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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No.  )
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Soliciting Material Pursuant to §240.14a-12
Arena Pharmaceuticals, Inc.
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April 27, 2021
Dear Fellow Stockholders:
On behalf of Arena Pharmaceuticals, Inc. and its Board of Directors, we are pleased to invite you to attend our 2021 Annual Meeting of Stockholders, or 2021 Annual Meeting, to be held on Friday, June 11, 2021, at 9:00 a.m. (Pacific Time). As you can imagine, in light of the ongoing COVID-19 pandemic we continue to take precautions to ensure the safety of our clinical trial participants, employees, investors, and community. Our Board of Directors has therefore determined, in the interests of public health and safety, that the 2021 Annual Meeting will be held virtually via a live interactive audio webcast at www.virtualshareholdermeeting.com/ARNA2021, where you will be able to vote and ask questions during the meeting. Details regarding admission to the meeting and the business to be conducted are more fully described in the Notice of Annual Meeting of Stockholders and proxy statement.
Whether or not you plan to join the 2021 Annual Meeting webcast, it is important that your shares be represented and voted. For those who are unable to attend, there are four ways that you can cast your ballot without attending the meeting: by telephone, by Internet, by scanning or by returning your signed and completed proxy card.
On behalf of Arena Pharmaceuticals and its Board of Directors, I would like to express our appreciation for your support and continued interest in Arena.
Sincerely,

Amit D. Munshi
Director, President, and Chief Executive Officer
Arena Pharmaceuticals, Inc.
6154 Nancy Ridge Drive
San Diego, CA 92121

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Notice of Annual Meeting
of Stockholders
Date:
June 11, 2021
Place:
www.virtualshareholdermeeting.com/ARNA2021
April 27, 2021
By Telephone



By Internet



By Mail



By Scanning



To the Stockholders of Arena Pharmaceuticals, Inc.:
The 2021 Annual Meeting of Stockholders of Arena Pharmaceuticals, Inc., a Delaware corporation, will be held on Friday, June 11, 2021, at 9:00 a.m. (Pacific Time), virtually via a live interactive audio webcast at www.virtualshareholdermeeting.com/ARNA2021, for the following purposes, which are more fully described in the proxy statement accompanying this notice:
1.
To elect the nine nominees for director named herein to our Board of Directors to serve until the next annual meeting of stockholders and until their respective successors are elected and qualified or until their earlier resignation or removal (Proposal 1);
2.
To approve, on an advisory basis, the compensation of our named executive officers, as disclosed in the proxy statement accompanying this notice (Proposal 2);
3.
To approve the Arena Pharmaceuticals, Inc. 2021 Long-Term Incentive Plan (Proposal 3);
4.
To ratify the appointment of KPMG LLP, an independent registered public accounting firm, as our independent auditors for the fiscal year ending December 31, 2021 (Proposal 4); and
5.
To transact such other business as may properly come before the meeting or any adjournment or postponement thereof.
The record date for the 2021 Annual Meeting is April 15, 2021. Only stockholders of record at the close of business on April 15, 2021, are entitled to notice of and to vote at the 2021 Annual Meeting and at any adjournment or postponement thereof.
Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting of
Stockholders to Be Held on June 11, 2021, at 9:00 a.m. (Pacific Time) virtually via a live interactive audio webcast at www.virtualshareholdermeeting.com/ARNA2021.

The proxy statement and annual report to stockholders
are available on our investor relations home page of our website at http://invest.arenapharm.com/.
Whether or not you expect to attend the meeting webcast, we urge you to submit your proxy on the Internet (accessible by scanning the code above) or by telephone or, if applicable, complete, sign, date and return the enclosed proxy card or proxy mailed to you at your earliest convenience, in order to ensure your representation at the meeting. Promptly submitting your vote will save us the expense and work of additional solicitation. If you received a printed copy of these materials by mail, you may return your proxy card in the enclosed envelope, which does not require postage if mailed in the United States. You may also vote on the Internet or by telephone pursuant to the instructions that accompanied your proxy card or were included in the Internet Notice. Sending in your proxy card or voting on the Internet or by telephone will not prevent you from voting at the meeting if you desire to do so, as your proxy may be cancelled at your option. Please note, however, that if your shares are held of record by a bank, broker or other agent and you wish to vote at the meeting, you must obtain a proxy issued in your name from that record holder.
By Order of our Board of Directors

Joan Schmidt
Executive Vice President, General Counsel and Secretary

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2021 PROXY STATEMENT

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2021 PROXY STATEMENT

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PROXY
STATEMENT
SUMMARY
This Proxy Statement Summary highlights information contained elsewhere in this proxy statement. This summary does not contain all of the information you should consider, so please read the entire proxy statement carefully before voting. On or about April 27, 2021, we intend to send to beneficial owners of our common stock a Notice of Internet Availability of Proxy Materials, or Internet Notice, containing instructions on how to access our
2021 proxy statement and annual report and vote online. In addition, on or about April 27, 2021, we intend to send a printed copy of our proxy materials to certain of our stockholders of record as of April 15, 2021, which is the record date, or Record Date, for our 2021 Annual Meeting of Stockholders, or 2021 Annual Meeting.
Matters to be Voted Upon
The following table summarizes the proposals to be voted upon at the 2021 Annual Meeting to be held on June 11, 2021, and the voting recommendations of our Board of Directors (sometimes referred to as the “Board”) with respect to each proposal.
Proposals
Required
Approval
Board
Recommendation
Page
Reference
1.
Election of Directors
Majority of votes cast
For each nominee
Page 2
2.
Advisory Approval of Executive Compensation
Majority of votes cast
For
Page 17
3.
Approval of the 2021 Long-Term Incentive Plan
Majority of votes cast
For
Page 47
4.
Ratification of Independent Auditors
Majority of votes cast
For
Page 62
Corporate Governance Highlights
We believe our Board of Directors is engaged, independent, and includes a diversity of backgrounds, experience, and viewpoints. It is our policy that at least two-thirds of our Board members be independent directors and that all members of our of Compensation Committee, Corporate Governance and Nominating Committee, and Audit Committee are independent directors. Director tenure varies from less than two years to more than 15 years. Each of our directors brings a wealth of experience, insight, and skills. For more information on our director candidates and the role of our Board, please see Proposal 1, beginning on page 2 of this proxy statement, and the pages immediately following Proposal 1.
In April of 2021 we published our second Corporate Environmental, Social and Governance (ESG) Report. This publication provides insight into how we monitor and manage risks as well as how we perform in key ESG areas. Arena’s ESG strategy is overseen at the Board level by our Corporate Governance and Nominating Committee. For more information on our ESG initiative, please see page 15 of this proxy statement.
Our Pay for Performance philosophy links our executives’ compensation with the achievement of our business objectives. For example, 90% of our CEO’s 2020 total compensation as reported in the Summary Compensation Table was performance-based and comprised of a stock option grant that will only provide value if the Company stock price increases and an annual cash bonus based on the achievement of corporate goals, both of which directly align the CEO’s financial interests with those of stockholders. Similarly, an average of 85% of our other named executive officers’ 2020 total compensation as reported in the Summary Compensation Table was comprised of equity grants and annual cash bonus incentive compensation. For more information on our Pay for Performance philosophy and practices, please see the section of this proxy statement titled “Compensation Discussion and Analysis,” beginning on page 23.
Questions and Answers About These Proxy Materials
Questions and answers about these proxy materials begin on page 63 of this proxy statement.
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ELECTION OF DIRECTORS (PROPOSAL 1)
Nominees and Election Process
Our Board of Directors currently consists of ten directors. The nine persons named in the table below are nominees for director at the 2021 Annual Meeting to serve until the next annual meeting of stockholders and until their respective successors are elected and qualified or until their earlier resignation or removal. Our Bylaws provide that the authorized number of directors shall be determined by a resolution of our Board of Directors. Our Board of Directors has determined by resolution to reduce the authorized number of directors to nine as of the election of the directors at our 2021 Annual Meeting. Proxies may not be voted for a greater number of persons than the number of nominees named in this proxy statement. Manmeet S. Soni will not continue as a director after our 2021 Annual Meeting, and we would like to thank Mr. Soni for his service on our Board of Directors.
All of the nominees for director at the 2021 Annual Meeting were elected at our 2020 Annual Meeting of Stockholders other than Dr. Katharine Knobil and Ms. Nawal Ouzren, who were appointed subsequent to our 2020 Annual Meeting of Stockholders. All of the nominees were recommended by the Corporate Governance and Nominating Committee for election to our Board of Directors at the 2021 Annual Meeting. Directors are elected by a plurality of votes of common stock present, either in person or represented by proxy, at the annual meeting and entitled to vote. However, if the number of votes “FOR” any of the nine nominees does not exceed 50% of the total number of votes cast with respect to such nominee’s election (from the holders of votes of shares either present in person or represented by proxy and entitled to vote), such nominee will promptly tender his/her resignation as a director, and the Corporate Governance and Nominating Committee of the Board will make a recommendation to the Board as to whether it is appropriate to accept such director’s resignation. Abstentions and broker non-votes will have no effect on the outcome. Unless otherwise instructed to withhold a vote for a particular nominee or all of the nominees, the proxy holders will vote the proxies received by them for the nominees named below. In the event that any of these nominees is unavailable to serve as a director at the time of the 2021 Annual Meeting, the proxies will be voted for any substitute nominee who shall be designated by our Board of Directors, unless our Board reduces the number of directors. We have no reason to believe that any nominee will be unavailable to serve.
Following is information regarding the nominees for director at the 2021 Annual Meeting. Such information includes biographical and other information about the nominees, including information concerning the specific experience, qualifications, attributes or skills that led our Board of Directors and the Corporate Governance and Nominating Committee to conclude that the nominees should serve as our directors.
Name
Positions and
Offices Held
Year First
Elected or
Appointed Director
Age
Garry A. Neil, M.D.
Director, Chair of the Board
2017
67
Jayson Dallas, M.D.
Director
2017
53
Oliver Fetzer, Ph.D.
Director
2017
56
Kieran T. Gallahue
Director
2018
57
Jennifer Jarrett
Director
2017
50
Katharine Knobil, M.D.
Director
2020
57
Amit D. Munshi
Director, President and Chief Executive Officer
2016
53
Tina S. Nova, Ph.D.
Director
2004
67
Nawal Ouzren
Director
2021
42
Business Experience of Nominees
Biographical information for each of the nominees is set forth below, together with a summary of the key qualifications and experience that led our Board and the Corporate Governance and Nominating Committee to the conclusion that each of the nominees should be nominated for reelection at the 2021 Annual Meeting.
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Garry Neil, M.D.

  DIRECTOR SINCE: 2017
AGE: 67
BIOGRAPHICAL INFORMATION

Garry Neil, M.D., has served on our Board of Directors since February 2017 and as its Chair since February 2021. Dr. Neil serves as the Chief Scientific Officer of Cerecor, Inc., a publicly held biotechnology company focused on translating genetic discoveries into novel therapies to improve the lives of children and adults with pediatric onset life altering diseases, a position he has held since Cerecor’s February 2020 merger with Aevi Genomic Medicine, Inc., a biotechnology company with the same focus, where Dr. Neil had served as Chief Scientific Officer since September 2013. Prior to joining Aevi, Dr. Neil was a Partner at Apple Tree Partners, a life science private equity firm, from September 2012 to September 2013, and held a number of senior positions in the pharmaceutical industry, including most recently Corporate VP of Science & Technology at Johnson & Johnson from November 2007 to August 2012. Prior to these roles, Dr. Neil served as Group President at Johnson & Johnson Pharmaceutical Research and Development, VP of R&D at Merck KGaA/EMD Pharmaceuticals, and VP of Clinical Research at AstraZeneca and Astra Merck. Dr. Neil holds a B.S. from the University of Saskatchewan and an M.D. from the University of Saskatchewan College of Medicine. He completed postdoctoral clinical training in internal medicine and gastroenterology at the University of Toronto. Dr. Neil also completed a postdoctoral research fellowship at the Research Institute of Scripps Clinic. He has previously served on the board of GTx, Inc., a publicly traded biopharmaceutical company focused on cancer and other serious medical conditions. He is the Founding Chairman of TransCelerate Biopharma, Inc., a non-profit pharmaceuticals industry R&D consortium, and is a past member of the TransCelerate Board. He also serves on the board of Reagan Udall Foundation and previously served on the board of Foundation for the National Institutes of Health (NIH) and on the Science Management Review Board of the NIH. Dr. Neil is also the past Chairman of the Pharmaceutical Research and Manufacturers Association (PhRMA) Science and Regulatory Executive Committee and the PhRMA Foundation Board.

KEY QUALIFICATIONS AND EXPERIENCE

Dr. Neil’s years of biopharmaceutical experience with emphasis on unique insight into gastrointestinal, or GI, drug development with vast network of global key opinion leaders, or KOLs, his medical degree and specialty training, as well as his global executive positions in research and development, clinical, and regulatory affairs, gives him the qualifications, attributes and skills to serve as one of our directors.
Jayson Dallas, M.D.


DIRECTOR SINCE: 2017
AGE: 53
BIOGRAPHICAL INFORMATION

Jayson Dallas, M.D., has served on our Board of Directors since February 2017. Dr. Dallas served as President and Chief Executive Officer of Aimmune Therapeutics, Inc., a biopharmaceutical company developing treatments for potentially life-threatening food allergies, from June 2018 until Aimmune’s acquisition by Nestlé S.A. in October 2020. Prior to joining Aimmune, he served as the first Chief Commercial Officer and Executive Vice President of Ultragenyx Pharmaceutical, Inc., a publicly held biopharmaceutical company focused on the development of novel products for rare and ultra-rare diseases, since August 2015. Prior to Ultragenyx, Dr. Dallas served as General Manager of F. Hoffmann-La Roche Ltd, a healthcare company, in the United Kingdom from January 2013 to July 2015. Before joining Roche, he held two different positions at Genentech, a pharmaceutical company, as Head of Global Oncology Launch Excellence and Biosimilar Strategy and Head of Global Product Strategy for Immunology and Ophthalmology, from May 2010 to December 2012 in South San Francisco. Earlier in his career, Dr. Dallas worked at Novartis International AG and Pfizer Inc. / Pharmacia Corporation in the United States and previously at Roche in Switzerland. Dr. Dallas holds an M.D. from the University of the Witwatersrand, Johannesburg, South Africa and an M.B.A. from Ashridge Business School in the United Kingdom. Dr. Dallas also serves on the Board of Galecto, Inc., a biotechnology company.
 

KEY QUALIFICATIONS AND EXPERIENCE

Dr. Dallas’s years of global experience at the intersection of drug development, medical and commercial planning, and business operations for leading biopharmaceutical and healthcare companies give him the qualifications, attributes and skills to serve as one of our directors.
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Oliver Fetzer, Ph.D.

