DEF 14A 1 d220122ddef14a.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

 

  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 Pursuant to Section 240.14a-12

AMGEN 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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Table of Contents

LOGO

2017 Proxy Statement and

Notice of

Annual Meeting of

Stockholders

 

LOGO


Table of Contents
 

Robert A. Bradway

Chairman of the Board,

Chief Executive Officer and President

 

LOGO

 
 

Amgen Inc.

One Amgen Center Drive

Thousand Oaks, CA 91320-1799

April 6, 2017

Dear Fellow Stockholder:

You are invited to attend the 2017 Annual Meeting of Stockholders, or Annual Meeting, of Amgen Inc. to be held on Friday, May 19, 2017, at 11:00 A.M., local time, at the Four Seasons Hotel Westlake Village, Two Dole Drive, Westlake Village, California 91362.

Our Company: At Amgen, our mission is to serve patients; this mission guides our unwavering commitment to deliver breakthrough treatments for unmet medical needs. We are a values-based company, deeply rooted in science and innovation to transform new ideas and discoveries into medicines for patients with serious illnesses. We believe that innovative medicines offer the best hope to reduce both the human and financial burden that serious diseases, such as cancer and heart disease, place on people, their families and our society. Six therapeutic areas form the core of our business – cardiovascular, oncology/hematology, bone health, neuroscience, inflammation and nephrology.

Business Strategy: At the core of our strategy is a commitment to innovation in these six therapeutic areas. To capitalize fully on our innovation, we have identified a set of strategic priorities, including continuing our transformation efforts, expanding our global reach, deploying next-generation biomanufacturing technology, advancing new drug delivery systems, and developing branded biosimilars, that enable multiple approaches to creating stockholder value. In the Compensation Discussion and Analysis section of this proxy, we further outline our strategy and discuss our progress against our strategic priorities in 2016.

Stockholder Engagement: We value the perspectives of our stockholders as expressed at our Annual Meeting and through direct conversations with us throughout the year. Since our 2016 annual meeting of stockholders, in addition to our outreach by our executives and our Investor Relations department to investors, we have engaged in governance-focused outreach activities and discussions with stockholders comprising approximately 52% of our outstanding shares. Topics discussed included our business and financial performance, our governance and executive compensation programs, including the direct link to our business strategy, and our corporate responsibility and sustainability initiatives. Feedback received during these meetings was shared with the full Board of Directors, informing Board decisions. The conversations held with our stockholders are beneficial, and we look forward to continuing our dialogue in the coming year.

I look forward to sharing more about our Company at the Annual Meeting. In addition to the business to be transacted and described in the accompanying Notice of Annual Meeting of Stockholders and proxy statement, I will discuss recent developments during the past year, the substantial progress we made on our strategic priorities for 2016, and respond to comments and questions of general interest.

On behalf of the Board of Directors, I thank you for your participation and investment in Amgen. We look forward to seeing you on May 19. As a final note and also on behalf of the Board of Directors, I would like to thank Frank J. Biondi, Jr. and Judith C. Pelham, who are not standing for re-election, for their counsel and guidance.

Sincerely,

 

LOGO

Robert A. Bradway

Chairman of the Board,

Chief Executive Officer and President


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Amgen Inc.                                                   

One Amgen Center Drive                           

Thousand Oaks, California 91320-1799    

Notice of Annual Meeting of Stockholders

To be Held on May 19, 2017

 

To the Stockholders of Amgen Inc.:

 

Date and Time:

 

Friday, May 19, 2017 at 11:00 A.M., local time

Location:

 

Four Seasons Hotel Westlake Village, Two Dole Drive, Westlake Village, California 91362

Record Date:

 

March 20, 2017. Amgen stockholders of record at the close of business on the record date are entitled to receive notice of, and vote at, the 2017 Annual Meeting of Stockholders, or Annual Meeting, and any continuation, postponement or adjournment thereof.

Mail Date:

 

We intend to mail the Notice Regarding the Availability of Proxy Materials, or the proxy statement and proxy card, as applicable, on or about April 6, 2017 to our stockholders of record on the record date.

Items of Business:
 

1.

 

To elect 13 directors to the Board of Directors of Amgen for a term of office expiring at the 2018 annual meeting of stockholders. The nominees for election to the Board of Directors are Dr. David Baltimore, Mr. Robert A. Bradway, Mr. François de Carbonnel, Mr. Robert A. Eckert, Mr. Greg C. Garland, Mr. Fred Hassan, Dr. Rebecca M. Henderson, Mr. Frank C. Herringer, Mr. Charles M. Holley, Jr., Dr. Tyler Jacks, Ms. Ellen J. Kullman, Dr. Ronald D. Sugar and Dr. R. Sanders Williams;

 

2.

 

To ratify the selection of Ernst & Young LLP as our independent registered public accountants for the fiscal year ending December 31, 2017;

 

3.

 

To hold an advisory vote to approve our executive compensation;

 

4.

 

To hold an advisory vote on the frequency of future stockholder advisory votes to approve executive compensation;

 

5.

 

To consider one stockholder proposal to adopt majority votes cast standard for matters presented by stockholders described in the proxy statement, if properly presented at the meeting; and

 

6.

 

To transact such other business as may properly come before the Annual Meeting or any continuation, postponement or adjournment thereof.

 

Attendance: If you plan to attend the Annual Meeting, you will need an admittance ticket and proof of ownership of our Common Stock as of the close of business on March 20, 2017. Please read “INFORMATION CONCERNING VOTING AND SOLICITATION—Attendance at the Annual Meeting” in the accompanying proxy statement.

Voting: Your vote is important, regardless of the number of shares that you own. Whether or not you plan to attend the Annual Meeting in person, it is important that your shares be represented and voted. Please read the Notice of Annual Meeting of Stockholders and proxy statement with care and follow the voting instructions to ensure that your shares are represented. By submitting your proxy promptly, you will save the Company the expense of further proxy solicitation. We encourage you to submit your proxy as soon as possible by Internet, by telephone or by signing, dating and returning all proxy cards or instruction forms provided to you.

By Order of the Board of Directors

 

LOGO

Jonathan P. Graham

Secretary                  

Thousand Oaks, California

April 6, 2017


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          TABLE OF CONTENTS  

 

Table of Contents

 

Proxy Statement Summary      1  
Information Concerning Voting and Solicitation      10  
Item 1—Election of Directors      16  
Item 2—Ratification of Selection of Independent Registered Public Accountants      30  
Item 3—Advisory Vote to Approve Our Executive Compensation      31  
Item 4—Advisory Vote on the Frequency of Future Stockholder Advisory Votes to Approve Executive Compensation      37  
Item 5—Stockholder Proposal      38  
Security Ownership of Directors and Executive Officers      41  
Security Ownership of Certain Beneficial Owners      43  
Corporate Governance      44  
Executive Compensation      56  

Compensation Discussion and Analysis

     56  

Executive Compensation Tables

     88  

Director Compensation

     107  
Audit Matters      111  
Annual Report on Form 10-K      113  
Certain Relationships and Related Party Transactions      113  
Other Matters      115  
Appendix A: Amgen Inc. Board of Directors Guidelines for Director Qualifications and Evaluations      A-1  
Appendix B: Reconciliations of GAAP to Non-GAAP Measures      B-1  

 

LOGO   ï 2017 Proxy Statement      


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          PROXY STATEMENT SUMMARY  

 

Proxy Statement Summary

This summary contains highlights about our Company and the upcoming 2017 Annual Meeting of Stockholders, or Annual Meeting. This summary does not contain all of the information that you should consider in advance of the meeting and we encourage you to read the entire proxy statement before voting.

2017 Annual Meeting of Stockholders

 

 

Date and Time:

  

Friday, May 19, 2017 at 11:00 A.M., local time

Location:

  

Four Seasons Hotel Westlake Village, Two Dole Drive, Westlake Village, California 91362

Record Date:

  

March 20, 2017

Mail Date:

  

We intend to mail the Notice Regarding the Availability of Proxy Materials, or the proxy statement and proxy card, as applicable, on or about April 6, 2017 to our stockholders.

Voting Matters and Board Recommendations

 

 

  Matter    Our Board Vote Recommendation    

 

  Item 1:

 

 

 

Election of 13 Nominees to the Board of Directors (page 16)

 

   FOR each Director Nominee

 

 

  Item 2:

 

 

 

Ratification of Selection of Independent Registered Public Accountants (page 30)

 

  

 

FOR

 

 

  Item 3:

 

 

 

Advisory Vote to Approve Our Executive Compensation (page 31)

 

   FOR

 

 

  Item 4:

 

 

 

Advisory Vote on the Frequency of Future Stockholder Advisory Votes to Approve
Executive Compensation (page 37)

 

   ONE YEAR

 

 

 

  Item 5:

 

 

 

Stockholder Proposal to Adopt Majority Votes Cast Standard for Matters Presented by
Stockholders (page 38)

 

  

 

AGAINST

 

 

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          PROXY STATEMENT SUMMARY  

 

Item 1: Election of 13 Nominees to the Board of Directors (Page 16)

 

 

    Nominee      Age      

Director

Since

 

 

    Audit(1)      

Governance

and

Nominating

 

 

 

    Executive      

Compensation

and

Management

Development(1)

 

 

 

 

   

Equity

Award(1)

 

 

    

Corporate  

Responsibility  

and  

Compliance  

 

 

 

 

 

 

David Baltimore

 

  

 

 

 

 

79

 

 

 

 

 

 

 

 

 

1999

 

 

 

 

   

 

 

 

 

X

 

 

 

 

        

 

 

 

 

X

 

 

 

 

 

 

Robert A. Bradway

 

  

 

 

 

 

54

 

 

 

 

 

 

 

 

 

2011

 

 

 

 

     

 

 

 

 

C

 

 

 

 

   

 

 

 

 

X

 

 

 

 

  
 

 

François de Carbonnel

 

  

 

 

 

 

70

 

 

 

 

 

 

 

 

 

2008

 

 

 

 

 

 

 

 

 

X

 

 

 

 

          

 

 

 

 

X

 

 

 

 

 

 

Robert A. Eckert

 

  

 

 

 

 

62

 

 

 

 

 

 

 

 

 

2012

 

 

 

 

   

 

 

 

 

X

 

 

 

 

 

 

 

 

 

X

 

 

 

 

 

 

 

 

 

X

 

 

 

 

    
 

 

Greg C. Garland

 

  

 

 

 

 

59

 

 

 

 

 

 

 

 

 

2013

 

 

 

 

   

 

 

 

 

C

 

 

 

 

 

 

 

 

 

X

 

 

 

 

 

 

 

 

 

X

 

 

 

 

 

 

 

 

 

X

 

 

 

 

  
 

 

Fred Hassan

 

  

 

 

 

 

71

 

 

 

 

 

 

 

 

 

2015

 

 

 

 

 

 

 

 

 

X

 

 

 

 

     

 

 

 

 

X

 

 

 

 

    
 

 

Rebecca M. Henderson

 

  

 

 

 

 

56

 

 

 

 

 

 

 

 

 

2009

 

 

 

 

 

 

 

 

 

X

 

 

 

 

          

 

 

 

 

X

 

 

 

 

 

 

Frank C. Herringer

 

  

 

 

 

 

74

 

 

 

 

 

 

 

 

 

2004

 

 

 

 

   

 

 

 

 

X

 

 

 

 

 

 

 

 

 

X

 

 

 

 

 

 

 

 

 

C

 

 

 

 

 

 

 

 

 

C

 

 

 

 

  
 

 

Charles M. Holley, Jr.

 

  

 

 

 

 

60

 

 

 

 

 

 

 

 

 

2017

 

 

 

 

 

 

 

 

 

X

 

 

 

 

          

 

 

 

 

X

 

 

 

 

 

 

Tyler Jacks

 

  

 

 

 

 

56

 

 

 

 

 

 

 

 

 

2012

 

 

 

 

 

 

 

 

 

X

 

 

 

 

     

 

 

 

 

X

 

 

 

 

    
 

 

Ellen J. Kullman

 

  

 

 

 

 

61

 

 

 

 

 

 

 

 

 

2016

 

 

 

 

 

 

 

 

 

X

 

 

 

 

 

 

 

 

 

X

 

 

 

 

        
 

 

Ronald D. Sugar

 

  

 

 

 

 

68

 

 

 

 

 

 

 

 

 

2010

 

 

 

 

   

 

 

 

 

X

 

 

 

 

 

 

 

 

 

X

 

 

 

 

      

 

 

 

 

C

 

 

 

 

   

 

R. Sanders Williams

 

  

 

 

 

 

68

 

 

 

 

 

 

 

 

 

2014

 

 

 

 

         

 

 

 

 

X

 

 

 

 

                          

 

 

 

 

X

 

 

 

 

 

“C”

indicates Chair of the committee.

(1) 

Reflects current committee composition. Mr. Biondi is currently Chair of the Audit Committee, but is not standing for re-election at the Annual Meeting. Effective following Mr. Biondi’s retirement from the Board at the Annual Meeting, Mr. Herringer has been appointed Chair of the Audit Committee and Mr. Eckert has been appointed Chair of the Compensation and Management Development Committee and the Equity Award Committee, subject to their respective re-election to the Board of Directors, or Board, by our stockholders at the Annual Meeting.

Our Board possesses a deep and broad set of skills and experiences that facilitate strong oversight and strategic direction for a leading global innovator in biomedicine:

 

LOGO

 

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          PROXY STATEMENT SUMMARY  

 

Corporate Governance Highlights

 

LOGO

We continuously monitor developments and best practices in corporate governance and consider stockholder feedback when enhancing our governance structures.

 

 

Proxy Access. Based on stockholder feedback, we adopted a proxy access bylaw, which provides that eligible stockholders with an ownership threshold of 3% who have held their shares for at least 3 years and who otherwise meet the requirements set forth in our Amended and Restated Bylaws of Amgen Inc., or Bylaws, may have their nominees consisting of the greater of 20% or two nominees of our Board included in our proxy materials. Up to 20 eligible stockholders may group together to reach the 3% ownership threshold. (page 44)

 

 

Majority Voting Standard. Our Bylaws provide for a majority voting standard for uncontested director elections. (page 44)

 

 

Highly Independent Board and Committees. 12 of our 13 director nominees (all directors except our Chief Executive Officer), and all members of the Audit Committee, Compensation and Management Development Committee, Corporate Responsibility and Compliance Committee and Governance and Nominating Committee are independent. (pages 46 and 50)

 

 

Commitment to Board Refreshment. We are committed to Board refreshment and a robust Director nominee selection process. Since 2012, seven new directors have been added to our Board.

 

Engaged in Strategy. Our Board is engaged in determining and overseeing the Company’s strategy and strategic priorities.

 

 

Director Qualifications and Evaluations. All directors meet the candidate qualifications in our Board of Directors Guidelines for Director Qualifications and Evaluations included in this proxy statement as Appendix A.

 

 

Lead Independent Director. The independent members of our Board elected Robert A. Eckert as our lead independent director. We have active participation by all directors, including the 12 independent director nominees. (pages 44 and 46)

 

 

Stock Ownership Requirements. We have significant stock ownership requirements for our directors and officers. (pages 82 and 107)

 

 

Corporate Responsibility and Compliance Committee. Our Board maintains a Corporate Responsibility and Compliance Committee that is responsible for overseeing our compliance program and reviewing our programs in a number of areas governing ethical conduct. (page 53)

 

 

Enterprise Risk Management. We have an Enterprise Risk Management Program to identify, assess, manage, report and monitor enterprise risk and areas that may affect our ability to achieve our objectives. This includes an annual detailed compensation risk analysis. (page 47)

 

 

*

For our director nominees.

 

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          PROXY STATEMENT SUMMARY  

 

Stockholder Engagement Program

Throughout 2016, in addition to our outreach by our executives and our Investor Relations department to investors, we contacted stockholders representing approximately 52% of our outstanding shares seeking governance-focused engagement meetings. Topics discussed included Amgen’s business and financial performance, the Company’s governance and executive compensation programs, including the direct link to our business strategy, and our corporate responsibility and sustainability initiatives. Feedback received during these meetings was shared with the full Board and subsequently incorporated into Board decisions. We believe the conversations held with our stockholders are very beneficial and look forward to continued dialogue.

 

 

 

THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” EACH OF

THE 13 NAMED NOMINEES.

 

 

 

Item 2: Ratification of Selection of Independent Registered Public Accountants (Page 30)

 

 

 

The Audit Committee of the Board has selected Ernst & Young LLP, or Ernst & Young, as our independent registered public accountants for the fiscal year ending December 31, 2017.

 

 

Ernst & Young has served as our independent registered public accounting firm since the Company’s inception in 1980.

 

 

Each year, the Audit Committee evaluates the qualifications and performance of the Company’s independent registered public accountants and determines whether to re-engage the current independent registered public accountants.

 

 

Based on this evaluation, the Audit Committee believes that the continued retention of Ernst & Young is in the best interests of the Company and its stockholders.

 

 

 

THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” RATIFICATION OF OUR

INDEPENDENT REGISTERED PUBLIC ACCOUNTANTS.

 

 

 

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          PROXY STATEMENT SUMMARY  

 

Item 3: Advisory Vote to Approve Our Executive Compensation (Page 31)

 

2016 Performance Highlights

 

 

LOGO

Executive Compensation Aligned With Business Strategy

The focus of our strategy is to develop innovative medicines that meet important unmet medical needs. Six therapeutic areas form the core of our business (cardiovascular, oncology/hematology, bone health, neuroscience, inflammation, and nephrology). Our strategy to execute in these therapeutic areas is multifaceted, with seven strategic priorities that allow us to drive long-term growth, while also delivering on our short- and medium-term goals.

Strategic Priorities

 

LOGO

We Delivered Strong Financial Performance and Made Progress on Our Strategic Priorities

We delivered strong financial results while making significant progress on our 2016 performance goals, which facilitate execution of our strategic priorities.

 

 

We grew revenues by 6% over 2015 to $23 billion in 2016.

 

 

Our U.S. Generally Accepted Accounting Principles, or GAAP, net income increased 11% to $7.7 billion and our non-GAAP net income(1) grew 10% to $8.8 billion in 2016.

 

 

We continued to execute on the transformation and process improvement efforts announced in 2014 and, since that time, have realized approximately $1.2 billion of transformation and process improvement savings the majority of which was reinvested in product launches, clinical programs and external business development.

 

 

(1) 

Non-GAAP net income is reported and reconciled in Appendix B to this proxy statement.

 

LOGO   ï 2017 Proxy Statement    5


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          PROXY STATEMENT SUMMARY  

 

We Executed Product and Delivery System Launches

2016 was the first full year that we have been able to provide patients with six innovative products launched in 2015 (Repatha®, Kyprolis®, BLINCYTO®, IMLYGIC®, Neulasta® On-Pro® Kit, and Corlanor®).

 

 

For Repatha®, we have focused on competing effectively, including capturing approximately 60% of share of new to brand prescriptions in the U.S., as of January 2017.

 

  -  

Supportive of our Repatha® launch, we also announced the results from three significant Phase 3 studies that demonstrate (1) significant low-density lipoprotein reductions for patients with high cholesterol treated with Repatha® who cannot tolerate statins, (2) that Repatha® regresses atherosclerosis in patients with coronary artery disease, and (3) that Repatha® reduces the risk of cardiovascular events in patients with clinically evident atherosclerotic disease.

 

 

For Kyprolis®, we reported strong unit growth driven by increased share and ex-U.S. launches.

 

 

We launched the Repatha® Pushtronex system in the U.S. and utilization of the Neulasta® On-Pro® Kit in the U.S. continued to grow as we exited 2016.

We Significantly Advanced Our Pipeline

 

 

We have continued our focus on developing innovative, breakaway medicines to address important unmet needs.

 

  -  

We reported the results of many important clinical trials including, three positive phase 3 trials in our bone health therapeutic area (two of which supported our EVENITY™* Biologics License Application with the FDA(1)) and three successful pivotal studies in our neuroscience area, and we have a number of programs nearing key regulatory milestones.

 

  -  

We also reported that the European Commission approved Parsabiv (etelcalcetide) for the treatment of secondary hyperparathyroidism in adult patients with chronic kidney disease on hemodialysis.

 

 

In our biosimilars portfolio, we received FDA approval for AMJEVITA (biosimilar adalimumab (HUMIRA®)), and submitted applications to both the FDA and European Medicines Agency for ABP 215(2) (biosimilar bevacizumab (Avastin®)). We are in Phase 3 for three other biosimilars.

We Invested for Long-Term Growth While Returning Substantial Capital to Our Stockholders

 

 

Our strong cash flows and balance sheet (along with our successful execution of our transformation efforts) allowed continued investment for long-term growth through internal research and development and external business development transactions, while simultaneously providing substantial returns to stockholders.

 

 

In 2016, while investing $3.8 billion in research and development, we also returned a total of $6 billion to our stockholders:

 

  -  

We returned $3 billion of cash to our stockholders in the form of dividends in 2016, with a 27% per share increase in our quarterly dividend over 2015. Our dividend has increased over 257% since its inception in 2011.

 

  -  

We repurchased approximately 20 million shares of our Common Stock at an aggregate cost of $3 billion in 2016.

 

 

 

 

(1) 

U.S. Food and Drug Administration.

(2) 

Developed in collaboration with Allergan plc.

*

FDA provisionally approved trade name.

 

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          PROXY STATEMENT SUMMARY  

 

Executive Compensation Highlights

 

 

We pay for performance, and pay outcomes reflect the achievements of our NEOs against our strategic priorities.

 

 

We target compensation at the 50th percentile, or median, of our peer group for all elements of compensation.

2016 Target Total Direct Compensation Mix

 

LOGO

 

 

Our compensation program is directly linked to our strategy. Each year, our Compensation and Management Development Committee, or Compensation Committee, approves Company performance goals that are designed to focus our staff on delivering on our financial and operational objectives to drive annual performance, facilitate the execution of our strategic priorities, and position us for longer-term success.

 

 

Performance units for the 2014-2016 performance period were based on an earned payout percentage of 112.5% reflecting the Company’s three-year TSR performance at the 56.2nd percentile relative to the TSRs of the companies in the Standard & Poor’s 500 Index, or S&P 500, for this performance period. The Compensation Committee approved the continued use of this relative comparison to the S&P 500 as it allows a comparison to a broader market performance indicator; a realistic representation of our stockholders’ investment opportunities.

 

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          PROXY STATEMENT SUMMARY  

 

2016 Award Allocation and Performance

 

2016 Annual Cash Incentive Program

 

Goal    Weighting      % of Target
Earned
 

1.    Financial Performance

 

        

Revenues

     30%        139.7%  

Non-GAAP Net Income(1)

     30%        147.5%  

2.    Execute Product and Delivery  System Launches

 

        

Execute Product and

Delivery System Launches

     10%        127.8%  

3.    Progress Innovative Pipeline

 

        

Execute Key Clinical Studies

and Regulatory Filings

     20%        190.0%  

Advance Early Pipeline

     10%        225.0%  

Composite Score

     Achieved 159.5%  

Long-Term Incentive Performance Award Program

 

Long-Term Incentive Program   Weighting     

% of Target
Earned

 
            

Performance Units

(2014-2016 performance period)

    80%        112.5%  

 

 

 

(1) 

Non-GAAP net income for purposes of the 2016 Company performance goals of our annual cash incentive award program is reported and reconciled in Appendix B to this proxy statement, excluding the incremental benefit ($95 million) of excess tax benefits recognized arising from the adoption of a new accounting standard on share-based payments.

 

 

 

THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” THE APPROVAL OF THE

ADVISORY RESOLUTION INDICATING THE APPROVAL OF THE COMPENSATION OF THE

COMPANY’S NAMED EXECUTIVE OFFICERS.

 

 

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          PROXY STATEMENT SUMMARY  

 

Item 4: Advisory Vote on the Frequency of Future Stockholder Advisory Votes to Approve Executive Compensation (Page 37)

 

 

 

Stockholders are being asked to vote on the frequency of future stockholder advisory votes to approve executive compensation.

 

 

The Board believes annual votes facilitate the highest level of accountability to, and communication with, our stockholders.

 

 

THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS ELECT TO HAVE

ADVISORY VOTES ON EXECUTIVE COMPENSATION EVERY “ONE YEAR” FOR THE

REASONS STATED ABOVE.

 

 

Item 5: Stockholder Proposal (Page 38)

 

 

 

Stockholders have informed the Company that they intend to present a proposal at our Annual Meeting.

 

 

The proposal requests a change in the Company’s governing documents to adopt majority votes cast standard for matters presented by stockholders.

