patient advocacy through philanthropic donations. Although we have not yet attained profitability as a company, we have donated hundreds of thousands of dollars to causes that we believe are important to society. These donations were directed to support glaucoma research and glaucoma patient education through ongoing collaborations with the Glaucoma Research Foundation, help fund free cataract surgery for 750 indigent patients in the United States over the past three years through a continuing match program with the American Society of Cataract Refractive Surgery Foundation and promote the empowerment of women in ophthalmology as a lead sponsor of Women in Ophthalmology. In addition, these donations were also directed to accelerate treatments and cures for retinal diseases for the next generation through the Foundation Fighting Blindness and expand opportunities for ophthalmology residents from groups that are underrepresented in medicine or who want to work in underserved communities through support of the National Medical Association’s Rabb-Venable Excellence in Ophthalmology Research Program. We have also made other donations as well as supported causes of interest to areas beyond our immediate scope in eye care, such as our long-standing relationship with Northside Center for Child Development (“NCCD”) and their work with New York City children in need, in order to support the communities we serve. Our Chief Financial Officer, currently President of the Board of NCCD, has served as a Director there since 2009. NCCD has become a pioneer of behavioral health programs for low-income children of color and their families located in Harlem, Brooklyn and the Bronx, New York.
We also strive to be socially conscious in our employment practices. We support diversity in our hiring practices and follow a management philosophy that integrates social responsibility and the highest governance standards. We established an Affirmative Action Plan in 2018 in compliance with the requirements of the Office of Federal Contract Compliance Programs. We are committed to making a good faith effort to improve our current practices over time when the opportunity is available. All managers
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are trained in Equal Employment Opportunity compliant recruiting and interviewing practices. See “Human Capital—Diversity and Inclusion” below.
From a governance perspective, our Audit Committee has consistently received very high ratings for independence and competency, and our most recent stockholder vote on executive compensation practices received nearly 95% support. Our Nominating and Corporate Governance Committee monitors the effectiveness of our corporate governance guidelines and our code of business conduct and ethics and oversees our ESG strategy and policies. Our Audit Committee monitors our compliance with legal and regulatory requirements. We have established and follow our Aerie Compliance & Ethics (“ACE”) program in an effort to ensure integrity in our activities and compliance with all legal and regulatory requirements applicable to our operations. Our Chief Compliance Officer manages the ACE program. As we continue to build our company, we will continue to keep the environment, our social responsibility and governance considerations at top of mind.
Human Capital
In order to successfully attract and retain highly professional and skilled employees, it is crucial that we offer a diverse, inclusive and safe workplace. Our recruitment process begins with hiring individuals that we believe meet our strong culture for respect, commitment, integrity and honesty. We have a philosophy of investing in our employees by providing the necessary resources to grow professionally through our training and development programs, which will ultimately help drive company success. We reward our employees by offering a competitive compensation and benefits package, including incentive-based awards, which we believe motivates our employees and drives company performance.
As of December 31, 2020, we employed approximately 365 full-time employees, of which 299 were employed in the United States and 66 were employed outside the United States. The majority of our employees outside of the United States primarily support our manufacturing operations in Athlone, Ireland. Of our total employee population, there were 145 sales force and marketing employees, 111 in research and development and medical affairs, 56 in product manufacturing and 53 in general and administrative support roles such as human resources, finance, legal and information technology. We are committed to providing our employees with a positive work environment that helps them realize their full potential and helps them contribute to the success of our company. None of our employees are represented by any collective bargaining unit. We believe that we maintain good relations with our employees.
Diversity and Inclusion
We have a strong commitment to continue to build a diverse and inclusive work environment that fosters a positive culture. We believe our diverse workforce brings a wide array of skills and experiences that help increase innovation and strategic thinking and ultimately contribute to the success of our company.
Our hiring practices reflect our commitment to increase diversity and inclusion among our employees, as shown below:
•We strive to achieve and maintain pay equity for employees of all races and for both female and male employees within our organization.
•From a governance perspective, our Compensation Committee of the Board of Directors provides oversight of our policies, programs and initiatives focusing on workforce diversity and inclusion.
•Approximately a third of our employees in the United States identify as a racial or ethnic minority, with the percentage of minority employees in management reflecting the broader employee population in the United States.
•The female to male ratio for our total employee population is approximately 50:50.
Talent and Development
The success of our company is highly dependent on the performance, skills and industry knowledge of our employees. A significant proportion of our employee base is comprised of professionals who have had prior experience with pharmaceutical and biotechnology companies. In order to attract and retain such highly qualified talent, we invest significant resources to further develop our employees and provide opportunities that help them achieve career goals and lead our organization.
We maintain a robust training curriculum for all our employees and executives based on function. These curricula incorporate training addressing specific regulatory requirements germane to the performance of specific functions. The training for our scientific and quality personnel, for example, includes modules focusing on our good manufacturing and laboratory practices as well
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as proper documentation and reporting. In addition to specific function-based training, all of our employees are required to regularly train on our code of business conduct and ethics, receive cyber security training and receive harassment training. We believe a well-trained employee base is the best way to ensure proper business operations and to best ensure the establishment of a collaborative and supportive corporate culture.
In keeping with our commitment to the highest standards of honest and ethical behavior and integrity in carrying out our business activities, all of our employees who interact with health care professionals on behalf of our company are required to be trained in, and knowledgeable of, not only our code of business conduct and ethics but also our healthcare compliance manual which is a compendium of our standards intended to not only help ensure continued compliance with the prevailing laws, regulations and standards of our industry, but also to provide a framework for our expectations for employee behavior, operational excellence and risk mitigation to help us achieve our broader organizational goals of discovering and delivering new technologies and safe and efficacious therapies to those in medical need. The healthcare compliance manual builds on our code of business conduct and ethics and governs how our employees engage with the healthcare community when conducting promotional activities and scientific exchanges as well as financial interactions. All such employees or those in areas who support those activities are trained on and required to follow these policies.
Health and Safety
We are dedicated to creating and maintaining a work environment where our employees feel safe to carry on their responsibilities. We regularly review health and safety legislation to ensure compliance with current standards; we identify and monitor potential health and safety hazards; we coordinate emergency and fire drills; and we train our employees to avoid or minimize any potential risks within the workplace. The health and safety of our employees, patients, prescribers, and community are of utmost importance to us and we strive to comply with good manufacturing practices and with all requirements and mandates from various agencies and governments. We value the patient volunteers who participate in clinical trials and we are committed to protecting their rights and well-being. As such, we have policies and procedures in place to ensure our clinical trial practices comply with laws and regulations in all countries in which we operate clinical trials and meet our high ethical standards. We also have protocols in place to obtain informed consent from patients participating in our clinical trials.
In our research and manufacturing facilities, we maintain a safety culture and seek to eliminate workplace incidents and minimize risks and hazards. We have created and implemented processes to help eliminate safety events by reducing their frequency and severity. These programs include an illness and injury prevention program and a safety committee. The safety committee oversees the implementation of our safety program. We also review and monitor our performance closely. We monitor and continuously seek to reduce safety incidents each year. Through our efforts, we had a recordable incident rate of 1.3 (recordable incidents per 100 employees, as defined by the U.S. Occupational Safety and Health Administration, “OSHA”) at our Athlone manufacturing plant in 2020. This compares to an OSHA incident rate of 1.6 for the U.S. pharmaceutical and medicine manufacturing industry in 2019.
In response to the COVID-19 pandemic, we have taken precautionary measures to protect our employees and our stakeholders by adapting company policy to maintain the continuity of our business. We have adapted our facilities and work practices and implemented all necessary safety controls in line with governmental health policy guidelines. We have formed interdisciplinary teams to (i) focus on company-wide communication about the COVID-19 pandemic, including initiatives implemented to address the COVID-19 pandemic and its impact on our business and (ii) discuss, recommend and supervise the implementation of physical measures at our sites to best ensure employee safety. For example, to further support our employees at the Athlone manufacturing plant, we rolled out a Wellbeing Program to boost communication, engagement and wellness initiatives. With precautionary measures implemented company-wide, we continue to operate effectively as most of our manufacturing plant personnel are working on site and the balance of our total workforce is primarily working from home. Especially important in light of the COVID-19 pandemic, we provide all of our employees with excellent healthcare benefits and we make every effort to provide high levels of coverage at the most affordable cost possible.
Compensation and Benefits
To compete in a highly competitive job market and attract, retain and reward outstanding talent, we offer our employees a comprehensive compensation package that includes competitive salaries and benefit programs.
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Our well-designed compensation package includes the following:
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•competitive salaries and annual bonuses;
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•equity compensation: stock options and restricted stock;
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•employee stock purchase plan in which employees may purchase company stock at a discounted price;
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•401(k) plan with 401(k) company match;
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•premium health and dental insurance;
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•life insurance;
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•short-term and long-term disability insurance and workers’ compensation insurance;
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•paid time off, paid sick leave and holidays; and
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•personal leave of absence, military leave and family medical leave.
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Our equity compensation plans, pursuant to which we may grant stock options, restricted stock and other equity-based awards, are designed to align employees’ interests with our stockholders’ interests and motivate effective performance which drives company success. We also maintain an employee stock purchase plan under which substantially all employees may purchase the Company’s common stock through payroll deductions and lump sum contributions at a price equal to 85% of the lower of the fair market value of the stock as of the beginning or end of the offering periods.
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PROPOSAL 1
Election of Directors
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DIRECTOR NOMINEE
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CLASS
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AGE(1)
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POSITION(S) HELD
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DIRECTOR SINCE
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CURRENT TERM EXPIRES(2)
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Mechiel (Michael) M. du Toit
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II
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68
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Independent Director
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2015
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2021
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David W. Gryska
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II
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65
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Independent Director
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2018
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2021
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(1) Age as of April 19, 2021.
(2) Represents date of annual meeting for that year.
Upon the recommendation of the Nominating and Corporate Governance Committee, our Board has nominated Mr. du Toit and Mr. Gryska for re-election as Class II directors at the Annual Meeting.
There are no arrangements or understandings between any director, or nominee for directorship, pursuant to which such director or nominee was selected as a director or nominee. We know of no reason why any nominee may be unable to serve as a director. If any nominee is unable to serve, your proxy may vote for another nominee proposed by the Board. If for any reason these nominees prove unable or unwilling to stand for election, the Board will nominate alternates or reduce the size of the Board to eliminate the vacancy. The Board has no reason to believe that its nominees would prove unable to serve if elected. Proxies cannot be voted for a greater number of persons than the number of nominees named in this proxy statement.
If the nominees listed above are elected, they will hold office until the annual meeting of stockholders to be held in 2024 or until their successors have been duly elected and qualified.
Vote Required
Directors are elected by a plurality of the votes cast at the meeting by the holders of shares present in person or represented by proxy at the Annual Meeting and entitled to vote on the election of directors. We will count shares represented by executed proxies, if authority to do so is not withheld, as voting for the election of the two nominees named above. If any nominee becomes unavailable for election because of an unexpected occurrence, your shares will be voted for the election of a substitute nominee proposed by our Board.
Our Recommendation
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The Board of Directors unanimously recommends a vote FOR each of the nominees as set forth above.
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PROPOSAL 2
Ratification of Appointment of
Independent Registered Public Accounting Firm
The Company’s stockholders are being asked by the Audit Committee of the Board to ratify the appointment of PricewaterhouseCoopers LLP to serve as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2021. The Audit Committee is solely responsible for selecting the Company’s independent registered public accounting firm, and stockholder approval is not required to appoint PricewaterhouseCoopers LLP as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2021. However, the Board believes that submitting the appointment of PricewaterhouseCoopers LLP to the stockholders for ratification is good corporate governance. If the stockholders do not ratify this appointment, the Audit Committee will reconsider whether to retain PricewaterhouseCoopers LLP. If the selection of PricewaterhouseCoopers LLP is ratified, the Audit Committee, in its discretion, may direct the appointment of a different independent registered public accounting firm at any time it decides that such a change would be in the best interest of the Company and its stockholders.
Representatives of PricewaterhouseCoopers LLP are expected to participate in the Annual Meeting. These representatives will be provided an opportunity to make a statement at the Annual Meeting if they desire to do so and will be available to respond to appropriate questions from stockholders.
Vote Required
This proposal requires an affirmative vote of a majority of the votes cast at the Annual Meeting by the holders of shares present in person or represented by proxy at the Annual Meeting and entitled to vote on the proposal.
Our Recommendation
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P
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The Board of Directors unanimously recommends a vote FOR the ratification of PricewaterhouseCoopers LLP to serve as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2021.
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Pre-Approval Policies and Procedures
Our Audit Committee pre-approves all audit and permissible non-audit services provided by PricewaterhouseCoopers LLP. These services may include audit services, audit-related services, tax services and other services. Pre-approval may be given as part of the Audit Committee’s approval of the scope of the engagement of the independent registered public accounting firm or on an individual case-by-case basis. All of the services described below were approved by our Audit Committee.
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Aerie Pharmaceuticals, Inc.
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38
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2021 | Proxy Statement
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Independent Registered Public Accounting Firm Fees and Services
During the fiscal years ended December 31, 2020 and 2019, we retained PricewaterhouseCoopers LLP to provide audit services. The following table represents aggregate fees billed or to be billed to us by PricewaterhouseCoopers LLP for services performed for the fiscal years ended December 31, 2020 and 2019:
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FEES
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2020
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2019
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Audit Fees (1)
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$1,460,000
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$1,527,500
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Audit-related Services (2)
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$1,650
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$0
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Tax Fees (3)
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$38,728
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$20,000
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All Other Fees (4)
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$16,300
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$11,800
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Total
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$1,516,678
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$1,559,300
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(1)Audit fees consist of fees for professional services rendered for the audit of our financial statements, review of interim financial statements, assistance with registration statements filed with the SEC and services that are normally provided by PricewaterhouseCoopers LLP in connection with statutory and regulatory filings or engagements as well as new transactions during the period.
(2)Audit-related fees consist of fees for financial statement preparation services.
(3)Tax fees are fees for tax consulting and advice.
(4)All other fees relate to professional services not included in the categories above, including fees related to a subscription to an accounting research tool.
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Aerie Pharmaceuticals, Inc.
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39
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2021 | Proxy Statement
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EXECUTIVE OFFICERS
Information about Our Executive Officers
The following table sets forth certain information about our executive officers.
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EXECUTIVE
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AGE (1)
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POSITION(S) HELD
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Vicente Anido, Jr., Ph.D.(2)
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68
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Chief Executive Officer and Chairman of the Board
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Richard J. Rubino
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63
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Chief Financial Officer, Secretary and Treasurer
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Thomas A. Mitro
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64
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President and Chief Operating Officer
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Casey C. Kopczynski, Ph.D.
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59
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Chief Scientific Officer
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John W. LaRocca, Esq.
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56
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General Counsel and Assistant Secretary
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David A. Hollander, M.D., M.B.A.
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47
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Chief Research and Development Officer
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(1) Age as of April 19, 2021.
(2) Dr. Anido’s biography is included above in the section titled “Information About Directors Continuing in Office.”
