DEF 14A 1 d629495ddef14a.htm DEF 14A DEF 14A
Table of Contents

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)

 

 

Payment of filing fee (check the appropriate box):

 

 

               

 

 

 

No fee required.

 

 

    

 

 

 

Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11

 

   

 

(1) 

 

 

 

Title of each class of securities to which transaction applies:

 

   

 

(2) 

 

 

 

Aggregate number of securities to which transaction applies:

 

   

 

(3) 

 

 

 

Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):

 

   

 

(4) 

 

 

 

Proposed maximum aggregate value of transaction:

 

   

 

(5) 

 

 

 

Total fee paid:

 

 

    

 

 

 

Fee paid previously with preliminary materials.

 

 

    

 

 

Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the  offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule  and the date of its filing.

 

   

 

(1) 

 

 

 

Amount Previously Paid:

 

   

 

(2) 

 

 

 

Form, Schedule or Registration Statement No.:

 

   

 

(3) 

 

 

 

Filing Party:

 

   

 

(4) 

 

 

 

Date Filed:


Table of Contents

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 8, 2019

Dear Fellow Stockholder:

You are invited to attend the 2019 Annual Meeting of Stockholders, or Annual Meeting, of Amgen Inc. to be held on Tuesday, May 21, 2019, at 11:00 A.M., local time, at the Four Seasons Hotel Westlake Village, Two Dole Drive, Westlake Village, California 91362.

Our Mission and Strategy: We seek to develop innovative medicines that address important unmet medical needs in the fight against serious illness. This objective is the central underpinning of our strategy which includes an integrated set of activities to strengthen our competitive position in our industry. In addition to our significant commitment to innovative research and development and the commercialization of the medicines we make, we are developing branded biosimilars which utilize our industry-leading biologics manufacturing skills. We are doing this while investing for long-term growth, deploying next-generation biomanufacturing facilities, expanding our global geographic reach, improving drug delivery systems, and building on our recent transformation successes to more efficiently bring our discoveries out of the lab and to patients worldwide. While investing in all these activities, we have simultaneously maintained a disciplined approach to capital allocation through which we invest in our future while also returning capital to stockholders. The consistent, strong execution of our strategy results in solving complex problems in biotechnology that benefit patients, building a long-lasting business, and generating long-term stockholder value.

Execution on Our Strategy in 2018: We launched several medicines, including Aimovig®*, the first calcitonin gene-related peptide (CGRP) inhibitor approved for the preventive treatment of migraine in adults, Parsabiv®, for secondary hyperparathyroidism, and our first two biosimilars, KANJINTI (biosimilar trastuzumab (Herceptin®)) and AMGEVITA(biosimilar adalimumab (HUMIRA®)), in Europe. Recognizing the urgent need presented by cardiovascular disease, we also took significant actions in 2018 to address affordability challenges for patients who would benefit from Repatha® (our medicine to dramatically reduce low-density lipoprotein (bad) cholesterol), making it available in the U.S. at a 60% reduction from the medicine’s original list price. We advanced our early oncology pipeline. We also broke ground on our new next-generation biomanufacturing plant in Rhode Island in 2018. This new plant will be the first of its kind in the U.S. and will use our proven next-generation biomanufacturing capabilities to reliably supply medicines and meet the need of every patient, every time. In the Compensation Discussion and Analysis section of this proxy, we further discuss our progress against our strategic priorities in 2018.

Our Transformation: 2018 was the capstone year for a set of ambitious non-GAAP financial commitments we made to our stockholders five years ago, including earnings per share growth, operating margin improvement, and return of capital. As we previously reported, we met and exceeded these targets. The larger goal of our transformation, however, was to enhance our ability to compete. And here too, we’ve made great progress. Over the past five years, we launched nine new products, including in two new therapeutic areas, expanded our global presence to approximately 100 countries, generated our largest ever number of innovative and first-in-class molecules in our pipeline, reduced our development cycle time by an average of approximately 36 months, expanded our industry-leading human genetics capabilities, established a biosimilars business, and deployed a first of its kind, highly-efficient, next-generation biologics manufacturing capability. While our transformation is not complete, we’re in a much better position than ever before to serve patients and to deliver long-term growth.

Stockholder Engagement: We are also guided by the perspectives of our stockholders as expressed through direct engagement with us throughout the year and at our Annual Meeting. Since our 2018 annual meeting of stockholders, in addition to outreach by our executives and Investor Relations department to our investors owning approximately 58% of our outstanding shares, we have engaged in governance-focused outreach activities and discussions with the governance teams for stockholders comprising approximately 53% of our outstanding shares. Topics discussed included our business and financial performance, our environmental, sustainability, and governance programs, executive compensation (including its direct link to our business strategy), and product pricing. Feedback received during these meetings is shared with the full Board of Directors and informs Board decisions. We are eager to continue this valuable dialogue with our investors 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, I will discuss recent developments during the past year, the substantial progress we made on our strategic priorities for 2018, and respond to comments and questions.

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 21. As a final note, and also on behalf of the Board of Directors, I would like to thank Frank Herringer, who is not standing for re-election, for his years of wise counsel and guidance for Amgen.

Sincerely,

 

 

LOGO

Robert A. Bradway

Chairman of the Board,

Chief Executive Officer and President

 

*Jointly

 developed in collaboration with Novartis AG.


Table of Contents

Amgen Inc.

One Amgen Center Drive

Thousand Oaks, California 91320-1799

Notice of Annual Meeting of Stockholders

To be Held on May 21, 2019

 

To the Stockholders of Amgen Inc.:

 

Date and Time:

 

Tuesday, May 21, 2019, at 11:00 A.M., local time

Location:

 

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

Record Date:

 

March 22, 2019. Amgen stockholders of record at the close of business on the record date are entitled to receive notice of, and vote at, the 2019 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 8, 2019, to our stockholders of record on the record date.

Items of Business:
 

1.

 

To elect 12 directors to the Board of Directors of Amgen for a term of office expiring at the 2020 annual meeting of stockholders. The nominees for election to the Board of Directors are Dr. Wanda M. Austin, Mr. Robert A. Bradway, Dr. Brian J. Druker, Mr. Robert A. Eckert, Mr. Greg C. Garland, Mr. Fred Hassan, Dr. Rebecca M. Henderson, Mr. Charles M. Holley, Jr., Dr. Tyler Jacks, Ms. Ellen J. Kullman, Dr. Ronald D. Sugar, and Dr. R. Sanders Williams;

 

2.

 

To hold an advisory vote to approve our executive compensation;

 

3.

 

To ratify the selection of Ernst & Young LLP as our independent registered public accountants for the fiscal year ending December 31, 2019; and

 

4.

 

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 22, 2019. 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 8, 2019


Table of Contents
       

 

 

 

 

Table of Contents

 

 

 

 

 

Table of Contents

 

Proxy Statement Summary      1  
Item 1—Election of Directors      6  
Corporate Governance      14  

Board of Directors Corporate Governance Highlights

     14  

Leadership Structure

     15  

The Board’s Role in Risk Oversight

     16  

Codes of Ethics and Business Conduct

     18  

Board Meetings

     18  

Communication With the Board

     18  

Board Committees and Charters

     18  

Governance and Nominating Committee

     19  

Process for Selecting Directors, Director Qualifications, and Board Diversity

     19  

Regular Board and Committee Evaluations

     20  

Director Independence

     21  

Governance Committee Processes and Procedures for Considering and Determining Director Compensation

     22  

Audit Committee

     22  

Corporate Responsibility and Compliance Committee

     23  

About Our Compliance Program

     23  

Our Environmental Sustainability and Social Responsibility Efforts

     24  

Compensation and Management Development Committee

     25  

Compensation Committee Processes and Procedures for Considering and Determining Executive Compensation in 2018

     25  

Compensation Risk Management

     26  

Pay Ratio

     27  

Compensation Committee Report

     27  
Item 2—Advisory Vote to Approve Our Executive Compensation      28  
Executive Compensation      33  
Compensation Discussion and Analysis      33  

Our Named Executive Officers

     34  

Planned Succession – Executive Officer Changes in 2018

     34  

Our Strategy

     35  

Aligning Pay With Performance and Execution of Our Strategic Priorities

     36  

Positive 2018 Say on Pay Vote Outcome and Engagement With Our Stockholders

     41  

Long-Term Incentive Equity Award Design Changes in 2018

     41  

Our 2018 Compensation Program Highlights and Objectives

     42  

Our Compensation and Governance Best Practices

     44  

How Compensation Decisions Are Made For Our Named Executive Officers

     45  

Elements of Compensation and Specific Compensation Decisions

     48  

Compensation Policies and Practices

     61  

Non-Direct Compensation and Payouts in Certain Circumstances

     63  

Taxes and Accounting Standards

     65  
Executive Compensation Tables      67  
Director Compensation      84  
Security Ownership of Directors and Executive Officers      88  
Security Ownership of Certain Beneficial Owners      90  
Item 3—Ratification of Selection of Independent Registered Public Accountants      91  
Audit Matters      92  
Annual Report on Form 10-K      93  
Certain Relationships and Related Transactions      94  
Information Concerning Voting and Solicitation      95  
Other Matters      99  
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 2019 Proxy Statement      


Table of Contents
       

 

 

 

 

Proxy Statement Summary

 

 

 

 

 

Proxy Statement Summary

This summary contains highlights about our Company and the upcoming 2019 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.

2019 Annual Meeting of Stockholders

 

 

Date and Time:

  

Tuesday, May 21, 2019, at 11:00 A.M., local time

Location:

  

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

Record Date:

  

March 22, 2019

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 8, 2019, to our stockholders.

Voting Matters and Board Recommendations

 

 

 

 

  Matter

 

  

 

Our Board Vote Recommendation    

 

 

  Item 1:

 

 

Election of 12 Nominees to the Board of Directors (page 6)

 

   FOR each Director Nominee

 

 

  Item 2:

 

 

Advisory Vote to Approve Our Executive Compensation (page 28)

 

   FOR

 

 

  Item 3:

 

 

Ratification of Selection of Independent Registered Public Accountants (page 91)

 

   FOR

 

How to Vote

 

 

LOGO

 

   By Internet: You may submit a proxy over the Internet by following the instructions on the website referred to in the Notice, proxy card, or voting instruction form mailed to you. You will need the control number that appears on your Notice, proxy card, or voting instruction form.

 

LOGO

 

   By Telephone: You may submit a proxy by telephone by following the instructions on the website referred to in the Notice, proxy card, or voting instruction form mailed to you. You will need the control number that appears on your Notice, proxy card, or voting instruction form.

 

LOGO

 

   By Mail: If you received a full paper set of materials, date and sign your proxy card or voting instruction form and mail it in the enclosed, postage-paid envelope. If you received a Notice, you may request a proxy card by following the instructions on your Notice. You do not need to mail the proxy card if you are voting by Internet or telephone.

 

LOGO

 

   In Person: 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 22, 2019. 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). Please read “INFORMATION CONCERNING VOTING AND SOLICITATION—Attendance at the Annual Meeting.” Even if you intend to attend the Annual Meeting, we encourage you to submit your proxy in advance of the Annual Meeting.

 

LOGO   ï 2019 Proxy Statement    1


Table of Contents
       

 

 

 

 

Proxy Statement Summary

 

 

 

 

 

Item 1: Election of 12 Nominees to the Board of Directors (Page 6)

 

 

   

  Nominee

     Independent        Age       

Director

Since

 

 

     Audit       

Governance

and

Nominating

 

 

 

     Executive       

Compensation

and

Management

Development

 

 

 

 

    

Equity

Award

 

 

    

Corporate  

Responsibility  

and  

Compliance  


 

 

  Wanda M. Austin

 

    

 

 

 

 

    

 

64

 

 

 

    

 

2017

 

 

 

    

 

M

 

 

 

                

 

M

 

 

 

 

 

  Robert A. Bradway

 

       

 

56

 

 

 

    

 

2011

 

 

 

          

 

C

 

 

 

       

 

M

 

 

 

  
 

 

  Brian J. Druker

 

    

 

 

 

 

    

 

63

 

 

 

    

 

2018

 

 

 

    

 

M

 

 

 

                

 

M

 

 

 

 

 

  Robert A. Eckert

 

    

 

 

 

 

    

 

64

 

 

 

    

 

2012

 

 

 

       

 

M

 

 

 

    

 

M

 

 

 

    

 

C

 

 

 

    

 

C

 

 

 

  
 

 

  Greg C. Garland

 

    

 

 

 

 

    

 

61

 

 

 

    

 

2013

 

 

 

       

 

C

 

 

 

    

 

M

 

 

 

    

 

M

 

 

 

    

 

M

 

 

 

  
 

 

  Fred Hassan

 

    

 

 

 

 

    

 

73

 

 

 

    

 

2015

 

 

 

    

 

M

 

 

 

          

 

M

 

 

 

     
 

 

  Rebecca M. Henderson

 

    

 

 

 

 

    

 

58

 

 

 

    

 

2009

 

 

 

    

 

M

 

 

 

                

 

M

 

 

 

 

 

  Charles M. Holley, Jr.

 

    

 

 

 

 

    

 

62

 

 

 

    

 

2017

 

 

 

    

 

C

 

 

 

       

 

M

 

 

 

          

 

M

 

 

 

 

 

  Tyler Jacks

 

    

 

 

 

 

    

 

58

 

 

 

    

 

2012

 

 

 

    

 

M

 

 

 

          

 

M

 

 

 

     
 

 

  Ellen J. Kullman

 

    

 

 

 

 

    

 

63

 

 

 

    

 

2016

 

 

 

    

 

M

 

 

 

    

 

M

 

 

 

           
 

 

  Ronald D. Sugar

 

    

 

 

 

 

    

 

70

 

 

 

    

 

2010

 

 

 

       

 

M

 

 

 

    

 

M

 

 

 

          

 

C

 

 

 

   

 

  R. Sanders Williams

 

    

 

 

 

 

    

 

70

 

 

 

    

 

2014

 

 

 

             

 

M

 

 

 

                               

 

M

 

 

 

 

“C”

indicates Chair of the committee.

“M”

indicates member of the committee.

 

 

 

LOGO

Corporate Governance Highlights and Best Practices

 

 

 

LOGO

 

*

For our director nominees.

 

2     LOGO   ï 2019 Proxy Statement


Table of Contents
       

 

 

 

 

Proxy Statement Summary

 

 

 

 

 

We Have Implemented Governance Best Practices

 

We continuously monitor developments and best practices in corporate governance and consider stockholder feedback when enhancing our governance structures. Below are highlights of our key governance practices:

 

 

Effective Board    

Leadership and    

Independent    

Oversight    

  

 

 Highly Independent Board – 11 of our 12 director nominees (page 21)

 

 Strong Refreshment Practices With 5 New Directors Since 2015 – Average Board tenure of approximately 5 years for our director nominees (pages 7 and 14)

 

 Annual Anonymous Board and Committee Evaluation Process (pages 14 and 20-21)

 

 All Directors Meet Our Board of Directors Guidelines for Director Qualifications and Evaluations (Appendix A)

 

 Robust Lead Independent Director Role (page 15)

 

 Corporate Responsibility and Compliance Committee (page 23)

 

 Enterprise Risk Management Program and Annual Detailed Compensation Risk Analysis – overseen by Board and Compensation and Management Development Committee, respectively (pages 16-17 and 26-27)

 

   

 

Focus on    

Stockholder Rights    

  

 

 Proxy Access (pages 15 and 99)up to 20 eligible stockholders that own 3% of shares for 3 years who meet the requirements set forth in our Bylaws can nominate director nominees constituting up to the greater of 20% of the total directors or two nominees

 

 Majority Voting Standard for Director Elections (pages 14 and 97)

 

 Stockholders* May Act By Written Consent (page 15)

 

 Stockholders* Have a Right to Call Special Meetings (15% threshold requirement) (page 15)

 

 No Supermajority Vote Provisions in Certificate of Incorporation or Bylaws (page 15)

 

 No Poison Pill (page 15)

 

   

 

History of    

Transparency and    

Accountability    

  

 

 Significant Stock Ownership Requirements for Officers and Directors (pages 62 and 84)

 

 Regular Engagement With Stockholders to Seek Feedback (page 41)

 

 We Continue to Seek Mechanisms to Lower the Cost Burden on Society of Serious Diseases

 

 We Have Demonstrated our Commitment to Environmentally Responsible Operations, Improving Patient Access to Medicines, Science Education, and our Community (page 24)

 

   

 

 

 

 

 

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

THE 12 NAMED NOMINEES.

