SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant ý | ||
Filed by a Party other than the Registrant o |
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Preliminary Proxy Statement |
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Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) |
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Definitive Proxy Statement |
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Definitive Additional Materials |
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Soliciting Material under §240.14a-12 |
Regeneron Pharmaceuticals, Inc. | ||||
(Name of Registrant as Specified In Its Charter) |
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant) |
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Payment of Filing Fee (Check the appropriate box): |
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No fee required. |
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Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. |
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Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. |
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MANAGEMENT LETTER TO SHAREHOLDERS |
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In 2018, we are celebrating the 30th anniversary of Regeneron's incorporation. A lot has changed since our early days, but many things remain constant, including our core mission of bringing important new medicines to people with serious diseases. We have always taken a long-term view to our business, investing in science and technology that we believe will drive innovation today and for many years to come. This investment has yielded six FDA-approved medicines and a robust, internally discovered and developed product pipeline. In 2017, we received U.S. Food and Drug Administration (FDA) and European Commission approvals for two important new medicines, DUPIXENT® (dupilumab, blocking the IL-4 and IL-13 pathways) Injection for adults with moderate-to-severe atopic dermatitis and KEVZARA® (sarilumab, blocking the IL-6 pathway) Injection for adults with moderately to severely active rheumatoid arthritis, both of which were homegrown in our laboratories. We were one of only three companies to obtain multiple FDA approvals for novel medicines in 2017, and in its overview of 2017 approvals, the FDA highlighted DUPIXENT as one of two notable examples of first-in-class medicines with "potential for strong positive impact on the health of the American people." We also continued to bring EYLEA® (aflibercept, blocking VEGF) Injection to more people in need, achieving nearly $6 billion in global sales in 2017, together with our ex-U.S. collaborator Bayer. In addition, the United States Court of Appeals for the Federal Circuit ordered a new trial on the issues of written description and enablement and vacated the permanent injunction in the ongoing litigation regarding PRALUENT® (alirocumab, blocking PCSK9) Injection. With positive results from the large cardiovascular ODYSSEY OUTCOMES trial announced in early 2018, we hope that PRALUENT will be able to deliver on its promise of helping the many patients at high cardiovascular risk who are not adequately treated with statins. In 2018, we are anticipating two additional FDA approval decisions: dupilumab for the treatment of adults and adolescents (12 years+) with moderate-to-severe asthma; and cemiplimab, our PD-1 antibody, in advanced cutaneous squamous cell carcinoma, a difficult-to-treat skin cancer. Our clinical-stage pipeline includes 16 important new product candidates, including fully human antibodies and bispecific antibodies, in multiple different therapeutic areas, including cancer, diabetic eye diseases, pain, muscle atrophy, and allergic disease. With DUPIXENT's approval in adults with uncontrolled moderate-to-severe atopic dermatitis and strong clinical data in multiple investigational settings (asthma, eosinophilic esophagitis, and nasal polyps), we see potential to change the practice of medicine in allergic diseases. We are further evaluating dupilumab in pediatric patients, in patients who suffer from multiple allergic conditions at the same time, as well as in people with peanut allergy and grass allergy. With the accelerated development of REGN3500, our IL-33 antibody which may also have a potential impact on diseases like atopic dermatitis, asthma, and chronic obstructive pulmonary disease, allergic diseases will be a focus of the company for many years to come. We also continue to actively develop and refine new technologies that can improve and expedite the drug development process. One major technology initiative, the Regeneron Genetics Center (RGC), is one of the leading genomics efforts in the world. To date, the RGC has sequenced exomes from 300,000 volunteers, enabled through collaborations with health-record pioneers like the Geisinger Health System and UK Biobank. Early in 2018, we were proud to form a novel, pre-competitive consortium with other leading life sciences companies to fund the RGC's sequencing of the 500,000 individuals in the UK Biobank populationone of the largest human sequencing efforts in the worldadvancing Regeneron's research and accelerating delivery of this unprecedented "big data" resource to the global research community. |
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REGENERON PHARMACEUTICALS, INC.
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NOTICE OF
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The 2018 Annual Meeting of Shareholders of Regeneron Pharmaceuticals, Inc. (the "Company") will be held on Friday, June 8, 2018, commencing at 10:30 a.m., Eastern Time, at the Westchester Marriott Hotel, 670 White Plains Road, Tarrytown, New York, for the following purposes: 1 to elect three Class III directors for a term of three years; 2 to ratify the appointment of PricewaterhouseCoopers LLP as the Company's independent registered public accounting firm for the fiscal year ending December 31, 2018; and 3 to act upon such other matters as may properly come before the meeting and any adjournment(s) or postponement(s) thereof. The board of directors has fixed the close of business on April 12, 2018 as the record date for determining shareholders entitled to notice of, and to vote at, the Annual Meeting and at any adjournment(s) or postponement(s) thereof. Pursuant to the rules of the Securities and Exchange Commission, we have elected to use the "Notice and Access" method of providing our proxy materials over the Internet. Accordingly, we will mail, beginning on or about April 23, 2018, a Notice of Internet Availability of Proxy Materials to our shareholders of record and beneficial owners as of the record date (other than (i) those who previously elected to receive proxy materials by e-mail, (ii) those who have previously asked to receive paper copies of the proxy materials, and (iii) shareholders who participate and hold shares of common stock in the Regeneron Pharmaceuticals, Inc. 401(k) Savings Plan). As of the date of mailing of the Notice of Internet Availability of Proxy Materials, all shareholders and beneficial owners will have the ability to access all of the proxy materials on a website referenced in the Notice of Internet Availability of Proxy Materials. The Notice of Internet Availability of Proxy Materials also contains a toll-free telephone number, an e-mail address, and a website where shareholders can request a paper or electronic copy of the proxy statement, our 2017 annual report, and/or a form of proxy relating to the Annual Meeting. These materials are available free of charge. The Notice also contains information on how to access and vote the form of proxy. As Authorized by the Board of Directors, |
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Joseph J. LaRosa
Senior Vice President, General Counsel and Secretary |
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April 23, 2018 |
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TABLE OF
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TABLE OF
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Note Regarding Forward-Looking Statements and Non-GAAP Financial Measures: See Appendix A for important
information regarding forward-looking statements and financial measures not calculated in accordance
with U.S. Generally Accepted Accounting Principles contained in this proxy statement.
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PROXY DASHBOARD
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GENERAL INFORMATION | ||||||
Meeting Date: |
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Time: |
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Location: |
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Record Date: |
JUNE 8, 2018 | 10:30 A.M., ET | WESTCHESTER MARRIOTT HOTEL | APRIL 12, 2018 | |||
670 White Plains Road,
Tarrytown, New York 10591 |
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PROXY HIGHLIGHTS
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The composition of our board of directors reflects our core principle of "science first": over half of our directors are members of the National Academy of Sciences, and our board members include two Nobel laureates and holders of many scientific awards. By having our board of directors heavily populated with top-science talent, we signal to our shareholders and employees our seriousness about the Company's core competencies and primary value driver. Our board also includes individuals with experience building shareholder value through all stages of corporate development, as well as governance, financial, and policy expertise. Five of our board's current 13 members are diverse by gender, race, or national origin.
Please refer to "Proposal No. 1: Election of Directors" for additional information.
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We pay close attention to the requirements applicable to us as a publicly traded company, including those relating to the audit of Regeneron's financial statements by our independent registered public accounting firm, PricewaterhouseCoopers LLP. In this proxy statement, we are asking you to ratify the appointment of PricewaterhouseCoopers LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2018.
Please refer to "Proposal No. 2: Ratification of Appointment of Independent Registered Public Accounting Firm" for additional information.
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GENERAL INFORMATION ABOUT THE MEETING
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ANNUAL
MEETING INFORMATION |
When is the Annual Meeting?
June 8, 2018
What time is the Annual Meeting? 10:30 a.m., ET
Where is the Annual Meeting? Westchester Marriott Hotel, 670 White Plains Road, Tarrytown, New York 10591
What form of identification do I need to be admitted to the meeting? If you attend the Annual Meeting in person, you will be asked to present valid, government-issued photo identification, such as a driver's license.
Where can I find directions to the Annual Meeting? Directions to this location are available on our website at http://newsroom.regeneron.com.
Can I vote at the Annual Meeting? Only shareholders of record at the close of business on the record date, April 12, 2018, are entitled to vote at the Annual Meeting. As of April 12, 2018, 105,949,824 shares of the Company's common stock, par value $0.001 per share ("common stock"), and 1,911,354 shares of Class A stock, par value $0.001 per share ("Class A stock"), were issued and outstanding. The common stock and the Class A stock vote together on all matters as a single class, with the common stock being entitled to one vote per share and the Class A stock being entitled to ten votes per share. |
Can I listen to the meeting live if I cannot attend in person?
The Annual Meeting will be webcast. Information about the webcast will be available on our website at http://newsroom.regeneron.com.
What is on the agenda at the meeting?
1 Election of three Class III directors for a term of three years
2 Ratification of the appointment of PricewaterhouseCoopers LLP as the Company's independent registered public accounting firm for the fiscal year ending December 31, 2018
Can I ask a question at the Annual Meeting? In-person attendees of the Annual Meeting will be given an opportunity to ask questions during a designated question-and-answer period. |
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What are the board's recommendations? |
The board of directors recommends that you vote:
election of each of the three nominated Class III directors (Proposal No. 1); and | ||
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ratification of the appointment of PricewaterhouseCoopers LLP as the Company's independent registered public accounting firm for 2018 (Proposal No. 2). |
What vote is required to approve each proposal? |
The following table summarizes the voting requirements applicable to the proposals to be voted on at the Annual Meeting:
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As noted above, abstentions will be counted as present for purposes of establishing a quorum at the Annual Meeting. | |
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Only relevant if you are the beneficial owner of shares held in "street name." If you are a shareholder of record and you do not cast your vote, no votes will be cast on your behalf on any of the items of business at the Annual Meeting. |
If any other matter is properly brought before the Annual Meeting, such matter also will be determined by the affirmative vote of a majority of the votes cast at the Annual Meeting.
Please note that cameras, other photographic equipment, or audio or video recording
devices will not be permitted at the Annual Meeting.
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INFORMATION |
If you would like to learn more about Regeneron, please visit our website at www.regeneron.com. The topics discussed on our website include: |
ABOUT
REGENERON |
Working at Regeneron
Our Science Research Mentorship Program The Regeneron Science Talent Search STEM Teaching Fellowship Our Graduate Internship Program |
Our Post-doctoral Training Program Regeneron employee volunteer programs Our patient support programs Our greenhouse gas emissions reduction efforts Our waste recycling, waste management, and energy conservation initiatives |
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| MEET THE BOARD | |||
As the first substantive order of business at the 2018 Annual Meeting, you have an opportunity to vote on three members of our board of directors. This is the right starting point not only because the board oversees Regeneron, but because understanding the Regeneron board leads to a better understanding of the Company and its business model.
As our President and CEO has observed, "Our dream when we started Regeneron was to build a company where the scientists would be the heroes." The composition of Regeneron's board reflects this founding principle: over half of our directors are members of the National Academy of Sciences, and our board members include two Nobel laureates and holders of many scientific awards. In addition, the board includes individuals with experience building shareholder value through all stages of corporate development. Various members bring substantial governance experience gained from service on other boards and others bring financial, policy, and management expertise. Five of our board's current 13 members are diverse by gender, race, or national origin.
The table below summarizes key qualifications, skills, or attributes most relevant to the decision to nominate the director to serve on the board of directors for each of our director nominees and directors (12 in total) expected to continue to serve immediately following the Annual Meeting. A mark indicates a specific area of focus or expertise on which the board of directors relies most. The lack of a mark does not mean the director does not possess that qualification or skill. Each director biography below describes these qualifications and relevant experience in more detail. We believe the table below demonstrates the breadth and diversity of the collective experience, expertise, and skills of our board of directors.
Experience,
Expertise, or Attribute |
Bonnie
L. Bassler, Ph.D. |
Michael
S. Brown, M.D. |
N.
Anthony Coles, M.D. |
Joseph L.
Goldstein, M.D. |
Christine
A. Poon |
Arthur
F. Ryan |
Leonard S.
Schleifer, M.D., Ph.D. |
George
L. Sing |
Marc
Tessier- Lavigne, Ph.D. |
P. Roy
Vagelos, M.D. |
George D.
Yancopoulos, M.D., Ph.D. |
Huda Y.