Set forth and described below is certain information about our executive officers (in addition to Dr. Anido).
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RICHARD J. RUBINO
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Richard J. Rubino has served as our Chief Financial Officer since October 2012.
From March 2008 to April 2012, Mr. Rubino served as Senior Vice President, Finance and Chief Financial Officer of Medco Health Solutions, Inc. and from May 1993 to March 2008 served as Controller, Chief Accounting Officer, and Vice President of Planning. Previously, Mr. Rubino held various positions at International Business Machines Corporation from 1983 to May 1993 and at PricewaterhouseCoopers LLP (formerly Price Waterhouse & Co.) from 1979 to 1983.
Mr. Rubino received his B.S. in Accounting from Manhattan College. He has been a director of the Northside Center for Child Development since 2009, the Board Treasurer from 2012 through 2016, and became Board President in 2016. He also currently serves as a member of the Finance Committee and Executive Committee.
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CHIEF FINANCIAL OFFICER
Positions:
Chief Financial Officer
Secretary and Treasurer
Age:
63
Joined Aerie:
2012
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Aerie Pharmaceuticals, Inc.
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40
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2021 | Proxy Statement
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THOMAS A. MITRO
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Thomas A. Mitro has served as our President and Chief Operating Officer since August 2013.
From November 2012 to August 2013, Mr. Mitro served as Vice President, Sales and Marketing at Omeros Corporation, a clinical-stage biopharmaceutical company. Prior to this, Mr. Mitro was Vice President, Sales and Marketing at ISTA Pharmaceuticals from July 2002 to July 2012, where he was instrumental in building ISTA’s commercial operations and launching several eye-care products, including Bromday (bromfenac ophthalmic solution) 0.09% and Bepreve (bepotastine besilate ophthalmic solution) 1.5%. Previously, Mr. Mitro held various positions at Allergan, Inc., including Vice President, Skin Care; Vice President, Business Development; and Vice President, e-Business.
Mr. Mitro received his B.S. from Miami University.
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PRESIDENT & CHIEF OPERATING OFFICER
Positions:
President
Chief Operating Officer
Age:
64
Joined Aerie:
2013
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CASEY C. KOPCZYNSKI, Ph.D.
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Casey C. Kopczynski, Ph.D. has served as our Chief Scientific Officer since co-founding our company in 2005.
From 2002 to 2005, Dr. Kopczynski was the Managing Partner at Biotech Initiative, LLC, a consulting practice dedicated to emerging biotech companies. Dr. Kopczynski was also previously the Vice President of Research at Ercole Biotech, Inc. from 2003 to 2004, a company developing drugs for the treatment of cancer, inflammation and orphan genetic diseases. Prior to Ercole Biotech, Inc., Dr. Kopczynski was Director of Research and a founding member of the scientific staff at Exelixis, Inc. from 1996 to 2002.
Dr. Kopczynski received his Ph.D. in Molecular, Cellular and Developmental Biology from Indiana University and was a Jane Coffin Childs Research Fellow at the University of California, Berkeley.
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CHIEF SCIENTIFIC
OFFICER
Position:
Chief Scientific Officer
Age:
59
Joined Aerie:
2005
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Aerie Pharmaceuticals, Inc.
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41
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2021 | Proxy Statement
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JOHN W. LAROCCA, Esq.
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John W. LaRocca, Esq. has served as our General Counsel since February 2018.
From March 2015 through January 2018, Mr. LaRocca served as Executive Vice President and General Counsel for Eagle Pharmaceuticals, Inc. From December 2005 through December 2012, Mr. LaRocca was Chief Legal Officer for the Americas for Actavis Inc. and from January 2013 through December 2014, was Deputy General Counsel for Actavis plc. Prior to such time, Mr. LaRocca served as Divisional Counsel-US Generics for both Purepac Pharmaceuticals and Alpharma Pharmaceuticals from September 2000 through December 2005.
Previously, Mr. LaRocca practiced corporate and commercial law in New York with Parker Duryee Rosoff & Haft; Christie & Viener; and Webster & Sheffield.
Mr. LaRocca received his B.A. from Columbia College and his J.D. from Columbia Law School.
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GENERAL COUNSEL
Positions:
General Counsel
Assistant Secretary
Age:
56
Joined Aerie:
2018
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DAVID A. HOLLANDER, M.D., M.B.A.
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David A. Hollander, M.D., M.B.A., has served as our Chief Research and Development Officer since November 2019.
Dr. Hollander began his career in industry in 2006 at Allergan as a Medical Director of Ophthalmology where he also held a number of leadership roles including Vice President of Eye Care for US Medical Affairs, Vice President and Head of Eye Care for Global Medical Affairs, as well as Therapeutic Area Head in Clinical Development for Anterior Segment and Consumer Eye Care. During this time, Dr. Hollander continued to see patients and instruct residents and fellows in cataract surgery and corneal transplantation. In 2016, Dr. Hollander joined Ora, Inc, the leading ophthalmic Contract Research Organization, as Chief Medical Officer. While at Ora, Dr. Hollander oversaw medical operations across pharmaceutical and device clinical development, preclinical studies, as well as research and development into new regulatory endpoints, most notably the development of novel mobility courses for evaluating treatments for inherited retinal diseases.
Dr. Hollander received his B.S. in chemistry with honors and distinction from Stanford University, and earned his medical degree at the University of Pennsylvania School of Medicine. Dr. Hollander also obtained an M.B.A. in Health Care Management from the Wharton School at the University of Pennsylvania.
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CHIEF RESEARCH
AND DEVELOPMENT OFFICER
Positions:
Chief Research and
Development Officer
Age:
47
Joined Aerie:
2019
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Aerie Pharmaceuticals, Inc.
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42
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2021 | Proxy Statement
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COMPENSATION DISCUSSION & ANALYSIS
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COMPENSATION
DISCUSSION & ANALYSIS
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A MESSAGE FROM OUR COMPENSATION COMMITTEE
2020 was a challenging year for the global economy as the COVID-19 pandemic brought disruptions to global supply chains, workforce participation was impacted by “shelter in place” restrictions and significant volatility disrupted the financial markets.
Given all the uncertainty, our leadership team swiftly responded to the environment and took important precautionary measures to protect our employees and stakeholders and adapted company policies to maintain the continuity of the business. The Company continued to operate effectively as most of our manufacturing plant personnel worked with precautionary measures in place, while the balance of the workforce primarily worked from home. Our sales force experienced successful engagement with eye-care professionals through either traditional face-to-face office meetings or virtual resources. The health and safety of our employees, patients, prescribers and community are of utmost importance to us, and the leadership team fully executed a plan to best ensure that outcome including complying with all requirements and mandates from various agencies and governments.
The Company continued to achieve strong financial and scientific results in 2020. Net product revenues generated by the glaucoma franchise increased 19% over 2019, and by the end of 2020, we had $240 million in cash and investments. We took significant steps to continue to advance our clinical development and commercialization of our products, including but not limited to gaining EC approval of Roclanda® (marketed as Rocklatan® in the United States), reporting positive interim topline 90-day efficacy data for a Phase 3b trial for Roclanda®, commencing trials for two late-stage programs, and executing an exclusive license agreement with Santen for Rhopressa® and Rocklatan® in Japan and other Asian countries.
Recognizing 2020 was a challenging year, the compensation decisions we made for both 2020 as well as looking forward to 2021 are intended to support our comprehensive pay-for-performance culture and philosophy as well as our objective to attract, motivate and retain talented executives. In 2020, approximately 95% of the votes cast on our Say-on-Pay vote were supportive of our compensation program and approach, and we are again seeking stockholder approval of our program this year under Proposal 3. The balance of this section covers our compensation actions for 2020 in greater detail, as well as the context and frameworks that we utilized in making our decisions.
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Purpose
The purpose of
this Compensation Discussion and Analysis is to provide our stockholders with an understanding
of our approach
to executive compensation and to detail our decision-making processes
for compensation to our NEOs for fiscal year 2020.
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NAMED EXECUTIVE OFFICERS
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The following individuals represent our Named Executive Officers (“NEOs”), comprised of our Principal Executive Officer, Principal Financial Officer and the four other most highly compensated executive officers in 2020.
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Vicente Anido, Jr., Ph.D.
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Richard J. Rubino
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Thomas A. Mitro
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Chief Executive Officer
and Chairman of the Board
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Chief Financial Officer, Secretary and Treasurer
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President and Chief
Operating Officer
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Casey C. Kopczynski, Ph.D.
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John W. LaRocca, Esq.
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David A. Hollander, M.D., M.B.A.
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Chief Scientific Officer
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General Counsel
and Assistant Secretary
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Chief Research and
Development Officer
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Aerie Pharmaceuticals, Inc.
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43
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2021 | Proxy Statement
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COMPENSATION DISCUSSION & ANALYSIS
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COMPANY OVERVIEW
We are an ophthalmic pharmaceutical company focused on the discovery, development and commercialization of first-in-class therapies for the treatment of patients with open-angle glaucoma, ocular surface diseases and retinal diseases. In 2020, we accomplished a number of key objectives that are critical to our continued growth. The industry we operate in is highly competitive from a business and human resource perspective, and thus we use our compensation program to create a competitive advantage. Our Compensation Committee based its actions in 2020 on the performance and accomplishments of the company throughout the year.
2020 Business and Financial Highlights
U.S. Commercial Products
Net Product revenue in 2020 of $83.1 million, which represents a 19% increase as compared to the prior year, was driven by our U.S. FDA approved glaucoma franchise products, Rhopressa® and Rocklatan®. Although there was a decline in total prescription volumes in April 2020, as seen within the entire pharmaceutical market according to IQVIA data primarily due to the impact of the COVID-19 pandemic, our sales volumes have increased each successive quarter in 2020 as compared to the first quarter of 2020 for both Rhopressa® and Rocklatan®.
We have obtained formulary coverage for Rhopressa® and Rocklatan® for the majority of lives covered under commercial plans and Medicare Part D plans. Our commercial team responsible for sales of Rhopressa® and Rocklatan® is targeting eye-care professionals throughout the United States, and with the addition of a contract sales organization and a separate telesales team in 2020, we are able to reach over 16,000 eye-care professionals.
Outside the United States
In Europe, Roclanda® (marketed as Rocklatan® in the United States) was granted a Centralised MA by the EC in January 2021. Roclanda® represents our second EC approved product in Europe as Rhokiinsa® (marketed as Rhopressa® in the United States) was granted a Centralised MA by the EC in late 2019.
Furthermore, we reported positive interim topline 90-day efficacy data in September 2020 for our Phase 3b clinical trial for Roclanda®, named Mercury 3, which we believe is important to the execution of our strategy in Europe, which generated interest from potential collaboration partners.
In Japan, we entered into the Santen Agreement with Santen in October 2020 to advance our clinical development and ultimately commercialize Rhopressa® and Rocklatan® in Japan and eight other countries in Asia. The agreement included an upfront payment to Aerie of $50.0 million, with net cash proceeds after withholding taxes of $45.0 million received in the fourth quarter of 2020. We initiated a Rhopressa® Phase 3 clinical trial in December 2020, the first of three expected Phase 3 clinical trials in Japan. Clinical trials for Rocklatan® have not yet begun.
Glaucoma Product Manufacturing
We have a sterile fill production facility in Athlone, Ireland, for the production of our clinical supplies and our products approved by the U.S. FDA. We received FDA approval for production for commercial distribution to the United States for Rocklatan® in the first quarter of 2020 and Rhopressa® in the third quarter of 2020. Shipments of commercial supply of Rocklatan® and Rhopressa® from the Athlone manufacturing plant to the
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19%
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INCREASE IN NET REVENUES
Rhopressa® and Rocklatan®
$83.1 million for the year ended December 31, 2020
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Sales Volumes Increased Each Successive Quarter of 2020
Rhopressa® and Rocklatan®
in 2020
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EC Approval
Roclanda®
in Europe
January 2021
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+
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Reported Positive Topline Data
Roclanda® Mercury 3
Phase 3b clinical trial
September 2020
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Executed Santen Agreement
Rhopressa® and Rocklatan®
in Japan, October 2020
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Initiated
Clinical Trial
Rhopressa®
in Japan, October 2020
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Aerie Pharmaceuticals, Inc.
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44
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2021 | Proxy Statement
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COMPENSATION DISCUSSION & ANALYSIS
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United States commenced in the third quarter and fourth quarter of 2020, respectively. The Athlone manufacturing plant has also manufactured clinical supplies of Rhopressa® for the Phase 3 clinical trials in Japan. We expect that in 2021 the Athlone manufacturing plant will manufacture most of our ongoing needs for Rhopressa® and Rocklatan® in the United States.
Product Candidates and Pipeline
We are developing AR-15512, our product candidate for the treatment of dry eye disease, for which we initiated a large Phase 2b clinical trial in October 2020. Furthermore, we are also developing three sustained-release implants focused on retinal diseases, AR-1105, AR-13503 SR and AR-14034 SR. For AR-1105, we reported topline results of the Phase 2 clinical trial for patients with macular edema due to RVO in July 2020, indicating sustained efficacy of up to six months, an important achievement in validating the potential capabilities of Aerie’s sustained release platform. With respect to future plans for AR-1105, we are currently evaluating next steps regarding advancement into a Phase 3 clinical trial along with commercialization prospects in both Europe and the United States.
For AR-13503 SR, we initiated a first in-human clinical safety study in the third quarter of 2019 for the treatment of wet AMD and DME, which is currently ongoing. We are still evaluating different formulations of this early stage product candidate.
For preclinical AR-14034 SR, we anticipate filing an IND with the FDA in the second half of 2022 to evaluate its potential as a treatment for wet AMD and DME.
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FDA Approval at Athlone Plant
Rhopressa® and
Rocklatan® Production
for commercial distribution
to the United States
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Initiated
Clinical Trial
AR-15512
TRPM8 agonist for dry eye
in the United States
October 2020
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Long-term Stockholder Return Performance
The following graph illustrates a comparison of the five-year cumulative total stockholder return on our common stock since December 31, 2015 to two indices: the NASDAQ Composite Index and the NASDAQ Biotechnology Index. The graph assumes an initial investment of $100 on December 31, 2015, in our common stock and in each index. It also assumes reinvestment of dividends, if any.
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+
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Reported Positive Topline Data
AR-1105
dexamethasone steroid implant Phase 2 clinical trial in patients with macular edema due to RVO
July 2020
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New Preclinical
Program
AR-14034 SR
pan-VEGF receptor inhibitor
Sustained Release Retinal Implant
for treatment of wet AMD and DME in the United States
Introduced early 2021
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Aerie Pharmaceuticals, Inc.