 

  
 

 

  

 

 

*

Who meet the requirements set forth in our Amended and Restated Bylaws.

 

LOGO   ï 2019 Proxy Statement    3


Table of Contents
       

 

 

 

 

Proxy Statement Summary

 

 

 

 

 

Item 2: Advisory Vote to Approve Our Executive

Compensation (Page 28)

 

2018 Total Target Direct Compensation Mix

 

 

LOGO

 

 

A significant majority of each Named Executive Officer’s, or NEOs, compensation is at-risk and dependent on our performance and execution of our strategic priorities.

 

 

We use median values as the reference point for each element of compensation at all levels, including our NEOs. We consider performance, job scope, and contribution in our final pay decisions.

 

 

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

 

 

80% of our annual long-term incentive, or LTI, equity award grants are performance-based, aligning compensation with long-term value creation for our stockholders. Three-year performance units comprise 50% of our LTI equity award grants for the 2016-2018 performance period and the goal design and all measurement targets are established at the beginning of the three-year performance period. Our 2016-2018 performance units were earned for a performance period ending December 31, 2018, based on the Company’s performance on three equally weighted annual non-Generally Accepted Accounting Principles, or non-GAAP, operating measures of earnings per share, or EPS, growth, operating margin, and operating expense as measured against the pre-established targets for each of the three years.

 

*

Mr. Gordon and Dr. Reese are not included in the pie chart because they commenced their roles as executive officers of our Company on September 3, 2018, and July 26, 2018, respectively.

 

4     LOGO   ï 2019 Proxy Statement


Table of Contents
       

 

 

 

 

Proxy Statement Summary

 

 

 

 

 

2018 Performance Against Pre-Established Goals and Measures

 

2018 Annual Cash Incentive Program

 

 

2016-2018 Long-Term Incentive Performance Award Payout

 

Goal

 

 

Weighting

 

   

 

% of Target  

Earned  

 

       LOGO

 

Financial Performance

 

 

Revenues

 

   

 

30%

 

 

 

 

224.7%  

 

 

Non-GAAP Net Income(1)

 

   

 

30%

 

 

 

 

186.5%  

 

 

Progress Innovative Pipeline

 

 

Advance Early Pipeline

 

   

 

5%

 

 

 

 

113.9%  

 

 

Execute Key Clinical Studies and Regulatory Filings

 

   

 

20%

 

 

 

 

120.8%  

 

 

Deliver Annual Priorities

 

 

Execute Critical Launches and Long-Term Commercial Objectives

 

   

 

10%

 

 

 

 

71.3%  

 

 

Achieve Transformation Objectives

 

   

 

5%

 

 

 

 

124.2%  

 

 

Final Score

 

   

 

Achieved 166.6%  

 

 

(1) 

Non-GAAP net income for purposes of the 2018 Company performance goals of our annual cash incentive award program is reported and reconciled in Appendix B.

(2)

The operating measures of the 2016-2018 performance units were based on non-GAAP financial results for 2016, 2017, and 2018 as reported and reconciled in Appendix B, except that operating measures were further adjusted for the impacts of Hurricane Maria as prescribed by the terms of the 2016-2018 performance goals document. For this purpose, operating expense was reduced by $147 million ($0.16 in EPS) for 2017 and increased by $21 million ($0.03 in EPS) for 2018.

 

 

 

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.

 

  

Item 3: Ratification of Selection of Independent Registered Public Accountants (Page 91)

 

 

 

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, 2019.

 

 

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.

 

  

 

LOGO   ï 2019 Proxy Statement    5


Table of Contents
       

 

 

 

 

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 13 authorized directors serving on our Board. Based upon the recommendation of our Governance and Nominating Committee, the Board has nominated each of the director nominees set forth below to stand for re-election, in each case for a one-year term expiring at our 2020 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 C. Herringer will retire from our Board and has not been nominated for re-election at the 2019 Annual Meeting of Stockholders, or Annual Meeting.

The Board has fixed the authorized number of directors at 12 to be effective as of the close of the Annual Meeting and the election by stockholders of the nominees standing for election. 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, 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. 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.

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.”

 

 

Nominees to the Board

 

 

   

  Nominee

     Independent        Age       

Director

Since

 

 

     Audit       

Governance

and

Nominating

 

 

 

     Executive       

Compensation

and

Management

Development

 

 

 

 

    

Equity

Award

 

 

    

Corporate  

Responsibility  

and  

Compliance  


 

 

  Wanda M. Austin

 

    

 

 

 

 

    

 

64

 

 

 

    

 

2017

 

 

 

    

 

M

 

 

 

                

 

M

 

 

 

 

 

  Robert A. Bradway

 

       

 

56

 

 

 

    

 

2011

 

 

 

          

 

C

 

 

 

       

 

M

 

 

 

  
 

 

  Brian J. Druker

 

    

 

 

 

 

    

 

63

 

 

 

    

 

2018

 

 

 

    

 

M

 

 

 

                

 

M

 

 

 

 

 

  Robert A. Eckert

 

    

 

 

 

 

    

 

64

 

 

 

    

 

2012

 

 

 

       

 

M

 

 

 

    

 

M

 

 

 

    

 

C

 

 

 

    

 

C

 

 

 

  
 

 

  Greg C. Garland

 

    

 

 

 

 

    

 

61

 

 

 

    

 

2013

 

 

 

       

 

C

 

 

 

    

 

M

 

 

 

    

 

M

 

 

 

    

 

M

 

 

 

  
 

 

  Fred Hassan

 

    

 

 

 

 

    

 

73

 

 

 

    

 

2015

 

 

 

    

 

M

 

 

 

          

 

M

 

 

 

     
 

 

  Rebecca M. Henderson

 

    

 

 

 

 

    

 

58

 

 

 

    

 

2009

 

 

 

    

 

M

 

 

 

                

 

M

 

 

 

 

 

  Charles M. Holley, Jr.

 

    

 

 

 

 

    

 

62

 

 

 

    

 

2017

 

 

 

    

 

C

 

 

 

       

 

M

 

 

 

          

 

M

 

 

 

 

 

  Tyler Jacks

 

    

 

 

 

 

    

 

58

 

 

 

    

 

2012

 

 

 

    

 

M

 

 

 

          

 

M

 

 

 

     
 

 

  Ellen J. Kullman

 

    

 

 

 

 

    

 

63

 

 

 

    

 

2016

 

 

 

    

 

M

 

 

 

    

 

M

 

 

 

           
 

 

  Ronald D. Sugar

 

    

 

 

 

 

    

 

70

 

 

 

    

 

2010

 

 

 

       

 

M

 

 

 

    

 

M

 

 

 

          

 

C

 

 

 

   

 

  R. Sanders Williams

 

    

 

 

 

 

    

 

70

 

 

 

    

 

2014

 

 

 

             

 

M

 

 

 

                               

 

M

 

 

 

 

“C”

indicates Chair of the committee.

“M”

indicates member of the committee.

 

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Item 1 — Election of Directors

 

 

 

 

 

LOGO

Summary of Director Nominee Core Experiences and Skills

 

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 biotechnology. The following chart summarizes the competencies of each director nominee to be represented on our Board. The details of each director’s competencies are included in each director’s profile.

 

 

LOGO

Experience / Skills Austin Bradway Druker Eckert Garland Hassan Henderson Holley Jacks Kullman Sugar Williams Healthcare Industry, Providers and Payers Science/Technology Public Company CEO/COO/CFO Regulatory Compliance Financial/Accounting Government/Public Policy International

The lack of a “” for a particular item does not mean that the director does not possess that qualification, characteristic, skill, or experience. Each of our Board members have experience and/or skills in the enumerated areas, however, the is designed to indicate that a director has particular strength in that area.

 

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Item 1 — Election of Directors

 

 

 

 

 

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

 

 

Wanda M. Austin

 

LOGO

 

 

 

Director since: 2017

 

Age: 64

 

Committees:

  Audit

  Corporate Responsibility and Compliance

Other Public Company Boards:

  Chevron Corporation

 

     

 

Wanda M. Austin has served as a director of the Company since 2017. Dr. Austin was appointed Interim President of the University of Southern California in August 2018. She is the retired President and Chief Executive Officer of The Aerospace Corporation, a leading architect of the United States’ national security space programs, where she served from 2008 until her retirement in 2016. From 2004 to 2007, Dr. Austin was Senior Vice President, National Systems Group of The Aerospace Corporation. Dr. Austin joined The Aerospace Corporation in 1979 and served in various positions from 1979 until 2004.

 

Dr. Austin has served as an Adjunct Research Professor at the University of Southern California’s Viterbi School of Engineering since 2007. She is the co-founder of MakingSpace, Inc., where she serves as a motivational speaker on STEM education. Dr. Austin has been a director of Chevron Corporation, a petroleum, exploration, production and refining company, since 2016, serving on its Board Nominating and Governance Committee and chairing its Public Policy Committee. Dr. Austin is a trustee of the University of Southern California and previously served on the boards of directors of the National Geographic Society and the Space Foundation. Dr. Austin received an undergraduate degree from Franklin & Marshall College, a master’s degree from the University of Pittsburgh, and a doctorate from the University of Southern California. She is a member of the National Academy of Engineering.

 

Qualifications

 

The Board concluded that Dr. Austin should serve on the Board based on her leadership and management experience as a chief executive officer, her extensive background in science, technology, and government affairs in a highly regulated industry, and her public board experience.

 

 

Robert A. Bradway

 

LOGO

 

 

Director since: 2011

 

Age: 56

 

Committees:

  Equity Award

  Executive (Chair)

 

Other Public Company Boards:

  The Boeing Company

 

     

 

Robert A. Bradway has served as our director since 2011 and Chairman of the Board since 2013. Mr. Bradway has been our President since 2010 and Chief Executive Officer since 2012. From 2010 to 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 2007 to 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 The Boeing Company, an aerospace company and manufacturer of commercial airplanes, defense, space and securities systems, since 2016, serving on its Audit and Finance Committees. From 2011 to May 2017, Mr. Bradway was a director of Norfolk Southern Corporation, a transportation company. He has served on the board of trustees of the University of Southern California since 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 based on his thorough knowledge of all aspects of our business, combined with his leadership and management skills having previously served as our President and Chief Operating Officer and as our Chief Financial Officer.

 

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Table of Contents
       

 

 

 

 

Item 1 — Election of Directors

 

 

 

 

 

 

Brian J. Druker

 

LOGO

 

 

Director since: 2018

 

Age: 63

 

Committees:

  Audit

  Corporate Responsibility and Compliance

 

     

 

Brian J. Druker has served as a director of the Company since May 2018. Dr. Druker joined Oregon Health & Science University, or OHSU, in 1993 and is currently a physician-scientist and professor of medicine. Dr. Druker has served as the director of the OHSU Knight Cancer Institute since 2007, associate dean for oncology of the OHSU School of Medicine since 2010, and the JELD-WEN chair of leukemia research at OHSU since 2001. He has been an investigator with the Howard Hughes Medical Institute, a nonprofit medical research organization, since 2002.

 

Dr. Druker has served on the scientific advisory boards of Aptose Biosciences Inc., a biotechnology company, since 2013, and Grail, Inc., a biotechnology company, since 2016. In 2011, he founded Blueprint Medicines Corporation, a biopharmaceutical company, and remains as a scientific advisor to this company. In 2006, he founded MolecularMD, a privately-held molecular diagnostics company.

 

Dr. Druker has received numerous awards, including the Lasker-DeBakey Clinical Research Award in 2009, the Japan Prize in Healthcare and Medical Technology in 2012, the Albany Medical Center Prize in 2013 (for influential work in the development of STI571 (Gleevec®) for the treatment of chronic myeloid leukemia), and the Tang Prize in Biopharmaceutical Science in 2018. He was elected to the National Academy of Sciences in 2012 as well as the National Academy of Medicine in 2007. Dr. Druker received both an undergraduate degree and his doctorate from the University of California, San Diego.

Qualifications

The Board concluded that Dr. Druker should serve on the Board based on his extensive scientific research and expertise leading an important academic institution, conducting highly significant research in the area of oncology, and directly managing the care of cancer patients.

 

 

Robert A. Eckert

 

Lead Independent Director

 

 

LOGO

 

 

Director since: 2012

 

Age: 64

 

Committees:

  Compensation and Management Development (Chair)

  Equity Award (Chair)

  Executive

  Governance and Nominating

 

Other Public Company Boards:

  Levi Strauss & Co.

  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 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 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 also has served as a director of Levi Strauss & Co., a jeans and casual wear manufacturer, since 2010, serving as Chair of the Compensation Committee and a member of the Nominating, Governance and Corporate Citizenship Committee. Levi Strauss & Co. was a privately-held company until March 2019 when it became publicly traded. Mr. Eckert was a director of Smart & Final Stores, Inc., a warehouse store, from 2013 until 2014 prior to it becoming a publicly-traded company. 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 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.

 

 

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Table of Contents
       

 

 

 

 

Item 1 — Election of Directors

 

 

 

 

 

 

Greg C. Garland

 

 

 

LOGO

 

Director since: 2013

 

Age: 61

 

Committees:

  Compensation and Management Development

  Equity Award

  Executive

  Governance and Nominating (Chair)

 

Other Public Company Boards:

  Phillips 66(1)

 

     

 

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 2012. Mr. Garland chairs the Executive Committee of Phillips 66.(1) Prior to Phillips 66, Mr. Garland served as Senior Vice President, Exploration and Production, Americas of ConocoPhillips from 2010 to 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 Council 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.

 

 

(1) 

Mr. Garland also serves as Chairman and Chief Executive Officer of Phillips 66 Partners LP, a master limited partnership and wholly-owned subsidiary of Phillips 66 without any employees.

 

 

Fred Hassan

 

 

 

LOGO

 

Director since: 2015

 

Age: 73

 

Committees:

  Audit

  Compensation and Management Development

 

Other Public Company Boards:

  Intrexon Corporation

 

Audit Committee financial expert

     

 

Fred Hassan is Director at Warburg Pincus LLC, a global private equity investment institution, since 2018. Mr. Hassan was Special Limited Partner at Warburg Pincus LLC from 2017 to 2018 and Partner and Managing Director from 2011 to 2017 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 Intrexon Corporation, a synthetic biology company, since 2016, serving on its Compensation Committee. Mr. Hassan was a director of Time Warner Inc., a media company, from 2009 until its acquisition by AT&T Inc., a provider of communications and digital entertainment services, in 2018. 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. from 2013 to 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 based on 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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Table of Contents
       

 

 

 

 

Item 1 — Election of Directors

 

 

 

 

 

 

Rebecca M. Henderson  

 

LOGO

 

 

 

 

Director since: 2009

 

Age: 58

 

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 Compensation 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 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 valuable insight into the Company’s strategic and technology issues.