  DIRECTOR SINCE: 2017
AGE: 56
BIOGRAPHICAL INFORMATION

Oliver Fetzer, Ph.D., has served on our Board of Directors since February 2017. Dr. Fetzer has served as the Chief Executive Officer of Synthetic Genomics, Inc., a private synthetic biology company commercializing genomic technologies, since November 2014. Prior to Synthetic Genomics, Dr. Fetzer was President and Chief Executive Officer of Cerulean Pharma Inc., a pharmaceutical company that developed nanoparticle drug conjugate oncology therapeutics, from April 2009 to October 2014. Prior to Cerulean Pharma, Dr. Fetzer served in a variety of positions at Cubist Pharmaceuticals, Inc., including Senior Vice President, Corporate Development and Research & Development, Senior Vice President, Corporate Development and Chief Business Officer, and Senior Vice President, Business Development. Dr. Fetzer began his career in 1993 in various positions of increasing responsibility at the Boston Consulting Group, Inc. (BCG), a global leading management consulting firm, including Consultant, Project Leader, Principal, Partner and Managing Director. Dr. Fetzer served on the boards of Auxilium Pharmaceuticals, Inc. from 2005 to 2015 and of Cerulean Pharma, Inc. from 2009 to 2014, and has served on the board of Tecan Group AG, a publicly traded provider of laboratory instruments and solutions in biopharmaceuticals, forensics and clinical diagnostics, since 2011. Dr. Fetzer received a B.S. in Biochemistry from the College of Charleston, a Ph.D. in Pharmaceutical Sciences from the Medical University of South Carolina, and an M.B.A. from Carnegie Mellon University.

KEY QUALIFICATIONS AND EXPERIENCE

Dr. Fetzer’s experience with transactions, operations and leadership from pre-clinical to late-stage development in the biopharmaceutical industry, in addition to his management consulting and prior publicly held company board service, give him the qualifications, attributes and skills to serve as one of our directors.
Kieran T. Gallahue

  DIRECTOR SINCE: 2018
AGE: 57
BIOGRAPHICAL INFORMATION

Kieran T. Gallahue has served as a member of our Board of Directors since July 2018. Mr. Gallahue served as Chairman and Chief Executive Officer of CareFusion Corporation, a medical products company, from 2011 until its acquisition by Becton, Dickinson and Company in 2015 for over $12 billion. He previously served as President, CEO and a director of ResMed Inc., a medical device firm serving the sleep disordered breathing and respiratory markets, and also held a variety of senior-level positions at Nanogen, Inc., Instrumentation Laboratory, Procter & Gamble Co., and General Electric Co. Mr. Gallahue is currently a member of the board of directors of three medical device companies, Edwards Lifesciences Corporation, Intersect ENT, Inc. and Envista Holdings Corporation. He previously served on the board of directors of Volcano Corporation, a developer of products for interventional cardiology and image guided therapy, from 2007 until its acquisition by Royal Philips in 2015. Mr. Gallahue also served on the Executive Committee of the Advanced Medical Technology Association, a trade association representing 80% of medical technology firms in the United States. He holds a B.A. in economics from Rutgers University and an M.B.A. from Harvard Business School.

KEY QUALIFICATIONS AND EXPERIENCE

Mr. Gallahue’s extensive leadership and business expertise, including his background serving as the President and Chief Executive Officer of companies in the healthcare industry and his service on other boards, give him the qualifications, attributes and skills to serve as one of our directors.
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Jennifer Jarrett

  DIRECTOR SINCE: 2017
AGE: 50
BIOGRAPHICAL INFORMATION

Jennifer Jarrett has served as a member of our Board of Directors since June 2017. Ms. Jarrett has served as Chief Operating Officer of Arcus Biosciences, Inc., a biotechnology company developing next generation cancer immunotherapies, since October 2020. Ms. Jarrett previously served as Vice President of Corporate Development and Capital Markets of Uber Technologies, Inc., a transportation and technology company, from February 2019 through September 2020. Prior to joining Uber, Ms. Jarrett was Chief Operating Officer and Chief Financial Officer of Arcus from June 2018 to January 2019 and Chief Business Officer and Chief Financial Officer of Arcus from March 2017 to June 2018. Prior to Arcus, Ms. Jarrett was Chief Financial Officer of Medivation, Inc., which was acquired by Pfizer Inc. in 2016. Before Medivation, Ms. Jarrett spent 20 years in investment banking, most recently at Citigroup Inc., where she ran the firm’s west coast life sciences investment banking practice, and prior to that at Credit Suisse AG and Donaldson, Lufkin & Jenrette Inc. In 2014, she was named one of the Most Influential Women in Bay Area Business by the San Francisco Business Times. Ms. Jarrett currently serves on the boards of Arcus, Syndax Pharmaceuticals, Inc. and Consonance-HFW Acquisition Corp (a SPAC) and previously served on the board of Audentes Therapeutics, Inc. until its acquisition by Astellas Pharma Inc. in January 2020. Ms. Jarrett received a B.A. in economics from Dartmouth College and an M.B.A. from Stanford Graduate School of Business.

KEY QUALIFICATIONS AND EXPERIENCE

Ms. Jarrett’s extensive experience and leadership, including in investment banking and in serving as a chief financial officer and chief business officer in the biopharmaceutical industry, give her the qualifications, attributes and skills to serve as one of our directors.
Katharine Knobil, M.D.


DIRECTOR SINCE: 2020
AGE: 57
BIOGRAPHICAL INFORMATION

Katharine Knobil, M.D., has served as a member of our Board of Directors since June 2020. Dr. Knobil currently serves as Chief Medical Officer of Agilent Technologies Inc., a position she has held since April 2021. Dr. Knobil previously served as Chief Medical Officer and Head of Research & Development at Kaleido Biosciences, Inc., a clinical-stage healthcare company targeting the microbiome to treat disease and improve health, from December 2018 to January 2021. Dr. Knobil spent more than 20 years in roles of increasing responsibility at GlaxoSmithKline plc (GSK), a pharmaceutical company, most recently serving as the corporate Chief Medical Officer from December 2017 to December 2018, overseeing medical affairs, health outcomes, global clinical safety and medical governance across the pharmaceutical, vaccines, and consumer businesses. Previously she was Chief Medical Officer for Pharmaceuticals at GSK from November 2015 to December 2017, and prior to that was senior vice president, value evidence and outcomes. Dr. Knobil first joined GSK in 1997 as a research physician in respiratory clinical development, and subsequently held a number of roles, including leading the European respiratory clinical team, and building the late-stage clinical development for all therapeutic areas in China. Dr. Knobil was recently named one of 2018’s Fiercest Women in Life Sciences by FiercePharma. She has served on the Board of Directors of the National Health Council and has been active with the National Academies of Sciences, Engineering, and Medicine, and the Patient Centered Outcomes Research Institute. Dr. Knobil received her B.A. from Cornell University, her M.D. from University of Texas Southwestern Medical School, and completed a Fellowship in Pulmonary and Critical Care Medicine at the Johns Hopkins Medical School.

KEY QUALIFICATIONS AND EXPERIENCE

Dr. Knobil’s years of leadership experience in the pharmaceutical and healthcare industry, including as Chief Medical Officer and Head of Research and Development, and her medical degree and specialty training give her the qualifications, attributes and skills to serve as one of our directors.
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Amit D. Munshi
  DIRECTOR SINCE: 2016
AGE: 53
BIOGRAPHICAL INFORMATION

Amit D. Munshi has served as a member of our Board of Directors since June 2016, and as our President and Chief Executive Officer since May 2016. Previously, Mr. Munshi served as President and Chief Executive Officer and as a director of Epirus Biopharmaceuticals, Inc., a biopharmaceutical company focused on biosimilars, and Percivia LLC, a biotechnology company (sold to Johnson & Johnson). Prior to Epirus and Percivia, Mr. Munshi was a co-founder and served as Chief Business Officer of Kythera Biopharmaceuticals, Inc., from 2005 to 2010, (sold $2.1B to Allergan Inc.) and held multiple leadership positions at Amgen Inc. from 1997 to 2005, including General Manager, Nephrology Europe. In July 2016, Epirus filed a voluntary Chapter 7 petition in the United States Bankruptcy Court for the District of Massachusetts. Mr. Munshi holds a B.S. in Economics and a B.A. in History from the University of California, Riverside, and an M.B.A. from the Peter F. Drucker School of Management at Claremont Graduate University. Mr. Munshi has more than 29 years of global biopharmaceutical industry experience in executive management, business development, product development and portfolio management. Mr. Munshi currently serves on the boards of Galecto, Inc. (Nasdaq: GLTO), a biotechnology company, and Enterprise Therapeutics Ltd, a biopharmaceutical company.

KEY QUALIFICATIONS AND EXPERIENCE

The Board believes that it is important to have the Company’s Chief Executive Officer serve on the Board as he is closest to our company’s day-to-day operations. Mr. Munshi’s vast executive management and business experience in the global biopharmaceutical industry and in-depth knowledge of product development gives him the qualifications, attributes and skills to serve as one of our directors.
Tina S. Nova, Ph.D.

DIRECTOR SINCE: 2004
AGE: 67
BIOGRAPHICAL INFORMATION

Tina S. Nova, Ph.D.has served as a member of our Board of Directors since September 2004 and as its Chair from June 2016 to February 2021. Dr. Nova previously served as the Board’s lead independent director from June 2015 to June 2016. Dr. Nova has served as President and Chief Executive Officer of Decipher Biosciences, Inc., a molecular diagnostics company focused on prostate cancer, since August 2018. Dr. Nova served as President and Chief Executive Officer of Molecular Stethoscope, Inc, a molecular diagnostics company, from September 2015 to August 2018. Dr. Nova served as Senior Vice President and General Manager of Illumina Inc.’s oncology business unit from July 2014 to August 2015. Dr. Nova was a co-founder of Genoptix, Inc., a medical laboratory diagnostics company, and served as its President from 2000 to April 2014. Dr. Nova also served as the Chief Executive Officer of Genoptix and as a member of its board of directors from 2000 until Novartis AG acquired Genoptix in March 2011. Dr. Nova was a co-founder of Nanogen, Inc., a provider of molecular diagnostic tests, and she served as its Chief Operating Officer and President from 1994 to 2000. Dr. Nova served as Chief Operating Officer of Selective Genetics, a biotechnology company, from 1992 to 1994, and in various director-level positions with Ligand Pharmaceuticals Incorporated, a drug discovery and development company, from 1988 to 1992, most recently as Executive Director of New Leads Discovery. Dr. Nova has also held various research and management positions with Hybritech, Inc., a former subsidiary of Eli Lilly & Company, a pharmaceutical company. Dr. Nova serves as a member of the board of directors of Veracyte, Inc., a diagnostics company. Dr. Nova holds a B.S. in Biological Sciences from the University of California, Irvine and a Ph.D. in Biochemistry from the University of California, Riverside.

KEY QUALIFICATIONS AND EXPERIENCE

Dr. Nova’s extensive leadership, business and scientific expertise, including her background of founding, financing, developing and operating companies in the healthcare industry, including her background as the President and Chief Executive Officer of a publicly held company in the healthcare industry, her experience in successfully developing, launching and commercializing medical products, and her service on other boards give her the qualifications, attributes and skills to serve as one of our directors.
 
 
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Nawal Ouzren

DIRECTOR SINCE: 2021
AGE: 42
BIOGRAPHICAL INFORMATION

Nawal Ouzren has served on our Board since February 2021. Ms. Ouzren has 19 years of experience in operational and strategic management within the pharmaceutical industry. She has served as the CEO of Sensorion, a biotechnology company specializing in the development of hearing loss therapeutics, since April 2017. Previously she headed up the Global Genetic Diseases Franchise at Shire plc, a specialty pharmaceutical company, from 2016 until 2017, where she supervised all marketing, business and strategy aspects of this global division’s product portfolio. From 2014 to June 2016, she was Vice President of the Global Hemophilia Franchise at Baxalta Incorporated, a biopharmaceutical company, when Baxalta was acquired by Shire. She began her career at General Electric Company and then moved to Baxter International, Inc., where she was Strategy and Operational Excellence Manager, Quality Operations Director and Senior Director Strategy before becoming Vice President of the BioSimilars business unit. Ms. Ouzren holds a Master of Science in Chemical Engineering from the Université de Technologie de Compiègne, France. She serves as a director of Sensorion and previously served as a director of Inventiva S.A., a clinical-stage biopharmaceutical company.

KEY QUALIFICATIONS AND EXPERIENCE

Ms. Ouzren’s extensive management background in the global pharmaceutical industry, including as Chief Executive Officer and board member in Europe, give her important experience and perspective and the qualifications, attributes and skills to serve as one of our directors.

THE BOARD OF DIRECTORS RECOMMENDS THAT
STOCKHOLDERS VOTE “FOR” EACH NAMED NOMINEE.
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Director Independence
Our common stock is listed on the Nasdaq Global Select Market, which requires that a majority of a listed company’s board of directors qualify as “independent” under the applicable Nasdaq listing standards. The board of directors must affirmatively make this determination. In addition, under our Corporate Governance Guidelines, it is our policy that at least two-thirds of the members of our Board of Directors be independent directors.
Our Board of Directors consults with its legal advisors to ensure that its independence determinations, including with respect to directors, director nominees and members of its committees, comply with all applicable securities and other laws and regulations regarding the definition of “independent,” including but not limited to those set forth in pertinent listing standards of Nasdaq, as in effect from time to time. Consistent with these considerations, our Board of Directors has reviewed relevant transactions and relationships between each non-employee director and Arena, other non-employee directors, our senior management and our independent auditors and has affirmatively determined that all of our non-employee directors are independent directors under the applicable Nasdaq listing standards.
Under our Corporate Governance Guidelines, directors who have been deemed “independent directors” by our Board of Directors will inform the Chair of the Board in writing if he or she believes there has been a change in his or her status as an independent director. The Chair of the Board, in turn, will advise the Corporate Governance and Nominating Committee of such potential change of status so that the committee, with the aid of the Chair of the Board, can determine whether the director continues to qualify as an independent director and whether to recommend to our full Board of Directors to ask for the resignation of such director.