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45
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2021 | Proxy Statement
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COMPENSATION DISCUSSION & ANALYSIS
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Key Compensation Actions for 2020
Our Compensation Committee took the following actions related to 2020 executive compensation for our NEOs:
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COMPENSATION AREA
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HIGHLIGHTS
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Cash Compensation
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•Approved base salary increases of 3-6% for our NEOs, recognizing individual performance and contributions as well as considering market positioning
•Maintained 2020 bonus targets (expressed as a percent of base salary) at the same level as 2019
•Approved a corporate achievement for 2020 bonuses of 93.6% based on incentive goals and weightings previously approved by the Committee that were established from our budget and strategic plan for the fiscal year; bonus payouts averaged at 94.2% for the NEOs after adjusting for individual performance
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Equity Compensation
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•Granted annual equity awards to our NEOs in February 2020 consisting of stock options and restricted stock awards with 4-year ratable vesting (no change to grant schedule or equity design)
•The value of the 2020 annual equity grants were significantly lower than the prior year’s grants, as further explained below in the section entitled “Fiscal 2020 Compensation Program in Detail - Long Term Equity Incentive Compensation”
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Process / Governance
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•Engaged ClearBridge Compensation Group in Q2 2020 as the Compensation Committee’s independent advisor on compensation matters
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Key Compensation Actions for 2021
In addition to the key compensation actions for 2020, the Compensation Committee also took the following actions as it relates to 2021 compensation for our NEOs:
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COMPENSATION AREA
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HIGHLIGHTS
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Peer Group
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•In Q3 2020, adopted a new peer group that is more closely aligned with our company size to inform compensation decisions
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Cash Compensation
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•Approved base salary increases for our NEOs approximating 2%
•Maintained 2020 NEO annual bonus target percentages for 2021
•Approved corporate incentive goals and weightings for the 2021 annual bonus
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Equity Compensation
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•Approved 2021 equity incentive awards that reflected competitive market data and performance during 2020, with the value of such awards being significantly lower as compared to the previous year’s grants (in a manner similar to the approach utilized for 2020 grants)
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Aerie Pharmaceuticals, Inc.
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46
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2021 | Proxy Statement
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COMPENSATION DISCUSSION & ANALYSIS
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2020 CEO Pay vs. Stock Price Performance
The decline in target value for our 2020 equity incentive awards is in line with the Company’s strong history of linking pay with performance. Our overall strategy is based on a long-term view of Company performance and strategic execution. Over the last three years, total compensation levels for the CEO have been commensurate with stock price performance, as shown below. All values in the chart are the same as the values in the corresponding Summary Compensation Table column for each year.
Any decline in stock price also impacts the actual current value of past equity awards that executives are still holding. The table below shows the grant date fair value of the CEO’s last three annual equity incentive awards, compared to their year-end value at December 31, 2020.
(1) Grant date fair value reflects the total grant date fair value for each type of award as disclosed in the grants of plan-based awards table for the corresponding year
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Aerie Pharmaceuticals, Inc.
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47
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2021 | Proxy Statement
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COMPENSATION DISCUSSION & ANALYSIS
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(2) Year-end value reflects the “in-the-money” value of stock option awards, and the total value of granted stock awards, based on the December 31, 2020 closing price of the Company’s stock, which was $13.51.
Key Compensation Governance Attributes
We believe that a sound executive compensation program is grounded in key governance practices. See below for key components of our executive compensation program:
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P
WHAT WE DO
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ü
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Align annual incentive pay and performance by linking annual bonuses to the achievement of performance goals tied to Company financial and strategic objectives
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ü
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Cap payouts for annual bonus
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ü
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Require significant stock ownership by our executives and directors through our stock ownership guidelines
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ü
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Maintain a claw back policy covering incentive compensation
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ü
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Consult an independent compensation consultant
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ü
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Evaluate the risk profile of our pay program
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ü
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Conduct an annual pay review
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ü
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Engage directly with our largest stockholders on a regular basis to solicit feedback
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ü
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Grant equity awards with “double-trigger” vesting upon a change in control
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ü
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Appoint a Compensation Committee comprised solely of independent directors
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ü
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Have a majority of executive compensation at-risk
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W
WHAT WE
DON’T DO
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X
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Provide gross-ups on excise taxes
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X
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Guarantee salary increases, bonuses, or grants of equity compensation
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X
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Provide executive perquisites
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X
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Provide pension plans or other post-employment benefit plans
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X
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Offer severance multipliers in excess of 2x base salary and bonus
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X
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Implement compensation or incentives that encourage unnecessary or excessive
risk taking
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X
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Allow for hedging or unauthorized pledging of Company stock
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X
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Reprice stock options without stockholder approval
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Aerie Pharmaceuticals, Inc.
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48
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2021 | Proxy Statement
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COMPENSATION DISCUSSION & ANALYSIS
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“Say-on-Pay” Vote
Although we believe strongly that our executive pay program adheres to market best practices and reflects our pay-for-performance strategy, we recognize that this vote presents another opportunity for us to further engage with our stockholders on important matters. We communicate with our stockholders regularly and share feedback we receive with our Board of Directors to ensure our practices align with our stockholders’ interests. Our Chief Financial Officer and our Chief Executive Officer lead our engagement efforts with stockholders, including regular stockholder engagement through our quarterly earnings calls, company presentations, investor conferences and other investor meetings where investors have an opportunity to discuss incentive compensation matters, among other topics.
For the advisory say-on-pay vote at our 2020 Annual Meeting of Stockholders, approximately 95% of the votes were in favor of the proposal related to compensation practices for 2019. While this was a positive assessment of our executive compensation program, the Compensation Committee will continue our dialogue with key stockholders and will continue to consider all feedback, including the results of this say-on-pay vote, as we administer the fiscal 2021 executive compensation program and plan for fiscal year 2022.
DETERMINING EXECUTIVE COMPENSATION
Executive Compensation Philosophy and Objectives
Our compensation philosophy is to pay for performance. We believe firmly that our executives’ interests should be aligned with our stockholders’ interests. To accomplish this we:
•provide a majority of compensation in the form of long-term incentives that tie our executives’ compensation directly to the performance of our stock and increased company value over time; and
•structure our program so that the ultimate amount of compensation earned by our NEOs through paid bonuses and the intrinsic value of equity grants reflects overall business and individual performance.
In so doing, we feel we provide competitive compensation opportunities that further our goals of attracting, motivating and retaining talented executives and that align with our overall business model and emphasize a long-term view of Company performance and strategic execution.
When setting pay opportunities, our Compensation Committee reviews competitive market ranges for base salary, target bonus and long-term incentives. All cash compensation, including merit increases and bonuses, and equity awards are determined based on both corporate goal performance and individual performance. Additionally, while our overall philosophy applies generally to all NEOs, we recognize at times the need to differentiate the NEOs on an individual basis to reflect additional considerations such as tenure, experience, past and expected contribution and criticality to the Company. As such, the actual value and relative composition of an annual award may vary by individual or on a year-to-year basis.
Our Decision-Making Process
We adhere to a set of guiding principles as we make pay determinations each year:
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•Maintain a pay-for-performance culture
•Foster long-term alignment with stockholders
•Preserve a low risk profile
•Reflect internal equity considerations
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•Emphasize variable performance-based compensation
•Directly tie pay outcomes to value creation and support individual retention through annual equity awards
•Utilize key governance best practices
•Consider individual factors when making award determinations
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Aerie Pharmaceuticals, Inc.
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49
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2021 | Proxy Statement
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COMPENSATION DISCUSSION & ANALYSIS
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Role of the Compensation Committee
The Compensation Committee of our Board is responsible for establishing and overseeing the executive compensation program, which includes, but is not limited to the following:
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Approving target pay opportunities for our NEOs on an annual basis by evaluating Company and individual performance. Specifically, the Compensation Committee evaluates:
•each executive officer’s role and responsibilities, and performance in that role;
•each executive officer’s compensation history (including their total equity compensation profile);
•key historical Company performance metrics and forward-looking projections; and
•compensation practices of the companies in our peer group and, when appropriate, broader market data.
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Approving grants of equity awards under our stock incentive plans
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Designing the annual bonus program each year and approving payouts based on Company and individual performance
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Reviewing and approving any compensation-related agreements
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Reviewing whether our compensation program encourages excessive risk-taking
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Reviewing non-executive director compensation
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The Compensation Committee meets regularly throughout the year to monitor our progress. The formal written Compensation Committee charter is available on our website.
Role of our CEO
Our Chief Executive Officer informs our Compensation Committee on the individual performance and contributions of each of the other NEOs, and annually makes recommendations to the Compensation Committee regarding base salary, non-equity incentive plan compensation and equity awards. The Compensation Committee reviews and takes into account such recommendations, but ultimately retains full discretion and authority over the final compensation decisions for the NEOs.
Role of our Independent Compensation Consultant
Pursuant to its charter, the Compensation Committee has the sole authority to retain compensation consultants to assist in its evaluation of executive and director compensation. At the beginning of the 2020 fiscal year, Pearl Meyer was serving as the Compensation Committee’s independent compensation advisor. In the second quarter of the 2020 fiscal year, the Compensation Committee engaged ClearBridge as its independent compensation advisor for the remainder of the fiscal year ended December 31, 2020. ClearBridge conducted various market studies and advised the Compensation Committee on general executive compensation matters to assist the Compensation Committee in fulfilling its duties.
As was the case with Pearl Meyer, ClearBridge reports directly to the Compensation Committee, participates in meetings, communicates with the Committee Chair between meetings as necessary and works with management at the direction of the Compensation Committee.
The Compensation Committee reviewed ClearBridge’s independence and concluded that it is an independent and conflict-free advisor to the Company pursuant to standards under the Dodd-Frank Wall Street Reform and Consumer Protection Act and NASDAQ’s independence standards.
Use of Peer Group and Market Data
In the third quarter of fiscal year 2019, the Compensation Committee approved the peer group that would be used to determine 2020 pay opportunity levels for the NEOs (our “2019 peer group”). For 2020, we referenced the 2019 peer group in our annual executive compensation benchmarking assessment, reviewing market employment arrangement practices, evaluating our
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Aerie Pharmaceuticals, Inc.
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2021 | Proxy Statement
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COMPENSATION DISCUSSION & ANALYSIS
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aggregate equity usage and dilution and reviewing non-executive director compensation. In developing the 2019 peer group we balanced removing companies that were no longer appropriate peer companies (e.g., due to mergers and acquisitions activity) with minimizing year-over-year turnover within the group to provide consistency in the data. The primary screening characteristics for evaluation included utilizing companies that are:
•Biotechnology, pharmaceutical or medical device companies that focus on ophthalmology;
•Publicly-traded on a major U.S. exchange;
•Commercial stage companies; and
•With a target market capitalization of approximately $3 billion.
The companies included in our 2019 peer group are presented in the table below. Aerie’s revenue and market capitalization was positioned below the 25th percentile of this group of companies.
2019 Peer Group
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ACADIA Pharmaceuticals Inc.
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Intercept Pharmaceuticals, Inc.
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Agios Pharmaceuticals, Inc.
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Ironwood Pharmaceuticals, Inc.
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Amicus Therapeutics, Inc.
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Neurocrine Biosciences, Inc.
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Clovis Oncology, Inc.
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Omeros Corporation
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Coherus BioScience, Inc.
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Portola Pharmaceuticals, Inc.
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Corcept Therapeutics Incorporated
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Radius Health, Inc.
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Glaukos Corporation
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Ultragenyx Pharmaceutical Inc.
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Insmed Incorporated
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In the third quarter of fiscal year 2020, the Compensation Committee, with the assistance of ClearBridge, determined to take a holistic review of the peer group and developed a new peer group that aligns with Aerie’s current revenue and market capitalization to be used as context for 2021 pay decisions (the “2020 peer group”). See below for screening criteria utilized by ClearBridge, the resulting 2020 peer group and Aerie’s size positioning versus the 2020 peer group.
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Company Details:
•U.S. based
•Publicly traded on a major U.S. exchange
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Industry:
•Primarily Biotechnology and Pharmaceuticals
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Company Size:
Revenue:
•Approximately 1/2x to 2x of Aerie’s
•Positive Estimated Revenue Growth
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Market Cap:
•Approximately 1/3x to 3x of Aerie’s
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Aerie Pharmaceuticals, Inc.
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2021 | Proxy Statement
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COMPENSATION DISCUSSION & ANALYSIS
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2020 Peer Group
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Anika Therapeutics, Inc.
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Karyopharm Therapeutics Inc.
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Athenex, Inc.
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MacroGenics, Inc.
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BioDelivery Sciences International
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MannKind Corporation
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Catalyst Pharmaceuticals, Inc.
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Pfenex Inc. (1)
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Clovis Oncology, Inc.
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Rigel Pharmaceuticals, Inc.
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Dynavax Technologies Corp
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TherapeuticsMD, Inc.
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Flexion Therapeutics, Inc.
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Theravance Biopharma, Inc.
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Heron Therapeutics, Inc.
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Vericel Corporation
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Intersect ENT, Inc.
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Xencor, Inc.
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(1) Acquired by Ligand Pharmaceuticals Inc. on October 1, 2020.
Note: Reflects the last four quarters of revenue and market capitalization as of June 30, 2020.
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Aerie Pharmaceuticals, Inc.
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52
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2021 | Proxy Statement
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COMPENSATION DISCUSSION & ANALYSIS
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Principal Elements of Executive Compensation
Our executive compensation program consists of a mix of fixed and variable pay elements, with the latter tied to both short- and long-term company success. Performance-based pay elements are linked to goals that we believe will deliver both year-to-year and long-term increases in stockholder value. The elements of total direct executive compensation include:
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ELEMENT
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DESCRIPTION
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FORM
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PERFORMANCE PERIOD
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PERFORMANCE MEASURES
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PAYOUT
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Base Salary
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Fixed amount to attract and retain top talent
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Cash
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—
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—
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—
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Annual Cash
Bonus
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At-risk variable incentive compensation used to reward strong Company and individual performance against critical annual goals
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Cash
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1 Year
1/1/2020 - 12/31/2020
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Net Revenue,
Net Income After Taxes, Ending Cash Balance &
Strategic Goals
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0% - 200%
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Long-Term Incentive
Awards
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At-risk variable incentive compensation
with value tied to stock price growth that promotes performance, supports retention and creates stockholder alignment
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Stock Options
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4-Year Ratable Vesting (Monthly) & 10-Year Term
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Absolute Stock Price Appreciation
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—
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Restricted Stock Awards
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4-Year Ratable Vesting (Annually)
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—
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—
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2020 Fiscal Year Target Annual Compensation Opportunities Mix
As described below, our compensation program is designed with significant at-risk components. In 2020, a substantial majority of our NEOs’ target compensation opportunities was at-risk, and a majority of compensation was delivered through long-term incentive awards. The following charts show the mix of fixed and at-risk target compensation for our CEO and our other NEOs on average.
(1) Percentages attributed to restricted stock and stock options are based on grant date fair value of awards granted in 2020.
(2) Excludes total compensation for Dr. Hollander. Due to his start date of November 2019, at which time he received sign-on incentives in accordance with his Employment Agreement, he did not receive long-term incentive awards in 2020.
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Aerie Pharmaceuticals, Inc.
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2021 | Proxy Statement
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COMPENSATION DISCUSSION & ANALYSIS
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2020 Fiscal Year Incentive Design
Our annual cash bonus and long-term incentive awards are designed to be at-risk variable incentive compensation that support our pay-for-performance philosophy. The following charts illustrate the design of our annual cash bonus and long-term incentive awards.