 

 

Charles M. Holley, Jr.     

 

 

LOGO

 

 

Director since: 2017

 

Age: 62

 

Committees:

  Audit (Chair)

  Corporate Responsibility and Compliance

  Executive

 

Audit Committee financial expert

 

     

 

Charles M. Holley, Jr. is the former Executive Vice President and Chief Financial Officer for Wal-Mart Stores, Inc., or Walmart, where he served from 2010 to 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 2010. From 2005 to 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, at Deloitte LLP, a privately-held provider of audit, consulting, tax, and advisory services, since 2016.

 

Mr. Holley serves on the Advisory Council 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 based on his experience as a chief financial officer of a global public company, his financial acumen, and his management and leadership skills. 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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Table of Contents
       

 

 

 

 

Item 1 — Election of Directors

 

 

 

 

 

 

Tyler Jacks

 

 

LOGO

 

Director since: 2012

 

Age: 58

 

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 2009, serving on its Strategy and Finance Committee and scientific advisory board and chairing its Science and Technology Committee. In 2006, he co-founded T2 Biosystems, Inc., a biotechnology company, and served on its scientific advisory board until 2013. Dr. Jacks 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., a privately-held biopharmaceutical company, and serves as 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 2011 and served as Chair until 2016. In 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 National Academy 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 based on his extensive scientific expertise relevant to our industry, including his broad experience as a cancer researcher, pioneering uses of technology to study cancer-associated genes, and service on several scientific advisory boards and membership in the National Cancer Advisory Board.

 

 

Ellen J. Kullman

 

 

LOGO

 

Director since: 2016

 

Age: 63

 

Committees:

  Audit

  Governance and Nominating

 

Other Public Company Boards:

  Dell Technologies Inc.

  Goldman Sachs Group, Inc.

  United Technologies Corporation

 

Audit Committee financial expert

 

     

 

Ellen J. 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 2009 to 2015. Prior to this, Ms. Kullman served as President of DuPont from 2008 to 2009. From 2006 through 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, and lead director since 2018, serving on its Compensation, Finance and Executive Committees. Ms. Kullman has been a director of Goldman Sachs Group, Inc., an investment banking firm, since 2016, serving on its Compensation, Corporate Governance and Nominating, and Risk Committees. Ms. Kullman has been a director of Dell Technologies Inc., a technology company, since 2016, serving on its Audit and Capital Stock Committees. Dell Technologies was a privately-held company until December 2018 when it became publicly traded. 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 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 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 based on her lengthy global experience as a public company chief executive officer and board chair, 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

 

LOGO

 

Director since: 2010

 

Age: 70

 

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. Dr. Sugar has been a director of 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. Dr. Sugar has been a director of Air Lease Corporation, an aircraft leasing company, since 2010, chairing the Compensation Committee and serving on the Nominating and Corporate 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 Visitors, and director of the Los Angeles Philharmonic Association.

 

Qualifications

 

The Board concluded that Dr. Sugar should serve on our Board because of Dr. Sugar’s board and senior executive-level expertise, including his experience as chief executive officer and board chair of a large, highly regulated, public company and his insight in the areas of operations, government affairs, science, technology and finance.

 

 

R. Sanders Williams

 

LOGO

 

Director since: 2014

 

Age: 70

 

Committees:

  Corporate Responsibility and Compliance

  Governance and Nominating

 

Other Public Company Boards:

  Laboratory Corporation of America Holdings

 

 

     

 

R. Sanders Williams is the President Emeritus of Gladstone Institutes, a non-profit biomedical research enterprise, having served in this position since 2018, and was the Chief Executive Officer of Gladstone Foundation, a not-for-profit organization supporting the Gladstone Institutes during 2018. Dr. Williams has been a Professor of Medicine at the University of California, San Francisco since 2010, and Professor of Medicine at Duke University since 2018. Dr. Williams was both President of Gladstone Institutes and its Robert W. and Linda L. Mahley Distinguished Professor of Medicine, from 2010 to 2017. 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, from 2011 to 2018. 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 because of his broad medical and scientific background, including his leadership roles in domestic and academic science settings, his deep experience in cardiology, oversight of governance of multi-hospital healthcare provider systems, leadership and development of international medical programs in Asia, and prior industry board experience.

 

 

THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” EACH OF THE ABOVE 12 NAMED NOMINEES.

 

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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 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 and stockholder rights include the following:

Board Governance Practices

 

 

Lead Independent Director. The independent members of the Board elect a lead independent director on an annual basis. The lead independent director has robust 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 the votes cast in favor for his or her election in an uncontested election, the Board will adhere to the director resignation policy as provided in our Amended and Restated Bylaws of Amgen Inc., or 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 and external 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.

 

 

Board Refreshment and Tenure. Our average Board tenure is approximately 5 years for our director nominees.

 

 

Director Retirement Age. After review of public company data and extensive discussion, in 2018, the Governance Committee recommended, and the Board approved, raising the retirement age of directors from 72 to 75. A director is expected to retire from the Board on the day of the annual meeting of stockholders following his or her 75th birthday.

 

 

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 the chairman of the Governance Committee. All directors are expected to 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. We provide more information regarding the Board and committee evaluations on pages 20 and 21.

 

 

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 41.

 

 

Management Succession Oversight. Our Board oversees CEO and senior management succession planning. Directors engage with potential CEO and senior management successors at Board and

 

 

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committee meetings. Our Board also establishes steps to address succession to respond to unexpected vacancies in the event of an emergency.

Stockholder Rights

 

 

Proxy Access. Our 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 up to the number of directors constituting the greater of 20% of the total number of directors 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.

 

Written Consent. Our Amgen Inc. Restated Certificate of Incorporation permits stockholders to act by written consent in lieu of a meeting upon the request of the holders of at least 15% of our outstanding common shares who otherwise meet the requirements of our Certificate of Incorporation.

 

 

Special Meetings. Our Bylaws permit stockholders to request that the Company call a special meeting upon the written request of the holders of at least 15% of our outstanding common shares who otherwise meet the requirements set forth in our Bylaws.

 

 

No Supermajority Vote Provisions in Certificate of Incorporation or Bylaws. We have a simple majority voting standard to amend our Certificate of Incorporation and Bylaws.

 

 

No Poison Pill. We do not have a shareholder rights plan, or poison pill.

 

 

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 2016 annual meeting of stockholders, or 2016 Annual Meeting.

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.

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 annually as the lead independent director since the 2016 Annual Meeting and was re-elected by our Board on March 7, 2019 to continue to serve as lead independent director subject to his re-election to the Board by our stockholders at the 2019 Annual Meeting.

The lead independent director is an additional conduit 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 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

 

 

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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 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 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 priorities 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 and safety, supply and quality, value and access, sales and promotion, business development, as well as protecting our assets (financial, intellectual

property, and information (including cybersecurity)), all of which are managed 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 that may affect our ability to achieve the Company’s objectives. The ERM program involves our Board and management 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 has the ultimate oversight responsibility for the risk management process. 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. At each regular meeting, or more frequently as needed, the Board receives and considers reports from each of the committees set forth below, which reports may provide additional detail on risk management issues and management’s response. Important categories of risk are assigned to appropriate Board committees that report back to the full Board:

 

 

  Committee

 

  

 

Primary Risk Oversight Responsibility

 

    

  Governance and Nominating

  

   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. Also oversees Board and committee evaluations and Board succession.

 

 

  Audit

  

   Oversees financial risk, such as capital risk, tax risk, financial compliance risk and internal controls over financial reporting, and oversees internal audit and independent registered public accountants.

 

 

  Compensation and Management Development

  

   Evaluates whether the right management talent is in place and oversees succession planning. Also oversees our compensation policies and practices and incentive program administration and design, including whether such policies, practices, and incentive programs balance risk-taking and rewards in an appropriate manner as discussed further below, align with stockholders’ interests, and are consistent with emerging best practices.

 

 

  Corporate Responsibility and Compliance

  

   Oversees non-financial compliance risk, such as regulatory risks associated with the requirements of the Federal health care program, Food and Drug Administration, and risks associated with pricing and access, information security, including cybersecurity, and our reputation. Also oversees staff member compliance with the Code of Conduct.

 

 

 

 

Oversight of Cybersecurity—Key Priority. The Compliance Committee receives regular updates on projects to strengthen our cybersecurity, major risk areas, and the Company’s approach to address such risks, and the emerging threat landscape. We have safeguards in place to help protect against unauthorized access to, use or disclosure of our information and data, and dedicated executives whose teams advise on risks and assess the effectiveness of our controls.

Oversight of Pricing—Key Priority. The Compliance Committee receives regular updates on pricing and access. We are committed to producing safe and effective therapies that can be appropriately accessed by the patients who need them most, including by:

 

 

investing billions of dollars annually in research and development;

 

 

developing more affordable therapeutic choices in the form of high-quality and reliably-supplied biosimilars;

 

 

partnering with payers to share risk and accountability for health outcomes;

 

 

providing patient support and education programs and helping patients in financial need access our medicines; and

 

 

working with policy makers, patients, and other stakeholders to establish a sustainable healthcare system with access to affordable care and where patients and their healthcare professionals are the primary decision makers.

 

 

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Codes of Ethics and Business Conduct

 

 

 

Our Board has adopted two codes of business conduct and ethics, one that applies to our Board and a second that applies to all our staff and others conducting business on our behalf, including our executive officers and Board. Annual training on the global code of conduct is required and our Board participates in such training. We also have a code of ethics for senior financial officers. To view our codes of

business conduct and ethics, 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 on our website. There were no waivers of any of our codes of business conduct or code of ethics in 2018.

 

 

Board Meetings

 

 

The Board held 11 meetings in 2018 and all of the directors attended at least 75% of the total number of meetings of the Board and committees on which they served. Brian J. Druker was appointed to the Board effective at our 2018 annual meeting of stockholders, or 2018 Annual Meeting, and attended all meetings of the Board and committees on

which he served after the date of his appointment. It is the Company’s policy that all current directors attend our annual meetings of stockholders barring unforeseen circumstances or irresolvable conflicts. Each of our directors were present at our 2018 Annual Meeting.

 

 

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 2018 Annual Meeting, please see page 41 of our Compensation Discussion and Analysis.

 

 

Board Committees and Charters

 

 

The Board has four key standing committees: Governance Committee; Audit Committee; Compliance Committee; and Compensation Committee. The Compensation Committee has delegated certain responsibilities to an Equity Award Committee. In addition, an Executive Committee of the Board has all of 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 our Certificate of Incorporation, or any other matter expressly prohibited by law or our Certificate of

Incorporation. The Executive Committee did not meet in 2018. 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.

 

 

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Governance and Nominating Committee

 

Current Members:

Greg C. Garland (Chair)

Robert A. Eckert

Frank C. Herringer

Ellen J. Kullman

Ronald D. Sugar

R. Sanders Williams

 

Others Who Served in 2018:

David Baltimore (until retirement at 2018 Annual Meeting)

 

Number of Meetings Held in 2018: 4

 

Each member has been determined by the Board to be independent under The NASDAQ Stock Market listing standards and the requirements of the Securities and Exchange Commission, or SEC.

      

 

Description and Key Responsibilities:

 

   Determines Board membership qualifications and 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.

 

   Selects, evaluates, 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 in “Process for Selecting Directors, Director Qualifications, and Board Diversity” below.

 

   Reviews the performance of the Board and its committees and is responsible for director education.

 

   Recommends to the Board nominees for appointment as executive officers and certain other officers.

 

   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.)

 

   Oversees the Board’s Corporate Governance Principles and a code of conduct applicable to members of the Board and monitors the independence of the Board.

 

Process for Selecting Directors, Director Qualifications, and 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 regularly and reports to the Board on the composition and size of the Board, 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 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.

 

 

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Continuous Board Refreshment

The Board, led by the Governance Committee, has an ongoing process for identifying, evaluating and selecting directors.

 

 

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Independent Search Firms Stockholders Independent Directors Candidate Pool Sourced, Maintained, and Updated Consider Guidelines for Director Qualifications and Evaluations (Appendix A) Consider skills matrix Consider diversity Review independence and potential conflicts Meet candidates Select Directors 5 new directors since 2015 Recommend Candidates to the Board Review by full Board

Regular Board and Committee Evaluations

 

Our Governance Committee leads an annual evaluation process of the Board and its committees. The Board and the Audit, Compensation, Compliance, and Governance Committees each complete an annual assessment focusing on their roles, effectiveness, and fulfillment of fiduciary duties.

 

 

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1. Commence Annual Anonymous Evaluations Formal annual anonymous evaluations of the full Board as well as the Audit, Compensation, and Governance Committees are compiled and distributed Overseen by the Governance Committee 2. Evaluation and Assessment Directors provide feedback regarding Board and applicable committee: Composition and structure Role and effectiveness Fulfillment of fiduciary duties Meetings and materials Interaction with management 3. Review The lead independent director speaks with each member of the Board for one-on-one discussions Each committee and the full Board conduct separate discussions in executive session 4. Incorporation of Feedback Follow-up items are addressed at subsequent Board and committee meetings

 

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The Audit, Compensation, Compliance, and Governance Committees each completed their assessments in October 2018 for further evaluation by the Governance Committee in December 2018. The Board completed its evaluation in December 2018. 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.

 

 

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 is and David Baltimore and François de Carbonnel, who served as directors during part of 2018, were independent during 2018 under The NASDAQ Stock Marketing listing standards 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, or (ii) exceeded $10,000 with respect to professional or consulting services provided by entities at which 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 the 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,

   

advisory 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 the independent directors (or their immediate family members) 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, payment of fees and expenses relating to repair and maintenance, transportation, utilities, clinical trials, research and development and training, sponsorship of healthcare programs and conferences, financial management, investment advisory and consulting services, and reimbursement of business-related expenses incurred by our staff members (such as for transportation and food purchases).

 

 

Drs. Austin, Baltimore, Druker, Henderson, Jacks, and Williams currently serve as professors for universities to which Amgen has made payments for certain business transactions such as symposiums, conferences and exhibits, postdoctoral research programs, clinical trials, training and research and development, software licenses and maintenance, as well as for grants.

None of the directors directly or indirectly provides any professional or consulting services to us and none of the 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.

 

 

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Governance Committee Processes and Procedures for Considering and Determining Director Compensation

 

 

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 conducted such an assessment in 2017 and no changes were made to director compensation.

 

 

The Governance Committee has the authority to retain consultants to advise on director compensation matters. During 2017, the

   

Governance Committee engaged Frederic W. Cook and Co., or FW Cook, to provide advice regarding director compensation. FW Cook reported directly to the Governance Committee and attended the Governance Committee meeting to evaluate director compensation. 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 2018.

