UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No.  )
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Preliminary Proxy Statement

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Definitive Proxy Statement

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Soliciting Material Pursuant to §240.14a-12
Ionis Pharmaceuticals, Inc.
(Name of Registrant as Specified In Its Charter)
 
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IONIS PHARMACEUTICALS, INC.
2855 Gazelle Court
Carlsbad, CA 92010
NOTICE OF 2021 ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JUNE 2, 2021
Dear Stockholders,
I am pleased to invite you to Ionis Pharmaceuticals, Inc.’s 2021 Annual Meeting of Stockholders. In light of the COVID-19 pandemic, to support the health and well-being of our stockholders, employees and directors, and taking into account federal, state and local guidance, the Annual Meeting will be held in a virtual meeting format only, via live webcast on the Internet, with no physical in-person meeting. You can attend and participate in the Annual Meeting online by visiting www.virtualshareholdermeeting.com/IONS2021, where you will be able to listen to the meeting live, submit questions and vote. As always, we encourage you to vote your shares prior to the Annual Meeting.
This booklet includes the agenda for this year’s Annual Meeting and the Proxy Statement. We will cover the formal items on the agenda during the Annual Meeting. Following the formal Annual Meeting, we will review the major developments of the past year and our plans for 2021 via webcast. You can find information regarding how to join the webcast on our website at ir.ionispharma.com. The Proxy Statement explains the matters we will discuss in the meeting and provides additional information about us.
Your vote is very important. Whether or not you plan to attend the meeting, please be sure to vote your shares as soon as possible to ensure your representation at the meeting. We are distributing our proxy materials under a Securities and Exchange Commission rule that allows us to furnish proxy materials to our stockholders over the Internet rather than in paper form. We believe this method of distribution reduces our environmental impact and costs without hindering our stockholders’ timely access to such important material. As a result, if you are a stockholder of record (that is, if your stock is registered with us in your own name) you will receive a Notice Regarding the Availability of Proxy Materials in the mail, which contains instructions on how to access our proxy materials and vote electronically through the Internet or to request printed proxy materials so you may vote by telephone or mail.
If your shares are registered in the name of a broker or other nominee, that nominee will forward the Notice Regarding the Availability of Proxy Materials to you and you can direct that nominee to vote your shares. Alternatively, if your nominee participates in a program provided through Broadridge Financial Solutions, Inc. that allows you to vote by telephone or through the Internet, your nominee will send you a voting form with telephone and Internet voting instructions.
If you plan to attend the virtual meeting and prefer to vote online, you may still do so even if you have already returned your proxy.
PLEASE NOTE, HOWEVER, THAT IF A BROKER, BANK OR OTHER NOMINEE HOLDS YOUR SHARES OF RECORD AND YOU WISH TO VOTE AT THE MEETING, YOU MUST OBTAIN A PROXY ISSUED IN YOUR NAME FROM THE BROKER, BANK OR OTHER NOMINEE.
In this document, unless the context requires otherwise, the words “Ionis,” “Company,” “we,” “our” and “us” refer only to Ionis Pharmaceuticals, Inc. and its subsidiaries and not to any other person or entity.
Sincerely,

Patrick R. O’Neil
Corporate Secretary

IONIS PHARMACEUTICALS, INC.
2855 Gazelle Court
Carlsbad, CA 92010
NOTICE OF 2021 ANNUAL MEETING OF STOCKHOLDERS
Date:
Wednesday, June 2, 2021
Time:
2:00 p.m. Pacific Time
Place:
www.virtualshareholdermeeting.com/IONS2021
Dear Stockholders,
At our 2021 Annual Meeting of Stockholders, we will ask you to:
Proposal 1:
elect our nominees, Brett Monia, Frederick Muto, and Peter Reikes, to our Board of Directors to serve as Directors for a three-year term;
Proposal 2:
approve an amendment of the Ionis Pharmaceuticals, Inc. 2011 Equity Incentive Plan to, among other things, increase the aggregate number of shares of common stock authorized for issuance under such plan by 6,700,000 shares to an aggregate of 29,700,000 shares and add a fungible share counting ratio;
Proposal 3:
make an advisory vote on executive compensation; and
Proposal 4:
ratify the Audit Committee’s selection of Ernst & Young LLP as independent auditors for our 2021 fiscal year.
Transact any other business that may be properly presented at the Annual Meeting.
The foregoing items of business are more fully described in the enclosed Proxy Statement. If you were an Ionis stockholder of record at the close of business on April 5, 2021 you may vote at the Annual Meeting.
The Annual Meeting will be a completely virtual meeting. To participate, vote or submit questions during the Annual Meeting via live webcast, please visit www.virtualshareholdermeeting.com/IONS2021. You will not be able to attend the Annual Meeting in person.
By order of the Board of Directors,

Patrick R. O’Neil
Corporate Secretary
Carlsbad, California
April 23, 2021
ALL STOCKHOLDERS ARE CORDIALLY INVITED TO ATTEND THE VIRTUAL MEETING VIA LIVE WEBCAST. WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE VOTE BY TELEPHONE OR INTERNET BY FOLLOWING THE INSTRUCTIONS INCLUDED IN THIS PROXY STATEMENT AND YOUR NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS OR PROXY CARD. ALTERNATIVELY, YOU MAY REQUEST A WRITTEN PROXY STATEMENT, AND COMPLETE, DATE, SIGN AND RETURN YOUR PROXY AS PROMPTLY AS POSSIBLE TO ENSURE YOUR REPRESENTATION AT THE MEETING. IF YOU RECEIVE YOUR PROXY MATERIALS BY MAIL, WE WILL INCLUDE A RETURN ENVELOPE (WHICH IS POSTAGE PREPAID IF MAILED IN THE UNITED STATES) FOR THAT PURPOSE. EVEN IF YOU HAVE GIVEN YOUR PROXY, YOU MAY STILL VOTE AT THE VIRTUAL MEETING VIA LIVE WEBCAST. PLEASE NOTE, HOWEVER, THAT IF YOUR SHARES ARE HELD OF RECORD BY A BROKER, BANK OR OTHER NOMINEE AND YOU WISH TO VOTE AT THE MEETING, YOU MUST OBTAIN FROM THE BROKER, BANK OR OTHER NOMINEE A PROXY ISSUED IN YOUR NAME.

IONIS PHARMACEUTICALS, INC.
2855 Gazelle Court
Carlsbad, CA 92010
PROXY STATEMENT
FOR THE 2021 ANNUAL MEETING OF STOCKHOLDERS

To Be Held on June 2, 2021
QUESTIONS AND ANSWERS ABOUT THESE PROXY MATERIALS AND VOTING
Why did I receive a Notice Regarding the Availability of Proxy Materials on the Internet?
Ionis’ Board of Directors (the “Board”) is soliciting your proxy to vote at the 2021 Annual Meeting of Stockholders, including at any adjournments or postponements of the meeting. We are distributing our Notice of Annual Meeting and Proxy Materials (the “Notice”) by mail using the Notice and Access procedures established by the United States Securities and Exchange Commission (the “SEC”). The Notice is important because it contains a control number and instructions that will allow you to access our proxy materials and vote electronically through the Internet or to request printed proxy materials so you may vote by telephone or mail. Your vote is very important. Whether or not you plan to attend the meeting, please be sure to vote your shares as soon as possible to ensure your representation at the meeting. All stockholders will have the ability to access the proxy materials on the website referred to in the Notice or request to receive a printed set of the proxy materials. You can find instructions on how to access the proxy materials over the Internet or to request a printed copy in the Notice.
We intend to mail the Notice on or before April 23, 2021 to all stockholders of record entitled to vote at the Annual Meeting.
Will I receive any other proxy materials by mail?
We may send you a proxy card, along with a second Notice, on or after May 3, 2021.
Where and when is the Annual Meeting?
The Annual Meeting will be held on Wednesday, June 2, 2021, at 2:00 p.m. Pacific Time. In light of the COVID-19 pandemic, to support the health and well-being of our stockholders, employees and directors, and taking into account federal, state and local guidance, the Annual Meeting will be held in a virtual meeting format only, via live webcast on the Internet, with no physical in-person meeting. To participate, vote or submit questions during the Annual Meeting via live webcast, please visit www.virtualshareholdermeeting.com/IONS2021.
If you cannot attend, please note that we will make a webcast of the presentation that follows the Annual Meeting available on the day of the meeting and for a limited time following the meeting at www.ionispharma.com.1
If you plan to attend the virtual meeting and prefer to vote online, you may still do so even if you have already returned your proxy.
How do I attend the Annual Meeting?
We will be hosting the Annual Meeting via live webcast on the Internet. You will not be able to attend the Annual Meeting in person. All stockholders at the close of business on April 5, 2021 can listen to and participate in the Annual Meeting live via the internet at www.virtualshareholdermeeting.com/IONS2021. The webcast will begin at 2:00 p.m. Pacific Time on June 2, 2021. Stockholders may vote and submit questions while connected to the Annual Meeting on the internet. A summary of the information you need to attend the Annual Meeting online is provided below.
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Any information that is included on or linked to our website is not part of this Proxy Statement or any registration statement or report that incorporates this Proxy Statement by reference.
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What do I need in order to be able to participate in the Annual Meeting online?
You will need the 16-digit control number included on your proxy card in order to be able to vote your shares or submit questions during the virtual Annual Meeting. Instructions on how to connect and participate in the Annual Meeting via the internet, including how to demonstrate proof of stock ownership, are posted at www.virtualshareholdermeeting.com/IONS2021.
What if I have technical difficulties or trouble accessing the live webcast of the Annual Meeting?
If you encounter any difficulties accessing the live webcast of the Annual Meeting or during the Annual Meeting, please call the telephone number that is listed at www.virtualshareholdermeeting.com/IONS2021 for assistance. If you misplace the 16-digit control number that is required to enter the Annual Meeting webcast and are a stockholder of record, operators providing assistance at this telephone number will be able to provide it to you. However, if you need your 16-digit control number and hold your shares in an account at a brokerage firm, bank, dealer, or other similar organization, you must contact that organization to obtain your 16-digit control number prior to the Annual Meeting.
Who can attend and vote at the Annual Meeting?
Only stockholders at the close of business on April 5, 2021 may attend and vote at the Annual Meeting. On this record date, there were 140,929,256 shares of common stock outstanding and entitled to vote.
Stockholder of Record: Shares Registered in Your Name
If on April 5, 2021 your shares were registered directly in your name with our transfer agent, American Stock Transfer & Trust Company, then you are a stockholder of record. As a stockholder of record, you may vote online at the virtual meeting or vote by proxy over the telephone, by mail, or the Internet as instructed under the section below titled “How do I vote?” Whether or not you plan to attend the meeting, we urge you to fill out and return the proxy card or vote over the telephone or Internet to ensure your vote is counted.
Beneficial Owner: Shares Registered in the Name of a Broker or Bank
If on April 5, 2021 you did not own shares in your name, but rather in an account at a brokerage firm, bank, dealer or other similar organization, then you are the beneficial owner of shares held in “street name” and that organization is forwarding the Notice to you. The organization holding your account is the stockholder of record for purposes of voting at the Annual Meeting. As a beneficial owner, you may direct your broker or other agent regarding how to vote the shares in your account. If your shares are registered in the name of a broker or other nominee, your nominee may be participating in a program provided through Broadridge Financial Solutions, Inc. (“Broadridge”) that also allows you to vote by telephone or through the Internet. If so, the voting form your nominee sends you will provide telephone and Internet instructions. You are also invited to attend the virtual Annual Meeting via live webcast.
PLEASE NOTE, HOWEVER, THAT IF A BROKER, BANK OR OTHER NOMINEE HOLDS YOUR SHARES OF RECORD AND YOU WISH TO VOTE AT THE MEETING, YOU MUST OBTAIN A PROXY ISSUED IN YOUR NAME FROM THE BROKER, BANK OR OTHER NOMINEE.
What am I voting on?
The following matters are scheduled for a vote:
Proposal 1:
elect our nominees, Brett Monia, Frederick Muto, and Peter Reikes, to our Board of Directors to serve as Directors for a three-year term;
Proposal 2:
approve an amendment of the Ionis Pharmaceuticals, Inc. 2011 Equity Incentive Plan to, among other things, increase the aggregate number of shares of common stock authorized for issuance under such plan by 6,700,000 shares to an aggregate of 29,700,000 shares and add a fungible share counting ratio;
Proposal 3:
make an advisory vote on executive compensation; and
Proposal 4:
ratify the Audit Committee’s selection of Ernst & Young LLP as independent auditors for our 2021 fiscal year.
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What if another matter is properly brought before the meeting?
The Board knows of no other matters that will be presented for consideration at the Annual Meeting. If any other matters are properly brought before the meeting, the persons named in the accompanying proxy intend to vote on those matters in accordance with their best judgment.
How do I vote?
You may vote in one of the following ways:
vote through the Internet by following the instructions included with your Notice or proxy card;
vote by telephone by following the instructions included with your proxy card if you have received proxy materials electronically or by mail;
vote by mail by completing, signing, dating, and returning your proxy card in the postage paid envelope provided; or
vote during the virtual Annual Meeting by following the instructions posted at www.virtualshareholdermeeting.com/IONS2021.
The procedures for voting are fairly simple:
For Shares Registered in Your Name:
If you are a stockholder of record, you may go to www.proxyvote.com to vote your shares through the Internet up until 11:59 P.M. Eastern Time on June 1, 2021. The votes represented by your proxy will be displayed on the computer screen and you will be prompted to submit or revise your votes as desired.
To vote your shares by telephone, you must first request that we send proxy materials to you by following the instructions included in your Notice. Once you have received your proxy materials, you may vote using a touch-tone telephone by calling 1-800-690-6903 up until 11:59 P.M. Eastern Time on June 1, 2021 and following the recorded instructions. Please have your proxy card available at the time you vote.
To vote using the proxy card, simply complete, sign and date the proxy card that may be delivered to you and return it promptly in the envelope provided. If you return your signed proxy card to us before the Annual Meeting, we will vote your shares as you direct.
For Shares Registered in the Name of a Broker or Bank:
If your broker or bank holds your shares in “street name,” you will need to obtain a proxy form from the institution that holds your shares and follow the instructions included on that form regarding how to instruct your broker to vote your shares. If you do not give instructions to your broker, your broker can vote your shares with respect to “discretionary” items, but not with respect to “non-discretionary” items. Discretionary items are proposals considered routine under the rules of the New York Stock Exchange (NYSE) on which a broker may vote shares held in street name in the absence of your voting instructions. While Ionis is listed with the Nasdaq Stock Market (Nasdaq), NYSE rules affect how brokers licensed by the NYSE can vote in a director election of any company, including companies listed with Nasdaq. The proposal to ratify Ernst & Young LLP as independent auditors is a discretionary item. Proposals 1-3 regarding (1) the election of Directors, (2) approval of an amendment of the Ionis Pharmaceuticals, Inc. 2011 Equity Incentive Plan to, among other things, increase the aggregate number of shares of common stock authorized for issuance under such plan by 6,700,000 shares to an aggregate of 29,700,000 shares and add a fungible share counting ratio, and (3) approval, on an advisory basis, of our executive compensation, are non-discretionary items. If you do not give your broker instructions for a non-discretionary item, the inspector of elections will treat your unvoted shares as broker non-votes. Broker non-votes will have no effect.
A number of brokers and banks are participating in a program provided by Broadridge that allows proxies to vote shares by means of the telephone and Internet. If your shares are held in an account with a broker or bank participating in the Broadridge program, you may vote your shares by telephone or through the Internet by having the voting form in hand and calling the number or going to the website indicated on the form and following the instructions.
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What if I return a proxy card or otherwise vote but do not make specific choices?
If you return a signed and dated proxy card or otherwise vote without marking voting selections, one of the individuals named on your proxy card will vote your shares as follows:
“For” the election of the nominees for Director named in the Proxy Statement;
“For” the approval of an amendment of the Ionis Pharmaceuticals, Inc. 2011 Equity Incentive Plan to, among other things, increase the aggregate number of shares of common stock authorized for issuance under such plan by 6,700,000 shares to an aggregate of 29,700,000 shares and add a fungible share counting ratio;
“For” the approval, on an advisory basis, of executive compensation; and
“For” the ratification of the Audit Committee’s selection of Ernst & Young LLP as independent auditors for our 2021 fiscal year.
If any other matter is properly presented at the meeting, one of the individuals named on your proxy card will vote your shares using his or her best judgment.
Who is paying for this proxy solicitation?
Our Board is soliciting your proxy to vote at the Annual Meeting. We will bear the entire cost of soliciting proxies, including preparing, assembling, making available on the Internet and printing and mailing this Proxy Statement, the proxy card and any additional information furnished to stockholders. We will furnish copies of solicitation materials to banks, brokerage houses, fiduciaries and custodians holding our common stock in “street name” on behalf of beneficial owners of such shares. We may reimburse persons representing beneficial owners of our common stock for their costs of forwarding solicitation materials to such beneficial owners. Our Directors, officers or other employees may supplement original solicitation of proxies by telephone, electronic mail, or personal solicitation. We will not pay our Directors, officers, or employees any additional compensation for soliciting proxies. However, please be aware that you must bear any costs associated with your Internet service, such as usage charges from Internet access providers or telephone companies.
What does it mean if I receive more than one Notice?
If you receive more than one Notice or proxy card, your shares are registered in more than one name or are registered in different accounts. Please complete, sign, date and return each separate proxy card or vote by telephone or through the Internet by following the instructions included with each Notice or proxy card to properly vote your shares.
Can I change my vote after submitting my proxy?
Yes. Once you have submitted your proxy by mail, Internet, or telephone, you may revoke it at any time before we exercise it at the Annual Meeting. You may revoke your proxy by any one of the following four ways:
you may mail another proxy marked with a later date;
you may revoke it through the Internet;
you may notify our corporate secretary in writing sent to 2855 Gazelle Court, Carlsbad, California 92010 that you wish to revoke your proxy before the Annual Meeting takes place; or
you may vote during the virtual Annual Meeting. Attending the meeting will not, by itself, revoke a proxy.
If your shares are held by your broker, bank, or other agent, you should follow the instructions provided by your broker, bank, or other agent.
When are stockholder proposals due for next year’s Annual Meeting?
If you have a proposal that you would like us to include in our Proxy Statement and form of proxy for, or to present at the 2022 Annual Meeting of Stockholders, you must send the proposal to us by no later than December 24, 2021. Stockholders wishing to submit proposals or Director nominations that are not to be
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included in such Proxy Statement and form of proxy must do so no later than the close of business on February 2, 2022. Stockholders should also review our bylaws, which contain additional requirements with respect to advance notice of stockholder proposals and Director nominations.
What is the quorum requirement?
A quorum of stockholders is necessary to hold a valid meeting. A quorum will be present at the meeting if at least a majority of the outstanding shares entitled to vote are represented at the meeting or by proxy. We will count your shares towards the quorum only if you submit a valid proxy vote (or one is submitted on your behalf by your broker, bank, or other nominee) or vote at the meeting. We will count abstentions and broker non-votes towards the quorum requirement.
If there is no quorum, the holders of a majority of shares present at the meeting or represented by proxy may adjourn the meeting to another date.
How are votes counted?
Each share of our common stock you own entitles you to one vote. Your Notice and proxy card indicates the number of shares of our common stock you owned at the close of business on April 5, 2021. The inspector of elections will count votes for the meeting and will separately count “For” and “Against” votes, abstentions, and broker non-votes. With respect to Proposal 1, the election of Directors, stockholders do not affirmatively vote “Against” nominees. Instead, if you do not want to elect a particular nominee, you should choose to “Withhold” a vote in favor of the applicable nominee for Director and the inspector of elections will count each “Withhold” for each nominee. Abstentions will have no effect on Proposals 1 and 4. Abstentions will count towards the vote total for Proposals 2 and 3, and in each case, will have the same effect as “Against” votes. Broker non-votes have no effect and the inspector of elections will not count them towards the vote total for any proposal.
What are “broker non-votes”?
Broker non-votes occur when a beneficial owner of shares held in “street name” does not give instructions to the broker or nominee holding the shares as to how to vote on matters deemed “non-routine.” If your broker holds your shares in “street name,” and you do not give instructions to your broker, your broker can vote your shares with respect to “discretionary” items, but not with respect to “non-discretionary” items. The proposal to ratify Ernst & Young LLP as independent auditors is a discretionary item. Proposals 1-3 regarding (1) the election of Directors, (2) approval of an amendment of the Ionis Pharmaceuticals, Inc. 2011 Equity Incentive Plan to, among other things, increase the aggregate number of shares of common stock authorized for issuance under such plan by 6,700,000 shares to an aggregate of 29,700,000 shares and add a fungible share counting ratio, and (3) approval, on an advisory basis, of our executive compensation, are non-discretionary items. If you do not give your broker instructions for a non-discretionary item, the inspector of elections will treat your unvoted shares as broker non-votes.
How many votes are needed to approve each proposal?
Proposal 1: For the election of Directors in an uncontested election, a Director nominee must receive a majority of the votes cast in the election such that the number of shares voted “For” the nominee must exceed 50% of the votes cast with respect to that Director. Only “For” and “Withhold” votes will affect the outcome. Abstentions and broker non-votes, if any, will have no effect.
Proposal 2: To be approved, the amendment of the 2011 Equity Incentive Plan must receive “For” votes from a majority of the holders of shares present or represented by proxy at the Annual Meeting and entitled to vote on the matter. If you “Abstain” from voting, it will have the same effect as an “Against” vote. Broker non-votes, if any, will have no effect.
Proposal 3: We will consider the advisory approval of the compensation of our executive officers to be approved if it receives “For” votes from a majority of the holders of shares present or represented by proxy at the Annual Meeting and entitled to vote on the matter. If you “Abstain” from voting, it will have the same effect as an “Against” vote. Broker non-votes, if any, will have no effect.
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Proposal 4: To be approved, the ratification of the selection of Ernst & Young LLP as our independent auditors for our 2021 fiscal year must receive “For” votes from a majority of the holders of shares present or represented by proxy at the Annual Meeting and entitled to vote on the matter. Abstentions, if any, will have no effect. Because brokers have discretionary authority to vote on the ratification of the selection of Ernst & Young LLP, we do not expect any broker non-votes in connection with the ratification.
How can I find out the results of the voting at the Annual Meeting?
We will announce preliminary voting results at the Annual Meeting. In addition, we will publish final voting results in a current report on Form 8-K that we expect to file within four business days after the Annual Meeting. If final voting results are not available to us in time to file as part of a Form 8-K within four business days after the Annual Meeting, we intend to file a Form 8-K to publish preliminary results and, within four business days after we know the final results, file an additional Form 8-K to publish final results.
How can I elect to receive materials for future Annual Meetings electronically?
We are pleased to offer to our stockholders the benefits and convenience of electronic delivery of Annual Meeting materials, including:
delivering the Proxy Statement, Annual Report on Form 10-K, and related materials by email to our stockholders;
stockholder voting online;
helping the environment by decreasing the use of paper documents;
reducing the number of bulky documents stockholders receive; and
reducing our printing and mailing costs associated with more traditional delivery methods.
We encourage you to conserve natural resources and to reduce printing and mailing costs by signing up for electronic delivery of our stockholder communications after you place your current vote at www.proxyvote.com.
List of Shareholders
A list of stockholders entitled to vote at the Annual Meeting will be available for examination at our principal executive offices at the address listed above for a period of 10 days prior to the Annual Meeting, and will be available during the virtual Annual Meeting for examination at www.virtualshareholdermeeting.com/IONS2021.
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PROPOSAL 1