 

 

The Board has thoroughly considered the proposal and believes that it is NOT in the Company or stockholders’ best interests for the reasons identified starting on page 39 of the proxy statement, which include the following:

 

  -  

Our stockholder approval standard and vote counting methodology of including abstentions adheres to Delaware law and applies identically to management-sponsored proposals and stockholder-sponsored proposals;

 

  -  

Since stockholders are made aware of the treatment and effect of abstentions, counting abstention votes effectively honors the intent of our stockholders; and

 

  -  

Faced with similar proposals in 2016, stockholders overwhelmingly did not support the adoption of the proposed vote counting methodology.

 

 

THE BOARD STRONGLY AND UNANIMOUSLY RECOMMENDS THAT YOU VOTE “AGAINST”

THE STOCKHOLDER PROPOSAL ON MAJORITY VOTES CAST STANDARD.

 

 

 

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          INFORMATION CONCERNING VOTING AND SOLICITATION  

 

Amgen Inc.

One Amgen Center Drive

Thousand Oaks, California 91320-1799

Proxy Statement

Information Concerning Voting and Solicitation

General

 

 

The enclosed proxy is solicited on behalf of the Board of Directors, or Board, of Amgen Inc., a Delaware corporation, for use at our 2017 Annual Meeting of Stockholders, or Annual Meeting, to be held on Friday, May 19, 2017, at 11:00 A.M., local time, or at any continuation, postponement or adjournment thereof, for the purposes discussed in this proxy statement and in the accompanying Notice of Annual Meeting of Stockholders and any business properly brought before the Annual Meeting. Amgen Inc. may also be referred to as Amgen, the Company, we, us or our in this proxy statement. Proxies are solicited to give all stockholders of record an opportunity to vote on matters properly presented at the Annual Meeting. The Annual Meeting will be held at the Four Seasons Hotel Westlake Village, Two Dole Drive, Westlake Village, California 91362.

Pursuant to the rules adopted by the Securities and Exchange Commission, we have elected to provide access to our proxy materials over the Internet. Accordingly, we are sending a Notice Regarding the Availability of Proxy Materials, or Notice, to certain of our stockholders of record, and we are sending a paper copy of the proxy materials and proxy card to other stockholders of record who we believe would prefer receiving such materials in paper form. Brokers and other nominees who hold shares on behalf of beneficial owners will be sending their own similar Notice. Stockholders will have the ability to access the proxy materials on the website referred to in the Notice or request to receive a printed set of the proxy materials. Instructions on how to request a printed copy by mail or electronically may be found on the Notice and on the website referred to in the Notice, including an option to request paper copies on an ongoing basis. We intend to make this proxy statement available on the Internet

and to mail the Notice, or to mail the proxy statement and proxy card, as applicable, on or about April 6, 2017 to all stockholders entitled to notice of and to vote at the Annual Meeting.

Important Notice Regarding the Availability of Proxy Materials for the 2017 Stockholder Meeting to Be Held on May 19, 2017.

This proxy statement, our 2016 annual report and our other proxy materials are available at: www.astproxyportal.com/ast/Amgen. At this website, you will find a complete set of the following proxy materials: notice of 2017 Annual Meeting of Stockholders; proxy statement; 2016 annual report and form proxy card. You are encouraged to access and review all of the important information contained in the proxy materials before submitting a proxy or voting at the meeting.

What Are You Voting On?

You will be entitled to vote on the following proposals at the Annual Meeting:

 

 

The election of the 13 director nominees named herein to serve on our Board for a term of office expiring at the 2018 annual meeting of stockholders;

 

 

The ratification of the selection of Ernst & Young LLP as our independent registered public accountants for the fiscal year ending December 31, 2017;

 

 

The advisory vote to approve our executive compensation;

 

 

The advisory vote on the frequency of future stockholder advisory votes to approve executive compensation;

 

 

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One stockholder proposal, if properly presented; and

 

 

Any other business as may properly come before the Annual Meeting.

Who Can Vote

The Board has set March 20, 2017 as the record date for the Annual Meeting. You are entitled to notice and to vote if you were a stockholder of record of our Common Stock, $.0001 par value per share, or Common Stock, as of the close of business on March 20, 2017. You are entitled to one vote on each proposal for each share of Common Stock you held on the record date. Your shares may be voted at the Annual Meeting only if you are present in person or your shares are represented by a valid proxy.

Difference Between a Stockholder of Record and a “Street Name” Holder

If your shares are registered directly in your name in the records of the Company’s transfer agent, you are considered the stockholder of record with respect to those shares.

If your shares are held in a stock brokerage account or by a bank, trust or other nominee, then the broker, bank, trust or other nominee is considered to be the stockholder of record with respect to those shares. However, you are still considered to be the beneficial owner of those shares, and your shares are said to be held in “street name.” Street name holders generally cannot submit a proxy or vote their shares directly and must instead instruct the broker, bank, trust or other nominee how to vote their shares using the methods described below.

Shares Outstanding and Quorum

At the close of business on March 20, 2017, there were 735,890,171 shares of our Common Stock outstanding and entitled to vote at the Annual Meeting. The presence of the holders of a majority of the outstanding shares of our Common Stock entitled to vote constitutes a quorum, which is required to hold and conduct business at the Annual Meeting. Shares are counted as present at the Annual Meeting if:

 

 

You are present in person at the Annual Meeting; or

 

Your shares are represented by a properly authorized and submitted proxy (submitted by mail, by telephone or over the Internet).

If you are a record holder and you submit your proxy, regardless of whether you abstain from voting on one or more matters, your shares will be counted as present at the Annual Meeting for the purpose of determining a quorum. If your shares are held in “street name,” your shares are counted as present for purposes of determining a quorum if your broker, bank, trust or other nominee submits a proxy covering your shares. Your broker, bank, trust or other nominee is entitled to submit a proxy covering your shares as to certain “routine” matters, even if you have not instructed your broker, bank, trust or other nominee on how to vote on those matters. Please see the subsection “If You Do Not Specify How You Want Your Shares Voted” below. In the absence of a quorum, the Annual Meeting may be adjourned, from time to time, by the chairman of the meeting or by the vote of the holders of a majority of the shares represented thereat, but no other business shall be transacted at such meeting.

Voting Your Shares

You may vote by attending the Annual Meeting and voting in person or by submitting a proxy. The method of voting by proxy differs (1) depending on whether you are viewing this proxy statement on the Internet or receiving a paper copy and (2) for shares held as a record holder and shares held in “street name.”

Shares Held as a Record Holder. If you hold your shares of Common Stock as a record holder and you are viewing this proxy statement on the Internet, you may submit a proxy over the Internet by following the instructions on the website referred to in the Notice previously mailed to you. You may request paper copies of the proxy statement and proxy card by following the instructions on the Notice. If you hold your shares of Common Stock as a record holder and you are reviewing a paper copy of this proxy statement, you may submit a proxy over the Internet or by telephone by following the instructions on the proxy card, or by completing, dating and signing the proxy card that was included with the proxy statement and promptly returning it in the pre-addressed, postage-paid envelope provided to you.

 

 

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Shares Held in Street Name. If you hold your shares of Common Stock in street name, you will receive a Notice from your broker, bank, trust or other nominee that includes instructions on how to vote your shares. Your broker, bank, trust or other nominee may allow you to deliver your voting instructions over the Internet and may also permit you to submit your voting instructions by telephone. In addition, you may request paper copies of the proxy statement and proxy card from your broker by following the instructions on the Notice provided by your broker, bank, trust or other nominee.

The Internet and telephone voting facilities will close at 11:59 P.M., Eastern Time, on May 18, 2017. Stockholders who submit a proxy through the Internet or telephone should be aware that they may incur costs to access the Internet or telephone, such as usage charges from telephone companies or Internet service providers and that these costs must be borne by the stockholder. Stockholders who submit a proxy by Internet or telephone need not return a proxy card or the form forwarded by your broker, bank, trust or other holder of record by mail.

 

YOUR VOTE IS VERY IMPORTANT.

You should submit your proxy even if you plan to

attend the Annual Meeting.

Voting in Person

If you plan to attend the Annual Meeting and wish to vote in person, you may request a ballot at the Annual Meeting. Please note that if your shares are held of record by a broker, bank, trust or other nominee, and you decide to attend and vote at the Annual Meeting, your vote in person at the Annual Meeting will not be effective unless you present a legal proxy, issued in your name from the record holder (your broker, bank, trust or other nominee). Even if you intend to attend the Annual Meeting, we encourage you to submit your proxy in advance of the Annual Meeting. Please see the important instructions and requirements below regarding “Attendance at the Annual Meeting.”

Changing Your Vote

As a stockholder of record, if you submit a proxy, you may revoke that proxy at any time before it is voted at the Annual Meeting. Stockholders of record may revoke a proxy by (i) delivering a written notice of revocation to the attention of

the Secretary at our principal executive offices at One Amgen Center Drive, Thousand Oaks, California 91320-1799, (ii) duly submitting a later-dated proxy over the Internet, by mail or by telephone or (iii) attending the Annual Meeting in person and voting in person. Attendance at the Annual Meeting will not, by itself, revoke a proxy.

If your shares are held in the name of a broker, bank, trust or other nominee, you may change your voting instructions by following the instructions of your broker, bank, trust or other nominee.

If You Receive More Than One Proxy Card or Notice

If you receive more than one proxy card or Notice, it means you hold shares that are registered in more than one account. To ensure that all of your shares are voted, sign and return each proxy card or, if you submit a proxy by telephone or the Internet, submit one proxy for each proxy card or Notice you receive.

How Will Your Shares Be Voted

Stockholders of record as of the close of business on March 20, 2017 are entitled to one vote for each share of our Common Stock held on all matters to be voted upon at the Annual Meeting. All shares entitled to vote and represented by properly submitted proxies received before the polls are closed at the Annual Meeting, and not revoked or superseded, will be voted at the Annual Meeting in accordance with the instructions indicated on those proxies. YOUR VOTE IS VERY IMPORTANT.

If You Do Not Specify How You Want Your Shares Voted

As a stockholder of record, if you submit a signed proxy card or submit your proxy by telephone or Internet and do not specify how you want your shares voted, the proxy holder will vote your shares:

 

 

FOR the election of the 13 nominees listed in this proxy statement to serve on our Board for a term of office expiring at the 2018 annual meeting of stockholders;

 

 

FOR the ratification of the selection of Ernst & Young LLP as our independent registered public accountants for the fiscal year ending December 31, 2017;

 

 

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FOR the advisory vote to approve our executive compensation;

 

 

FOR holding the advisory vote on the frequency of future stockholder advisory votes to approve executive compensation every “ONE YEAR”; and

 

 

AGAINST the one stockholder proposal to adopt majority votes cast standard for matters presented by stockholders, if properly presented.

A “broker non-vote” occurs when a nominee holding shares for a beneficial owner has not received voting instructions from the beneficial owner and the nominee does not have discretionary authority to vote the shares. If you hold your shares in street name and do not provide voting instructions to your broker or other nominee, your shares will be considered to be broker non-votes and will not be voted on any proposal on which your broker or other nominee does not have discretionary authority to vote. Shares that constitute broker non-votes will be counted as present at the Annual Meeting for the purpose of determining a quorum, but will not be considered entitled to vote on the proposal in question. Brokers generally have discretionary authority to vote on the ratification of the selection of Ernst & Young LLP as our independent registered public accountants. Brokers, however, do not have discretionary authority to vote on the election of directors to serve on our Board, the advisory vote to approve our executive compensation, the advisory vote on the frequency of future advisory votes to approve executive compensation or on any stockholder proposals.

In their discretion, the proxy holders named in the proxy are authorized to vote on any other matters that may properly come before the Annual Meeting and at any continuation, postponement or adjournment thereof. The Board knows of no other items of business that will be presented for consideration at the Annual Meeting other than those described in this proxy statement. In addition, other than the stockholder proposal described in this proxy statement, no other stockholder proposal or nomination (that was not subsequently withdrawn or excluded) was received on a timely basis, so no such matters may be brought to a vote at the Annual Meeting.

Inspector of Election and Counting of Votes

All votes will be tabulated as required by Delaware law, the state of our incorporation, by the inspector of election

appointed for the Annual Meeting, who will separately tabulate affirmative and negative votes, abstentions and broker non-votes. Shares held by persons attending the Annual Meeting but not voting, shares represented by proxies that reflect abstentions as to one or more proposals and broker non-votes will be counted as present for purposes of determining a quorum.

Election of Directors. We have a majority voting standard for the election of directors in an uncontested election, which is generally defined as an election in which the number of nominees does not exceed the number of directors to be elected at the meeting. In the election of directors, you may either vote “for,” “against” or “abstain” for each nominee. Cumulative voting is not permitted. Under our majority voting standard, in uncontested elections of directors, such as this election, each director must be elected by the affirmative vote of a majority of the votes cast by the shares present in person or represented by proxy. A “majority of the votes cast” means that the number of votes cast “for” a director nominee exceeds the number of votes cast “against” the nominee. For these purposes, abstentions will not count as a vote “for” or “against” a nominee’s election and thus will have no effect in determining whether a director nominee has received a majority of the votes cast. Brokers do not have discretionary authority to vote on this proposal. Broker non-votes will have no effect on the election of directors as brokers are not entitled to vote for or against a nominee without instruction from the beneficial owner. If a director nominee is an incumbent director and does not receive a majority of the votes cast in an uncontested election, that director will continue to serve on the Board as a “holdover” director, but must tender his or her resignation to the Board promptly after certification of the election results of the stockholder vote. The Governance and Nominating Committee of the Board will then recommend to the Board whether to accept the resignation or whether other action should be taken. The Board will act on the tendered resignation, taking into account the recommendation of the Governance and Nominating Committee, and the Board’s decision will be publicly disclosed within 90 days after certification of the election results of the stockholder vote. A director who tenders his or her resignation after failing to receive a majority of the votes cast will not participate in the recommendation of the Governance and Nominating Committee or the decision of the Board with respect to his or her resignation.

 

 

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Management Proposals (Ratification of Ernst & Young LLP, Advisory Vote to Approve Our Executive Compensation and Advisory Vote on the Frequency of Future Stockholder Advisory Votes to Approve Executive Compensation) and Stockholder Proposal to Adopt Majority Votes Cast Standard for Matters Presented by Stockholders. The ratification of the selection of Ernst & Young LLP, the approval of the advisory vote to approve our executive compensation, the approval of the advisory vote on the frequency of future stockholder advisory votes to approve executive compensation, and the approval of the stockholder proposal, if properly presented at the Annual Meeting, each require the affirmative votes of the holders of a majority of the shares present or represented by proxy at the Annual Meeting and entitled to vote on the matter. Abstentions will have the same effect as votes “against” each proposal. With respect to the advisory vote on the frequency of future stockholder advisory votes to approve executive compensation, if none of the frequency alternatives (one year, two years or three years) receive a majority vote, we will consider the frequency that receives the highest number of votes by stockholders to be the frequency that has been selected by our stockholders on an advisory basis.

Because brokers have discretionary authority to vote on the ratification of the selection of Ernst & Young LLP, we do not expect any broker non-votes in connection with the ratification. Brokers do not have discretionary authority to vote on the advisory vote to approve our executive compensation, the advisory vote on the frequency of future stockholder advisory votes to approve executive compensation or on the stockholder proposal to adopt majority votes cast standard for matters presented by stockholders. Broker non-votes, therefore, will have no effect on the advisory votes to approve our executive compensation, the advisory vote on the frequency of future stockholder advisory votes to approve executive compensation, or on the stockholder proposal as brokers are not entitled to vote on such proposals in the absence of voting instructions from the beneficial owner.

Solicitation of Proxies

We will bear the entire cost of solicitation of proxies, including preparation, assembly and mailing of this proxy statement, the proxy, the Notice and any additional information furnished to stockholders. Copies of solicitation

materials will be furnished to banks, brokerage houses, fiduciaries and custodians holding shares of our Common Stock in their names that are beneficially owned by others to forward to those beneficial owners. We may reimburse persons representing beneficial owners for their costs of forwarding the solicitation materials to the beneficial owners. Original solicitation of proxies may be supplemented by telephone, facsimile, electronic mail or personal solicitation by our directors, officers or staff members. No additional compensation will be paid to our directors, officers or staff members for such services. In addition, we have retained D.F. King & Co. to assist in the solicitation of proxies for a fee of approximately $150,000 plus distribution costs and other costs and expenses. A list of stockholders entitled to vote at the Annual Meeting will be available for examination by any stockholder for any purpose germane to the Annual Meeting during ordinary business hours at our principal executive offices at One Amgen Center Drive, Thousand Oaks, California, 91320-1799 for the ten days prior to the Annual Meeting and also at the Annual Meeting.

Attendance at the Annual Meeting

To attend the Annual Meeting, you will need an admittance ticket and proof of ownership of our Common Stock as of the close of business on March 20, 2017. If you have received a paper copy of the proxy statement, to receive an admittance ticket you will need to complete and return the postage-paid reply card included in this proxy statement. If you received electronic delivery of this proxy statement, you will receive an e-mail with instructions for obtaining an admittance ticket. If you are viewing the proxy statement over the Internet, please follow the instructions indicated on the website referred to in the Notice. Each stockholder is entitled to one admittance ticket. Directions to attend the Annual Meeting will be sent with your admittance ticket and are available at the website referred to in the Notice and www.astproxyportal.com/ast/Amgen.

You must bring certain documents with you to be admitted to the Annual Meeting. The purpose of this requirement is to help us verify that you are actually a stockholder of the Company. Please read the following rules carefully, because they specify the documents that you must bring with you to the Annual Meeting to be admitted. The items that you must bring with you differ depending upon whether or not you

 

 

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were a record holder of our Common Stock as of the close of business on March 20, 2017. See “Difference Between a Stockholder of Record and a ‘Street Name’ Holder” previously discussed.

All persons must bring a valid personal photo identification (such as a driver’s license or passport). If you are a record holder, at the Annual Meeting, we will check your name for verification purposes against our list of record holders as of the close of business on March 20, 2017.

If a broker, bank, trust or other nominee was the record holder of your shares of Common Stock as of the close of business on March 20, 2017, then in addition to the applicable items above, you must also bring to the Annual Meeting:

 

 

Proof that you owned shares of our Common Stock as of the close of business on March 20, 2017; and

 

 

If you intend to vote at the Annual Meeting, the executed proxy naming you as the proxy holder, signed by the

   

broker, bank, trust or other nominee who was the record holder of your shares of Common Stock as of the close of business on March 20, 2017.

Examples of proof of ownership include the following: (1) an original or a copy of the voting information form from your bank or broker with your name on it; (2) a letter from your bank or broker stating that you owned shares of our Common Stock as of the close of business on March 20, 2017 or (3) a brokerage account statement indicating that you owned shares of our Common Stock as of the close of business on March 20, 2017.

If you are a proxy holder for a stockholder of the Company who owned shares of our Common Stock as of the close of business on March 20, 2017, then you must also bring to the Annual Meeting:

 

 

The executed proxy naming you as the proxy holder, signed by a stockholder of the Company who owned shares of our Common Stock as of the close of business on March 20, 2017.

 

 

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          ITEM 1 — ELECTION OF DIRECTORS  

 

Item 1

Election of Directors

 

 

Under our governing documents, the Board of Directors, or Board, has the power to set the number of directors from time to time by resolution. We currently have 15 authorized directors serving on our Board. Ellen J. Kullman was appointed on October 14, 2016 and Charles M. Holley, Jr. was appointed on February 1, 2017 to serve on our Board. Based upon the recommendation of our Governance and Nominating Committee, the Board has nominated each of the current directors set forth below to stand for re-election, or in the case of Ms. Kullman and Mr. Holley to stand for initial election by our stockholders, in each case for a one-year term expiring at our 2018 annual meeting of stockholders and until his or her successor is elected and qualified, or until his or her earlier retirement, resignation,

disqualification, removal or death. Frank J. Biondi, Jr. and Judith C. Pelham will retire from our Board and have not been nominated for re-election at the 2017 Annual Meeting of Stockholders, or Annual Meeting. The Board has fixed the authorized number of directors at 13 to be effective as of the close of the Annual Meeting and the election by stockholders of the nominees standing for election. The independent members of the Board have elected Robert A. Eckert to continue to serve as our lead independent director, subject to his re-election to the Board by our stockholders at the Annual Meeting. As lead independent director, Mr. Eckert will continue to have the specific and significant duties as discussed under “Corporate Governance.”

 

 

Our Board possesses a deep and broad set of skills and experiences that facilitate strong oversight and strategic direction for a leading global innovator in biomedicine:

 

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          ITEM 1 — ELECTION OF DIRECTORS  

 

Nominees to the Board of Directors

 

  Nominee    Age     

Director

Since

    Audit(1)  

Governance

and

Nominating

  Executive  

Compensation

and

Management

Development(1)

 

Equity

Award(1)

 

Corporate    

Responsibility    

and    

Compliance    

 

  David Baltimore

 

     79        1999       X         X

 

  Robert A. Bradway

 

     54        2011         C     X  

 

  François de Carbonnel

 

     70        2008     X           X

 

  Robert A. Eckert

 

     62        2012       X   X   X    

 

  Greg C. Garland

 

     59        2013       C   X   X   X  

 

  Fred Hassan

 

     71        2015     X       X    

 

  Rebecca M. Henderson

 

     56        2009     X           X

 

  Frank C. Herringer

 

     74        2004       X   X   C   C  

 

  Charles M. Holley, Jr.

 

     60        2017     X           X

 

  Tyler Jacks

 

     56        2012     X       X    

 

  Ellen J. Kullman

 

     61        2016     X   X        

 

  Ronald D. Sugar

 

     68        2010       X   X       C

 

  R. Sanders Williams

 

     68        2014         X               X

 

“C”

indicates Chair of the committee.

 

(1)

Reflects current committee composition. Mr. Biondi is currently Chair of the Audit Committee, but is not standing for re-election at the Annual Meeting. Effective following Mr. Biondi’s retirement from the Board at the Annual Meeting, Mr. Herringer has been appointed Chair of the Audit Committee and Mr. Eckert has been appointed Chair of the Compensation and Management Development Committee and the Equity Award Committee, subject to their respective re-election to the Board by our stockholders at the Annual Meeting.

 

Vacancies on the Board (including any vacancy created by an increase in the size of the Board) may be filled only by a majority of the directors remaining in office, even though less than a quorum of the Board. A director elected by the Board to fill a vacancy (including a vacancy created by an increase in the size of the Board) will serve until the next annual meeting of stockholders and until such director’s successor is elected and qualified, or until such director’s earlier retirement, resignation, disqualification, removal or death.

Each nominee has agreed to serve if elected and the Board has no reason to believe that any nominee will be unable to serve. However, if any nominee should become unavailable for election prior to the Annual Meeting (an event that currently is not anticipated by the Board) the proxies will be voted in favor of the election of a substitute nominee or nominees proposed by the Board or, alternatively, the number of directors may be reduced accordingly by the Board.

 

 

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            ITEM 1 — ELECTION OF DIRECTORS    

 

THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” EACH OF THE NOMINEES NAMED BELOW. PROXIES WILL BE VOTED “FOR” THE ELECTION OF THE NOMINEES UNLESS OTHERWISE SPECIFIED.

Set forth below is biographical information for each nominee and a summary of the specific qualifications, attributes, skills and experiences which led our Board to conclude that each nominee should serve on the Board at this time. All of our directors meet the qualifications and skills of our Amgen Inc. Board of Directors Guidelines for Director Qualifications and Evaluations included in this proxy statement as Appendix A. There are no family relationships among any of our directors or among any of our directors and our executive officers.

David Baltimore

 

 

 

Director since: 1999

 

Age: 79

 

Committees:

  Corporate Responsibility and Compliance

  Governance and Nominating

 

Other Public Company Boards:

  Regulus Therapeutics Inc.

  Immune Design Corp.

 

David Baltimore is President Emeritus and Robert Andrews Millikan Professor of Biology at the California Institute of Technology, or Caltech. He received the Nobel Prize in Medicine as a co-recipient in 1975. Dr. Baltimore has been a director of Regulus Therapeutics Inc., a biopharmaceutical company, since 2007, serving on its Compensation Committee and chairing its Nominating and Governance Committee, and is a member of its scientific advisory board. Dr. Baltimore has also been a member of the board of directors of Immune Design Corp. (formerly Vaccsys), a clinical-stage immunotherapy company, since 2008, chairing its Nominating and Governance Committee, and is a member of its scientific advisory board. He was a director of BB Biotech, AG, a Swiss investment company, from 1994 to March 2011 and served as a director of MedImmune, Inc., a privately-held antibody formulation company, from 2003 until its acquisition by AstraZeneca plc, a pharmaceutical and biotechnology company, in 2007. In 2008, Dr. Baltimore became a founder of Calimmune, Inc., a privately-held clinical-stage gene therapy company, and served as Chairman of the board of directors until November 2015.