 

 

 

Audit Committee

 

Current Members:

Charles M. Holley, Jr.* (Chair)

Wanda M. Austin

Brian J. Druker (since May 2018)

Fred Hassan*

Rebecca M. Henderson

Frank C. Herringer*

Tyler Jacks

Ellen J. Kullman*

 

*Audit Committee financial expert

 

Others Who Served in 2018:

François de Carbonnel (until retirement at 2018 Annual Meeting)

 

Number of Meetings Held in 2018: 10

 

Each member has been determined by the Board to be independent under The NASDAQ Stock Market listing standards and the requirements of the SEC, including the requirements regarding financial literacy and sophistication.

 

         

 

Description and Key Responsibilities:

 

   Oversees our accounting and financial reporting process and the audits of the financial statements, as required by NASDAQ.

 

   Assists the Board in fulfilling its fiduciary responsibilities with respect to the oversight of our financial accounting and reporting, the underlying internal controls and procedures over financial reporting, and the audits of the financial statements.

 

   Has sole authority for the appointment, compensation, retention, and oversight of the work of the independent registered public accountants.

 

   Reviews and discusses, 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.

 

   Approves all related party transactions, as required by NASDAQ.

 

     

 

Oversight of the Independent Registered Public Accountants

The Audit Committee:

   Auditor Selection. Evaluates the qualifications and performance of our independent registered public accountants each year and determines whether to re-engage the current independent registered public accountants.

   Audit Partner Selection. Directly involved in the selection of the lead engagement partner through an interview process.

   Audit Firm Evaluation. Considers the quality and efficiency of the services provided, the independent registered public accountants’ technical expertise and knowledge of our operations and industry.

   Audit Services. Pre-approves services.

 

   
               

 

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Corporate Governance

 

 

 

 

 

 

Corporate Responsibility and Compliance Committee

 

Current Members:

Ronald D. Sugar (Chair)

Wanda M. Austin

Brian J. Druker (since May 2018)

Rebecca M. Henderson

Charles M. Holley, Jr.

R. Sanders Williams

 

Others Who Served in 2018:

David Baltimore (until retirement at 2018 Annual Meeting)

François de Carbonnel (until retirement at 2018 Annual Meeting)

 

Number of Meetings Held in 2018: 5

 

Each member has been determined by the Board to be independent under The NASDAQ Stock Market listing standards and the requirements of the SEC.

 

 

      

 

Description and Key Responsibilities:

 

   Oversees our compliance program and reviews our programs in a number of areas governing ethical conduct including:

 

-  U.S. Federal health care program requirements;

 

-  U.S. Food and Drug Administration requirements and other regulatory agency requirements, including good manufacturing, clinical and laboratory practices, drug safety and pharmacovigilance activities;

 

-  interactions with members of the healthcare community;

 

-  anti-bribery/anti-corruption activities;

 

-  environment, health, and safety;

 

-  information security, including cybersecurity; and

 

-  human resources and government affairs.

 

   Receives regular updates on pricing and access, political, social, and environmental trends, and public policy issues that may affect our reputation, including our business or public image, and reviews our corporate responsibility (including sustainability), political, and philanthropic activities.

 

About Our Compliance Program

 

 

Amgen’s Compliance Program is designed to promote ethical business conduct and ensure compliance with applicable laws and regulations. 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 avenues for staff to raise concerns, including anonymously through a business conduct hotline;

 

conducting investigations;

 

 

responding appropriately to any compliance violations; and

 

 

taking appropriate steps to detect and prevent recurrence.

Our Chief Compliance Officer, who reports to the CEO, oversees the ongoing operations of the compliance program.

 

 

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Corporate Governance

 

 

 

 

 

Our Environmental Sustainability and Social Responsibility Efforts

 

 

Environmental Sustainability

We have demonstrated our commitment to environmentally responsible operations by reducing our impact on the environment in multiple areas of our global business.

 

 

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Progress Toward Targets. Our 2020 sustainability targets are set in areas where we can make the most progress in reducing our environmental impact and business costs, including targets for reductions in fleet and facilities carbon, waste, and water use.

Reducing Carbon Through Energy Conservation. Our carbon reduction strategy focuses on eliminating energy use, increasing energy efficiency, and increasing the proportion of energy used from renewable and alternative sources.

Innovation in Operations. Our next-generation biomanufacturing facility in Singapore dramatically reduces the scale and costs of making biologics, vastly reduces water and energy use, while maintaining a reliable, high-quality, compliant supply of medicines. We broke ground on a next-generation biomanufacturing plant in the U.S. in 2018.

United Nations Global Compact. We are a signatory to the United Nations Global Compact, a voluntary initiative based on commitments to implement universal sustainability principles and take steps to support United Nations goals.

Accolades and Where to Find Further Information. In 2018, we earned placement on the Dow Jones Sustainability World Index for the fifth year in a row and on the North America Index for the sixth year in a row. Our Responsibility Highlights Report is available online at www.amgen.com/responsibility.

 

Social Responsibility

Improving Patient Access to Medicines. Amgen is committed to assisting patients with no or limited drug coverage to access the medicines they need. We provide patient support and education programs and help patients in financial need access our medicines. Amgen Safety Net Foundation supports qualifying patients in the U.S. who might go without important medicines because of financial barriers, by providing our medicines at no cost. In 2018, Direct Relief, a leading non-governmental organization, distributed Amgen-donated medicines in a number of developing countries for patients in need.

We also partner with payers to share risk and accountability for health outcomes, and help patients access the medicines they need without significant financial burden. We have been at the forefront of developing innovative contracting and partnerships designed to improve population health and patient access, as well as outcomes-based and risk-sharing approaches that directly link the price of our medicines to their effectiveness.

Science Education. Through The Amgen Foundation, Inc., established in 1991, we seek to advance excellence in science education to inspire the next generation of innovators, and invest in strengthening communities where our staff members live and work. Since inception, the Amgen Foundation has contributed more than $300 million to non-profit organizations across the world that reflect our core values and complement Amgen’s dedication to impacting lives in inspiring and innovative ways. Moreover, through what is now a sixteen-year, $74 million commitment from the Amgen Foundation, the Amgen Scholars Program makes it possible for young scientists across the globe to engage in cutting-edge research experiences and learn more about biotechnology and drug discovery. Additionally, the Amgen Foundation supports the Amgen Biotech Experience, an innovative science education program that empowers high school teachers to bring biotechnology into their classrooms.

Our Community. We have provided support following devastating disasters, including immediate relief for victims of Hurricanes Florence and Michael and devastating wildfires in Southern California, as well as a mass shooting in the community of Thousand Oaks, California, the location of our Company headquarters. We also continue to provide support for reconstruction efforts in Puerto Rico following Hurricane Maria.

 

 

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Corporate Governance

 

 

 

 

 

 

Compensation and Management Development Committee

 

Current Members:

Robert A. Eckert (Chair)

Greg C. Garland

Fred Hassan

Tyler Jacks

 

Number of Meetings Held in 2018: 6

 

Independent Compensation

Consultant: FW Cook

 

Each member has been determined by the Board to be independent under The NASDAQ Stock Market listing standards and the requirements of the SEC.

         

 

Description and Key Responsibilities:

 

   Assists the Board in fulfilling its fiduciary responsibilities with respect to the oversight of the Company’s compensation plans, policies, and programs with a focus on encouraging high performance, promoting accountability and adherence to Company values, and aligning with the interests of the Company’s stockholders.

 

   Reviews all executive officer compensation.

 

   Oversees succession planning for senior management, including that the senior management development processes attract, develop, and retain talented leadership to serve the long-term best interests of the Company.

 

   Oversees 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.

 

 

 

 

Executive Compensation Website

We maintain a website accessible throughout the year at www.amgen.com/executive compensation, which provides a link to our most recent proxy statement and invites our stockholders to fill out a survey to provide input and feedback to the Compensation Committee regarding our executive compensation policies and practices.

 

   
   
 

 

Equity Award Committee – 4 Meetings Held

Determines equity-based awards to non-Section 16 officers, vice presidents, and below consistent with the equity grant guidelines established by the Compensation Committee.

 

Current Members:

Robert A. Eckert (Chair), Robert A. Bradway, Greg C. Garland

 

   
                 

Compensation Committee Processes and Procedures for Considering and Determining Executive Compensation in 2018

 

 

Compensation Committee Determination of Compensation. 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 for the previous year 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.

Values and Components. The values of each component of total compensation (base salary, target annual cash incentive awards, and equity awards) for the current year, as well 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.

Executive Officers. 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.

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

Delegation of Authority. The Compensation Committee has authority to delegate any of its functions to a subcommittee of its members. No delegation of this authority was made in 2018.

Independent Compensation Consultant. The Compensation Committee continued to engage FW Cook, 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

 

 

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Corporate Governance

 

 

 

 

 

of our executive compensation programs relative to market practice. FW Cook 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). Each year the Compensation Committee reviews the independence of FW Cook and whether any conflicts of interest exist. After review and consultation with FW Cook, the Compensation Committee has determined that FW Cook is independent and there is no conflict of interest resulting from retaining FW Cook currently or during the year ended December 31, 2018. In performing its analysis, the Compensation Committee considers the factors set forth in the SEC rules and The NASDAQ Stock Market listing standards.

Peer Group Review. 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 FW Cook, 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, are based on reports prepared by management from information contained in compensation surveys and proxy statements. FW Cook provides the Compensation Committee with market data, an annual report on the compensation levels and practices of our peer group, and recommendations for the CEO position.

Compensation Risk Management. In cooperation with management, FW Cook assesses the potential risks arising from our compensation policies and practices as discussed more fully below.

 

 

Compensation Risk Management

 

 

Annual Risk Management Assessment. 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.

Results of Risk Management Assessment. 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.

Factors That Discourage Excessive Risk-Taking. 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:

 

 

Mix of Incentives. 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.

 

 

Company-wide Results. Company-wide results are the most important factor in determining the amount of an annual cash incentive award, one of our mix of incentives, for each of our staff members.

 

 

Emphasis on Long-Term Performance. 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 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 those of our stockholders.

 

 

Equity Award Grant Practices. We employ appropriate 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.

 

 

Robust Stock Ownership and Retention Guidelines. 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 his or her 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 (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.

 

 

Comprehensive Performance Evaluations. 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.

 

 

Discretion to Reduce Awards. 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.

 

 

Recoupment Provisions. We have recoupment provisions that expressly allow the Compensation Committee or management, as

 

 

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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.

 

 

Clawback Policy. 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.

 

 

No Hedging or Pledging. Our Insider Trading Policy prohibits pledging or purchasing of our Common Stock on margin and hedging the economic risk of our Common Stock.

 

 

Pay Ratio

 

 

Following is a reasonable estimate, prepared under applicable SEC rules, of the ratio of the annual total compensation of our CEO to the median of the annual total compensation of our other staff members, calculated in accordance with the requirements of Item 402(c)(2)(x) of Regulation S-K. The Company determined our median employee based on total direct compensation paid to all of our staff members worldwide (consisting of approximately 21,516 individuals) recorded in our global systems as of December 31, 2018. Total direct compensation included base salary (wages recorded in our payroll records as of December 31, 2018), annual cash incentive awards earned for the period (and target sales incentive awards for our sales force), and the annual grant value of LTI equity awards during 2018. Earnings of our staff members

outside of the U.S. were converted to U.S. dollars using the currency exchange rate as of December 31, 2018. No cost-of-living adjustments were made. We then determined the annual total compensation of our median employee for 2018 which was $131,375. As disclosed in the “Summary Compensation Table” appearing on page 67, our CEO’s annual total compensation for 2018 was $18,555,266. Based on the foregoing, the ratio of the annual total compensation of our CEO to that of the median staff member was 141 to 1. For information on the determination of executive compensation, please see “Compensation Committee Processes and Procedures for Considering and Determining Executive Compensation in 2018” above and our Compensation Discussion and Analysis beginning on page 33.

 

 

Compensation Committee Report

 

 

The Compensation Committee has reviewed and discussed the 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 2019 Annual Meeting proxy statement and incorporated by reference into the Company’s Annual Report on Form 10-K for the year ended December 31, 2018.

 

 

Compensation Committee of the Board of Directors

Robert A. Eckert, Chairman

Greg C. Garland

Fred Hassan

Tyler Jacks

 

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Item 2

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 33 through 66) and related compensation tables and the narrative in this proxy statement (pages 67 through 83).

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 our business strategy by positioning our staff to execute on our strategic priorities 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.

 

 

We Have Implemented Compensation Best Practices

 

 

 

What we do

 

 

 

 

A substantial majority of NEO compensation is performance-based and at-risk

 

 

Recoupment in the case of misconduct causing serious financial or reputational damage

 

 

Clawback policy tied to financial restatement

 

 

Robust stock ownership and retention guidelines

 

 

Minimum vesting periods for equity compensation

 

 

Double-trigger for stock options and restricted stock units in the event of a change of control

 

 

Long-term performance-based equity awards (80% of total target equity)

 

 

Independent compensation consultant

 

What we don’t do

 

 

 

×  

No hedging or pledging

 

×  

No re-pricing or backdating

 

×  

No tax gross-ups (except in connection with relocation)

 

×  

No excessive perks

 

×  

No employment agreements

 

×  

No dividends paid on unvested equity

 

×  

No defined benefit pension or supplemental executive retirement plan (SERP) benefits

 

 

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Item 2 — Advisory Vote to Approve Our Executive Compensation

 

 

 

 

 

2018 Executive Compensation Was Aligned With Our Strategy and Performance

 

As discussed more fully in our Compensation Discussion and Analysis starting on page 33, a significant majority of each NEO’s compensation is at-risk and dependent on our performance and execution of our strategic priorities.

 

LTI Equity Award Allocation   2018 Total Target Direct Compensation Mix

 

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  LOGO

 

2018 Performance Against Pre-Established Goals and Measures

 

2018 Annual Cash Incentive Program

 

 

2016-2018 Long-Term Incentive Performance Program

 

Goal

 

 

Weighting

 

   

 

% of Target 

Earned 

 

  LOGO

 

Financial Performance

 

 

Revenues

 

   

 

30%

 

 

 

 

224.7% 

 

 

Non-GAAP Net Income(1)

 

   

 

30%

 

 

 

 

186.5% 

 

 

Progress Innovative Pipeline

 

 

Advance Early Pipeline

 

   

 

5%

 

 

 

 

113.9% 

 

 

Execute Key Clinical Studies and Regulatory Filings

 

   

 

20%

 

 

 

 

120.8% 

 

 

Deliver Annual Priorities

 

 

Execute Critical Launches

and Long-Term

Commercial Objectives

 

   

 

10%

 

 

 

 

71.3% 

 

 

Achieve Transformation Objectives

 

   

 

5%

 

 

 

 

124.2% 

 

 

Final Score

 

   

 

Achieved 166.6% 

 

 

*

Mr. Gordon and Dr. Reese are not included in the pie chart because they commenced their roles as executive officers of our Company on September 3, 2018, and July 26, 2018, respectively.

(1) 

Non-Generally Accepted Accounting Principles, or non-GAAP, net income for purposes of the 2018 Company performance goals of our annual cash incentive award program is reported and reconciled in Appendix B.

(2)

The operating measures of the 2016-2018 performance units were based on non-GAAP financial results for 2016, 2017, and 2018 as reported and reconciled in Appendix B, except that operating measures were further adjusted for the impacts of Hurricane Maria as prescribed by the terms of the 2016-2018 performance goals document. For this purpose, operating expense was reduced by $147 million ($0.16 in EPS) for 2017 and increased by $21 million ($0.03 in EPS) for 2018.

 

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2018 Alignment of Pay with Performance

Our strategy includes a series of integrated activities to strengthen our long-term competitive position in the industry. Key 2018 activities that align our NEO pay with performance and support the execution of our strategic priorities are summarized below.

