DEF 14A 1 d846287ddef14a.htm DEF 14A DEF 14A
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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of the

Securities Exchange Act of 1934

 

  Filed by the registrant                      Filed by a party other than the registrant

 

 

Check the appropriate box:

 

   

 

               

 

 

 

Preliminary Proxy Statement

 

   

 

    

 

 

 

CONFIDENTIAL, FOR USE OF THE COMMISSION ONLY (AS PERMITTED BY RULE 14A-6(E)(2))

 

   

 

    

 

 

 

Definitive Proxy Statement

 

   

 

    

 

 

 

Definitive Additional Materials

 

   

 

    

 

 

 

Soliciting Material Pursuant to Section 240.14a-12

 

AMGEN INC.

(Name of Registrant as Specified in Its Charter)

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

 

 

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

 

   

 

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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 7, 2020

Dear Fellow Stockholder:

You are invited to attend the 2020 Annual Meeting of Stockholders, or Annual Meeting, of Amgen Inc. to be held on Tuesday, May 19, 2020, at 11:00 A.M., Pacific Time.

Our Mission: We seek to develop innovative medicines that address important unmet medical needs in the fight against serious illness. This mission is the central underpinning of our strategy, inherently long-term, and in service of patients and their families.

Our Heritage: This month, we are celebrating our fortieth anniversary. Entrepreneurs started Amgen 40 years ago knowing that biotechnology could change lives. Today, our innovative medicines can be found in approximately 100 countries. We are proud of what Amgen has accomplished in the past four decades, and excited for what the future holds.

Execution of Our Strategy: In 2019, we advanced key facets of our long-term growth strategy in a year of transition. We have reshaped our portfolio of innovative medicines in recent years, focusing on products that can grow primarily through volume increases, rather than price increases, including Repatha®, Aimovig®, Prolia®, EVENITY® and, most recently, Otezla®. Leveraging our industry-leading biologics manufacturing skills, we have delivered our first biosimilars to the U.S. market, MVASI® (biosimilar bevacizumab (Avastin®)) and KANJINTI® (biosimilar trastuzumab (Herceptin®)), in 2019 (adding to our two successful biosimilar launches outside of the U.S. last year). We progressed our early oncology programs, including AMG 510, our KRASG12C small molecule inhibitor, that has enrolled a potentially pivotal Phase 2 monotherapy study in advanced non-small cell lung cancer, began enrollment of colorectal cancer patients in a Phase 2 monotherapy study, and is also being investigated as a treatment for a variety of other solid tumors. Outside of oncology, we have also advanced our pipeline in our other therapeutic areas and await data from tezepelumab for allergic and non-allergic asthma, omecamtiv mecarbil for heart failure, and Otezla for mild to moderate psoriasis. And we are increasingly well-positioned to take advantage of the growing demand for innovative healthcare globally, with our expanding presence in markets around the world, including China, where we have entered into a strategic oncology collaboration with BeiGene Ltd., and Japan. In 2019, we also continued to work on the construction of our second next-generation manufacturing facility in Rhode Island, building on the success we have had with our first next-generation facility in Singapore; delivering the same output as a traditional plant, but with a much smaller environmental footprint. We continue to maintain a disciplined approach to capital allocation through which we invest in our future while also returning capital to stockholders. In the Compensation Discussion and Analysis section of this proxy, we further discuss our progress against our strategy in 2019.

Our Commitment to Society: As we strive to bring to market first-in-class or best-in-class medicines to treat serious illness and deliver a large effect size, we believe that we are bringing the type of innovation that can address the challenges of our increasingly older and more urban global population. How we achieve this aspiration is equally important since making a positive difference in the world is at the heart of what we do. As part of our mission to serve patients, we take our responsibilities seriously with respect to the areas of environmental sustainability, social responsibility, and corporate governance (ESG). In addition to a commitment to ethical business practices, our ESG efforts include integrating environmentally sustainable practices throughout our business, improving patient access to our medicines, supporting science education for the next generation of innovators, and enhancing the diversity and inclusiveness of our workforce.

Stockholder Engagement: We are also guided by the perspectives of our stockholders as expressed through their direct engagement with us throughout the year and at our Annual Meeting. Since our 2019 annual meeting of stockholders, in addition to outreach by our executives and Investor Relations department to 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 51% of our outstanding shares. Topics discussed included our business performance, our ESG programs, and executive compensation (including its direct link to our strategy). Feedback received during these meetings is shared with the full Board of Directors and informs Board and committee decisions. We are eager to continue this valuable dialogue with our investors in the coming year.

We are grateful to our former Executive Vice President and Chief Financial Officer, David W. Meline, who retired as CFO at the end of 2019 for his significant and lasting contributions to Amgen. Peter H. Griffith joined us as our new CFO this year and his extensive financial and operational experience will benefit Amgen as we continue our efforts to serve more patients and drive long-term growth and stockholder value.

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 2019, and respond to comments and questions.

On behalf of our Board of Directors, I thank you for your participation and investment in Amgen. We look forward to the Annual Meeting on May 19. As a final note, and also on behalf of our Board of Directors, I would like to thank Rebecca M. Henderson, who is not standing for re-election this year, for her decade of wise counsel to and guidance of Amgen.

Sincerely,

 

 

LOGO

Robert A. Bradway

Chairman of the Board,

Chief Executive Officer and President


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 19, 2020

 

To the Stockholders of Amgen Inc.:

 

Date and Time:  

Tuesday, May 19, 2020, at 11:00 A.M., Pacific Time

Location:  

After careful consideration, in light of the on-going developments related to the COVID-19 pandemic and governmental decrees that in-person gatherings be postponed or canceled, and in the best interests of public health and the health and safety of our stockholders, Board of Directors, and employees, our 2020 Annual Meeting of Stockholders, or Annual Meeting, will be held solely by remote communication via the internet at www.virtualshareholdermeeting.com/AMGN2020. You will not be able to attend the Annual Meeting in person.

 

Stockholders or their proxyholders may participate, vote, and examine our list of stockholders at our Annual Meeting via the Internet at www.virtualshareholdermeeting.com/AMGN2020 and using your control number.

Record Date:  

March 20, 2020. Amgen stockholders of record at the close of business on the record date are entitled to receive notice of, and vote at, the 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 7, 2020, to our stockholders of record on the record date.

Items of Business:
  1.  

To elect 11 directors to the Board of Directors of Amgen for a term of office expiring at the 2021 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, 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, 2020;

  4.  

To consider one stockholder proposal, if properly presented at the Annual Meeting; and

  5.  

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

 

Attendance: The live audio webcast of the Annual Meeting will begin promptly at 11:00 A.M., Pacific Time. To participate in the virtual meeting, you will need the control number included on your Notice, proxy card, or voting instruction form. We encourage you to access the meeting prior to the start time. 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, 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 7, 2020


Table of Contents
       

 

 

 

 

Table of Contents

 

 

 

 

 

Table of Contents

 

 

Proxy Statement Summary

   1

 

Item 1—Election of Directors

   9

 

Corporate Governance

   17

Board of Directors Corporate Governance Highlights

   17

Leadership Structure

   18

The Board’s Role in Risk Oversight

   20

Codes of Ethics and Business Conduct

   21

Board Meetings

   21

Communication With the Board

   21

Board Committees and Charters

   21

Governance and Nominating Committee

   22

Process for Selecting Directors, Director Qualifications, and Board Diversity

   22

Regular Board and Committee Evaluations

   24

Director Independence

   25

Governance Committee Processes and Procedures for Considering and Determining Director Compensation

   26

Audit Committee

   26

Corporate Responsibility and Compliance Committee

   27

About Our Compliance Program

   27

Compensation and Management Development Committee

   28

Compensation Committee Processes and Procedures for Considering and Determining Executive Compensation in 2019

   28

Compensation Risk Management

   29

Prohibition on Hedging

   30

Pay Ratio

   30

Compensation Committee Report

   31

Our Commitment to Environmental Sustainability, Social Responsibility, and Human Capital Management

   31

 

Item 2—Advisory Vote to Approve Our Executive Compensation

   34

 

Executive Compensation

   38
Compensation Discussion and Analysis    38

Our Named Executive Officers

   38

Our Strategy

  

39

Our Compensation and Governance Best Practices

  

40

Aligning Pay With Performance and Execution of Our Strategic Priorities

  

41

Positive 2019 Say on Pay Vote Outcome and Engagement With Our Stockholders

  

46

Long-Term Incentive Equity Award Design in 2019

  

46

Our 2019 Compensation Program Highlights and Objectives

  

47

How Compensation Decisions Are Made For Our Named Executive Officers

  

48

Elements of Compensation and Specific Compensation Decisions

  

51

Compensation Policies and Practices

  

61

Non-Direct Compensation and Payouts in Certain Circumstances

  

63

Taxes and Accounting Standards

  

65

Executive Compensation Tables

  

66

Director Compensation

  

83

 

Security Ownership of Directors and Executive Officers

  

87

 

Security Ownership of Certain Beneficial Owners

  

89

 

Item 3—Ratification of Selection of Independent Registered Public Accountants

  

90

 

Audit Matters

  

91

 

Annual Report on Form 10-K

  

92

 

Item 4—Stockholder Proposal to Require an Independent Board Chair

  

93

 

Certain Relationships and Related Transactions

  

96

 

Information Concerning Voting and Solicitation

  

97

 

Other Matters

  

101

 

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 2020 Proxy Statement      


Table of Contents
       

 

 

 

 

Proxy Statement Summary

 

 

 

 

 

Proxy Statement Summary

This summary contains highlights about our Company and the upcoming 2020 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.

2020 Annual Meeting of Stockholders

 

 

Date and Time:

  

Tuesday, May 19, 2020, at 11:00 A.M., Pacific Time

Location:

  

After careful consideration, in light of the on-going developments related to the COVID-19 pandemic and governmental decrees that in-person gatherings be postponed or canceled, and in the best interests of public health and the health and safety of our stockholders, Board of Directors, and employees, our 2020 Annual Meeting of Stockholders will be held solely by remote communication via the internet at www.virtualshareholdermeeting.com/AMGN2020. You will not be able to attend the Annual Meeting in person.

 

Stockholders or their proxyholders may participate, vote, and examine our list of stockholders at our Annual Meeting via the Internet at www.virtualshareholdermeeting.com/AMGN2020 and using your control number.

Record Date:

  

March 20, 2020

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 7, 2020, to our stockholders.

Voting Matters and Board Recommendations

 

 

  Matter

  

Our Board Vote Recommendation    

 

  Management Proposals:

 

 

  Item 1:

 

 

Election of the 11 Nominees to the Board of Directors Named in This Proxy Statement (page 9)

 

   FOR each Director Nominee

 

 

  Item 2:

 

 

Advisory Vote to Approve Our Executive Compensation (page 34)

 

   FOR

 

 

  Item 3:

 

 

Ratification of Selection of Independent Registered Public Accountants (page 90)

 

   FOR

 

 

  Stockholder Proposal:

 

 

  Item 4:

 

 

Stockholder Proposal to Require an Independent Board Chair, if properly presented (page 93)

 

   AGAINST

 

 

LOGO   ï 2020 Proxy Statement    1


Table of Contents
       

 

 

 

 

Proxy Statement Summary

 

 

 

 

 

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 submitting your proxy by Internet or telephone.

 

LOGO

 

   At the Meeting: To vote at the Annual Meeting, visit www.virtualshareholdermeeting.com/AMGN2020. You will need the control number that appears on your Notice, proxy card, or voting instruction form. 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 provide 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.

