DEF 14A 1 mdvn-def14a_20160622.htm DEF 14A mdvn-def14a_20160622.htm

 

 

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.           )

 

Filed by the Registrant  x           Filed by a Party other than the Registrant  o

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Preliminary Proxy Statement

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Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))

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Definitive Proxy Statement

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Definitive Additional Materials

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Soliciting Material Pursuant to §240.14a-12

MEDIVATION, INC.

(Name of Registrant as Specified In Its Charter)

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

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MEDIVATION, INC.

525 Market Street, 36th Floor

San Francisco, CA 94105

 

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS

TO BE HELD ON JUNE 22, 2016

Dear Stockholder:

You are cordially invited to attend the 2016 Annual Meeting of Stockholders (the “Annual Meeting”) of Medivation, Inc., a Delaware corporation. The Annual Meeting will be held on Wednesday, June 22, 2016, at 8:30 a.m. Pacific time at 499 Illinois Street, 2nd Floor, Treasure Island Conference Room, San Francisco, CA  94158 for the following purposes:

 

1.

To elect our Board of Directors’ nominees, Kim D. Blickenstaff, Kathryn E. Falberg, David T. Hung, M.D., Michael L. King, Ph.D., C. Patrick Machado, Dawn Svoronos, W. Anthony Vernon, and Wendy L. Yarno, to our Board of Directors to serve until the next Annual Meeting of Stockholders and until their successors are duly elected and qualified.

 

2.

To ratify the selection by the Audit Committee of our Board of Directors of PricewaterhouseCoopers LLP as Medivation’s independent registered public accounting firm for the fiscal year ending December 31, 2016.

 

3.

To approve, on an advisory basis, the compensation of Medivation’s named executive officers, as disclosed in the accompanying Proxy Statement.

 

4.

To approve an Amendment and Restatement of the Medivation, Inc. Amended and Restated 2004 Equity Incentive Award Plan, or the Amended and Restated 2004 Plan, to increase the number of shares of Medivation’s common stock reserved for issuance under the plan by 1,600,000 shares and make certain other changes as described in Proposal No. 4 in the accompanying Proxy Statement.

 

5.

To vote on the shareholder proposal regarding proxy access, if properly presented at the Annual Meeting.

 

6.

To conduct any other business properly brought before the Annual Meeting.

These items of business are more fully described in the Proxy Statement accompanying this Notice. The record date for the Annual Meeting is April 25, 2016. Only stockholders of record at the close of business on that date may vote at the Annual Meeting or any adjournment thereof.

By Order of the Board of Directors

Andrew Powell

Corporate Secretary

San Francisco, California

April 28, 2016

 

You are cordially invited to attend the Annual Meeting in person. It is important that your shares be represented and voted at the Annual Meeting. You can vote your shares electronically over the internet or by telephone, or if you receive a paper proxy card by mail, by completing and returning the proxy card mailed to you. Voting instructions are provided in the Notice of Internet Availability of Proxy Materials, or, if you receive a paper proxy card by mail, the instructions are printed on your proxy card and included in the accompanying Proxy Statement. Even if you have voted by proxy, you may still vote in person if you attend the Annual Meeting. Please note, however, that if your shares are held of record by a broker, bank or other nominee and you wish to vote at the Annual Meeting, you must obtain a proxy issued in your name from that record holder.

 

 

 


MEDIVATION, INC.

525 Market Street, 36th Floor

San Francisco, California 94105

PROXY STATEMENT

FOR THE 2016 ANNUAL MEETING OF STOCKHOLDERS

June 22, 2016

QUESTIONS AND ANSWERS ABOUT THESE PROXY MATERIALS AND VOTING

We are providing you with these proxy materials because the Board of Directors of Medivation, Inc., or Medivation, is soliciting your proxy to vote at Medivation’s 2016 Annual Meeting of Stockholders, or the Annual Meeting, including at any adjournments or postponements thereof, to be held on Wednesday, June 22, 2016, at 8:30 a.m. Pacific time at 499 Illinois Street, 2nd Floor, Treasure Island Conference Room, San Francisco, CA  94158. You are invited to attend the Annual Meeting to vote on the proposals described in this Proxy Statement. However, you do not need to attend the Annual Meeting to vote your shares. Instead, you may simply follow the instructions below to submit your proxy. The proxy materials, including this Proxy Statement and our 2015 Annual Report on Form 10-K for the fiscal year ended December 31, 2015, or our 2015 Annual Report, are being distributed and made available on or about May 6, 2016.

Why did I receive a notice regarding the availability of proxy materials on the internet?

Pursuant to rules adopted by the U.S. Securities and Exchange Commission, or SEC, we have elected to provide access to our proxy materials, including this Proxy Statement and our 2015 Annual Report, over the internet. Consequently, our stockholders generally will not receive paper copies of our proxy materials unless they request them. We have instead sent a Notice of Internet Availability of Proxy Materials, or the Notice, to our stockholders of record with instructions for accessing the proxy materials and voting over the internet or by telephone. All stockholders will have the ability to access the proxy materials on the website referred to in the Notice and to request to receive a printed set of the proxy materials. This makes the proxy distribution process more efficient and less costly and helps conserve natural resources. Instructions on how to access the proxy materials over the internet or to request a printed copy of the proxy materials may be found in the Notice.

We intend to mail the Notice on or about May 6, 2016, to all stockholders of record entitled to vote at the Annual Meeting.

Will I receive any other proxy materials by mail?

We may send you a proxy card, along with a second Notice, on or after May 16, 2016. In addition, you may request a printed copy of our proxy materials by following the instructions found in the Notice.

Can I vote my shares by filling out and returning the Notice?

No. The Notice identifies the items to be voted on at the Annual Meeting, but you cannot vote by marking the Notice and returning it. The Notice provides instructions on how to vote over the internet or by telephone, by requesting and returning a printed proxy card, or by submitting a ballot in person at the Annual Meeting.

How do I attend the Annual Meeting?

The meeting will be held on Wednesday, June 22, 2016, at 8:30 a.m. Pacific time at 499 Illinois Street, 2nd Floor, Treasure Island Conference Room, San Francisco, CA  94158. Attendance will be limited to stockholders or their proxy holders. If you are a proxy holder for a stockholder whose shares are registered in his or her name, you must provide a copy of the proxy from the stockholder of record.  If you hold shares through a broker, bank or similar organization, you must provide proof of beneficial ownership as of April 25, 2016, such as a brokerage or bank account statement, a copy of the proxy from the broker or other agent, or other similar evidence of ownership. Each attendee must also present valid photo identification, such as a driver’s license or passport. Cameras, recording devices, and other electronic devices will not be permitted at the Annual Meeting.  Directions to the Annual Meeting may be obtained by emailing ir@medivation.com. Information about how to vote in person at the Annual Meeting is discussed below.

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Who can vote at the Annual Meeting?

Only stockholders of record at the close of business on April 25, 2016, will be entitled to vote at the Annual Meeting. On this record date, there were 164,610,106 shares of common stock outstanding and entitled to vote.

Stockholder of Record: Shares Registered in Your Name

If on April 25, 2016, your shares were registered directly in your name with our transfer agent, American Stock Transfer and Trust Company, then you are a stockholder of record. As a stockholder of record, you may vote in person at the Annual Meeting or vote by proxy. Whether or not you plan to attend the Annual Meeting, we urge you to vote your shares electronically over the internet or by telephone, or by completing and returning a printed proxy card that you may request or that we may elect to deliver at a later time, to ensure your vote is counted.

Beneficial Owner: Shares Registered in the Name of a Broker or Bank

If on April 25, 2016, your shares were held, not in your name, but rather in an account at a brokerage firm, bank, dealer, or other similar organization, then you are the beneficial owner of shares held in “street name” and the Notice is being forwarded to you by that organization. The organization holding your account is considered to be the stockholder of record for purposes of voting at the Annual Meeting. As a beneficial owner, you have the right to direct your broker or other agent regarding how to vote the shares in your account. You are also invited to attend the Annual Meeting. However, since you are not the stockholder of record, you may not vote your shares in person at the Annual Meeting unless you request and obtain a valid proxy from your broker or other agent.

What am I voting on?

There are five matters scheduled for a vote:

 

·

Proposal No. 1: the election of the eight nominees of our Board of Directors, or our Board;

 

·

Proposal No. 2: the ratification of the selection by Audit Committee of our Board of PricewaterhouseCoopers LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2016;

 

·

Proposal No. 3: the approval, on an advisory basis, of the compensation of our named executive officers, as disclosed in this Proxy Statement in accordance with SEC rules;

 

·

Proposal No. 4: the approval of an Amendment and Restatement of the Medivation, Inc. Amended and Restated 2004 Equity Incentive Award Plan, or the Amended and Restated 2004 Plan, to increase the number of shares of Medivation’s common stock reserved for issuance under the plan by 1,600,000 shares and make certain other changes as described in Proposal No. 4; and

 

·

Proposal No. 5: the shareholder proposal regarding proxy access, if properly presented at the Annual Meeting.

What if another matter is properly brought before the Annual Meeting?

Our Board knows of no other matters that will be presented for consideration at the Annual Meeting. If any other matters are properly brought before the Annual Meeting, it is the intention of the persons named in the accompanying proxy to vote on those matters in accordance with their best judgment.

How do I vote?

You may either vote “For” all the nominees to our Board or you may “Withhold” your vote for any nominee you specify. For each of the other matters to be voted on, you may vote “For” or “Against” or abstain from voting.

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The procedures for voting are as follows:

Stockholder of Record: Shares Registered in Your Name

If you are a stockholder of record, you may vote in person at the Annual Meeting, vote by proxy over the telephone, vote by proxy over the internet or vote by proxy using a printed proxy card that you may request or that we may elect to deliver at a later time. Whether or not you plan to attend the Annual Meeting, we urge you to vote by proxy to ensure your vote is counted. You may still attend the Annual Meeting and vote in person even if you have already voted by proxy.

 

·

To vote in person, come to the Annual Meeting and we will give you a ballot when you arrive.

 

·

To vote using the printed proxy card that may be delivered to you, simply complete, sign and date the proxy card that may be delivered and return it promptly in the envelope provided. If you return your signed proxy card to us before the Annual Meeting, we will vote your shares as you direct.

 

·

To vote over the telephone, dial toll-free 1-800-PROXIES (1-800-776-9437) in the United States or 1-718-921-8500 from foreign countries using a touch-tone phone and follow the recorded instructions. You will be asked to provide the company number and account number from the Notice. Your vote must be received by 11:59 p.m. Eastern Time on June 21, 2016, to be counted.

 

·

To vote over the internet, go to http://www.voteproxy.com to complete an electronic proxy card. You will be asked to provide the company number and account number from the Notice. Your vote must be received by 11:59 p.m. Eastern Time on June 21, 2016, to be counted.

Beneficial Owner: Shares Registered in the Name of Broker or Bank

If you are a beneficial owner of shares registered in the name of your broker, bank, or other agent, you should have received a Notice containing voting instructions from that organization rather than from us. Simply follow the voting instructions in the Notice to ensure that your vote is counted. Alternatively, you may vote by telephone or over the internet as instructed by your broker or bank. To vote in person at the Annual Meeting, you must obtain a valid proxy from your broker, bank, or other agent. Follow the instructions from your broker or bank included with these proxy materials, or contact your broker or bank to request a proxy form.

We provide internet proxy voting to allow you to vote your shares online, with procedures designed to ensure the authenticity and correctness of your proxy vote instructions. However, please be aware that you must bear any costs associated with your internet access, such as usage charges from internet access providers and telephone companies.

How many votes do I have?

On each matter to be voted upon, you have one vote for each share of common stock you own as of April 25, 2016.

What happens if I do not vote?

Stockholder of Record; Shares Registered in Your Name

If you are a stockholder of record and do not vote by completing your proxy card, by telephone, over the internet or in person at the Annual Meeting, your shares will not be voted.

Beneficial Owner; Shares Registered in the Name of a Broker or Bank

If you are a beneficial owner and do not instruct your broker, bank or other agent how to vote your shares, the question of whether your broker or nominee will still be able to vote your shares depends on whether the New York Stock Exchange, or NYSE, deems the particular proposal to be a “routine” matter. Brokers and nominees can use their discretion to vote “uninstructed” shares with respect to matters that are considered to be “routine,” but not with respect to “non-routine” matters. Under the rules and interpretations of the NYSE, “non-routine” matters are matters that may substantially affect the rights or privileges of stockholders, such as mergers, stockholder proposals, elections of directors (even if not contested), executive compensation (including any advisory stockholder votes on executive compensation and on the frequency of stockholder votes on executive compensation) and certain corporate governance proposals, even if management supported. Accordingly, your broker or nominee may not vote your shares on Proposals No. 1, No. 3, No. 4 or No. 5 without your instructions, but may vote your shares on Proposal No. 2.

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What if I return a proxy card or otherwise vote but do not make specific choices?

If you return a signed and dated proxy card or otherwise vote without indicating voting selections, your shares will be voted, as applicable:

 

·

“For” the election of all eight nominees for director;

 

·

“For” the ratification of the selection of PricewaterhouseCoopers LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2016;

 

·

“For” the advisory approval of the compensation of our named executive officers;

 

·

“For” the approval of the Amended and Restated 2004 Plan to increase the number of shares of Medivation’s common stock reserved for issuance under the plan by 1,600,000 shares and make certain other changes as described in Proposal No. 4; and

 

·

“Against” the shareholder proposal regarding proxy access.

If any other matter is properly presented at the Annual Meeting, the proxyholders will vote your shares using their best judgment.

Who is paying for this proxy solicitation?

We will pay for the entire cost of soliciting proxies. In addition to these proxy materials, our directors and employees may also solicit proxies in person, by telephone, or by other means of communication. Directors and employees will not be paid any additional compensation for soliciting proxies. We may also reimburse brokerage firms, banks and other agents for the cost of forwarding proxy materials to beneficial owners.

What does it mean if I receive more than one Notice?

If you receive more than one Notice, your shares may be registered in more than one name or in different accounts. Please follow the voting instructions on the Notices to ensure that all of your shares are voted.

Can I change my vote after submitting my proxy?

Stockholder of Record: Shares Registered in Your Name

Yes. You can revoke your proxy at any time before the final vote at the Annual Meeting. If you are the record holder of your shares, you may revoke your proxy in any one of the following ways:

 

·

You may submit another properly completed proxy card with a later date.

 

·

You may grant a subsequent proxy by telephone or over the internet.

 

·

You may send a timely written notice that you are revoking your proxy to our Corporate Secretary at 525 Market Street, 36th Floor, San Francisco, California 94105.