Zoghbi, M.D. |
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NOMINEES FOR CLASS III DIRECTORS
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Director since: 2003 Age: 75 Independent
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In 2008, Mr. Ryan retired as the Chairman of the Board of Prudential Financial, Inc., one of the largest diversified financial institutions in the world. He served as Chief Executive Officer of Prudential until December 2007. Prior to joining Prudential in December 1994, Mr. Ryan served as President and Chief Operating Officer of Chase Manhattan Bank since 1990. Mr. Ryan managed Chase's worldwide retail bank between 1984 and 1990. From 2008 to 2013, Mr. Ryan served as a non-executive director of the Royal Bank of Scotland Group plc. Since April 2009, Mr. Ryan has served as a director of Citizens Financial Group, Inc., a retail bank holding company that became publicly traded in September 2014, and currently serves as its lead director, chair of the Compensation and Human Resources Committee, and a member of the Nominating and Corporate Governance Committee. Mr. Ryan's substantial leadership experience as a chief executive officer of leading companies in the banking and insurance industries, and his extensive business experience and financial expertise, led to the board's decision to nominate Mr. Ryan for reelection to the board. |
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Citizens Financial Group, Inc. |
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Board and Committee Membership |
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Royal Bank of Scotland Group plc |
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Board of Directors |
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Audit Committee |
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Corporate Governance and Compliance Committee (Chairman) |
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Prior Voting Results (2015) |
| 96.7% | | 3.3% | |
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Regeneron Securities Beneficially Owned as of April 12, 2018 |
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Common Stock |
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Biographical information is given, as of April 12, 2018, for each nominee for Class III Director and for each of the other directors whose term of office will continue after the 2018 Annual Meeting. All the nominees are presently directors and were previously elected by the shareholders. None of the corporations or other organizations referred to below with which a director has been or is currently employed or otherwise associated is a parent, subsidiary, or affiliate of the Company. |
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Director since: 1988 | |
Board and Committee Membership |
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Age: 68 | |
Board of Directors |
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Independent | |
Audit Committee (Chairman) |
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Compensation Committee |
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Prior Voting Results (2015) |
| 90.3% | | 9.7% | |
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Regeneron Securities Beneficially Owned as of April 12, 2018 |
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Common Stock |
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Options |
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CLASS I DIRECTORS CONTINUING IN OFFICE
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Director since: 2016 Age: 55 Independent
The National Academy of Sciences The American Academy of Arts and Sciences |
Dr. Bassler is currently the Chair of the Department of Molecular Biology and the Squibb Professor in Molecular Biology at Princeton University, and a Howard Hughes Medical Institute Investigator. Dr. Bassler has previously served as the President of the American Society for Microbiology, as well as on the boards for the American Association for the Advancement of Science, the National Science Foundation, and the American Academy of Microbiology. She has been elected to the National Academy of Sciences, the American Academy of Arts and Sciences, the Royal Society of London, and the American Philosophical Society, and has received many scientific honors, including a MacArthur Foundation Fellowship, the Lounsbery Award, and the Shaw Prize for Life Science and Medicine. Dr. Bassler received her B.Sc. from the University of California, Davis, and her Ph.D. in Biochemistry from Johns Hopkins University. She served as a Postdoctoral Fellow and Research Scientist at the Agouron Institute in La Jolla, California, before becoming a faculty member at Princeton University. Dr. Bassler served as a director of Sanofi from November 2014 to July 2016. Dr. Bassler's extensive research experience and her scientific and academic career and accomplishments, as well as her experience as a corporate director, led the board to conclude that Dr. Bassler should serve as a director. |
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The Royal Society of London |
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Board and Committee Membership |
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The American Philosophical Society |
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Board of Directors |
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OTHER PUBLIC BOARDS (RECENT SERVICE) |
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Corporate Governance and Compliance Committee |
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Sanofi (until 2016) |
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Technology Committee |
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Prior Voting Results (2017) |
| 99.6% | | 0.4% | |
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Regeneron Securities Beneficially Owned as of April 12, 2018 |
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Common Stock |
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Options |
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SCIENTIFIC SOCIETY MEMBERSHIPS |
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Board and Committee Membership |
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The National Academy of Sciences |
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Board of Directors |
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The National Academy of Medicine |
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Corporate Governance and Compliance Committee |
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The Royal Society of London |
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Technology Committee (Chairman) |
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Prior Voting Results (2016)
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90.8% | | 9.2% | |
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Regeneron Securities Beneficially Owned as of April 12, 2018 |
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Common Stock |
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Options |
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Board and Committee Membership |
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Board of Directors |
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Technology Committee |
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Prior Voting Results (2016)
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99.4% | | 0.6% | |
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Regeneron Securities Beneficially Owned as of April 12, 2018 |
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Class A Stock |
| | | 1,726,565 | |
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Common Stock |
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Options |
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Board and Committee Membership |
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Board of Directors |
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Technology Committee |
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Prior Voting Results (2016)
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98.9% | | 1.1% | |
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Regeneron Securities Beneficially Owned as of April 12, 2018 |
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Class A Stock |
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Common Stock |
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CLASS II DIRECTORS CONTINUING IN OFFICE
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Director since: 2017 Age: 57 Independent
McKesson Corporation CRISPR Therapeutics AG (until 2017) Onyx Pharmaceuticals, Inc. (until 2013) |
Dr. Coles has served as Chairman and Chief Executive Officer of Yumanity Therapeutics, LLC, a company focused on transforming drug discovery for neurodegenerative diseases, since October 2014. Prior to this, from October 2013, Dr. Coles served as Chairman and CEO of TRATE Enterprises LLC, a privately held company. Dr. Coles served as President, Chief Executive Officer and Chairman of the Board of Onyx Pharmaceuticals, Inc., a biopharmaceutical company, from 2012 until 2013, having served as its President, Chief Executive Officer, and a member of its board of directors from 2008 until 2012. Prior to joining Onyx in 2008, he was President, Chief Executive Officer, and a member of the board of directors of NPS Pharmaceuticals, Inc., a biopharmaceutical company. Before joining NPS in 2005, he served in various leadership positions in the biopharmaceutical and pharmaceutical industries, including at Merck & Co., Inc., Bristol-Myers Squibb Company, and Vertex Pharmaceuticals Incorporated. In addition to having previously served as a director of Onyx and NPS, he was formerly a director of Laboratory Corporation of America Holdings, Campus Crest Communities, Inc., and CRISPR Therapeutics AG. Dr. Coles has been a director of McKesson Corporation since April 2014 and serves on the Compensation Committee and the Finance Committee of its board of directors. The experience of Dr. Coles as a seasoned executive and corporate director with extensive knowledge of highly regulated biopharmaceutical and pharmaceutical companies, as well as his in-depth knowledge and understanding of the regulatory environment in which Regeneron operates, led the board to conclude that Dr. Coles should serve as a director. |
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Board and Committee Membership |
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Board of Directors |
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Audit Committee |
| | | 9/9 | |
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| | | ||||
| | For | | Against/Withheld | ||
| | | | | | |
|
Prior Voting Results (2017)
|
|
99.7% | | 0.3% | |
| | | | | | |
| | | ||||
|
Regeneron Common Stock Beneficially Owned as of April 12, 2018 |
| ||||
| | | | | | |
|
Common Stock |
| | | 0 | |
| | | | | | |
|
Options |
| | | 4,350 | |
| | | | | | |
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|
| | |
2 |
|
Dr. Coles was elected as a member of the board and the Audit Committee effective January 27, 2017. |
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15 |
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SCIENTIFIC SOCIETY MEMBERSHIPS |
|
Board and Committee Membership |
| | 2017 Attendance | |
| | | | | | |
The National Academy of Sciences |
|
Board of Directors |
| | | 6/6 |
| | | | | | |
The National Academy of Medicine |
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Compensation Committee |
| | | 12/12 |
| | | | | | |
The Royal Society of London |
|
Technology Committee |
| | | 2/2 |
| | | | | | |
| | | ||||
| | For | | Against/Withheld | ||
| | | | | | |
|
Prior Voting Results (2017)
|
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84.6% | | 15.4% | |
| | | | | | |
| | | ||||
|
Regeneron Securities Beneficially Owned as of April 12, 2018 |
| ||||
| | | | | | |
|
Common Stock |
| | | 12,000 | |
| | | | | | |
|
Options |
| | | 37,090 | |
| | | | | | |
|
16 |
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Prudential Financial, Inc. |
|
Board and Committee Membership |
| | 2017 Attendance | |
| | | | | | |
The Sherwin-Williams Company |
|
Board of Directors |
| | | 6/6 |
| | | | | | |
Royal Philips Electronics |
|
Compensation Committee (Chairperson) |
| | | 12/12 |
| | | | | | |
|
Corporate Governance and Compliance Committee |
| | | 6/6 | |
| | | | | | |
| | | ||||
| | For | | Against/Withheld | ||
| | | | | | |
|
Prior Voting Results (2017)
|
|
84.0% | | 16.0% | |
| | | | | | |
| | | ||||
|
Regeneron Securities Beneficially Owned as of April 12, 2018 |
| ||||
| | | | | | |
|
Common Stock |
| | | 790 | |
| | | | | | |
|
Options |
| | | 101,870 | |
| | | | | | |
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|
17 |
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|
The National Academy of Sciences |
|
Board and Committee Membership |
| | 2017 Attendance | |
| | | | | | |
The National Academy of Medicine |
|
Board of Directors |
| | | 5/6 |
| | | | | | |
The American Philosophical Society |
|
Technology Committee |
| | | 2/2 |
| | | | | | |
| | | ||||
| | For | | Against/Withheld | ||
| | | | | | |
|
Prior Voting Results (2017) |
| 99.5% | | 0.5% | |
| | | | | | |
| | | ||||
|
Regeneron Securities Beneficially Owned as of April 12, 2018 |
| ||||
| | | | | | |
|
Common Stock |
| | | 960,640 | |
| | | | | | |
|
Options |
| | | 1,601,266 | |
| | | | | | |
|
18 |
|
|
|
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|
|
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|
|
|
The American Association for the |
|
Board and Committee Membership |
| | 2017 Attendance | |
| | | | | | |
Advancement of Science | |
Board of Directors |
| | | 6/6 |
| | | | | | |
|
Corporate Governance and Compliance Committee |
| | | 6/6 | |
| | | | | | |
|
Technology Committee |
| | | 2/2 | |
| | | | | | |
| | | ||||
| | For | | Against/Withheld | ||
| | | | | | |
|
Prior Voting Results (2017) |
| 97.7% | | 2.3% | |
| | | | | | |
| | | ||||
|
Regeneron Securities Beneficially Owned as of April 12, 2018 |
| ||||
| | | | | | |
|
Common Stock |
| | | 0 | |
| | | | | | |
|
Options |
| | | 5,931 | |
| | | | | | |
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19 |
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BOARD COMMITTEES |
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The board has a standing Audit Committee, Compensation Committee, and Corporate Governance and Compliance Committee, each of which is comprised entirely of independent directors. The Corporate Governance and Compliance Committee is responsible for reviewing and recommending for the board's selection candidates to serve on our board of directors and for overseeing all aspects of the Company's compliance program other than financial compliance. The board also has a standing Technology Committee. The board has adopted charters for the Audit Committee, Compensation Committee, Corporate Governance and Compliance Committee, and Technology Committee, current copies of which are available on our website at www.regeneron.com under the "Corporate Governance" heading on the "Investors & Media" page.
We show below information on the membership, key functions, and number of meetings of each board committee during 2017.
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20 |
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1 |
Ex Officio Member. |
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21 |
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22 |
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23 |
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24 |
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25 |
3 |
Based on information reported by our Peer Group companies in 2017. See "Compensation-Related MattersCompensation Discussion and AnalysisOur Compensation ProcessesPeer Data" below for a list of the companies included in our Peer Group. |
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26 |
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27 |
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28 |
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The following table and explanatory footnotes provide information with respect to compensation paid to Dr. Vagelos and each non-employee director for their service in 2017 in accordance with the policies, plans, and employment agreement described above: |
1 |
The amounts in column (d) reflect the aggregate grant date fair value of options awarded during the year ended December 31, 2017 pursuant to the Amended and Restated Regeneron Pharmaceuticals, Inc. 2014 Long-Term Incentive Plan or the Regeneron Pharmaceuticals, Inc. 2014 Long-Term Incentive Plan, as applicable. Assumptions used in the calculation of this amount do not take into account expected forfeitures and are otherwise described in Note 14 to the Company's audited financial statements for the fiscal year ended December 31, 2017 included in the 2017 Annual Report. | |
2 |
At December 31, 2017, the non-employee directors and Dr. Vagelos had the following stock option awards outstanding: Mr. Baker: 100,630; Dr. Bassler: 17,791; Dr. Brown: 42,130; Dr. Coles: 13,050; Dr. Goldstein: 49,380; Ms. Poon: 110,160; Mr. Ryan: 41,380; Mr. Sing: 115,630; Dr. Tessier-Lavigne: 69,909; Dr. Vagelos: 1,807,538; and Dr. Zoghbi: 17,791. | |
3 |
Dr. Coles was elected as a member of the board of directors on January 27, 2017; accordingly, his 2017 fees were prorated based on his election date. | |
4 |
Consists of the aggregate grant date fair value of the initial option award granted to Dr. Coles upon his election to the board of directors on January 27, 2017. | |
5 |
Consists of a Company contribution paid or payable on or before April 12, 2018 under the Regeneron Matching Gift Program in respect of charitable gifts made in 2017. | |
6 |
Consists of (i) $100,000 for the salary paid pursuant to the terms of our employment agreement with Dr. Vagelos, (ii) $4,000 for 401(k) Savings Plan matching contributions in respect of 2017 paid in
February 2018, and (iii) a $5,000 Company contribution paid or payable on or before April 12, 2018 under the Regeneron Matching Gift Program in respect of a charitable gift made in 2017.