Corporate Governance Guidelines
Our Board of Directors has adopted Corporate Governance Guidelines for the conduct and operation of our Board. The guidelines cover such topics as board composition and selection, the Board’s role, the responsibilities of the Chair of the Board, director orientation and education, director compensation, Board meetings, Board committees, Board access to management and use of outside advisors, succession planning, and the evaluation of the Board and our Chief Executive Officer.
Director Commitments
Our Board believes that each member of the Board should have sufficient time and attention to devote to Board duties and to otherwise fulfill the responsibilities required of directors. In assessing whether directors and nominees for director have sufficient time and attention to devote to Board duties, our Corporate Governance and Nominating Committee and our Board of Directors consider, among other things, whether directors may be “overboarded,” which refers to the situation where a director serves on an excessive number of boards. Our Corporate Governance Guidelines recommend limitations on the number of public company boards and audit committees and require that a director notify the Chair of the Board and the Chair of the Corporate Governance and Nominating Committee prior to accepting an invitation to serve on any additional corporate board.
Our Board believes that each of our director nominees has demonstrated the ability to devote sufficient time and attention to Board duties and to otherwise fulfill the responsibilities required of directors and has declined to nominate individuals who could be deemed “overboarded.”
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Board Leadership Structure
Our Board’s policy is to separate the roles of Chair of the Board and Chief Executive Officer. Our Board of Directors believes that there is no single, generally accepted approach to providing board leadership and that, given the dynamic and competitive environment in which we operate, the appropriate Board leadership structure may vary as circumstances change. As such, our Board of Directors periodically reviews its leadership structure to confirm that it is an appropriate structure for our company at such time.
On February 12, 2021, our Board appointed Dr. Neil, an independent director, the Chair of the Board. Our Board’s policy is one of the independent directors shall be appointed by a majority of the independent directors as the Chair to serve for a minimum of one year or until the earlier of when replaced by the independent directors or six years from appointment. Our Chair’s responsibilities and authority include the following:
Serving as the chair of Board meetings, including during executive sessions of independent directors;
Establishing the schedule and agenda for Board meetings and approving information to be sent to our Board;
Presiding over any portion of Board meetings at which the performance of our Board is presented or discussed;
Establishing the agenda for meetings of the independent directors and presiding over such meetings;
Coordinating with the committee chairs, as needed, regarding meeting agendas, informational requirements and other matters, as appropriate;
Serving as the liaison between the Chief Executive Officer and the independent directors, including providing feedback from the Board to the Chief Executive Officer after each regularly scheduled meeting of the Board;
Being available for communications with stockholders, as appropriate and in accordance with our policy on stockholder communications with our Board; and
Performing such other duties as our Board may establish or delegate.
Our Board of Directors believes that this structure provides an efficient and effective leadership model for our company at this time. In considering its leadership structure, our Board of Directors has taken into account that it consists of a substantial majority of independent directors who are highly qualified and experienced, has a Chair with defined corporate governance responsibilities, the Board’s Audit Committee, Compensation Committee and Corporate Governance and Nominating Committee are each comprised entirely of independent directors, and that it has regular interactions outside of Board and committee meetings with our management, including our Chief Executive Officer. Our Board of Directors believes that we have an appropriate balance between the authority of those who oversee our company and those who manage it on a day-to-day basis.
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Board’s Role in Risk Oversight
Our management has the primary responsibility for identifying and managing our business risks, including by overseeing and implementing enterprise risk management. Our Board of Directors actively oversees potential risks and our risk management activities, including by discussing with management our risks and the management of such risks at meetings of the Board and its committees. Our Board of Directors also makes use of the independent understanding and knowledge of many of such risks possessed by our directors. Our Board of Directors regularly reviews our corporate strategy in light of the evolving nature of such risks and makes adjustments to that strategy when appropriate. Our Board of Directors also regularly considers risks facing us when it approves the annual budget, plan and corporate goals and throughout the year as it monitors developments and reviews our financial and other periodic reports.

Our Board of Directors also delegates risk oversight to each of its standing committees within their areas of responsibility, as well as to special committees it forms from time to time. The Audit Committee’s duties include assisting our Board of Directors in its risk oversight function with regard to, among other things, our internal control over financial reporting, periodic filings with the SEC, investment policy, procedures relating to the receipt and treatment of complaints, and policies and procedures designed to ensure adherence to applicable laws and regulations. The Compensation Committee’s duties include assisting our Board of Directors in its risk oversight function with regard to, among other things, assessing risk created by current and proposed compensation policies and practices for all of our employees. The Corporate Governance and Nominating Committee’s duties include assisting our Board of Directors in its risk oversight function with regard to, among other things, our management succession plans, our insider trading policy and related procedures, and our other compliance-related policies and practices that are not within the purview of the Audit Committee or that are referred to the committee by our Board.
We have assessed our compensation policies and practices on a company-wide basis to determine if such programs or practices create undesirable or unintentional risks of a material nature. Based on such assessment, we believe that our compensation policies and practices do not create risks that are reasonably likely to have a material adverse effect on our company.
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Annual Performance Evaluations; Assessment of Charters; Director Education
Our Board of Directors, as well as each of its standing committees, conducts an annual self-evaluation, which includes a review of its performance and, in the case of each of the committees, an assessment of the adequacy and appropriateness of its charter. Our Board of Directors also reviews each of our directors. The Corporate Governance and Nominating Committee is responsible for overseeing this evaluation process, evaluating all standing committees and their charters and recommending to our Board of Directors any changes to our Board and the authority, charters, compositions and chairs of such committees.
Each director is expected to maintain the necessary level of expertise to perform his or her responsibilities as a director. Our Board of Directors regularly discusses recent developments in legal standards related to corporate governance, disclosure obligations or industry-specific issues. In addition, we may, from time to time and depending on the circumstances, pay for all or a portion of outside continuing education programs to assist our directors in maintaining such level of expertise. It is our Board of Directors’ policy for us to reimburse each director for attending one of such continuing education programs per year (and, when possible, for such cost to be shared if the director is a member of more than one board of directors).
Code of Business Conduct and Ethics
Our Board of Directors has adopted a Code of Business Conduct and Ethics that applies to our directors and employees (including our principal executive officer and our principal financial and accounting officer), and we have posted the policy on our website www.arenapharm.com under “Investors – Corporate Governance.” To facilitate compliance with this policy, we periodically conduct a program of awareness, training and review. The Code of Business Conduct and Ethics complies with the applicable Nasdaq listing standards and SEC rules and regulations, and includes procedures for (i) the filing, receipt and treatment of complaints regarding suspected improper conduct by our employees, directors, collaborators, vendors and others associated with us and (ii) the confidential, anonymous submission by employees of concerns regarding any matter covered by the policy. In addition, we intend to promptly disclose on our website in the future (i) the date and nature of any amendment (other than technical, administrative or other non-substantive amendments) to the policy that applies to our principal executive officer, our principal financial and accounting officer, or persons performing similar functions and relates to any element of the code of ethics definition enumerated in Item 406(b) of Regulation S-K, and (ii) the nature of any waiver, including an implicit waiver, from a provision of the policy that is granted to one of these specified individuals that relates to one or more of the elements of the code of ethics definition enumerated in Item 406(b) of Regulation S-K, the name of such person who is granted the waiver and the date of the waiver.
Non-employee Director Meetings
Our independent directors meet in regularly scheduled executive sessions without management. These executive sessions occur in conjunction with regularly scheduled meetings of our Board of Directors and its standing committees and otherwise as needed.
Director Meeting Attendance
Our Board of Directors held ten meetings during the fiscal year ended December 31, 2020. Each incumbent director attended at least 75% of the aggregate of the total number of meetings of our Board of Directors and all committees of our Board on which such director served during the periods in which he or she served. In addition to regularly scheduled meetings, the directors participate in telephone interactions and other communications with each other and certain of our officers, as well as with our independent auditors and external advisors, counsel and consultants.
As stated in our Corporate Governance Guidelines, our directors are encouraged to attend our annual meetings of stockholders. Six of our nine directors attended our 2020 Annual Meeting of Stockholders.
Director Tenure
Our Board of Directors considers, among other factors, the tenure of individual directors and the Board as a whole when evaluating director nominees, but it does not believe that fixed term limit is appropriate. Directors who have served on our Board of Directors for an extended period of time are able to provide continuity and valuable insight into our company, our operations and prospects based on their experience with, and understanding of, our history, policies and objectives. Our Board of Directors believes that, as an alternative to limiting the number of terms, it can ensure that our Board continues to evolve and adopt new ideas and viewpoints through the director nomination process and through periodic rotation of committee assignments.
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Committees of the Board
The standing committees of our Board of Directors are the Audit Committee, the Compensation Committee, and the Corporate Governance and Nominating Committee. Each of these committees is comprised entirely of “independent” directors under the applicable Nasdaq listing standards. The members and chairs of our Board of Directors’ committees are appointed by our Board and may change in the future. Our Board of Directors has no set policy for rotation of committee members or chairs, but it annually reviews committee composition and chair positions, seeking the appropriate blend of continuity and new perspectives on the committees. The authority and responsibility of each of these committees are summarized below, and more detailed descriptions of their functions are included in their written charters, which are available on our website at www.arenapharm.com.
Pursuant to their charters, each of the Audit Committee, the Compensation Committee, and the Corporate Governance and Nominating Committee is authorized to access, at our expense, such internal and external resources as the particular committee deems necessary or appropriate to fulfill its defined responsibilities. Each committee has sole authority to approve fees, costs and other terms of engagement of such outside resources.
The following chart provides current membership, and meeting information for 2020, for the Audit Committee, Compensation Committee and Corporate Governance and Nominating Committee.
Member
Audit
Committee
Compensation
Committee
Corporate
Governance and
Nominating Committee
Garry Neil, M.D.
Jayson Dallas, M.D.
 
C
 
Oliver Fetzer, Ph.D.
C
Kieran T. Gallahue
 
 
Jennifer Jarrett
Katharine Knobil, M.D.
 
 
Tina S. Nova, Ph.D.
Nawal Ouzren
 
 
Manmeet S. Soni
C
Total meetings in 2020
5
8
6
- Committee member
C - Committee chair
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Audit Committee
The Audit Committee’s responsibilities include:
selecting and evaluating the performance of our independent auditors;
reviewing the scope of the audit to be conducted by our independent auditors, as well as the results of their audit, and approving audit and non-audit services to be provided by them;
reviewing and assessing our financial reporting activities and disclosure, including our financial results press releases and periodic reports, and the accounting standards and principles followed;
reviewing the scope, adequacy and effectiveness of our internal control over financial reporting;
reviewing management’s assessment of our compliance with our disclosure controls and procedures;
reviewing our public disclosure policies and procedures;
reviewing our guidelines and policies with respect to risk assessment and management, our tax strategy and our investment policy;
reviewing and approving related-party transactions;
overseeing our Code of Business Conduct and Ethics and our Policy on Filing, Receipt and Treatment of Complaints; and
reviewing threatened or pending litigation matters and investigating matters brought to the committee’s attention that are within the scope of its duties.
Our Board of Directors has determined that each of the Audit Committee members meets the independence and experience requirements included in the applicable Nasdaq listing standards and Rule 10A-3(b)(1) of the Securities Exchange Act of 1934, as amended, or the Exchange Act. Our Board of Directors has also determined that each of the committee members is an “audit committee financial expert” as defined in Item 407(d) of Regulation S-K.
The Audit Committee was established in accordance with Section 3(a)(58)(A) of the Exchange Act. Our Board of Directors has adopted a written charter for the Audit Committee, which is available on our website at www.arenapharm.com. Mr. Soni is the Chair of the Audit Committee. The Audit Committee held five meetings in 2020. The Audit Committee’s report is set forth below under “Audit Committee Report.”
Compensation Committee
The Compensation Committee’s responsibilities include:
overseeing Arena’s compensation strategy, policies, plans and programs;
assessing risk created by current and proposed compensation policies and practices;
reviewing and approving incentive plan performance goals relevant to the compensation of our executive officers;
evaluating the CEOs performance in light of relevant corporate performance goals and objectives;
reviewing and approving all aspects of compensation and benefits for executive officers and the Board of Directors;
authorizing and approving equity grants under our equity compensation plans; and
overseeing preparation and review of the Committee’s report and the Compensation Discussion and Analysis included in our proxy statement.
Our Board of Directors has adopted a written charter for the Compensation Committee, which is available on our website at www.arenapharm.com. Dr. Dallas is the Chair of the Compensation Committee, and Ms. Jarrett was a member of the Compensation Committee until February 2021. The Compensation Committee held eight meetings in 2020. The Compensation Committee’s report is set forth below under “Compensation Committee Report.”
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Corporate Governance and Nominating Committee
The Corporate Governance and Nominating Committee’s responsibilities include:
recommending guidelines to our Board of Directors for our corporate governance;
overseeing director orientation and continuing education;
establishing criteria for membership on our Board of Directors;
identifying, evaluating, reviewing and recommending to our Board of Directors qualified director candidates;
reviewing and assessing the performance of our Board of Directors and its standing committees;
reviewing and approving a management succession plan and related procedures;
establishing the process for receiving and considering stockholder proposals and suggestions for director nominations;
overseeing our strategy, initiatives and policies concerning corporate social responsibility, including environmental, social and governance matters;
overseeing our insider trading policy and related procedures; and
overseeing compliance related policies and practices that are not within the purview of the Audit Committee or are referred by our Board of Directors.
The Corporate Governance and Nominating Committee uses many sources to identify potential director candidates, including the network of contacts among our directors, officers and other employees, and may engage outside consultants and search firms in this process. As set forth below under “Stockholder Director Recommendations,” the Corporate Governance and Nominating Committee will consider director candidates recommended by our stockholders.
The Corporate Governance and Nominating Committee believes that candidates for director should have certain minimum qualifications, including being able to understand basic financial statements. In considering candidates for director, the Corporate Governance and Nominating Committee will consider all relevant factors, which may include, among others, the candidate’s experience and accomplishments, the relevance of such experience to our business, the availability of the candidate to devote sufficient time and attention to our company, the candidate’s reputation for integrity and ethics and the candidate’s ability to exercise sound business judgment. Director candidates are reviewed in the context of the then-current composition of our Board of Directors, our requirements and the interests of our stockholders. In conducting this assessment, our Board of Directors considers skills, diversity and such other factors as it deems appropriate given the current needs of our Board of Directors and our company, to maintain a balance of knowledge, experience, perspective and capability. Our Board of Directors believes that its membership should reflect diversity in a broad sense that includes such things as differences of viewpoint, background, professional experience, expertise, education, skills, specialized knowledge, and other individual qualities and attributes. In the case of incumbent directors whose terms of office are set to expire, when determining whether such directors should be nominated for reelection, our Board of Directors reviews such directors’ overall service to us during their term, including the number of meetings attended, level of participation, quality of performance, and any relationships and transactions that might impair such directors’ independence. The Board will also consider the independence and other requirements of Nasdaq, the rules and regulations of the Securities and Exchange Commission and applicable law when selecting director candidates. The Corporate Governance and Nominating Committee retains the right to modify these qualifications from time to time.
The Corporate Governance and Nominating Committee recommended the nominations of each of the director nominees for election at the 2021 Annual Meeting.
Our Board of Directors has adopted a written charter for the Corporate Governance and Nominating Committee, which is available on our website at www.arenapharm.com. Dr. Neil was a member and the Chair of the Corporate Governance and Nominating Committee until February 2021. Dr. Fetzer is now the Chair of the Corporate Governance and Nominating Committee. The Corporate Governance and Nominating Committee held six meetings in 2020.
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Corporate Environmental, Social and Governance Initiative
In 2019 we launched a corporate Environmental, Social & Governance (or ESG) Initiative, overseen by the Corporate Governance and Nominating Committee of our Board of Directors. This committee is responsible for overseeing ESG activities at the Board level, including significant strategies, activities and policies regarding sustainability, access to medicines, social impact, and charitable activities, among other duties. These activities are managed day-to-day by a cross-functional ESG Working Group, with input from external stakeholders, and supported by respective subject matter experts.
Our ESG principles are directly aligned with corporate objective of building a durable and sustainable global company to last for generations through:
applying a multi-year horizon and multi-stakeholder approach;
honoring our obligations to all our stakeholders; and
deliver on our commitment to our patients, community, environment, and shareholders.
In our recently published ESG Report we have laid out our approach to monitoring and managing risks, and taking advantage of opportunities to enhance our disclosures, relative to key ESG areas of focus. We are focused on building a vibrant, sustainable company and creating long-term value for our stockholders through careful management of resources against focused priorities. We strongly believe that aligning our organization to ESG principles will be critical to delivering on these goals.
Additional details regarding our ESG Initiative are included in our ESG Report for 2021, published on our website at http://invest.arenapharm.com/static-files/5aff52c3-5bc3-449b-8452-de379d23c0a5. The information posted on or accessible through our website is not incorporated into this proxy statement (see “No Incorporation by Reference” on page 68).
ESG Roles and Responsibilities

