UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10‑K/A
(Amendment No. 1)
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☒
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the fiscal year ended December 31, 2017
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or
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☐
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the transition period from to
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Commission file number: 001‑37859
Bioverativ Inc.
(Exact name of Registrant as Specified in its Charter)
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Delaware
(State or Other Jurisdiction of
Incorporation or Organization)
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81‑3461310
(I.R.S. Employer
Identification No.)
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225 Second Avenue, Waltham, Massachusetts
(Address of Principal Executive Offices)
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02451
(Zip Code)
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(781) 663‑4400
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class
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Name of Each Exchange on which registered
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Common Stock, par value $0.001 per share
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The Nasdaq Stock Market
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Securities to be registered pursuant to Section 12(g) of the Act:
None
Indicate by check mark if the registrant is a well‑known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act. Yes ☐ No ☒
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S‑T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files): Yes ☒ No ☐
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S‑K is not contained herein, and will not be contained, to the best of the registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10‑K or any amendment to this Form 10‑K. ☒
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non‑accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b‑2 of the Exchange Act. (Check one):
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Emerging growth company ☐
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Large accelerated filer ☒
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Accelerated filer ☐
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Non‑accelerated filer ☐
(Do not check if a
smaller reporting company)
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Smaller reporting company ☐
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Emerging growth company ☐
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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in rule 12b‑2) of the Act. Yes ☐ No ☒
The aggregate market value of the registrant’s common stock held by non-affiliates of the registrant (without admitting that any person whose shares are not included in such calculation is an affiliate) computed by reference to the price at which the common stock was last sold as of the last business day of the registrant’s most recently completed second fiscal quarter was $6,433.3 million.
The number of shares of the registrant’s common stock, $0.001 par value, outstanding as of February 9, 2018 was 108,223,644.
Richard Brudnick
became the Executive Vice President, Business Development of Bioverativ in January 2017. Prior to that, Mr. Brudnick served as Biogen’s Senior Vice President of Corporate Development since 2014. Mr. Brudnick joined Biogen in 2001 and held senior positions in the areas of Portfolio Strategy & Business Development and Corporate Development. Before joining Biogen, Mr. Brudnick was the Chief Executive Officer of a regional pharmaceutical distribution business, a co‑founder of two companies and a strategy consultant at Bain & Company.
Lucia Celona
became Executive Vice President, Chief Human Resources and Corporate Communications Officer of Bioverativ in January 2017. Prior to that, Ms. Celona served as the Vice President of Human Resources for the Pharmaceutical Operations and Technology function of Biogen from 2013 through June 2016. Ms. Celona joined Biogen in 2006 and held senior level positions including Vice President, Talent Acquisition & Global Mobility, interim Vice President of Compensation & Benefits, Chief of Staff to the Executive Vice President of Human Resources and Executive Vice President of Global Therapeutic Operations. Before joining Biogen, Ms. Celona was head of human resources for Sentillion Inc., a privately held company that focused on single‑sign on solutions for healthcare providers, and the human resources director for two manufacturing sites at Philips Medical Systems in Andover, Massachusetts.
Andrea DiFabio
became Executive Vice President and Chief Legal Officer of Bioverativ in January 2017. Prior to that, Ms. DiFabio served as Biogen’s Senior Vice President, Chief Research and Business Development Counsel since 2015. Ms. DiFabio joined Biogen in 2006 and held various positions including serving as Chief U.S. Counsel, Interim Chief Compliance Officer and Chief Research and Business Development Counsel. Prior to Biogen, she was Corporate Vice President and Deputy General Counsel at Parexel International, a global contract research organization. Prior to her work at Parexel International, Ms. DiFabio was a trial lawyer for two Boston law firms, Brown Rudnick and Robins, Kaplan Miller & Ceresi.
Timothy J.R. Harris, Ph.D., D.Sc
. joined Bioverativ in February 2017 as interim Head of Research & Development, and was appointed Executive Vice President, Research and Development in April 2017. Prior to joining Bioverativ, Dr. Harris was a venture partner at SV Health Investors, since March 2016. Prior to that, Dr. Harris was Senior Vice President for Precision Medicine at Biogen from March 2015 until February 2016. Prior to such position, he was Senior Vice President for Translational Medicine and Technology at Biogen from June 2011 to February 2015. Before joining Biogen, he was the Chief Technical Officer and Director of the Advanced Technology Program at SAIC-Frederick in Maryland from January 2007 to June 2011. His professional experience includes senior executive positions at a number of companies, including Novasite Pharmaceuticals, where he served as President and Chief Executive Officer from 2005 to September 2006. Dr. Harris founded SGX Pharmaceuticals, Inc. (formerly Structural GenomiX Inc.) (SGX) in 1999, and was Chief Executive Officer of that company until 2005. Before founding SGX, Dr. Harris was Senior Vice President, Research and Development at Axys Pharmaceuticals Inc. (formerly Sequana Therapeutics Inc.). Dr. Harris serves on the Board of Directors of Opgen Inc. and during the past five years, previously served on the board of directors of BG Medicine, Inc. He is a visiting Professor at Columbia University. Dr. Harris is a molecular biologist and biochemist and an executive with nearly 40 years of scientific and leadership expertise in the biotechnology industry. He holds a Ph. D in molecular virology and a D.Sc., both from the University of Birmingham, UK, and is credited with over 100 publications and five issued patents.
Board of Directors
The following table sets forth information with respect to our board of directors as of March 1, 2018.
Name
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Age
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Title
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John G. Cox
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55
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Director and Chief Executive Officer
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Alexander J. Denner, Ph.D.
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48
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Director
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Geno Germano
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57
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Director
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Louis J. Paglia
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60
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Director
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Brian S. Posner
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56
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Chairman of the Board
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Anna Protopapas
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53
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Director
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John G. Cox
became a director and the Chief Executive Officer of Bioverativ in August 2016. Previously, from June 2010 through June 2016, Mr. Cox served on Biogen’s executive committee as Executive Vice President,
Pharmaceutical Operations & Technology, where he oversaw Biogen’s global manufacturing facilities, supply chain operations, technical development, quality and engineering. Mr. Cox also had responsibility for the development and commercialization of Biogen’s biosimilar business. From October 2015 to May 2016, Mr. Cox also served as interim Executive Vice President, Global Therapeutic Operations, responsible for Biogen’s therapeutic groups of Specialty Medicines and Rare Diseases, which included responsibility for the global commercial performance of Biogen’s marketed products. Mr. Cox joined Biogen in 2003, holding several senior executive positions including Senior Vice President of Technical Operations, Senior Vice President of Global Manufacturing and Vice President of Manufacturing and General Manager of Biogen’s operations in Research Triangle Park, North Carolina. He reported to Biogen’s Chief Executive Officer as a member of Biogen’s executive committee, since 2010. Mr. Cox’s qualifications for service on our board of directors include his substantial executive, operational, business and technical experience and acumen in the biotechnology industry. Mr. Cox serves on the board of directors of Repligen Corporation, a life sciences company.
Alexander J. Denner, Ph.D.
became a director of Bioverativ in January 2017. Dr. Denner is a founding partner and Chief Investment Officer of Sarissa Capital Management LP (Sarissa Capital). Sarissa Capital focuses on improving the strategies of companies to enhance stockholder value. From 2006 to 2011, Dr. Denner served as a Senior Managing Director at Icahn Capital. Prior to that, he served as a portfolio manager at Viking Global Investors and Morgan Stanley Investment Management. He is currently a member of the boards of directors of Biogen and The Medicines Company, and within the past five years, served on the boards of directors of Amylin Pharmaceuticals, Inc., Ariad Pharmaceuticals Inc., Vivus, Inc. and Enzon Pharmaceuticals, Inc. Dr. Denner’s qualifications for service on our board of directors include his significant experience overseeing the operations and research and development of healthcare companies and evaluating corporate governance matters. He also has extensive experience as an investor, particularly with respect to healthcare companies, and possesses broad healthcare industry knowledge.
Geno Germano
became a director of Bioverativ in May 2017. He most recently served as President of Intrexon Corporation, having held that position from June 2016 through March 2017. Mr. Germano previously served as Group President, Global Innovative Pharma Business at Pfizer Inc., a global pharmaceutical corporation, from 2014 to February 2016, and as President and General Manager, Specialty Care and Oncology at Pfizer, from 2009 through 2013. Prior to that, he held various senior leadership positions at Wyeth Pharmaceuticals and Johnson & Johnson. He is currently a member of the board of directors of Sage Therapeutics, Inc. and The Medicines Company, and within the past five years, served on the board of directors of Zoetis Inc. He is a member of Group of Fifty (G50) and previously served on the Board of the Biotechnology Innovation Organization where he chaired the International Committee and was a member of the Executive Committee. He serves on the Advisory Board of the Healthcare Businesswomen’s Association and was a Trustee of the Albany College of Pharmacy for the past nine years until he reached the term limit, where he received his B.S. in Pharmacy. Mr. Germano’s qualifications to sit on the Board of Bioverativ include his extensive experience working for various pharmaceutical and biotechnology companies.
Louis J. Paglia
became a director of Bioverativ in January 2017. Mr. Paglia is the founding member of Oakstone Capital LLC, a private investment firm. He previously founded Customer Choice LLC in April 2010, a data analytics company serving the electric utility industry. He previously served as Executive Vice President of UIL Holdings Corporation (UIL), an electric utility, contracting and energy infrastructure company. Mr. Paglia also served as UIL’s Chief Financial Officer and as President of its investment subsidiaries. Prior to joining UIL, Mr. Paglia was Executive Vice President and Chief Financial Officer of eCredit.com, a credit evaluation software company. Prior to that, Mr. Paglia served as the Chief Financial Officer both for TIG Holdings Inc., a property and casualty insurance and reinsurance holding company, and for Emisphere Technologies, Inc., a specialty pharmaceutical company. He is currently a member of the board of directors of Arch Capital Group Ltd., and within the past five years, Mr. Paglia served on the board of directors of NorthStar Realty Finance Corp. and NorthStar Asset Management Group Inc. Mr. Paglia’s qualifications for service on our board of directors include his strong financial background, experience in investment banking and extensive executive management and operating experience in publicly‑held companies.