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29 |
All officers of the Company are appointed annually and serve at the pleasure of the board of directors. The names, positions, ages, and background of the Company's executive officers as of April 12, 2018 are set forth below. There are no family relationships between any of our directors and executive officers. None of the corporations or other organizations referred to below with which an executive officer has previously been employed or otherwise associated is a parent, subsidiary, or affiliate of the Company. | ||
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Leonard S. Schleifer, M.D., Ph.D., 65, founded the Company in 1988, has been a Director and its President and Chief Executive Officer since its inception, and served as Chairman of the Board from 1990 through 1994. Dr. Schleifer, together with Regeneron's founding scientist, Dr. Yancopoulos, built and has managed the Company over the past 30 years. Dr. Schleifer received his M.D. and Ph.D. in Pharmacology from the University of Virginia. Dr. Schleifer is a licensed physician and is certified in Neurology by the American Board of Psychiatry and Neurology. |
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George D. Yancopoulos, M.D., Ph.D., 58, joined Dr. Schleifer in 1989 as founding scientist of the Company, and together they built and have managed the Company since then. Dr. Yancopoulos is currently President and Chief Scientific Officer, and has served on the board since 2001. He received his M.D. and Ph.D. from Columbia University. Dr. Yancopoulos was the 11th most highly cited scientist in the world in the 1990s, and in 2004 he was elected to be a member of the National Academy of Sciences. Dr. Yancopoulos, together with key members of his team, is a principal inventor and/or developer of the six FDA-approved drugs the Company has developed, EYLEA®, PRALUENT®, DUPIXENT®, KEVZARA®, ZALTRAP®, and ARCALYST®, as well as of its foundation technologies, including the TRAP technology, VelociGene® , and VelocImmune® . |
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Christopher Fenimore, 47, has been Vice President, Controller since March 2017. From January 2017 to March 2017, he served as Vice President, Deputy Controller, and previously served as Vice President, Financial Planning from January 2012 to December 2016. Prior to joining the Company in 2003, he was Vice President, Finance at Mojave Therapeutics, Inc. Mr. Fenimore's prior experience includes working as a supervising senior accountant at KPMG, as well as healthcare industry-focused venture capital and investment banking roles. Mr. Fenimore holds an M.A. in Biotechnology from Columbia University, an M.B.A. in Professional Accounting from Rutgers Business School, and a B.A. in Economics from Rutgers University. Mr. Fenimore is a Certified Public Accountant in the State of New York. |
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Robert E. Landry, 54, has been Senior Vice President, Finance since September 2013 and Chief Financial Officer since October 2013. Previously, Mr. Landry served as Senior Vice President, Treasurer, at Pfizer Inc. from October 2012 to August 2013 and Senior Vice PresidentFinance, Pfizer's Diversified Business, from October 2009 to October 2012. Prior to those roles, Mr. Landry held a number of positions at Wyeth, which was acquired by Pfizer Inc. in October 2009, including Treasurer and Principal Corporate Officer from 2007 to 2009, Director of Pharmaceutical Marketing and Sales of Wyeth's Australian affiliate from 2006 to 2007, and Chief Financial Officer of Wyeth's Australian and New Zealand affiliates from 2004 to 2006. |
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31 |
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Joseph J. LaRosa, 59, has been Senior Vice President, General Counsel, and Secretary since September 2011. Before joining Regeneron, Mr. LaRosa was Senior Vice President, General Counsel, and Secretary at Nycomed US Inc. Mr. LaRosa's prior experience includes working in a number of senior legal positions at Schering-Plough Corporation from 1993 to 2009, where he was a corporate officer and served most recently as Vice President, Legal Affairs, and a member of the Operations Management Team. Mr. LaRosa received his J.D. from New York University School of Law. | |
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Marion McCourt, 58, has been Senior Vice President, Commercial since February 2018. From April 2017 until joining the Company, Ms. McCourt served as the Principal Operating Officer and the Chief Operating Officer and President of Axovant Sciences, Inc. Ms. McCourt previously served as chief operating officer of Medivation, Inc. from February 2016 until its acquisition by Pfizer Inc. in September 2016. Previously, Ms. McCourt worked at Amgen Inc., where she most recently served as a Vice President in U.S. Commercial Operations from February 2014 to January 2016. From May 2013 to January 2014, Ms. McCourt served as Vice President and General Manager at Amgen where she was responsible for the bone health and primary care business unit. From 2012 to 2013, she was Chief Operating Officer for AstraZeneca U.S., a division of AstraZeneca plc. Her responsibilities included oversight and leadership of all U.S. commercial functions, including medical affairs, business development, finance, human resources, legal, operations, and corporate affairs. During her 12-year tenure at AstraZeneca, Ms. McCourt was President and Chief Executive Officer of AstraZeneca Canada Inc. from 2011 to 2012 and also held various other roles at AstraZeneca Pharmaceuticals LP, a subsidiary of AstraZeneca plc. She currently is a member of the boards of CytomX Therapeutics, Inc., a biopharmaceutical company, and SCYNEXIS, Inc., a drug-development company. Ms. McCourt received her B.S. in Biology from Lafayette College. |
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Neil Stahl, Ph.D., 61, has been Executive Vice President, Research and Development since January 2015. He previously served as Senior Vice President, Research and Development Sciences from January 2007 to December 2014, as Senior Vice President, Preclinical Development and Biomolecular Sciences from December 2000 to December 2007, and as Vice President, Preclinical Development and Biomolecular Sciences from January 2000 to December 2000. He joined the Company in 1991. Before becoming Vice President, Biomolecular Sciences in July 1997, Dr. Stahl was Director, Cytokines and Signal Transduction. Dr. Stahl received his Ph.D. in Biochemistry from Brandeis University. |
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Daniel P. Van Plew, 45, has been Executive Vice President and General Manager, Industrial Operations and Product Supply since January 2016. From April 2008 to December 2015, Mr. Van Plew served as Senior Vice President and General Manager, Industrial Operations and Product Supply. Prior to that date, he served as Vice President and General Manager, Industrial Operations and Product Supply since joining the Company in 2007. From 2006 until 2007, Mr. Van Plew served as Executive Vice President, R&D and Technical Operations of Crucell Holland B.V., a global biopharmaceutical company. Between 2004 and 2006, Mr. Van Plew held positions of increasing responsibility at Chiron Biopharmaceuticals, part of Chiron Corporation, a biotechnology company, most recently as Senior Director, Vacaville Operations. From 1998 until 2004, Mr. Van Plew held various managerial positions in the health and life sciences practice at Accenture, Ltd., a management consulting business. Mr. Van Plew received his M.S. in Chemistry from The Pennsylvania State University and his M.B.A. from Michigan State University. |
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32 |
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1 |
|
As of April 12, 2018, except as otherwise indicated; does not give effect to the previously announced retirement of Charles A. Baker effective as of the conclusion of the 2018 Annual Meeting. |
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33 |
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* |
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Carbon and Electricity baselines are reported based on the original Carbon Disclosure Project (CDP) reporting year; 2013 noted above corresponds to June 2013May 2014 reporting year. |
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34 |
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We are equally committed to conducting our business responsibly and ethically. This is demonstrated through the range of policies, practices, and initiatives we have implemented, encompassing compliance, anti-bribery and corruption, responsible sales and marketing, ethical clinical trials, and product quality and safety. |
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Building a better future. We are a long-standing supporter of science education and make major philanthropic investment to inspire future innovators, including our 10-year, $100 million dollar commitment to the Regeneron Science Talent Search, the nation's most prestigious pre-college science and mathematics competition. Science, technology, engineering, and math (STEM) education represents more than 96% of our corporate philanthropy grants made in 2017, not including medical grants and matched funds. |
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In 2017, we also held our first annual Day for Doing Good , a company-wide day of service that had over 50% employee participation. We were also proud to be added for the first time to the Civic 50 list of the most "community-minded" companies in the United States. |
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For more information about our corporate responsibility efforts and results, please refer to the 2017 Responsibility Report available on our website. |
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35 |
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SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE |
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Based solely upon a review of reports filed pursuant to Section 16(a) of the Exchange Act or written representations from reporting persons, the Company is not aware of any director, executive officer, or beneficial owner of more than 10% of our common stock who has not filed on a timely basis any report required by such Section 16(a) to be filed during or in respect of our fiscal year ended December 31, 2017. |
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36 |
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37 |
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"Antibody License and Collaboration Agreement"). In addition, in 2017, we recognized other Sanofi collaboration revenue of $119.1 million, a portion of which was recognized in connection with reimbursements by Sanofi for commercial
manufacturing activities. In 2017, we also funded an aggregate of $91.8 million of Sanofi's Phase 3 development costs for PRALUENT®, KEVZARA®, and DUPIXENT® under the Antibody License and Collaboration Agreement.
In 2017, we and Sanofi shared losses in connection with commercialization-related activities for PRALUENT, KEVZARA, and DUPIXENT, which resulted in us funding $442.6 million of such costs in the aggregate. In 2018, Sanofi has continued
to fund the agreed-upon worldwide research and development expenses incurred by us and Sanofi, we have continued to fund certain Phase 3 development costs, and we and Sanofi have continued to share certain commercialization-related revenues and
expenses under the Antibody License and Collaboration Agreement. The Antibody Discovery Agreement ended on December 31, 2017 without any extension and, therefore, funding from Sanofi under the Antibody Discovery Agreement ceased after 2017.
In 2017, Sanofi also funded $138.8 million of our research and development expenses under the Immuno-oncology Discovery and Development Agreement and $101.2 million under the Immuno-oncology License and Collaboration Agreement. In 2018, Sanofi has continued to fund certain of our research and development expenses under the Immuno-oncology Discovery and Development Agreement and the Immuno-oncology License and Collaboration Agreement, and we and Sanofi will share certain development and/or commercialization expenses for cemiplimab under the Immuno-oncology License and Collaboration Agreement (as amended effective as of January 7, 2018 by the letter agreement discussed below). A description of our antibody collaboration and our immuno-oncology collaboration with Sanofi is set forth in Note 3 to our audited financial statements for the fiscal year ended December 31, 2017 included in the 2017 Annual Report under the heading "a. SanofiAntibodies" and "a. SanofiImmuno-Oncology," respectively. In 2017, we recorded $24.8 million of revenue primarily related to a percentage of net sales of ZALTRAP® (ziv-aflibercept) Injection for Intravenous Infusion and manufacturing ZALTRAP commercial supplies for Sanofi under the amended and restated collaboration agreement relating to ZALTRAP. A description of the agreement is set forth in Note 3 to our audited financial statements for the fiscal year ended December 31, 2017 included in the 2017 Annual Report under the heading "a. SanofiZALTRAP." Amended and Restated Investor Agreement with Sanofi; 2018 Letter Agreement In January 2014, we entered into an Amended and Restated Investor Agreement with Sanofi, which was subsequently amended effective as of January 7, 2018 by the letter agreement discussed below. Pursuant to the Amended and Restated Investor Agreement, Sanofi has agreed to vote its shares as recommended by our board of directors, except that it may elect to vote proportionally with the votes cast by all of our other shareholders with respect to certain change-of-control transactions and to vote in its sole discretion with respect to liquidation or dissolution of our company, stock issuances equal to or exceeding 20% of the outstanding shares or voting rights of common stock and Class A stock (taken together), and new equity compensation plans or amendments if not materially consistent with our historical equity compensation practices. In addition, we are required under the Amended and Restated Investor Agreement to appoint an individual agreed upon by us and Sanofi to our board of directors. Subject to certain exceptions, we are required to use our reasonable efforts (including recommending that our shareholders vote in favor) to cause the election of this designee at our annual shareholder meetings for so long as (other than during the term of the letter agreement discussed below) Sanofi maintains an equity interest in us that is equal to the applicable Highest Percentage Threshold (as defined below). This designee is required to be "independent" of Regeneron, as determined under NASDAQ rules, and to not be a current or former officer, director, employee, or paid consultant of Sanofi. The current Sanofi designee, Dr. Coles, was elected by the board of directors in January 2017 and by the shareholders at the 2017 Annual |
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38 |
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Meeting as a Class II director with a term expiring at the 2020 Annual Meeting.
Under the Amended and Restated Investor Agreement, Sanofi also has three demand rights to require us to use all reasonable efforts to conduct a registered underwritten offering with respect to shares of our common stock held by Sanofi from time to time; however, shares of our common stock held by Sanofi from time to time may not be sold until December 20, 2020 (other than with respect to an aggregate of 1,400,000 shares, as to which we have agreed to waive such "lock-up" during the term of the letter agreement). These restrictions on dispositions are subject to earlier termination upon the occurrence of certain events, such as the consummation of a change-of-control transaction involving us or a dissolution or liquidation of Regeneron. Pursuant to the Amended and Restated Investor Agreement, Sanofi is bound by certain "standstill" provisions, which contractually prohibit Sanofi from seeking to directly or indirectly exert control of Regeneron or acquiring more than 30% of our Class A stock and common stock (taken together). This prohibition will remain in place until the earliest of (i) the later of the fifth anniversaries of the expiration or earlier termination of our Antibody License and Collaboration Agreement with Sanofi or our ZALTRAP® collaboration agreement with Sanofi, each as amended; (ii) our announcement recommending acceptance by our shareholders of a tender offer or exchange offer that, if consummated, would constitute a change of control involving us; (iii) the public announcement of any definitive agreement providing for a change of control involving us; (iv) the date of any issuance of shares of common stock by us that would result in another party's having more than 10% of the voting power of our outstanding Class A stock and common stock (taken together) unless such party enters into a standstill agreement containing certain terms substantially similar to the standstill obligations of Sanofi; or (v) other specified events, such as a liquidation or dissolution of Regeneron. Effective January 7, 2018, we and Sanofi and certain of Sanofi's direct and indirect subsidiaries entered into a letter agreement in connection with (i) the increase of the development budget amount for cemiplimab set forth in the Immuno-oncology License and Collaboration Agreement and (ii) the allocation of additional funds to certain proposed activities relating to the development of dupilumab and REGN3500 and non-approval trials of dupilumab (the "Dupilumab/REGN3500 Eligible Investments"). Pursuant to the letter agreement, we have agreed, among other things, to amend the definition of "Highest Percentage Threshold" to be the lower of (i) 25% of our outstanding shares of Class A stock and common stock (taken together) and (ii) the higher of (a) Sanofi's percentage ownership of Class A stock and common stock (taken together) on the termination date of the letter agreement and (b) the highest percentage ownership Sanofi attains following such termination date of our outstanding shares of Class A stock and common stock (taken together); and to grant a limited waiver of Sanofi's obligation to maintain the then-existing Highest Percentage Threshold during the term of the letter agreement in order to allow Sanofi to satisfy in whole or in part (a) its funding obligations with respect to the cemiplimab development costs under the Immuno-oncology License and Collaboration Agreement for the quarterly periods commencing on October 1, 2017 and ending on September 30, 2020 by selling up to 800,000 shares of our common stock directly or indirectly owned by Sanofi and (b) its funding obligations with respect to the costs incurred by or on behalf of the parties to the Antibody License and Collaboration Agreement with respect to the Dupilumab/REGN3500 Eligible Investments for the quarterly periods commencing on January 1, 2018 and ending on September 30, 2020 by selling up to 600,000 shares of our common stock directly or indirectly owned by Sanofi. If Sanofi desires to sell shares of our common stock during the term of the letter agreement to satisfy a portion or all of its funding obligations for the cemiplimab development and/or Dupilumab/REGN3500 Eligible Investments, we may elect to purchase, in whole or in part, such shares from Sanofi. If we do not elect to purchase such shares, Sanofi may sell the applicable number of shares (subject to certain daily and quarterly limits) in one or more open-market transactions. A more detailed description of the letter agreement with Sanofi is set forth in the 2017 Annual Report under Part I. Item 1. "BusinessCollaboration AgreementsCollaborations with Sanofi." |