 

·

You may attend the Annual Meeting and vote in person. Simply attending the meeting will not, by itself, revoke your proxy.

Your most current proxy card or telephone or internet proxy is the one that is counted.

Beneficial Owner: Shares Registered in the Name of Broker or Bank

If your shares are held by your broker or bank as a nominee or agent, you should follow the instructions provided by your broker or bank.

When are stockholder proposals due for next year’s annual meeting?

To be considered for inclusion in next year’s proxy materials, your proposal must be submitted in writing by January 6, 2017, to our Corporate Secretary at 525 Market Street, 36th Floor, San Francisco, California 94105, and you must comply with all applicable requirements of Rule 14a-8 promulgated under the Securities Exchange Act of 1934, as amended, or the Exchange Act.

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Pursuant to our bylaws, if you wish to bring a proposal before the stockholders or nominate a director at the 2017 Annual Meeting of Stockholders, but you are not requesting that your proposal or nomination be included in next year’s proxy materials, you must notify our Corporate Secretary, in writing, not later than the close of business on March 24, 2017, nor earlier than the close of business on February 22, 2017. However, if our 2017 Annual Meeting of Stockholders is held before May 23, 2017, or after July 22, 2017, to be timely, notice by the stockholder must be received no earlier than the close of business on the 120th day prior to the 2017 Annual Meeting of Stockholders and not later than the close of business on the later of the 90th day prior to the 2017 Annual Meeting of Stockholders or the 10th day following the day on which public announcement of the date of the 2017 Annual Meeting of Stockholders is first made. You are also advised to review our bylaws, which contain additional requirements about advance notice of stockholder proposals and director nominations. The chair of the 2017 Annual Meeting of Stockholders may determine, if the facts warrant, that a matter has not been properly brought before the meeting and, therefore, may not be considered at the meeting. In addition, the proxy solicited by our Board for the 2017 Annual Meeting of Stockholders will confer discretionary voting authority with respect to (i) any proposal presented by a stockholder at that meeting for which Medivation has not been provided with timely notice and (ii) any proposal made in accordance with our bylaws, if the 2017 proxy statement briefly describes the matter and how management’s proxy holders intend to vote on it, if the stockholder does not comply with the requirements of Rule 14a-4(c)(2) promulgated under the Exchange Act.

How are votes counted?

Votes will be counted by the inspector of election appointed for the Annual Meeting, who will separately count, for the proposal to elect directors, “For” and “Withhold” votes and broker non-votes and, with respect to the other proposals, “For” and “Against” votes, abstentions and, if applicable, broker non-votes. Abstentions will be counted towards the vote total for each of Proposals No. 2, No. 3, No. 4 and No. 5, and will have the same effect as “Against” votes. Broker non-votes have no effect and will not be counted towards the vote total for Proposals No. 1, No. 3, No. 4 and No. 5. We do not expect that there will be any broker non-votes for Proposal No. 2, but if there are, broker non-votes will have the same effect as “Against” votes.

What are “broker non-votes”?

As discussed above, when a beneficial owner of shares held in “street name” does not give instructions to the broker or nominee holding the shares as to how to vote on matters deemed by the NYSE to be “non-routine,” the broker or nominee cannot vote the shares. These unvoted shares are counted as “broker non-votes.”

How many votes are needed to approve each proposal?

 

·

For the election of directors, the eight nominees receiving the most “For” votes (from the holders of shares present in person or represented by proxy and entitled to vote at the Annual Meeting) will be elected. Only votes “For” will affect the outcome. Broker non-votes and “Withhold” votes will have no effect.

 

·

To be approved, Proposal No. 2, the ratification of the selection by the Audit Committee of our Board of PricewaterhouseCoopers LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2016, must receive “For” votes from the holders of a majority of shares either present in person or represented by proxy and entitled to vote at the Annual Meeting. If you “Abstain” from voting, it will have the same effect as an “Against” vote. Proposal No. 2 is considered a routine matter, and therefore no broker non-votes are expected in connection with Proposal No. 2.

 

·

To be approved, Proposal No. 3, advisory approval of the compensation of our named executive officers, must receive “For” votes from the holders of a majority of shares either present in person or represented by proxy and entitled to vote at the Annual Meeting. If you “Abstain” from voting, it will have the same effect as an “Against” vote. Broker non-votes will have no effect.

 

·

To be approved, Proposal No. 4, the approval of the Amended and Restated 2004 Plan to increase the number of shares of Medivation’s common stock reserved for issuance under the plan by 1,600,000 shares and make certain other changes as described in Proposal No. 4, must receive “For” votes from the holders of a majority of shares either present in person or represented by proxy and entitled to vote at the Annual Meeting. If you “Abstain” from voting, it will have the same effect as an “Against” vote. Broker non-votes will have no effect.

 

·

To approve the adoption of the shareholder proposal, Proposal No. 5, Shareholder Proxy Access, must receive “For” votes from the holders of a majority of shares either present in person or represented by proxy and entitled to vote at the Annual Meeting. If you “Abstain” from voting, it will have the same effect as an “Against” vote. Broker non-votes will have no effect.

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What is the quorum requirement?

A quorum of stockholders is necessary to hold a valid meeting. A quorum will be present if stockholders holding at least a majority of the outstanding shares entitled to vote are present at the Annual Meeting in person or represented by proxy. On the record date, there were 164,610,106 shares outstanding and entitled to vote, and therefore 82,305,054 shares present at the Annual Meeting in person or represented by proxy will be required for a quorum.

If there is no quorum, the Annual Meeting may be adjourned either by the chair of the meeting or by vote of the holders of a majority of the shares represented thereat, but no other business may be transacted at the meeting.

How can I find out the results of the voting at the Annual Meeting?

Preliminary voting results will be announced at the Annual Meeting. In addition, final voting results will be published in a current report on Form 8-K that we expect to file within four business days after the Annual Meeting. If final voting results are not available to us in time to file a Form 8-K within four business days after the Annual Meeting, we intend to file a Form 8-K to publish preliminary results and, within four business days after the final results are known to us, file an additional Form 8-K to publish the final results.

 

 

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Proposal No. 1

Election of Directors

Our Board of Directors, or our Board, consists of eight directors. There are eight nominees for director this year, each of whom was recommended for re-election by the Nominating and Corporate Governance Committee of our Board, or our Nominating and Corporate Governance Committee. Each nominee to be elected and qualified will hold office until the next annual meeting of stockholders and until his or her successor is elected, or, if sooner, until the director’s death, resignation or removal. Each of the nominees listed below is currently a director of Medivation and, except for Michael L. King, Ph.D. who joined our Board on December 4, 2015, was previously elected by the stockholders. Dr. King was recommended to our Board by a non-management director. It is our policy to encourage our directors and nominees for director to attend our annual meetings. All of the directors at the time attended the 2015 Annual Meeting of Stockholders.

Directors are elected by a plurality of the votes of the holders of shares present in person or represented by proxy and entitled to vote at the Annual Meeting. The eight nominees receiving the highest number of affirmative votes will be elected. Shares represented by proxies will be voted, if authority to do so is not withheld, “For” the election of the eight nominees named below. If any nominee becomes unavailable for election as a result of an unexpected occurrence and you have submitted a proxy, your shares will be voted for the election of a substitute nominee proposed by our Nominating and Corporate Governance Committee. Each person nominated for election has agreed to serve if elected. Our management has no reason to believe that any nominee will be unable to serve.

Although directors are elected by a plurality of votes, it is our policy that any nominee for director in an uncontested election who receives a greater number of votes “withheld” from his or her election than votes “for” such election shall submit his or her offer of resignation for consideration by our Nominating and Corporate Governance Committee, which will then consider all of the relevant facts and circumstances and recommend to our Board the action to be taken with respect to such offer of resignation. Our Board will then act on our Nominating and Corporate Governance Committee’s recommendation. Promptly following our Board’s decision, we will disclose that decision and an explanation of such decision in a filing with the SEC or a press release.

NOMINEES

The following includes a brief biography of each nominee for director, including their respective ages as of April 25, 2016. Our Nominating and Corporate Governance Committee seeks to assemble a Board that, as a group, possesses the appropriate talent, skills and expertise to oversee our business and operations. To that end, our Nominating and Corporate Governance Committee has identified and evaluated nominees in the broader context of our Board’s overall composition, with the goal of recruiting and retaining members who complement and strengthen the skills of the other members of our Board and who also exhibit integrity, collegiality, leadership skills, sound business judgment and other qualities that our Nominating and Corporate Governance Committee views as critical to effective functioning of our Board. The brief biographies below include information regarding the specific experience, qualifications, attributes or skills that led our Nominating and Corporate Governance Committee and our Board to determine that the applicable nominee should serve as a member of our Board as of the date of this Proxy Statement.

 

NAME

 

AGE

 

PRINCIPAL OCCUPATION

Kim D. Blickenstaff

 

63

 

President and Chief Executive Officer of Tandem Diabetes Care, Chairman of the Board of Medivation, Inc.

Kathryn E. Falberg

 

55

 

Former Executive Vice President and Chief Financial Officer of Jazz Pharmaceuticals plc

David T. Hung, M.D.

 

58

 

President and Chief Executive Officer of Medivation, Inc.

Michael L. King, Ph.D.

 

63

 

Professor of Practice, University of Virginia – School of Engineering and Applied Science (Department of Chemical Engineering); Retired Senior Vice President/Advisor to the Chairman, President and Chief Executive Officer, Merck & Co., Inc.

C. Patrick Machado

 

52

 

Former Chief Business Officer and Chief Financial Officer of Medivation, Inc.

Dawn Svoronos

 

62

 

Former President of Europe/Canada of Merck & Co., Inc.

W. Anthony Vernon

 

60

 

Former Chief Executive Officer of Kraft Foods Group, Inc.

Wendy L. Yarno

 

61

 

Former Chief Marketing Officer of Merck & Co., Inc.

 

Kim D. Blickenstaff. Mr. Blickenstaff has served on our Board since 2005 and as the Chairman of our Board since 2007. Mr. Blickenstaff is a member of our Audit Committee. Since September 2007, Mr. Blickenstaff has been President and Chief Executive Officer of Tandem Diabetes Care, Inc., or Tandem, a company focusing on improved insulin infusion therapy, which became publicly listed in November 2011. From 1988 until August 2007, Mr. Blickenstaff served as Chairman and Chief Executive Officer of Biosite Incorporated, a provider of medical diagnostic products. Mr. Blickenstaff has been a director of Tandem since September 2007. He

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was also a director of SenoRx, Inc., a public company that is focused on developing improved breast cancer biopsy and treatment devices from 2002 to 2010, and was a member of its compensation committee. Mr. Blickenstaff was formerly a certified public accountant and has more than 10 years of experience overseeing the preparation of financial statements. Mr. Blickenstaff received a B.A. from Loyola University, Chicago and an M.B.A. from the Graduate School of Business, Loyola University, Chicago. We recruited Mr. Blickenstaff to our Board based on his substantial experience as a founder and chief executive officer of life sciences companies, as well as his financial and accounting skills and experience.

Kathryn E. Falberg. Ms. Falberg has served on our Board since January 2013. Ms. Falberg is currently the Chair of our Audit Committee. Ms. Falberg served as Executive Vice President and Chief Financial Officer of Jazz Pharmaceuticals PLC, a multi-national specialty biopharmaceutical company, from March 2012 to March 2014 after serving as Senior Vice President and Chief Financial Officer since December 2009. Her responsibilities at Jazz Pharmaceuticals included strategy, corporate development, corporate communications and information technology. During this period, the company grew rapidly and completed a number of significant acquisitions and financing transactions. From 2001 through 2009, Ms. Falberg worked with a number of smaller companies while serving as a corporate director and audit committee chair for several companies. From 1995 to 2001, Ms. Falberg was with Amgen Inc., a leading global biotechnology company, where she served as Senior Vice President, Finance and Strategy and Chief Financial Officer, and before that as Vice President, Controller and Chief Accounting Officer, and Vice President, Treasurer. Ms. Falberg received an M.B.A. and B.A. in Economics from the University of California, Los Angeles and is a certified public accountant, inactive. Ms. Falberg serves as a member of the board of directors of biopharmaceutical companies Aimmune Therapeutics, Inc., aTyr Pharma, Inc., and Halozyme Therapeutics, Inc.  Ms. Falberg previously served on the board of directors of QLT Inc., Human Genome Sciences, Inc., VISX and Fresh del Monte, Inc. We recruited Ms. Falberg to our Board based on her substantial experience in the life sciences industry, her service on the boards of directors and audit committees of other life sciences companies, her substantial experience with corporate strategy and corporate development, as well as her general financial and accounting skills and experience.

David T. Hung, M.D. Dr. Hung is a co-founder of Medivation, Inc., has been our President and Chief Executive Officer since inception, as well as a member of our Board since December 2004. Previously, Dr. Hung served as the President and Chief Executive Officer, and member of the board of directors, of Medivation Neurology, Inc. from its inception in September 2003 through December 2004, when it became our wholly owned subsidiary by merger. From 1998 until 2001, Dr. Hung was employed by ProDuct Health, Inc., a privately held medical device company, as Chief Scientific Officer (1998-1999) and as President and Chief Executive Officer (1999-2001). Dr. Hung served as a consultant to Cytyc Corporation from 2001 until 2002 to assist with transitional matters related to Cytyc Corporation’s acquisition of ProDuct Health, Inc. Dr. Hung serves on the board of directors of NKT Therapeutics Inc. and Establishment Labs S.A., both of which are privately held, and previously served as a member of the board of directors of Opexa Therapeutics, Inc., a biopharmaceutical company, from May 2006 to October 2011. Dr. Hung received an M.D. from the University of California, San Francisco, School of Medicine, and an A.B. in Biology from Harvard College. Dr. Hung is responsible for our overall corporate strategy and selection of our product development candidates. Dr. Hung also brings to our Board his experience as a practicing physician and molecular biologist.

Michael L. King, Ph.D.  Dr. King has served on our board of directors since December 2015. Dr. King is a member of our Nominating and Corporate Governance Committee.  Dr. King is currently a professor of practice at the University of Virginia School of Engineering and Applied Science and is an independent consultant to the pharmaceutical and biologics/vaccine industries, serving as a subject matter expert on chemistry, manufacturing and controls. Dr. King retired in 2007 from Merck & Co, Inc., following a 32-year career there focused on the commercialization, manufacturing and supply of vaccine and pharmaceutical products, where he most recently served as Senior Vice President / advisor to the Chairman, President and Chief Executive Officer. In that role, he provided assistance and leadership to facilitate implementation of Merck’s corporate strategy. Prior to that role, he served as Senior Vice President, Science and Technology, Merck Manufacturing Division. Dr. King received his Ph.D., in Chemical Engineering from the University of Delaware, M.S., in Chemical Engineering from the University of Virginia, and B.S., in Chemical Engineering from Virginia Tech. He also serves on the board of directors and advisory boards of multiple organizations. We recruited Dr. King to our Board based on his substantial biologics and manufacturing experience, subject matter expertise on chemistry, manufacturing and controls, as well as leadership experience at a leading pharmaceutical company.