Brian S. Posner
became a director and Chairman of the Board of Bioverativ in January 2017. Mr. Posner is President of Point Rider Group LLC, a consulting and advisory services firm within the financial services industry, and has served as private investor since 2008. From 2005 to March 2008, Mr. Posner served as the President, Chief Executive Officer and Co‑Chief Investment Officer of ClearBridge Advisors, LLC, an asset management company and a wholly owned subsidiary of Legg Mason. Prior to that, Mr. Posner co‑founded Hygrove Partners LLC, a private
investment fund, in 2000 and served as its Managing Member for five years. He served as a portfolio manager and an analyst at Fidelity Investments, a financial services company, from 1987 to 1996 and, from 1997 to 1999, at Warburg Pincus Asset Management/Credit Suisse Asset Management where he also served as co‑Chief Investment Officer and Director of Research. Mr. Posner currently serves on the boards of directors of Biogen and Arch Capital Group Ltd. and he is a trustee of the AQR Funds. During the past five years, Mr. Posner previously served on the board of directors of BG Medicine, Inc. Mr. Posner’s qualifications for service on our board of directors include his substantial experience as a leading institutional investment manager and advisor and significant management and financial expertise.
Anna Protopapas
became a director of Bioverativ in February 2017. Since March 2015, Ms. Protopapas has served as President, Chief Executive Officer and a Director of Mersana Therapeutics, Inc., a publicly‑held biotechnology company focused on engineering antibody drug conjugates. Prior to joining Mersana, from October 2010 to October 2014, Ms. Protopapas served as a member of the Executive Committee of Takeda Pharmaceutical Company Limited (Takeda), a global pharmaceutical company, and held various senior management positions at the company, including serving as President of Millennium Pharmaceuticals, a wholly owned subsidiary of Takeda focused on oncology, where she was responsible for leading Takeda’s oncology business, and Executive Vice President of Global Business Development, where she was responsible for global acquisitions, partnering, licensing and venture investing. From October 1997 to October 2010, Ms. Protopapas served in various positions at Millennium Pharmaceuticals, including as the Senior Vice President of Strategy and Business Development and a member of the Executive Committee, where she led the company’s business development initiatives. Ms. Protopapas previously served on the board of directors of Ariad Pharmaceutics Inc., a life sciences company, until its acquisition in February 2017. Ms. Protopapas’ qualifications for service on our board of directors include her extensive transactional and senior management experience in the biopharmaceutical industry.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act requires our executive officers, directors and greater than 10% stockholders to file initial reports of ownership and changes of ownership of our common stock. As a practical matter, we assist our directors and executive officers by monitoring transactions and completing and filing Section 16 forms on their behalf. Based solely on our review of the copies of such forms furnished to us or written representations that no reports were required to be filed, we believe that each of our executive officers, directors and greater than 10% beneficial owners complied with all Section 16(a) filing requirements applicable to them with respect to transactions during the 2017 fiscal year.
Code of Conduct
We have adopted a code of conduct setting forth standards applicable to all of our companies and our directors, officers and employees. The code of conduct is available on Bioverativ’s website at www.bioverativ.com. Any amendment to the code, or any waiver of its requirements, that applies to our Chief Executive Officer, Chief Financial Officer, Controller or persons performing similar functions will be disclosed on our website.
Committees of the Board of Directors
Our board of directors has the following standing committees: an Audit Committee, a Compensation Committee and a Corporate Governance Committee. Each committee is governed by a written charter, all of which are posted on our website, www.bioverativ.com.
Audit Committee
The Audit Committee is comprised of Dr. Denner, Mr. Paglia and Mr. Posner, each of whom is independent under the listing standards of the Nasdaq Global Select Market and Rule 10A‑3 under the Exchange Act. Mr. Paglia is the chair of the Audit Committee. Each member of the Audit Committee is financially literate and has accounting or related financial management expertise, as such terms are interpreted by our board of directors in its business judgment. Additionally, the board of directors has determined that each of the members of the Audit Committee is an “audit
Item 11. Executive Compensation
COMPENSATION DISCUSSION AND ANALYSIS
This Compensation Discussion and Analysis (“CD&A”) describes our compensation strategy, philosophy, policies, and practices underlying our executive compensation program for 2017. It also provides information regarding the manner and context in which compensation was earned by and awarded to our 2017 named executive officers listed below, whom we refer to collectively as “Named Executive Officers” or “NEOs”.
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John G. Cox
Chief Executive Officer
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John T. Greene
Executive Vice President, Chief Financial Officer
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Rogério Vivaldi Coelho, MD
Executive Vice President, Chief Global Therapeutic Operations
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Andrea DiFabio
Executive Vice President, Chief Legal Officer and Corporate Secretary
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Richard Brudnick
Executive Vice President, Business Development
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During a portion of 2017, Bioverativ was part of Biogen Inc. On February 1, 2017, we separated from Biogen and became an independent public company. Due to the timing of the separation, Biogen’s compensation and management development committee made many of the compensation decisions for 2017 regarding the Company's executives.
Following the separation of Bioverativ from Biogen, the Compensation Committee of the Board of Directors of Bioverativ (the “Compensation Committee”) adopted compensation and benefit programs that were based on Biogen’s determinations. In 2017, the Compensation Committee further reviewed the decisions made by Biogen and developed its own executive compensation philosophy, objectives, programs, and peer group.
On January 21, 2018, Bioverativ entered into an Agreement and Plan of Merger (the “Merger Agreement”), with Sanofi (“Parent” or “Sanofi”), a French
société anonyme
, and Blink Acquisition Corp. (“Merger Sub”), a Delaware corporation and indirect wholly-owned subsidiary of Parent. Following completion of the transactions contemplated by the Merger Agreement, we will no longer be a public company.
Compensation Program
Compensation Philosophy
Our compensation program is intended to align management to a common long-term goal of creating significant shareholder value.
The guiding principles of our executive compensation program are as follows:
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Drive long-term shareholder value creation
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Reinforce pay for performance culture
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Encouragement of high levels of ownership
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Mitigate potential of excessive risk taking
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Role of the Compensation Committee
The Compensation Committee oversees and administers our executive compensation programs. The roles and responsibilities of the Compensation Committee are set forth in its written charter adopted by our Board of Directors, which can be found on our website, www.bioverativ.com, under the “Corporate Governance” subsection of the site.
Role of the Independent Compensation Consultant
The Compensation Committee believes that independent advice is important in developing our executive compensation programs.
In 2016, Biogen engaged Pay Governance to assist it in developing a compensation program for Bioverativ as a stand-alone company. Pay Governance, among other things, provided advice to:
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develop a compensation philosophy;
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develop a peer group for use in benchmarking executive pay levels and practices;
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benchmark our executive compensation levels relative to market;
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develop an annual incentive and long-term incentive plan design;
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develop a director compensation program;
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determine the appropriate treatment of unvested Biogen long-term incentive awards upon our separation from Biogen; and
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develop recommendations for stock ownership guidelines for our executives.
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In 2017, our Compensation Committee continued to engage Pay Governance as its independent compensation consultant. Pay Governance does not provide any other services to Bioverativ.
Reporting directly to the Compensation Committee, Pay Governance provides guidance on executive compensation matters, including trends in CEO, executive and non-employee director compensation, the development of specific executive compensation programs, and recommendations on the composition of the Company’s compensation peer group.
Using the information provided by Pay Governance and other similar information, the Compensation Committee recommends, and our Board of Directors approves, the elements and target levels of our CEO’s compensation. Pay Governance also engages in other matters as needed and as directed solely by the Compensation Committee.
During 2017, Bioverativ paid Pay Governance approximately $335,000 in consulting fees directly related to these services. The Compensation Committee assesses Pay Governance’s independence annually and confirmed that Pay Governance’s work did not raise any conflicts of interest and that Pay Governance is independent under applicable rules.
Role of our CEO
Our CEO provides an assessment of the performance of each executive officer, other than himself, during the prior year and recommends to the Compensation Committee the compensation to be awarded to each executive. Our CEO’s recommendations are based on numerous factors including:
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Company, team and individual performance;
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potential for future contributions;
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external market competitiveness;
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internal pay comparisons; and
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other factors deemed relevant.
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To understand external market competitiveness of the compensation for our executive officers, our CEO and the Compensation Committee review a report analyzing publicly available information and surveys prepared by Pay Governance and reviewed by our internal compensation group. The report compares the compensation of each executive officer, other than our CEO, relative to data for comparable positions at companies in our peer group, by compensation element (see “External Market Competitiveness and Peer Group” below for further details). The Compensation Committee considers all of the information presented, discusses the recommendations with our CEO and with Pay Governance, and applies its judgment to determine the elements of compensation and target compensation levels for each executive officer other than the CEO.
Our CEO also provides a summary of his achievements for the prior year. The Compensation Committee reviews and considers this in determining the CEO’s performance, and in recommending for approval by the Board of Directors, the compensation of our CEO. Our CEO does not participate in the deliberations regarding his own compensation.