*Measured on an option-equivalent basis using a 3.0 stock option to 1.0 restricted stock conversion ratio
Fiscal 2020 Compensation Program in Detail
Base Salaries
We set base salaries that are competitive in the marketplace and reflect each individual’s duties, responsibilities, experience and performance. Base salaries are reviewed annually and adjusted periodically to take into account inflation, market movement, promotions, increased responsibility and performance. We do not provide for automatic salary increases.
The Compensation Committee established the base salaries for the NEOs in fiscal 2020 as follows, as compared to fiscal year 2019:
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Base Salary at
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Base Salary at
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Percent
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EXECUTIVE
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December 31, 2019
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December 31, 2020
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Increase
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Vicente Anido, Jr., Ph.D.
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$772,500
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$795,675
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3.0%
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Richard J. Rubino
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$463,000
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$476,890
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3.0%
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Thomas A. Mitro
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$473,800
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$501,000
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5.7%
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Casey C. Kopczynski, Ph.D.
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$435,000
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$448,050
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3.0%
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John W. LaRocca, Esq.
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$430,000
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$442,900
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3.0%
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David A. Hollander, M.D., M.B.A.
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$430,000
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$450,000
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4.7%
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Aerie Pharmaceuticals, Inc.
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2021 | Proxy Statement
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COMPENSATION DISCUSSION & ANALYSIS
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Annual Bonus (Non-Equity Incentive Compensation)
At the beginning of each fiscal year, the Compensation Committee establishes a non-equity incentive compensation plan that is tied to critical short-term business goals. Our annual bonus program is an important incentive tool used to motivate achievement of our short-term goals for the forthcoming fiscal year. Each NEO participates in the plan and has a target bonus opportunity amount that is stated as a percentage of base salary. Participants can earn between 0% and 200% of their targeted payout level based upon actual Company and individual performance as reviewed and assessed by the Compensation Committee.
Bonus payouts are made in cash and paid in arrears on an annual basis if the performance goals are met, or at the Board’s discretion after taking into account various subjective factors, including individual performance and execution on our long-term plans. We do not provide for guaranteed bonus payouts.
Initially, prior to the Board exercising its discretion to modify an award payout, annual bonus awards are calculated based on Company performance as follows:
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Base Salary
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x
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Individual Target Award %
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x
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Net Revenue
(40% Weight)
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+
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Net Income After Taxes (5% Weight)
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+
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Ending Cash Balance
(5% Weight)
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+
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Strategic Measures
(50% Weight)
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=
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Annual Bonus
(prior to adjustment for individual performance, etc.)
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Target Bonus Opportunity
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Company Performance
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For 2020, our Compensation Committee set the following target bonus opportunities as a percentage of base salary for each NEO, which percentages were unchanged from the prior year’s target:
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EXECUTIVE
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TARGET BONUS OPPORTUNITY AS
PERCENTAGE OF BASE SALARY AS
OF DECEMBER 31, 2020
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TARGET BONUS OPPORTUNITY
IN DOLLARS
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Vicente Anido, Jr., Ph.D.
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70%
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$556,973
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Richard J. Rubino
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50%
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$238,445
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Thomas A. Mitro
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50%
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$250,500
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Casey C. Kopczynski, Ph.D.
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50%
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$224,025
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John W. LaRocca, Esq.
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50%
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$221,450
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David A. Hollander, M.D., M.B.A.(1)
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50%
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$220,958
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(1) Dr. Hollander’s target bonus was prorated to reflect a mid-year increase in base salary.
Our Compensation Committee established five core goals to assess short-term Company performance in 2020 (the “Core Goals”), which span across a balance of meaningful financial and non-financial categories. As a recently commercial pharmaceutical company, we focused on goals that are important to our investors and stockholders. Our financial goals were to achieve an aggressive net revenue goal, as well as to achieve our net income after taxes, ending cash balance and our strategic goals. Strategic goals for 2020 were related to specific pipeline, globalization and manufacturing considerations, as outlined further below. We believe these goals were set at appropriately aggressive levels that were neither certain to be met, nor unachievable at the onset of the year. Although we may use different financial performance measures in the future, the Compensation Committee believes that net revenue, net income after taxes and ending cash balance were the most meaningful financial measures to assess the Company’s performance in 2020. Our non-financial goals reflect prospective opportunities that we believe can drive future stockholder value.
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Aerie Pharmaceuticals, Inc.
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55
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2021 | Proxy Statement
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COMPENSATION DISCUSSION & ANALYSIS
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At the conclusion of the year, our Compensation Committee reviewed the Company’s success against its annual goals. The Compensation Committee’s assessment of our performance against our goals is as follows:
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CORE GOALS
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WEIGHTING
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ACHIEVEMENT
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1. Achieve 2020 budgeted net revenue of $108 million, net income after tax of ($182) million and ending cash balance of $191 million (partially met based on $83.1 million net revenue, ($178.1) million net income after tax, and $195.4 million ending cash balance)
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50%
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43.6%
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2. Pipeline (met)
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20%
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20%
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• Report topline data from AR-1105 Phase 2 study
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• Completion of enrollment in AR-13503 Phase 1b Stage 1 study
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• First patient dosed in P2 for AVX-012
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3. Globalization (met)
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15%
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15%
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• Completion of Japan partnering agreement
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• Report topline data from Mercury 3 study in Europe
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• EMA approval of Roclanda®
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4. Manufacturing (met)
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15%
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15%
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• Ireland Plant commercial production of Rocklatan® and Rhopressa®
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• PRINT implant semi auto-load operational
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Total
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100%
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93.6%
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Overall, the Compensation Committee strives to set objective, measurable goals for the bonus plan each year, but like many recently commercial biotechnology or pharmaceutical companies, recognizes that the dynamic nature of drug development and approval requires some subjectivity and qualitative assessment to arrive at the final bonus funding. That qualitative assessment can manifest itself in partial achievement for a goal that is substantially met but not completely met for a particular reason, or reduction in the achievement level if the goal is met but there were suboptimal aspects of the achievement. Based on the Core Goals performance described above, the Compensation Committee determined the corporate goals were achieved at 93.6% of target for NEOs.
In addition to the achievement of the Core Goals, adjustments to individual incentive payouts may be made below or above target achievement based on the Compensation Committee’s assessment of individual performance that may be outside of the Core Goals. Ultimately, the Compensation Committee’s objective is to arrive at bonus payouts that reflect both performance against the set of Core Goals articulated at the onset of the year, as well as an overall evaluation of the Company’s performance and individual performance in that given year. For 2020, the CEO’s annual incentive was awarded in line with the corporate funding factor for the Core Goals. Drs. Kopczynski and Hollander and Mr. LaRocca were also awarded bonuses that were in line with the corporate funding factor. Mr. Rubino’s bonus was adjusted upward to 96.0%, reflecting his successful efforts related to cash management and business development activities. Mr. Mitro’s bonus was adjusted upward to 95.0%, reflecting his significant efforts in successfully driving the commercial business and re-negotiating with wholesalers and managed care organizations.
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Aerie Pharmaceuticals, Inc.
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56
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2021 | Proxy Statement
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COMPENSATION DISCUSSION & ANALYSIS
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Bonus payouts for our NEOs in respect of performance for fiscal year 2020 were as follows:
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EXECUTIVE
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2020 TARGET BONUS OPPORTUNITY IN DOLLARS
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2020 ACTUAL BONUS PAYOUT
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PAYOUT PERCENTAGE
OF TARGET
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Vicente Anido, Jr., Ph.D.
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$556,973
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$521,326
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93.6%
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Richard J. Rubino
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$238,445
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$229,000
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96.0%
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Thomas A. Mitro
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$250,500
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$238,000
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95.0%
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Casey C. Kopczynski, Ph.D.
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$224,025
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$209,690
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93.6%
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John W. LaRocca, Esq.
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$221,450
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$207,300
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93.6%
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David A. Hollander, M.D., M.B.A.(1)
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$220,958
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$206,850
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93.6%
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(1) Dr. Hollander’s target bonus was prorated to reflect a mid-year increase in base salary.
Long-Term Equity Incentive Compensation
The Compensation Committee approves the grant of equity awards under our stock incentive plans to our NEOs. Our stock incentive plans afford the Compensation Committee flexibility to determine the specific award types and parameters that it believes are in the best long-term interests of the Company. We believe that long-term incentive awards provide the strongest alignment with stockholder interests and as such have a general philosophy of emphasizing long-term incentives as part of our total compensation program. Further, we believe that properly structured awards are a valuable motivating incentive and strong retention tool.
The terms of our equity awards generally provide time-based vesting provisions that require the recipient remain an employee of the Company to obtain such awards on the vesting date(s), and in certain instances are also subject to the achievement of performance-based goals. Time-vested equity awards are subject to double-trigger acceleration upon a change in control of the Company, whereby outstanding awards are only subject to accelerated vesting or other enhanced vesting in the event that there is a change in control event and the executive is terminated without “Cause” or for “Good Reason” within twelve months following the change in control event.
We do not provide for automatic awarding of equity awards. Grants are typically made by the Compensation Committee to the NEOs on an annual basis after considering factors such as Company and individual performance, current equity ownership by the individual, our total equity usage and dilution and our available share pool. From time-to-time, we may grant equity awards to our NEOs outside of our annual grant cadence when the Committee believes it is in the best interests of the Company, reflects Company performance and further aligns the interests of our NEOs with those of our stockholders.
Our primary approach for sizing equity awards is to consider the award as a percentage of shares outstanding. Since public reporting requirements stipulate disclosures of equity awards as a grant date fair value, our Compensation Committee evaluates the implied grant date fair value of these awards as another parameter. We believe that our approach is best for the Company as it allows us to better manage our equity pool, but recognize that it can lead to sizable year-to-year swings in the grant date fair value of awards to any particular NEO. Our Compensation Committee continues to evaluate this process.
2020 Equity Awards
In February 2020, the Compensation Committee approved equity awards to our NEOs following a review of competitive market data and Company and individual performance. Our approach to these annual awards was to provide a mix of 60% stock options and 40% restricted stock awards (when measured on an option-equivalent basis using a 3.0 stock option to 1.0 restricted stock conversion ratio), as follows:
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Aerie Pharmaceuticals, Inc.
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57
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2021 | Proxy Statement
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COMPENSATION DISCUSSION & ANALYSIS
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•Time-vested stock options, which vest in 48 equal installments on each of the first 48 monthly anniversaries of the grant date (four years cumulative).
•Time-vested restricted stock, which vest in four equal installments on each of the first four anniversaries of the grant date (four years cumulative).
The structure of the grants was the same as the annual grants provided in 2019, but the value of the grants was substantially lower reflecting stock price performance, given our approach of sizing equity awards as a percentage of shares outstanding rather than as a grant value. Consistent with last year, the Compensation Committee considered whether to award grants that vest on the basis of achieving performance targets as part of the Company’s annual long term incentive program and ultimately determined not to implement this type of award at this time. This decision was underpinned by the following:
•Setting multi-year financial goals would be very challenging given the Company’s early stage in product launches and current drug development timeline;
•The goals that would be used for purposes of these awards were captured in the Core Goals in the Annual Bonus plan;
•Performance-vested awards are not the predominant market practice in development-stage and recently-commercial biotechnology and pharmaceutical companies (a majority of our peers do not make use of this type of award); and
•The Compensation Committee believes time-vested stock options and restricted stock achieve its desired goals of performance-orientation, stockholder alignment and retention.
Equity awards made to our NEOs(1) in 2020 were as follows:
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EXECUTIVE
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GRANT DATE
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# OF TIME-VESTED
STOCK OPTIONS
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# OF TIME-VESTED RESTRICTED STOCK AWARDS
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Vicente Anido, Jr., Ph.D.
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2/6/2020
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125,000
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28,000
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Richard J. Rubino
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2/6/2020
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52,000
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11,750
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Thomas A. Mitro
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2/6/2020
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62,500
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14,000
|
|
Casey C. Kopczynski, Ph.D.
|
2/6/2020
|
45,000
|
10,000
|
|
John W. LaRocca, Esq.
|
2/6/2020
|
15,500
|
3,500
|
|
David A. Hollander, M.D., M.B.A.(1)
|
—
|
—
|
—
|
(1) Dr. Hollander did not receive long-term incentive awards in 2020 due to his start date of November 2019, at which time he received sign-on incentives of 110,000 shares of time-vested stock options and 25,000 shares of time-vested restricted stock awards in accordance with his Employment Agreement.
Vesting of Prior Performance-Vested Equity Awards
In 2017, our Compensation Committee granted performance-vested awards to certain of our NEOs. We designed the awards to provide the ultimate alignment of our NEOs’ incentives with stockholder interests, in that the payout of the awards were contingent upon the approval and commercial launch of the Company’s FDA approved products, Rhopressa® and Rocklatan®, respectively. As the performance and service conditions were satisfied, the final portion of performance awards fully vested during the fiscal year 2020.
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|
Aerie Pharmaceuticals, Inc.
|
58
|
2021 | Proxy Statement
|
|
|
|
|
|
|
|
|
|
|
|
COMPENSATION DISCUSSION & ANALYSIS
|
|
|
2021 Equity Awards
In the first quarter of 2021, the Compensation Committee approved the annual equity grants for our NEOs. The structure of the grants was the same as the annual grants provided in 2020, but as was the case for 2020 grants, the value of the 2021 grants was lower than the prior year’s grants reflecting stock price performance over the course of 2020. The Compensation Committee strongly believes in a pay for performance philosophy, as demonstrated through our prior compensation decisions (for example, performance-based bonus payouts and long-term incentive grant amount approach), and has continued to evaluate the use of performance-vested equity awards. Given the current market environment and challenges in setting long-term goals, the Compensation Committee has determined not to adopt performance-vested equity for fiscal 2021 at this time and believes that through the use of stock options and restricted stock, management continues to be fully aligned with stockholder interests, with the ultimate value of the awards delivered subject to company stock price performance. Below is a summary comparing the fair value of equity grants made in 2020 at the time of grant against the fair value of the equity grants made in 2021 at the time of grant.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EXECUTIVE
|
FAIR VALUE OF 2020
EQUITY INCENTIVE AWARDS
|
FAIR VALUE OF 2021 EQUITY INCENTIVE AWARDS
|
% CHANGE
|
|
|
|
|
|
|
Vicente Anido, Jr., Ph.D.
|
$2,303,088
|
$1,952,112
|
(15)%
|
|
Richard J. Rubino
|
$960,359
|
$818,473
|
(15)%
|
|
Thomas A. Mitro
|
$1,151,709
|
$976,071
|
(15)%
|
|
Casey C. Kopczynski, Ph.D.
|
$827,633
|
$777,540
|
(6)%
|
|
John W. LaRocca, Esq.(1)
|
$286,217
|
$777,671
|
*
|
|
David A. Hollander, M.D., M.B.A.(2)
|
$—
|
$777,410
|
—
|
(1) Award granted in February 2020 took into account August 2019 grant with a fair value of $752,207 made to Mr. LaRocca at the same time as other employees of the Company (not including the NEOs). Mr. LaRocca’s 2021 grant reflects the value of a full year’s award, similar to the other NEOs.