C. Patrick Machado. Mr. Machado has served on our Board since April 2014. Previously, Mr. Machado was our Chief Financial Officer from December 2004 to March 2014 and our Chief Business Officer from December 2009 to April 2014. Mr. Machado served as the Senior Vice President and Chief Financial Officer, and a member of the board of directors, of Medivation Neurology, Inc. from its inception in September 2003 through December 2004, when it became our wholly owned subsidiary by merger. From 1998 until 2001, Mr. Machado was employed by ProDuct Health, Inc., a privately held medical device company, as Vice President, Chief Financial Officer and General Counsel (1998-2000) and as Senior Vice President and Chief Financial Officer (2000-2001). From 2001 until 2002, Mr. Machado served as a consultant to Cytyc Corporation to assist with transitional matters related to Cytyc Corporation’s acquisition of ProDuct Health, Inc. Mr. Machado currently serves on the board of directors of Chimerix, Inc., a biopharmaceutical company, and SCYNEXIS, Inc., a pharmaceutical company, and serves as the chair of the board of directors of Armaron Bio Pty. Ltd., a privately held biotechnology company based in Melbourne, Australia. Mr. Machado received

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a J.D. from Harvard Law School and a B.A. and B.S. in German and Economics, respectively, from Santa Clara University. Because of Mr. Machado’s extensive knowledge of our company, the pharmaceutical industry and our competitors, we believe he is able to make valuable contributions to our Board.

Dawn Svoronos. Ms. Svoronos has served on our Board since April 2013. Ms. Svoronos is currently the Chair of our Nominating and Corporate Governance Committee and a member of our Compensation Committee. Ms. Svoronos served as our interim Chief Commercial Officer from July 2014 to December 2014. She retired in 2011 from Merck & Co., Inc. following a 23-year career in commercial positions of increasing seniority, most recently President of Europe and Canada. In that role, Ms. Svoronos had full P&L responsibility for 30 European markets with annual sales of several billion dollars and an employee base of several thousand. Prior to those roles, she served as Vice President, Asia Pacific for Merck. In 2009, Ms. Svoronos was elected as One of the Most Powerful Women in Canada by the Canadian Women’s Executive Network. Ms. Svoronos received a B.A. in English and French Literature from Carleton University. Ms. Svoronos is currently the chair of the board of directors of Theratechnologies, Inc. in Montreal, Canada and is also the chair of the board of directors of the Centre for Drug Research and Development in Vancouver, Canada. She is also a member of the board of directors of AgNovos Healthcare Co., a privately held organization. We recruited Ms. Svoronos to our Board based on her extensive experience in the commercialization of pharmaceutical products, including her substantial ex-U.S. commercialization expertise.

W. Anthony Vernon. Mr. Vernon has served on our Board since 2006. Mr. Vernon is a member of our Compensation Committee and a member of our Nominating and Corporate Governance Committee. He served as senior advisor to Kraft Foods Group, Inc. from January 2015 through May 2015, and Chief Executive Officer for Kraft Foods Group, Inc. from October 2012 to December 2014. Mr. Vernon previously served as Executive Vice President and President at Kraft Foods of North America from 2009 to October 2012. From 2006 to 2009, Mr. Vernon was the Healthcare Industry Partner at Ripplewood Holdings, Inc., a private equity firm. Mr. Vernon had previously led a number of Johnson & Johnson’s largest franchises during a 24-year career at Johnson & Johnson, a public company engaged in the research and development, manufacture and sale of products in the healthcare field. From 2004 until 2005, Mr. Vernon was employed as Company Group Chairman of Depuy Inc., an orthopedics company, which is a subsidiary of Johnson & Johnson. From 2001 until 2004, Mr. Vernon served as President and Chief Executive Officer of Centocor, Inc., a biomedicines company, which is a division of Johnson & Johnson. He has also served as President of McNeil Consumer Products and Nutritionals, Worldwide President of The Johnson & Johnson-Merck Joint Venture and as a member of Johnson & Johnson’s Group Operating Committees for Consumer Healthcare and Nutritionals, Biopharmaceuticals, and Medical Devices and Diagnostics. Mr. Vernon serves as a member of the board of directors of NovoCure Ltd., a medical device company, Intersect ENT, Inc., a medical device company, and The WhiteWave Foods Company, a consumer packaged food and beverage company, and formerly served as a director of Kraft Foods Group, Inc. Mr. Vernon received a B.A. from Lawrence University and an M.B.A. from the Northwestern University Kellogg Graduate School of Management. We recruited Mr. Vernon to our Board based on his substantial executive management, commercialization, business development and financial experience at a large, multinational pharmaceutical company.

Wendy L. Yarno. Ms. Yarno has served on our Board since April 2013. Ms. Yarno is currently the Chair of our Compensation Committee and a member of our Audit Committee. Ms. Yarno retired in September 2008 from Merck & Co., Inc. following a 26-year career in commercial and human resource positions of increasing seniority, most recently Chief Marketing Officer before she retired. In that role, Ms. Yarno led a global organization charged with all aspects of supporting pre- and post-launch commercialization of pharmaceuticals in more than 20 therapeutic areas. Prior to this role, she served as General Manager, Cardiovascular/Metabolic U.S. Business Unit, where she had P&L responsibility for Merck’s largest therapeutic area, and as Senior Vice President, Human Resources. After retiring from Merck, Ms. Yarno worked part-time as the Chief Marketing Officer of HemoShear LLC, a biotechnology research company and leading developer of human cell-based surrogate systems for discovery and assessment of new drug compounds, from September 2010 through September 2011. From September 2011 through December 2013, Ms. Yarno was an independent consultant in the life sciences industry.  Ms. Yarno has served as a director of St. Jude Medical, Inc., a Fortune 500 medical device company, since 2002, Aratana Therapeutics, a biopharmaceutical company developing medicines for pets, since October 2013, and Durata Therapeutics, Inc., a pharmaceutical company, from August 2014 to November 2014 when it was acquired by Actavis W.C. Holding Inc. Ms. Yarno received a B.S. in Business Administration from Portland State University and an M.B.A from Temple University. We recruited Ms. Yarno to our Board based on her extensive experience in commercialization of pharmaceutical products and in human resource management in the pharmaceutical industry.

All directors will hold office until our next annual meeting of stockholders and until their successors have been duly elected or qualified. There are no family relationships between any of our directors or executive officers.

Vote Required; Recommendation of our Board of Directors

For the election of directors, the eight nominees receiving the most “For” votes (from the holders of shares present in person or represented by proxy and entitled to vote at the Annual Meeting) will be elected. Only votes “For” will affect the outcome. Broker non-votes and “Withhold” votes will have no effect.

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OUR BOARD RECOMMENDS

A VOTE “FOR” ALL OF THE NAMED NOMINEES IN PROPOSAL NO. 1

INFORMATION REGARDING OUR BOARD OF DIRECTORS AND CORPORATE GOVERNANCE

INDEPENDENCE OF OUR BOARD OF DIRECTORS

As required under the NASDAQ Stock Market LLC, or NASDAQ, listing standards, a majority of the members of a listed company’s board of directors must qualify as “independent,” as affirmatively determined by the board of directors. Our Board consults with our counsel to ensure that its determinations are consistent with relevant securities and other laws and regulations regarding the definition of “independent,” including those set forth in pertinent listing standards of NASDAQ, as in effect from time to time.

Consistent with these considerations, after review of all relevant identified transactions or relationships between each director, or any of his or her family members, and Medivation, its senior management and its independent auditors, our Board has affirmatively determined that the following six directors are independent directors within the meaning of the applicable NASDAQ listing standards: Mr. Blickenstaff, Ms. Falberg, Dr. King, Ms. Svoronos, Mr. Vernon and Ms. Yarno. In making this determination, our Board concluded that none of these directors had a material or other disqualifying relationship with us. Although Ms. Svoronos served as our interim Chief Commercial Officer from July 2014 to December 2014 and provided brief consulting services to the Company in February 2015 relating to that role, her total engagement was for less than one year and, pursuant to the NASDAQ listing standards, is not precluded from being independent following the cessation of her status as our interim Chief Commercial Officer, and our Board after considering this short duration of service as our interim Chief Commercial Officer has determined that she is independent. Dr. Hung, our President and Chief Executive Officer, is not an independent director by virtue of his employment with us. Mr. Machado was our Chief Financial Officer until March 2014 and was our Chief Business Officer and employee until April 18, 2014, and therefore is not an independent director by virtue of his prior employment with us.

BOARD LEADERSHIP STRUCTURE

Our Board has an independent Chairman, Mr. Blickenstaff, who has authority, among other things, to call and preside over Board meetings, including meetings of the independent directors, to set meeting agendas and to determine materials to be distributed to our Board. Accordingly, our Chairman has substantial ability to shape the work of our Board. Our Board believes separation of the positions of Chairman and Chief Executive Officer reinforces the independence of our Board in its oversight of the business and affairs of Medivation. In addition, our Board believes that having an independent Chairman creates an environment that is more conducive to objective evaluation and oversight of management’s performance, increasing management accountability and improving the ability of our Board to monitor whether management’s actions are in the best interests of Medivation and its stockholders. As a result, our Board believes that having an independent Chairman can enhance the effectiveness of our Board as a whole.

Our Board has six independent members within the meaning of the applicable NASDAQ listing standards and two non-independent members, Dr. Hung, our President and Chief Executive Officer, and Mr. Machado, our former Chief Business Officer and Chief Financial Officer. A number of our independent Board members are serving or have served as members of senior management of other public companies and are serving or have served as directors of other public companies. We have three Board committees composed solely of independent directors within the meaning of the applicable NASDAQ listing standards. We believe that the number of independent, experienced directors that compose our Board, along with the independent oversight of our Board by our (non-executive) Chairman, benefits Medivation and its stockholders and enhances our Board leadership structure.

ROLE OF OUR BOARD IN RISK OVERSIGHT

Our Board is responsible for the consideration and oversight of risks facing Medivation, and is responsible for ensuring that material risks are identified and managed appropriately. Our Board does not have a standing risk management committee, but rather administers this function directly through our Board as a whole, as well as through various Board standing committees that address risks inherent in their respective areas of oversight. In particular, our Board is responsible for monitoring and assessing strategic risk exposure, including a determination of the nature and level of risk appropriate for Medivation. Our Audit Committee has the responsibility to consider and discuss our major financial risk, information technology and security risk and enterprise risk exposures and the steps our management has taken to limit, monitor and control these exposures. Our Nominating and Corporate Governance Committee reviews the qualifications of all new and incumbent directors and recommends to the full Board whether our Board should elect or nominate them. The Compensation Committee of our Board, or our Compensation Committee, provides oversight of all compensation plans for Medivation, and ensures that there are appropriate incentives for meeting both short-term and long-term objectives and increasing stockholder value over time. While each committee is responsible for addressing risks inherent in their respective areas of oversight, the entire Board is informed through reports from the committee members about the risks.

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NON-EMPLOYEE DIRECTOR STOCK OWNERSHIP GUIDELINES

Our Board believes that each non-employee director should own not less than three times the annual cash board retainer for such directors, and that compliance with this stock ownership guideline should be accomplished by January 1, 2018. All of our directors have already met their stock ownership obligations.

MEETINGS OF OUR BOARD OF DIRECTORS

Our Board met eleven times during 2015. Each Board member who served on our Board in 2015 attended 75% or more of the aggregate number of meetings of our Board and of the committees on which he or she served, held during the portion of 2015 for which he or she was a director or committee member.

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INFORMATION REGARDING THE COMMITTEES OF OUR BOARD OF DIRECTORS

Our Board has three standing committees: our Audit Committee, our Compensation Committee and our Nominating and Corporate Governance Committee. The following table provides membership and meeting information for 2015 for each of our Board committees:

 

Name

 

Audit

Committee

 

 

Compensation

Committee

 

 

Nominating

and

Corporate

Governance

Committee

 

 

Kim D. Blickenstaff

 

X

 

 

 

 

 

 

 

 

Kathryn E. Falberg

 

X

 

*

 

 

 

 

 

 

Dawn Svoronos

 

 

 

 

X

 

 

X

 

*

W. Anthony Vernon

 

 

 

 

X

 

 

X

 

 

Wendy L. Yarno

 

X

 

 

X

 

*

X

 

(1)

Total meetings in 2015

 

 

7

 

 

 

9

 

 

 

3

 

 

 

*

Committee Chair.

(1)

Dr. King replaced Ms. Yarno on our Nominating and Corporate Governance Committee in February 2016.

Below is a description of each committee of our Board. Our Board has determined that each member of each committee meets the applicable NASDAQ rules and regulations regarding “independence” and that each member is free of any relationship that would impair his or her individual exercise of independent judgment with regard to Medivation.

Audit Committee

The Audit Committee of our Board, or our Audit Committee, is responsible for reviewing the work of our internal accounting processes and our independent registered public accounting firm. To this end, our Audit Committee performs several functions, including meeting to review our annual audited consolidated financial statements and quarterly consolidated financial statements with management and the independent registered public accounting firm, which includes a review of our disclosures under “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and recommending whether or not such consolidated financial statements should be included in the applicable filings. Our Audit Committee has the sole authority for the appointment, compensation and oversight of our independent registered public accounting firm and approval of any significant non-audit relationship with the independent registered public accounting firm and is also responsible for preparing the report required by the rules of the SEC to be included in our annual proxy statements. Our Audit Committee has a written charter that is available to stockholders on our website at www.medivation.com in the Investor Relations section under “Corporate Governance.” However, information found on our website is not incorporated by reference into this Proxy Statement.

Our Board reviews the NASDAQ listing standards definition of independence for audit committee members on an annual basis and has determined that all members of our Audit Committee are independent (as independence is currently defined in Rule 5605(c)(2)(A)(i) and (ii) of the NASDAQ listing standards). Our Board has also determined that each of Mr. Blickenstaff and Ms. Falberg qualifies as an “audit committee financial expert,” as defined in applicable SEC rules. Our Board made a qualitative assessment of each Audit Committee member’s level of knowledge and experience based on a number of factors, including his or her formal education and experiences as described in their biographies included in this Proxy Statement.