Board Oversight of Human Capital
In addition to the traditional areas of focus for the Compensation Committee, our Board of Directors recognizes the importance of our broader human capital philosophies, practices, and risk management which creates value and supports our mission. Our ability to attract and retain talented team members, and create a workplace in which they thrive, is an integral part of our competitive strategy, long-term value and risk mitigation. To support accountability for these goals, our Compensation Committee, and other Committees of the Board of Directors, engage in periodic discussions on matters such as talent pipeline, turnover, workplace culture, inclusion and engagement, and workforce risk. In addition, certain human
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capital metrics have been and continue to be measured, reviewed and managed as part of our short-term incentive programs and therefore are discussed by the Compensation Committee in its regular meetings. To ensure the full Board has visibility into our human capital matters, the Chair of the Compensation Committee also provides regular updates to the full Board on the status of human capital initiatives and metrics.
Stockholder Director Recommendations
The Corporate Governance and Nominating Committee will consider director candidates recommended by our stockholders. A candidate must be highly qualified and be willing and expressly interested in serving on our Board of Directors. The Corporate Governance and Nominating Committee does not intend to alter the manner in which it evaluates candidates, including the minimum qualifications set forth above, based on whether or not the candidate was recommended by a stockholder. To be considered by the Corporate Governance and Nominating Committee, a stockholder recommendation for director candidates for an annual meeting of stockholders must be received by the committee by December 31 of the year before such annual meeting. A stockholder who wishes to recommend a candidate for the Corporate Governance and Nominating Committee’s consideration should forward the candidate’s name and information about the candidate’s qualifications to Corporate Secretary, Arena Pharmaceuticals, Inc., 136 Heber Avenue, Suite 204, Park City, Utah 84060. Submissions must include a representation that the nominating stockholder is a beneficial or record owner of our stock. Any such submission must be accompanied by the written consent of the proposed nominee to be named as a nominee and to serve as a director if elected. This procedure does not affect the deadline for submitting other stockholder proposals for inclusion in the proxy statement, nor does it apply to questions a stockholder may wish to ask at an annual meeting. Additional information regarding submitting stockholder proposals is set forth in our Bylaws. Stockholders may request a copy of the bylaw provisions relating to stockholder proposals from our Corporate Secretary.
Stockholder Communications with our Board of Directors
Our Board of Directors has a formal process by which stockholders may communicate with our Board or any of our directors or officers. Stockholders who wish to communicate with our Board of Directors or any of our directors or officers may do so by sending written communications addressed to such person or persons in care of Corporate Secretary, Arena Pharmaceuticals, Inc., 136 Heber Avenue, Suite 204, Park City, Utah 84060. Each communication must set forth the name and address of the Company stockholder on whose behalf the communication is sent and the number of Company shares that are owned beneficially by such stockholder as of the date of the communication. All such communications will be compiled by our Corporate Secretary and submitted to the addressees on a periodic basis. If our Board of Directors modifies this process, we will post the revised process on our website.
Compensation Committee Interlocks and Insider Participation
Drs. Dallas and Fetzer, Ms. Jarrett, and Mr. Randall Woods served on the Compensation Committee during 2020. No director serving on the Compensation Committee during 2020 was, at any time during or before such fiscal year, one of our employees. None of our executive officers served during 2020 as a member of the board of directors or compensation committee of any other entity that had one or more of its executive officers serving as members of our Board of Directors or the Compensation Committee.
Certain Relationships and Related Transactions
Except for the compensation arrangements between us and our executive officers and directors described below under “Compensation Discussion and Analysis,” since January 1, 2020, we have not been a party to any transactions involving more than $120,000 and in which any director, nominee for director, executive officer, holder of more than 5% of our common stock or any immediate family member of the foregoing has a direct or indirect material interest, nor are any such transactions currently proposed.
Policies and Procedures for the Review and Approval of Transactions with Related Persons
The Audit Committee’s charter requires the Audit Committee to review and approve any related-person transactions. In considering related-person transactions, the Audit Committee considers the relevant available facts and circumstances, including, but not limited to, (i) the risks, costs and benefits to Arena, (ii) the impact on a director’s independence in the event the related party is a director, immediate family member of a director or an entity with which a director is affiliated, (iii) the terms of the transaction, (iv) the availability of other sources for comparable services or products, and (v) the terms available to or from, as the case may be, unrelated third parties or to or from employees generally. In the event a director has an interest in the proposed transaction, the director must recuse himself or herself from the deliberations and approval. In determining whether to approve, ratify or reject a related-person transaction, the Audit Committee evaluates whether, in light of known circumstances, the transaction is in, or is not inconsistent with, our best interests and those of our stockholders.
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ADVISORY VOTE ON EXECUTIVE COMPENSATION (PROPOSAL 2)
At our 2017 Annual Meeting of Stockholders, the stockholders indicated their preference that we solicit a non-binding advisory vote on the compensation of our named executive officers, commonly referred to as a “say-on-pay vote,” every year. Our Board of Directors has adopted a policy that is consistent with that preference. Therefore, the next say-on-pay vote is expected to be solicited at the 2022 Annual Meeting of Stockholders. 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.
The compensation of our named executive officers subject to the vote is disclosed in the “Compensation Discussion and Analysis,” the compensation tables and the related narrative disclosure contained in this proxy statement. As discussed in those disclosures, we believe that our compensation policies and decisions are focused on pay-for-performance principles, aligned with our stockholders’ interests and consistent with current market practices. Compensation of our named executive officers is intended to enhance stockholder value by attracting, motivating and retaining qualified individuals to perform at the highest of professional levels and to contribute to our growth and success. Approximately 94% of the votes cast on the say-on-pay proposal at our 2020 Annual Meeting of Stockholders voted in support of the compensation paid to our named executive officers for 2019.
We urge stockholders to read the below “Compensation Discussion and Analysis” and the compensation tables and related narrative, which describe in more detail how our executive compensation policies and procedures operate and are designed to achieve our compensation objectives. Our Board of Directors and the Compensation Committee believe that our compensation policies and practices are effective in implementing our compensation philosophy and in helping us achieve our strategic goals.
Accordingly, our Board of Directors is asking the stockholders to indicate their support for the compensation of our named executive officers as described in this proxy statement by casting a non-binding advisory vote “FOR” the following resolution:
“RESOLVED, that the compensation paid to Arena Pharmaceuticals, Inc.’s named executive officers, as disclosed pursuant to Item 402 of Regulation S-K, including the Compensation Discussion and Analysis, compensation tables and narrative discussion, is hereby APPROVED.”
Because the vote is advisory, it is not binding on us or our Board of Directors. Nevertheless, the views expressed by our stockholders, whether through this vote or otherwise, are important to us and our Board of Directors and, accordingly, our Board and the Compensation Committee intend to consider the results of this vote in making determinations in the future regarding executive compensation arrangements.
Advisory approval of this proposal requires a majority of the votes cast by stockholders entitled to vote on the proposal voting “FOR” approval. Abstentions and broker non-votes will have no effect.
 
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS
VOTE “FOR” THE APPROVAL OF THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS, AS DISCLOSED IN THIS PROXY STATEMENT.
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Compensation and Other Information Concerning Executive Officers, Directors and Certain Stockholders
Security Ownership of Certain Beneficial Owners and Management
The following table sets forth certain information known to us with respect to the beneficial ownership of our common stock as of March 31, 2021, by:
Each person, group or entity who is the beneficial owner of more than 5% of our common stock;
Each director and nominee for director;
Our Named Executive Officers (as defined below in “Compensation Discussion and Analysis”); and
All current directors and executive officers as a group.
Unless otherwise indicated in the footnotes below, the address for the beneficial owners listed in this table is in care of Corporate Secretary, Arena Pharmaceuticals, Inc., 136 Heber Avenue, Suite 204, Park City, Utah 84060. This table is based on information supplied by our current and former executive officers, directors and principal stockholders and Schedules 13D, 13G and other filings made with the SEC on or before March 31, 2021. Unless otherwise indicated in the footnotes to this table and subject to community property laws where applicable, we believe that the stockholders named in this table have sole voting and investment power with respect to the shares indicated as beneficially owned. Applicable percentages are based on 60,594,481 shares of common stock outstanding on March 31, 2021, as adjusted as required by the rules promulgated by the SEC. This table includes shares issuable pursuant to stock options and other rights to purchase shares of our common stock exercisable within 60 days of March 31, 2021.
Name of Beneficial Owner
Shares Beneficially
Owned
Percentage
of Total
Greater than 5% Stockholders
Wellington Management Company, LLP(1)
6,289,051
10.38%
BlackRock, Inc.(2)
5,390,560
8.90%
The Vanguard Group(3)
5,263,839
8.69%
Avoro Capital Advisors, LLC(4)
4,190,000
6.91%
Directors and Named Executive Officers
 
 
Amit D. Munshi(5)
706,083
1.15%
Vincent E. Aurentz(6)
286,475
*
Kevin R. Lind(7)
235,253
*
Steven W. Spector, J.D.(8)
179,044
*
Robert Lisicki(9)
135,482
*
Tina S. Nova, Ph.D.(10)
48,513
*
Garry Neil, M.D.(11)
46,954
*
Laurie Stelzer(12)
46,744
*
Joan Schmidt(13)
46,441
*
Oliver Fetzer, Ph.D.(14)
45,429
 
Jayson Dallas, M.D.(15)
44,112
*
Jennifer Jarrett(16)
42,787
*
Chris Cabell, M.D., MHS, FACC(17)
31,230
*
Kieran T. Gallahue(18)
23,925
*
Manmeet S. Soni(19)
17,552
*
Katharine Knobil(20)
5,431
*
Nawal Ouzren(21)
624
*
All current directors and executive officers as a group (14 persons)(22)
1,496,552
2.41%
*
Less than one percent
(1)
Wellington Management Group LLP had shared voting power with respect to 5,521,833 shares and shared dispositive power with respect to 6,289,051 shares. The principal business office of Wellington Management Company LLP is 280 Congress Street, Boston, Massachusetts 02210.
(2)
BlackRock, Inc., had sole voting power with respect to 5,279,905 shares and sole dispositive power with respect to 5,390,560 shares. The principal business office of BlackRock, Inc. is 55 East 52nd Street, New York, New York 10055.
(3)
The Vanguard Group had sole voting power with respect to 0 shares, sole dispositive power with respect to 5,153,068 shares, shared voting power with respect to 64,094 shares and shared dispositive power with respect to 110,771 shares. The principal business office of The Vanguard Group is 100 Vanguard Blvd., Malvern, Pennsylvania 19355
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(4)
Avoro Capital Advisors LLC had the sole voting power with respect to 4,190,000 shares and sole dispositive power with respect to 4,190,000. The principal business office of Avoro Capital Advisors LLC is 110 Greene Street, Suite 800, New York, NY 10012.
(5)
Includes 698,333 shares issuable to Mr. Munshi upon the exercise of stock options that are exercisable within 60 days of March 31, 2021.
(6)
Includes 259,475 shares issuable to Mr. Aurentz upon the exercise of stock options that are exercisable within 60 days of March 31, 2021.
(7)
Represents 231,796 shares issuable to Mr. Lind upon the exercise of stock options that are exercisable within 60 days of March 31, 2021.
(8)
Represents 161,607 shares issuable to Mr. Spector upon the exercise of stock options that are exercisable within 60 days of March 31, 2021.
(9)
Represents 126,041 shares issuable to Mr. Lisicki upon the exercise of stock options that are exercisable within 60 days of March 31, 2021.
(10)
Includes 34,383 shares issuable to Dr. Nova upon the exercise of stock options that are exercisable within 60 days of March 31, 2021.
(11)
Includes 41,250 shares issuable to Dr. Neil upon the exercise of stock options that are exercisable within 60 days of March 31, 2021.
(12)
Represents 38,500 shares issuable to Ms. Stelzer upon the exercise of stock options that are exercisable within 60 days of March 31, 2021.
(13)
Represents 38,500 shares issuable to Ms. Schmidt upon the exercise of stock options that are exercisable within 60 days of March 31, 2021.
(14)
Represents 41,250 shares issuable to Dr. Fetzer upon the exercise of stock options that are exercisable within 60 days of March 31, 2021.
(15)
Represents 41,250 shares issuable to Mr. Dallas upon the exercise of stock options that are exercisable within 60 days of March 31, 2021.
(16)
Represents 37,083 shares issuable to Ms. Jarrett upon the exercise of stock options that are exercisable within 60 days of March 31, 2021.
(17)
Represents 29,829 shares issuable to Mr. Cabell upon the exercise of stock options that are exercisable within 60 days of March 31, 2021.
(18)
Represents 16,527 shares issuable to Mr. Gallahue upon the exercise of stock options that are exercisable within 60 days of March 31, 2021.
(19)
Represents 14,096 shares issuable to Mr. Soni upon the exercise of stock options that are exercisable within 60 days of March 31, 2021.
(20)
Represents 5,346 shares issuable to Ms. Knobil upon the exercise of stock options that are exercisable within 60 days of March 31, 2021.
(21)
Represents 624 shares issuable to Ms. Ouzren upon the exercise of stock options that are exercisable within 60 days of March 31, 2021.
(22)
Includes 1,392,658 shares issuable upon the exercise of stock options held by our current directors and executive officers that are exercisable within 60 days of March 31, 2021.
Information About Our Executive Officers
Our executive officers are appointed by our Board of Directors and serve at the discretion of our Board. The following table sets forth information regarding our executive officers.
Name
Age
Position
Current executive officers
Amit D. Munshi
53
President and Chief Executive Officer
Laurie Stelzer
53
Executive Vice President and Chief Financial Officer (beginning March 16, 2020)
Vincent E. Aurentz
53
Executive Vice President and Chief Business Officer
Robert Lisicki
54
Executive Vice President and Chief Commercial Officer
Joan Schmidt
57
Executive Vice President, General Counsel and Secretary (beginning March 2, 2020)
Certain former executive officers
Kevin R. Lind
45
Executive Vice President and Chief Financial Officer (through March 15, 2020)
Chris Cabell, M.D., MHS, FACC
52
Executive Vice President, Chief Medical Officer (through November 30, 2020)
Steven W. Spector, J.D.
56
Executive Vice President, General Counsel and Secretary (through March 1, 2020)
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Executive Officers
Amit D. Munshi

AGE: 53
EXPERIENCE
Amit D. Munshi – See “ELECTION OF DIRECTORS (PROPOSAL 1)” for biographical information regarding Mr. Munshi, our President and Chief Executive Officer, who is also a director nominated for reelection at the 2021 Annual Meeting.
Laurie Stelzer