External Market Competitiveness and Peer Group
Market practices are one of our considerations when determining executive compensation levels and program designs at Bioverativ. We do not target a specific market percentile or simply replicate the market practice. Instead, we review external market practices as a reference point to assist us in providing programs designed to attract, retain and inspire extraordinary talent. The Compensation Committee also uses a peer group to provide context for its executive compensation decision-making. Our compensation consultant reviews the external market landscape and evaluates the composition of our peer group for appropriateness.
The Compensation Committee reviews the information provided from internal sources as well as the information provided by our compensation consultant to select our peer group.
In 2016, in preparation of the spinoff of Bioverativ, Biogen worked with Pay Governance to identify a peer group of publicly-traded companies to be used for purposes of benchmarking pay levels and pay practices for our senior executives and director pay. Pay Governance recommended a peer group based on the following factors: industry, size, location, research and development spend, business focus, and location, including several peers in the hemophilia space and/or in Massachusetts.
Based on the sales and market capitalization of the recommended peer companies, as well as the nature of their businesses, histories, industries and the availability of relevant comparative compensation data, the Biogen compensation and management development committee selected the following core group of peer companies:
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Alexion Pharmaceuticals
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Alnylam Pharmaceuticals
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BioMarin Pharmaceuticals
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United Therapeutics Corporation
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Following the separation, our Compensation Committee further reviewed the peer group. In so doing, Pay Governance assisted in reviewing our peer group, with a focus on industry and market cap, as well as minimum size, research spend and product stage. In choosing the peer group, Pay Governance recommended selecting between 15-20 companies to provide sufficient sample size, with appropriately sized companies, and with Bioverativ at or around the
median market cap. Companies with revenues as well as those with operations covering late-stage clinical through commercialization were considered, with a preference for companies developing or offering products in the hemophilia or blood disorder field and for companies with expected revenue growth, as these types of companies are with whom we compete for executive talent.
Based on these factors, the Compensation Committee selected the following peer group to be used in connection with future compensation decisions:
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Alexion Pharmaceuticals
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Alnylam Pharmaceuticals
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BioMarin Pharmaceutical
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Intercept Pharmaceuticals
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Ironwood Pharmaceuticals
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For each of the companies in our peer group, where available, we analyze the company’s Compensation Discussion and Analysis and other data publicly filed to identify the executives at such companies whose positions are comparable to those held by our executive officers. We then compile and analyze the data for each comparable position. Our competitive analysis includes the structure and design of the compensation programs as well as the targeted value of the compensation.
Compensation Elements
Biogen’s compensation and management development committee initially determined the elements of compensation we provide to our executive officers. Our Compensation Committee has continued to review these elements. Specifically, the elements of our executive compensation programs and their objectives are as follows:
Element
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Objective(s)
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Base
Salary
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Provides a fixed level of compensation that is competitive with the external market and reflects each executive’s contributions, experience, responsibilities and potential to contribute to our future success.
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Annual Bonus Plan
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Aligns short-term compensation with the annual goals of the Company.
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Motivates and rewards the achievement of annual goals that support short- and long-term value creation.
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Long-term Incentives
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Aligns executives’ interests with the long-term interests of our stockholders by linking awards to increases in our stock price.
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Motivates and rewards the achievement of stock price growth.
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Promotes executive retention and stock ownership, and focuses executives on enhancing stockholder value.
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Benefits
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Promotes health and wellness.
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Provides financial protection in the event of disability or death.
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Provides tax-beneficial ways for executives to save towards their retirement.
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Compensation Pay Mix
The Compensation Committee determines the general mix of the elements of our executive compensation programs. It does not target a specific mix of value for our compensation elements in either the program design or pay decisions. Rather, the Compensation Committee reviews the pay mix to ensure an appropriate level of performance-based compensation is apportioned to the short-term and even more to the long-term to ensure alignment with our business goals and performance.
Additionally, the Compensation Committee believes the greater the leadership responsibilities, the greater the potential impact an individual will have on Bioverativ’s future strategic direction. Therefore, for our executive officers, including our NEOs, additional emphasis is placed on performance-based compensation.
The 2017 pay mix for our CEO and our other NEOs was highly performance-based and at-risk; 90% performance-based compensation for our CEO and an average of 76% performance-based compensation for our other NEOs.
2017 Base Salary
In 2017, in determining Mr. Cox’s base salary, the Biogen compensation and management development committee reviewed the base salaries of comparable chief executive officers in our peer group and considered Mr. Cox’s pay mix, capabilities, performance and future expected contributions and risks relating to launch of a new public company resulting from the separation from Biogen.
The Biogen compensation and management development committee undertook a similar review when approving the base salaries for the other NEOs which positioned them, on average, at approximately the median compared to persons with comparable jobs within the peer group selected by Biogen. Our CEO’s base salary was below the median of the peer group selected by Biogen.
Our Compensation Committee reviewed and made modifications to the compensation decisions made by the Biogen compensation and management development committee with respect to our NEOs based on updated peer data provided by Pay Governance. The base salary of each of our NEOs in 2017 was as follows:
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Name
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2017 Salary
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J. Cox
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$
800,000
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J. Greene
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$
625,000
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R. Vivaldi Coelho
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$
500,000
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A. DiFabio
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$
462,000
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R. Brudnick
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$
442,900
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2017 Performance-Based Plans and Goal Setting
We maintain a short-term incentive plan, known as our annual bonus plan, as well as a long-term incentive plan. Awards to our NEOs under our annual bonus plan are made under our 2017 Performance-Based Management Incentive Plan, and awards under our long-term incentive plan are granted under our 2017 Omnibus Equity Plan (“2017 Equity Plan”).
Awards under our annual bonus plan are directly tied to the achievement of our annual operating goals, which are aligned with the Company’s short- and long-term strategic plans. Our long-term incentives are directly tied to the performance of the price of shares of our common stock, which align our executives’ long-term interests with the interests of our stockholders.
In setting our annual goals, we establish challenging targets that result in payouts at target levels only when Company performance warrants it. The Compensation Committee is responsible for reviewing and approving our annual
Company goals, targets and levels of payout and for reviewing and determining actual performance results at the end of the performance period.
In setting and approving the performance goals under both the short- and long-term plans, the Compensation Committee considers the alignment of such goals to our business plan and the degree of difficulty of attainment and the potential for the goals to encourage inappropriate risk-taking. The Compensation Committee has determined that the structures of our executive compensation programs do not put our patients, investors or the Company at any material risk.
2017 Annual Bonus Plan
Our 2017 annual bonus plan is a cash incentive plan that rewards near-term financial, strategic and operational performance.
The target annual bonus opportunity as a percent of year-end base salary for each of our NEOs in 2017 was as follows:
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Name
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2017 Target %
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J. Cox
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100%
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J. Greene
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50%
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R. Vivaldi Coelho
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50%
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A. DiFabio
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50%
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R. Brudnick
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50%
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The approved annual target bonus opportunities for 2017 were generally at the median target amounts provided by companies in the peer group selected by Biogen as our compensation programs place a greater emphasis on long-term incentives. Our CEO’s total target cash bonus was below the median of the peer group selected by Biogen.
2017 Annual Bonus Plan Design
Awards for our NEOs under our 2017 annual bonus plan were based solely on the achievement of Company goals. The 2017 annual bonus plan provided for a payout multiplier ranging from 0% to 200% for each Company goal based on the determination of the level of achievement of each goal and application of the weighting previously assigned to each goal, which determined the Company performance multiplier applied to the bonus calculation.
2017 Company Performance Goals and Results
Company goals were established in early 2017 following our separation from Biogen, with assigned weightings that reflected the Company’s focus on financial, pipeline and life cycle and strategic priorities.
Set forth below is a summary of the Company goals and weightings that the Compensation Committee established for the 2017 annual bonus plan, the degree to which we attained these goals, and the overall company multiplier.
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Performance Range
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Company Goals
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Weight
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Threshold
|
Target
|
Max
|
Results
|
Payout
|
Financial (50%)
|
|
|
|
|
|
|
Product Revenue
|
25%
|
$932M
|
$977M
|
$1,059M
|
$1,089M
|
200%
|
Operating Income (based on non-GAAP)
|
25%
|
$437M
(43% Operating margin)
|
$486M
(46% Operating Margin)
|
$507M
(44%-48% Operating Margin)
(1)
|
$566M
|
200%
|
Pipeline Performance & Life Cycle (30%)
|
|
|
|
|
|
|
Achieve first patient in for BIVV001
|
10%
|
December
|
September
|
July
|
Below Target
(2
)
|
75%
|
Reach Go/No-Go research to development for BIVV002
|
5%
|
September
|
June
|
April
|
Below Threshold
|
0%
|
Execute Business Development Strategy
|
10%
|
Qualitative deal analysis by audit committee
|
Above Target
(2
)
|
175%
|
Differentiate Fc product for sustainable growth
|
5%
|
ITI Phase IV December
|
ITI Phase IV Operational September
|
ITI Phase IV May
|
Target met
|
100%
|
Strategic (20%)
|
|
|
|
|
|
|
Build the right culture, competencies and business practices to achieve our vision
|
10%
|
Measured qualitatively via compensation committee
|
Above Target
|
130%
|
Execute on capital allocation strategy which optimizes long-term growth and establishes reputation with long-range investors
|
5%
|
Measured qualitatively with input from board, key investors, analyst community and share register composition
|
Target met
|
100%
|
Advance scientific, medical and patient centric reputation with hemophilia community
|
5%
|
Measured qualitatively (field survey reports)
|
Target met
|
100%
|
Weighted Company Performance Multiplier
|
153%*
|
*
Numbers may not recalculate due to rounding.