We delivered strong financial performance.

 

 

Revenues were $23.7 billion in 2018, an increase of 4% from 2017, driven primarily by product sales growth.

 

 

Our non-GAAP net income(1) grew 4% to $9.6 billion in 2018.

 

 

We realized benefits from ongoing transformation initiatives along with increased investment in both research and development and our launch products.

 

 

We delivered a one-year total shareholder return of 15% and a five-year return of 93%, outperforming our peer group and the Standard & Poor’s 500 Index over both time periods.

 

 

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Total Shareholder Return

 

 

Our quarterly 2018 dividend of $1.32 per share represented a 15 percent increase from the quarterly dividend for 2017.

 

 

During 2018, we repurchased $17.9 billion of our Common Stock and paid dividends totaling $3.5 billion, resulting in our returning a total of $21.4 billion of capital to our stockholders through stock repurchases and dividends.

We progressed our pipeline.

We develop innovative and biosimilar medicines that address unmet medical needs to treat serious illnesses. In 2018, we launched two innovative products, two biosimilars, and generated a significant number of innovative and first-in-class molecules in our portfolio.

We launched four medicines in 2018.

 

v

Innovative Medicines Launched. We launched two important innovative products in 2018 in the U.S. in two different therapeutic areas:

 

   

Aimovig® (migraine), the first calcitonin gene-related peptide (CGRP) inhibitor approved by the U.S. Food and Drug Administration for the preventive treatment of migraine in adults. Migraine is a debilitating condition that continues to have a significant lasting impact on the lives of patients and society at large. In 2018, we served more than 150,000 patients with Aimovig.

 

(1) 

Non-GAAP net income for purposes of the 2018 Company performance goals of our annual cash incentive award program is reported and reconciled in Appendix B.

 

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Parsabiv® (nephrology), our medicine for secondary hyperparathyroidism. Parsabiv, which is administered along with dialysis, delivers clinical benefits to patients by putting control in the hands of the health care provider.

 

v

Biosimilars Launched. We also launched two important biosimilars outside the U.S. in 2018:

 

   

KANJINTI (biosimilar trastuzumab (Herceptin®)) launched in Europe for the treatment of HER2-positive metastatic breast cancer, HER2-positive early breast cancer, and HER2-positive metastatic adenocarcinoma of the stomach or gastroesophageal junction.

 

   

AMGEVITA (biosimilar adalimumab (HUMIRA®)) launched in Europe for the treatment of inflammatory diseases, including moderate-to-severe rheumatoid arthritis, psoriatic arthritis, severe active ankylosing spondylitis, moderate-to-severe chronic plaque psoriasis, moderate-to-severe Crohn’s disease, and moderate-to-severe ulcerative colitis.

We advanced our early pipeline with approximately 20 unique oncology assets in development.

 

 

We initiated 10 first-in-human studies, including for small-cell lung cancer, obesity, glioblastoma, relapsed/refractory diffuse large b-cell lymphoma, mantle cell lymphoma and follicular lymphoma, multiple myeloma, acute myeloid leukemia, non-hodgkins lymphoma, and cardiovascular disease.

 

 

In the oncology pipeline, we are advancing approximately 20 early-stage product candidates in therapeutic indications ranging from solid tumors (including small-cell lung cancer) and hematological malignancies (including multiple myeloma and acute myeloid leukemia). We have designed these development programs to rapidly establish proof-of-concepts and generate data to support our move into the pivotal phase so that we may get these innovative therapies to patients as quickly as possible.

We executed key clinical studies and regulatory filings.

 

v

Innovative Portfolio Developments. We executed key clinical studies and regulatory filings for KYPROLIS®, XGEVA®, BLINCYTO®, and Nplate® in oncology, for Repatha® in cardiovascular disease, for tezepelumab(1) in inflammatory disease, and for Prolia® and EVENITY(2)* in bone health.

 

v

Biosimilar Portfolio Developments. In our biosimilars portfolio, MVASI(3) (biosimilar bevacizumab (Avastin®)) was approved in Europe, we submitted applications in the U.S. and Europe for ABP 710 (biosimilar infliximab (REMICADE®)), and ABP 798(3) (biosimilar rituximab (RITUXAN®)) met its primary endpoint in our Phase 1/Phase 3 study.

We delivered on our annual priorities to execute critical launches and long-term commercial objectives.

Revenue growth (4%) benefited from double-digit, volume-driven sales growth from a number of our innovative medicines that address unmet medical needs to treat serious illnesses, including Repatha in cardiovascular disease, Prolia in osteoporosis, and KYPROLIS in cancer.

We realized our 2014-2018 commitments to investors and our transformation objectives.

2018 was the capstone year for a set of ambitious non-GAAP financial commitments we made to our stockholders five years ago, including earnings per share growth, operating margin improvement, and return of capital that we met and exceeded through significant transformation and process improvement efforts. The benefits of our transformation continues in the productivity capabilities we have embedded into our business to reallocate resources to our pipeline and growth opportunities, putting us in a better position to serve patients and deliver long-term growth.

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

 

 

In 2018, we invested $3.7 billion in research and development and $738 million in capital expenditures.

 

 

Between 2011 and 2018, we have increased our global presence to approximately 100 countries from 50.

 

 

Next-generation biomanufacturing plants require a smaller manufacturing footprint and offer greater environmental benefits, including reduced consumption of water and energy and lower levels of carbon emissions. In 2018, we successfully operated our next-generation manufacturing facility in Singapore and broke ground on a next-generation biomanufacturing plant in Rhode Island. This new plant will be the first of its kind in the U.S. and will use our proven next-generation biomanufacturing capabilities to manufacture our products while maintaining a reliable, high-quality, compliant supply of medicines to continue our commitment to meet the need of every patient every time.

 

(1) 

Jointly developed in collaboration with AstraZeneca plc.

(2) 

Jointly developed in collaboration with UCB. *Trade name provisionally approved in U.S.

(3) 

Jointly developed in collaboration with Allergan plc.

 

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Item 2 — Advisory Vote to Approve Our Executive Compensation

 

 

 

 

 

Positive 2018 Say on Pay Vote Outcome and Engagement With Our Stockholders

 

 

In 2018, we received approximately 95% stockholder support on our say on pay advisory vote. Consistent with our broad direct stockholder outreach over the past several years, since our 2018 annual meeting of stockholders, in addition to our outreach by our executives and our Investor Relations department to our investors owning approximately 58% of our outstanding shares, we have engaged in governance-focused outreach activities and discussions with stockholders

comprising approximately 53% of our outstanding shares. The compensation-related feedback is reviewed by our Compensation and Management Development Committee, or Compensation Committee. In 2018, the predominant feedback from investors with respect to our compensation and governance practices was that they are satisfied with our compensation program and governance practices. For more detail regarding our stockholder engagement, see page 41.

 

 

Board Recommends a Vote “FOR” Our Executive Compensation

 

 

Our Board of Directors, or 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 and more fully in the Compensation Discussion and Analysis, 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 2020 annual meeting of stockholders.

 

 

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

 

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Table of Contents
       

 

 

 

 

Compensation Discussion and Analysis

 

 

 

 

 

Executive Compensation

Compensation Discussion and Analysis

 

Table of Contents

 

 

Our Named Executive Officers

     34  

Planned Succession – Executive Officer Changes in 2018

     34  

Our Strategy

     35  

Aligning Pay With Performance and Execution of Our Strategic Priorities

     36  

Positive 2018 Say on Pay Vote Outcome and Engagement With Our Stockholders

     41  

Long-Term Incentive Equity Award Design Changes in 2018

     41  

Our 2018 Compensation Program Highlights and Objectives

     42  

Our Compensation and Governance Best Practices

     44  

How Compensation Decisions Are Made For Our Named Executive Officers

     45  

Elements of Compensation and Specific Compensation Decisions

     48  

Compensation Policies and Practices

     61  

Non-Direct Compensation and Payouts in Certain Circumstances

     63  

Taxes and Accounting Standards

     65  

 

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Table of Contents
       

 

 

 

 

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 2018 below.

Our Named Executive Officers

 

 

Name    Title

Robert A. Bradway

  

Chairman of the Board, Chief Executive Officer and President

Anthony C. Hooper

  

Former Executive Vice President, Global Commercial Operations (through September 3, 2018)

Murdo Gordon

  

Executive Vice President, Global Commercial Operations

Sean E. Harper

  

Former Executive Vice President, Research and Development (through July 26, 2018)

David W. Meline

  

Executive Vice President and Chief Financial Officer

David M. Reese

  

Executive Vice President, Research and Development

Jonathan P. Graham

  

Senior Vice President, General Counsel and Secretary

Planned Succession – Executive Officer Changes in 2018

 

 

In 2018, as part of our planned executive succession and to address retirements, we announced transition plans for two Executive Vice Presidents. Sean Harper retired from the role of Executive Vice President, Research and Development on July 26, 2018, after serving in this role since 2012 and for 16 years with Amgen. David Reese, then our Senior Vice President, Translational Sciences and Oncology, was promoted to the role of Executive Vice President, Research and Development, effective July 26, 2018. Dr. Reese joined Amgen in 2005 and has served in a variety of leadership roles since that time. Dr. Harper remained employed with us in a non-executive officer capacity to assist in the transition until January 2019.

Anthony Hooper retired from the role of Executive Vice President, Global Commercial Operations on September 3, 2018, after serving in this role since 2011. Murdo Gordon joined us as our Executive Vice President, Global Commercial Operations, effective September 3, 2018, from Bristol-Myers Squibb Company where he served as Chief Commercial Officer since 2016 and, prior to that, head of worldwide markets. Mr. Hooper continues to be employed in a non-executive officer capacity to assist in the transition, as well as to lead and execute on several corporate strategic objectives.

 

 

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Compensation Discussion and Analysis

 

 

 

 

 

Our Strategy

 

Our strategy includes a series of integrated activities to strengthen our long-term competitive position in the industry. Select 2018 activities that support the execution of our strategic priorities and align our NEO pay with performance are summarized below and discussed further in the following pages.

Our Strategic Priorities

 

            Select 2018 Activities       Description      
 
 

Innovative

Medicines

   

  Launched:

Aimovig®(1) (migraine)

Parsabiv® (nephrology)

•  Progressed pipeline:

10 investigational
new  drug applications
submitted

10 first-in-human studies

 

 

Our research and development strategy is aimed at advancing differentiated, best-in-class or first-in-class molecules that deliver large effect sizes against serious illnesses. 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.

 

 
                
 
 

Branded

Biosimilars

   

•  Launched:

–  KANJINTI

–  AMGEVITA

•  3 biosimilars in Phase 3

 

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

 
                
 
 

Transforming

Amgen

for the Future

   

•  Met and exceeded 2014-2018
investor commitments

•  Embedded productivity
capabilities in how we
operate

 

We have improved our business and operating model through significant transformation and process improvement efforts. We have driven research and development efficiency through productivity initiatives. Among these programs, we reduced our development cycle time by an average of approximately 36 months, reduced the time it takes to bring new medicines to market, reengineered internal processes to make them more efficient, and explored new technologies with the potential to further enhance the value we deliver to patients. Further, the benefits of our transformation continue in the productivity capabilities we have embedded in our business to reallocate resources to our pipeline and growth opportunities.

 

 
                
 
  Capital Allocation
and Investing for
Long-Term Growth
   

•   $17.9B in stock repurchases

•  $3.5B of dividends

– 15% per share dividend
increase over 2017

 

We recognize that stockholders who support investment in developing innovative medicines require an appropriate return on the capital they commit to Amgen. In 2018, we returned $21.4 billion in capital to our stockholders, consisting of $17.9 billion in stock repurchases and $3.5 billion of dividends.

 
                
 
 

Global Geographic

Reach

   

•  Presence in ~100 countries
– up from 50 in 2011

 

We are leveraging our global presence to deliver the potential of our products to patients globally. Amgen medicines are now available to patients in approximately 100 countries worldwide.

 

 
                
 
  Next-Generation Biomanufacturing    

•  Broke ground on U.S.
next-generation
biomanufacturing plant

 

Next-generation biomanufacturing plants, such as our Singapore facility licensed in 2017, require a smaller manufacturing footprint and offer greater environmental benefits, including reduced consumption of water and energy and lower levels of carbon emissions. Our new plant being built in Rhode Island will be the first of its kind in the U.S. and will use these proven next-generation biomanufacturing capabilities.

 
                
 
    Improved Drug Delivery Systems      

•  Invested in delivery devices to enhance patient experience, including our SureClick® autoinjector
for Aimovig

 

 

Biologic medicines are, for the most part, injected subcutaneously or administered intravenously. Innovations that make the delivery of our medicines easier and less costly are good for patients and have positive economic benefits to the healthcare system. They also offer important opportunities for differentiation and contribute to our life cycle management strategies for our mature brands.

 

       

 

(1)

Jointly developed in collaboration with Novartis AG.

 

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Compensation Discussion and Analysis

 

 

 

 

 

Aligning Pay With Performance and Execution of Our Strategic Priorities

 

 

A significant majority of each NEO’s compensation is earned based 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.” We have been pleased with the 95%+ level of stockholder support we have received on our say on pay advisory vote over time. In 2018, we made significant progress on our 2018 performance goals and advancing our strategic priorities, facilitating execution on our strategy, and mission to serve patients.

 

                  Annual Cash Incentive  Program Results                  

 

 

Our 2018 annual cash incentive compensation program is tied directly to our performance based on pre-established financial goals of revenues and non-GAAP net income(1), and operating performance goals of progressing our pipeline and delivering on annual priorities, which were designed to drive execution of strategic priorities. Our 2018 results and the weighting of the goals are as follows:

 

 

Goal

 

  

Weighting

 

   

 

% of Target
Earned

 

 

 

Financial Performance

 

   

 

Revenues

 

    

 

30%

 

 

 

 

224.7%

 

   

 

Non-GAAP Net Income(1)

 

    

 

 

30%

 

 

 

 

 

 

186.5%

 

 

 

Progress Innovative Pipeline

 

   

 

Advance Early Pipeline

 

    

 

5%

 

 

 

 

113.9%

 

   

 

Execute Key Clinical Studies and Regulatory Filings

 

    

 

20%

 

 

 

 

120.8%

 

 

 

Deliver Annual Priorities

 

   

 

Execute Critical Launches and Long-Term Commercial Objectives

 

    

 

10%

 

 

 

 

71.3%

 

   

 

Achieve Transformation Objectives

 

    

 

5%

 

 

 

 

124.2%

 

   

 

Final Score

 

    

 

Achieved 166.6%

 

The above-target results under our 2018 incentive program reflect our successes against our strategic priorities as outlined below.

1. Our financial performance was strong.

 

 

Revenues were $23.7 billion in 2018, an increase of 4% from 2017, primarily driven by product sales growth.

 

 

Our non-GAAP net income(1) also grew 4% to $9.6 billion in 2018. We realized benefits from ongoing transformation initiatives along with increased investment in both research and development and our launch products.

 

 

We delivered a one-year total shareholder return, or TSR, of 15% and a five-year return of 93%, outperforming our peer group and the Standard & Poor’s 500 Index, or S&P 500, over both time periods.