 

2     LOGO      2020 Proxy Statement


Table of Contents
       

 

 

 

 

Proxy Statement Summary

 

 

 

 

 

Item 1: Election of 11 Nominees to the Board of Directors (Page 9)

 

 

   

  Nominee

     Independent        Age       

Director

Since

 

 

     Audit       

Governance

and

Nominating

 

 

 

     Executive       

Compensation

and

Management

Development

 

 

 

 

    

Equity

Award

 

 

  

 

 

 

Corporate  

Responsibility  

and  

Compliance  

 

 

 

  Wanda M. Austin

 

    

 

 

 

 

    

 

65

 

 

 

    

 

2017

 

 

 

    

 

M

 

 

 

          

 

M

 

 

 

     
 

 

  Robert A. Bradway

 

       

 

57

 

 

 

    

 

2011

 

 

 

          

 

C

 

 

 

       

 

M

 

 

 

  
 

 

  Brian J. Druker

 

    

 

 

 

 

    

 

64

 

 

 

    

 

2018

 

 

 

             

 

M

 

 

 

       

 

M

 

 

 

 

 

  Robert A. Eckert

 

    

 

 

 

 

    

 

65

 

 

 

    

 

2012

 

 

 

       

 

M

 

 

 

    

 

M

 

 

 

    

 

C

 

 

 

     
 

 

  Greg C. Garland

 

    

 

 

 

 

    

 

62

 

 

 

    

 

2013

 

 

 

       

 

C

 

 

 

    

 

M

 

 

 

    

 

M

 

 

 

     
 

 

  Fred Hassan

 

    

 

 

 

 

    

 

74

 

 

 

    

 

2015

 

 

 

    

 

M

 

 

 

          

 

M

 

 

 

     
 

 

  Charles M. Holley, Jr.

 

    

 

 

 

 

    

 

63

 

 

 

    

 

2017

 

 

 

    

 

C

 

 

 

    

 

M

 

 

 

    

 

M

 

 

 

        
 

 

  Tyler Jacks

 

    

 

 

 

 

    

 

59

 

 

 

    

 

2012

 

 

 

             

 

M

 

 

 

       

 

M

 

 

 

 

 

  Ellen J. Kullman

 

    

 

 

 

 

    

 

64

 

 

 

    

 

2016

 

 

 

    

 

M

 

 

 

    

 

M

 

 

 

           
 

 

  Ronald D. Sugar

 

    

 

 

 

 

    

 

71

 

 

 

    

 

2010

 

 

 

       

 

M

 

 

 

    

 

M

 

 

 

          

 

C

 

 

 

   

 

  R. Sanders Williams

 

    

 

 

 

 

    

 

71

 

 

 

    

 

2014

 

 

 

             

 

M

 

 

 

                               

 

M

 

 

 

 

“C”

indicates Chair of the committee.

“M”

indicates member of the committee.

 

 

 

LOGO

Director* and Corporate Governance Highlights

 

 

LOGO

 

*

For our director nominees.

 

LOGO   ï 2020 Proxy Statement    3


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 – 10 of our 11 director nominees (page 25)

 

Strong Refreshment Practices With 5 New Directors Since 2015 – Average Board tenure of approximately 5.5 years for our director nominees (pages 10 and 17)

 

Annual Anonymous Board and Committee Evaluation Process (pages 17 and 24)

 

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

 

Robust Lead Independent Director Role (pages 18-19)

 

Corporate Responsibility and Compliance Committee (page 27)

 

Enterprise Risk Management Program and Annual Detailed Compensation Risk Analysis – overseen by Board and Compensation and Management Development Committee, respectively (pages 20  and 29-30)

 

   

 

Focus on    

Stockholder Rights    

  

 

Proxy Access (pages 18 and 101)up to 20 eligible stockholders that own 3% of shares for 3 years who meet the requirements set forth in our Bylaws may have their director nominees constituting up to the greater of 20% of the total directors or two nominees included in our proxy materials

 

Majority Voting Standard for Director Elections (pages 17 and 99)

 

Stockholders* May Act By Written Consent (page 18)

 

Stockholders* Have a Right to Call Special Meetings (15% threshold requirement) (page 18)

 

No Supermajority Vote Provisions in Certificate of Incorporation or Bylaws (page 18)

 

No Poison Pill (page 18)

 

   

 

History of    

Transparency and    

Accountability    

  

 

Significant Stock Ownership Requirements for Officers and Directors (pages 61-62 and 83)

 

Regular Engagement With Stockholders to Seek Feedback (page 46)

 

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 (pages 31-33)

 

   

 

 

 

 

 

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

THE 11 NAMED NOMINEES.

 

  
 

 

  

 

 

*

Who meet the requirements set forth in our Restated Certificate of Incorporation or our Amended and Restated Bylaws, as applicable.

 

4     LOGO   ï 2020 Proxy Statement


Table of Contents
       

 

 

 

 

Proxy Statement Summary

 

 

 

 

 

Item 2: Advisory Vote to Approve Our Executive

Compensation (Page 34)

 

We Have Implemented Compensation Best Practices

 

 

 

What we do

 

 

 

A substantial majority of Named Executive Officer 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

 

 

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

 

 

No excessive perks

 

 

No employment agreements

 

 

No dividends paid on unvested equity

 

 

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

 

 

NEO Compensation is Dependent on Our Performance

 

 

   A significant amount 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.

 

2019 Total Target Direct Compensation Mix

 

 

LOGO

 

LOGO   ï 2020 Proxy Statement    5


Table of Contents
       

 

 

 

 

Proxy Statement Summary

 

 

 

 

 

2019 Annual and Long-Term Awards Reflect Performance Against Pre-Established Goals and Measures

 

2019 Annual Cash Incentive Program

 

 

2017-2019 Long-Term Incentive Performance Award Payout

 

Our annual cash incentive program is designed to focus our staff on delivering financial and operational objectives to drive annual performance, advance strategic priorities, and position us for long-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, with the goal design and all measurement targets established at the beginning of the three-year performance period.

Goal

 

 

Weighting

 

   

 

% of Target 

Earned 

 

  LOGO

 

Financial Performance

 

 

Revenues

 

   

 

30%

 

 

 

 

177% 

 

 

Non-GAAP Net Income(1)

 

   

 

30%

 

 

 

 

168% 

 

 

Progress Innovative Pipeline

 

 

Advance Early Pipeline

 

   

 

10%

 

 

 

 

100% 

 

 

Execute Key Clinical Studies and Regulatory Filings

 

   

 

20%

 

 

 

 

80% 

 

 

Deliver Annual Priorities

 

 

Execute Critical Launches

and Long-Term

Commercial Objectives

 

   

 

5%

 

 

 

 

77% 

 

 

Achieve Productivity Objectives

 

   

 

5%

 

 

 

 

107% 

 

 

Final Score

 

   

 

Achieved 138.9% 

 

 

(1) 

Non-GAAP net income for purposes of the 2019 Company performance goals of our annual cash incentive award program is reported and reconciled in Appendix B.

(2)

The operating measures of the 2017-2019 performance goals were based on non-GAAP financial results for 2017, 2018, and 2019 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 2017-2019 performance goals document as follows: operating expense was reduced by $147 million ($0.16 in EPS) for 2017, increased by $21 million ($0.03 in EPS) for 2018, and increased by $49 million ($0.07 in EPS) for 2019.

 

 

 

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

  ADVISORY RESOLUTION INDICATING THE APPROVAL OF THE COMPENSATION OF THE  

COMPANY’S NAMED EXECUTIVE OFFICERS.

 

  

 

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Proxy Statement Summary

 

 

 

 

 

Item 3: Ratification of Selection of Independent Registered

Public Accountants (Page 90)

 

 

 

The Audit Committee of the Board has selected Ernst & Young LLP, or EY, as our independent registered public accountants for the fiscal year ending December 31, 2020.

 

 

EY 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 EY 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.

 

  

Item 4: Stockholder Proposal (Page 93)

 

Stockholder proposal to require an independent Board Chair, if properly presented.

 

 

Independent Oversight. Our Company has numerous mechanisms that ensure independent oversight of the Company’s affairs and that facilitate communication with, and independent evaluation of, senior management, including:

 

  -  

An active lead independent director elected annually by and from the independent directors with a robust set of duties and authority outlined below;

 

  -  

Strong Board and committee involvement to provide sound and robust oversight of management;

 

  -  

Regular communication between the lead independent director, the independent directors, and Robert A. Bradway, keeping Mr. Bradway apprised of any concerns, issues, or determinations made during the independent sessions, and consulting with Mr. Bradway on other matters pertinent to the Company and the Board;

 

  -  

Diverse, experienced, and skilled directors, with ten of our eleven director nominees independent as defined by The NASDAQ Stock Market listing standards and the requirements of the Securities and Exchange Commission;

 

  -  

All members of the Board’s key committees are independent; and

 

  -  

A meeting of the independent directors is scheduled at every regular Board meeting and the independent directors meet in executive session without Mr. Bradway to review Company performance, management effectiveness, proposed programs and transactions, and the Board meeting agenda items.

 

 

Leadership Structure. Our governance documents give the Board discretion in determining whether to separate or combine the roles of the Chairman and Chief Executive Officer. This flexibility permits the Board to choose a leadership structure that can be tailored to the strengths of the Company’s officers and directors and to best address our evolving and highly complex business.

 

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Table of Contents
       

 

 

 

 

Proxy Statement Summary

 

 

 

 

 

 

Annual Evaluation of Leadership Structure. The Board conducts annual evaluations of the Company’s leadership structure and determined that the Company and its stockholders are best served at this time by having Mr. Bradway serve as both Chairman and Chief Executive Officer, coupled by a separate active lead independent director, currently served by Robert A. Eckert.

 

 

Our Lead Independent Director Responsibilities

 

The lead independent director’s responsibilities outlined in the Amgen Board of Directors Corporate Governance Principles include:

 

- Approving meeting agendas for the Board;

 

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

 

- Previewing the information to be provided to the Board;

 

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

 

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

 

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

 

- Leading the Board’s annual self-assessment;

 

- Ensuring that he/she is available for consultation and direct communication, if requested by major stockholders; and

 

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

 

In addition to the responsibilities outlined above, the lead independent director:

 

- Meets with the Chairman prior to each regular meeting of the Board and its committees to discuss, provide input on, and approve the agendas;

 

- With the Chairman, determines presenters for attendance at Board meetings;

 

- Has one-on-one discussions with each independent director, including as part of the Board’s annual evaluation process;

 

- Attends all committee meetings, including those committees for which he is not a member (at his discretion) and is provided with access to all committee materials;

 

- Has the authority to engage independent consultants;

 

- Is regularly apprised of inquiries from stockholders;

 

- Interviews Board candidates; and

 

- Has an increased role in crisis management, as appropriate.

 

Please see “Leadership Structure” in the Corporate Governance section for a full discussion of our current leadership structure and lead independent director responsibilities.

 

 

 

THE BOARD OF DIRECTORS RECOMMENDS A VOTE “AGAINST” THE

STOCKHOLDER PROPOSAL.

 

  

 

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Item 1 — Election of Directors

 

 

 

 

 

Item 1

Election of Directors

 

 

Under our governance 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 12 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 as a director, in each case for a one-year term expiring at our 2021 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. Rebecca M. Henderson is not standing for re-election at the 2020 Annual Meeting of Stockholders, or Annual Meeting, after ten years of valuable service to the Company.

The Board has fixed the authorized number of directors at 11 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

 

    

 

 

 

 

    

 

65

 

 

 

    

 

2017

 

 

 

    

 

M

 

 

 

          

 

M

 

 

 

     
 

 

  Robert A. Bradway

 

       

 

57

 

 

 

    

 

2011

 

 

 

          

 

C

 

 

 

       

 

M

 

 

 

  
 

 

  Brian J. Druker

 

    

 

 

 

 

    

 

64

 

 

 

    

 

2018

 

 

 

             

 

M

 

 

 

       

 

M

 

 

 

 

 

  Robert A. Eckert

 

    

 

 

 

 

    

 

65

 

 

 

    

 

2012

 

 

 

       

 

M

 

 

 

    

 

M

 

 

 

    

 

C

 

 

 

     
 

 

  Greg C. Garland

 

    

 

 

 

 

    

 

62

 

 

 

    

 

2013

 

 

 

       

 

C

 

 

 

    

 

M

 

 

 

    

 

M

 

 

 

     
 

 

  Fred Hassan

 

    

 

 

 

 

    

 

74

 

 

 

    

 

2015

 

 

 

    

 

M

 

 

 

          

 

M

 

 

 

     
 

 

  Charles M. Holley, Jr.