Notes to 2017 Company Performance Goals and Results Table
|
(1)
|
|
Reference is made to the GAAP to non-GAAP reconciliation included in our earnings release dated February 13, 2018, furnished as Exhibit 99.1 to our Current Report on 8-K filed with the SEC on February 14, 2018.
|
|
(2)
|
|
Specific details are not disclosed for competitive reasons.
|
2017 Annual Bonus Plan Awards
The Compensation Committee determined that the final bonus awards under the 2017 annual bonus plan were as follows:
|
|
|
|
|
Name
|
Year-end
Salary
(A) x
|
Target
Bonus %
(B) x
|
Company
Multiplier
(C) =
|
Bonus
Award
(D)
|
J. Cox
|
$800,000
|
100%
|
153%
|
$1,224,000
|
J. Greene
|
$625,000
|
50%
|
153%
|
$478,125
|
R. Vivaldi Coelho
|
$500,000
|
50%
|
153%
|
$382,500
|
A. DiFabio
|
$462,000
|
50%
|
153%
|
$353,430
|
R. Brudnick
|
$442,900
|
50%
|
153%
|
$338,819
|
Long-Term Incentives (LTI)
Our 2017 Plan is a comprehensive long-term incentive compensation plan that permits us to grant equity-based compensation awards to employees intended to reward long-term Company performance.
Prior to our separation from Biogen, the Biogen compensation and management development committee established an annual long-term incentive target for each of our NEOs for 2017 based on external benchmarks for similar positions in the peer companies selected by Biogen, as well as in commercially available compensation surveys. In February 2017, shortly following our separation from Biogen, the annual long-term incentive values were delivered to the NEOs, other members of our executive team and other eligible employees of Bioverativ through a mix of 50% stock options and 50% restricted stock units (RSUs). The annual long-term incentive values delivered to our NEOs in 2017 are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-term
|
|
|
|
|
|
|
|
|
# of Stock
|
|
|
Incentive
|
Stock Option
|
RSU
|
Options
|
# of RSUs
|
Executive
|
Value
|
Value
|
Value
|
Granted
|
Granted
|
J. Cox
|
|
$
|
6,499,988
|
|
|
$
|
3,250,001
|
|
|
$
|
3,249,987
|
|
|
193,683
|
|
73,017
|
J. Greene
|
|
$
|
1,900,021
|
|
|
$
|
950,000
|
|
|
$
|
950,021
|
|
56,615
|
|
|
21,344
|
R. Vivaldi Coelho
|
|
$
|
1,900,021
|
|
|
$
|
950,000
|
|
|
$
|
950,021
|
|
56,615
|
|
|
21,344
|
A. DiFabio
|
|
$
|
999,975
|
|
|
$
|
499,994
|
|
|
$
|
499,981
|
|
29,797
|
|
|
11,233
|
R. Brudnick
|
|
$
|
999,975
|
|
|
$
|
499,994
|
|
|
$
|
499,981
|
|
29,797
|
|
|
11,233
|
In addition to the annual LTI grant, in recognition of the substantial efforts to complete the separation from Biogen, in February 2017 certain employees, including our NEOs and other members of our executive team, received a one-time founders’ grant of stock options. The one-time founders’ grant of stock options delivered to our NEOs are as follows:
|
|
|
Executive
|
Stock Option Value
|
# of Stock Options Granted
|
J. Cox
|
$6,500,001
|
387,366
|
J. Greene
|
$1,899,999
|
113,230
|
R. Vivaldi Coelho
|
$1,899,999
|
113,230
|
A. DiFabio
|
$1,000,004
|
59,595
|
R. Brudnick
|
$1,000,004
|
59,595
|
Further, in recognition of very strong 2016 individual performance certain NEOs received an additional one-time LTI grant of stock options in February 2017, as follows:
|
|
|
Executive
|
Stock Option Value
|
# of Stock Options Granted
|
A. DiFabio
|
$499,994
|
29,797
|
R. Brudnick
|
$250,005
|
14,899
|
Stock Options
. All stock options granted to the NEOs were made under and subject to the terms of the 2017 Equity Plan. The annual stock options and one-time LTI awards granted in February 2017 had an exercise price equal to $44.51 (the fair market value on the date of grant) and are subject to vesting in three equal annual installments from the date of grant. The founders’ stock options granted in February 2017 had an exercise price equal to $44.51 (the fair market value on the date of grant) and do not vest until the third anniversary of the grant date.
We view stock options as a form of long-term incentive that reward executives for increasing our stock price. If the stock price does not increase from the level at the date of the grant, the stock options will have no value to the executives. We believe that stock options encourage our executives to focus on decisions that will lead to increases in the stock price for the long-term and are an effective retention tool, since executives must remain with the company for a period of time before they can exercise the stock options and the options have a ten-year term from the date of grant.
Restricted Stock Units.
The RSUs granted in February 2017 provide executives with the right to receive shares of our common stock over a three-year annual vesting period. We view RSUs as being effective in achieving several objectives:
|
·
|
|
aligning the interests of executives with those of stockholders over the vesting period;
|
|
·
|
|
retaining executive talent; and
|
|
·
|
|
encouraging stock ownership by delivering shares upon settlement.
|
RSUs complement stock options by encouraging executives to guard against downside risk to the stock price as well as focus on increasing the stock price.
Treatment of Biogen Long-Term Incentives upon Our Separation from Biogen.
Upon our separation from Biogen, Biogen equity awards held by NEOs were converted into Bioverativ equity awards. The Biogen equity awards were adjusted with the intent to maintain, immediately following the separation date, the vesting terms and economic value of the award immediately before the separation date. All converted awards were issued under and are subject to the terms of the 2017 Equity Plan.
Retirement Plans
Following our separation from Biogen, we maintained a 401(k) Plan, and a Supplemental Savings Plan (SSP), a non-qualified deferred compensation plan covering our executive officers and other management employees in the U.S. Following the separation, the SSP was terminated effective in June 2017.
Other Benefits
In addition to eligibility for the benefit programs generally provided to all employees, such as our employee stock purchase plan and medical, dental, vision, life and disability insurance, we provide certain supplemental benefits to our executives. These benefits include:
Life Insurance
All our U.S. employees, including our NEOs, receive Company-paid term life insurance equal to two times their annual base salary, up to a maximum benefit of $500,000. The cost of Company-paid life insurance in excess of a $50,000 insurance level is taxable income to U.S. employees and is not grossed up by the Company.
Executive Physicals
All of our executive officers, including our CEO, are eligible for reimbursement of up to $5,500 for the cost of their executive physicals. This benefit provides our executives with flexibility to proactively manage their health and wellness. None of our NEOs utilized this benefit during 2017.
CEO Pay Ratio
In 2017, the compensation of Mr. Cox, our CEO, was approximately 72 times the median pay of our employees.
We identified our median employee by examining 2017 total compensation for all individuals, excluding Mr. Cox, who were employed as of December 31, 2017. We included all of our employees in this process, whether employed on a full-time or part-time basis. We annualized the compensation for any employees that were not employed by us for all of 2017 and we adjusted compensation paid to our non-U.S. employees based on the exchange rates as of December 31, 2017 between the local currencies in which such employees are paid and U.S dollars. We define “total compensation” as the aggregate of base salary (plus overtime, as applicable), commissions (as applicable), cash bonus and the grant date fair value of long-term incentive compensation awards.
After identifying the median employee based on total compensation, we calculated total compensation in 2017 for such employee using the same methodology we use for our named executive officers as set forth below in the Summary Compensation Table for 2017.
As illustrated in the table below, our 2017 CEO Pay Ratio is 72:1:
|
|
|
|
|
John Cox
|
Median Employee
|
|
Base Salary ($)
|
788,698
|
143,764
|
|
Cash Bonus ($)
|
1,224,000
|
39,713
|
|
Long-term Incentive Awards ($)
|
12,999,989
|
19,000
|
|
Change in Pension Value and Nonqualified Deferred Compensation Earnings ($)
|
21,256
|
-----
|
|
All Other Compensation ($)(1)
|
90,663
|
8,644
|
|
Total ($)
|
15,124,606
|
211,121
|
|
2017 CEO Pay Ratio
|
|
|
72:1
|
Notes to the CEO Pay Ratio Table
|
(1)
|
|
For a description of Mr. Cox’s other compensation, please refer to the Summary Compensation Table below. The Median Employee’s other compensation represents the employee’s Company match provided under our 401(k) plan.
|
Post-Termination Compensation and Benefits
We provide severance benefits to our executives if they are terminated without cause or in certain other instances following a corporate transaction or a corporate change in control. The terms of these arrangements and the amounts payable under them are described below for each NEO in the subsection titled “Potential Payments Upon Employment Termination Table.” We provide these benefits because we believe that some severance protection is necessary to help our executives maintain their focus on the best interests of the Company when providing advice to the Company and making strategic decisions about a potential corporate transaction or change in control, and encourages effective leadership in the closing and integration of significant transactions affecting the Company.
Share Ownership Guidelines
We maintain share ownership guidelines for our executive officers to strengthen and reinforce the link our compensation programs create between our executives and our stockholders. A summary of our share ownership guidelines are set forth below.
|
|
|
Level
|
|
Number of Shares
Equal in Value to:
|
CEO
|
|
6x salary
|
EVP
|
|
3x salary
|
Executive officers have five years from their initial appointment to meet the requirement. In the event the requirement is not met within that time, 100% of vested shares are required to be held until the requirement is satisfied. Only shares owned outright or otherwise earned are credited toward the share ownership requirement. Unvested restricted stock units are not included in the calculation. All of our executive officers currently meet the share ownership requirement or are still within the five-year period to meet such requirement.
