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TABLE OF CONTENTS
Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy
Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
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Filed by the Registrant
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Filed by a Party other than the Registrant
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Check the appropriate box:
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Preliminary Proxy Statement
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Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
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Definitive Proxy Statement
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Definitive Additional Materials
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Soliciting Material under §240.14a-12
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IRONWOOD PHARMACEUTICALS, INC.
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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Payment of Filing Fee (Check the appropriate box):
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No fee required.
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Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
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(1)
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Title of each class of securities to which transaction applies:
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(2)
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Aggregate number of securities to which transaction applies:
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(3)
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Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):
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(4)
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Proposed maximum aggregate value of transaction:
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(5)
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Total fee paid:
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Fee paid previously with preliminary materials.
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Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
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(1)
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Amount Previously Paid:
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(2)
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Form, Schedule or Registration Statement No.:
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(3)
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Filing Party:
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(4)
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Date Filed:
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301 Binney Street
Cambridge, Massachusetts 02142
PRELIMINARY PROXY STATEMENTSUBJECT TO COMPLETION
NOTICE OF 2018 ANNUAL MEETING OF STOCKHOLDERS OF
IRONWOOD PHARMACEUTICALS, INC.
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Date:
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[ ], [ ], 2018
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Time:
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[ ] [a.m./p.m.] Eastern Time
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Place:
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[ ]
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Purpose:
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We are holding the annual meeting for stockholders to consider the following proposals:
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1.
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To elect our Class II directors, Lawrence S. Olanoff, Douglas E. Williams and Amy W. Schulman, each for a three-year term;
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2.
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To hold an advisory vote on named executive officer compensation;
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3.
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To ratify our audit committee's selection of Ernst & Young LLP as our auditors for 2018; and
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4.
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To hold a vote on a proposal submitted by Sarissa Capital Offshore Master Fund LP, which we refer to, together with its affiliates, as Sarissa, to repeal any provisions of our bylaws not included in the bylaws
publicly filed as of March 27, 2018, if properly introduced at the annual meeting.
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We will also consider action on any other matter that may be properly brought before the meeting or any postponement(s) or adjournment(s) thereof.
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Our board of directors recommends you vote "for" each of the nominees for Class II director (proposal no. 1), "for" on an advisory vote on named executive officer
compensation (proposal no. 2), "for" ratification of our selection of auditors (proposal no. 3), and "against" the proposal submitted by Sarissa (proposal
no. 4).
Only stockholders of record at the close of business on [ ], 2018 are entitled to notice of and to vote at the
meeting.
Please note that Sarissa has provided notice to the company of its intention to nominate an individual, or the Sarissa nominee, for election as director at the
annual meeting in opposition to the nominees proposed by our board of directors. You may receive solicitation materials from Sarissa, including proxy statements and proxy cards. We are not responsible
for the accuracy of any information provided by or relating to Sarissa or its nominee contained in solicitation materials filed or disseminated by or on behalf of Sarissa or any other statements
Sarissa or its representatives may make.
Our board of directors unanimously recommends that you vote FOR the election of each of the nominees proposed by our board of directors. As previously disclosed,
the board's Governance and Nominating Committee has a thorough process for evaluating prospective directors and is carefully reviewing and considering the Sarissa nominee. Subject to the completion of
this evaluation and review, our board of directors urges you not to sign or return any proxy card sent to you by Sarissa and strongly recommends that you vote AGAINST the proposal submitted by
Sarissa. If you have previously submitted a proxy card sent to you by Sarissa, you can revoke that proxy and vote for our
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board's nominees and on the other matters to be voted on at the meeting by using the enclosed WHITE proxy card.
It
is extremely important that your shares be represented and voted at the annual meeting.
Whether or not you plan to attend the annual meeting, please vote as
soon as possible. You are urged to date, sign and return the WHITE proxy card in the envelope provided to you, or to use the telephone or internet method of voting described on your WHITE proxy card,
even if you plan to attend the annual meeting, so that your shares can be voted regardless of whether you attend the annual meeting. Voting now will not limit your right to change your vote or to
attend the annual meeting.
If you should be present at the meeting and desire to vote in person, you may withdraw your proxy at such time. If your shares are held in the name
of a broker, bank or other holder of record, follow the voting instructions you received from the holder of record in order to vote your shares.
If
you have any questions regarding this information or the proxy materials, please contact MacKenzie Partners, Inc., or MacKenzie Partners, our proxy solicitor assisting us in
connection with the annual meeting, toll-free at (800) 322-2885 or at (212) 929-5500 or via email to proxy@mackenziepartners.com.
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Proxy Material Mailing Date:
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Sincerely,
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[ ], 2018
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Senior Vice President, Chief Legal Officer, and Secretary
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TABLE OF CONTENTS
Table of Contents
301 Binney Street
Cambridge, Massachusetts 02142
PRELIMINARY PROXY STATEMENTSUBJECT TO COMPLETION
PROXY STATEMENT FOR 2018 ANNUAL MEETING OF STOCKHOLDERS
GENERAL INFORMATION
Our board of directors is soliciting proxies on the
WHITE
proxy card for the 2018 annual meeting
of stockholders. This proxy statement explains the agenda, voting information and procedures for the meeting. Please read it carefully. This proxy statement and accompanying
WHITE
proxy card are first
being mailed to the stockholders on or about [ ], 2018 . All stockholders will also
have the ability to access the proxy materials online through the Investors section of our website at
www.ironwoodpharma.com
, under the heading Featured
Reports.
In
this proxy statement, references to "the company" or "Ironwood" and, except within the Audit Committee Report and the Compensation Committee Report, references to "we", "us" or "our"
mean Ironwood Pharmaceuticals, Inc. LINZESS® is a trademark of Ironwood Pharmaceuticals, Inc. ZURAMPIC® and DUZALLO® are trademarks of AstraZeneca AB.
Any other trademarks referred to in this proxy statement are the property of their respective owners. All rights reserved.
The
contents of our website are not incorporated into this document and you should not consider information provided on our website to be part of this document.
Who can vote.