 

LOGO

Total Shareholder Return

2. We progressed our pipeline.

We develop innovative and biosimilar medicines that address unmet medical needs to treat serious illnesses. In 2018, we launched two innovative products, two biosimilars, and generated a significant number of innovative and first-in-class molecules in our portfolio. (For complete information regarding our significant pipeline advancements, please refer to our Form 10-K for the year ended December 31, 2018.)

Pipeline Launches.

LOGO

We launched two important innovative products in 2018 in the U.S. in two different therapeutic areas:

 

 

Aimovig (migraine), the first calcitonin gene-related peptide (CGRP) inhibitor approved for the preventive treatment of migraine in adults. Migraine is a debilitating condition that continues to have a significant lasting impact on the lives of patients and society at large. In 2018, we served more than 150,000 patients with Aimovig.

 

 

Parsabiv (nephrology), our medicine for secondary hyperparathyroidism. Parsabiv, which is administered along with dialysis, delivers clinical benefits to patients by putting control in the hands of the health care provider.

 

 

(1)

Non-Generally Accepted Accounting Principles, or non-GAAP, net income for purposes of the 2018 Company performance goals of our annual cash incentive award program is reported and reconciled in Appendix B.

 

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We also launched outside the U.S. two important biosimilars in 2018:

 

 

KANJINTI (biosimilar trastuzumab (Herceptin®)) launched in Europe for the treatment of HER2- positive metastatic breast cancer, HER2-positive early breast cancer, and HER2-positive metastatic adenocarcinoma of the stomach or gastroesophageal junction.

 

 

AMGEVITA (biosimilar adalimumab (HUMIRA®)) launched in markets across Europe for the treatment of inflammatory diseases, including moderate-to-severe rheumatoid arthritis, psoriatic arthritis, severe active ankylosing spondylitis, moderate-to-severe chronic plaque psoriasis, moderate-to-severe Crohn’s disease, and moderate-to-severe ulcerative colitis.

We advanced our early pipeline with approximately 20 unique oncology assets in development.

In the oncology pipeline, we are advancing approximately 20 early-stage product candidates in therapeutic indications ranging from solid tumors (including small-cell lung cancer) and hematological malignancies (including multiple myeloma and acute myeloid leukemia). We have designed these development programs to rapidly establish proofs-of-concept and generate data to support our move into the pivotal phase so that we may get these innovative therapies to patients as quickly as possible.

We executed key clinical studies and regulatory filings.

In Oncology:

 

 

For KYPROLIS® (our medicine for patients with relapsed or refractory multiple myeloma), in 2018:

 

  -  

The FDA(1) and the European Commission approved label variations for KYPROLIS to include the ENDEAVOR(2) study results (showing a KYPROLIS and dexamethasone regimen reduced the risk of death by 21 percent and increased overall survival by 7.6 months versus Velcade and dexamethasone) and to include the final overall survival data from the Phase 3 ASPIRE(3) study (showing KYPROLIS, lenalidomide and dexamethasone (KRd) significantly reduced the risk of death by 21 percent and extended overall survival by 7.9 months versus lenalidomide and dexamethasone alone).

 

  -  

The FDA approved our supplemental NDA(4) to allow a once-weekly dosing option.

 

 

For XGEVA® (our medicine for the prevention of fractures and other skeletal-related events), in 2018 the FDA and the European Commission approved expanded indications for the prevention of skeletal-related events in patients with multiple myeloma.

 

For BLINCYTO® (our medicine for patients with acute lymphoblastic leukemia, or ALL), in 2018:

 

  -  

The European Commission granted a full marketing authorization based on the overall survival data from the Phase 3 TOWER study in adult patients with Philadelphia chromosome-negative relapsed or refractory B-cell precursor ALL and approved expanded indications for BLINCYTO as a monotherapy for the treatment of pediatric patients with Philadelphia chromosome-negative CD19 positive B-cell precursor ALL. In January 2019, the European Commission also approved an expanded indication to include certain adult patients who have small traces of malignant cells remaining after treatment of their Philadelphia chromosome-negative CD19 positive B-cell precursor ALL.

 

  -  

In Japan, the Ministry of Health, Labour and Welfare granted marketing authorization approval for use of BLINCYTO(5) to treat relapsed or refractory B-cell precursor ALL.

 

  -  

The FDA approved (under accelerated approval) the supplemental BLA(6) for the treatment of certain adults and children who have small traces of malignant cells remaining after treatment of their B-cell precursor ALL.

 

 

For Nplate® (our medicine to treat low blood platelet counts), in 2018 the FDA approved a supplemental BLA for the treatment of certain pediatric patients with immune thrombocytopenia, or ITP, and accepted a supplemental BLA filing to enable the treatment of adult patients with ITP who have had ITP for 12 months or less.

In Cardiovascular Disease:

Cardiovascular disease is the costliest 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 social and financial burden of this disease is projected to rise rapidly. In 2018, we continued to advance our cardiovascular disease program to address this unmet need.

 

 

For Repatha® (our medicine for patients who are unable to get their low-density lipoprotein, or LDL, (bad) cholesterol under control):

 

  -  

The European Commission approved a new Repatha indication for adults with established atherosclerotic cardiovascular disease (myocardial infarction, stroke, or peripheral arterial disease) to reduce cardiovascular risk by lowering LDL cholesterol levels.

 

  -  

In China, the National Medical Products Administration approved Repatha as the first PCSK9 inhibitor in China for adults with established atherosclerotic cardiovascular disease to reduce the risk of myocardial infarction, stroke, and coronary revascularization.

 

 

 

(1)

U.S. Food and Drug Administration.

(2)

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

(3)

CArfilzomib, Lenaldidomide, and DexamethaSone versus Lenalidomide and Dexamethasone for the treatment of PatIents with Relapsed Multiple MyEloma.

(4)

New Drug Application.

(5)

Developed in Japan by Amgen Astellas BioPharma K.K., our joint venture with Astellas Pharma Inc.

(6)

Biologics License Application.

 

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In Inflammatory Disease:

Respiratory disease is one of the leading causes of death in the world.

 

 

For tezepelumab(1) (our medicine being developed for asthma), in 2018 the FDA granted Breakthrough Therapy Designation in patients with severe asthma without an eosinophilic phenotype supported by our Phase 2b trial data showing a significant reduction in the annual asthma exacerbation rate compared with placebo in a broad population of severe asthma patients. A Phase 3 study of this molecule is enrolling.

In Bone Health:

Osteoporotic fractures are a significant medical problem for patients, often require hospitalization, and can be very expensive to treat. In 2018, we continued to invest in bone health:

 

 

For Prolia® (our medicine for patients with osteoporosis), both the FDA and European Commission approved a new indication for the treatment of glucocorticoid-induced osteoporosis in adult patients at high risk of fracture.

 

 

For EVENITY™(2)* (our investigational medicine for patients with osteoporosis):

 

  -  

In January 2019, the Japanese Ministry of Health, Labour and Welfare granted a marketing authorization for the treatment of osteoporosis in men and postmenopausal women at high risk of fracture.

 

  -  

We resubmitted a BLA to the FDA adding two additional Phase 3 trial results and, in January 2019, the FDA Bone, Reproductive and Urologic Advisory Committee (BRUDAC) voted to recommend approval of EVENITY for the treatment of osteoporosis in postmenopausal women at high risk for fracture.

In Biosimilars:

Our deep experience in biologics development and capabilities in biotechnology manufacturing is an important contributor to our success in the emerging biosimilars market. In our biosimilars portfolio in 2018, we had the following progress in our clinical studies and regulatory filings:

 

 

The EMA(3) approved MVASI(4) (biosimilar bevacizumab (Avastin®)) for the treatment of five types of cancer.

 

 

We submitted a BLA to the FDA for ABP 710 (biosimilar infliximab (REMICADE®)) and, in January 2019, we submitted a Marketing Authorization Application to the EMA.

 

 

In January 2019, our Phase 1/Phase 3 study for ABP 798(4) (biosimilar rituximab (RITUXAN®)) evaluating the pharmacokinetics,

   

efficacy, and safety compared to rituximab in patients with moderate-to-severe rheumatoid arthritis met its primary endpoint.

3. We delivered on our annual priorities to execute critical launches and long-term commercial objectives.

Revenue growth (4%) benefited from double-digit, volume-driven sales growth from a number of our innovative medicines that address unmet medical needs in serious illnesses, including Repatha in cardiovascular disease, Prolia in osteoporosis, and KYPROLIS in cancer.

 

 

Repatha worldwide sales increased 72% in 2018, but this growth fell short of our aspirations due to access and affordability challenges in a competitive market. Given the gravity of the impact of cardiovascular disease, we took significant actions to address these challenges for patients who would benefit from Repatha.

 

  -  

Efforts to Improve Access. To address access challenges, Amgen has offered payers significant rebates on Repatha in exchange for improved patient access.

 

  -  

Action to Increase Affordability. We established new National Drug Codes to make Repatha available in the U.S. at a 60% lower list price to address affordability for patients, particularly those on Medicare.

We realized our 2014-2018 commitments to investors and our transformation objectives.

 

LOGO

2018 was the capstone year for a set of ambitious non-GAAP financial commitments we made to our stockholders five years ago, including earnings per share, or EPS, growth, operating margin improvement, and return of capital that we met and exceeded through significant transformation and process improvement efforts. The benefits of our transformation continue in the productivity capabilities we have embedded in our business to reallocate resources to our pipeline and growth opportunities putting us in a better position to serve patients and deliver long-term growth.

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

 

LOGO

Between 2011 and 2018, we have increased our global presence to approximately 100 countries from 50. In 2018, we also marked the milestone of securing our first product approval in China (Repatha) and received the first approval in the world for EVENITY in Japan.

 

 

 

(1)

Jointly developed in collaboration with AstraZeneca plc.

(2)

Jointly developed in collaboration with UCB. Developed in Japan by Amgen Astellas BioPharma K.K., our joint venture with Astellas Pharma Inc. *Trade name provisionally approved in U.S.

(3)

European Medicines Agency.

(4)

Jointly developed in collaboration with Allergan plc.

 

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Our next-generation biomanufacturing plant incorporates multiple innovative technologies and can be built in less time and operate at one half of the operating costs of a traditional plant. Next-generation biomanufacturing plants have a smaller manufacturing footprint and offer greater environmental benefits, including reduced consumption of water and energy and lower levels of carbon emissions. In 2018, we successfully operated our next-generation manufacturing facility in Singapore and broke ground on our U.S. facility.

 

 

Rhode Island Facility. To support expected product volume growth, we broke ground on a next-generation biomanufacturing plant in Rhode Island in 2018. This new plant will be the first of its kind in the U.S., is anticipated to create a substantial number of additional highly-skilled manufacturing positions in the U.S., and will employ our next-generation biomanufacturing capabilities.

 

 

LOGO

We have built leading patient- and provider-friendly device capabilities, and continue to invest in such products. Innovations that make the delivery of our medicines easier and less costly are good for patients, have positive economic benefits to the healthcare system, offer important opportunities for differentiation, and contribute to our life cycle management strategies for our mature brands.

 

 

Our SureClick® autoinjector allows patients the convenience of self-administering Aimovig monthly without a doctor’s visit.

 

 

The Neulasta® Onpro® kit provides physicians the opportunity to initiate the administration of Neulasta on the same day as chemotherapy, with drug delivery of the recommended dose of Neulasta occurring the day after chemotherapy, thereby saving patients a trip back to the doctor. In 2018, we announced that the CHMP(1) of the EMA issued a positive opinion recommending a label variation for Neulasta to include the Neulasta Onpro kit.

 

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Our strong cash flows and balance sheet allowed continued investment for long-term growth in 2018 through internal research and development ($3.7 billion), capital expenditures ($738 million), and external business development transactions, while simultaneously providing substantial returns to stockholders.

 

In 2018, while investing $3.7 billion in

research and development and $738 million in capital expenditures, we also returned $21.4 billion of capital to our stockholders ($17.9 billion in stock repurchases and

$3.5 billion of dividends)

Annual Dividend Increases

 

 

LOGO

 

 

We increased our quarterly dividend per share 15% over 2017 (to $1.32 per share for 2018). Our dividend per share increased 371% since the inception of our dividend in 2011.

 

 

We repurchased approximately $17.9 billion of our shares, including a tender offer to repurchase $10 billion in shares.

 

Performance Under Our Long-Term Incentive Program

Our long-term incentive, or LTI, 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, aligning compensation with value creation for our stockholders. Performance units comprise 50% of our LTI equity award grants. For 2016-2018, the goal design and all measurement targets were established at the beginning of this three-year performance period and were earned based on our performance on the three equally weighted non-GAAP operating measures of EPS growth, operating margin, and operating expense as measured against each of the pre-established annual targets for each of the three years. These non-GAAP operating measures were chosen to drive performance in alignment with, and focus our executives on, our 2014-2018 investor commitments discussed earlier. At the end of the performance period on December 31, 2018, the operating measure percentages were averaged, resulting in a total operating measures score of 115.4% driven by our strong EPS growth and improved operating margins over the period.

 

 

 

(1)

Committee for Medicinal Products for Human Use of the European Medicines Agency.

 

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The total operating measures score is then increased or decreased based on our relative TSR performance as compared to the companies in the S&P 500. Our strong TSR performance ranking (65.2%) relative to the TSRs of the companies in the S&P 500 over the three year

performance period resulted in a TSR modifier of +30.3% and a payout of 145.7% of target performance units granted. All of the operating performance measure results shown below were determined on a non-GAAP basis.

 

 

2016-2018 Operating Measures Score

(Operating Measure Percentages 50 – 150% with linear
interpolation along the payout curve)

 

 

Operating Measures Percentages are Equally Weighted

for Each of the Three Years

 

Non-GAAP(1)
Operating
Measures

 

 

2016

 

 

2017

 

 

2018

 

 

 

2016-2018
Average
Operating
Measures

 

 

EPS    

Growth ($)    

 

 

137.0%

($11.65)

 

 

 

128.8%

($12.74)

 

 

142.9%

($14.37)

 

 

136.2%

 

Operating    

Margin (%)    

 

 

128.6%

(52.3%)

 

 

 

134.7%

(54.2%)

 

 

106.6%

(52.5%)

 

 

123.3%

 

Operating    

Expense    

(in billions)    

 

 

94.4%

($11.54)

 

115.6%

($11.04)

 

50.0%

($11.91)

  86.7%
 

 

120.0%

 

 

 

126.4%

 

 

99.8%

 

 

115.4%

 

2016-2018 S&P 500 Relative TSR Modifier

 

 

Payout for Performance Relative to S&P 500 TSR Percentage

 

 

 

Amgen TSR ³ 75th percentile = 50% (Maximum)

 

                  Actual Amgen TSR = 65.2 percentile resulting in a 30.3% score

 

Amgen TSR = 50th percentile LOGO = 0% (Target)

 

         

 

Amgen TSR £ 25th percentile = -50% (Minimum)

 

       
         

 

TSR Measurement Points = Average daily closing price of stock for the first 20 trading days beginning on the grant date (May 3, 2016) and the last 20 trading days of the performance period.

 

 

LOGO

Payout no greater than 0% (target) if Amgen’s TSR is less than 0.

 

 

 

LOGO

Final 2016-2018 Performance Period Calculation 2016-2018 Non-GAAP(1) Operating Measures EPS Growth (1/3rd) Operating Margin (1/3rd) Operating Expense (1/3rd) 115.4% 2016-2018 Amgen Relative TSR Performance 30.3% Final Payout 145.7%

 

(1)

The operating measures of the 2016-2018 performance units were based on Non-GAAP financial results for 2016, 2017, and 2018 as reported and reconciled in Appendix B, except that operating measures were further adjusted for the impacts of Hurricane Maria as prescribed by the terms of the 2016-2018 performance goals document. For this purpose, operating expense was reduced by $147 million ($0.16 in EPS) for 2017 and increased by $21 million ($0.03 in EPS) for 2018.