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39 |
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40 |
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41 |
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43 |
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1 | The inclusion in this table of any Class A stock or common stock, as the case may be, deemed beneficially owned does not constitute an admission of beneficial ownership of those shares. | |
2 |
|
For each person listed who beneficially owns Class A stock (and for directors and executive officers as a group), the number of shares of common stock listed includes the number of shares of Class A stock listed as beneficially owned by such person (or persons in the case of directors and executive officers as a group). |
3 |
|
Based solely on an amendment to a Schedule 13D filed by Sanofi with the SEC on January 9, 2018. According to this amendment, 21,080,985 of the shares are held directly by sanofi-aventis Amérique du Nord and 2,799,552 of the shares are held directly by Aventisub LLC. sanofi-aventis Amérique du Nord is a direct, wholly-owned subsidiary of Sanofi. Aventisub LLC is an indirect, wholly-owned subsidiary of sanofi-aventis Amérique du Nord. Pursuant to the Amended and Restated Investor Agreement, dated as of January 11, 2014 (as amended), by and among Sanofi, sanofi-aventis US LLC, Aventis Pharmaceuticals Inc., and sanofi-aventis Amérique du Nord (collectively, the "Sanofi Parties"), and the Company, the Sanofi Parties have agreed to vote all shares of our voting securities they are entitled to vote from time to time as recommended by our board of directors, except that they may elect to vote proportionally with the votes cast by all of our other shareholders with respect to certain change-of-control transactions and to vote in their sole discretion with respect to liquidation or dissolution of Regeneron, stock issuances equal to or exceeding 20% of the outstanding shares or voting rights of common stock and Class A stock (taken together), and new equity compensation plans or amendments if not materially consistent with our historical equity compensation practices. See "The CompanyCertain Relationships and Related TransactionsTransactions with Related PersonsAmended and Restated Investor Agreement with Sanofi; 2018 Letter Agreement" above for further information regarding the Amended and Restated Investor Agreement with Sanofi. |
4 |
|
Based solely on an amendment to a Schedule 13G filed by BlackRock, Inc. on January 29, 2018. According to this amendment, BlackRock, Inc. has sole voting power as to 5,418,337 of the shares reported as beneficially owned and sole dispositive power as to all of the shares reported as beneficially owned. |
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44 |
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5 |
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Based solely on an amendment to a Schedule 13G jointly filed by FMR LLC and Abigail P. Johnson on February 13, 2018. According to this amendment, FMR LLC has sole voting power as to 813,612 of the shares reported as beneficially owned and sole dispositive power as to all of the shares reported as beneficially owned. Abigail P. Johnson is a Director, the Chairman, the Chief Executive Officer, and the President of FMR LLC. Members of the Johnson family, including Abigail P. Johnson, are the predominant owners, directly or through trusts, of Series B voting common shares of FMR LLC, representing 49% of the voting power of FMR LLC. The Johnson family group and all other Series B shareholders have entered into a shareholders' voting agreement under which all Series B voting common shares will be voted in accordance with the majority vote of Series B voting common shares. Accordingly, through their ownership of voting common shares and the execution of the shareholders' voting agreement, members of the Johnson family may be deemed to form a controlling group with respect to FMR LLC. Neither FMR LLC nor Abigail P. Johnson has the sole power to vote or direct the voting of the shares owned directly by the various investment companies (the "Fidelity Funds") advised by Fidelity Management & Research Company, a wholly owned subsidiary of FMR LLC, which power resides with the Fidelity Funds' Boards of Trustees. Fidelity Management & Research Company carries out the voting of the shares under written guidelines established by the Fidelity Funds' Boards of Trustees. |
6 |
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Based solely on a Schedule 13G filed by The Vanguard Group, Inc. According to this filing, The Vanguard Group, Inc. has sole voting power as to 111,220, shared voting power as to 18,188, sole dispositive power as to 5,367,013, and shared dispositive power as to 127,038 of the shares reported as beneficially owned. Vanguard Fiduciary Trust Company, a wholly-owned subsidiary of The Vanguard Group, Inc., is the beneficial owner of 86,682 shares as a result of its serving as investment manager of collective trust accounts. Vanguard Investments Australia, Ltd., a wholly-owned subsidiary of The Vanguard Group, Inc., is the beneficial owner of 64,326 shares as a result of its serving as investment manager of Australian investment offerings. |
7 |
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The address for each director and executive officer is c/o Regeneron Pharmaceuticals, Inc., 777 Old Saw Mill River Road, Tarrytown, New York 10591-6707. |
8 |
|
Includes 15,775 shares of Class A stock held in trust for the benefit of Dr. Schleifer's son, of which Dr. Schleifer is a trustee. |
9 |
|
Includes (i) 2,133,282 shares of common stock purchasable upon the exercise of options granted pursuant to the Regeneron Pharmaceuticals, Inc. Second Amended and Restated 2000 Long-Term Incentive Plan, the Regeneron Pharmaceuticals, Inc. 2014 Long-Term Incentive Plan, or the Amended and Restated Regeneron Pharmaceuticals, Inc. 2014 Long-Term Incentive Plan that are exercisable or become so within sixty days after April 12, 2018; and (ii) 5,754 shares of common stock held in an account under the Company's 401(k) Savings Plan. |
10 |
|
Includes (i) 1,601,266 shares of common stock purchasable upon exercise of options granted pursuant to the Regeneron Pharmaceuticals, Inc. Second Amended and Restated 2000 Long-Term Incentive Plan, the Regeneron Pharmaceuticals, Inc. 2014 Long-Term Incentive Plan, or the Amended and Restated Regeneron Pharmaceuticals, Inc. 2014 Long-Term Incentive Plan that are exercisable or become so within sixty days after April 12, 2018; (ii) 2,310 shares of common stock held in an account under the Company's 401(k) Savings Plan; (iii) 148,544 shares of common stock held in a charitable lead annuity trust, of which Dr. Vagelos is the trustee; (iv) 83,652 shares of common stock held in a trust for his grandchildren, of which Dr. Vagelos's wife is the trustee; (v) 1,203 shares of common stock held in trusts for his grandchildren, of which Dr. Vagelos and/or his wife are trustees; and (vi) 109,385 shares of common stock and 215,699 shares of common stock held by the Marianthi Foundation and the Pindaros Foundation, respectively, both of which are charitable foundations of which Dr. Vagelos is a director and an officer. Dr. Vagelos disclaims beneficial ownership of the shares held by these charitable foundations. |
11 |
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Of these shares, 23,367 shares are held in trust for the benefit of Dr. Yancopoulos's children and certain other family members; Dr. Yancopoulos is a trustee of the trust. The remaining 19,383 shares are held in custody for the benefit of Dr. Yancopoulos's children. |
12 |
|
Includes (i) 1,816,080 shares of common stock purchasable upon exercise of options granted pursuant to the Regeneron Pharmaceuticals, Inc. Second Amended and Restated 2000 Long-Term Incentive Plan, the Regeneron Pharmaceuticals, Inc. 2014 Long-Term Incentive Plan, or the Amended and Restated Regeneron Pharmaceuticals, Inc. 2014 Long-Term Incentive Plan that are exercisable or become so within sixty days after April 12, 2018; (ii) 5,728 shares of common stock held in an account under the Company's 401(k) Savings Plan; (iii) 900,000 shares held in separate grantor retained annuity trusts, of which Dr. Yancopoulos is the trustee; and (iv) 86,820 shares of common stock held in trust for the benefit of Dr. Yancopoulos's children and certain other family members, of which Dr. Yancopoulos is a trustee. |
13 |
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Consists of 4,350 shares of common stock purchasable upon exercise of options granted pursuant to the Regeneron Pharmaceuticals, Inc. 2014 Long-Term Incentive Plan or the Amended and Restated Regeneron Pharmaceuticals, Inc. 2014 Long-Term Incentive Plan that are exercisable or become so within sixty days after April 12, 2018. |
14 |
|
All shares of Class A stock are held by a limited partnership, of which Mr. Baker is a general partner. |
15 |
|
Includes 92,340 shares of common stock purchasable upon exercise of options granted pursuant to the Regeneron Pharmaceuticals, Inc. Second Amended and Restated 2000 Long-Term Incentive Plan, the Regeneron Pharmaceuticals, Inc. 2014 Long-Term Incentive Plan, or the Amended and Restated Regeneron Pharmaceuticals, Inc. 2014 Long-Term Incentive Plan that are exercisable or become so within sixty days after April 12, 2018. |
16 |
|
Consists of 5,931 shares of common stock purchasable upon exercise of options granted pursuant to the Regeneron Pharmaceuticals, Inc. 2014 Long-Term Incentive Plan or the Amended and Restated Regeneron Pharmaceuticals, Inc. 2014 Long-Term Incentive Plan that are exercisable or become so within sixty days after April 12, 2018. |
17 |
|
Consists of (i) 33,840 shares of common stock purchasable upon exercise of options granted pursuant to the Regeneron Pharmaceuticals, Inc. Second Amended and Restated 2000 Long-Term Incentive Plan, the Regeneron Pharmaceuticals, Inc. 2014 Long-Term Incentive Plan, or the Amended and Restated Regeneron Pharmaceuticals, Inc. 2014 Long-Term Incentive Plan that are exercisable or become so within sixty days after April 12, 2018; (ii) 12,349 shares of common stock held in a trust of which Dr. Brown and his spouse are trustees for the benefit of Dr. Brown's immediate family members; (iii) 5,000 shares of common stock held in a trust of which Dr. Brown's spouse is trustee for the benefit of Dr. Brown's immediate family members; and (iv) 4,500 shares of common stock held by a family charitable foundation of which Dr. Brown is a director and an officer and his wife is a director. Dr. Brown disclaims beneficial ownership of the shares referenced in (iii) and (iv). |
18 |
|
Includes 37,090 shares of common stock purchasable upon exercise of options granted pursuant to the Regeneron Pharmaceuticals, Inc. Second Amended and Restated 2000 Long-Term Incentive Plan, the Regeneron Pharmaceuticals, Inc. 2014 Long-Term Incentive Plan, or the Amended and Restated Regeneron Pharmaceuticals, Inc. 2014 Long-Term Incentive Plan that are exercisable or become so within sixty days after April 12, 2018. |
19 |
|
Includes 101,870 shares of common stock purchasable upon exercise of options granted pursuant to the Regeneron Pharmaceuticals, Inc. Second Amended and Restated 2000 Long-Term Incentive Plan, the Regeneron Pharmaceuticals, Inc. 2014 Long-Term Incentive Plan, or the Amended and Restated Regeneron Pharmaceuticals, Inc. 2014 Long-Term Incentive Plan that are exercisable or become so within sixty days after April 12, 2018. |
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45 |
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20 |
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Includes 33,090 shares of common stock purchasable upon exercise of options granted pursuant to the Regeneron Pharmaceuticals, Inc. Second Amended and Restated 2000 Long-Term Incentive Plan, the Regeneron Pharmaceuticals, Inc. 2014 Long-Term Incentive Plan, or the Amended and Restated Regeneron Pharmaceuticals, Inc. 2014 Long-Term Incentive Plan that are exercisable or become so within sixty days after April 12, 2018. |
21 |
|
Includes (i) 92,340 shares of common stock purchasable upon exercise of options granted pursuant to the Regeneron Pharmaceuticals, Inc. Second Amended and Restated 2000 Long-Term Incentive Plan, the Regeneron Pharmaceuticals, Inc. 2014 Long-Term Incentive Plan, or the Amended and Restated Regeneron Pharmaceuticals, Inc. 2014 Long-Term Incentive Plan that are exercisable or become so within sixty days after April 12, 2018; (ii) 3,000 shares of common stock held by Mr. Sing's spouse; (iii) 4,500 shares of common stock held by Mr. Sing's spouse as custodian for the benefit of their son; and (iv) 10,000 shares of common stock held in a trust for benefit of Mr. Sing's son. |
22 |
|
Includes 61,619 shares of common stock purchasable upon exercise of options granted pursuant to the Regeneron Pharmaceuticals, Inc. Second Amended and Restated 2000 Long-Term Incentive Plan, the Regeneron Pharmaceuticals, Inc. 2014 Long-Term Incentive Plan, or the Amended and Restated Regeneron Pharmaceuticals, Inc. 2014 Long-Term Incentive Plan that are exercisable or become so within sixty days after April 12, 2018. |
23 |
|
Includes (i) 103,092 shares of common stock purchasable upon exercise of options granted pursuant to the Regeneron Pharmaceuticals, Inc. Second Amended and Restated 2000 Long-Term Incentive Plan, the Regeneron Pharmaceuticals, Inc. 2014 Long-Term Incentive Plan, or the Amended and Restated Regeneron Pharmaceuticals, Inc. 2014 Long-Term Incentive Plan that are exercisable or become so within sixty days after April 12, 2018; (ii) 5,000 shares of restricted stock which vest on September 9, 2018; and (iii) 109 shares of common stock held in an account under the Company's 401(k) Savings Plan. |
24 |
|
Includes (i) 466,784 shares of common stock purchasable upon exercise of options granted pursuant to the Regeneron Pharmaceuticals, Inc. Second Amended and Restated 2000 Long-Term Incentive Plan, the Regeneron Pharmaceuticals, Inc. 2014 Long-Term Incentive Plan, or the Amended and Restated Regeneron Pharmaceuticals, Inc. 2014 Long-Term Incentive Plan that are exercisable or become so within sixty days after April 12, 2018; (ii) 6,977 shares of common stock held in separate grantor retained annuity trusts of which Dr. Stahl is the trustee; and (iii) 5,673 shares of common stock held in an account under the Company's 401(k) Savings Plan. |
25 |
|
Includes (i) 301,814 shares of common stock purchasable upon exercise of options granted pursuant to the Regeneron Pharmaceuticals, Inc. Second Amended and Restated 2000 Long-Term Incentive Plan, the Regeneron Pharmaceuticals, Inc. 2014 Long-Term Incentive Plan, or the Amended and Restated Regeneron Pharmaceuticals, Inc. 2014 Long-Term Incentive Plan that are exercisable or become so within sixty days after April 12, 2018; (ii) 6,043 shares of common stock held in a grantor retained annuity trust of which Mr. Van Plew is the trustee; and (iii) 1,488 shares of common stock held in an account under the Company's 401(k) Savings Plan. |
26 |
|
Consists of 5,931 shares of common stock purchasable upon exercise of options granted pursuant to the Regeneron Pharmaceuticals, Inc. 2014 Long-Term Incentive Plan or the Amended and Restated Regeneron Pharmaceuticals, Inc. 2014 Long-Term Incentive Plan that are exercisable or become so within sixty days after April 12, 2018. |
27 |
|
Includes (i) 7,179,796 shares of common stock purchasable upon exercise of options granted pursuant to the Regeneron Pharmaceuticals, Inc. Second Amended and Restated 2000 Long-Term Incentive Plan, the Regeneron Pharmaceuticals, Inc. 2014 Long-Term Incentive Plan, or the Amended and Restated Regeneron Pharmaceuticals, Inc. 2014 Long-Term Incentive Plan that are exercisable or become so within sixty days after April 12, 2018; (ii) 7,500 shares of unvested restricted stock; and (iii) 22,605 shares of common stock held in an account under the Company's 401(k) Savings Plan. |
28 |
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Represents less than 1%. |
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46 |
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TABLE OF
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INTRODUCTION
Regeneron's General Approach to Compensation |
48
48 |
COMPENSATION DASHBOARD
2017 Compensation Tables 2017 Summary Compensation Table |
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COMPENSATION DISCUSSION AND ANALYSIS |
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Components of Named Executive Officer
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Regeneron Pharmaceuticals, Inc.