Only stockholders of record of either of our two series of common stock, our Class A common stock and our
Class B common
stock, at the close of business on [ ], 2018 can vote at the meeting.
Quorum.
In order to hold and complete the business of the annual meeting, we must have a majority of the votes entitled to be cast
represented in
person or by proxy at the meeting. On our record date, [ ], 2018, we had [ ] shares
of our common stock outstanding and
entitled to vote ([ ] shares of our Class A common stock and [ ] shares of our Class B common
stock).
With
respect to all matters that will come before the meeting, each share is entitled to one vote, and holders of shares of our Class A common stock and of our Class B
common stock will vote together as a single class.
Opposing Board nominee.
Sarissa Capital Offshore Master Fund LP and its affiliates, which we collectively refer to as Sarissa, are
company
stockholders that are reported to beneficially own approximately 2.2% of our common stock as of March 28, 2018. Sarissa has notified the company of its intention to nominate an individual for
election as director at the annual meeting in opposition to the nominees recommended by our board of directors. Our board of directors unanimously recommends that you vote
FOR
the election of each of
the nominees proposed by our board of directors. As previously disclosed, the board's Governance and Nominating Committee
has a thorough process for evaluating prospective directors and is carefully reviewing and considering the Sarissa nominee. Subject to the completion of this evaluation and review, our board of
directors urges you not to sign or return any proxy card sent to you by Sarissa. If you have previously submitted a proxy card sent to you by
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Sarissa,
you can revoke that proxy and vote for our board's nominees and on the other matters to be voted on at the meeting by using the enclosed
WHITE
proxy card.
Voting proceduresstockholders of record and beneficial owners.
You are a stockholder of record if your shares of our stock are
registered directly in your own name with our transfer agent, Computershare Trust Company, N.A., or Computershare. You are a beneficial owner if a brokerage firm, bank, trustee or other agent, called
a "nominee", holds your stock. This is often called ownership in "street name" because your name does not appear in the records of Computershare. If you hold your shares in street name, you should
receive a
WHITE
voting instruction form from your broker nominee.
It is important that your shares be represented and voted at the annual meeting.
Whether or not you plan to attend the
annual meeting, please vote as soon as possible. You are urged to date, sign and return the WHITE proxy card in the envelope provided to you, or to use the telephone or internet method of voting
described below and on your proxy card, even if you plan to attend the annual meeting, so that your shares can be voted regardless of whether you attend the annual meeting. Voting now will not limit
your right to change your vote or to attend the annual meeting.
If you should be present at the meeting and desire to vote in person, you may withdraw your proxy at such time.
If
you are a stockholder of record, there are four ways to vote:
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In Person.
You may vote in person
at the annual meeting. We will give you a ballot when you arrive.
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Via the Internet.
You may vote by
proxy via the internet by following the instructions provided on the
WHITE
proxy card. You must have the control number that is on the
WHITE
proxy card
when voting.
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By Telephone.
If you live in the
United States or Canada, you may vote by proxy by calling the toll-free number found on the
WHITE
proxy card. You must have the control number that is
on the
WHITE
proxy card when voting.
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By Mail.
You may vote by proxy by
filling out the
WHITE
proxy card and sending it back in the envelope provided.
If
you are a beneficial owner of shares held in street name, there are four ways to provide voting instructions:
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In Person.
If you wish to vote in
person at the annual meeting, you must obtain a legal proxy from the nominee that holds your shares. Please contact that nominee for instructions regarding obtaining a legal proxy.
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Via the Internet.
You may provide
voting instructions via the internet by following the instructions provided on your
WHITE
voting instruction form. You must have the control
number that is on the
WHITE
voting instruction form.
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By Telephone.
You may provide
voting instructions by calling the toll-free number found on your
WHITE
voting instruction form. You must have the control number that is on the
WHITE
voting instruction form.
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By Mail.
You may provide voting
instructions by filling out the
WHITE
voting instruction form and sending it back in the envelope provided.
How you may revoke your proxy or voting instructions.
If you are a stockholder of record, you may revoke or amend your proxy before it
is voted at
the annual meeting by writing to us directly in a
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timely
manner "revoking" your earlier proxy, submitting a new proxy in a timely manner with a later date by mail, over the telephone or on the internet, or by attending the meeting and voting in
person. Your last dated proxy timely received prior to or vote cast at the annual meeting will be counted. If you have previously signed a proxy card sent to you by Sarissa or otherwise voted
according to instructions provided by Sarissa, you may change your vote by submitting a new proxy. Submitting a proxy card sent to you by Sarissaeven if you "withhold" your vote on the
Sarissa nomineewill revoke votes you have previously made by the company's
WHITE
proxy card. Accordingly, if you wish to vote pursuant to
the recommendation of our board of directors, you should disregard and not return any proxy card that you may receive from Sarissa. If you hold your shares in street name, you must follow the
instructions on your
WHITE
voting instruction form to revoke or amend any prior voting instructions.
What if you receive more than one proxy card or voting instruction form?
If you received more than one
WHITE
proxy card or
WHITE
voting instruction form, this means that you may have more than one account at
Computershare and/or with a nominee. Your
WHITE
proxy card or
WHITE
voting instruction form lists the
number of shares you are voting. Please vote all
WHITE
proxy cards and
WHITE
voting instruction forms
that you receive.
We
recommend you consolidate your holdings under the same name, address and tax identification number, if possible. This will eliminate some duplication of mailings and reduce costs.
Please contact your nominee to consolidate accounts, or our transfer agent, Computershare, at (800) 662-7232, as applicable.
Additionally,
please note that Sarissa has stated its intention to nominate an individual for election as director at the annual meeting and present a proposal calling for the repeal of
any provision of our bylaws not included in the bylaws publicly filed with the Securities and Exchange Commission, the SEC, on or prior to March 27, 2018, or the Sarissa proposal. If Sarissa
proceeds with its director nomination and the Sarissa proposal, you may receive proxy solicitation materials from Sarissa, including an opposition proxy statement and a proxy card. Our board of
directors strongly recommends that you disregard and do not return any proxy card you receive from Sarissa. Voting to "withhold" with respect to the Sarissa nominee on the proxy card sent to you by
Sarissa is not the same as voting for our board of directors' nominees because such a vote would revoke any
WHITE
proxy card you previously submitted.