 

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Compensation Discussion and Analysis

 

 

 

 

 

Positive 2018 Say on Pay Vote Outcome and Engagement With Our Stockholders

 

 

In 2018, we received approximately 95% 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 2018 annual meeting of stockholders, in addition to outreach by our executives and Investor Relations department to our investors owning approximately 58% of our outstanding shares, we have engaged in governance-focused outreach activities and discussions with stockholders owning approximately 53% 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.

In 2018, the predominant feedback from investors with respect to our compensation and governance practices was that they are satisfied with our compensation program and governance practices. We are pleased with our say on pay results and stockholder feedback, and will continue to engage with our stockholders to be sure we understand and address any concerns.

 

 

 

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Long-Term Incentive Equity Award Design Changes in 2018

 

 

In 2018, the Compensation and Management Development Committee, or Compensation Committee, evaluated potential performance award goal designs for the 2018-2020 performance period (January 1, 2018 to December 31, 2020) to take into account discussions with our stockholders and to continue to drive operating performance and discipline. Our LTI performance units have annual operating performance measures and goals that are established at the beginning of the three year performance period. For the 2018-2020 performance period, the Compensation Committee decided to retain the three non-GAAP operating measures of EPS growth, operating margin, and operating expense for the annual 2018 operating measures to remain consistent with the 2018 annual performance measures of the 2017-2019 performance period. For the second and third years (2019 and 2020) of the 2018-2020 performance period, the Compensation Committee selected EPS growth and Return on Invested Capital, or ROIC (which are two of the three non-GAAP operating measures used for 2019 of the 2017-2019 performance period). The Compensation Committee retained EPS growth to incentivize continued focus on investor commitments and delivering stockholder value, and added ROIC to emphasize our goal of remaining disciplined in our management of the business and use of capital as we move beyond our 2014-2018 investor commitments discussed earlier. Our performance

against the operating measure targets are calculated for each year of the 2018-2020 performance period and these operating measure percentages are averaged at the end of the performance period, resulting in a total operating measures percentage that can range from 30% for minimum to 170% for maximum performance. The total operating measures percentage is then modified by an increase or decrease of up to 30 percentage points based on how our TSR ranks relative to the TSRs of the companies in the S&P 500 over the performance period. The Compensation Committee determined to reduce the TSR modifier from 50 to 30 percentage points for the 2018-2020 performance period to rebalance the weighting of this period’s goal design in favor of the operating measures to further emphasize the Company’s operational priorities while maintaining alignment of our performance with the long-term value created for our stockholders. The Compensation Committee also retained the requirement that the TSR modifier cannot exceed target (100%) regardless of our relative TSR performance if our absolute TSR over the performance period is less than 0. This feature provides a greater tie to stockholders’ interests and investment experience. A detailed depiction of the 2018-2020 performance period goal design can be found in “Performance Award Goal Design for the 2018-2020 Performance Period—2018-2020 Performance Period Goal Design and Award Calculation.

 

 

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Table of Contents
       

 

 

 

 

Compensation Discussion and Analysis

 

 

 

 

 

Our 2018 Compensation Program Highlights and Objectives

 

 

 

Total Target Direct Compensation Focuses on “At Risk” Compensation

(90% for our Chief Executive Officer, or CEO, and 83% for our other NEOs)

 

 

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2018 Total Target Direct Compensation Mix 76% 14% 10% 90% At Risk CEO 90% pay at risk 75% performance based 17% 17% 66% 83% At Risk other NEOs* 83% pay at risk 69% performance based Purpose LTI Equity Awards Provide a direct link to the creation of stockholder value and execution on our strategy Align NEO's interests with stockholders Foster long-term focus and retention Annual Cash Incentives Measure NEO's performance against pre-established Company performance goals Align all staff members around the same Company performance goals as all such annual cash incentive awards are based on these goals Motivate NEOs to meet or exceed our Company performance goals to drive annual performance and position us for longer-term success via our strategy Base Salary Provides a degree of financial certainty that helps us retain talent Recognizes competitive market conditions and/or rewards individual performance through periodic increases LTI Equity Award Allocation: 80% Performance Based 50% Performance Units 30% Stock Options 20% Restricted Stock Units All preceding pie charts are calculated using (i) the "Salary" column from the "Summary Compensation Table" in our Executive Compensation Tables (ii) the target annual cash incentive cash incentive award in the "Estimated Possible Payouts Under Non-Equity Incentive Plan Awards - Target" column in the table in footnote 3 to the "Grants of Plan-Based Awards" table in our Executive Compensation Tables and (iii) the grant date fair value of annual grants of performance units, restricted stock units, or RSUs and stock options in the "Grant Date Fair Value of Stock and Option Awards" column of the "Grants of Plan-Based Awards" table in our Executive Compensation Tables.

 

*

Mr. Gordon and Dr. Reese are not included in the pie chart because they commenced their roles as executive officers of our Company on September 3, 2018, and July 26, 2018, respectively.

 

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Table of Contents
       

 

 

 

 

Compensation Discussion and Analysis

 

 

 

 

 

LTI Equity Awards (“At Risk”)

 

 

Performance Units (50%). 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 Compensation Committee establishes the performance award goal design at the beginning of each three-year period of the performance award program. The number of performance units earned is determined by our performance as measured against the pre-established performance goals at the end of the performance period. 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 (30%). Aligned with stockholder interests as they only have value if the Company’s stock price increases after grant.

 

 

 

Restricted Stock Units (20%). Designed to encourage retention and long-term value creation.

 

 

 

Stock options and RSUs generally vest over four years in three approximately equal 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.

 

 

 

Performance Units Earned for the 2016-2018 Performance Period

 

The performance units for the 2016-2018 performance period were earned based on the Company’s performance on three pre-established equally weighted annual non-GAAP operating measures(1) (EPS growth, operating margin, and operating expense) as measured against the pre-established targets for each of the three years. At the end of this performance period, the operating measures were averaged resulting in the total operating measures score of 115.4%. This score was then modified based on our three-year TSR performance of +30.3% (at the 65.2% percentile relative to the TSRs of the companies in the S&P 500 for this performance period)(2). These calculations resulted in a payout of 145.7% of target performance units granted.

 

   

 

 

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

 

      

Our Compensation Committee annually approves Company performance goals that are designed to focus our staff on delivering on our financial performance and operational objectives and to support our strategic 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 made to our NEOs using the Compensation Committee’s negative discretion under the EIP generally based on the Company’s performance against the pre-established Company performance goals.

 

 

 

Our annual cash incentive awards are earned based on achieving financial performance, operational objectives that drive near- and long-term growth, stockholder value, and support our strategy. In 2018, we established annual Company performance goals that also serve to support our longer-term strategy. These performance goals are composed of revenues (30%), non-GAAP net income(3) (30%), and a number of operational measures supporting “Progress Innovative Pipeline” (25%) (composed of “Advance Early Pipeline” (5%) and “Execute Key Clinical Studies and Regulatory Filings” (20%)) and “Deliver Annual Priorities” (15%) (composed of “Execute Critical Launches and Long-Term Commercial Objectives” (10%) and “Achieve Transformation Objectives” (5%)). Based on our overall performance in 2018 compared to these pre-established Company performance goals, we paid annual cash incentive awards at 166.6% of target bonus opportunity.

 

 

 

   

 

 

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

 

   

Based on data provided to the Compensation Committee, including recommendations of Frederic W. Cook & Co., or FW Cook, the Compensation Committee’s independent consultant, the Compensation Committee provided no base salary increases to its NEOs in 2018 consistent with our market positioning and reflective of our continued exercise of financial discipline.

 

 

 

(1)

The operating measures of the 2016-2018 performance units were based on non-GAAP financial results for 2016, 2017, and 2018 as reported and reconciled in Appendix B, except that operating measures were further adjusted for the impacts of Hurricane Maria as prescribed by the terms of the 2016-2018 performance goals document. For this purpose, operating expense was reduced by $147 million ($0.16 in EPS) for 2017 and increased by $21 million ($0.03 in EPS) for 2018.

(2)

Based on our average daily closing price of a share of our Common Stock for the first 20 trading days beginning on the grant date (May 3, 2016) and last 20 trading days of the performance period.

(3)

Non-GAAP net income for purposes of the 2018 Company performance goals of our annual cash incentive award program is reported and reconciled in Appendix B.

 

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Table of Contents
       

 

 

 

 

Compensation Discussion and Analysis

 

 

 

 

 

Our Compensation and Governance Best Practices

 

  What we do

 

 

 

Majority of compensation is performance-based: A substantial majority of NEO compensation is performance-based and at-risk.

 

 

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.

 

 

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.

 

 

Robust stock ownership and retention guidelines: We have a six times base salary ownership requirement for our CEO. Our Executive Vice Presidents and Senior Vice Presidents have three times and two times base salary ownership requirements, respectively. 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. Compliance with this policy is assessed annually and all executive officers, including our NEOs, who were expected to meet such guidelines by December 31, 2018, were in compliance.

 

 

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: We do not have “single-trigger” equity vesting acceleration upon a change of control for RSUs and stock options and do not provide tax gross-ups on change of control payments.

 

 

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

 

 

Independent compensation consultant: The Compensation Committee retained and sought advice from FW Cook to assist the Compensation Committee in its review and determination of executive compensation.

 

  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 tax gross-ups: We do not provide tax gross-ups, except for business-related payments such as reimbursement of certain 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 equivalents accrue on our performance units and RSUs, but are paid out in shares of our Common Stock only when and to the extent the underlying award is earned and vested. Stock options do not have dividend equivalent rights.

 

×

 

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

 


 

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Table of Contents
       

 

 

 

 

Compensation Discussion and Analysis

 

 

 

 

 

How Compensation Decisions Are Made For Our Named Executive Officers

 

 

 

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  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 of our CEO and other members of 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.

 

   Provides advice and studies on our equity programs.

 

   Provides advice on 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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Table of Contents
       

 

 

 

 

Compensation Discussion and Analysis

 

 

 

 

 

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 FW Cook, an independent consultant. George B. Paulin, the Chairman of FW Cook, 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 in 2018 provided consultation regarding regulatory updates, selection of our peer group, consultation on market competitiveness for our LTI equity award practices, 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 FW Cook to inform the Compensation Committee’s decisions, but does not engage FW Cook for any other services to the Company. During 2018, the Compensation Committee, as in past years, had responsibility for engaging FW Cook and directed the nature of the activity and interchange of data between FW Cook 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 medicines 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, FW Cook reviews our peer group with the Compensation Committee to determine whether the peer group remains appropriate. FW Cook recommended adding Regeneron Pharmaceuticals, Inc. to the peer group for 2018 because this company fully satisfies the objective criteria for inclusion described in the following chart and, as such, is appropriate for executive compensation benchmarking. Based in part on these recommendations from FW Cook, as well as a review of the objective criteria, the Compensation Committee added Regeneron Pharmaceuticals, Inc. to the peer group for 2018.

 

 

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Table of Contents
       

 

 

 

 

Compensation Discussion and Analysis

 

 

 

 

 

How We Establish Our Peer Group

 

    

2018 Peer Group Companies

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

    

Objective Criteria Considered

 

 

 

2018 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.

 

•   Regeneron Pharmaceuticals, Inc.

 

•   Roche Holding AG

 

   Sanofi S.A.

 

(1)

For purposes of the 2018 peer group analyses:

 

      Market Capitalization(a)    2017 Revenues(b)  

  Amgen

  

$127 billion

  

 

$23 billion

 

  Relative Peer Group Position

  

3rd Quartile (above median)

  

 

2nd Quartile

 

 

  (a)

Represents the 12-month average market capitalization as of May 31, 2018.

  (b)

Represents revenues for the trailing four quarters ended March 31, 2018. Revenues for GlaxoSmithKline plc, Roche Holding AG, and Sanofi S.A. were converted into U.S. dollars using Standard & Poor’s Capital IQ.

 

Peer Group Data Sources

Our primary data sources for evaluating all elements of compensation for our CEO is data compiled by FW Cook from SEC filings of our peer group, including for the 25th, 50th, and 75th percentiles of the specific compensation elements paid to CEOs in our peer group. 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 data, augmented by the available data from proxy statements filed with the SEC for companies in our peer group. The Executive Vice President, Global Commercial Operations role is well-matched in the PHRA Survey. However, the role is not consistently well-represented in the peer group proxy statements

and, as a result, to reflect the scope and criticality of the role, is instead benchmarked to the second highest paid named executive officers in such filings. Solely for the determination of LTI equity awards, we also provide data from the FW Cook Survey of Long-Term Incentives (FW Cook 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 based on the prior year’s compensation and is reviewed by the Compensation Committee to inform compensation decisions made in March of each year as follows:

 

 

Market Median

 

 

 

 

CEO (compiled by FW Cook)

 

  

 

Other NEOs

 

        

 

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

  

 

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

 

        

 

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Table of Contents
       

 

 

 

 

Compensation Discussion and Analysis

 

 

 

 

 

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. For 2018, equity-based compensation represents 76% of our CEO’s target compensation and 66% of target compensation for our other NEOs, and 50% of annual equity awards are in the form of performance units. In addition, while being mindful of stockholder dilution (see below), we also grant LTI equity awards each year to nearly all of our staff members worldwide to increase staff awareness of how our performance impacts stockholder value. We believe that our practice of granting equity-based compensation broadly has been a significant factor in advancing our strategic priorities by aligning all of our staff members’ (including our NEOs’) interests with those of our stockholders, rewarding execution of our strategy, fostering long-term focus, and enhancing retention.

We Continue to Exercise Discipline in the Grant of Long-Term Incentive Equity Awards—Monitoring Dilution and Annual Equity Usage

Our compensation philosophy, practices, and approach balance the use of equity to align staff members with our stockholders while being mindful of the level of dilution that our stockholders experience. Annually, LTI equity award grant guidelines are established for each job level 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 also sets an annual LTI equity award budget at approximately the 50th percentile of our peer group. Further, the Compensation Committee annually reviews the Shareholder Value Transfer (SVT) associated with the proposed aggregate LTI equity award grants to ensure that our SVT is aligned with our peer group practices because, while the Compensation Committee supports delivery of broad-based equity awards to drive alignment of our staff with our stockholders, the Compensation Committee also strives to limit stockholder dilution to that amount which investors would expect to experience with members of our peer group. As illustrated, the resulting dilutive effect has been trending downward to essentially flat over the past seven years.

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Long-Term Incentive Equity Award Mix

As part of its annual evaluation of our LTI equity award practices, the Compensation Committee reviewed our LTI equity award mix with FW Cook and elected to maintain the previous year’s LTI equity award allocation for 2018 given its pay-for-performance alignment.

LTI Equity Award Allocation

 

 

LOGO

For 2018, 80% of our annual equity award value continued to be delivered as performance-based LTI equity awards consisting of 50% performance units (earned at the end of a three-year performance period) and 30% stock options. Time-vested RSUs, designed to foster retention, continued to comprise the remaining 20% of value. Both our stock options and 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 furthers the longer-term performance emphasis of our LTI equity award program and enhances retention.