 

    

 

 

 

 

    

 

63

 

 

 

    

 

2017

 

 

 

    

 

C

 

 

 

    

 

M

 

 

 

    

 

M

 

 

 

        
 

 

  Tyler Jacks

 

    

 

 

 

 

    

 

59

 

 

 

    

 

2012

 

 

 

             

 

M

 

 

 

       

 

M

 

 

 

 

 

  Ellen J. Kullman

 

    

 

 

 

 

    

 

64

 

 

 

    

 

2016

 

 

 

    

 

M

 

 

 

    

 

M

 

 

 

           
 

 

  Ronald D. Sugar

 

    

 

 

 

 

    

 

71

 

 

 

    

 

2010

 

 

 

       

 

M

 

 

 

    

 

M

 

 

 

          

 

C

 

 

 

   

 

  R. Sanders Williams

 

    

 

 

 

 

    

 

71

 

 

 

    

 

2014

 

 

 

             

 

M

 

 

 

                               

 

M

 

 

 

 

“C”

indicates Chair of the committee.

“M”

indicates member of the committee.

 

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Item 1 — Election of Directors

 

 

 

 

 

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.

 

LOGO

 

*

For our director nominees.

 

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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: 65

 

Committees:

  Audit

  Compensation and Management Development

 

Other Public Company Boards:

  Chevron Corporation

  Virgin Galactic Holdings, Inc.

 

     

 

Wanda M. Austin 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 served as Interim President of the University of Southern California from August 2018 until June 2019. She 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 has been a director of Virgin Galactic Holdings, Inc., a commercial space flight company, since October 2019 and is a member of its Audit Committee and Safety Committee, and chair of its Compensation 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: 57

 

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 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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Item 1 — Election of Directors

 

 

 

 

 

 

Brian J. Druker

 

LOGO

 

 

Director since: 2018

 

Age: 64

 

Committees:

  Compensation and Management Development

  Corporate Responsibility and Compliance

 

     

 

Brian J. 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 was an investigator with the Howard Hughes Medical Institute, a nonprofit medical research organization, from 2002 to 2019.

 

Dr. Druker has served on the scientific advisory board of Aptose Biosciences Inc., a biotechnology company, since 2013. Dr. Druker was on the scientific advisory board of Grail, Inc., a biotechnology company, from 2016 to 2019. 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 that was acquired by ICON plc in 2019.

 

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, and the Sjöberg Prize in 2019, for influential work in the development of STI571 (Gleevec®) for the treatment of chronic myeloid leukemia. 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: 65

 

Committees:

  Compensation and Management Development (Chair)

  Executive

  Governance and Nominating

 

Other Public Company Boards:

  Levi Strauss & Co.

  McDonald’s Corporation

  Uber Technologies, Inc.

 

     

 

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. In March 2020, Mr. Eckert was appointed a director of Uber Technologies, Inc., a personal mobility, meal delivery and logistics technology platform, serving on its Compensation and Nominating and Governance Committees. 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 and director of large public companies, his broad international experience in marketing and business development, and his valuable leadership experience.

 

 

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Item 1 — Election of Directors

 

 

 

 

 

 

Greg C. Garland

 

 

LOGO

Director since: 2013

 

Age: 62

 

Committees:

  Compensation and Management Development

  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, a diversified energy manufacturing and logistics company 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: 74

 

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 the 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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Item 1 — Election of Directors

 

 

 

 

 

 

Charles M. Holley, Jr.     

 

LOGO

 

 

Director since: 2017

 

Age: 63

 

Committees:

  Audit (Chair)

  Executive

  Governance and Nominating

 

Other Public Company Boards:

  Carrier Global Corporation

  Phillips 66

 

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 in January 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 was an Independent Senior Advisor, U.S. CFO Program, at Deloitte LLP, a privately-held provider of audit, consulting, tax, and advisory services, from 2016 to 2019.

 

Mr. Holley has been a director of Phillips 66, an energy manufacturing and logistics company, since October 2019 and serves on the Audit and Finance, and Public Policy Committees. In connection with the 2020 spin-off from United Technologies Corporation of Carrier Global Corporation, a provider of heating, ventilating, air conditioning (HVAC), refrigeration, fire, and security solutions, Mr. Holley has been appointed as a director of Carrier. He 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.

 

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.

 

 

Tyler Jacks

 

 

LOGO

 

 

Director since: 2012

 

Age: 59

 

Committees:

  Compensation and Management Development

  Corporate Responsibility and Compliance

 

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.

 

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Item 1 — Election of Directors

 

 

 

 

 

 

Ellen J. Kullman

 

 

LOGO

 

 

Director since: 2016

 

Age: 64

 

Committees:

  Audit

  Governance and Nominating

 

Other Public Company Boards:

  Dell Technologies Inc.

  Goldman Sachs Group, Inc.

 

Audit Committee financial expert

 

     

 

Ellen J. Kullman was appointed President and Chief Executive Officer of Carbon, Inc., or Carbon, a privately-held 3D printing company, in November 2019, and has served as a director of Carbon since 2016. She 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 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, a technology company, since 2016, serving on its Audit and Capital Stock Committees. Ms. Kullman served as a director of United Technologies Corporation, a technology products and services company, from 2011 (and as lead director from 2018) until April 2020, serving on its Compensation, Finance and Executive Committees. Ms. Kullman served as a director of General Motors, from 2004 to 2008, serving on its Audit Committee.

 

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 chief executive officer and board chair at both public and private companies, 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.

 

 

Ronald D. Sugar

 

 

LOGO

 

 

Director since: 2010

 

Age: 71

 

Committees:

  Corporate Responsibility and Compliance (Chair)

  Executive

  Governance and Nominating

 

Other Public Company Boards:

  Air Lease Corporation (will not be standing for re-election)

  Apple Inc.

  Chevron Corporation

  Uber Technologies, Inc.

 

     

 

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, and will not be standing for election to the board of Air Lease Corporation at the next annual meeting of stockholders expected to occur in May 2020. Dr. Sugar has been a director of Uber Technologies, Inc., a personal mobility, meal delivery and logistics technology platform, since 2018, serving as the Chair of the board of directors and chairing the Nominating and Governance Committee and serving on the Compensation Committee. Since 2010, he has been a senior advisor to Ares Management LLC, a privately-held asset manager and registered investment advisor. In 2014, Dr. Sugar joined the Temasek Americas Advisory Panel of Temasek Holdings (Private) Limited, a privately-held investment company based in Singapore. Dr. Sugar is a member of the National Academy of Engineering, trustee of the University of Southern California, member of the UCLA Anderson School of Management Board of Advisors, and director of the Los Angeles Philharmonic Association.

 

Qualifications

 

The Board concluded that Dr. Sugar should serve on our Board because Dr. Sugar’s board and senior executive-level expertise, including his experience as 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.

 

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Item 1 — Election of Directors

 

 

 

 

 

 

R. Sanders Williams

 

LOGO

 

Director since: 2014

 

Age: 71

 

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 and Compensation Committees 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 until 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 11 NAMED NOMINEES.

 

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Corporate Governance

 

 

 

 

 

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.

 

 

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.

 

 

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 page 24.

 

Management Succession Oversight. Our Board oversees Chief Executive Officer, or CEO, and senior management succession planning. Directors engage with potential CEO, executive, and senior management successors at Board and committee meetings. Our Board also establishes steps to address succession to respond to unexpected vacancies in the event of an emergency.

 

 

Solicitation of Stockholder Perspectives. The Board believes that engagement with stockholders is a 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 has also met directly with stockholders when appropriate. We provide more information regarding the stockholder engagement program on page 46.

 

 

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.

 

 

Director Limitation on Number of Boards. A director who is currently serving as our 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 five and a half years for our director nominees.

 

 

Director Retirement Age. The Board has established a retirement age of 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

 

 

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Corporate Governance

 

 

 

 

 

   

themselves from any discussion or decision found to affect their personal, business, or professional interests.

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 serves as the lead independent director.

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.

Annual Evaluation of Leadership Structure and Annual Election of Lead Independent Director. The Board considers and discusses the leadership structure every year. As part of this 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. The Board also considers:

 

 

The effectiveness of the policies, practices, and people in place at the Company to help ensure strong, independent Board oversight;

 

 

The Company’s performance and the effect the leadership structure could have on its performance;

 

 

The Board’s performance and the effect the leadership structure could have on the Board’s performance;

 

 

The Chairman’s performance in the role;

 

 

The views of the Company’s stockholders; and

 

The practices at other companies and trends in governance.

If the Board determines that it remains in the best interests of the Company and its stockholders that the CEO serve as chairman, the lead independent director is considered and elected by the independent members of the Board.

Overview of Lead Independent Director Responsibilities. The lead independent director engages in 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 responsibilities outlined in our Corporate Governance Principles include:

 

 

Approving meeting agendas for the Board;

 

 

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

 

 

Previewing the information to be provided to the Board;

 

 

Having the authority to call meetings of the independent directors;

 

 

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

 

 

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

 

 

Leading the Board’s annual self-assessment;

 

 

Ensuring that he/she is available for consultation and direct communication, if requested by major stockholders; and

 

 

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

 

 

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Corporate Governance

 

 

 

 

 

In addition to the responsibilities outlined above, the lead independent director:

 

 

Meets with the Chairman prior to each regular meeting of the Board and its committees to discuss, provide input on, and approve the agendas;

 

 

With the Chairman, determines presenters for attendance at Board meetings;

 

 

Has one-on-one discussions with each independent director, including as part of the Board’s annual evaluation process;

 

 

Attends all committee meetings, including those committees for which he is not a member (at his discretion) and is provided with access to all committee materials;

 

 

Has the authority to engage independent consultants;

 

 

Is regularly apprised of inquiries from stockholders;

 

 

Interviews Board candidates; and

 

 

Has an increased role in crisis management, as appropriate.

Independent Directors Sessions. A meeting of the independent directors is scheduled at every regular Board meeting and the independent directors meet in an executive session without Mr. Bradway to review Company performance, management effectiveness, proposed programs and transactions, and the Board meeting agenda items. These independent sessions are organized and chaired by our lead independent director and our lead independent director provides direct feedback to Mr. Bradway after these executive sessions.

Independent Committee Leadership. The Audit, Compensation, Compliance, and Governance Committees are each led by independent directors and provide independent oversight of management. In addition:

 

 

Each committee chair meets with management in advance of meetings to review and refine agendas, add topics of interest, and review and comment on materials to be delivered to the committee;

 

 

Every independent director has access to all committee materials;

 

 

Each committee chair provides a report summarizing committee meetings to the full Board at each regular meeting of the Board;

 

 

Each committee meeting includes adequate time for executive session and the committees meet in executive session on a regular basis with no members of management present (unless otherwise requested by the committee); and

 

 

Each committee effectively manages its Board-delegated duties and communicates regularly with the Chairman and members of management.

Furthermore, the Compensation Committee has an effective process for monitoring and evaluating Mr. Bradway’s compensation and performance.

 

Lead Independent Director. Mr. Eckert has been elected annually as the lead independent director since the May 2016 annual meeting of stockholders and was re-elected by our Board on March 4, 2020 to continue to serve as lead independent director subject to his re-election to the Board by our stockholders at the 2020 Annual Meeting.

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 comprehensive 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 annually evaluates whether combining or separating the roles of Chairman and CEO is in the best interests of the Company and our stockholders.