ELECTION OF DIRECTORS
Information about our Board
The Board is divided into three classes. Presently, the Board has twelve members with each class consisting of four Directors. Each class serves a three-year term and we hold elections each year at the Annual Meeting to elect the Directors whose terms are expiring.
In addition, the Board may elect a new Director to fill any vacant spot, including a vacancy caused by an increase in the size of the Board. However, the Board believes it is important for our stockholders to ratify any member of the Board whom the Board appoints. As a result, whenever the Board appoints a new member, the Board will submit such new member’s directorship for ratification at the next regularly scheduled Annual Meeting of Stockholders, unless such new director is up for election at the next regularly scheduled Annual Meeting of Stockholders.
The Board represents the interests of our stockholders by overseeing the Chief Executive Officer and other members of senior management in our operation. The Board’s goal is to optimize long-term value by providing guidance and strategic oversight to Ionis’ management on our stockholders’ behalf.
Information about the 2021 Elections
The Board has nominated three individuals for election at the Annual Meeting. Each of the nominees currently serves as one of our Directors. Dr. Monia, Mr. Muto and Mr. Reikes have each served as a Director for the periods set forth in the table below.
Name
Commencement of Ionis Directorship
Brett Monia
March 2019
Frederick Muto
March 2001
Peter Reikes
September 2018
In accordance with Ionis’ Board membership requirement that prohibits members from running for re-election once they have reached the age of 80, Mr. Castleman will not be standing for re-election at the 2021 Annual Meeting. Ionis thanks Mr. Castleman for his eight years of Board service to the Company.
Mr. Muto has been re-elected by our stockholders each successive term. This is the first time Dr. Monia and Mr. Reikes are nominees for election by our stockholders. If re-elected or elected, as applicable, Dr. Monia, Mr. Muto and Mr. Reikes will serve until the 2024 Annual Meeting or, in each case, until his successor is elected and has qualified, or until his earlier death, resignation or removal.
Our bylaws provide a majority vote standard for the election of directors in uncontested elections. In an uncontested election, the majority vote standard means that to be elected, a Director nominee must receive a majority of the votes cast in the election such that the number of shares voted “For” the nominee must exceed 50% of the votes cast with respect to that Director. The number of votes cast with respect to a Director’s election excludes abstentions and broker non-votes. In contested elections where the number of nominees exceeds the number of Directors to be elected, the vote standard will be a plurality of the shares present or represented by proxy and entitled to vote.
If a nominee who already serves as a Director is not elected, and no successor is elected, the Director will offer to tender his or her resignation to the Board. The Nominating, Governance and Review Committee will make a recommendation to the Board on whether to accept or reject the resignation, or whether to take other action. The Board will act on the Nominating, Governance and Review Committee’s recommendation and publicly disclose its decision and the rationale behind it within 90 days from the date of the certification of the election results. The Director who tenders his or her resignation will not participate in the recommendation of the Nominating, Governance and Review Committee or in the Board’s decision. If a nominee’s failure to be elected at the Annual Meeting results in a vacancy on the Board, then the Board can fill the vacancy.
On March 22, 2021, the Nominating, Governance and Review Committee delivered its report to the Board providing its recommendations for Director nominees to stand for election at the Annual Meeting. Following that
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report, the Board determined it would be in the best interests of Ionis and its stockholders to nominate Dr. Monia, Mr. Muto and Mr. Reikes to be elected as Directors at the Annual Meeting. We provide below a short biography for each nominee. Dr. Monia, Mr. Muto and Mr. Reikes have agreed to serve if elected, and we have no reason to believe that they cannot serve. However, if they cannot serve, we may vote your proxy for another nominee proposed by the Board, or the Board may reduce the number of authorized Directors.
Biographies of the Nominees for Election for a Three-Year Term Expiring at the 2024 Annual Meeting
Brett Monia, Ph.D., age 592, has served as a Director of Ionis since March 2019. Dr. Monia was promoted to Chief Executive Officer in January 2020. From January 2018 to December 2019, Dr. Monia served as our Chief Operating Officer, from January 2012 to January 2018, as our Senior Vice President, Drug Discovery, from February 2009 to January 2012, as our Vice President, Drug Discovery, and from October 2000 to February 2009, as our Vice President, Preclinical Drug Discovery. From October 1989 to October 2000, he held various positions within our Molecular Pharmacology department. Following the Company’s acquisition of all of the outstanding shares of Akcea Therapeutics, Inc. (“Akcea,” and such acquisition, the “Akcea Acquisition”), Dr. Monia became the President of Akcea.
The Board believes Dr. Monia is uniquely suited to serve on the Board primarily because, as an executive officer of the Company since 2012 and a founder of Ionis, he has dedicated more than 31 years to discovering and developing antisense-based drugs. Dr. Monia is the inventor on over 100 issued patents and has directly supervised programs resulting in the clinical development of more than 40 antisense-based drugs across a broad range of therapeutic areas.
Frederick T. Muto, age 67, has served as a Director of Ionis since March 2001. Mr. Muto joined the law firm of Cooley LLP, outside counsel to Ionis, in 1980, became a partner in 1986 and senior counsel in 2018. He is a founder of Cooley LLP’s San Diego office and was chair of the firm’s Business Department for a number of years.
The Board believes Mr. Muto is uniquely suited to serve on the Board and the Audit Committee primarily because, with over 40 years of experience at one of the country’s leading law firms focused on life sciences and technology companies, he provides us important advice regarding our strategic transactions, corporate governance and compensation matters.
Peter N. Reikes, age 60, has served as a Director of Ionis since September 2018. Mr. Reikes is a Vice Chairman in the Investment Banking Division at Stifel, Nicolaus & Company, Inc., which he joined in late 2010. Over the course of his extensive career in investment banking, Mr. Reikes has completed a wide range of financing and merger and acquisition transactions for companies in the life sciences, medical technology, and healthcare services sectors. Prior to joining Stifel, Nicolaus, he spent 11 years at Cowen and Company, LLC, where he was Vice Chairman and Head of Healthcare Investment Banking, and over 14 years at PaineWebber Incorporated, where he was a Managing Director and Head of Healthcare Investment Banking and began his career in 1985. Mr. Reikes is also a director of the Heart & Soul Foundation, an organization that supports a range of community service programs in the greater New York City area. Mr. Reikes is a former director of Ricerca Biosciences, LLC, Biocompatibles, Ltd., and the affiliated partnership boards of Alkermes, Inc., Cephalon, Inc., Gensia, Inc., Genzyme Corporation and Repligen Corporation, as well as the Institute for Quality Improvement of the Accreditation Association for Ambulatory Health Care. Mr. Reikes received his B.A. in Economics from the University of California at Los Angeles and his M.B.A. in Finance from The Wharton School at the University of Pennsylvania.
The Board believes Mr. Reikes is uniquely suited to serve on the Board primarily because of his extensive experience in finance and strategic transactions for companies in the life sciences, medical technology, and healthcare services industries.
THE BOARD UNANIMOUSLY RECOMMENDS A VOTE “FOR” THE ELECTION OF THE ABOVE NOMINEES.
Biographies of the Directors Not Seeking Re-Election
Breaux B. Castleman, age 80, has served as a Director of Ionis since June 2013. Since August 2001, Mr. Castleman has been President and Chief Executive Officer of Syntiro Healthcare Services, Inc., a healthcare
2
The ages of all our Directors are as of March 1, 2021.
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investment company, which sold its operations as a service provider of integrated care management and disease management. Since January 2008, Mr. Castleman has been a Senior Advisor of McNally Capital, LLC, a private equity and merchant banking firm focused on investments in private equity, both direct to companies and through private equity partnerships. Mr. Castleman was a director of USMD Holdings, Inc., a physician-led integrated healthcare system, from August 2010 until September 2016.
In accordance with Ionis’ Board membership requirement that prohibits members from running for re-election once they have reached the age of 80, Mr. Castleman will not be standing for re-election at the 2021 Annual Meeting. Ionis thanks Mr. Castleman for his eight years of Board service to the Company.
Stanley T. Crooke, M.D., Ph.D., age 75, is a founder of Ionis and is our Executive Chairman of the Board. He has been a Director since January 1989. He served as our Chief Executive Officer from February 1989 until January 2020. In January 2020, Dr. Crooke was appointed Executive Chairman of the Board, and he has served as Chairman of the Board since February 1991. Prior to founding Ionis, from 1980 until January 1989, Dr. Crooke worked for SmithKline Beckman Corporation, a pharmaceutical company, where his titles included President of Research and Development of SmithKline and French Laboratories. Dr. Crooke served on the board of directors of Akcea Therapeutics, Inc. from January 2015 through October 2018.
Following the 2021 Annual Meeting of Stockholders, Dr. Crooke will step down from the Board and will serve as a Strategic Advisor to the Company, providing strategic advice and continuing to participate in the Company’s scientific activities. Ionis thanks Dr. Crooke for his 32 years of service to the Company as its founder, former Chief Executive Officer and Executive Chairman of the Board.
Biographies of the Directors Whose Terms Expire at the 2022 Annual Meeting
Michael Hayden, CM, OBC, MB, ChB, Ph.D., FRCP(C), FRSC, age 69, has served as a Director of Ionis since September 2018. Dr. Hayden is a Killam Professor at the University of British Columbia, the highest honor UBC can confer on any faculty member. He is also an accomplished scientist and physician. He was the President of Global R&D and Chief Scientific Officer at Teva Pharmaceuticals from 2012-2017. During this time approximately 35 new products were approved in major markets with many for diseases of the central nervous system. In 2015 Teva R&D was recognized as one of the 10 most exciting innovators in the pharmaceutical industry by IDEA Pharma and in 2017 Teva R&D ranked top of the industry for central nervous system development and clinical trial success rate by Pharma Intelligence. Dr. Hayden has founded three biotechnology companies and has been the recipient of numerous prestigious honors and awards, including being inducted into the Canadian Medical Hall of Fame and receiving the July 2012 Diamond Jubilee Medal on behalf of HRH Queen Elisabeth II. He has also received the Canada Gairdner Wightman award. Dr. Hayden was awarded the Order of Canada, the Order of British Columbia, named Canada’s Health Researcher of the Year by Canadian Institutes of Health Research, and received the Prix Galien Award in 2007. Dr. Hayden serves on the boards of Aurinia Pharmaceuticals, Xenon Pharmaceuticals, 89Bio and AbCellera.
The Board believes Dr. Hayden is uniquely suited to serve on the Board because he has significant expertise in pharmaceutical research and development, both in academia and in commercial settings. In addition, Dr. Hayden has made substantial research contributions to advance treatments for brain diseases, which is particularly valuable as we grow our neurology franchise.
Joseph Klein, III, age 59, has served as a Director of Ionis since December 2005. Mr. Klein is currently Managing Director of Gauss Capital Advisors, LLC, a financial consulting and investment advisory firm focused on biopharmaceuticals, which he founded in March 1998. From September 2003 to December 2008, Mr. Klein also served as a Venture Partner of Red Abbey Venture Partners, L.P., a life science private equity fund. From September 2001 to September 2002, Mr. Klein was a Venture Partner of MPM Capital, a healthcare venture capital firm. From June 1999 to September 2000 when it merged with WebMD Corporation, Mr. Klein served as Vice President, Strategy, for Medical Manager Corporation, a leading developer of physician office management information systems. For over nine years from 1989 to 1998, Mr. Klein was a health care investment analyst at T. Rowe Price Associates, Inc., where he was the founding portfolio manager of the T. Rowe Price Health Sciences Fund. Mr. Klein has served on the boards of directors of The Prospector Funds, Inc., an SEC Registered Investment Company that manages two no-load mutual funds, since September 2007 and Akcea Therapeutics, Inc., from September 2019 until the completion of the Akcea Acquisition. Mr. Klein also serves on the boards of private and non-profit entities.
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The Board believes Mr. Klein is uniquely suited to serve on the Board and as Chairman of the Audit Committee because he is a Chartered Financial Analyst and has extensive public company, venture investment, board, and financial advisory expertise in the life sciences industry, including previously serving as Chairman of the Audit Committee at several public biopharmaceutical companies.
Joseph Loscalzo, M.D., Ph.D., age 69, has served as a Director of Ionis since February 2014. Dr. Loscalzo is Hersey Professor of the Theory and Practice of Medicine at Harvard Medical School, Chairman of the Department of Medicine, and Physician-in-Chief at Brigham and Women’s Hospital. Dr. Loscalzo received his A.B. degree, summa cum laude, his Ph.D. in biochemistry, and his M.D. from the University of Pennsylvania. He completed his clinical training at Brigham and Women’s Hospital and Harvard Medical School, where he served as Resident and Chief Resident in medicine and Fellow in cardiovascular medicine. Post-training, Dr. Loscalzo joined the Harvard faculty and staff at Brigham and Women’s Hospital in 1984. He rose to the rank of Associate Professor of Medicine, Chief of Cardiology at the West Roxbury Veterans Administration Medical Center, and Director of the Center for Research in Thrombolysis at Brigham and Women’s Hospital. He joined the faculty of Boston University in 1994, first as Chief of Cardiology and, in 1997, Wade Professor and Chair of Medicine, Professor of Biochemistry, and Director of the Whitaker Cardiovascular Institute. He returned to Harvard and Brigham and Women’s Hospital in 2005. Since January 2016, Dr. Loscalzo has served on the board of directors of Leap Therapeutics, Inc., a public biopharmaceutical company.
The Board believes Dr. Loscalzo is uniquely suited to serve on the Board primarily because of his extensive scientific expertise, including 30 years of research in the areas of vascular biology, thrombosis, and atherosclerosis, and practical knowledge as a practicing physician. Dr. Loscalzo’s expertise and role as a leading cardiologist is particularly valuable as we advance and grow our cardiovascular franchise.
Biographies of the Directors Whose Terms Expire at the 2023 Annual Meeting
Spencer R. Berthelsen, M.D., age 68, has served as a Director of Ionis since May 2002. Dr. Berthelsen practiced Internal Medicine with the Kelsey Seybold Clinic, a 400-physician medical group based in the Texas Medical Center in Houston, until March 2017. Dr. Berthelsen began at Kelsey Seybold in 1980 and served in various senior leadership positions throughout his nearly four-decade career at the clinic, including Chairman of the Department of Internal Medicine, Medical Director and Managing Director. He also served as Chairman of its board of directors from October 2001 through April 2016. He has served as Clinical Professor of Medicine at both Baylor College of Medicine and The University of Texas Health Science Center. Dr. Berthelsen served on the board of the Texas Academy of Internal Medicine in the past and the Caremark National Pharmacy and Therapeutics Committee from 1999 through 2005.
The Board believes Dr. Berthelsen is uniquely suited to serve on the Board because of his experience advising a large multispecialty group practice and almost 40 years of experience as a practicing physician.
Joan E. Herman, age 67, has served as a Director of Ionis since June 2019. Since 2008, Ms. Herman has served as President and Chief Executive Officer of Herman & Associates, a management consulting firm that specializes in advising private equity firms investing in healthcare. She has experience leading healthcare and payor companies, serving in several executive positions at Anthem (formerly WellPoint), including as President and Chief Executive Officer of several different business units. Ms. Herman also served as a Senior Vice President of Phoenix Life Insurance Company. Since January 2013, Ms. Herman has served on the board of directors for Encompass Health (formerly HealthSouth). She previously served on the boards of both Convergys and AARP Services, Inc.
The Board believes Ms. Herman is uniquely suited to serve on the Board because of her experience leading healthcare and payor companies.
B. Lynne Parshall, age 66, has served as a Director of Ionis since September 2000 and as a Senior Strategic Advisor to Ionis since January 2018. Previously she served as our Chief Operating Officer from December 2007 through January 2018 and as our Chief Financial Officer from June 1994 through December 2012. She also served as our Corporate Secretary through 2014 and has served with the Company in various executive roles since November 1991. Prior to joining Ionis, Ms. Parshall practiced law at Cooley LLP, outside counsel to Ionis, where she was a partner from 1986 to 1991. Ms. Parshall is a member of the American and California bar associations. Ms. Parshall has served on the boards of directors of Cytokinetics, Inc., a public biopharmaceutical company, since February 2013, and Akcea Therapeutics, Inc., from January 2015 until the completion of the Akcea Acquisition.
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The Board believes Ms. Parshall is uniquely suited to serve on the Board primarily because, as the former Chief Operating Officer and former executive of the Company for over 26 years, she has valuable Company-specific experience and expertise. In addition, Ms. Parshall has over 34 years of experience structuring and negotiating strategic licensing and financing transactions in the life sciences field.
Joseph H. Wender, age 76, has served as a Director of Ionis since January 1994 and our independent lead Director since December 2020. Mr. Wender began with Goldman, Sachs & Co. in 1971 and became a General Partner of that firm in 1982, where he headed the Financial Institutions Group for over a decade. Since January 2019 he has been an Advisory Director to Goldman Sachs & Co. and from January 2008 to December 2018 was a Senior Consultant to Goldman Sachs & Co. He is a former Independent Trustee of the Schwab Family of Funds and Director of Grandpoint Capital, a bank holding company. Mr. Wender also is co-CEO and partner of Colgin Cellars. Since March 2014, Mr. Wender has been a Director of Outfront Media, a lessor of advertising space on out-of-home advertising structures, and has served as its Lead Independent Director since 2016.
The Board believes Mr. Wender is uniquely suited to serve on the Board and as our independent lead Director primarily because, with over 49 years of experience as an investment banker with Goldman, Sachs & Co., he provides Ionis important advice regarding our financial reporting, corporate finance, strategic transactions, and compensation matters.
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INFORMATION REGARDING THE BOARD AND CORPORATE GOVERNANCE
Independence of the Board of Directors
As required under Nasdaq listing standards, a majority of the members of a listed company’s board of directors must qualify as “independent,” as evaluated by our Nominating, Governance and Review Committee and affirmed by our Board. Our Nominating, Governance and Review Committee consults with our legal counsel to ensure that the Committee’s determinations are consistent with all relevant securities and other laws and regulations regarding the definition of “independent,” including those set forth in the applicable Nasdaq listing standards and applicable SEC rules and regulations, as in effect from time to time.
Consistent with these considerations, after review of all relevant transactions or relationships between each Director, or any of his or her family members, and Ionis, its senior management and its independent auditors, the Board affirmatively has determined that all of our Directors are independent Directors within the meaning of the applicable Nasdaq listing standards and SEC rules and regulations, except for Dr. Crooke, Ms. Parshall and Dr. Monia, our former Chief Executive Officer, former Chief Operating Officer, and current Chief Executive Officer, respectively. In making this determination, the Board found that none of these independent Directors has a material or other disqualifying relationship with us. Notably, Mr. Muto is no longer a partner at Cooley LLP, Ionis’ outside counsel. Also, although the Company does business with Stifel, Nicolaus & Company, Inc., and Goldman Sachs & Co., neither Mr. Reikes nor Mr. Wender, respectively, receives any personal compensation directly from revenue received from Ionis.
Information Regarding the Board and its Committees
Leadership Structure
Until January 2020, our Chief Executive Officer was the Chairman of the Board. In January 2020, Dr. Monia assumed the position of Chief Executive Officer and Dr. Crooke transitioned to Executive Chairman of the Board. Following the 2021 Annual Meeting of Stockholders, Dr. Crooke will step down from the Board and will serve as a Strategic Advisor to the Company, providing strategic advice and continuing to participate in the Company’s scientific activities.
Independent Lead Director
In December 2020, the Board of Directors appointed Mr. Wender as the independent lead Director of the Board. The Board believes that the appointment of an independent lead Director and the separated roles of Executive Chairman of the Board and Chief Executive Officer reinforce the independence of the Board in its oversight of the business and affairs of the Company.
Risk Oversight
Our Board administers its risk oversight function directly and through all of its current committees. We provide a complete description of each committee and its respective roles and responsibilities on pages 16 through 20 of this Proxy Statement. While each of these committees is responsible for evaluating certain risks and overseeing how we manage risk, these committees regularly inform the entire Board about such risks through committee reports.
The Audit Committee oversees management of financial risks and related party transactions. In 2019, the Audit Committee authorized the formation of an internal audit function known as “Advisory Services” that reports to the Audit Committee. Advisory Services strives to accomplish its mission of adding value to and improving the Company’s operations through sustaining a systematic, disciplined, and transparent approach to evaluating the effectiveness of governance, risk management, and control processes. The scope of Advisory Services is to determine if the control environment and internal control structure, as designed and represented by Company management, are adequate and functioning in a manner to enable the Company to meet its business objectives and satisfy its responsibilities.
The Nominating, Governance and Review Committee manages risks associated with the independence of the Board and potential conflicts of interests at the Board level, and periodically reviews our policies and procedures and makes recommendations when appropriate. The Compensation Committee reviews risks to the Company related to our executive compensation program and our general compensation philosophies. The Finance
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Committee evaluates risks to the Company associated with our corporate finance matters. The Science/Medical Committee identifies risks to the Company related to our technology platform. The newly formed Commercial Compliance Committee will be responsible for evaluating risks to the Company in connection with the commercialization of our medicines.
In addition to the formal compliance program, the Board and its committees encourage management to promote a corporate culture that understands risk management and incorporates it into the overall corporate strategy and day-to-day business operations. Our risk management structure also includes an ongoing effort to assess and analyze the most likely areas of future risk for Ionis. As a result, the Board and most of its committees periodically ask our executives to discuss the most likely sources of material future risks and how we are addressing any significant potential vulnerability.
Board Committees
The Board had six committees as of December 31, 2020: an Audit Committee, a Compensation Committee, a Nominating, Governance and Review Committee, an Agenda Committee, a Science/Medical Committee, and a Finance Committee. As of March 26, 2021, the Board dissolved the Agenda Committee and formed a Commercial Compliance Committee. Below is a description of each committee of our Board. Each of the committees has authority to engage legal counsel or other experts or consultants as it deems appropriate to carry out its responsibilities. The Board has determined that each member of our Audit Committee, Compensation Committee, and Nominating, Governance and Review Committee:
meets the applicable rules and regulations regarding “independence,” including, but not limited to, Rule 5605(a)(2) of the Nasdaq listing standards and applicable SEC rules and regulations;
is not an officer or employee of Ionis; and
is free of any relationship that would interfere with his or her individual exercise of independent judgment with regard to Ionis.
Meetings and Attendance; Committee Members
The Board met seven times in 2020. During 2020, each Director attended 75% or more of the aggregate number of meetings of the Board and the committees on which such Director served. We encourage each member of the Board to attend the Annual Meeting of Stockholders. In 2020, due to the COVID-19 pandemic, the Company held a virtual Annual Meeting of Stockholders via live webcast and presented a Company update via a separate webcast following the Annual Meeting. Due to technical difficulties, only two Board members were able to attend the 2020 virtual Annual Meeting, but many of the Board members attended the Company update presentation that followed the Annual Meeting.
Board Committee Members
The table below provides membership and meeting information for fiscal 2020 for each of the Board committees.
Name
Audit
Compensation
Nominating,
Governance and
Review
Agenda
Science/
Medical
Finance
Attended
2020 Annual
Meeting
Dr. Spencer R. Berthelsen
X*
X
X
X
Mr. Breaux B. Castleman
X
Dr. Stanley T. Crooke
X*
X*
Dr. Michael Hayden
X
Ms. Joan E. Herman
X
X
Mr. Joseph Klein, III
X*
Dr. Joseph Loscalzo
X
X
X
Dr. Brett Monia
X
Mr. Frederick T. Muto
X
X
X
X
X
Ms. B. Lynne Parshall
X
X
Mr. Peter Reikes
X
X
Mr. Joseph H. Wender
X
X*
X*
Total meetings in fiscal year 2020
10
5
3
4
1
6
 