If
you have already voted using Sarissa's proxy card, you have every right to change your vote and revoke your prior proxy by signing and dating the enclosed
WHITE
proxy card and returning it in the
envelope provided or by voting via the Internet or by telephone by following the instructions provided on the
enclosed
WHITE
proxy card or
WHITE
voting instruction form. Only the latest dated proxy you timely
submit will be counted. If you have any questions or need assistance voting, please contact our proxy solicitor, MacKenzie Partners, toll-free at (800) 322-2885 or at (212) 929-5500 or
via email to proxy@mackenziepartners.com.
Abstentions and "broker non-votes".
If you are a stockholder of record and you vote "abstain" or "withhold" on any matter, your shares
will not be
voted on that matter and will not be counted as votes cast in the final tally of votes on that matter. However, your shares will be counted for purposes of determining whether a quorum is present. If
you are a beneficial owner holding through a broker nominee, you may instruct your nominee that you wish to abstain from voting on a proposal or withhold authority to vote for one or more nominees for
director.
A
broker nominee generally may not vote on "non-routine" matters without receiving your specific voting instructions. A "broker non-vote" occurs when a broker nominee holding shares in
street name votes shares on some matters at the meeting but not others. Like abstentions, broker non-votes are counted as present and entitled to vote for quorum purposes, but are not counted as votes
cast. At the annual meeting, your broker nominee will not be able to submit a vote on the election of directors, the
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advisory
votes on named executive officer compensation or the Sarissa proposal unless it receives your specific instructions. If your nominee does not receive your specific instructions for these
proposals, it will submit a broker non-vote if it has the discretion to vote, without instruction, on the selection of our independent auditors, as outlined below.
Although
votes on the ratification of the selection of our independent auditors are normally considered "routine" matters such that broker nominees may vote without instructions from
beneficial owners, to the extent that your broker nominee provides you with Sarissa's proxy materials, it will not be able to vote your shares without your specific instructions and there will be no
broker non-votes at the annual meeting. To the extent that your broker nominee does not provide you with Sarissa's proxy materials, your broker nominee will be able to vote on the ratification of the
selection of our independent auditors on the
WHITE
proxy card even if it does not receive your instructions.
Discretionary authority.
If you are a stockholder of record and you properly submit your
WHITE
proxy
card without making any specific selections, your shares will be voted on each matter before the annual meeting in the manner recommended by our board. If other matters not included in this proxy
statement properly come before the annual meeting, the persons named on the
WHITE
proxy card, or otherwise designated, will have the authority to vote
on those matters for you as they determine. If you are a beneficial owner of shares held in street name, please see the discussion above regarding broker non-votes and the rules related to voting by
nominees.
Vote required.
The required vote for each of the proposals expected to be acted upon at the annual meeting is described below.
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1.
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Proposal No. 1Election of Class II Directors
: the three nominees for director
with the highest number of affirmative votes will be elected as directors to serve for three-year terms and until their successors are duly elected and qualified or until their death, resignation or
removal. Because there is no minimum vote required, abstentions and broker non-votes, if any, will not affect the outcome of this proposal.
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2.
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Proposal No. 2Advisory (non-binding) Vote on Named Executive Officer Compensation, or
"Say-on-Pay"
: because this proposal calls for a non-binding, advisory vote there is no "required vote" that would constitute approval. However, our board,
including our compensation and HR committee, values the opinions of our stockholders and, to the extent there are a substantial number of votes cast against the named executive officer compensation
disclosed in this proxy statement, we will consider our stockholders' concerns and evaluate what actions may be appropriate to address those concerns. Broker nominees do not have discretion to vote on
this proposal without your instruction; if you do not instruct your nominee how to vote on this proposal, your nominee will deliver a non-vote. Any shares that are not voted, whether by abstention,
broker non-votes, if any, or otherwise, will not affect the outcome of this proposal.
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3.
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Proposal No. 3Ratification of Auditors
: the approval of this proposal requires a
majority of the votes cast for or against the proposal. To the extent that a broker nominee provides you with Sarissa's proxy materials, such nominee would not have discretion to vote on this
proposal; if you did not instruct your nominee how to vote on this proposal, your nominee would deliver a non-vote. To the extent that a broker nominee does not provide you with Sarissa's proxy
materials, such nominee may vote on your behalf on the
WHITE
proxy card if you do not otherwise provide instructions. Abstentions and broker non-votes,
if any, will not affect the outcome of this proposal.
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4.
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Proposal No. 4Stockholder Proposal
: the approval of this proposal requires 80% of the
votes entitled to be cast at the annual meeting. Abstentions and broker non-votes, if any, will have the same effect as a vote against this proposal.
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Results of the voting.
The final voting results will be tallied by the inspector of election and, if available, published in a Current
Report on
Form 8-K, which we are required to file with the SEC within four business days following the annual meeting. If final voting results are not available to us in time to file a
Form 8-K within four business days after the annual meeting, we intend to file a Form 8-K to report preliminary results, and to file an amendment to such Form 8-K to report
the final results within four business days after the final results are known to us.
Costs of solicitation and solicitation participants.
We will pay the costs of soliciting proxies on the
WHITE
proxy card. We will solicit proxies on the
WHITE
proxy card by email from stockholders who
are our employees or who previously requested to receive proxy materials electronically. Our directors, our officers and our employees also may solicit proxies on our behalf, personally,
electronically or by telephone, facsimile or mail or other means, without additional compensation. We may request that brokerage firms, banks and other agents forward proxy materials to beneficial
owners and would reimburse such institutions for their out-of-pocket expenses incurred.