AGE: 53
EXPERIENCE
Laurie Stelzer has served as our Executive Vice President and Chief Financial Officer since March 2020. Previously, Ms. Stelzer spent the last five years as the Chief Financial Officer at Halozyme Therapeutics, Inc., leading the Finance, Information Technology, Business Development, Project Management and Site Operations organizations. Prior to joining Halozyme, Ms. Stelzer held senior management roles at Shire Plc (acquired by Takeda), including Senior Vice President of Finance, Division CFO for the Regenerative Medicine Division, and Head of Investor Relations. Previously she held positions of increasing responsibility during her fifteen-year career at Amgen, Inc., spanning the areas of Finance, Treasury, Global Accounting and International/Emerging Markets. Ms. Stelzer received her B.S. in Accounting from Arizona State University, and her M.B.A. from University of California, Los Angeles, Anderson School of Management. She currently serves on the boards of Surface Oncology, Inc., an immuno-oncology company, and PMV Pharmaceuticals, Inc., a precision oncology platform company.
Vincent E. Aurentz

AGE: 53
EXPERIENCE

Vincent E. Aurentz has served as our Executive Vice President and Chief Business Officer since August 2016. Mr. Aurentz has over 30 years of experience in the biopharmaceutical industry. Previously, he was the Chief Business Officer of Epirus Biopharmaceuticals, Inc. from November 2015 to July 2016. Prior to that, Mr. Aurentz served as President and was a member of the Board of Directors of HemoShear Therapeutics, LLC from July 2013 to November 2015, where he oversaw discovery programs, scientific, and business development efforts including R&D collaborations with global pharmaceutical companies. Prior to joining HemoShear Therapeutics, Mr. Aurentz was Executive Vice President and member of the Executive Management Board at Merck KGaA (Merck Serono S.A.) where he directed R&D programs, portfolio strategy and headed all deal activity and venture investments. Mr. Aurentz is a former Executive Vice President at Quintiles and a Co-founder and Managing Director of a venture capital and advisory business. He was a partner with CSC Healthcare, the life sciences strategic management consulting division of Computer Sciences Corporation, after starting his career and working for 8 years at Andersen Consulting (now Accenture). In July 2016, Epirus filed a voluntary Chapter 7 petition in the United States Bankruptcy Court for the District of Massachusetts. Mr. Aurentz serves on the Board of Directors for Longboard Pharmaceuticals, Inc., a pharmaceutical company developing therapeis to treat rare neurological diseases. Mr. Aurentz received a B.S. in mathematics from Villanova University.
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Robert Lisicki

AGE: 54
EXPERIENCE

Robert Lisicki has served as our Executive Vice President and Chief Commercial Officer since November 2018. Prior to joining Arena, Mr. Lisicki most recently served as General Manager, Vice President Cardio-Metabolic and Inflammation at Regeneron Pharmaceuticals, Inc., a biotechnology company, from May 2018 to November 2018. Prior to joining Regeneron, he was Senior Vice President of Sales and Marketing and Chief Customer Officer at Daiichi Sankyo, Inc., a global pharmaceutical company, from August 2014 to April 2018. Prior to Daiichi Sankyo, Mr. Lisicki held several management positions at Amgen Inc., including Vice President and General Manager, responsible for a 700+ person sales force in the U.S. His U.S. leadership experiences included such market shaping products as Enbrel and Prolia. During his tenure he also covered several ex-U.S. regions, and worked as an International Franchise Lead running the development and international strategies and business plans across Amgen’s portfolio including Nephrology, Cardiology, Bone and Oncology. Prior to joining Amgen, Mr. Lisicki held various sales and marketing positions at Johnson & Johnson Corporation. Mr. Lisicki brings over 20 years of experience in biopharmaceutical management, sales and marketing to Arena. Mr. Lisicki holds a B.S. in Finance and Business Administration from the State University of New York at Albany.
Joan Schmidt, J.D.

AGE: 57
EXPERIENCE

Joan Schmidt, J.D., has served as our Executive Vice President and General Counsel since March 2020. From June 2018 to February 2020, Ms. Schmidt served as Executive Vice President, Chief Legal Officer and Secretary at DBV Technologies SA, a French, publicly traded, clinical-stage biopharmaceuticals company. From July 2015 to May 2018, Ms. Schmidt was Executive Vice President, Legal Affairs and Human Resources, and General Counsel at Biotronik, Inc., the US subsidiary of Biotronik AG, a privately held, global commercial-stage medical device company. Ms. Schmidt’s experience includes 20 years of increasing responsibility at Novo Nordisk in both the United States and Europe from May 1995 to May 2015, most recently as Corporate Vice President, Legal Affairs of Novo Nordisk A/S, a publicly traded, Fortune 100 company. Ms. Schmidt earned a J.D. from Pace University and a B.A. from the University of Connecticut.
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Certain Former Executive Officers
Kevin R. Lind

AGE: 45
EXPERIENCE

Kevin R. Lind serves as President and Chief Executive Officer, and as a director, of Longboard Pharmaceuticals, Inc. (formerly Arena Neuroscience, Inc.), a pharmaceutical company. Previously, Mr. Lind served as our Executive Vice President and Chief Financial Officer from June 2016 until his appointment to Arena Neuroscience in March 2020. Prior to joining the Company, Mr. Lind was a Principal focused on healthcare at TPG Special Situations Partners, a global investment firm, from January 2009 to June 2016. Mr. Lind was a member of the TPG Pharma Partners effort at TPG-Axon, a global investment firm, from 2006 to 2008. He served in various capacities as a healthcare investment banker at Lehman Brothers, Inc., a former global financial services firm, from 1998 to 2002 and 2004 to 2006. Mr. Lind received a B.S. from Stanford University in Biological Sciences and an M.B.A. from UCLA Anderson School of Management.
Chris Cabell, M.D.,
M.H.S., FACC


AGE: 52
EXPERIENCE

Chris Cabell, M.D., M.H.S., FACC, served as our Executive Vice President, Head of Research and Development, and Chief Medical Officer from June 2020 until November 2020. From August 2019 to June 2020 he served as our Senior Vice President and Chief Medical Officer, and October 2017 to July 2019 he served as our Senior Vice President and Head of Clinical Development. Over the past nearly 3 years, Dr. Cabell has been a member of the Arena senior leadership team and has been instrumental in helping to develop and shape the R&D organization which has seen a significant growth and maturity, from less than 40 team members to an organization of more than 225 experienced professionals. In addition, Dr. Cabell, as Chief Medical Officer, has been accountable for all Arena regulatory interactions and commitments over the past year. Prior to joining Arena, Dr. Cabell spent 10 years at IQVIA (formerly Quintiles, Inc. and QuintilesIMS) in a variety of executive positions including Chief Medical and Scientific Officer, and Global Head of Medical and Project Management, managing an international organization of over 1600 staff. Prior to joining IQVIA, Dr. Cabell was on faculty at Duke University, where he led efforts on multiple important collaborative consortia including the Cardiac Safety Research Consortium, a public/private partnership between academic medical centers, the Food and Drug Administration (FDA), and Industry. He is a Fellow of the American College of Cardiology with over 100 peer reviewed publications including in the New England Journal of Medicine, JAMA, and Annals of Internal Medicine. Board certified in both internal medicine and cardiovascular diseases, Dr. Cabell is an honors graduate of the Pennsylvania State University and earned his Doctor of Medicine and Masters in Health Science degrees from Duke University.
Steven W. Spector,
J.D.


AGE: 56
EXPERIENCE

Steven W. Spector, J.D., served as our Executive Vice President and General Counsel from February 2012 to March 2020, and previously served as our Senior Vice President and General Counsel from June 2004 to February 2012 and as our Vice President and General Counsel from October 2001 to June 2004. Mr. Spector also served as our Secretary from November 2001 to March 2020. Mr. Spector is an advisory director and a former President of the Association of Corporate Counsel, San Diego, and an Adjunct Professor at the University of San Diego School of Law. Prior to joining Arena, Mr. Spector was a partner with the law firm of Morgan, Lewis & Bockius LLP, where he worked from 1991 to October 2001. Mr. Spector holds a B.A. and a J.D. from the University of Pennsylvania.
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Compensation Discussion and Analysis
Our executive compensation programs are designed to attract, motivate and retain qualified and talented executives, incentivize them to achieve our business objectives, and reward them for superior short- and long-term performance. This Compensation Discussion and Analysis describes the key elements of our executive compensation program and compensation decisions for our named executive officers, or NEOs, for 2020 and material changes for 2021. The Compensation Committee of the Board of Directors (the “Compensation Committee”), with input from its independent compensation consultant, oversees these programs and determined compensation for our NEOs.
Our 2020 NEOs are listed below and fall into three categories: (1) “Continuing NEOs” are executives who were not new hires and did not discontinue employment during the year, (2) “New Hire NEOs” are executives who were hired during the year, and (3) “Former NEOs” are former executives who discontinued their employment with the Company during the year.
NEO
Position
Amit D. Munshi
President and Chief Executive Officer (Continuing NEO)
Laurie Stelzer
Executive Vice President and Chief Financial Officer (New Hire NEO—joined in March 2020)
Vincent E. Aurentz
Executive Vice President and Chief Business Officer (Continuing NEO)
Robert Lisicki
Executive Vice President and Chief Commercial Officer (Continuing NEO)
Joan Schmidt, J.D.
Executive Vice President, General Counsel and Secretary (New Hire NEO—joined in March 2020)
Kevin R. Lind
Former Executive Vice President and Chief Financial Officer (Former NEO—ceased in March 2020)(1)
Chris Cabell, M.D., M.H.S., FACC
Former Executive Vice President, Head of Research and Development, and Chief Medical Officer (Former NEO—ceased in November 2020)(2)
Steven W. Spector, J.D.
Former Executive Vice President, General Counsel and Secretary (Former NEO—ceased in March 2020)(3)
(1)
Mr. Lind ceased serving as an executive officer in March 2020 at which time he transitioned to the role of President and Chief Executive Officer of our wholly owned subsidiary Arena Neuroscience. Mr. Lind remained an employee of Arena during his service as President and Chief Executive Officer of Arena Neuroscience until October 2020 when Arena Neuroscience was spun out as Longboard Pharmaceuticals and ceased to be our wholly-owned subsidiary.
(2)
Dr. Cabell ceased serving as an executive officer and employee in November 2020 and continues to provide advisory services to us.
(3)
Mr. Spector ceased serving as an executive officer and employee in March 2020 and continued to provide consulting services to us through the end of 2020.
Executive Summary
We are a biopharmaceutical company focused on developing novel, transformational medicines with optimized pharmacology and pharmacokinetics for patients globally. Our proprietary, internally developed pipeline includes multiple potentially first- or best-in-class assets with broad clinical utility.
Business Highlights
Since 2016, our leadership team has led the turnaround and transformation of Arena, refocusing on our pipeline, delivering on key milestones, divesting historical obligations that were not aligned with our business strategy, rebuilding the organization and stockholder base, and focusing on the financial strength of the Company. As a direct result of these efforts, Arena has seen its market capitalization grow, supported by strong institutional ownership, and has secured a robust financial foundation with approximately $1.1 billion in cash, cash equivalents and investments as of December 31, 2020.
This transformation took place under the leadership of Mr. Munshi, who was hired and appointed President and Chief Executive Officer effective May 11, 2016, and has since hired an entirely new executive team and brought new perspectives to our Board of Directors. The change in our focus required not only new leadership, but also a significant buildout of our drug development capabilities and other operations, with approximately 439 employees hired from 2016 through 2020. During this period we have significantly advanced etrasimod, olorinab and APD418 in clinical development and negotiated an $800 million upfront payment for the global license agreement for ralinepag with United Therapeutics.
Arena is primed for and focused on the next stage of its evolution with multiple clinical stage assets deployed across 8 diseases and 3 therapeutic areas, with additional preclinical compounds in the pipeline, and multiple ongoing global trials that are expected to yield up to 8 Phase 2 and Phase 3 data readouts between 2021 and 2022 and generate multiple Investigational New Drug applications (INDs) over the next 5 years.
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Key 2020 achievements reflected strong scientific, clinical, and business performance, which we believe will create long-term value for our stockholders:
Corporate:
Formed and spun out Arena Neuroscience into Longboard Pharmaceuticals
Executed a multi-target inflammation and immunology (I&I) research collaboration with Beacon Discovery
Maintained business continuity throughout COVID-19 pandemic as illustrated by the execution and enrollment completion of key clinical trials during 2020
Continued to grow our headcount 25% and successfully transitioned the workforce to virtual working conditions which leveraged technology to ensure ongoing collaboration
Attained the maximum stock price target established under the 2019 Performance Restricted Stock Unit program of $75, representing an 83% TSR over the grant date fair market value, and delivered shares to participants at 200% of the established target grant.
Etrasimod:
Initiated two new clinical programs in Eosinophilic Esophagitis (EoE) and Alopecia Areata (AA)
Completed and readout ADVISE Study in Atopic Dermatitis
Met pre-specified enrollment target for ELEVATE UC52 Study
Olorinab:
Completed CAPTIVATE Study enrollment for patients with pain due to IBS
APD418:
Conducted successful Phase I study of APD418 in healthy volunteers and commenced readying for Phase II program
The transformation of our business has created a significant amount of stockholder value. Our closing stock price (adjusted to give effect to our 2017 reverse stock split) has increased from $15.50 on May 11, 2016, the date Mr. Munshi’s appointment was effective, to $76.83 on December 31, 2020, reflecting a 496% increase in Total Stockholder Return, or TSR, during that period. TSR during 2020 was 69.2%, which exceeded the Nasdaq Biotech Index return of 26.4% in 2020.
Compensation Highlights
Target Cash: Continuing NEO 2020 base salaries increased approximately 4% (ranging from 3% to 5%) from 2019 base salaries and target bonus percentages remained flat, resulting in target cash compensation that was generally within 10% of the median of our 2019 Peer Group.
Equity Awards: Continuing NEOs received annual 2020 equity awards in the form of stock options, at grant values below the median of the 2019 Peer Group. Each of our Continuing NEOs held outstanding PRSUs granted in 2019 that were eligible to vest upon meeting rigorous performance goals that we believed continued to provide significant incentive and retention value. New Hire NEOs, received 2020 equity awards in the form of stock options and PRSUs that reflected similar terms to the PRSUs held by our Continuing NEOs that were granted in 2019 and remained outstanding during 2020.
Performance Results and Payouts: We achieved our annual 2020 corporate goals at 106% of target (COVID-19 had minimal impact on business performance during 2020) and due to our strong TSR, we met our stretch PRSU stock price performance goals in 2020. As a result, we paid 2020 performance bonuses based on such corporate achievement and PRSUs granted in 2019 and 2020 completed vesting in early 2021.
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Total Compensation: Our CEO’s 2020 total compensation, as reported in the Summary Compensation Table, falls below the median of the 2019 Peer Group and the 2020 Peer Group and was about 23% lower in 2020 than 2019. Our CEO and other NEO total compensation for 2020, as reported in the Summary Compensation Table, consisted primarily of performance-based ‘at-risk’ pay that was dependent on our company performance, as reflected below.