*
Committee Chairperson
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The table below identifies our Board and committee members immediately following the 2021 Annual Meeting of Stockholders.
Name
Audit
Compensation
Nominating,
Governance and
Review
Science/
Medical**
Finance
Commercial
Compliance
Dr. Spencer R. Berthelsen
X*
X
X
Dr. Michael Hayden
X*
Ms. Joan E. Herman
X
X
Mr. Joseph Klein, III
X*
Dr. Joseph Loscalzo
X
X
Dr. Brett Monia
Mr. Frederick T. Muto
X
X
X
X
Ms. B. Lynne Parshall
X
X*
Mr. Peter Reikes
X
Mr. Joseph H. Wender
X
X*
X*
*
Committee Chairperson
**
Dr. C. Frank Bennett, the Company’s EVP and Chief Scientific Officer, is the executive sponsor of the committee
Audit Committee
The Audit Committee of the Board oversees our corporate accounting and financial reporting process, including audits of our financial statements. For this purpose, the Audit Committee performs several functions.
The Audit Committee:
reviews the annual and quarterly financial statements, including the disclosures contained under the caption “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and oversees the annual and quarterly financial reporting processes, including sessions with the independent auditors and internal auditors in which Ionis’ employees and management are not present;
selects and hires our independent auditors;
oversees the independence of our independent auditors;
evaluates our independent auditors’ performance; and
has the authority to hire its own outside consultants and advisors, if necessary.
In addition to the responsibilities listed above, the Audit Committee has the following functions:
receiving and considering our independent auditors’ comments as to the audit of the financial statements and internal controls, adequacy of staff and management performance and procedures in connection with internal controls;
reviewing and, if appropriate, approving related party transactions;
establishing and enforcing procedures for the receipt, retention, and treatment of complaints regarding accounting or auditing improprieties;
pre-approving all audit and non-audit services provided by our independent auditors that are not prohibited by law;
overseeing cybersecurity preparedness; and
meeting regularly with members of the internal audit/Advisory Services team.
Our Audit Committee utilizes an Audit Committee calendar to manage and track its key duties and responsibilities throughout each year.
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Our Audit Committee charter requires that each member must be independent. We consider the members to be independent as long as they:
do not accept any consulting, advisory or other compensatory fee from us, except in connection with their service as a Director;
are not an affiliate of Ionis or one of its subsidiaries; and
meet all of the other Nasdaq independence requirements.
In addition, all Audit Committee members must be financially literate and at least one member must be a “financial expert,” as defined by SEC regulations. Our Board has determined that the Audit Committee’s financial expert is Mr. Klein based on, among other things, his status as a Chartered Financial Analyst and his extensive public company, venture investment, board, and financial advisory expertise in the life sciences industry, including previously serving as Chairman of the Audit Committee at several public biopharmaceutical companies. We provide the Audit Committee with the funding it needs to perform its duties.
The Audit Committee typically meets twice each quarter: once face-to-face in connection with quarterly Board of Director meetings, and once by teleconference to review quarterly financial results and Form 10-Q or annual financial results and Form 10-K. In 2020, the Audit Committee met ten times, all via teleconference due to the COVID-19 pandemic. The Board has adopted a written Audit Committee charter, which you can find on our corporate website at www.ionispharma.com.3 Each member meets the membership criteria set forth in the Audit Committee charter and as stated above.
Compensation Committee
The primary function of the Compensation Committee of the Board is to review, modify (as needed) and approve our overall compensation strategy and policies and approve the compensation and other terms of employment of our executive officers, including our Chief Executive Officer. We include a full list of the Compensation Committee’s responsibilities as part of the Compensation Discussion and Analysis (“CD&A”) set forth on pages 40 through 65 of this Proxy Statement. The charter of the Compensation Committee grants the Compensation Committee full access to all of our books, records, facilities and personnel, and authority to obtain, at our expense, advice and assistance from internal and external legal, accounting or other advisors and consultants and other external resources that the Compensation Committee considers necessary or appropriate in the performance of its duties. In particular, the Compensation Committee has the sole authority to retain independent compensation consultants to help the Compensation Committee evaluate executive and Director compensation, including the authority to approve the consultants’ reasonable fees and other retention terms.
We also have a Non-Management Stock Option Committee that, as delegated by the Compensation Committee, may award stock options and RSUs to employees who are below director level in accordance with guidelines adopted by the Compensation Committee. The Non-Management Stock Option Committee has one member, Dr. Monia.
The Compensation Committee met five times in 2020, all via teleconference due to the COVID-19 pandemic, and acted by unanimous written consent 13 times. The Board has adopted a written Compensation Committee charter, which you can find on our corporate website at www.ionispharma.com.4
The Compensation Committee reviews with management Ionis’ CD&A to consider whether to recommend that we include the CD&A in our Proxy Statements and other filings.
Compensation Committee Interlocks and Insider Participation
As noted above, during the fiscal year ended December 31, 2020, our Compensation Committee was composed of Dr. Berthelsen, Mr. Wender and Mr. Muto. In each case, none of the members of the Compensation Committee has ever been an employee or officer of Ionis. None of our executive officers serves as a member of the board of directors or compensation committee of any other entity that has one or more executive officers serving as a member of our Board or Compensation Committee.
3
Any information that is included on or linked to our website is not part of this Proxy Statement or any registration statement or report that incorporates this Proxy Statement by reference.
4
Any information that is included on or linked to our website is not part of this Proxy Statement or any registration statement or report that incorporates this Proxy Statement by reference.
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Nominating, Governance and Review Committee
The Nominating, Governance and Review Committee of the Board is responsible for:
interviewing, evaluating, nominating, and recommending individuals for membership on our Board, and considering proposed changes to the Board for approval;
managing risks associated with the independence of the Board and potential conflicts of interests at the Board level, and periodically reviewing our policies and procedures and making recommendations when appropriate; and
performing such other functions as may be necessary or convenient for the efficient discharge of the foregoing.
The Nominating, Governance and Review Committee met three times during 2020. You can find our Nominating, Governance and Review Committee charter on our corporate website at www.ionispharma.com.5
Director Nominations - Approach to Board Composition
The Nominating, Governance and Review Committee believes that candidates for Director should have certain minimum qualifications. As a result, the Board adopted membership standards and believes that the Board members should meet the minimum membership requirements listed below.
The minimum membership requirements are as follows:
members must be able to read and understand basic financial statements;
members must demonstrate high personal integrity and ethics;
members cannot serve as a director on the board of more than five other publicly traded companies;
members cannot serve more than ten consecutive terms on the Board; and
members cannot run for re-election or serve on the Board once they have reached the age of 80.
In addition to these minimum standards, the Nominating, Governance and Review Committee will consider such factors as:
possessing relevant expertise to offer advice and guidance to management;
having sufficient time to devote to Ionis’ affairs;
demonstrating excellence in his or her field;
having sound business judgment; and
being committed to vigorously representing the long-term interests of our stockholders.
Director Nominations - Diversity Discussion
In considering Director nominations, the Nominating, Governance and Review Committee considers the total mix of competencies represented on the Board as a whole, as well as the competencies each member, or nominee, brings to the Board. In general, our Board members’ experience falls into three large categories: (1) investment banking, financial accounting, and corporate governance experience; (2) medical and scientific expertise; and (3) employee versus non-employee Directors. By selecting individuals who have investment banking, financial accounting, and corporate governance backgrounds, we gain valuable experience that ensures we are managing our financial resources appropriately, reporting our financial results fairly and accurately, and generally running our business consistent with current good corporate practices. As a cutting-edge drug discovery and development company, we also greatly benefit from Board members who themselves are scientists and medical doctors and can help set and adjust our strategy and objectives based on the results we generate from our research and development efforts. In different ways, these first two categories allow us to effectively manage our cash and make prudent investments in our technology to achieve the greatest likelihood of success. We try to evenly balance the Board members across these first two categories.
5
Any information that is included on or linked to our website is not part of this Proxy Statement or any registration statement or report that incorporates this Proxy Statement by reference.
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Regarding the third category, we believe that employee Directors can provide the Board valuable insight regarding our day-to-day operations, which can offer the Board a different perspective and help the Board make important management and compensation decisions. Our non-employee Directors can compare the opportunities and challenges presented to Ionis against the facts and circumstances they are experiencing outside Ionis. We have more non-employee Directors than employee Directors and believe that the current mix in this respect provides consistent leadership balanced with appropriate independent oversight. Additionally, the non-employee Directors regularly meet in executive session without employee Directors present.
We also value diversity on our Board and do not discriminate against nominees on the basis of gender, race, religion, national origin, sexual orientation, disability, or any other basis. Recognizing the importance of diversity on our Board, in December 2020, the Nominating, Governance and Review Committee approved authorizing the Company to begin a search for qualified Director candidates who are diverse and have commercial experience.
Director Nominations - Process
The Nominating, Governance and Review Committee will consider Director candidates our stockholders recommend. The Nominating, Governance and Review Committee does not intend to alter the manner in which it evaluates candidates, including the minimum criteria set forth above, based on whether or not a stockholder recommended the candidate.
The Nominating, Governance and Review Committee reviews new candidates for Director in the context of the Board’s composition, our operating requirements, and our stockholders’ long-term interests. In conducting this assessment, the Nominating, Governance and Review Committee considers diversity, maturity, skills, the minimum membership requirements discussed above, and such other factors as it deems appropriate given the current needs of the Board and Ionis, to maintain a balance of knowledge, experience and capability. The Nominating, Governance and Review Committee then uses its network of contacts to compile a list of potential candidates, but may also engage, if it deems appropriate, a paid professional search firm. The Nominating, Governance and Review Committee conducts any appropriate and necessary inquiries into the backgrounds and qualifications of possible candidates after considering the function and needs of the Board. In the case of incumbent Directors whose terms of office are set to expire, the Nominating, Governance and Review Committee reviews such Directors’ overall service to Ionis during their term, including the number of meetings attended, level of participation, quality of performance, and any other relationships and transactions that might impair such Directors’ independence.
The Nominating, Governance and Review Committee meets to discuss and consider the candidates’ qualifications and determines whether each candidate is independent based upon applicable Nasdaq listing standards, SEC rules and regulations, and the advice of counsel, if necessary. Finally, the Nominating, Governance and Review Committee then selects a nominee for recommendation to the Board by majority vote.
Stockholder Recommendations for Directors
Stockholders who wish to recommend individuals for consideration by the Nominating, Governance and Review Committee to become nominees for election to the Board may do so by delivering a written recommendation to Ionis’ corporate secretary at the following address: 2855 Gazelle Court, Carlsbad, CA 92010. Submissions must include:
the name, age, business address and residence address of the nominee;
the principal occupation or employment of the nominee;
the stock ownership in Ionis of the nominee;
the stock ownership in Ionis of the stockholder making the nomination, including any trading in derivative securities that may disguise ownership occurring within the last 12 months;
the information relating to the nominee that is required to be disclosed in solicitations of proxies under applicable securities laws;
the nominee’s written consent to being named in the Proxy Statement as a nominee and to serving as a Director if elected;
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other information as we may reasonably require to determine the eligibility of the proposed nominee to serve as an independent Director or that could be material to a reasonable stockholder’s understanding of the independence of the proposed nominee; and
any voting commitments the nominee has to third parties.
In addition, the nominee will need to complete a written questionnaire regarding the background and qualifications of the nominee, and the background of any other person or entity on whose behalf the nomination is being made. The nominee must also agree to comply with all of our applicable publicly disclosed corporate governance, conflict of interest, confidentiality and stock ownership and trading policies and guidelines. The description of the requirements for Director nomination set forth above is qualified in its entirety by reference to our full and complete bylaws, which is an exhibit to our Current Report on Form 8-K filed with the SEC on March 29, 2021, a copy of which is available by contacting our corporate secretary. To date, the Board has not received or rejected a timely Director nominee for election at the upcoming stockholder meeting from a stockholder or stockholders holding more than 5% of our voting stock.
Agenda Committee
The primary function of the Agenda Committee of the Board is to determine the matters to be considered by the Board at each of its meetings and prepare an agenda accordingly. The Agenda Committee discussed in advance and set the agenda for each regularly scheduled Board meeting held in 2020. Since we now have an independent lead Director, we dissolved the Agenda Committee as of March 26, 2021.
Science/Medical Committee
The primary functions of the Science/Medical Committee of the Board are to focus on the key scientific and development issues facing our technology and medicines in development and help set our strategy in such areas. The Science/Medical Committee met one time in 2020 via teleconference due to the COVID-19 pandemic.
Finance Committee
The primary function of the Finance Committee of the Board is to advise the Board on certain corporate finance matters for the Company and its subsidiaries, including capital structures, financings, investments, and share repurchase activities. The Finance Committee met six times in 2020, all via teleconference due to the COVID-19 pandemic.
Commercial Compliance Committee
The Commercial Compliance Committee was formed in March 2021. The primary function of the Commercial Compliance Committee is to provide oversight of compliance matters with respect to the commercialization and marketing of the Company’s medicines.
Stockholder Communications with the Board
We make every effort to ensure that our Board or individual Directors, as applicable, hear our stockholders’ views, and provide appropriate responses to stockholders in a timely manner. Stockholders who wish to communicate with the Board, or individual Directors, may do so by sending written communications addressed to Ionis’ corporate secretary at 2855 Gazelle Court, Carlsbad, CA 92010. If you wish to communicate with the independent Directors about your concerns or issues, you may address correspondence to a particular Director or to the independent Directors generally. If you do not name a particular Director, depending on the subject matter, we will forward the letter to the Chair of the Audit, Compensation, or Nominating, Governance and Review Committee. One or more of our employees designated by the Board will review these communications and will determine whether to present the materials to the Board. The purpose of this screening is to allow the Board to avoid having to consider irrelevant or inappropriate communications, such as advertisements, commercial solicitations, and hostile communications. In accordance with our Code of Ethics and Business Conduct, all communications that relate to questionable accounting or auditing matters involving Ionis will be promptly and directly forwarded to the Audit Committee. Other than the processes described above, our Board has not adopted a formal written process for stockholder communications with the Board. We believe our Board’s responsiveness to stockholder communications has been excellent.
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Code of Ethics and Business Conduct
We have adopted a Code of Ethics and Business Conduct that applies to all officers, Directors, and employees. We have posted our Code of Ethics and Business Conduct on our website. If we make any substantive amendments to the Code of Ethics and Business Conduct or grant any waiver from a provision of the Code of Ethics and Business Conduct to any executive officer or Director, we will promptly disclose the nature of the amendment or waiver via an 8-K filing with the SEC or on our website at www.ionispharma.com.6
Corporate Governance Guidelines
The Board has adopted corporate governance guidelines to ensure that the Board will have the necessary authority and practices in place to review and evaluate our business operations as needed and to make decisions that are independent of our management. The guidelines are also intended to align our Directors’ and management’s interests with those of our stockholders. The corporate governance guidelines set forth the practices the Board intends to follow with respect to board composition and selection, board meetings and involvement of senior management, Chief Executive Officer performance evaluation, succession planning for Board committees and compensation, “clawbacks” of executive compensation, and share retention guidelines for our executive officers and Directors. The Board adopted the corporate governance guidelines to, among other things, reflect changes to the Nasdaq listing standards and SEC rules adopted to implement provisions of the Sarbanes-Oxley Act of 2002. You may view our corporate governance guidelines, as well as the charters for the Audit, Compensation and Nominating, Governance and Review committees at www.ionispharma.com.7
Anti-Hedging Policy and Anti-Pledging Policy
All employees, including our named executive officers, are prohibited from taking a “short” position in our stock and otherwise hedging their position in our stock against a future drop in our stock price. In addition, we specifically prohibit all of our employees from trading derivative instruments based on our common stock (e.g. put or call options for our stock) and prohibit pledging our stock as collateral.
6
Any information that is included on or linked to our website is not part of this Proxy Statement or any registration statement or report that incorporates this Proxy Statement by reference.
7
Any information that is included on or linked to our website is not part of this Proxy Statement or any registration statement or report that incorporates this Proxy Statement by reference.
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PROPOSAL 2
APPROVAL OF AN AMENDMENT OF OUR 2011 EQUITY INCENTIVE PLAN
In March 2011, the Compensation Committee of the Board, and the Board, adopted the Ionis Pharmaceuticals, Inc. 2011 Equity Incentive Plan (the “2011 Plan”) and the stockholders approved the Plan on June 16, 2011. The stockholders have approved amendments to the 2011 Plan to increase the aggregate number of shares of common stock authorized for issuance under the 2011 Plan as follows: on June 30, 2015, an increase of 5,500,000 to an aggregate of 11,000,000 shares; on May 24, 2017, an increase of 5,000,000 to an aggregate of 16,000,000 shares; and on June 6, 2019, an increase of 7,000,000 to an aggregate of 23,000,000 shares. In March 2021, the Compensation Committee of the Board, and the Board, approved an amendment of the 2011 Plan as further described herein.
In this Proposal 2, we are requesting stockholders to approve an amendment of the 2011 Plan to:
increase the aggregate number of shares of common stock authorized for issuance under the 2011 Plan by 6,700,000 to an aggregate of 29,700,000 shares;
add a fungible share counting ratio so that the share reserve will be reduced or increased by 1.7 shares for each share of common stock issued pursuant to, or returning from, a Full Value Award (as defined below), respectively; and
clarify the type of events that may trigger additional acceleration of vesting and exercisability of stock awards in connection with a change in control.
Our management, Board and Compensation Committee believe that stock options, restricted stock units (“RSUs”) and performance-based restricted stock units (“PRSUs”) are a key aspect of our ability to attract and retain qualified personnel in the face of intense competition for experienced scientists and other personnel among many pharmaceutical and health care companies. On March 26, 2021, the Board, upon the recommendation of the Compensation Committee, approved an amendment to the 2011 Plan to increase the aggregate number of shares of common stock authorized for issuance under the 2011 Plan by 6,700,000 to an aggregate of 29,700,000 shares, to ensure that for a period of at least two years, based on our current business plans, we can continue to grant stock options, RSUs and PRSUs to employees at appropriate levels as determined by the Compensation Committee; to add a fungible share counting ratio; and to clarify the type of events that may trigger additional acceleration of vesting and exercisability of stock awards in connection with a change in control. We refer to the 2011 Plan, as amended on March 26, 2021, as the “Amended 2011 Plan” throughout this Proposal 2. If the stockholders do not approve this Proposal 2, and as a consequence, we cannot continue to grant options, RSUs and PRSUs at competitive levels, we believe that it will negatively affect our ability to recruit and retain highly qualified personnel and our ability to manage future growth. Without these additional shares, management expects that the current shares available for grant under the 2011 Plan will not be sufficient to maintain our stock award practices for new employees or for promotions or merit awards for current employees.
Each year the Compensation Committee approves a budget that sets the number of stock options, RSUs and PRSUs we can grant our employees for annual merit awards. We do not grant options, RSUs or PRSUs that exceed this budget without the Compensation Committee’s approval. Over the past three years, the average merit award stock budget set by the Compensation Committee has been approximately 2.2% of our outstanding common stock on an issued and outstanding basis. This stock compensation budget, and therefore our equity compensation burn rate, is well below the 4.2% average of our peers.
The 2011 Plan was adopted to ultimately replace the Ionis Pharmaceuticals, Inc. 1989 Stock Option Plan (the “89 Plan”). There were only approximately 45,000 shares available as of March 31, 2021 for grant under the 89 Plan.
The 2011 Plan is our primary means of offering stock options, RSUs and PRSUs to our employees. There were only approximately 1.2 million shares available as of March 31, 2021 for grant under the 2011 Plan. The 2011 Plan also allows us to utilize a broad array of equity incentives and performance cash incentives to secure and retain the services of our employees and to provide long-term incentives that align the interests of our employees with the interests of our stockholders.
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We also have the Ionis Pharmaceuticals, Inc. 2020 Equity Incentive Plan (the “2020 Plan”) that we assumed in connection with the Akcea Acquisition. Equity awards granted under the 2020 Plan are reserved primarily for legacy employees of Akcea who were employed as of October 12, 2020, which was the completion date of the Akcea Acquisition. There were approximately 2 million shares available as of March 31, 2021 for grant under the 2020 Plan.
The table below provides certain information regarding the 2020 Plan, 2011 Plan and the 89 Plan.
Employee Equity Incentive Plans (as of March 31, 2021)
 
