DEF 14A 1 d84416ddef14a.htm DEF 14A DEF 14A
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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of the

Securities Exchange Act of 1934

(Amendment No.    )

 

 

Filed by the Registrant  ☒                 Filed by a Party other than the Registrant  ☐

Check the appropriate box:

 

Preliminary Proxy Statement

 

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

 

Definitive Proxy Statement

 

Definitive Additional Materials

 

Soliciting Material under § 240.14a-12

SEAGEN 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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Dear Fellow Shareholders:

2020 was a pivotal year for Seagen as we expanded our commercial portfolio and our pipeline, broadened our geographic footprint and augmented our business with strategic partnerships. We successfully launched two important medicines for cancer patients, PADCEV®, for urothelial (bladder) cancer, and TUKYSA®, for HER2-positive breast cancer. These products, along with ADCETRIS®, for blood-related cancers, drove 2020 net product sales to $1 billion. We are focused on maximizing the potential of these products through broad clinical development programs. In addition, we are expanding our global footprint and now have presence across Europe. Recently, we received approval for TUKYSA in the European Union and Great Britain, and we and our partner, Astellas, submitted marketing applications for PADCEV in the European Union and several other ex-U.S. countries. We are committed to bringing these impactful medicines to cancer patients in need.

Beyond our commercial products, we are working to develop additional first-in-class or best-in-class cancer treatments. We and our partner, Genmab, recently submitted a Biologics License Application to the FDA for tisotumab vedotin for women with metastatic cervical cancer. We also established a co-development and co-commercialization agreement with Merck for ladiratuzumab vedotin, our novel antibody-drug conjugate (ADC) targeting breast cancer and other solid tumors. This collaboration, in addition to another agreement with Merck to commercialize TUKYSA outside of the U.S., Canada and Europe, strengthened our balance sheet. We received $725 million in upfront payments and proceeds of $1 billion from an equity investment by Merck.

We are also advancing multiple programs in our earlier-stage pipeline. These product candidates utilize novel technologies, including our industry-leading ADC technology. We believe continued investment in research and development is key to our success and will result in long-term shareholder value.

In response to the global pandemic, we implemented measures focused on protecting the health and safety of our workforce and designed to ensure business continuity. This included requiring most employees to work remotely and providing additional resources for them to successfully conduct their work. For those with roles that required them to be onsite, such as laboratory research personnel, we implemented changes including staggering work times to provide for appropriate distancing and mandatory COVID-19 screening when coming onsite. We also worked diligently across our commercial, clinical and research activities to ensure we continue to advance our programs and deliver our medicines to patients. In addition, we supported our communities through charitable giving including corporate matching campaigns, volunteer programs, and donations to patient organizations to provide financial relief and services to individuals impacted by the pandemic.

During 2020, we furthered our focus on fostering diversity, equity and inclusion at Seagen through a number of initiatives that are discussed further in this proxy statement. We believe this will contribute to our innovation, as well as better represent and serve our stakeholders.

As part of our investor relations activities, we continued our proactive shareholder engagement effort focused on corporate governance, executive compensation, and social topics. These discussions and the feedback we received from investors provided valuable information for senior management and our Board of Directors in their planning and decision making, and continue to influence changes to our practices in these areas.

We hope that you will participate in the Annual Meeting because your vote is important to us. This year, to protect the health and safety of our shareholders and employees and to facilitate shareholder participation despite the global pandemic, the Annual Meeting will be held through a live webcast at www.virtualshareholdermeeting.com/SGEN2021. The following notice of our Annual Meeting contains details of the business to be conducted at the meeting, as well as information regarding how to vote.

 

Sincerely,
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Clay B. Siegall, Ph.D.

Chairman, President and

Chief Executive Officer

April 1, 2021

 

 

                                               


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2021 NOTICE OF ANNUAL MEETING OF SHAREHOLDERS

 

           
    Meeting Date:   May 14, 2021   Meeting Place:    The Annual Meeting will be held online at www.virtualshareholdermeeting.com/SGEN2021    
    Meeting Time:   2:30 p.m. (Pacific)      
    Record Date:  

March 18, 2021

 

       

VOTING METHODS

Your vote is very important to us. Whether or not you expect to attend the Annual Meeting online, please ensure your representation and the presence of a quorum at the Annual Meeting by voting via one of the methods listed below, as promptly as possible. If you are an owner of record as of the record date, you may vote via any of the following methods:

 

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Via the Internet:    Call Toll-Free:    Mail Signed Proxy Card
www.proxyvote.com    1-800-690-6903   

Using the Provided

Postage-Paid Envelope

 

If you are a beneficial owner of shares held through a broker, bank or other owner of record, you must follow the voting instructions you receive from the owner of record to vote your shares.

ATTENDING THE MEETING

To attend the Annual Meeting, access the meeting center at www.virtualshareholdermeeting.com/SGEN2021 and enter the 16-digit control number from your proxy card or Notice of Internet Availability of Proxy Materials.

MEETING AGENDA

The proposals for the Annual Meeting are to:

 

1.

Elect the three nominees for Class II director named in the accompanying proxy statement to hold office until Seagen’s 2024 Annual Meeting of Shareholders.

 

2.

Approve, on an advisory basis, the compensation of Seagen’s named executive officers as disclosed in the accompanying proxy statement.

 

3.

Ratify the appointment of PricewaterhouseCoopers LLP as Seagen’s independent registered public accounting firm for the fiscal year ending December 31, 2021.

 

4.

Transact such other business as may properly come before the Annual Meeting and any adjournment or postponement thereof.

You can find more information about each of these items, including the nominees for directors, in the accompanying proxy statement.

A complete list of the shareholders entitled to vote at the Annual Meeting will be available during the Annual Meeting for examination by any shareholder at www.virtualshareholdermeeting.com/SGEN2021.

 

By Order of the Board of Directors,
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Jean I. Liu

CORPORATE SECRETARY

APRIL 1, 2021

 

 

YOUR VOTE IS IMPORTANT TO US.

PLEASE EXERCISE YOUR SHAREHOLDER RIGHT TO VOTE.

 

                    Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting of Shareholders to be Held on May 14, 2021: The proxy statement and annual report to shareholders are available at www.proxyvote.com.                       


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TABLE OF CONTENTS

 

                      

 

PROXY STATEMENT SUMMARY      1  

PROPOSAL NO. 1

ELECTION OF DIRECTORS

     8  
NOMINEES FOR THE BOARD OF DIRECTORS AND CONTINUING DIRECTORS      9  
CORPORATE GOVERNANCE      14  

Director Independence; Audit Committee Financial Expert

     14  

Board Leadership Structure

     14  

Director Commitments

     15  

Board Committees

     16  

Board and Committee Meetings and Attendance

     17  

Board Risk Oversight

     17  

Compensation Committee Process and Procedures

     18  

Board Refreshment

     18  

Criteria for Board Membership

     18  

Director Nomination Process

     20  

Shareholder Director Nominations and Recommendations

     20  

Communications with the Board of Directors

     21  

Majority Voting in Uncontested Elections

     21  

Board Classification

     21  

Succession Planning

     22  

Corporate Governance Guidelines

     22  

Stock Ownership Guidelines

     22  

Code of Conduct and Business Ethics

     22  

Whistleblower Policy

     22  

Prohibitions on Hedging, Pledging and Short-Term Speculative Transactions

     22  

Corporate Responsibility

     23  

Diversity, Equity and Inclusion

     24  
DIRECTOR COMPENSATION      25  
EXECUTIVE OFFICERS      28  

EXECUTIVE OFFICER PROFILES

     28  
PROPOSAL NO. 2   
ADVISORY VOTE ON EXECUTIVE COMPENSATION       30  
COMPENSATION OF EXECUTIVE OFFICERS      31  

A MESSAGE FROM THE COMPENSATION COMMITTEE

     31  

COMPENSATION DISCUSSION AND ANALYSIS

     31  

Shareholder Engagement

     32  

Key Compensation Changes and Highlights for 2020

     33  

Compensation Philosophy and Objectives

     33  

Our Executive Compensation Practices

     34  

Company Overview

     35  

Business Highlights

     35  

Alignment of CEO Pay to Total Shareholder Return

     36  

Principal Elements of Pay

     37  

Compensation-Setting Process

     38  

2020 Key Compensation Decisions for Named Executive Officers

     51  

Post-Employment Compensation

     56  

Clawback Policy

     56  

Tax and Accounting Considerations

     56  

Stock Ownership Guidelines

     57  

Prohibitions on Hedging, Pledging and Short-Term Speculative Transactions

     57  

Compensation and Risk

     58  

COMPENSATION COMMITTEE REPORT

     58  

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

     58  

SUMMARY COMPENSATION TABLE

     59  

GRANTS OF PLAN-BASED AWARDS

     60  

EMPLOYMENT AGREEMENTS AND ARRANGEMENTS

     61  

OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END

     65  

OPTION EXERCISES AND STOCK VESTED

     68  

CEO PAY RATIO

     68  

POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE-IN-CONTROL

     69  
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS      74  
EQUITY COMPENSATION PLAN INFORMATION      75  
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT      76  
PROPOSAL NO. 3   
RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM      78  
AUDIT COMMITTEE REPORT      80  
FREQUENTLY ASKED QUESTIONS AND OTHER INFORMATION      81  
 

 

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PROXY STATEMENT SUMMARY

 

                      

 

The following summary highlights certain information contained elsewhere in this proxy statement and does not contain all of the information you should consider. You should read the entire proxy statement carefully before voting.

 

     
           

2021 ANNUAL MEETING INFORMATION

 

           
    Meeting Date:   May 14, 2021   Meeting Place:   The Annual Meeting will be held online at www.virtualshareholdermeeting.com/SGEN2021    
    Meeting Time:   2:30 p.m. (Pacific)      
    Record Date:  

March 18, 2021

 

       

VOTING MATTERS

 

Proposals

   Board Vote
Recommendation
     See Page Number  
for More Detail

 

PROPOSAL NO. 1

  

 

Election of Class II directors

  

 

FOR EACH
NOMINEE

  

 

Page 8

 

PROPOSAL NO. 2

  

 

Advisory vote on the compensation of our named executive officers

  

 

FOR

  

 

Page 30

 

PROPOSAL NO. 3

  

 

Ratification of the appointment of PricewaterhouseCoopers LLP as our independent registered public accounting firm

   FOR   

 

Page 78

Our proxy materials, which include this proxy statement and our 2020 annual report, are first being mailed or made available to shareholders on or about April 1, 2021.

COMPANY OVERVIEW

Seagen is a global biotechnology company that develops and commercializes targeted therapies to treat cancer. We are commercializing ADCETRIS® (brentuximab vedotin), for the treatment of certain CD30-expressing lymphomas, PADCEV® (enfortumab vedotin-ejfv), for the treatment of certain metastatic urothelial cancers, and TUKYSA® (tucatinib), for treatment of certain metastatic HER2-positive breast cancers. We are also advancing a pipeline of novel therapies for solid tumors and blood-related cancers designed to address unmet medical needs and improve treatment outcomes for patients. Many of our programs, including ADCETRIS and PADCEV, are based on our antibody-drug conjugate, or ADC, technology that utilizes the targeting ability of monoclonal antibodies to deliver cell-killing agents directly to cancer cells.

 

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  PROXY STATEMENT SUMMARY

 

 

 

BUSINESS HIGHLIGHTS

 

In 2020, Seagen delivered on multiple important business, regulatory and development milestones. We reported record net product sales of $1 billion driven by the successful launches of PADCEV and TUKYSA and continued growth of ADCETRIS. PADCEV, approved in late 2019 for the treatment of previously treated urothelial (bladder) cancer, and TUKYSA, approved in 2020 for previously treated HER2-positive metastatic breast cancer, address significant unmet patient needs and have been rapidly adopted by oncologists. To build on the potential of our three approved drugs, we are conducting clinical trials in earlier lines and stages of disease as well as in other cancer types.

 

We are also extending the availability of our products outside of the U.S. and recently received approval of TUKYSA in the European Union and United Kingdom. Additionally, in 2020 we entered into a strategic collaboration with Merck for TUKYSA commercialization beyond the U.S, Canada and Europe. For PADCEV, in early 2021 we and our partner Astellas submitted marketing applications for approval in the European Union and Japan. ADCETRIS use continues to expand globally, and in 2020 our partner Takeda received approval in China.

 

Over the past year, we have also made significant progress in advancing our late-stage pipeline. In early 2021, we and our partner Genmab submitted a Biologics License Application to the FDA for tisotumab vedotin based on positive results from a pivotal trial in metastatic cervical cancer in women who progress following first-line

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treatment. We also established an important strategic partnership with Merck to co-develop and co-commercialize ladiratuzumab vedotin, which is in development for breast cancers and other solid tumors. Under this collaboration and the TUKYSA commercial agreement with Merck we received $725 million in upfront payments and, in connection with the ladiratuzumab vedotin collaboration, Merck made a $1 billion equity investment in Seagen.

Our earlier-stage pipeline is robust, with seven clinical-stage and multiple preclinical programs in development for a range of solid tumors and hematologic malignancies. Our product candidates include both ADCs as well as other types of empowered antibodies. We are making significant investment in our pipeline and technologies as we believe it is important to ensuring long-term growth.

Our accomplishments in 2020 and early 2021 required us to address the impact of the global pandemic on our business. This included proactive efforts designed to protect the health and safety of our workforce, patients and healthcare professionals and ensure business continuity while we advance our goal of bringing important medicines to patients in need. Entering 2021, we will continue to closely monitor and respond to any further impacts of the global pandemic, while focusing on our strategic priorities to maximize the global potential of our approved medicines, advance our late-stage programs and expand our early-stage pipeline.

 

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PROXY STATEMENT SUMMARY  

 

 

 

 

BOARD OF DIRECTORS AND NOMINEES SNAPSHOT

The names of the nominees and of the directors whose terms of office will continue after the Annual Meeting, their ages as of April 1, 2021, and certain other information about them are set forth below. For more detailed information about the background of each of our directors, please see “Nominees for the Board of Directors and Continuing Directors,” below.

 

Director Nominee

  Age   Director
Since
  Term
Expires
  Principal Occupation   Audit   Compensation   Nominating &
Corporate
Governance

Felix J. Baker, Ph.D.

Lead Independent Director

  52   2003   2021   Founder and Co-Managing Member of Baker Bros. Advisors LP       ¡  

Clay B. Siegall, Ph.D.

  60   1997   2021   President, Chief Executive Officer and Chairman of the Board of Seagen Inc.            

Nancy A. Simonian, M.D.

  60   2012   2021   Chief Executive Officer of Syros Pharmaceuticals, Inc.       ¡

Director

                                  

David W. Gryska

  65   2005   2023   Former Executive Vice President and Chief Financial Officer of Incyte Corporation   ¡        

Marc E. Lippman, M.D.

  76   2000   2022   Professor of Oncology at Georgetown University Medical Center’s Lombardi Comprehensive Cancer Center          

Ted Love, M.D.

  62   2020   2022   President and Chief Executive Officer of Global Blood Therapeutics, Inc.          

John A. Orwin

  56   2014   2023   President and Chief Executive Officer of Atreca, Inc.          

Alpna H. Seth, Ph.D.

  57   2018   2023   Chief Executive Officer and President of Nura Bio Inc. (formerly Proneurotech Inc.)          

Daniel G. Welch

  63   2007   2022   Former Executive Partner, Sofinnova Ventures          

¡ = Committee Chair

             
                             

BOARD COMPOSITION

 

 

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PROXY STATEMENT SUMMARY

 

 

 

 

 

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GOVERNANCE HIGHLIGHTS

Our Board of Directors is committed to building long-term shareholder value and maintaining sound corporate governance practices. We highlight some of our corporate governance practices below.

 

   

Number of directors

     9  

Percentage of directors who are independent

     89%  

Directors who attended at least 75% of board and committee meetings

     ALL  

Strong and active lead independent director

      

100% independent audit, compensation and nominating and corporate governance committees

      

Board and committees may engage outside advisors independent of management

      

Adopted a policy to instruct search firms to include diverse candidates in director candidate pools

      

Corporate governance guidelines formalize policy of considering diversity of race, ethnicity, gender, age and sexual orientation in selecting director nominees

      

Annual Board self-evaluations

      

Active shareholder engagement program

      

Corporate governance guidelines

      

Majority voting in uncontested elections

      

All employees, officers and directors must adhere to a Code of Conduct and Business Ethics

      

 

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PROXY STATEMENT SUMMARY  

 

 

 

SHAREHOLDER ENGAGEMENT

In 2020, we continued our proactive shareholder outreach program to solicit feedback and better understand investor perspectives on operational, governance and executive compensation matters. We held discussions with a number of our shareholders in the spring before the Annual Meeting and again in late fall. Our cross-functional team that participated in these discussions to address investors’ specific focus areas included executives from our Investor Relations, Human Resources and Legal departments as well as our Chief Financial Officer. Feedback from these engagement activities was shared with management and our Board of Directors to inform our goal of aligning Company interests with those of our shareholders. Investor feedback is important to us, and we are committed to continuing to engage with our shareholders in the future to understand and consider their views.

2020 SHAREHOLDER ENGAGEMENT EFFORT

 

 

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SHAREHOLDER FEEDBACK

In 2020, these discussions covered a wide range of topics, including:

 

    diversity, equity and inclusion and human capital management

 

    director commitments
    executive compensation

 

    managing the business during the global pandemic
 

 

OUTCOMES OF ENGAGEMENT

The feedback from discussions with shareholders led to changes in 2020 to our executive compensation program and corporate governance practices, as described below.

 

   

  Executive
  Compensation

 

  

  Incorporated performance-based equity awards into the annual long-term incentive awards for all executives serving on our executive committee, including all of our named executive officers

 

  Corporate
  Governance
  

  Formally adopted a policy to instruct third-party search firms to include women and candidates from underrepresented communities in the pool as part of director nominee searches

 

  Revised our Code of Conduct and Business Ethics, including updates to reflect our global expansion

 

  Enhanced our disclosure on diversity, equity and inclusion (please see “Diversity, Equity and Inclusion” below in this proxy statement) and human capital management (please see “Business—Human Capital Resources” in our Annual Report on Form 10-K)

 

  In recognition of shareholder feedback about director board commitments, Dr. Simonian has committed to reduce the number of public company boards on which she serves prior to the end of the year

 

 

 

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PROXY STATEMENT SUMMARY  

 

 

 

2020 COMPENSATION HIGHLIGHTS

We endeavor to maintain sound executive compensation policies and practices consistent with our executive compensation philosophy. The following table highlights some of our executive compensation policies and practices, which are structured to drive performance and align our executives’ interests with our shareholders’ long-term interests. For more detailed information, please see the discussion under “Compensation Discussion and Analysis—Our Executive Compensation Practices.”

 

       
        WHAT WE DO   WHAT WE DON’T DO        
   
   

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Pay for Performance

 

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No Special Health or Welfare Benefits for Executives

   
   
   

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Significant Portion of Compensation is at Risk

 

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No Post-Employment Tax Gross-Ups

   
   
   

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Double-Trigger Vesting

 

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No Hedging or Pledging of Our Stock Permitted

   
   
   

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Independent Compensation Committee

 

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No Stock Option Repricing

   
   
   

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Independent Compensation Advisor Reports Directly to the Compensation Committee

 

 

     
   
   

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Annual Market Review of Executive Compensation

 

 

     
   
   

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Stock Ownership Guidelines for Directors and Executive Officers

 

 

     
   
   

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Multi-Year Vesting Requirements

 

 

     
   
   

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Annual Say-on-Pay Vote

 

 

     
   
   

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Active Shareholder Engagement Program

 

 

     
   
   

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Clawback Policy

 

 

     
   
   

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Cap on Annual Cash Bonuses

 

 

     
   
   

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Minimize Inappropriate Risk Taking

 

 

     
   
   

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Competitive Peer Group

 

   

 

       

 

                    6  

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PROXY STATEMENT SUMMARY  

 

 

 

ALIGNMENT OF CEO PAY TO TOTAL SHAREHOLDER RETURN

We design our executive compensation program to align pay with company performance, and as highlighted in the charts below, there is strong alignment between the two. The charts below show the relative degree of alignment between our CEO’s total compensation and our total shareholder return, or TSR, over the one- and three- year periods ended December 31, 2020. TSR is calculated by dividing the change in share price over the relevant period by the initial share price. For comparison purposes, the charts below also show the relative degree of alignment between the total compensation of the CEOs of the companies in our compensation peer group over the one- and three-year periods ended December 31, 2019, which are the most recent periods for which data was available to the Compensation Committee when making pay decisions in August 2020, and the TSRs of the companies in our compensation peer group over the one- and three-year periods ended December 31, 2020. For more information on our pay elements and our compensation decision making process, including our compensation peer group, please see “Executive Compensation—Compensation Discussion and Analysis—Principal Elements of Pay” and “Executive Compensation—Compensation Discussion and Analysis —Compensation-Setting Process” below.

