XNPT Xenoport, Inc.

ADVISORY VOTE ON EXECUTIVE COMPENSATION

Under the Dodd-Frank Wall Street Reform and Consumer Protection Act, or the Dodd-Frank Act, and Section 14A of the Exchange Act, the company’s stockholders are entitled to vote to approve, on an advisory basis, the compensation of XenoPort’s executive officers named in the Summary Compensation Table, or our named executive officers, as disclosed in this proxy statement in accordance with SEC rules.

At the 2011 annual meeting of stockholders, we requested that our stockholders indicate, on an advisory basis, the preferred frequency of stockholder advisory votes on the compensation of XenoPort’s named executive officers, commonly referred to as a “say-on-pay vote.” Although our stockholders did not indicate a majority preference on the frequency of future say-on-pay votes, there were more votes for an annual frequency than any other frequency, and our board of directors ultimately decided to hold annual say-on-pay votes. In accordance with that policy, this year, we are again asking our stockholders to approve, on an advisory basis, the compensation of our named executive officers as disclosed in this proxy statement in accordance with SEC rules. This vote is not intended to address any specific item of compensation, but rather the overall compensation of XenoPort’s named executive officers and the philosophy, policies and practices described in this proxy statement.

The board of directors is asking the stockholders to indicate their support for the compensation of XenoPort’s named executive officers as described in this proxy statement by casting a non-binding advisory vote “FOR” the following resolution:

“RESOLVED, that the compensation paid to XenoPort’s named executive officers, as disclosed pursuant to Item 402 of Regulation S-K, including the Compensation Discussion and Analysis, compensation tables and narrative discussion, is hereby APPROVED.”

Because the vote is advisory, it is not binding on the board of directors or XenoPort. Nevertheless, the views expressed by the stockholders, whether through this vote or otherwise, are important to management and the board of directors, and, accordingly, the board of directors and the compensation committee intend to consider the results of this vote in making determinations in the future regarding executive compensation arrangements.

Unless our board of directors modifies its policy on the frequency of future advisory votes on the compensation of our named executive officers, or our stockholders indicate at the 2017 annual meeting of stockholders, on an advisory basis, a preferred frequency of stockholder advisory votes on the compensation of XenoPort’s named executive officers other than on an annual basis, the next advisory vote on the compensation of our named executive officers will be held at the 2017 annual meeting of stockholders.

Approval of this advisory proposal requires the vote of the holders of a majority of the shares present in person or represented by proxy and entitled to vote at the annual meeting.

THE BOARD OF DIRECTORS RECOMMENDS

A VOTE IN FAVOR OF PROPOSAL 3.

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SECURITY OWNERSHIP OF

CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth certain information regarding the ownership of our common stock as of March 1, 2016 by: (i) each director and each of our nominees for director; (ii) each of the officers named in the Summary Compensation Table (our “named executive officers”); (iii) all of our current executive officers and directors as a group; and (iv) all those known by us to be beneficial owners of more than five percent of our common stock.

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SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Section 16(a) of the Exchange Act requires our directors and executive officers, and persons who own more than ten percent of a registered class of our equity securities, to file with the SEC initial reports of ownership and reports of changes in ownership of our common stock and other equity securities. Executive officers, directors and greater than ten percent stockholders are required by SEC regulation to furnish us with copies of all Section 16(a) forms they file.

To our knowledge, based solely on a review of the copies of such reports furnished to us and written representations that no other reports were required, during the fiscal year ended December 31, 2015, we believe that all Section 16(a) filing requirements applicable to our officers, directors and greater than ten percent beneficial owners were complied with; except that in January 2015 Form 4s filed for each of (i) Dr. Barrett covering the vesting of 28,750 shares of our common stock, (ii) Mr. Angotti covering the vesting of 12,500 shares of our common stock, (iii) Mr. Harris covering the vesting of 6,500 shares of our common stock, (iii) Ms. Bosko covering the vesting of 4,250 shares of our common stock, (iv) Dr. Bates covering the vesting of 6,000 shares of our common stock, and (v) Dr. Kim covering the vesting of 6,500 shares of our common stock, were filed late due to clerical error.

EXECUTIVE COMPENSATION

C OMPENSATION D ISCUSSION AND A NALYSIS

This Compensation Discussion and Analysis explains the material elements of compensation for the following executives, who are referred to in this Compensation Discussion and Analysis and in the following tables as the named executive officers:

XenoPort’s executive compensation program is designed to pay our executive officers for performance, by appropriately motivating and rewarding them for the achievement of strategic objectives that drive value for XenoPort and its stockholders over the long-term. XenoPort remains committed to its pay-for-performance philosophy, recognizing that the competitive market for talented executives and the volatility of our business may result in highly variable compensation during any given annual period. As further described below, 2015 was a year of transition and change for the company that warranted special compensation considerations and pay decisions. The compensation committee continues to develop, analyze and review its methods for aligning executive management’s long-term compensation with the benefits generated for stockholders, including taking into account the results of the stockholder advisory vote to be held at the 2016 annual meeting and described under “Proposal 3 – Advisory Vote on Executive Compensation” in this proxy statement.

Executive Summary

2015 was a year of transition and change for XenoPort. We implemented a shift in our strategy to focus on and maximize the value of our commercial product, HORIZANT, resulting in a substantial change in our

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leadership team and a reduction in our workforce. In connection with this shift in business focus, Ronald W. Barrett, Ph.D. retired as chief executive officer and Vincent J. Angotti, our then executive vice president and chief operating officer, was promoted to the role of chief executive officer. Mr. Angotti spearheaded the commercialization of HORIZANT and as such, retaining him and ultimately promoting him to chief executive officer was fundamental to the company’s shift in strategy. Dr. Barrett continues to work with XenoPort in an important advisory role, ensuring a smooth transition and advising on partnering activities for our XP23829 and XP21279 product candidates. It was critical to the compensation committee and board of directors that our compensation arrangements with our executive officers provided the appropriate support and incentives to retain, motivate and reward our executive officers through this time of transition. As a result, we made several key changes in our compensation arrangements during 2015. We view these decisions as unique, one-time events to meet the needs of our transition and path forward as a business. We continue to carefully evaluate our compensation arrangements, as necessary, to move our company forward and ensure that our pay program aligns our executives’ compensation with our stockholders’ interests and our company performance over the long-term.