2020 Plan
2011 Plan
89 Plan
Total number of shares of common stock subject to outstanding stock options
363,350
13,453,327
31,070
Weighted-average exercise price of outstanding stock options
$56.82
$55.11
$48.03
Weighted-average remaining term in years of outstanding stock options
6.74
4.25
1.47
Total number of shares of common stock subject to outstanding full value awards
161,483
2,658,712
Total number of shares of common stock available for grant under the plan
2,078,596
1,246,420
45,751
Total number of shares of common stock available for grant to non-employee Directors under the Non-Employee Director Plan(1)
770,111
Total number of shares of common stock available for grant under other equity incentive plans
Total number of shares of common stock outstanding
140,924,356
Per-share closing price of common stock as reported on Nasdaq Capital Market
$44.96
(1)
This amount reflects the number of shares of common stock available as of March 31, 2021 for grant under our 2002 Amended and Restated Non-Employee Directors’ Stock Option Plan (the “Non-Employee Director Plan”), which we use solely to offer equity awards to our non-employee Directors. With respect to the Non-Employee Director Plan, the total number of shares of common stock subject to outstanding stock options is 965,250, the weighted-average exercise price of outstanding stock options is $47.66, the weighted-average remaining term in years of outstanding stock options is 6.11, the total number of shares of common stock subject to outstanding full value awards is 140,858, and the total number of shares of common stock available for grant under the Non-Employee Director Plan is 770,111. We have no equity incentive plans other than the 2020 Plan, 2011 Plan, 89 Plan and the Non-Employee Director Plan.
Required Vote and Board of Directors Recommendation
Approval of this Proposal 2 requires the affirmative vote of a majority of the holders of shares present or represented by proxy at the Annual Meeting and entitled to vote on the matter. Abstentions will be counted toward the tabulation of votes cast on the proposal and will have the same effect as “Against” votes. Broker non-votes will have no effect on the outcome of the vote.
Our Board believes that approval of Proposal 2 is in our best interests and the best interests of our stockholders for the reasons stated above.
THE BOARD UNANIMOUSLY RECOMMENDS A VOTE “FOR” APPROVAL OF PROPOSAL 2.
DESCRIPTION OF THE AMENDED IONIS PHARMACEUTICALS, INC. 2011 EQUITY INCENTIVE PLAN
Below is a high-level summary of the terms of the Amended 2011 Plan. This summary is qualified in its entirety by reference to the complete text of the Amended 2011 Plan. We encourage our stockholders to read the actual text of the Amended 2011 Plan, as amended, in its entirety, a copy of which we filed with this Proxy Statement.
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The Amended 2011 Plan:
is administered by our Compensation Committee, which is composed entirely of independent Directors;
has a term ending on June 15, 2031;
contains a “fungible share counting” structure, whereby the number of shares of our common stock available for issuance under the Amended 2011 Plan will be reduced by (i) one share for each share issued pursuant to a stock option or stock appreciation right with an exercise price that is at least 100% of the fair market value of our common stock on the date of grant (an “Appreciation Award”) granted under the Amended 2011 Plan, and (ii) 1.7 shares for each share issued pursuant to a stock award that is not an Appreciation Award (a “Full Value Award”). As part of such fungible share counting structure, the number of shares of our common stock available for issuance under the Amended 2011 Plan will be increased by (i) one share for each share that becomes available again for issuance under the terms of the Amended 2011 Plan subject to an Appreciation Award, and (ii) 1.7 shares for each share that is granted after the effective date of the Amended 2011 Plan that becomes available again for issuance under the terms of the Amended 2011 Plan subject to a Full Value Award;
prohibits the repricing of any option or stock appreciation rights outstanding under the Amended 2011 Plan, or “cashing out” underwater awards unless approved by our stockholders;
is limited to the granting of stock options, SARs, restricted stock awards, RSUs, PRSUs, and performance cash awards;
prohibits the payment of dividends and dividend equivalents with respect to shares subject to an award until such shares have vested in accordance with the terms of the corresponding award agreement;
eliminates the recycling of shares forfeited to cover the exercise price or withholding taxes for stock options and SARs;
requires that each newly granted stock option, restricted stock award, RSU, SAR and PRSU award not become fully vested until a date at least one year after the date of grant, except in the case of (1) a sale of all or substantially all of the assets of the Company, (2) a disposition of at least 90% of the Company’s securities, a merger or other similar transaction after which the Company is not the surviving corporation, (3) a merger or other similar transaction after which the Company is the surviving corporation but the shares of common stock immediately preceding the transaction are exchanged into other property, (4) an award granted in exchange for previously granted awards of a company acquired by the Company and (5) awards to non-employee directors that vest on the earlier of the one-year anniversary of the date of grant or the next annual meeting of stockholders, provided that such vesting period may not be less than 50 weeks; and Ionis may grant up to 1,485,000 shares worth of stock options, restricted stock awards, RSUs, SARs or PRSU awards that vest earlier than the minimum period described above;
provides that if any stock awards held by participants who haven’t terminated service prior to a corporate transaction are not assumed, continued or substituted for by the acquiror (or its parent) in the transaction, then, contingent on the closing of the transaction, the vesting (and exercisability, if applicable) of such awards will be accelerated in full, and with respect to any awards subject to performance-based vesting conditions, vesting will be deemed satisfied at the greater of actual performance or target level; and
requires all options and SARs outstanding under the Amended 2011 Plan to have an exercise or strike price of not less than 100% of the fair market value of our common stock on the date of grant.
Purpose
The main purpose of the Amended 2011 Plan is to allow us to give our employees (including officers), Directors and consultants an opportunity to benefit from increases in value of our common stock through the granting of a combination of stock options and RSUs. We believe providing our employees a combination of stock options and RSUs allows us to:
retain the highest quality employees while motivating all employees to achieve key drivers of stock value;
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issue fewer shares, thereby reducing dilution;
better align employee and stockholder interests; and
encourage long-term holding by executive employees because stock settlement for RSUs does not require a same-day-sale.
In 2020, we granted our employees a combination of stock options and RSUs under our 2011 Plan, where we allocated 60% of the grant date dollar value to stock options and allocated 40% of the value to RSUs; and assumed that each share subject to an RSU was worth one-and-a-half shares subject to a stock option.
Background
The terms of the Amended 2011 Plan provide for the grant of stock options, SARs, restricted stock awards, RSUs, PRSU awards and performance cash awards that may be settled in cash, stock, or other property.
Shares Available for Awards
If this Proposal 2 is approved, there will be a total of 29,700,000 shares of our common stock authorized for issuance under the Amended 2011 Plan. If this Proposal 2 is not approved, there will only be approximately 1.2 million shares available for issuance under the Amended 2011 Plan as of March 31, 2021, which we expect will not be sufficient to maintain our stock award practices for new employees or for promotions or merit awards for current employees.
The following table summarizes the equity awards granted over the last three years, and through March 31, 2021, to our employees under our equity plans. We grant most of our equity awards for each year in January of such year as part of the annual merit compensation process. We have not attempted to forecast our future grant activity due to the number of assumptions that would be necessary to do so and the potential unpredictability of such underlying assumptions and estimates.
Equity Award Grant History Under Employee Equity Plans(1)
 