 

 

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Corporate Governance

 

 

 

 

 

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 its strategic priorities to improve long-term operational and financial 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 controls and mitigation activities for such risks. We believe that the risk management areas that are fundamental to the success of our enterprise include the areas of product development, safety and surveillance, 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. Our Board has 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. For example, the potential risk associated with our pricing and access strategy and approach is an area of enterprise risk with respect to which our Board and Compliance Committee receive regular updates. All risk areas are appropriately monitored by management and all risk areas that could lead to business disruption, including the potential to cause severe financial or reputational harm, report to the Board regularly or as-needed, and are subject to appropriate Board oversight.

 

Each Board Committee has primary risk oversight responsibility that is aligned with its areas of focus. At each regular meeting, or more frequently as needed, the Board receives and considers committee reports, which reports may provide additional detail on risk management issues and management’s response.

 

  Committee    Primary Risk Oversight Responsibility     

  Governance and Nominating

  

   Oversees the assessment of each member of the Board’s independence, as well as the compliance with our Corporate Governance Principles and Board of Directors’ Code of Conduct. Also oversees Board and committee evaluations and Board succession.

 

 

  Audit

  

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

 

 

  Compensation and Management Development

  

   Oversees human capital management, as well as executive talent management, development, and 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 privacy, antitrust and competition, anti-corruption, information systems and security (including cybersecurity), pricing and access, government affairs, labor and employment (including diversity and inclusion), and our reputation. Also oversees staff member compliance with the Code of Conduct.

 

 

 

 

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Corporate Governance

 

 

 

 

 

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 our Board, all our staff, and others conducting business on our behalf. 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 2019.

 

 

Board Meetings

 

 

The Board held 6 meetings in 2019 and all of the directors attended at least 75% of the total number of meetings of the Board and committees on which they served. 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 2019 Annual Meeting.

 

 

Communication With the Board

 

 

Our annual meeting of stockholders provides an opportunity each year for stockholders to ask questions of our lead independent director and other 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 2019 Annual Meeting, please see page 46 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 2019. The Board maintains charters for each of these standing committees and these charters are evaluated annually. 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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Corporate Governance

 

 

 

 

 

 

Governance and Nominating Committee

 

Current Members:

Greg C. Garland (Chair)

Robert A. Eckert

Rebecca M. Henderson

Charles M. Holley, Jr.

Ellen J. Kullman

Ronald D. Sugar

R. Sanders Williams

 

Others Who Served in 2019:

Frank C. Herringer (until retirement at 2019 Annual Meeting)

 

Number of Meetings Held in 2019: 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

 

 

Board Composition. Board composition is one of the most critical areas of focus for the Board. Reflecting our Board’s commitment to refreshment, the Board has appointed five new directors since 2015, including two additional women, adding critical skills and experience to our Board in furtherance of our strategic priorities.

Our Governance Committee regularly screens and recommends candidates for nomination by the full Board and, among other things, considers feedback received during the annual Board and Committee evaluation process, investor feedback, our qualification guidelines and skills matrix, and diversity. The Governance Committee will consider recommendations for director candidates made by stockholders and evaluate them using the same criteria as for other candidates.

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 maintains at least the minimum number of independent directors required by applicable laws and regulations.

The Governance Committee determines and oversees 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:

 

 

a 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, scientific and academic expertise, geography, and personal backgrounds.

 

 

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Continuous Board Refreshment

Our Board is committed to strong refreshment practices to continuously align the composition of the Board and its leadership structure with our long-term strategic needs. The Board, led by the Governance Committee, has an ongoing process for identifying, evaluating, and selecting directors, and these decisions are also informed by the annual Board and committee evaluation process described below. Our Governance Committee uses a variety of methods to help identify potential Board candidates and considers an assessment of current Board skills, background, diversity, independence, experience, tenure, and anticipated retirements to identify gaps that may need to be filled through the Board refreshment process.

 

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Regular Board and Committee Evaluations

 

Board and committee evaluations play a critical role in supporting the effective functioning of our Board. Through evaluations, our directors review where they believe our Board functions effectively and, importantly, areas where our Board thinks there may be opportunities for improvement, including through Board refreshment.

Annual Governance Review. Our Governance Committee leads an annual evaluation process of the Board and its committees. Directors provide feedback regarding Board and committee composition and structure, role and effectiveness, fulfillment of fiduciary duties, meetings and materials, and interaction with management.

 

 

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Evaluation Results. The Audit, Compensation, Compliance, and Governance Committees each completed their assessments in October 2019 for further evaluation by the Governance Committee in December 2019. The Board completed its evaluation in December 2019. 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.

Ongoing Feedback. Our directors provide real-time feedback throughout the year outside of the formal evaluation process and have open access to management and third-party advisors. Additionally,

executive sessions of directors (without management) are scheduled for every regular Board and committee meeting to identify any issues and assess whether meeting objectives were satisfied.

Changes Implemented. Based on the annual Board and committee evaluation process, ongoing feedback provided by directors, and one-on-one discussions between our lead independent director and each director, changes to Board practices have included enhancements to our committee structure and composition, additional presentations on various topics, and the addition of new directors.

 

 

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Director Independence

 

 

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

The Board has determined that each of our non-employee directors is and Frank C. Herringer, who served as a director during part of 2019, was independent during 2019 under The NASDAQ Stock Market 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 as an employee, officer, partner, or director, 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), except for Fred Hassan, 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 or memberships, and expenses relating to repair and maintenance, 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, gas, and food purchases).

 

 

Wanda M. Austin, Brian J. Druker, Rebecca M. Henderson, Tyler Jacks, and R. Sanders Williams currently serve as professors for universities to which Amgen has made payments for certain business transactions such as symposiums, conferences 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.

 

 

 

Audit Committee

 

Current Members:

Charles M. Holley, Jr.* (Chair)

Wanda M. Austin

Fred Hassan*

Ellen J. Kullman*

 

*Audit Committee financial expert

 

Others Who Served in 2019:

Frank C. Herringer (until retirement at 2019 Annual Meeting)

Brian J. Druker

Rebecca M. Henderson

Tyler Jacks

 

Number of Meetings Held in 2019: 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, 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.

 

     

 

Audit Committee Oversight of the Independent Registered Public Accountants

   Auditor Selection. Evaluates the qualifications and performance of our independent registered public accountants each year and appoints the independent registered public accountants annually.

   Audit Partner Selection. Participates directly 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 Responsibility and Compliance Committee

 

Current Members:

Ronald D. Sugar (Chair)

Brian J. Druker

Rebecca M. Henderson

Tyler Jacks

R. Sanders Williams

 

Others Who Served in 2019:

Wanda M. Austin

Charles M. Holley, Jr

 

Number of Meetings Held in 2019: 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;

 

-  the Company’s Corporate Integrity Agreement;

 

-  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 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 and the Compliance Committee, oversees the ongoing operations of the compliance program.

 

 

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Compensation and Management Development Committee

 

Current Members:

Robert A. Eckert (Chair)

Wanda M. Austin (since August 2019)

Brian J. Druker (since August 2019)

Greg C. Garland

Fred Hassan

Tyler Jacks

 

Number of Meetings Held in 2019: 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.

 

   Approves all executive officer compensation.

 

   Oversees human capital management and succession planning for senior management, including that our approaches to management development are effective in attracting, developing, and retaining talented leadership.

 

   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, employees at the level of vice presidents and below consistent with the equity grant guidelines established by the Compensation Committee.

 

Current Member:

Robert A. Bradway

 

Others Who Served in 2019:

Robert A. Eckert, Greg C. Garland

 

             

Compensation Committee Processes and Procedures for Considering and Determining Executive Compensation in 2019

 

 

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 as well as the compensation for each executive officer.

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 compensation recommendations for each NEO, our CEO reviews comparative peer group data, as well as the performance of the executive. The Compensation Committee has typically followed these recommendations.

Executive Sessions. Each Compensation Committee meeting includes adequate time for executive session and the Compensation Committee meets in executive session on a regular basis with no members of management present (unless otherwise requested by the Compensation Committee).

Delegation of Authority. The Compensation Committee has authority to delegate any of its functions to a subcommittee of its members.

 

 

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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 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, 2019. 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 long-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 equity to staff members; and 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 hold 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.

 

 

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

 

 

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.

 

 

Disclosure. Subject to our recoupment and clawback policy statement, we intend to disclose the general circumstances of any application of our recoupment provisions or clawback policy against any executive officer (current or former) and the aggregate amount of compensation recovered. Our policy statement is available on our website at www.amgen.com.

 

 

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 (as discussed more fully below).

 

 

Prohibition on Hedging

 

 

Under our global Insider Trading Policy, all of our Board members and staff members, including our NEOs, consultants, contract workers, secondees, and temporary staff worldwide are considered “Covered Persons.” It is against the Insider Trading Policy for Covered Persons to directly or indirectly participate in transactions involving trading activities that by their nature are aggressive or speculative, or may give rise to an appearance of impropriety. Covered Persons may not:

 

 

Engage in short sales (sales of stock that the seller does not own or a sale that is completed by delivery of borrowed stock) with respect to our securities;

 

 

Engage in transactions that hedge or offset, or are designed to hedge or offset, any decrease in the market value of Amgen stock;

 

Purchase or pledge Amgen stock on margin or as collateral to secure a loan or other obligation(1); or

 

 

Enter into any derivative or similar transactions with respect to our securities.

Examples of prohibited derivative transactions include, but are not limited to, purchases or sales of puts and calls (whether written or purchased or sold), options (whether “covered” or not), forward contracts, including but not limited to prepaid variable forward contracts; put and call “collars” (“European” or “American”), “equity” or “performance” swap or exchange agreements, or any similar agreements or arrangements however denominated, in our securities.

 

 

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 recorded in our global human resources systems as of December 31, 2019. Total direct compensation included base salary (wages recorded in our payroll records as of December 31, 2019), 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 2019. 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, 2019. No cost-of-living adjustments were made. We then determined the annual total compensation of our median employee for 2019 which was $130,904. As disclosed in the “Summary Compensation Table” appearing on page 66, our CEO’s annual total compensation for 2019 was $19,612,793. Based on the foregoing, the ratio of the annual total compensation of our CEO to that of the median staff member was 150 to 1. For information on the determination of executive compensation, please see “Compensation Committee Processes and Procedures for Considering and Determining Executive Compensation in 2019” above and our Compensation Discussion and Analysis beginning on page 38.

 

 

 

(1) 

With the exception of the use of a margin account to purchase our common stock in connection with the exercise of Amgen-granted stock options (i.e., “cashless exercises”).

 

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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 2020 Annual Meeting proxy statement and incorporated by reference into the Company’s Annual Report on Form 10-K for the year ended December 31, 2019.

 

 

Compensation Committee of the Board of Directors

Robert A. Eckert, Chairman

Wanda M. Austin

Brian J. Druker

Greg C. Garland

Fred Hassan

Tyler Jacks

Our Commitment to Environmental Sustainability, Social Responsibility, and Human Capital Management

 

 

Corporate responsibility is important to Amgen since making a positive difference in the world is at the heart of what we do. As part of our mission to serve patients, we take our responsibilities seriously with respect to the areas of environmental sustainability, social responsibility and corporate governance (ESG).

ESG matters at Amgen are governed at the highest levels. Our executive leadership reports our progress to the Compliance Committee of the Board. An executive-level governance council, chaired by the Senior Vice President of Corporate Affairs, oversees the continuing evolution and enhancement of our approach to corporate responsibility and ESG. With the oversight of executive leadership, individual programmatic elements are managed at a functional level.

In addition to a commitment to ethical business practices, our ESG efforts include integrating environmentally sustainable practices throughout our business, improving patient access to medicines, promoting supplier sustainability and diversity, supporting science education for the next generation of innovators, and enhancing the diversity and inclusiveness of our workplace.

Environmental Sustainability

We have a long-standing commitment to reducing our impact on the environment and regularly set targets to challenge ourselves to deliver further improvements.