 

 

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CERTAIN DEFINED TERMS

In this Proxy Statement:

 

   

“We,” “us,” “our”, the “Company” and “Seagen” refer to Seagen Inc. and its wholly-owned subsidiaries on a consolidated basis;

 

   

“Annual Meeting” means our 2021 Annual Meeting of Shareholders;

 

   

“Board of Directors” or “Board” means our Board of Directors; and

 

   

“SEC” means the Securities and Exchange Commission.

 

                      2021 PROXY STATEMENT    7                       


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PROPOSAL NO. 1

ELECTION OF DIRECTORS

Our Board of Directors is divided into three equal classes with staggered three-year terms, as shown in the table below:

 

Director Nominee

 

 

Class

 

 

Age*

 

 

Position

 

 

Director
Since

 

 

Current
Term
Expires

 

 

 

Expiration
of Term
for Which
Nominated

 

Felix J. Baker, Ph.D.

  II   52   Lead Independent Director   2003   2021   2024

Clay B. Siegall, Ph.D.

  II   60   President, CEO and Chairman of the Board   1997   2021   2024

Nancy A. Simonian, M.D.

  II   60   Director   2012   2021   2024

 

Director

                             

Marc E. Lippman, M.D.

  III   76   Director   2000   2022    

Ted Love, M.D.

  III   62   Director   2020   2022    

Daniel G. Welch

  III   63   Director   2007   2022    

David W. Gryska

  I   65   Director   2005   2023    

John A. Orwin

  I   56   Director   2014   2023    

Alpna H. Seth, Ph.D.

  I   57   Director   2018   2023    

 

*

Ages as of April 1, 2021

If elected at the Annual Meeting, each of the above director nominees would serve until the 2024 Annual Meeting of Shareholders and until the director’s successor is elected and has qualified, or, if sooner, until the director’s death, resignation or removal.

As this is an uncontested election, each nominee for director must receive a majority of the votes cast in order to be elected, meaning the number of shares voted “for” each nominee must exceed the number of shares voted “against” such nominee.

In addition, under our Corporate Governance Guidelines, any nominee for director who receives a greater number of votes “against” his or her election than votes “for” such election is required to submit an offer of resignation for consideration by the Nominating and Corporate Governance Committee, or the Governance Committee. In such case, the Governance Committee will then consider all of the relevant facts and circumstances and recommend to the full Board the action to be taken with respect to such offer of resignation.

If any nominee is unavailable for election due to an unexpected occurrence, such shares will be voted for the election of such substitute nominees as the Governance Committee may propose. Proxies may not be voted for a greater number of persons than the number of nominees named. Each person nominated for election has consented to being named as a nominee in this proxy statement and has agreed to serve if elected, and management has no reason to believe that any nominee will be unable to serve.

 

 

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The Board recommends a vote FOR all three of the nominees for director named above.

 

 

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NOMINEES FOR THE BOARD OF DIRECTORS AND CONTINUING DIRECTORS  

 

   

 

NOMINEES FOR THE BOARD OF DIRECTORS AND CONTINUING DIRECTORS

The names of the nominees and of the directors whose terms of office will continue after the Annual Meeting, their ages as of April 1, 2021, and certain other information about them are set forth below. Such information includes the specific and particular experience, qualifications, attributes or skills of each nominee and continuing director that led the Governance Committee and the Board to believe that such nominee or continuing director should continue to serve on the Board as of the date of this proxy statement.

DIRECTOR NOMINEE PROFILES

 

      

 

 FELIX J. BAKER, PH.D.                                                                     LEAD INDEPENDENT DIRECTOR  

         
         KEY QUALIFICATIONS    RECENT EXPERIENCE
           
 

 

LOGO

Age: 52

 

Director Since:
2003

 

Term Expires:
2021

 

Committees:

•  Compensation (Chair)   

•  Governance

      

As a board member and investor in many successful biotechnology companies, Dr. Baker is able to draw on his experience and vision in investing in and building companies to add significant value to Board of Directors discussions and company strategy.

  

Baker Bros. Advisors LP, a biotechnology investment firm

 

  Founder and Co-Managing Member (2000-present)

 

OTHER PUBLIC COMPANY BOARDS

 

Current

 

  IGM Biosciences, Inc.

 

  Kiniksa Pharmaceuticals, Ltd.

 

  Kodiak Sciences Inc.

 

  Talis Biomedical Corporation

 

Past 5 Years

 

  Alexion Pharmaceuticals, Inc.

 

  Genomic Health, Inc.

 

                      2021 PROXY STATEMENT    9                       


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NOMINEES FOR THE BOARD OF DIRECTORS AND CONTINUING DIRECTORS

 

 

DIRECTOR NOMINEE PROFILES

 

      

 

 CLAY B. SIEGALL, PH.D.                                                                          CHAIRMAN OF THE BOARD  

         
         KEY QUALIFICATIONS    RECENT EXPERIENCE
           
 

 

LOGO

Age: 60

 

Director Since:
1997

 

Term Expires:
2021

      

Dr. Siegall’s experience in founding and building Seagen is integral to our success and our mission. His scientific understanding along with his corporate vision and operational knowledge provide strategic insights to our Board of Directors.

  

Seagen Inc.

 

  Chairman of the Board (2004-present)

 

  Chief Executive Officer (2002-present)

 

  President (2000-present)

 

  Chief Scientific Officer (1997-2002)

 

  Co-founder (1997-present)

 

OTHER PUBLIC COMPANY BOARDS

 

Current

 

  Ultragenyx Pharmaceutical Inc.

 

Past 5 Years

 

  Alder BioPharmaceuticals, Inc.

 

  Mirna Therapeutics, Inc.

           
      

 

 NANCY A. SIMONIAN, M.D.                                                                                           INDEPENDENT  

         
         KEY QUALIFICATIONS    RECENT EXPERIENCE
           
 

 

LOGO

Age: 60

 

Director Since:
2012

 

Term Expires:
2021

 

Committees:

•  Governance (Chair)

      

As a current and former senior executive of several other biotechnology companies, including Syros Pharmaceuticals, Inc., Millennium Pharmaceuticals, Inc. and Biogen, Inc., Dr. Simonian possesses a strong understanding of the biotechnology industry and the development and commercialization of our product candidates. Her knowledge of late-stage product development, as former Chief Medical Officer of Millennium Pharmaceuticals, Inc., and her understanding of patient perspectives as a medical doctor, bring important insights to our Board of Directors.

  

Syros Pharmaceuticals, Inc., a publicly-traded life sciences company

 

  Chief Executive Officer (2012-present)

 

Millennium Pharmaceuticals, Inc., an affiliate of The Takeda Oncology Company

 

  Chief Medical Officer (2006-2011)

 

OTHER PUBLIC COMPANY BOARDS

 

Current*

 

  Evelo Biosciences, Inc.

 

  Syros Pharmaceuticals, Inc.

 

* Dr. Simonian has committed to reduce the total number of public company boards on which she serves to two prior to the end of the year.

           

 

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NOMINEES FOR THE BOARD OF DIRECTORS AND CONTINUING DIRECTORS

 

   

 

CONTINUING DIRECTOR PROFILES

 

      

 

 DAVID W. GRYSKA                                                                                                              INDEPENDENT  

         
         KEY QUALIFICATIONS    RECENT EXPERIENCE
           
 

 

LOGO

Age: 65

 

Director Since:
2005

 

Term Expires:
2023

 

Committees:

•  Audit (Chair)

      

Mr. Gryska has years of experience as Chief Financial Officer at Incyte Corporation, Celgene Corporation, Scios, Inc., and Cardiac Pathways Corporation. He brings to the Board valuable and relevant experience as a senior financial executive at life sciences and biotechnology companies engaged in financings, global expansion and other strategic transactions. He also has extensive knowledge of accounting principles and financial reporting rules and regulations, tax compliance and oversight of the financial reporting processes of several large, publicly-traded corporations, which assists Mr. Gryska in fulfilling his duties as chair of our Audit Committee.

  

Incyte Corporation, a publicly-traded biopharmaceutical company

 

  Executive Vice President and Chief Financial Officer (2014-2018; retired)

 

Myrexis, Inc., a publicly-traded biotechnology company

 

  Chief Operating Officer and Interim Chief Executive Officer (2012)

 

Celgene Corporation, a publicly-traded biopharmaceutical company

 

  Senior Vice President and Chief Financial Officer (2006-2010)

 

OTHER PUBLIC COMPANY BOARDS

 

Current

 

  Aerie Pharmaceuticals, Inc.

 

  GW Pharmaceuticals plc

 

Past 5 Years

 

  PDL BioPharma, Inc.

 

           
        

 

MARC E. LIPPMAN, M.D.                                                                                                INDEPENDENT  

           
         KEY QUALIFICATIONS    RECENT EXPERIENCE
           
 

 

LOGO

Age: 76

 

Director Since:
2000

 

Term Expires:
2022

 

Committees:

•  Governance

      

Dr. Lippman’s extensive experience in treating patients and conducting oncology research at the National Cancer Institute and at the medical schools of the University of Miami, the University of Michigan and Georgetown University provides an important patient perspective and focus on innovation in our development of targeted oncology therapies.

  

Georgetown University Medical Center’s Lombardi Comprehensive Cancer Center

 

  Professor of Oncology (2018-present)

 

University of Miami Leonard M. Miller School of Medicine

 

  Kathleen and Stanley Glaser Professor of Medicine and Chairman of the Department of Medicine (2017-2018)

 

  Deputy Director of the Sylvester Comprehensive Cancer Center (2008-2017)

 

OTHER PUBLIC COMPANY BOARDS

 

  None

 

           

 

                      2021 PROXY STATEMENT    11                       


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NOMINEES FOR THE BOARD OF DIRECTORS AND CONTINUING DIRECTORS

 

 

CONTINUING DIRECTOR PROFILES

 

      

 

 TED LOVE, M.D.                                                                                                                    INDEPENDENT  

         
       KEY QUALIFICATIONS    RECENT EXPERIENCE
         
 

LOGO

Age: 62

 

Director Since:
2020

 

Term Expires:
2022

 

Committees:

•  Audit

      

Dr. Love has more than twenty years of leadership and management experience in the pharmaceutical industry, including Global Blood Therapeutics, Inc. and Onyx Pharmaceuticals, Inc., in addition to his prior experience as a practicing physician. He brings both strong business expertise and knowledge of patient perspectives to our Board of Directors.

  

Global Blood Therapeutics, Inc., a publicly-traded biopharmaceutical company

 

  President and Chief Executive Officer (2014-present)

 

Onyx Pharmaceuticals, Inc.

 

  Executive Vice President, Research and Development and Technical Operations (2010-2012)

 

OTHER PUBLIC COMPANY BOARDS

 

Current

 

  Global Blood Therapeutics, Inc.

 

  Royalty Pharma plc

 

Past 5 Years

 

  Amicus Therapeutics, Inc.

 

  Cascadian Therapeutics, Inc.

 

  Portola Pharmaceuticals, Inc.

 

      

 

 JOHN A. ORWIN                                                                                                                  INDEPENDENT  

         
       KEY QUALIFICATIONS    RECENT EXPERIENCE
         
 

LOGO

Age: 56

 

Director Since:
2014

 

Term Expires:
2023

 

Committees:

•  Compensation

      

Mr. Orwin has many years of experience as a senior executive at leading pharmaceutical and biotechnology companies, including Atreca, Inc., Relypsa, Inc., Affymax, Inc., Genentech, Inc., and Johnson & Johnson. This gives him a strong understanding of the biotechnology industry and the challenges we must meet in order to continue developing and commercializing ADCETRIS, PADCEV, TUKYSA and our product candidates.

  

Atreca, Inc., a publicly-traded biopharmaceutical company

 

  President and Chief Executive Officer (2018-present)

 

Relypsa, Inc., now an affiliate of Vifor Pharma AG, a Swiss-listed public company

 

  Chief Executive Officer (2013-2017)

 

Affymax, Inc., a biotechnology company

 

  Board member (2011-2014)

 

  Chief Executive Officer (2011-2013)

 

  President and Chief Operating Officer (2010-2011)

 

Genentech, Inc., now a member of the Roche Group

 

  Vice President and then Senior Vice President of the BioOncology Business Unit (2005-2010)

 

OTHER PUBLIC COMPANY BOARDS

 

Current

 

  Atreca, Inc.

 

  Travere Therapeutics, Inc.

 

Past 5 Years

 

  Array BioPharma Inc.

         

 

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NOMINEES FOR THE BOARD OF DIRECTORS AND CONTINUING DIRECTORS

 

   

 

CONTINUING DIRECTOR PROFILES

 

      

 

 ALPNA H. SETH, PH.D.                                                                                                      INDEPENDENT  

         
         KEY QUALIFICATIONS    RECENT EXPERIENCE
           
 

 

LOGO

Age: 57

 

Director Since:
2018

 

Term Expires:
2023

 

Committees:      

•  Audit

      

Dr. Seth has over 20 years of global experience in the biotechnology industry. Having held a range of leadership roles around the globe, Dr. Seth brings a breadth of experience in drug development, commercial, international operations and general management.

  

Nura Bio Inc. (formerly Proneurotech Inc.), a private biotechnology company

 

  Chief Executive Officer and President (2019-present)

 

Vir Biotechnology, Inc., now a publicly traded biopharmaceutical company

 

  Chief Operating Officer (2017-2019)

 

Biogen, Inc., a publicly-traded biotechnology company

 

  Senior Vice President and Global Head of the Biosimilars Global Business Unit (2014-2017)

 

  Range of leadership roles in business development, drug development and commercial (1998-2014)

 

 

OTHER PUBLIC COMPANY BOARDS

 

Current

 

  Bio-Techne Corporation

           
      

 

 DANIEL G. WELCH                                                                                                            INDEPENDENT  

         
         KEY QUALIFICATIONS    RECENT EXPERIENCE
           
 

 

LOGO

Age: 63

 

Director Since:
2007

 

Term Expires:
2022

 

Committees:      

•  Compensation

      

Mr. Welch’s global commercial background and strong senior executive experience at a wide range of biotechnology companies, including previously serving as Chairman and Chief Executive Officer of two publicly-traded biotechnology companies, InterMune, Inc. and Triangle Pharmaceuticals, Inc., gives him insight into strategy and planning for a biopharmaceutical company that is valuable to our senior management and our Board of Directors.

  

Sofinnova Ventures, a venture capital firm

 

  Executive Partner (2015-2018; retired)

 

InterMune, Inc., a publicly-traded biotechnology company

 

  Chief Executive Officer and President (2003-2014)

 

  Chairman of the Board (2007-2014)

 

OTHER PUBLIC COMPANY BOARDS

 

Current

 

  Intercept Pharmaceuticals, Inc.

 

  Nuvation Bio Inc. (Chairman of the Board)

 

  Ultragenyx Pharmaceutical, Inc. (Chairman of the Board)

 

Past 5 Years

 

  Avexis, Inc.

 

                      2021 PROXY STATEMENT    13                       


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CORPORATE GOVERNANCE

 

 

CORPORATE GOVERNANCE

Our Board of Directors is committed to building long-term shareholder value and maintaining sound corporate governance practices. In furtherance of this commitment, we regularly monitor developments in the area of corporate governance and review our processes, policies and procedures in light of such developments.

DIRECTOR INDEPENDENCE; AUDIT COMMITTEE FINANCIAL EXPERT

Our Board of Directors has determined that all of our directors are independent directors within the meaning of Rule 5605(a)(2) of the Nasdaq listing standards, except for Clay B. Siegall, our President and Chief Executive Officer. Our Board of Directors considered Dr. Baker’s role as a Co-Managing Member of Baker Brothers Investments, and the relationship Seagen has with Baker Brothers Investments and affiliated entities as significant shareholders in making the determination that Dr. Baker is independent.

Our Board of Directors has also determined that all of the members of the Compensation Committee currently serving are independent under the additional criteria for members of the Compensation Committee under the Nasdaq listing standards. In the case of Dr. Baker, our Board of Directors determined that, given his affiliation with our largest shareholder, his interests are aligned with other shareholders in seeking an appropriate executive compensation program for Seagen. In addition, the Board of Directors has determined that all of the members of the Audit Committee are independent within the meaning of Rules 5605(c)(2)(A)(i) and (ii) of the Nasdaq listing standards and that Mr. Gryska is an audit committee financial expert as defined in Item 407(d)(5)(ii) of Regulation S-K. There are no family relationships among any of the directors or executive officers of Seagen.

BOARD LEADERSHIP STRUCTURE

Our Board of Directors has chosen to combine the principal executive officer and Board chairman positions and, in addition, has appointed a separate lead independent director. Dr. Siegall has served as our principal executive officer and Board chairman since 2004. At the present time, the independent directors believe that Dr. Siegall’s in-depth knowledge of our operations and vision for our development make him the best-qualified director to serve as Board chairman. We believe that combining the positions of chief executive officer and Board chairman provides a single, clear chain of command to execute our strategic initiatives and business plans. In addition, we believe that a combined chief executive officer/Board chairman is better positioned to act as a bridge between management and the Board, facilitating the regular flow of information. We also believe that it is advantageous to have a Board chairman with an extensive history with and knowledge of Seagen (as is the case with our chief executive officer) as compared to an independent Board chairman with less direct involvement.

Under our Corporate Governance Guidelines, when the Board chairman also serves as our chief executive officer or as another executive officer of Seagen, the Board may designate an independent director who acts as a lead independent director. The position of lead independent director has been structured to serve as an effective balance to a combined chief executive officer/Board chairman. In addition, we believe that having a lead independent director, who is independent of management, creates an environment that is more conducive to objective evaluation and oversight of management’s performance, increasing management accountability and improving the ability of the Board of Directors to monitor whether management’s actions are in the best interests of Seagen and its shareholders. Since February 2005, Dr. Baker has served as the lead independent director of the Board. His formal and informal duties include, among others:

 

 

providing leadership to the Board complementary to the Board chairman;

 

 

working with the Board chairman and Corporate Secretary to set the agenda for Board meetings;

 

 

serving as the principal liaison between the independent directors and the Board chairman;

 

 

calling meetings of the independent directors;

 

 

chairing meetings of independent directors without management present;

 

 

chairing Board meetings if the Board chairman is not in attendance;

 

 

if requested by shareholders, ensuring that he is available, when appropriate, for consultation and direct communication; and

 

 

reviewing and providing input on Board meeting schedules.

 

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CORPORATE GOVERNANCE

 

   

 

In addition, as chair of our Compensation Committee, Dr. Baker provides additional oversight of management by leading the annual evaluation of the pay and performance of our chief executive officer and our other executive officers.

DIRECTOR COMMITMENTS

Our Board only nominates candidates who it believes will be able to devote sufficient time and attention to fulfill their duties, taking into account each candidate’s principal occupation, other board service, attendance and performance. In 2020, based on discussions during shareholder engagements, as well as our Governance Committee’s review of institutional and proxy advisory firms’ policies on director time commitments and the policies of peers and other public companies, our Governance Committee and Board revised our Corporate Governance Guidelines as outlined below. All of our directors are in compliance with this policy.

 

   

Director who also serves as a Section 16 executive officer of a public company

  

£3 public company boards including our Board unless approved in advance by our Board

 

  Director who is not an Executive Officer   

£5 public company boards including our Board unless approved in advance by the Board

 

Non-employee directors are required to notify the Governance Committee if they:

 

   

retire from their executive positions at outside companies;

 

   

change the position they held when they became a member of the Board; or

 

   

join the board of a private or public company.