2018
2019
2020
2021
(through March 31)
Shares subject to equity awards granted
4,091,209
3,379,379
3,892,931
4,011,092
Shares subject to equity awards canceled, forfeited, or withheld for taxes
(612,762)
(465,440)
(712,131)
(487,992)
Net shares subject to equity awards(2)
3,478,447
2,913,939
3,180,800
3,523,100
(1)
Amounts shown reflect grants under our 2020 Plan, 2011 Plan and 89 Plan. We currently grant equity awards to our non-employee Directors separately under our Non-Employee Director Plan.
(2)
Shares subject to equity awards that are canceled, forfeited, or withheld for taxes become available for re-issuance under the applicable equity plan. Therefore, net shares for any year is the total shares subject to awards granted in that year less the shares subject to awards canceled, forfeited, or withheld for taxes in such year.
The number of shares of our common stock available for issuance under the Amended 2011 Plan will be reduced by (i) one share for each share of common stock issued pursuant to a stock option or stock appreciation right with an exercise or strike price of at least 100% of the fair market value of the underlying common stock on the date of grant, and (ii) 1.7 shares for each share of common stock issued pursuant to a Full Value Award.
If, under the Amended 2011 Plan, (i) any shares of common stock subject to a stock award are not issued because the stock award expires or otherwise terminates without all of the shares covered by the stock award having been issued or is settled in cash, (ii) any shares of common stock issued pursuant to a stock award are forfeited back to or repurchased by us because of the failure to meet a contingency or condition required for the vesting of such shares, or (iii) with respect to a Full Value Award, any shares of common stock are reacquired or withheld (or not issued) by us to satisfy a tax withholding obligation in connection with the award, then such shares will again become available for issuance under the Amended 2011 Plan (collectively, the “2011 Plan Returning Shares”). For each 2011 Plan Returning Share subject to a Full Value Award that is granted following the effective date of the Amended 2011 Plan, the number of shares of common stock available for issuance under the Amended 2011 Plan will increase by 1.7 shares.
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Limited Recycling of Shares Related to Options and SARs
We prohibit the recycling of shares we reacquire pursuant to our withholding obligations in connection with a stock option or SAR or as consideration for the exercise of a stock option or SAR and such reacquired shares will not become available for issuance under the Amended 2011 Plan.
Eligibility
All of our employees in the United States and our Directors and consultants are eligible to participate in the Amended 2011 Plan. Our practice, however, is not to grant awards to consultants or non-employee Directors under the Amended 2011 Plan. As of April 5, 2021, we had a total of 720 employees who were eligible to participate in the Amended 2011 Plan.
Administration
Our Board administers the Amended 2011 Plan. The Board may delegate authority to administer the Amended 2011 Plan to a committee but may retain the authority to concurrently administer the Amended 2011 Plan with the committee and may, at any time, revest in itself some or all of the powers previously delegated to the committee. Our Board has delegated administration of the Amended 2011 Plan to the Compensation Committee. Subject to the terms of the Amended 2011 Plan, the Compensation Committee may determine the recipients, numbers, and types of stock awards to be granted, and terms and conditions of the stock awards, including the period of their exercisability and vesting. Subject to the limitations set forth below, the Compensation Committee also determines the fair market value applicable to a stock award and the exercise price of stock options and SARs granted under the Amended 2011 Plan.
At the discretion of the Board, the Compensation Committee may consist solely of two or more “non-employee directors” within the meaning of Rule 16b-3 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). We also have a Non-Management Stock Award Committee that, as delegated by the Compensation Committee, awards stock awards to employees who are below director level in accordance with guidelines adopted by the Compensation Committee. The Non-Management Stock Award Committee has one member, Dr. Monia. As used herein, except as explicitly stated otherwise, with respect to the Amended 2011 Plan, the “Board” refers to any committee the Board appoints or, if applicable, any subcommittee, as well as to the Board itself.
No Repricing, “Cash-Out,” or Cancellation and Re-Grant of Stock Awards without Stockholder Approval
Under the Amended 2011 Plan, the Board cannot reprice any outstanding options or SARs by reducing the exercise price of the stock award or cancel any outstanding options or SARs in exchange for cash or other stock awards without obtaining the approval of our stockholders within 12 months prior to the repricing or cancellation and re-grant event.
Minimum Vesting; Restrictions on Accelerated Vesting
Under the Amended 2011 Plan, no stock award granted to an employee or member of the Board will become 100% vested in a period of less than one year after the grant of such award, except that the vesting of a stock award may accelerate (or may be accelerated by the Board or Compensation Committee) in the case of (1) a sale of all or substantially all of the assets of the Company, (2) a disposition of at least 90% of the Company’s securities, a merger or other similar transaction after which the Company is not the surviving corporation, (3) a merger or other similar transaction after which the Company is the surviving corporation but the shares of common stock immediately preceding the transaction are exchanged into other property, (4) an award granted in exchange for previously granted awards of a company acquired by the Company and (5) awards to non-employee directors that vest on the earlier of the one-year anniversary of the date of grant or the next annual meeting of stockholders, provided in such case that such vesting period may not be less than 50 weeks; and Ionis may grant up to 1,485,000 shares worth of stock options, restricted stock awards, RSUs, SARs or PRSU awards that vest earlier than the minimum period described above.
Dividends and Dividend Equivalents
The Amended 2011 Plan prohibits the payment of dividends and dividend equivalents with respect to shares subject to an award until such shares have vested in accordance with the terms of the corresponding award agreement.
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No Evergreen
The Amended 2011 Plan does not include an automatic share reserve increase provision (i.e., an evergreen provision).
Stock Options
The Board grants stock options under the Amended 2011 Plan pursuant to stock option agreements. The Amended 2011 Plan permits the grant of stock options that qualify as nonstatutory stock options, or “NSOs.” Individual stock option agreements may be more restrictive as to any or all of the permissible terms described in this section.
Exercise Price; Payment
The exercise price of stock options may not be less than 100% of the fair market value of the common stock subject to the stock option on the date of grant. As of March 31, 2021, the closing price of our common stock as reported on the Nasdaq Global Select Market was $44.96 per share.
Vesting
Stock options granted under the Amended 2011 Plan may become exercisable in cumulative increments, or “vest,” as determined by our Board at the rate specified in the stock option agreement, subject to the minimum vesting requirements described above. Shares covered by different stock options granted under the Amended 2011 Plan may be subject to different vesting schedules as our Board may determine.
Term
In general, the term of stock options granted under the Amended 2011 Plan is seven years, and the Amended 2011 Plan does not allow stock options to have a term that exceeds ten years. Unless the terms of an option holder’s stock option agreement or other agreement with the Company provides for earlier or later termination:
if an option holder’s service relationship with us, or any affiliate of ours, ceases due to disability, the option holder may exercise any vested stock options for up to 12 months after the date the service relationship ends;
if an option holder’s service relationship with us, or any affiliate of ours, ceases due to death, the option holder, or his or her beneficiary, may exercise any vested stock options for up to 18 months after the date the service relationship ends; and
if an option holder’s service relationship with us, or any affiliate of ours, ceases for any reason, other than as described above, the option holder may exercise any vested stock options for up to three months after the date the service relationship ends.
Under the Amended 2011 Plan, the stock option term may be extended in the event that exercise of the stock option following termination of service is prohibited by applicable securities laws or if the sale of stock received upon exercise of a stock option would violate the Company’s insider trading policy. In no event may a stock option be exercised after its expiration date.
Consideration
Our Board determines the acceptable forms of consideration for the purchase of our common stock pursuant to the exercise of a stock option under the Amended 2011 Plan, which may include cash, check, bank draft or money order made payable to us, shares of our common stock, payment pursuant to a program developed under Regulation T as promulgated by the Federal Reserve Board, or a net exercise feature.
Transferability
Generally, an option holder may not transfer a stock option other than by will or the laws of descent and distribution or a domestic relations order. However, to the extent permitted under the terms of the applicable stock option agreement, an option holder may designate a beneficiary who may exercise the stock option following the option holder’s death.
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Restricted Stock Unit Awards
RSUs are granted under the Amended 2011 Plan pursuant to restricted stock unit award agreements. Payment of any purchase price is made in any legal form acceptable to the Board. We settle a payment due to a recipient of a restricted stock unit award by delivery of shares of our common stock, by cash, by a combination of cash and stock, or in any other form of consideration determined by our Board and set forth in the restricted stock unit award agreement. We may credit dividend equivalents in respect of shares of our common stock covered by a restricted stock unit award; however, no dividend equivalents may be paid with respect to such shares before the date such shares have vested in accordance with the terms of the corresponding award agreement. RSUs are subject to vesting in accordance with a vesting schedule determined by our Board, subject to the minimum vesting requirements described earlier. Except as otherwise provided in the applicable RSU award agreement, RSUs that have not vested will be forfeited upon the participant’s termination of continuous service for any reason.
Restricted Stock Awards
The Board may grant restricted stock awards under the Amended 2011 Plan pursuant to restricted stock award agreements. The Board may grant a restricted stock award in consideration for cash, check, bank draft or money order payable to us, the recipient’s services performed for us or our affiliate, or any other form of legal consideration acceptable to the Board. Shares of our common stock acquired under a restricted stock award are subject to forfeiture to us in accordance with a vesting schedule determined by our Board. Holders of awards may only transfer their rights to acquire shares of our common stock under a restricted stock award upon such terms and conditions as are set forth in the restricted stock award agreement. We may credit dividend equivalents in respect of shares of our common stock covered by a restricted stock award; however, no dividend equivalents may be paid with respect to such shares before the date such shares have vested in accordance with the terms of the corresponding award agreement. Except as otherwise provided in the applicable restricted stock award agreement, restricted stock awards that have not vested will be forfeited upon the participant’s termination of continuous service for any reason.
Stock Appreciation Rights
The Board may grant SARs under the Amended 2011 Plan pursuant to SAR agreements. Each SAR is denominated in common stock share equivalents. The Board will determine the strike price of each stock appreciation right but the strike price cannot be less than 100% of the fair market value of the stock subject to the SAR at the time of grant. Our Board may also impose restrictions or conditions upon the vesting of SARs that it deems appropriate, subject to the minimum vesting requirements described earlier. We may settle SARs in our common stock, in cash, in a combination of cash and stock, or in any other form of legal consideration approved by our Board and set forth in the stock appreciation right agreement. SARs will be subject to the same conditions upon termination and restrictions on transfer as stock options under the Amended 2011 Plan.
Performance Awards
The Amended 2011 Plan provides for the grant of two types of performance awards: PRSU awards and performance cash awards. The Board may grant, vest, or settle performance awards based upon the attainment of specified performance goals during a specified period of time. The Compensation Committee will determine the length of any performance period, the performance goals to be achieved during the performance period, and the measure of whether and to what degree such performance goals have been attained.
In granting a performance award, the Compensation Committee will set a period of time, called a performance period, over which the attainment of one or more performance goals will be measured for the purpose of determining whether the award recipient has a vested right in or to such award. The Compensation Committee will establish the performance goals, based upon one or more criteria, called performance criteria enumerated in the Amended 2011 Plan and described below. As soon as administratively practicable following the end of the performance period, the Compensation Committee will determine whether the performance goals have been satisfied.
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The Board will determine performance goals under the Amended 2011 Plan, based on any one or more of the following performance criteria:
earnings (including earnings per share and net earnings)
earnings before interest, taxes, and depreciation
earnings before interest, taxes, depreciation, and amortization
total stockholder return
return on equity or average stockholders’ equity
return on assets, investment, or capital employed
stock price
margin (including gross margin)
income (before or after taxes)
sales or revenue targets
operating income
expenses and cost reduction goals
operating cash flow
economic value added (or an equivalent metric)
increases in revenue or product revenue
cash flow
improvement in or attainment of working capital levels
share price performance
market share
stockholders’ equity
cash flow per share
debt levels
debt reduction
workforce diversity
customer satisfaction
billings
capital expenditures
implementation or completion of projects or processes (including, but not limited to, development and regulatory milestones)
operating profit
other measures of performance selected by the Board
growth of net income or operating income
The Board is authorized to determine whether, when calculating the attainment of performance goals for a performance period, as follows:
to exclude restructuring and/or other nonrecurring charges;
to exclude exchange rate effects, as applicable, for non-U.S. dollar denominated performance goals;
to exclude the effects of changes to generally accepted accounting principles;
to exclude the effects of any statutory adjustments to corporate tax rates;
to exclude the effects of items that are “unusual” in nature or occur “infrequently,” as determined under generally accepted accounting principles; and
to exclude accounting expenses relating to share-based compensation.
Changes to Capital Structure
If certain capitalization adjustments occur, the Board will appropriately adjust:
the class(es) and maximum number of securities subject to the Amended 2011 Plan; and
the class(es) and number of securities and price per share of stock subject to outstanding stock awards.
Corporate Transactions
Unless otherwise provided in the stock award agreement, any other written agreement between the Company or any of its affiliates and the participant, or in any director compensation policy of the Company, in the event of a corporate transaction (as specified in the Amended 2011 Plan and described below), all outstanding stock awards under the Amended 2011 Plan will be assumed, continued or substituted for by any surviving or acquiring entity (or its parent company). If the surviving or acquiring entity (or its parent company) elects not to assume, continue or substitute for such stock awards, then (i) with respect to any such stock awards that are held by individuals whose continuous service with us or an affiliate has not terminated prior to the effective date of the corporate transaction, the vesting and exercisability provisions of such stock awards will be accelerated in
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full (and with respect to any performance stock awards, vesting will be deemed satisfied at the greater of actual performance or target level) and such awards will terminate if not exercised prior to the effective date of the corporate transaction, and (ii) with respect to any stock awards that are held by individuals whose continuous service with the Company or an affiliate of the Company has terminated prior to the effective date of the corporate transaction, the vesting and exercisability provisions of such stock awards will not be accelerated and such awards will terminate if not exercised prior to the effective date of the corporate transaction (except that any reacquisition or repurchase rights held by the Company with respect to such stock awards will not terminate and may continue to be exercised notwithstanding the corporate transaction).
For purposes of the Amended 2011 Plan, a corporate transaction will be deemed to occur in the event of the consummation of:
a sale of all or substantially all of our consolidated assets;
a sale of at least 90% of our outstanding securities;
a merger or consolidation in which we are not the surviving corporation; or
a merger or consolidation in which we are the surviving corporation but shares of our outstanding common stock are converted into other property by virtue of the transaction.
The acceleration of vesting of an award in the event of a corporate transaction under the Amended 2011 Plan may be viewed as an anti-takeover provision, which may have the effect of discouraging a proposal to acquire or otherwise obtain control of the Company.
Change in Control
A stock award will not be subject to additional acceleration of vesting and exercisability in connection with a change in control (as defined in the Amended 2011 Plan), except upon certain termination events that are in connection with a change in control as provided in the stock award agreement for such stock award or as otherwise may be provided in any other written agreement between us or any affiliate and the participant. In such a case, the stock award agreement or other written agreement may provide that vesting (and, if applicable, exercisability) of time-based awards will be accelerated in full and performance-based stock awards will be deemed to have been satisfied at the greater of actual performance or target level.
The acceleration of vesting of an award in the event of a change in control event under the Amended 2011 Plan may be viewed as an anti-takeover provision, which may have the effect of discouraging a proposal to acquire or otherwise obtain control of the Company.
Plan Amendments
Our Board has the authority to amend or terminate the Amended 2011 Plan. However, no amendment or termination of the plan will adversely affect any rights under awards already granted to a participant unless agreed to by the affected participant. We will obtain stockholder approval of any amendment to the Amended 2011 Plan as required by applicable law and listing requirements. We will not seek to amend the prohibition on option repricing or “cashing-out” without obtaining such stockholder approval.
Plan Termination
Unless sooner terminated by our Board, the Amended 2011 Plan will automatically terminate on June 15, 2031.
Federal Income Tax Information
The information set forth below is a summary only and does not purport to be complete. The information is based upon current federal income tax rules and therefore is subject to change when those rules change. Because the tax consequences to any recipient may depend on his or her particular situation, each recipient should consult the recipient’s tax adviser regarding the federal, state, local, and other tax consequences of the grant or exercise of an award or the disposition of stock acquired as a result of an award. The Amended 2011 Plan is not qualified under the provisions of Section 401(a) of the Code and is not subject to any of the provisions of the Employee Retirement Income Security Act of 1974. Our ability to realize the benefit of any tax deductions described below depends on our generation of taxable income, as well as the requirement of reasonableness and the satisfaction of our tax reporting obligations.
30

Nonstatutory Stock Options
Generally, there is no taxation upon the grant of an NSO if the stock option is granted with an exercise price equal to the fair market value of the underlying stock on the grant date. On exercise, an option holder will recognize ordinary income equal to the excess, if any, of the fair market value of the underlying stock on the date of exercise of the stock option over the exercise price. If the option holder is employed by us or one of our affiliates, that income will be subject to withholding taxes. The option holder’s tax basis in those shares will be equal to their fair market value on the date of exercise of the stock option, and the option holder’s capital gain holding period for those shares will begin on that date.
Subject to the requirement of reasonableness, the provisions of Section 162(m) of the Code, and the satisfaction of our tax reporting obligation, we will generally be entitled to a tax deduction equal to the taxable ordinary income realized by the option holder.
Restricted Stock Unit Awards
Generally, the recipient of a restricted stock unit award structured to comply with the requirements of Section 409A of the Code or an exemption to Section 409A of the Code will recognize ordinary income at the time the stock is delivered equal to the excess, if any, of the fair market value of the shares of our common stock received over any amount paid by the recipient in exchange for the shares of our common stock. To comply with the requirements of Section 409A of the Code, the shares of our common stock subject to a restricted stock unit award may generally only be delivered upon one of the following events: a fixed calendar date (or dates), separation from service, death, disability or a change in control. If delivery occurs on another date, unless the restricted stock unit award otherwise complies with or qualifies for an exemption to the requirements of Section 409A of the Code, in addition to the tax treatment described above, the recipient will owe an additional 20% federal tax and interest on any taxes owed.
The recipient’s basis for the determination of gain or loss upon the subsequent disposition of shares acquired from a restricted stock unit award will be the amount paid for such shares plus any ordinary income recognized when the stock is delivered.
Subject to the requirement of reasonableness, the provisions of Section 162(m) of the Code, and the satisfaction of our tax reporting obligation, we will generally be entitled to a tax deduction equal to the taxable ordinary income realized by the recipient of the restricted stock unit award.
Restricted Stock Awards
Generally, the recipient of a restricted stock award will recognize ordinary income at the time the stock is received equal to the excess, if any, of the fair market value of the stock received over any amount paid by the recipient in exchange for the stock. If, however, the stock is not vested when it is received (for example, if the employee is required to work for a period of time in order to have the right to sell the stock), the recipient generally will not recognize income until the stock becomes vested, at which time the recipient will recognize ordinary income equal to the excess, if any, of the fair market value of the stock on the date it becomes vested over any amount paid by the recipient in exchange for the stock. A recipient may, however, file an election with the Internal Revenue Service, within 30 days following his or her receipt of the stock award, to recognize ordinary income, as of the date the recipient receives the award, equal to the excess, if any, of the fair market value of the stock on the date the award is granted over any amount paid by the recipient for the stock.
The recipient’s basis for the determination of gain or loss upon the subsequent disposition of shares acquired from a restricted stock award will be the amount paid for such shares plus any ordinary income recognized either when the stock is received or when the stock becomes vested.
Subject to the requirement of reasonableness, the provisions of Section 162(m) of the Code, and the satisfaction of our tax reporting obligation, we will generally be entitled to a tax deduction equal to the taxable ordinary income realized by the recipient of the restricted stock award.
Stock Appreciation Rights
We may grant stock appreciation rights under the Amended 2011 Plan separate from any other award or together with other awards under the Amended 2011 Plan.
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Generally, if a stock appreciation right is granted with an exercise price equal to the fair market value of the underlying stock on the grant date, the recipient will recognize ordinary income equal to the fair market value of the stock or cash received upon such exercise.
Subject to the requirement of reasonableness, the provisions of Section 162(m) of the Code, and the satisfaction of our tax reporting obligation, we will generally be entitled to a tax deduction equal to the taxable ordinary income realized by the recipient of the stock appreciation right.
Section 162(m) Limitations
Section 162(m) of the Code disallows a deduction to any publicly held corporation and its affiliates for certain compensation paid to “covered employees” in a taxable year to the extent that compensation paid to a covered employee exceeds $1 million. The exemption from Section 162(m)’s deduction limit for performance-based compensation has been repealed, effective for taxable years beginning after December 31, 2017, such that compensation paid to our covered employees in excess of $1 million will not be deductible unless it qualifies for transition relief applicable to certain arrangements in place as of November 2, 2017, and not modified in any material respect on or after such date. As a result, compensation (including compensation pursuant to awards granted under the Amended 2011 Plan) paid to any of our “covered employees” under Section 162(m) of the Code in excess of $1 million per taxable year generally will not be deductible.
New Plan Benefits
Awards granted under the Amended 2011 Plan to our executive officers and other employees are discretionary and are not subject to set benefits or amounts under the terms of the Amended 2011 Plan, and our Board and our Compensation Committee have not granted any awards under the Amended 2011 Plan subject to stockholder approval of this Proposal 2. Accordingly, the benefits or amounts that will be received by or allocated to our executive officers and other employees under the Amended 2011 Plan, as well as the benefits or amounts which would have been received by or allocated to our executive officers and other employees for fiscal year 2020 if the Amended 2011 Plan had been in effect, are not determinable.
Plan Benefits
The following table sets forth, for each of the individuals indicated, the total number of shares subject to awards that have been granted under the 2011 Plan as of March 31, 2021.
PLAN BENEFITS
2011 PLAN
Name and Position
Total Number of
Shares
Options
RSUs
PRSUs(1)
Brett Monia
Chief Executive Officer
872,884
612,014
197,900
62,970
Elizabeth L. Hougen
Executive Vice President and Chief Financial Officer
430,533
342,336
88,197
Stanley T. Crooke
Executive Chairman of the Board
1,145,669
978,479
167,190
Richard Geary
Executive Vice President, Chief Development Officer
423,735
338,170
85,565
Patrick R. O’Neil
Executive Vice President, Legal, General Counsel and Chief Compliance Officer
384,912
300,567
84,345
All Executive Officers as a Group
4,267,635
3,360,701
843,964
62,970
All Non-Employee Directors as a Group
All Non-Executive Officer Employees as a Group
14,032,423
11,177,434
2,854,989
(1)
Reflects the target payout of shares under the PRSU awards.
Please see page 39 for information regarding outstanding options and shares reserved for future issuance under our equity compensation plans as of March 31, 2021.
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PROPOSAL 3

ADVISORY VOTE ON EXECUTIVE COMPENSATION
The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, called the “Dodd-Frank Act,” entitles Ionis’ stockholders to vote to approve, on an advisory (nonbinding) basis, the compensation of our Chief Executive Officer, Chief Financial Officer and our three other most highly compensated executive officers (at December 31, 2020), called our “named executive officers” as disclosed in this Proxy Statement in accordance with Section 14A of the Exchange Act.
We are asking our stockholders to indicate their support for our named executive officers’ compensation as described in this Proxy Statement. This Proposal 3, commonly known as a “say on pay” proposal, gives our stockholders the opportunity to express their views on the compensation paid to our named executive officers. This vote is not intended to address any specific item of compensation, but rather the overall compensation of our named executive officers and the philosophy, policies and practices described in this Proxy Statement. Accordingly, we are asking our stockholders to vote “FOR” the following resolution at the Annual Meeting:
“RESOLVED, that Ionis’ stockholders approve, on an advisory basis, the compensation of the named executive officers, as disclosed in this Proxy Statement for the 2021 Annual Meeting of Stockholders pursuant to the compensation disclosure rules of the Securities and Exchange Commission.”
We recommend you carefully review the EXECUTIVE COMPENSATION section of this Proxy Statement located on pages 40 through 65. Below is a high-level summary of some of our compensation practices. This summary is qualified by the detailed disclosure contained in the EXECUTIVE COMPENSATION section of this Proxy Statement.
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The table below summarizes some of our executive compensation practices, both the practices we implement because we believe they are consistent with our vision and long-term stockholder value (see “What We Do” below), and those that we choose not to implement as we believe they are counter to our vision and long-term stockholder value (see “What We Don’t Do” below):
What We Do
What We Don’t Do
In 2020 we began allocating 20% of our Chief Executive Officer’s equity awards as performance-based restricted stock units
Do not guarantee a cash bonus – cash bonuses can be, and have been, zero
Demand more of every employee: more commitment, more knowledge, more intensity, more innovation, more productivity
Do not provide perquisites for any employees
Reward productivity and performance
Do not provide “gross-up” payments, other than for relocation
Recognize the value of long-term employees and low turnover
Do not allow pledging, shorting, or hedging against our stock
Use a balanced mix of fixed and variable cash incentives and long-term equity incentives
Do not reprice or “cash-out” stock options without stockholder approval
Review compensation compared to the 25th, 50th and 75th percentiles of our peer group
Design our compensation philosophy and objectives to mitigate unnecessary or imprudent business risk taking
Set explicit and demanding objectives at the beginning of each year from which we measure performance for the year
Place a maximum limit on Performance Management By Objective (MBO) awards
Set a strict budget for equity awards and salary increases
Set the size of equity awards based on individual and company performance
Require minimum vesting periods for equity awards
Maintain equity holding periods that require our executive officers and non-employee Directors to hold shares received from their RSUs until they meet certain ownership thresholds or no longer serve the Company
Maintain equity holding periods that require our employees to hold ESPP shares for a minimum of six months
Require our executive officers and VPs to trade Ionis’ stock through Rule 10b5-1 trading plans
Use a “double trigger” for cash payments for change of control
Use a “double trigger” for equity acceleration for change of control for our executive officers
Use an executive “clawback” policy that applies to all Section 16 Officers
Use an independent compensation consultant engaged by the Compensation Committee
The affirmative vote of a majority of the holders of shares present or represented by proxy at the Annual Meeting and entitled to vote on the matter is required to adopt the resolution. If you indicate on your proxy to
34