A summary of the major compensation actions relating to our transition include:

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In addition to affecting a smooth transition during 2015, there were a number of notable performance achievements that were attained, including:

Important Features of our Executive Compensation Program . Important features of our executive compensation program include:

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Compensation Philosophy and Objectives

The goals of XenoPort’s executive compensation program are to:

XenoPort has created a compensation program that combines cash and stock-based compensation components to reward the achievement of specific annual, long-term and strategic goals by the company and in the proportions that the company believes are most appropriate to motivate and reward its executive officers and other key employees for achieving these goals. XenoPort’s executive compensation program not only aims to be competitive in its industry, but also aims to be fair relative to: (i) compensation paid to other professionals across the company; (ii) XenoPort’s long-term performance; and (iii) the value XenoPort delivers to its stockholders.

Principal Elements of Compensation

As discussed in further detail below, XenoPort’s executive compensation program for 2015 consisted of, and was intended to strike a balance among, the following three principal components: base salary, annual cash bonuses and long-term incentive compensation. XenoPort also provides its executive officers with certain severance and change-in-control benefits. Finally, XenoPort offers to its executive officers participation (with all other eligible employees) in the company’s 401(k) Plan (including the company’s employer match program), employee stock purchase plan and certain other benefits available generally to the company’s employees.

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The compensation committee has not established any formal policies or guidelines for allocating compensation between current and long-term incentive compensation, or between cash and non-cash compensation. However, commensurate with the company’s philosophy of establishing a link between compensation and corporate performance, the compensation committee believes that a greater component of overall targeted cash compensation for executive officers compared to other employees should be dependent on company performance goals and that a significant percentage of total target pay should be dependent on company performance with a long-term emphasis.

We do not have any programs, plans or practices with respect to the timing of stock awards in coordination with the release of material nonpublic information. For all stock awards granted to officers and all stock awards granted in connection with employee promotions, the board of directors or compensation committee approves all such stock awards at meetings of the board of directors or compensation committee or by unanimous consents on or before the stock award grant date. Likewise, we do not time the release of material nonpublic information for the purpose of affecting the value of equity or other compensation granted to our executive officers. With respect to annual incentivizing stock awards for the company’s executive officers, the board of directors generally grants such awards to its executive officers at the first regularly-scheduled board meeting of each fiscal year or a later consent in January if necessary to finalize the terms of special types of awards.

Advisory Vote on Executive Compensation

We held our annual advisory vote on the compensation of our named executive officers at our stockholder meeting in May 2015, and it was supported by more than 99% of the shares present in person or represented by

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proxy and entitled to vote at the meeting. The compensation committee and board of directors considered the advisory vote held in 2015 and, given the significant level of support, determined not to make any significant changes to the executive compensation policies or decisions as a result of the 2015 advisory vote. However, our compensation committee and board of directors continues to carefully evaluate our compensation program to ensure it is furthering its objectives, including linking pay to our performance. Our compensation committee and board of directors will continue to consider the outcome of our say-on-pay votes and our stockholder views when making future compensation decisions for the named executive officers.

Role of the Compensation Committee and Executive Officers in Setting Executive Compensation

The compensation committee is responsible for evaluating the performance of XenoPort’s chief executive officer, recommending to the board of directors for approval the chief executive officer’s compensation and reviewing and approving the compensation for XenoPort’s other executive officers. To date, all decisions by the compensation committee relating to the compensation of XenoPort’s other executive officers have been reviewed by the board of directors as well.

Historically, the compensation committee has made significant adjustments to the annual compensation of our named executive officers, determined bonus and equity awards and reviewed and approved a list of specific corporate goals for a one-year performance period that runs from January 1 through December 31, usually at multiple meetings held during the fourth quarter of the performance period and the first quarter of the ensuing year. Generally, the compensation committee’s process comprises two related elements: the determination of compensation levels and the establishment of performance objectives for the current performance period. Individual goals and objectives established for the current performance period are based on the company’s operational goals, which are reviewed and approved by the compensation committee and the board of directors. At the end of the performance period, corporate performance is evaluated by the compensation committee and the board of directors by reviewing the extent to which pre-determined strategic, commercial, scientific and business goals were met, and each executive’s individual performance is evaluated by the compensation committee (and, with respect to the chief executive officer, the board of directors) reviewing his or her accomplishment of individual performance objectives and overall contributions to the company. The results, combined with comparative compensation data, are then used to determine appropriate compensation levels. In addition, the compensation committee and the board of directors also considers matters related to individual compensation or overall retention and motivation, such as compensation for new or promoted executives, at various meetings throughout the year. During 2015, the compensation committee and board of directors enhanced its general compensation process to evaluate and approve compensation arrangements beginning in the summer and continuing through the end of 2015 to address our retention concerns, chief executive officer transition and shift in business strategy.

For executive compensation decisions, including decisions relating to the grant of stock awards to executive officers, the compensation committee typically considers the recommendations of XenoPort’s chief executive officer (Dr. Barrett and, subsequent to Dr. Barrett’s retirement, Mr. Angotti), who often participates in the compensation committee’s deliberations about executive compensation matters. However, the compensation committee also meets in executive session, and the chief executive officer does not participate in the determination of his own compensation, nor does he participate in deliberations with respect thereto. From time to time, various members of management, including Mr. Angotti, in his role as XenoPort’s executive vice president, chief operating officer prior to his appointment as chief executive officer; Mr. Harris, our senior vice president of finance and chief financial officer; and other employees as well as outside advisors or consultants have been, or may in the future be, invited by the compensation committee to make presentations, provide financial or other background information or advice or otherwise participate in compensation committee meetings. For all executives, as part of its deliberations, the compensation committee may review and consider, as appropriate, materials such as financial reports and projections, operational data, tax and accounting information, executive stock ownership information, company stock performance data, analyses of historical executive compensation levels and current company-wide compensation levels, and recommendations of the compensation consultant, including analyses of executive compensation paid at other companies identified by the consultant.