(2) Dr. Hollander did not receive long-term incentive awards in 2020 due to his start date of November 2019, at which time he received sign-on equity incentives with a fair value of $1,848,235 in accordance with his Employment Agreement.
* Percentage not meaningful.
Benefits
Our executives receive the Company’s standard employee benefits package, including health and disability insurance paid by the Company and are eligible to participate in the Company’s 401(k) plan, in each case, on the same basis as other employees.
Perquisites
We did not provide our NEOs with any perquisites during the fiscal year ended December 31, 2020.
Pension Benefits
Other than the Company’s 401(k) plan, we did not maintain any plan for our NEOs providing for payments or other benefits at, following, or in connection with, retirement during the fiscal year ended December 31, 2020.
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|
|
Aerie Pharmaceuticals, Inc.
|
59
|
2021 | Proxy Statement
|
|
|
|
|
|
|
|
|
|
|
|
COMPENSATION DISCUSSION & ANALYSIS
|
|
|
Nonqualified Deferred Compensation
We did not maintain any deferred compensation plans for our NEOs for the fiscal year ended December 31, 2020.
Stock Ownership Guidelines
In 2019, we adopted stock ownership guidelines for our Board and our executive officers. The purpose of these guidelines is to encourage meaningful ownership of our Company, and ensure that there is significant alignment between the interests of our executives, our Board of Directors and our stockholders. Under the policy the following ownership levels, expressed as a multiple of base salary or annual base retainer, must be met and maintained:
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|
|
|
|
POSITION
|
GUIDELINE
|
|
|
|
|
|
|
Chief Executive Officer
|
3x Annual Base Salary
|
|
|
Other Executive Officers
|
1x Annual Base Salary
|
|
|
Directors
|
3x Annual Base Retainer
|
|
Participants are expected to be in compliance with the guideline levels of ownership within five years of becoming subject to the policy. For the purposes of determining compliance, only the value of the shares owned outright, held in our equity incentive plans, or held in trust for the sole benefit of the participant will be counted. If a participant is not in compliance with the guidelines, the Compensation Committee may, among other remedies, require the participant to receive shares of the Company in lieu of earned cash, or enact other policies, based on relevant facts and circumstances.
Claw backs
In 2019, we adopted a “claw back” policy, which allows us to recoup incentive compensation paid to individual NEOs in the event that there is a material restatement of financial results due to fraud or intentional misconduct of such NEO.
Policy on Hedging, Pledging and Other Transactions
Our insider trading policy prohibits all members of the Board of Directors, employees, including executive officers, and our contractual workers from engaging in hedging or monetization transactions related to Company securities, including using financial instruments such as prepaid variable forwards, equity swaps, collars and exchange funds. Further, employees, members of the Board of Directors and contractual workers may not pledge Aerie stock as security for a loan without the prior written consent of the Chief Financial Officer or the General Counsel.
Employment Agreements with our Named Executive Officers
We believe that providing our NEOs market-competitive security protections in the event of certain termination scenarios serves as an important retention tool and ensures that our NEOs remain dedicated, motivated and focused on achieving the best results for our stockholders. To that end, we have entered into employment agreements with each of our NEOs (the “NEO Employment Agreements”). These agreements provide certain benefits upon termination of employment that we believe reinforce our pay-for-performance philosophy and reflect best governance practices.
The NEO Employment Agreements generally provide for base salary, a target annual bonus opportunity, certain employee benefits, severance upon qualifying terminations of employment (including in connection with a Change in Control as defined in the Company’s Amended and Restated 2013 Omnibus Incentive Plan) and restrictive covenants during employment and for specified periods following termination of employment. The general terms of the NEO Employment Agreements are described in more detail
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|
Aerie Pharmaceuticals, Inc.
|
60
|
2021 | Proxy Statement
|
|
|
|
|
|
|
|
|
|
|
|
COMPENSATION DISCUSSION & ANALYSIS
|
|
|
in the narrative disclosures following the Grants of Plan-Based Awards table of this Proxy Statement and the terms of the NEO Employment Agreements relating to the termination of an NEO’s employment, including in connection with a Change in Control, are described in more detail in the section titled “Potential Payments Upon Termination or Change in Control” of this Proxy Statement.
Tax and Accounting Considerations
The Compensation Committee considers tax and accounting implications in its executive compensation determinations, although in some cases, other important considerations may outweigh tax or accounting considerations, and the Compensation Committee maintains the flexibility to compensate its officers in accordance with the Company’s compensation philosophy.
Under Section 162(m) of the Code, as amended (“Section 162(m)”), the Company will generally not be entitled to a tax deduction for individual compensation over $1 million that is paid to, generally, the named executive officers, unless the compensation amounts are grandfathered under transition rules that apply to the amended Section 162(m). While the Committee will continue to consider the potential impact of the application of Section 162(m) on compensation for its named executive officers, it may approve compensation arrangements that will not be tax-deductible.
Compensation Risk Assessment
Our management and the Compensation Committee review our compensation practices and policies with regard to risk management. We have reviewed our programs and determined that there are no practices or policies that are likely to lead to excessive risk-taking or have a material adverse effect on the Company. Further, we identified the following policies and practices that serve to mitigate risk:
•High level of executive equity ownership to prevent short-term risk taking;
•Long-term incentive grants with multi-year vesting;
•Stock ownership requirements;
•Incentive claw back policy;
•Balance between goals and objectives of short- and long-term incentive compensation plans;
•Proper administrative and oversight controls; and
•Key compensation governance attributes, as discussed above.
Compensation Committee Report
We, the Compensation Committee of the Board of Directors, met with management to review and discuss the Compensation Discussion and Analysis set forth above, and based upon the review and discussions, we recommended to the Board that the Compensation Discussion and Analysis be included in this report.
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|
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|
|
Aerie Pharmaceuticals, Inc. Compensation Committee
|
|
|
|
Benjamin F. McGraw, III, Pharm.D., Chair
|
|
Gerald D. Cagle, Ph.D.
|
|
Richard Croarkin
|
|
Peter J. McDonnell, M.D.
|
|
|
|
|
|
|
|
|
|
|
|
Aerie Pharmaceuticals, Inc.
|
61
|
2021 | Proxy Statement
|
|
|
|
|
|
|
|
|
|
|
|
COMPENSATION DISCUSSION & ANALYSIS
|
|
|
Summary Compensation Table for 2020
The following table sets forth the portion of compensation paid to the NEOs that is attributable to services performed during the fiscal years ended December 31, 2020, 2019 and 2018.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NAME AND PRINCIPAL POSITION
|
|
YEAR
|
|
SALARY
($)
|
|
NON-EQUITY INCENTIVE PLAN COMPENSATION
($)(1)
|
|
STOCK AWARDS
($)(2)
|
|
OPTION AWARDS
($)(3)
|
|
ALL OTHER COMPENSATION
($)(4)
|
|
TOTAL
($)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Vicente Anido, Jr., Ph.D.
|
|
2020
|
|
795,675
|
|
521,326
|
|
593,040
|
|
1,710,048
|
|
—
|
|
3,620,089
|
|
Chief Executive Officer and Chairman of the Board
|
|
2019
|
|
772,500
|
|
362,303
|
|
1,094,538
|
|
3,300,325
|
|
—
|
|
5,529,666
|
|
|
|
2018
|
|
750,000
|
|
409,500
|
|
1,360,866
|
|
4,254,360
|
|
—
|
|
6,774,726
|
|
Richard J. Rubino
|
|
2020
|
|
476,890
|
|
229,000
|
|
248,865
|
|
711,494
|
|
11,922
|
|
1,678,171
|
Chief Financial Officer,
Secretary and Treasurer
|
|
2019
|
|
463,000
|
|
145,799
|
|
459,428
|
|
1,385,604
|
|
11,575
|
|
2,465,406
|
|
|
|
2018
|
|
450,000
|
|
175,500
|
|
571,218
|
|
1,785,832
|
|
5,625
|
|
2,988,175
|
|
Thomas A. Mitro
|
|
2020
|
|
501,000
|
|
238,000
|
|
296,520
|
|
855,189
|
|
8,683
|
|
1,899,392
|
President and Chief
Operating Officer
|
|
2019
|
|
473,800
|
|
103,000
|
|
550,348
|
|
1,659,848
|
|
5,980
|
|
2,792,976
|
|
|
|
2018
|
|
460,000
|
|
161,000
|
|
684,262
|
|
2,139,054
|
|
—
|
|
3,444,316
|
|
Casey C. Kopczynski, Ph.D.
|
|
2020
|
|
448,050
|
|
209,690
|
|
211,800
|
|
615,833
|
|
7,841
|
|
1,493,214
|
|
Chief Scientific Officer
|
|
2019
|
|
435,000
|
|
139,896
|
|
344,560
|
|
1,038,845
|
|
7,613
|
|
1,965,914
|
|
|
|
2018
|
|
415,000
|
|
161,850
|
|
428,400
|
|
1,339,321
|
|
1,183
|
|
2,345,754
|
|
John W. LaRocca, Esq.
|
|
2020
|
|
442,900
|
|
207,300
|
|
74,130
|
|
212,087
|
|
8,663
|
|
945,080
|
General Counsel and
Assistant Secretary
|
|
2019
|
|
430,000
|
|
136,848
|
|
493,250
|
|
1,454,807
|
|
9,454
|
|
2,524,359
|
|
|
|
2018
|
|
361,141
|
|
153,700
|
|
975,600
|
|
2,677,383
|
|
6,225
|
|
4,174,049
|
|
David A. Hollander, M.D., M.B.A.(5)
|
|
2020
|
|
441,917
|
|
206,850
|
|
—
|
|
—
|
|
—
|
|
648,767
|
Chief Research and
Development Officer
|
|
2019
|
|
61,894
|
|
185,000
|
|
476,250
|
|
1,371,985
|
|
—
|
|
2,095,129
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)Represents bonuses payable in accordance with the employment agreement of each respective NEO, as further described below in the section entitled “NEO Employment Agreements.”
(2)Amounts reflected in this column represent the grant date fair value of restricted stock awards. The grant date fair value is measured based on the closing price of our common stock on the date of grant in accordance with Financial Accounting Standards Board’s Accounting Standards Codification Topic 718: Compensation—Stock Compensation (“ASC 718”). The valuation methodology and assumptions used in determining such amounts are described in the notes to our audited consolidated financial statements included in our Form 10-K filed with the SEC on February 26, 2021.
(3)Amounts reflected in this column represent the grant date fair value of options to purchase common stock, computed in accordance with ASC 718. The valuation methodology and assumptions used in determining such amounts are described in the notes to our audited consolidated financial statements included in our Form 10-K filed with the SEC on February 26, 2021.
(4)Amounts reflected in this column represent matching contributions under the Company’s 401(k) retirement plan paid during the fiscal year.
(5)Amounts reflected in the “Salary” and “Non-Equity Incentive Plan Compensation” columns reflect Dr. Hollander’s 2020 mid-year salary increase. Further, Dr. Hollander did not receive long-term incentive awards in 2020 due to his start date of November 2019, at which time he received sign-on incentives in accordance with his Employment Agreement.
|
|
|
|
|
|
|
|
|
|
|
Aerie Pharmaceuticals, Inc.
|
62
|
2021 | Proxy Statement
|
|
|
|
|
|
|
|
|
|
|
|
COMPENSATION DISCUSSION & ANALYSIS
|
|
|
Grants of Plan-Based Awards in 2020
The following table summarizes the awards granted to each of the NEOs during the fiscal year ended December 31, 2020.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ESTIMATED FUTURE PAYOUTS UNDER NON-EQUITY INCENTIVE PLAN AWARDS(1)
|
|
ALL OTHER STOCK AWARDS: NUMBER OF SHARES OF STOCK OF UNITS(2)
|
ALL OTHER OPTION AWARDS: NUMBER OF SECURITIES UNDERLYING OPTIONS(3)
|
EXERCISE OR BASE PRICE OF OPTION AWARDS
($/Shares)(4)
|
|
GRANT DATE FAIR VALUE OF STOCK AND OPTION AWARDS($)(5)
|
|
|
|
|
|
|
|
|
NAME
|
|
GRANT DATE
|
|
THRESHOLD ($)
|
TARGET
($)
|
MAXIMUM ($)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Vicente Anido, Jr., Ph.D.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Performance Bonus
|
|
—
|
|
—
|
556,973
|
1,113,946
|
|
—
|
—
|
—
|
|
—
|
|
Stock Option Award
|
|
2/6/2020
|
|
—
|
—
|
—
|
|
—
|
125,000
|
21.18
|
|
1,710,048
|
|
Restricted Stock Award
|
|
2/6/2020
|
|
—
|
—
|
—
|
|
28,000
|
—
|
—
|
|
593,040
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Richard J. Rubino
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Performance Bonus
|
|
—
|
|
—
|
238,445
|
476,890
|
|
—
|
—
|
—
|
|
—
|
|
Stock Option Award
|
|
2/6/2020
|
|
—
|
—
|
—
|
|
—
|
52,000
|
21.18
|
|
711,494
|
|
Restricted Stock Award
|
|
2/6/2020
|
|
—
|
—
|
—
|
|
11,750
|
—
|
—
|
|
248,865
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Thomas A. Mitro
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Performance Bonus
|
|
—
|
|
—
|
250,500
|
501,000
|
|
—
|
—
|
—
|
|
—
|
|
Stock Option Award
|
|
2/6/2020
|
|
—
|
—
|
—
|
|
—
|
62,500
|
21.18
|
|
855,189
|
|
Restricted Stock Award
|
|
2/6/2020
|
|
—
|
—
|
—
|
|
14,000
|
—
|
—
|
|
296,520
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Casey C. Kopczynski, Ph.D.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Performance Bonus
|
|
—
|
|
—
|
224,025
|
448,050
|
|
—
|
—
|
—
|
|
—
|
|
Stock Option Award
|
|
2/6/2020
|
|
—
|
—
|
—
|
|
—
|
45,000
|
21.18
|
|
615,833
|
|
Restricted Stock Award
|
|
2/6/2020
|
|
—
|
—
|
—
|
|
10,000
|
—
|
—
|
|
211,800
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John W. LaRocca, Esq.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Performance Bonus
|
|
—
|
|
—
|
221,450
|
442,900
|
|
—
|
—
|
—
|
|
—
|
|
Stock Option Award
|
|
2/6/2020
|
|
—
|
—
|
—
|
|
—
|
15,500
|
21.18
|
|
212,087
|
|
Restricted Stock Award
|
|
2/6/2020
|
|
—
|
—
|
—
|
|
3,500
|
—
|
—
|
|
74,130
|
|
David A. Hollander, M.D., M.B.A.(6)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Performance Bonus
|
|
—
|
|
—
|
220,958
|
441,916
|
|
—
|
—
|
—
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)The dollar amounts set forth in the target column are calculated in accordance with the employee agreement of the respective NEO, as further described below in the section entitled “NEO Employment Agreements.”