Recoupment of Compensation
We may recover compensation from our employees who engage in detrimental or competitive activity. Detrimental activity includes any action or failure to act that constitutes financial malfeasance that is materially injurious to the Company, violates our Code of Conduct, results in a restatement of our earnings or financial results or results in a violation or breach of law or contract. Competitive activity includes any action or failure to act that violates non-disclosure, non-competition and/or non-solicitation agreements. Our 2017 Performance-Based Management Incentive Plan allows for the forfeiture and/or repayment of cash-based awards, and 2017 Equity Plan allows for the cancellation of LTI grants in these circumstances. In addition, cash sign-on bonuses to our NEOs may be forfeited if they voluntarily resign from the Company within a pre-determined period of time.
Insider Trading, Hedging and Pledging Policy Prohibitions
We maintain a Global Insider Trading Policy that prohibits our employees and directors from, among other things, engaging in hedging or derivative transactions with respect to the Company’s equity securities, purchasing Company stock on margin or pledging Company securities as collateral for a loan, or engaging in short sales of the Company’s securities.
Tax-Deductibility of Compensation
Section 162(m) of the Internal Revenue Code (Section 162(m)) limits the amount a company may deduct for compensation paid to its chief executive officer and any of its other three named executive officers (excluding its chief financial officer) to $1.0 million. This limitation does not, however, apply to compensation meeting the definition of qualifying performance-based compensation.
Management regularly reviews the provisions of our plans and programs, monitors legal developments, and works with our Compensation Committee and its consultant to review and consider Section 162(m) tax deductibility of compensation payments. Our Compensation Committee, however, believes that a compensation program that attracts, retains, and rewards executive talent and achievement is necessary for our success and, therefore, is in the best interests of the Company and our stockholders and that, in establishing the cash and equity incentive compensation program for the Company’s executive officers, the potential deductibility of the compensation payable under that program should only be one of a number of relevant factors taken into consideration. Consequently, our Compensation Committee may pay or provide, and has paid or provided, compensation in excess of $1.0 million that is not exempt from the deduction limitations under Section 162(m).
Amounts of base salary above $1.0 million are not deductible by the Company. Our annual bonus plan payouts in 2017 for our 2016 plan year and our 2017 stock option grants are intended to fall within the exception for qualifying performance-based compensation (and therefore to be tax-deductible compensation) under Section 162(m).
Under the Tax Cuts and Jobs Act of 2017 (“TCJA”), effective for our taxable year beginning January 1, 2018, the exception under Section 162(m) for performance-based compensation will no longer be available, subject to transition relief for certain grandfathered arrangements in effect as of November 2, 2017. In addition, the covered employees will be expanded to include our CFO, and once one of our NEOs is considered a covered employee, the NEO will remain a covered employee so long as he or she receives compensation from us. Given the lack of regulatory guidance to date, the Compensation Committee is not yet able to determine the full impact of the TCJA’s changes to Section 162(m) on the Company and our compensation programs.
Compensation Committee Report
The Compensation Committee furnishes the following report:
The Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis with Bioverativ management. Based on this review and discussion, the Compensation Committee recommended to our Board of Directors that the Compensation Discussion and Analysis be included in this Form 10-K.
Submitted by,
Brian Posner (Chair)
Geno Germano
Louis Paglia
EXECUTIVE COMPENSATION TABLES
Summary Compensation Table
The following table shows the compensation paid to or earned by our NEOs during the years ended December 31, 2017 and December 31, 2016, for the year(s) in which they were a named executive officer.
Name and Principal Position
|
Year
|
Salary
|
Bonus
(1)
|
Stock
Awards
(2)
|
Option
Awards
(2)
|
Non-Equity
Incentive Plan
Compensation
(3)
|
Change in
Pension
Value and
Nonqualified
Deferred
Compensation
Earnings
(4)
|
All Other
Compensation
(5)
|
Total
|
John Cox
|
2017
|
$
788,698
|
-
|
$
3,249,987
|
$
9,750,002
|
$
1,224,000
|
$
21,256
|
$
90,663
|
$
15,124,606
|
Chief Executive Officer
|
2016
|
$
696,750
|
$258,706
|
$
6,010,767
|
-
|
$
594,636
|
$
247,644
|
$
181,167
|
$ 7,989,670
|
John Greene
(6)
|
2017
|
$
625,000
|
-
|
$
950,021
|
$
2,849,999
|
$
478,125
|
-
|
$
222,095
|
$
5,125,240
|
EVP, Chief Financial Officer
|
2016
|
$
84,135
|
$500,000
|
-
|
-
|
-
|
-
|
$
3,105
|
$
587,240
|
Rogério Vivaldi Coelho
(7)
|
2017
|
$
500,002
|
-
|
$
950,021
|
$
2,849,999
|
$
382,500
|
-
|
$
21,976
|
$
4,704,498
|
EVP, Chief Global Therapeutic Operations
|
2016
|
$
96,154
|
$500,000
|
-
|
-
|
$
57,855
|
-
|
$
4,879
|
$
658,888
|
Andrea DiFabio
|
2017
|
$
459,236
|
-
|
$
499,981
|
$
1,999,992
|
$
353,430
|
$
743
|
$
46,239
|
$
3,359,621
|
EVP, Chief Legal Officer
|
2016
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
Richard Brudnick
|
2017
|
$
441,373
|
-
|
$
499,981
|
$
1,750,003
|
$
338,819
|
$
343
|
$
36,595
|
$
3,067,114
|
EVP, Business Development
|
2016
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
Notes to the Summary Compensation Table
|
(1)
|
|
The amount for Mr. Cox in 2016 reflects an additional cash bonus awarded in February 2017 in special recognition of his exceptional performance in 2016 in leading Bioverativ through the separation from Biogen and launch of the newly independent company. The amounts for Mr. Greene and Dr. Vivaldi Coelho in 2016 reflect sign‑on bonuses provided to each of them at the time of their hire in consideration of forfeitures due to their departure from their prior companies when joining Bioverativ.
|
|
(2)
|
|
The grant date fair value has been determined based on the assumptions and methodologies set forth in Note 13 of the audited consolidated financial statements included in our Form 10-K filed on February 14, 2018.
|
|
(3)
|
|
The amounts in this column reflect actual bonuses paid under Biogen’s annual bonus plan for fiscal year 2016 and Bioverativ’s annual bonus plan for fiscal year 2017.
|
|
(4)
|
|
The amounts in this column reflect earnings in the Biogen Supplemental Savings Plan for 2016 and January 2017, in each case for earnings in excess of 120% of the applicable federal long‑term rate. For 2016, the federal long‑term rate applied in this calculation is 3.14%, and 0.28% for January 2017. The Bioverativ Supplemental Savings Plan, which became effective on February 1, 2017 did not contain a fixed-rate option. For further information, see the description of the supplemental savings plan in the narrative preceding the 2017 Non-Qualified Deferred Compensation Table.
|
|
(5)
|
|
The amounts in this column for 2017 reflect the following:
|
Name
|
Company Matching
Contribution to 401(k)
Plan Account
|
Company
Contribution
to SSP Account
|
Value of Company-
Paid Life Insurance
Premiums
|
Relocation
(8)
|
John Cox
|
$
20,574
|
$
69,663
|
$
426
|
-
|
John Greene
|
$
20,094
|
$
2,550
|
$
412
|
$
199,039
|
Rogério Vivaldi Coelho
|
$
19,315
|
$
2,271
|
$
390
|
-
|
Andrea DiFabio
|
$
18,773
|
$
27,090
|
$
376
|
-
|
Richard Brudnick
|
$
18,877
|
$
17,346
|
$
372
|
-
|
|
(6)
|
|
Mr. Greene was hired effective November 7, 2016. Due to his hire after November 1 during 2016, Mr. Greene was not eligible to participate in the Biogen 2016 annual bonus plan.
|
|
(7)
|
|
Dr. Vivaldi Coelho was hired effective October 16, 2016.
|
|
(8)
|
|
The amount for Mr. Greene reflects relocation benefits provided to Mr. Greene in connection with his employment.
|
2017 Grants of Plan-Based Awards
The following table shows additional information regarding all grants of plan-based awards made to our NEOs for the year ended December 31, 2017.