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Under its charter, the compensation committee may form, and delegate authority to, subcommittees, including a subcommittee composed of one or more members of the board of directors to grant stock awards under the company’s equity incentive plans. The compensation committee does not delegate its authority with respect to executive compensation, including equity awards.

Independent Compensation Consultant

The compensation committee has the sole authority to retain compensation consultants to assist in its evaluation of executive compensation, including the authority to approve the consultant’s reasonable fees and other retention terms. The compensation committee engaged Radford, an Aon Hewitt Company, as the committee’s compensation consultant for the 2015 executive compensation review process. The compensation committee has been advised by Radford since 2012. In 2015, Radford evaluated the efficacy of the company’s existing compensation strategy and practices in supporting and reinforcing the company’s long-term strategic goals, reviewed the company’s compensation strategy practices in the context of developing best practices for public companies and assisted in refining the company’s compensation strategy and developing and implementing a competitive executive compensation program to execute that strategy. As part of its engagement, Radford developed a comparative group of companies and performed analyses of competitive performance and compensation levels for that group. Radford also assisted the compensation committee in developing compensation strategies for Mr. Angotti’s retention and subsequent promotion to the Chief Executive Officer role, including a review of peer pay practices and of Mr. Angotti’s compensation.

During 2015, the compensation committee analyzed whether the work of Radford as a compensation consultant raised any conflict of interest, taking into consideration the following factors: (i) the provision of services to the company by Radford and its affiliates; (ii) the amount of fees paid to Radford and its affiliates by XenoPort as a percentage of Radford and its affiliates’ total revenue; (iii) Radford’s policies and procedures that are designed to prevent conflicts of interest; (iv) any business or personal relationship of Radford or the individual compensation advisors employed by Radford with any executive officer; (v) any business or personal relationship of the individual compensation advisors with any member of our compensation committee; and (vi) any XenoPort stock owned by Radford or the individual compensation advisors employed by Radford. Based on its analysis of these factors, our compensation committee determined that the work of Radford and the individual compensation advisors employed by Radford does not create any conflict of interest.

Peer Companies and Competitive Pay Positioning

The compensation committee believes that it is important when making its compensation decisions to be informed as to the current practices of comparable, publicly-held companies. To this end, as part of its engagement, Radford was requested by the compensation committee to develop a comparative group of companies and to perform analyses of competitive performance and compensation levels for that group for the purposes of evaluating and setting 2015 compensation. The report provided by Radford reviewed base salary, target incentive opportunities, total cash compensation, equity grants, equity vehicle mix and executive stock ownership levels, as well as certain financial data, from the following 22 comparable, publicly-held companies in our peer group in connection with determining 2015 compensation levels:

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Radford designed this 2015 peer group using key size measures such as market capitalization at the time the peer group was determined, which allows the market data to be used without size distortion. The peer group companies were chosen for inclusion in the report by Radford and the compensation committee as a representative industry group most similar to XenoPort based on stage of development and history of commercialization (most have late-stage product candidates in development or recently commercialized products), revenues (revenue generally under $100M), market value (market value generally between $100M and $1B), number of employees (headcount between about 50 and 250 employees) and locale (in the San Francisco Bay Area or other biotechnology “hub” markets).

As part of its engagement, Radford was requested by the compensation committee to review and update the comparative group of companies, if appropriate, for determining 2016 compensation levels. Radford designed the 2016 peer group in the fall of 2015 using the same criteria as used to form the 2015 group, with adjustment to reflect XenoPort’s revenues and market value at the time. The updated peer group consisted of the following 24 comparable, publicly-held companies in our peer group in connection with determining 2016 compensation levels:

The compensation committee reviews the compensation practices and data from the peer companies provided by Radford, or the peer data, as well from the broader biotechnology industry, in making executive compensation decisions. The compensation committee generally targets individual executive base salary and long-term incentive compensation at approximately the 50 ^th percentile of the peer data, with target bonus opportunities set using a team-approach, based upon positions that have similar impact on the organization, resulting in targets at or above the 50 ^th percentile of the peer data to allow for higher pay upon performance achievement. The compensation committee reviews data from the broader biotechology industry when there is not sufficient peer data for a particular position and to gain a general understanding of compensation trends in the industry. While the peer data is the principal component that is used to determine executive compensation, targeted compensation is also individually adjusted by the compensation committee on a purely subjective basis considering a number of factors, including, depending on the individual executive, individual performance, any change in position scope or responsibilities, managerial leadership, compensation granted to other professionals across the executive group and the overall performance and business needs of our company, including shifts in our business strategy and leadership.

The above peer positioning provides the opportunity for most executives to achieve overall cash compensation, when targeted levels of performance are achieved or exceeded, which is above the median of pay practices of our peer group. The compensation committee believes that offering the executive officers the opportunity to achieve aggregate levels of cash compensation above the 50 ^th percentile of its peers provides the appropriate incentive to achieve the challenging performance objectives of our Corporate Bonus Plan and to retain such executives in a highly competitive industry. Some base salaries, target bonuses and equity incentive awards of our executive officers may be lower or higher than the 50 ^th percentile due to the subjective factors described above. Providing target bonus opportunities at or above the 50 ^th percentile encourages executives to achieve rigorous performance goals and emphasizes our pay for performance philosophy.

Furthermore, the compensation committee believes that offering the executive officers the opportunity to achieve levels of total compensation (when target levels of annual bonus goals and long-term incentive opportunities are exceeded ) above the 50 ^th percentile of its peer group provides the appropriate alignment between challenging individual performance objectives and the long-term success of our company.

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The compensation committee realizes that referencing compensation data from peer companies in making our executive compensation decisions may not always be appropriate as a stand-alone tool for setting compensation due to the aspects of the company’s business and objectives that may be unique to the company; however, the compensation committee generally believes that gathering peer data is an important part of its decision-making process with respect to the company’s executive compensation program and uses this information as one key component in its decisions with respect to base salary, target bonuses and equity incentive grants. As described above, targeted levels of peer data are reviewed and may be adjusted in the context of a number of other relevant factors. In addition, the compensation committee considers from time to time, as a reference point, compensation information and practices from other sources, including input from other independent members of the board of directors based on their experience and publicly-available data relating to the compensation practices and policies of other companies within and outside of the life sciences industry.