“Abstain” from voting, it will have the same effect as a vote “Against” this Proposal 3. Brokers do not have discretion to vote uninstructed shares with respect to this Proposal 3. Accordingly, if brokers do not receive voting instructions from beneficial owners of the shares, they cannot vote the shares. Therefore, broker non-votes will not affect the outcome of the voting on this Proposal 3.
The “say on pay” vote is advisory, and therefore is not binding on Ionis, the Compensation Committee or the Board. However, Ionis’ management, the Board and the Compensation Committee value the opinions of the stockholders. As such, if there is any significant vote against the named executive officers’ compensation as disclosed in this Proxy Statement, the Board will consider the stockholders’ concerns and the Board and Compensation Committee will evaluate whether any actions are necessary to address those concerns.
THE BOARD UNANIMOUSLY RECOMMENDS A VOTE “FOR” APPROVAL OF PROPOSAL 3.
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PROPOSAL 4
RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS
The Audit Committee has selected Ernst & Young LLP as our independent registered public accounting firm for our 2021 fiscal year and has requested management to ask for stockholder ratification at the Annual Meeting. Ernst & Young LLP has audited our financial statements since we were founded in 1989. Representatives of Ernst & Young LLP will be at the virtual Annual Meeting to answer any questions and make a statement should they desire to do so.
Although our bylaws do not require stockholders to ratify our independent registered public accounting firm, the Audit Committee would like our stockholders’ opinion as a matter of good corporate practice. If the stockholders do not ratify the selection of Ernst & Young LLP, the Audit Committee will reconsider whether to keep the firm. However, even if the stockholders ratify the selection, the Audit Committee may choose to appoint a different independent accounting firm at any time during the year if it believes that a change would be in the best interests of our stockholders and Ionis.
The affirmative vote of the holders of a majority of the shares present or represented by proxy at the Annual Meeting and entitled to vote on the matter will be required to ratify the selection of Ernst & Young LLP. Abstentions and broker non-votes will have no effect on this Proposal 4.
Independent Auditors’ Fees; Pre-Approval Policies and Procedures
The Audit Committee has adopted a policy and procedure for the pre-approval of audit and permissible non-audit services rendered by our independent registered public accounting firm, Ernst & Young LLP. The policy generally pre-approves specific services in the defined categories of audit services, audit-related services, and tax services up to pre-determined amounts. The Audit Committee may pre-approve services as part of its approval of the scope of the engagement of the independent auditor or on an individual explicit case-by-case basis before the Audit Committee engages the independent registered public accounting firm to provide each service. The Audit Committee pre-approved all of the services described below.
Audit Fees
For the fiscal years ended December 31, 2020 and 2019, Ernst & Young LLP billed us approximately $2.0 million and $1.6 million, respectively, primarily related to the integrated audit of our financial statements and reviews of our interim financial statements. In addition, Ernst & Young LLP billed us approximately $90,000 and approximately $220,000 in 2020 and 2019, respectively, related to corporate transactions, of which approximately $10,000 and $85,000 was billed to Akcea for each year, respectively. Additionally, for the fiscal years ended December 31, 2020 and 2019, Ernst & Young LLP billed us approximately $415,000 and $750,000, respectively, related to the audit of the financial statements of Akcea.
Audit Related Fees
For the fiscal years ended December 31, 2020 and 2019, there were no audit related fees billed by Ernst & Young LLP.
Tax Fees
For the fiscal years ended December 31, 2020 and 2019, Ernst & Young LLP billed us approximately $640,000 and $225,000 for each year, respectively, primarily related to professional services on tax projects, of which approximately $195,000 in 2020 was related to the Akcea Acquisition.
All Other Fees
During the fiscal years ended December 31, 2020 and 2019, all other fees billed by Ernst & Young LLP were approximately $6,000 each year. These fees were for a subscription to an online accounting and tax information service. The Audit Committee has determined that the rendering of all non-audit services by Ernst & Young LLP is compatible with maintaining the auditor’s independence. During the fiscal year ended December 31, 2020, none of the total hours expended on our financial audit by Ernst & Young LLP were provided by persons other than Ernst & Young LLP’s employees.
THE BOARD UNANIMOUSLY RECOMMENDS A VOTE “FOR” APPROVAL OF PROPOSAL 4.
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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
This table outlines the ownership of our common stock as of March 1, 2021 by:
each Director and nominee for Director;
each executive officer named in the Summary Compensation Table under “Executive Compensation--Compensation of Executive Officers”;
all Directors and executive officers as a group; and
every entity that we know beneficially owns more than five percent of our common stock.
Except as otherwise indicated below, the address of each beneficial owner listed in this table is c/o Ionis Pharmaceuticals, Inc., 2855 Gazelle Court, Carlsbad, California 92010.
 
Beneficial Ownership(1)
Beneficial Owner
Number of
Shares
Percent of
Total(2)
FMR LLC(3)
245 Summer Street
Boston, MA 02210
20,979,722
14.89%
 
 
 
T. Rowe Price Associates, Inc.(4)
100 E. Pratte Street
Baltimore, MD 21202
13,114,967
9.31%
 
 
 
The Vanguard Group(5)
100 Vanguard Boulevard
Malvern, PA 19355
12,244,388
8.69%
 
 
 
BlackRock, Inc.(6)
55 East 52nd Street
New York, NY 10055
9,750,502
6.92%
 
 
 
BB Biotech AG(7)
Schwertstrasse 6
CH-8200, Schaffhausen
Switzerland
8,220,000
5.84%
 
 
 
Spencer R. Berthelsen(8)
210,553
*
Breaux B. Castleman(9)
114,933
*
Stanley T. Crooke(10)
1,333,990
*
Michael Hayden(11)
25,334
*
Joan Herman(12)
17,334
*
Joseph Klein, III(13)
65,894
*
Joseph Loscalzo(14)
111,808
*
Frederick T. Muto(15)
134,683
*
B. Lynne Parshall(16)
519,178
*
Peter Reikes(17)
25,334
*
Joseph H. Wender(18)
160,305
*
Richard S. Geary(19)
219,696
*
Elizabeth L. Hougen(20)
251,397
*
Brett Monia(21)
348,651
*
Patrick R. O’Neil(22)
136,915
*
All Directors and executive officers as a group (nineteen persons)(23)
4,166,306
2.96%
*
Less than one percent
(1)
We base this table upon information supplied by officers, Directors, principal stockholders, and Form 3s, Form 4s, Form 5s, Schedules 13D and 13G filed with the SEC. Unless otherwise indicated in the footnotes to this table and subject to community property laws where applicable, we believe that each of the stockholders named in this table has sole voting and investment power with respect to the shares indicated as beneficially owned.
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(2)
Applicable percentages are based on 140,867,798 shares of common stock outstanding on March 1, 2021, adjusted as required by rules promulgated by the SEC.
(3)
FMR LLC has sole voting power to direct the vote of 7,587,587 shares and sole power to dispose or direct the disposition of 20,979,722 shares. The Fidelity Growth Company Commingled Pool holds the interest of 7,553,613 shares of our common stock, which amounts to 5.36% of our total outstanding as of March 1, 2021.
Abigail P. Johnson is a Director, the Chairman, and the Chief Executive Officer 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, under the Investment Company Act of 1940, 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 registered under the Investment Company Act (“Fidelity Funds”) advised by Fidelity Management & Research Company (“FMR Co. LLC”), a wholly owned subsidiary of FMR LLC, which power resides with the Fidelity Funds’ Boards of Trustees. FMR Co. LLC carries out the voting of the shares under written guidelines established by the Fidelity Funds’ Boards of Trustees.
(4)
T. Rowe Price Associates, Inc. has sole voting power to direct the vote of 3,941,347 shares and sole power to dispose or direct the disposition of 13,114,967 shares.
(5)
The Vanguard Group has shared voting power to direct the vote of 136,226 shares, sole power to dispose or direct the disposition of 12,000,887 shares, and shared dispositive power for 243,501 shares.
(6)
BlackRock, Inc. is a parent holding company and various persons have the right to receive or the power to direct the receipt of dividends from, or the proceeds from the sale of shares of our common stock. BlackRock has sole voting power to direct the vote of 9,045,495 shares and sole power to dispose or direct the disposition of 9,750,502 shares.
(7)
BB Biotech AG shares voting and dispositive powers for its shares with Biotech Invest N.V.
(8)
Includes 70 shares owned by Dr. Berthelsen’s daughter for which he disclaims beneficial ownership. Includes 109,500 shares of common stock issuable upon exercise of options held by Dr. Berthelsen that are exercisable on or before April 30, 2021.
(9)
Includes 95,750 shares of common stock issuable upon exercise of options held by Mr. Castleman that are exercisable on or before April 30, 2021.
(10)
Includes 776,658 shares of common stock issuable upon exercise of options held by Dr. Crooke that are exercisable on or before April 30, 2021. Also includes 494,391 shares of common stock held in a family trust for which Dr. Crooke shares voting and investment power. Also includes 57,809 shares of common stock issuable upon exercise of options held by Rosanne Crooke, Dr. Crooke’s wife, which are exercisable on or before April 30, 2021. Dr. Crooke disclaims beneficial ownership of the shares of common stock owned and issuable upon exercise of options held by his wife.
(11)
Includes 20,000 shares of common stock issuable upon exercise of options held by Dr. Hayden that are exercisable on or before April 30, 2021.
(12)
Includes 12,000 shares of common stock issuable upon exercise of options held by Ms. Herman that are exercisable on or before April 30, 2021.
(13)
Includes 100 shares of common stock beneficially owned by Mr. Klein’s son and 52,000 shares of common stock issuable upon exercise of options held by Mr. Klein that are exercisable on or before April 30, 2021.
(14)
Includes 94,500 shares of common stock issuable upon exercise of options held by Dr. Loscalzo that are exercisable on or before April 30, 2021.
(15)
Includes 1,500 shares of common stock beneficially owned through the Cooley LLP Salary Deferral and Profit Sharing Plan and 101,500 shares of common stock issuable upon exercise of options held by Mr. Muto that are exercisable on or April 30, 2021.
(16)
Includes 453,800 shares of common stock issuable upon exercise of options held by Ms. Parshall that are exercisable on or before April 30, 2021.
(17)
Includes 20,000 shares of common stock issuable upon exercise of options held by Mr. Reikes that are exercisable on or before April 30, 2021.
(18)
Includes 88,305 shares of common stock held by Mr. Wender in a trust, and 72,000 shares of common stock issuable upon exercise of options held by Mr. Wender that are exercisable on or before April 30, 2021.
(19)
Includes 189,390 shares of common stock issuable upon exercise of options held by Dr. Geary that are exercisable on or before April 30, 2021.
(20)
Includes 207,810 shares of common stock issuable upon exercise of options held by Ms. Hougen that are exercisable on or before April 30, 2021.
(21)
Includes 298,537 shares of common stock issuable upon exercise of options held by Dr. Monia that are exercisable on or before April 30, 2021.
(22)
Includes 110,216 shares of common stock issuable upon exercise of options held by Mr. O’Neil that are exercisable on or before April 30, 2021.
(23)
Includes an aggregate of 3,100,461 shares issuable upon exercise of options held by all current Directors and executive officers as a group that are exercisable on or before April 30, 2021.
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Delinquent Section 16(a) Reports
Section 16(a) of the Exchange Act requires our Directors, executive officers, and persons who own more than ten percent of a registered class of our equity securities, to file with the SEC initial reports of ownership and reports of changes in ownership of our common stock and other equity securities. Officers, Directors and greater than ten percent stockholders are required by SEC regulation to furnish us with copies of all Section 16(a) forms they file.
To our knowledge, based on a review of Section 16 reports submitted on EDGAR and written representations from the reporting persons that no Form 5 was required, during the fiscal year ended December 31, 2020, all Section 16(a) filing requirements applicable to our officers, Directors and greater than ten percent beneficial owners were complied with except for a release of restricted stock units to Ms. Herman on June 10, 2020, which was reported on June 17, 2020.
Securities Authorized for Issuance Under Equity Compensation Plans
The following table sets forth information regarding outstanding options and shares reserved for future issuance under our equity compensation plans as of March 31, 2021:
Plan Category
Number of Shares
to be Issued
Upon Exercise of
Outstanding Options
Weighted Average
Exercise Price of
Outstanding Options
Number of Shares
Remaining
Available for
Future Issuance
Equity compensation plans approved by stockholders(1)
14,812,997
$54.65
4,736,141(2)
Total
14,812,997
$54.65
4,736,141
(1)
Consists of five Ionis plans: 1989 Stock Option Plan, Amended and Restated 2002 Non-Employee Directors’ Stock Option Plan, 2011 Equity Incentive Plan, 2020 Equity Incentive Plan and Employee Stock Purchase Plan, or ESPP.
(2)
Of these shares, 624,857 remained available for purchase under the ESPP as of March 31, 2021.
39

EXECUTIVE COMPENSATION
Compensation Discussion and Analysis
Business and Compensation Overview and 2020 Corporate Performance Achievement
  Our Mission. Since inception, the Ionis mission has been to create a new, more efficient technology for drug discovery and development – antisense technology – and exploit that technology to create a pipeline of first-in-class and/or best-in-class medicines to treat a wide range of diseases. Today, due to our innovation and perseverance, we believe antisense technology has the potential to treat diseases where no other therapeutic approach has proved effective.

  Ionis is focused on innovation. Ionis has created an innovation-focused, science-driven culture that couples with the technology and business model to ensure long-term productivity and a commitment to the patients we serve, our employees, and our stockholders.
As a company focused on improving the health of people around the world, our priority during the COVID-19 pandemic is the safety of our employees, their families, the healthcare workers who work with us and the patients who rely on our medicines. We are also focused on maintaining the quality of our studies and minimizing the impact to timelines. While the COVID-19 pandemic has impacted some areas of our business, we believe our mitigation efforts and financial strength will enable us to continue to manage through the pandemic and execute on our strategic initiatives.
Innovation Drives Our Success. Antisense technology exists today primarily because of the innovation at Ionis, with almost 1,100 issued patents that provide substantial control of key elements of the technology for many years to come. Our intellectual property has been critical in the completion of strategic partnerships through which we have earned significant commercial revenue and a broad sustaining base of R&D revenue and the development of a consortium of companies that advance the technology alongside us, thereby increasing our reach. Ionis has been recognized as one of the top ten most innovative companies in the biotechnology industry, based on number of granted patents, scientific strength, industry impact, technology strength and research intensity. In addition, Ionis and Biogen received the prestigious International Prix Galien Award for the Best Biotechnology Product in 2018 for SPINRAZA, and Ionis received the Prix Galien USA Award for the Best Biotechnology Product in 2020 for TEGSEDI. In 2020, Dr. C. Frank Bennett, Ionis’ Executive Vice President and Chief Scientific Officer, was awarded the Lifetime Achievement Award by the Oligonucleotide Therapeutics Society for his important contributions to basic science and for being instrumental in the development of antisense oligonucleotide drugs that modulate splicing to correct severe genetic disease.
Commercial Medicines and Robust Pipeline. We are primarily focused on two core franchises: neurology and cardiometabolic. We have three commercial medicines approved in major markets around the world: SPINRAZA, TEGSEDI and WAYLIVRA. These medicines, along with the more than 30 additional medicines in our pipeline, represent multiple potential drivers of value for years to come. In 2020, we initiated multiple phase 3 studies and reported clinical proof-of-concept results from six medicines. In addition, we made significant progress across the rest of our pipeline by advancing more than ten medicines into Phase 2 studies, four of which were wholly owned medicines. We also broadened the scope of our antisense technology by demonstrating clinical proof-of-concept for aerosol delivery of an antisense medicine directly to the lungs. These accomplishments enabled us to achieve revenues of over $700 million and a year-end cash balance of $1.9 billion. We believe our efficient drug discovery platform, coupled with our innovation-centric business model, provides us with the flexibility to determine the optimal development and commercialization strategy to maximize the commercial opportunity for each of our medicines and ensure that we continue to produce transformative medicines for patients who need them. We believe we are positioned to continue to drive substantial value for patients and stockholders.
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  Organizational Strategy. 2020 was a transformational year for Ionis. With new leadership in place that has established a new strategy for Ionis to commercialize medicines from our wholly owned pipeline, and to accelerate progress across our entire pipeline, we took important steps towards realizing our goal of having 12 or more medicines on the market in 2026. Key to our new strategy is maximizing the value of each medicine in our wholly owned portfolio. To that end, we invested in strengthening our commercial capabilities and expanded our wholly owned pipeline, accelerated by the Akcea Acquisition. With this acquisition, we believe we are stronger and more efficient, with enhanced ability to achieve even greater future success. We should continue to realize value from our wholly owned and partnered medicines for many years to come in the form of product sales, license fees, upfront payments, milestone payments and royalties.

  Our Compensation System. By design, Ionis demands a great deal from every employee. This requires us to design our compensation system to recruit, motivate and retain outstanding individuals. Here too, we have been successful. Our average employee turnover rate in 2020 was 11.5%, excluding reductions related to the Akcea Acquisition, while the turnover for life sciences/medical device companies over this period was 21% according to a survey published by Radford – an Aon company. Given the uniqueness and complexity of our technology, it is critical to retain the knowledge and experience of outstanding long service employees. The experience and seniority of our employees is as critical to our future success as it has been to the success we have enjoyed to date.
Our Vision. At Ionis our vision is clear and designed to create sustainable long-term value through innovation and to transform the lives of generations of patients in need across a wide variety of diseases. Our vision is to:
work with the understanding that patients depend on us;
continuously maintain an environment of cutting-edge innovation;
create and constantly advance a more efficient drug discovery platform – antisense technology;
maximize the value of each medicine in our wholly owned portfolio;
maintain a culture committed to creating long-term value through innovation;
broaden, deepen, and advance our pipeline of antisense medicines;
demand more of every employee – more commitment, more knowledge, more intensity, more innovation, and more productivity;
aggressively manage average and below average performance so every employee produces more; and
demand great performance and pay for that performance.
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Equity and Diversity
Pay Equity
  We are committed to paying our employees fairly, regardless of their gender, race, or other personal characteristics. To ensure we are achieving our commitment, we benchmark and evaluate pay based on market data and consider factors such as an employee’s role and experience, an employee’s performance, and internal equity. We also regularly review our compensation practices, both in terms of our overall workforce and individual employees, to ensure our pay is fair and equitable. We periodically engage a third-party expert to review pay equity and will continue to do so as we determine necessary.