After receiving such a notice, the Governance Committee will review the appropriateness of continued Board membership under the circumstances and the affected director will be expected to act in accordance with the Governance Committee’s recommendation.

We are aware that some shareholders have policies that are more restrictive than our policy on director commitments. Over the past year, our Governance Committee has continued to review shareholder policies on director time commitments. We also discussed this topic during shareholder engagements.

Our Governance Committee and Board believe that each of our directors has demonstrated an ongoing commitment and ability to devote ample time and attention to their duties as directors of Seagen based on their exemplary participation in meetings of our Board and, where applicable, the Board committees on which they serve. Each of our directors also brings important expertise and experience to Seagen, as described more fully under “Nominees for the Board of Directors and Continuing Directors” above in this proxy statement. The Board believes that it is in the Company’s best interest that each of our current directors continue to serve on our Board. In addition, as indicated above, our Board continues to actively discuss the topic of director commitments in light of evolving shareholder positions on this topic. In 2020, the Chair of our Governance Committee, Dr. Simonian, committed to reduce the total number of public company boards on which she serves to two, prior to the end of this year.

 

                      2021 PROXY STATEMENT    15                       


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CORPORATE GOVERNANCE

 

 

BOARD COMMITTEES

The Board has a standing Audit Committee, Compensation Committee and Governance Committee, each of which is made up solely of independent directors. Each of these committees operates under a written charter setting forth the functions and responsibilities of the committee, which is available on our website at www.seagen.com.

 

      

AUDIT COMMITTEE

      
 

 

Chair:

David W. Gryska

 

Other Members:

Ted Love*

Alpna H. Seth

    

KEY FUNCTIONS

    
       

  appoint and establish the fees for our independent registered public accounting firm;

 

  review and approve the procedures we use to prepare our periodic and annual reports;

 

 

  review and discuss with management and our independent auditor our quarterly earnings release, financial statements, and related periodic SEC filings;

 

  review our critical accounting policies and critical audit matters;

 

  review the independence of the independent registered public accounting firm in accordance with the Public Company Accounting Oversight Board;

 

  monitor the effectiveness of the audit effort; and

 

  oversee our financial and accounting organization, our system of internal accounting controls and our internal audit function.

 

 

*

Mr. Orwin served as a member of the Audit Committee until September 2020, when Dr. Love joined the Audit Committee.

 

 

      

COMPENSATION COMMITTEE

      
 

 

Chair:

Felix J. Baker

 

Other Members:

John A. Orwin

Daniel G. Welch

    

KEY FUNCTIONS

    
       

  review and advise the Board regarding the performance of the CEO and other executive officers;

 

  review overall corporate performance against goals and determine corporate payout factor used for annual executive and nonexecutive bonuses;

 

  review and determine the compensation to be paid to the Company’s executive officers;

 

  establish and administer our policies regarding annual executive salaries, cash incentives and long-term equity incentives;

 

  oversee our equity plans, long-term incentive plans, executive bonus plan and other compensation policies, plans and programs;

 

  review with management our Compensation Discussion and Analysis; and

 

  review the compensation paid to our directors.

 

 

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CORPORATE GOVERNANCE

 

   

 

      

GOVERNANCE COMMITTEE

      
 

 

Chair:

Nancy A. Simonian

 

Other Members:

Felix J. Baker

Marc E. Lippman

    

KEY FUNCTIONS

    
       

  identify and evaluate individuals qualified to serve as members of the Board of Directors and consider board composition, including evaluating incumbent directors for re-election;

 

  recommend nominees to the Board for election as directors of Seagen and appointment as members of the committees of the Board of Directors;

 

  develop and make recommendations to the Board regarding the Company’s Corporate Governance Guidelines and provide oversight with respect to corporate governance and ethical conduct; and

 

  oversee an annual evaluation of the performance of the Board.

 

BOARD AND COMMITTEE MEETINGS AND ATTENDANCE

The Board met nineteen times and acted by written consent four times during 2020. On at least a quarterly basis, the Board meets in executive sessions of independent directors without management present. During 2020, the Audit Committee held five meetings and acted by written consent two times, the Compensation Committee held eight meetings and acted by written consent four times and the Governance Committee met twice and acted by written consent two times. Each of our directors attended at least 75% of the aggregate of Board and applicable committee meetings during his or her service on the Board or applicable committees during 2020.

Although we do not have a formal policy regarding attendance by members of the Board of Directors at our annual meetings of shareholders, directors are encouraged to attend. Six of the directors then serving on our Board attended the 2020 Annual Meeting of Shareholders.

BOARD RISK OVERSIGHT

Our Board of Directors has overall responsibility for risk oversight with a focus on the most significant risks facing Seagen. Throughout the year, the Board and the committees to which it has delegated responsibility dedicate a portion of their meetings to reviewing and discussing specific risk topics in greater detail. Strategic and operational risks are presented and discussed in the context of the Chief Executive Officer’s report on operations to the Board at regularly scheduled Board meetings and at presentations to the Board and its committees by the respective committee chairs, our Chief Financial Officer, our General Counsel and Executive Vice President, Legal Affairs, and other officers. In addition, management periodically reports to the Board on enterprise risk management. Our Board also retains responsibility for assessment of succession-related risks and succession planning.

The Board has delegated responsibility for the oversight of specific risks to Board committees as follows:

 

   
  Audit Committee   

  Reviews and oversees risks related to cybersecurity and compliance matters, including but not limited to, Foreign Corrupt Practices Act compliance.

 

  Reviews and oversees related-party transactions on behalf of Seagen.

 

  Compensation

  Committee

  

  Evaluates the risks and rewards associated with our compensation philosophy and programs.

 

  Reviews and approves compensation programs with features that mitigate risk without diminishing the  incentive nature of the compensation. For more detail see “Compensation of Executive Officers—Compensation Discussion and Analysis—Compensation and Risk,” below in this proxy statement.

 

  Discusses with management the procedures that have been put in place to identify and mitigate potential  risks in compensation.

 

  Governance

  Committee

 

  

  Oversees risks related to Seagen’s governance structure and processes, board composition,  refreshment and committee leadership.

 

 

 

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CORPORATE GOVERNANCE

 

 

In addition, our General Counsel and Executive Vice President, Legal Affairs works with our committees and Board to develop risk identification, risk management and risk mitigation strategies and reports periodically to the Board and the committees on Seagen’s risk profile and various management and mitigation strategies.

COMPENSATION COMMITTEE PROCESS AND PROCEDURES

Information on the Compensation Committee’s processes and procedures for consideration of executive compensation are addressed in “Compensation Discussion and Analysis” below. For information regarding our processes and procedures for the consideration and determination of director compensation, please see “Director Compensation” below. In accordance with its charter, the Compensation Committee may delegate any of its authority or responsibility as appropriate, except to the extent inconsistent with any applicable laws and rules, including the Nasdaq listing standards. Our Compensation Committee does not, however, delegate any of its functions to others in determining or recommending executive or director compensation.

BOARD REFRESHMENT

Under our Corporate Governance Guidelines, our Governance Committee is responsible for assessing the appropriate balance of experience, skills and characteristics required of the Board. In this regard, our Governance Committee identifies and evaluates individuals qualified to serve as Board members, including evaluating incumbent directors for re-election, and recommends to the Board nominees for election as directors. On an annual basis, our Governance Committee is tasked with considering and articulating the qualities, experiences, skills and attributes that qualify each director to be a member of the Board in light of our business and structure and assessing its effectiveness in diversifying the Board. Our Governance Committee also oversees an annual Board self-evaluation process. Director responses are collated into a summary by an outside third party, and the results are discussed with the full Board.

CRITERIA FOR BOARD MEMBERSHIP

The Governance Committee assesses many characteristics and diversity considerations when reviewing director candidates and these characteristics are set forth in our Corporate Governance Guidelines. Among the characteristics to be considered are:

 

 

professional background;

 

 

depth and breadth of experience;

 

 

wisdom;

 

 

sound business judgment;

 

 

integrity;

 

 

collegiality;

 

 

ability to make independent analytical inquiries;

 

 

understanding of the Company’s business environment;

 

 

familiarity with the biotechnology industry;

 

 

willingness to devote adequate time to Board duties;

 

 

the interplay of the candidate’s experience and skills with those of other Board members; and

 

 

the extent to which a candidate would be a desirable addition to the Board and any committees of the Board.

Our Corporate Governance Guidelines further provide that the Governance Committee seeks nominees with:

 

 

a broad range of experience, viewpoints, professions, skills, geographic representations and cultural backgrounds; and

 

 

diversity of race, ethnicity, gender, age and sexual orientation.

We believe that the backgrounds and qualifications of our directors, considered as a group, should provide a significant composite mix of experience, knowledge and abilities that will allow the Board to fulfill its responsibilities and should represent an appropriate balance between institutional knowledge and fresh perspectives.

 

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CORPORATE GOVERNANCE

 

   

 

BOARD SKILLS AND EXPERIENCE

 

      Baker    Gyrska    Lippman    Love    Orwin    Seth    Siegall    Simonian    Welch

CEO/CFO Leadership

Experience serving as a chief executive officer or chief financial officer at a publicly traded or private organization

                              

Financial / Accounting

Experience or expertise in financial accounting and reporting processes or the financial management of an organization

                            

Scientific

Scientific expertise related to the healthcare industry

                                

Healthcare Industry

Experience with complex issues within the healthcare industry

                          

Regulatory

Experience with regulation in the healthcare industry

                                

Business Strategy / Operations

Experience overseeing and/or driving strategic direction and growth of an organization

                          

Public Company Governance

Experience as a board member of another public company

                            

Capital Markets Experience

Experience in capital market transactions or mergers and acquisitions

                            

BOARD COMPOSITION

 

 

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                      2021 PROXY STATEMENT    19                       


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CORPORATE GOVERNANCE

 

 

DIRECTOR NOMINATION PROCESS

The Governance Committee identifies nominees by first evaluating the current members of the Board willing to continue in service. Current members of the Board with skills and experience that are relevant to our business and who are willing to continue in service are considered for re-nomination. In determining whether to recommend a director for re-election, the Governance Committee considers the director’s past attendance at meetings and participation in and contributions to the activities of the Board and its committees, as well as the nature and time involved in a director’s service on other boards. It also considers the overall composition of the Board, including considerations of refreshment and diversity. If there is a vacancy on the Board as a result of a resignation or otherwise, or if the Board decides not to nominate a member for re-election or decides to add a member to the Board, the Governance Committee identifies the desired skills and experience of a new nominee in light of the criteria above and the Board’s needs. Current members of the Board are asked to submit suggestions as to individuals meeting the criteria described above.

 

 

LOGO

In February 2021, in order to advance our efforts to promote a diverse set of directors, our Board revised our Corporate Governance Guidelines to implement a policy that, when a third-party search firm is engaged and requested to furnish a list of possible director candidates, the firm will be instructed to include women and candidates from underrepresented communities who meet the applicable business and search criteria.

SHAREHOLDER DIRECTOR NOMINATIONS AND RECOMMENDATIONS

In accordance with our bylaws and applicable law, nominations for directors may be made by any shareholder of record entitled to vote for the election of directors at shareholder meetings held for such purpose. The requirements a shareholder must follow for nominating persons for election as directors are set forth in our bylaws and under the heading “Frequently Asked Questions and Other Information—When are proposals and nominations due for the 2022 Annual Meeting?” below in this proxy statement.

The Governance Committee will also consider director candidates recommended by shareholders. In order to recommend director candidates to the Governance Committee, shareholders should follow the procedures in our bylaws for director nominations. If a shareholder complies with these procedures for recommending persons for election as directors, the Governance Committee will conduct the appropriate and necessary inquiries into the backgrounds, qualifications and skills of the recommended candidates and, in the exercise of the Governance Committee’s independent judgment in accordance with the policies and procedures adopted in the Governance Committee’s charter, will determine whether to recommend the candidate(s) recommended by the shareholders to the Board for inclusion in the list of candidates for election as directors at the next shareholder meeting held to elect directors. The Governance Committee does not intend to alter the manner in which it evaluates director candidates based on whether or not the candidate was recommended by a shareholder.

 

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CORPORATE GOVERNANCE

 

   

 

COMMUNICATIONS WITH THE BOARD OF DIRECTORS

Our Board of Directors currently does not have a formal process for shareholders to send communications to the Board of Directors. Nevertheless, efforts are made to ensure that the views of shareholders are heard by the Board or individual directors, as applicable, and that appropriate responses are provided to shareholders on a timely basis. The Board does not recommend that formal communication procedures be adopted at this time because it believes that informal communications are sufficient to communicate questions, comments and observations that could be useful to the Board. Shareholders wishing to formally communicate with the Board of Directors may send communications directly to Seagen Inc., Attention: Investor Relations, 21823 – 30th Drive SE, Bothell, Washington 98021, and communications that are relevant to the duties and responsibilities of the Board will be forwarded, as appropriate. If the communication regards a shareholder proposal to be considered at an annual meeting of shareholders, the methods and timing for submitting a shareholder proposal are covered under the heading “Frequently Asked Questions and Other Information—When are proposals and nominations due for the 2022 Annual Meeting?”

MAJORITY VOTING IN UNCONTESTED ELECTIONS

Our bylaws provide for a majority voting standard in uncontested director elections, instead of plurality voting. In uncontested elections, a director must be elected by a majority of the votes cast with respect to the election of such director (meaning the number of shares voted “for” such nominee’s election must exceed the number of votes cast “against” his or her election) at any meeting for the election of directors at which a quorum is present. However, in the event of a contested election of directors, directors shall be elected by the highest number of votes, or a plurality of votes, cast.

In addition, under our Corporate Governance Guidelines, any nominee for director who receives a greater number of votes “against” his or her election than votes “for” such election is required to submit an offer of resignation for consideration by the Governance Committee. In such case, the Governance Committee will then consider all of the relevant facts and circumstances and recommend to the full Board the action to be taken with respect to such offer of resignation.

BOARD CLASSIFICATION

The Board believes that there is no single approach to corporate governance that is appropriate for all companies and that the key consideration in determining whether to implement a particular governance practice is whether that practice promotes the interests of shareholders, taking into account the specific circumstances of Seagen. While the Board acknowledges that declassification proposals have received popular support, it has reviewed the rationale for its current classified structure and continues to believe that a classified board is the appropriate board structure for Seagen at this time and is in the best interest of our shareholders for the reasons set forth below:

 

 

Long-Term Focus. The Board believes that a classified board encourages directors to look to the long-term best interest of Seagen and our shareholders by strengthening the independence of non-employee directors against the often short-term focus of certain investors and special interests.

 

 

Continuity of Board Leadership. A classified board allows for a greater amount of stability and continuity, providing institutional perspective and knowledge both to management and other directors in a time of rapid growth and transformation for Seagen. In addition, the development and commercialization of pharmaceuticals is complex and requires significant expertise. By its very nature, a classified board ensures that at any given time there will be experienced directors serving on our Board who are fully immersed in and knowledgeable about our highly technical business, including our relationships with our current and potential strategic partners, as well as the competition, opportunities, risks and challenges that exist in the biotechnology and pharmaceutical industries. Each year the Governance Committee reviews the qualifications and performance of the directors prior to nominating them to stand for re-election. We believe the benefit of a classified board to Seagen and our shareholders comes not from continuity alone—but rather from the continuity of highly qualified, engaged and knowledgeable directors focused on long-term shareholder interests.

 

 

Unsolicited Takeover Protection. A classified board can reduce vulnerability to potential abusive takeover tactics by encouraging persons seeking control of Seagen to negotiate with the Board and thereby better positioning the Board to negotiate effectively on behalf of all shareholders. Because less than a majority of directors stand for election at each annual meeting under a classified board structure, a hostile bidder could not simply replace a majority of the Board at a single annual meeting with directors aligned with the hostile bidder’s own interests,

 

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thereby gaining control of Seagen without paying a fair market price to all shareholders. Rather, in the interests of fairness to shareholders as a whole, having a classified board encourages the hostile bidder to negotiate directly with the Board on a potential transaction.

In sum, Seagen has benefited from the independence and continuity of experienced leadership provided by our Board of Directors under the classified structure, and we believe these factors have been critical drivers of the significant growth in shareholder value that Seagen has generated over time.

SUCCESSION PLANNING

Succession planning is an important part of planning for the long-term success of our business. Under our Corporate Governance Guidelines, our Board is responsible for CEO succession planning, and they discuss CEO and executive officer performance and succession in executive session. In addition, our CEO and senior executives actively discuss future candidates for leadership positions at all levels within our organization. In fall 2020, we held an executive succession planning session at the Board level with the support of our Executive Vice President, Human Resources.

CORPORATE GOVERNANCE GUIDELINES

As a part of the Board’s commitment to building long-term shareholder value and maintaining sound corporate governance, the Board has adopted a set of Corporate Governance Guidelines, which guides the operation of the Board and its committees. Our Corporate Governance Guidelines cover, among other topics, Board composition, structure and functioning, including our director resignation policy, Board membership criteria, including but not limited to diversity considerations, director independence, Board self-evaluations, committees of the Board, Board access to management and independent advisers, stock ownership guidelines for members of the Board and our executive officers, and succession and leadership development. A copy of the Corporate Governance Guidelines can be viewed on our website at www.seagen.com.

STOCK OWNERSHIP GUIDELINES

Our Corporate Governance Guidelines include stock ownership guidelines for our directors and executive officers. For more information about these guidelines, please see “Director Compensation—Director Stock Ownership Guidelines” and “Compensation of Executive Officers—Compensation Discussion and Analysis—Stock Ownership Guidelines” below.

CODE OF CONDUCT AND BUSINESS ETHICS

The Board of Directors has adopted a Code of Conduct and Business Ethics, or the Code of Ethics, for all directors, officers and employees of Seagen Inc. A copy of the Code of Ethics can be viewed on our website at www.seagen.com. We intend to satisfy the disclosure requirement under Item 5.05 of Form 8-K regarding an amendment to, or waiver from, a provision of the Code of Ethics by posting such information on our website at the website address specified above.

WHISTLEBLOWER POLICY

Seagen has adopted a Whistleblower Policy applicable to its employees that provides for protection from retaliation or discrimination by Seagen due to reporting issues relating to concerns involving questionable accounting or auditing matters and compliance with applicable laws and regulations.

PROHIBITIONS ON HEDGING, PLEDGING AND SHORT-TERM SPECULATIVE TRANSACTIONS

Under the terms of our insider trading policy, no employees (including executive officers) of Seagen or its subsidiaries, members of our Board or consultants who know or have access to material information regarding Seagen that has not been fully disclosed to the public may engage in any hedging or monetization transactions relating to Seagen or its securities, including through the use of financial instruments such as prepaid variable forwards, equity swaps, collars and exchange funds, nor may any of these persons engage in short-term speculative transactions involving Seagen securities (or derivatives of Seagen securities), including short sales and the buying and selling of put or call options. In addition, none of these persons may hold Seagen securities in a margin account or otherwise pledge Seagen securities as collateral for a loan.

 

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CORPORATE GOVERNANCE

 

   

 

CORPORATE RESPONSIBILITY

At Seagen, we are committed to developing transformative medicines for patients with cancer in a socially responsible and sustainable manner. We are dedicated to providing patients access to our medicines and education about their disease. We also believe that fostering a culture of inclusion with diverse teams and perspectives and operating with integrity are key to our success. We continue to support the community both locally and through nonprofits that are dedicated to patients and advancing research. Finally, as we grow, we are striving to limit our environmental impact and operate in an increasingly sustainable manner.