(2)Represents a grant of restricted stock awards for all our NEOs granted under the Aerie Pharmaceuticals, Inc. Second Amended and Restated Omnibus Incentive Plan (the “Amended and Restated Equity Plan”). All restricted stock awards vest in equal annual installments over a four-year period from the grant date of February 6, 2020, such that the shares of restricted stock will be fully vested on February 6, 2024.
(3)Represents stock option awards granted under the Amended and Restated Equity Plan. All stock option awards have a four-year vesting schedule, vesting equally over 48 months from the grant date of February 6, 2020, such that the option will be fully vested on February 6, 2024. All stock option awards have a 10-year term.
(4)The exercise prices reflect the closing price of our stock on the grant date.
(5)Amounts reflected in this column represent the grant date fair value of stock awards and option awards computed in accordance with ASC 718. The valuation methodology and assumptions used in determining such amounts are described in the notes to our audited consolidated financial statements included in our Form 10-K filed with the SEC on February 26, 2021.
(6)Dr. Hollander did not receive long-term incentive awards in 2020 due to his start date of November 2019, at which time he received sign-on incentives in accordance with his Employment Agreement.
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Aerie Pharmaceuticals, Inc.
|
63
|
2021 | Proxy Statement
|
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|
|
COMPENSATION DISCUSSION & ANALYSIS
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|
NEO Employment Agreements
We have entered into employment agreements with each of our NEOs and believe these agreements have helped create stability for our management team. These agreements provide for the basic terms of their employment, as described below. In addition, each agreement provides for severance upon certain qualifying terminations as described below in the section “—Potential Payments upon Termination or Change-in-Control.”
Chief Executive Officer (Vicente Anido, Jr., Ph.D.)
On July 25, 2017, we entered into an amended and restated employment agreement with Dr. Anido which provides for the following material terms:
•an initial term expired on July 25, 2020, with automatic extensions for successive one (1) year periods thereafter, unless either party provides written notice of non-renewal at least 180 days prior to the end of the then applicable term; and
•payment of base salary ($795,675 per annum as of February 6, 2020) and eligibility to receive a target annual bonus equal to a percentage of his base salary (for 2020, 70%), with the actual amount of the annual bonus to be determined by our Board based on achievement of the relevant performance goals, as described above in the section “—Annual Bonus (Non-Equity Incentive Compensation Plan”).
After an overall review of Dr. Anido’s compensation package, on February 4, 2021, our Board approved an increase in Dr. Anido’s base salary to $811,589 while keeping his target annual bonus percentage consistent with the percentage set for 2020. Dr. Anido’s base salary may be increased annually at the discretion of the Board and may be decreased only in connection with an overall reduction in executive officer salaries.
Chief Financial Officer (Richard J. Rubino)
On March 6, 2017, we entered into an amendment to the amended and restated employment agreement with Mr. Rubino, effective as of December 18, 2013 which collectively provides for the following material terms:
•Mr. Rubino will continue to serve as our Chief Financial Officer for successive one (1) year periods which will renew automatically on December 18th of each year unless either party provides 90 days’ notice of non-renewal; and
•payment of base salary ($476,890 per annum as of February 6, 2020) and eligibility to receive a target annual bonus equal to a percentage of his base salary (for 2020, 50%), with the actual amount of the annual bonus to be determined by our Board based on achievement of the relevant performance goals, as described above in the section “—Annual Bonus (Non-Equity Incentive Compensation Plan”).
After an overall review of Mr. Rubino’s compensation package, on February 4, 2021, our Board approved an increase in Mr. Rubino’s base salary to $486,430 while keeping his target annual bonus percentage consistent with the percentage set for 2020. Mr. Rubino’s base salary may be increased annually at the discretion of the Board, and may be decreased only in connection with an overall reduction in executive officer salaries.
President and Chief Operating Officer (Thomas A. Mitro)
On March 6, 2017, we entered into an amendment to the amended and restated employment agreement with Mr. Mitro, effective as of December 18, 2013 which collectively provides for the following material terms:
•Mr. Mitro will continue to serve as our President and Chief Operating Officer for successive one (1) year periods which renew automatically on December 18 of each year unless either party provides 90 days’ notice of non-renewal; and
•payment of base salary ($501,000 per annum as of February 6, 2020) and eligibility to receive a target annual bonus equal to a percentage of his base salary (for 2020, 50%), with the actual amount of the annual bonus to be determined by our Board based on achievement of the relevant performance goals, as described above in the section “—Annual Bonus (Non-Equity Incentive Compensation Plan”).
After an overall review of Mr. Mitro’s compensation package, on February 4, 2021, our Board approved an increase in Mr. Mitro’s base salary to $511,020 while keeping his target annual bonus percentage consistent with the percentage set for 2020. Mr. Mitro’s
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Aerie Pharmaceuticals, Inc.
|
64
|
2021 | Proxy Statement
|
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|
|
COMPENSATION DISCUSSION & ANALYSIS
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|
base salary may be increased annually at the discretion of the Board, and may be decreased only in connection with an overall reduction in executive officer salaries.
Chief Scientific Officer (Casey C. Kopczynski, Ph.D.)
On March 6, 2017, we entered into an amendment to the employment agreement with Dr. Kopczynski, dated December 18, 2013 which collectively provides for the following material terms:
•Dr. Kopczynski will continue to serve as our Chief Scientific Officer for successive one (1) year periods which renew automatically on December 18 of each year unless either party provides 90 days’ notice of non-renewal; and
•payment of base salary ($448,050 per annum as of February 6, 2020) and eligibility to receive a target annual bonus equal to a percentage of his base salary (for 2020, 50%), with the actual amount of the annual bonus to be determined by our Board based on achievement of the relevant performance goals, as described above in the section “—Annual Bonus (Non-Equity Incentive Compensation Plan”).
After an overall review of Dr. Kopczynski’s compensation package, on February 4, 2021, our Board approved an increase in Dr. Kopczynski’s base salary to $457,010 while keeping his target annual bonus percentage consistent with the percentage set for 2020. Dr. Kopczynski’s base salary may be increased annually at the discretion of the Board, and may be decreased only in connection with an overall reduction in executive officer salaries.
General Counsel and Assistant Secretary (John W. LaRocca, Esq.)
On January 19, 2018, we entered into an employment agreement with Mr. LaRocca which provides for the following material terms:
•an initial term that expired on February 19, 2021, with automatic extensions for successive one (1) year periods thereafter, unless either party provides written notice of non-renewal at least 90 days prior to the end of the applicable term; and
•payment of base salary ($442,900 per annum as of February 6, 2020) and eligibility to receive a target annual bonus equal to a percentage of his base salary (for 2020, 50%), with the actual amount of the annual bonus to be determined by our Board based on achievement of the relevant performance goals, as described above in the section “—Annual Bonus (Non-Equity Incentive Compensation Plan”).
After an overall review of Mr. LaRocca’s compensation package, on February 4, 2021, our Board approved an increase in Mr. LaRocca’s base salary to $451,760 while keeping his target annual bonus percentage consistent with the percentage set for 2020. Mr. LaRocca’s base salary may be increased annually at the discretion of the Board, and may be decreased only in connection with an overall reduction in executive officer salaries.
Chief Research and Development Officer (David A. Hollander, M.D., M.B.A.)
On October 7, 2019, we entered into an employment agreement with Dr. Hollander which provides for the following material terms:
•an initial term commenced on November 11, 2019 and will expire on November 11, 2022, with automatic extensions for successive one (1) year periods thereafter, unless either party provides written notice of non-renewal at least 90 days prior to the end of the applicable term;
•a guaranteed bonus payment of $185,000 in respect of calendar year 2019, which amount must be returned to the Company in full in the event Dr. Hollander voluntary leaves or is terminated for cause within two years of the payment date (which occurred in February 2020); and
•payment of base salary ($450,000 per annum as of May 27, 2020) and eligibility to receive a target annual bonus equal to a percentage of his base salary (for 2020, 50%), with the actual amount of the annual bonus to be determined by our Board based on achievement of the relevant performance goals, as described above in the section “—Annual Bonus (Non-Equity Incentive Compensation Plan”).
After an overall review of Dr. Hollander’s compensation package, on February 4, 2021, our Board approved an increase in Dr. Hollander’s base salary to $459,000 while keeping his target annual bonus percentage consistent with the percentage set for 2020.
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Aerie Pharmaceuticals, Inc.
|
65
|
2021 | Proxy Statement
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|
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|
COMPENSATION DISCUSSION & ANALYSIS
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|
Dr. Hollander’s base salary may be increased annually at the discretion of the Board, and may be decreased only in connection with an overall reduction in executive officer salaries.
All NEOs — Restrictive Covenants
In addition, each NEO employment agreement provides that the NEO, during the employment term and thereafter, has an obligation of confidentiality and non-disclosure in regard to any confidential and proprietary information owned by, or received by or on behalf of, the Company or any of its affiliates. Additionally, each NEO employment agreement provides that during the employment term and for a period of 12 months thereafter, the NEO shall not, directly or indirectly, without the Company’s prior written consent (a) hire, contact, induce or solicit for employment any person who is, or within six months prior to the date of such hiring, contacting, inducing or soliciting was, an employee of the Company or any of its affiliates, or (b) induce or solicit any customer, client or vendor of, or other person having a business relationship with, the Company or any of its affiliates to terminate its relationship or otherwise cease doing business in whole or in part with the Company or any of its affiliates, or interfere with any relationship between the Company or any of its affiliates and any of their respective customers, clients, vendors or any other business contacts.
Outstanding Equity Awards at 2020 Fiscal Year-End
The following table provides information concerning outstanding equity awards for each of our NEOs as of December 31, 2020. As of December 31, 2020, the fair market value of a share of our common stock was $13.51.
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NAME
|
|
OPTION AWARDS
|
|
STOCK AWARDS
|
|
|
NUMBER OF SECURITIES UNDERLYING UNEXERCISED OPTIONS EXERCISABLE
(#)
|
|
NUMBER OF SECURITIES UNDERLYING UNEXERCISED OPTIONS UNEXERCISABLE
(#)
|
|
|
OPTION EXERCISE PRICE ($)
|
|
OPTION EXPIRATION DATE
|
|
NUMBER OF SHARES OR UNITS OF STOCK THAT HAVE NOT VESTED
(#)
|
|
|
MARKET VALUE OF SHARES OR UNITS OF STOCK THAT HAVE NOT VESTED
($)
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|
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|
|
|
|
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|
|
|
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|
Vicente Anido, Jr., Ph.D.
|
|
846,329
|
|
—
|
(1)
|
|
3.15
|
|
9/12/2023
|
|
—
|
|
|
—
|
|
|
|
300,000
|
|
—
|
(1)
|
|
20.70
|
|
3/13/2024
|
|
—
|
|
|
—
|
|
|
|
133,125
|
|
—
|
(1)
|
|
28.03
|
|
2/25/2025
|
|
—
|
|
|
—
|
|
|
|
150,504
|
|
—
|
(1)
|
|
16.69
|
|
2/24/2026
|
|
—
|
|
|
—
|
|
|
|
149,048
|
|
6,480
|
(2)
|
|
44.25
|
|
2/23/2027
|
|
—
|
|
|
—
|
|
|
|
81,004
|
|
33,354
|
(3)
|
|
53.55
|
|
2/8/2028
|
|
—
|
|
|
—
|
|
|
|
52,414
|
|
61,944
|
(4)
|
|
43.07
|
|
2/7/2029
|
|
—
|
|
|
—
|
|
|
|
26,042
|
|
98,958
|
(5)
|
|
21.18
|
|
2/6/2030
|
|
—
|
|
|
—
|
|
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
4,320
|
(6)
|
|
58,363
|
|
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
12,706
|
(7)
|
|
171,658
|
|
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
19,060
|
(8)
|
|
257,501
|
|
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
28,000
|
(9)
|
|
378,280
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
|
|
|
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|
|
Richard J. Rubino
|
|
174,939
|
|
—
|
(1)
|
|
2.90
|
|
10/15/2022
|
|
—
|
|
|
—
|
|
|
|
25,000
|
|
—
|
(1)
|
|
3.15
|
|
9/12/2023
|
|
—
|
|
|
—
|
|
|
|
89,000
|
|
—
|
(1)
|
|
20.70
|
|
3/13/2024
|
|
—
|
|
|
—
|
|
|
|
54,375
|
|
—
|
(1)
|
|
28.03
|
|
2/25/2025
|
|
—
|
|
|
—
|
|
|
|
60,000
|
|
—
|
(1)
|
|
16.69
|
|
2/24/2026
|
|
—
|
|
|
—
|
|
|
|
41,227
|
|
1,792
|
(2)
|
|
44.25
|
|
2/23/2027
|
|
—
|
|
|
—
|
|
|
|
34,000
|
|
14,000
|
(3)
|
|
53.55
|
|
2/8/2028
|
|
—
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
Aerie Pharmaceuticals, Inc.
|
66
|
2021 | Proxy Statement
|
|
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|
|
|
|
|
|
|
|
|
COMPENSATION DISCUSSION & ANALYSIS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
22,000
|
|
26,000
|
(4)
|
|
43.07
|
|
2/7/2029
|
|
—
|
|
|
—
|
|
|
|
10,833
|
|
41,167
|
(5)
|
|
21.18
|
|
2/6/2030
|
|
—
|
|
|
—
|
|
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
1,195
|
(6)
|
|
16,144
|
|
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
5,333
|
(7)
|
|
72,049
|
|
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
8,000
|
(8)
|
|
108,080
|
|
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
11,750
|
(9)
|
|
158,743
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Thomas A. Mitro
|
|
126,984
|
|
—
|
(1)
|
|
3.15
|
|
8/26/2023
|
|
—
|
|
|
—
|
|
|
|
63,499
|
|
—
|
(1)
|
|
3.15
|
|
9/12/2023
|
|
—
|
|
|
—
|
|
|
|
126,000
|
|
—
|
(1)
|
|
20.70
|
|
3/13/2024
|
|
—
|
|
|
—
|
|
|
|
71,250
|
|
—
|
(1)
|
|
28.03
|
|
2/25/2025
|
|
—
|
|
|
—
|
|
|
|
71,250
|
|
—
|
(1)
|
|
16.69
|
|
2/24/2026
|
|
—
|
|
|
—
|
|
|
|
76,109
|
|
3,309
|
(2)
|
|
44.25
|
|
2/23/2027
|
|
—
|
|
|
—
|
|
|
|
40,729
|
|
16,771
|
(3)
|
|
53.55
|
|
2/8/2028
|
|
—
|
|
|
—
|
|
|
|
26,354
|
|
31,146
|
(4)
|
|
43.07
|
|
2/7/2029
|
|
—
|
|
|
—
|
|
|
|
13,021
|
|
49,479
|
(5)
|
|
21.18
|
|
2/6/2030
|
|
—
|
|
|
—
|
|
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
2,206
|
(6)
|
|
29,803
|
|
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
6,389
|
(7)
|
|
86,315
|
|
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
9,583
|
(8)
|
|
129,466
|
|
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
14,000
|
(9)
|
|
189,140
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Casey C. Kopczynski, Ph.D.