Diversity, Equity, and Inclusion
At Ionis, we encourage diversity in our workforce. Prejudicial barriers to human potential and productivity are foreign to our values. We recognize that to realize the full potential of our workforce, we must cultivate an inclusive culture where all employees feel empowered to contribute fully in an environment that values different perspectives, leading to better ideas and increased innovation.
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Summary of Compensation Practices
Below we summarize some of our compensation practices, both the practices we implement because we believe they are consistent with our vision and building long-term stockholder value (see “What We Do” below), and those we choose not to implement as we believe they are counter to our vision and building long-term stockholder value (see “What We Don’t Do” below):
What We Do
What We Don’t Do
In 2020 we began allocating 20% of our Chief Executive Officer’s equity awards as performance-based restricted stock units
Do not guarantee a cash bonus – cash bonuses can be, and have been, zero
Demand more of every employee: more commitment, more knowledge, more intensity, more innovation, more productivity
Do not provide perquisites for any employees
Reward productivity and performance
Do not provide “gross-up” payments, other than for relocation
Recognize the value of long-term employees and low turnover
Do not allow pledging, shorting, or hedging against our stock
Use a balanced mix of fixed and variable cash incentives and long-term equity incentives
Do not reprice or “cash-out” stock options without stockholder approval
Review compensation compared to the 25th, 50th and 75th percentiles of our peer group
Design our compensation philosophy and objectives to mitigate unnecessary or imprudent business risk taking
Set explicit and demanding objectives at the beginning of each year from which we measure performance for the year
Place a maximum limit on Performance Management By Objectives (“MBO”) awards
Set a strict budget for equity awards and salary increases
Set the size of equity awards based on individual and company performance
Require minimum vesting periods for equity awards
Maintain equity holding periods that require our executive officers and non-employee Board members to hold shares received from their RSUs until they meet certain ownership thresholds or no longer serve the Company
Maintain equity holding periods that require our employees to hold ESPP shares for a minimum of six months
Require our executive officers and VPs to trade Ionis’ stock through Rule 10b5-1 trading plans
Use a “double trigger” for cash payments for change of control
Use a “double trigger” for equity acceleration for change of control for our officers
Use an executive “clawback” policy that applies to all Section 16 Officers
Use an independent compensation consultant engaged by the Compensation Committee
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In 2020, we made several notable compensation and governance-related changes. Specifically, as discussed in greater detail in the pages that follow, we:
implemented performance-based equity awards, allocating 20% of our Chief Executive Officer’s equity awards as performance-based restricted stock units;
expanded our executive clawback policy to apply to all Section 16 Officers; and
adopted a policy whereby the Compensation Committee, with input from its independent consultant, may reduce the number of shares to be automatically issued on a grant date for each such award so that the awards granted have an aggregate grant date fair value that is aligned with the set of peer companies the Compensation Committee uses to evaluate compensation.
We believe these changes appropriately address feedback we have received from some stockholders and our Compensation Committee and continue to align the Company with peer companies and incentivize management to enhance long-term stockholder value.
2020 CEO Transition
After 30 years as Ionis’ Chief Executive Officer, in January 2020, Dr. Crooke, our founder, transitioned to Executive Chairman of the Board. As Executive Chairman, Dr. Crooke is responsible for the activities of the Board. Following the 2021 Annual Meeting of Stockholders, Dr. Crooke will step down from the Board and will serve as a Strategic Advisor to the Company, providing strategic advice and continuing to participate in the Company’s scientific activities. Dr. Monia, who was our Chief Operating Officer and a member of the Ionis team since our founding, assumed the position of Chief Executive Officer in January 2020. The historical information contained in this Proxy Statement for the period preceding 2020 provides compensation data for Dr. Crooke and Dr. Monia with respect to each of their former roles.
Compensation Overview and the Role of the Compensation Committee
We have designed our executive compensation program to attract and retain executives who can help us meet our business objectives and to motivate our executive officers to enhance long-term stockholder value. The Compensation Committee, with input from an independent compensation consultant, manages and oversees our executive compensation program. At the end of each year, and as otherwise required, the Compensation Committee approves the total compensation for each of our executive officers. In addition, the full Board reviews and ratifies the Compensation Committee’s decisions regarding the compensation of our executive officers.
The Compensation Committee’s responsibilities include:
reviewing and approving overall compensation strategy;
reviewing and approving corporate performance goals and objectives relevant to the compensation of our executive officers;
evaluating and recommending to the Board the compensation plans and programs advisable for Ionis, as well as modifying or terminating existing plans and programs;
establishing policies with respect to stock compensation arrangements;
reviewing and approving compensation arrangements for our executive officers, including our Chief Executive Officer;
reviewing and recommending approval by the Board of compensation arrangements for our Directors;
administering our stock-based awards and ESPP;
evaluating risks associated with our compensation policies and practices and assessing whether these risks are reasonably likely to have a material adverse effect on us;
selecting and retaining a qualified, independent compensation consultant;
performing other functions as may be necessary or convenient in the efficient discharge of the foregoing; and
reporting to the Board from time to time, or whenever it is called upon to do so.
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Independent Compensation Consultant
The Compensation Committee has the authority and budget to hire an independent compensation consultant as it deems necessary. The Compensation Committee has retained Radford, which is part of the Rewards Solutions practice at Aon plc (“Aon”) as its independent compensation consultant. For 2020, Aon primarily provided the Compensation Committee advice in the following areas:
selecting the 2020 Executive Peer Group;
reviewing new hire awards and target annual equity awards for employees;
evaluating the pay mix for our executive officers;
assessing executive officer compensation;
evaluating our named executive officer equity awards; and
reviewing our non-executive equity strategy.
Compensation Consultant Fees
As described above, the Compensation Committee has engaged Aon to provide the committee with peer company and industry compensation data and advice regarding executive officers’ compensation. In 2020, we paid Aon approximately $125,000 for Aon’s consulting services directly related to Compensation Committee support.
In addition, management of the Company engaged affiliates of Aon for other services in 2020 that were not related to Aon’s Compensation Committee consulting services. Our human resources department obtained general benchmarking survey data and benefits data from an affiliate of Aon, for which we paid approximately $14,000, and $3,500, respectively, in 2020. Additionally, our Finance department engaged an affiliate of Aon for insurance brokerage services, for which we paid approximately $770,000 in 2020. Although the Compensation Committee was aware of the nature of these additional services, the committee did not review and approve such services, insurance premiums or policies, as those were reviewed and approved by management in the ordinary course of business.
Aon maintains certain policies and practices to protect the independence of the executive compensation consultants engaged by the Compensation Committee. In particular, Aon provides an annual update to the Compensation Committee on the financial relationship between Aon and the Company, and provides written assurances that, within Aon, the compensation of the affiliate consultants who perform executive compensation services for the Compensation Committee is determined separately from Aon’s other lines of business and from the other services it provides to the Company. These safeguards were designed to help ensure that the Compensation Committee’s executive compensation consultants continued to fulfill their role in providing independent, objective advice.
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Compensation Philosophy
Our compensation philosophy supports and rewards the characteristics and behaviors we believe will make us successful:

Pay for Performance. We incorporate a number of features into our compensation structure to mitigate the risk that our compensation policies and practices could encourage unnecessary or imprudent business risk taking. We use a combination of compensation vehicles that provide a balanced mix of fixed and variable cash incentives, and long-term stock incentives. Our Performance Management By Objective (“MBO”) awards are not guaranteed (i.e., are 100% at risk) and include a multiplier, or performance factor, based on Ionis’ and the employee’s performance (respectively, the “Company Performance Factor” and the “Individual Performance Factor”). Therefore, if either Ionis or the employee performs poorly, the Performance MBO can be, and has been, zero.
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  Beginning in 2020, we added performance-based restricted stock unit (“PRSU”) awards to the compensation for our Chief Executive Officer. As further described below, certain stockholders previously requested we implement performance-based stock awards and after thoughtful deliberation, the Compensation Committee decided to grant our CEO awards that provide him the opportunity to earn a defined number of shares of our common stock if we achieve pre-determined performance goals. The PRSU awards represent 20% of our CEO’s equity compensation. We believe these PRSU awards provide a challenging incentive to the CEO to significantly grow the Company.

One third of the PRSUs may vest at the end of three separate performance periods spread over the three years following the date of grant (i.e., the one-year period commencing on the date of grant and ending on the first anniversary of the date of grant; the two-year period commencing on the date of grant and ending on the second anniversary of the date of grant; and the three-year period commencing on the date of grant and ending on the third anniversary of the date of grant) based on the Company’s relative total shareholder return (“TSR”) as compared to a peer group of companies and as measured, in each case, at the end of the applicable performance period. No number of PRSUs is guaranteed to vest and the actual number of PRSUs that will vest at the end of each performance period may be anywhere from zero to 150% of the target number depending on the Company’s relative TSR. If the Company’s TSR is negative over the applicable performance period, the payout will not exceed 100% of the target number for that performance period.
For the first performance period of the PRSU award that was granted in January 2020, Ionis’ TSR was -3.29%, which ranked 69 out of the 198 companies in the peer group under the PRSU award, or approximately the 35th percentile. Based on performance at approximately the 35th percentile as of January 15, 2021, the final number of units earned for the first performance period of the PRSU award granted in January 2020 equaled 69.7% of the target number.
Internal Pay Equity. An executive officer’s salary plus bonus represents the officer’s total cash compensation. Our philosophy has been to have the CEO’s total cash compensation be between 20-30 times the lowest levels of compensation received by an employee. Historically, the total cash compensation of our CEO over a rolling three-year period has been on average approximately 30 times that of the average cash compensation for our lowest level employees, and two to three times greater than the average of that of our other executive officers. Our CEO’s total cash compensation over the last three years was on average approximately 26 times greater than the average cash compensation for our lowest level employees, and 1.89 times greater than the average of that of our other executive officers. For 2020, these ratios decreased due to Dr. Monia’s transition to CEO, as the salary data used for the calculation of such ratios included the MBO bonus paid to him in 2020 for performance in 2019 as COO.
We cover the specific elements of our compensation structure in more detail below.
Business Objectives
As noted above, our vision is clear and is designed to promote long-term creation of value through innovation and to bring benefit to generations of patients with many diseases. Our vision is to:
work with the understanding that patients depend on us;
continuously maintain an environment of cutting-edge innovation;
create and constantly advance a more efficient drug discovery platform – antisense technology;
maximize the value of each medicine in our wholly owned portfolio;
maintain a culture committed to creating long-term value through innovation;
broaden, deepen, and advance our pipeline of antisense medicines;
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demand more of every employee – more commitment, more knowledge, more intensity, more innovation, more productivity;
aggressively manage average and below average performance so that every employee produces more; and
demand great performance and pay for that performance.
Overview of Our Compensation Program
  Drug discovery and development across a portfolio of many medicines (currently over 30) is a long process that spans many years, where decisions we make today can have a positive or negative consequence five years, ten years, and even further into the future. As such, it is essential we set goals that incentivize our employees to execute our long-term strategy, because we believe our long-term strategy should continue to reward our stockholders into the future.

For us to retain our technology leadership and effectively manage the technical complexity and broad scope of our development pipeline, our most senior executives and the members of their teams must advance multiple drug strategies and collaborative partnerships in parallel and consistently over many years, versus emphasizing one or two at the expense of others that deserve attention. As a result, other than stock price, budget, sales targets and our annual financial guidance to Wall Street, we currently do not use financial-based metrics as objectives, such as earnings per share, because financial metrics typically overly emphasize two or three annual business metrics and ignore the complexity of the tasks we are undertaking. By taking this approach, we avoid the temptation to deviate from creating fundamental long-term value to meet a short-term metric.
We structure our corporate objectives so they are results driven rather than task driven. We have historically included a number of objectives that are based on achieving positive data in the clinic, and as our strategy to commercialize medicines from our wholly owned pipeline has evolved, we have added objectives that are based on achieving sales targets. For example, in 2020 we had corporate objectives to (i) strengthen our Phase 3 pipeline with one of the measures being to initiate at least two new Phase 3 studies and another measure being to advance four specified medicines so they are on track to reach scheduled readouts; (ii) advance our pipeline to enable additional Phase 3 studies in 2021 with the measure being to achieve positive clinical proof-of-concept on at least four medicines; and (iii) ensure the success of our commercial pipeline with the measure being to achieve specified sales targets for our commercial medicines. Results driven objectives only reward our employees if the data are positive or the sales efforts are successful – we do this to encourage the prudent spending of stockholder money on development and commercialization decisions. In other words, we want to structure our objectives to reward success based on judgment, rather than the making of “bad bets.”
At the beginning of each year, we set aggressive corporate objectives, including objective measures, that our Board approves. On at least a quarterly basis, the Board evaluates our progress in achieving these objectives. We define excellent performance as a year in which we have met most of our objectives.
Importance of Tenure; Our Investment in Knowledge-Rich Employees
It takes a significant period of time and a substantial investment to recruit and develop employees who possess the experience and talent necessary to lead at Ionis given our transformative technology and deep drug development pipeline. Senior executives must have experience with all aspects of our business to be effective leaders. Our drug technology is a “platform technology,” which means the more knowledge and experience an employee has with our technology platform, the better equipped she or he is to create value at Ionis. Given the uniqueness and complexity of our technology, it is critical to retain the knowledge and experience of outstanding long service employees. The experience and seniority of our employees is critical to our future success. For these reasons, it is our objective to attract and retain the best talent available and to invest in those individuals who deliver long-term productivity.
Long tenure among a dedicated and highly skilled workforce, combined with the highest performance standards, contributes to our leadership in the industry and serves the interests of stockholders.
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Our focus on retention is coupled with a strong belief that executive talent most often should be developed and promoted from within Ionis.
The long tenure of high-performing executive officers reflects this strategy at all levels of the organization. Our executive officers have on average approximately 21 years and individually as much as over 31 years of tenure at Ionis.
The Company has carefully evaluated and selected each of our executive officers through a rigorous performance assessment process over a long career. In their current assignments, they remain subject to a challenging annual performance assessment in which they must continue to meet the highest standards or be reassigned or separated from the Company.
To recognize our employees, including our named executive officers, who deliver long-term productivity to the Company, Ionis has implemented two awards. In 2019, we implemented the “Lifetime Achievement Award” to recognize our distinguished, long-tenured, senior-level contributors, including Board members, who had extraordinary contributions that helped determine the Company’s future with a $50,000 cash award. In 2018, we implemented the “Commitment to Ionis Award” to thank employees for their commitment to the Company. The amount of the Commitment to Ionis Award correlates to the employee’s length of service with the Company and is paid on the employee’s milestone anniversary as shown below. When we implemented this award in 2018, every employee with five or more years of service who was not scheduled to receive a Commitment to Ionis Award in 2018 or 2019 received a one-time “catch-up” award for one-half of the amount of the milestone award immediately preceding his or her actual length of service.
Years of Service
Award
5
$5,000
10
$10,000
20
$20,000
30
$30,000
In 2020, certain of our Board members and named executive officers received such awards. Mr. Wender and Dr. Geary were each awarded a Lifetime Achievement Award and Ms. Hougen was awarded a Commitment to Ionis Award to recognize her 20 years of service to Ionis.
Elements of Executive Compensation
  Employees in our organization do not share either accountability or responsibility equally for strategic and/or tactical decisions. It is well ingrained in our culture that not everyone should share the same level of risk/reward for the consequences of these decisions. As a result, we have structured the various components of

our compensation system to reflect accountability both for the successes and failures (both long-term and short-term) of Ionis and our employees. We pay our senior management team for results and their use of judgment in executing the strategies they have established. Therefore, the more senior a person becomes within Ionis, the more the person’s cash compensation will be “at risk.” We compensate the more junior employees for accomplishing their work well and, therefore, a lower portion of their cash compensation is “at risk.”
Our executive officers’ total compensation consists of four elements:
(1)
base salary;
(2)
Performance MBO – performance-based, at-risk cash compensation, no portion of which is guaranteed;
(3)
stock-based compensation, including performance-based restricted stock unit awards for our CEO; and
(4)
the same benefits, including 401(k) matching, that we provide to all employees.
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The Performance MBO (performance-based, at-risk cash compensation) and performance-based restricted stock unit awards are the only elements that do not apply to all employees. Employees at the director level and above are eligible to receive Performance MBO awards, and our CEO receives performance-based restricted stock unit awards.
We consider many factors in determining the amounts we grant to our executive officers for all of the compensation elements listed above, with the exception of item 4. These factors include:
 
company-wide performance, including achievement of pre-established corporate objectives;

 
the Compensation Committee’s assessment of our CEO’s and executive officers’ individual performance;
 
competitive compensation practices;
 
increased efficiencies and process improvements;
 
effective collaboration and teamwork;
 
individual expertise, skills, and knowledge;
 
the need to retain and motivate;
 
the impact an individual’s judgment has on our success or failure; and
 
the advice of the Compensation Committee’s independent compensation consultant.
The Compensation Committee relies on these and other factors such as general economic conditions, industry conditions, and the Compensation Committee’s collective business judgment in setting and/or approving the appropriate increases. We do not have specific weightings assigned to these factors, as the importance of each factor can vary among the executive officers and from year to year.
Executive Peer Group
The Compensation Committee considers relevant market pay practices when setting executive compensation to ensure our ability to recruit and retain high performing talent. Although we do not benchmark or target our compensation to any particular level in relation to the compensation of the Executive Peer Group (as defined below), the Compensation Committee compares the compensation opportunity for our named executive officers to similarly-situated executives at the 25th, 50th and 75th percentiles of the Executive Peer Group (as defined below) as a “market check” to ensure, in its judgment, that the named executive officers’ compensation remains appropriate. The Executive Peer Group data is just one factor considered in the annual compensation approval process, in addition to the factors described above under “Elements of Executive Compensation.”
The Compensation Committee, in consultation with its independent compensation consultant, evaluated and selected a peer group of 18 life science companies for evaluating Ionis’ compensation (the “Executive Peer Group”). The Compensation Committee reviews the compensation of our named executive officers against the Executive Peer Group’s executive compensation to ensure that our compensation is competitive and to inform and shape its decision-making when setting compensation. While the Compensation Committee uses these data to inform and shape decision-making, it does not strictly adhere to quantitative benchmarks.
The Executive Peer Group, which the Compensation Committee reviews on an annual basis, consists of companies that generally:
are similar to Ionis in terms of certain factors, including one or more of the following: size (i.e., revenue, market capitalization), industry, stage of development and location;
have named executive officer positions that are comparable to ours in terms of breadth, complexity, and scope of responsibilities; and
compete with us for executive talent.
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The Executive Peer Group generally does not include companies headquartered outside the United States (because compensation and benefit practices are generally different outside the United States, the comparable compensation data for the named executive officers is not available and cost of living is different) or companies in industries whose compensation programs are not comparable to our programs, such as non-life science companies.
In June 2020, the Compensation Committee reviewed the Executive Peer Group using the criteria listed above and publicly available data as of May 2020. The Compensation Committee noted Ionis’ market capitalization was approximately $7.6 billion and trailing 12-month revenue was approximately $960 million. As part of this process, the Compensation Committee looked at companies in Ionis’ industry with an emphasis on companies with market capitalizations of between $2.5 billion and $25 billion, and revenue between $375 million and $2.25 billion. The Compensation Committee also looked at companies that identified Ionis as a peer, so called “reverse peers.”
Based on this evaluation, the Compensation Committee added BeiGene, Horizon Therapeutics and United Therapeutics to the Executive Peer Group. These companies all fell within the market capitalization range and were in Ionis’ sector. BeiGene and Horizon Therapeutics were identified as “reverse peers.” Although BeiGene is headquartered in China, it was a suitable addition to our Executive Peer Group because its leadership team is located in the United States and the company maintains a traditional American compensation program. Additionally, the Compensation Committee removed Array and The Medicines Company, as they were acquired by Pfizer and Novartis, respectively, and removed Clovis Oncology, Ironwood Pharmaceuticals and Ligand Pharmaceuticals because they all fell below the market capitalization range.
The following table lists the companies in the 2020 Executive Peer Group, along with Ionis’ rankings among these companies, based on market capitalization and financial data reported by each company at the time the Compensation Committee selected the Executive Peer Group in June 2020.
Company (ticker)
Annual Revenues
(in millions)(1)
Market
Capitalization
(in millions)(2)
Stage of Lead Drug
Acadia Pharmaceuticals (ACAD)
$339.1
$7,427.6
Market
Agios Pharmaceuticals (AGIO)
$174.8
$2,908.8
Market
Alkermes (ALKS)
$1,194.1
$2,422.9
Market
Alnylam Pharmaceuticals (ALNY)
$285.9
$15,158.0
Market
BeiGene (BGNE)
$428.2
$11,946.8
Market
BioMarin Pharmaceuticals (BMRN)
$1,805.4
$16,287.8
Market
bluebird bio (BLUE)
$44.7
$3,000.1
Market (EU)
Exact Sciences Corp (EXAS)
$1,062.1
$11,168.7
Market
Exelixis (EXEL)
$979.2
$7,123.2
Market
Horizon Therapeutics (HZNP)
$1,375.6
$6,633.7
Market
Incyte Corporation (INCY)
$2,229.4
$20,977.9
Market
Intercept Pharmaceuticals (ICPT)
$252.0
$2,613.4
Market
Jazz Pharmaceuticals (JAZZ)
$2,188.3
$6,084.3
Market
Nektar Therapeutics (NKTR)
$114.6
$3,428.7
NDA
Neurocrine Biosciences (NBIX)
$886.8
$9,181.9
Market
Sarepta Therapeutics (SRPT)
$407.5
$9,091.8
Market
Seattle Genetics (SGEN)
$956.0
$24,374.5
Market
United Therapeutics (UTHR)
$1,442.5
$4,676.2
Market
Ionis Pharmaceuticals, Inc. (IONS)
$958.8
$7,660.6
Market
Ionis’ Percentile Rank
54%
54%
N/A
(1)
Trailing 12-month revenue.
(2)
30-day average market cap.
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Our Productivity vs. Industry Peers
  All companies in all industries strive to be more productive than their peers. Compensation systems and management of leadership are primarily focused on enhancing long-term productivity. However, measuring productivity is challenging, particularly in biotechnology.