 

 

 

     LOGO

 

PATIENTS

      

 

     LOGO

  EMPLOYEES & COMMUNITY       

 

     LOGO

  ENVIRONMENT  
  Providing patients with safe and effective medicines as well as supporting patient advocacy and education through philanthropic donations        Continuing to be an employer of choice by promoting an inclusive and rewarding workplace and being a good corporate citizen in the communities where we operate      Seeking to operate our business in a sustainable manner and aligning with suppliers that we believe share our vision
 

  Assisting patients with access to our medicines through coverage and reimbursement support, as well as financial support for eligible patients through our Seagen Secure program

 

  Supporting patient advocacy organizations to help patients learn more about their disease states and find a community support group

 

  Improving patients’ lives through scientific excellence by seeking to develop therapies for areas of significant unmet need

 

  Working to ensure that our supply chain meets or exceeds good manufacturing practices (GMP) as well as U.S. Food & Drug Administration and European Medicines Agency standards

      

  Continuing to foster a diverse and inclusive workforce at all levels. See the “Diversity, Equity and Inclusion” section below.

 

  Proactively seeking feedback from employees, including a 2020 survey where employee responses included the following:

 

   97% are proud to work for Seagen

 

   95% consider our culture and values as very important to their satisfaction

 

  Expanding philanthropic and volunteer opportunities in support of nonprofits, including environmental and cancer groups, through our Employee Impact Committee

 

 

  Educating our employees on adherence to our Code of Ethics and seeking partners who share our standards for suppliers

    

  Focusing on improving energy, water and waste management practices

 

  Continuing to make available and promote to employees environmentally friendly options such as alternative commute options, bicycle racks, and electric vehicle charging stations

 

  Implementing and maintaining a risk management process and internal controls designed to comply with our policy on Environmental, Health and Safety (EHS) management

 

  Identifying and seeking to manage EHS risks and issues in line with principles of good governance and tiered accountability

Corporate social responsibility and sustainability are important to us and to our Board. We are continuing to direct resources towards these topics, and our management is undertaking a cross-functional effort to identify areas where we can enhance our disclosures on these topics during the upcoming year.

 

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DIVERSITY, EQUITY AND INCLUSION

We believe that fostering diversity, equity and inclusion is a key element to discovering, developing, and bringing transformative therapies to patients with cancer. We strive to build a workforce representative of the people we serve and to build an inclusive culture where all voices are welcomed, heard, and respected.

As of the end of 2020, 57% of our global workforce and 37% of our leadership (at the executive director level and above) were women. In addition, as of the end of 2020, 33% of our U.S. workforce and 36% of our U.S. leadership (at the executive director level and above) were racially or ethnically diverse.

In 2020 and early 2021, our executive management took the following steps to advance our progress toward improving diversity, equity and inclusion, or DEI, at Seagen:

 

 

Established DEI goals to promote our focus and serve as a baseline for measuring our progress over time

 

 

Included progress towards our DEI goals in our 2021 corporate goals

 

 

Engaged with the Board on the Company’s DEI initiatives

 

 

Hired a Head of Diversity, Equity and Inclusion, a leader who will work closely with our executive leadership and Human Resources department to continue to evolve and execute our DEI strategy, including our goal to ensure a powerful, inclusive experience for all of our employees and to hire and retain the diverse talent needed to achieve our business strategy

 

 

Established two new Employee Resource Networks, both with executive sponsorship, to advance our efforts to improve DEI at Seagen, Seagen Black Employees Supporting Talent (BEST) and Seagen PRIDE, and established a Diversity in Leadership Committee in our employee-led Leaders in Action organization

 

 

Increased training programs to further promote diversity and inclusion at Seagen, including training on recognizing unconscious bias and supporting an inclusive environment

Please see “Corporate Governance—Criteria for Board Membership” and “—Director Nomination Process” above in this proxy statement for information on the diversity of our Board and the recent adoption by our Board of a policy to instruct third-party search firms to include women and candidates from underrepresented communities in the pool as part of director nominee searches.

 

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DIRECTOR COMPENSATION

 

   

 

DIRECTOR COMPENSATION

The responsibility for reviewing director compensation and recommending changes to the Board is vested in the Compensation Committee per its charter. The Compensation Committee reviews our director compensation against the director compensation of our peer group companies annually, as described below under “—Processes and Procedures for Determining Director Compensation.”

CASH COMPENSATION

Our non-employee directors receive an annual cash retainer for service on the Board, plus reimbursement for out-of-pocket expenses incurred in connection with attendance at Board and Board committee meetings, as well as additional retainers for service as our lead independent director or service on committees of the Board. In January 2020, on the recommendation of the Compensation Committee based on a review of our peer group companies, the retainers for service on the Board and Board committees were revised as follows:

 

Service

  

Previous Annual Cash

Compensation

    

                         

  

New Annual Cash  

Compensation  

 

Non-Employee Director

     $55,000           $ 60,000  

Lead Independent Director

     $37,500             no change  

 

      Chair      Member            Chair      Member    

Audit Committee

   $ 25,000      $ 12,000             no change        no change    

Compensation Committee

   $ 20,000      $ 10,000           $ 22,000        no change    

Governance Committee

   $ 15,000      $ 6,500             no change        no change    

Effective January 1 2021, on the recommendation of the Compensation Committee based on a review of our peer group companies, the annual retainer for service as the lead independent director was further revised from $37,500 to $40,000, and the annual retainers for non-chair members of the Audit and Governance Committees were further revised from $12,000 and $6,500, respectively, to $12,500 and $7,500, respectively. If a non-employee director has not served on the Board or a Board committee for the full year, the Board and any applicable Board committee retainers will be prorated for the portion of the year served.

EQUITY COMPENSATION

Our Board has established a policy of providing each new non-employee director of Seagen an initial grant of stock options and restricted stock units, or RSUs, under our Amended and Restated 2007 Equity Incentive Plan, or the 2007 Equity Plan. These initial awards are granted effective on the date on which a recipient first becomes a non-employee director of Seagen. In addition, effective on the date of each annual meeting of shareholders, each non-employee director receives an annual grant of stock options and RSUs under the 2007 Equity Plan if, on such date, he or she has served on the Board for at least six months prior to such date. The target values of the initial and annual grants to non-employee directors are as follows:

 

      Target Value of
Option Award (1)
    

Target Value of

RSU Award (2)

    Total Target  
Value of Award  
 

Initial grant

     $300,000        $300,000       $600,000  

Annual grant

     $200,000        $200,000       $400,000  
(1)

The actual number of shares underlying each option grant is calculated based on an approximation of the target award value based on the average stock price during the 30 calendar days preceding the effective date of the grant and using the Black Scholes methodology for stock option valuation.

(2)

The actual number of shares underlying each RSU grant is calculated by dividing the target value of the RSU award by the average stock price during the 30 calendar days preceding the effective date of the grant.

 

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In 2020, each of our non-employee directors who was serving at the time of our 2020 Annual Meeting of Shareholders received an annual option grant to purchase 3,171 shares of common stock and an annual RSU grant covering 1,335 shares of common stock, effective on the date of our 2020 Annual Meeting of Shareholders. In addition, effective August 17, 2020, in connection with his appointment to our Board, Dr. Love received an initial stock option grant to purchase 4,460 shares of common stock and an initial RSU grant covering 1,799 shares of common stock.

The exercise price of options granted to our directors is equal to the fair market value of our common stock on the Nasdaq Global Select Market on the effective date of grant. Options granted to non-employee directors under the 2007 Equity Plan have ten year terms and remain exercisable for up to three months following the grantee’s termination of service, unless such termination is a result of death or disability, in which case the options remain exercisable for up to a twelve-month period (or such lesser period as is determined by the Board).

The initial option grants vest as to 25% of the underlying shares on the first anniversary of the grant date and ratably thereafter on a monthly basis until such grant is fully vested on the fourth anniversary of the grant date, and the initial RSU grant vests as to 25% per year over a four year period on the anniversaries of the vesting commencement date, subject in both cases to continued service. The annual option and RSU awards made to each of our eligible directors in 2020 will vest on May 15, 2021. In addition, all non-employee directors would receive full acceleration of vesting of any outstanding options or RSU awards under the 2007 Equity Plan immediately prior to a change in control of Seagen.

DIRECTOR STOCK OWNERSHIP GUIDELINES

In order to align the interests of the directors with Seagen’s shareholders, our Corporate Governance Guidelines state that all non-employee directors should, not later than December 31st of the year during which the applicable director achieves his or her fifth anniversary as a non-employee director, own, directly or indirectly, a number of shares of Seagen common stock with a value not less than a multiple of the annual cash retainer paid by Seagen to such director for service on the Board, and thereafter such director should continue to own a number of shares with such value until he or she is no longer a director. In 2020, the minimum multiple was three times the annual cash retainer. The Compensation Committee used December 31, 2020 as the date to assess compliance with these director ownership guidelines. All of our non-employee directors serving as of such date were in compliance with these guidelines or had not yet reached the applicable deadline for compliance.

In February 2021, on the recommendation of the Compensation Committee following a review of the policies of our peer group companies, the Board increased the stock ownership guidelines for non-employee directors from three times to five times the annual cash retainer.

PROCESSES AND PROCEDURES FOR DETERMINING DIRECTOR COMPENSATION

In December 2020, Radford, part of the Rewards Solutions practice of Aon plc, or Radford, our Compensation Committee’s compensation consultant, conducted an analysis to compare our director compensation to the director compensation of the peer group of companies approved by our Compensation Committee, with input from senior management and Radford, in June 2020. For additional information on this peer group, please see “Compensation of Executive Officers—Compensation Discussion and Analysis—Compensation-Setting Process—Competitive Positioning.” Radford concluded that the annual retainer paid to our lead independent director and the annual retainers for service as a member of the Audit and Governance Committees were below the 50th percentile of our peer group medians. As a result of this analysis, in December 2020, our Compensation Committee recommended that these annual cash retainers be increased to approximate the 50th percentile of cash compensation received by members of the boards of directors of our peer companies, and in February 2021, the Board approved this recommended change, resulting in the revised cash compensation effective January 1, 2021 described above.

In addition, the 2007 Equity Plan includes a limit on the amount of non-employee director compensation under the 2007 Equity Plan. Under the 2007 Equity Plan, the aggregate value of all compensation granted or paid to any individual solely for service as a non-employee director of the Board of Directors with respect to any calendar year may not exceed $1,000,000 in total value, calculating the value of any stock awards based on the grant date fair value of such awards for financial reporting purposes), or, with respect to the calendar year in which a non-employee director is first appointed or elected to the Board, $1,500,000. This limit does not serve as an increase in the annual amount of non-employee director compensation; rather, its purpose is limiting the amount of compensation the Board can approve for non-employee directors each year.

 

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DIRECTOR COMPENSATION

 

   

 

DIRECTOR COMPENSATION TABLE

The following table sets forth all of the compensation awarded to or earned by each person who served as a non-employee director during 2020. Dr. Siegall, our only employee director, receives no compensation for Board service but is reimbursed for reasonable and customary travel expenses. Dr. Siegall’s compensation is described under “Compensation of Executive Officers” below.

 

Name

  

Fees Earned or

Paid in Cash in 2020(1)

$

    

Stock Awards(2)

$

    

Option Awards(3)

$

    

All Other
Compensation

$

    

Total 

$ 

 

Felix J. Baker, Ph.D.(4)(13)

     116,083        214,041        186,547               516,671   

David W. Gryska(5)(13)

     78,333        214,041        186,547               478,921   

Marc E. Lippman, M.D.(6)(13)

     61,375        214,041        186,547               461,963   

Ted W. Love M.D.(7)(13)

     26,190        291,114        293,238               610,542   

John A. Orwin(8)(13)

     71,893        214,041        186,547               472,481   

Alpna H. Seth, Ph.D.(9)(13)

     66,417        214,041        186,547               467,005   

Nancy A. Simonian, M.D.(10)(13)

     69,167        214,041        186,547               469,755   

Daniel G. Welch(11)(13)

     64,583        214,041        186,547               465,171   

Srinivas Akkaraju, M.D., Ph.D.(12)(13)

     32,917        214,041        186,547        10,000        443,505   

 

(1)

Fees paid in cash for Board and Committee services reflect a portion paid at the current fee retainers, reflecting the changes made during January 2020 as discussed above, and a portion paid at the fee retainers paid prior to the change.

(2)

The amounts in this column represent the aggregate full grant date fair value of RSU awards granted during 2020 in accordance with FASB ASC Topic 718 with no estimate for future forfeitures, which value is based on the closing price of our common stock on the date of grant of May 15, 2020.

(3)

The amounts in this column represent the aggregate full grant date fair value of options granted during 2020 calculated in accordance with FASB ASC Topic 718 with no estimate for future forfeitures. For information regarding the assumptions used in calculating these amounts, see Note 17 of the Notes to the Consolidated Financial Statements included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2020. The option awards amounts represent the grant date fair value of options granted on May 15, 2020 and with respect to Dr. Love, August 17, 2020.

(4)

Dr. Baker served as our lead independent director, chairman of our Compensation Committee and a member of our Governance Committee in 2020. The fees earned included a $55,417 retainer for Board service, a $34,375 retainer for service as the lead independent director, a $20,333 retainer for service as the chairman of our Compensation Committee, and a $5,958 retainer for service as a member of our Governance Committee.

(5)

Mr. Gryska served as chairman of our Audit Committee in 2020. The fees earned included a $55,417 retainer for Board service and a $22,916 retainer for service as chairman of our Audit Committee during 2020.

(6)

Dr. Lippman served as a member of our Governance Committee in 2020. The fees earned included a $55,417 retainer for Board service and a $5,958 retainer for service as a member of our Governance Committee.

(7)

Dr. Love served as a member of our Audit Committee from August through December 2020. The fees earned included a prorated retainer for Board service in the amount of $22,500 and a prorated retainer for service as a member of the Audit Committee in the amount of $3,690.

(8)

Mr. Orwin served as a member of our Audit Committee until August 2020, and our Compensation Committee during 2020. The fees earned included a $55,417 retainer for Board service, a $7,310 retainer for service as a member of the Audit Committee, and a $9,166 retainer for service as a member of the Compensation Committee.

(9)

Dr. Seth served as a member of our Audit Committee in 2020. The fees earned included a $55,417 retainer for Board service and $11,000 retainer for service as a member of the Audit Committee.

(10)

Dr. Simonian served as chair of our Governance Committee in 2020. The fees earned included a $55,417 retainer for Board service and a $13,750 retainer for service as chair of our Governance Committee.

(11)

Mr. Welch served as a member of our Compensation Committee in 2020. The fees earned included a $55,417 retainer for Board service and a $9,166 retainer for service as a member of our Compensation Committee.

(12)

The fees earned by Dr. Akkaraju consisted entirely of a retainer for Board service and all other compensation consists of $10,000 for consulting services. Dr. Akkaraju resigned from our Board in August 2020.

(13)

As of December 31, 2020, our non-employee directors listed in the table above held outstanding stock awards and options, as follows:

 

Name

  

Number of Shares

Underlying

Outstanding Restricted

Stock Units

    

Number of Shares   

Subject to   

Outstanding Options   

 

Felix J. Baker, Ph.D.

     1,335        99,749   

David W. Gryska

     1,335        82,249   

Marc E. Lippman, M.D.

     1,335        19,469   

Ted W. Love, M.D.

     1,799        4,460   

John A. Orwin

     1,335        59,749   

Alpna H. Seth, Ph.D.

     7,085        24,459   

Nancy A. Simonian, M.D.

     1,335        89,749   

Daniel G. Welch

     1,335        47,249   

Srinivas Akkaraju, M.D., Ph.D.*

     1,335        73,749     

 

*

Dr. Akkaraju resigned from our Board in August 2020. In August 2020, we entered into a consulting agreement with Dr. Akkaraju upon his departure from our Board. Under the agreement, Dr. Akkaraju’s outstanding equity awards previously granted to him continued to vest during the term of the agreement, which ends on December 31, 2021. Please see “Certain Relationships and Related Party Transactions” for more information.

 

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EXECUTIVE OFFICERS

 

 

EXECUTIVE OFFICERS

The executive officers of Seagen, their ages as of April 1, 2021, and certain other information about them are set forth below:

 

Non-Director Executive Officers

   Age    Company Positions/Offices

Clay B. Siegall, Ph.D.

   60    President and Chief Executive Officer

Todd E. Simpson

   60    Chief Financial Officer

Roger D. Dansey, M.D.

   64    Chief Medical Officer

Vaughn B. Himes

   60    Chief Technical Officer

Chip R. Romp

   53    Executive Vice President, Commercial U.S.

Jean I. Liu

   52    General Counsel and Executive Vice President, Legal Affairs

EXECUTIVE OFFICER PROFILES

 

LOGO

  

Clay B. Siegall, Ph.D. co-founded Seagen in 1997. He has served as our Chief Executive Officer since November 2002, as our President since June 2000, as one of our directors since December 1997 and as our Board chairman since March 2004. Dr. Siegall also served as our Chief Scientific Officer from December 1997 until November 2002. Prior to co-founding Seagen, Dr. Siegall was with the Bristol-Myers Squibb Pharmaceutical Research Institute from 1991 to 1997, most recently as a Principal Scientist. From 1988 to 1991, Dr. Siegall was a Staff Fellow/Biotechnology Fellow at the National Cancer Institute, National Institutes of Health. In addition to Seagen, Dr. Siegall serves as a director of Ultragenyx Pharmaceutical Inc., a publicly-traded biotechnology company. He previously served as a director of two other publicly-traded biotechnology companies, Alder BioPharmaceuticals, Inc., which was acquired by H. Lundbeck A/S in 2019, and Mirna Therapeutics, Inc. Dr. Siegall received a Ph.D. in Genetics from George Washington University and a B.S. in Zoology from the University of Maryland.

 

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Todd E. Simpson has served as our Chief Financial Officer since October 2005. Previously, Mr. Simpson served from October 2001 to October 2005 as Vice President, Finance & Administration and Chief Financial Officer of Targeted Genetics Corporation, a biotechnology company. From January 1996 to October 2001, Mr. Simpson served as Vice President, Finance & Administration and CFO of Aastrom Biosciences, Inc., a biotechnology company. From August 1995 to December 1995, he served as Treasurer of Integra LifeSciences Corporation, a biotechnology company, which acquired Telios Pharmaceuticals, Inc., in August 1995. From 1992 until its acquisition by Integra, he served as Vice President of Finance and CFO of Telios and in various other finance-related positions. Mr. Simpson is a certified public accountant (inactive), and from 1983 to 1992 he practiced public accounting with the firm of Ernst & Young LLP. Mr. Simpson currently serves as chairman of the board of directors of Neoleukin Therapeutics, Inc., a publicly-traded biotechnology company. Mr. Simpson received a B.S. in Accounting and Computer Science from Oregon State University.

 

 

 

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EXECUTIVE OFFICERS

 

   

 

LOGO

  

Roger D. Dansey, M.D. has served as our Chief Medical Officer since May 2018. Prior to that, Dr. Dansey served as Senior Vice President, Clinical Oncology Research at Merck & Co. from January 2015 through April 2018. While at Merck, Dr. Dansey was Therapeutic Area Head for Late Stage Oncology and was responsible for the ongoing registration efforts for KEYTRUDA® (pembrolizumab) across multiple tumor types. Prior to Merck, from August 2013 to December 2014, Dr. Dansey served as the Vice President, Oncology Clinical Research at Gilead Sciences, Inc. Dr. Dansey previously worked at Amgen in roles of increasing responsibility in Amgen’s oncology and hematology therapeutic areas, including as the Global Development Leader for XGEVA®. Dr. Dansey received his Medical Degrees from the University of Witwatersrand, Johannesburg, South Africa.

 

 

 

LOGO

  

 

 

Vaughn B. Himes, Ph.D. has served as our Chief Technical Officer since August 2016. Dr. Himes joined Seagen as Executive Vice President, Technical Operations in April 2009 and served as our Executive Vice President, Technical Operations and Process Science from July 2012 until August 2016. Previously, Dr. Himes was with ZymoGenetics, Inc. from November 2005 to March 2009, most recently as Senior Vice President, Technical Operations where his responsibilities included commercial and clinical manufacturing, supply chain and logistics, quality control and process development. From March 2003 to October 2005, he was Vice President, Manufacturing at Corixa, Inc. Prior to that, he held Vice President positions in manufacturing and development at Targeted Genetics and Genovo, Inc. Dr. Himes received a B.A. in Chemistry from Pomona College in California and a Ph.D. in Chemical Engineering from the University of Minnesota.