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Report of the Audit Committee of the Board of Directors(1)

The Audit Committee has reviewed and discussed the audited consolidated financial statements for the fiscal year ended December 31, 2015, with management of Medivation. The Audit Committee has discussed with the independent registered public accounting firm the matters required to be discussed by Auditing Standard No. 16, Communications with Audit Committees, as adopted by the Public Company Accounting Oversight Board, or PCAOB. The Audit Committee has also received the written disclosures and the letter from the independent registered public accounting firm required by applicable requirements of the PCAOB regarding the independent accountants’ communications with the Audit Committee concerning independence, and has discussed with the independent registered public accounting firm the accounting firm’s independence. Based on the foregoing, the Audit Committee has recommended to the Board that the audited consolidated financial statements be included in our 2015 Annual Report.

 

Respectfully submitted,

The Audit Committee of the Board of Directors

 

Kathryn E. Falberg, Chair

Kim D. Blickenstaff

Wendy L. Yarno

 

(1)

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 filing of Medivation under the Securities Act of 1933, as amended, or the Securities Act, or the Exchange Act, whether made before or after the date hereof and irrespective of any general incorporation language in any such filing.

Compensation Committee

The purpose of our Compensation Committee is to design (in consultation with management and our Board), recommend for approval and evaluate our compensation plans, policies and procedures, to review and approve the compensation of the executive officers and directors, and to produce an annual report on executive compensation for inclusion in our proxy statement. In carrying out these purposes, our Compensation Committee’s responsibilities include: reviewing and, if necessary, revising our compensation philosophy; reviewing and approving corporate goals and objectives relating to the compensation of the Chief Executive Officer, evaluating the performance of the Chief Executive Officer in light of these goals and objectives, and establishing the compensation of the Chief Executive Officer based on the evaluation; reviewing and approving compensation for other officers and directors; reviewing any equity incentive, employee retirement and benefit plans; reviewing the grant of perquisite benefits; reviewing executive officer and director indemnification and insurance matters; and reviewing any employee loans. Our Compensation Committee has the authority to approve the compensation provided to our executive officers. As described in “Executive Compensation—Compensation Discussion and Analysis” below, our Compensation Committee utilizes Radford, an Aon-Hewitt company, for executive compensation benchmarking and consulting based on its recognized status as a leading global provider of compensation intelligence and consulting services to companies in the life sciences sectors. Radford is engaged by our Compensation Committee to provide it with competitive compensation data and input on base salaries, bonus opportunities and equity awards for executive officers, and for compensation of our non-employee directors, for which we paid Radford $49,550 in 2015. Radford also performed work related to employee compensation support initiated in 2014, for which we paid Radford $5,460 in 2015, and provided our management with access to the Radford Global Life Sciences Survey for a fee of $10,439 in 2015, which in each case were requested by our management and of which our Compensation Committee was aware of but did not review and approve as those services were reviewed and approved by management in the ordinary course of business. We also retained the services of Aon Risk Services, an affiliate of Radford and a leading provider of insurance and risk management services, in certain ongoing insurance broker roles. We paid Aon Risk Services $200,000 for its insurance brokerage services performed at the request of management in 2015. Although our Compensation Committee was aware of the nature of the services performed by Aon Risk Services, our Compensation Committee did not review and approve such services as those services were reviewed and approved by management in the ordinary course of business. Before engaging Radford, for purposes of minimizing any potential conflicts of interest, our Compensation Committee also required that any matters on which Radford works with management will be fully disclosed to our Compensation Committee. Our Compensation Committee considered and assessed all relevant factors that could give rise to a potential conflict of interest with respect to the work of Radford. Based on this review, our Compensation Committee did not believe that there was any conflict of interest raised by work performed by Radford.

Under its charter, our Compensation Committee may select, or receive advice from, a compensation consultant, legal counsel or other adviser to our Compensation Committee, other than in-house counsel and certain other types of advisers, only after taking into consideration six factors, prescribed by the SEC and NASDAQ, that bear upon the adviser’s independence; however, there is no requirement that any adviser be independent.

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Reviews of our compensation programs are performed annually. Each year, our Compensation Committee reviews with management our Compensation Discussion and Analysis and considers whether to recommend that it be included in proxy statements and other filings. Our Compensation Committee met nine times during 2015. Our Compensation Committee has a written charter that is available to stockholders on our website at www.medivation.com in the Investor Relations section under “Corporate Governance.” However, information found on our website is not incorporated by reference into this Proxy Statement.

The specific determinations of our Compensation Committee with respect to executive compensation for 2015, as well as our Compensation Committee’s processes and procedures and the role of our executive officers in recommending and determining executive compensation, are described in greater detail in the section of this Proxy Statement titled “Executive Compensation—Compensation Discussion and Analysis.” For information regarding our processes and procedures for the consideration and determination of director compensation, please see “Executive Compensation—Director Compensation.”

Compensation Committee Interlocks and Insider Participation

As noted above, our Compensation Committee consists of Ms. Yarno, Ms. Svoronos and Mr. Vernon. No member of our Compensation Committee was our officer or employee during 2015 and, except that Ms. Svoronos served as our interim Chief Commercial Officer between July 2014 and December 2014 and provided brief consulting services to the company in February 2015 relating to that role, no member of our Compensation Committee was formerly our officer or our employee. No interlocking relationship exists between the members of our Board or Compensation Committee and the board of directors or compensation committee of any other company, nor has such an interlocking relationship existed in the past.

Compensation Committee Report(1)

The Compensation Committee has reviewed and discussed with management the Compensation Discussion and Analysis, or CD&A, contained in this Proxy Statement. Based on this review and discussion, the Compensation Committee has recommended to the Board that the CD&A be included in this Proxy Statement and our 2015 Annual Report.

 

Respectfully submitted,

The Compensation Committee of the Board of

Directors

 

Wendy L. Yarno, Chair

Dawn Svoronos

W. Anthony Vernon

 

(1)

The material in this report is not “soliciting material”, is not deemed “filed” with the SEC and is not to be incorporated by reference in any filing of Medivation under the Securities Act or the Exchange Act, whether made before or after the date hereof and irrespective of any general incorporation language in any such filing.

Nominating and Corporate Governance Committee

Our Nominating and Corporate Governance Committee is responsible for recommending to our Board individuals to be nominated as directors and committee members. This includes evaluation of new candidates as well as evaluation of current directors. This committee is also responsible for making recommendations to our Board regarding corporate governance issues. All members of our Nominating and Corporate Governance Committee are independent (as independence is currently defined in Rule 5605(a)(2) of the NASDAQ listing standards). Our Nominating and Corporate Governance Committee met three times during 2015. Our Nominating and Corporate Governance Committee has a written charter that is available to stockholders on our website at www.medivation.com in the Investor Relations section under “Corporate Governance.” However, information found on our website is not incorporated by reference into this Proxy Statement.

Our Nominating and Corporate Governance Committee considers several factors in evaluating potential candidates for our Board. The director qualifications that our Nominating and Corporate Governance Committee has developed to date focus on what our Nominating and Corporate Governance Committee believes to be essential competencies to effectively serve on our Board, including the candidate’s experience in corporate governance, such as an officer or former officer of a publicly held company, experience in our industry, experience as a board member of another publicly held company and academic expertise in an area of our operations. We do not have a formal policy with regard to the consideration of diversity in identifying director nominees, but our Nominating and Corporate Governance Committee strives to nominate directors with a variety of individual backgrounds and complementary skills so that, as a group, our Board will possess the appropriate talent, skills and expertise to oversee our business and operations.  The Nominating and Corporate Governance Committee also evaluates whether candidates are independent and whether they exhibit

15


integrity, collegiality, leadership skills, sound business judgment and other qualities that the Nominating and Corporate Governance Committee views as critical to effective functioning of the Board.

Prior to each annual meeting of stockholders at which directors are to be elected, and whenever there is otherwise a vacancy on our Board, our Nominating and Corporate Governance Committee considers incumbent members of our Board and other well-qualified individuals as potential director nominees. Our Nominating and Corporate Governance Committee may retain an executive search firm to identify Board candidates, and if so, will approve the search firm’s fees and other retention terms and specify for the search firm the criteria to use in identifying potential candidates, consistent with the director qualification criteria described above. Our Nominating and Corporate Governance Committee did not engage a third party to identify or assist in identifying potential director nominees for election at the Annual Meeting. Our Nominating and Corporate Governance Committee makes its recommendations to our Board, which selects the candidate or candidates it believes are the most qualified to recommend to the stockholders as a director nominee.

Our Nominating and Corporate Governance Committee will consider director candidates recommended by stockholders. Stockholders who wish to recommend individuals for consideration by the Nominating and Corporate Governance Committee to become nominees for election to our Board may do so by delivering a written recommendation to our Corporate Secretary at 525 Market Street, 36th Floor, San Francisco, California 94105 at least 120 days prior to the anniversary date of the mailing of our proxy statement for the last annual meeting of stockholders and must include the following information:

 

·

name and address of the nominating stockholder;

 

·

a representation that the nominating stockholder is a record holder;

 

·

a representation that the nominating stockholder intends to appear in person or by proxy at the annual meeting to nominate the person or persons specified;

 

·

information regarding each nominee that would be required to be included in a proxy statement;

 

·

a description of any arrangements or understandings between the nominating stockholder and the nominee; and

 

·

the consent of each nominee to serve as a director, if elected.

Our Nominating and Corporate Governance Committee will evaluate candidates recommended by a stockholder in the same manner as candidates identified by any other person, including members of our Board. To date, our Nominating and Corporate Governance Committee has not rejected a timely director nominee from a stockholder or group of stockholders.

Stockholder Communications with Our Board

Stockholders may direct correspondence to our Board or any individual member of our Board to our Corporate Secretary at our principal executive offices at 525 Market Street, 36th Floor, San Francisco, California 94105. The Corporate Secretary will review all correspondence addressed to our Board, or any individual Board member, for any inappropriate correspondence and correspondence more suitably directed to management. However, the Corporate Secretary will summarize all correspondence not forwarded to our Board and make the correspondence available to our Board for its review upon request. The Corporate Secretary will forward stockholder communications to our Board prior to the next regularly scheduled meeting of our Board following the receipt of the communication.

Code of Business Conduct and Ethics

We have adopted a written code of business conduct and ethics that applies to our principal executive officer, principal financial officer, principal accounting officer, or persons serving similar functions. The code of business conduct and ethics is available at our website www.medivation.com in the Investor Relations section under “Corporate Governance.” However, information found on our website is not incorporated by reference into this Proxy Statement. If we make any substantive amendments to our code of business conduct and ethics or grant to any of our directors or executive officers any waiver, including any implicit waiver, from a provision of our code of business conduct and ethics, we will disclose the nature of the waiver or amendment on our website or in a Current Report on Form 8-K.

 

 

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Proposal No. 2

Ratification of Selection of Independent Registered Public Accounting Firm

Our Audit Committee has selected PricewaterhouseCoopers LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2016, and has further directed that management submit the selection of independent registered public accounting firm for ratification by the stockholders at the Annual Meeting. PricewaterhouseCoopers LLP has audited our consolidated financial statements since 2007. Representatives of PricewaterhouseCoopers LLP are expected to be present at the Annual Meeting. They will have an opportunity to make a statement if they so desire and will be available to respond to appropriate questions.

Neither our bylaws nor other governing documents or law require stockholder ratification of the selection of PricewaterhouseCoopers LLP as our independent registered public accounting firm. However, our Audit Committee is submitting the selection of PricewaterhouseCoopers LLP to the stockholders for ratification as a matter of good corporate practice. If the stockholders fail to ratify the selection, our Audit Committee will reconsider whether or not to retain that firm. Even if the selection is ratified, our Audit Committee in its discretion may direct the appointment of different independent registered public accounting firms at any time during the year if our Audit Committee determines that such a change would be in the best interests of Medivation and its stockholders.

Vote Required; Recommendation of our Board of Directors

The affirmative vote of the holders of a majority of the shares of common stock present in person or represented by proxy and entitled to vote at the Annual Meeting will be required to ratify the selection of PricewaterhouseCoopers LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2016. If you “Abstain” from voting, it will have the same effect as an “Against” vote. Proposal No. 2 is considered a routine matter, and therefore no broker non-votes are expected in connection with Proposal No. 2.

Our Board Recommends

A Vote “For” Proposal No. 2

Principal Accounting Fees and Services

In connection with the audit of our 2015 and 2014 consolidated financial statements, we entered into an engagement agreement with PricewaterhouseCoopers LLP, which sets forth the terms by which PricewaterhouseCoopers LLP will perform audit and interim services for us. We have agreed not to demand a jury trial in any proceeding arising out of this agreement.

The following table represents aggregate fees billed and to be billed to Medivation for the fiscal years ended December 31, 2015 and 2014, by PricewaterhouseCoopers LLP, our independent registered public accounting firm.

 

 

 

Fiscal Year Ended

 

 

 

2015

 

 

2014

 

Audit fees (1)

 

$

1,622,350

 

 

$

1,518,700

 

Audit-related fees (2)

 

 

613,830

 

 

 

408,489

 

Tax fees (3)

 

 

32,100

 

 

 

41,150

 

All other fees (4)

 

 

135,522

 

 

 

3,900

 

Total fees

 

$

2,403,802

 

 

$

1,972,239

 

 

(1)

Audit fees for 2015 and 2014 are fees billed and to be billed for the audit of our consolidated financial statements, review of the consolidated financial statements included in our quarterly reports, and for services in connection with regulatory filings and engagements.

(2)

Audit-related fees for 2015 and 2014 are fees billed and to be billed for the audit of certain financial statements relating to a subsidiary.

(3)

Tax fees for 2015 and 2014 represent fees for tax advisory and tax planning services, including with respect to payroll and equity matters and state tax considerations.

(4)

All other fees in 2015 and 2014 represent fees for access to an online database of automated disclosure checklists and accounting pronouncements and interpretations maintained by PricewaterhouseCoopers LLP. During 2015, these fees also included fees incurred in connection with a fair value analysis related to healthcare provider engagements.

All fees described above were pre-approved by our Audit Committee.

17


Pre-Approval Policies and Procedures

Before any independent registered public accounting firm is engaged by us or our subsidiaries to render audit or non-audit services, our Audit Committee is required to pre-approve the engagement. Our Audit Committee’s pre-approval of audit and non-audit services will not be required if the engagement for the services is entered into pursuant to pre-approval policies and procedures established by our Audit Committee regarding our engagement of the independent registered public accounting firm, provided the policies and procedures are detailed as to the particular service, our Audit Committee is informed of each service provided and the policies and procedures do not include delegation of our Audit Committee’s responsibilities under the Exchange Act to our management. Our Audit Committee may delegate to one or more designated members of our Audit Committee the authority to grant pre-approvals, provided the approvals are presented to our Audit Committee at a subsequent meeting. If our Audit Committee elects to establish pre-approval policies and procedures regarding non-audit services, our Audit Committee must be informed of each non-audit service provided by the independent registered public accounting firm. Audit Committee pre-approval of non-audit services (other than review and attest services) also is not required if the services fall within available exceptions established by the SEC.