 

 

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Progress Toward Targets. We are in the last year of our 2012-2020 conservation targets, which are set in areas where we can make the most progress in reducing our environmental impact and deliver value, including targets for reductions in fleet and facilities carbon, waste, and water use. In addition to being on-track to deliver on all of our targets, we are well-head of our targets to reduce our carbon and water consumption.

 

 

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Reducing Carbon Emissions 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. We have exceeded our 2020 carbon targets and are continuing to work through our portfolio of identified carbon reduction opportunities as we finalize our next generation of environmental targets. Amgen also participates in the CDP (formerly Carbon Disclosure Project).

Sustainable by Design. Amgen helped invent the processes and tools that created the global biotech industry. As we continue to grow and innovate, we are pioneering advanced technologies for research and development and manufacturing to increase operational efficiency, improve access to our medicines, and reduce our environmental footprint.

Our next-generation biomanufacturing facility in Singapore is an example of our innovative capability at work. This redesign of our approach to biomanufacturing 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. In 2019, we continued to work on the construction of our second next-generation biomanufacturing plant in Rhode Island. This new plant is expected to be the first of its kind in the U.S. and will use our next-generation biomanufacturing capabilities.

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.

Climate-Related Risks and Opportunities. We have processes to evaluate and quantify risk from climatic events to our operations and take steps to avoid the associated consequences. Additionally, Amgen has had a carbon and energy reduction strategy since 2008 and, as described above, considerable progress has been made in reducing our carbon footprint as a result.

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 (ASNF), a separate legal entity entirely funded by Amgen, 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 2019, the commercial value of Amgen’s medicines provided at no cost to uninsured or underinsured patients by ASNF was approximately $1.5 billion(1). In 2018, Amgen donated over $93 million worth of Amgen cancer treatment and supportive care medicines(1) for distribution to patients in 18 developing countries through Direct Relief, a leading non-governmental organization, and we recently completed a second donation of medicine through Direct Relief in 2019.

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 continue to spearhead implementation of innovative contracting, including outcomes-based and risk-sharing approaches, to improve patient access to medicines while providing budget predictability to payers, in addition to value based partnerships designed to create mutually beneficial opportunities, improve patient outcomes, experience, and satisfaction in the context of the healthcare system and overall total costs to society.

Supplier Sustainability and Diversity. All staff members are responsible for upholding the Amgen Values and Code of Conduct and, similarly, we require our suppliers to conduct their businesses in alignment with our mission and values. We focus not only on commitment to quality, cost, and reliability but also on a wide range of sustainability and social responsibility considerations, such as business ethics, labor and human rights, and environmental impacts.

We also have a supplier diversity program designed to identify, develop, and utilize small, disadvantaged, veteran, service-disabled veteran, minority, and women-owned business enterprises, as well as companies located in historically underutilized business zones, in our procurement of goods and services.

Science Education. The Amgen Foundation, Inc. (Amgen Foundation), a separate legal entity entirely funded by Amgen, seeks 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 its inception almost 30 years ago, the Amgen Foundation has contributed more than $325 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.

 

 

Through what is now a sixteen-year 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.

 

 

LabXchange, developed at Harvard University with the financial sponsorship of the Amgen Foundation, is a free online science education platform which launched in January 2020 providing students around the world with access to personalized instruction, next-generation virtual lab experiences, and networking opportunities across the global, scientific community.

 

 

The Amgen Foundation is the biology partner of the Khan Academy, a leading online learning educational platform with over 89 million registered users across the globe.

 

 

Additionally, the Amgen Foundation supports the Amgen Biotech Experience, an innovative science education program that empowers high school teachers to bring biotechnology education into their classrooms.

 

 

(1) 

Valued at wholesale acquisition cost.

 

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Corporate Governance

 

 

 

 

 

Our Community. The Amgen Foundation has provided support following devastating disasters, including immediate relief for victims of the wildfires in Australia and Southern California, and continues to provide support for reconstruction efforts in Puerto Rico following Hurricane Maria. Moreover, the Amgen Foundation provides programs and resources to empower individual Amgen staff in their charitable giving, including through a matching gift program and by providing service grants to non-profit organizations where staff members regularly volunteer.

 

 

Amgen’s Response to the COVID-19 Pandemic

 

As a leading global healthcare company and responsible corporate citizen, Amgen is committed to help address the COVID-19 outbreak. We have prioritized the safety of our employees, supply of our medicines to patients, and health of the communities where we live and work. For information on our response to this unprecedented situation, please visit www.amgen.com/COVID-19(1).

 

Human Capital Management

Our Board has a key role in the oversight of our culture, setting the tone at the top, and holding management accountable for maintaining high ethical standards. The Board believes that human capital management, including diversity and inclusion initiatives, are important to our success. We conduct staff member engagement surveys on a regular basis and the results of these surveys are discussed with the Board.

Amgen places significant value on fostering and enabling growth for staff, both personally and professionally, and we are committed to providing a safe, healthy, innovative, and diverse work environment for our staff.

Our Social Architecture. Since Amgen’s founding in 1980, our staff members have directed their intelligence and enthusiasm toward a simple, yet powerful mission to serve patients. This clearly articulated mission, our aspiration to be the world’s best human therapeutics company, a carefully considered strategy informed by our mission and aspiration, a well-defined set of Amgen Values that define how we behave, and clear leadership attributes that we expect from our staff members, together form the “social architecture” that defines our unique culture. This social architecture is deeply rooted in our culture and has enabled Amgen’s growth over the past forty years from an early pioneer in the biotech industry to a leading innovator and world-class biologics manufacturer.

The Amgen Values were formalized in 1996 and continue to serve as the principles that guide the way we conduct business

Amgen Values

 

Be Science-Based  

 

Trust and Respect Each

Other

 

Compete Intensely and Win  

 

Ensure Quality

 

 

Create Value for Patients,
Staff, and Stockholders

 

 

 

Work in Teams

 

Be Ethical  

 

Collaborate, Communicate,

and Be Accountable

 

Diverse and Inclusive Workforce. We believe that an environment of inclusion and belonging fosters innovation, which drives our ability to serve patients. Our global presence is strengthened by having a workforce that reflects the diversity of the patients we serve. To that end, we established a new executive diversity, inclusion, and belonging council chaired by our CEO. With endorsement from executive management and engagement with senior leaders across the organization, we have implemented a global strategy designed to leverage our diversity and create a more inclusive workspace.

This strategy is designed to help us successfully navigate a global, complex marketplace as we bring more medicines to patients around the world. In addition, we are setting goals to improve our focus around diversity, inclusion, and belonging and Amgen is positioned to amplify our program reach across the globe and measure our progress towards creating a more inclusive workplace. Additionally, we currently have global Employee Resource Groups at our Company, all with executive sponsorship, that are organized around primary diversity attributes, including:

 

 

Amgen Asian Association

(AAA)

 

 

 

Amgen Black Employee Network (ABEN)

 

 

Ability Bettered through Leadership and Education (ABLE), a resource group for the physically or cognitively disabled

 

 

Amgen Early Career

Professionals (AECP)

 

 

 

Amgen Indian Subcontinent Network (AISN)

 

 

Amgen Latino Employee

Network (ALEN)

 

 

 

Amgen LGBTQ and Allies Network (PRIDE)

 

 

Amgen Veterans Employees

Network (AVEN)

 

 

 

Women Empowered to be Exceptional (WE2)

 

Attracting and Developing Talent. Our success depends on our ability to attract and retain talent and skilled staff members. We compensate our staff members based on their roles, experience, and performance, provide wellness resources, as well as support employees in giving back and volunteering in their local communities. Amgen has added transgender benefits and continues to pride itself on industry-leading, family-friendly offerings for families of all compositions.

 

 

(1) 

Reference to our website is not intended to function as a hyperlink and the information contained on our website is not intended to be part of this proxy statement.

 

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Table of Contents
       

 

 

 

 

Item 2 — Advisory Vote to Approve Our Executive Compensation

 

 

 

 

 

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 cast an advisory vote on the compensation of our Named Executive Officers, or NEOs, as disclosed in the Compensation Discussion and Analysis (pages 38 through 65) and related compensation tables and the narrative in this proxy statement (pages 66 through 82).

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 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

 

 

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

 

 

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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Table of Contents
       

 

 

 

 

Item 2 — Advisory Vote to Approve Our Executive Compensation

 

 

 

 

 

2019 Executive Compensation Was Aligned With Our Strategy and Performance

 

As discussed more fully in our Compensation Discussion and Analysis starting on page 38, 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   2019 Total Target Direct Compensation Mix

 

LOGO

 

 

LOGO

2019 Performance Against Pre-Established Goals and Measures

 

2019 Annual Cash Incentive Program

 

 

2017-2019 Long-Term Incentive Performance Award Payout

 

Goal

 

   

 

Weighting

 

 

 

 

 

% of Target 

Earned 

 

 

LOGO

 

Financial Performance

 

 

Revenues

 

   

 

30%

 

 

 

 

177% 

 

 

Non-GAAP Net Income(1)

 

   

 

30%

 

 

 

 

168% 

 

 

Progress Innovative Pipeline

 

 

Advance Early Pipeline

 

   

 

10%

 

 

 

 

100% 

 

 

Execute Key Clinical Studies and Regulatory Filings

 

   

 

20%

 

 

 

 

80% 

 

 

Deliver Annual Priorities

 

 

Execute Critical Launches

and Long-Term

Commercial Objectives

 

   

 

5%

 

 

 

 

77% 

 

 

Achieve Productivity Objectives

 

   

 

5%

 

 

 

 

107% 

 

 

Final Score

 

   

 

Achieved 138.9% 

 

 

(1) 

Non-GAAP net income for purposes of the 2019 Company performance goals of our annual cash incentive award program is reported and reconciled in Appendix B.

(2)

The operating measures of the 2017-2019 performance goals were based on non-GAAP financial results for 2017, 2018, and 2019 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 2017-2019 performance goals document. For this purpose, operating expense was reduced by $147 million ($0.16 in EPS) for 2017, increased by $21 million ($0.03 in EPS) for 2018, and increased by $49 million ($0.07 in EPS) for 2019.

 

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Table of Contents
       

 

 

 

 

Item 2 — Advisory Vote to Approve Our Executive Compensation

 

 

 

 

 

2019 Alignment of Pay with Performance

Our strategy includes a series of integrated activities to strengthen our long-term competitive position in the industry. Key 2019 activities that align our NEO pay with performance and support the execution of our strategic priorities are summarized below.

Our financial performance was strong in a year of transition.

 

 

We delivered a one-year total shareholder return, or TSR, of 28%. We outperformed our peer group average for the one-, three-, and five-year TSRs and significantly outperformed the Standard & Poor’s 500 Index for the three-year period.

 

 

In March 2019, when we established our 2019 performance goals, we expected to drive volume growth in our newer products, but we also anticipated substantial competition against our legacy products due to patent expiries that would more than offset newer product sales growth. Our early 2019 investor guidance also reflected this anticipated competitive intensity.

 

 

In 2019, we grew product volumes by 3% globally. And, despite the anticipated competitive headwinds, we outperformed our budgeted financial targets and exceeded our original guidance as we retained more of our legacy product sales than expected, drove our newer product volume growth, and added Otezla® to our product portfolio.

 

 

Our strong cash flows and balance sheet allowed continued investment for long-term growth in 2019 through internal research and development, capital expenditures, and external business development transactions.

 

 

Our quarterly 2019 dividend of $1.45 per share represented a 10% increase from the quarterly dividend for 2018.

 

 

In 2019, we returned $11.2 billion to our stockholders in the form of repurchases of our Common Stock ($7.7 billion) and dividends paid ($3.5 billion).

We progressed our pipeline.

We develop innovative and biosimilar medicines that address unmet medical needs to treat serious illnesses.