 

Dr. Baltimore was President of Caltech from 1997 to 2006. Prior to this, he was a professor at the Massachusetts Institute of Technology, or MIT, and at The Rockefeller University where he also served as the President. During this time he was also the Chairman of the National Institutes of Health AIDS Vaccine Research Committee, a director and member of the Whitehead Institute for Biomedical Research, and a professor of microbiology and research professor of the American Cancer Society. He was a postdoctoral fellow at MIT and Albert Einstein College of Medicine and on the staff of The Salk Institute for Biological Studies. Dr. Baltimore has been awarded honorary degrees from numerous institutions, including Harvard, Yale and Columbia.

 

Dr. Baltimore holds leadership roles in a number of scientific and philanthropic non-profit organizations, having been President of the American Association for the Advancement of Science and currently serving as a director and member of the Board of Scientific Counselors of the Broad Institute of MIT and Harvard. He is co-chair of The National Academy of Sciences Committee on Science, Technology and Law. Dr. Baltimore received an undergraduate degree from Swarthmore College and a doctorate from The Rockefeller University.

 

Qualifications

 

The Board concluded that Dr. Baltimore should serve on the Board because Dr. Baltimore has spent his career in scientific academia at a number of well-known and highly regarded institutions and has played an important role in the field of biotechnology. This experience provides Dr. Baltimore with extensive scientific knowledge and a deep understanding of our industry and of the research and development activities and operations of our Company.

 

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            ITEM 1 — ELECTION OF DIRECTORS    

 

Robert A. Bradway

 

 

 

Director since: 2011

 

Age: 54

 

Committees:

  Equity Award

  Executive (Chair)

 

Other Public Company Boards:

  The Boeing Corporation

  Norfolk Southern Corporation

 

Robert A. Bradway has served as our director since October 2011 and Chairman of the Board since January 1, 2013. Mr. Bradway has been our President since May 2010 and Chief Executive Officer since May 2012. From May 2010 to May 2012, Mr. Bradway served as our Chief Operating Officer. Mr. Bradway joined Amgen in 2006 as Vice President, Operations Strategy and served as Executive Vice President and Chief Financial Officer from April 2007 to May 2010. Prior to joining Amgen, he was a Managing Director at Morgan Stanley in London where, beginning in 2001, he had responsibility for the firm’s banking department and corporate finance activities in Europe.

 

Mr. Bradway has been a director of Norfolk Southern Corporation, a transportation company, since July 2011, serving on its Audit and Governance and Nominating Committees, and The Boeing Corporation, an aerospace company and manufacturer of commercial airplanes, defense, space and securities systems, since October 2016, serving on its Audit and Finance committees. He has served on the board of trustees of the University of Southern California since April 2014 and on the advisory board of the Leonard D. Schaeffer Center for Health Policy and Economics at that university since 2012. Mr. Bradway holds a bachelor’s degree in biology from Amherst College and a master’s degree in business administration from Harvard Business School.

 

Qualifications

 

The Board concluded that Mr. Bradway should serve on the Board due to Mr. Bradway’s knowledge of all aspects of our business, combined with his leadership and management skills having served as our President and Chief Operating Officer and formerly our Chief Financial Officer. During this time, Mr. Bradway provided strong leadership through a variety of challenges and this positions him well to serve as a director and provides the Board with a knowledgeable perspective with regard to the Company’s products and operations.

 

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Table of Contents
            ITEM 1 — ELECTION OF DIRECTORS    

 

François de Carbonnel

 

 

 

Director since: 2008

 

Age: 70

 

Committees:

  Audit

  Corporate Responsibility and Compliance

 

Audit Committee financial expert

 

François de Carbonnel is a director of corporations and corporate advisor. Mr. de Carbonnel was a member of the group governance council of Mazars Group, a privately-held international organization specializing in audit, accountancy, tax, legal and advisory services, from December 2011 to January 2016. From 2004 to May 2015, Mr. de Carbonnel was a director of Solocal Group (formerly known as Pages Jaunes S.A.), a French company which offers online content, advertising solutions and transactional services, and served as Chairman of the Remuneration and Appointments Committee.

 

From 2004 until October 2013, Mr. de Carbonnel was a director of a number of funds managed by Ecofin, a privately-held investment management firm. Mr. de Carbonnel was a director of Thomson S.A., a French multimedia corporation, from 2007 to January 2010, serving as Chairman of the Audit Committee throughout his tenure, and as non-executive Chairman of the Board from April 2008 to April 2009. Mr. de Carbonnel was a director of Quilvest S.A., a Luxembourg company which provides wealth management and private equity services, from 2006 to 2013.

 

Mr. de Carbonnel was a Senior Advisor of the Global Corporate and Investment Bank of Citigroup from 2004 to 2006, and a Managing Director from 1999 to 2004. He was the Chairman and Chief Executive Officer of Midial S.A., a French listed company, from 1994 to 1998, Chairman of General Electric Capital SNC from 1996 to 1998. He was a corporate Vice President of General Electric Company and President of General Electric Capital-Europe from 1990 to 1992, President of Strategic Planning Associates, an international consulting company, from 1981 to 1990 and Vice President of Boston Consulting Group from 1971 to 1981. He is a member emeritus of the Business Board of Advisors of the Carnegie Mellon Tepper School of Business. Mr. de Carbonnel is a French citizen and resides in Europe. Mr. de Carbonnel received an engineering diploma from the Ecole Centrale de Lyon, a master in economics from Lyon Université and a master of sciences degree from the Tepper School of Business at Carnegie Mellon University.

 

Qualifications

 

The Board concluded that Mr. de Carbonnel should serve on the Board because Mr. de Carbonnel has acquired knowledge, skills and brings a strong vantage point through his international career as an executive officer of well-known consulting firms as well as a number of public companies. This perspective is important as the Company undertakes further global expansion plans. Given his experience in the financial industry, Mr. de Carbonnel has been determined to be an Audit Committee financial expert by our Board.

 

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Table of Contents
            ITEM 1 — ELECTION OF DIRECTORS    

 

Robert A. Eckert

 

 

 

 

Lead Independent Director

 

Director since: 2012

 

Age: 62

 

Committees:

  Compensation and Management Development

  Executive

  Governance and Nominating

 

Other Public Company Boards:

  McDonald’s Corporation

 

Robert A. Eckert is our lead independent director. Mr. Eckert has been an Operating Partner at Friedman Fleischer & Lowe, a private equity firm, since September 2014. Mr. Eckert was the Chief Executive Officer of Mattel, Inc., a toy design, manufacture and marketing company, having held this position from 2000 through December 2011, and its Chairman of the Board from 2000 through 2012. He was President and Chief Executive Officer of Kraft Foods Inc., a consumer packaged food and beverage company, from 1997 to 2000, Group Vice President from 1995 to 1997, President of the Oscar Mayer Foods Division from 1993 to 1995 and held various other senior executive and other positions from 1977 to 1992.

 

Mr. Eckert has been a director of McDonald’s Corporation, a company which franchises and operates McDonald’s restaurants in the global restaurant industry, since 2003, serving as the Chair of the Public Policy and Strategy Committee and a member of the Executive and Governance Committees. Mr. Eckert was a director of Smart & Final Stores, Inc., a warehouse store, from May 2013 until July 2014 prior to it becoming a publicly-traded company. Mr. Eckert also has served as a director of Levi Strauss & Co., a privately-held jeans and casual wear manufacturer, since 2010. He was appointed director of Eyemart Express Holdings LLC, a privately-held eyewear retailer and portfolio company of Friedman Fleischer & Lowe, in 2015. Mr. Eckert is on the Global Advisory Board of the Kellogg School of Management at Northwestern University and serves on the Eller College National Board of Advisors at the University of Arizona. Mr. Eckert received an undergraduate degree from the University of Arizona and a master’s degree in business administration from the Kellogg School of Management at Northwestern University.

 

Qualifications

 

The Board concluded that Mr. Eckert should serve on our Board because of Mr. Eckert’s recent and long-tenured experience as a Chief Executive Officer of large public companies, his broad international experience in marketing and business development and his valuable leadership experience.

Greg C. Garland

 

 

 

Director since: 2013

 

Age: 59

 

Committees:

  Compensation and Management Development

  Equity Award

  Executive

  Governance and Nominating (Chair)

 

Other Public Company Boards:

  Phillips 66

 

Greg C. Garland is the Chairman and Chief Executive Officer of Phillips 66, an energy manufacturing and logistics company with midstream, chemical, refining and marketing and specialties businesses created through the repositioning of ConocoPhillips, having held this position since April 2012. Mr. Garland chairs the Executive Committee of Phillips 66. Prior to Phillips 66, Mr. Garland served as Senior Vice President, Exploration and Production, Americas of ConocoPhillips from 2010 to April 2012. He was President and Chief Executive Officer of Chevron Phillips Chemical Company (now a joint venture between Phillips 66 and Chevron) from 2008 to 2010 and Senior Vice President, Planning and Specialty Chemicals from 2000 to 2008. Mr. Garland served in various positions at Phillips Petroleum Company from 1980 to 2000. Mr. Garland is a member of the Engineering Advisory Board for Texas A&M University. Mr. Garland received an undergraduate degree from Texas A&M University.

 

Qualifications

 

The Board concluded that Mr. Garland should serve on our Board because of Mr. Garland’s experience as a Chief Executive Officer and his over 30 years of international experience in a highly regulated industry.

 

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            ITEM 1 — ELECTION OF DIRECTORS    

 

Fred Hassan

 

 

 

Director since: 2015

 

Age: 71

 

Committees:

  Audit

  Compensation and Management Development

 

Other Public Company Boards:

  Intrexon Corporation

  Time Warner Inc.

 

Audit Committee financial expert

 

Fred Hassan has been Partner and Managing Director at Warburg Pincus LLC, a global private equity investment institution, since 2011 and, prior to that, served as Senior Advisor from 2009 to 2010. Mr. Hassan was Chairman of the Board and Chief Executive Officer of Schering-Plough Corporation from 2003 to 2009. Prior to this, Mr. Hassan was Chairman, President and Chief Executive Officer of Pharmacia Corporation, from 2001 to 2003. Before assuming these roles, he had served as President and Chief Executive Officer of Pharmacia Corporation from its creation in 2000 as a result of the merger of Pharmacia & Upjohn, Inc. with Monsanto Company. He was President and Chief Executive Officer of Pharmacia & Upjohn, Inc. beginning in 1997. Mr. Hassan previously held senior positions with Wyeth (formerly known as American Home Products), including that of Executive Vice President with responsibility for its pharmaceutical and medical products businesses, and served as a member of the board from 1995 to 1997. Prior to that, Mr. Hassan held various roles at Sandoz Pharmaceuticals and headed its U.S. pharmaceuticals businesses.

 

Mr. Hassan has been a director of Time Warner Inc., a media company, since 2009, serving on its Nominating and Governance and Compensation and Human Development Committees; and Intrexon Corporation, a synthetic biology company, since June 2016. Mr. Hassan was a director of Avon Products, Inc., a manufacturer and marketer of beauty and related products, from 1999 until 2013 and served on its Compensation and Management Development, Nominating and Corporate Governance and Audit Committees, as lead independent director from 2009 to 2012, and Chairman of the Board between January and April 2013. Mr. Hassan was Chairman of the Board of Bausch & Lomb, from 2010 until its acquisition by Valeant Pharmaceuticals International, Inc., a pharmaceutical company, in 2013. Mr. Hassan served on the board of directors and Compensation and Audit Committees of Valeant Pharmaceuticals International, Inc. between August 2013 and May 2014. Mr. Hassan received an undergraduate degree from Imperial College of Science and Technology, University of London and a master’s degree in business administration from Harvard Business School.

 

Qualifications

 

The Board concluded that Mr. Hassan should serve on the Board due to his global experience as a public company Chief Executive Officer, his particular knowledge and experience in the healthcare and pharmaceutical industries, including overseeing businesses with significant research and development operations, his diversified financial and business expertise, as well as prior public company board experience. Given his financial and leadership experience, Mr. Hassan has been determined to be an Audit Committee financial expert by our Board.

 

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            ITEM 1 — ELECTION OF DIRECTORS    

 

Rebecca M. Henderson

 

 

 

Director since: 2009

 

Age: 56

 

Committees:

  Audit

  Corporate Responsibility and Compliance

 

Other Public Company Boards:

  IDEXX Laboratories, Inc.

 

Rebecca M. Henderson has been the John and Natty McArthur University Professor at Harvard University since 2011. From 2009 to 2011, Dr. Henderson served as the Senator John Heinz Professor of Environmental Management at Harvard Business School. Prior to this, she was a professor of management at the Massachusetts Institute of Technology, or MIT, for 21 years, having been the Eastman Kodak LFM Professor of Management since 1999. Since 1995, she has also been a Research Associate at the National Bureau of Economic Research. She specializes in technology strategy and the broader strategic problems faced by companies in high technology industries.

 

Dr. Henderson has been a director of IDEXX Laboratories, Inc., a company which provides diagnostic and information technology-based products and services for veterinary, food and water applications, since 2003, chairing its Finance Committee and serving on its Nominating and Governance Committee. Dr. Henderson has also served as a director of the Ember Corporation, a privately-held semiconductor chip manufacturer, and on its Compensation Committee, from 2001 to July 2009. She has further been a director of Linbeck Construction Corporation, a privately-held facility solutions company, from 2000 until 2004. Dr. Henderson has published articles, papers and reviews in a range of scholarly journals. Dr. Henderson received an undergraduate degree from MIT and a doctorate from Harvard University.

 

Qualifications

 

The Board concluded that Dr. Henderson should serve on the Board because Dr. Henderson’s study of the complex strategy issues faced by high technology companies provides unique insight into the Company’s strategic and technology issues.

 

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Table of Contents
            ITEM 1 — ELECTION OF DIRECTORS    

 

Frank C. Herringer

 

 

 

Director since: 2004

 

Age: 74

 

Committees:

  Compensation and Management Development (Chair)

  Executive

  Equity Award (Chair)

  Governance and Nominating

 

Other Public Company Boards:

  The Charles Schwab Corporation

 

Frank C. Herringer has been a director of the Board of Transamerica Corporation, a financial services company, since 1986, serving as Chairman of the board of directors from 1995 to December 2015. Mr. Herringer was an executive with Transamerica for 20 years, including its Chief Executive Officer from 1991 until its acquisition by Aegon N.V., a life insurance, pensions and asset management company, in 1999, subsequently serving on Aegon’s Executive Board for one year. Mr. Herringer was a director of Aegon U.S. Holding Corporation from 1999 until its merger into Transamerica Corporation in December 2015.

 

Mr. Herringer has been a director of The Charles Schwab Corporation, a brokerage and banking company, since 1996, serving on its Compensation Committee and chairing its Nominating and Corporate Governance Committee. Mr. Herringer is a member of the Board of Trustees of the California Pacific Medical Center Foundation, a not-for-profit organization which develops philanthropic resources for the California Pacific Medical Center, a privately-held, not-for-profit academic medical center, since 2013. Mr. Herringer was a director of Safeway Inc., a food and drug retailer, from 2008 until January 2015, serving on its Executive Compensation and Executive Committees and chairing its Nominating and Corporate Governance Committee. Mr. Herringer was a director of Cardax, Inc., a biotechnology company, from 2014 to April 2015, serving on its Compensation Committee and chairing its Governance and Nominating Committee, and was a director of its parent company, Cardax Pharmaceuticals, Inc., from 2006 until April 2015. From 2002 to 2005, Mr. Herringer was a director of AT&T Corporation, and a member of its Audit and Compensation Committees. In 2004, Mr. Herringer was named an Outstanding Director of the Year by the Outstanding Directors Exchange. Mr. Herringer received an undergraduate degree and master’s degree in business administration from Dartmouth College.

 

Qualifications

 

The Board concluded that Mr. Herringer should serve on the Board due to Mr. Herringer’s career as Transamerica’s Chief Executive Officer and Chairman of the Board which developed Mr. Herringer’s management and leadership skills and provides an informed perspective on our financial performance, prospects and strategy.

 

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            ITEM 1 — ELECTION OF DIRECTORS    

 

Charles M. Holley, Jr.

 

 

 

Director since: 2017

 

Age: 60

 

Committees:

  Audit

  Corporate Responsibility and Compliance

 

Audit Committee financial expert

 

Charles M. Holley, Jr. has served as a director of the Company since February 1, 2017. Mr. Holley was first identified to the Governance and Nominating Committee as a potential director candidate by the Company’s outside search firm. Mr. Holley is the former Executive Vice President and Chief Financial Officer for Wal-Mart Stores, Inc., or Walmart, where he served from November 2010 to December 2015 and as Executive Vice President between January 1, 2016 and January 31, 2016. Prior to this, Mr. Holley served as Executive Vice President, Finance and Treasurer of Walmart from 2007 to November 2010. From December 2005 through December 2006, he served as Senior Vice President. Prior to that, Mr. Holley was Senior Vice President and Controller from 2003 to 2005. Mr. Holley served various roles in Wal-Mart International from 1994 through 2002. Prior to this, Mr. Holley served in various roles at Tandy Corporation. He spent more than ten years with Ernst & Young LLP. Mr. Holley is an Independent Senior Advisor, U.S. CFO Program, Deloitte LLP, a privately-held provider of audit, consulting, tax, and advisory services, since July 2016.

 

Mr. Holley serves on the Dean’s Advisory Board for the McCombs School of Business at the University of Texas at Austin and the University of Texas Presidents’ Development Board.

 

Qualifications

 

The Board concluded that Mr. Holley should serve on the Board due to his experience as a Chief Financial Officer and financial acumen, his global experience as a public company Chief Financial Officer, and his management and leadership skills, all of which provide valuable insight into the operations of our Company. Given his financial and leadership experience, Mr. Holley has been determined to be an Audit Committee financial expert by our Board.

 

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            ITEM 1 — ELECTION OF DIRECTORS    

 

Tyler Jacks

 

 

 

Director since: 2012

 

Age: 56

 

Committees:

  Audit

  Compensation and Management Development

 

Other Public Company Boards:

   Thermo Fisher Scientific, Inc.

 

Tyler Jacks joined the faculty of Massachusetts Institute of Technology, or MIT, in 1992 and is currently the David H. Koch Professor of Biology and director of the David H. Koch Institute for Integrative Cancer Research, which brings together biologists and engineers to improve detection, diagnosis and treatment of cancer, a position he has held since 2007. Dr. Jacks has been an investigator with the Howard Hughes Medical Institute, a nonprofit medical research organization, since 1994.

 

Dr. Jacks has been a director of Thermo Fisher Scientific, Inc., a life sciences supply company, since May 2009, and serves on its Strategy and Finance Committee and scientific advisory board. In 2006, he co-founded T2 Biosystems, Inc., a biotechnology company, and served on its scientific advisory board until 2013. Dr. Jacks has been a consultant scientific advisor to Epizyme, Inc., a biopharmaceutical company, since 2007, and has served on the scientific advisory board of SQZ Biotech, a privately-held biotechnology company, since 2015. Dr. Jacks served on the scientific advisory board of Aveo Pharmaceuticals Inc., a biopharmaceutical company, from 2001 until 2013. In 2015, Dr. Jacks founded Dragonfly Therapeutics, Inc. (formerly known as Equipoise Therapeutics), a privately-held biopharmaceutical company, in 2015 and serves as co-Chair of its scientific advisory board. He was appointed to the National Cancer Advisory Board, which advises and assists the Director of the National Cancer Institute with respect to the National Cancer Program, in October 2011. In April 2016, Dr. Jacks was named to a blue ribbon panel of scientists and advisors established as a working group of the National Cancer Advisory Board and served as co-Chair advising the Cancer MoonshotSM Task Force. Dr. Jacks was a director of MIT’s Center for Cancer Research from 2001 to 2007 and received numerous awards including the Paul Marks Prize for Cancer Research and the American Association for Cancer Research Award for Outstanding Achievement. He was elected to the National Academy of Sciences as well as the Institute of Medicine in 2009 and received the MIT Killian Faculty Achievement Award in 2015. Dr. Jacks received an undergraduate degree from Harvard University and his doctorate from the University of California, San Francisco.

 

Qualifications

 

The Board concluded that Dr. Jacks should serve on the Board due to Dr. Jacks’ extensive scientific expertise relevant to our industry, including his broad experience as a cancer researcher and service on several scientific advisory boards. His expertise in the field of oncology, which includes pioneering the use of technology to study cancer-associated genes and to construct animal models of many human cancer types, is evidenced by his appointment to the National Cancer Advisory Board and by his numerous awards for cancer research. Dr. Jacks’ scientific knowledge and thorough understanding of our industry positions him to provide valuable insights into the scientific activities of our Company.

 

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            ITEM 1 — ELECTION OF DIRECTORS    

 

Ellen J. Kullman

 

 

 

Director since: 2016

 

Age: 61

 

Committees:

  Audit

  Governance and Nominating

 

Other Public Company Boards:

  Goldman Sachs Group, Inc.

  United Technologies Corporation

 

Audit Committee financial expert

 

Ellen J. Kullman has served as a director of the Company since October 14, 2016. Ms. Kullman was first identified to the Governance and Nominating Committee as a potential director candidate by the Company’s outside search firm. Ms. Kullman is the former President, Chair and Chief Executive Officer of E.I. du Pont de Nemours and Company, or DuPont, a science and technology-based company, where she served from January 2009 to October 2015. Prior to this, Ms. Kullman served as President of DuPont from October 2008 to January 2009. From June 2006 through September 2008, she served as Executive Vice President of DuPont. Prior to that, Ms. Kullman was Group Vice President, DuPont Safety and Protection. Ms. Kullman has been a director of United Technologies Corporation, a technology products and services company, since 2011, serving on its Committee on Compensation and Executive Development and Chairing its Committee on Governance and Public Policy. Ms. Kullman has been a director of Goldman Sachs Group, Inc., an investment banking firm, since December 2016, serving on its Compensation, Corporate Governance and Nominating, and Risk Committees. Ms. Kullman served as a director of General Motors, from 2004 to 2008, serving on its Audit Committee.

 

Ms. Kullman has also served as a director of Carbon3D, Inc., a privately-held 3D printing company, since April 2016. Ms. Kullman has served on the Board of Trustees of Northwestern University since 2016 and on the Board of Overseers of Tufts University School of Engineering since 2006. She served as Chair of the US-China Business Council from 2013 to 2015. In 2016, Ms. Kullman joined the board of directors of Dell Technologies, a privately-held technology company, and the Temasek Americas Advisory Panel of Temasek Holdings (Private) Limited, a privately-held investment company based in Singapore. Ms. Kullman received a bachelor of science in mechanical engineering degree from Tufts University and a master’s degree from the Kellogg School of Management at Northwestern University.

 

Qualifications

 

The Board concluded that Ms. Kullman should serve on the Board due to her recent and long-tenured global experience as a public company chief executive officer, her management and leadership skills, and her experience with scientific operations, all of which provide valuable insight into the operations of our Company. Given her leadership and financial experience, Ms. Kullman has been determined to be an Audit Committee financial expert by our Board.

 

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Table of Contents
            ITEM 1 — ELECTION OF DIRECTORS    

 

Ronald D. Sugar

 

 

 

Director since: 2010

 

Age: 68

 

Committees:

  Corporate Responsibility and Compliance (Chair)

  Executive

  Governance and Nominating

 

Other Public Company Boards:

  Air Lease Corporation

  Apple Inc.

  Chevron Corporation

 

Ronald D. Sugar is the retired Chairman of the Board and Chief Executive Officer of Northrop Grumman Corporation, a global aerospace and defense company, having held these posts from 2003 through 2009.

 

Dr. Sugar has been a director of Chevron Corporation, a petroleum, exploration, production and refining company, since 2005, serving as the lead director and on the Management Compensation Committee and chairing the Board Nominating and Governance Committee; Apple Inc., a manufacturer and seller of, among other things, personal computers, mobile communication and media devices, since 2010, chairing the Audit and Finance Committee; and of Air Lease Corporation, an aircraft leasing company, since 2010, chairing the Compensation Committee and serving on the Governance Committee. Since 2010, he has been a senior advisor to Ares Management LLC, a privately-held asset manager and registered investment advisor. In 2014, Dr. Sugar joined the Temasek Americas Advisory Panel of Temasek Holdings (Private) Limited, a privately-held investment company based in Singapore. Dr. Sugar is a member of the National Academy of Engineering, trustee of the University of Southern California, member of the UCLA Anderson School of Management Board of Advisors, director of the Los Angeles Philharmonic Association and national trustee of the Boys and Girls Clubs of America.