2015 Compensation Actions for XenoPort’s Named Executive Officers

Base Salary

In adjusting base salaries for 2015, the compensation committee principally assessed peer company pay levels and to a lesser extent, a number of other factors, including, depending on the individual executive, individual performance during the prior year, tenure, experience, skills and responsibilities, any change in position scope or responsibilities, managerial leadership, pay level compared to the company’s other executive officers, pay level compared to the executive officer’s peers, expected cost of living increases as well as the company’s overall performance. As noted above, the compensation committee also considered the performance assessments and recommendations made by Dr. Barrett in adjusting base salaries for the company’s other executive officers in early 2015.

Initial 2015 Annual Base Salaries

For 2015, the compensation committee determined to provide increases of approximately 3% to each named executive officer’s base salary, with the exception of Dr. Kim. Although these increases resulted in Mr. Angotti, Mr. Harris, Dr. Bates and Ms. Bosko’s base salaries falling close to the 75 ^th percentiles of the market data, the compensation committee felt these increases were appropriate to maintain salary levels competitive with peer data and expected cost of living increases. Because Dr. Kim’s base salary fell well below the 50 ^th percentile of the peer data, the compensation committee, in their judgment, determined that 10% was an appropriate annual increase to bring him closer to the 50 ^th percentile of the peer data. After increase, Dr. Barrett’s 2015 base salary still remained below his $525,000 base salary initially set by the board of directors in 2010. In 2010, in light of the company’s reduction in force and restructuring, Dr. Barrett voluntarily reduced his 2010 base salary by 15%, and in 2014, Dr. Barrett voluntarily requested, and our board of directors agreed, to not increase his salary for 2014. Although Dr. Barrett’s 2015 base salary remained at approximately the 25 ^th percentile in our peer group, the compensation committee concluded, and the board of directors agreed, this was appropriate so that Dr. Barrett’s total cash compensation would consist more heavily of the at-risk component, in conformance with the our pay for performance objective.

The 2015 base salaries and increases from 2014, which were effective January 1, 2015, for our named executive officers were as follows:

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Mid-Year and Promotion Adjustments

In August 2015, the compensation committee and board of directors determined that a base salary increase for Mr. Angotti from $454,574 to $500,000 was necessary, along with certain promotion equity grants as explained below, to improve the retention value of Mr. Angotti’s compensatory arrangements with the company. Upon his promotion to chief executive officer in September 2015, the compensation committee recommended and the board of directors approved an increase to Mr. Angotti’s base salary to $525,000, which the compensation committee determined was appropriate due to Mr. Angotti’s increased duties as chief executive officer while keeping his base salary at approximately the 25 ^th percentile of the peer data and target total cash compensation at between the 25 ^th and 50 ^th percentile of the peer data, which the compensation committee and board of directors also determined was appropriate in light of the equity award opportunities granted to Mr. Angotti in connection with his promotion to chief executive officer.

No other mid-year or other adjustments were made to the base salaries of any other named executive officers during their period of employment in 2015.

Annual Corporate Bonus Opportunity

In early 2015, the compensation committee and the board of directors approved an amendment and restatement of the Corporate Bonus Plan to apply for 2015 bonus opportunities in order to better align the plan with market standards and competitive peer data. The changes included adjusting the chief executive officer’s bonus to be entirely dependent upon company performance, shifting the eligibility for participation for new hires to October 1 and setting the threshold performance level necessary to justify any financial reward under the Corporate Bonus Plan at 60% of the target goals.

Target Bonuses and Performance Goal Weighting

Taking into consideration the results of the peer data and the potential impact of executive officers on overall corporate performance, the compensation committee determined to maintain the same executive target bonus percentages for 2015 as were in place in 2014, and accordingly, the chief executive officer, the executive vice president and each of the other named executive officers (senior vice presidents) were assigned a target bonus of 90%, 60% and 40%, respectively, of his or her base salary, which would be earned by the officer upon achievement of the company’s corporate objectives at the 100% level and his or her respective individual performance targets, if applicable, at the 100% level.

As it has in the past, the compensation committee set 2015 target bonuses as a percentage of base salary, determined by position, rather than individual, because it believes that maintaining this team-based approach creates internal equity and is consistent with market practices. The target bonus levels provided the executives the opportunity to achieve levels of cash compensation (base salary plus bonus) that would be above the 50 ^th percentile of its peers, if targeted levels of performance are achieved or exceeded. The compensation committee believes that offering this opportunity above the peer median is appropriate because the performance goals established for the Corporate Bonus Plan reflect tasks beyond those reasonably expected of an executive officer and which, if attained, justify payment of additional compensation. Accordingly, the opportunity for this level of pay incentivizes our named executive officers to achieve our significant performance objectives, and serves to retain our executives in a highly competitive industry. Additionally, having a significant portion of an executive’s compensation contingent upon company-wide performance aligns with the company’s philosophy

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that pay-for-performance programs attract, motivate and retain executive officers who contribute to the company’s long-term success and related stockholder value creation.

Beginning in 2015, the compensation committee and the board of directors determined that the chief executive officer’s bonus under the Corporate Bonus Plan would be entirely dependent upon company performance, while the other named executive officer’s bonus would continue to be based in part upon company performance and in part upon individual performance. The board of directors and compensation committee determined this was appropriate because our chief executive officer has the greatest impact on, and should be responsible for, our corporate performance. The following are the weightings of the individual and company corporate performance components used in 2015 for participants in determining the actual bonus award amounts:

Upon Mr. Angotti’s appointment as chief executive officer in September 2015, the compensation committee and board of directors determined not to increase his target bonus to that of Dr. Barrett’s because Mr. Angotti’s promotion package was structured to be more heavily weighted towards equity grants that aligned Mr. Angotti’s interests with company stockholders’ interests over the longer-term, rather than on shorter-term compensation. Accordingly, Mr. Angotti’s target bonus remained at 60% of his base salary. The compensation committee and the board of directors did, however, adjust Mr. Angotti’s bonus to be based 100% on corporate goals, given his role as our chief executive officer and direct responsibility for such goals.