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1 |
In this section, "we," "us," and "our" refer to the Company and, where applicable, to the Compensation Committee of the Company's Board of Directors. | |
2 |
These are determined in accordance with SEC rules, and for this year consist of our President and Chief Executive Officer ("CEO"); President and Chief Scientific Officer ("CSO"); Senior Vice President, Finance and Chief Financial Officer ("CFO"); and our two other highest-paid executives for 2017, our Executive Vice President, Research & Development and our Executive Vice President and General Manager, Industrial Operations and Product Supply. |
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48 |
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Our Company Culture
Our compensation model has been instrumental in furthering a culture of loyal and motivated employees with an entrepreneurial spirit. In each of the last five years, our attrition rate was less than half the industry average. For example, our 2017 turnover rate was 7.8% compared to an industry average of 18.3%, 3 with turnover of our scientists ranking among the lowest of all employee groups. We continued to retain employees well above the industry average and to attract new talent, even though our stock price declined in 2016 and remained relatively flat year-over-year in 2017. Stability and consistency have been important not only to our compensation model, but also our governance. We are led by the longest-serving founder CEO in the S&P 500. He, and our exceptionally stable management and scientific teams, have been the stewards of our long-term focus, and we believe that they are part of the formula for our success. We also believe that our compensation model has helped us avoid creating a culture where managers overly focus on short-term metrics, which could encourage decision-making that is not in the best interest of the long-term sustainability of our Company and our reputation. The emphasis on the long-term is a core Company belief, consistent with our history of growing through innovation and through a pipeline of internally developed medicines, rather than through price increases. In fact, Regeneron has never increased the price of any of its drugs, all of which were discovered and developed internally . Further, many of our employees effectively invest in Regeneron's future by holding their option awards long after they vest and could be exercised for a gain. We think this exemplifies our employees' belief in our future and the long-term ownership culture that we have created with our compensation program. Similarly, our CEO and CSO have generally held their vested, in-the-money option awards until nearly the end of the full 10-year option term. |
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Our Performance
Our compensation program underpins our strategy of delivering sustainable, long-term growth through continued innovation. We believe the success of our compensation program and our performance are best judged on a long-term basis. We think this approach is particularly appropriate because it allows investors to assess our pipeline progress and financial performance in the relevant context. |
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Over the last five years, we delivered on our strategic plan and made great strides as we brought important new medicines to the market; obtained regulatory approval for several new indications of our flagship drug, EYLEA® (aflibercept) Injection; advanced multiple new product candidates into clinical development; grew revenue and earnings; started to diversify our revenue stream; and strengthened our balance sheet. Operational performance highlights from this period include: New EYLEA Indications. We obtained U.S. Food and Drug Administration ("FDA") approval for three additional EYLEA indications (diabetic macular edema ("DME"), macular edema following branch retinal vein occlusion, and diabetic retinopathy in patients with DME), and grew EYLEA net product sales in the United States by 163%, to $3.7 billion. |
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3 |
Industry average is based on the Radford U.S. Life Sciences Trends Report for the relevant year. |
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49 |
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Newly Approved Treatments. We brought three important, novel treatments to patientsPRALUENT® (alirocumab) Injection, KEVZARA® (sarilumab) Injection, and DUPIXENT® (dupilumab) Injectioneach of which was both discovered and developed by Regeneron, and took important steps toward greater diversification of our revenues. In particular, the launch of DUPIXENT has compared favorably to other recent launches of antibody-based products targeting dermatological conditions, with DUPIXENT generating $256 million of global net product sales in the nine months it was on the market in 2017. 4 Pipeline Progress. We completed 57 clinical trials, including 16 pivotal studies, and advanced 12 product candidates into clinical development. Revenue Increase. Our progress with expanding our portfolio of internally discovered and developed marketed products translated into an increase in our revenues by 179%, to $5.9 billion. We achieved this organic growth without increasing the price of our products. New Income Growth. We increased our profitability as our net income grew by 190%, to $1.2 billion, and our diluted earnings per share increased by 178%, to $10.34. Strengthening Our Financial Condition. Our cash, cash equivalents, and marketable securities grew by 167%, to $2.9 billion, and we solidified our financial condition by repaying all of our outstanding convertible senior notes and purchasing outstanding warrants we issued as part of a 2011 financing transaction. Deployment of Capital to R&D. Over the last five years, we deployed an aggregate of $7.9 billion to research and development, excluding the additional $3.6 billion deployed to our R&D projects directly by our collaborators over this period. Importantly, our R&D spend was focused on organic growth, not growth through acquisitions. Human Genetics Initiative. We launched Regeneron Genetics Center® (the "RGC"), our human genetics initiative, the objective of which is to expand the use of human genetics for discovering and validating genetic factors that cause or influence a range of diseases where there are major unmet medical needs. Since its founding, the RGC has entered into a number of important collaborations, including those with the Geisinger Health System of Pennsylvania and the UK Biobank, and had sequenced over 250,000 exomes (the portions of a genome that code information for protein synthesis) as of December 31, 2017. Company Recognition. We were recognized four times as the No. 1 employer in the global biopharmaceutical industry by Science magazine, named four times as one of the "100 Best Companies to Work For" by FORTUNE magazine, and named five times as one of the world's top 10 Most Innovative Companies by Forbes . |
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4 |
Launch comparison is based on the number of total weekly prescriptions in the first nine months after launch. DUPIXENT global net product sales are recorded by our collaborator, Sanofi, and we and Sanofi share profits and losses from such sales. |
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As shown below, over the last five years, our financial growth has been driven primarily by the increase in the number of EYLEA indications and the growth of our EYLEA franchise. |
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5-Year Change in Operational Performance
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In this period, our stock outperformed the S&P 500 index, but, despite progress in many key areas of our business as described above, underperformed the S&P Biotechnology Select Industry Index.
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5 |
We define "direct pay" or "direct compensation" as total compensation as reported in the Summary Compensation Table in the applicable proxy statement, other than the amounts reported as "All other compensation." |
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Shareholder Feedback
While we believe our compensation model is the right one for our Company at this time and is supported by our long-term performance, we actively seek your input on compensation and governance matters and are always open to new ideas . We have instituted a robust shareholder outreach program. Last year, we engaged in direct one-on-one discussions with shareholders collectively representing approximately 53% of the shares of common stock outstanding as of December 31, 2017 (excluding shares held by our directors and executive officers and Sanofi). We encourage director participation as part of our shareholder engagement, and the Compensation Committee Chair has been involved in our outreach. See the subsection "Our Compensation ProcessesShareholder Input and Outreach" below for additional information. |
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COMPENSATION DISCUSSION AND ANALYSIS |
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OUR COMPENSATION PHILOSOPHY AND OBJECTIVES
We consider the following seven objectives when determining compensation of our NEOs and other executives:
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1. | Driving innovation through our ownership culture while balancing the dilutive impact of equity grants | |||||
2. | Design simplicity, long-term orientation, and avoidance of too much emphasis on short-term metrics | |||||
3. | At-risk, performance-based pay at all levels, with increased performance accountability as responsibility increases | |||||
4. | Year-over-year consistency in making compensation decisions | |||||
5. | Aligning our executive compensation with shareholder interests by linking compensation to the core elements of our long-term performance | |||||
6. | Using independent sources of expertise and comparative data to inform our decision-making | |||||
7. | Assessing our compensation objectives in light of measurable results |
CEO Grant as a Percentage of Basic Shares Outstanding
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Based on 2017 stock option award
information reported in the Summary Compensation Table included in this proxy statement for Regeneron and on the Market Composite Data. |
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6 |
See the subsection "Our Compensation ProcessesPeer Data" below for a list of the companies included in our Peer Group. |
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Industry information is based on the Market Composite Data referenced above. |
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OUR NEO
COMPENSATION HAS FIVE COMPONENTS |
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59 |
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However, using some degree of subjectivity in assessing the annual progress made within the product pipeline does not imply a lack of concrete performance considerations. For 2017, the Compensation Committee set the Company performance multiplier at 1.6, from a possible range of 0 to 2.0. The key factors that drove the Compensation Committee's decision included the following: |
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Regulatory Approvals for New Products |
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We received FDA and European Commission approvals for (1) DUPIXENT for the treatment of adults with moderate-to-severe atopic dermatitis and (2) KEVZARA for the treatment of adult patients with moderately to severely active rheumatoid arthritis. We were just one of three companies to have had more than one novel treatment approved by the FDA in 2017. |
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Support of Further Commercialization of Marketed Products |
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We submitted to the FDA the supplemental Biologics License Application (sBLA) for a 12-week dosing interval of EYLEA in patients with neovascular age-related macular degeneration. |
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A Phase 3 study of EYLEA for the treatment of non-proliferative diabetic retinopathy in patients without DME completed enrollment. |
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We reported positive results from Phase 3 studies of dupilumab for the treatment of asthma. A Phase 3 study in pediatric patients was also initiated. |
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Phase 3 studies of dupilumab in adolescent and pediatric patients with atopic dermatitis were initiated. |
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Two phase 3 studies of dupilumab in nasal polyps completed enrollment. |
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We reported positive results in the Phase 2 study of dupilumab in eosinophilic esophagitis. |
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Late-Stage Clinical Programs |
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We reported positive top-line results from a pivotal Phase 2 study of cemiplimab in advanced cutaneous squamous cell carcinoma ("CSCC"). The FDA granted Breakthrough Therapy designation to cemiplimab for the treatment of adults with metastatic CSCC and adults with locally advanced and unresectable CSCC. A Phase 3 study as a first-line treatment for non-small cell lung cancer and a Phase 3 study in cervical cancer were initiated. A potentially pivotal Phase 2 study in basal cell carcinoma was also initiated. |
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Phase 3 efficacy studies of fasinumab in osteoarthritis of the knee or hip were initiated, while the Phase 3 long-term safety study in osteoarthritis continued patient enrollment. A Phase 3 study in chronic low back pain in patients with concomitant osteoarthritis of the knee and hip was also initiated. |
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We reported negative data from our Phase 3 study of suptavumab in respiratory syncytial virus. Although the therapy showed signs of activity in one patient population, it failed to meet the primary endpoint. We have discontinued further development of suptavumab. |
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Earlier-Stage Clinical Programs and Advancement of New Product Candidates into Clinical Development |
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The FDA granted Breakthrough Therapy designation for evinacumab for the treatment of hypercholesterolemia in patients with homozygous familial hypercholesterolemia. |
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We advanced one new product candidate (REGN3918) into Phase 1 clinical development. |
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Our two Phase 2 studies of the angiopoietin2 antibody nesvacumab added to EYLEA did not provide sufficient differentiation to warrant Phase 3 development. |
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60 |
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Growth and Delivery of the Company's Industrial Operations and Product Supply Organization |
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Continued strong and reliable product-supply performance in support of Regeneron's growing demands despite supply-chain complexities. |
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Successfully launched and supplied the uptake of two newly marketed products. |
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Successfully completed all regulatory audits, and obtained FDA regulatory approval relating to our Raheen facility. |
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Financial Performance |
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Significant year-over-year revenue growth, which amounted to 21%, with $5.9 billion of revenues generated for the year ended December 31, 2017. |
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Estimated non-GAAP net income and diluted non-GAAP EPS growth for 2017 significantly in excess of the Board-approved financial plan (exluding the impact of the Tax Cuts and Jobs Act enacted in December 2017). |
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61 |
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8 |
In the case of our CEO, this is subject to the terms of his employment agreement. See the subsection "Compensation Dashboard2017 Compensation TablesPost-Employment CompensationLeonard S. Schleifer, M.D., Ph.D. Employment Agreement." | |
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62 |
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1 | These stock options all have an exercise price of $378.98 per share, the average of the high and low sales price per share of our common stock as quoted on the NASDAQ Global Select Market on the date of grant. All of these grants consist of non-qualified stock options, which vest ratably over a period of four years. Except as set forth below in the subsection "Compensation Dashboard2017 Compensation TablesPost-Employment Compensation," stock option vesting ceases, and unvested stock options are forfeited, upon termination of employment. | |||
2 | Mr. Landry was hired in 2013. | |||
3 | This adjustment reflects a realignment of responsibilities within the Company's research and development function. | |||
4 | This adjustment takes into account the increased importance to Regeneron's business, growth in the number of employees, and strong and reliable performance of the Company's Industrial Operations and Product Supply organization, including successful completion of all regulatory audits in 2017 and significant expansion of commercial and clinical manufacturing. |
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63 |
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64 |
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OUR COMPENSATION PROCESSES
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65 |
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66 |
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67 |
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68 |
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The Peer Group is also meant to provide a representative sample of companies with which we compete for talent. We periodically reassess the composition of the Peer Group and make changes as appropriate, taking into account factors such as changes in the Company's market capitalization and merger-and-acquisition activity impacting the existing Peer Group companies. The Compensation Committee reviewed the Peer Group in June 2017 and, based on the recommendation of Frederic W. Cook & Co., did not make any changes. As part of its assessment, the Compensation Committee took into account that, as of the approval date, Regeneron was the median company in the Peer Group based on market capitalization, revenues for the last four completed quarters, and the then-available reported number of employees, as shown in the table below. |
Source: Standard & Poor's Capital IQ.