|
|
60,651
|
|
—
|
(1)
|
|
0.20
|
|
4/28/2021
|
|
—
|
|
|
—
|
|
|
|
25,000
|
|
—
|
(1)
|
|
3.15
|
|
9/12/2023
|
|
—
|
|
|
—
|
|
|
|
121,000
|
|
—
|
(1)
|
|
20.70
|
|
3/13/2024
|
|
—
|
|
|
—
|
|
|
|
43,125
|
|
—
|
(1)
|
|
28.03
|
|
2/25/2025
|
|
—
|
|
|
—
|
|
|
|
51,000
|
|
—
|
(1)
|
|
16.69
|
|
2/24/2026
|
|
—
|
|
|
—
|
|
|
|
38,054
|
|
1,655
|
(2)
|
|
44.25
|
|
2/23/2027
|
|
—
|
|
|
—
|
|
|
|
25,500
|
|
10,500
|
(3)
|
|
53.55
|
|
2/8/2028
|
|
—
|
|
|
—
|
|
|
|
16,500
|
|
19,500
|
(4)
|
|
43.07
|
|
2/7/2029
|
|
—
|
|
|
—
|
|
|
|
9,375
|
|
35,625
|
(5)
|
|
21.18
|
|
2/6/2030
|
|
—
|
|
|
—
|
|
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
1,103
|
(6)
|
|
14,902
|
|
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
4,000
|
(7)
|
|
54,040
|
|
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
6,000
|
(8)
|
|
81,060
|
|
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
10,000
|
(9)
|
|
135,100
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John W. LaRocca, Esq.
|
|
49,583
|
|
20,417
|
(10)
|
|
54.90
|
|
2/19/2028
|
|
—
|
|
|
—
|
|
|
|
14,208
|
|
16,792
|
(4)
|
|
43.07
|
|
2/7/2029
|
|
|
|
|
|
|
|
|
12,000
|
|
24,000
|
(11)
|
|
23.97
|
|
8/14/2029
|
|
|
|
|
|
|
|
|
3,229
|
|
12,271
|
(5)
|
|
21.18
|
|
2/6/2030
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9,000
|
(12)
|
|
121,590
|
|
|
|
|
|
|
|
|
|
|
|
|
5,250
|
(8)
|
|
70,928
|
|
|
|
|
|
|
|
|
|
|
|
|
6,000
|
(13)
|
|
81,060
|
|
|
|
|
|
|
|
|
|
|
|
|
3,500
|
(9)
|
|
47,285
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Aerie Pharmaceuticals, Inc.
|
67
|
2021 | Proxy Statement
|
|
|
|
|
|
|
|
|
|
|
|
COMPENSATION DISCUSSION & ANALYSIS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
David A. Hollander, M.D., M.B.A.
|
|
29,792
|
|
80,208
|
(14)
|
|
19.05
|
|
11/11/2029
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
18,750
|
(15)
|
|
253,313
|
(1)This option was fully vested as of December 31, 2020.
(2)This option was granted on February 23, 2017. The option vests ratably on each of the 48 successive monthly anniversaries of February 23, 2017.
(3)This option was granted on February 8, 2018. The option vests ratably on each of the 48 successive monthly anniversaries of February 8, 2018.
(4)This option was granted on February 7, 2019. The option vests ratably on each of the 48 successive monthly anniversaries of February 7, 2019.
(5)This option was granted on February 6, 2020. The option vests ratably on each of the 48 successive monthly anniversaries of February 6, 2020.
(6)These shares of restricted stock were granted on February 23, 2017 and vest in four equal annual installments on successive anniversaries of February 23, 2017.
(7)These shares of restricted stock were granted on February 8, 2018 and vest in four equal annual installments on successive anniversaries of February 8, 2018.
(8)These shares of restricted stock were granted on February 7, 2019 and vest in four equal annual installments on successive anniversaries of February 7, 2019.
(9)These shares of restricted stock were granted on February 6, 2020 and vest in four equal annual installments on successive anniversaries of February 6, 2020.
(10)This option was granted on February 19, 2018. The option vests 25% on February 19, 2019 and 75% ratably on the following 36 monthly anniversaries of February 19, 2018.
(11)This option was granted on August 14, 2019. The option vests ratably on each of the 48 successive monthly anniversaries of August 14, 2019.
(12)These shares of restricted stock were granted on February 19, 2018 and vest in four equal annual installments on successive anniversaries of February 19, 2018.
(13)These shares of restricted stock were granted on August 14, 2019 and vest in four equal annual installments on successive anniversaries of August 14, 2019.
(14)This option was granted on November 11, 2019. The option vests 25% on November 11, 2020 and 75% ratably on the following 36 monthly anniversaries of November 11, 2019.
(15)These shares of restricted stock were granted on November 11, 2019 and vest in four equal annual installments on successive anniversaries of November 11, 2019.
Option Exercises and Stock Vested
The following table summarizes stock vested with respect to each of the NEOs during the fiscal year ended December 31, 2020. None of the NEOs exercised any stock options in 2020.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
STOCK AWARDS
|
|
|
|
NUMBER OF SHARES ACQUIRED ON VESTING (#)(1)
|
|
VALUE REALIZED ON VESTING ($)(2)
|
|
NAME
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Vicente Anido, Jr., Ph.D.
|
|
39,384
|
|
719,733
|
|
Richard J. Rubino
|
|
15,809
|
|
286,493
|
|
Thomas A. Mitro
|
|
18,344
|
|
339,458
|
|
Casey C. Kopczynski, Ph.D.
|
|
7,353
|
|
151,449
|
|
John W. LaRocca, Esq.
|
|
8,250
|
|
148,893
|
|
David A. Hollander, M.D., M.B.A.
|
|
6,250
|
|
81,563
|
(1)This column represents the number of shares of common stock received upon vesting of restricted stock during the 2020 fiscal year.
(2)The amounts in this column represent the aggregate dollar value realized upon vesting of restricted stock, based on the market price of our common stock on the date of vesting.
|
|
|
|
|
|
|
|
|
|
|
Aerie Pharmaceuticals, Inc.
|
68
|
2021 | Proxy Statement
|
|
|
|
|
|
|
|
|
|
|
|
COMPENSATION DISCUSSION & ANALYSIS
|
|
|
Potential Payments Upon Termination or Change in Control
As discussed below, our NEOs may receive various forms of compensation or benefits in the event of a termination of his employment under certain circumstances.
Severance Entitlements Under Employment Agreements
Chief Executive Officer (Anido)
In the event of a termination of Dr. Anido’s employment by the Company without Cause or by Dr. Anido for Good Reason (such terms are defined in his employment agreement), Dr. Anido will be entitled to, subject to his execution and delivery of an effective release of claims against the Company, the following:
•6 months of base salary paid in a lump sum;
•continued payment of Dr. Anido’s base salary at the rate in effect at the time of termination for a period of (in each case with the payments beginning six months following the termination date):
◦6 months or
◦18 months if such termination of employment occurs within 12 months following a Change Control (as defined in the Amended and Restated Equity Plan);
•Company-paid health insurance continuation coverage less the amount payable by an active employee for such coverage, for a period of:
◦12 months or
◦24 months if such termination of employment occurs within 12 months following a Change in Control;
•payment of the greater of (x) the target annual performance bonus for the year in which termination occurs and (y) the average of the annual performance bonuses received by Dr. Anido for the three years immediately preceding the date of termination.
NEOs other than the Chief Executive Officer (Rubino, Mitro, LaRocca, Kopczynski and Hollander)
With respect to each of Messrs. Rubino, Mitro and LaRocca and Dr. Kopczynski and Dr. Hollander, in the event of a termination of the NEO’s employment by the Company without Cause or by the NEO for Good Reason (as such terms are defined in the applicable employment agreement), the NEO will be entitled to, subject to his execution and delivery of an effective release of claims against the Company:
•continued payment of the NEO’s base salary at the rate in effect at the time of termination for a period of:
◦12 months or
◦18 months if such termination of employment occurs in connection with or within 12 months following a Change Control;
•Company-paid health insurance continuation coverage less the amount payable by an active employee for such coverage, for a period of:
◦12 months or
◦18 months if such termination of employment occurs in connection with or within 12 months following a Change in Control;
•if the termination occurs in connection with or within 12 months following a Change in Control, an amount equal to 1.5 times the greater of (x) the target annual performance bonus for the year in which termination occurs and (y) the average of the annual performance bonuses received by the NEO for the two years immediately preceding the date of termination
|
|
|
|
|
|
|
|
|
|
|
Aerie Pharmaceuticals, Inc.
|
69
|
2021 | Proxy Statement
|
|
|
|
|
|
|
|
|
|
|
|
COMPENSATION DISCUSSION & ANALYSIS
|
|
|
Additional Benefits for all NEOs
Post-Termination Exercise Period.
For each of our NEOs, their employment agreement provides that in the event the NEO’s employment is terminated by the Company with or without Cause, or he resigns for or without Good Reason, unless treatment more favorable to the NEO is provided in the applicable equity plan or award agreement, he will have a post-termination exercise period of 90 days during which he may exercise the portion of his options to purchase shares of common stock of the Company that was vested as of the termination date.
280G Parachute Payments.
Each of the NEO employment agreement provides that to the extent any of the payments or benefits provided or to be provided by the Company or its affiliates to the NEO pursuant to the terms of their employment agreement or otherwise would constitute “parachute payments” (“Parachute Payments”) within the meaning of Section 280G of the Code, and would be subject to the excise tax imposed under Section 4999 of the Code (the “Excise Tax”), then such Parachute Payments will be payable either (1) in full or (2) as to such lesser amount which would result in no portion of such Parachute Payments being subject to the Excise Tax, whichever results in the NEO receiving the highest after-tax amount. If such a reduction in Parachute Payments is necessary, the reduction will occur in the manner that results in the greatest economic benefit to the NEO. The NEO Employment Agreements do not provide for excise tax gross-ups.
Equity Arrangements
In addition, pursuant to the terms of each NEO’s stock option awards and restricted stock awards granted under the Amended and Restated Equity Plan, equity awards held by the executives will be treated as set forth below:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TERMINATION EVENT
|
OPTIONS
|
RESTRICTED STOCK
|
|
|
|
|
|
|
|
Termination of employment without Cause:
|
No accelerated vesting.
|
No accelerated vesting and no proration of the awards.
|
|
|
Termination of employment due to death or disability:
|
No accelerated vesting.
|
No accelerated vesting and no proration of the awards.
|
|
|
Termination of employment in connection with or within 12 months following a Change in Control:
|
Unvested awards will become fully vested.
|
Unvested awards will become fully vested.
|
|
The payments and benefits to which our NEOs would be entitled in the event of certain termination of employment events, or as a result of a Change in Control, are set forth in the table below, following a description of these payments and benefits, assuming the triggering event occurred on December 31, 2020. For this purpose, we have assumed a value of $13.51 per share of our common stock, the closing price of our common stock on December 31, 2020. The actual amounts payable can only be determined at the time of such executive’s separation from the Company.
|
|
|
|
|
|
|
|
|
|
|
Aerie Pharmaceuticals, Inc.
|
70
|
2021 | Proxy Statement
|
|
|
|
|
|
|
|
|
|
|
|
COMPENSATION DISCUSSION & ANALYSIS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EXECUTIVE
|
|
QUALIFYING TERMINATION (NOT IN CONNECTION WITH A CHANGE IN CONTROL) ($)(1)
|
|
QUALIFYING TERMINATION IN CONNECTION WITH A CHANGE IN CONTROL ($)(2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Vicente Anido, Jr., Ph.D.
|
|
|
|
|
|
Lump sum payment & Salary Continuation
|
|
795,675
|
|
1,591,350
|
|
Benefits Continuation
|
|
20,472
|
|
42,583
|
|
Payment in respect of Bonus
|
|
556,973
|
|
—
|
|
Value of Equity Acceleration
|
|
—
|
|
865,802
|
|
Total
|
|
1,373,120
|
|
2,499,735
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Richard J. Rubino
|
|
|
|
|
|
Salary Continuation
|
|
476,890
|
|
715,335
|
|
Benefits Continuation
|
|
20,472
|
|
31,528
|
|
Payment in respect of Bonus
|
|
—
|
|
357,668
|
|
Value of Equity Acceleration
|
|
—
|
|
355,016
|
|
Total
|
|
497,362
|
|
1,459,547
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Thomas A. Mitro
|
|
|
|
|
|
Salary Continuation
|
|
501,000
|
|
751,500
|
|
Benefits Continuation
|
|
20,472
|
|
31,528
|
|
Payment in respect of Bonus
|
|
—
|
|
375,750
|
|
Value of Equity Acceleration
|
|
—
|
|
434,725
|
|
Total
|
|
521,472
|
|
1,593,503
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Casey C. Kopczynski, Ph.D.
|
|
|
|
|
|
Salary Continuation
|
|
448,050
|
|
672,075
|
|
Benefits Continuation
|
|
30,371
|
|
46,771
|
|
Payment in respect of Bonus
|
|
—
|
|
336,038
|
|
Value of Equity Acceleration
|
|
—
|
|
285,102
|
|
Total
|
|
478,421
|
|
1,339,986
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John W. LaRocca, Esq.
|
|
|
|
|
|
Salary Continuation
|
|
442,900
|
|
664,350
|
|
Benefits Continuation
|
|
30,371
|
|
46,771
|
|
Payment in respect of Bonus
|
|
—
|
|
332,175
|
|
Value of Equity Acceleration
|
|
—
|
|
320,863
|
|
Total
|
|
473,271
|
|
1,364,159
|
|
|
|
|
|
|
|
|
|
|
|
|
|
David A. Hollander, M.D., M.B.A.
|
|
|
|
|
|
Salary Continuation
|
|
450,000
|
|
675,000
|
|
Benefits Continuation
|
|
30,371
|
|
46,771
|
|
Payment in respect of Bonus
|
|
—
|
|
331,437
|
|
Value of Equity Acceleration
|
|
—
|
|
253,313
|
|
|
|
|
|
|
|
Total
|
|
480,371
|
|
1,306,521
|
(1)Amounts in this column are payable in the event the executive is terminated without cause or resigns for good reason (as such terms are defined in the relevant employment agreement), and such termination does not qualify for treatment under footnote 2 below.
(2)Amounts in this column are payable (A) for Dr. Anido, in the event he is terminated without cause or resigns for good reason at any time during the twelve (12) month period following a Change in Control, and (B) for all the other executives, in the event (i) a Change in Control occurs during the executive’s employment and the successor corporation does not offer employment on terms comparable to the executive’s then existing terms and, in connection therewith, the executive terminates employment, or (ii) the executive’s employment is
|
|
|
|
|
|
|
|
|
|
|
Aerie Pharmaceuticals, Inc.
|
71
|
2021 | Proxy Statement
|
|
|
|
|
|
|
|
|
|
|
|
COMPENSATION DISCUSSION & ANALYSIS
|
|
|
terminated by the successor corporation without cause or he resigns for good reason, within one (1) year after the Change in Control (as such terms are defined in the relevant employment agreement).