 

 

LOGO

  

Chip R. Romp has served as our Executive Vice President, Commercial U.S. since April 2020. Prior to that, he served in various capacities with Seagen, including Senior Vice President from February 2014 to April 2020 and Vice President from May 2010 to February 2014. From 1998 to 2010, he was with Genentech (a member of the Roche Group) where he was a National Sales Director for oncology and immunology products. Prior to Genentech, Mr. Romp was a product manager at Marquette Medical Systems, which was acquired by GE, and a pharmaceutical sales representative at Sankyo Park Davis and GlaxoSmithKline. Mr. Romp holds an M.B.A. from Saint Leo University (formerly Saint Leo College) and a B.A. from the University of Florida.

 

 

LOGO

   Jean I. Liu, J.D. has served as our General Counsel, Executive Vice President, Legal Affairs and Corporate Secretary since November 2014. Prior to that, she served as Vice President and General Counsel of Halozyme Therapeutics, Inc., a publicly-traded biotechnology company, from November 2011 to November 2014. From 1998 to 2011, she was with Durect Corporation, a publicly-traded biotechnology company, where she served in positions of increasing responsibility, including most recently Chief Legal Officer and Corporate Secretary. Prior to Durect, Ms. Liu was with the law firms of Pillsbury, Madison & Sutro (now Pillsbury Winthrop) and Venture Law Group where she focused on broad areas of legal advisory for early stage companies, including technology transfer, licensing, patents, and copyright and trademark litigation. Ms. Liu received her B.S. in Cellular and Molecular Biology with highest distinction from the University of Michigan, her M.S. in Biology from Stanford University and her J.D. from Columbia University where she was a Harlan Fiske Stone Scholar.

 

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PROPOSAL NO. 2

ADVISORY VOTE ON EXECUTIVE COMPENSATION

Pursuant to Section 14A of the Securities Exchange Act of 1934, or the Exchange Act, we ask shareholders to cast an advisory vote to approve the compensation of our named executive officers disclosed in the “Compensation of Executive Officers” section of this proxy statement. While this vote is non-binding, we value the opinions of our shareholders and will consider the outcome of the vote when making future compensation decisions. As described in the Compensation Discussion and Analysis below, we believe that our executive compensation program strongly aligns pay with company performance and the interests of our shareholders and to enhance our governance practices.

We are asking our shareholders to indicate their support for our named executive officer compensation as described in this proxy statement. This proposal gives our shareholders the opportunity to express their views on our named executive officers’ compensation. This vote is not intended to address any specific item of compensation, but rather the overall compensation of our named executive officers and the philosophy, policies and practices described in this proxy statement. Accordingly, we are asking our shareholders to cast a non-binding advisory vote “FOR” the following resolution at the Annual Meeting:

“RESOLVED, that the compensation paid to the named executive officers, as disclosed in the Company’s proxy statement for the 2021 Annual Meeting of Shareholders pursuant to Item 402 of Regulation S-K, including the Compensation Discussion and Analysis, compensation tables and narrative discussion is hereby APPROVED.”

Unless our Board of Directors modifies its policy on the frequency of future advisory votes on the compensation of our named executive officers, the next advisory vote on the compensation of our named executive officers will be held at the 2022 Annual Meeting of Shareholders. In addition, our shareholders will be able to indicate by advisory vote at our 2023 Annual Meeting of Shareholders their preference as to the frequency of future advisory votes.

Shareholder approval of this Proposal No. 2 will require the affirmative vote of a majority of the votes cast in person, virtually or by proxy at the Annual Meeting.

 

 

   LOGO   

 

 

 

The Board recommends a vote FOR this Proposal No. 2.

 

 

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COMPENSATION OF EXECUTIVE OFFICERS

 

   

 

COMPENSATION OF EXECUTIVE OFFICERS

A MESSAGE FROM THE COMPENSATION COMMITTEE

We are committed to ensuring that our compensation programs help support and drive the Company’s focus to discover, develop and commercialize transformative medicines targeting cancer to make a meaningful difference in people’s lives.

2020 was another tremendous year for Seagen and we believe the Company’s future is bright. In determining compensation, we wanted to make sure that the compensation of the executive team reflected their strong performance and the need to retain them for the long term to deliver on our key, strategic objectives over the next several years.

With an approval of nearly 95% of votes cast on the say-on-pay vote at the 2020 Annual Meeting of Shareholders, the changes we implemented to our executive compensation program in 2019 and 2020 demonstrate our commitment to align our compensation programs to our business strategy and industry best practices.

We remain committed to listening to shareholder feedback as we continue to evaluate and refine the Company’s compensation programs.

Sincerely,

 

LOGO

 

LOGO

  

 

LOGO

  

 

LOGO

COMPENSATION DISCUSSION AND ANALYSIS

This Compensation Discussion and Analysis describes how the Compensation Committee determined the total compensation for the following executive officers during the year ended December 31, 2020, whom we refer to as our named executive officers:

 

 

Clay B. Siegall, Ph.D., President and Chief Executive Officer, or CEO;

 

 

Todd E. Simpson, Chief Financial Officer;

 

 

Roger D. Dansey, M.D., Chief Medical Officer;

 

 

Chip R. Romp, Executive Vice President, Commercial U.S.; and

 

 

Jean I. Liu, General Counsel and Executive Vice President, Legal Affairs.

This Compensation Discussion and Analysis also describes our overall executive compensation philosophy, objectives and practices, as well as the Compensation Committee’s decisions and determinations regarding executive compensation for 2020.

 

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SHAREHOLDER ENGAGEMENT

In 2020, we continued our proactive shareholder outreach program to solicit feedback and better understand investor perspectives on operational, governance and executive compensation matters. We held discussions with a number of our shareholders in the spring before the Annual Meeting and again in late fall. Our cross-functional team that participated in these discussions to address investors’ specific focus areas included executives from our Investor Relations, Human Resources and Legal departments as well as our Chief Financial Officer. Feedback from these engagement activities was shared with management and our Board of Directors to inform our goal of aligning Company interests with those of our shareholders. Investor feedback is important to us, and we are committed to continuing to engage with our shareholders in the future to understand and consider their views.

2020 SHAREHOLDER ENGAGEMENT EFFORT

 

 

LOGO

SHAREHOLDER FEEDBACK

In 2020, these discussions covered a wide range of topics, including:

 

    diversity, equity and inclusion and human capital management
    director commitments

 

    executive compensation

 

    managing the business during the global pandemic
 

 

OUTCOMES OF ENGAGEMENT

The feedback from the say-on-pay vote and discussions with shareholders led to changes in 2020 to our executive compensation program and corporate governance practices, as described below.

 

   

  Executive

  Compensation

  

  Incorporated performance-based equity awards into the annual long-term incentive awards for all executives serving on our executive committee, including all of our named executive officers

 

  Corporate

  Governance

  

  Formally adopted a policy to instruct third-party search firms to include women and candidates from underrepresented communities in the pool as part of any director nominee searches

 

  Revised our Code of Ethics, including updates to reflect our global expansion

 

  Enhanced our disclosure on diversity, equity and inclusion (please see “Diversity, Equity and Inclusion” above in this proxy statement) and human capital management (please see “Business—Human Capital Resources” in our Annual Report on Form 10-K)

 

  In recognition of shareholder feedback about director board commitments, Dr. Simonian has committed to reduce the number of public company boards on which she serves prior to the end of the year

 

 

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COMPENSATION DISCUSSION AND ANALYSIS

 

   

 

     
           

KEY COMPENSATION CHANGES AND HIGHLIGHTS FOR 2020

 

           
   
   

 

 

 

 

 

 

 

Expanded our performance-based RSU, or PSU, program to all our named executive officers

 

 

 

    In 2020, we granted approximately 33% of our CEO’s annual equity award, and approximately 20% of our other named executive officers’ annual equity awards, in the form of PSU awards to further align our equity program with market practices and shareholder expectations. The performance goals for the PSU awards are based on certain cumulative product sales revenue and relative TSR goals over a three-year period.    
   
      Changed our PSU target from a one-year revenue goal to a three-year cumulative revenue goal     We listened to feedback regarding our revenue target used in the 2019 PSU plan for our CEO and changed it from a one-year revenue target achievable in three years to a three-year cumulative revenue goal.    
   
      Increased the stock ownership guidelines for our CEO and executive officers    

As part of our annual review, we determined that it was appropriate to increase our ownership guidelines to more closely align with the market. We revised the guideline applicable to our CEO from 5x to 6x base salary, and the guideline applicable to our other executive officers from 1.5x to 2x base salary.

 

 

   

 

COMPENSATION PHILOSOPHY AND OBJECTIVES

Our compensation philosophy is to provide overall compensation that is competitive with biotechnology peers to attract and retain the highest caliber executive talent. Key objectives of our executive compensation program include:

 

   

supporting our business strategy,

 

   

aligning pay with company performance and shareholder interests,

 

   

ensuring competitiveness when compared to companies with whom we compete for talent,

 

   

rewarding success in building both short- and long-term growth,

 

   

weighting pay deliberately toward “at risk” performance-based compensation,

 

   

ensuring that our pay practices are executed consistently and fairly for all executives, regardless of ethnicity or gender, and

 

   

motivating performance that aligns with our corporate values of integrity, scientific excellence, teamwork, innovation and mutual respect.

 

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OUR EXECUTIVE COMPENSATION PRACTICES

We endeavor to maintain sound executive compensation policies and practices consistent with our executive compensation philosophy. The following table highlights some of our executive compensation policies and practices, which are structured to drive performance and align our executives’ interests with our shareholders’ long-term interests:

 

     
                    WHAT WE DO                    
   
    LOGO   Pay for Performance. We design our executive compensation program to align pay with company performance.    
   
    LOGO   Significant Portion of Compensation is at Risk. Under our executive compensation program, a significant portion of compensation is “at risk” based on our performance, including short-term cash incentives and long-term cash and equity incentives, to align the interests of our executive officers and shareholders.    
   
    LOGO   Double-Trigger Vesting. We use double-trigger accelerated vesting of equity awards in the event of a change in control. Cash amounts payable upon a change in control are also subject to a double trigger.    
   
    LOGO   Independent Compensation Committee. The Compensation Committee is comprised solely of independent directors.    
   
    LOGO   Independent Compensation Advisor Reports Directly to the Compensation Committee. The Compensation Committee engages its own compensation consultant to assist with making compensation decisions.    
   
    LOGO   Annual Market Review of Executive Compensation. The Compensation Committee and its compensation consultant annually assess the Company’s peer group and the competitiveness and market alignment of our compensation plans and practices.    
   
    LOGO   Stock Ownership Guidelines for Directors and Executive Officers. We maintain a policy that requires minimum ownership of shares of our common stock by our CEO and other executive officers.    
   
    LOGO   Multi-Year Vesting Requirements. The equity awards granted to our executive officers generally vest over multi-year periods, consistent with current market practice and our retention objectives.    
   
    LOGO   Annual Say-on-Pay Vote. We hold an annual say-on-pay advisory vote for shareholders.    
   
    LOGO   Active Shareholder Engagement Program. We proactively engage with our shareholders throughout the year.    
   
    LOGO   Clawback Policy. We have the ability to recoup certain cash and equity incentive compensation paid to any of our executives if we are required to prepare an accounting restatement due to material noncompliance with any financial reporting requirement under securities laws and it is determined that such noncompliance was due in whole or in part to such executive’s misconduct.    
   
    LOGO   Cap on Annual Cash Bonuses. Each executive officer’s annual bonus is capped at 200% of the target award amount.    
   
    LOGO   Minimize Inappropriate Risk Taking. Our compensation program is weighted toward long-term incentive compensation to discourage short-term risk taking, and it includes goals that are quantifiable with objective criteria, multiple performance measures and caps on short-term incentive compensation.    
   
    LOGO  

Competitive Peer Group. Our Compensation Committee selects our peers from publicly traded biotechnology companies that are similar to us with respect to market capitalization, revenue, headcount, commercialization stage, and research focus, while also taking into account a number of qualitative criteria.

 

 

 

   

 

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                    WHAT WE DON’T DO                    
   
    LOGO   No Special Health or Welfare Benefits for Executives. Our executive officers participate in broad-based, company-sponsored health and welfare benefits programs on the same basis as our other full-time, salaried employees. Executives do not have access to special benefits programs.    
   
    LOGO   No Post-Employment Tax Gross-Ups. We do not provide any post-employment tax reimbursement payments (including “gross-ups”) on any severance or change-in-control payments or benefits.    
   
    LOGO   No Hedging or Pledging Permitted. Our insider trading policy prohibits our employees (including executive officers) and directors from engaging in hedging or short-term speculative transactions involving our securities. In addition, none of these persons may hold Seagen securities in a margin account or otherwise pledge Seagen securities as collateral for a loan.    
   
    LOGO  

No Stock Option Repricing. Our equity plan does not permit repricing underwater stock options without shareholder approval.

 

 

   

COMPANY OVERVIEW

Seagen is a global biotechnology company that develops and commercializes targeted therapies to treat cancer. We are commercializing ADCETRIS® (brentuximab vedotin), for the treatment of certain CD30-expressing lymphomas, PADCEV® (enfortumab vedotin-ejfv), for the treatment of certain metastatic urothelial cancers, and TUKYSA® (tucatinib), for treatment of certain metastatic HER2-positive breast cancers. We are also advancing a pipeline of novel therapies for solid tumors and blood-related cancers designed to address unmet medical needs and improve treatment outcomes for patients. Many of our programs, including ADCETRIS and PADCEV, are based on our antibody-drug conjugate, or ADC, technology that utilizes the targeting ability of monoclonal antibodies to deliver cell-killing agents directly to cancer cells.

BUSINESS HIGHLIGHTS

 

In 2020, Seagen delivered on multiple important business, regulatory and development milestones. We reported record net product sales of $1 billion driven by the successful launches of PADCEV and TUKYSA and continued growth of ADCETRIS. PADCEV, approved in late 2019 for the treatment of previously treated urothelial (bladder) cancer, and TUKYSA, approved in 2020 for previously treated HER2-positive metastatic breast cancer, address significant unmet patient needs and have been rapidly adopted by oncologists. To build on the potential of our three approved drugs, we are conducting clinical trials in earlier lines and stages of disease as well as in other cancer types.

 

We are also extending the availability of our products outside of the U.S. and recently received approval of TUKYSA in the European Union and United Kingdom. Additionally, in 2020 we entered into a strategic collaboration with Merck for TUKYSA commercialization beyond the U.S, Canada and Europe. For PADCEV, in early 2021 we and our partner Astellas submitted marketing applications for approval in the European Union and Japan. ADCETRIS use continues to expand globally, and in 2020 our partner Takeda received approval in China.

 

Over the past year, we have also made significant progress in advancing our late-stage pipeline. In early 2021, we and our partner Genmab submitted a Biologics License Application to the FDA for tisotumab vedotin based on positive results from a pivotal trial in metastatic cervical cancer in women who progress

   LOGO

 

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COMPENSATION DISCUSSION AND ANALYSIS

 

 

following first-line treatment. We also established an important strategic partnership with Merck to co-develop and co-commercialize ladiratuzumab vedotin, which is in development for breast cancers and other solid tumors. Under this collaboration and the TUKYSA commercial agreement with Merck we received $725 million in upfront payments and, in connection with the ladiratuzumab vedotin collaboration, Merck made a $1 billion equity investment in Seagen.

Our earlier-stage pipeline is robust, with seven clinical-stage and multiple preclinical programs in development for a range of solid tumors and hematologic malignancies. Our product candidates include both ADCs as well as other types of empowered antibodies. We are making significant investment in our pipeline and technologies as we believe it is important to ensuring long-term growth.

Our accomplishments in 2020 and early 2021 required us to address the impact of the global pandemic on our business. This included proactive efforts designed to protect the health and safety of our workforce, patients and healthcare professionals and ensure business continuity while we advance our goal of bringing important medicines to patients in need. Entering 2021, we will continue to closely monitor and respond to any further impacts of the global pandemic, while focusing on our strategic priorities to maximize the global potential of our approved medicines, advance our late-stage programs and expand our early-stage pipeline.

ALIGNMENT OF CEO PAY TO TOTAL SHAREHOLDER RETURN

We design our executive compensation program to align pay with company performance, and as highlighted in the charts below, there is strong alignment between the two. The charts below show the relative degree of alignment between our CEO’s total compensation and our TSR over the one- and three-year periods ended December 31, 2020. For comparison purposes, they also show the relative degree of alignment between the total compensation of the CEOs of the companies in our compensation peer group over the one- and three-year periods ended December 31, 2019, which are the most recent periods for which data was available to the Compensation Committee when making pay decisions in August 2020, and the TSRs of the companies in our compensation peer group over the one- and three-year periods ended December 31, 2020. For more information on our pay elements and our compensation decision making process, including our compensation peer group, please see “Principal Elements of Pay” and “Compensation-Setting Process” below.

 

 

LOGO    LOGO

 

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COMPENSATION DISCUSSION AND ANALYSIS

 

   

 

PRINCIPAL ELEMENTS OF PAY

Our 2020 executive compensation program generally consisted of three principal components, as further described below. We also provide other forms of compensation, including discretionary and other cash bonuses and equity awards and other cash or equity long-term incentive plans or awards when the Compensation Committee determines it is appropriate to do so. In addition, we provide retirement and benefits plans to executives on the same basis as our other employees and we provide certain other limited remuneration to them. For additional information, please see “Compensation-Setting Process” and “Summary Compensation Table” below.

 

    Percentage of 2020 Target Compensation(1)     
     President and CEO  

Average of Other Named

Executive Officers

   Description and Purpose

Base Salary

 

LOGO

 

  LOGO    Competitive fixed cash compensation used to attract and retain talented executives.

Annual Cash Incentive Awards

  LOGO  

 

LOGO

  

Cash incentives designed to reward executive officers for successful corporate performance against Board-approved annual bonus targets and individual performance toward achieving corporate goals.

 

Annual Long-Term

Equity Awards

  LOGO  

LOGO

 

  

Stock option, RSU and PSU awards subject to time-based and/or performance-based vesting designed to align each executive officer’s incentives with shareholder value creation.

 

 

(1)

For purposes of the charts in this table, target compensation consists of base salary and target annual cash incentive awards as set by the Compensation Committee in February 2020 and target annual equity awards determined by the Compensation Committee in August 2020. It does not include other forms of compensation the executive officers received. Target compensation for Dr. Dansey and Mr. Romp consists of annualized amounts of base salary as approved by the Compensation Committee in April 2020 and August 2020, respectively.

 

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COMPENSATION DISCUSSION AND ANALYSIS

 

 

COMPENSATION-SETTING PROCESS

The Compensation Committee oversees, reviews, and approves our executive compensation program. The calendar below summarizes the key compensation-setting decisions made by our Compensation Committee throughout the year:

 

Compensation Committee Calendar

 

February – March   June – August   December
   

  Assess Company and individual performance in the prior year and determine corporate payout factor for corporate performance

 

  Approve annual bonus awards for the prior year and base salary adjustments based on prior year’s performance and market data on compensation for the executive’s position

 

  Finalize corporate and strategic goals for the upcoming year

 

  Approve annual equity budget

 

  Set annual bonus targets for the upcoming year as a percentage of base salary

 

  Review Compensation Committee charter

 

  Conduct compensation risk assessment

 

  Review director and executive officer share ownership against corporate ownership guidelines

 

  Review and approve Compensation Discussion and Analysis

 

  Update compensation peer group

 

  Conduct market assessment of base salaries, annual bonuses and long-term equity incentive compensation using new peer group

 

  Make market-based adjustments to base salaries and annual bonus award opportunities when appropriate

 

  Review metrics for annual equity awards

 

  Review and refresh performance-based equity programs

 

  Approve long-term RSU, stock option and PSU equity awards

 

  Review feedback from investor outreach

 

  Assess compensation governance practices

 

  Prepare for incentive plans for the following year

 

  Prepare for annual compensation decisions

 

  Review director compensation against the market

The Compensation Committee also believes it is important to align the mix and levels of compensation we offer to those offered by our peers in order to retain and incentivize the talented executive officers whose efforts are key to our long-term success. As an executive’s ability to impact operational performance increases, so does the proportion of at-risk compensation. Target long-term incentive compensation grows proportionately as job responsibilities increase, which encourages our executives to focus on the Company’s long-term success and aligns with the long-term interests of our shareholders. The charts below show the mix of the target compensation of our CEO and the average target compensation of our other named executive officers.