 

Qualifications

 

The Board concluded that Dr. Sugar should serve on our Board because Dr. Sugar’s board and senior executive-level expertise, including his experience as Chairman and Chief Executive Officer of Northrop Grumman Corporation, provides valuable leadership experience and insight in the areas of operations, government affairs, science, technology and finance.

 

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          ITEM 1 — ELECTION OF DIRECTORS  

 

R. Sanders Williams

 

 

 

Director since: 2014

 

Age: 68

 

Committees:

  Corporate Responsibility and Compliance

  Governance and Nominating

 

Other Public Company Boards:

  Laboratory Corporation of America Holdings

 

R. Sanders Williams is President of Gladstone Institutes, a non-profit biomedical research enterprise, and its Robert W. and Linda L. Mahley Distinguished Professor of Medicine, both since 2010. He is also a Professor of Medicine at the University of California, San Francisco since 2010. Prior to this, Dr. Williams served as Senior Vice Chancellor of the Duke University School of Medicine from 2008 to 2010 and Dean of the Duke University School of Medicine from 2001 to 2008. He was the founding Dean of the Duke-NUS Graduate Medical School, Singapore, from 2003 to 2008 and served on its Governing Board from 2003 to 2010. From 1990 to 2001, Dr. Williams was Chief of Cardiology and Director of the Ryburn Center for Molecular Cardiology at the University of Texas, Southwestern Medical Center.

 

Dr. Williams has been a director of the Laboratory Corporation of America Holdings, a diagnostic technologies company, since 2007, serving on the Audit Committee and chairing the Quality and Compliance Committee. Dr. Williams was a director of Bristol-Myers Squibb Company, a pharmaceutical company, from 2006 until 2013. Dr. Williams has served on the board of directors of the Gladstone Foundation, a non-profit institution that is distinct from Gladstone Institutes, since 2012 and on the board of directors of Exploratorium, a non-profit science museum and learning center located in San Francisco, since 2011. Dr. Williams was elected to the National Academy of Medicine in 2002. Dr. Williams received his undergraduate degree from Princeton University and his doctorate from Duke University.

 

Qualifications

 

The Board concluded that Dr. Williams should serve on the Board due to his broad medical and scientific background, including his leadership roles at Gladstone Institutes and Duke University, deep experience in cardiology, oversight of governance of multi-hospital healthcare provider systems, leadership and/or development of international medical programs in Singapore and China, and prior industry board experience, all of which provide valuable perspectives and insight into the operations of our Company.

 

THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” EACH OF THE ABOVE 13 NAMED NOMINEES.

 

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  ITEM 2 — RATIFICATION OF SELECTION OF INDEPENDENT REGISTERED  PUBLIC ACCOUNTANTS  

 

Item 2

Ratification of Selection of Independent Registered Public Accountants

 

 

The Audit Committee of the Board of Directors, or Board, has selected Ernst & Young LLP, or Ernst & Young, as our independent registered public accountants for the fiscal year ending December 31, 2017, and the Board has directed that management submit this selection for ratification by the stockholders at our 2017 Annual Meeting of Stockholders, or Annual Meeting. Ernst & Young has served as our independent registered public accounting firm and has audited our financial statements since the Company’s inception in 1980. The Audit Committee periodically considers whether there should be a rotation of our independent registered public accountants. Each year, the Audit Committee evaluates the qualifications and performance of the Company’s independent registered public accountants and determines whether to re-engage the current independent registered public accountants. In doing so, the Audit Committee considers the quality and efficiency of the services provided by the independent registered public accountants, their technical expertise and knowledge of our operations and industry. Based on this evaluation, the members of the Audit Committee believe that the continued retention of Ernst & Young as our independent registered public accountants is in the best interests of the Company and its stockholders. In conjunction with the mandated rotation of Ernst & Young’s lead engagement partner, the Audit Committee and its chairperson are directly

involved in the selection of Ernst & Young’s new lead engagement partner. The process for selection of Ernst & Young’s lead engagement partner involves a meeting between the Audit Committee’s chairperson and the candidate, as well as an assessment by the full Audit Committee and management. A representative of Ernst & Young is expected to be present at the Annual Meeting and will have an opportunity to make a statement and respond to appropriate questions.

Stockholder ratification of the selection of Ernst & Young as our independent registered public accountants is not required by the Amgen Inc. Restated Certificate of Incorporation, the Amended and Restated Bylaws of Amgen Inc., or otherwise. However, the Board is submitting the selection of Ernst & Young to the stockholders for ratification because we believe it is a matter of good corporate governance practice. If our stockholders fail to ratify the selection, the Audit Committee will reconsider whether or not to retain Ernst & Young, but still may retain them. Even if the selection is ratified, the Audit Committee in its discretion may direct the appointment of a different independent registered public accounting firm at any time during the year if the Audit Committee determines that such a change would be in our best interests and that of our stockholders.

 

 

THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” RATIFICATION OF OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTANTS.

 

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          ITEM 3 — ADVISORY VOTE TO APPROVE OUR EXECUTIVE COMPENSATION  

 

Item 3

Advisory Vote to Approve Our Executive Compensation

 

 

This advisory stockholder vote, commonly known as “Say on Pay,” gives you, as a stockholder, the opportunity to endorse or not endorse our executive pay program and policies. Accordingly, you are being asked to vote on the compensation of our Named Executive Officers, or NEOs, as disclosed in the Compensation Discussion and Analysis (pages 56 through 87) and related compensation tables and the narrative in this proxy statement (pages 88 through 106).

Our executive compensation program is designed to achieve the following objectives:

 

 

Pay for performance in a manner that strongly aligns with stockholder interests by rewarding both our short-and long-term measurable performance.

 

 

Drive implementation of our business strategy and position our staff to execute on our strategy in the near-and longer-term.

 

Attract, motivate and retain the highest level of executive talent by providing competitive compensation, consistent with their roles and responsibilities, our success and their contributions to this success.

 

 

Mitigate compensation risk by maintaining pay practices that reward actions and outcomes consistent with the sound operation of our Company and with the creation of long-term stockholder value.

 

 

Consider all Amgen staff members in the design of our executive compensation programs, to ensure a consistent approach that encourages and rewards all staff members who contribute to our success.

 

 

2016 Executive Compensation Was Aligned With Our Strategy and Performance

 

 

As discussed more fully in our Compensation Discussion and Analysis starting on page 56, a significant majority of each NEO’s compensation is dependent on our performance and our execution of our strategic priorities and the compensation objectives discussed above.

The focus of our strategy is to develop innovative medicines that meet important unmet medical needs. Six therapeutic areas form the core of our business (cardiovascular, oncology/hematology, bone health, neuroscience, inflammation, and nephrology). Our strategy to execute in these therapeutic areas is multifaceted, with seven strategic priorities that allow us to drive long-term growth, while also delivering on our short- and medium-term goals.

Strategic Priorities

 

 

LOGO

 

 

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Table of Contents
            ITEM 3 — ADVISORY VOTE TO APPROVE OUR EXECUTIVE COMPENSATION    

 

Our annual cash incentive award program compensation is tied directly to our performance based on pre-established financial and operating performance goals that support execution of our strategic priorities

 

 Goal    Weighting      % of Target
Earned
 

 

1. Financial Performance

 

 

 

Revenues

 

  

 

 

 

 

30%

 

 

 

 

  

 

 

 

 

139.7%

 

 

 

 

 

Non-GAAP Net Income(1)

 

  

 

 

 

 

30%

 

 

 

 

  

 

 

 

 

147.5%

 

 

 

 

 

2. Execute Product and Delivery System Launches

 

 

 

Execute Product and Delivery System Launches

 

    

 

10%

 

 

 

    

 

127.8%

 

 

 

 

3. Progress Innovative Pipeline

 

 

 

Execute Key Clinical Studies and Regulatory Filings

 

    

 

20%

 

 

 

    

 

190.0%

 

 

 

 

Advance Early Pipeline

 

  

 

 

 

 

10%

 

 

 

 

  

 

 

 

 

225.0%

 

 

 

 

 

Composite Score

 

  

 

 

 

 

Achieved 159.5%

 

 

 

 

Below is a summary discussion of our key accomplishments for 2016. For further discussion of these accomplishments, the achievement of which aligns our NEO pay with performance and supports the execution of our strategic priorities, please see pages 57 through 61 of our Compensation Discussion and Analysis.

1. We delivered on our financial performance goals.

In 2016, our financial performance was strong, and we delivered on our financial performance goals.

 

 

We grew revenues by 6% over 2015 to $23 billion in 2016.

 

 

Our U.S. Generally Accepted Accounting Principles, or GAAP, net income increased 11% to $7.7 billion and our non-GAAP net income(1) grew 10% to $8.8 billion in 2016.

 

LOGO  

Our commitment to re-shape the expense base of the business delivered results once more in 2016  as  we  continued

to execute on the transformation and process improvement efforts announced in 2014. Our transformation and process improvement efforts across Amgen are enabling us to reallocate resources to fund many of our innovative pipeline and growth opportunities that deliver value to patients and stockholders.

 

 

Operating leverage from the changes we have made enables us to drive net income growth in the near-term while our longer-term investments have laid the foundation for growth beyond this period.

 

 

Since 2014, we have realized approximately $1.2 billion of transformation and process improvement savings the majority of which was reinvested in product launches, clinical programs and external business development.

2. We executed on product and delivery system launches.

 

LOGO

This is the first full year that we have been able to provide patients with our six innovative products launched in 2015 (Repatha®, Kyprolis®, BLINCYTO®, IMLYGIC®, Neulasta® On-Pro® Kit, and Corlanor®). Repatha® and Kyprolis® both represent substantial opportunities as they address serious diseases impacting large patient populations with significant unmet medical needs.

For Repatha® (our medicine for certain patients who are unable to get their low-density lipoprotein (bad cholesterol) under control with current treatment options), we have focused on competing effectively, including capturing approximately 60% of share of new to brand prescriptions in the U.S., as of January 2017. Our focus remains on enabling Repatha® for appropriate patients as hurdle rates for access and reimbursement for prescribers and patients remain high. Supportive of our Repatha® launch, we also announced the results from three significant Phase 3 studies that demonstrate (1) significant low-density lipoprotein reductions for patients with high cholesterol treated with Repatha® who cannot tolerate statins, (2) that Repatha® regresses atherosclerosis in patients with coronary artery disease, and (3) that Repatha® reduces the risk of cardiovascular events in patients with clinically evident atherosclerotic disease.

 

 

(1) 

Non-GAAP net income is reported and reconciled in Appendix B to this proxy statement. Non-GAAP net income for purposes of the 2016 Company performance goals of our annual cash incentive award program is reported and reconciled in Appendix B to this proxy statement, excluding the incremental benefit ($95 million) of excess tax benefits recognized arising from the adoption of a new accounting standard on share-based payments.

 

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            ITEM 3 — ADVISORY VOTE TO APPROVE OUR EXECUTIVE COMPENSATION    

 

In our oncology therapeutic area for Kyprolis® (our medicine for patients with relapsed or refractory multiple myeloma), we reported strong unit growth driven by increased share and ex-U.S. launches.

 

LOGO   

    

We have built leading patient- and provider-friendly device capabilities.

 

 

In 2016, we reported strong performance from the Neulasta® On-Pro® Kit, including that, as we exited the year, utilization of the Kit in the U.S. continues to grow.

 

 

We launched the Repatha® Pushtronex™ system, the first and only single monthly injection for a PCSK9 inhibitor, in the U.S. and, based on our work in 2016, received approval in early 2017 for this device in the E.U.

 

LOGO

    

During the last five years, we have expanded our reach to approximately 100 countries. In 2016, capitalizing on our expansion activities, we had 94 product country launches.

3. We significantly advanced our pipeline.

 

LOGO

    

Our pipeline continued to advance in 2016. In addition to announcing the approval of Parsabiv™ (etelcalcetide) in the E.U., we reported the results of several important clinical trials, including the Phase 3 trials discussed above for Repatha®, as well as successful Phase 3 trials in EVENITY™* (romosuzumab)(1), Prolia®, XGEVA®, and erenumab(2). We have programs nearing key regulatory milestones, including the Biologics License Application under review with the FDA(3) for EVENITY™*.

Also, in our nephrology therapeutic area, we reported that the European Commission approved Parsabiv™ (etelcalcetide) for the treatment of secondary hyperparathyroidism in adult patients with chronic kidney disease on hemodialysis.

 

LOGO

    

In our biosimilars portfolio in 2016, we reported we received FDA approval for AMJEVITA™ (biosimilar adalimumab (HUMIRA®)) and submitted applications to the FDA and EMEA(4) for ABP 215(5) (biosimilar bevacizumab (Avastin®)) and are in Phase 3 for ABP 980(5) (biosimilar trastuzumab (Herceptin®)), ABP 798(5) (biosimilar rituximab (Rituxan®/Mabthera®)), and ABP 710 (biosimilar infliximab (REMICADE®)).

 

 

 

 

(1) 

Developed in collaboration with UCB.

(2) 

Jointly developed in collaboration with Novartis AG.

(3) 

U.S. Food and Drug Administration.

(4) 

European Medicines Agency.

(5) 

Developed in collaboration with Allergan plc.

 

*

FDA provisionally approved trade name.

 

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            ITEM 3 — ADVISORY VOTE TO APPROVE OUR EXECUTIVE COMPENSATION    

 

In 2016, we also made strong progress on executing against our other strategic priorities:

        We invested for long-term growth while            returning substantial capital to our            stockholders.

 

LOGO

    

Our strong cash flows and balance sheet allowed continued investment for long-term growth through internal research and development and external business development transactions, while simultaneously providing substantial returns to stockholders.

 

 

In 2016, we invested $3.8 billion in research and development while also returning $6 billion of capital to our stockholders through the payment of dividends and stock repurchases.

 

  -  

We returned a total of $3 billion of cash to our stockholders in the form of dividends.

 

  -  

We increased our dividend per share 27% over 2015 (to $1.00 per share for 2016).

We repurchased approximately 20 million shares of our Common Stock during 2016 at an aggregate cost of $3 billion.

 

LOGO

    

We made investments in next-generation biomanufacturing that dramatically reduces the scale and costs of making biologics while maintaining a reliable, high-quality, compliant supply of medicines.

 

Our Long-Term Incentive Program Results

Our long-term incentive, or LTI, equity award compensation is tied directly to our stock performance and aligns with the interests of our stockholders.

80% of our annual LTI equity award grants are performance-based and, as such, a significant portion of total compensation is tied to our stock price performance and value creation for our stockholders.

Payout under our LTI performance award program for our 2014-2016 performance period at 112.5% reflects our three-year total shareholder return, or TSR, performance at the 56.2nd percentile relative to the TSRs of the companies in the Standard & Poor’s 500 Index for this performance period.

 

 

Positive 2016 Say on Pay Vote Outcome and Engagement With Our Stockholders

 

 

In 2016, we received approximately 97% stockholder support on our say on pay advisory vote. We have engaged consistently in broad direct stockholder outreach over the past several years and the compensation-related feedback is reviewed by our Compensation and Management Development Committee, or Compensation Committee. We have made a number of compensation changes in response to past discussions with our stockholders and have implemented the compensation best practices discussed below.

Since our 2016 annual meeting of stockholders, in addition to our outreach by our executives and our Investor Relations department to investors, we have engaged in governance-focused outreach activities and discussions with stockholders comprising approximately 52% of our outstanding shares. While we are pleased with our say on pay results and stockholder feedback, we will continue to reach out to understand and address any concerns of our stockholders. For more detail regarding stockholder engagement, see page 62.

 

 

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          ITEM 3 — ADVISORY VOTE TO APPROVE OUR EXECUTIVE COMPENSATION  

 

We Have Implemented Compensation Best Practices

 

We are mindful of compensation and governance best practices as demonstrated below:

 

 

What we do

 

 

 

Target median: We target compensation at the 50th percentile, or median, of our peer group for all elements of compensation.

 

 

Clawback policy: We have a clawback policy that requires our Board of Directors, or Board, to consider the recapture of past cash or LTI equity award payouts to our NEOs if the amounts were determined based on financial results that are later restated and the NEOs’ misconduct is determined by the Board to have caused the restatement.

 

 

Recoupment: Our incentive compensation plans contain recoupment provisions applicable to all staff members that expressly allow the Compensation Committee to determine that annual cash incentive awards are not earned fully or in part where such employee has engaged in misconduct that causes serious financial or reputational damage to the Company.

 

 

Robust stock ownership and retention guidelines: We have robust stock ownership guidelines, with a six times base salary ownership requirement for our Chief Executive Officer. Officers are required to retain shares of our Common Stock until they have reached the required stock ownership level.

 

 

Minimum vesting periods: Our equity incentive plan provides that equity awards are subject to a minimum vesting period of no less than one year on 95% of equity awards granted and our grants generally vest over four years, with no vesting in the first year and vesting in three approximately equal annual installments on the second, third and fourth anniversaries of the grant date.

 

 

Double-trigger in the event of a change of control, No tax gross-ups: We do not have “single-trigger” equity vesting acceleration upon a change of control for restricted stock units, or RSUs, or stock options, and our double-trigger cash severance is limited to a multiple of two times target annual cash compensation, without tax gross-ups. Any performance awards are earned based on a truncated performance period.

 

 

Performance-based equity. Our LTI equity award grants are primarily (80%) performance-based.

 

What we don’t do

 

 

×

 

 

No hedging or pledging: With respect to our Common Stock, our staff members and Board are prohibited from engaging in short sales, purchasing or pledging our Common Stock on margin, or entering into any hedging, derivative or similar transactions.

 

×

 

 

No re-pricing or backdating: Our LTI equity award plans and policies prohibit re-pricing or backdating of equity awards.

 

×

 

 

No special tax gross-ups: We do not provide tax gross-ups, except for business related payments such as reimbursement of certain moving and relocation expenses.

 

×

 

 

No excessive perks: Our perquisites are limited to those with a clear business-related rationale.

 

×

 

 

No employment agreements: We do not have employment contracts or guaranteed bonuses, other than in countries where they are required by law.

 

×

 

 

No dividends paid on unvested equity: Dividends accrue on our performance units and RSUs, but are paid only when and to the extent the underlying award is earned and vested.

 

×

 

 

No defined benefit pension or supplemental executive retirement plan (SERP) benefits: We do not have any defined benefit pension or SERP benefits or “above-market” interest on deferred compensation.

 

 

 

 

 

 

 

 

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          ITEM 3 — ADVISORY VOTE TO APPROVE OUR EXECUTIVE COMPENSATION  

 

Board Recommends a Vote “FOR” Our Executive Compensation

 

 

Our Board believes that our current executive compensation program aligns the interests of our executives with those of our stockholders and compensation outcomes are primarily based on the performance of our Company. We intend that our compensation programs reward actions and outcomes that are consistent with the sound operation of our Company, advance our strategy and are aligned with the creation of long-term stockholder value.

For the reasons discussed above, the Board recommends that stockholders vote “FOR” the following resolution:

“Resolved, that the stockholders approve, on an advisory basis, the compensation paid to the Company’s Named Executive Officers, as disclosed pursuant to Securities and

Exchange Commission rules in the Compensation Discussion and Analysis, the compensation tables and the accompanying narrative disclosure of this proxy statement.”

Although this vote is advisory and is not binding on the Board, our Compensation Committee values the opinions expressed by our stockholders and will consider the outcome of the vote when making future executive compensation decisions.

We currently conduct annual advisory votes on executive compensation, and we expect to conduct the next advisory vote on executive compensation at our 2018 annual meeting of stockholders.

 

 

THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” THE APPROVAL OF THE ADVISORY RESOLUTION INDICATING THE APPROVAL OF THE COMPENSATION OF THE COMPANY’S NAMED EXECUTIVE OFFICERS.

 

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          ITEM 4 — ADVISORY VOTE ON THE FREQUENCY OF FUTURE STOCKHOLDER ADVISORY   VOTES TO APPROVE EXECUTIVE COMPENSATION  

 

Item 4

Advisory Vote on the Frequency of Future Stockholder Advisory Votes to Approve Executive Compensation

 

 

In connection with the advisory vote on our executive compensation, Item 3, stockholders are also being asked to vote on the frequency of future stockholder advisory votes to approve executive compensation, as required by Securities and Exchange Commission rules. Stockholders may vote whether an advisory vote to approve our executive compensation should be held every year, every two years or every three years. Our current practice is to provide advisory votes on executive compensation every year.

We believe that it is important to give our stockholders the opportunity to provide input on our executive compensation in a consistent and meaningful manner. As such, the Board believes that our stockholders should have the opportunity to voice their approval or disapproval of our executive compensation each year. The Board believes that annual votes will facilitate the highest level of accountability to, and communication with, our stockholders. Further, an annual

vote clearly ties the advisory vote on executive compensation to the current year’s compensation disclosure and avoids the potential for confusion as to which year stockholders are being asked to evaluate and vote on that might exist with a biennial or triennial vote.

This vote is advisory and is not binding. However, the Board values the opinions expressed by our stockholders and will consider the outcome of the vote when determining the frequency with which advisory votes on executive compensation should be held. Stockholders are not being asked to approve or disapprove of the Board’s recommendation of an advisory vote on executive compensation every year, but rather to indicate their own choice among the frequency options for an advisory vote on executive compensation of every one year, every two years or every three years.

 

 

THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS ELECT TO HAVE ADVISORY VOTES TO APPROVE EXECUTIVE COMPENSATION EVERY “ONE YEAR” FOR THE REASONS STATED ABOVE.

 

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          ITEM 5 — STOCKHOLDER PROPOSAL  

 

Item 5

Stockholder Proposal

 

 

Stockholders have informed the Company that they intend to present the proposal to adopt majority votes cast standard for matters presented by stockholders set forth below at our 2017 Annual Meeting of Stockholders, or Annual Meeting. If the stockholders (or their respective “qualified representative” as determined under our Amended and Restated Bylaws of Amgen Inc.) are present at the Annual Meeting and properly submit the proposal for a vote, then the stockholder proposal will be voted upon at the Annual Meeting.

In accordance with the Federal securities laws, the stockholder proposal and supporting statement is presented below as submitted by the stockholders, is quoted verbatim and in italics. The Company disclaims all responsibility for the content of the proposal and the supporting statement, including other sources referenced in the supporting statement.

FOR THE REASONS STATED IN THE BOARD OF DIRECTOR’S, OR BOARD, RESPONSES, WHICH FOLLOW THE STOCKHOLDER PROPOSAL, THE BOARD STRONGLY AND UNANIMOUSLY RECOMMENDS THAT YOU VOTE “AGAINST” THE STOCKHOLDER PROPOSAL.

Stockholder Proposal

Sarah F. Rutherford and M. Burke Stansbury, each the owner of 50 shares of our Common Stock as of December 5, 2016, along with a co-filer and appointing Investor Voice, SPC as their representative, with an address of 111 Queen Anne Ave N, Suite 500, Seattle, WA 98109, have notified the Company that they intend to submit the following proposal at the Annual Meeting. Walden Asset Management, owner of a purported 27,018 shares of our Common Stock as of December 7, 2016, has notified us that they are co-filing the proposal.

RESOLVED: Amgen, Inc. (“Amgen”) shareholders ask the Board to take or initiate steps to amend Company governing documents to provide that all non-binding matters presented by shareholders shall be decided by a simple majority of the

votes cast FOR and AGAINST an item. This policy would apply to all such matters unless shareholders have approved higher thresholds, or applicable laws or stock exchange regulations dictate otherwise.

SUPPORTING STATEMENT:

This proposal seeks greater transparency, clarity, and understanding around how informed stockholders vote on shareholder proposals

A democratic “simple majority” formula includes votes cast FOR and AGAINST but not abstentions. It provides the most clear and accurate picture of the intent of shareowners who are both informed and decided, while not including in the formula the votes of abstaining voters who, by definition, have chosen not to express an opinion.

 

  ·  

70% of Amgen’s U.S. peers employ a “simple majority” standard: http://bit.ly/AMGN-Peer-Voting-2016.

When abstaining voters choose to not express an opinion and mark ABSTAIN (whether they are confused, disinterested, agnostic, or lack time to become fully informed), it is apparent that their votes should be regarded as neither FOR nor AGAINST an item.