 

 

In 2019, we launched EVENITY®(1), an innovative product for the treatment of osteoporosis in postmenopausal women at high risk of fracture, and two oncology biosimilars, MVASI®(2) (biosimilar bevacizumab (Avastin®)) and KANJINTI®(2) (biosimilar trastuzumab (Herceptin®)) in the U.S.

 

 

We advanced our early pipeline and executed key clinical studies and regulatory filings.

We delivered on our annual priorities.

 

 

We executed critical launches and long-term commercial objectives. Our revenues benefited from volume-driven growth from a number of innovative medicines, including Prolia®, Aimovig®(3), and Repatha®.

 

 

We achieved our productivity objectives. We realized gross savings of approximately $286 million as a result of our focus on productivity to support continued reinvestment opportunities (such as our early pipeline).

We continued to deliver on our other strategic priorities.

 

 

We launched our first product in China and made significant progress in expanding our presence in China and Japan, the second and third largest pharmaceutical markets, respectively.

 

 

We successfully operated our next-generation manufacturing facility in Singapore and continued to work on the construction of our U.S facility in Rhode Island.

Positive 2019 Say on Pay Vote Outcome and Engagement With Our Stockholders

 

 

In 2019, we received approximately 93% stockholder support on our say on pay advisory vote. In addition to our outreach by our executives and our Investor Relations department to our investors owning approximately 58% of our outstanding shares, since our 2019 annual meeting of stockholders, we have engaged in governance-focused outreach activities and discussions with stockholders comprising approximately 51% of our outstanding shares. The compensation-related feedback is

reviewed by our Compensation and Management Development Committee, or Compensation Committee. In 2019, 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 46.

 

 

(1) 

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

(2) 

Jointly developed in collaboration with Allergan plc.

(3) 

Jointly developed in collaboration with Novartis AG.

 

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Item 2 — Advisory Vote to Approve Our Executive Compensation

 

 

 

 

 

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 2021 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

     38  

Our Strategy

     39  

Our Compensation and Governance Best Practices

     40  

Aligning Pay With Performance and Execution of Our Strategic Priorities

     41  

Positive 2019 Say on Pay Vote Outcome and Engagement With Our Stockholders

     46  

Long-Term Incentive Equity Award Design in 2019

     46  

Our 2019 Compensation Program Highlights and Objectives

     47  

How Compensation Decisions Are Made For Our Named Executive Officers

     48  

Elements of Compensation and Specific Compensation Decisions

     51  

Compensation Policies and Practices

     61  

Non-Direct Compensation and Payouts in Certain Circumstances

     63  

Taxes and Accounting Standards

     65  

This Compensation Discussion and Analysis describes our compensation strategy, philosophy, policies, programs, and practices for our Named Executive Officers, or NEOs, and the positions they held in 2019 below.

Our Named Executive Officers

 

 

Name    Title

Robert A. Bradway

  

Chairman of the Board, Chief Executive Officer and President

Murdo Gordon

  

Executive Vice President, Global Commercial Operations

David W. Meline

  

Executive Vice President and Chief Financial Officer(1)

David M. Reese

  

Executive Vice President, Research and Development

Jonathan P. Graham

  

Executive Vice President, General Counsel and Secretary

 

(1) 

Mr. Meline retired as Chief Financial Officer on December 31, 2019. Peter H. Griffith became Executive Vice President and Chief Financial Officer effective January 1, 2020. As he was not an executive officer in 2019, Mr. Griffith is not considered a Named Executive Officer in this proxy statement.

 

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Table of Contents
       

 

 

 

 

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 2019 activity that supports the execution of our strategic priorities and delivery of performance are summarized below and discussed further in the following pages.

Strategic Priorities

 

 

Innovative Medicines

    

 

Branded Biosimilars

    

 

Transforming Amgen

for the Future

 

         

 

Capital Allocation and Investing for Long-Term Growth

 

    

 

Global Geographic Reach

    

 

Next-Generation

Biomanufacturing

 

 

            Description   Selected 2019 Activity
              
   
 

Innovative

Medicines

     

Innovation is at the core of our strategy. 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.

 

 

  Launched EVENITY®(1) (osteoporosis)

  Acquired Otezla® (apremilast)

•  Progressed innovative pipeline:

8 product teams formed(2)

7 first-in-human studies initiated

 

4 programs advanced through early-to-late stage portal(3)

                
   
 

Branded

Biosimilars

     

We believe our deep experience in biologics development and biotechnology manufacturing position us for leadership in the emerging biosimilars market. Our branded biosimilar medicines have the potential to expand access to important medicines for patients while delivering volume-based sales growth in our therapeutic areas.

 

•  Launched our first biosimilars in the U.S.:

MVASI®(4) (biosimilar bevacizumab (Avastin®))

KANJINTI®(4) (biosimilar trastuzumab (Herceptin®))

  AVSOLA (biosimilar infliximab (Remicade®)) approved in U.S.

  ABP 798(4) (biosimilar rituximab (Rituxan®)) Biologics License Application submitted to U.S. Food and Drug Administration

                
   
 

Transforming

Amgen

for the Future

     

In 2019, we began realizing the benefit of productivity initiatives embedded in our business. The savings from the productivity initiatives have contributed, and we expect will continue to contribute, to funding strategic growth investments, such as investment in research and development.

 

  Realized gross productivity savings which we reinvested in our business, including in our early oncology research and development programs

                
   
  Capital Allocation
and Investing for
Long-Term Growth
     

Our strong cash flows and balance sheet also allows us to make substantial investments for long-term growth. We also recognize that stockholders who support investment in developing innovative medicines require an appropriate return on the capital they commit to Amgen.

 

•  Invested $16B for long-term growth:

Acquired Otezla and Nuevolution AB

20.5% equity stake in BeiGene Ltd.(5)

•  Returned capital to stockholders:

– $7.7B in stock repurchases

– $3.5B of dividends paid

$1.45 per share per quarter, a 10% per share dividend increase over 2018

                
   
 

Global Geographic

Reach

     

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 (up from 50 in 2011).

 

•  Launched Repatha® in China

•  Launched EVENITY in Japan

•  Expanded oncology presence in China through strategic collaboration with BeiGene Ltd.

                
   
    Next-Generation Biomanufacturing      

Next-generation biomanufacturing plants have a smaller manufacturing footprint and reduce environmental impact, including reducing consumption of water and energy and lower levels of carbon emissions. Next-generation biomanufacturing plants can be built in less time than traditional plants and have lower operating costs.

 

•  Singapore next-generation biomanufacturing facility operating and delivering cost and environmental efficiencies

•  Continued work on the construction of our first U.S. next-generation biomanufacturing plant

 

(1) 

Jointly developed in collaboration with UCB. Developed in Japan by Amgen Astellas BioPhrama K.K., our joint venture with Astellas Pharma Inc.

(2)

Formed when a molecule has been judged to have the potential to be safe and effective in humans.

(3)

The period covering Phase 2 through Phase 3.

(4)

Jointly developed in collaboration with Allergan plc.

(5)

Entered into strategic collaboration with BeiGene Ltd. in October 2019; closed in January 2020.

 

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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 and Management Development Committee, or 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 of Directors, or Board, is required to consider the recapture of past cash or long-term incentive, 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 Chief Executive Officer, or CEO. Our Executive Vice Presidents and Senior Vice Presidents have three times and two times base salary ownership requirements, respectively. Officers are required to hold shares of our Common Stock acquired through the vesting of restricted stock units, or 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, 2019, 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.

 

 

Performance-based equity: Our LTI equity award grants are primarily (80%) performance-based, with 50% in the form of three-year performance units.

 

 

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

 

 

Amgen Values: The Amgen Values overlay our Company performance goals and the Compensation Committee assesses each NEO’s annual compensation, including the annual incentive award, based on compliance with these internal standards.

 

  What we don’t do

 

 

 

No hedging or pledging: With respect to our Common Stock, all of our staff members and Board members 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 single-trigger and no gross-ups 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.

 

 

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

 

 

 

 

 

Aligning Pay With Performance and Execution of Our Strategic Priorities

 

 

A substantial majority of each NEO’s compensation is “at risk” and earned based on our execution of our strategy and performance. Our annual cash and long-term equity incentive programs promote focus on activities supporting the execution of our strategic priorities as well as near- and long-term stockholder value creation. This incentive compensation is earned based on our financial, operating, and stock price performance. In 2019, we made significant progress on our performance goals and advancing our strategic priorities, facilitating execution of our strategy and mission to serve patients.

We delivered a one year total shareholder return, or TSR, of 28%. As depicted below, we outperformed our peer group average TSR for each of the one-, three-, and five-year periods, and strongly outperformed the Standard and Poor’s 500 Index, or S&P 500, TSR for the three-year period.

 

 

LOGO

 

LOGO

Our strong cash flows and balance sheet allowed continued investment for long-term growth in 2019 through internal research and development and capital expenditures, and external business development transactions (including the acquisition of Otezla and our equity stake in BeiGene), while simultaneously providing substantial returns to stockholders.

 

 

Otezla Acquisition. The acquisition of Otezla, the only oral non-biologic treatment for psoriasis and psoriatic arthritis, offers many benefits, including:

 

  -  

A strong strategic fit with our long-standing expertise in psoriasis and inflammation;

 

  -  

A differentiated, oral therapy complementary to our existing inflammation franchise of innovative biologics and biosimilar products; and

 

  -  

Worldwide rights enhancing our global geographic expansion objectives.

 

BeiGene Ltd. Equity Stake. To support the development of our early oncology pipeline and our global geographic expansion objectives, we entered into a collaboration with BeiGene, a research-based, oncology-focused biotechnology company with an established, experienced team in China, the world’s second-largest pharmaceutical market. BeiGene will commercialize three of our products in China (XGEVA®, KYPROLIS®, and BLINCYTO®) and we and BeiGene will collaborate to advance 20 medicines from our innovative oncology pipeline in China and globally. In support of this collaboration, we took a 20.5% equity stake in BeiGene.

 

In 2019, while investing $4.1 billion in research and development, $618 million in capital expenditures, and $13.6 billion in acquisitions, we also allocated $11.2 billion of capital for return to our stockholders ($7.7 billion in stock repurchases and $3.5 billion of dividends)

 

 

We increased our quarterly dividend per share 10% over 2018 (to $1.45 per share per quarter for 2019). Our dividend per share increased 418% since the inception of our dividend in 2011.

Annual Dividend Increases

 

 

LOGO

 

 

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Table of Contents
       

 

 

 

 

Compensation Discussion and Analysis

 

 

 

 

 

Earned amounts from our 2019 annual cash incentive compensation program are tied directly to our performance based on pre-established financial and operating performance goals designed to drive execution of our strategic priorities.

 

Goal

 

    

 

Weighting

 

 

 

 

 

% of Target Earned

 

 

1. Financial Performance

 

Revenues

Target  $22.1B

Results $23.4B

 

  

 

 

 

 

30%

 

 

 

 

 

 

177%

 

 

Non-GAAP Net Income(1)

Target  $8.2B

Results $9.0B

 

  

 

 

 

 

30%

 

 

 

 

 

 

168%

 

 

 

2. Progress Innovative Pipeline

 

 

Advance Early Pipeline

 

  

 

 

 

10%

 

 

 

 

100%

 

Execute Key Clinical Studies and Regulatory Filings

 

  

 

 

 

 

20%

 

 

 

 

 

 

80%

 

 

 

3. Deliver Annual Priorities

 

 

Execute Critical Launches and Long-Term Commercial Objectives

 

  

 

 

 

 

5%

 

 

 

 

 

 

77%

 

 

Achieve Productivity Objectives

 

  

 

 

 

 

5%

 

 

 

 

 

 

107%

 

   

 

Final Score

 

  

 

 

 

 

Achieved 138.9%

 

 

1. Our financial performance was strong in a year of transition.

In March 2019, when we established our 2019 performance goals, we expected to drive volume growth in our newer products, but we also anticipated substantial competition against our legacy products due to patent expiries that would more than offset newer product sales growth. Our early 2019 investor guidance also reflected this anticipated competitive intensity.