 

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COMPENSATION DISCUSSION AND ANALYSIS

 

   

 

2020 TARGET COMPENSATION AT RISK(1)

 

LOGO

 

(1)

For purposes of these charts, target compensation consists of base salary and target annual cash incentive awards as set by the Compensation Committee in February 2020 and target annual equity awards determined by the Compensation Committee in August 2020. It does not include other forms of compensation the executive officers received. Target compensation for Dr. Dansey and Mr. Romp consists of annualized amounts of base salary as approved by the Compensation Committee in April 2020 and August 2020, respectively.

ROLE OF EXECUTIVE OFFICERS

Our CEO makes recommendations to the Compensation Committee with respect to base salary levels, annual cash incentive awards, individual performance assessments, and the amount of long-term equity awards to be granted to our executive officers (other than with respect to his own compensation) in consultation with Radford and our Executive Vice President, Human Resources. In addition, our Executive Vice President, Human Resources supports the Compensation Committee in its work, including preparation of historical and prospective executive compensation data, review of peer group data and biotechnology market practices, and research in response to technical Compensation Committee inquiries. Other than as described above, neither the CEO nor any other executive officers take part in the Compensation Committee’s decisions regarding executive officer compensation.

ROLE OF COMPENSATION CONSULTANT

Radford provides support to the Compensation Committee on matters related to the compensation of our executive officers, including reviewing pay against the market, providing independent and expert advice relative to our pay programs, and ensuring the Compensation Committee stays abreast of trends in practices and legislative updates and is equipped to properly make decisions regarding the Company’s compensation programs. In 2020, the Compensation Committee analyzed whether the work of Radford as a compensation consultant raised any conflict of interest, taking into consideration the factors set forth in the SEC and Nasdaq rules regarding compensation advisor conflicts of interest and independence. The Compensation Committee determined that, based on those factors, Radford is independent and free from conflicts of interest.

 

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COMPETITIVE POSITIONING

The Compensation Committee reviews our peer group annually to reflect changes in market capitalization and other factors, including acquisitions, and revises the companies included in the peer group accordingly. The compensation peer group used by the Compensation Committee to review compensation in August 2020 and February 2021 was approved by the Compensation Committee, with input provided by senior management and Radford, in June 2020. The criteria used to select this peer group are described below:

 

CORE CRITERIA

 

  Market Capitalization   

~25%-~300% of our market cap (~$7B-~$70B)

 

  Sector   

Publicly-traded, commercial-stage biotechnology companies with preference given to oncology companies

 

  Revenue   

~25%-~500% of trailing twelve months reported revenue (~$300M-~$5B) to capture companies becoming like us and directionally where we are heading

 

  Global Headcount   

~25%-~300% of our headcount (~500-~5,500)

 

OTHER QUALITATIVE CRITERIA

 

  Cutting Edge Research

  and Development

 

  

Focus on innovative, research-based R&D companies with cutting edge science and a preference for oncology focus

 

  Headquarters Location

 

  

Primarily focused on U.S.-based companies

 

  Past Peer

 

  

Preference given to past peer companies to ensure year-over-year stability

 

  Recruiting   

Companies that the Company loses talent to and recruits from are considered to help narrow the list

 

  Cross-Pollination   

Peers of peers and companies listing us as a peer, in addition to companies that comprise proxy advisor peer lists, will also be considered

 

 

 

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Based on this analysis, the Compensation Committee selected the following peer group in June 2020:

 

 

Peer Group Companies

 

ACADIA Pharmaceuticals Inc.

 

Alexion Pharmaceuticals, Inc.

 

Alnylam Pharmaceuticals, Inc.

 

BeiGene, Ltd.

 

Biogen Inc.

 

BioMarin Pharmaceutical Inc.

 

Exact Sciences Corporation

 

Exelixis, Inc.

 

Horizon Therapeutics plc

 

Incyte Corporation

 

Ionis Pharmaceuticals, Inc.

 

Jazz Pharmaceuticals plc

 

Neurocrine Biosciences, Inc.

 

Regeneron Pharmaceuticals, Inc.

 

Sarepta Therapeutics, Inc.

 

United Therapeutics Corporation

 

Vertex Pharmaceuticals Incorporated

 

  

 

LOGO

 

 

(1) Based on data used by the Compensation Committee in June 2020 when selecting the peer group.

 

(2) Market capitalization is the 30-day average as of May 22, 2020.

 

(3) Revenue for the peer group reflects the trailing twelve months ended March 31, 2020.

 

(4) Global headcount for the peer group is as of December 31, 2019.

 

 

     

Changes from Prior Peer Group

  

Added:   Biogen Inc.
Exact Sciences Corporation
Horizon Therapeutics plc Regeneron Pharmaceuticals, Inc.

 

Deleted:   Alkermes plc
bluebird bio, Inc.
Nektar Therapeutics

The peer group used by the Compensation Committee when making salary and bonus target compensation decisions in February 2020 was approved by the Compensation Committee, with input provided by senior management and Radford, in July 2019. The criteria used to select this peer group were similar to the criteria used to select the new peer group in June 2020, as described above, and were applied to the data available to the Compensation Committee in July 2019. As of June 21, 2019, these prior peer group companies had a median market capitalization of approximately $7.5 billion, as compared to our market capitalization of approximately $11.1 billion. For the twelve months ended March 31, 2019, these prior peer group companies had median revenue of approximately $974 million, as compared to our twelve-month revenue of approximately $709 million, and as of December 31, 2018, these peer group companies had a median of 963 employees, as compared to our 1,302 employees.

 

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BASE SALARY

In considering the appropriate level of base salary for our named executive officers for 2020, the Compensation Committee referenced market data on compensation for the executive’s position and considered aspects of individual performance. In making such determination, the Compensation Committee also considered any changes in the executive’s job duties and responsibilities due to growth and scale of the organization or other changes, base compensation relative to our other executive officers and the scope and criticality of the executive’s role. The factors considered by the Compensation Committee in determining the individual performance percentage of each executive officer are further described below under “2020 Key Compensation Decisions for Named Executive Officers.” The Compensation Committee did not apply a formula, but rather employed a holistic analysis of these factors using its professional judgment and experience. We compare executive base salaries to similar roles at our peer companies and review them annually to ensure competitiveness and internal equity for the value of our unique roles. The Compensation Committee does not target a specific percentile within our peer group to determine base salary levels for the named executive officers. Instead, we review the practices of our peer group and the general biotechnology market as merely a reference point to assist us in developing programs designed to attract and retain exceptional talent and drive company performance.

 

Named Executive Officer

   2019 Base Salary     

2020 Base Salary

Approved in
February 2020

     Revised 2020 Base
Salary 
     Total 
Percentage 
Increase 
 

Dr. Siegall

   $ 967,208      $ 1,050,600        No adjustment        8.62%  

Mr. Simpson

   $ 575,200      $ 604,000        No adjustment        5.01%  

Dr. Dansey(1)

   $ 672,800      $ 706,400      $ 730,000        8.50%  

Mr. Romp(2)

   $ 450,000      $ 465,800      $ 500,000        11.11%  

Ms. Liu

   $ 522,200      $ 548,300        No adjustment        5.00%  

 

(1)

On August 14, 2020, the Compensation Committee approved an increase in Dr. Dansey’s base salary , effective September 1, 2020, to maintain his competitive positioning in the market.

(2)

Mr. Romp was promoted to his position in April 2020, at which time his salary was increased to reflect his expanded leadership responsibilities and to establish competitive positioning in the market based on his new role.

ANNUAL CASH INCENTIVE AWARDS

We maintain an annual cash incentive bonus plan, or the Executive Bonus Plan, which provides annual cash incentives designed to reward each executive officer for our corporate performance and such officer’s individual contributions and performance toward achieving key corporate goals. The Executive Bonus Plan has a strong link to performance, focusing both on team-based corporate performance and individual-based functional and department performance under the executive’s remit. In the case of the CEO, 100% of his annual cash incentive award is linked to the performance of the Company against Board-approved corporate goals. In the case of our other executive officers, under the Executive Bonus Plan for 2020, 60% of each executive’s annual cash incentive award was tied to corporate performance and 40% was tied to individual performance toward achieving corporate goals. Additionally, each executive officer’s annual cash incentive award was capped at 200% of the target award amount.

In February 2021, to increase the focus on individual pay-for-performance while maintaining our strong team-based culture, the Compensation Committee amended the Executive Bonus Plan to change the relative weight of the corporate and individual performance factors for our executive officers other than the CEO so that, for 2021, 50% of each executive’s annual cash incentive award will be tied to corporate performance and 50% will be tied to individual performance toward achieving corporate goals. Additionally, the Company modified the funding approach on the individual component to more closely align with corporate performance. As a result, both the 50% that is based on corporate performance alone and the 50% that is modified by individual performance are tied to corporate results. These changes more closely align the executive’s full bonus with corporate performance and allow the Compensation Committee to better align the total bonus earned with results and hold individual executives accountable for their performance.

 

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CORPORATE PERFORMANCE GOALS

The corporate performance goals under the Executive Bonus Plan for 2020 were approved by the Compensation Committee in March 2020. The 2020 performance goals were aggressive and set at challenging levels such that the attainment of executive target annual cash incentive award opportunities was not assured at the time they were set and would require a high level of effort and execution on the part of the executive officers and others in order to achieve the goals. The Compensation Committee believes that each of these goals is strongly aligned to the creation of shareholder value.

The specific performance goals, and their relative weightings, established for 2020 are set forth below:

 

 

Annual Sales Goals (25%)

 

   Achieve sales goals established by the Board

 

Regulatory Goals for TUKYSA, PADCEV and Tisotumab Vedotin (17.5%)

 

   Secure first U.S. approval and one ex-U.S. approval for TUKYSA

 

   Submit a supplemental Biologics License Application, or BLA, for PADCEV to the FDA based on cohort 2 of the EV-201 trial

 

   Submit a BLA to the FDA for tisotumab vedotin

 

Potential Expansion Strategies for ADCETRIS, PADCEV and TUKYSA (15%)

 

   Execute strategies for potential future label expansions for ADCETRIS, PADCEV, and TUKYSA

 

Development Goals for Tisotumab Vedotin and Ladiratuzumab Vedotin (12.5%)

 

   Make go/no-go decisions for potential tisotumab vedotin and ladiratuzumab vedotin weekly dosing schedule and solid tumor program expansions

 

Pipeline Development Goals (12.5%)

 

   Achieve goals to make go/no-go decisions for Phase 1 programs, submit new investigational new drug applications, or INDs, and advance new programs from research to development

 

Business Infrastructure Goals (7.5%)

 

   Achieve business infrastructure goals to enable multiple product launches in expanding territories and support the hiring, development and retention of a diverse workforce

 

External Portfolio Enhancement Goals (5%)

 

   Enhance our product portfolio through external sources of innovation and business opportunities

 

Stock Performance Goals (5%)

 

   Stock performance relative to appropriate biotechnology indices

 

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COMPENSATION DISCUSSION AND ANALYSIS

 

 

CORPORATE PERFORMANCE LEVELS

The Compensation Committee considered 2020 to be another exceptional year for our Company. In addition to meeting or exceeding most of our 2020 performance goals, the Compensation Committee believed that the Company had several other outstanding accomplishments, including strategic collaborations with Merck for TUKYSA and ladiratuzumab vedotin, a $1 billion equity investment in Seagen by Merck, a joint commercialization agreement with Genmab for tisotumab vedotin and management’s ability to maintain business continuity and productivity during the COVID-19 pandemic while prioritizing the safety of patients, healthcare workers and employees. The Compensation Committee considered management’s response to the COVID-19 pandemic to be strong, including managing the pivot to remote working for the majority of office employees, establishing safety protocols for essential laboratory and other personnel whose jobs cannot be performed remotely and implementing protocols to enable rapid contact tracing and communication in the event of suspected or confirmed cases. To determine our corporate performance percentage for 2020, the Compensation Committee employed a holistic analysis that took into account both the extent to which the performance goals had been achieved or exceeded as well as the relative difficulty of achieving the goals that were met and that were only partially met. The table below provides additional details about the Compensation Committee’s assessment of our actual performance against our 2020 corporate performance goals:

 

2020 Corporate

Performance Goal

  Relative
Weighting
     Highlights    2020 Performance

Annual Sales Goals

  25%     

  Significantly exceeded plan for sales of PADCEV and TUKYSA

 

  Achieved ADCETRIS sales within guidance as revised due to impacts of the COVID-19 pandemic, partially achieving our pre-pandemic sales goal

   Exceeded
most goals

Regulatory Goals for TUKYSA, PADCEV and Tisotumab Vedotin

  17.5%     

  Obtained regulatory approvals for TUKYSA in the U.S., Canada, Switzerland, Singapore, and Australia through the Project Orbis initiative of the FDA’s Oncology Center of Excellence

 

  Submitted Marketing Authorization Application for TUKYSA to the European Medicines Authority, leading to approval in the European Union in February 2021

 

  Achieved positive results from second cohort of EV-201 pivotal trial of PADCEV, providing the basis for a BLA filed February 2021 seeking an additional indication in the U.S.

 

  Achieved positive results from EV-301 phase 3 trial showing that PADCEV significantly improved overall survival in previously treated metastatic urothelial cancer patients. Data intended to serve as the confirmatory trial following accelerated approval in the U.S. and support global marketing applications. Although the submission of the BLA for PADCEV based on the results of cohort 2 of the EV-201 trial and the supplemental BLA for PADCEV based on the results of the EV-301 trial were not completed until February 2021, the Compensation Committee determined that this goal was mainly achieved as the first part of the submissions under the FDA’s Real-Time Oncology Review pilot program were made in December 2020.

 

  Achieved positive results from the innovaTV 204 trial of tisotumab vedotin, providing the basis for a BLA submitted in February 2021

   Met or exceeded most goals

 

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2020 Corporate

Performance Goal

  Relative
Weighting
     Highlights    2020 Performance

Potential Expansion Strategies for ADCETRIS, PADCEV and TUKYSA

  15%     

  Initiated phase 3 trial for ADCETRIS in relapsed or refractory diffuse large B-cell lymphoma and phase 2 trial for ADCETRIS as a frontline treatment in earlier stage Hodgkin lymphoma

 

  Reached agreements with Merck and Astellas to evaluate PADCEV in combination with pembrolizumab in two phase 3 trials in cis-ineligible and cis-eligible muscle-invasive bladder cancer

 

  Announced that, based on discussions with the FDA, data from randomized cohort K in the EV-103 trial of PADCEV, along with other data from the EV-103 trial, could potentially support application for accelerated approval in the U.S.

 

  Initiated EV-302 phase 3 trial of PADCEV in combination with pembrolizumab in first-line metastatic urothelial cancer, with Astellas and Merck

 

  Initiated EV-202 phase 2 trial of PADCEV in solid tumors that have high-levels of Nectin-4 expression, with Astellas

 

  Initiated a phase 1b trial of TUKYSA in combination with chemotherapy in first-line unresectable or metastatic colorectal, gastric, esophageal and gallbladder cancers, which may inform potential registrational trials

 

  Initiated a number of additional trials of TUKYSA, including the potentially registrational HER2CLIMB-02 and MOUNTAINEER-02 trials

   Met or exceeded all goals

Development Goals for Tisotumab Vedotin and Ladiratuzumab Vedotin

  12.5%     

  Refined and advanced ladiratuzumab vedotin and tisotumab vedotin development strategies and programs

   Met all goals

Pipeline Development Goals

  12.5%     

  Initiated three new phase 1 trials, submitted three new INDs, and added new programs from research to development

   Met or exceeded all goals

Business Infrastructure Goals

  7.5%     

  Successfully hired nearly 700 employees in the U.S. and Europe, including new senior executives and key talent in several areas

 

  Achieved low turnover with overall turnover rate below biotechnology benchmarks

   Exceeded all goals

External Portfolio Enhancement Goals

  5%     

  In-licensed pre-clinical antibodies and finalized multiple clinical collaboration agreements with third parties

   Met all goals

Stock Performance Goals

  5%     

  Stock performance exceeded goals relating to appropriate biotechnology indices and resulted in total shareholder return of 53% in 2020

   Exceeded all goals

In light of our strong performance and the challenging nature of the goals, the Compensation Committee, in its judgment, determined our corporate performance percentage to be 150% of the target performance level for 2020.

 

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COMPENSATION DISCUSSION AND ANALYSIS

 

 

INDIVIDUAL PERFORMANCE LEVELS

Our CEO assessed the other executive officers’ contributions to the 2020 corporate goals and made a recommendation to the Compensation Committee with respect to the individual performance percentages for the other executive officers for 2020. The factors considered by the CEO in making this determination included a holistic, non-formulaic evaluation of individual officer’s performance, as well as his or her contribution to achieving corporate goals. The Compensation Committee reviewed the CEO’s recommendations on individual performance factors for each executive officer for 2020 and then made a final determination of the 2020 individual performance percentage for each executive officer. The factors considered by the Compensation Committee in determining the individual performance percentage of each executive officer are further described below under “2020 Key Compensation Decisions for Named Executive Officers.” The individual performance percentages for each of our executive officers are set forth under “Annual Cash Incentive Payout Formula” below.

ANNUAL CASH INCENTIVE PAYOUT FORMULA

 

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Named Executive Officer

  Target Cash Incentive
Award for 2020
     Corporate
Performance
Weighting
     Corporate
Performance
Percentage
                   Annual
Cash
Incentive
Award
for 2020
 
 

Percentage

of Base
Salary

     Dollar
Amount
     Individual
Performance
Weighting
     Individual
Performance
Percentage
 

Dr. Siegall

    100%      $ 1,050,600        100%        150%        0%             $ 1,575,900  

Mr. Simpson

    50%      $ 302,000        60%        150%        40%        140%      $ 440,900  

Dr. Dansey

    65%      $ 474,500        60%        150%        40%        175%      $ 759,300  

Mr. Romp

    45%      $ 225,000        60%        150%        40%        150%      $ 337,500  

Ms. Liu

    50%      $ 274,150        60%        150%        40%        140%      $ 400,200  

With the exception of Dr. Dansey, the target cash incentive awards of our executive officers as a percentage of base salary remained unchanged from 2019 to 2020. For 2020, Dr. Dansey’s target cash incentive award changed from 50% to 65% of base salary based on an analysis of market data and the importance of Dr. Dansey’s role to the Company’s achievement of its strategic goals. For 2021, Mr. Simpson’s target cash incentive award changed from 50% to 60% of base salary, and Mr. Romp’s target cash incentive award changed from 45% to 50% of base salary. Both changes were based on an analysis of market data, the importance of their roles to the achievement of the Company’s strategic goals and to align with similarly situated peers.

Each executive officer’s annual cash incentive award is targeted at 100%, and capped at 200%, of the target award amount. Each executive officer (other than our CEO whose annual cash incentive award is based solely on the achievement of corporate goals) must achieve at least a 50% individual performance percentage to receive a bonus award under our Executive Bonus Plan. If the executive officer’s individual performance percentage is less than 100%, then when calculating the bonus payout, the executive officer’s corporate performance percentage will be capped at such individual performance percentage, regardless of actual corporate performance.

DISCRETIONARY AND OTHER CASH BONUS AWARDS

Historically, the Compensation Committee has approved sign-on bonuses for new executives as an inducement to joining Seagen and to compensate the executive for forgone compensation with a previous employer. Discretionary bonuses may also be awarded for an anniversary with Seagen. In 2020, Mr. Simpson received a fifteen-year work anniversary bonus in the amount of $1,500, and Mr. Romp received a ten-year work anniversary bonus in the amount of $1,500.