Instead of this, Amgen counts ABSTAIN votes as if AGAINST every shareholder sponsored proposal.

 

  ·  

Is it reasonable for Amgen to assert it knows the will of undecided voters (and to artificially construe abstentions in favor of management)?

Amgen has implied that it must use the Delaware “default standard” (which includes abstentions). However, this nominal ‘standard’ is not mandated – it is what Delaware assigns to companies that do not proactively choose “simple majority” voting.

Research has demonstrated that the so-called ‘default standard’ systematically disadvantages shareholders:

http://bit.ly/Voting-Research_Corporate-Secretary.

 

 

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          ITEM 5 — STOCKHOLDER PROPOSAL  

 

How does it do this?

 

  ·  

By depressing the appearance of support for shareholder concerns.

The math is simple: When abstaining shareholders elect to not express an opinion, but then are treated as if having voted AGAINST a proposal, management benefits. This is because shareholder proposals normally appear in proxies only when management disagrees with the proposal or would rather avoid the subject.

 

  ·  

By subverting vote outcomes.

Historically, these practices have allowed management teams to describe numerous true majority votes on shareholder items as, instead, having ‘failed’.

 

  ·  

By distorting communication.

Annual meeting votes offer the sole opportunity for most shareholders to communicate with Boards. Counting abstentions as de facto votes AGAINST

shareholder proposals, management changes how outcomes are reported and how the public perceives support for shareholder concerns.

In contrast to how shareholder items are treated, we note that Amgen’s Director Election (where management benefits from the appearance of strong support), does not count abstentions. Thus, management items and shareholder items do not receive equal treatment; though the Company has complete discretion to cure these inconsistencies in its voting policies.

To avert such discrepancies, a Council of Institutional Investors policy states: “...abstentions should be counted only for purposes of a quorum.”

 

THEREFORE:  

    Support     accuracy,     fairness,    and    good governance at Amgen by voting FOR simple majority vote-counting on shareholder-sponsored proposals.

~ ~ ~

 

 

Board Response to the Stockholder Proposal

 

 

The Board of Directors recommends a vote “AGAINST” the Stockholder Proposal for the following reasons:

Our Board of Directors has considered this proposal and has concluded that it is not in the best interests of the Company or its stockholders to adopt the proponent’s vote-counting methodology.

Our stockholder approval standard and vote counting methodology of including abstentions adheres to Delaware law. The Company is incorporated in the State of Delaware and, therefore, Delaware law governs the voting standards for action by the Company’s stockholders. The required vote for action by the Company’s stockholders follows the default approval standard for stockholder action under Delaware law. The Company’s Amended and Restated Bylaws provide that, except in the election of directors, as otherwise provided by the Company’s governing documents or required by applicable laws, rules and regulations, when a quorum is present, the affirmative vote of the holders of a majority of the shares present (in person or by proxy) and entitled to vote is required to approve any matter brought before a stockholder meeting. We believe the majority of Delaware corporations adhere to the same default voting standard.

Under Delaware law, abstentions are considered shares “entitled to vote.” Accordingly, in the vote tabulation for matters that require the affirmative vote of the majority of the shares present and entitled to vote, abstentions are not included in the numerator (because they are not affirmative votes), but are included in the denominator as shares entitled to vote. Therefore, abstentions under this standard have the same practical effect as a vote “against” a proposal.

Our vote counting methodology applies identically to management-sponsored proposals and stockholder proposals. In its supporting statement, the proponent focuses on the effect that counting abstentions has on stockholder proposals. As disclosed in this proxy statement, abstention votes are included in the vote count for each of the management-sponsored proposals and have the same practical effect as a vote against them. This vote count standard does not favor the management-sponsored proposals over the stockholder proposals. Both are treated equally. In contrast, the proponent’s vote-counting methodology favors stockholder proposals over management-sponsored proposals.

 

 

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          ITEM 5 — STOCKHOLDER PROPOSAL  

 

Our Board of Directors believes that since stockholders are made aware of the treatment and effect of abstentions, counting abstention votes effectively honors the intent of our stockholders. Stockholders typically have three voting choices for a particular proposal: for; against; and abstain. In the proxy statement for each annual meeting, the Company discloses the vote required to approve each proposal, and also describes how abstentions will be counted in the vote tabulation and the effect of abstentions on the outcome of a matter. The Company’s stockholders are informed that if they vote “abstain” on a proposal other than the election of directors their vote will have the same practical effect as an “against” vote, and the Board believes that counting abstention votes effectively honors the intent of the Company’s stockholders.

If a stockholder elects to abstain on a matter, the Board believes that the stockholder recognizes the impact of the vote and expects it to be included in the vote count.

Furthermore, the Board believes that abstentions serve a worthwhile purpose. The proponent of an item of business, be it management or a stockholder, bears the burden of persuading a majority of stockholders to affirmatively vote in favor of the item. Contrary to the proponent’s perception, we believe that our stockholders are fully informed (and not “confused, disinterested, agnostic, or lack time to become fully informed”) when they choose to abstain. Consistent with conversations we have had with some of our stockholders, a CalPERS report recognizes the value of abstentions, noting, “that some institutional investors abstain on shareholder proposals when they wish to convey support for the general subject matter, but have reservations about the specific action requested.”(1) We therefore do not believe it would be in our stockholders’ best interest or effective corporate governance to disregard these views.

Our Board of Directors believes that lowering the approval standard for stockholder-sponsored proposals would be poor corporate governance. The proponent

requests that abstentions be ignored for all stockholder-sponsored matters presented to the Company’s stockholders. Ignoring abstention votes would lower the approval standard and effectively make approval easier. Except with respect to the election of directors and matters that require, statutorily or otherwise, a different vote, the Board believes that a proposal—whether management-sponsored or stockholder-sponsored—should receive more “for” votes than the sum of “against” and “abstain” votes in order to constitute approval by the Company’s stockholders.

The Board believes that it would not be effective corporate governance or serve the best interests of the Company’s stockholders to take one voting standard that an organization applies to a specific context and adopt that standard to stockholder-sponsored matters. Further, we also note that based on our review of our prior annual meeting voting results, the counting of abstention votes as shares entitled to vote was not determinative of the outcome of any proposal submitted to our stockholders at any of our annual meetings in the past decade.

Faced with similar proposals in 2016, stockholders overwhelmingly did not support the adoption of the proposed vote counting methodology. In 2016, eight companies, including Amgen, included a proposal related to a majority vote counting methodology in their 2016 annual meeting proxy statements. Each of those proposals received less than 13% support from stockholders. Additionally, Investor Voice (then known as Newground Social Investment, SPC) included a similar proposal in our 2016 annual meeting proxy statement which received very low support (approximately 6.5%) from our stockholders. Moreover, this proposal has been in our proxy statement for a number of years and has consistently received very low support (well under 10%), a clear indication that stockholders are informed about our vote counting methodology and approve of our current practice.

 

 

THE BOARD OF DIRECTORS RECOMMENDS A VOTE “AGAINST” THE STOCKHOLDER PROPOSAL ON MAJORITY VOTES CAST STANDARD.

 

(1) 

Vote Calculation Methodologies report dated September 17, 2013 prepared for CalPERS by GMI Ratings.

 

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          SECURITY OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS  

 

Security Ownership of Directors and Executive Officers

The following table sets forth certain information regarding the beneficial ownership of our Common Stock as of March 20, 2017 by: (i) each current director and nominee; (ii) our Named Executive Officers, or NEOs (as specified on page 56) and (iii) all of our current directors and executive officers as a group. There were 735,890,171 shares of our Common Stock outstanding as of March 20, 2017. None of our directors, nominees, NEOs or executive officers, individually or as a group, beneficially owns greater than 1% of our outstanding shares of Common Stock.

 

     Amgen Inc.
Common Stock(1)(2)
 
  Beneficial Owner   

Total Common Stock

Beneficially Owned

      

Shares Acquirable

Within 60 Days

      

Percent  

of Total  

 

 

 

 

 

  Non-Employee Directors and Nominees

            

 

 

  David Baltimore

  

 

 

 

48,629

 

 

    

 

 

 

15,000

 

 

    

 

 

 

*  

 

 

 

 

  Frank J. Biondi, Jr.

  

 

 

 

31,696

 

 

    

 

 

 

15,000

 

 

    

 

 

 

*  

 

 

 

 

  François de Carbonnel

  

 

 

 

16,382

 

 

    

 

 

 

0

 

 

    

 

 

 

*  

 

 

 

 

  Robert A. Eckert

  

 

 

 

20,435

 

 

    

 

 

 

20,000

 

 

    

 

 

 

*  

 

 

 

 

  Greg C. Garland

  

 

 

 

4,694

 

 

    

 

 

 

0

 

 

    

 

 

 

*  

 

 

 

 

  Fred Hassan

  

 

 

 

4,861

 

 

    

 

 

 

0

 

 

    

 

 

 

*  

 

 

 

 

  Rebecca M. Henderson

  

 

 

 

8,000

 

 

    

 

 

 

8,000

 

 

    

 

 

 

*  

 

 

 

 

  Frank C. Herringer(3)

  

 

 

 

42,722

 

 

    

 

 

 

15,000

 

 

    

 

 

 

*  

 

 

 

 

  Charles M. Holley, Jr.

  

 

 

 

30

 

 

    

 

 

 

0

 

 

    

 

 

 

*  

 

 

 

 

  Tyler Jacks

  

 

 

 

21,890

 

 

    

 

 

 

20,000

 

 

    

 

 

 

*  

 

 

 

 

  Ellen J. Kullman

  

 

 

 

410

 

 

    

 

 

 

0

 

 

    

 

 

 

*  

 

 

 

 

  Judith C. Pelham

  

 

 

 

10,002

 

 

    

 

 

 

0

 

 

    

 

 

 

*  

 

 

 

 

  Ronald D. Sugar

  

 

 

 

30,000

 

 

    

 

 

 

30,000

 

 

    

 

 

 

*  

 

 

 

 

  R. Sanders Williams

  

 

 

 

2,779

 

 

    

 

 

 

0

 

 

    

 

 

 

*  

 

 

 

 

  Named Executive Officers

            

 

 

  Robert A. Bradway

  

 

 

 

519,217

 

 

    

 

 

 

200,500

 

 

    

 

 

 

*  

 

 

 

 

  Anthony C. Hooper

  

 

 

 

177,032

 

 

    

 

 

 

0

 

 

    

 

 

 

*  

 

 

 

 

  David W. Meline

  

 

 

 

14,769

 

 

    

 

 

 

0

 

 

    

 

 

 

*  

 

 

 

 

  Sean E. Harper

  

 

 

 

72,614

 

 

    

 

 

 

37,000

 

 

    

 

 

 

*  

 

 

 

 

  Jonathan P. Graham

  

 

 

 

6,018

 

 

    

 

 

 

0

 

 

    

 

 

 

*  

 

 

 

  All current directors and executive officers as a group (24 individuals)(4)

 

  

 

 

 

1,388,369

 

 

    

 

 

 

417,467

 

 

    

 

 

 

*  

 

 

 

 

*

Less than 1%.

 

(1) 

Information in this table is based on our records and information provided by directors, NEOs, executive officers and in public filings. Unless otherwise indicated in the footnotes and subject to community property laws, where applicable, each of the directors and nominees, NEOs and executive officers has sole voting and/or investment power with respect to such shares, including shares held in trust.

 

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(2) 

Includes shares which the individuals shown have the right to acquire (a) upon vesting of restricted stock units, or RSUs, and related dividend equivalents (excluding fractional shares), where the shares are issuable as of March 20, 2017 or within 60 days thereafter, and (b) upon exercise of stock options that are vested as of March 20, 2017 or within 60 days thereafter, as set forth in the table below. Such shares are deemed to be outstanding in calculating the percentage ownership of such individual (and the group), but are not deemed to be outstanding as to any other person. Excludes vested RSUs, and related dividend equivalents, for which receipt has been deferred by certain of the non-employee directors to a date later than 60 days after March 20, 2017. Dividend equivalents credited on RSUs are deemed reinvested and are paid out with the vested RSUs in shares of our Common Stock. Excludes the number of shares the Company is required to withhold for taxes from each executive officers’ performance units earned for the 2014-2016 performance period, as such amounts were not available as of the date this proxy statement went to print.

 

  Name   

RSUs and Dividend

Equivalents Included

      

Stock
Options

Included

   

RSUs and Dividend  

Equivalents Excluded  

Because of Deferrals  

 

 

 

  David Baltimore

  

 

 

 

0

 

 

    

 

 

 

15,000

 

 

 

 

 

 

0  

 

 

 

 

  Frank J. Biondi, Jr.

  

 

 

 

0

 

 

    

 

 

 

15,000

 

 

 

 

 

 

18,709  

 

 

 

 

  François de Carbonnel

  

 

 

 

0

 

 

    

 

 

 

0

 

 

 

 

 

 

2,229  

 

 

 

 

  Robert A. Eckert

  

 

 

 

0

 

 

    

 

 

 

20,000

 

 

 

 

 

 

6,485  

 

 

 

 

  Greg C. Garland

  

 

 

 

0

 

 

    

 

 

 

0

 

 

 

 

 

 

0  

 

 

 

 

  Fred Hassan

  

 

 

 

0

 

 

    

 

 

 

0

 

 

 

 

 

 

0  

 

 

 

 

  Rebecca M. Henderson

  

 

 

 

0

 

 

    

 

 

 

8,000

 

 

 

 

 

 

10,435  

 

 

 

 

  Frank C. Herringer

  

 

 

 

0

 

 

    

 

 

 

15,000

 

 

 

 

 

 

20,211  

 

 

 

 

  Charles M. Holley, Jr.

  

 

 

 

0

 

 

    

 

 

 

0

 

 

 

 

 

 

0  

 

 

 

 

  Tyler Jacks

  

 

 

 

0

 

 

    

 

 

 

20,000

 

 

 

 

 

 

4,478  

 

 

 

 

  Ellen J. Kullman

  

 

 

 

0

 

 

    

 

 

 

0

 

 

 

 

 

 

0  

 

 

 

 

  Judith C. Pelham

  

 

 

 

0

 

 

    

 

 

 

0

 

 

 

 

 

 

0  

 

 

 

 

  Ronald D. Sugar

  

 

 

 

0

 

 

    

 

 

 

30,000

 

 

 

 

 

 

10,056  

 

 

 

 

  R. Sanders Williams

  

 

 

 

0

 

 

    

 

 

 

0

 

 

 

 

 

 

0  

 

 

 

 

  Robert A. Bradway

  

 

 

 

0

 

 

    

 

 

 

200,500

 

 

 

 

 

 

0  

 

 

 

 

  Anthony C. Hooper

  

 

 

 

0

 

 

    

 

 

 

0

 

 

 

 

 

 

0  

 

 

 

 

  David W. Meline

  

 

 

 

0

 

 

    

 

 

 

0

 

 

 

 

 

 

0  

 

 

 

 

  Sean E. Harper

  

 

 

 

0

 

 

    

 

 

 

37,000

 

 

 

 

 

 

0  

 

 

 

 

  Jonathan P. Graham

  

 

 

 

0

 

 

    

 

 

 

0

 

 

 

 

 

 

0  

 

 

 

(3) 

Includes 17,152 shares held by family trusts.

(4) 

Includes 239,980 shares (excluding fractional shares) held by the five executive officers who are not NEOs and who have a right to acquire such shares upon the vesting of RSUs that have not been deferred to a date later than 60 days after March 20, 2017 or upon exercise of vested stock options as of March 20, 2017 or within 60 days thereafter. All current directors and executive officers as a group have the right to acquire a total of 6,102 shares upon vesting of RSUs, and related dividend equivalents, where the shares are issuable as of March 20, 2017 or within 60 days thereafter and 411,365 shares upon exercise of stock options that are vested as of March 20, 2017 or within 60 days thereafter.

 

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Security Ownership of Certain Beneficial Owners

The following table shows the number of shares of our Common Stock owned by each person or entity known to the Company to be the beneficial owners of more than 5% of our Common Stock as of March 20, 2017, based on a review of publicly available statements of beneficial ownership filed with the Securities and Exchange Commission, or SEC, on Schedules 13D and 13G through March 20, 2017.

 

     Common Stock
Beneficially Owned
 
  Name and Address of Beneficial Owner    Number of Shares        Percent of Total(1)     

 

  Capital Research Global Investors(2)

  333 South Hope Street

  Los Angeles, CA 90071

 

    

 

 

65,482,167

 

 

 

 

 

      

 

 

8.9%   

 

 

 

 

 

 

  BlackRock, Inc.(3)

  55 East 52nd Street

  New York, NY 10055

 

    

 

50,485,583

 

 

 

      

 

6.9%   

 

 

 

 

  The Vanguard Group(4)

  100 Vanguard Blvd.

  Malvern, PA 19355

 

    

 

48,096,649

 

 

 

      

 

6.5%   

 

 

 

 

  FMR LLC(5)

  245 Summer Street

  Boston, MA 02210

 

    

 

40,789,786

 

 

 

      

 

5.5%   

 

 

 

 

 

(1) 

The “Percent of Total” reported in this column has been calculated based upon the numbers of shares of Common Stock outstanding as of March 20, 2017 and may differ from the “Percent of Class” reported in statements of beneficial ownership filed with the SEC.

(2) 

The amounts shown and the following information was provided by Capital Research Global Investors pursuant to a Schedule 13G/A filed with the SEC on February 13, 2017. Capital Research Global Investors reports that it has sole voting and dispositive power over all 65,482,167 shares.

(3) 

The amounts shown and the following information was provided by BlackRock, Inc. pursuant to a Schedule 13G/A filed with the SEC on January 19, 2017. BlackRock, Inc. reports that it has sole voting power over 43,488,935 of these shares and sole dispositive power over 50,471,793 shares.

(4) 

The amounts shown and the following information was provided by The Vanguard Group pursuant to a Schedule 13G/A filed with the SEC on February 9, 2017. The Vanguard Group reports that it has sole voting power over 1,168,942 of these shares and sole dispositive power over 46,800,660 shares.

(5) 

The amounts shown and the following information was provided by FMR LLC pursuant to a Schedule 13G filed with the SEC on February 14, 2017. FMR LLC reports that it has sole voting power over 3,363,623 of these shares and sole dispositive power over 40,789,786 shares.

 

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Corporate Governance

Board of Directors Corporate Governance Highlights

 

 

Our Board of Directors, or Board, is governed by our Amgen Board of Directors Corporate Governance Principles, or Corporate Governance Principles, which are amended from time to time to incorporate certain current best practices in corporate governance. Our Corporate Governance Principles may be found on our website at www.amgen.com and are available in print upon written request to the Company’s Secretary at our principal executive offices at One Amgen Center Drive, Thousand Oaks, California 91320-1799. The Board’s corporate governance practices include the following:

 

 

Proxy Access. The Amended and Restated Bylaws of Amgen Inc., or Bylaws, permit proxy access for director nominations. Eligible stockholders with an ownership threshold of 3% who have held their shares for at least 3 years and who otherwise meet the requirements set forth in our Bylaws may have their nominees consisting of the greater of 20% or two nominees of our Board included in our proxy materials. Up to 20 eligible stockholders may group together to reach the 3% ownership threshold. In the course of designing our proxy access provisions, we carefully considered each element in the interest of our stockholders as a whole, including that the number of stockholders who may group together (20) would afford those stockholders likely to utilize proxy access with the opportunity to do so.

 

 

Lead Independent Director. The independent members of the Board elect a lead independent director on an annual basis. The lead independent director has specific responsibilities and authorities as discussed below. Robert A. Eckert currently serves as our lead independent director.

 

 

Regular Executive Sessions of Independent Directors. Our independent directors meet privately on a regular basis. Our lead independent director presides at such meetings.

 

 

Majority Approval Required for Director Elections. If an incumbent director up for re-election at a meeting of stockholders fails to receive a majority of affirmative votes in an uncontested election, the Board will adhere to the director resignation policy as provided in our Bylaws.

 

Board Access to Management. We afford our directors ready access to our management. Key members of management attend Board and committee meetings to present information concerning various aspects of the Company, its operations and results. The Corporate Responsibility and Compliance Committee, or Compliance Committee, members also have regular meetings in executive session with our Chief Compliance Officer, and the Audit Committee members have regular meetings in executive session with our internal auditors and separate meetings in executive session with our head of Corporate Audit.

 

 

Board Authority to Retain Outside Advisors. Our Board committees have the authority to retain outside advisors. The Audit Committee has the sole authority to appoint, compensate, retain and oversee the independent registered public accountants. The Compensation and Management Development Committee, or Compensation Committee, has the sole authority to appoint, compensate, retain and oversee compensation advisors for senior management compensation review. The Governance and Nominating Committee, or Governance Committee, has the sole authority to appoint, retain and replace search firms to identify director candidates and compensation advisors for our directors’ compensation review.

 

 

Director Limitation on Number of Boards. A director who is currently serving as our Chief Executive Officer, or CEO, should not serve on more than two outside public company boards. No director should serve on more than five outside public company boards.

 

 

Director Tenure. Our average Board tenure of approximately 6.2 years for our director nominees is substantially less than the average board tenure of the companies in the Standard & Poor’s 500 Index.

 

 

Director Retirement Age. The Board has established a retirement age of 72. A director is expected to retire from the Board on the day of the annual meeting of stockholders following his or her 72nd birthday. After due consideration, the Board has waived the retirement age

 

 

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with respect to David Baltimore based on its determination that it would be beneficial to have Dr. Baltimore continue to serve as a director due to his unique scientific knowledge and deep understanding of the research and development activities and operations of the Company. The Board has waived the retirement age with respect to Frank C. Herringer based on its determination that it would be beneficial to have Mr. Herringer continue to serve as a director due to his financial acumen and Company knowledge and experience.

 

 

Director Changes in Circumstances Evaluated. If a director has a substantial change in principal business or professional affiliation or responsibility, including a change in principal occupation, he or she shall offer his or her resignation to the chairman of the Governance Committee. The Governance Committee determines whether to accept the resignation based on what it believes to be in the best interests of the Company and our stockholders.

 

 

Director Outside Relationships Require Pre-Approval. Without the prior approval of disinterested members of the Board, directors should not enter into any transaction or relationship with the Company in which they will have a financial or a personal interest or any transaction that otherwise involves a conflict of interest.

 

 

Director Conflicts of Interest. If an actual or potential conflict of interest arises for a director or a situation arises giving the appearance of an actual or potential conflict, the director must promptly inform the Chairman

   

of the Board, or Chairman, or the chairman of the Governance Committee. All directors will recuse themselves from any discussion or decision found to affect their personal, business or professional interests.

 

 

Regular Board and Committee Evaluations. The Board and the Audit, Compensation, Compliance and Governance Committees each have an annual evaluation process which focuses on their role and effectiveness, as well as fulfillment of their fiduciary duties. In 2016, the evaluations were each completed anonymously to encourage candid feedback. The Board completed its evaluation in December 2016, while the Audit, Compensation, Compliance and Governance Committees each completed its assessment in October 2016 for further evaluation by the Governance Committee in December 2016. The results of the committee evaluations are reported to and reviewed by the full Board. Each committee and the Board was satisfied with its performance and each was considered to be operating effectively, with appropriate balance among governance, oversight, strategic and operational matters.

 

 

Solicitation of Stockholder Perspectives. The Board believes that engagement with stockholders is the source of valuable information and perspectives on the Company. The Board has requested that management solicit input from investors on behalf of the Board and the lead independent director may also meet directly with stockholders when appropriate. We provide more information regarding the stockholder engagement program on page 62.

 

 

Director Qualifications and Review of Board Diversity

 

 

Our Governance Committee is responsible for determining Board membership qualifications and for selecting, evaluating and recommending to the Board nominees for annual election to the Board and to fill vacancies as they arise. The Governance Committee reviews periodically with the Board the composition and size of the Board, each committee’s performance and makes recommendations, as necessary, so that the Board reflects the appropriate balance of knowledge, experience, skills, expertise and diversity advisable for the Board as a whole and contains at least the minimum number of independent directors required by applicable laws and regulations.