In 2019, we grew product volumes by 3% globally. And, despite the anticipated competitive headwinds, we outperformed our budgeted financial targets and exceeded our original guidance as we retained more of our legacy product sales than expected, drove our newer product volume growth, and added Otezla to our product portfolio.

Our 2019 revenues benefited from volume-driven growth from a number of our newer innovative medicines that grew units double digit or better, including Repatha®, Parsabiv®, BLINCYTO, Aimovig®(2), and Prolia®. Overall 2019 revenues decreased 2% to $23.4 billion reflecting

the impact of biosimilar and generic competition against our mature products. Lower product sales were affected by lower net selling price, offset partially by higher unit demand.

Our non-GAAP net income performance also benefited from our success in retaining more of our mature product sales, driving unit growth of our newer products, and the favorable productivity savings resulting from our strong performance of our “Achieve Productivity Objectives” annual goal discussed further below.

2. We progressed our pipeline(3).

 

2019 Pipeline Launches.

 

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   We launched EVENITY, an innovative product for the treatment of osteoporosis in postmenopausal women at high risk of fracture, in the U.S., Canada, Japan, South Korea, and Australia(4).

 

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   We also launched two oncology biosimilars in the U.S.:

 

-  MVASI (biosimilar bevacizumab (Avastin®)), the first oncology therapeutic biosimilar approved by the U.S. Food and Drug Administration, or FDA, was approved for all approved indications of Avastin.

 

  

-  KANJINTI (biosimilar trastuzumab (Herceptin®)) was approved for all approved indications of Herceptin.

 

In 2019, we advanced our early pipeline and executed key clinical studies and regulatory filings.

 

 

We generated eight new product teams (formed when a molecule has been judged to have the potential to be safe and effective in humans).

 

 

We initiated seven first-in-human studies.

 

 

We advanced four programs through the early-to-late stage portal (the period covering Phase 2 through Phase 3).

 

Oncology:

 

 

We advanced our early oncology programs with approximately 17 individual therapeutics in development. Early data readouts from this pipeline have been promising, including for AMG 510

 

 

 

 

(1) 

Non-Generally Accepted Accounting Principles, or non-GAAP, net income for purposes of the 2019 Company performance goals of our annual cash incentive award program is reported and reconciled in Appendix B.

(2)

Jointly developed in collaboration with Novartis AG.

(3)

For complete information regarding our significant pipeline advancements, please refer to our Form 10-K for the year ended December 31, 2019.

(4)

EVENITY is also approved in Japan and South Korea for men at high risk for fracture and in Australia as a treatment to increase bone mass in men with osteoporosis at high risk of fracture.

 

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(our KRASG12C small molecule inhibitor being investigated as a treatment for a variety of solid tumors):

 

  -  

The FDA granted Orphan Drug Designation for previously treated metastatic non-small cell lung cancer, or NSCLC, and colorectal cancer with KRASG12C mutation and Fast Track Designation for previously treated metastatic NSCLC with KRASG12C mutation.

 

  -  

We enrolled a potentially pivotal Phase 2 monotherapy study in advanced NSCLC, and began enrollment of colorectal cancer patients in a Phase 2 monotherapy study.

 

 

We submitted an FDA Biologics License Application for ABP 798 (biosimilar rituximab (Rituxan®)).

 

 

In our marketed oncology therapeutics, we invested in studies that expanded treatment options for patients:

 

  -  

For KYPROLIS (our medicine for patients with relapsed or refractory multiple myeloma), the Phase 3 CANDOR(1) study (evaluating KYPROLIS in combination with dexamethasone and DARZALEX® compared to KYPROLIS and dexamethasone alone) met its primary endpoint of progression-free survival.

 

  -  

Nplate® (our medicine to treat low blood platelet count) was approved for earlier use in adults with immune thrombocytopenia; and

 

  -  

BLINCYTO (our medicine for patients with acute lymphoblastic leukemia) was approved for patients with Philadelphia chromosome negative minimal residual disease-positive B-cell precursor acute lymphoblastic leukemia in the European Union.

 

Cardiovascular Disease:

We launched Repatha® in China as the first PCSK9 inhibitor for adults with established atherosclerotic cardiovascular disease to reduce the risk of myocardial infarction, stroke, and coronary revascularization.

 

Inflammatory Disease:

 

 

Received a Breakthrough Therapy designation for Tezepelumab(2) (our medicine in Phase 3 development for asthma) in patients with severe asthma without an eosinophilic phenotype.

 

 

The FDA approved AVSOLA (biosimilar infliximab (Remicade®)) for all approved indications of Remicade.

 

Bone Health:

Received approval for EVENITY in the European Union for the treatment of severe osteoporosis in postmenopausal women at high risk of fracture.

3. We delivered on our annual priorities.

 

We executed on our critical launches and long-term commercial objectives.

As discussed above, our revenues benefited from volume-driven growth from a number of our newer innovative medicines, including those medicines that were the focus of our annual priorities to execute critical launches:

 

 

Prolia (our medicine for patients with osteoporosis) worldwide sales increased 17% in 2019.

 

 

Aimovig worldwide sales increased 157% in 2019.

 

 

Repatha worldwide sales increased 20% in 2019. Given the gravity of the impact of cardiovascular disease, we took significant actions to address access challenges for patients who would benefit from Repatha, including:

 

  -  

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

 

  -  

Action to Increase Affordability. In the U.S. we established a 60% lower list price to address affordability for patients, particularly those on Medicare. Beginning January 2020, Repatha is available exclusively at this 60% lower list price.

 

We achieved our productivity objectives.

 

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We began realizing the benefit of the productivity initiatives embedded in our business. In 2019, as a result of our focus on productivity to support continued reinvestment opportunities, we achieved gross savings of approximately $286 million. Part of these savings have been invested into our research and development activities. We expect savings from these productivity initiatives will continue to contribute to funding strategic growth investments, such as investment in our early oncology programs.

We delivered on additional strategic priorities.

 

LOGO

In 2019, in addition to launching Repatha as our first product in China, we made significant progress in expanding our presence in China and Japan, the second and third largest pharmaceutical markets, respectively.

 

 

 

(1)

Carfilzomib, Daratumumab and Dexamethasone for Patients With Relapsed and/or Refractory Multiple Myeloma.

(2)

Jointly developed in collaboration with AstraZeneca plc.

 

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Compensation Discussion and Analysis

 

 

 

 

 

 

We entered into a strategic collaboration with BeiGene Ltd. to collaborate on the commercialization of XGEVA, KYPROLIS, and BLINCYTO in China and the global development and commercialization of 20 Amgen oncology pipeline products.

 

 

With EVENITY, we realized our third product approval in three years in Japan through our Amgen Astellas BioPharma K.K. joint venture.

 

 

We executed our first biosimilar launch in the Asia-Pacific region with the launch of MVASI in Thailand. This was also the fourth biosimilar launch for Amgen globally.

 

 

We acquired Otezla, with approvals around the world, providing an attractive international growth opportunity.

 

LOGO

In 2019, we successfully operated our next-generation manufacturing facility in Singapore and continued to work on the construction of our U.S. facility in Rhode Island.

 

 

Rhode Island Facility. In 2019, to support expected product volume growth, we continued construction on our first U.S. next-generation biomanufacturing plant in Rhode Island. 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.

 

Performance Under Our Long-Term Incentive Program

Pay delivery from our LTI compensation plan is tied directly to our stock performance and aligns with long-term value creation for our stockholders.

80% of our annual 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 annual LTI equity award grants. The goal design and all measurement targets are established at the beginning of the three-year performance period and, for the 2017-2019 performance period, were earned based on our performance as measured against these pre-established annual targets for the three equally weighted non-GAAP operating measures of earnings per share, or EPS, growth, operating margin, and operating expense (in 2017 and 2018) and EPS growth, operating margin, and return on invested capital, or ROIC (for 2019). These non-GAAP operating measures were chosen to drive performance in alignment with, and focus our executives on, our 2014-2018 investor commitments, which included EPS growth, operating margin improvement, and operating expense reduction through significant transformation improvement efforts. 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 our goal of delivering an efficient disciplined business model beyond 2018. At the end of the 2017-2019 performance period, our performance under the three annual operating measure percentages was averaged, resulting in a total operating measures score of 103.7% driven by our strong non-GAAP EPS growth over the period.

The total operating measures score was then increased or decreased based on our relative TSR performance as compared to the companies in the S&P 500 over the three-year performance period. Our strong TSR performance ranking (77.8th percentile) relative to the TSRs of the companies in the S&P 500 for the three-year performance period resulted in a TSR modifier for the 2017-2019 performance period of +50 percentage points and a payout of 153.7% of performance units granted. A detailed depiction of this calculation is on the next page.

 

 

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2017-2019 Performance Period Goal Design and Award Calculation

All operating measures and goals were established at the

beginning of the three-year performance period

2019 Operating Measures and Performance                                                             

 

    Non-GAAP(1)
Operating
Measures
 

Minimum

(50%)

 

Target

(100%)

 

Intermediate

(125%)

 

Maximum

(150%)

 

2019

Performance


LOGO           

 

  EPS Growth  

($)

                         

136.8%

$14.75

   

£$11.60

     

$12.75

     

$14.35

         

³$15.20

 
                                               
 

 

Operating

Margin

(%)

                         

75.3%

50.0%

   

£48%

         

52%

     

54%

     

³58%

 
                                               
 

 

ROIC (%)

                         

66.6%

30.7%

   

£30%

         

32%

     

     

³36%

 
                                               
           

 

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92.9%

 

                         

2017-2019 Operating Measures Score

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

 

Operating Measure Percentages are Equally Weighted
for Each of the Three Years
Non-GAAP(1)
Operating
Measures
  2017(2)   2018(2)   2019   2017-2019
Average
Operating
Measures

EPS  

Growth ($)  

 

133.8%

($12.74)

 

142.9%

($14.37)

 

136.8%

($14.75)

  137.8%

Operating  

Margin (%)  

 

114.5%

(54.2%)

 

106.6%

(52.5%)

 

75.3%

(50.0%)

  98.8%

Operating   Expense   

Years 1 & 2  

(in billions)  

 

107.0%

($11.04)

 

50.0%

($11.91)

      74.5%

ROIC (%)  

Year 3  

     

66.6%

(30.7%)

 

 

118.4%

 

 

 

99.8%

 

 

 

92.9%

 

 

 

103.7%

 

 

2017-2019 S&P 500 Relative TSR(3) Modifier

 

 

Payout for Performance Relative to S&P 500 TSR Percentage
 

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

                 

Actual Amgen

percentile

ranking 77.8th

percentile

resulting in a

+50% score

         

 

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

 

 

   
   

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

 

 

       
 

 

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If Amgen’s TSR is less than 0, the relative TSR modifier can be no greater than 0% (target).

 

LOGO

 

 

(1)

The operating measures of the 2017-2019 performance units were based on Non-GAAP financial results for 2017, 2018, and 2019 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 2017-2019 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, and increased by $49 million ($0.07 in EPS) for 2019.

(2)

Our targets for our 2017 and 2018 performance were disclosed under the 2017-2019 performance goals in our 2018 and 2019 proxy statement, respectively, filed with the Securities and Exchange Commission on April 11, 2018 and April 8, 2019, respectively.

(3)

TSR Measurement Points = Average daily closing price of stock for the first 20 trading days beginning on the grant date (May 1, 2017) and the last 20 trading days of the performance period (December 31, 2019).