Name
|
Grant Date
|
|
Estimated Future Payouts Under
Non-Equity Incentive Plan
Awards
(1)
|
All
Other
Stock
Awards:
Number
of
Shares
or Units
|
All Other
Option
Awards:
Number of
Securities
Underlying
Options
|
Exercise
or Base
Price of
Option
Awards
|
Grant Date
Fair Value
of Stock
and Option
Awards
(2)
|
Threshold
|
Target
|
Maximum
|
John Cox
|
|
(3)
|
$600,000
|
$800,000
|
$1,800,000
|
-
|
-
|
-
|
-
|
|
2/14/2017
|
(4)
|
-
|
-
|
-
|
73,017
|
-
|
-
|
$
3,249,987
|
|
2/14/2017
|
(5)
|
-
|
-
|
-
|
-
|
193,683
|
$44.51
|
$3,250,001
|
|
2/14/2017
|
(6)
|
-
|
-
|
-
|
-
|
387,366
|
$44.51
|
$6,500,001
|
John Greene
|
|
(3)
|
$234,375
|
$312,500
|
$703,125
|
-
|
-
|
-
|
-
|
|
2/14/2017
|
(4)
|
-
|
-
|
-
|
21,344
|
-
|
-
|
$
950,021
|
|
2/14/2017
|
(5)
|
-
|
-
|
-
|
-
|
56,615
|
$44.51
|
$950,000
|
|
2/14/2017
|
(6)
|
-
|
-
|
-
|
-
|
113,230
|
$44.51
|
$1,899,999
|
Rogério Vivaldi Coelho
|
|
(3)
|
$187,500
|
$250,000
|
$562,500
|
-
|
-
|
-
|
-
|
|
2/14/2017
|
(4)
|
-
|
-
|
-
|
21,344
|
-
|
-
|
$
950,021
|
|
2/14/2017
|
(5)
|
-
|
-
|
-
|
|
56,615
|
$
44.51
|
$
950,000
|
|
2/14/2017
|
(6)
|
-
|
-
|
-
|
|
113,230
|
$
44.51
|
$
1,899,999
|
Andrea DiFabio
|
|
(3)
|
$173,250
|
$231,000
|
$519,750
|
-
|
-
|
-
|
-
|
|
2/14/2017
|
(4)
|
-
|
-
|
-
|
11,233
|
-
|
-
|
$
499,981
|
|
2/14/2017
|
(5)
|
-
|
-
|
-
|
-
|
29,797
|
$
44.51
|
$
499,994
|
|
2/14/2017
|
(5)
|
-
|
-
|
-
|
-
|
29,797
|
$
44.51
|
$
499,994
|
|
2/14/2017
|
(6)
|
-
|
-
|
-
|
-
|
59,595
|
$
44.51
|
$
1,000,004
|
Richard Brudnick
|
|
(3)
|
$
166,088
|
$
221,450
|
$
498,263
|
-
|
-
|
-
|
-
|
|
2/14/2017
|
(4)
|
-
|
-
|
-
|
11,233
|
-
|
-
|
$
499,981
|
|
2/14/2017
|
(5)
|
-
|
-
|
-
|
-
|
29,797
|
$
44.51
|
$
499,994
|
|
2/14/2017
|
(5)
|
-
|
-
|
-
|
-
|
14,899
|
$
44.51
|
$
250,005
|
|
2/14/2017
|
(6)
|
-
|
-
|
-
|
-
|
59,595
|
$
44.51
|
$
1,000,004
|
Notes to the 2017 Grants of Plan-Based Awards Table
|
(1)
|
|
Reflects the estimated future payouts of awards granted in 2017 under our annual bonus plan and our long-term incentive program as of the grant date.
|
|
(2)
|
|
Represents the grant date value based on the assumptions and methodologies set forth in Note 13 of the audited consolidated financial statements included in our Form 10-K filed on February 14, 2018.
|
|
(3)
|
|
The amounts shown in this column represent the 2017 target payout amount based on the target percentage applied to each NEO’s base salary as of December 31, 2017. For 2017, the bonus targets were 100% of salary for Mr. Cox, and 50% of salary for all other NEOs.
|
|
(4)
|
|
These amounts relate to the annual grant of RSUs, which vest in three equal annual installments from the date of grant.
|
|
(5)
|
|
These amounts relate to the annual grant of stock options and an additional grant of stock options, each of which vest in three equal annual installments from the date of grant.
|
|
(6)
|
|
These amounts relate to a special founders’ stock option grant, which cliff vests three years from the date of grant.
|
2017 Outstanding Equity Awards at Fiscal Year-End Table
The following table summarizes the equity awards that were outstanding as of December 31, 2017 for each of our NEOs.
Name
|
|
Option Awards
(2)
|
|
Stock Awards
|
|
|
|
Grant
Date
(1)
|
Number of Securities
Underlying Unexercised
Options
|
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
(3)
|
Number
of
Unearned
Shares or
Units
That
Have Not
Vested
|
Exercisable
|
John Cox
|
2/12/2008
|
18,381
|
-
|
$ 9.53
|
2/12/2018
|
|
-
|
-
|
-
|
-
|
|
2/24/2009
|
48,230
|
-
|
$ 7.82
|
2/24/2019
|
|
-
|
-
|
-
|
-
|
|
2/14/2017
|
-
|
193,683
|
$
44.51
|
2/14/2027
|
|
-
|
-
|
-
|
-
|
|
2/14/2017
|
-
|
387,366
|
$
44.51
|
2/14/2027
|
|
-
|
-
|
-
|
-
|
|
2/23/2015
|
-
|
-
|
-
|
-
|
|
5,625
|
$
303,300
|
-
|
-
|
|
2/23/2015
|
-
|
-
|
-
|
-
|
|
7,408
|
$
399,439
|
-
|
-
|
|
2/22/2016
|
-
|
-
|
-
|
-
|
|
27,376
|
$
1,476,114
|
-
|
-
|
|
2/22/2016
|
-
|
-
|
-
|
-
|
|
36,054
|
$
1,944,032
|
-
|
-
|
|
4/1/2016
|
-
|
-
|
-
|
-
|
|
35,784
|
$
1,929,473
|
-
|
-
|
|
2/14/2017
|
-
|
-
|
-
|
-
|
|
73,017
|
$
3,937,077
|
-
|
-
|
John Greene
|
2/14/2017
|
-
|
113,230
|
$
44.51
|
2/14/2027
|
|
-
|
-
|
-
|
-
|
|
2/14/2017
|
-
|
56,615
|
$
44.51
|
2/14/2027
|
|
-
|
-
|
-
|
-
|
|
2/14/2017
|
-
|
-
|
-
|
-
|
|
21,344
|
$
1,150,868
|
-
|
-
|
Rogerio Vivaldi Coelho
|
2/14/2017
|
-
|
113,230
|
$
44.51
|
2/14/2027
|
|
-
|
-
|
-
|
-
|
|
2/14/2017
|
-
|
56,615
|
$
44.51
|
2/14/2027
|
|
-
|
-
|
-
|
-
|
|
2/14/2017
|
-
|
-
|
-
|
-
|
|
21,344
|
$
1,150,868
|
-
|
-
|
Andrea DiFabio
|
2/14/2017
|
-
|
59,595
|
$
44.51
|
2/14/2027
|
|
-
|
-
|
-
|
-
|
|
2/14/2017
|
-
|
29,797
|
$
44.51
|
2/14/2027
|
|
-
|
-
|
-
|
-
|
|
2/14/2017
|
-
|
29,797
|
$
44.51
|
2/14/2027
|
|
-
|
-
|
-
|
-
|
|
2/23/2015
|
-
|
-
|
-
|
-
|
|
889
|
$
47,935
|
-
|
-
|
|
2/23/2015
|
-
|
-
|
-
|
-
|
|
1,170
|
$
63,086
|
-
|
-
|
|
11/2/2015
|
-
|
-
|
-
|
-
|
|
1,958
|
$
105,575
|
-
|
-
|
|
2/22/2016
|
-
|
-
|
-
|
-
|
|
5,663
|
$
305,349
|
-
|
-
|
|
2/22/2016
|
-
|
-
|
-
|
-
|
|
7,467
|
$
402,621
|
-
|
-
|
|
2/14/2017
|
-
|
-
|
-
|
-
|
|
11,233
|
$
605,683
|
-
|
-
|
Richard Brudnick
|
2/14/2017
|
-
|
59,595
|
$
44.51
|
2/14/2027
|
|
-
|
-
|
-
|
-
|
|
2/14/2017
|
-
|
29,797
|
$
44.51
|
2/14/2027
|
|
-
|
-
|
-
|
-
|
|
2/14/2017
|
-
|
14,899
|
$
44.51
|
2/14/2027
|
|
-
|
-
|
-
|
-
|
|
2/23/2015
|
-
|
-
|
-
|
-
|
|
71
|
$
3,828
|
-
|
-
|
|
2/23/2015
|
-
|
-
|
-
|
-
|
|
1,055
|
$
56,886
|
-
|
-
|
|
2/23/2015
|
-
|
-
|
-
|
-
|
|
1,306
|
$
70,420
|
-
|
-
|
|
2/22/2016
|
-
|
-
|
-
|
-
|
|
282
|
$
15,205
|
-
|
-
|
|
2/22/2016
|
-
|
-
|
-
|
-
|
|
4,201
|
$
226,518
|
-
|
-
|
|
2/22/2016
|
-
|
-
|
-
|
-
|
|
5,240
|
$
282,541
|
-
|
-
|
|
2/14/2017
|
-
|
-
|
-
|
-
|
|
11,233
|
$
605,683
|
-
|
-
|
Notes to the 2017 Outstanding Equity Awards at Fiscal Year End Table
|
(1)
|
|
Equity awards with a grant date prior to February 1, 2017 represent equity awards granted to the NEO as a result of the conversion of Biogen equity awards held by such NEO into Bioverativ equity awards, as set forth in an employee matters agreement entered into between Bioverativ and Biogen in connection with the spinoff.
|
|
(2)
|
|
All stock options were granted with a ten-year term.
|
|
(3)
|
|
The market value of awards is based on the closing price of our stock on December 29, 2017 ($53.92), as reported by the NASDAQ Global Select Market.
|
2017 Option Exercises and Stock Vested
The following table shows information regarding option exercises and vesting of stock awards for each NEO during the year ended December 31, 2017.