We
may also utilize the assistance of third parties in connection with our proxy solicitation efforts, and we would compensate such third parties for their efforts. We have engaged one
such third party, MacKenzie Partners, to assist in the solicitation of proxies and provide related advice and informational support, for services fees of up to
$[ ] and the reimbursement of certain expenses. MacKenzie Partners estimates that approximately [ ] of its
employees will
assist in the company's proxy solicitation. Annex A sets forth information relating to our directors, including nominees for directors at the annual meeting, and certain of our officers and
employees who are considered "participants" in our solicitation under the rules of the SEC by reason of their position as directors of the company, as nominees for directors or because they may be
soliciting proxies on our behalf. Our expenses in connection with our solicitation of proxies, excluding salaries and wages of our officers and regular employees, are expected to aggregate to
approximately $[ ], of which approximately $[ ] has been spent to date.
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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information with respect to the beneficial ownership of our common stock at March 31, 2018
for:
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each person whom we know beneficially owns more than five percent of our common stock;
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each of our directors;
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each of our named executive officers; and
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all of our directors and executive officers as a group.
The
number of shares beneficially owned by each stockholder is determined under rules issued by the SEC. Under these rules, beneficial ownership includes any shares as to which the
individual or entity has sole or shared voting power or investment power. Each of the stockholders listed has sole voting and investment power with respect to the shares beneficially owned by the
stockholder unless noted otherwise, subject to community property laws where applicable.
The
percentage of common stock beneficially owned by each person is based on 151,604,044 shares of common stock outstanding on March 31, 2018 137,606,687 shares of
Class A common stock and 13,997,357 shares of Class B common stock). Each share of Class B common stock is convertible at any time into one share of Class A common stock.
Shares of common stock that may be acquired within 60 days following March 31, 2018 pursuant to the exercise of options or the vesting of restricted stock units, or RSUs, are included in
the holdings of each stockholder, as applicable, and are deemed to be outstanding for the purpose of computing the percentage ownership of such holder. Such amounts, however, are not included in the
holdings of any other stockholder in the table and are not deemed to be outstanding for computing the percentage ownership of any other holder shown in the table. Beneficial ownership representing
less than one percent is denoted with an "*."
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Unless
otherwise indicated, the address for each of the stockholders in the table below is c/o Ironwood Pharmaceuticals, Inc., 301 Binney Street, Cambridge, Massachusetts
02142.
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Shares Beneficially Owned
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Class A Common
Stock
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Class B Common
Stock
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% Total Voting
Power(1)
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Name of Beneficial Owner
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Shares
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%
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Shares
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%
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Officers and Directors
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Peter M. Hecht(2)
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2,591,665
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1.8
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4,826,917
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34.2
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4.8
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Gina Consylman(3)
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84,990
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*
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*
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*
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Mark G. Currie(4)
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980,362
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*
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970,000
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6.8
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1.3
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Halley E. Gilbert(5)
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474,098
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*
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70,000
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*
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*
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Thomas A. McCourt(6)
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675,659
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*
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250,000
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1.8
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*
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Tom Graney
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25,126
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*
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*
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*
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Andrew Dreyfus
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41,884
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*
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*
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*
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Marsha H. Fanucci
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75,633
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*
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44,863
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*
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*
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Terrance G. McGuire(7)
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91,540
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*
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40,000
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*
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*
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Julie H. McHugh
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77,908
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*
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*
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*
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Lawrence S. Olanoff
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29,330
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*
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*
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*
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Edward P. Owens
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183,305
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*
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*
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*
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Amy W. Schulman
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25,418
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*
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*
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*
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Douglas E. Williams
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75,633
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*
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*
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*
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All executive officers and directors as a group (14 persons)(8)
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5,407,425
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3.8
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6,201,780
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42.4
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7.4
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5% Security Holders
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Wellington Management Group LLP(9)
|
|
|
18,957,167
|
|
|
13.8
|
|
|
|
|
|
*
|
|
|
12.5
|
|
T. Rowe Price(10)
|
|
|
18,924,414
|
|
|
13.8
|
|
|
|
|
|
*
|
|
|
12.5
|
|
FMR LLC (Fidelity)(11)
|
|
|
17,652,960
|
|
|
12.8
|
|
|
|
|
|
*
|
|
|
11.6
|
|
BlackRock, Inc.(12)
|
|
|
11,702,048
|
|
|
8.5
|
|
|
|
|
|
*
|
|
|
7.7
|
|
The Vanguard Group(13)
|
|
|
11,274,790
|
|
|
8.2
|
|
|
|
|
|
*
|
|
|
7.4
|
|
Janus Henderson Group plc(14)
|
|
|
8,309,638
|
|
|
6.0
|
|
|
|
|
|
*
|
|
|
5.5
|
|
UBS Group AG(15)
|
|
|
7,632,969
|
|
|
5.5
|
|
|
|
|
|
*
|
|
|
5.0
|
|
-
(1)
-
Percentage
total voting power represents voting power with respect to all shares of our Class A common stock and Class B common stock, as a single
class, on matters in which holders of our Class B common stock are entitled to one vote per share. Each share of Class A common stock and each share of Class B common stock has
one vote per share, except (a) on the following matters (on which each share of Class A common stock has one vote per share and each share of Class B common stock has ten votes
per share), if submitted to a vote of stockholders: (i) adoption of a merger or consolidation agreement involving Ironwood; (ii) a sale of all or substantially all of Ironwood's assets;
or (iii) a dissolution or liquidation of Ironwood; and (b) on every matter if and when any individual, entity or "group" (as such term is used in Regulation 13D of the Securities
Exchange Act of 1934, as amended, or the Exchange Act) has, or has publicly disclosed (through a press release or a filing with the SEC) an intent to have, beneficial ownership of 30% or more of the
number of outstanding shares of Class A common stock and Class B common stock, combined. Holders of shares of Class A common stock and Class B common stock vote together as
a single class on all matters (including those set forth in this proxy statement) submitted to a vote of stockholders, unless otherwise required by our certificate of incorporation or bylaws. The
Class B common stock is convertible at any time by the holder into shares of Class A common stock on a share-for-share basis.
7
Table of Contents
-
(2)
-
Includes
2,591,665 shares of Class A common stock and 130,000 shares of Class B common stock issuable to Dr. Hecht upon the exercise of options
that are exercisable within 60 days following March 31, 2018.