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69 |
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70 |
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Due to the requirements set forth in Section 274(e)(2) of the Internal Revenue Code, Company-provided personal and guest air travel (which is provided by the Company only to the extent permitted under board-approved guidelines and a security policy adopted by the board based on an independent, third-party security study) results in a partial disallowance of the related corporate tax deductions. In 2017, this disallowance amounted to approximately $1.3 million. We take into account the deductibility of compensation in determining NEOs' compensation. However, we reserve the right to use our judgment to authorize compensation payments that are not deductible, such as when we believe that such payments are necessary to maintain the flexibility needed to attract talent, promote executive retention, reward performance, or attain other Company objectives, or as required to comply with the Company's contractual commitments. Prior to the enactment of the Tax Cuts and Jobs Act in December 2017, compensation attributable to stock options generally qualified as "performance-based" compensation and, as such, received favorable treatment under Section 162(m) of the Internal Revenue Code. Under the Tax Cuts and Jobs Act, effective for our fiscal year beginning January 1, 2018, the exception under Section 162(m) for performance-based compensation is no longer generally 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. In addition, once one of our NEOs is considered a covered employee subject to the deduction limitation of Section 162(m), 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 Tax Cuts and Jobs Act's changes to Section 162(m) on the Company and our compensation programs. |
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71 |
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We, the members of the Compensation Committee, have reviewed and discussed with management the Compensation Discussion and Analysis set forth above. Based on that review and discussion, we have recommended to the board of directors that the Compensation Discussion and Analysis be included in this proxy statement. |
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The Compensation Committee Christine A. Poon, Chairperson Charles A. Baker Joseph L. Goldstein, M.D. George L. Sing |
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None of the members of the Compensation Committee is currently, or has been at any time since our formation, one of our officers or employees. None of our executive officers serves as a member of the board of directors or compensation committee of any entity that has one or more executive officers serving as a member of our board of directors or Compensation Committee. |
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72 |
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COMPENSATION DASHBOARD |
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2017 COMPENSATION TABLES
2017 Summary Compensation Table
The following table and accompanying footnotes provide information regarding compensation earned by, or paid to, our NEOs during the last three fiscal years (other than with respect to Mr. Van Plew, who qualified as an NEO for 2017 but not for the prior two years).
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Name and principal position |
| Year | | Salary ($) | | Bonus ($) 1 | |
Stock
Awards ($) |
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Option
Awards ($) 2 |
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Non-Equity
Incentive Plan Compensation ($) 1 |
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All other
compensation ($) 3 |
| Total ($) | | ||||||||||||||||
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| | | 2017 | | 1,285,500 | |
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21,967,210 | | | 2,468,160 | | | | 787,188 | 4 | | 26,508,058 | | ||||||||
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Leonard S. Schleifer, M.D., Ph.D. |
| 2016 | | 1,242,000 | |
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24,631,012 | | | 2,235,600 | | | | 228,908 | | | 28,337,520 | | ||||||||||
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President and Chief Executive Officer |
| 2015 | | 1,200,000 | | 2,880,000 | |
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43,307,918 | |
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| 74,608 | | | 47,462,526 | | ||||||||||
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| | | 2017 | | 1,092,700 | |
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21,967,210 | | | 2,097,984 | | | | 141,345 | 5 | | 25,299,239 | | ||||||||
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George D. Yancopoulos, M.D., Ph.D. |
| 2016 | | 1,055,700 | |
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24,631,012 | | | 1,900,260 | | | | 180,547 | | | 27,767,519 | | ||||||||||
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President and Chief Scientific Officer |
| 2015 | | 1,020,000 | | 2,448,000 | |
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36,811,837 | |
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| 22,519 | | | 40,302,356 | | ||||||||||
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| | | 2017 | | 618,000 | |
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3,675,566 | | | 482,040 | | | | 19,130 | 6 | | 4,794,736 | | ||||||||
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Robert E. Landry |
| 2016 | | 585,600 | |
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4,121,229 | | | 439,200 | | | | 18,700 | | | 5,164,729 | | ||||||||||
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Senior Vice President, Finance and Chief Financial Officer |
| 2015 | | 517,500 | | 465,750 | |
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7,246,284 | |
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| 19,360 | | | 8,248,894 | | ||||||||||
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| | | 2017 | | 641,000 | |
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7,875,030 | | | 599,976 | | | | 21,210 | 7 | | 9,137,216 | | ||||||||
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Neil Stahl, Ph.D. |
| 2016 | | 619,300 | |
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9,787,960 | | | 557,370 | | | | 20,725 | | | 10,985,355 | | ||||||||||
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Executive Vice President, Research & Development |
| 2015 | | 550,000 | | 594,000 | |
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17,209,995 | |
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| 20,515 | | | 18,374,510 | | ||||||||||
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Daniel P. Van Plew |
| 2017 | | 560,000 | |
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7,875,030 | | | 524,160 | | | | 19,410 | 8 | | 8,978,600 | | ||||||||||
Executive Vice President and General Manager, |
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Industrial Operations and Product Supply 9 |
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1 |
Bonuses and non-equity incentive plan compensation amounts are shown in the year in which they were accrued and earned. Prior to 2016, the Company did not use a formal bonus plan for the NEOs, and bonus amounts in respect of 2015 are shown in the "Bonus" column. In 2016, the Company adopted the Cash Incentive Bonus Plan, which was utilized for cash incentives paid to the NEOs in respect of 2016 and 2017; such 2016 and 2017 cash incentives are reported in the "Non-Equity Incentive Plan Compensation" column in accordance with SEC rules. | |
2 |
The amounts in column (f) reflect the respective aggregate grant date fair values (disregarding estimated forfeitures) of option awards granted in 2017, 2016, and 2015, respectively, pursuant to the Amended and Restated Regeneron Pharmaceuticals, Inc. 2014 Long-Term Incentive Plan or the Regeneron Pharmaceuticals, Inc. 2014 Long-Term Incentive Plan, as applicable. Assumptions used in the calculation of these amounts are included in Note 14 to the Company's audited financial statements for the fiscal year ended December 31, 2017 included in the 2017 Annual Report. | |
3 |
See the subsection "Additional Compensation InformationPerquisites and Personal Benefits" below for further information. Certain 2017 perquisites and other personal benefits are quantified for each of the NEOs in the footnotes to this table below based on the actual additional cost incurred by us in providing the perquisite or other personal benefit. | |
4 |
Consists of (i) $20,724 for life insurance premiums, (ii) $23,696 for long-term disability insurance premiums, (iii) $11,797 for medical malpractice insurance premiums, (iv) $10,800 for 401(k) Savings Plan matching contributions in respect of 2017 paid in February 2018, (v) $10,410 for tax and financial planning advisory services, (vi) $280,000 for fees the Company paid on behalf of Dr. Schleifer associated with a filing required to be made by Dr. Schleifer under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, which related to an anticipated acquisition by Dr. Schleifer of common stock upon exercise of his stock options (as described further in the subsection "Additional Compensation InformationPerquisites and Personal Benefits" below), (vii) $243,618 for a tax gross-up related to the fees referenced in (vi), and (viii) $170,441 and $15,702 for personal use of Company-provided aircraft and secure car transportation, respectively, in each case in accordance with our security policy (calculated as described in the subsection "Additional Compensation InformationPerquisites and Personal Benefits" below). | |
5 |
Consists of (i) $10,800 for 401(k) Savings Plan matching contributions in respect of 2017 paid in February 2018, (ii) $10,410 for tax and financial planning advisory services, and (iii) $117,877 and $2,258 for personal use of Company-provided aircraft and secure car transportation, respectively, in each case in accordance with our security policy (calculated as described in the subsection "Additional Compensation InformationPerquisites and Personal Benefits" below). | |
6 |
Consists of (i) $10,800 for 401(k) Savings Plan matching contributions in respect of 2017 paid in February 2018 and (ii) $8,330 for tax and financial planning advisory services. | |
7 |
Consists of (i) $10,800 for 401(k) Savings Plan matching contributions in respect of 2017 paid in February 2018 and (ii) $10,410 for tax and financial planning advisory services. | |
8 |
Consists of (i) $9,000 for 401(k) Savings Plan matching contributions in respect of 2017 paid in February 2018 and (ii) $10,410 for tax and financial planning advisory services. | |
9 |
Mr. Van Plew qualified as an NEO for 2017 but not for the prior two years. |
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2017 Grants of Plan-Based Awards
The following table and explanatory footnotes provide information regarding the annual cash incentive and equity awards granted to our NEOs during 2017.
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Estimated Possible Payouts Under
Non-Equity Incentive Plan Awards 1 |
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All other
stock awards: number of shares of stock or |
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All other
option awards: number of securities underlying |
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Exercise or
base price of |
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Closing
price of Company common stock on |
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Grant date
fair value of stock and option |
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Name |
| Grant date | |
Threshold
($) |
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Target
($) |
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Maximum
($) |
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units
(#) |
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options
(#) |
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option awards
($/Sh) 2 |
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grant date
($/Sh) 2 |
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awards
($) 3 |
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| Leonard S. Schleifer, M.D., Ph.D. | | | | | | | | 1,542,600 | | 3,085,200 | | | | | | | | | | | | | | | | | | | | |||||||||
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| | | 12/12/2017 | 4 | | | | | | | | | | | | | | 139,474 | | | | 378.98 | | | | 381.72 | | | 21,967,210 | | |||||||||
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| George D. Yancopoulos, M.D., Ph.D. | | | | | | | | 1,311,240 | | 2,622,480 | | | | | | | | | | | | | | | | | | | | |||||||||
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| | | 12/12/2017 | 4 | | | | | | | | | | | | | | 139,474 | | | | 378.98 | | | | 381.72 | | | 21,967,210 | | |||||||||
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| Robert E. Landry | | | | | | | | 309,000 | | 556,200 | | | | | | | | | | | | | | | | | | | | |||||||||
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| | | 12/12/2017 | 4 | | | | | | | | | | | | | | 23,337 | | | | 378.98 | | | | 381.72 | | | 3,675,566 | | |||||||||
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| Neil Stahl, Ph.D. | | | | | | | | 384,600 | | 692,280 | | | | | | | | | | | | | | | | | | | | |||||||||
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| | | 12/12/2017 | 4 | | | | | | | | | | | | | | 50,000 | | | | 378.98 | | | | 381.72 | | | 7,875,030 | | |||||||||
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| Daniel P. Van Plew | | | | | | | | 336,000 | | 604,800 | | | | | | | | | | | | | | | | | | | | |||||||||
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| | | 12/12/2017 | 4 | | | | | | | | | | | | | | 50,000 | | | | 378.98 | | | | 381.72 | | | 7,875,030 | | |||||||||
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1 |
Cash incentive awards under the Regeneron Pharmaceuticals, Inc. Cash Incentive Bonus Plan. The actual cash incentive awards earned in respect of 2017 and paid out in January 2018 are reported as "Non-Equity Incentive Plan Compensation" in the Summary Compensation Table above. | |
2 |
These options have an exercise price equal to the average of the high and low sales price per share of the Company's common stock on the date of grant. Therefore, the closing price of our common stock on the grant date may be higher or lower than the exercise price of these options. | |
3 |
The amounts in this column represent the grant date fair value of the awards made pursuant to the Amended and Restated Regeneron Pharmaceuticals, Inc. 2014 Long-Term Incentive Plan. The assumptions used in the calculation of these amounts are included in Note 14 to the Company's audited financial statements for the fiscal year ended December 31, 2017 included in the 2017 Annual Report. | |
4 |
The NEO received a non-qualified stock option award that vests subject to continued employment at a rate of 25% per year over the first four years of the maximum ten-year option term. |
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Outstanding Equity Awards at 2017 Fiscal Year-End
The following table and explanatory footnotes provide information regarding unexercised stock options and unvested restricted stock awards held by our NEOs as of December 31, 2017.
1 |
This stock option award was granted to the NEO on December 12, 2017 and vests at a rate of 25% per year over the first four years of the option term. | |
2 |
This stock option award was granted to the NEO on December 16, 2016 and vests at a rate of 25% per year over the first four years of the option term. | |
3 |
This stock option award was granted to the NEO on December 16, 2015 and vests at a rate of 25% per year over the first four years of the option term. | |
4 |
This stock option award was granted to the NEO on December 16, 2014 and vests at a rate of 25% per year over the first four years of the option term. | |
5 |
This restricted stock award was granted to the NEO on September 9, 2013 and vests 100% on the fifth anniversary of the date of grant, subject to the NEO's continued employment. | |
6 |
Reflects the closing price of $375.96 per share of the Company's common stock on the NASDAQ Global Select Market on December 29, 2017. |
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2017 Option Exercises and Stock Vested
The following table and explanatory footnotes provide information with regard to amounts realized by our NEOs during 2017 as a result of the exercise of stock options or the vesting of restricted stock awards.
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| Option awards | | Stock awards | | |||||||||||||||||
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Name | |
Number of shares
acquired on exercise (#) |
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Value realized on
exercise ($) 1 |
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Number of shares
acquired onvesting (#) |
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Value realized on
vesting ($) 2 |
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Leonard S. Schleifer, M.D., Ph.D. | | | 250,000 | | | | 90,790,000 | | |
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George D. Yancopoulos, M.D., Ph.D. | | | 195,438 | | | | 70,975,264 | | |
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500,000
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Robert E. Landry | | | 9,000 | | | | 1,909,550 | | |
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Neil Stahl, Ph.D. | | | 50,839 | | | | 21,619,047 | | |
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Daniel P. Van Plew | |
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1 |
Amounts reflect the difference between the exercise price of the option(s) and the average of the high and low sales price per share of the Company's common stock on the NASDAQ Global Select Market on the exercise date(s). | |
2 |
Amount reflects the average of the high and low sales price per share of the Company's common stock on the NASDAQ Global Select Market on the vesting date. |
Post-Employment Compensation
As discussed in "Compensation DashboardAdditional Compensation InformationPotential Severance Payments," our NEOs are entitled to certain severance benefits upon the voluntary or involuntary termination of their employment. We provide additional information regarding the severance benefits available to our NEOs in the tables set out below in this subsection. For our CEO, the table shows the amounts payable under his employment agreement upon his involuntary or not-for-cause termination, termination in connection with a corporate change of control, and in the event of his disability or death. For the other NEOs, the table shows their post-termination compensation arrangements under our change in control severance plan upon an involuntary or not-for-cause termination in connection with a corporate change of control.