Our Audit Committee has determined that the rendering of the services other than audit services by PricewaterhouseCoopers LLP is compatible with maintaining the independent registered public accounting firm’s independence.

 

 

18


Proposal No. 3

Advisory Vote on Executive Compensation

At the 2011 Annual Meeting of Stockholders, our stockholders indicated their preference that we solicit a non-binding advisory vote on the compensation of the named executive officers, commonly referred to as a “say-on-pay vote,” every year. Our Board has adopted a policy that is consistent with that preference. In accordance with that policy, this year, we are again asking our stockholders to approve, on an advisory basis, the compensation of our named executive officers as disclosed in this Proxy Statement in accordance with SEC rules. 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. Our executive compensation program is designed to align our executive officers’ compensation with our business objectives and the interests of our stockholders, to incentivize and reward our executive officers for our success, and to reflect the teamwork philosophy of our executive management team. To do that, our executive compensation program combines short- and long-term components, cash and equity, and fixed and contingent payments, in the proportions that we believe are the most appropriate to incentivize and reward our executive officers for achieving our objectives.

Consistent with the goals of our executive compensation program and as discussed in “Executive Compensation—Compensation Discussion and Analysis,” our Compensation Committee has designed guiding principles focused on pay-for-performance, competitiveness of our compensation program with our peer group, and a straight-forward compensation program with very few fringe benefits and without employment agreements that contain multi-year guarantees for salary increases, non-performance based guaranteed bonuses or guaranteed equity compensation. We believe that our executive compensation program has been effective at encouraging the achievement of positive results, appropriately aligning pay and performance, and in enabling us to attract and retain talented executive officers within our industry.

We encourage our stockholders to read “Information Regarding our Board of Directors and Corporate Governance—Information Regarding the Committees of our Board of Directors—Compensation Committee,” “Executive Compensation—Compensation Discussion and Analysis,” “Executive Compensation—Compensation Plans and Arrangements” and the other sections of this Proxy Statement under “Executive Compensation” for more detail on our executive compensation programs and practices.

Our Board 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 Medivation’s named executive officers, as disclosed in Medivation’s proxy statement for the 2016 Annual Meeting of Stockholders 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 our Board or us. Nevertheless, the views expressed by the stockholders, whether through this vote or otherwise, are important to management and our Board and, accordingly, our Board and our Compensation Committee intend to consider the results of this vote in making determinations in the future regarding executive compensation arrangements.

Vote Required; Recommendation of our Board of Directors

The affirmative vote of the holders of a majority of the shares of common stock present in person or represented by proxy and entitled to vote at the Annual Meeting will be required to obtain advisory approval of the compensation of our named executive officers. If you “Abstain” from voting, it will have the same effect as an “Against” vote. Broker non-votes will have no effect.

Our Board Recommends

A Vote “For” Proposal No. 3

19


Proposal No. 4

Approval Of An Amendment And Restatement Of The Medivation, Inc.

Amended And Restated 2004 Equity Incentive Award Plan

Our Board and stockholders originally adopted the Medivation, Inc. 2004 Equity Incentive Award Plan in 2004, which was subsequently amended and restated in 2007, 2012, 2013, 2014 and 2015 as the Medivation, Inc. Amended and Restated 2004 Equity Incentive Award Plan (in its original form and as so amended and restated, theAmended 2004 Plan”). Our Board is requesting stockholder approval of an amendment and restatement of the Amended 2004 Plan, or the Amended and Restated 2004 Plan, to make the following material changes:

 

·

increase the aggregate number of shares of common stock authorized for issuance under the Amended and Restated 2004 Plan by 1,600,0001 shares, from 47,700,000 to 49,300,000 shares, subject to certain changes in our capitalization; and

 

·

extend the term of the Amended and Restated 2004 Plan, as well as the last date upon which incentive stock options may be granted under the Amended and Restated 2004 Plan, to April 22, 2026, which is the ten-year anniversary of the date the Amended and Restated 2004 Plan was approved by our Board.

Our Board approved the Amended and Restated 2004 Plan on April 22, 2016, subject to stockholder approval. If this Proposal No. 4 is approved by our stockholders, the Amended and Restated 2004 Plan will become effective upon the date of the Annual Meeting. In the event our stockholders do not approve this Proposal No. 4, the Amended and Restated 2004 Plan will not become effective and the Amended 2004 Plan will continue in its current form.

Why Are We Requesting Additional Shares Now?

With our acquisition of talazoparib, our license of exclusive worldwide rights to pidilizumab, our diversification of enzalutamide beyond prostate cancer, and the advancement of our proprietary research and development programs, our employee base grew from 485 employees on December 31, 2014 to 628 employees on December 31, 2015, representing almost 30% growth in 2015.  While we still have 5,584,633 shares remaining available for grant as of March 15, 2016, if we exhaust our remaining share reserve, we will be unable to issue new equity awards to new and existing employees, consultants, officers and directors, and this would seriously hamper our ability to provide a competitive pay package to retain current and recruit prospective employees. Equity awards are a critical component of our compensation philosophy and our ability to compete for qualified employees with other biotechnology and pharmaceutical companies in the San Francisco Bay Area, where competition is fierce.  Therefore, we believe that approval of this request is in the best interest of our stockholders and Medivation.

While we recognize that equity awards may have a dilutive impact on existing stockholders, we believe that we have managed our existing equity reserves carefully, and that our current level of dilution and “burn rate” is reasonable, and in line with those of our peer companies, as demonstrated in the tables below. In addition, because many of our employee awards are granted in the form of stock options, these employees will only realize value from this type of award if they remain employed by the Company and our stock price increases, and in this circumstance, stockholders will also benefit through the increase in value of their holdings.

We believe that this share increase request will provide us with a sufficient number of shares to enable us to grant equity awards to our employees, directors and consultants for approximately one year. Thus, we anticipate seeking stockholder approval to increase the number of shares available for issuance under the Amended and Restated 2004 Plan again at our 2017 Annual Meeting of Stockholders.

 

1 

All share amounts provided in this Proposal No. 4 have been adjusted to reflect our September 15, 2015, two-for-one stock split effected through a stock dividend.

20


Why You Should Vote for the Amended and Restated 2004 Plan

We Manage Our Equity Award Use Carefully and Dilution Is Reasonable

The following table provides certain additional information regarding our equity incentive program.

 

 

 

As of

 

 

 

As of

 

 

 

 

March 15, 2016

 

 

 

December 31, 2015

 

 

Total number of shares of common stock subject to

   outstanding stock options and SARs

 

 

12,772,194

 

(1)

 

 

11,406,297

 

(2)

Weighted-average exercise price of outstanding

   stock options and SARs

 

$

23.77

 

(3)

 

$

21.80

 

(4)

Weighted-average remaining term of outstanding

   stock options and SARs

 

 

6.35

 

(5)

 

 

6.00

 

(6)

Total number of shares of common stock subject to

   outstanding full value awards

 

 

1,736,967

 

 

 

 

1,089,046

 

 

Total number of shares of common stock available for

   grant under the Amended 2004 Plan

 

 

5,584,633

 

 

 

 

8,719,589

 

 

Total number of shares of common stock available for

   grant under other equity incentive plans

 

 

 

 

 

 

 

 

 

 

 

As of

April 25, 2016

 

 

 

(Record Date)

 

Total number of shares of common stock outstanding

 

 

164,610,106

 

Per-share closing price of common stock as reported on

   NASDAQ Global Select Market

 

$

52.07

 

 

(1)

There were 11,474,066 shares of common stock subject to outstanding stock options and 1,298,128 shares of common stock subject to outstanding SARs. The shares subject to outstanding SARs would be converted into 878,647 shares of our common stock based on the closing price of our common stock on March 15, 2016, which was $37.29 per share.

(2)

There were 10,108,169 shares of common stock subject to outstanding stock options and 1,298,128 shares of common stock subject to outstanding SARs. The shares subject to outstanding SARs would be converted into 974,536 shares of our common stock based on the closing price of our common stock on December 31, 2015, which was $48.34 per share.

(3)

The weighted-average exercise price of outstanding stock options was $25.10 and the weighted-average exercise price of outstanding SARs was $12.05.

(4)

The weighted-average exercise price of outstanding stock options was $23.05 and the weighted-average exercise price of outstanding SARs was $12.05.

(5)

The weighted-average remaining term of outstanding stock options was 6.45 years and the weighted- average remaining term of outstanding SARs was 5.50 years.

(6)

The weighted-average remaining term of outstanding stock options was 6.01 years and the weighted- average remaining term of outstanding SARs was 5.96 years.

Our Burn Rate Is Reasonable

The following table provides detailed information regarding the activity related to the Amended 2004 Plan for the fiscal year ended December 31, 2015. Our only equity incentive plan is the Amended 2004 Plan.

 

 

 

Fiscal Year 2015

 

Total number of shares of common stock subject to stock

   options granted

 

 

1,822,724

 

Total number of shares of common stock subject to SARs

   granted

 

 

 

Total number of shares of common stock subject to full value

   awards granted

 

 

670,244

 

Weighted-average number of shares of common stock

   outstanding

 

 

160,344,534

 

Burn Rate

 

 

1.6

%

 

21


The Amended and Restated 2004 Plan Combines Compensation and Corporate Governance Best Practices

The Amended and Restated 2004 Plan includes provisions that are designed to protect our stockholders’ interests and to reflect corporate governance best practices including:

 

·

Repricing is not allowed. The Amended and Restated 2004 Plan prohibits the repricing of outstanding stock options and SARs and the cancellation of any outstanding stock options or SARs that have an exercise or strike price greater than the then-current fair market value of our common stock in exchange for cash or other awards under the Amended and Restated 2004 Plan without prior stockholder approval.

 

·

Stockholder approval is required for additional shares. The Amended and Restated 2004 Plan does not contain an annual “evergreen” provision. The Amended and Restated 2004 Plan authorizes a fixed number of shares, so that stockholder approval is required to issue any additional shares, allowing our stockholders to have direct input on our equity compensation programs.

 

·

Limit on Full Value Awards. The Amended and Restated 2004 Plan limits the number of shares available for full value awards by providing that each share issued pursuant to one of these types of awards reduces the number of shares available for grant under the Amended and Restated 2004 Plan by 1.5 shares. We provide this limit to reflect the greater grant date value of full value award shares as compared to stock options and SARs and we believe this ratio appropriately reflects the difference in value.

 

·

No liberal share counting or recycling. The following shares will not become available again for issuance under the Amended and Restated 2004 Plan: (i) shares that are reacquired or withheld (or not issued) by us to satisfy the exercise or purchase price of an award; (ii) shares that are reacquired or withheld (or not issued) by us to satisfy a tax withholding obligation in connection with an award; and (iii) any shares repurchased by us on the open market with the proceeds of the exercise or purchase price of an award.

 

·

No liberal change in control provisions. The definition of change in control in the Amended and Restated 2004 Plan requires the consummation of an actual transaction so that no vesting acceleration benefits may occur without an actual change in control transaction occurring.

 

·

No discounted stock options or SARs. All stock options and SARs granted under the Amended and Restated 2004 Plan must have an exercise or strike price equal to or greater than the fair market value of our common stock on the date the stock option or SAR is granted.

 

·

Limits on transferability. As described below, awards generally may not be sold, pledged, transferred, or disposed of in any manner other than by will or by the laws of descent and distribution and awards may not be transferred if the participant is to receive consideration in connection with the transfer.

 

·

No dividends or dividend equivalents on unvested performance awards. The Amended and Restated 2004 Plan prohibits paying or granting dividends or dividend equivalent rights with respect to any awards that are subject to performance-based vesting unless and until such awards actually vest.

 

·

Minimum vesting requirement. The Amended and Restated 2004 Plan provides that full value awards that are subject to performance-based vesting conditions generally may not vest at a rate faster than one year following the grant date (subject to certain exceptions).

 

·

Awards subject to forfeiture/clawback. Awards granted under the Amended and Restated 2004 Plan will be subject to recoupment in accordance with any clawback policy that we are required to adopt pursuant to the listing standards of any national securities exchange or association on which our securities are listed or as is otherwise required by the Dodd-Frank Wall Street Reform and Consumer Protection Act or other applicable law. In addition, we may impose other clawback, recovery or recoupment provisions in an award agreement, including a reacquisition right in respect of previously acquired shares or other cash or property upon the occurrence of cause.

 

·

Limit on non-employee director awards. The aggregate value of all compensation paid or granted, as applicable, to any individual for service as a non-employee director of our Board with respect to any calendar year, including awards granted under the Amended and Restated 2004 Plan and cash fees paid by us to such non-employee director, will not exceed (i) $1,000,000 in total value or (ii) in the event such non-employee director is first appointed or elected to our Board during such calendar year, $1,500,000 in total value.

Continued Ability to Grant Performance-Based Awards

Approval of the Amended and Restated 2004 Plan by our stockholders will also constitute approval of terms and conditions set forth therein that will permit us to grant stock options, SARs and performance-based stock and cash awards under the Amended and Restated 2004 Plan that may qualify as “performance-based compensation” within the meaning of Section 162(m) of the Internal

22


Revenue Code of 1986, as amended, or the Code. Section 162(m) of the Code disallows a deduction to any publicly held corporation and its affiliates for certain compensation paid to “covered employees” in a taxable year to the extent that compensation to a covered employee exceeds $1 million. However, some kinds of compensation, including qualified “performance-based compensation,” are not subject to this deduction limitation. For compensation awarded under a plan to qualify as “performance-based compensation” under Section 162(m) of the Code, among other things, the following terms must be disclosed to and approved by the stockholders before the compensation is paid: (i) a description of the employees eligible to receive such awards; (ii) a per-person limit on the number of shares subject to stock options, SARs and performance-based stock awards, and the amount of cash subject to performance-based cash awards, that may be granted to any employee under the plan in any year; and (iii) a description of the business criteria upon which the performance goals for performance-based awards may be granted (or become vested or exercisable). Accordingly, we are requesting that our stockholders approve the Amended and Restated 2004 Plan, which includes terms and conditions regarding eligibility for awards, annual per-person limits on awards and the business criteria for performance-based awards granted under the Amended and Restated 2004 Plan (as described in the summary below).