-
(3)
-
Includes
73,957 shares of Class A common stock issuable to Ms. Consylman upon the exercise of options that are exercisable within 60 days
following March 31, 2018.
-
(4)
-
Includes
967,706 shares of Class A common stock and 195,000 shares of Class B common stock issuable to Dr. Currie upon the exercise of options
that are exercisable within 60 days following March 31, 2018.
-
(5)
-
Includes
433,331 shares of Class A common stock and 70,000 shares of Class B common stock issuable to Ms. Gilbert upon the exercise of options
that are exercisable within 60 days following March 31, 2018.
-
(6)
-
Includes
646,770 shares of Class A common stock and 250,000 shares of Class B common stock issuable to Mr. McCourt upon the exercise of options
that are exercisable within 60 days following March 31, 2018.
-
(7)
-
Includes
1,626 shares of Class A common stock held by Polaris Venture Management Co. II, L.L.C. and 29,117 shares of Class A common stock
and 40,000 shares of Class B common stock held by Bartlett Partners, LLC. Mr. McGuire is a managing member of Bartlett Partners, LLC and Polaris Venture
Management Co. II, L.L.C. and has shared voting and investment authority over these shares.
-
(8)
-
Includes
4,713,429 shares of Class A common stock and 645,000 shares of Class B common stock issuable upon the exercise of options that are exercisable
within 60 days following March 31, 2018. Mr. Graney was no longer an executive officer of Ironwood as of March 31, 2018, and therefore his beneficial ownership information
is not included in this amount.
-
(9)
-
Based
upon the information provided by Wellington Management Group LLP ("Wellington"), Wellington Group Holdings LLP ("Wellington Group"), Wellington
Investment Advisors Holdings LLP ("Wellington Investment") and Wellington Management Company LLP ("Wellington Management," collectively with Wellington, Wellington Group and Wellington
Investment, the "Wellington Entities") in a Schedule 13G/A filed on February 8, 2018, reporting as of December 31, 2017. According to this Schedule 13G/A,
(i) Wellington has sole voting and dispositive power with respect to none of these shares, shared voting power with respect to 11,740,665 of these shares, and shared dispositive power with
respect to all of these shares, (ii) Wellington Group has sole voting and dispositive power with respect to none of these shares, shared voting power with respect to 11,740,665 of these shares,
and shared dispositive power with respect to all of these shares, (iii) Wellington Investment has sole voting and dispositive power with respect to none of these shares, shared voting power
with respect to 11,740,665 of these shares, and shared dispositive power with respect to all of these shares, and (iv) Wellington Management has sole voting and dispositive power with respect
to none of these shares, shared voting power with respect to 11,304,317 of these shares, and shared dispositive power with respect to 17,776,619 of these shares. The address of the Wellington Entities
is c/o Wellington Management Company LLP, 280 Congress Street, Boston, MA 02210.
-
(10)
-
Based
upon the information provided by T. Rowe Price Associates, Inc. ("T. Rowe Price") in a Schedule 13G/A filed on February 14, 2018,
reporting as of December 31, 2017. According to this Schedule 13G/A, T. Rowe Price has sole voting power with respect to 3,057,280 of these shares, sole dispositive power with respect to
18,924,414 shares, and shared voting and dispositive power with respect to none of these shares. The address of T. Rowe Price is 100 E. Pratt Street, Baltimore, MD 21202.
8
Table of Contents
-
(11)
-
Based
upon the information provided by FMR LLC ("FMR") and Abigail P. Johnson in a Schedule 13G/A filed on February 13, 2018, reporting as of
December 31, 2017. According to this Schedule 13G/A, (i) FMR has sole voting power with respect to 3,410,382 of these shares, sole dispositive power with respect to all of these
shares, and shared voting and dispositive power with respect to none of these shares, and (ii) Ms. Johnson has neither sole nor shared voting power with respect to these shares and sole
dispositive power with respect to all of these shares and shared dispositive power with respect to none of these shares. The address of FMR and Ms. Johnson is 245 Summer Street, Boston, MA
02210.
-
(12)
-
Based
upon the information provided by BlackRock, Inc. ("BlackRock") in a Schedule 13G/A filed on January 25, 2018, reporting as of
December 31, 2017. According to this Schedule 13G/A, Blackrock has sole voting power with respect to 11,393,916 of these shares, sole dispositive power with respect to 11,702,048 of
these shares, and shared voting and dispositive power with respect to none of these shares. The address of BlackRock is 55 East 52
nd
Street, New York, NY 10055.
-
(13)
-
Based
upon the information provided by The Vanguard Group ("Vanguard") in a Schedule 13G/A filed on February 9, 2018, reporting as of
December 31, 2017. According to this Schedule 13G/A, Vanguard has sole voting power with respect to 262,988 of these shares, sole dispositive power with respect to 11,003,173 of these
shares, shared voting power with respect to 19,406 of these shares and shared dispositive power with respect to 271,617 of these shares. The address of Vanguard is 100 Vanguard Blvd., Malvern, PA
19355.
-
(14)
-
Based
upon the information provided by Janus Henderson Group plc ("Janus") in a Schedule 13G filed on February 13, 2018, reporting as of
December 31, 2017. According to this Schedule 13G, Janus has sole voting and sole dispositive power with respect to none of these shares, and shared voting and dispositive power with
respect to all of these shares. The address of Janus is 201 Bishopsgate EC2M 3AE, United Kingdom.
-
(15)
-
Based
upon the information provided by UBS Group AG ("UBS") in a Schedule 13G filed on February 13, 2018, reporting as of December 31, 2017.
According to this Schedule 13G, UBS has sole voting power with respect to 7,147,982 of these shares, shared dispositive power with respect to 7,632,959 of these shares, and shared voting power
and sole dispositive power with respect to none of these shares. The address of UBS is 100 Bahnhofstrasse 45, Zurich, Switzerland.