Pay Ratio Disclosure
In accordance with SEC rules and applying the methodology described below, we calculated the annual total compensation of our median employee (other than our CEO) for fiscal 2020 to be $165,659. As reported in the Summary Compensation Table for fiscal 2020 in this Proxy Statement, the annual total compensation of our CEO for fiscal 2020 was $3,620,089. Based on this information, the ratio of the annual total compensation of our CEO to the annual total compensation of our median employee for fiscal year 2020 was 22-to-1.
To identify our median employee, we used the following methodology:
•We determined our median employee based on our employee population (full-time and part-time) as of December 31, 2020.
•We used a consistently applied compensation measure that included the sum of each employee’s base salary, bonuses and commissions earned in 2020 and the grant date fair value of all equity granted in 2020.
•We annualized the base salaries for employees who were employed by us for less than the entire calendar year.
•Compensation paid in foreign currencies was converted to U.S. dollars based on the annual average exchange rates for the year ended December 31, 2020.
Using this approach, we identified our median employee and then calculated the annual total compensation of this employee for 2020 in accordance with the requirements of the Summary Compensation Table.
This pay ratio is a reasonable estimate calculated in a manner consistent with SEC rules based on our payroll and employment records and the methodology described above. Because the SEC’s rules for identifying the median compensated employee and calculating the pay ratio based on that employee’s annual total compensation allow companies to adopt a variety of methodologies, to apply certain exclusions, and to make reasonable estimates and assumptions that reflect their compensation practices, the pay ratio reported by other companies may not be comparable to the pay ratio reported above, as other companies may have different employment and compensation practices and may utilize different methodologies, exclusions, estimates and assumptions in calculating their own pay ratios.
|
|
|
|
|
|
|
|
|
|
|
Aerie Pharmaceuticals, Inc.
|
72
|
2021 | Proxy Statement
|
PROPOSAL 3
Advisory Vote on the Compensation of Our Named Executive Officers
In accordance with Section 14A of the Exchange Act, we are asking that our stockholders approve, on an advisory basis, the compensation of our executive officers named in the Summary Compensation Table of this proxy statement. Stockholders also may, if they wish, abstain from casting a vote on this proposal.
In connection with this proposal, the Board encourages stockholders to review in detail the description of the compensation program for our named executive officers that is set forth in the Compensation Discussion and Analysis of this Proxy Statement, as well as the information contained in the compensation related tables and narrative discussion in this proxy statement.
As described in more detail in the Compensation Discussion and Analysis of this Proxy Statement, our overarching compensation philosophy is to pay for performance. This has been accomplished in a number of ways, including by structuring our program so that a significant portion of the ultimate amount of compensation earned by our named executive officers is earned through bonuses and an increase in the intrinsic value of equity grants. Further, our compensation program is designed to align the compensation of our named executive officers with the interests of our stockholders, and therefore provides a majority of compensation in the form of long-term equity incentives that tie our named executive officers’ compensation directly to the performance of our stock.
Although the advisory vote is non-binding, the Board values stockholders’ opinions. The Compensation Committee will review the results of the vote and consistent with our record of stockholder responsiveness, the Compensation Committee will consider stockholders’ views and take into account the outcome of the vote when considering future decisions concerning our executive compensation program.
We are asking our stockholders to indicate their support for the compensation of our named executive officers as disclosed in this proxy statement by voting “FOR” the following resolution:
“RESOLVED, that the stockholders of Aerie Pharmaceuticals, Inc. approve, on an advisory basis, the compensation paid to Aerie Pharmaceuticals, Inc.’s named executive officers, as disclosed pursuant to the compensation disclosure rules of the Securities and Exchange Commission, including the Compensation Discussion and Analysis, the compensation tables and the narrative discussion in Aerie Pharmaceuticals, Inc.’s 2021 Proxy Statement.”
Vote Required
This proposal requires an affirmative vote of a majority of the votes cast at the Annual Meeting by the holders of shares present in person or represented by proxy at the Annual Meeting and entitled to vote on the proposal.
Our Recommendation
|
|
|
|
|
|
|
|
P
|
The Board of Directors unanimously recommends a vote FOR the approval, on an advisory basis, of the compensation of our named executive officers.
|
|
|
|
|
|
|
|
|
|
|
|
Aerie Pharmaceuticals, Inc.
|
73
|
2021 | Proxy Statement
|
TRANSACTIONS WITH RELATED PERSONS
Policies and Procedures for Related Person Transactions
All related person transactions are reviewed and approved by our Audit Committee in accordance with our written related party transaction policy. This review covers any material transaction, arrangement or relationship, or any series of similar transactions, arrangements or relationships, in which we were or are to be a participant and the amount involved exceeds $120,000, and in which a related person had or will have a direct or indirect material interest, including, purchases of goods or services by or from the related person or entities in which the related person has a material interest, indebtedness, guarantees of indebtedness and employment by us of a related person. A “related person” is any person who is or was one of our executive officers, directors or director nominees or is a holder of more than 5% of our common stock, or an immediate family member of any of the foregoing or any entity owned or controlled by any of the foregoing persons. The standard applied by our Audit Committee seeks to ensure that any related person transaction is consistent with our related transaction policy and is on terms, taken as a whole, which are no less favorable to the Company than could be obtained in an arm’s-length transaction with an unrelated third party.
Certain Related-Person Transactions
Other than compensation arrangements with directors and executive officers, which are described under “NEO Employment Agreements” and “Director Compensation,” we have no other related-party transactions that are subject to disclosure in accordance with our related party transaction policy.
|
|
|
|
|
|
|
|
|
|
|
Aerie Pharmaceuticals, Inc.
|
74
|
2021 | Proxy Statement
|
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information known to us regarding beneficial ownership of our common stock as of March 18, 2021 by:
•our named executive officers;
•our directors;
•all of our executive officers and directors as a group; and
•each person, or group of affiliated persons, known by us to be the beneficial owner of more than
5% of our common stock.
We have based our calculation of beneficial ownership on 46,896,785 shares of common stock outstanding as of March 18, 2021.
Information with respect to beneficial ownership is based upon information furnished to us by each director and executive officer and Schedules 13D or 13G filed with the SEC, as the case may be. Beneficial ownership is determined in accordance with SEC rules. These rules generally attribute beneficial ownership of securities to persons who possess sole or shared voting power or investment power with respect to those securities and include shares of common stock that are issuable upon the exercise of stock options or warrants that are either immediately exercisable or exercisable within 60 days of March 18, 2021, in each case with any shares of common stock issuable upon the exercise of such stock options or warrants being deemed to be outstanding and beneficially owned by the person holding such options or warrants that are either immediately exercisable or exercisable within 60 days of March 18, 2021. These shares, however, are not deemed outstanding for the purposes of computing the percentage ownership of any other person. Except as otherwise indicated, all of the shares reflected in the table are shares of common stock and all persons listed below have sole voting and investment power with respect to the shares beneficially owned by them. The information is not necessarily indicative of beneficial ownership for any other purpose. Except as otherwise indicated in the table below, addresses of named beneficial owners are in care of Aerie Pharmaceuticals, Inc., 4301 Emperor Boulevard, Suite 400, Durham, North Carolina 27703.
|
|
|
|
|
|
|
|
|
|
|
Aerie Pharmaceuticals, Inc.
|
75
|
2021 | Proxy Statement
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SHARES
BENEFICIALLY OWNED
|
|
|
NAME OF BENEFICIAL OWNER
|
NUMBER
|
|
PERCENT
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5% Stockholders
|
|
|
|
|
|
The Vanguard Group, Inc. (1)
|
4,217,071
|
|
8.99%
|
|
|
BlackRock Institutional Trust Company, N.A. (2)
|
3,345,723
|
|
7.13%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Named Executive Officers and Directors
|
|
|
|
|
|
Vicente Anido, Jr., Ph.D. (3)
|
2,033,499
|
|
4.18%
|
|
|
Richard J. Rubino (4)
|
885,770
|
|
1.87%
|
|
|
Thomas A. Mitro (5)
|
727,610
|
|
1.53%
|
|
|
Casey C. Kopczynski, Ph.D. (6)
|
610,990
|
|
1.29%
|
|
|
John W. LaRocca, Esq. (7)
|
137,010
|
|
*
|
|
|
David A. Hollander, M.D., M.B.A. (8)
|
78,213
|
|
*
|
|
|
Gerald D. Cagle, Ph.D. (9)
|
112,550
|
|
*
|
|
|
Benjamin F. McGraw, III, Pharm.D. (10)
|
87,550
|
|
*
|
|
|
Richard Croarkin (11)
|
75,850
|
|
*
|
|
|
Mechiel (Michael) M. du Toit (11)
|
75,850
|
|
*
|
|
|
Julie McHugh (11)
|
75,850
|
|
*
|
|
|
David W. Gryska(12)
|
41,279
|
|
*
|
|
|
Peter J. McDonnell, M.D. (13)
|
6,250
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*
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All executive officers and directors as a group (13 persons)
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4,948,271
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10.34%
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*
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Represents beneficial ownership of less than 1% of our outstanding common stock.
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(1)The information concerning The Vanguard Group is based solely upon a Schedule 13G/A filed with the SEC on February 10, 2021. The address of The Vanguard Group is 100 Vanguard Boulevard, Malvern, Pennsylvania 19355. The Schedule 13G/A filed by the reporting institution provides information as of December 31, 2020 and, consequently, the beneficial ownership of the reporting institution may have changes between December 31, 2020 and March 18, 2021.
(2)The information concerning BlackRock, Inc. is based solely upon a Schedule 13G/A filed with the SEC on February 5, 2021. The address of BlackRock, Inc. is 55 East 52nd Street, New York, New York 10055. The Schedule 13G/A filed by the reporting institution provides information as of December 31, 2020 and, consequently, the beneficial ownership of the reporting institution may have changes between December 31, 2020 and March 18, 2021.
(3)Consists of (a) 243,896 shares of common stock and (b) 1,789,603 shares of common stock issuable upon exercise of options exercisable within 60 days after March 18, 2021.
(4)Consists of (a) 353,937 shares of common stock and (b) 531,833 shares of common stock issuable upon exercise of options exercisable within 60 days after March 18, 2021.
(5)Consists of (a) 86,709 shares of common stock and (b) 640,901 shares of common stock issuable upon exercise of options exercisable within 60 days after March 18, 2021.
(6)Consists of (a) 264,469 shares of common stock and (b) 346,521 shares of common stock issuable upon exercise of options exercisable within 60 days after March 18, 2021.
(7)Consists of (a) 40,437 shares of common stock and (b) 96,573 shares of common stock issuable upon exercise of options exercisable within 60 days after March 18, 2021.
(8)Consists of (a) 33,838 shares of common stock and (b) 44,375 shares of common stock issuable upon exercise of options exercisable within 60 days after March 18, 2021.
(9)Consists of (a) 18,300 shares of common stock and (b) 94,250 shares of common stock issuable upon exercise of options exercisable within 60 days after March 18, 2021.
(10)Consists of (a) 9,800 shares of common stock and (b) 77,750 shares of common stock issuable upon exercise of options exercisable within 60 days after March 18, 2021.
(11)Consists of (a) 8,100 shares of common stock and (b) 67,750 shares of common stock issuable upon exercise of options exercisable within 60 days after March 18, 2021.
(12)Consists of (a) 3,500 shares of common stock and (b) 35,783 shares of common stock issuable upon exercise of options exercisable within 60 days after March 18, 2021.
(13)Consists of 6,250 shares of common stock issuable upon exercise of options exercisable within 60 days after March 18, 2021.
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Aerie Pharmaceuticals, Inc.
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76
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2021 | Proxy Statement
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DELINQUENT SECTION 16(a) REPORTS
Section 16(a) of the Exchange Act requires our directors and executive officers, and persons who own more than ten percent (10%) of our common stock, to report to the SEC their initial ownership of our common stock and any subsequent changes in that ownership. Specific due dates for these reports have been established by the SEC and we are required to disclose in this proxy statement any late filings or failures to file.
Based solely on our review of the copies of such reports filed with the SEC and written representations from the reporting person that no other reports were required during the fiscal year ended December 31, 2020, all Section 16(a) filing requirements during that fiscal year were met, other than one Form 4 for each of Julie McHugh, Benjamin F. McGraw, III, Pharm.D., David W. Gryska, Mechiel (Michael) M. du Toit, Richard Croarkin, and Gerald D. Cagle, Ph.D. that were not timely filed with respect to a grant of stock options and a grant of restricted stock.
SECURITIES AUTHORIZED FOR ISSUANCE
UNDER EQUITY COMPENSATION PLANS
The following sets forth the aggregate information of our equity compensation plans in effect as of December 31, 2020:
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PLAN CATEGORY
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NUMBER OF SECURITIES TO BE ISSUED UPON
EXERCISE OF
OUTSTANDING OPTIONS,
WARRANTS AND RIGHTS AND VESTING OF RESTRICTED STOCK
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Weighted-average
exercise price of
outstanding options,
warrants, rights and restricted stock
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Number of securities
remaining
available for
future issuance under
equity compensation
plans (excluding
securities reflected in
column (a))
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(a)
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(b)
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(c)
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Equity compensation plans approved by security holders:
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2005 Equity Incentive Plan (1)
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1,407,002
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2.98
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—
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Amended and Restated Equity Plan (2)
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7,121,726
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26.62
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2,220,703
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Employee Stock Purchase Plan
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—
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—
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389,025
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Equity compensation plans not approved by security holders
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Inducement Award Plan (3)
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976,595
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42.15
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354,880
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Total
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9,505,323
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—
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2,964,608
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(1)No additional awards (column (c)) will be made under the 2005 Equity Incentive Plan. The number of securities underlying awards that are currently outstanding under this plan (column (a)) includes 1,407,002 of stock options.
(2)The number of securities to be issued upon exercise of outstanding stock options and rights (column (a)) includes stock options, shares subject to restricted stock awards (“RSA”) and shares subject to restricted stock units (“RSU”) awards. As of December 31, 2020, total number of securities (column (a)) included RSA awards of 762,449, stock options of 6,252,095 and RSU awards of 107,182. As RSU and RSA awards do not have an exercise price, such awards are excluded from the calculation of weighted-average exercise price (column (b)).
(3)Consists of stock options and restricted stock awards that were issued under the Aerie Pharmaceuticals, Inc. Amended and Restated Inducement Award Plan, or the Inducement Plan, which was not approved by security holders. These awards generally have a four-year vesting period. As of December 31, 2020, total number of securities (column (a)) included stock options of 929,517 and RSA awards of 47,078. For additional details regarding the Inducement Plan, see Note 13 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, 2020, filed with the SEC on February 26, 2021.
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Aerie Pharmaceuticals, Inc.
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77
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2021 | Proxy Statement
|