Actual bonus payouts that each executive officer could be paid in 2015 were set to range from 0 to 1.5 multiplied by the target bonus awards, based on achievement of the designed 2015 goals. The compensation committee and the board of directors determine the ultimate bonus that is paid to an executive officer.

Corporate Goals

For 2015, the corporate bonus component of our Corporate Bonus Plan depended on the achievement of key performance objectives divided into five primary weighted categories, as reflected in the table below. The goals were developed in early 2015; however, in the spring of 2015, the board of directors determined to increase the HORIZANT gross sales target goal. The updated goal is reflected in the table below.

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In early 2016, the compensation committee and the board of directors evaluated the company’s achievement of its corporate objectives for the 2015 performance period. Specifically, in the goal category of objectives for XP23829 development, the compensation committee noted that although we had attained our primary endpoint in the XP23829 Phase 2 psoriasis study, the company determined not to pursue further XP23829 development activities and to instead focus our resources on the continued commercialization of HORIZANT, thereby obviating the need to obtain FDA agreement on, or initiate development activities and secure clinical services to

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support, our then-proposed XP23829 Phase 3 psoriasis program. However, the compensation committee noted the significant progress that had been made during the year in reaching agreement with the FDA and the EMA on our then-proposed Phase 3 clinical trial program in MS and with the FDA on our development program in psoriasis, as well as the achievements on our XP23829 product development objectives. The compensation committee further considered that meeting our stretch goal of obtaining FDA agreement in the then-proposed Phase 3 MS study warranted extra score credit, resulting in an overall XP23829 development objective achievement of 50% (funding the overall corporate bonus component at 15% out of 30% in this category).

In the goal category of commercial objectives for HORIZANT, the compensation committee noted that although we did not reach our full-year gross sales target for HORIZANT, we had achieved 98% of that target. The compensation committee further noted that we had made significant improvements in our HORIZANT finished product and active pharmaceutical ingredient manufacturing capabilities, meriting additional score credit, resulting in an overall HORIZANT commercial objective achievement of 97% (funding the overall corporate bonus component at 29% out of 30% in this category).

In assessing the goal category of clinical development, medical affairs and regulatory objectives, the compensation committee noted that we had achieved every one of our goals in this category, noting in particular that the company’s efforts in supporting its development partners in the conduct of their respective clinical trial activities warranted extra score credit. The compensation committee awarded an overall clinical development, medical affairs and regulatory objective achievement of 120% (funding the overall corporate bonus component at 12% out of 10% in this category).

When assessing the goal category of corporate development objectives, the compensation committee noted the company’s successful issuance of the 2022 Notes on February 3, 2015, which resulted in $111.3 million in net proceeds to us. The compensation committee further noted the company’s successes in establishing corporate readiness to respond to any HORIZANT generic filing. The compensation committee in particular recognized our efforts in developing and assessing several proposed strategic business options, and in obtaining commercially significant new U.S. patent rights, warranting additional score credit, and the compensation committee thus awarded an overall corporate development objective achievement of 125% (funding the overall corporate bonus component at 25% out of 20% in this category).

In the organization goal category, the compensation committee noted that we had achieved all of our goals in this category. The compensation committee noted in particular the successful expansion of our XenoPort-employed sales representative team. The compensation committee further noted our successful management of operating expenses to not exceed 2015 publicly-disclosed cash burn guidance while maintaining effective Sarbanes-Oxley controls and procedures, and awarded extra score credit, resulting in an overall organizational objective achievement of 110% (funding the overall corporate bonus component at 11% out of 10% in this category).

After conducting the above-described analysis on a goal-by-goal basis, the compensation committee concluded that 2015 was a year of both significant accomplishments and challenges for XenoPort. After review, evaluation and deliberation of all corporate objectives against the weighting of the specific categories, as described above the compensation committee determined, and the board of directors approved, that the corporate performance objectives under the Corporate Bonus Plan for the 2015 performance period had been met at an overall level of 92%.

Individual Goals

Under the Corporate Bonus Plan for 2015, individual performance objectives were established and evaluated for purposes of determining bonus awards for our continuing named executive officers other than our chief executive officer. Individual performance objectives for 2015 were established in consultation with Dr. Barrett (who was our chief executive officer at the time the individual performance objectives were

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established) based on the corporate performance objectives relevant to the executive officer’s principal business unit, and the compensation committee established specific performance criteria for each applicable executive officer that were aligned with the corporate performance objectives set forth above.

The 2015 individual performance goals and the relative weighting of each such goal for Mr. Harris, Dr. Bates and Dr. Kim are set forth in the table below. As described previously, Mr. Angotti and Dr. Barrett were not awarded bonuses based on the establishment and evaluation of individual performance objectives; rather, their bonuses were determined solely on the extent to which we had achieved our corporate performance objectives. Ms. Bosko, our former senior vice president, chief legal officer and secretary, resigned from the company in February 2015 and was not eligible for a bonus under the Corporate Bonus Plan for 2015. While Mr. Harris, Dr. Bates and Dr. Kim shared some of the same specific performance goals, weightings of goals by category varied to reflect the different impact each executive officer was expected to have on the related specified corporate performance objectives, and an executive officer had additional goals to be consistent with the executive officer’s particular duties and responsibilities. For example, the individual performance goals for Mr. Harris, our senior vice president of finance and chief financial officer, were not as heavily weighted towards success in our development and clinical trial objectives, but reflect greater weighting for financial, organizational and budgeting related matters that were more within his control. In like manner, the individual performance goals for Dr. Kim, our senior vice president of clinical development and medical affairs and chief medical officer, were not weighted towards our commercial objectives for HORIZANT, but do reflect heavy weighting for objectives related to XP23829 development, medical affairs, regulatory and compliance objectives that were more within his control.