ANNUAL LONG-TERM EQUITY AWARDS

We offer long-term incentive compensation in the form of equity awards to our executive officers. Generally, a significant equity award is granted on the date an executive officer commences employment. Thereafter, equity awards may be granted at varying times and in varying amounts in the discretion of the Compensation Committee, but are generally granted once a year at the Compensation Committee’s regularly scheduled meeting held in August unless

 

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such executive officer is promoted, provided with a retention grant, recognized for outstanding performance or granted a performance-based incentive award intended to incentivize achievement of a company milestone of particular importance. We do not have any program, plan or practice to time stock awards to our executive officers or other employees in coordination with the release of material, non-public information.

Annual equity awards are granted under our 2007 Equity Plan, using a mix of different equity instruments to further our goal of attracting and retaining top performers and to balance the relative advantages of different instruments.

 

   

Stock options are an important vehicle for tying executive pay to performance, because they deliver future value only if the value of our common stock increases above the exercise price. As a result, they provide strong incentives for our executive officers to increase the value of our common stock over the long term, and they tightly align the interests of our executives with those of our shareholders.

 

   

RSU awards are granted because they are less dilutive to our shareholders, as fewer shares of our common stock are granted to achieve an equivalent value relative to stock options, and because RSU awards are an effective retention tool that maintain value even in cases where the share price is trading lower than the initial grant price.

 

   

PSU awards are granted to align executive compensation with the shareholder experience and to help focus executives on key metrics to drive business results. In 2020, our Compensation Committee granted a portion of each named executive officer’s annual long-term incentive award in the form of PSU awards, with metrics tied to a three-year cumulative net product sales revenue target and relative TSR performance, to further align their compensation with company performance, as further described below.

ALLOCATION OF ANNUAL EQUITY AWARDS

Generally, the Compensation Committee determines the value of each executive officer’s annual equity grant using a holistic evaluation that takes into account a competitive market analysis prepared by our independent compensation consultant with market data for each role, the recommendations of our CEO based on his evaluation of their individual performance (except with respect to the CEO’s performance), the extent to which the executive officer is currently vested in his or her stock awards, scope and criticality of the executive’s role and parity in targets among executives in roles of a given level. The Compensation Committee does not target a specific percentile within our peer group to determine annual equity awards for the named executive officers. Instead, we review the practices of our peer group and the general biotechnology market as a reference point to assist us in developing programs and targets designed to attract and retain exceptional talent and drive company performance.

In August 2020, the Compensation Committee granted approximately one-third of the overall value of our CEO’s annual equity awards in the form of PSU awards, one-third in the form of RSU awards and one-third in the form of stock options. For the annual equity awards to each of our named executive officers (other than our CEO), the Compensation Committee granted approximately 20% of the overall value in the form of PSU awards, 40% in the form of RSU awards, 40% in the form of stock options.

2020 TARGET ANNUAL LONG-TERM EQUITY AWARDS

 

 

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The number of shares underlying each stock option grant was calculated by dividing the target value of the option award by the product of the average stock price for the 30 calendar days prior to the effective date of the grant and the Company’s then-current Black-Scholes factor. The number of shares underlying each RSU grant and the target number of shares underlying each PSU grant were calculated by dividing the target value of the grant by the average stock price over the 30 calendar days leading up to the date of grant.

 

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Each RSU award granted as part of the annual equity awards in 2020 vests in four equal installments on the anniversary of the grant vesting commencement date. Each option award granted as part of the annual equity awards in 2020 have a ten-year term and vest as to 1/4th of the shares subject to the options on the one year anniversary of the grant date and 1/36th of the remaining shares each month thereafter until such option is fully vested on the four year anniversary of the grant date. These vesting provisions are subject to continued employment of the executive on the applicable vesting date and are subject to accelerated vesting under the terms of each executive’s employment agreement with us and pursuant to the 2007 Equity Plan. These vesting provisions are consistent with the intention that these awards serve as a long-term retention incentive.

PSU AWARDS

The PSU awards granted to our named executive officers were allocated among two separate awards and are not earned unless certain pre-specified long-term performance goals are achieved, as shown in the table below.

 

Percentage of Total

PSU Grant, by Target

Number of Shares

   Type of Target   

Factors Considered to Establish Rigorous

Targets

  

Performance

Period

 

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Product Sales Revenue—consolidated total net product sales revenue during the performance period attributable to sales of products, product candidates, technology or other assets as to which we or our affiliates hold commercialization rights in any territory at the time of grant

 

  

Target value is based on an internal benchmark for revenue growth and long-range goals that incorporate optimistic assumptions. In order to achieve the target, the Company must achieve significant revenue growth.

 

   Three
years,
beginning
January 1,
2021
LOGO   

Relative TSR—designed to measure our relative TSR performance compared to a group of other public biotechnology companies, or the BTK Index Companies(1)

 

   Based on relative performance as compared to other public biotechnology companies.    Three
years,
beginning
August 17,

2020

(1)

The other public biotechnology companies are ACADIA Pharmaceuticals Inc.; Agios Pharmaceuticals, Inc.; Alexion Pharmaceuticals, Inc.; Alkermes plc; Alnylam Pharmaceuticals, Inc.; Amgen Inc.; Bio-Techne Corporation; Biogen Inc.; BioMarin Pharmaceutical Inc.; bluebird bio, Inc.; Charles River Laboratories International, Inc.; Exact Sciences Corporation; Exelixis, Inc.; FibroGen Inc.; Gilead Sciences, Inc.; Grifols SA ADR; Illumina, Inc.; Incyte Corporation; Intercept Pharmaceuticals Inc.; Ionis Pharmaceuticals, Inc.; IQVIA Holdings Inc.; Nektar Therapeutics; Neurocrine Biosciences, Inc.; QIAGEN N.V.; Regeneron Pharmaceuticals, Inc.; Sarepta Therapeutics, Inc.; Ultragenyx Pharmaceutical Inc.; United Therapeutics Corporation; and Vertex Pharmaceuticals Incorporated. The list of companies is subject to adjustment in certain circumstances such as a bankruptcy, acquisition of the reference company or going private transaction.

Each PSU award granted to our named executive officers in 2020 will vest upon the Compensation Committee’s certification as to the level of achievement of the performance target. The payout on each of these PSU awards may vary from 0% to 200% of target, depending on the level of achievement certified. In addition, for each of these PSU awards, a threshold level of performance must be achieved or no stock units will be earned.

With respect to the PSU awards based on the net product sales revenues described in the table above, or the Product Sales Revenue PSU awards, the Compensation Committee set the three-year target at a level that it believed challenging and that presented significant risk of not being achieved in light of the competitive nature of our industry, pricing pressures, the stage of our pipeline candidates and the degree of execution required to achieve its multi-product strategies on the scale necessary to meet the target. In addition, adequately forecasting revenues three years in the future for multiple products involves a significant amount of challenge, uncertainty and risk of error, which could result in a forecast that ultimately proves to be unattainable.

 

 

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The PSU awards based on relative TSR, or the Relative TSR PSU awards, vest based on the Company’s TSR performance relative to the BTK Index Companies over a three-year performance period. To calculate the Company’s relative TSR performance, the cumulative three-year TSR for the Company and each of the BTK Index Companies is calculated and then the Company’s discrete percentile rank is calculated. The potential payouts for the Relative TSR PSU are set forth below. If the Company’s percentile ranking falls between the 25th percentile and the 90th percentile, the payout percentage will be linearly interpolated between the applicable levels set forth below. In addition, if the Company’s TSR is below 0%, the number of shares that vest may not exceed 100% of the target number of shares.

 

Company’s Relative TSR Ranking

   Percentage of
Target Shares

90th percentile or above

       200%  

75th percentile

       150%  

50th percentile

       100%  

25th percentile

       25%  

Below 25th percentile

       0%  

Vesting of the PSU awards granted as part of the annual equity awards in 2020 will cease upon termination of service as an employee for any reason other than death or disability. The PSU awards provide for acceleration of vesting if the applicable named executive officer’s employment is terminated due to death or disability or in the event of certain specified change in control events wherein the PSU awards are not assumed by the surviving entity. In the event of certain specified change in control events wherein the PSU awards are assumed by the surviving entity, the PSU awards will convert to time-based vesting and cliff vest on the last day of the applicable performance period, subject to the named executive officer’s continued service through the applicable vesting date; provided, however, that if a named executive officer is involuntarily terminated immediately prior to or within 12 months after any such change in control event, the PSU awards will vest effective as of the date of such involuntary termination.

CERTIFICATION OF MILESTONE UNDER TUCATINIB LTIP

In October 2018, the Compensation Committee approved a company-wide long-term incentive plan, or the Tucatinib LTIP, for the purpose of incentivizing the Company’s employees to achieve the FDA approval of TUKYSA. The Tucatinib LTIP provides that each eligible employee, including each named executive officer, is eligible to receive grants of equity awards relating to our common stock, which consist of a “First Tranche” and a “Second Tranche” as set forth in the Tucatinib LTIP, each of which is granted as a separate stock unit award on the applicable date of grant.

The First Tranche was granted on November 1, 2018. The target number of stock units granted in the First Tranche equaled 50% of the target award value applicable to each executive officer divided by the average closing sales price of our common stock for the 30 calendar day period ending on October 31, 2018. The First Tranche vested on April 19, 2020, or the Certification Date, upon the Compensation Committee’s certification of the first approval by the FDA for the commercial sale and marketing of TUKYSA in the United States by us or any of our partners for any indication, which approval was based on the data from the pivotal HER2CLIMB trial l (such achievement, the Tucatinib Milestone). The number of shares that vested was determined by multiplying the target number of stock units subject to each stock unit award by an earn out percentage, or the Earn Out Percentage, to be determined using a sliding scale from 0% to 144% based on the date of achievement of the Tucatinib Milestone and the breadth of the indication for which TUKYSA was approved. The sliding scale was established so that the Earn Out Percentage would equal 100% if TUKYSA was approved by the FDA according to an optimistic internal timeline established in October 2018. The Earn Out Percentage could increase above 100% only for achieving FDA approval ahead of schedule or for achieving a broader indication. The Earn Out Percentage would decrease if FDA approval was achieved behind schedule or for a narrower indication. When the Tucatinib LTIP was established, it was not clear whether TUKYSA would ever earn any regulatory approvals or, if it did, what the indication might be. On the Certification Date, the Compensation Committee determined that the earn out percentage was 120%.

The Second Tranche was granted upon certification of the Tucatinib Milestone. The number of stock units granted with respect to the Second Tranche was equal to 50% of the target award value applicable to each executive officer multiplied by the earn out percentage, with the product of these numbers then divided by the average closing sales price of our common stock for the 30 calendar day period ending on the calendar day prior to the date of grant of the Second Tranche. The Second Tranche will vest on the second anniversary of the Certification Date, provided that the executive officer’s continuous service with us has not terminated prior to the vesting date.

 

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PSU AWARDS DEEMED ELIGIBLE TO VEST

In August 2018, the Compensation Committee also approved a PSU grant to Dr. Dansey with a target and maximum number of shares equal to 17,263. The PSU awards vest in tranches contingent on the FDA’s approval of PADCEV, TUKSYA and tisotumab vedotin but will not vest prior to December 31, 2021, subject to Dr. Dansey’s continued employment on the vesting date. When Dr. Dansey received these PSU awards, it was not clear whether PADCEV, TUKYSA or tisotumab vedotin would ever earn any FDA approvals, and tisotumab vedotin still may not receive any FDA approvals. In 2019, upon the Compensation Committee’s certification that PADCEV received accelerated approval from the FDA, the PADCEV portion of the PSU was deemed eligible to vest. In 2020, upon the Compensation Committee’s certification that TUKYSA received FDA approval, the TUKYSA portion of the PSU was deemed eligible to vest. The PADCEV and TUKYSA portions will vest on December 31, 2021, subject to Dr. Dansey’s continued employment on the vesting date.

DISCRETIONARY AND OTHER EQUITY AWARDS

Discretionary equity awards may be granted for special recognition of achievement or in connection with a promotion and to provide an additional long-term retention and other incentives to top performing employees. In May 2020, per our standard practice of providing equity awards in connection with promotions, Mr. Romp received an RSU award with a target value of $450,000 following his promotion to Executive Vice President, Commercial U.S. The number of shares subject to this RSU award was determined by dividing the target value of the award by the average stock price for the month of April 2020. This RSU award is subject to vesting in four equal tranches on the anniversary of the vesting commencement date until vested in full, subject to continued employment on the applicable vesting date.

When a new executive joins the Company, the Compensation Committee, in accordance with past practice, may also approve sign-on equity grants for the new executive as an inducement to joining Seagen, to compensate the executive for forgone compensation with a previous employer and to provide long-term retention incentive. No such grants were provided to our named executive officers in 2020.

HEALTH AND WELFARE AND RETIREMENT BENEFITS

All of our named executive officers are eligible to receive our standard employee benefits, such as our 401(k) plan, medical, dental and vision coverage, short-term disability, long-term disability, group life insurance, and employee stock purchase plan, in each case on the same basis as our other employees, including the matching contributions provided under our Section 401(k) plan. For 2020, we made a matching contribution equal to 100% of each employee’s salary deferral contribution up to 5.5% of the employee’s compensation, subject to the applicable statutory limit. The matched contribution is not subject to a vesting period.

OTHER BENEFITS

In 2020, Dr. Dansey received reimbursement for commuting expenses incurred in connection with his travel from his California residence to our headquarters in Bothell, Washington, including airfare and the cost of a corporate apartment, grossed up for related taxes. These commuting benefits were negotiated with Dr. Dansey at the time of his initial employment and were deemed a reasonable expense and necessary inducement to his commencement of employment with us, particularly in light of the importance of his skills and experience in late stage drug development to our efforts to become a multi-product oncology company. During 2020, Dr. Dansey’s travel to our corporate headquarters was limited due to travel restrictions and guidelines from governmental authorities on limiting travel due to the COVID-19 pandemic, and Dr. Dansey discontinued rental of his corporate apartment. However, he was reimbursed for travel prior to the pandemic and the cost of his corporate apartment prior to the discontinuation.

 

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2020 KEY COMPENSATION DECISIONS FOR NAMED EXECUTIVE OFFICERS

The table below highlights performance factors and key compensation decisions for our named executive officers for 2020. It includes decisions regarding base salary, annual cash incentive awards and annual equity awards. It does not include other forms of compensation the executive officers received, including earned awards under the Tucatinib LTIP, discretionary or other cash or equity awards, retirement and benefits plans or other remuneration. For additional information, please see “Compensation-Setting Process” above and “Summary Compensation Table” below.

 

     
      Named Executive Officer Performance    2020 Key Compensation Decisions

 

Dr. Siegall

  

 

FINANCIAL PERFORMANCE

 

  Under Dr. Siegall’s leadership in 2020, product sales grew by more than 59% in 2020 to over $1 billion. This growth was powered by ADCETRIS sales as well as our two new products, TUKYSA and PADCEV.

 

 Additionally, the Company’s one-year TSR was at the 90th percentile when compared to our peers for 2020.

 

PRODUCTS

 

  During 2020, under Dr. Siegall’s leadership, the Company received approval in the U.S., Canada, Switzerland, Singapore, and Australia, for TUKYSA, the first product that we are commercializing outside the U.S. and Canada, which was approved for patients suffering with previously treated, metastatic HER2+ breast cancer.

 

 Additionally, the Company released positive results from the innovaTV 204 trial of tisotumab vedotin for which it is seeking accelerated approval from the FDA for previously treated metastatic cervical cancer.

 

 In addition, the Company filed three IND applications with the FDA to bring new potential therapies into the clinic.

 

PEOPLE

 

  During 2020, Dr. Siegall oversaw the continued evolution of the Company into a global, multi-product oncology company and the integration of nearly 700 new employees to deliver on the vision of serving more patients.

 

  He oversaw the hiring and onboarding of new key executive leaders including our new EVP, Commercial—International. He also oversaw a talent review of senior leadership for succession planning and development at the Board level.

 

  He was heavily engaged in discussions around our global commercial strategy and footprint as we commercialize TUKYSA.

 

  He remains very involved in overseeing the work to drive cultural changes that support the creation of an environment where each employee can thrive, do their best work and support the Company’s mission.

 

  He also continues to be involved in work promoting diversity, inclusion and equity.

 

  

 

 

LOGO

 

Base Salary: Effective February 1, 2020 Dr. Siegall’s base salary increased by 8.62% to $1,050,600 due to performance and to maintain competitive positioning in the market.

 

Annual Cash Incentive Award: Dr. Siegall’s annual bonus was 150% of target and reflected the corporate performance percentage. To ensure absolute alignment between the CEO’s bonus and corporate performance, Dr. Siegall’s bonus percentage is equal to the corporate performance percentage.

 

Annual Equity Awards: Dr. Siegall’s annual equity awards granted August 17, 2020 had an aggregate grant date fair value of $13,856,879, which consisted of approximately 1/3 options, 1/3 RSU awards and 1/3 PSU awards. The PSU awards consisted of an award representing 20% of the target number of shares with a goal based on our TSR performance relative to the BTK Index Companies and an award representing 80% of the target number of shares, with a product sales revenue goal.

 

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COMPENSATION DISCUSSION AND ANALYSIS

 

 

     
      Named Executive Officer Performance    2020 Key Compensation Decisions

 

Mr. Simpson

  

 

FINANCIAL PERFORMANCE

 

  Mr. Simpson provided leadership in multiple transactions, including collaborations with Genmab and Merck and a $1 billion equity investment by Merck in Seagen. The Company ended 2020 with $2.7 billion in cash and investments and no debt.

 

PRODUCTS

 

  Under Mr. Simpson’s leadership, the Company invested over $827.1 million into research and development, and made investments to expand our pipeline and commercial footprint in 2020.

 

PEOPLE

 

  During 2020, Mr. Simpson oversaw the expansion of his finance team to support a growing, organization to support multiple products and our expanding global operations.

 

  Mr. Simpson also supported the creation of a new corporate strategy function that includes Investor Relations and Corporate Communications, as well as the scale-up in advance of the TUKYSA launch in Europe.

 

  Mr. Simpson also oversaw the Facilities, Real Estate and Engineering function, which drove our on-site safety protocols during the COVID-19 pandemic.

  

 

 

LOGO

Base Salary: Effective February 1, 2020, Mr. Simpson’s salary increased by 5.01% to $604,000 due to performance and to maintain competitive positioning in the market.

 

Annual Cash Incentive Award: Mr. Simpson’s annual bonus was 146% of target and reflected an individual performance factor of 140%.

 

Annual Equity Awards: Mr. Simpson’s annual equity awards granted August 17, 2020 had an aggregate grant date fair value of $3,540,404, which consisted of approximately 40% options, 40% RSU awards and 20% PSU awards. The PSU awards consisted of an award representing 20% of the target number of shares with a goal based on our TSR performance relative to the BTK Index Companies and an award representing 80% of the target number of shares, with a product sales revenue goal.

 

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COMPENSATION DISCUSSION AND ANALYSIS

 

   

 

     
      Named Executive Officer Performance    2020 Key Compensation Decisions

 

Dr. Dansey

  

 

FINANCIAL PERFORMANCE

 

  Dr. Dansey oversaw the significant budget of a sizable clinical development engine.

 

PRODUCTS

 

  Under Dr. Dansey’s leadership in 2020, the Company obtained FDA accelerated approval for TUKYSA in the U.S. and Canada, Switzerland, Singapore, and Australia through the Project Orbis initiative of the FDA’s Oncology Center of Excellence and filed for approval in the EU.

 

  Dr. Dansey also oversaw a large expansion of the scope of development efforts for ADCETRIS, PADCEV and TUKYSA to potentially expand the labels for these drugs and bring these drugs to more patients in need. He also oversaw the announcement of positive topline data from the EV-301 clinical trial of PADCEV and the innovaTV 204 clinical trial of tisotumab vedotin.

 

  Under Dr. Dansey’s leadership in 2020, we filed three IND applications with the FDA to bring new potential therapies into the clinic and advanced our early stage clinical pipeline.

 

PEOPLE

 

  During a pandemic, Dr. Dansey and his leadership team were able to maintain the dedication, productivity, and engagement of a highly skilled workforce with below average turnover.

 

  Dr. Dansey brought on a new Senior Vice President of Late Stage Development and successfully recruited 21 medical doctors as well as other key talent across our clinical development function.