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
Stock Awards
|
Name
|
Number of Shares
Acquired on
Exercise
|
Value
Realized
Upon Exercise
|
|
Number of Shares
Acquired on
Vesting
(1)
|
Value
Realized on
Vesting
(2)
|
John Cox
|
--
|
--
|
|
99,432
|
$4,729,827
|
John Greene
|
--
|
--
|
|
--
|
--
|
Rogério Vivaldi Coelho
|
--
|
--
|
|
--
|
--
|
Andrea DiFabio
|
--
|
--
|
|
17,872
|
$836,556
|
Richard Brudnick
|
--
|
--
|
|
15,221
|
$696,356
|
Notes to the 2017 Option Exercises and Stock Vested Table
|
(1)
|
|
The number of actual shares of our common stock acquired on vesting of RSUs after shares were withheld to pay the minimum withholding of taxes were as follows:
|
|
|
Name
|
Net Shares
Acquired
|
John Cox
|
53,085
|
John Greene
|
--
|
Rogério Vivaldi Coelho
|
--
|
Andrea DiFabio
|
12,069
|
Richard Brudnick
|
10,276
|
|
(2)
|
|
The value realized for RSUs are calculated by multiplying the closing price of a share of our common stock on the vesting date by the total number of shares that vested on such date.
|
2017 Non-Qualified Deferred Compensation
In connection with the separation from Biogen, on February 1, 2017, we adopted a Supplemental Savings Plan (“Bioverativ SSP”), a non-qualified deferred compensation plan covering our executive officers and certain other management employees in the U.S. Executive officers and other management employees of Biogen who joined Bioverativ had their balances that were previously held in the Biogen supplemental savings plan (“Biogen SSP”) transferred to the Bioverativ SSP on February 1, 2017.
Under the Bioverativ SSP, executive officers and other management employees in the U.S. whose base salary and annual cash incentives for the year exceed a specified limit ($270,000 in 2017) receive a Company-paid restoration match on the portion of their base salary, and annual cash incentive that exceeds this limit; the restoration match equals 6% of this excess compensation. The restoration match feature is intended to replace the amount of matching employer contributions that the participant would otherwise have been eligible to receive under our 401(k) plan but for the $270,000 limit imposed by Section 401(a)(17) of the Internal Revenue Code. In addition, eligible employees may make voluntary contributions of up to 80% of their base salary and 100% of their annual cash incentives to the Bioverativ SSP, and thereby defer income taxes on such amounts until distribution is made from the Bioverativ SSP. The Company does not match participants’ voluntary contributions to the Bioverativ SSP. The Bioverativ SSP provides for immediate vesting of the restoration match consistent with our immediate vesting of the Company match provided under our 401(k) plan.
Under the Bioverativ SSP, notional SSP accounts are maintained for each participant. Accounts include employee and employer contributions and reflect the performance of notional investments selected by the employee or a default investment if the employee does not make a selection. These notional investment options only included the mutual funds offered under our 401(k) plan.
In March 2017, the Bioverativ SSP Plan was terminated effective June 30, 2017.
The following “2017 Non-Qualified Deferred Compensation Table” summarizes activity during 2017 and account balances in the Bioverativ SSP for our NEOs as of December 31, 2017.
|
|
|
|
|
|
|
Name
(1)
|
Executive
Contributions
in Last Fiscal
Year
(2)
|
Company
Contributions
in Last Fiscal
Year
(3)
|
Aggregate
Earnings
in Last
Fiscal
Year
|
Aggregate
Distributions
in Last
Fiscal Year
|
Aggregate
Balance at
Last Fiscal
Year-End
|
John Cox
|
-
|
$
69,663
|
$
1,754,852
|
-
|
$
15,953,089
|
John Greene
|
-
|
$
2,550
|
$
11
|
-
|
$
2,561
|
Rogério Vivaldi Coelho
|
-
|
$
2,271
|
$
10
|
-
|
$
2,281
|
Andrea DiFabio
|
$
16,171
|
$
27,090
|
$
3,560
|
-
|
$
480,498
|
Richard Brudnick
|
-
|
$
17,346
|
$
35,364
|
-
|
$
420,924
|
Notes to the 2017 Non-Qualified Deferred Compensation Table
|
(1)
|
|
Amounts shown in the “Executive Contributions in Last Fiscal Year,” “Company Contributions in Last Fiscal Year” and “Aggregate Earnings in Last Fiscal Year” columns reflect the aggregate totals from both the Biogen SSP and Bioverativ SSP. The table below shows the balances transferred from the Biogen SSP into the Bioverativ SSP on February 1, 2017.
|
|
|
|
Transferred Balance
($)
|
|
Name
|
John Cox
|
$
14,128,574
|
John Greene
|
-
|
Rogério Vivaldi Coelho
|
-
|
Andrea DiFabio
|
$
433,678
|
Richard Brudnick
|
$
368,214
|
|
(2)
|
|
Executive contribution amounts shown in this table are reflected in the “Salary” column of the Summary Compensation Table.
|
|
(3)
|
|
Company contribution amounts shown in this table include company matching contributions and are reflected in the “All Other Compensation” column of the Summary Compensation Table. Aggregate earnings are not reflected in the Summary Compensation Table.
|
Potential Payments Upon Employment Termination Table
In connection with our separation from Biogen, Biogen had entered into offer letter agreements with our NEOs (the “Offer Letters”), which provided for certain payments and benefits in the event of certain terminations of employment. In the event that, within one year following the separation, the NEO is involuntarily terminated other than for cause or resigns his or her employment following adverse changes to his or her terms and conditions of employment under certain circumstances following a change in control (and subject to execution of a release of claims), the NEO will be entitled to receive (i) a lump sum severance payment equal to 18 months (24 months for Mr. Cox) of base salary and target bonus, (ii) up to 9 months (12 months for Mr. Cox) of outplacement services and (iii) continued subsidized health benefits for up to 18 months (21 months for Mr. Cox). Mr. Cox’s Offer Letter further provides that no gross-up payment would be made in the event that a severance payment or benefit due to Mr. Cox is subject to a “golden parachute” excise tax, and specifies that if the amounts payable to Mr. Cox otherwise would be subject to such an excise tax, the payment amount will be reduced to the maximum amount that will not trigger the excise tax.
The following “Potential Payments upon Employment Termination Table” shows the estimated benefits payable to our NEOs upon a hypothetical qualifying termination of employment under their Offer Letters and 2017 Equity Plan under various termination scenarios as of December 31, 2017. Severance benefits are subject to the execution of a release agreement.
|
|
|
|
|
|
|
|
|
|
Named Executive Officer
|
Description
|
Without Cause ($)
|
|
Change in Control ($)
|
|
Death or Disability ($)
|
|
Retirement ($)
|
|
John Cox
|
Severance Amount
|
$3,200,000
|
(1)
|
$3,200,000
|
(1)
|
-
|
|
-
|
|
|
Value of Benefits Continuation
|
$91,095
|
(2)
|
$91,095
|
(2)
|
-
|
|
-
|
|
|
Value of Outplacement Services
|
$38,000
|
(3)
|
$38,000
|
(3)
|
-
|
|
-
|
|
|
Equity Acceleration
|
-
|
|
$15,457,106
|
(4)
|
$15,457,106
|
(5)
|
$13,911,395
|
(6)
|
|
TOTAL
|
$3,329,095
|
|
$18,786,201
|
|
$15,457,106
|
|
$13,911,395
|
|
John Greene
|
Severance Amount
|
$1,406,250
|
(1)
|
$1,406,250
|
(1)
|
-
|
|
-
|
|
|
Value of Benefits Continuation
|
$78,081
|
(2)
|
$78,801
|
(2)
|
-
|
|
-
|
|
|
Value of Outplacement Services
|
$28,000
|
(3)
|
$28,000
|
(3)
|
-
|
|
-
|
|
|
Equity Acceleration
|
-
|
|
$2,749,110
|
(4)
|
$2,749,110
|
(5)
|
-
|
|
|
TOTAL
|
$1,512,331
|
|
$4,262,161
|
|
$2,749,110
|
|
-
|
|
Rogério Vivaldi Coelho
|
Severance Amount
|
$1,125,000
|
(1)
|
$1,125,000
|
(1)
|
-
|
|
-
|
|
|
Value of Benefits Continuation
|
$87,592
|
(2)
|
$87,592
|
(2)
|
-
|
|
-
|
|
|
Value of Outplacement Services
|
$28,000
|
(3)
|
$28,000
|
(3)
|
-
|
|
-
|
|
|
Equity Acceleration
|
-
|
|
$2,749,110
|
(4)
|
$2,749,110
|
(5)
|
-
|
|
|
TOTAL
|
$1,240,592
|
|
$3,989,702
|
|
$2,749,110
|
|
-
|
|
Andrea DiFabio
|
Severance Amount
|
$1,039,501
|
(1)
|
$1,039,501
|
(1)
|
-
|
|
-
|
|
|
Value of Benefits Continuation
|
$87,592
|
(2)
|
$87,592
|
(2)
|
-
|
|
-
|
|
|
Value of Outplacement Services
|
$28,000
|
(3)
|
$28,000
|
(3)
|
-
|
|
-
|
|
|
Equity Acceleration
|
-
|
|
$2,651,818
|
(4)
|
$2,651,818
|
(5)
|
-
|
|
|
TOTAL
|
$1,155,093
|
|
$3,806,911
|
|
$2,651,818
|
|
-
|
|
Richard Brudnick
|
Severance Amount
|
$996,525
|
(1)
|
$996,525
|
(1)
|
-
|
|
-
|
|
|
Value of Benefits Continuation
|
$78,081
|
(2)
|
$78,081
|
(2)
|
-
|
|
-
|
|
|
Value of Outplacement Services
|
$28,000
|
(3)
|
$28,000
|
(3)
|
-
|
|
-
|
|
|
Equity Acceleration
|
-
|
|
$2,242,459
|
(4)
|
$2,242,459
|
(5)
|
-
|
|
|
TOTAL
|
$1,102,606
|
|
$3,345,065
|
|
$2,242,459
|
|
-
|
|
Notes to the Potential Payments upon Employment Termination Table
|
(1)
|
|
These amounts represent a lump sum severance payment equal to 18 months (24 months for Mr. Cox) of base salary and target bonus.
|
|
(2)
|
|
These amounts represent a company subsidy of COBRA coverage for 18 months (21 months for Mr. Cox) post-termination.
|
|
(3)
|
|
These amounts represent the reasonable cost of up to nine months (12 months for Mr. Cox) of executive-level outplacement services.
|
|
(4)
|
|
These amounts represent the value of Bioverativ long-term incentive awards that vest following a change in control using Bioverativ’s closing stock price of $53.92 on December 29, 2017. In the event of the executive’s Involuntary Employment Action (defined in the 2017 Equity Plan) within 24 months after a change in control, all unvested stock options and RSUs fully vest.