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Mr. Harris . The compensation committee determined that Mr. Harris earned a bonus of $150,405, representing a payout of 96% of his target bonus. The payout was earned upon Mr. Harris’ achievement of his individual performance targets and the company’s achievement of corporate objectives, and was weighted equally on individual performance and corporate performance against the corporate objectives and the company’s achievements during the year that, in the determination of the compensation committee and board of directors had been met at a level of 92%. The compensation committee next assessed Mr. Harris’ accomplishments during 2015 with respect to his weighted performance objectives, determining that Mr. Harris had performed at a level of 100% of his individual target. In particular, the compensation committee noted Mr. Harris’ role in: guiding the company through the convertible debt financing in January 2015 to support the

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company business; the company’s maintenance of effective Sarbanes-Oxley 404 controls and procedures and obtaining unqualified audit opinions of the company’s independent registered public accounting firm with no material weaknesses noted in connection with the 2015 fiscal year integrated audit; the company coming in under its publicly-disclosed cash burn guidance for the 2015 fiscal year; and the company’s ongoing communication outreach with the company’s stockholders and the investor community.

Dr. Bates . The compensation committee determined that Dr. Bates earned a bonus of $136,882, representing a payout of 96% of his target bonus. The payout was earned upon Dr. Bates’ achievement of his individual performance targets and the company’s achievement of corporate objectives, and was weighted equally on individual performance and corporate performance against the corporate objectives and the company’s achievements during the year that, in the determination of the compensation committee and board of directors had been met at a level of 92%. The compensation committee next assessed Dr. Bates’ accomplishments during 2015 with respect to his weighted performance objectives, determining that Dr. Bates had performed at a level of 100% of his individual target. In particular, the compensation committee noted Dr. Bates’ role in: obtaining FDA agreement on the company’s then-proposed XP23829 development program in psoriasis, and FDA and EMA agreement on the Phase 3 development program in MS; managing post market regulatory, pharmacovigilance and quality systems related to HORIZANT; submitting compliant aggregate safety reports; his success in advancing the company’s PMC and PMR commitments and requirements, support of the NIAAA and Indivior clinical trial activities, and the successful submission of the HORIZANT PK study plan to the FDA.

Dr. Kim . The compensation committee determined that Dr. Kim earned a bonus of $154,176, representing a payout of 96% of his target bonus. The payout was earned upon Dr. Kim’s achievement of his individual performance targets and the company’s achievement of corporate objectives, and was weighted equally on individual performance and corporate performance against the corporate objectives and the company’s achievements during the year that, in the determination of the compensation committee and board of directors had been met at a level of 92%. The compensation committee next assessed Dr. Kim’s accomplishments during 2015 with respect to his weighted performance objectives, determining that Dr. Kim had performed at a level of 100% of his individual target. In particular, the compensation committee noted Dr. Kim’s role in: obtaining FDA agreement on the company’s then-proposed XP23829 development program in psoriasis, and FDA and EMA agreement on the Phase 3 development program in MS; medical affairs, regulatory, compliance and operational expertise and advice in support of corporate clinical development goals; his support of the NIAAA and Indivior clinical trial activities, his successful execution of the company’s PMC/PMR commitments and requirements; the successful conduct of the HORIZANT PK study and his role in maintaining scientific collaboration with key experts, providing staffing at medical congresses, conducting clinical exchange programs, supporting investigator initiated proposals and implementing the HORIZANT publication plan.

Other Bonuses/Retention Awards. XenoPort has not historically paid automatic or guaranteed bonuses to its executive officers. However, the company has and may, from time to time, pay signing or promotion bonuses in connection with the initial hiring or appointment of an executive officer, or a change in a person’s position or responsibilities with the company as the compensation committee determines appropriate under the circumstances. No such bonuses were paid to the named executive officers in 2015. The company from time to time may also grant spot bonus awards, which are limited bonuses provided to specific employees as warranted to recognize outstanding effort, service or achievement in connection with a specific objective. The spot bonus award program is available to all employees generally across the company. No such bonuses were paid to the named executive officers in 2015.

Long-Term Incentive Compensation.

The company’s 2015 long-term compensation program for the named executive officers consisted of stock options and RSU awards. In addition to having service-based vesting conditions, the compensation committee structured a portion of the stock options to vest based on specific performance-based milestones. The compensation committee determined this mix of types of stock awards provided the appropriate long-term

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incentives to our executives and aligned their interests with those of our stockholders. The compensation committee also concluded that companies in our peer group were increasingly granting full value awards such as RSUs and, therefore, RSUs would be necessary as part of a competitive compensation package to attract and retain highly qualified executives. In addition, even though the majority of the company’s peers did not grant this type of award, the compensation committee awarded performance vesting awards because the compensation committee felt it was important to further link executive compensation with corporate performance.

The compensation committee viewed each of the three types of equity awards granted to our named executive officers in 2015 as having distinct and important functions. While both stock options and RSUs enable our executive officers to benefit, like stockholders, from any increases in the value of our stock, stock options deliver future value only if the value of our stock increases above the exercise price. In contrast, RSUs generally cover lesser shares and deliver fully paid shares of our stock upon vesting, so they retain some value and, therefore, serve both retention and incentive purposes, even if our stock price declines, stays flat or only increases marginally after the RSU is granted. For equity awards that vest based on achievement of performance goals, the economic value will only be realized if such performance goals are achieved, which continues to directly align the interests of our executive officers with the interests of our stockholders and our long-term success.

2015 Annual Grants

For purposes of determining the annual grants for 2015, the compensation committee considered a number of Radford recommendations regarding grant value and set the annual grants with the general objective of achieving an overall targeted amount for the stock awards around the 50 ^th percentile of the peer data, with the opportunity for up to the 75 ^th percentile of the peer data, including the performance-vesting awards. The recommendations were derived from modeling different stock option and RSU mixtures (using stock option values calculated by Black Scholes option-pricing and annual delivery as a percentage of the company’s outstanding shares, and RSU values calculated at full fair value, both at a one-month average share price value). The final appropriate mix of stock options, performance-based stock options and RSUs for our 2015 annual grants was then selected by application of a number of factors, including balancing the greater per-share value of RSUs as opposed to stock options, overall company performance and corporate tax implications.