We believe it is in the best interests of our company and our stockholders to preserve the ability to grant “performance-based compensation” under Section 162(m) of the Code. However, in certain circumstances, we may determine to grant compensation to covered employees that is not intended to qualify as “performance-based compensation” for purposes of Section 162(m) of the Code. Moreover, even if we grant compensation that is intended to qualify as “performance-based compensation” for purposes of Section 162(m) of the Code, we cannot guarantee that such compensation ultimately will be deductible by us.

Description of the Amended and Restated 2004 Plan

The material features of the Amended and Restated 2004 Plan are summarized below, but the summary is qualified in its entirety by reference to the Amended and Restated 2004 Plan itself which is attached as Annex A to this Proxy Statement.

Purpose

The purpose of the Amended and Restated 2004 Plan is to promote the success and enhance the value of Medivation by aligning the personal interests of the members of our Board and our officers, employees and consultants and of our subsidiaries with those of our stockholders and by providing these individuals with an incentive for outstanding performance to generate superior returns to our stockholders. The Amended and Restated 2004 Plan is further intended to provide us flexibility in our ability to motivate, attract and retain the services of members of our Board and our officers, employees and consultants and of our subsidiaries upon whose judgment, interest and special effort the successful conduct of our operation is largely dependent.

Securities Subject to the Amended and Restated 2004 Plan

Under the Amended and Restated 2004 Plan, a total of 49,300,000 shares of our common stock are reserved for issuance pursuant to awards granted under the Amended and Restated 2004 Plan if this Proposal No. 4 is approved, subject to certain changes in our capitalization.

To the extent that an award terminates, expires or lapses for any reason, any shares subject to the award will be available for future grant or sale under the Amended and Restated 2004 Plan. Shares which are delivered to us by a participant or withheld by us in payment of the grant or exercise price of an award or in satisfaction of tax withholding obligations pursuant to an award (including any shares subject to an award that are not delivered to a participant because the award is exercised through a reduction of shares subject to the award (i.e., “net exercised”)) will be treated as issued under the Amended and Restated 2004 Plan and be deducted from the aggregate number of shares that may be issued. Shares repurchased on the open market with the proceeds of a grant or exercise price will not again be available for the grant of an award under the Amended and Restated 2004 Plan. Notwithstanding that a SAR may be settled by the delivery of a net number of shares, the full number of shares underlying such SAR will not again be available for the grant of an award under the Amended and Restated 2004 Plan. The shares of common stock delivered pursuant to a “full value award” will reduce the aggregate share limit described in the previous paragraph (1) by 1.4 shares for each share of our common stock that is issued or transferred pursuant to a full value award that was granted prior to the date of our 2014 Annual Meeting of Stockholders, or the 2014 Annual Meeting, and (2) by 1.5 shares for each share of our common stock that is issued or transferred pursuant to a full value award that was granted on or after the date of the 2014 Annual Meeting. Further, to the extent that a share of our common stock is issued pursuant to a full value award and such share again becomes available for issuance under the Amended and Restated 2004 Plan, the number of shares of our common stock available for issuance under the Amended and Restated 2004 Plan will increase (1) by 1.4 shares for shares returning prior to the date of the 2014 Annual Meeting, and (2) by 1.5 shares for shares returning on or after the date of the 2014 Annual Meeting. A “full value award” is any award other than an option or other award for which a participant pays the value of the common stock on the date of grant (whether directly or by forgoing a right to receive a payment from Medivation). To the extent permitted by applicable law or any exchange rule, shares issued in assumption of, or in substitution for, any outstanding awards of any entity acquired by Medivation or any our subsidiaries will not be counted against shares available for grant pursuant to the Amended and Restated 2004

23


Plan. The payment of dividend equivalents in cash in conjunction with any outstanding awards will also not be counted against the shares available for issuance under the Amended and Restated 2004 Plan.

No shares may again be the subject of options, granted or awarded if the action would cause any option intended to qualify as an incentive stock option under Section 422 of the Code, not to so qualify.

Administration

Our Board has delegated administration of the Amended and Restated 2004 Plan to our Compensation Committee. Our Compensation Committee will administer the Amended and Restated 2004 Plan and is also authorized to adopt, amend and rescind rules relating to the administration of the Amended and Restated 2004 Plan, and may also delegate certain functions to a committee comprising one or more members of our Board or, subject to all applicable limitations and requirements of Delaware law, officers of the company. Our Compensation Committee has the authority to select the persons to whom awards are to be made, to determine the number of shares to be subject thereto and the terms and conditions thereof, and to make all other determinations and to take all other actions necessary or advisable for the administration of the Amended and Restated 2004 Plan. Our Board may at any time abolish our Compensation Committee and/or revest in itself the authority to administer the Amended and Restated 2004 Plan.

Eligibility

All of our employees, as well as directors and consultants of Medivation and our subsidiaries, are eligible to participate in the Amended and Restated 2004 Plan and may receive all types of awards authorized under the Amended and Restated 2004 Plan other than incentive stock options. Incentive stock options may only be granted under the Amended and Restated 2004 Plan to employees of Medivation and employees of our subsidiaries. We currently do not grant equity awards to consultants. As of April 25, 2016, we had approximately 694 employees, seven non-employee directors and a limited number of consultants who were employees at the time of their grants, whose service as employees and consultants were continuous such that termination of their employment did not constitute a termination of service for purposes of our Amended and Restated 2004 Plan. As such, vesting of their outstanding stock options and other equity awards did not cease on their separation date but continued for the duration of their consulting period.

Non-Employee Director Compensation Limit

The aggregate value of all compensation paid or granted, as applicable, to any individual for service as a non-employee director of our Board with respect to any calendar year, including awards granted under the Amended and Restated 2004 Plan and cash fees paid by us to such non-employee director, will not exceed (i) $1,000,000 in total value or (ii) in the event such non-employee director is first appointed or elected to our Board during such calendar year, $1,500,000 in total value, in each case calculating the value of any awards granted under the Amended and Restated 2004 Plan based on the grant date fair value of such awards for financial reporting purposes.

24


Awards Under the Amended and Restated 2004 Plan

The Amended and Restated 2004 Plan provides for awards in the form of stock options, SARs, Restricted Stock Units, or RSUs, dividend equivalents, stock payments, performance shares, performance-based awards or any combination thereof. Each award will be set forth in a separate agreement with the person receiving the award and will indicate the type, terms and conditions of the award, including any vesting provisions. Although our Compensation Committee has the authority to determine the vesting conditions for awards granted under the Amended and Restated 2004 Plan, the terms of the Amended and Restated 2004 Plan provide that full value awards granted to employees or consultants that are subject to performance-based vesting conditions may not vest at a rate faster than one year following the grant date (subject to certain exceptions).

 

·

Non-Qualified Stock Options, or NQSOs, provide for the right to purchase common stock at a specified price and usually will become exercisable (at the discretion of our Compensation Committee) in one or more installments after the grant date, subject to the participant’s continued service with us and/or subject to the satisfaction of performance targets established by our Compensation Committee. NQSOs may be granted for any term not to exceed ten years from the date of grant. All NQSOs granted under the Amended and Restated 2004 Plan will have an exercise price not less than the fair market value of our common stock on the date of grant. Our Compensation Committee will determine the methods by which the exercise price of an NQSO may be paid, which may include (i) cash, (ii) a promissory note, (iii) shares of our common stock, (iv) other property acceptable to our Compensation Committee (including through the delivery of a notice that the participant has placed a market sell order with a broker with respect to shares then issuable upon exercise of the stock option, and that the broker has been directed to pay a sufficient portion of the net proceeds of the sale to us in satisfaction of the exercise price, provided that payment of such proceeds is then made to us upon settlement of such sale), and (v) a “net exercise” arrangement.

 

·

Incentive Stock Options, or ISOs, are designed to comply with the provisions of Section 422 of the Code and are subject to specified restrictions contained in the Code. Among the restrictions, ISOs must have an exercise price not less than the fair market value of a share of common stock on the date of grant, may only be granted to employees, must expire within a specified period of time following the optionee’s termination of employment, and must be exercised within ten years after the date of grant. In the case of an ISO granted to an employee who owns (or is deemed to own) more than ten percent of the total combined voting power of all classes of our stock, the exercise price must be at least 110% of the fair market value of a share of common stock on the date of grant, and the ISO must expire no later than the fifth anniversary of the date of its grant. The aggregate fair market value, determined at the time of grant, of shares of our common stock with respect to ISOs that are exercisable for the first time by an optionee during any calendar year under all of our stock plans may not exceed $100,000. The stock options or portions of stock options that exceed this limit are treated as NQSOs. Our Compensation Committee will determine the methods by which the exercise price of an ISO may be paid, which may include the forms of payment described above for NQSOs, except for a “net exercise” arrangement. Subject to adjustment for certain changes in our capitalization, the aggregate maximum number of shares of our common stock that may be issued pursuant to the exercise of incentive stock options under the Amended and Restated 2004 Plan is 95,400,000 shares. The reason this number is greater than the share reserve is because we will deduct shares from this limit each time an ISO is granted (that is, if shares subject to an ISO terminate, expire or lapse and become available again for grant, we will again deduct the same shares from this ISO limit if they are again granted in the form of an ISO). No incentive stock options may be granted under the Amended and Restated 2004 Plan after April 22, 2026.

 

·

Restricted stock awards may be granted to participants and made subject to the restrictions as may be determined by our Compensation Committee (including limitations on voting rights or the right to receive dividends on the restricted stock). Except as otherwise determined by our Compensation Committee, upon termination of a participant’s service during the applicable restriction period, restricted stock that is at that time subject to restrictions will be forfeited. In general, restricted stock may not be sold, or otherwise transferred, until restrictions are removed or expire.

 

·

RSUs may be awarded to participants, typically without payment of consideration, but subject to vesting conditions based on continued service or on performance criteria established by our Compensation Committee. Like restricted stock, RSUs may not be sold, or otherwise transferred or hypothecated, until vesting conditions are removed or expire. Unlike restricted stock, stock will not be issued until the RSU award has vested and the award has been settled. Recipients of RSUs generally will have no voting or dividend rights prior to the time when vesting conditions are satisfied.

 

·

SARs may be granted in connection with stock options or separately. SARs granted by our Compensation Committee in connection with stock options typically will provide for payments to the holder based upon increases in the fair market value of our common stock over the exercise price of the related option. There are no restrictions specified in the Amended and Restated 2004 Plan on the exercise of SARs or the amount of gain realizable therefrom, although restrictions may be imposed by our Compensation Committee in the SAR agreements, including for purposes of compliance with Section 162(m) of the Code. Our Compensation Committee may elect to pay SARs in cash or in common stock or in a combination of both. SARs may be granted for any term not to exceed ten years from the date of grant specified by our Compensation Committee. All independent SARs granted under the Amended and Restated 2004 Plan will have an exercise price not less than the fair market value of our common stock on the date of grant.

25


 

·

Dividend Equivalents represent the right to receive the value (in cash or common stock) of the dividends, if any, per share paid by us, calculated with reference to the number of shares covered by awards held by the participant. No dividends or dividend equivalents may be paid or granted with respect to options or SARs subject to performance-based vesting or otherwise intended to qualify as “performance-based compensation” under Section 162(m) of the Code. Notwithstanding anything in the Amended and Restated 2004 Plan to the contrary, no dividend equivalents will be paid with respect to any Performance-Based Awards until such awards are earned.

 

·

Stock Payments may be authorized by our Compensation Committee in the form of shares of common stock or an option or other right to purchase common stock as part of any bonus, deferred compensation or arrangement in lieu of all or any part of the compensation.

 

·

Performance Share Awards represent the right to receive cash, common stock or other awards, the payment of which is contingent upon achieving performance goals established by our Compensation Committee. The awards may be denominated in a number of shares of common stock or in a dollar value of shares of common stock.

 

·

Performance-Based Awards are awards of restricted stock, RSUs, dividend equivalents, stock payments or performance shares granted to an employee who is, or could be, a “covered employee” within the meaning of Section 162(m) of the Code. The awards are subject to terms and conditions, as described under “Section 162(m)” below. The vesting period for such awards may not be less than one year, except that such awards may vest in full upon the participant’s death or disability, or upon a change of control.

Subject to certain changes in our capitalization, (i) the maximum number of shares which may be subject to all awards (including options, SARs and performance-based awards) granted under the Amended and Restated 2004 Plan to any one participant during any calendar year may not exceed 4,000,000 shares of common stock and (ii) the maximum amount of cash that may be paid to any one participant during any calendar year with respect to one or more performance-based awards that are only payable in cash is $5 million. These limits are designed to allow us to grant certain awards that are intended to be exempt from the $1 million limit on the income tax deductibility of compensation paid to “covered employees” under Section 162(m) of the Code.

Section 162(m). As discussed above, Section 162(m) of the Code disallows a deduction to any publicly-held corporation and its affiliates for compensation paid to “covered employees” in excess of $1 million, although certain types of “performance-based compensation” may qualify for an exemption from this deductibility limit. Our Compensation Committee may grant awards to covered employees that may qualify as performance-based compensation that is not subject to this $1 million limit on deductibility; however, we cannot guarantee that such compensation ultimately will be deductible by us. The awards may be paid, vest or become exercisable only upon the attainment of performance goals which are related to one or more of the following performance criteria:

 

·

earnings per share;

 

·

earnings before interest, taxes and depreciation;

 

·

earnings before interest, taxes, depreciation and amortization (EBITDA);

 

·

net earnings;

 

·

return on equity;

 

·

return on assets, investment, or capital employed;

 

·

operating margin;

 

·

gross margin;

 

·

operating income;

 

·

net income (before or after taxes);

 

·

net operating income;

 

·

net operating income after tax;

 

·

pre- and after-tax income;

 

·

pre-tax profit;

 

·

operating cash flow;

 

·

sales or revenue targets;

 

·

increases in revenue or product revenue;

26


 

·

expenses and cost reduction goals;

 

·

improvement in or attainment of expense levels;

 

·

improvement in or attainment of working capital levels;

 

·

economic value added;

 

·

market share;

 

·

cash flow;

 

·

cash flow per share;

 

·

share price performance;

 

·

debt reduction;

 

·

implementation or completion of projects or processes (including, without limitation, in-license, out- license and collaboration agreements, clinical trial initiation, clinical trial enrollment, clinical trial results, new and supplemental indications for existing products, regulatory filing submissions, regulatory filing acceptances, regulatory or advisory committee interactions, regulatory approvals, and product supply);

 

·

customer satisfaction;

 

·

total stockholder return; and

 

·

stockholders’ equity.