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In March 2021, we granted PRSUs to each of our NEOs who were employed with the Company on the grant date. This is described further in the Equity Compensation portion of this Compensation Discussion and Analysis section below.
Compensation Practices and Governance Highlights
Pay for Performance
Significant link between the compensation of our NEOs and the achievement of our short- and long-term business objectives through annual cash incentives that are tied to key annual scientific, clinical, and business milestones and with long-term equity compensation that only rewards creation of stockholder value through stock options and performance-based RSUs tied to achieving considerably higher stock price goals that we believe can only be met if business objectives are achieved
Stockholder Alignment
Alignment of the interests of our NEOs with those of our stockholders through the use of long-term equity incentives that require stock price growth
Compensation Governance
100% independent directors on the Compensation Committee Compensation Committee meets regularly in executive session without management present Independent compensation consultant, Frederic W. Cook & Co., reports directly to the Compensation Committee Conduct an annual risk assessment of our compensation policies and practices
Equity Plan and Award Features
Maximum seven-year term for stock options

Stock option exercise prices are set at the closing price of our common stock on the date of grant as reported on the Nasdaq Global Select Market (or, if there is no closing price on such date, on the last preceding date on which a closing price was reported)

No repricing of underwater stock options without prior stockholder approval

Performance-based equity awards
Change in Control Provisions
No excessive change in control payments

Change in control payments contingent upon “double-trigger”

No tax gross-ups on severance or change in control benefits
Post-termination/Retirement Benefits
No post-termination retirement or pension benefits
Prohibition on Hedging, Margin Loans and Pledging
Prohibit hedging, purchases on margin, and pledging of our common stock by all employees and directors
Clawback Policy
Maintain policy to seek repayment of incentive-based compensation in the event we experience certain accounting restatements
Stock Ownership Guidelines
Maintain stock ownership guidelines to promote executive and director stock ownership
2020 Say-on-pay Vote
At our 2020 Annual Meeting of Stockholders, approximately 94% of the votes cast on the say-on-pay proposal voted in support of the compensation paid to our named executive officers for 2019. While this vote was only advisory and not binding, the Compensation Committee considered the results of the vote in the context of our overall compensation philosophy, as well as our compensation philosophies, policies, decisions and performance. The Compensation Committee believes that the 2020 stockholder vote generally endorsed our compensation philosophy and the decisions made for 2019. After considering this vote, the Compensation Committee decided not to make significant changes to its fundamental compensation philosophies and policies in 2020. Additionally, in 2021 the Company engaged in stockholder outreach regarding its executive compensation program and other ESG matters. The purpose of the outreach was to discuss the Company’s perspective on each topic and solicit input from key shareholders that would be used to make future decisions.
Compensation Philosophy, Objectives and Development
The primary principles of our compensation strategy include:
Compensation decisions are driven by a pay-for-performance philosophy; and
Compensation should reflect corporate and individual performance.
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Our overall compensation philosophy and objective is to maintain a compensation program for our NEOs that helps us attract and retain highly qualified individuals and motive them to execute on our business strategy and positively contribute to our success by aligning their interests with those of our stockholders, which we believe will result in enhancing stockholder value. The compensation programs for our NEOs are designed to provide compensation opportunities that are tied to our overall corporate performance, as well as their individual performance. NEOs’ compensation includes three key elements: (i) base salary; (ii) performance-based annual cash incentives; and (iii) equity compensation. Our compensation strategy emphasizes at-risk compensation for each NEO by using both performance-based annual incentives and performance-based long-term equity awards in the form of stock options and periodic awards of PRSUs. Stock options are utilized because they only provide value if the stock price increases. Our stock options have a seven-year term which generally aligns with a clinical development timeline.
To further emphasize our performance-based compensation philosophy, in 2019 we added PRSUs as a component of annual equity awards for our NEOs and these 2019 PRSUs were in place for our Continuing NEOs during 2020. The 2019 PRSUs were structured to provide value only if the stock price increased to three specified price targets that represented significant appreciation over the closing price on the date the PRSUs were granted and remained at or above such prices for a sustained period of time. The ‘threshold’ price required for any PRSUs to vest ($60) represented nearly a 50% increase in our stock price from the grant date price, the ‘target’ price ($67.50) represented approximately a 65% increase in our stock price from the grant date price and the ‘stretch’ price ($75) represented approximately an 83% increase our stock price from the grant date price. We continued this practice by granting PSUs to each of our New Hire NEOs in 2020 that reflected similar terms to the 2019 PSUs, except they did not include the ‘threshold’ price (due to our stock price appreciation) and required an extended service period in order to earn any shares. The Compensation Committee believes that the combination of stock options and PRSUs significantly aligns the interests of NEOs with those of our stockholders because there is no ability to realize a gain on either type of equity award without increasing the stock price and, with respect to the PRSUs, without significant and sustained stock price increases. Performance during 2020 against the PRSU stock price goals resulted in vesting of all of the PRSUs, which was viewed as an outcome driven by high performance, as shown by shareholder return that was considerably higher than the Nasdaq Biotech Index and well above the median of our peer group during 2020.
Consistent with our pay-for-performance philosophy, and the long product development life cycles in the pharmaceuticals industry, the Compensation Committee links the compensation of our executive officers to performance by emphasizing equity compensation opportunities for long-term performance and cash incentives for near-term goal alignment. Consistent with this philosophy, the total compensation provided to our executive officers will vary from year to year and will vary between executive officers based on corporate performance, including performance against annual goals that are pre-established by the Compensation Committee, as well as individual performance. Our NEOs are also entitled to market-competitive health and welfare benefits, and as described below, they may be entitled to receive additional benefits if certain criteria are met at termination of employment.
Program Development and Role of Compensation Committee, Compensation Consultant and Management
As part of the process for setting the compensation of our NEOs, our Chief Executive Officer, working with our Chief Human Capital Officer, provides the Compensation Committee with his performance assessments of the Company and of the individual NEOs and recommends to the Compensation Committee base salaries, target annual cash incentive (as percentage of base salary), annual cash incentive payouts (actual incentive paid based on performance against goals), and equity-based compensation for our NEOs other than the Chief Executive Officer. The Compensation Committee considers our Chief Executive Officer’s input and can accept, reject or modify these recommendations in its discretion. The Compensation Committee may consult with compensation consultants, legal counsel and other advisors in designing our compensation program, including in evaluating the competitiveness of individual compensation packages and in relation to our performance goals. The Compensation Committee also considers peer company data and factors such as the past, current and expected contributions of each NEO, our corporate performance and strategic focus, global economic conditions, the mix of compensation that would be most appropriate for each NEO, and such officer’s particular responsibilities, experience, level of accountability and decision authority.
The Compensation Committee meets in executive session without management. Various members of management may attend committee meetings, and they and other employees, as well as outside advisors or consultants, may be invited by the Compensation Committee to make presentations, provide financial, competitive market, or other background information or advice. None of our NEOs was present during the Compensation Committee’s determinations regarding his/her own compensation.
The Compensation Committee has retained Frederic W. Cook & Co., Inc., or FW Cook, as its compensation consultant. FW Cook reports directly to the Compensation Committee and takes its direction from the Chair of the Compensation Committee,
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working with management on select issues under the Compensation Committee’s oversight. The Compensation Committee retained FW Cook in 2019 and 2020 to provide data, context, and advice regarding executive officer compensation and our peer group.
Peer Groups Used in Program Development and Compensation Decisions
Our Compensation Committee generally does not target the amount of compensation for our NEOs relative to a peer group of companies, but it does consider peer data as context for purposes of assessing the competitiveness of the executive compensation program. An individual NEO may earn more or less than the peer group median depending on factors, including the individual’s experience, role, and past and expected future contribution and performance.
2019 Peer Group
In the second quarter of 2019, the Compensation Committee reviewed and updated our peer group to include the group of companies set forth below that were similar to Arena as measured by industry segment, financial criteria/market capitalization, headcount, asset pipeline, location and commercial stage. We refer to this peer group of 18 companies as the “2019 Peer Group.” For example, these companies had 2018 12-month average market capitalizations of between $1.7 billion and $8.6 billion with a median 12-month average market capitalization of $3.2 billion. In the second quarter of 2019 when these peer data were reviewed, our market capitalization was $2.7 billion, so Arena were similar in size to the trailing market capitalization of the 2019 Peer Group companies when they made the compensation decisions disclosed in their 2019 proxy statements. The 2019 Peer Group data was considered in reviewing our executive compensation program for 2020, including the determination of 2020 base salaries, target cash incentive compensation, and annual equity awards.
2019 Peer Group
Acadia Pharmaceuticals Inc.
Acceleron Pharma, Inc.
Agios Pharmaceuticals, Inc.
Aimmune Therapeutics, Inc.
Array BioPharma Inc.
bluebird bio, Inc.
Blueprint Medicines Corporation
FibroGen, Inc.
Global Blood Therapeutics, Inc.
Halozyme Therapeutics, Inc.
Immunomedics, Inc.
Ironwood Pharmaceuticals, Inc.
MyoKardia, Inc.
Neurocrine Biosciences, Inc.
Sage Therapeutics, Inc.
Sarepta Therapeutics, Inc.
Ultragenyx Pharmaceutical Inc.
United Therapeutics Corporation
2020 Peer Group
In the second quarter of 2020, the Compensation Committee reviewed and updated our peer group again using the same criteria as applied for 2019 and developed a new peer group of 18 companies (referred to as the “2020 Peer Group”. These companies had 2019 12-month average market capitalizations of between $1.8 billion and $8.6 billion, with a median 12-month average market capitalization of $3.2 billion. In the second quarter of 2020 when these peer data were reviewed, our market capitalization was $3.7 billion, so Arena were larger than the median trailing market capitalization of the 2020 Peer Group companies when they made the compensation decisions disclosed in their 2019 proxy statements. The 2020 Peer Group data is mostly used as a reference point for 2021 decisions about cash and long-term incentive compensation. The 2020 peer group was the same as the 2019 peer group except that four companies were removed (Aimmune, Array BioPharmaceuticals, Halozyme, and United Therapeutics), with four companies added (Arrowhead Pharmaceuticals, Intercept Pharmaceuticals, Mirati Therapeutics, and Nektar Therapeutics).
2020 Peer Group
Acadia Pharmaceuticals Inc.
Acceleron Pharma, Inc.
Agios Pharmaceuticals, Inc.
Arrowhead Pharmaceuticals
bluebird bio, Inc.
Blueprint Medicines Corporation
FibroGen, Inc.
Global Blood Therapeutics, Inc.
Immunomedics, Inc.
Intercept Pharmaceuticals
Ironwood Pharmaceuticals, Inc.
Mirati Therapeutics
MyoKardia, Inc.
Nektar Therapeutics
Neurocrine Biosciences, Inc.
Sage Therapeutics, Inc.
Sarepta Therapeutics, Inc.
Ultragenyx Pharmaceutical Inc.
Compensation Consultant Conflict of Interest Analysis
The Compensation Committee has determined that the work of FW Cook and the individual compensation advisors employed by FW Cook does not create any conflict of interest. In making that determination, the Compensation Committee took into consideration the following factors: (i) the provision of other services to Arena by FW Cook; (ii) the amount of fees we paid
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FW Cook as a percentage of FW Cook’s total revenue; (iii) FW Cook’s policies and procedures that are designed to prevent conflicts of interest; (iv) any business or personal relationship of FW Cook or the individual compensation advisors employed by FW Cook with an Arena executive officer; (v) any business or personal relationship of the individual compensation advisors with any member of the Compensation Committee; and (vi) any Arena stock owned by FW Cook or the individual compensation advisors employed by the consultant. During 2020, we paid FW Cook fees that constituted less than 1% of FW Cook’s total revenue.
2020 Compensation Decisions
The 2020 NEO compensation program is best understood by reference to the decisions for the Continuing NEOs because compensation for the New Hire NEOs and the Former NEOs both reflect specific one-time circumstances related to each individual’s joining or separating from employment with Arena. In general, decisions for the New Hire NEOs were made to attract their employment with Arena, while decisions for Former NEOs were made based on either pre-existing severance plans or the individual circumstance surrounding their departure: compensation decisions for Kevin Lind reflected his transition from NEO at Arena to President and Chief Executive Officer of our subsidiary Arena Neuroscience, which recently listed on the Nasdaq as the standalone company Longboard Pharmaceuticals.
Base Salary
The purpose of base salary is to provide fixed compensation to attract, retain and motivate executives with the qualifications desired for the individual position. The base salary for our NEOs is influenced by a number of factors, including the individual’s position, scope of responsibilities, breadth and depth of experience, performance to date, expected future contribution, and the overall mix of base salary, performance-based cash incentives and equity compensation.
In early 2020, the Compensation Committee approved base pay increases from 2019 levels for our Continuing NEOs and to Kevin Lind, for whom the transition to President and Chief Executive Officer of the wholly owned Arena Neurosciences subsidiary had not yet been finalized. These salary increases, which followed positive 2019 TSR, included consideration of median target cash compensation of the 2019 Peer Group. The 2020 annual base salaries for our NEOs for their employment services during 2020 were as follows:
NEO
2019 Base Salary
2020 Base Salary
Increase
(%)
Amit D. Munshi
Continuing NEO
$660,000
$693,000
5.0%
Laurie Stelzer
New Hire NEO
$480,000
Vincent E. Aurentz
Continuing NEO
$420,240
$435,369
3.6%
Robert Lisicki
Continuing NEO
$410,000
$432,140
5.4%
Joan Schmidt
New Hire NEO
$420,000
Kevin R. Lind
Former NEO
$420,240
$432,847
3.0%
Chris Cabell, M.D., MHS, FACC(1)
Former NEO
$405,000
$425,250
5.0%
Steven W. Spector, J.D.
Former NEO
$440,232
$440,232
0.0%
(1)
Amount in the table reflects the approved base pay increase from 2019 levels in early 2020. In June 2020, the Company promoted Dr. Chris Cabell, our Senior Vice President and Chief Medical Officer, to Executive Vice President, Head of Research and Development, and Chief Medical Officer and subsequently increased Dr. Cabell’s salary to $500,000 to account for his increased responsibilities in his promoted role.
The base salaries for our New Hire NEOs were determined at the time each NEO joined us, based on the general factors above, and also considering the 2019 Peer Group Data and the amount the Compensation Committee determined was appropriate to induce such individual to join our company based on experience, scope of role, competing offers, if applicable, and expectations of pay.
Performance-Based Cash Incentives
Annual Incentive Plan. All of our NEOs were participants in the Annual Incentive Plan for 2020, except for Steven Spector due to his termination of employment early in 2020. Under the Annual Incentive Plan, each participant was assigned an incentive target that was expressed as a percentage of annual base salary. Our Chief Executive Officer’s incentive target under the Annual Incentive Plan was 70% of his annual base salary, and the other NEO participants in the 2020 bonus plan had incentive targets of 50% of their annual base salaries. These were the same incentive targets as under the Annual Incentive Plan for 2019. No amount of incentive award was guaranteed, and the maximum potential incentive award under the Annual Incentive Plan for 2020 was 150% of the target cash incentive award amount for extraordinary goal achievement in 2020. All of the 2020 goals were established by the Compensation Committee in early 2020.
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The objective of the Annual Incentive Plan was to align near-term incentives for executive officers of the Company, including our NEOs, to be consistent with stockholders and long-term corporate objectives. All participants’ potential incentive awards were based on the same 2020 corporate goals, which we believe aligns the interests of our executive officers with one another and with our stockholders. Each Annual Incentive Plan participant’s actual incentive award was based on the level of achievement of pre-established corporate goals, the quality of such achievement, the participant’s role in goal achievement and the weighting of the goals, with the Compensation Committee retaining discretion to adjust or modify actual awards, subject to the cap of 150% of the targeted award amount.
In early 2021, the Compensation Committee assessed our corporate performance against the 2020 corporate goals, from both a qualitative and quantitative perspective, and determined that we had achieved our corporate goals at an overall level of 106%. This score considers performance versus goals, as well as the success of the June financing and the manner in which the organization was able to adapt internally and clinically to the challenges of COVID. The 2020 corporate goals, the weighting of such goals, and the facts the Compensation Committee considered in determining the achievement of such goals are set forth below. The categories were similar to those used for 2019 with the weightings shifted slightly in accordance with our areas of focus for the year.
Category and Weighting
Corporate Goals
Achievement and Rationale
1.
Pipeline (85%)