The 2015 annual equity awards approved for our named executive officers in January 2015 were as follows:

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Retention and Promotion Grants for Mr. Angotti

The compensation committee and the board of directors approved additional equity awards to Mr. Angotti in August and September 2015 in connection with our retention and strategic transition initiatives. In August 2015, the compensation committee approved a stock option to purchase 118,540 shares and an RSU award covering 151,516 shares to Mr. Angotti, each of which vests over a four year period, subject to Mr. Angotti’s continued services. The compensation committee determined these awards were necessary to retain Mr. Angotti’s services in the senior leadership of our company, particularly noting the majority of his outstanding equity was underwater and was thus delivering limited retentive value, and sought to deliver equity awards to Mr. Angotti having a total grant date value of approximately $1.5 million. In determining the mix between stock options and RSUs, this was simply based on the compensation committee’s subjective view of the retention value of the new equity awards. In connection with Mr. Angotti’s appointment as chief executive officer in late September, the compensation committee and board of directors approved to Mr. Angotti a performance-based RSU award covering 108,695 shares and a time-based RSU award covering 326,086 shares. The performance-based RSU award vests only if, prior to September 29, 2019, the daily VWAP of our common stock is greater than or equal to twice the closing price of our common stock on the date of grant for 30 consecutive trading days. The time-based RSU award vests annually over a four-year period subject to Mr. Angotti’s continued services. In approving these promotion equity awards, which had total grant date value of approximately $1.4 million, the compensation committee and board of directors carefully considered the amount and mix of equity award types, mindful of the fact that these awards would cause Mr. Angotti’s total target direct compensation to exceed the 75 ^th percentile of the peer data. However, the compensation committee and the board of directors determined this level of opportunity and the mix of awards was a special circumstance where the grant of such awards was necessary to recruit and retain Mr. Angotti to lead the company’s new strategic focus, particularly given Mr. Angotti’s expressed concerns about the adequacy of his chief executive officer compensation package, and appropriate in that it served to further align Mr. Angotti’s interests with those of our stockholders, particularly due to the performance goal for the performance-based RSU award and long-term nature of the awards.

Severance and Change of Control Benefits.

XenoPort maintains severance rights agreements with all of its named executive officers, and maintains change of control agreements with its other officers, providing for certain severance and change of control benefits. In addition, the outstanding stock awards held by each of our named executive officers are subject to the termination and change of control terms of the applicable plans and forms of award agreements under which they were granted. The terms of the severance and change of control benefits, equity plans and forms of award agreements are described in more detail below in the sections entitled “Employment Agreements and Arrangements” and “Potential Payments Upon Termination or Change of Control.” XenoPort believes that these severance and change of control benefits are an important element of the company’s executive compensation and retention program, with particular importance in the context of a change of control. Change of control benefits are structured on a “double-trigger” basis, meaning that the executive officer must experience a constructive termination or a termination without cause in connection with the change of control in order for the change of control benefits to become due. XenoPort believes that the events triggering change of control benefits, comprising both a change of control and an involuntary termination, and then only when there is no misconduct by the officer, are appropriate hurdles for the ensuing rewards. It is the board of directors’ belief that providing change of control benefits should eliminate, or at least reduce, the reluctance of the company’s executive officers to diligently consider and pursue potential change of control transactions that may be in the best interests of the company’s stockholders.

The severance rights agreement for Dr. Barrett also provided for certain severance benefits in the event of an involuntary termination outside of the change of control context, including continued payment of salary and healthcare benefits for 18 months and a prorated bonus if it otherwise would have been earned, in exchange for his general release of claims. The severance rights agreements for the other executive officers also provide for certain severance benefits in the event of an involuntary termination outside of the change in control context,

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including continued payment of salary and healthcare benefits for 12 months and a prorated bonus if it otherwise would have been earned, in exchange for such officer’s full general release of claims. The board of directors and compensation committee believe that the severance benefits in the event of an involuntary termination outside of a change of control are an important element of retention and motivation of XenoPort’s executive officers and consistent with compensation arrangements provided in a competitive market for executive talent, and that the benefits to the company of entering into the severance rights agreements, including requiring a release of claims against XenoPort as a condition to receiving the severance benefits and removing any rights such executive officer had to an excise tax gross-up payment in the event of a change of control under prior agreements, were in the best interests of the company.

2015 Actions . In connection with Mr. Angotti’s promotion to chief executive officer, in late September 2015 we entered into a new severance rights agreement with Mr. Angotti that provides Mr. Angotti with the same level of severance benefits (both within and outside of the change of control context) as Dr. Barrett had as our chief executive officer.

In connection with Dr. Barrett’s retirement, on October 1, 2015, we entered into a transition and consulting agreement with Dr. Barrett, under which Dr. Barrett will provide strategic consulting services to us for a period of twelve months for a monthly consulting fee of $8,619, and the equity awards previously granted to Dr. Barrett will continue to vest in accordance with their existing terms for so long as Dr. Barrett continues to provide such consulting services, subject to certain exceptions. In addition, under the transition and consulting agreement, Dr. Barrett became entitled to receive the severance benefits under the terms of his severance rights agreement described above for an involuntary termination. Specifically, Dr. Barrett received continued payment of salary and healthcare benefits for 18 months and a 2015 prorated bonus based on actual company performance for 2015, in exchange for his general release of claims. In addition, if within six months after Dr. Barrett’s resignation we enter into a definitive agreement which would constitute a change of control if consummated, and such change of control subsequently results from such agreement, Dr. Barrett would be entitled to receive the change of control benefits stated his severance rights agreement. In approving such arrangements, the compensation committee and the board of directors determined that this was a fair separation package for Dr. Barrett, particularly given his many years of service and contributions to XenoPort, along with the compensation committee’s and the board of directors’ determination that it was critical to retain Dr. Barrett’s services following his resignation, particularly to advise us on partnering activities for XP23829 and XP21279.

In connection with Ms. Bosko’s resignation of employment in February 2015, we entered into a consulting agreement with Ms. Bosko, under which Ms. Bosko will provide consulting services to us in the field of general legal, corporate governance and business matters, at a rate of $500.00 per hour, through March 1, 2016. Under the consulting agreement, the equity awards previously granted to Ms. Bosko prior to her resignation will continue in accordance with their existing terms, however, the equity awards were modified to cease vesting as of February 28, 2015. Ms. Bosko did not receive any severance benefits upon her resignation, which was not an involuntary termination entitling her to benefits under her severance rights agreement. Due to her resignation, Ms. Bosko is no longer eligible for any severance benefits under her severance rights agreement.