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(5)
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In the event of an executive’s death or disability, all outstanding awards under the Company’s long-term incentive program will vest in full.
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(6)
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As of December 31, 2017, Mr. Cox was the only NEO eligible for potential payments upon retirement. Under our 2017 Equity Plan, if an individual’s employment ceases as a result of Retirement (defined in the 2017 Equity Plan as termination on or after the age of 55 with at least ten (10) years of service, other than for cause or insufficient performance), 50% of any unvested award, plus an additional 10% of the number of shares covered by such unvested award for every full year of employment beyond ten (10) years by the Company, will become vested, and vested awards requiring exercise will remain exercisable until the earlier of (i) three (3) years from the date you cease to be employed, or (ii) the expiration of their stated term.
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Under our 2017 Equity Plan, “Involuntary Employment Action” generally means the NEO’s termination of employment within two years following a change in control, by us other than “For Cause” (as defined in our 2017 Equity Plan), or by the NEO upon the occurrence of any of the following:
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·
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any adverse or material alteration or diminution in the NEO’s authority, duties or responsibilities (other than a mere change in title or reporting relationship) as they existed immediately prior to the change in control or as the same may be increased from time to time thereafter;
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·
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a reduction in the NEO’s base salary or targeted bonus opportunity, in each case as in effect on the date prior to the change in control or as the same may be increased from time to time thereafter; or
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·
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a relocation of the NEO’s offices of employment that increase his or her daily commute by more than 100 miles on a round-trip basis.
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Under our 2017 Equity Plan, “For Cause” generally includes, but is not limited to, dishonesty with respect to the Company or any affiliate, insubordination, substantial malfeasance or non-feasance of duty, unauthorized disclosure of confidential information, breach by a participant of any provision of any employment, nondisclosure, non-competition or similar agreement between the participant and the Company or any affiliate and conduct substantially prejudicial to the business of the Company or an affiliate.
On January 31, 2018, we adopted the Severance Plan for U.S. Executive Officers (“Severance Plan”), which provides for severance payments and benefits to our NEOs upon an Involuntary Employment Action, which is defined substantially similarly to the 2017 Equity Plan.
As described in our Schedule 14d-9 filed with the SEC on February 8, 2018, in connection with the transactions contemplated by the Merger Agreement, our NEOs (other than Mr. Cox) will experience an Involuntary Employment Action under the terms of the Severance Plan immediately upon consummation of the transactions.
The Merger Agreement also contemplates that Parent and the Company will enter into an agreement with Mr. Cox whereby, among other things, (i) Mr. Cox will be deemed to have experienced an Involuntary Employment Action to terminate his employment under the Severance Plan effective on October 1, 2018 and receive the severance payments and benefits in accordance with the Severance Plan and (ii) Mr. Cox will agree to waive any right to terminate his employment prior to October 1, 2018 on the basis of an Involuntary Employment Action as a result of any “adverse or material alteration or diminution in authority, duties or responsibilities” or similar language under the Severance Plan, any letter agreement or similar agreement regarding severance entitlements so long as he serves in the position of Chief Executive Officer or Interim Chief Executive Officer of the Company (or the unit of Parent that is comprised of the Company’s business) and reports directly to Olivier Brandicourt with duties and responsibilities customary for a privately held subsidiary of a public company, subject to the notice and cure provisions contained in the Severance Plan.
Parent has agreed to provide tax reimbursement payments for Company employees who are subject to any excise taxes under Sections 280G and 4999 of the Code in connection with the Transactions, up to an aggregate limit of $20 million.
Compensation Committee Interlocks and Insider Participation
During the year ended December 31, 2017, the Compensation Committee members were Brian Posner, Geno Germano and Louis Paglia. Mr. Germano joined the Compensation Committee in May 2017. Each of these individuals is independent under Nasdaq listing standards. None of them:
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·
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is or was an employee of Bioverativ;
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·
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is or was a participant in a “related person” transaction with Bioverativ since the beginning of 2017; or
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·
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is an executive officer of another company at which one of our executive officers serves on the board of directors.
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DIRECTOR COMPENSATION
This section describes our compensation program for our non-employee directors and shows the compensation paid to or earned by our non-employee directors during 2017. Mr. Cox receives no compensation for his service on our Board of Directors.
Annual compensation for our non-employee directors is as follows:
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·
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An annual cash retainer of $60,000, which may, at the election of the director, be paid in shares in lieu of such cash retainer; and
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·
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For each term of service after the initial term, an annual equity retainer with a grant date value of $300,000, divided equally between options and full value awards such as RSUs. The annual equity retainer will generally vest on the first anniversary of the date of grant (subject to continued service) and will be granted pursuant to the 2017 Non-Employee Directors Equity Plan.
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In addition to the foregoing remuneration (i) our non-executive chair of the Board of Directors is entitled to receive an additional $100,000 annual retainer, $50,000 of which is payable in cash, and, in 2017, the remaining $50,000 was an initial supplemental grant of Options vesting ratably on each of the first three anniversaries of the date of grant and, for years subsequent to 2017, the remaining $50,000 will be a supplemental grant of RSUs generally vesting on the first anniversary of the date of grant (subject to continued service); (ii) the chair of each of the Audit Committee, Compensation Committee and the Corporate Governance Committee is entitled to receive an additional annual cash retainer of $25,000, $20,000 and $15,000, respectively; and (iii) directors serving on each of the Audit Committee, Compensation Committee and the Corporate Governance Committee, other than the chairs of such committees, receive an additional annual cash retainer of $10,000, $8,000 and $6,000, respectively.
The Company also reimburses directors for all reasonable out-of-pocket expenses associated with their duties as directors, including travel to and from Board and committee meetings.
In 2017, each non-employee director received an initial election grant of stock options with a grant date value of $450,000. The initial election grant will generally vest ratably on each of the first three anniversaries of the date of grant (subject to continued service) and be granted pursuant to the 2017 Non-Employee Directors Equity Plan. The non-
executive chairman also received a supplemental initial grant of stock options having a grant date value of $50,000. This supplemental initial grant vests ratably on each of the first three anniversaries of the date of grant.
Periodically we review our compensation program for our non-employee directors in relation to those of the peer group used for compensation purposes (as described above in our Compensation Discussion and Analysis) to assess its competitiveness and appropriateness. While the grant date fair values of the equity awards granted in 2017 were above the median of our peer group, our annual cash retainer for directors is below the median of that same peer group. The Compensation Committee and our Board of Directors believes that a somewhat heavier reliance on equity awards than that of our peer group companies will further align the interests of our directors with those of our stockholders.
2017 Director Compensation
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|
|
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Name
|
Fees
Earned or
Paid in
Cash
(1)
|
Stock
Awards
|
Option
Awards
(
2
)
|
All Other
Compensation
|
Total
|
Alexander J. Denner
|
$
85,012
|
—
|
$
450,006
|
—
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$
535,018
|
Geno J. Germano
|
$
43,520
|
—
|
$
450,008
|
—
|
$
493,528
|
Louis J. Paglia
|
$
99,012
|
—
|
$
450,006
|
—
|
$
549,018
|
Brian S. Posner
|
$
140,012
|
—
|
$
500,010
|
—
|
$
640,022
|
Anna Protopapas
|
$
63,852
|
—
|
$
449,997
|
—
|
$
513,849
|
Notes to the 2017 Director Compensation Table
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(1)
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Included in this column are fees earned by each of Dr. Denner, Mr. Paglia, Mr. Posner and Ms. Protopapas that were paid in 2017 through the election of such board member to receive shares of common stock in lieu of cash payment of the annual cash retainer fee pursuant to the 2017 Non-Employee Directors Equity Plan. On April 17, 2017, each of Dr. Denner, Mr. Paglia, Mr. Posner and Ms. Protopapas received 1,056 shares of common stock under the 2017 Non-Employee Directors Equity Plan in lieu of their annual cash retainer fee of $60,000. Mr. Germano joined the board of directors in May 2017 and was not eligible to make the election to receive shares in lieu of cash payment of the annual cash retainer fee.
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(2)
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Reflects the grant date fair value of the initial election grant, and in the case of Mr. Posner, the supplemental initial grant of stock options made in 2017 to non-employee directors granted under the 2017 Non-Employee Directors Equity Plan, as described in the narrative preceding this table. Grant date values were calculated based on the assumptions and methodologies set forth in Note 13 of the audited consolidated financial statements included in our Form 10-K filed on February 14, 2018.
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Director Equity Outstanding at 2017 Fiscal Year-End
The following table summarizes the equity awards that were outstanding as of December 31, 2017, for each of the non-employee directors serving during 2017.
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Option Awards
(1)
|
|
Stock Awards
|
Name
|
Number of Securities Underlying Unexercised Options
|
|
Number of Shares or Units of Stock That Have Not Vested
|
Alexander J. Denner
|
26,818
|
|
—
|
Geno J. Germano
|
21,729
|
|
—
|
Louis J. Paglia
|
26,818
|
|
—
|
Brian S. Posner
|
29,798
|
|
—
|
Anna Protopapas
|
23,006
|
|
—
|
Notes to the Director Equity Outstanding at 2017 Fiscal Year-End Table
|
(1)
|
|
All stock options were granted with a ten-year term. Stock options vest in three equal annual installments from the grant date.
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