 

The Governance Committee maintains guidelines for selecting nominees to serve on the Board and for considering stockholder recommendations for nominees. The Amgen Inc. Board of Directors Guidelines for Director Qualifications and Evaluations are included in this proxy statement as Appendix A. Among other things, Board members should possess demonstrated breadth and depth of management and leadership experience, financial and/or business acumen or relevant industry or scientific experience, integrity and high ethical standards, sufficient time to devote to the Company’s business, the ability to oversee, as a director, the Company’s business and affairs for the benefit of our

 

 

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stockholders, the ability to comply with the Amgen Board of Directors Code of Conduct and a demonstrated ability to think independently and work collaboratively. In addition, although the Governance Committee does not maintain a diversity policy, the Governance Committee considers diversity in its

determinations. Diversity includes race, ethnicity, age and gender and is also broadly construed to take into consideration many other factors, including industry knowledge, operational experience and scientific and academic expertise, geography and personal backgrounds.

 

 

Leadership Structure

 

 

Our current leadership structure and governing documents permit the roles of Chairman and CEO to be filled by the same or different individuals. The Board has currently determined that it is in the best interests of the Company and our stockholders to have Robert A. Bradway, our CEO and President, serve as Chairman, coupled with an active lead independent director. As such, Mr. Bradway holds the position of Chairman, CEO and President, and Mr. Eckert has served as the lead independent director since the May 19, 2016 annual meeting of stockholders, or 2016 Annual Meeting. Prior to this, Vance D. Coffman served as the lead independent director until his retirement from the Board.

Corporate Governance Structure. The Board believes our corporate governance structure, with its strong emphasis on Board independence, an active lead independent director and strong Board and committee involvement, provides sound and robust oversight of management.

Director Independence. At least annually, the Governance Committee reviews the independence of each non-employee director and makes recommendations regarding director independence to the Board and the Board affirmatively determines whether each director qualifies as independent. Each director must keep the Governance Committee fully and promptly informed as to any development that may affect the director’s independence. 12 out of the 13 director nominees (approximately 92%) are independent as defined by The NASDAQ Stock Market, or NASDAQ, listing standards and the requirements of the Securities and Exchange Commission, or SEC, with the exception being Mr. Bradway. All of our directors are elected annually.

Lead Independent Director. The lead independent director is elected by the independent members of the Board on an annual basis. Mr. Eckert has been elected as the lead independent director effective since the 2016 Annual Meeting and was re-elected by our Board on March 7, 2017 to continue to serve as lead independent director subject to his re-election to the Board by our stockholders at the Annual Meeting.

 

In such position, the lead independent director serves as a means for regular communication between the independent directors and Mr. Bradway, keeping Mr. Bradway apprised of any concerns, issues or determinations made during the independent sessions, and consults with Mr. Bradway on other matters pertinent to the Company and the Board. The lead independent director’s additional responsibilities include:

 

 

Presiding at meetings of the Board at which the Chairman is not present, including executive sessions of the independent directors;

 

 

Serving as a liaison between the Chairman and the independent directors;

 

 

Previewing the information to be provided to the Board;

 

 

Approving meeting agendas for the Board;

 

 

Assuring that there is sufficient time for discussion of all meeting agenda items;

 

 

Organizing and leading the Board’s evaluation of the CEO;

 

 

Being responsible for leading the Board’s annual self-assessment;

 

 

Having the authority to call meetings of the independent directors; and

 

 

If requested by major stockholders, ensuring that he/she is available for consultation and direct communication.

Key Committees Composed of Independent Directors. The Audit, Compensation, Compliance and Governance Committees are each composed solely of independent directors and provide independent oversight of management. In addition, the Audit, Compensation and Compliance Committees meet in executive session on a regular basis with no members of management present (unless otherwise requested by the committee). Each of our committees effectively manages its Board-delegated duties and communicates regularly with the Chairman and members of

 

 

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management. In addition, the Compensation Committee has an effective process for monitoring and evaluating Mr. Bradway’s compensation and performance. Each committee chair provides a report on committee meetings held to the full Board at each regular meeting of the Board.

Independent Directors Sessions. On a regular basis, the independent directors meet in an executive session without Mr. Bradway to review Company performance, management effectiveness, proposed programs and transactions and the Board meeting agenda items. These independent sessions are organized and chaired by our lead independent director.

Annual Assessment. As part of the Board’s annual self-evaluation process, the Board reviews its leadership structure and whether combining or separating the roles of Chairman and CEO is in the best interests of the Company and our stockholders.

Benefits of Combined Leadership Structure. The Board believes that the Company and our stockholders have been best served by having Mr. Bradway in the role of Chairman and CEO for the following reasons:

 

 

Mr. Bradway is most familiar with our business and the unique challenges we face. Mr. Bradway’s day-to-day insight into our challenges facilitates a timely deliberation by the Board of important matters.

 

 

Mr. Bradway has and will continue to identify agenda items and lead effective discussions on the important matters affecting us. Mr. Bradway’s knowledge and extensive experience regarding our operations and the highly-regulated industries and markets in which we compete position him to identify and prioritize matters for Board review and deliberation.

 

 

As Chairman and CEO, Mr. Bradway serves as an important bridge between the Board and management and provides critical leadership for carrying out our strategic initiatives and confronting our challenges. The Board believes that Mr. Bradway brings a unique, stockholder-focused insight to assist the Company to most effectively execute its strategy and business plans to maximize stockholder value.

 

 

The strength and effectiveness of the communications between Mr. Bradway as our Chairman and Mr. Eckert as our lead independent director result in effective Board oversight of the issues, plans and prospects of our Company.

 

This leadership structure provides the Board with more complete and timely information about the Company, a unified structure and consistent leadership direction internally and externally and provides a collaborative and collegial environment for Board decision making.

Flexibility of the Leadership Structure. The Board is committed to high standards of corporate governance. The Board values its flexibility to select, from time to time, a leadership structure that is most able to serve the Company’s and stockholders’ best interests based on the qualifications of individuals available and circumstances existing at the time. As such, the Board regularly evaluates whether combining or separating the roles of Chairman and CEO is in the best interests of the Company and our stockholders. The Board believes that a policy limiting its flexibility to choose, consistent with its fiduciary duties, a leadership structure that will enable the Company to most effectively execute its strategy and business plans to maximize stockholder value would be detrimental to the Company and our stockholders.

The Board’s Role in Risk Oversight

Our Board oversees an enterprise-wide approach to risk management, which is designed to support the achievement of the Company’s objectives, including strategic objectives to improve long-term financial and operational performance and enhance stockholder value. Our Board believes that a fundamental part of risk management is understanding the risks that we face, monitoring these risks and adopting appropriate control and mitigation of these risks. We believe that the risk management areas that are fundamental to the success of our annual and strategic plans include the areas of product development, safety, supply, quality, value and access, sales and promotion and corporate development, as well as protecting our assets (financial, intellectual property and information), all of which are managed cross-functionally by senior executive management reporting directly to our CEO.

We have implemented an Enterprise Risk Management, or ERM, program, which is a Company-wide effort to identify, assess, manage, report and monitor enterprise risks and risk areas that may affect our ability to achieve the Company’s objectives. The ERM program involves our Board, our management and other personnel and is overseen by one of our senior executive officers. Enterprise risks are identified and managed by management and the business functions and, as discussed below, are overseen by the Board or the appropriate Board committee.

 

 

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The Board discusses enterprise risks with our senior management on a regular basis, including as a part of its annual strategic planning process, annual budget review and approval, capital plan review and approval and through reviews of compliance issues in the applicable committees of

our Board, as appropriate. While the Board has the ultimate oversight responsibility for the risk management process, various committees of the Board are structured to oversee specific risks, as follows:

 

 

 

  Committee

 

  

Primary Risk Oversight Responsibility

 

    

 

  Audit Committee

  

 

   Oversees financial risk, such as capital risk, financial compliance risk and internal controls over financial reporting.

 

 

 

  Corporate Responsibility and Compliance Committee

  

 

   Oversees non-financial compliance risk, such as regulatory risks (including the compliance risks associated with the requirements of the Federal health care program, Food and Drug Administration and Corporate Integrity Agreement). Oversees staff member compliance with the Code of Conduct.

 

 

 

  Compensation and Management Development Committee

  

 

   Evaluates whether the right management talent is in place. Oversees our compensation policies and practices, including whether such policies and practices balance risk-taking and rewards in an appropriate manner as discussed further below.

 

 

 

  Governance and Nominating Committee

  

 

   Oversees the assessment of each member of the Board’s independence, as well as the effectiveness of our Corporate Governance Principles and Board of Directors’ Code of Conduct.

 

 

 

 

At each regular meeting, or more frequently as needed, the Board considers reports from each of the committees set forth above, which reports may provide additional detail on risk management issues and management’s response.

Compensation Risk Management

On an annual basis, management, working with the Compensation Committee’s independent compensation consultant, conducts an assessment of the Company’s compensation policies and practices for all staff members generally, and for our staff members who participate in our sales incentive compensation program, for material risk to the Company. The results of this assessment are reviewed and discussed with the Compensation Committee. Based on this assessment, review and discussion, we believe that, through a combination of risk-mitigating features and incentives guided by relevant market practices and our Company performance goals, our compensation policies and practices do not present risks that are reasonably likely to have a material adverse effect on us.

In evaluating our compensation policies and practices, a number of factors were identified which the Company, the Compensation Committee and its independent consultant believe discourage excessive risk-taking, including the factors described below:

 

 

Our compensation programs consist of a mix of incentives that are tied to varying performance periods and are designed to balance our need to drive our current performance with the need to position the Company for longer-term success.

 

 

Of this mix of incentives, Company-wide results are the most important factor in determining the amount of an incentive award for each of our staff members. Additionally, we cap short-term incentives and make long-term incentive, or LTI, equity awards a component of compensation for nearly all of our full-time staff members. In particular, the CEO and the other executive officers participate in compensation plans that are designed so that the largest component of their

 

 

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compensation is in the form of LTI equity awards to ensure that a significant portion of their compensation is associated with long-term, rather than short-term, outcomes, which aligns these individuals’ interests with our stockholders.

 

 

We employ strong practices with respect to equity awards: we do not award mega-grants, discounted stock options or immediately vested stock options to staff members; we have grant guidelines that generally limit the grant date for our equity grants to the third business day after our announcement of quarterly earnings.

 

 

We have robust stock ownership guidelines for vice presidents and above that require significant investment by these individuals in our Common Stock.

 

 

We require that each officer who has not met their required ownership guidelines retain shares of our Common Stock acquired through the vesting of restricted stock units, the payout of performance units, and the exercise of stock options awarded on or after December 15, 2015, net of shares retained by us to satisfy associated tax withholding requirements and exercise price amounts, until such officer has reached his or her required stock ownership level.

 

 

Our Company values and leadership behaviors are an integral part of the performance assessments of our

   

staff members and are particularly emphasized in our assessment tools at higher positions. These evaluations serve as an important information tool and basis for compensation decisions.

 

 

The Compensation Committee retains full discretion to reduce or eliminate annual cash incentive awards to our executive officers and can and has modified awards downwards.

 

 

We have a clawback policy that requires our Board to consider recapturing past cash or equity compensation payouts awarded to our executive officers if it is subsequently determined that the amounts of such compensation were determined based on financial results that are later restated and the executive officer’s misconduct caused or partially caused such restatement.

 

 

We have recoupment provisions that expressly allow the Compensation Committee or management, as appropriate, to consider employee misconduct that caused serious financial or reputational damage to the Company when determining whether an employee has earned an annual cash incentive award or the amount of any such award.

 

 

Our Insider Trading Policy prohibits pledging or purchasing of our Common Stock on margin and hedging the economic risk of our Common Stock.

 

 

Codes of Ethics and Business Conduct

 

 

Our Board has adopted two codes of business conduct and ethics, one that applies to our directors and the second which applies to all of our staff members, including our executive officers. We also have a Code of Ethics for senior financial officers. To view our codes of business conduct, please visit our website at www.amgen.com. We intend to

disclose any future amendments to certain provisions of our codes of business conduct and ethics, or waivers of such provisions, applicable to our directors and executive officers, at the same location on our website identified above. There were no waivers of any of the codes of business conduct or the codes of ethics in 2016.

 

 

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Director Independence

 

 

At least annually, the Governance Committee reviews the independence of each non-employee director and makes recommendations to the Board and the Board affirmatively determines whether each director qualifies as independent. Each director must keep the Governance Committee fully and promptly informed as to any development that may affect the director’s independence.

The Board has determined that each of our non-employee directors, as well as Dr. Coffman, who served as a director during part of 2016, is independent under the listing standards of NASDAQ and the requirements of the SEC. Mr. Bradway is not independent based on his service as our CEO and President. Mr. Bradway is the only director who also serves us in a management capacity. In making its independence determinations, the Board reviewed direct and indirect transactions and relationships between each director, or any member of his or her immediate family, and us or one of our subsidiaries or affiliates based on information provided by the director, our records and publicly available information. All of the reviewed transactions and arrangements were entered into in the ordinary course of business and none of the business transactions, donations or grants involved an amount that (i) exceeded the greater of 5% of the recipient entity’s revenues or $200,000 with respect to transactions where a director or any member of his or her immediate family or spouse served in any capacity other than as a director of a publicly held-corporation or (ii) exceeded $10,000 with respect to professional or consulting services provided by entities at which our directors serve as professors or employees. The following types and categories of transactions, relationships and arrangements were considered by our Board in making its independence determinations:

 

 

Each of our independent directors (or their immediate family members), currently serves or has previously served within

   

the last three years as a professor, trustee, director, or member of a board, council or committee for one or more colleges, universities or non-profit, charitable organizations, including research or scientific institutions, to which The Amgen Foundation, Inc. has made matching donations under our Amgen matching gift program that is available to all of our employees and directors, or has made grants.

 

 

Each of our independent directors (or their immediate family members), other than Judith C. Pelham, currently serves or has previously served within the last three years as a member of the board of directors or the board of trustees or an advisory board for an entity with which Amgen has business transactions or to which Amgen makes donations or grants. The business transactions include, among other things, purchasing supplies, equipment and software licenses, repair and maintenance fees, healthcare sponsorships and programs, utilities, clinical trials, research and development expenses, executive education, conferences and consulting services.

 

 

Drs. Baltimore, Rebecca M. Henderson, Tyler Jacks and R. Sanders Williams currently serve as professors for universities to which Amgen has made payments for certain business transactions such as symposiums, conferences, internships, clinical trials, training and research and development expenses, software licenses and maintenance fees, as well as for grants.

None of our directors directly or indirectly provides any professional or consulting services to us and none of our directors currently has or has had any direct or indirect material interest in any of the above transactions and arrangements. The Board determined that these transactions and arrangements did not warrant a determination that the director was not independent.

 

 

Board Meetings

 

 

The Board held six meetings in 2016 and all of the directors attended at least 75% of the total number of meetings of the Board and committees on which they served. Ellen J. Kullman was appointed to the Board in October 2016 and attended all meetings of the Board and committees on which she served after the date of her appointment. It is the Company’s policy

that all current directors attend our annual meetings of stockholders barring unforeseen circumstances or irresolvable conflicts. All of the then-current members of the Board, except for Dr. Baltimore, were present at our 2016 Annual Meeting.

 

 

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Board Committees and Charters

 

 

The Board has six standing committees: Audit Committee; Compensation Committee; Compliance Committee; Equity Award Committee; Executive Committee and Governance Committee. The Board maintains charters for each of these standing committees. In addition, the Board has adopted a written set of Corporate Governance Principles and a Board of Directors’ code of conduct that generally formalize practices we have in place. To view the charters of our standing Board committees, our Corporate Governance Principles and the Board of Directors’ code of conduct, please visit our website at www.amgen.com.

Audit Committee

The Audit Committee met ten times in 2016. Throughout 2016 and currently, Frank J. Biondi, Jr. serves as chairman and Ms. Pelham, François de Carbonnel, and Fred Hassan serve as members of the Audit Committee, with Drs. Henderson and Jacks joining the Audit Committee on the date of the 2016 Annual Meeting and Ms. Kullman and Charles M. Holley, Jr. joining upon their appointments to the Board. Dr. Baltimore, Mr. Eckert and Greg C. Garland served on the Audit Committee in 2016 until the 2016 Annual Meeting. All members of the Audit Committee meet the NASDAQ composition requirements, including the requirements regarding financial literacy and financial sophistication, and the Board has determined that each member is independent under the listing standards of NASDAQ and the rules of the SEC regarding audit committee membership. The Board has also determined that Ms. Kullman and Messrs. de Carbonnel, Hassan, and Holley are each an “audit committee financial expert” as defined by SEC rules. The Audit Committee has sole authority for the appointment, compensation, retention and oversight of the work of the independent registered public accountants, and responsibility for reviewing and discussing, prior to filing or issuance, with management and the independent registered public accountants (when appropriate) our audited consolidated financial statements to be included in our Annual Report on Form 10-K and earnings press releases.

Compensation and Management Development Committee

The Compensation Committee met five times in 2016. Throughout 2016 and currently, Mr. Herringer serves as

chairman and Ms. Pelham, and Messrs. Biondi and Hassan serve as members of the Compensation Committee, with Dr. Coffman retiring and Messrs. Eckert and Garland and Dr. Jacks joining the Compensation Committee on the date of the 2016 Annual Meeting. Each member of the Compensation Committee has been determined by the Board to be independent under the listing standards of NASDAQ and the requirements of the SEC.

The Compensation Committee assists the Board in fulfilling its fiduciary responsibilities with respect to the oversight of the Company’s compensation plans, policies and programs, especially those regarding executive compensation. The Compensation Committee is responsible for designing the Company’s compensation programs that encourage high performance, promote accountability and adherence to Company values and the staff member code of conduct and to align with the interests of the Company’s stockholders. The Compensation Committee is responsible for ensuring that the executive management development processes attract, develop and retain talented leadership to serve the long-term best interests of the Company.

The Compensation Committee has authority for overseeing the Board’s relationship with stockholders on executive compensation matters, including stockholder outreach efforts, stockholder proposals, advisory votes, communications with proxy advisory firms and related matters.

The processes and procedures of the Compensation Committee for considering and determining compensation for 2016 for our executive officers were as follows:

 

 

With respect to our CEO, by the first calendar quarter of each year, the Compensation Committee reviews and approves Company performance goals and objectives for the current year and evaluates the CEO’s performance in light of the Company performance goals and objectives established for the prior year. The Compensation Committee evaluates the performance of the CEO within the context of the financial and operational performance of the Company, considers competitive market data and establishes the CEO’s compensation based on this evaluation. The values of each component of total compensation (base salary, target annual cash incentive awards and equity awards) for the current year, as well

 

 

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as total annual compensation for the prior year (including the value of equity holdings, potential change of control payments and vested benefits under our Retirement and Savings Plan, Supplemental Retirement Plan and Nonqualified Deferred Compensation Plan as of the end of the last fiscal year) are considered at this time. Final determinations regarding our CEO’s performance and compensation are made during an executive session of the Compensation Committee and are reported to and reviewed by the Board in an independent directors’ session.

 

 

During 2016, the Compensation Committee engaged Frederic W. Cook & Co., Inc., or Cook & Co. or the consultant, an independent compensation consultant, to provide advice regarding executive compensation and executive compensation trends and developments, compensation designs and equity compensation practices, market data as requested, and opinions on the appropriateness and competitiveness of our executive compensation programs relative to market practice. Cook & Co. reported directly to the Compensation Committee and attended regularly scheduled meetings of the Compensation Committee (including meeting in executive session with the Compensation Committee, as requested). In cooperation with management, Cook & Co. assesses the potential risks arising from our compensation policies and practices. Management interacts with the consultant to provide information or the perspective of management as requested by the consultant or Compensation Committee, coordinates payment to the consultant out of the Board’s budget, notifies the consultant of upcoming agenda items and makes the consultant aware of regular or special meetings of the Compensation Committee.

 

 

In setting executive compensation, the Compensation Committee compares the Company’s pay levels and programs to those of the Company’s competitors for executive talent and uses this comparative data as a guide in its review and determination of compensation. Our Compensation Committee considers and selects an appropriate peer group (consisting of biotechnology and pharmaceutical companies), based, in part, on the recommendations of Cook & Co., and, for each Named Executive Officer, or NEO, the Compensation Committee reviews the compensation levels and practices of our peer group, which for our NEOs, other than the CEO, is

 

based on reports prepared by management from information contained in compensation surveys and proxy statements. Cook & Co. provides the Compensation Committee with market data, the practices of our peer group and recommendations for the CEO position.

 

 

Our Compensation Committee determines compensation for the executive officers (other than the CEO) based, in part, on the recommendations of our CEO regarding base salary, annual cash incentive awards and equity awards. In determining his compensation recommendations for each NEO, our CEO reviews comparative peer group data. The Compensation Committee has typically followed these recommendations.

 

 

The Compensation Committee generally holds executive sessions (with no members of management present, unless requested by the Compensation Committee) at its regular meetings.

 

 

The Compensation Committee has authority to delegate any of the functions described above to a subcommittee of its members. No delegation of this authority was made in 2016.

Each year the Compensation Committee reviews the independence of Cook & Co. and whether any conflicts of interest exist. In performing its analysis, the Compensation Committee considers the factors set forth in the SEC rules and the NASDAQ listing standards. After review and consultation with Cook & Co., the Compensation Committee has determined that Cook & Co. is independent and there is no conflict of interest resulting from retaining Cook & Co. currently or during the year ended December 31, 2016.

Equity Award Committee

The Equity Award Committee met four times in 2016. Throughout 2016 and currently, Mr. Herringer serves as chairman and Mr. Bradway serves as a member of the Equity Award Committee, with Mr. Garland joining the Equity Award Committee after Dr. Coffman’s retirement at the 2016 Annual Meeting. Our Board has delegated to the Equity Award Committee the responsibility for determining annual equity-based awards to vice presidents and below who are not Section 16 officers and authority to make equity-based awards from time to time to such eligible staff members for purposes of compensation, retention, promotion and upon commencement of their employment consistent with the

 

 

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equity grant guidelines established by the Compensation Committee. In addition, the Equity Award Committee presents a report to the Compensation Committee detailing the equity-based awards made by the Equity Award Committee at least twice per year.

Governance and Nominating Committee

The Governance Committee met five times in 2016. Currently, Mr. Garland serves as chairman, having served on the Governance Committee throughout 2016 and as chairman since Dr. Coffman’s retirement at the 2016 Annual Meeting. Throughout 2016 and currently, Drs. Baltimore, Sugar and Williams, and Mr. Herringer serve as members of the Governance Committee, with Mr. Eckert joining the Governance Committee at the 2016 Annual Meeting and Ms. Kullman joining upon her appointment to the Board. Messrs. de Carbonnel and Drs. Henderson and Jacks served on the Governance Committee until the 2016 Annual Meeting. Each of the members of the Governance Committee has been determined by the Board to be independent under the listing standards of NASDAQ and the requirements of the SEC.

The Governance Committee is responsible for developing and overseeing the Board’s Corporate Governance Principles and a code of conduct applicable to members of the Board and for monitoring the independence of the Board. The Governance Committee also determines Board membership qualifications, selects, evaluates and recommends to the Board nominees to fill vacancies as they arise, reviews the performance of the Board and its committees and is responsible for director education. The Governance Committee maintains, with the approval of the Board, guidelines for selecting nominees to serve on the Board and considering stockholder recommendations for nominees. Such guidelines are included in this proxy statement as Appendix A. Stockholders wishing to communicate with the Governance Committee regarding recommendations for director nominees should follow the procedure described in “Communication with the Board” below. See “OTHER MATTERS—Stockholder Proposals for the 2018 Annual Meeting” for a description of the information that a stockholder proposing to nominate a director for election must provide to the Company in their advance notice. Additionally, the Governance Committee recommends to the Board nominees for appointment as executive officers and certain other officers.

The Governance Committee also oversees the corporate governance and Board membership matters of the Company. The Governance Committee identifies and recommends to the Board qualified individuals for Board and committee membership and considers and recommends to the Board nominees to stand for election at the annual meeting of stockholders and to fill vacancies as they arise as more fully described previously in “Director Qualifications and Review of Board Diversity.” Among the Governance Committee’s responsibilities, the Governance Committee evaluates and makes recommendations to our Board regarding compensation for non-employee Board members. Any Board member who is also an employee of the Company does not receive separate compensation for service on the Board.

The processes and procedures of the Governance Committee for considering and determining director compensation are as follows:

 

 

The Governance Committee has the authority to evaluate and make recommendations to our Board regarding director compensation. The Governance Committee conducts this evaluation periodically by reviewing our director compensation practices against the practices of an appropriate peer group and the Governance Committee may determine to make recommendations to our Board regarding possible changes to director compensation.

 

 

The Governance Committee has the authority to retain consultants to advise on director compensation matters. No executive officer has any role in determining or recommending the form or amount of director compensation.