9
Table of Contents
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Since January 1, 2017, except as described below, there has not been, nor is there currently proposed, any transaction or series of
similar transactions to which we were or are a party in which the amount involved exceeded or exceeds $120,000 and in which any of our directors, executive officers, holders of more than 5% of any
class of our voting securities, or any member of the immediate family of any of the foregoing persons, had or will have a direct or indirect material interest, other than compensation arrangements
with directors and executive officers, which are described under the caption
Executive and Director Compensation
appearing elsewhere in this proxy
statement.
Indemnification Agreements
We have entered into indemnification agreements with each of our current directors and certain of our officers. These agreements require us to
indemnify these individuals to the fullest extent permitted under Delaware law against liabilities that may arise by reason of their service to us, and to advance expenses incurred as a result of any
proceeding against them as to which they could be indemnified. We intend to enter into indemnification agreements with our future directors and executive officers.
Procedures for Related Party Transactions
Under our code of business conduct and ethics, our employees, officers and directors are discouraged from entering into any transaction that may
create or give the appearance of a conflict of interest. In addition, they must report any potential conflict of interest, including related party transactions, to certain members of our management or
the chair of our audit committee. Pursuant to its charter, our audit committee must approve any related party transactions, including those transactions involving our directors. In approving or
rejecting a proposed transaction, the audit committee considers the relevant facts and circumstances available to and deemed relevant by the audit committee, including the material terms of the
transaction, risks, benefits, costs, availability of other comparable services or products and, if applicable, the impact on a director's independence. Our audit committee will approve only those
transactions that, in light of known circumstances, are in, or are not inconsistent with, our best interests, as our audit committee determines in the good faith exercise of its discretion. A copy of
our code of business conduct and ethics and our audit committee charter are available through the Investors section of our website at
www.ironwoodpharma.com
, under the heading Corporate Governance.
DIRECTORS AND CORPORATE GOVERNANCE
Board Composition and Structure
Our certificate of incorporation states that our board shall consist of between one and 15 members, and the precise number of directors shall be
fixed by a resolution of our board. Each director holds office until his or her successor is duly elected and qualified or until his or her death, resignation or removal. Our certificate of
incorporation provides that our directors may be removed only for cause by a majority of the stockholders entitled to vote on such removal. Any vacancy in the board, including a vacancy that results
from an increase in the number of directors, may be filled by a vote of the majority of the directors then in office. Any additional directorships resulting from an increase in the number of directors
will be apportioned by our board among the three classes.
Our
board of directors currently consists of nine members, eight of whom are non-employee members. In accordance with the terms of our certificate of incorporation, our board of
directors is divided into three classes, and the directors in each class serve for three-year terms. Upon the expiration of the term of a class of directors, directors in that class will be eligible
to be nominated and elected for a new three-year term at the annual meeting in the year in which their term expires. The current members of each class are set forth in the table below under
Directors
.
10
Table of Contents
We
separate the roles of chair of the board and chief executive officer and rotate the chairperson approximately every five years. Our board believes that this structure enhances the
board's oversight of, and independence from, management, and enables the board to carry out its responsibilities on behalf of our stockholders. This leadership structure also allows Dr. Hecht,
our chief executive officer, to focus his time and energy on operating and managing the company, while leveraging the experience and perspective of Mr. McGuire, the current chair of our board.
As set forth in our corporate governance guidelines, our board of directors currently anticipates that its chairperson shall rotate approximately every five years, unless the governance and nominating
committee recommends otherwise. We expect this rotation will take place in approximately 2020.
Directors
We believe that our board of directors should be comprised of individuals with sophistication and experience in many substantive areas that will
help us achieve our goals of creating and commercializing medicines that make a difference for patients, building value for our fellow stockholders, and empowering our passionate team.
The
core criteria that we use in evaluating each nominee to our board consists of the following: (a) an owner-oriented attitude and a commitment to represent the interests of our
stockholders, demonstrated, in part, through ownership of our capital stock; (b) strong personal and professional ethics, integrity and values; (c) strong business acumen and savvy;
(d) a deep, genuine passion for our business and the patients whom we serve; (e) demonstrated achievement in the nominee's field of expertise; (f) the absence of conflicts of
interest that would impair the nominee's ability to represent the interests of our stockholders; (g) the ability to dedicate the time necessary to regularly participate in meetings of the board
and committees of our board; and (h) the potential to contribute to the diversity of our board of directors, as a result of the nominee's professional background, expertise, gender, age or
ethnicity.
As
illustrated in the matrix below, we believe our current directors possess the professional and personal qualifications and necessary expertise both within and outside of the
healthcare industry to maintain an effective board of directors that can effectively represent stockholders.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Broader Business
|
|
Healthcare Industry
|
Ironwood Board
|
|
Capital
allocation /
Finance /
Accounting
|
|
Strategic
Transactions
|
|
Risk
Management
|
|
Human
Capital
|
|
Public
Company
Board
|
|
Senior
Leadership
(small biotech)
|
|
Senior
Leadership
(large pharma)
|
|
Customer /
market insights
(patient, payer,
physician)
|
Terrance McGuire
|
|
ü
|
|
ü
|
|
ü
|
|
|
|
ü
|
|
|
|
|
|
|
Andrew Dreyfus
|
|
ü
|
|
ü
|
|
ü
|
|
ü
|
|
|
|
|
|
|
|
ü
|
Marsha Fanucci
|
|
ü
|
|
ü
|
|
ü
|
|
ü
|
|
ü
|
|
|
|
ü
|
|
|
Peter Hecht, Ph.D.
|
|
ü
|
|
ü
|
|
ü
|
|
ü
|
|
|
|
ü
|
|
|
|
|
Julie McHugh
|
|
ü
|
|
ü
|
|
|
|
ü
|
|
ü
|
|
ü
|
|
ü
|
|
ü
|
Lawrence Olanoff, M.D., Ph.D.
|
|
|
|
ü
|
|
ü
|
|
ü
|
|
ü
|
|
ü
|
|
ü
|
|
ü
|
Edward Owens
|
|
ü
|
|
ü
|
|
ü
|
|
|
|
|
|
|
|
|
|
|
Amy W. Schulman
|
|
ü
|
|
ü
|
|
ü
|
|
ü
|
|
ü
|
|
ü
|
|
ü
|
|
ü
|
Douglas Williams, Ph.D.
|
|
|
|
ü
|
|
|
|
ü
|
|
ü
|
|
ü
|
|
ü
|
|
|
11
Table of Contents
We refresh our board of directors and assess our board succession plans regularly with the aim of balancing tenure and expertise. As of
[ ], 2018, the average age of our independent directors is 62 years, and the average tenure of our independent directors is six years. We have added six
new independent directors since 2013.