 Clinical progress on
Etrasimod (APD334)

 Clinical progress on Olorinab APD418, and other assets

Build sustainable pipeline
       Achievement: 107%
       (91% weighted result)

  Met pre-specified enrollment target for ELEVATE UC52 at/near target even during COVID-19
pandemic

 Completed enrollment of ADVISE and CAPTIVATE despite the challenging context of COVID-19 pandemic
2.
Global Strategy (5%)


 Global strategic plan: Optimize global footprint in preparation for product launches and enhance portfolio value thru external engagement
       Achievement: 120%
       (6% weighted result)

 Spun out Arena Neuroscience as Longboard
Pharmaceuticals

 Executed a multi-target inflammation and immunology (I&I) research collaboration with Beacon Discovery
3.
Corporate Resource Management (10%)


 Manage cash to efficiently
reach major milestones

 Build a high-performing culture and hire, engage and retain key employees
       Achievement: 90%
       (9% weighted result)

 Raised $302M in financing in June 2020

 Increased headcount 25% (over 110 hires)
 
Overall Assessment:
 
  106% of Target Achievement
The Compensation Committee determined it was appropriate to award Mr. Munshi a bonus equivalent to our corporate performance for the year and therefore approved a bonus to Mr. Munshi equivalent to 106% of his target award. The Compensation Committee adjusted some of the other NEO’s bonuses based on its assessment of each NEO’s individual contributions towards our corporate performance (resulting in a range of 95% to 114% of each NEO’s target award). The amount of each NEO’s earned cash incentive award and target award are reflected below, with both the target and the actual award for the New Hire NEOs and former NEOs pro-rated for partial year service during 2020. Ms. Stelzer’s award amount reflected contributions above the overall corporate performance due to exceptional execution of the revamp and buildout of a global financial structure including revised tax strategies and the achievement of successful financing in June. Mr. Aurentz’s award amount reflected his leadership of the Beacon collaboration and the successful spin-out of Arena Neurosciences as Longboard Pharmaceuticals (which is publicly traded on Nasdaq as of March 12, 2021). Mr. Lisicki’s award amount reflected the instrumental preparation and buildout of our commercial organization heading towards launch. Ms. Schmidt’s award amount reflected the additional efforts of rebuilding a global legal, compliance and IP functions for long-term corporate
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growth. Mr. Lind’s award amount at target reflected his contributions at Arena Neuroscience (now Longboard Pharmaceuticals) and his achievement of most of his objectives prior to his transition to Arena Neuroscience. Dr. Cabell’s award amount below target level reflected Dr. Cabell’s contributions to pipeline goal achievement as well as certain organizational deficiencies during 2020.
NEO
Target Award
Actual Award
Amit D. Munshi
Continuing NEO
$485,100
$514,206
Laurie Stelzer
New Hire NEO
$191,475
$218,282
Vincent E. Aurentz
Continuing NEO
$217,684
$241,630
Robert Lisicki
Continuing NEO
$216,070
$239,838
Joan Schmidt
New Hire NEO
$175,574
$194,887
Kevin R. Lind
Former NEO
$178,475
$178,475
Chris Cabell, M.D., MHS, FACC
Former NEO
$212,816
$202,175
Steven W. Spector, J.D.
Former NEO
Equity Compensation
General. We believe that equity grants provide our NEOs with the opportunity to share in increases, if any, in the value of our common stock, reinforce a long-term interest in our corporate performance, and directly motivate our NEOs to maximize long-term stockholder value. The potential realized value of certain grants depends on our stock performance and all of our equity grants utilize vesting that encourage our NEOs to continue working for us long term.
The Compensation Committee determines the size and type of equity awards after evaluating various factors applicable at the time of each such grant in their totality, which has included, among other things: the particular NEO’s role and responsibilities and the Compensation Committee’s view of the officer’s individual performance; the prior equity awards granted to such individual; retentive value of prior awards; our corporate performance; the value of equity grants; comparative peer data provided by its compensation consultant; dilution to our stockholders; and TSR.
All grants to executive officers require the approval of the Compensation Committee.
2020 Equity Grants. The Compensation Committee granted each of our NEOs equity compensation in 2020 in the form of stock options, which require the price to increase in order to realize any value and for New Hire NEOs, equity compensation in the form of stock options and PRSUs. The Compensation Committee was mindful that each of our Continuing NEOs had received PRSUs in 2019 that remained outstanding and provided for the opportunity to realize significant value if we met the rigorous stock price goals, and accordingly did not grant additional PRSUs to our Continuing NEOs in 2020. The Compensation Committee felt that the mix of PRSUs and new options provided an appropriate mix of equity awards for incentive and retention purposes and was consistent with our compensation philosophy that our NEOs should have a significant proportion of their total compensation at-risk, to encourage retention, and to align their long-term compensation with the interests of our stockholders.
The Compensation Committee determined the size of the 2020 equity grants based on several factors, including:
the 2019 Peer Group competitive compensation market data;
Our high TSR for 2019, which was 16.5%
The PRSUs and prior equity awards granted to our Continuing NEOs;
Internal equity within the Executive Leadership Team; and
Potential dilution of equity grants to our stockholders.
The 2020 stock option grants to each of our NEOs are reflected in the table below. The grant date fair value of each of the stock options was below the median of 2019 Peer Group data for Continuing NEOs. The comparison to median was conducted by our independent consultant based on a comparison of annual LTI as a percent of shares outstanding. The New Hire NEOs represented slightly less than 2x the number of options as the 2020 grants to the continuing NEOs, which is consistent with Company’s framework for new hire offers, and in addition they were granted PRSUs at half the level of the awards granted in 2019 for the other executive officers since the awards were issued at a time when the threshold performance had already been achieved and continuing NEOs had half of their target PRSU award already released. At the time the new NEOs started employment, the target and maximum performance levels were not yet achieved.
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NEO
2020 Stock Options
(#)
2020 Stock
Options
($)
2020 Target
PRSUs
(#)(1)
2020 Target
PRSUs
($)
Amit D. Munshi
Continuing NEO
270,000
$5,676,561
Laurie Stelzer
New Hire NEO
132,000
2,252,725
6,300
72,041
Vincent E. Aurentz
Continuing NEO
70,000
1,471,701
Robert Lisicki
Continuing NEO
70,000
1,471,701
Joan Schmidt
New Hire NEO
132,000
2,559,916
6,300
108,360
Kevin R. Lind
Former NEO
70,000
1,471,701
Chris Cabell, M.D., MHS
Former NEO
70,000
1,656,225
Steven W. Spector, J.D.
Former NEO
(1)
As described in more detail below, a number of shares of common stock that is equal to the target number of PRSUs are earned for achieving a closing stock price of $67.50, and the maximum number of common shares that may be earned under the PRSUs, which number equals 200% of the number of target PRSUs granted, are earned upon achieving a closing stock price of $75.00.
2020 Stock Options. The stock options granted to our NEOs in 2020 vest over four years, with 25% of the shares subject to the options vesting on the first anniversary of the grant date, and the remainder of the shares vesting monthly over the following three years in equal installments. The stock options have a seven-year term, which is generally consistent with the time horizon required to develop internally discovered medicines.
2019 PRSUs (Continuing NEOs). The Compensation Committee granted PRSUs to our Continuing NEOs and all other employees at the start of January 2019. The PRSUs vest if the closing price of a share of our common stock reaches certain price thresholds and remains at or above such thresholds for a period of time (the “Price Goal”) during the three-year performance period beginning January 4, 2019 and ending January 3, 2022 (the “Performance Period”), followed by the grantee’s subsequent satisfaction of a continuing service requirement of generally 90 calendar days. The Price Goals required our closing price to equal or exceed $60.00 (threshold), $67.50 (target) or $75.00 (stretch) for five consecutive trading days or ten non-consecutive trading days during the Performance Period, in which case, the PRSUs vest as to 50% (threshold), 100% (target) or 200% (stretch), respectively, of the grantee’s target PRSU amount, and the grantee will receive a number of shares following 90 days of additional employment service. These price goals were established by our Compensation Committee with the goal of requiring significant share price appreciation for any payout (the threshold goal represented nearly a 50% increase in our stock price from the grant date price, with the other goals requiring an even greater increase in our stock price). The Compensation Committee believed these were rigorous and difficult objectives which, if achieved, would benefit all stockholders.
2020 PRSUs (New Hire NEOs). Each of the New Hire NEOs was granted 6,300 target PRSUs upon commencement of their employment in early 2020 with two of the original price goals ($67.50 to earn target and $75 to earn 2x target). These PRSUs for New Hire NEOs were, subject to the same provisions for earnout as the other employee awards (with the Performance Period ending on January 3, 2022), but with a one-year minimum vesting period, and served to align the recently hired NEOs interests with the Continuing NEOs and employees who had been provided the 2019 PRSU awards in January 2019. The target and stretch price goals remained a challenge at the time of grant, requiring in the case of Ms. Schmidt a 64% increase in stock price to reach the target, and in the case of Ms. Stelzer an 86% price increase to reach the target from the closing price of the stock on the respective dates of grant.
During 2019, the first Price Goal ($60.00) and subsequent continuing service requirement were both achieved. The remaining Price Goals were met at the end of 2020, and the PRSUs vested in accordance with the Price Goals and vesting schedule in 2020 and 2021. There was no discretion used and the Compensation Committee views the 2020 and 2021 earnout and vesting as a performance-based outcome from a challenging grant.
2021 Equity Awards. As of March 1, 2021, the Compensation Committee granted options, RSUs, and PRSUs to our current NEOs and other eligible employees. Similar to the 2019 PRSUs, the 2021 PRSUs vest if the closing price of a share of our common stock reaches certain price thresholds and remains at or above such thresholds for a period of time (the “Price Goal”) during the three-year performance period beginning March 1, 2021 and ending February 29, 2024 (the “Performance Period”), followed by the grantee’s subsequent satisfaction of a continuing service requirement of generally 90 calendar days. The Price Goals require our closing price to equal or exceed $120.00 (threshold), $130.00 (target) or $145.00 (stretch) for five consecutive trading days or ten non-consecutive trading days during the Performance Period, in which case, the PRSUs vest as to 50% (threshold), 100% (target) or 200% (stretch), respectively, of the grantee’s target PRSU amount, and the grantee will receive a number of shares following 90 days additional employment service. These price goals were established by our
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Compensation Committee with the goal of requiring significant share price appreciation for any payout (the threshold goal represented nearly a 50% increase in our stock price from the grant date price of $80.08, with the other goals requiring an even greater increase in our stock price). The Compensation Committee believes these are rigorous and difficult objectives which, if achieved, would benefit all stockholders.
Other Benefits
All of our current NEOs, as well as our other regular, full-time US employees, are eligible for a variety of health and welfare benefits, which are market competitive for our industry, size, and locations. We believe that competitive health and welfare benefits help ensure that we can attract, retain and maintain a productive and focused workforce.
Time Off
During 2020, all of our regular, full-time US employees accrued vacation time during the year, with the maximum amount of vacation time any employee may accrue being 240 hours. In addition, our employees, including NEOs, are eligible for paid sick leave, which meets state requirements. As of January 1, 2021, the company has adopted a Flexible Time Off policy that replaces the prior Vacation Time Off policy for U.S. exempt employees. All accrued and unused vacation time as of December 31, 2020 was paid to U.S. full-time exempt employees on February 26, 2021, including our NEOs. As of January 1, 2021, vacation hours do not accrue for our U.S. exempt employees, including our NEOs.
Retirement Savings Plan and Company Match
Our US employees are eligible to participate in our Retirement Savings Plan in the form of a qualified 401(k) plan, beginning on their hire date. Employees may make pre-tax or after-tax (Roth) contributions of up to 50% of gross cash compensation into the plan, up to the annual limit under the Internal Revenue Code, as amended, or Code. Subject to limits under the Code, we match 100% of each of the employee’s contributions, up to a maximum match of 6% of the employee’s eligible gross cash compensation per pay period. This matching contribution vests over a two-year period from the individual’s original date of hire. Our Retirement Savings Plan also allows employees to make certain after-tax contributions in addition to the contributions described above.
Employee Stock Purchase Plan
Our employees are eligible to participate in our 2019 Employee Stock Purchase Plan, or 2019 ESPP. Under the 2019 ESPP, employees may elect to have up to 20% of their annual compensation withheld to purchase up to 2,000 shares of our common stock per six-month purchase period, subject to certain limitations. The shares of our common stock can be purchased over an offering period with a maximum duration of 12 months and at a price of not less than 85% of the lesser of the fair market value of the common stock on (i) the first trading day of the applicable offering period or (ii) the last trading day of the applicable six-month purchase period.
Life and Disability Coverage
During 2020, we provided all regular, full-time US employees with a life insurance policy equal to two times the employee’s annual base salary, up to a maximum coverage of $500,000. Such employees are also covered by short- and long-term disability plans that coordinate with state disability insurance programs, if any.
Perquisites and Other Benefits
Except for the commuting expense related reimbursement provided to Mr. Aurentz, we did not provide any of our NEOs or other senior members of management with perquisites in 2020 that exceeded $10,000 in the aggregate for any person. Mr. Aurentz’s position and duties require him to travel extensively and do not require him to be present in our San Diego headquarters all of the time. Accordingly, pursuant to the terms of his employment agreement, we reimburse Mr. Aurentz for the cost of his airfare to San Diego on an after-tax basis in order to make such airfare expenses cost neutral for Mr. Aurentz. These benefits were individually negotiated with Mr. Aurentz and were provided because they were deemed necessary for his employment.
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Post-Termination Compensation
Below is a summary of potential post-termination compensation for our NEOs. More details regarding such arrangements, including potential payouts, are provided below under “Potential Post-Employment Payments Table.” These termination benefits are intended to keep our NEOs focused on corporate interests while employed and to ease the consequences to an NEO of a termination of employment. In order to receive termination benefits the applicable NEO must execute a waiver and release of claims in our favor.
Severance Benefits. We have an Amended and Restated Severance Agreement with Mr. Munshi, or Severance Agreement, that may require us to provide compensation and benefits to him. We also have an Amended and Restated Severance Benefit Plan, or Severance Benefit Plan, that may require us to provide compensation and benefits to our NEOs other than Mr. Munshi.
We provide these benefits because we determined that it was appropriate to provide our NEOs severance compensation if their employment is terminated under certain circumstances. The Compensation Committee believes that the severance benefits are an important element of the NEOs’ competitive pay packages, that they serve important retention and motivation purposes and that such severance benefits, including generally requiring a release of claims against us as a condition to receiving any severance benefits, are best market practice and are in the best interests of the Company and its stockholders.
The Compensation Committee periodically reviews the severance benefits we offer to our NEOs to ensure that the benefits we offer remain competitive. A description of the severance benefits provided under the Severance Agreement and the Severance Benefit Plan is provided below under the heading “Potential Post-Employment Payments Table at December 31, 2020.”
Severance Benefits for Former NEOs: In March 2020, Steven Spector, who was serving as our Executive Vice President, General Counsel and Secretary, terminated employment. As a result, Mr. Spector received severance benefits under the Severance Benefit Plan. In addition, the Company and Mr. Spector entered into a Consulting Services Agreement which continued in effect until December 31, 2020. Mr. Spector was eligible to receive a market rate hourly consulting fee, with a minimum monthly payment from March 2, 2020 to September 2, 2020. Mr. Spector’s consulting services constituted continuous service and his stock options remained outstanding, plus his outstanding PRSUs continued pursuant to the vesting and issuance criteria set forth in the applicable PRSU grant agreement until March 5, 2021. The Company accelerated the vesting of all remaining unvested option awards held by Mr. Spector and extended the exercise period of certain of Mr. Spector’s options for thirty-six (36) months after the termination of the Consulting Agreement (but not beyond the original contractual life of the options).
In November 2020, Dr. Cabell, who was serving as our Executive Vice President and Chief Medical Officer, terminated employment and is now serving in an advisory capacity through May 2021. During Dr. Cabell’s advisory service period and subject to his compliance with certain post-employment conditions, he continues to receive his salary, equity vesting, and we agreed to cover a portion of his COBRA premiums, and he remained eligible for his performance bonus under our Annual Incentive Plan for 2020, prorated for his employment services in 2020, which was paid in early 2021. Dr. Cabell did not receive severance under the Severance Benefit Plan as a result of his termination of employment and is no longer eligible for such benefits.
In March, Mr. Lind ceased serving as our Executive Vice President and Chief Financial Officer and transitioned to employment at Arena Neuroscience, Inc. as the President and Chief Executive Officer of Arena Neuroscience, Inc. This subsidiary was wholly owned at the time of the transition but ceased to be wholly owned and became Longboard Pharmaceuticals, Inc., pursuing development of their central nervous system assets, in October 2020, at which time Mr. Lind’s services for Arena ceased. To ensure a smooth transition to a company in which Arena continues to have a significant investment stake, Mr. Lind was provided the following separation benefits (1) eligibility to receive a prorated annual performance bonus for 2020, to be paid at the same time as bonuses are paid to our executive officers in 2021, and determined in accordance with the terms of our Annual Incentive Plan for 2020; (2) acceleration of stock options that would otherwise have vested through the 18-month period following the date of his separation; (3) continued stock option exercisability until February 28, 2023 (but not beyond the original contractual life of the option); and (4) continued eligibility to vest in his outstanding 2019 PRSUs pursuant to the vesting and issuance criteria set forth in the applicable PRSUs, until March 15, 2021. The Compensation Committee felt these separation benefits were appropriate and necessary because of Mr. Lind’s transition to lead an entity related to Arena whose success benefits Arena stockholders.
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Tax Considerations
We take into account the tax effects of various forms of compensation and the potential for excise taxes to be imposed on our executive officers. There are various provisions of the Code that we consider in determining compensation, including the following:
Section 162(m). Under Section 162(m) of the Code (“Section 162(m)”), compensation paid to each of the Company’s “covered employees” that exceeds $1 million per taxable year is generally non-deductible unless the compensation qualifies for certain grandfathered exceptions (including the “performance-based compensation” exception) for certain compensation paid pursuant to a written binding contract in effect on November 2, 2017, and not materially modified on or after such date.
Although the Compensation Committee will continue to consider tax implications as one factor in determining executive compensation, the Compensation Committee also looks at other factors in making its decisions and retains the flexibility to provide compensation for the Company’s named executive officers in a manner consistent with the goals of the Company’s executive compensation program and the best interests of the Company and its stockholders, which may include providing for compensation that is not deductible by the Company due to the deduction limit under Section 162(m). The Compensation Committee also retains the flexibility to modify compensation that was initially intended to be exempt from the deduction limit under Section 162(m) if it determines that such modifications are consistent with the Company’s business needs.
Sections 280G and 4999. Any payment or benefit provided to executive officers in connection with a change-in-control transaction may be subject to an excise tax under Section 4999 of the Code. These payments also may not be eligible for a company tax deduction pursuant to Section 280G of the Code. If any of these payments or benefits are subject to the excise tax, they may be reduced to provide the individual with the best after-tax result. The individual will receive a reduced amount so that the excise tax is not triggered, or the individual will receive the full amount of the payments and benefits and then be liable for any excise tax.
Additional Executive Compensation Practices, Policies and Procedures
Clawback Policy. We maintain a clawback policy that applies to current and former executive officers. Under the policy, following an accounting restatement that is required to be prepared due to material noncompliance with any financial reporting requirements under the securities laws, we will seek repayment from any current or former executive officer of any incentive-based compensation (cash or equity) that was: (i) based on the erroneous data; (ii) paid during the three-year period preceding the date on which the accounting restatement is required to be prepared; and (iii) in excess of what would have been paid under the accounting restatement. In addition, in the event that legislation is enacted or the SEC adopts rules or promulgates regulations defining the circumstances under which we are entitled to seek repayment from a current or former executive officer, such legislation, rules or regulations shall apply.
Stock Ownership Guidelines. The Compensation Committee has established ownership guidelines for our NEOs. Within five years after the date an individual becomes an executive officer, he or she will be expected to hold ownership or equivalent with an aggregate value equal to the amount (or, in the case of the Chief Executive Officer, three times the amount) of the executive officer’s annual base salary. If an executive is not in compliance after the applicable five-year period, the executive will be expected to retain at least 50% of the shares acquired upon option exercise (after payment of both the exercise cost and taxes) and 50% of the shares issued upon vesting of RSU grants (net of shares necessary to satisfy taxes).
Prohibition of Hedging and Pledging. We prohibit our NEOs (and other employees) and non-employee directors from engaging in short sales, transactions in put or call options, hedging transactions, margin accounts, pledges, or other inherently speculative transactions with respect to our securities at any time.
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Compensation Committee Report
The material in this report is not “soliciting material,” is furnished to, but not deemed “filed” with, the SEC and is not deemed to be incorporated by reference in any of our filings under the Securities Act or the Exchange Act, other than our Annual Report on Form 10-K (where it shall be deemed to be “furnished”), whether made before or after the date hereof and irrespective of any general incorporation language in any such filing.
The Compensation Committee, comprised of independent directors, reviewed and discussed the above “Compensation Discussion and Analysis” with our management. Based on such review and discussions, the Compensation Committee recommended to our Board of Directors that the “Compensation Discussion and Analysis” be included in this proxy statement and included into our Annual Report on Form 10-K for the fiscal year ended December 31, 2020.
 