  Even for established pharmaceutical companies for which the comparator group is obvious, comparisons of productivity are challenging. While revenues and profits per employee may be good measures for a portion of the equation, they provide little insight into potential for
topline sales growth and no insight into innovation, which is the foundation for long-term sustainable growth. To provide insight into these attributes, measures of the size, maturity and potential value of the drug pipeline as well as the number of issued patents are useful and, viewed in the context of the company’s financial performance, they help show a comprehensive picture of the company’s productivity and strength. We have historically been, and continue to be, at the top of the Executive Peer Group in these measures. For example, of the companies in the Executive Peer Group, we have the fewest employees per medicine in clinical trials. With over 30 medicines in clinical trials and just 746 employees8, we are able to develop more medicines more efficiently, all while continuing to achieve exceptional financial results.
In 2020, a number of achievements demonstrated our productivity and strength, even in the challenging COVID-19 pandemic environment:
We earned over $700 million in revenue, met our 2020 financial guidance and ended the year with $1.9 billion in cash.
We achieved these financial successes while initiating multiple phase 3 studies, reporting clinical proof-of-concept results from six medicines, and making significant progress across the rest of our pipeline by advancing more than ten medicines into Phase 2 studies, four of which were wholly owned medicines.
We broadened the scope of our antisense technology by demonstrating aerosol delivery of an antisense medicine directly to the lungs.
Our efficient platform and the dedication of our employees enabled us to accomplish these robust results and they set us apart from our peers.
8
As of April 5, 2021.
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Advancing Our Pipeline
We now have six Phase 3 studies underway, including four studies for wholly owned medicines. We also have a prolific mid-stage pipeline of medicines advancing towards Phase 3 development, many of which are expected to reach pivotal trials in the near term. With so many programs in mid- to later stages of development, coupled with our historically high rate of clinical success, we are in a position to deliver a steady cadence of Phase 3 data readouts for many years to come.

Financial Performance
Additional evidence of our productivity and the benefit of our business strategy is reflected in our strong financial performance. Ionis ended 2020 in a very strong financial position with $1.9 billion in cash and 2020 revenues of over $700 million. For the fifth year in a row, Ionis was profitable on a non-GAAP9 basis. This success is driven by the strength of our business strategy, which leverages numerous sources of revenue, with multiple opportunities for upside, while reducing risk.

*
Non-GAAP. See footnote below for additional information regarding non-GAAP financial results.
9
We use “non-GAAP” in place of “pro-forma” when discussing our financial results that exclude non-cash compensation expense related to equity awards, costs related to the Akcea Acquisition, and costs related to our restructured European operations, because we believe that non-GAAP financial results better represent the economics of our business and how we manage our business. For a detailed reconciliation of non-GAAP and GAAP measures, see our earnings release reporting fourth quarter and full year 2020 financial results available here.
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Compensation Allocation/Pay Mix
A key element of our compensation philosophy is to monitor and adjust our pay mix for our senior management team so the pay mix is less heavily weighted on fixed compensation (salary) and more heavily weighted on at-risk cash compensation and long-term equity incentive compensation. As part of the Compensation Committee’s review of our total pay mix for executive officers, the Compensation Committee focuses on the following:
A significant portion of cash compensation is at risk. The Compensation Committee structures cash compensation such that a significant proportion of our CEO’s and other named executive officers’ cash compensation is at risk;
More of total compensation is long-term equity. The Compensation Committee structures the total pay mix for our CEO and other named executive officers such that more of their compensation is in the form of long-term equity compensation; and
Less of total compensation is salary. The Compensation Committee strives to structure the total pay mix for our CEO and other named executive officers such that less of their compensation is in the form of salary. For example, in previous years, the Compensation Committee did not increase salaries for the CEO or our named executive officers to allow an increasing percentage of total compensation to be at risk.
An annual review of our total pay mix helps Ionis compete for and retain talent in the competitive marketplace and maintain compensation equity and balance among positions with similar responsibilities. The target pay mix for our named executive officers is a result of the compensation targets that emphasize long-term compensation versus short-term compensation. Actual salary levels, annual Performance MBO awards and long-term incentive awards vary based on one or more of the following: an individual’s responsibilities, tenure in a particular position, experience, individual performance, and company performance.
“Say on Pay” Vote
In June 2020, we held a stockholder advisory vote on the compensation of our named executive officers. Our stockholders overwhelmingly approved, on an advisory basis, the compensation of our named executive officers, with over 97% of stockholder votes cast in favor of our “say on pay” resolution. In evaluating our compensation practices during fiscal 2020 and in early 2021, we were mindful of the strong support our stockholders expressed for our compensation philosophies and practices. As a result, the Compensation Committee retained our general approach to executive compensation as in the prior fiscal year. The Compensation Committee will continue to consider stockholder feedback in the future.
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CEO Compensation vs. Total Return (Over Five Years)
The graph below shows the relationship of our CEO’s compensation ($ in thousands) as calculated pursuant to SEC rules compared to the TSR on $100 invested on December 31, 2016 in our common stock through December 31, 2020. While stock price is only one of the measures of performance we use to set executive compensation, including for our CEO, over the past five-year period, our CEO’s compensation has generally aligned with our stock performance. Over this period, TSR has generally increased year over year, with the exception of 2020. Historical compensation data prior to 2020 used in the graph below reflects Dr. Crooke’s compensation as CEO, and beginning in 2020, reflects Dr. Monia’s compensation as CEO.
Ionis ended 2020 in a very strong financial position, with 2020 revenues of over $700 million. For the fifth year in a row, Ionis was profitable on a non-GAAP10 basis and ended the year with $1.9 billion in cash. As shown in the graph below, our CEO’s compensation aligned with TSR for 2017, 2018 and 2019.11 While our CEO’s compensation for 2020 did increase, such increase was due to additional equity grants awarded to Dr. Monia in connection with his promotion to CEO. Removal of the value of such additional equity awards in connection with Dr. Monia’s promotion results in total compensation of $8,607,827 for Dr. Monia’s 2020 performance, which is approximately 10% less than Dr. Crooke’s 2019 total compensation.

10
We use “non-GAAP” in place of “pro-forma” when discussing our financial results that exclude non-cash compensation expense related to equity awards, costs related to the Akcea Acquisition, and costs related to our restructured European operations, because we believe that non-GAAP financial results better represent the economics of our business and how we manage our business. For a detailed reconciliation of non-GAAP and GAAP measures, see our earnings release reporting fourth quarter and full year 2020 financial results available here.
11
This graph is not “soliciting material,” is not deemed “filed” with the SEC, is not subject to the liabilities of Section 18 of the Exchange Act and is not to be incorporated by reference in any of our filings under the Securities Act of 1933, as amended (the “Securities Act”) or the Exchange Act, whether made before or after the date hereof and irrespective of any general incorporation language in any such filing.
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2020 Compensation Decisions and Results
The following chart illustrates the portions of actual total direct compensation for the named executive officers that are composed of base salary, annual Performance MBO and long-term equity ($ shown in thousands) for 2020:

 
% of Total Direct Compensation
Name
Year
Base
Salary
Annual
Performance
MBO
Long-Term
Equity
Base
Salary
%
Annual
Performance
MBO %
Long-
Term
Equity
%
Brett Monia
CEO
2020
$700,000
$601,738
$9,620,555
6%
6%
88%
Elizabeth L. Hougen
EVP, Finance and CFO
2020
$499,555
$298,734
$3,478,973
12%
7%
81%
Stanley T. Crooke
Executive Chairman of the Board
2020
$683,630
$587,665
$8,175,902
7%
6%
87%
Richard Geary
EVP, CDO
2020
$509,360
$281,167
$3,142,130
13%
7%
80%
Patrick O’Neil
EVP, Legal & General Counsel, CCO and Corporate Secretary
2020
$500,925
$288,032
$3,142,130
13%
7%
80%
Base Salary
The fixed component of our compensation structure is base salary. We categorize our jobs in a system called broad banding. That is to say there are relatively few job levels within Ionis, specifically eleven levels, but the scope of responsibility and accountability an employee may assume is broad. We do not have salary ranges, and therefore we do not set salary minimums or maximums. It is therefore possible that someone may be in a lower job level, but his or her salary may reach levels that exceed those of someone in a higher job level. We have chosen not to have salary ranges because years of experience have shown that this approach often creates unnecessary bureaucracy and a loss of talented individuals. Our aim is to attract and retain the most highly qualified employees in an extremely competitive market.
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  We determine base compensation levels for all our employees primarily by market forces. Accordingly, the Compensation Committee believes that it is important when making its compensation decisions to be informed as to the current practices of comparable publicly held companies with which we compete for top talent. To this end, the Compensation Committee reviews market and

peer company data, which includes competitive information relating to the mix and levels of compensation for executives in the life sciences industry. We obtain this information for the Executive Peer Group based on recent public filings with the SEC. In addition, we also review data from the Radford Global Life Sciences Survey, which is a summary of compensation data submitted by over 900 life sciences companies. The Compensation Committee uses these data to inform and shape its decision-making but does not strictly adhere to quantitative benchmarks. In addition, we assess whether the scope of job responsibilities and internal equity warrant a given base salary.
We guarantee base salary to all employees as wages for hours worked. It represents consideration for the performance of job responsibilities. This portion of total cash compensation is not at risk and may increase as a result of how well an individual performs his or her job responsibilities.
Each year our employees are eligible to receive an appropriate merit salary increase. The Compensation Committee sets a Company-wide merit increase budget percentage based on Ionis’ performance and external factors such as the average merit budget of comparable companies. The actual merit increase award for each employee, including our executive officers, will vary depending upon the respective employee’s contributions to Ionis. For example, for 2020 performance the Company-wide merit increase budget was 3.3%, with a range of individual merit award increases of 0% to 10%. However, regardless of individual employee variances, we do not exceed the Company-wide approved merit budget.
The Compensation Committee evaluates each executive officer’s performance to set his or her annual merit increase. As part of this process, the Compensation Committee reviews the written reports prepared by the CEO evaluating the performance of each individual executive officer. The Compensation Committee carefully considers these reports since our CEO is in the best position to evaluate our executive officers’ day-to-day and overall performance. The Compensation Committee meets in executive session and evaluates the CEO’s performance, primarily based upon the CEO’s achievement of our key corporate objectives for the year. At the end of this process, the Compensation Committee determines the CEO’s merit increase and approves or recommends changes to the merit increases for the remaining executive officers. Our CEO has no role in determining his own compensation.
The executive officers’ new salaries for each year are calculated as follows:
Current Base Salary (x) Merit Increase = Increase to Base Salary
Current Base Salary (+) Increase to Base Salary = New Base Salary
The table below reflects the 2020 salary calculations for our named executive officers, other than Drs. Crooke and Monia:
Name
2019 Base Salary
Merit Increase for 2020
2020 Base Salary
Elizabeth L. Hougen
$479,880
4.1%
$499,555
Richard Geary
$491,186
3.7%
$509,360
Patrick O’Neil
$483,052
3.7%
$500,925
When reviewing salaries, the Compensation Committee noted that the salary of most of our named executive officers was within the competitive range of the Executive Peer Group. The Compensation Committee also noted its desired target mix of compensation that is less weighted on salary. Given Ionis’ strong 2019 performance, the Compensation Committee approved merit increases to the 2020 salaries of the named executive officers other than Drs. Crooke and Monia of 3.8% on average, which were consistent with the budget for merit increases approved by the Compensation Committee. As a result of their respective transitions to Executive Chairman and Chief Executive Officer, neither Dr. Crooke nor Dr. Monia received a merit increase for 2020.
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Instead, the Compensation Committee evaluated the salary levels for each of these positions with assistance from our independent compensation consultant, which prepared a comprehensive assessment of the compensation of a newly appointed CEO and Executive Chairman, and approved the salaries for each position following review of such assessment. Consistent with their new roles and responsibilities, for 2020, Dr. Crooke’s annual salary decreased to $683,630 and Dr. Monia’s annual salary increased to $700,000.
Performance MBO Program – Performance-Based, At-Risk Cash Compensation
The next component of an executive officer’s compensation, and the compensation of our employees at the director level and above, is an annual performance-based cash payment through our Performance MBO program. While an employee’s base salary compensates the employee for his or her continued service and performance, our Performance MBO program rewards employees for reaching specific objectives and for the judgment they use in making decisions. We do not guarantee a Performance MBO award as compensation. It is totally at risk. As such, a Performance MBO award represents an opportunity for reward based upon the individual’s level of accountability and depends on the relative success of both Ionis and the individual. Our approach for awarding Performance MBO bonuses differs from salary increases because, unlike salary increases, market forces do not impact bonus amounts.
We calculate the actual amount of each executive officer’s respective Performance MBO award based on the following formula:
Base Salary (x) Target Performance MBO % (x) Company Performance Factor (x) Individual Performance Factor = Performance MBO Amount
  Performance MBO Awards can be zero. The multipliers in this formula ensure we award bonuses based on both Ionis’ performance and individual performance. This means an employee may not receive a Performance MBO even if he or she performed well in a year in which the Company does not meet its corporate objectives. Similarly, if an employee performed poorly in a year in which the Company met its key corporate objectives, he or she may not receive a Performance MBO.

For example, in a prior year, we did not pay Performance MBOs to executive officers due to the failures we faced at the time. In another year, our CEO’s Performance MBO was 64% of the Performance MBO he received in the immediately preceding year because of disappointing clinical trial results; the Company Performance Factor was 50% that year. Conversely, in successful years, we reward our executive officers consistent with Ionis’ success.
Performance MBOs have a maximum limit. Performance MBOs are limited by a maximum Company Performance Factor, maximum Individual Performance Factor and Target Performance MBO Percentage:
We have a maximum Company Performance Factor of 200% and a maximum Individual Performance Factor of 160%. This range represents the boundary conditions for our Performance Factors and ensures we reward our employees consistent with Ionis’ success.
We base Target Performance MBO percentages on position levels within Ionis. The Target Performance MBO percentages for 2020 were: Directors 20%; Executive Directors 25%; Vice Presidents 30% or 35%; Executive Vice Presidents 40%; CEO and Executive Chairman 65%.
An individual’s Target Performance MBO percentage does not change unless he or she changes position level or the Compensation Committee sets a new target for that level. The table below summarizes the minimum and maximum Performance MBO for 2020 as a percentage of salary:
Name
Minimum Performance
MBO Percentage of Salary
Maximum Performance
MBO Percentage of Salary
Brett Monia
0%
208%
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Name
Minimum Performance
MBO Percentage of Salary
Maximum Performance
MBO Percentage of Salary
Elizabeth L. Hougen
0%
128%
Stanley T. Crooke
0%
208%
Richard Geary
0%
128%
Patrick O’Neil
0%
128%
The Compensation Committee sets the Company Performance Factor based on the following process:
 
At the end of each year, the Compensation Committee meets to evaluate Ionis’ overall performance for the year. As described below in the chart called “Evaluation of Key 2020 Corporate Objectives,” the Compensation Committee measures Ionis’ performance based upon the achievement of goals set at the beginning of the year with objective measures and agreed upon by our Board and upper management.

 
In addition, the Compensation Committee considers our one-, three- and five-year TSRs, and based on these returns has negative discretion to reduce the Corporate Performance Factor and Individual Performance Factors for our executive officers.
 
The Compensation Committee then reviews the Company Performance Factor history from the prior ten years to form a comparison for our current year’s successes and/or failures.
 
Finally, the Compensation Committee approves each executive officer’s Individual Performance Factor based on the individual’s performance.
Once the Compensation Committee has determined the elements of the formula above, we use that formula to calculate each executive officer’s Performance MBO.
Evaluation of 2020 Key Corporate Objectives. On December 16, 2020, the Compensation Committee completed its evaluation of the Company’s performance against the 2020 Key Corporate Objectives.
The Compensation Committee set the Company Performance Factor for the 2020 Performance MBO at 115% due to our strong achievements for the year across drug discovery, development, corporate development, and financial performance, especially given the challenges of the COVID-19 pandemic. Because of the dedication of our employees and strength of our technology and our business, we were able to successfully manage the evolving pandemic and achieve the following in 2020:
We earned over $700 million in revenue, met our 2020 financial guidance, and ended the year with $1.9 billion in cash.
We achieved these financial successes while initiating multiple phase 3 studies, reporting clinical proof-of-concept results from six medicines, and making significant progress across the rest of our pipeline by advancing more than ten medicines into Phase 2 studies, four of which were wholly owned medicines.
We broadened the scope of our antisense technology by demonstrating aerosol delivery of an antisense medicine directly to the lungs.
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The Compensation Committee evaluates performance based on the achievement of goals (including objective measures) that the Board and management set at the beginning of each year. The table below provides a detailed evaluation of each key objective and the related achievements for 2020, as well as a description of notable unplanned accomplishments that the Compensation Committee considered in evaluating the Company’s performance. The Company Performance Factor of 115% for 2020 reflects a decrease from 125% for 2019, which was primarily due to our failure to meet the key corporate objectives to increase our stock price performance and complete key business development transactions. For 2020, the Company reduced the total number of key corporate objectives to increase the Company’s focus on objectives we considered most important for the year. We will maintain this focused approach in future years.
Evaluation of 2020 Key Corporate Objectives
 
Objective & Pre-Approved Objective Measures
Evaluation
1
Meet budget projections:
Ionis met this objective:
Deliver pro forma net income