Our directors conduct annual evaluations to assess the performance and effectiveness of the board of directors and each committee in which they
are a member. In addition, each director completes a self evaluation as well as a peer evaluation of each other director. For 2017, each director completed a written questionnaire which solicited
open-ended and candid feedback on an anonymous basis. In addition to the director evaluations, we also solicit annual feedback from senior management concerning the board's performance on an anonymous
basis. The self and peer evaluations and comments were compiled, summarized and discussed between our chief executive officer, the chairman of our board of directors and the chairperson of the
governance and nominating committee. The chairperson of the governance and nominating committee then conducted individual feedback sessions with each director to discuss the results of the individual
evaluations. The collective board and committee evaluations and comments (including those from senior management) were compiled, summarized and presented to the board of directors.
Our governance and nominating committee identifies potential director candidates through referrals and recommendations, including by incumbent
directors, management and stockholders, as well as through business and other organizational networks. To date, our governance and nominating committee has not retained or paid any third party to
identify or evaluate, or assist in identifying or evaluating, potential director nominees, although it reserves the right to engage executive search firms and other third parties to assist in finding
suitable candidates. Stockholders who wish to recommend candidates may contact the governance and nominating committee in the manner described in
Stockholder Communications,
Proposals and Nominations for DirectorshipsCommunications
. Stockholder-recommended candidates whose recommendations comply with these procedures will be
12
Table of Contents
evaluated
by the governance and nominating committee in the same manner as candidates identified by the governance and nominating committee.
The following table sets forth certain information, as of [ ], 2018, with respect to each of our
directors:
|
|
|
|
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|
|
|
|
|
|
|
|
|
|
Name
|
|
Age
|
|
Class
|
|
Year
term
expires
|
|
Audit
committee
|
|
Governance
and Nominating
committee
|
|
Compensation
and HR
committee
|
Lawrence S. Olanoff, M.D., Ph.D.
|
|
|
66
|
|
II
|
|
|
2018
|
|
|
|
ü
|
|
|
Amy W. Schulman
|
|
|
57
|
|
II
|
|
|
2018
|
|
|
|
|
|
ü
|
Douglas E. Williams, Ph.D.
|
|
|
60
|
|
II
|
|
|
2018
|
|
|
|
|
|
ü
|
Marsha H. Fanucci
|
|
|
64
|
|
III
|
|
|
2019
|
|
C
|
|
|
|
|
Terrance G. McGuire, Chair
|
|
|
62
|
|
III
|
|
|
2019
|
|
|
|
ü
|
|
|
Edward P. Owens
|
|
|
71
|
|
III
|
|
|
2019
|
|
|
|
|
|
C
|
Andrew Dreyfus
|
|
|
59
|
|
I
|
|
|
2020
|
|
ü
|
|
|
|
|
Peter M. Hecht, Ph.D., Chief Executive Officer
|
|
|
54
|
|
I
|
|
|
2020
|
|
|
|
|
|
|
Julie H. McHugh
|
|
|
53
|
|
I
|
|
|
2020
|
|
ü
|
|
C
|
|
|
"C"
indicates chair of the committee.
Class II Directors (accepted nomination for election at the 2018 annual
meeting)
Lawrence S. Olanoff, M.D., Ph.D., 66, Independent
Director since 2015
Dr. Olanoff
most recently served as chief operating officer for Forest Laboratories, Inc. (acquired by Allergan plc) from October 2006 to December 2010.
Dr. Olanoff also served as a director of Forest from October 2006 to July 2014. From July 2005 to October 2006, Dr. Olanoff was president and chief executive officer at Celsion
Corporation. He also served as executive vice president and chief scientific officer of Forest from 1995 to 2005. Prior to joining Forest in 1995, Dr. Olanoff served as senior vice president of
clinical research and development at Sandoz Pharmaceutical Corporation (now a division of the Novartis Group) and at the Upjohn Company in a number of positions including corporate vice president of
clinical development and medical affairs.
In
addition, he is currently an adjunct assistant professor and special advisor to the president for corporate relations at the Medical University of South Carolina (MUSC), an ex-officio
director of the
MUSC Foundation for Research Development, chairman of the board of the Clinical Biotechnology Research Institute at Roper St. Francis Hospital, a board member of the Horizon Project and the
Zucker Institute for Applied Neurosciences, and a former board member of Axovant Sciences Ltd.
Dr. Olanoff
received his Ph.D. in biomedical engineering and M.D. degree from Case Western Reserve University. Dr. Olanoff's detailed knowledge of the pharmaceutical
industry, his broad operational experience and his research and development leadership over the course of his career make him an important asset to our board of directors.
Douglas E. Williams, Ph.D., 60, Independent
Director since 2014
Dr. Williams
has been the president and chief executive officer of Codiak Biosciences Inc. since August 2015; previously he served as executive vice president, research and
development at Biogen Inc. from January 2011 to July 2015. Before joining Biogen, Dr. Williams held several senior executive
13
Table of Contents
positions
at ZymoGenetics Inc., a biopharmaceutical company, including chief executive officer and a director from January 2009 to October 2010, president and chief scientific officer from July
2007 to January 2009 and executive vice president, research and development and chief scientific officer from 2004 to July 2007. Previously, he held leadership positions within the biotechnology
industry, including chief scientific officer and executive vice president of research and development at Seattle Genetics Inc., and senior vice president and Washington site leader at
Amgen Inc. Dr. Williams also served in a series of scientific and senior leadership positions over a decade at Immunex Corp., including as executive vice president and chief technology
officer and senior vice president of discovery research, as well as previously serving as a director of the company.