Other Benefits . XenoPort believes that establishing competitive benefit packages for its employees is an important factor in attracting and retaining highly-qualified personnel. Executive officers are eligible to participate in all of XenoPort’s employee benefit plans, such as the 401(k) Plan (see the section entitled “ Executive Compensation – Employment Agreements and Arrangements – 401(k) Plan ”), medical, dental, vision, health and commuter subsidy, flexible time off, short-term disability, long-term disability, group life insurance, Section 125 flexible spending accounts and the employee stock purchase plan, in each case generally on the same basis as other employees. XenoPort does not currently offer pension or other retirement benefits.

XenoPort may provide executive officers with perquisites and benefits that XenoPort and the compensation committee believe are reasonable and consistent with, or less than, what XenoPort’s peer group offers its executive officers. The compensation committee periodically reviews the levels of perquisites and other benefits provided to executive officers to ensure they remain reasonable and consistent with its compensation philosophy.

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2016 Compensation Actions.

In early 2016, the compensation committee and board of directors approved base salary, target bonuses and equity awards for our continuing named executive officers that were generally consistent with past practice. However, the compensation committee made changes to the annual equity awards. The awards were structured to now include a mix of time-based RSUs and performance-based RSUs, subject to time and performance-based vesting, respectively. The performance-based stock awards were structured to vest upon the achievement of specified performance goals based on levels of HORIZANT sales over a two-year measurement period, with a portion of the award vesting after two years on achievement of the sales target milestone trigger and the remainder of the award vesting on the three year anniversary of the award. The performance-based awards would be forfeited in their entirety if we fail to meet at least 90% of the HORIZANT sales performance goal. In the event that we exceed the HORIZANT sales goal, the performance-based awards may vest up to a maximum of 120% of the target shares, depending on the extent to which we exceed the performance goal. The compensation committee determined this shift was important to focus our named executive officers on our core business strategy and further our pay-for-performance objective.

In early 2016, the compensation committee also approved a retention bonus opportunity for Mr. Harris to incentivize Mr. Harris to continue with the company. Under the retention bonus agreement, Mr. Harris is eligible to receive a cash bonus equal to 12 months of his annual base salary if he remains employed with us through August 31, 2016, paid in a lump sum shortly after such date, and a pro-rated annual bonus under the Corporate Bonus Plan for 2016, paid in a lump sum when our other employees are paid bonuses under such plan. If Mr. Harris does not remain employed through August 31, 2016, he will not be entitled to receive the retention bonuses described above, however, if he terminates for any reason on August 31, 2016, such termination will be considered a “qualifying termination” under Mr. Harris’ severance rights agreement and Mr. Harris will be eligible to receive the benefits thereunder described in more detail below in the sections entitled “ Change of Control and Severance Rights Agreements ” and “ Potential Payments Upon Termination or Change of Control .”

Compensation Recovery Policy

We do not have a policy to attempt to recover cash bonus payments paid to our executive officers if the performance objectives that led to the determination of such payments were to be restated or found not to have been met to the extent the compensation committee originally believed. However, as a public company subject to the provisions of Section 304 of the Sarbanes-Oxley Act of 2002, if we are required as a result of misconduct to restate our financial results due to our material noncompliance with any financial reporting requirements under the federal securities laws, our chief executive officer and chief financial officer may be legally required to reimburse us for any bonus or other incentive-based or equity-based compensation they receive. In addition, we plan to implement appropriate compensation recoupment programs in accordance with any clawback policy that we are required to adopt pursuant to the listing standards of any national securities exchange or association on which our securities are listed or as is otherwise required by the Dodd-Frank Wall Street Reform and Consumer Protection Act or other applicable law.

Accounting and Tax Considerations

XenoPort accounts for stock-based awards exchanged for employee services in accordance with the Compensation – Stock Compensation topic of the Financial Accounting Standards Board, or FASB, Accounting Standards Codification, or ASC. In accordance with the topic, XenoPort is required to estimate and record an expense for each award of equity compensation over the vesting period of the award. Accounting rules also require the company to record cash compensation as an expense over the period during which it is earned.

Section 162(m) of the Code limits companies, including XenoPort, to a deduction for federal income tax purposes of no more than $1.0 million of compensation paid to certain executive officers in a taxable year. Compensation above $1.0 million may be deducted if it is “performance-based compensation” within the

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meaning of the Code. From time to time the compensation that we pay out our named executive officers has been, and may in the future be, in excess of $1.0 million. In that event, the company will evaluate with its tax advisors whether such compensation may be deemed “performance-based compensation” within the meaning of the Code. The company and the compensation committee intend to continue to evaluate the effects of the compensation limits of Section 162(m) and to grant compensation awards in the future in a manner consistent with the best interests of the company and our stockholders.

Conclusion

2015 was a year of transition and change for XenoPort. We implemented a shift in our strategy to focus on and maximize the value of HORIZANT which resulted in a change in our executive leadership and a reduction in our workforce. It was critical to the compensation committee and board of directors that our compensation arrangements with our executive officers provided the appropriate support and incentives to retain, motivate and reward our executive officers through this time of transition. As a result, we made several key changes in our compensation arrangements during 2015. We view these decisions as unique, one-time events to meet the needs of our transition and path forward as a business. In this regard, it is the opinion of the compensation committee that the compensation policies and elements described above provide the necessary incentives to properly align our executive officers’ performance with the interests of our stockholders while maintaining equitable and competitive executive compensation practices that enable us to attract and retain the highest caliber of executive officers.

We continue to carefully evaluate our compensation arrangements as necessary to move our company forward and ensure that our pay program aligns executives’ compensation with stockholders’ interests and company performance over the long-term.

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S UMMARY OF C OMPENSATION

The following table shows for the fiscal years ended December 31, 2015, 2014 and 2013, compensation awarded or paid to, or earned by, “named executive officers.”

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G RANTS OF P LAN -B ASED A WARDS

The following table sets forth certain information regarding grants of plan-based awards to the named executive officers during the year ended December 31, 2015.