 

 

The Governance Committee has authority to delegate any of these functions to a subcommittee of its members. No delegation of this authority was made in 2016.

Corporate Responsibility and Compliance Committee

The Compliance Committee met five times in 2016. Throughout 2016 and currently, Dr. Sugar serves as chairman and Drs. Henderson and Williams serve as members of the Compliance Committee, with Dr. Baltimore and Mr. de Carbonnel joining the Compliance Committee on the date of the 2016 Annual Meeting and Mr. Holley joining upon his appointment to the Board.

 

 

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The Compliance Committee is responsible for overseeing our compliance program and reviewing our programs in a number of areas governing ethical conduct including: (i) Federal health care program requirements; (ii) Food and Drug Administration requirements and other regulatory agency requirements, including good manufacturing, clinical and laboratory practices, drug safety and pharmacovigilance activities; (iii) interactions with members of the healthcare community; (iv) the Company’s Corporate Integrity Agreement; (v) environment, health and safety and (vi) human resources and government affairs. Additionally, the Compliance Committee receives regular updates on political, social and environmental trends, and public policy issues that may affect our business or public image, and reviews our sustainability, political and philanthropic activities.

Our compliance program is designed to promote ethical business conduct and ensure compliance with applicable laws and regulations. We have codes of conduct for our officers, staff and suppliers that delineate standards for ethical business conduct and legal and regulatory compliance as well as a business conduct hotline through which anonymous reports of misconduct can be made to our Chief Compliance Officer. To view the codes of conduct, please visit our website at www.amgen.com.

Our Chief Compliance Officer, who reports to the Compliance Committee, oversees the ongoing operations of the compliance program. The key objectives of our compliance program operations include developing policies and procedures, providing ongoing compliance training and education, auditing and monitoring of compliance risks, maintaining and promoting the business conduct hotline, conducting investigations, responding appropriately to any compliance violations and taking appropriate steps to detect and prevent recurrence.

Executive Committee

The Executive Committee did not meet in 2016. Throughout 2016 and currently, Mr. Bradway serves as chairman and Messrs. Biondi and Herringer and Dr. Sugar serve as members of the Executive Committee, with Dr. Coffman retiring and Mr. Garland joining on the date of the 2016 Annual Meeting and Mr. Eckert joining in July 2016, respectively. The Executive Committee has all the powers and authority of the Board in the management of our business and affairs, except with respect to certain enumerated matters, including Board composition and compensation, changes to the Amgen Inc. Restated Certificate of Incorporation or any other matter expressly prohibited by law or the Amgen Inc. Restated Certificate of Incorporation.

 

 

Communication with the Board

 

 

Our annual meeting of stockholders provides an opportunity each year for stockholders to ask questions of, or otherwise communicate directly with, members of the Board on appropriate matters. In addition, stockholders may communicate in writing with any particular director, any committee of the Board, or the directors as a group, by sending such written communication to our Secretary at our principal executive offices at One Amgen Center Drive, Thousand Oaks, California 91320-1799. Copies of written communications received at such address will be provided to the Board or the relevant director unless such communications are considered, in the reasonable judgment of our Secretary, to be inappropriate for submission to the intended recipient(s). Examples of stockholder communications that would be considered inappropriate for submission to the Board include,

without limitation, customer complaints, solicitations, communications that do not relate directly or indirectly to our business or communications that relate to improper or irrelevant topics. The Secretary or his designee may analyze and prepare a response to the information contained in communications received and may deliver a copy of the communication to other Company staff members or agents who are responsible for analyzing or responding to complaints or requests. Communications concerning potential director nominees submitted by any of our stockholders will be forwarded to the chairman of the Governance Committee.

For information on our engagement with our stockholders since the 2016 Annual Meeting, please see page 62 of our Compensation Discussion and Analysis.

 

 

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Compensation Committee Report

 

 

The Compensation Committee has reviewed and discussed the following Compensation Discussion and Analysis with management, and based on the review and discussions, recommended to the Board of Directors that the

Compensation Discussion and Analysis be included in the Company’s 2017 Annual Meeting proxy statement and incorporated by reference into the Company’s Annual Report on Form 10-K for the year ended December 31, 2016.

 

 

Compensation Committee of the Board of Directors

Frank C. Herringer, Chairman

Frank J. Biondi, Jr.

Robert A. Eckert

Greg C. Garland

Fred Hassan

Tyler Jacks

Judith C. Pelham

 

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Executive Compensation

Compensation Discussion and Analysis

 

This Compensation Discussion and Analysis describes our compensation strategy, philosophy, policies, programs and practices, or compensation program, for our Named Executive Officers, or NEOs, and the positions they held in 2016 below:

Table of Contents

 

 

Our Named Executive Officers

     56  

Our Strategy

     57  

Aligning Pay With Performance and Execution of Our Strategic Priorities

     58  

Positive 2016 Say on Pay Vote Outcome and Engagement With Our Stockholders

     62  

LTI Equity Award Design Changes in 2016

     62  

Our 2016 Compensation Program Highlights and Objectives

     63  

Our Compensation and Governance Best Practices

     65  

How Compensation Decisions Are Made For Our Named Executive Officers

     66  

Elements of Compensation and Specific Compensation Decisions

     69  

Compensation Policies and Practices

     82  

Non-Direct Compensation and Payouts in Certain Circumstances  

     84  

Taxes and Accounting Standards

     86  

Our Named Executive Officers

 

 

Name    Role in 2016

Robert A. Bradway

  

Chairman of the Board, Chief Executive Officer and President

Anthony C. Hooper

  

Executive Vice President, Global Commercial Operations

David W. Meline

  

Executive Vice President and Chief Financial Officer

Sean E. Harper

  

Executive Vice President, Research and Development

Jonathan P. Graham

  

Senior Vice President, General Counsel and Secretary

 

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Our Strategy

 

Six therapeutic areas form the core of our business—cardiovascular, oncology/hematology, bone health, neuroscience, inflammation, and nephrology. Our strategy to execute in these therapeutic areas is multifaceted, with seven strategic priorities that allow us to drive long-term growth, while also delivering on our short- and medium-term goals. As a result, our strategy enables multiple approaches to creating stockholder value. Key 2016 activities that align our NEO pay with performance and support the execution of these strategic priorities are summarized in the following pages.

Our Strategic Priorities

 

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  Strategic Priorities

 

  

Description

 

 

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Our focus on developing innovative, breakaway medicines to address important unmet needs guides how we allocate resources across internal and external program possibilities. This results in a productive balance of internal development and external programs and collaborations reflected in our current product portfolio and pipeline.

 

 

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We continue to improve our business and operating model through significant transformation and process improvement efforts. Among these programs, we have reduced the time it takes to bring new medicines to market, reengineered internal processes to make them more efficient, and explored new technologies with potential to further enhance the value we deliver to patients.

 

 

LOGO

  

Biologic medicines are, for the most part, injected subcutaneously or administered intravenously, which often means that patients need to visit a doctor’s office or hospital to receive treatment. Innovations that make the delivery of our medicines easier and less costly offer important opportunities for differentiation, are good for patients and also have positive economic benefits to the healthcare system overall.

 

 

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We believe our deep experience in biologics development and unparalleled capabilities in biotechnology manufacturing make entry into the emerging biosimilars market attractive and position us for leadership.

 

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We have been actively expanding our presence by opening new affiliates and locations around the world, pursuing smart acquisitions and acquiring global rights to market our products. Amgen medicines are now available to patients in approximately 100 countries worldwide.

 

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We recognize that stockholders who support investment in developing innovative medicines require an appropriate return on the capital they commit to Amgen.

 

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Our first next-generation biomanufacturing facility in Singapore has been constructed in less than half the time, at a quarter of the cost of a traditional facility while using 80% less space and having a much smaller impact on the environment.

 

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Aligning Pay With Performance and Execution of Our Strategic Priorities

 

 

A significant majority of each NEO’s compensation is dependent on our performance and execution of our strategic priorities. Our annual cash incentive and long-term equity incentive programs together promote focus on both near- and long-term stockholder value creation by providing incentive compensation that is earned based on our financial, operating, and stock price performance and is “at risk.” In 2016, we delivered strong financial results while making significant progress on our 2016 operating performance goals and advancing our strategic priorities, which facilitate execution of our strategy.

 

Annual Cash Incentive Program Results

Our annual cash incentive compensation program is tied directly to our performance based on pre-established financial goals of revenues (30%) and non-GAAP net income(1) (30%), and operating performance goals tied to executing product and delivery system launches (10%) and progressing innovative pipeline (30%):

 

 Goal    Weighting      % of Target
Earned
 

 

1. Financial Performance

 

 

 

Revenues

 

  

 

 

 

 

30%

 

 

 

 

  

 

 

 

 

139.7%

 

 

 

 

 

Non-GAAP Net Income(1)

 

  

 

 

 

 

30%

 

 

 

 

  

 

 

 

 

147.5%

 

 

 

 

 

2. Execute Product and Delivery System Launches

 

 

 

Execute Product and Delivery System Launches

 

    

 

10%

 

 

 

    

 

127.8%

 

 

 

 

3. Progress Innovative Pipeline

 

 

 

Execute Key Clinical Studies and Regulatory Filings

 

    

 

20%

 

 

 

    

 

190.0%

 

 

 

 

Advance Early Pipeline

 

  

 

 

 

 

10%

 

 

 

 

  

 

 

 

 

225.0%

 

 

 

 

 

Composite Score

 

    

 

Achieved 159.5%

 

 

 

 

1. We delivered on our financial performance goals.

 

Revenues increased 6% to $23 billion in 2016

In 2016, our financial performance was strong and we delivered on our financial performance goals.

 

 

We grew revenues by 6% over 2015 to $23 billion in 2016.

 

 

Our U.S. Generally Accepted Accounting Principles, or GAAP, net income increased 11% to $7.7 billion and our non-GAAP net income(1) grew 10% to $8.8 billion in 2016.

 

LOGO

Our commitment to re-shape the expense base of the business delivered results once more in 2016 as we continued to execute on the transformation and process improvement efforts announced in 2014. Our transformation and process improvement efforts across Amgen are enabling us to reallocate resources to fund many of our innovative pipeline and growth opportunities that deliver value to patients and stockholders.

 

 

Operating leverage from the changes we have made enables us to drive net income growth in the near-term while our longer-term investments have laid the foundation for growth beyond this period.

 

 

Since 2014, we have realized approximately $1.2 billion of transformation and process improvement savings, the majority of which was reinvested in product launches, clinical programs and external business development.

 

 

 

 

(1) 

Non-GAAP net income is reported and reconciled in Appendix B to this proxy statement. Non-GAAP net income for purposes of the 2016 Company performance goals of our annual cash incentive award program is reported and reconciled in Appendix B to this proxy statement, excluding the incremental benefit ($95 million) of excess tax benefits recognized arising from the adoption of a new accounting standard on share-based payments.

 

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2. We executed on product and delivery system launches.

 

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This is the first full year that we have been able to provide patients with our six innovative products launched in 2015 (Repatha®, Kyprolis®, BLINCYTO®, IMLYGIC®, Neulasta® On-Pro® Kit, and Corlanor®). Repatha® and Kyprolis® both represent substantial opportunities as they address serious diseases impacting large patient populations with significant unmet medical needs.

Cardiovascular disease is the most costly disease for society today. In the absence of new therapies to reduce the risk of cardiovascular events for the millions of high risk patients in the U.S. and around the world, the burden of this disease is set to rapidly rise.

 

 

For Repatha® (our medicine for certain patients who are unable to get their low-density lipoprotein, or LDL, (bad cholesterol) under control with current treatment options), we have focused on competing effectively, including capturing approximately 60% of share of new to brand prescriptions in the U.S., as of January 2017. Our focus remains on enabling access to Repatha® for appropriate patients as hurdle rates for access and reimbursement for prescribers and patients remain high.

 

 

Supportive of the Repatha® value proposition, we also announced the results from three significant Phase 3 studies that add to the data from our comprehensive clinical development program—GAUSS-3(1) (demonstrating significant LDL reductions for patients with high cholesterol treated with Repatha® who cannot tolerate statins); GLAGOV(2) (demonstrating that Repatha® regresses atherosclerosis in patients with coronary artery disease) and FOURIER(3) (showing that Repatha® reduces the risk of cardiovascular events in patients with clinically evident atherosclerotic disease).

  -  

FOURIER is a landmark outcomes study that shows that Repatha® decreases LDL cholesterol to unprecedented low levels and reduces the risk of cardiovascular events with no new safety issues.

 

 

In our oncology therapeutic area, for Kyprolis® (our medicine for patients with relapsed or refractory multiple myeloma), we reported strong unit growth driven by increased share and ex-U.S. launches and supportive of the Kyprolis® launch we also received approval in Europe of Kyprolis® for use in combination with dexamethasone alone for adult patients with relapsed multiple myeloma based on data from the ENDEAVOR(4) clinical trial.

 

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We have built leading patient- and provider-friendly device capabilities.

 

 

In 2016, we reported strong performance from the Neulasta® On-Pro® Kit, including that, as we exited the year, utilization of the Kit in the U.S. continues to grow, a clear example of our commitment to innovation to improve the quality of patient care throughout the product lifecycle. This Kit improves the patient experience by eliminating the need to return to a doctor’s office the day after chemotherapy for a Neulasta® injection, which translates to increased value for providers, patients and payers.

 

 

We launched the Repatha® Pushtronex™ system, the first and only single monthly injection for a PCSK9 inhibitor, in the U.S. and, based on our work in 2016, received approval in early 2017 for this device in the E.U.

 

LOGO

During the last five years, we have expanded our reach to approximately 100 countries. In 2016, capitalizing on our expansion activities, we had 94 product country launches.

 

 

 

(1) 

Goal Achievement After Utilizing an Anti-PCSK9 Antibody in Statin Intolerant Subjects-3.

(2) 

GLobal Assessment of Plaque ReGression with a PCSK9 AntibOdy as Measured by IntraVascular Ultrasound.

(3) 

Further Cardiovascular OUtcomes Research with PCSK9 Inhibition in Subjects with Elevated Risk.

(4) 

RandomizEd, OpeN Label, Phase 3 Study of Carfilzomib Plus DExamethAsone Vs Bortezomib Plus DexamethasOne in Patients With Relapsed Multiple Myeloma.

 

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3. We significantly advanced our pipeline.

 

LOGO

    

Our pipeline continued to advance in 2016. In addition to the Repatha® trials and Kyprolis® E.U. approval discussed above, we reported the results of many important clinical trials, and we also have a number of programs nearing key regulatory milestones. A selected summary of these developments is contained below. (For complete information of all of our material pipeline advancements, please refer to our Form 10-K for the year ended December 31, 2016.)

In our bone health therapeutic area in 2016, we reported that:

 

 

We submitted a BLA(1) to the FDA(2) for EVENITY™* (romosuzumab)(3) for the treatment of osteoporosis in postmenopausal women at increased risk of fracture.

 

 

Our Phase 3 study evaluating the safety and efficacy of Prolia® compared with risedronate in patients receiving glucocorticoid treatment met all primary and secondary endpoints at 12 months.

Also, in 2016 in our oncology therapeutic area, we reported that our Phase 3 study evaluating XGEVA® in the prevention of skeletal-related events, or SREs, in patients with multiple myeloma met its primary endpoint of non-inferiority compared with zoledronic acid in delaying the time to first on-study SRE.

In our neuroscience therapeutic area, we reported three positive pivotal studies for erenumab(4) (our medicine designed for the treatment of migraine):

 

 

A Phase 2b chronic migraine study showed that erenumab statistically significantly reduces patients’ monthly migraine days; and

 

 

Two Phase 3 episodic migraine studies demonstrated statistically significant reductions in monthly migraine days in patients treated with erenumab.

In our nephrology therapeutic area, we reported that the European Commission approved Parsabiv™ (etelcalcetide) for the treatment of secondary hyperparathyroidism in adult patients with chronic kidney disease on hemodialysis.

 

LOGO

  

    

In our biosimilars portfolio in 2016, we reported:

 

 

We received FDA approval for AMJEVITA™ (biosimilar adalimumab (HUMIRA®)) and submitted applications to both the FDA and EMEA(5) for ABP 215(6) (biosimilar bevacizumab (Avastin®)).

 

 

We are in Phase 3 for ABP 980(6) (biosimilar trastuzumab (Herceptin®)), ABP 798(6) (biosimilar rituximab (Rituxan®/Mabthera®)), and ABP 710 (biosimilar infliximab (REMICADE®)).

In 2016, we also made strong progress on executing against our other strategic priorities:

 

  We invested for long-term growth while returning substantial capital to our stockholders.

 

LOGO

Our strong cash flows and balance sheet allowed continued investment for long-term growth through internal research and development ($3.8 billion in 2016) and external business development transactions, while simultaneously providing substantial returns to stockholders.

 

In 2016, while investing $3.8 billion in research and development, we also returned $6 billion of capital to our stockholders ($3 billion in dividends and ~20 million shares in stock repurchases)

 

 

 

(1) 

Biologics License Application.

(2) 

U.S. Food and Drug Administration.

(3) 

Developed in collaboration with UCB.

(4) 

Jointly developed in collaboration with Novartis AG.

(5) 

European Medicines Agency.

(6) 

Developed in collaboration with Allergan plc.

*

FDA provisionally approved trade name.

 

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Annual Dividend Increases

 

LOGO

 

  *

Represents annualized dividend

 

 

We increased our dividend per share 27% over 2015 (to $1.00 per share for 2016).

 

LOGO

We made investments in next-generation biomanufacturing that build on our existing competitive advantage in manufacturing. This next-generation biomanufacturing dramatically reduces the scale and costs of making biologics while maintaining a reliable, high-quality, compliant supply of medicines. Final preparations are underway for licensure of our new Singapore facility. At this facility, the next-generation biomanufacturing approach is environmentally responsible, vastly reducing water use and requiring less energy.

 

Performance Under Our Long-Term Incentive

Program

Our long-term incentive, or LTI, equity award compensation is tied directly to our stock performance and aligns with the interests of our stockholders.

80% of our annual LTI equity award grants are performance-based and, as such, a significant portion of total compensation is tied to our stock price performance and value creation for our stockholders. Our performance units that were earned based on the three year performance period ending January 31, 2017 were earned based on our relative total shareholder return, or TSR.

 

LOGO

 

        Our three-year TSR outperformed the TSRs of the Standard and Poor’s 500 Index, or S&P 500, for the same period.

Payout under our LTI performance award program for our 2014-2016 performance period at 112.5% reflects our three-year TSR performance at the 56.2nd percentile relative to the TSRs of the companies in the S&P 500 for this performance period.

An investor who had invested in our Company Common Stock on January 1, 2014 would have earned a TSR of 37% as of December 31, 2016 versus 29% for the S&P 500 for the same period as depicted above.

 

 

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Positive 2016 Say on Pay Vote Outcome and Engagement With Our Stockholders

 

 

In 2016, we received approximately 97% stockholder support on our say on pay advisory vote. We have engaged consistently in broad direct stockholder outreach over the past several years. Since our 2016 annual meeting of stockholders, in addition to our outreach by our executives and our Investor Relations department to investors, we have engaged in governance-focused outreach activities and discussions with stockholders comprising approximately 52% of our outstanding shares. These discussions have been valuable and informative and we will continue to engage with our stockholders to further enhance our understanding of the perspectives of our investors. The compensation-related feedback from our stockholders is reviewed by our Compensation and Management Development Committee, or Compensation Committee, and we have made a number of compensation changes in response to past discussions with our stockholders, including changes to our long-term incentive equity award design described below. Governance-related feedback is reviewed by our Governance and

Nominating Committee and has also been a source of governance changes, including our adoption of proxy access for director nominations. Insights from investors are reported to the full Board of Directors, or Board.

In 2016, our predominant feedback from investors with respect to our compensation and governance practices was that they are satisfied with our compensation program and governance practices. While we are pleased with our say on pay results and stockholder feedback, we will continue to reach out to understand and address any concerns of our stockholders. Our stockholder outreach efforts will continue after the filing of this proxy statement, as well as through our executive compensation website (accessible at www.amgen.com/executivecompensation) initiated in 2008 that invites stockholders to provide feedback directly to the Compensation Committee regarding our executive compensation program.

 

 

LTI Equity Award Design Changes in 2016

 

 

In 2016, the Compensation Committee made the following LTI equity award design changes which take into account feedback from dialogue with our stockholders and are designed to drive operating performance and increase performance hurdles.

 

 

We added non-GAAP financial measures of earnings per share, operating margin and operating expense, and maintained the relative TSR measure as a modifier for our 2016-2018 performance period performance award goal design. The new operating performance measures were chosen to drive operating performance in alignment with our operating performance commitments to stockholders through 2018, focus our executives on the transformation of our business and our operating efficiency and profitability, and address the challenges of a single performance metric for a full three-year period.

 

To better align our performance award program with those of our peers and to further encourage our executives to drive performance, we increased the maximum amount that can be earned for the 2016-2018 performance period from 150% to 200%.

 

 

To emphasize the importance of long-term growth and stock appreciation, we reintroduced non-qualified stock options, or stock options, into our LTI equity award mix. Like our restricted stock units, or RSUs, stock options generally vest in three approximately equal annual installments on the second, third and fourth anniversaries of the grant date. Stock options directly align with stockholder interests as they only have value if the Company’s stock price increases after grant. The addition of stock options results in a more diversified mix of performance-based equity.

 

 

We revised our equity incentive plan design to require a minimum vesting period of no less than one year on 95% of equity awards granted.

 

 

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Our 2016 Compensation Program Highlights and Objectives

 

 

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LTI Equity Awards (“At Risk”)

 

 

Performance Units. The Compensation Committee establishes the performance award goal design at the commencement of each three year period of the performance award program. There is no guarantee of any value realized from the grants as they are earned only if specific long-term performance goals are achieved.

 

 

Stock Options. Aligned with stockholder interests as they only have value if the Company’s stock price increases after grant.

 

 

Restricted Stock Units. Designed to encourage retention and long-term value creation.

 

 

Stock options and RSUs vest in three approximately equal installments on the second, third and fourth anniversaries of the grant date.

Performance Units Earned for the 2014-2016 Performance Period

 

 

Our payout for the most recent 2014-2016 performance period was at 112.5% of target because our absolute TSR for this performance period (36.2%) resulted in our 56.2nd percentile ranking relative to the TSRs of the companies in the S&P 500 since the beginning of the performance period (January 31, 2014).

 

 

Annual Cash Incentive Awards (“At Risk” and Designed to Drive Execution of Our Strategic Priorities)

 

 

In 2016, we delivered strong financial results while making significant progress on our 2016 operating objectives and advancing our strategic priorities, which facilitate execution of our strategy. Our Compensation Committee annually approves Company performance goals that are designed to focus our staff on delivering on our financial performance, operational objectives and specific priorities to drive annual performance and position us to execute on our strategy in the near- and longer-term. Our Executive Incentive Plan, or EIP, establishes a maximum award possible for each participant and annual cash incentive awards are generally made to our NEOs under the EIP based on the Company’s performance against the pre-established Company performance goals.

 

 

Our annual cash incentive awards are earned based on achieving financial growth and operational objectives that drive near- and long-term growth, stockholder value and support our strategy. In 2016, we established annual Company performance goals of revenues (30%), non-GAAP net income(1) (30%), and a number of operational measures supporting “Execute Product and Delivery System Launches” (10%) and “Progress Innovative Pipeline” (30%) (comprises “Execute Key Clinical Studies and Regulatory Filings” (20%) and “Advance Early Pipeline” (10%)). Based on our strong overall performance in 2016 compared to these pre-established Company performance goals, we paid annual cash incentive awards at 159.5% of target bonus opportunity.

 

 

Increased target bonus opportunities in 2016, to more closely approximate the Market Median, to have a greater proportion of cash compensation performance-based and “at risk,” and to foster a team approach. For 2016, we increased our Chief Executive Officer’s, or CEO’s, target annual cash incentive award opportunity from 140% to 150% of base salary for target total annual cash and, each Executive Vice President target annual cash incentive award opportunity was increased to 100% of base salary (from 90%) for 2016.

 

 

Base Salaries (the smallest component of compensation for our NEOs)

 

 

In both 2014 and 2015, no base salary increases were made to the NEOs. Based on data provided to the Compensation Committee, including recommendations of Frederic W. Cook & Co., or Cook & Co., the Compensation Committee’s independent consultant, an overall merit increase of 3% was recommended for our NEOs in 2016, adjusted to align with the Market Median for each position. Although our CEO’s 2015 base salary was at the 25th percentile of our peer group, our CEO received a 2% salary increase based on Cook & Co.’s recommendation to bring him closer to the Market Median, but to retain the substantial majority of his compensation as “at risk” and performance-based in the form of LTI equity awards and annual cash incentive awards.