The length of any performance period, the performance goals to be achieved during the performance period, and the measure of whether and to what degree the performance goals have been attained will be determined by our Compensation Committee within the time period prescribed by Section 162(m) of the Code. If any performance goals are based on the performance criteria set forth in the bullets above that refer to items that are typically calculated in accordance with GAAP, at the time such performance goals are established for a performance period, our Compensation Committee must specify whether the performance goals are to be calculated in accordance with GAAP or on a non-GAAP basis; provided, that to the extent the performance goals are to be determined on a non-GAAP basis, our Compensation Committee must also set forth in writing at the time the performance goals are established, the precise manner in which such performance goals will be calculated. Performance goals may be expressed in terms of Medivation’s overall performance or the performance of a subsidiary, affiliate, division or business unit, and may be measured either in absolute terms or as compared to any incremental increase or results of a peer group. Our Compensation Committee is authorized to, within the time period prescribed by Section 162(m) of the Code, make adjustments in the method of calculating the attainment of performance goals for a performance period as follows: (i) to exclude restructuring and/or other nonrecurring charges or benefits; (ii) to exclude exchange rate effects, as applicable, for non-U.S. dollar denominated net sales and operating earnings; (iii) to exclude the effects of changes to generally accepted accounting principles required by the Financial Accounting Standards Board; (iv) to exclude the effects of any statutory adjustments to corporate tax rates; (v) to exclude non-cash charges or benefits; and (vi) to exclude the effects of any “extraordinary items” as determined under generally accepted accounting principles. In addition, our Compensation Committee retains the discretion to reduce or eliminate the amount due under a performance-based award.

Limits on Transferability

Awards generally may not be sold, pledged, transferred, or disposed of in any manner other than by will or by the laws of descent and distribution. Our Compensation Committee may allow awards other than ISOs to be transferable to certain permitted transferees (i.e., immediate family members for estate planning purposes), subject to such additional terms and conditions as our Compensation Committee deems appropriate. Awards may not be transferred if the participant is to receive consideration in connection with the transfer.

Repricing; Cancellation and Re-Grant of Awards

Under the Amended and Restated 2004 Plan, neither our Board nor our Compensation Committee will have the authority to (i) reduce the exercise price of any outstanding stock option or SAR under the Amended and Restated 2004 Plan or (ii) cancel any outstanding stock option or SAR that has an exercise price greater than the then-current fair market value of our common stock in exchange for cash or other awards under the Amended and Restated 2004 Plan, unless our stockholders have approved such an action within 12 months prior to such an event.

27


Clawback Policy

Awards granted under the Amended and Restated 2004 Plan will be subject to recoupment in accordance with any clawback policy that we are required to adopt pursuant to the listing standards of any national securities exchange or association on which our securities are listed or as is otherwise required by the Dodd-Frank Wall Street Reform and Consumer Protection Act or other applicable law. In addition, our Compensation Committee may impose other clawback, recovery or recoupment provisions in an award agreement as our Compensation Committee determines necessary or appropriate, including a reacquisition right in respect of previously acquired shares of our common stock or other cash or property upon the occurrence of cause.

Adjustments Upon Changes in Capitalization

In the event of any stock dividend, stock split, combination or exchange of shares, merger, consolidation, spin-off, recapitalization or other extraordinary distribution (other than normal cash dividends) of assets to our stockholders (including extraordinary dividends) or any other change affecting our common stock, our Compensation Committee will make proportionate adjustments to the aggregate number and type of shares of stock that may be issued under the Amended and Restated 2004 Plan (including the limitations on the number of shares issuable to a participant during a given calendar year and the aggregate number of shares issuable pursuant to the exercise of incentive stock options), the terms and conditions of any award outstanding under the Amended and Restated 2004 Plan (including any applicable performance targets or criteria), and the number and type of shares subject to, and the grant or exercise price of, any such award. Any adjustment affecting an award intended to qualify as performance-based compensation will be made consistent with the requirements of Section 162(m) of the Code.

Change of Control

In the event of a change of control, all unvested awards under the Amended and Restated 2004 Plan will become fully vested and exercisable or payable, as applicable, and all forfeiture restrictions on the awards will lapse. Upon, or in anticipation of, a change of control, our Compensation Committee may cause any and all awards outstanding under the Amended and Restated 2004 Plan to terminate at a specific time in the future and will give each participant the right to exercise the awards during a period determined by our Compensation Committee. Under the Amended and Restated 2004 Plan, a change of control is generally defined as:

 

·

the direct or indirect acquisition of 50% or more of the voting stock of Medivation;

 

·

if, during any period of two consecutive years, individuals who, at the beginning of the period, constitute our Board together with any new director(s) whose election was approved by a vote of at least two-thirds of the directors then still in office who either were directors at the beginning of the two-year period or whose election or nomination for election was previously so approved, cease for any reason to constitute a majority thereof;

 

·

the consummation by Medivation (whether directly involving Medivation or indirectly involving Medivation through one or more intermediaries) of (1) a merger, consolidation, reorganization or business combination, (2) a sale or other disposition of all or substantially all of our assets or (3) the acquisition of assets or stock of another entity (other than a transaction which results in our outstanding voting securities immediately before the transaction continuing to represent a majority of the voting power of the acquiring company’s outstanding voting securities and after which no person owns 50% or more of the voting stock of the successor entity); or

 

·

a liquidation or dissolution of Medivation.

Amendment and Termination of the Amended and Restated 2004 Plan

With the approval of our Board, our Compensation Committee may amend, modify or terminate the Amended and Restated 2004 Plan at any time and for any reason. However, the Amended and Restated 2004 Plan requires stockholder approval for any amendment to the Amended and Restated 2004 Plan to the extent necessary to comply with applicable laws, rules and regulations, or stock exchange rules. Stockholder approval is also required for any amendment to the Amended and Restated 2004 Plan that increases the number of shares available under the Amended and Restated 2004 Plan (other than any adjustments as discussed above), permits our Compensation Committee to extend the exercise period for an option beyond ten years from the date of grant, or results in a material increase in benefits or a change in eligibility requirements. No termination, amendment, or modification of the Amended and Restated 2004 Plan may adversely affect in any material way any award previously granted without the consent of the holder. Unless terminated earlier, the Amended and Restated 2004 Plan will terminate on April 22, 2026.

Securities Laws

The Amended and Restated 2004 Plan is intended to conform with all provisions of the Securities Act and the Exchange Act and any and all regulations and rules promulgated thereunder, including without limitation Rule 16b-3. The Amended and Restated

28


2004 Plan will be administered, and awards will be granted and may be exercised, if applicable, only in such a manner as to conform to these laws, rules and regulations.

Federal Income Tax Consequences Associated with the Amended and Restated 2004 Plan

The following is a general summary of the principal United States federal income taxation consequences to participants and us under current law with respect to participation in the Amended and Restated 2004 Plan. This summary is not intended to be exhaustive, and does not discuss the income tax laws of any city, state or foreign jurisdiction in which a participant may reside or the rules applicable to deferred compensation under Section 409A of the Code. Our ability to realize the benefit of any tax deductions described below depends on our generation of taxable income as well as the requirement of reasonableness, the provisions of Section 162(m) of the Code and the satisfaction of our tax reporting obligations.

Non-Qualified Stock Options. Generally, there is no taxation upon the grant of an NQSO if the option is granted with an exercise price equal to the fair market value of the underlying stock on the grant date. On exercise of NQSOs the optionee will recognize ordinary income in an amount equal to the difference, if any, between the option exercise price and the fair market value of the shares on the date each such option is exercised. The optionee’s basis for the stock for purposes of determining gain or loss on subsequent disposition of such shares generally will be the fair market value of the common stock on the date the optionee exercises such option. Any subsequent gain or loss will be generally taxable as capital gains or losses. Subject to certain restrictions and limitations, we will generally be entitled to a tax deduction equal to the taxable ordinary income realized by the optionee.

Incentive Stock Options. Generally, an optionee is not subject to ordinary income tax upon the grant or exercise of an ISO, although the amount by which the fair market value of a share of stock acquired on exercise of an ISO exceeds the exercise price of the ISO generally will be an adjustment included in the optionee’s alternative minimum taxable income for the year in which the ISO is exercised. If an optionee holds a share received on exercise of an ISO for more than two years from the date the option was granted and more than one year from the date the option was exercised, which is referred to as the required holding period, the difference, if any, between the amount realized on a sale or other taxable disposition of that share and the optionee’s tax basis in that share will be long-term capital gain or loss.

If, however, an optionee disposes of a share acquired on exercise of an ISO before the end of the required holding period, which is referred to as a disqualifying disposition, the optionee generally will recognize ordinary income in the year of the disqualifying disposition equal to the excess, if any, of the fair market value of the share on the date the ISO was exercised over the exercise price. However, if the sales proceeds are less than the fair market value of the share on the date of exercise of the ISO, the amount of ordinary income recognized by the optionee will not exceed the gain, if any, realized on the sale. If the amount realized on a disqualifying disposition exceeds the fair market value of the share on the date of exercise of the ISO, that excess will be short-term or long-term capital gain, depending on whether the holding period for the share exceeds one year.

Upon a disqualifying disposition of shares in the year in which the option is exercised, there will be no adjustment for alternative minimum tax purposes with respect to those shares. In computing alternative minimum taxable income, the tax basis of a share acquired on exercise of an ISO is increased by the amount of the adjustment taken into account with respect to that share for alternative minimum tax purposes in the year the option is exercised.

We are not allowed an income tax deduction with respect to the grant or exercise of an ISO or the disposition of a share acquired on an exercise of an ISO after the required holding period. If there is a disqualifying disposition of a share, however, we are allowed a deduction in an amount equal to the ordinary income includible in income by the optionee, subject to Section 162(m) of the Code and provided that amount constitutes an ordinary and necessary business expense for us and is reasonable in amount, and either the optionee includes that amount in income or we timely satisfy our reporting requirements with respect to that amount.

An ISO exercised more than three months after an optionee terminates employment, other than by reason of death or disability, will be taxed as a NQSO, and the optionee will have been deemed to have received income on the exercise taxable at ordinary income rates. We will be entitled to a tax deduction equal to the ordinary income, if any, realized by the optionee.

SARs. In general, the tax treatment of a SAR is similar to that of a NQSO.

Restricted Stock Awards. Generally, the recipient of a restricted stock award will recognize ordinary income at the time the shares are received equal to the excess, if any, of the fair market value of the shares received over any amount paid by the recipient for the shares. If a share is not vested when it is received, the recipient generally will not recognize income until the share becomes vested, at which time the recipient will recognize ordinary income equal to the excess, if any, of the fair market value of the share on the date it becomes vested over any amount paid by the recipient in exchange for the share. A recipient may file an election with the Internal Revenue Service, within 30 days following his or her receipt of the restricted stock award, to recognize ordinary income, as of the date the recipient receives the award, equal to the excess, if any, of the fair market value of the share on the date the award is

29


granted over any amount paid by the recipient for the share. The recipient’s basis for the determination of gain or loss upon the subsequent disposition of shares acquired from restricted stock awards will be the amount paid for such shares plus any ordinary income recognized either when the share is received or when the share becomes vested.

Subject to the satisfaction of certain reporting requirements and other conditions as described above, we will generally be entitled to a tax deduction equal to the taxable ordinary income realized by the recipient of the restricted stock award.

RSU Awards. Generally, the recipient of an RSU structured to either comply with or be exempt from the requirements of Section 409A of the Code will recognize ordinary income at the time the shares of our common stock are delivered equal to the excess, if any, of the fair market value of the shares of our common stock received over any amount paid by the recipient in exchange for the shares of our common stock. The recipient’s basis in the shares will be the amount paid plus any ordinary income recognized when the shares are delivered. Subject to the satisfaction of certain reporting requirements and other conditions as described above, we will generally be entitled to a tax deduction equal to the taxable ordinary income realized by the recipient of the RSU.

Dividend Equivalents. A recipient of a dividend equivalent award generally will not recognize taxable income at the time of grant, and we will not be entitled to a deduction at that time. When a dividend equivalent is paid, the participant generally will recognize ordinary income. Subject to the satisfaction of certain reporting requirements and other conditions as described above, we will generally be entitled to a tax deduction equal to the taxable ordinary income realized by the recipient.

Performance Share Awards. A participant who has been granted a performance share award generally will not recognize taxable income at the time of grant, and we will not be entitled to a deduction at that time. When an award is paid, whether in cash or common shares, the participant generally will recognize ordinary income. Subject to the satisfaction of certain reporting requirements and other conditions as described above, we will generally be entitled to a tax deduction equal to the taxable ordinary income realized by the recipient.

Stock Payments. A participant who receives a stock payment in lieu of a cash payment that would otherwise have been made will generally be taxed as if the cash payment has been received. Subject to the satisfaction of certain reporting requirements and other conditions as described above, we will generally be entitled to a tax deduction equal to the taxable ordinary income realized by the recipient.

Impact of Section 409A of the Code. The Amended and Restated 2004 Plan provides for the grant of various types of awards which may not be exempt from Section 409A of the Code. If an award is subject to Section 409A of the Code, and if the requirements of Section 409A of the Code are not met, the taxable events as described above could apply earlier than described and also could result in the imposition of additional taxes and penalties.

30


New Plan Benefits

 

Amended and Restated 2004 Plan

 

Name and position

 

Dollar value

 

 

Number of shares

 

David T. Hung, M.D.

 

 

(1)

 

 

(1)

President and Chief Executive Officer

 

 

 

 

 

 

Richard A. Bierly

 

 

(1)

 

 

(1)

Former Chief Financial Officer

 

 

 

 

 

 

Mohammad Hirmand, M.D.

 

 

(1)

 

 

(1)

Interim Chief Medical Officer

 

 

 

 

 

 

Andrew Powell

 

 

(1)

 

 

(1)

General Counsel and Corporate Secretary

 

 

 

 

 

 

Thomas Templeman, Ph.D.

 

 

(1)

 

 

(1)

Senior Vice President of Pharmaceutical

   Operations

 

 

 

 

 

 

Jennifer J. Rhodes

 

 

(1)

 

 

(1)

Former General Counsel and Corporate

   Secretary

 

 

 

 

 

 

Lynn Seely, M.D.

 

 

(1)

 

 

(1)

Former Chief Medical Officer

 

 

 

 

 

 

All current executive officers as a group

 

 

(1)

 

 

(1)

All current directors who are not executive officers

   as a group

 

$2,450,000 per year

 

 

 

(2)

All employees, including all current officers who

   are not executive officers, as a group

 

 

(1)

 

 

(1)

 

(1)

Awards granted under the Amended and Restated 2004 Plan to our executive officers and other employees are discretionary and are not subject to set benefits or amounts under the terms of the Amended and Restated 2004 Plan, and our Board and our Compensation Committee have not granted any awards under the Amended and Restated 2004 Plan subject to stockholder approval of this Proposal No. 4. Accordingly, the benefits or amounts that will be received by or allocated to our executive officers and other employees under the Amended and Restated 2004 Plan are not determinable.