Leonard S. Schleifer, M.D., Ph.D., Employment Agreement
We entered into an employment agreement with our CEO, Dr. Schleifer, effective as of December 20, 2002, providing for his employment with the Company through December 31, 2003 and continuing thereafter on a year-by-year basis. On November 14, 2008, this employment agreement was amended and restated to bring the employment agreement into compliance with Section 409A of the Internal Revenue Code. Pursuant to this agreement, we agreed that in the event that Dr. Schleifer's employment is terminated by us other than for cause (as defined in the agreement) or is terminated by Dr. Schleifer for good reason (as defined in the agreement to include specified acts of constructive termination, together called an "involuntary termination"), we will pay Dr. Schleifer an amount equal to 125% of the sum of his base salary plus his average cash incentive paid over the prior three years. This amount will be paid in a lump-sum severance payment. In addition, we will continue to provide Dr. Schleifer and his dependents medical, dental, and life insurance benefits for 18 months. Subject to the discussion in the following paragraph, in the event that Dr. Schleifer's employment is terminated for any reason other than for cause, all of his unvested stock options will continue to vest in accordance with the terms of the applicable award grant and he will be entitled to exercise the stock options throughout their original term, which is generally ten years from the date of grant.
Upon an involuntary termination ( i.e. , a termination by the Company without cause or by Dr. Schleifer for good reason, each as defined in the agreement) within three years after a change of control of the Company or within three months prior to such a change of control, we will pay Dr. Schleifer an amount equal to three times the sum of his annual base salary plus his average cash incentive over the prior three years. This amount will be paid in a lump-sum severance payment. In addition, we will continue to provide Dr. Schleifer and his dependents medical, dental, and life insurance benefits for 36 months. Upon such an involuntary termination in connection with a change of control, Dr. Schleifer's outstanding stock options will vest immediately and remain exercisable throughout their original term, which is generally ten years from the date of grant. If aggregate severance payments to Dr. Schleifer in connection with a change of control exceed certain thresholds set forth in the Internal Revenue Code, then we will pay him an additional amount to cover any resulting excise tax obligations, unless the
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excise taxes could be eliminated by reducing Dr. Schleifer's cash severance payments and benefits under the agreement by less than 10%, in which case such benefits and payments will be reduced accordingly.
The following table reflects the potential payments to our CEO under his employment agreement assuming a termination effective December 31, 2017 under different scenarios (including following a change of control), as well as upon death or disability. The information in the table below is based on the assumptions set forth in the footnotes to the table; actual values and amounts may differ from those presented below.
Potential Severance Payments under Dr. Schleifer's Employment Agreement
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Cash
Severance ($) |
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Benefits
Continuation ($) |
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Death
Benefits 4 |
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Disability
Benefits ($) |
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Value of Accelerated
Stock Options |
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Cutback/
Gross-up 6 |
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Total
Amount ($) |
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| Involuntary Termination Following a Change of Control 1 | | | 11,114,500 | 2 | | | 247,928 | 3 | |
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| Involuntary Termination | | | 4,631,042 | 7 | | | 119,864 | 8 | |
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| Death | | | | | | | 88,778 | 8 | |
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| Disability | | | | | | | 119,864 | 8 | |
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| 674,888 | 10 | | | | | |
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794,752 | | |||||||
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1 |
For purposes of these calculations, (i) we used Dr. Schleifer's 2017 base salary and the annual cash incentives paid to Dr. Schleifer for performance in 2014, 2015, and 2016, respectively; (ii) we assumed that Dr. Schleifer received his annual cash incentive that was earned in 2017 and paid in 2018 (described in the Summary Compensation Table above); (iii) we took into consideration, for purposes of determining whether Dr. Schleifer was entitled to receive a gross-up payment under the terms of his employment agreement, the fact that Dr. Schleifer's stock options continue to vest according to their original vesting schedule following a voluntary or involuntary termination (other than in connection with a change of control); (iv) we assumed a 7% annual increase in medical premiums, 5% annual increase in dental premiums, and no increase in annual disability or life insurance premiums; (v) we assumed that the medical and dental insurance benefits received in 2018, 2019, and 2020 would be taxable and that Dr. Schleifer would be eligible for a tax gross-up for these benefits under the terms of his employment agreement; (vi) although Dr. Schleifer's employment agreement provides for restrictive covenants, including a six-month non-compete obligation, no specific value has been ascribed to these covenants solely for purposes of this calculation; and (vii) although certain payments to Dr. Schleifer would be subject to potential delays upon separation of service under Section 409A of the Internal Revenue Code, we did not attempt to determine which, if any, payments would be delayed. | |
2 |
Equal to three times the sum of (a) Dr. Schleifer's 2017 base salary and (b) the average annual cash incentive paid to Dr. Schleifer for performance in the three completed years prior to the termination date. For purposes of this calculation, we used Dr. Schleifer's annual cash incentives for performance in 2014, 2015, and 2016. | |
3 |
Equal to the estimated cost of providing Dr. Schleifer and his dependents medical, dental, and life insurance benefits for thirty-six months. | |
4 |
We maintain $1 million of term life insurance covering Dr. Schleifer payable to his designated beneficiary. | |
5 |
No amount is included for the value of accelerated stock options as all unvested options held by Dr. Schleifer as of December 31, 2017 had an exercise price that exceeded the closing sales price per share of the Company's common stock on the NASDAQ Global Select Market on December 29, 2017, the last business day of 2017, of $375.96. | |
6 |
Under Dr. Schleifer's employment agreement, if payments due in connection with a change of control are subject to excise taxes under Section 280G of the Internal Revenue Code, we will cut back the payments if the excise tax can be eliminated by reducing his cash severance payments and benefits by less than ten percent. Otherwise, we will pay him an additional "gross up" amount so that his after-tax benefits are the same as though no excise tax had been applied. We have determined that Dr. Schleifer would not be subject to excise taxes if he had been terminated on December 31, 2017 as a result of a change of control. | |
7 |
Equal to 1.25 times the sum of (a) Dr. Schleifer's 2017 base salary and (b) the average annual cash incentive paid to Dr. Schleifer for performance in the three completed years prior to the termination date. For purposes of this calculation, we used Dr. Schleifer's year-end cash incentive awards for performance in 2014, 2015, and 2016. | |
8 |
Equal to the estimated cost of providing Dr. Schleifer and his dependents medical, dental, and life insurance benefits for eighteen months. | |
9 |
As discussed in "Compensation DashboardAdditional Compensation InformationPotential Severance Payments," unvested stock options held by any employee (including Dr. Schleifer) become immediately exercisable upon his or her death. | |
10 |
Represents 35% of Dr. Schleifer's 2017 salary over a period of 18 months. We have assumed long-term disability coverage exists pursuant to Dr. Schleifer's employment agreement for the remaining 65% of Dr. Schleifer's salary. |
Change in Control Severance Plan
Each of the NEOs, other than our CEO, participates in our change in control severance plan that was adopted by the board of directors on January 20, 2006. The purposes of the plan are (i) to help us retain key employees, (ii) to help maintain the focus of such employees on our business and to mitigate the distractions caused by the possibility that we may be the target of an acquisition, and (iii) to provide certain benefits to such employees in the event their employment is terminated (or constructively terminated) after, or in contemplation of, a change in control. On November 14, 2008, the change in control severance plan was amended and restated to bring it into compliance with Section 409A of the Internal Revenue Code.
Under the plan, each participant is entitled to receive a cash severance payment in an amount equal to one, or, in designated cases, including with respect to the NEOs other than Dr. Schleifer, two times the sum of the participant's annual base salary and his or her average annual cash incentive over the prior three years if, within two years after or 180 days before a change
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in control, either the participant resigns his or her employment for Good Reason (as defined in the plan) or the participant's employment is terminated by the Company for any reason other than Cause (as defined in the plan). This amount will be paid in a lump-sum severance payment. A participant so terminated is also entitled to receive a pro-rata cash incentive for the year in which he or she is terminated based on the portion of the year the participant was employed by us. In addition, for either one or two years, as the case may be, plan participants will receive continuation of health care coverage and welfare benefits provided by us, to the extent permitted by our benefit plans, at a cost no greater than what the participant's cost would have been if he or she had continued his or her employment with the Company.
In the event that a plan participant resigns his or her employment for Good Reason (which generally conforms to the definition in Section 409A), or the participant's employment is terminated by the Company for any reason other than Cause, in either case within two years after or 180 days before a change in control, then the participant's stock options and other equity awards granted under our long-term incentive plans that would have vested prior to or upon the change in control will become vested on the change in control date, and the exercise period of such equity awards, and other equity awards held by the participant that otherwise would have expired, will be extended to the later of (i) thirty days following the first date after a change in control in which the shares underlying the equity award may be traded, and (ii) the permitted exercise date in the plan or grant assuming the change in control happened immediately prior to the participant's termination. However, in no event will any stock option or other equity award be extended (i) beyond the expiration date of the grant, or (ii) such that the grant will be subject to the additional tax under Section 409A of the Internal Revenue Code.
In the event that a participant would become subject to a "golden parachute" excise tax under Section 4999 of the Internal Revenue Code as a result of severance benefits and payments, the severance benefits and payments owed to the participant shall be reduced to an amount one dollar less than the amount that would subject the participant to the excise tax, unless the total severance benefits/payments net of the excise taxes are greater than the amount that the participant would receive following any such reduction.
The following table shows the potential payments to our NEOs (other than our CEO), upon their hypothetical termination (other than for Cause) or resignation for Good Reason, in the two years following, or the six months prior to, a change in control. The information in the table below assumes an effective termination or resignation date of December 31, 2017 and is further based on the assumptions set forth in the footnotes to the table; actual values and amounts may differ from those presented below.
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Potential Payments under Change in Control Severance Plan
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Name | |
Cash
Severance 1 ($) |
|
Benefits
Continuation 2 ($) |
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Value of Accelerated
Stock Options/ Restricted Stock 3 ($) |
| Cutback 4 | |
Total
Amount 5 ($) |
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George D. Yancopoulos, M.D., Ph.D. | | 6,298,267 | | | 115,140 | | |
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6,413,407 | | |||||
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Robert E. Landry | | 2,109,300 | | | 109,783 | | |
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1,879,800
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4,098,883 | | |||||
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Neil Stahl, Ph.D. | | 2,404,900 | | | 54,417 | | |
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2,459,317 | | |||||
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Daniel P. Van Plew | | 1,951,720 | | | 97,826 | | |
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2,049,546 | | |||||
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1 |
Equal to two times the sum of (a) the NEO's 2017 base salary and (b) the average annual cash incentives paid to the NEO over the prior three years. | |
2 |
Equal to the estimated cost of providing each NEO and his dependents medical, dental, vision, disability, and life insurance coverage for twenty-four months, plus the estimated cost of providing each NEO tax and financial planning advisory services for twenty-four months. | |
3 |
For Mr. Landry, the amount consists of the value of unvested restricted stock held by Mr. Landry as of December 31, 2017 based on the closing sales price per share of the Company's common stock on the NASDAQ Global Select Market on December 29, 2017, the last business day of 2017, of $375.96. No amounts are included for the value of accelerated stock options as all unvested options held by the NEOs as of December 31, 2017 had an exercise price that exceeded the December 29, 2017 closing sales price. | |
4 |
We have determined that all of the NEOs listed in the table above would have been under their applicable "golden parachute" safe harbor limits and not subject to any cutbacks or excise taxes if terminated on December 31, 2017. | |
5 |
For purposes of these calculations, (i) we used base salaries as of December 31, 2017 and annual cash incentives paid to the NEOs for performance in 2014, 2015, and 2016, respectively; (ii) we assumed that each NEO received his annual cash incentive that was earned in 2017 and paid in 2018 (described in the Summary Compensation Table above); (iii) we took into consideration, for purposes of determining whether each NEO was subject to a reduction under the terms of the change in control severance plan, the fact that each NEO's stock options vest in full following an involuntary termination without Cause or termination for Good Reason following a change in control (parachute payments for time vesting stock options and restricted stock were valued using Internal Revenue Code Treas. Reg. Section 1.28G-1 Q&A 24(c)); (iv) we assumed a 7% annual increase in medical premiums, 5% annual increase in dental premiums, 4% increase in vision premiums, and no increase in disability or life insurance premiums or employer cost of tax and financial planning advisory services for 2018 and 2019; (v) we assumed that the medical insurance benefits received in 2018 and 2019 would be taxable and that the NEOs would be eligible for a tax gross-up for these benefits under the terms of the change in control severance plan; (vi) although the change in control severance plan provides for restrictive covenants, including a one-year covenant prohibiting the solicitation of company employees, no specific value has been ascribed to these covenants; and (vii) although certain payments to the NEOs would be subject to potential delays upon separation of service under Section 409A of the Internal Revenue Code, we did not attempt to determine which, if any, payments would be delayed. |
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In order to ensure increased efficiencies and to provide a more secure traveling environment, the Company provides air transportation for certain executive and director travel in accordance with guidelines approved by our board of directors. Based on the recommendation of an independent, third-party security study, the guidelines and our security policy require Drs. Schleifer and Yancopoulos (as well as their spouses and children when they accompany them) to use, as much as practicable, Company-provided aircraft for all business and personal air travel. Regeneron covers the cost of any such personal air travel for up to $250,000 in incremental cost (as defined below) annually for each of Drs. Schleifer and Yancopoulos. Family members or other guests may accompany our NEOs and directors during Company-provided air business travel, space permitting, so long as they cover any incremental cost related to such guests (other than with respect to the family members of Drs. Schleifer and Yancopoulos as described above). In addition, in limited circumstances personal use of Company-provided air travel by our other NEOs or directors may be permitted if authorized by the Chairman and any incremental cost is paid by the lead passenger. Any required reimbursement or other payment of the incremental cost is made to the extent permitted by applicable Federal Aviation Administration rules. | ||