 



 

 

(1) 

Non-GAAP net income is reported and reconciled in Appendix B to this proxy statement, excluding the incremental benefit ($95 million) of excess tax benefits recognized arising from the adoption of a new accounting standard on share-based payments.

 

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Our Compensation and Governance Best Practices

 

 

 

  What we do

 

 

 

Target Median: We target compensation at the 50th percentile, or median, of our peer group for all elements of compensation.

 

 

Clawback policy: Our Board is required to consider the recapture of past cash or LTI equity award payouts to our NEOs if the amounts were determined based on financial results that are later restated and the NEOs’ misconduct is determined by the Board to have caused the restatement.

 

 

Recoupment: Our incentive compensation plans contain recoupment provisions applicable to all staff members that expressly allow the Compensation Committee to determine that annual cash incentive awards are not earned fully or in part where such employee has engaged in misconduct that causes serious financial or reputational damage to the Company.

 

 

Robust stock ownership and retention guidelines: We have a six times base salary ownership requirement for our CEO. Officers are required to retain shares of our Common Stock acquired through the vesting of RSUs, the payout of performance units, or the exercise of stock options until they have reached the required stock ownership level.

 

 

Minimum vesting periods: Our equity incentive plan provides that our equity awards are subject to a minimum vesting period of no less than one year on 95% of equity awards granted and our grants generally vest over four years, with no vesting in the first year and vesting in three approximately equal annual installments on the second, third and fourth anniversaries of the grant date.

 

 

Double-trigger in the event of a change of control, No tax gross-ups: We do not have “single-trigger” equity vesting acceleration upon a change of control for RSUs and stock options.

 

 

Performance-based equity: Our LTI equity award grants are primarily (80%) performance-based.

 

  What we don’t do

 

 

       ×

 

 

No hedging or pledging: With respect to our Common Stock, our staff members and Board are prohibited from engaging in short sales, purchasing or pledging our Common Stock on margin, or entering into any hedging, derivative or similar transactions.

 

       ×

 

 

No re-pricing or backdating: We have strong LTI equity award plans and policies that prohibit re-pricing or backdating of equity awards.

 

       ×

 

 

No special tax gross-ups: We do not provide tax gross-ups, except for business-related payments such as reimbursement of certain moving and relocation expenses on behalf of newly-hired and current executives who agree to relocate to work on the Company’s behalf.

 

       ×

 

 

No excessive perks: Our perquisites are limited to those with a clear business-related rationale.

 

       ×

 

 

No employment agreements: We do not have employment contracts or guaranteed bonuses, other than in countries where they are required by law.

 

       ×

 

 

No dividends paid on unvested equity: Dividends accrue on our performance units and RSUs, but are paid only when and to the extent the underlying award is earned and vested.

 

       ×

 

 

No defined benefit pension or supplemental executive retirement plan (SERP) benefits or “above market” interest on deferred compensation.

 

 

 

 

 

 

 

 



 

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How Compensation Decisions Are Made For Our Named Executive Officers

 

 

LOGO

 

Roles and Responsibilities

 

 

Compensation Committee

Composed solely of independent directors and reports to the Board

 

   Evaluates the performance of our CEO within the context of the financial and operational performance of the Company.

   Determines and approves compensation packages for our CEO, other NEOs, Executive Vice Presidents, Senior Vice Presidents and Section 16 officers (collectively, “Senior Management”).

   Reviews and approves all compensation programs in which our NEOs participate.

   Oversees the development and effective succession planning for members of Senior Management.

   Discusses succession plans for our CEO and other Senior Management annually.

   Exercises the sole authority to select, retain, replace and/or obtain advice from compensation consultants, legal counsel and other outside advisors and assesses the independence of each such advisor, taking into consideration the factors set forth in the Securities and Exchange Commission, or SEC, rules and The NASDAQ Stock Market listing standards.

   Oversees the Board’s relationship with and response to stockholders on executive compensation matters and the Compensation Discussion and Analysis.

 

 

Consultant to the Compensation Committee

Frederic W. Cook & Co., Inc., Independent consultant retained directly by the Compensation Committee

 

   Regularly attends Compensation Committee meetings, including meeting in executive session with the Compensation Committee.

    Provides advice and studies on the appropriateness and competitiveness of our compensation program relative to market practice for our NEO compensation and the selection of our peer group.

    Consults on executive compensation trends and developments.

   Consults and makes recommendations, when requested, on various compensation matters and compensation program designs and practices to support our business strategy and objectives.

   Coordinates and reviews the appropriateness of market data compiled by management.

    Works with management to assess the potential risks arising from our compensation policies and practices.

 

 

CEO

Assisted by the Senior Vice President, Human Resources and other Company staff members

 

   Conducts performance reviews of the other NEOs and makes recommendations to the Compensation Committee with respect to compensation of Senior Management other than himself.

   Provides recommendations on the development of and succession planning for the members of Senior Management other than himself.

 

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Use of Independent Compensation Committee Consultant

To assist the Compensation Committee in its review and determination of executive compensation, the Compensation Committee retained and sought advice from Cook & Co., an independent consultant. George B. Paulin, the Chairman of Cook & Co., worked directly with the Compensation Committee in the roles and undertaking the responsibilities previously described in “How Compensation Decisions Are Made For Our Named Executive Officers” and specifically provided consultation regarding regulatory updates, selection of our peer group, consultation on design changes for our LTI equity awards, competitive practice for CEO compensation and general market practices for NEO compensation.

On a periodic basis, the Company purchases proprietary executive compensation survey data from Cook & Co. to inform the Compensation Committee’s decisions, but does not engage Cook & Co. for any other services to the Company. During 2016, the Compensation Committee, as in past years, had responsibility for engaging Cook & Co. and directed the nature of the activity and interchange of data between Cook & Co. and management.

The Compensation Committee recognizes the unique demands of our industry, including its complex regulatory and reimbursement environment, and the challenges of running an enterprise focused on the discovery, development, manufacture and commercialization of innovative treatments to address serious illness. The Compensation Committee believes that these unique demands require executive talent that has significant industry experience as well as, for certain key functions, specific scientific expertise to oversee research and development activities and the complex manufacturing requirements for biologic products. Further, the Compensation Committee believes that these very particular skills and capabilities limit the pool of talent from which we can recruit and also cause our employees to be highly valued and sought after in our industry.

On an annual basis, Cook & Co. reviews our peer group with the Compensation Committee to determine whether it remains appropriate. Based in part on recommendations from Cook & Co., as well as a review of the objective criteria described in the chart below, the Compensation Committee determined that no changes were necessary in 2016 as the peer group remained appropriate and continued to meet the criteria.

 

 

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How We Establish Our Peer Group

 

    

2016 Peer Group Companies

Biotechnology and pharmaceutical companies with which we compete for executive talent.

     Objective Criteria Considered  

2016 Peer Group

(Companies in blue also list Amgen as a peer)

 

   GICS codes of biotechnology (352010) and pharmaceuticals (352020);

   12-month average market capitalization between 0.25 and 4.0x that of Amgen’s average market capitalization for the same period(1);

   Trailing four-quarter revenues between 0.25 and 4.0x that of Amgen’s revenues(1);

   Non-U.S. peers limited to those commonly identified as a “peer of peers”;

   Competitors for executive talent;

   Companies of comparable scope and complexity;

   Competitors for equity investor capital;

   Companies that identify us as their direct peer; and

   Companies with similar pay practices.

 

•   AbbVie Inc.

   Allergan plc

   AstraZeneca plc

•   Biogen Inc.

•   Bristol-Myers Squibb Company

•   Celgene Corporation

•   Eli Lilly and Company

•   Gilead Sciences, Inc.

•   GlaxoSmithKline plc

•   Johnson & Johnson

•   Merck & Co., Inc.

•   Novartis AG

•   Pfizer Inc.

•   Roche Holding AG

   Sanofi S.A.

 

 

(1)

For purposes of the 2016 peer group analyses:

 

      2015 Market Capitalization    2015 Revenues(a)  

 

  Amgen

 

  

 

$122.5 billion

 

  

 

$

 

 

21.7 billion

 

 

 

 

 

  Relative Peer Group Position

 

  

 

3rd Quartile (above median)

 

  

 

 

 

 

2nd Quartile

 

 

 

 

 

  (a)

Revenues for GlaxoSmithKline plc, Roche Holding AG and Sanofi S.A. were converted into U.S. dollars using the average of daily exchange rates for 2015 as provided by Bloomberg L.P.

Our market capitalization as of July 22, 2016 (the date on which the Compensation Committee considered our peer group) was as follows:

 

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Peer Group Data Sources

Our primary data sources for evaluating all elements of compensation for our CEO is data compiled by Cook & Co. from SEC filings of our peer group for the 25th, 50th and 75th percentiles of the specific compensation elements paid to CEOs in our peer group (and the 85th percentile for LTI equity awards). For our other NEOs, our primary data sources for evaluating all elements of compensation are the Willis Towers Watson Pharmaceutical Human Resources Association Executive Compensation Survey, or PHRA Survey, which provides peer company pharmaceutical data, augmented by the available data from proxy statements filed with the SEC for biotechnology companies in our peer group.

Solely for the determination of LTI equity awards, we also provide data from the Cook & Co. Survey of Long-Term Incentives (Cook & Co. Survey). Based on this data, the Compensation Committee is presented with a comparison of each NEO on a position or pay rank basis with an analysis of each element of direct compensation for such NEO at the 50th and 75th percentile of the peer group. Because PHRA Survey and proxy statement data is only available for the previous calendar year, consistent with generally accepted practice, base pay data is aged forward to the current year based on expected salary movement. Annual cash incentive award and LTI equity award market data are not adjusted for aging.

 

 

The “Market Median” is determined for our CEO and our other NEOs by the Compensation Committee in March of each year as follows:

 

Market Median     

 

CEO (compiled by Cook & Co.)

 

 

 

Other NEOs

 

   

    50th percentile of each compensation element paid to
CEOs in our peer group in the previous year.

 

   Average of the 50th percentile of each compensation element of our peer group from the PHRA Survey (pharmaceutical peers) and proxy statements (biotechnology peers) in the previous year (with base pay data aged forward to the current year).

   

Elements of Compensation and Specific Compensation Decisions

 

Described below are our three primary elements of executive compensation in order of magnitude: LTI equity awards; annual cash incentive awards and base salaries.

 

Long-Term Incentive Equity Awards

Our compensation program aims to achieve the appropriate balance of compensation elements relative to the responsibilities of our staff members, with the result that the largest proportion of compensation for our CEO and the other NEOs is in the form of LTI equity awards that are risk-based and closely aligned with the creation of long-term stockholder value. Equity-based compensation represents 75% of our CEO’s target compensation and 64% of target compensation for our other NEOs. In addition, while being mindful of dilution (see below), we also grant LTI equity awards each year to nearly all of our staff members worldwide to increase individual awareness of how our performance impacts stockholder value. We believe that our capacity to grant equity-based compensation has been a

significant factor in achieving our strategic objectives by rewarding execution of our strategy and stock price appreciation, aligning our NEOs’ and staff members’ interests with stockholders and fostering long-term focus and retention.

Company Continues to Exercise Discipline in the Grant of Long-Term Incentive Equity Awards – Monitoring Dilution and Annual Equity Usage

Our compensation philosophy, practices and approach continue to be effective in balancing the use of equity to align employees with our stockholders while being mindful of the level of dilution that our stockholders experience. LTI equity award grant guidelines are established for each job level

 

 

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within the Company targeting the 50th percentile of our peer group for levels for which equity data is broadly available. For certain lower job levels where data is not as comprehensive, we have developed guidelines that trend in-line with available data and consider internal equity. The Compensation Committee sets an LTI equity award budget at approximately the 50th percentile of our peer group. The Compensation Committee periodically reviews the Shareholder Value Transfer (SVT) associated with the aggregate LTI equity award grants to ensure that our SVT is aligned with our peer group practices because, while the Compensation Committee supports a broad-based equity plan to align our staff members with our stockholders, the Compensation Committee also strives to limit the amount of stockholder dilution to that which stockholders would expect to experience with our peer group. We regularly review dilution and the rates at which we grant LTI equity awards and the resulting potential dilutive effect has decreased over the last five years and is consistent with that of our peer group.

 

LOGO

Long-Term Incentive Equity Award Composition

As part of its annual evaluation of our LTI equity award practices, the Compensation Committee reviewed our LTI equity award mix with Cook & Co. Based on the Compensation Committee’s interest in aligning long-term executive compensation with stockholder interests through a diversified equity program, the Compensation Committee determined to re-introduce stock options into our LTI equity award mix at executive levels in 2016. The Compensation Committee believes that stock options are an important addition to available forms of performance-based LTI equity awards given the direct link between the value of stock

price appreciation to our stockholders and the compensation value delivered by stock option awards to our executives.

LTI Equity Award Allocation

 

LOGO

On a value basis, in 2016 80% of our annual equity award value continued to be delivered in the form of performance-based LTI equity awards consisting of 50% in the form of performance units (earned at the end of a generally three year performance period) and 30% in the form of stock options. Previously performance units comprised 80% of the equity mix. Time-vested RSUs, designed to incentivize retention, continued to make up the remaining 20% of value. Both stock options and our time-vested RSUs generally vest over four years, with no vesting in the first year and vesting in three approximately equal annual installments on the second, third and fourth anniversaries of the grant date. The delay in the commencement of vesting further emphasizes the long-term performance focus of our LTI equity award program and enhances retention.

The Compensation Committee believes that this equity award mix presents a balanced approach to executive LTI equity awards and is well aligned with stockholder interests and pay for performance.

Value of Long-Term Incentive Equity Awards Granted to Named Executive Officers in 2016

In March 2016, the Compensation Committee determined executive LTI equity award grant values for 2016. In its review, the Compensation Committee considered a range between the 25th and 85th percentile of the peer group for the CEO and, for proposed awards to NEOs other than the CEO, the Compensation Committee considered the recommendations of our CEO and analyzed the range between 50th and 75th percentiles of our peer group for each available NEO position. The Compensation Committee also took into account the Company’s performance, the

 

 

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individual’s performance in their role and historical grant levels when determining individual grants.

The Compensation Committee continued to consider the value of the LTI equity awards granted in 2016 relative to the Market Median  with the  result that  the 2016  grant value  for our CEO

was slightly above Market Median (3.5%) to increase the proportion of the CEO’s compensation “at risk” and the remaining NEO grant values were slightly less than Market Median (from -0.4% to -7.1%).

 

 

2016 Annual Long-Term Incentive Equity Awards

Based on a review of Company and executive performance and market data, the Compensation Committee determined to grant the following LTI equity awards to our CEO and the other NEOs in March 2016, with an effective grant date of May 3, 2016, the third business day after the announcement of our first quarter 2016 earnings results. The Compensation Committee approved the aggregate LTI equity award grant value, with the exact number of performance units, stock options and RSUs determined based on the fair value of such awards in proportion to the 50% performance units/30% stock options/20% RSUs value allocation on the grant date. For more information regarding the determination of the Market Median, see “How Compensation Decisions Are Made For Our Named Executive Officers—Peer Group Data Sources” previously discussed.

 

  Named Executive Officer   

Performance

Units(1)

($)

    

Stock

Options

($)

    

Restricted

Stock

Units

($)

    

Total Equity

Value

Granted

($)

    

2015

Market

Median

($)

    

Difference vs.

Market Median

Over/ (Under)

(%)

 

 

  Robert A. Bradway

 

  

 

 

 

 

5,500,000

 

 

 

 

  

 

 

 

 

3,300,000

 

 

 

 

  

 

 

 

 

2,200,000

 

 

 

 

  

 

 

 

 

11,000,000

 

 

 

 

  

 

 

 

 

10,632,000

 

 

 

 

  

 

 

 

 

3.5

 

 

 

 

 

  Anthony C. Hooper

 

  

 

 

 

 

2,000,000

 

 

 

 

  

 

 

 

 

1,200,000

 

 

 

 

  

 

 

 

 

800,000

 

 

 

 

  

 

 

 

 

4,000,000

 

 

 

 

  

 

 

 

 

4,016,624

 

 

 

 

  

 

 

 

 

(0.4

 

 

 

 

  David W. Meline

 

  

 

 

 

 

1,750,000

 

 

 

 

  

 

 

 

 

1,050,000

 

 

 

 

  

 

 

 

 

700,000

 

 

 

 

  

 

 

 

 

3,500,000

 

 

 

 

  

 

 

 

 

3,769,094

 

 

 

 

  

 

 

 

 

(7.1

 

 

 

 

  Sean E. Harper

 

  

 

 

 

 

1,750,000

 

 

 

 

  

 

 

 

 

1,050,000

 

 

 

 

  

 

 

 

 

700,000

 

 

 

 

  

 

 

 

 

3,500,000

 

 

 

 

  

 

 

 

 

3,552,994

 

 

 

 

  

 

 

 

 

(1.5

 

 

 

 

  Jonathan P. Graham

 

  

 

 

 

 

1,150,000

 

 

 

 

  

 

 

 

 

690,000

 

 

 

 

  

 

 

 

 

460,000

 

 

 

 

  

 

 

 

 

2,300,000

 

 

 

 

  

 

 

 

 

2,378,426

 

 

 

 

  

 

 

 

 

(3.3

 

 

 

 

(1) 

The 2016-2018 performance period runs from January 1, 2016 through December 31, 2018.

 

Based on the March 2016 Compensation Committee review of the Market Median, the Compensation Committee awarded Mr. Bradway a 2016 LTI equity award grant valued at $11 million, which is approximately 7.8% higher than the value of his grant in 2015 and slightly above the Market Median. After considering the effect of the 2016 LTI equity award grant on Mr. Bradway’s target total direct compensation, the Compensation Committee determined that awarding a grant value for 2016 LTI equity slightly above the Market Median was appropriate as it retains the substantial majority of Mr. Bradway’s compensation as “at risk” and performance-based and also achieved the intent of the Compensation Committee for the CEO’s target total direct compensation to approximate the Market Median within three-to-five years of Mr. Bradway’s promotion to that role in May 2012.

The March 2016 Compensation Committee review of the Market Median also supported increased 2016 LTI equity award values for Executive Vice President roles as Market

Median LTI equity award grant values had increased for these roles. While the Compensation Committee believes that internal equity is an important consideration for building a team approach, in reviewing the Market Median data, the Compensation Committee noted the higher LTI equity award Market Median values for the Executive Vice President, Global Commercial Operations role compared to that of the Chief Financial Officer and Executive Vice President, Research and Development roles. As a result, the Compensation Committee approved a higher grant value for Mr. Hooper that was matched to the Market Median for his role of Executive Vice President, Global Commercial Operations. The Compensation Committee determined that this increase of approximately 14% was appropriate, not only because of its Market Median competitiveness, but also because of the scope and span of Mr. Hooper’s responsibility and the level of importance of his role to the Company. The Compensation Committee approved equal grant values for Mr. Meline and Dr. Harper to take into account the similar

 

 

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strategic impact of their roles to the Company. These values are slightly less than the Market Median for each role and reflects Mr. Meline’s relative newness in this position at Amgen. Mr. Graham’s relatively lower LTI equity award reflects his Senior Vice President role and is also slightly less than Market Median for his position given his relative newness to this position at Amgen.

Performance Units (50% of LTI Equity Awards)

Performance units are rights to earn shares of our Common Stock, based on pre-established performance goals achieved over a performance period of generally three years. The number of performance units earned is determined by our performance as measured against the pre-established performance goals at the end of the related performance period. Each performance unit earned entitles the participant

to one share of our Common Stock. Given the design of our performance award program, there is no guarantee of any value realized from grants of performance units.

Performance Award Program—Performance Units Earned for the 2014-2016 Performance Period

Performance units for the 2014-2016 performance period, which ended January 31, 2017, were earned, certified and converted into shares of Common Stock in March 2017 based on an earned payout percentage of 112.5% resulting from the Company’s three-year absolute TSR of 36.2% ranking in the 56.2nd percentile relative to the TSRs of the companies in the S&P 500 as of the beginning of the performance period (January 31, 2014).

 

 

2014-2016 Performance Period Program Design*

 

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*

The 2015-2017 performance period has a substantially similar design.

 

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Payout Calculation for the 2014-2016 Performance Period

 

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2014-2016 Performance Period Performance Units Earned

Our actual performance results (the 56.2nd percentile, or above the median) for the 2014-2016 performance period that ended January 31, 2017 resulted in the following number of shares of Common Stock being earned under our performance award program for this performance period. Each earned performance unit converts to one share of Common Stock upon the payout date of March 24, 2017.

 

  Named Executive Officer     

Performance Units

Value

Granted (Target)

($)

 

 

 

 

   

Number of

Performance

Units Granted

(#)

 

 

 

 

   

Number of Shares
of our Common
Stock  Earned

(#)



(1) 

 

 

  Robert A. Bradway

 

  

 

 

 

 

7,200,000

 

 

 

 

 

 

 

 

 

57,738

 

 

 

 

 

 

 

 

 

69,727

 

 

 

 

 

  Anthony C. Hooper

 

  

 

 

 

 

2,400,000

 

 

 

 

 

 

 

 

 

19,246

 

 

 

 

 

 

 

 

 

23,241

 

 

 

 

 

  David W. Meline

 

  

 

 

 

 

 

 

(2) 

 

 

 

 

 

 

 

 

(2) 

 

 

 

 

 

 

 

 

(2) 

 

 

  Sean E. Harper

 

  

 

 

 

 

2,400,000

 

 

 

 

 

 

 

 

 

19,246

 

 

 

 

 

 

 

 

 

23,241

 

 

 

 

 

  Jonathan P. Graham

 

  

 

 

 

 

 

 

(2) 

 

 

 

 

 

 

 

 

(2) 

 

 

 

 

 

 

 

 

(2) 

 

 

(1) 

Includes dividend equivalents earned on these amounts rounded down to the nearest whole number of shares (excluding fractional shares paid in cash).

(2) 

Messrs. Meline and Graham commenced employment with the Company after the participants for the 2014-2016 performance period had been determined and, as such, they did not receive any performance units for the 2014-2016 performance period.

 

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New Performance Award Goal Design—Performance Units Granted in 2016 for the 2016–2018 Performance Period

To ensure that the performance award program continues to strongly align with the interests of our stockholders and motivates management to long-term value creation, the Compensation Committee regularly reviews and considers whether to update the performance award goal design with input from management and Cook & Co. Based on review and deliberation in December 2015 and March 2016, and having considered the performance award goal designs of our peer group and stockholder feedback, the Compensation Committee approved the 2016-2018 performance period performance award goal design that retained relative TSR as a modifier to continue to tie these awards to our market performance and stockholder interests while adding the following operating performance measures to drive operational performance and increase performance hurdles:

 

 

Non-GAAP earnings per share(1) (EPS) growth;

 

 

Non-GAAP operating margin(1); and

 

 

Non-GAAP operating expense(1).

The new operating performance measures were chosen to:

 

 

Drive operating performance in alignment with our operating performance commitments to stockholders through 2018;

 

 

Focus our executives on the transformation of our business and our operating efficiency and profitability; and

 

 

Address the challenges of a single performance metric for a full three-year period.

The three operating measures are weighted equally (one-third per measure) and calculated against pre-established targets for each year in the 2016-2018 performance period. All operating goals (for each year) are established at the commencement of the three year performance period. At the end of the performance period, the final average operating measure percentages for each of the three years are averaged, resulting in a total operating measures score that can range from 50% to 150% for maximum performance. The total operating measures score is then modified up or down by up to 50 percentage points based on our TSR performance ranking relative to the TSRs from the grant date through the end of the performance period of the companies in the S&P 500 (the relative TSR modifier) resulting in a payout range of 0% to 200% of target awards granted. The TSR modifier is limited to target (zero) where our absolute TSR is less than zero to limit reward in a performance period in which we perform better than the S&P 500 for the period but investors do not recognize stock price growth.

 

 

  

 

(1) 

Non-GAAP EPS, Non-GAAP operating margin and Non-GAAP operating expense for purposes of 2016 for the 2016-2018 performance period are reported and reconciled in Appendix B to this proxy statement. Non-GAAP for purposes of each of the years of the 2016-2018 performance period was defined as earnings per share, operating margin and operating expense under GAAP, excluding certain items, net of tax, related to acquisitions, restructuring and certain other items.

 

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