THE COMPENSATION COMMITTEE
 
Jayson Dallas, M.D., Chair
 
Oliver Fetzer, Ph.D.
 
Jennifer Jarrett
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Summary Compensation Table for Fiscal Years Ended December 31, 2020, 2019 and 2018
The table below summarizes the total compensation of our Named Executive Officers for the fiscal years indicated.
Name and Principal Position
Year
Salary
($)(2)
Bonus
($)(3)
Stock
Awards
($)(4)
Option
Awards ($)(5)
Non-Equity
Incentive Plan
Compensation
($)(6)
All Other
Compensation
($)(7)
Total
($)
Amit D. Munshi
President, Chief Executive Officer and Director
2020
$687,500
$
$
$5,676,561
$514,206
$18,342
$6,896,609
2019
656,250
1,423,539
6,279,747
554,400
17,466
8,931,402
2018
635,938
5,752,825
455,813
18,869
6,863,445
Laurie Stelzer
Executive Vice President, Chief Financial Officer and Principal Financial Officer
2020
380,000
40,318(8)
144,081
2,252,725
202,964
7,483
3,027,572
Vincent E. Aurentz
Executive Vice President and
Chief Business Officer
2020
432,847
10,884
1,471,701
230,745
18,342
2,164,520
2019
418,200
1,095,030
1,652,565
252,144
31,466(12)
3,449,405
2018
407,000
2,412,475
224,400
120,055(12)
3,163,930
Robert Lisicki
Executive Vice President and
Chief Commercial Officer
2020
428,450
10,804
1,471,701
229,034
18,342
2,158,332
2019
410,000
168,308(9)
766,521
1,652,565
246,000
17,466
3,260,860
Joan Schmidt
Executive Vice President, General Counsel and Secretary
2020
350,000
8,779
216,720
2,559,916
186,108
9,723
3,331,245
Kevin R. Lind
Former Executive Vice President, Chief Financial Officer and Principal Financial Officer(1)
2020
355,880
8,541,669(10)
178,475
63,192
9,139,216
2019
418,200
766,521
1,652,565
239,537
17,466
3,094,289
2018
407,000
2,412,475
224,400
17,165
3,061,040
Chris Cabell, M.D., MHS, FACC
Former Executive Vice President and Chief Medical Officer
2020
422,408
1,656,225
202,175
62,519(13)
2,342,055
Steven W. Spector, J.D.
Former Executive Vice President, General Counsel and Secretary
2020
145,878
4,098,039(11)
1,010,248(14)
5,254,165
2019
440,232
766,521
1,652,565
242,128
17,466
3,118,912
2018
439,153
2,412,475
242,128
18,869
3,112,625
(1)
In March 2020, Mr. Lind ceased serving as our Executive Vice President and Chief Financial Officer and was appointed the President and Chief Executive Officer of our wholly owned subsidiary, Arena Neuroscience, Inc. In October 2020, Mr. Lind’s employment with Arena Pharmaceuticals, Inc. concluded and he commenced employment with Longboard Pharmaceuticals, Inc., or Longboard (formerly Arena Neuroscience, Inc.), as President and Chief Executive Officer.
(2)
In accordance with SEC rules, the compensation described in this table does not include various health and welfare or other benefits received by our Named Executive Officers that are available generally to all of our regular, full-time employees, except as described in footnote 6 in this table. This table also does not include any perquisites and other personal benefits received by our Named Executive Officers that, in the aggregate, were less than $10,000 for any officer. Amounts earned but deferred at the election of our Named Executive Officers pursuant to our 401(k) plan are included in the “salary” column.
(3)
Except as otherwise noted, epresents the portion of the cash incentive award approved by the Compensation Committee for an NEO that exceeded our 2020 corporate goal achievement, which was approved in consideration of the high quality of the NEO’s performance and their individual contributions toward achievement of our 2020 goals.
(4)
Represents the aggregate grant date fair value of PRSUs granted in accordance with Financial Accounting Standards Board, or FASB, Accounting Standards Codification, or ASC, Topic 718, “Compensation - Stock Compensation.” The fair value of the PRSUs granted was calculated using a Monte Carlo simulation model based on the probability of achieving the performance goals. The amounts disclosed in the table represent maximum value potential assuming the achievement of the highest level of performance goals as stipulated by the PRSUs. For the relevant assumptions used in determining these amounts, refer to Note 7 to our audited consolidated financial statements included in our Annual Report on Form 10-K as filed with the SEC on February 23, 2021.
(5)
Represents the aggregate grant date fair value of option awards granted in accordance with FASB ASC Topic 718, “Compensation - Stock Compensation.” For the relevant assumptions used in determining these amounts, refer to Note 7 to our audited consolidated financial statements included in our Annual Report on Form 10-K as filed with the SEC on February 23, 2021.
(6)
Represents cash awards earned pursuant to our annual incentive plans for 2020, 2019, and 2018, as further described below in the “Grants of Plan-Based Awards” table and the above “Compensation Discussion and Analysis.”
(7)
Represents matching contributions to our 401(k) plan made on behalf of our Named Executive Officers, group-term life insurance premiums paid by us for our Named Executive Officers and other compensation described below in these footnotes.
(8)
Of this amount, $25,000 represents the amount paid to Ms. Stelzer in the form of a signing bonus in connection with her appointment as Executive Vice President and Chief Financial Officer in March 2020 with the intention to offset a reduction in base pay as compared to her salary at her most recent prior employer. $15,318 represents an additional bonus amount paid above the 106% corporate performance achievement for 2020 and which is reflected in the non-equity incentive plan compensation column.
(9)
Represents the amount paid to Mr. Lisicki in 2019 in the form of a signing bonus of $108,308 and a relocation allowance of $60,000 provided to Mr. Lisicki in connection with his appointment as Executive Vice President and Chief Commercial Officer in October 2018.
(10)
In addition to the aggregate grant date fair value of option awards granted in 2020, amount includes $7,069,968 of incremental fair value of materially modified awards computed as of the October 2020 modification date in accordance with FASB ASC Topic 718.
(11)
Represents incremental fair value of materially modified option awards computed as of the March and December 2020 modification dates in accordance with FASB ASC Topic 718.
2021 PROXY STATEMENT

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(12)
In addition to the items noted in footnote 7 above, “all other compensation” includes $14,000 and $87,249 provided to Mr. Aurentz in 2019 and 2018, respectively, in the form of monthly taxable housing and automobile allowances and $13,937 provided to Mr. Aurentz in 2018 for commuting airfare reimbursement, on an after-tax basis, following his appointment as Executive Vice President and Chief Business Officer in August 2016.
(13)
In addition to the items noted in footnote 7 above, “all other compensation” includes cash payments of $41,667 paid during his advisory services to the Company from December 1 through December 31, 2020.
(14)
In addition to the items noted in footnote 7 above, “all other compensation” includes a cash severance payment of $990,522.
Grants of Plan-Based Awards During Fiscal Year Ended December 31, 2020
The table below provides information on estimated future payouts under non-equity and equity incentive plans, stock awards and options granted to our Named Executive Officers during the fiscal year ended December 31, 2020.
Estimated Future Payouts
Under Non-Equity
Incentive Plan Awards(1)
Estimated Future Payouts
Under Equity Incentive
Plan Awards(2)
All Other
Option
Awards:
Number of
Securities
Underlying
Options
(#)(3)
Exercise or
Base Price
of Option
Awards
($/sh)(4)
Grant Date
Fair
Value of
Stock and
Option
Awards
($)(5)
Name
Grant
Date/
Modification
Date
Target
($)
Maximum
($)
Threshold
(#)
Target
(#)
Maximum
(#)
Amit D. Munshi
$485,100
$727,650
$
$
3/1/2020
270,000
44.60