 

 

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Compensation Discussion and Analysis

 

 

 

 

 

Value of 2018 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 award grant values to our CEO and the other NEOs in March 2018, with an effective grant date of April 27, 2018, the third business day after the announcement of our first quarter 2018 earnings results (with the exception of Mr. Gordon who joined the Company in September 2018). (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

($)

    

2017

Market

Median

($)

    

Difference vs. 

Market Median 

Over/ (Under) 

(%) 

 

  Robert A. Bradway

     6,250,000        3,750,000        2,500,000        12,500,000        11,000,000        13.6   

  Anthony C. Hooper

     2,000,000        1,200,000        800,000        4,000,000        3,993,938        0.2   

  Murdo Gordon(2)

     n/a        n/a        n/a        n/a        n/a        n/a   

  Sean E. Harper

     2,000,000        1,200,000        800,000        4,000,000        3,740,699        6.9   

  David W. Meline

     2,000,000        1,200,000        800,000        4,000,000        3,555,907        12.5   

  David M. Reese(3)

     450,000        270,000        180,000        900,000        n/a        n/a   

  Jonathan P. Graham

     1,400,000        840,000        560,000        2,800,000        2,583,298        8.4 

 

(1) 

The 2018-2020 performance period runs from January 1, 2018 through December 31, 2020.

(2) 

Mr. Gordon commenced employment with the Company effective September 3, 2018. For a description of the new-hire LTI equity awards granted to Mr. Gordon in connection with the commencement of his employment, see the subsection “Initial Hire and Promotion Equity Awards” below.

(3) 

Dr. Reese was appointed as Executive Vice President, Research and Development, effective July 26, 2018. Prior to that date, and at the time that the 2018 annual LTI equity awards were granted, Dr. Reese served as Senior Vice President, Translational Sciences and Oncology and the grant amounts reflect his level as a Senior Vice President. A Market Median was not available for this position. The table excludes the promotional RSU award with a cash value of $2,400,000 granted on November 2, 2018. See the subsection “Initial Hire and Promotion Equity Awards” below for more details.

 

Based on the March 2018 Compensation Committee review of the market data, the Compensation Committee awarded Mr. Bradway a 2018 LTI equity award grant valued at $12.5 million, which is approximately 4% higher than the value of his grant in 2017 of $12 million and 13.6% above the Market Median to reward Mr. Bradway for strong performance and continued and consistent leadership of the Company in a year of transition. In making its decision, the Compensation Committee noted that the Market Median had declined because of leadership turnover at a number of companies in our peer group while peer group LTI equity awards for CEOs who had remained in place had increased by 10%. Further, Mr. Bradway’s total target annual cash compensation was slightly below the Market Median. The Compensation Committee’s determination of the appropriateness of the grant value awarded to Mr. Bradway also took into account that delivery of this value in the form of LTI equity awards (as opposed to an increase in cash compensation) ensures the substantial majority of Mr. Bradway’s compensation is “at risk,” performance-based, and focused on the longer-term.

The March 2018 Compensation Committee review of the market data also resulted in granting Mr. Hooper the same LTI equity award value that he had received in 2017 as this aligned him with the Market Median. For Dr. Harper and Mr. Meline, after reviewing their total target annual cash compensation against the Market Median and noting that both were below the Market Median (see the subsection “Total Target Annual Cash Compensation” below), and to promote internal equity, the Compensation Committee decided to increase Dr. Harper’s and Mr. Meline’s LTI equity award grant values from $3.7 million and $3.5 million, respectively, in 2017, to $4 million in 2018. The

Compensation Committee concluded that these increases in LTI equity award values (as opposed to increases in cash compensation) were appropriate because they address the difference in total target annual cash compensation from the Market Median and target their target total annual direct compensation closer to the Market Median with compensation that is substantially “at risk,” performance-based, and focused on the longer-term. Further, the Compensation Committee also determined to increase Mr. Graham’s LTI equity award value from $2.5 million in 2017 to $2.8 million in 2018 to reflect the breadth and duration of Mr. Graham’s experience in the role of General Counsel at large public companies.

Initial Hire and Promotion Equity Awards

To induce Mr. Gordon to join us and to provide long-term incentives that are in alignment with stockholder interests, a performance unit award valued at $3.5 million was granted with substantially the same terms and conditions as the existing performance award goal design described above for the 2018-2020 performance period except for modifications to address Mr. Gordon’s September 2018 start date. The performance period for Mr. Gordon’s performance unit award began on Mr. Gordon’s equity award grant date (November 2, 2018—the third business day after third quarter 2018 earnings) for purposes of calculating relative TSR and excluded the 2018 operating measures given Mr. Gordon’s late 2018 start date. We also agreed to provide Mr. Gordon with RSUs valued at $6.4 million to compensate Mr. Gordon for equity forfeited as a result of leaving his previous employer, to induce him to join the Company, and to provide long-term incentives that tie a significant portion of Mr. Gordon’s compensation to the value

 

 

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Table of Contents
       

 

 

 

 

Compensation Discussion and Analysis

 

 

 

 

 

of our stock in alignment with our stockholders’ interests. These RSUs were also granted on November 2, 2018, and, to better align with the value of the equity forfeited, will vest over three years beginning on the first anniversary of the equity award grant date through the third anniversary (at a rate of 35%, 35%, and 30% each year), contingent upon Mr. Gordon being actively employed at the time of each vesting date.

In connection with Dr. Reese’s promotion to Executive Vice President, Research and Development, in July 2018, the Compensation Committee granted Dr. Reese a promotion RSU award with a cash value of $2.4 million. This grant was intended to bring Dr. Reese’s annual grant more in-line with Market Median for his new position. These RSUs were granted on November 2, 2018, and will vest over four years in two equal tranches of 33% on the second and third anniversary of the grant date with the remaining 34% vesting on the fourth anniversary of the grant date. To promote his retention and given that Dr. Reese has satisfied the age and service requirements for retirement eligibility, the terms of our RSU equity award agreement providing for continued vesting after retirement were eliminated from this grant. Thus, in the event of Dr. Reese’s retirement prior to vesting, these promotional RSUs will be forfeited.

Performance Award Program—Performance Units Earned for the 2016-2018 Performance Period

Performance units for the 2016-2018 performance period, which ended December 31, 2018, were earned, certified, and converted into shares of Common Stock in March 2019. The non-GAAP operating measures(1) of EPS growth, operating margin, and operating expense were chosen to drive performance in alignment with, and focus our executives on, our 2014-2018 investor commitments discussed earlier. At the end of the performance period, the earned percentages from our performance for the three years under each non-GAAP operating measure were averaged and the resulting earned operating measure percentages for each of the three measures were averaged, resulting in a total operating measures score of 115.4%. This score was then modified based on our strong three-year TSR performance ranking (65.2%) relative to the TSRs of the companies in the S&P 500 for this performance period, resulting in a TSR modifier of +30.3% and a payout of 145.7% of target performance units granted. The calculation methodology for the 2016-2018 performance period design is depicted on the following page.

 

  

 

(1) 

The operating measures for the 2016-2018 performance units were based on non-GAAP financial results for 2016, 2017, and 2018 as reported and reconciled in Appendix B, except that operating measures were further adjusted for the impacts of Hurricane Maria as prescribed by the terms of the 2016-2018 performance goals document. For this purpose, operating expense was reduced by $147 million ($0.16 in EPS) for 2017 and increased by $21 million ($0.03 in EPS) for 2018.

 

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Compensation Discussion and Analysis

 

 

 

 

 

2016-2018 Performance Period Goal Design and Award Calculation

All operating measures were established in early 2016 at the

beginning of the three-year performance period

2018 Operating Measures and Performance                                                             

 

    Non-GAAP(1)
Operating
Measures
 

Minimum

(50%)

 

Target

(100%)

 

Intermediate

(125%)

 

Maximum

(150%)

  2018 Performance

LOGO           

 

  EPS Growth  

($)

                         

142.9%

($14.37)

   

£$11.15

     

$12.25

     

$13.80

         

³$14.60

 
                                               
 

 

Operating

Margin

(%)

                         

106.6%

(52.5%)

   

£48%

     

52%

         

54%

     

³58%

 
                                               
 

 

Operating

Expense

(in billions)

                         

50.0%

($11.91B)

   

³$11.5B

         

$10.9B

     

     

£$10.3B

 
                                               
           

 

   LOGO

 

 

99.8%

 

                         

2016-2018 Operating Measures Score

(Operating Measure Percentages 50 – 150% with linear
interpolation along the payout curve)

Operating Measures Percentages are Equally Weighted for Each of
the Three Years
Non-GAAP(1)
Operating
Measures
  2016(2)   2017(2)   2018   2016-2018
Average
Operating
Measures

EPS

Growth ($)

 

137.0%

($11.65)

 

128.8%

($12.74)

 

142.9%

($14.37)

  136.2%

Operating

Margin (%)

 

128.6%

(52.3%)

 

134.7%

(54.2%)

 

106.6%

(52.5%)

  123.3%

Operating Expense

(in billions)

 

94.4%

($11.54)

 

115.6%

($11.04)

 

50.0%

($11.91)

  86.7%
 

 

120.0%

 

 

 

126.4%

 

 

 

99.8%

 

 

 

115.4%

 

 

 

 

2016-2018 S&P 500 Relative TSR Modifier

 

 

Payout for Performance Relative to S&P 500 TSR Percentage
 

Amgen TSR ³75th percentile = 50% (Maximum)

 

                 

Actual Amgen

TSR = 65.2

percentile –

resulting in a

+30.3% TSR

modifier

 

Amgen TSR = 50th percentile LOGO = 0% (Target)

 

 

         
   

Amgen TSR £25th percentile = -50% (Minimum)

 

 

       
 

TSR Measurement Points = Average daily closing price of stock for the first 20 trading days from the grant date (May 3, 2016) and the last 20 trading days of the performance period.

 

LOGO

Payout no greater than 0% (target) if Amgen’s TSR is less than 0.

 

 

 

LOGO

Final 2016-2018 Performance Period Calculation 2016-2018 Non-GAAP(1) Operating Measures EPS Growth (1/3rd) Operating Margin (1/3rd) Operating Expense (1/3rd) 115.4% 2016-2018 Amgen Relative TSR Performance 30.3% Final Payout 145.7%

 

(1)

The operating measures of the 2016-2018 performance goals were based on non-GAAP financial results for 2016, 2017, and 2018 as reported and reconciled in Appendix B, except that operating measures were further adjusted for the impacts of Hurricane Maria as prescribed by the terms of the 2016-2018 performance goals document. For this purpose, operating expense was reduced by $147 million ($0.16 in EPS) for 2017 and increased by $21 million ($0.03 in EPS) for 2018.

(2)

Our targets for our 2016 and 2017 performance under the 2016-2018 performance goals were disclosed in our 2018 proxy statement filed with the Securities and Exchange Commission on April 11, 2018.

 

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Compensation Discussion and Analysis

 

 

 

 

 

Performance Units Earned for 2016-2018 Performance Period

Our actual performance of 145.7% for the 2016-2018 performance period 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 converted to one share of Common Stock upon the payout date of March 22, 2019.

 

  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

     5,500,000        32,246        50,962  

  Anthony C. Hooper

     2,000,000        11,726        18,532  

  Murdo Gordon(2)

     n/a        n/a        n/a  

  Sean E. Harper

     1,750,000        10,260        16,215  

  David W. Meline

     1,750,000        10,260        16,215  

  David M. Reese

     400,000        2,345        3,706  
  Jonathan P. Graham      1,150,000        6,742        10,655  

 

(1) 

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

(2) 

Mr. Gordon commenced employment with the Company after the participants for the 2016-2018 performance period had been determined and, as such, he did not receive any performance units for the 2016-2018 performance period. For a description of the new-hire LTI equity awards granted to Mr. Gordon in connection with the commencement of his employment, see the subsection “Initial Hire and Promotion Equity Awards” above.

 

Outstanding Performance Units—2017–2019 Performance Period

Based on review and deliberation in December 2016 and March 2017, the Compensation Committee constructed the 2017-2019 performance period (January 1, 2017 to December 31, 2019) design to be similar to that of the 2016-2018 performance period design. For the first and second years of the 2017-2019 performance period, the Compensation Committee retained the three non-GAAP operating measures of EPS growth, operating margin, and operating expense used for the 2016-2018 performance period as they continued to drive performance in alignment with, and focus our executives on, our 2014-2018 investor commitments discussed earlier.

For the third year of the 2017-2019 performance period (2019), the Compensation Committee replaced non-GAAP operating expense with

non-GAAP ROIC in response to stockholder feedback, as well as to support our 2014-2018 investor commitments and our goal of delivering an efficient, disciplined business model beyond 2018.

To create greater alignment with our stockholders’ interests, the Compensation Committee also retained the requirement that the TSR modifier could not effect a payout greater than target if our absolute TSR over the performance period was less than 0.

The calculation methodology for the 2017-2019 performance period design is substantially similar to that depicted above for the 2016-2018 performance units. The performance metrics and their weightings, as well as our actual performance for the completed annual operating measurement periods of 2017 and 2018 are set forth on the following page.

 

 

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Compensation Discussion and Analysis

 

 

 

 

 

2017-2019 Performance Period Goal Design and Award Calculation

All operating measures were established in early 2017 at the

beginning of the three-year performance period

2018 Operating Measures and Performance                                                             

 

    Non-GAAP(1)
Operating
Measures
 

Minimum

(50%)

 

Target

(100%)

 

Intermediate

(125%)

 

Maximum

(150%)

 

2018

Performance

LOGO           

 

  EPS Growth  

($)

                         

142.9%

($14.37)

   

£$11.15

     

$12.25

     

$13.80

         

³$14.60

 
                                               
 

 

Operating

Margin

(%)

                         

106.6%

(52.5%)

   

£48%

     

52%

         

54%

     

³58%

 
                                               
 

 

Operating

Expense

(in billions)

                         

50.0%

($11.91B)

   

³$11.5B

     

$10.9B

     

     

£$10.3B

 
                                               
   

 

   LOGO

 

 

99.8%

                           

2017-2019 Operating Measures Score

(Operating Measure Percentages 50 – 150% with linear
interpolation along the payout curve)

Operating Measures Percentages are Equally Weighted

for Each of the Three Years

Non-GAAP(1)
Operating
Measures
  2017(2)   2018   2019   2017-2019
Average
Operating
Measures

EPS

Growth ($)

 

 

1/3rd 

 

133.8%

($12.74)

 

142.9%

($14.37)

 

 

Pre-established

and to be

disclosed(3)

  TBD

Operating

Margin (%)

 

 

1/3rd 

 

114.5%

(54.2%)

 

106.6%

(52.5%)

  TBD

Operating  Expense Years 1 & 2

(in billions)

 

 

1/3rd 

 

107.0%

($11.04)

 

50.0%

($11.91)

 

Not Applicable

for 2019

  TBD

ROIC

Year 3

     

Not Applicable for

2017 and 2018

 

 

Pre-established

and to be

disclosed(3)

   

 

118.4%

 

 

 

99.8%

 

 

 

TBD

 

 

 

TBD

 

 

 

2017-2019 S&P 500 Relative TSR Modifier

 

 

Payout for Performance Relative to S&P 500 TSR Percentage
 
 

Amgen TSR ³ 75th percentile = 50% (Maximum)

 

 

Amgen TSR = 50th percentile LOGO = 0% (Target)

 

 

Amgen TSR £ 25th perc