We determine the incremental cost of any Company-provided personal or guest air travel based on the direct variable operating cost. Items included in the calculation include (as applicable) fuel costs; landing, hangar or aircraft parking, and ground handling fees; in-flight catering; travel, lodging, and other expenses for flight crew; and other trip-related variable cost, including per hour accruals for maintenance service plans and the use of our fractional jet interests. Because Company-provided air transportation is used primarily for business travel, incremental costs exclude fixed costs that generally do not change based on usage, such as (as applicable) flight crew salaries; aircraft purchase or lease costs; depreciation; insurance costs; certain maintenance fees; and home-base hangar costs. When the aircraft is already flying to a destination for business purposes, only the direct variable costs associated with the guest (for example, catering), if any, are included in determining the aggregate incremental cost to Regeneron. If any aircraft flies empty before picking up or after dropping off a passenger for personal reasons, this "deadhead" segment would be included in the aggregate incremental cost based on the methodology described above. The amount of disallowed corporate tax deductions attributable to Company-provided personal and guest air travel is not included in the incremental cost calculation. | ||
We calculate the incremental costs of the secure car transportation provided by Regeneron as the average fuel cost per mile times total personal use miles plus the contractor rate (if any), salary, taxes, and benefits of drivers attributed to personal use based on the number of personal hours driven. Fixed lease costs and routine maintenance that would have been incurred in any event are not included. | ||
Amounts associated with personal or guest Company-provided air and secure car transportation are imputed as income to the NEOs to the extent required by applicable tax regulations. The NEOs do not receive a tax gross-up from us to cover their personal income tax obligations in respect of any such imputed income. | ||
The amounts disclosed in the "All other compensation" column of the Summary Compensation Table relating to personal and guest use of Company-provided air and secure car transportation in accordance with our security policy attributable to Drs. Schleifer and Yancopoulos are based on the incremental cost resulting from such transportation as described above. | ||
The Corporate Governance and Compliance Committee monitors business and any personal or guest Company-provided air travel on a periodic basis. |
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In 2017, we paid a $280,000 filing fee relating to the Hart-Scott-Rodino ("HSR") filing for Dr. Schleifer, as well as a tax "gross-up" payment of $243,618 to Dr. Schleifer to cover Dr. Schleifer's imputed income associated with the filing fee payment. The filing and the associated filing fee were triggered under the HSR regulations as a result of Dr. Schleifer's then-current and anticipated future total holdings of Regeneron stock exceeding a specified threshold. The Compensation Committee determined it appropriate to pay these amounts because the HSR filing obligation resulted from equity awards granted to Dr. Schleifer under the Company's compensation program and the price appreciation in Regeneron stock acquired by Dr. Schleifer over a period of time during which he made substantial contributions toward such appreciation. The Compensation Committee also recognized that Regeneron had required Dr. Schleifer (as well as other senior executives) to hold Regeneron stock under the Company's stock ownership guidelines and encouraged alignment of his interests with those of Regeneron's shareholders through share ownership. | ||
Additional information regarding perquisites and other personal benefits provided to our NEOs in, or with respect to, 2017 is given in the applicable footnotes to the Summary Compensation Table included in this proxy statement. |
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Note Regarding Forward-Looking Statements and Non-GAAP Financial Measures
This proxy statement includes forward-looking statements that involve risks and uncertainties relating to future events and the future performance of Regeneron Pharmaceuticals, Inc. (where applicable, together with its subsidiaries, "Regeneron" or the "Company"), and actual events or results may differ materially from these forward-looking statements. Words such as "anticipate," "expect," "intend," "plan," "believe," "seek," "estimate," variations of such words, and similar expressions are intended to identify such forward-looking statements, although not all forward-looking statements contain these identifying words. These statements concern, and these risks and uncertainties include, among others, the nature, timing, and possible success and therapeutic applications of Regeneron's products, product candidates, and research and clinical programs now underway or planned, including without limitation EYLEA® (aflibercept) Injection, DUPIXENT® (dupilumab) Injection, PRALUENT® (alirocumab) Injection, KEVZARA® (sarilumab) Injection, cemiplimab, fasinumab, and evinacumab; the likelihood and timing of achieving any of Regeneron's anticipated clinical development milestones; unforeseen safety issues resulting from the administration of products and product candidates in patients, including serious complications or side effects in connection with the use of Regeneron's product candidates in clinical trials; the likelihood and timing of possible regulatory approval and commercial launch of Regeneron's late-stage product candidates and new indications for marketed products, including without limitation EYLEA, DUPIXENT, PRALUENT, KEVZARA, cemiplimab, fasinumab, and evinacumab; the extent to which the results from the research and development programs conducted by Regeneron or its collaborators may be replicated in other studies and lead to therapeutic applications; ongoing regulatory obligations and oversight impacting Regeneron's marketed products (such as EYLEA, DUPIXENT, PRALUENT, and KEVZARA), research and clinical programs, and business, including those relating to patient privacy; determinations by regulatory and administrative governmental authorities which may delay or restrict Regeneron's ability to continue to develop or commercialize Regeneron's products and product candidates; competing drugs and product candidates that may be superior to Regeneron's products and product candidates; uncertainty of market acceptance and commercial success of Regeneron's products and product candidates; the ability of Regeneron to manufacture and manage supply chains for multiple products and product candidates; the ability of Regeneron's collaborators, suppliers, or other third parties to perform filling, finishing, packaging, labeling, distribution, and other steps related to Regeneron's products and product candidates; coverage and reimbursement determinations by third-party payers, including Medicare and Medicaid; unanticipated expenses; the costs of developing, producing, and selling products; the ability of Regeneron to meet any of its financial projections or guidance, and changes to the assumptions underlying those projections or guidance; the potential for any license or collaboration agreement, including Regeneron's agreements with Sanofi, Bayer, and Teva Pharmaceutical Industries Ltd. (or their respective affiliated companies, as applicable), to be cancelled or terminated without any further product success; and risks associated with intellectual property of others and pending or future litigation relating thereto, including without limitation the patent litigation proceedings relating to PRALUENT, the ultimate outcome of any such litigation proceedings, and the impact any of the foregoing may have on Regeneron's business, prospects, operating results, and financial condition. A more complete description of these and other material risks can be found in Regeneron's filings with the U.S. Securities and Exchange Commission, including its Form 10-K for the fiscal year ended December 31, 2017, including in the section thereof captioned "Item 1A. Risk Factors." Any forward-looking statements are made based on management's current beliefs and judgment, and the reader is cautioned not to rely on any forward-looking statements made by Regeneron. Regeneron does not undertake any obligation to update publicly any forward-looking statement, whether as a result of new information, future events, or otherwise.
This proxy statement uses non-GAAP net income, non-GAAP net income per share, and free cash flow, which are financial measures that are not calculated in accordance with U.S. Generally Accepted Accounting Principles ("GAAP"). These non-GAAP financial measures are computed by excluding certain non-cash and other items from the related GAAP financial measure. Non-GAAP adjustments also include the estimated income tax effect of reconciling items. Free cash flow is calculated as cash flows from operating activities as presented in the statement of cash flows under GAAP, less capital expenditures.
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90 |
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The Company makes such adjustments for items the Company does not view as useful in evaluating its operating performance. For example, adjustments may be made for items that fluctuate from period to period based on factors that are not within the Company's control (such as the Company's stock price on the dates share-based grants are issued) or items that are not associated with normal, recurring operations (such as changes in applicable laws and regulations). Management uses these non-GAAP measures for planning, budgeting, forecasting, assessing historical performance, and making financial and operational decisions, and also provides forecasts to investors on this basis. Additionally, such non-GAAP measures provide investors with an enhanced understanding of the financial performance of the Company's core business operations. However, there are limitations in the use of these and other non-GAAP financial measures as they exclude certain expenses that are recurring in nature. Furthermore, the Company's non-GAAP financial measures may not be comparable with non-GAAP information provided by other companies. Any non-GAAP financial measure presented by Regeneron should be considered supplemental to, and not a substitute for, measures of financial performance prepared in accordance with GAAP. A reconciliation of the Company's historical GAAP to non-GAAP results is included below.
Reconciliation of GAAP Net Income to Non-GAAP Net Income
(Unaudited)
(In thousands, except per share data)
|
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| | | | | | | |
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Year Ended December 31, | ||||||
| | | | | | | |
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2017 | 2016 | |||||
| | | | | | | |
GAAP net income |
$ | 1,198,511 | $ | 895,522 | |||
Adjustments: |
| | |||||
R&D: Non-cash share-based compensation expense |
| 271,878 | | 313,048 | |||
R&D: Up-front payments related to license and collaboration agreements |
| 25,000 | | 100,000 | |||
SG&A: Non-cash share-based compensation expense |
| 208,395 | | 231,183 | |||
COGS and COCM: Non-cash share-based compensation expense |
| 27,004 | | 15,647 | |||
Other expense: Loss on extinguishment of debt |
| 30,100 | | 467 | |||
Income tax effect of reconciling items above |
| (186,039 | ) | | (236,663 | ) | |
Income tax expense: Charge related to enactment of U.S. Tax Reform Act |
| 326,202 | | | |||
| | | | | | | |
Non-GAAP net income |
$ | 1,901,051 | $ | 1,319,204 | |||
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Non-GAAP net income per sharebasic |
$ |
17.88 |
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$ |
12.60 |
||
Non-GAAP net income per sharediluted |
$ | 16.32 | $ | 11.32 | |||
Shares used in calculating: |
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Non-GAAP net income per sharebasic |
| 106,338 | | 104,719 | |||
Non-GAAP net income per sharediluted |
| 116,518 | | 116,548 | |||
| | | | | | | |
Reconciliation of Free Cash Flows
(Unaudited)
(In thousands)
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||
| | |
|
Year Ended
December 31, 2017 |
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Net cash provided by operating activities |
$1,307,112 | |
Capital expenditures |
(272,626) | |
| | |
Free cash flows |
$1,034,486 | |
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91 |
you can consent to receiving all future proxy statements, proxy cards and annual reports Use any touch-tone telephone to transmit your voting instructions up until 11:59 proxy card in hand when you call and then follow the instructions. John Sample 234567 VOTE BY MAIL 1234567 123,456,789,012.12345 TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: KEEP THIS PORTION FOR YOUR RECORDS DETACH AND RETURN THIS PORTION ONLY THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. The Board of Directors recommends you vote FOR the following: 1. Election of Directors Nominees For 0 0 0 For 0 Against 0 0 0 Against 0 Abstain 0 0 0 Abstain 0 1 Arthur F. Ryan 2 George L. Sing 3 Marc Tessier-Lavigne The Board of Directors recommends you vote FOR the following proposal: 2. Ratification of the appointment of PricewaterhouseCoopers LLP as the Company's independent registered public accounting firm for the fiscal year ending December 31, 2018. NOTE: Such other business as may properly come before the meeting or any adjournment thereof. John Sample attorney, executor, administrator, or other fiduciary, please give full ANY CITY, ON A1A 1A1 partnership name by authorized officer. Signature [PLEASE SIGN WITHIN BOX] Date Signature (Joint Owners) Date 02 0000000000 1 OF 1 1 2 0000378423_1 R1.0.1.17 Please sign exactly as your name(s) appear(s) hereon. When signing as title as such. Joint owners should each sign personally. All holders must sign. If a corporation or partnership, please sign in full corporate or Investor Address Line 1 Investor Address Line 2 Investor Address Line 3 Investor Address Line 4 Investor Address Line 5 1234 ANYWHERE STREET SHARES CUSIP # JOB #SEQUENCE # VOTE BY INTERNET - www.proxyvote.com Use the Internet to transmit your voting instructions and for electronic delivery of information up until 11:59 P.M. Eastern Time the day before the cut-off date or meeting date. Have your proxy card in hand when you access the web site and follow the instructions to obtain your records and to create an electronic voting instruction form. ELECTRONIC DELIVERY OF FUTURE PROXY MATERIALS If you would like to reduce the costs incurred by our company in mailing proxy materials, electronically via e-mail or the Internet. To sign up for electronic delivery, please follow the instructions above to vote using the Internet and, when prompted, indicate that you agree to receive or access proxy materials electronically in future years. VOTE BY PHONE - 1-800-690-6903 P.M. Eastern Time the day before the cut-off date or meeting date. Have your 234567 1234567 Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717. NAME THE COMPANY NAME INC. - COMMON THE COMPANY NAME INC. - CLASS A THE COMPANY NAME INC. - CLASS B THE COMPANY NAME INC. - CLASS C THE COMPANY NAME INC. - CLASS D THE COMPANY NAME INC. - CLASS E THE COMPANY NAME INC. - CLASS F THE COMPA N Y NAME INC. - 401 K CONTROL # SHARES123,456,789,012.12345 123,456,789,012.12345 123,456,789,012.12345 123,456,789,012.12345 123,456,789,012.12345 123,456,789,012.12345 123,456,789,012.12345 x PAGE1 OF 2 REGENERON PHARMACEUTICALS, INC. 777 OLD SAW MILL RIVER ROAD TARRYTOWN, NY 10591-6707 ATTN: CORPORATE SECRETARY Investor Address Line 1 Investor Address Line 2 Investor Address Line 3 Investor Address Line 4 Investor Address Line 5 8 8 8 1 1234 ANYWHERE STREET ANY CITY, ON A1A 1A1 234567 234567 234567
Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting: The Annual Report, Notice & Proxy Statement is/ are available at www.proxyvote.com . REGENERON PHARMACEUTICALS, INC. Annual Meeting of Shareholders June 8, 2018 10:30 AM This proxy is solicited by the Board of Directors The undersigned hereby appoint(s) Leonard S. Schleifer, M.D., Ph.D. and Joseph J. LaRosa, and each of them individually, as lawful proxies, each with full power of substitution, to represent the undersigned, with all powers that the undersigned would possess if personally present, and to vote, as indicated on the reverse side of this card, all of the shares of Common Stock and Class A Stock of REGENERON PHARMACEUTICALS, INC. that the undersigned would be entitled to vote if personally present at the Annual Meeting of Shareholders of the Company to be held on June 8, 2018 or at any adjourned or postponed session thereof. This proxy revokes all prior proxies given by the undersigned. SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AT THE MEETING AND AT ANY ADJOURNMENTS OR POSTPONEMENTS THEREOF IN ACCORDANCE WITH THE SHAREHOLDER'S SPECIFICATIONS ABOVE. IF YOU SIGN AND RETURN YOUR PROXY CARD IN A TIMELY MANNER, BUT DO NOT INDICATE HOW THESE SHARES ARE TO BE VOTED, THIS PROXY WILL BE VOTED FOR THE ELECTION OF THE NOMINEES NAMED ABOVE AS DIRECTORS AND FOR PROPOSAL 2. THIS PROXY ALSO CONFERS DISCRETIONARY AUTHORITY WITH RESPECT TO MATTERS NOT KNOWN OR DETERMINED AT THE TIME OF THE MAILING OF THE NOTICE OF THE ANNUAL MEETING OF SHAREHOLDERS TO THE UNDERSIGNED. Continued and to be signed on reverse side 0000378423_2 R1.0.1.17