(2)

Awards granted under the Amended and Restated 2004 Plan to our non-employee directors are discretionary and are not subject to set benefits or amounts under the terms of the Amended and Restated 2004 Plan. However, pursuant to our current compensation arrangements for non-employee directors, each of our current non-employee directors is eligible to receive annual equity grants each year equal to a Black-Scholes value of $350,000, split equally between stock options and restricted stock awards. After the date of the Annual Meeting, any such awards will be granted under the Amended and Restated 2004 Plan if this Proposal No. 4 is approved by our stockholders. For additional information regarding our current compensation arrangements for non-employee directors, please see “Executive Compensation—Director Compensation” below.

31


Plan Benefits

The following table sets forth, for each of the individuals and groups indicated, the total number of shares of our common stock subject to awards that have been granted (even if not currently outstanding) under the Amended 2004 Plan through April 25, 2016.

 

Amended 2004 Plan

 

Name and position

 

Number of shares

 

David T. Hung, M.D.

 

 

5,172,738

 

President and Chief Executive Officer

 

 

 

 

Richard A. Bierly

 

 

232,198

 

Former Chief Financial Officer

 

 

 

 

Mohammad Hirmand, M.D.

 

 

717,454

 

Interim Chief Medical Officer

 

 

 

 

Andrew Powell

 

 

120,700

 

General Counsel and Corporate Secretary

 

 

 

 

Thomas Templeman, Ph.D.

 

 

116,400

 

Senior Vice President of Pharmaceutical Operations

 

 

 

 

Jennifer J. Rhodes

 

 

284,000

 

Former General Counsel and Corporate Secretary

 

 

 

 

Lynn Seely, M.D.

 

 

3,467,873

 

Former Chief Medical Officer

 

 

 

 

All current executive officers as a group

 

 

6,312,077

 

All current directors who are not executive officers as a group

 

 

4,295,710

 

Each nominee for election as a director:

 

 

 

 

Kim D. Blickenstaff

 

 

840,470

 

Kathryn E. Falberg

 

 

87,870

 

David T. Hung, M.D.

 

 

5,172,738

 

Michael L. King, Ph.D.

 

 

18,353

 

C. Patrick Machado

 

 

2,374,397

 

Dawn Svoronos

 

 

106,280

 

W. Anthony Vernon

 

 

780,470

 

Wendy L. Yarno

 

 

87,870

 

Each associate of any executive officers, current directors

   or director nominees

 

 

 

Each other person who received or is to receive 5% of awards

 

 

 

All employees, including all current officers who are not

   executive officers, as a group

 

 

12,148,278

 

 

Vote Required; Recommendation of our Board of Directors

The affirmative vote of the holders of a majority of the shares of common stock present in person or represented by proxy and entitled to vote at the Annual Meeting will be required to approve the Amended and Restated 2004 Plan. If you “Abstain” from voting, it will have the same effect as an “Against” vote. Broker non-votes will have no effect.

Our Board Recommends

A Vote “For” Proposal No. 4

 

 

32


Proposal No. 5

Shareholder Proxy Access

Mr. James McRitchie, 9295 Yorkship Court, Elk Grove, California, 95758, a beneficial owner of 80 shares of common stock of Medivation (which he refers to as “the Company” in his proposal), has notified us that he, along with Myra K. Young, intend to present the following resolution at the Annual Meeting.  We are not responsible for the contents of this shareholder proposal or the supporting statement. OUR BOARD, AFTER CAREFUL CONSIDERATION, RECOMMENDS A VOTE “AGAINST” THIS SHAREHOLDER PROPOSAL.

Beginning of Shareholder Proposal:

RESOLVED: Shareholders ask our board of directors to adopt, and present for shareholder approval, a “proxy access” bylaw as follows:

Require the Company to include in proxy materials prepared for a shareholder meeting at which directors are to be elected the name, Disclosure and Statement (as defined herein) of any person nominated for election to the board by a shareholder or an unrestricted number of shareholders forming a group (the “Nominator”) that meets the criteria established below.

Allow shareholders to vote on such nominee on the Company’s proxy card.

The number of shareholder-nominated candidates appearing in proxy materials should not exceed one quarter of the directors then serving or two, whichever is greater.  This bylaw should supplement existing rights under Company bylaws, providing that a Nominator must:

 

(a)

Have beneficially owned 3% or more of the Company’s outstanding common stock, including recallable loaned stock, continuously for at least three years before submitting the nomination;

 

(b)

Give the Company, within the time period identified in its bylaws, written notice of the information required by the bylaws and any Securities and Exchange Commission (SEC) rules about (i) the nominee, including consent to being named in proxy materials and to serving as director if elected; and (ii) the Nominator, including proof it owns the required shares (the “Disclosure”); and

 

(c)

Certify that (i) it will assume liability stemming from any legal or regulatory violation arising out of the Nominator’s communications with the Company shareholders, including the Disclosure and Statement; (ii) it will comply with all applicable laws and regulations if it uses soliciting material other than the Company’s proxy materials; and (iii) to the best of its knowledge, the required shares were acquired in the ordinary course of business, not to change or influence control at the Company.

The Nominator may submit with the Disclosure a statement not exceeding 500 words in support of the nominee (the “Statement”).  The Board should adopt procedures for promptly resolving disputes over whether notice of a nomination was timely, whether the Disclosure and Statement satisfy the bylaw and applicable federal regulations, and the priority given to multiple nominations exceeding the one-quarter limit.  No additional restrictions that do not apply to other board nominees should be placed on these nominations or re-nominations.

Proxy access would “benefit both the markets and corporate boardrooms, with little cost or disruption,” raising U.S. market capitalization by up to $140 billion.  This is according to a cost-benefit analysis by the Chartered Financial Analyst Institute, Proxy Access in the United States: Revisiting the Proposed SEC Rule.

Please vote to enhance shareholder value: Shareholder Proxy Access – Proposal 5

End of Shareholder Proposal.

Our Board of Directors’ Statement in Opposition

Our Board of Directors has considered this proposal and believes it does not serve the best interests of Medivation or our stockholders.  As discussed in more detail below, our Board believes the proposal ignores the effective voice that our stockholders already have through our existing corporate governance principles and practices, would introduce a potentially destabilizing dynamic into the director election process, could increase the influence of special interests and fails to provide appropriate safeguards.  Accordingly, our Board recommends a vote “AGAINST” this proposal.

33


 

1.

The proposal is a solution in search of a problem that does not exist at Medivation.

The fundamental premise of the proposal is that our stockholders do not have an effective voice in electing directors and that the proposed measure is required to remedy that situation. However, our Board believes this premise is invalid and that the proposal is unnecessary. At each annual meeting over the last three years, none of our director nominees received less than 97% of votes “for” his or her election (excluding broker non-votes).  Accordingly, our Board believes our stockholders have spoken clearly and expressed their continued confidence in the Board through their votes for our director nominees.    

Our Board believes that the need for proxy access should be evaluated in the context of Medivation’s overall corporate governance practices, which already provide stockholders with the following opportunities to offer input into the director nomination and election process and to make their views known to our Board:

 

·

Stockholders can correspond with our Board or any individual member of our Board (see the section titled “Stockholder Communications with our Board”) and we actively seek stockholder input on matters relating to corporate governance.  In response to this proxy access proposal, our Board directed management to seek input from our significant stockholders regarding their philosophy and guidelines relating to proxy access.  As a result of that outreach, we learned that our stockholders have different perspectives on the advisability of proxy access.  One perspective was that proxy access proposals were unnecessary in light of the existing avenues stockholders have available to communicate with Medivation.  Another perspective was that, while proxy access may be advisable because it may improve long-term stockholders’ ability to participate in director elections, such proposals should be appropriately limited to avoid abuse.  Institutional stockholder guidelines available to us generally provided for more limited proxy access rights than the proposal presented here.

 

·

Stockholders can propose director candidates to the Nominating and Corporate Governance Committee, which the Committee evaluates in the same manner as candidates identified by any other person, including incumbent members of our Board (see the section titled “Nominating and Corporate Governance Committee”).  To date, none of our stockholders has asked the Committee to consider a nominee for election to the Board.

 

·

Stockholders can solicit proxies for their own candidates for director and nominate them directly at the annual meeting of stockholders, and can submit proposals on other matters for inclusion in the proxy and presentation at the annual meeting.

 

·

We do not have classified a board; our directors are elected annually.  We also have a director resignation policy under which any nominee for director in an uncontested election who receives a greater number of votes “withheld” from his or her election than votes “for” such election must submit his or her offer of resignation for consideration by our Nominating and Corporate Governance Committee (see the section titled “Proposal No. 1—Election of Directors”).

The Board believes that these provisions and policies together have been effective in providing stockholders with significant access and other rights, while promoting Board responsiveness and accountability to all stockholders, not a narrow few seeking to advance their own agenda.

 

2.

The proposal would undermine the important role of our independent Nominating and Corporate Governance Committee.    

Our Nominating and Corporate Governance Committee strives to nominate directors with a variety of individual backgrounds and complementary skills so that, as a group, our Board will possess the appropriate talent, skills and expertise to oversee our business and operations.  The Committee also evaluates whether candidates are independent and whether they exhibit integrity, collegiality, leadership skills, sound business judgment and other qualities that the Committee views as critical to effective functioning of the Board. We believe this Committee is best situated to assess all of these particular qualifications of potential director nominees and determine whether they will contribute to an effective and well-rounded board of directors that operates openly and collaboratively and represents the interests of all stockholders.  Furthermore, in making its assessment, the Committee has a fiduciary duty to act in the best interests of Medivation and all stockholders, unlike a stockholder or a group of stockholders, who have no fiduciary obligations to Medivation or other stockholders, are not bound by our corporate governance policies and practices and can therefore be motivated entirely by their own special interests, including promotion of short-term horizons at the expense of long-term value creation.

 

3.

This proposal has the potential to result in an inexperienced, fragmented and less effective Board of Directors, which is not in the long-term interest of our stockholders.    

Given that our Board is not classified, proxy access could make disruptive contested elections an annual event, which could lead to high director turnover and result in a less experienced Board that lacks sufficient knowledge and understanding of our current and past business to provide meaningful and effective oversight of our operations and long-term strategies.  These abrupt changes in the composition of our Board of Directors could encourage a more short-term focus and impair our ability to develop, refine, monitor and

34


execute our long-term plans, putting stockholder value at risk.  In addition, the prospect of routine proxy contests may deter qualified Board candidates, and even incumbent directors, from serving or continuing to serve on our Board.

Moreover, the election of a stockholder’s director nominee, particularly one representing a narrow interest, risks creating discord among members of the Board. A director that does not offer the mix of skills, character and professional experience the Board seeks would at best fail to contribute to the work of the Board and would at worst create tensions that disrupt the effective functioning of the Board, particularly if the director injects special interest politics into the boardroom to advance the agenda of a minority rather than advocating for the long-term interests of all stockholders. Significantly, at the time the stockholder’s nominee is submitted to a vote of the stockholders, any special agenda of the nominating stockholder or the director nominee may not be known to us or to our stockholders.

 

4.

The Specific Terms of This Proposal Are Problematic.    

The Board believes that specific terms of this proposal, including those discussed below, fail to provide safeguards to avoid abuse, and therefore, are not in the best interests of our stockholders:

 

·

The proposal does not require proxy access nominees to be free of affiliations with our competitors or even to qualify as “independent” within the meaning of the NASDAQ independence requirements, and the proposal further prohibits us from including such requirements.  Our Board believes that the introduction of non-independent directors to the Board may cause Medivation to fall out of compliance with applicable NASDAQ independence requirements, which could ultimately harm stockholders.

 

·

The proposal does not require nominating stockholders to retain ownership of their shares through the date of the annual meeting, which would allow a nominating stockholder to sell all of its shares prior to the annual meeting, but still have the nomination submitted at the annual meeting even though the interests of the nominating stockholder may well diverge from those of Medivation and our remaining stockholders.

 

·

The proposal permits the use of recallable loaned stock by a nominating stockholder to meet the 3% ownership requirement, but does not require the nominating stockholder to have recalled the loaned stock or the stockholder’s voting rights associated with the loaned stock prior to submitting its director nominee for inclusion in Medivation’s proxy or at any time prior to the annual meeting.

 

·

The proposal prohibits any limit on the number of stockholders forming a group for purposes of achieving the 3% ownership threshold, which undermines the important concept that only those with a substantial financial stake should be able to nominate directors and could allow hundreds of special-interest stockholders to act together and administratively burden us to verify their eligibility.

 

·

The effects of the proposal are disproportionate with the ownership requirement as the proposal allows a single stockholder owning 3% of Medivation’s common stock to nominate 25% of the Board of Directors.

Our Board recognizes that the ability to elect directors is one of stockholders’ most fundamental rights.  Our Board believes that the current measures employed by Medivation for the nomination and election of directors support that right and have led to a board that is responsive to stockholder input and promotes a strategy of long-term value creation.  For the foregoing reasons, our Board believes that adoption of this proposal is not in the best interests of our stockholders and, after careful consideration, recommends a vote “Against” this stockholder proposal for proxy access.

Vote Required

The affirmative vote of the holders of a majority of the shares of common stock present in person or represented by proxy and entitled to vote on the matter at the Annual Meeting will be required to approve the adoption of this proposal.  If you “Abstain” from voting, it will have the same effect as an “Against” vote. Broker non-votes will have no effect.

Our Board Recommends

A VoteAgainst” Proposal No. 5

35


EQUITY COMPENSATION PLAN INFORMATION

The following table provides information with respect to all of Medivation’s compensation plans in effect as of December 31, 2015.

 

Plan Category

  

Number of securities  to
be issued upon exercise
of outstanding options,
warrants and rights
(a)(#) (1)

 

  

Weighted-average
exercise price of
outstanding options,
warrants and rights
(b)($) (2)

 

  

Number of  securities
remaining available for
future issuance under equity
compensation plans
(excluding securities reflected
in column (a))
(c)(#) (3)

 

Equity compensation plans approved by security holders

  

 

12,171,751

  

  

$

22.08

  

  

 

14,407,503

 

Equity compensation plans not approved by security holders

  

 

—  

  

  

 

—  

  

  

 

—  

 

Total

  

 

12,171,751

  

  

$

22.08

 

  

 

14,407,503