 

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Positive 2019 Say on Pay Vote Outcome and Engagement With Our Stockholders

 

 

In 2019, we received approximately 93% stockholder support on our say on pay advisory vote. We have engaged consistently in broad direct governance-focused stockholder outreach since 2011. Since our 2019 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 51% 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 2019, 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 in 2019

 

 

In December 2018 and March 2019, the Compensation Committee evaluated and established a performance award goal design for the 2019-2021 performance period (January 1, 2019 to December 31, 2021) with input from management and FW Cook, to take into account discussions with our stockholders, and to continue to drive operating performance and financial discipline. For the 2019-2021 performance period, the Compensation Committee retained the same general performance award goal design as for the 2018-2020 performance period, including 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 zero. This feature provides a greater tie to stockholders’ interests and investment

experience. The Compensation Committee moved to using two operating measures, retaining the two non-GAAP operating measures of EPS growth and ROIC used for the last two years of the 2018-2020 performance period for the entire 2019-2021 performance period to continue to incentivize focus on delivering stockholder value and to emphasize our goal of remaining disciplined in our management of the business and use of capital, respectively. These operating measures are weighted equally (one-half per measure). A depiction of the 2019-2021 performance period goal design can be found in “Performance Award Goal Design for the 2019-2021 Performance Period—2019-2021 Performance Period Goal Design and Award Calculation.

 

 

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Compensation Discussion and Analysis

 

 

 

 

 

Our 2019 Compensation Program Highlights and Objectives

 

 

 

 

Total Target Direct Compensation Focuses on “At Risk” Compensation

(91% for our CEO and 82% for our other NEOs)

 

 

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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 Executive 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.

 

Annual performance reviews for each staff member (including NEOs) include an assessment of delivery of performance in alignment with our Amgen Values, a set of principles established in 1996 that guide the way we conduct business:

 

    Amgen Values:         
   

   Be science-based;

  

   Trust and respect each other;

   
   

   Compete intensely and win;

  

   Ensure quality;

   
   

   Create value for patients, staff, and stockholders;

  

   Work in teams; and

   
   

   Be ethical;

  

   Collaborate, communicate, and be accountable.

   
              

 

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Use of Independent Compensation Committee Consultant

To assist the Compensation Committee in its review and determination of executive compensation, the Compensation Committee retained and sought advice from 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 2019 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.

During 2019, 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 Company did not engage FW Cook for any other services to the Company.

 

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. In 2019, FW Cook recommended continuing the objective criteria previously established and making no changes to the peer group. Based, in part, on these recommendations from FW Cook, as well as a review of the objective criteria, the Compensation Committee determined that the current peer group remained appropriate.

 

 

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Compensation Discussion and Analysis

 

 

 

 

 

How We Establish Our Peer Group

 

    

2019 Peer Group Companies

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

 

    

Objective Criteria Considered

 

 

 

2019 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 2019 peer group analyses:

 

     

Market  Capitalization(a)

  

Revenues(b)

 

  Amgen

  

$122 billion

  

 

$24 billion

 

  Relative Peer Group Position

  

3rd Quartile (above median)

  

 

2nd Quartile

 

 

  (a)

Represents the 12-month average market capitalization as of May 31, 2019.

 
  (b)

Represents revenues for the trailing four quarters ended March 31, 2019. 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. 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) except for the Executive Vice President, Global Commercial Operations role as described above.

        

 

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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 2019, equity-based compensation represents 78% of our CEO’s target compensation and 65% of target compensation for our other NEOs, and 50% of annual equity awards are in the form of long-term 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 Committee balances the use of equity to align staff members with our stockholders while striving to limit stockholder dilution to that amount which investors would expect to experience with members of our peer group. Annually, LTI equity award grant guidelines are established for each Company job level targeting the 50th percentile of our peer group for levels for which equity data is broadly available, setting an annual LTI equity award budget at approximately the 50th percentile of our peer group, and reviewing 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. (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.) As illustrated, the resulting dilutive effect has generally trended downward.

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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 2019 given its pay-for-performance alignment. As such, 80% of our annual equity award value continued to be delivered as performance-based LTI equity awards consisting of performance units (50%) and stock options (30%). Time-vested RSUs, designed to foster retention, continued to comprise the remaining 20% of equity 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.

LTI Equity Award Allocation

 

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Compensation Discussion and Analysis

 

 

 

 

 

Value of 2019 Annual Long-Term Incentive Equity Awards

Based on a review of Company and executive performance and market data, the Compensation Committee determined to grant the following annual LTI equity award grant values to our CEO and the other NEOs in March 2019, with an effective grant date of May 3, 2019, the third business day after the announcement of our first quarter 2019 earnings results. (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

($)

    

2018

Market

Median

($)

    

Difference vs. 

Market Median 

Over/ (Under) 

(%) 

 

  Robert A. Bradway

     7,000,000        4,200,000        2,800,000        14,000,000        11,209,000        24.9   

  Murdo Gordon

     2,000,000        1,200,000        800,000        4,000,000        3,918,612        2.1   

  David W. Meline

     2,000,000        1,200,000        800,000        4,000,000        3,399,988        17.6   

  David M. Reese

     2,000,000        1,200,000        800,000        4,000,000        4,010,465        (0.3)  

  Jonathan P. Graham(2)

 

    

 

1,400,000

 

 

 

    

 

840,000

 

 

 

    

 

560,000

 

 

 

    

 

2,800,000

 

 

 

    

 

2,594,725

 

 

 

    

 

7.9 

 

 

 

 

(1)

The 2019-2021 performance period runs from January 1, 2019 through December 31, 2021.

(2)

Mr. Graham was promoted to Executive Vice President, General Counsel and Secretary, effective October 22, 2019. Prior to that date, and at the time that the 2019 annual LTI equity awards were granted, Mr. Graham served as Senior Vice President, General Counsel and Secretary and the grant amounts reflect his role prior to his promotion, and does not give effect to his promotion grant.

 

Based on the March 2019 Compensation Committee review of the market data, the Compensation Committee approved an increase in Mr. Bradway’s LTI equity award from $12.5 million to $14 million to reward Mr. Bradway for strong performance and excellent leadership of the Company since 2012, noting that, since 2012 Mr. Bradway’s base salary and/or total target annual cash compensation had been below the Market Median, and to differentiate his pay with equity that is substantially performance-based. In making its decision, the Compensation Committee noted that, while the Market Median for CEO pay had declined as a result of turnover in leadership at four of our peer group companies, among continuing incumbents at our peer group companies, the Market Median increased. The March 2019 Compensation Committee review of the market data also resulted in granting Mr. Meline the same LTI equity award value ($4 million) that he had received in 2018 in recognition of Mr. Meline’s lengthy tenure in the role of Chief Financial Officer of large public companies and the value of his expertise. The Compensation Committee also granted Mr. Gordon and Dr. Reese LTI equity award grant values of $4 million each to position their respective total target direct compensation closer to the Market Median for their respective roles. Further, in continued recognition of Mr. Graham’s tenure and diversity of experience in the

role of General Counsel at other complex publicly traded companies, the Compensation Committee granted Mr. Graham the same LTI equity award value ($2.8 million) that he had received in 2018. The Compensation Committee concluded that the LTI equity award values granted were appropriate because they recognize and reward strong execution by our executives with compensation that is substantially “at risk,” performance-based, and focused on the longer-term.

Promotion Equity Awards

Mr. Graham was promoted to Executive Vice President, General Counsel and Secretary effective October 22, 2019 to recognize the scope and impact of his service to the Company. In connection with Mr. Graham’s promotion, the Compensation Committee granted Mr. Graham a promotional RSU award on November 1, 2019 with a value of $2 million. This grant was intended to bring Mr. Graham’s 2019 annual LTI equity award grant more in-line with his role as Executive Vice President and will vest in accordance with our standard vesting schedule over four years, with no vesting in the first year and three approximately equal installments each year thereafter.

 

 

52     LOGO   ï 2020 Proxy Statement


Table of Contents
       

 

 

 

 

Compensation Discussion and Analysis

 

 

 

 

 

Performance Award Program 2017-2019 Performance Period Performance Units Earned

At the end of the 2017-2019 performance period, our performance for each of the three annual non-GAAP operating measures was averaged, resulting in 137.8% earned for EPS growth, 98.8% earned for operating margin, and 74.5% earned for operating expense and ROIC over the three-year period. These three non-GAAP operating measure percentages were then averaged for a total operating measures score of 103.7% for the three-year performance period. Based on our strong TSR ranking of 77.8th percentile relative to the TSRs of the companies in the S&P 500, the total operating measures score of 103.7% was increased by the maximum TSR adjustment of 50 percentage points to 153.7%. This actual earned performance of 153.7% for the 2017-2019 performance period resulted in the following number of shares of Common Stock being earned. Each earned performance unit converted to one share of Common Stock upon the payout date of March 20, 2020. See the detailed description of the 2017-2019 performance period previously discussed.

 

  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

     6,000,000          33,543          56,106  

  Murdo Gordon(2)

     n/a          n/a          n/a  

  David W. Meline

     1,750,000          9,783          16,363  

  David M. Reese

     400,000          2,236          3,740  

  Jonathan P. Graham

 

    

 

1,250,000

 

 

 

      

 

6,988

 

 

 

      

 

11,688 

 

 

 

 

(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 in 2018 after the participants for the 2017-2019 performance period had been determined and did not receive any performance units for such 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 “Non-Direct Compensation and Payouts in Certain Circumstances—Change of Control Benefits and Offer Letter with Limited Severance Benefits—Offer Letter Mr. Gordon” below.

 

LOGO   ï 2020 Proxy Statement    53


Table of Contents
       

 

 

 

 

Compensation Discussion and Analysis

 

 

 

 

 

2018-2020 Performance Period Goal Design and Award Calculation

All operating measures and goals were established at the

beginning of the three-year performance period

Based on review and deliberation in December 2017 and March 2018, the Compensation Committee with input from management and FW Cook constructed the 2018-2020 performance period (January 1, 2018 to December 31, 2020) design to be similar to that of the 2017-2019 performance period design. All operating measures and goals were established at the beginning of the 2018-2020 performance period. For 2018, the three annual non-GAAP operating measures established for 2018 under the 2017-2019 performance period were employed. For 2019 and 2020, non-GAAP EPS growth and ROIC, two measures included among the three operating measures established for 2019 under the 2017-2019 performance period, are the operating measures under the 2018-2020 performance period. The TSR modifier was rebalanced for the 2018-2020 performance period from 50 to 30 percentage points to shift the weighting of the TSR modifier to be in greater alignment with the value of each of the operating measures. For our 2019 operating performance measures (after weighting), we performed at 110.6%.

2019 Operating Measures and Performance                                                     

 

   

    Non-GAAP(1)    

Operating

Measures

 

Minimum

(30%)

      

Low

(65%)

      

Target

(100%)

 

High

(135%)

 

Maximum

(170%)

 

2019

Performance

LOGO           

 

  EPS Growth  

($)

                               

131.8%

($14.82)

   

£$9.05

     

$10.05

 

     

$12.55

         

$15.05

     

³$16.05

 
                                                           
 

 

ROIC

(%)

                               

89.5%

(30.8%)

   

£26%

     

 

28%

 

         

32%

     

36%

     

³38%

 
                                                           
   

 

   LOGO

 

 

110.6%

 

                                 

2018-2020 Operating Measures Score

(Operating Measure Percentages 30 – 170% with linear
interpolation along the payout curve)

Operating Measure Percentages are Equally Weighted

for Each of the Three Years

Non-GAAP(1)   
Operating  
Measures  
  2018(2)   2019   2020   2018-2020
Average
Operating
Measures

Operating  

Margin (%)  

Year 1  

 

105.4%

(52.6%)

          TBD

Operating Expense   Year 1  

(in billions)  

 

30.0%

($11.89)

  TBD

EPS  

Growth ($)  

Years 1, 2, and 3  

 

132.7%

($14.40)

 

131.8%

($14.82)

 

Pre-established

and to be

disclosed(3)

  TBD

ROIC (%)  

Years 2 and 3  

     

89.5%

(30.8%)

  TBD