  

 

 

LOGO

Base Salary: Effective February 1, 2020, Dr. Dansey’s salary increased by 4.99% to $706,400 due to performance and to maintain competitive positioning in the market. Effective September 1, 2020, his salary increased by 3.34% to $730,000 to maintain his competitive positioning in the market.

 

Annual Cash Incentive Award: Dr. Dansey’s annual bonus was 160% of target and reflected an individual performance factor of 175%.

 

Annual Equity Awards: Dr. Dansey’s annual equity awards granted August 17, 2020 had an aggregate grant date fair value of $5,408,958, which consisted of approximately 40% options, 40% RSU awards and 20% PSU awards. The PSU awards consisted of an award representing 20% of the target number of shares with a goal based on our TSR performance relative to the BTK Index Companies and an award representing 80% of the target number of shares, with a product sales revenue goal.

 

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COMPENSATION DISCUSSION AND ANALYSIS

 

 

     
      Named Executive Officer Performance    2020 Key Compensation Decisions

 

Mr. Romp

  

 

FINANCIAL PERFORMANCE

 

  Product sales under Mr. Romp’s leadership grew by over 59% in 2020 to over $1 billion.

 

PRODUCTS

 

  Mr. Romp oversaw the commercial launch of two products in 2020, PADCEV and TUKYSA, as well as the preparations for our potential fourth new product in the U.S.

 

PEOPLE

 

  In 2020, Mr. Romp served as our interim Chief Commercial Officer while we recruited a new Executive Vice President, Commercial - International and successfully worked with our new Executive Vice President, Commercial - International, once hired, to transition to a new U.S. and international commercial model.

 

  Under Mr. Romp’s leadership, a new franchise model was introduced for the U.S. Commercial team to ensure scalability and support for our different therapeutic areas. Additionally, Mr. Romp and his leadership team oversaw the commercialization of our products at a time when representatives of the Company were unable to meet in-person with healthcare providers. Even during these difficult circumstances, we were still able to serve more patients in need of our therapies.

  

 

 

LOGO

Base Salary: Effective February 1, 2020, Mr. Romp’s salary increased by 3.51% to $465,800 due to performance and to maintain competitive positioning in the market. Effective on his promotion to Executive Vice President, Commercial U.S. on April 15, 2020, Mr. Romp’s salary increased 7.34% to $500,000 to reflect his expanded leadership responsibilities and to establish competitive positioning in the market based on his new role.

 

Annual Cash Incentive Award: Mr. Romp’s annual bonus was 150% of target and reflected an individual performance factor of 150%.

 

Annual Equity Awards: Mr. Romp’s annual equity awards granted August 17, 2020 had an aggregate grant date fair value of $3,196,245, which consisted of approximately 40% options, 40% RSU awards and 20% PSU awards. The PSU awards consisted of an award representing 20% of the target number of shares with a goal based on our TSR performance relative to the BTK Index Companies and an award representing 80% of the target number of shares, with a product sales revenue goal.

 

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COMPENSATION DISCUSSION AND ANALYSIS

 

   

 

     
      Named Executive Officer Performance    2020 Key Compensation Decisions

 

Ms. Liu

  

 

FINANCIAL PERFORMANCE

 

  With the support of Ms. Liu’s leadership, the Company executed multiple transactions, including new strategic collaborations, the in-licensing of new antibodies and raising $1 billion in new capital through Merck’s equity investment.

 

PRODUCTS

 

  Ms. Liu’s leadership was important in our preparations to commercialize multiple products and to do so in regions where we have not previously had commercial operations.

 

  In addition, Ms. Liu was instrumental in our efforts to protect our intellectual property assets and to build and maintain our compliance program, as well as in managing our litigation matters.

 

PEOPLE

 

  During 2020, Ms. Liu oversaw the continued growth of our legal team and its capabilities in transactional law, securities law, compliance and the Company’s European expansion.

 

  Ms. Liu also took a leadership role in overseeing the company’s efforts surrounding DEI in 2020, including helping to formulate the Company’s DEI strategy and roadmap for creating a more diverse, equitable and inclusive workplace.

  

 

 

LOGO

Base Salary: Effective February 1, 2020, Ms. Liu’s salary increased by 5.00% to $548,300 due to performance and to maintain competitive positioning in the market.

 

Annual Cash Incentive Award: Ms. Liu’s annual bonus was 146% of target and reflected an individual performance factor of 140%.

 

Annual Equity Awards: Ms. Liu’s annual equity awards granted August 17, 2020 had an aggregate grant date fair value of $2,950,272, which consisted of approximately 40% options, 40% RSU awards and 20% PSU awards. The PSU awards consisted of an award representing 20% of the target number of shares with a goal based on our TSR performance relative to the BTK Index Companies and an award representing 80% of the target number of shares, with a product sales revenue goal.

 

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COMPENSATION DISCUSSION AND ANALYSIS

 

 

POST-EMPLOYMENT COMPENSATION

We provide severance benefit protection to our named executive officers through our individual employment agreements with each such individual.

The Compensation Committee believes these severance payments and benefits are important from a retention perspective to provide some level of protection to our executive officers from having their employment terminated without cause or constructively terminated prior to or after a change in control of the Company, or from experiencing a life-changing disability, and that the amounts are reasonable when compared with similar arrangements adopted by other biotechnology companies. In addition, the Compensation Committee believes that these severance payments and benefits align our executive officer and shareholder interests by enabling them to consider corporate objectives and possible transactions that are in the best interests of the shareholders and other constituents of the Company without undue concern over whether such objectives or transactions may jeopardize their own employment.

With these arrangements, the Compensation Committee sought uniformity of terms among our executive officers based on their positions at the Company. In addition, the Compensation Committee believes that the payment-triggering event outside of the death or disability context, namely, being terminated without cause or constructively terminated, and then only when there is no misconduct by the executive officer, is a fair hurdle for the corresponding compensation.

More information regarding these arrangements is provided under the heading “Potential Payments Upon Termination or Change-in-Control—Employment Agreements.”

CLAWBACK POLICY

Our clawback policy provides for the recoupment of certain cash and equity incentive compensation paid to any of our executives if we are required to prepare an accounting restatement due to material noncompliance with any financial reporting requirement under the securities laws and it is determined that such noncompliance was due in whole or in part to such executive’s misconduct.

TAX AND ACCOUNTING CONSIDERATIONS

DEDUCTION LIMITATION

Under Section 162(m) of the Internal Revenue Code, or the Code, compensation paid to any publicly held corporation’s “covered employees” that exceeds $1 million per taxable year for any covered employee is generally non-deductible.

Prior to the enactment of the Tax Cuts and Jobs Act, Section 162(m) of the Code provided a performance-based compensation exception, pursuant to which the deduction limit under Section 162(m) of the Code did not apply to any compensation that qualified as “performance-based compensation” under Section 162(m) of the Code. Pursuant to the Tax Cuts and Jobs Act, the performance-based compensation exception under Section 162(m) of the Code was repealed with respect to taxable years beginning after December 31, 2017, except that certain transition relief is provided for compensation paid pursuant to a written binding contract which was in effect on November 2, 2017 and which is not modified in any material respect on or after such date.

Compensation paid to each of the Company’s “covered employees” in excess of $1 million per taxable year generally will not be deductible unless it qualifies for the performance-based compensation exception under Section 162(m) of the Code pursuant to the transition relief described above. Because of certain ambiguities and uncertainties as to the application and interpretation of Section 162(m) of the Code, as well as other factors beyond the control of the Compensation Committee, no assurance can be given that any compensation paid by the Company will be eligible for such transition relief and be deductible by the Company in the future. Although the Compensation Committee will continue to consider tax implications as one factor in determining executive compensation, the Compensation Committee also looks at other factors in making its decisions and retains flexibility to provide compensation for the Company’s named executive officers in a manner consistent with the goals of the Company’s executive compensation program and the best interests of the Company and its shareholders (which may include providing for compensation that is not deductible by the Company due to the deduction limit under Section 162(m) of the Code). The Compensation Committee also retains the flexibility to modify compensation that was initially intended to be exempt from the deduction limit under Section 162(m) of the Code if it determines that such modifications are consistent with the Company’s business needs.

 

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COMPENSATION DISCUSSION AND ANALYSIS

 

   

 

ACCOUNTING CONSIDERATIONS

We follow Financial Accounting Standards Board ASC Topic 718 for our stock-based compensation awards. In accordance with ASC Topic 718, stock-based compensation cost is measured at the grant date, or with respect to performance-based awards, the service inception date, based on the estimated fair value of the awards using a variety of assumptions. This calculation is performed for accounting purposes and, as applicable, reported in the compensation tables, even though recipients may never realize any value from their awards. We record this expense on an ongoing basis over the requisite employee service period. For performance-based stock options, we record compensation expense over the estimated service period once the achievement of the performance-based milestone is considered probable. At each reporting date, we assess whether achievement of a milestone is considered probable, and if so, record compensation expense based on the portion of the service period elapsed to date with respect to that milestone, with a cumulative catch-up, net of estimated forfeitures. We will recognize remaining compensation expense with respect to a milestone, if any, over the remaining estimated service period. Accounting rules also require us to record cash compensation as an expense at the time the obligation is incurred.

STOCK OWNERSHIP GUIDELINES

In 2020, our Corporate Governance Guidelines included the following stock ownership guidelines for our named executive officers:

 

Role

   2020 Stock Ownership Guidelines  

CEO

   5x base salary  

Other Executive Officers

   1.5x base salary  

Our executives were required to be in compliance with these stock ownership guidelines by December 31st of the fifth year following the year during which such individual became subject to the ownership guidelines. As of December 31, 2020, our CEO was in compliance with those stock ownership guidelines. With the exception of Dr. Dansey and Mr. Romp, our currently serving executive officers first became subject to the guidelines in 2017 when we first adopted stock ownership guidelines for executive officers other than our CEO. Dr. Dansey first became subject to the guidelines in 2018 when he commenced employment with us, and Mr. Romp first became subject to the guidelines in 2020 when he assumed his current role. As a result, as of December 31, 2020, none of our executive officers, other than our CEO, were yet required to comply with the 2020 stock ownership guidelines. However, all of our named executive officers still satisfied the stock ownership guidelines as of that date.

In February 2021, on the recommendation of the Compensation Committee based on a review of our peer group companies, the Board increased the stock ownership guidelines as shown in the table below. Each of our named executives is required to be in compliance with these new stock ownership guidelines by December 31st of the year during which such individual achieves his or her fifth anniversary as an executive on our Executive Committee.

 

Role

   New Stock Ownership Guidelines   

CEO

   6x base salary  

Other Executive Officers

   2x base salary  

PROHIBITIONS ON HEDGING, PLEDGING AND SHORT-TERM SPECULATIVE TRANSACTIONS

Under the terms of our insider trading policy, no employees (including executive officers) of Seagen or its subsidiaries, members of our Board or consultants who know or have access to material information regarding Seagen that has not been fully disclosed to the public may engage in any hedging or monetization transactions relating to Seagen or its securities, including through the use of financial instruments such as prepaid variable forwards, equity swaps, collars and exchange funds, nor may any of these persons engage in short-term speculative transactions involving Seagen securities (or derivatives of Seagen securities), including short sales and the buying and selling of put or call options. In addition, none of these persons may hold Seagen securities in a margin account or otherwise pledge Seagen securities as collateral for a loan.

 

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COMPENSATION DISCUSSION AND ANALYSIS

 

 

COMPENSATION AND RISK

We believe that the risks arising from our compensation policies and practices are not reasonably likely to have a material adverse effect on the Company. In addition, the Compensation Committee believes that the mix and design of the elements of executive compensation do not encourage our employees to assume excessive risks.

The Compensation Committee periodically reviews the elements of executive compensation to determine whether any portion of executive compensation encourages excessive risk taking. The Compensation Committee most recently conducted this review in March 2021 with input from its compensation consultant, Radford, and concluded that it does not. Among the factors that the Compensation Committee considered were:

 

 

significant weighting towards long-term incentive compensation discourages short-term risk taking;

 

 

goals are appropriately set to provide meaningful target levels that enhance shareholder value but that are quantifiable using objective criteria and include multiple performance measures;

 

 

short-term incentive awards are capped by the Compensation Committee; and

 

 

sales incentive plans and associated award programs for the Company’s sales team are aligned with market practice and support performance towards appropriate business objectives.

COMPENSATION COMMITTEE REPORT(1)

The Compensation Committee has reviewed and discussed the foregoing Compensation Discussion and Analysis required by Item 402(b) of Regulation S-K with management and, based on such review and discussions, the Compensation Committee has recommended to our Board of Directors that the Compensation Discussion and Analysis be included in this proxy statement and incorporated into our Annual Report on Form 10-K for the fiscal year ended December 31, 2020.

Submitted by the members of the Compensation Committee:

 

LOGO

 

(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 Seagen under the Securities Act or the Exchange Act, other than in Seagen’s Annual Report on Form 10-K where it shall be deemed to be furnished, whether made before or after the date hereof and irrespective of any general incorporation language in any such filing.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

During 2020, the Compensation Committee consisted of Felix J. Baker (chair), John A. Orwin and Daniel G. Welch. None of these directors is a current or former officer or employee of Seagen. Please refer to the section of this proxy statement entitled “Certain Relationships and Related Party Transactions” for information concerning certain transactions involving entities affiliated with Dr. Baker.

During 2020, no member of the Compensation Committee or executive officer of Seagen has or had a relationship that would constitute an interlocking relationship with executive officers or directors of another entity.

 

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COMPENSATION OF EXECUTIVE OFFICERS

 

   

 

SUMMARY COMPENSATION TABLE

The following table sets forth all of the compensation awarded to, or earned by, our named executive officers.

 

Name and Principal Position

   Year     

Salary

($)

    

Bonus(1)

($)

    

Stock

Awards(2)

($)

   

Option

Awards(3)

($)

    

Non-Equity

Incentive Plan

Compensation(4)

($)

    

All Other

Compensation(5)

($)

    

Total

($)

 

Clay B. Siegall, Ph.D.

     2020        1,043,651               9,295,156       4,561,723        1,575,900        17,127        16,493,557  

President and CEO

     2019        963,369               8,137,179       3,502,217        1,903,500        15,230        14,521,495  
       2018        918,554        2,000        8,217,394       7,539,792        1,409,995        19,302        18,107,037  

Todd E. Simpson

     2020        601,600        1,500        2,132,760       1,407,644        440.900        17,127        4,601,531  

Chief Financial Officer

     2019        572,342               1,824,697       1,552,123        525,700        15,230        4,490,092  
       2018        519,458        13,300        1,847,912       1,627,287        411,550        12,855        4,432,362  

Roger D. Dansey, M.D.

     2020        711,467               3,258,442       2,150,516        759,300        181,812        7,061,537  

Chief Medical Officer

     2019        670,900        150,000        2,831,698       2,149,091        622,675        294,460        6,718,824  
       2018        399,479        300,000        6,804,499       1,970,275        276,455        176,312        9,927,020  

Chip R. Romp

     2020        488,708        1,500        2,477,660 (6)      1,270,762        337,500        1,452        4,577,582  

Executive Vice President, Commercial U.S.

     2019        437,233        125,000        2,062,862       405,948        349,600        1,999        3,382,642  
       2018        409,646               1,101,443       455,624        271,947        815        2,239,475  

Jean I. Liu

     2020        546,125               1,777,282       1,172,990        400,200        17,127        3,913,724  

General Counsel and Executive Vice President, Legal Affairs

     2019        520,325        500        1,578,609       1,384,957        466,500        15,230        3,966,121  
       2018        485,017        13,300        1,536,026       1,383,188        330,802        12,855        3,761,188  

 

(1)

For 2020, the amounts in this column consist of a 15 and 10 year work anniversary bonus for Mr. Simpson and Mr. Romp, respectively.

(2)

The amounts in this column do not represent amounts the named executive officers received or are entitled to receive. Rather, the reported amounts include the aggregate grant date fair value of stock awards granted during the relevant year in accordance with FASB ASC Topic 718 with no estimate for future forfeitures. For time-based RSUs, the aggregate grant date fair value is based on the closing price of our common stock on the date of grant. For 2020, the amounts in this column include the fair value of awards granted on August 17, 2020 for Product Sales Revenue PSU and Relative TSR PSU awards granted on August 17, 2020 each in accordance with FASB ASC Topic 718 based upon the probable outcome of the performance conditions. For these purposes, the fair value of the Product Sales Revenue and Relative TSR PSUs awards were computed based on achieving the target level. Assuming the highest level of achievement of the performance conditions under each of these performance based RSUs, the fair value for these awards would be $9,534,217 for Dr. Siegall, $1,470,889 for Mr. Simpson, $2,247,425 for Dr. Dansey, $1,328,192 for Mr. Romp, and $1,225,974 for Ms. Liu. Please see “—Compensation Discussion and Analysis” above and “Grants of Plan-Based Awards” below for more information regarding the RSUs we granted to the named executive officers. For 2020, the amounts in this column do not include the fair value of the Tucatinib LTIP Second Tranche that were granted in 2020, as the fair value of such RSUs were reported in 2018 at the fair value on the service inception date (i.e. the date the Compensation Committee approved the Tucatinib LTIP RSUs), based on the then-probable outcome of the performance conditions.

(3)

The amounts in this column represent the aggregate grant date fair value of stock options granted during the relevant year in accordance with FASB ASC Topic 718 with no estimate for future forfeitures. For information regarding the assumptions used in calculating these amounts for 2020, see Note 17 of the Notes to the Consolidated Financial Statements included in our Annual Report on Form 10-K for the year ended December 31, 2020.

(4)

The amounts in this column reflect the 2020 annual cash bonus awards to the named executive officers under our Executive Bonus Plans.

(5)

The amounts in this column consist of life insurance premiums and company matching contributions to our 401(k) plan for all named executive officers. In addition, for 2020 the amount in this column with respect to Dr. Dansey includes $164,685 for corporate housing in Washington and travel to and from his residence in California, grossed up for related payroll taxes.

(6)

The amount includes the aggregate grant date fair value of $552,177 for RSUs awarded on May 15, 2020 in connection with Mr. Romp’s promotion. The fair value of stock awards granted is in accordance with FASB ASC Topic 718 with no estimate for future forfeitures and is based on the closing price of our common stock on the date of grant.

 

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COMPENSATION OF EXECUTIVE OFFICERS

 

 

GRANTS OF PLAN-BASED AWARDS

The following table sets forth each equity and non-equity award granted to our named executive officers during 2020.

 

          Estimated Future
Payouts under
Non-Equity Incentive
Plan Awards(1)
          Estimated Future
Payouts under
Equity Incentive
Plan Awards
                         
                                                   

Name

  Grant
Date
    Target    

Maximum

($)

           Target     Maximum    

All Other Stock
Awards: Number
of Shares of
Stock or Units

($)

   

All Other Option
Awards: Number
of Securities
Underlying Options

($)

   

Exercise or Base
price of Option
Awards (per
share)

($)

   

Grant
Date Fair
Value of
Stock
Options
and
Awards

($)(2)

 

Clay B. Siegall, Ph.D.

                                                                     

Executive Bonus Plan

    N/A       1,050,600       2,101,200                                              

Discretionary Stock Option Award(3)

    8/17/2020                                             69,383       161.82       4,561,723  

Discretionary RSU Award(4)

    8/17/2020                                       27,982                   4,528,047  

Product Sales Revenue PSU Award(5)

    8/17/2020                           22,386       44,772                         3,622,503  

Relative TSR PSU Award(6)

    8/17/2020                           5,596       11,192                         1,144,606  

Todd E. Simpson

                                                                     

Executive Bonus Plan

    N/A       302,000       604,000                                              

Discretionary Stock Option Award(3)

    8/17/2020                                             21,410       161.82       1,407,644  

Discretionary RSU Award(4)

    8/17/2020                                       8,635                   1,397,316  

Product Sales Revenue PSU Award(5)

    8/17/2020                           3,454       6,908                         558,926  

Relative TSR PSU Award(6)

    8/17/2020                           863       1,726                         176,518  

Roger D. Dansey, M.D.

                                                                     

Executive Bonus Plan

    N/A       474,500       949,000