Prior
to that, Dr. Williams served on the faculty of the Indiana University School of Medicine and the Department of Laboratory Medicine at the Roswell Park Memorial Institute in
Buffalo, New York. Dr. Williams serves on the board of directors of Ovid Therapeutics, Inc., and previously served on the board of directors of Regulus Therapeutics Inc. and
Oncothyreon Inc.
Dr. Williams
received his B.S. in Biological Sciences from the University of Massachusetts Lowell and Ph.D. in Physiology from the State University of New York at Buffalo, Roswell
Park Memorial Institute
Division. Dr. Williams brings to our board of directors significant senior management and scientific experience at biotechnology companies, which we believe is important to our goal of
maximizing our current products and executing on our corporate strategy and associated pipeline.
Amy W. Schulman, 57, Independent
Director since 2017
In
July 2015, Ms. Schulman co-founded and joined Lyndra, Inc. as chief executive officer. In February 2017, she became chief executive officer of Olivo
Laboratories, LLC. Ms. Schulman is also a senior lecturer at Harvard Business School, where she was appointed to the faculty in July 2014, and has been a partner at Polaris Partners
since August 2014. Ms. Schulman served as chief executive officer of Arsia Therapeutics, Inc. from August 2014 to November 2016 when Arsia was acquired by Eagle
Pharmaceuticals, Inc. Ms. Schulman was previously the executive vice president and general counsel of Pfizer Inc. from May 2008 to July 2014, where she also served as the business
unit lead for Pfizer's consumer healthcare business from April 2012 to December 2013. Before joining Pfizer, she was a partner at the law firm DLA Piper, where she was a member of the board and
executive policy committees.
Ms. Schulman
also serves as a director of Arsanis, Inc., Alnylam Pharmaceuticals, Inc. and Blue Buffalo Pet Products, Inc., and previously served as a
director of BIND Therapeutics, Inc. Ms. Schulman graduated with honors with B.A. degrees in philosophy and English from Wesleyan University, where she was elected to Phi Beta Kappa, and
earned her J.D. from Yale Law School in 1989. Ms. Schulman brings to our board of directors extensive leadership experience in the biotechnology industry in areas of great importance to the
success of our business as we execute on our corporate objectives, including commercial strategy, corporate development and capability building.
Class III Directors (term expires at the 2019 annual meeting)
Marsha H. Fanucci, 64, Independent
Director since 2009
Ms. Fanucci
served as senior vice president and chief financial officer of Millennium Pharmaceuticals, Inc. from July 2004 through January 2009, where she was responsible
for corporate strategy, treasury, financial planning and reporting and operations. While at Millennium, she also served as vice president, finance and corporate strategy and vice president, corporate
development and strategy. Previously, she was vice president of corporate development and strategy at Genzyme Corporation, a biotechnology company, from 1998 to 2000. From 1987 to 1998,
Ms. Fanucci was employed at Arthur D. Little, Inc. where she most recently served as vice president and director.
14
Table of Contents
Ms. Fanucci presently serves on the board of directors of Alnylam Pharmaceuticals, Inc. and Syros Pharmaceuticals, Inc., and previously
served on the board of directors of Momenta Pharmaceuticals, Inc. She received her B.S. in pharmacy from West Virginia University and her M.B.A. from Northeastern University. Because of her
extensive financial experiences at Millennium Pharmaceuticals and Genzyme in addition to her current and former directorships at Syros Pharmaceuticals, Alnylam Pharmaceuticals and Momenta
Pharmaceuticals, we believe that Ms. Fanucci provides valuable industry insight and essential financial expertise as we execute our corporate objectives.
Terrance G. McGuire, 62, Independent
Director since 1998
Chair since 2015
Mr. McGuire
was a co-founder and is currently a general partner of Polaris Partners. Prior to starting Polaris Partners in 1996, Mr. McGuire spent seven years at Burr,
Egan, Deleage & Co., investing in early
stage medical and information technology companies. He serves on the board of directors of Arsanis, Inc. and Pulmatrix, Inc. and several private companies and has served on the boards of
Acceleron Pharma, Inc., Akamai Technologies, Inc., Aspect Medical Systems, Inc., Cubist Pharmaceuticals, Inc., deCODE genetics, Inc., Trevena, Inc. and
various private companies.
Mr. McGuire
is the former chairman of the National Venture Capital Association, which represents ninety percent of the venture capitalists in the U.S., chairman of the board of
the Thayer School of Engineering at Dartmouth College, and a member of the boards of The David H. Koch Institute for Integrative Cancer Research at the Massachusetts Institute of Technology and The
Arthur Rock Center for Entrepreneurship at Harvard Business School. Mr. McGuire earned a B.S. in physics and economics from Hobart College, an M.S. in engineering from The Thayer School at
Dartmouth College, and an M.B.A from Harvard Business School. Mr. McGuire brings to our board extensive experience as a venture capitalist focused on the biotechnology industry, as well as many
years of experience as a director of biotechnology companies guiding them in the execution of their corporate strategy and objectives.
Edward P. Owens, 71, Independent
Director since 2013
Mr. Owens
was previously partner, portfolio manager and global industry analyst with Wellington Management Company, LLP where he worked in investment management since 1974.
He was the portfolio manager of the Vanguard Health Care Fund for 28 years from its inception in May 1984 until his retirement from Wellington in December 2012.
Mr. Owens
has a B.S. in physics from the University of Virginia and an M.B.A. from Harvard Business School. He brings to our board extensive experience in evaluating and investing
in life sciences companies, providing valuable insight as we continue to strive towards our goal of maximizing long-term stockholder value.
Class I Directors (term expires at the 2020 annual meeting)
Andrew Dreyfus, 59, Independent
Director since 2016
Mr. Dreyfus
has served as president and chief executive officer for Blue Cross Blue Shield of Massachusetts, or BCBSMA, one of the largest independent, not-for-profit Blue Cross
Blue Shield plans in the country, since September 2010. From July 2005 to September 2010, Mr. Dreyfus served as the executive vice president of health care services of BCBSMA. Prior to joining
BCBSMA, he served as the first president of the Blue Cross Blue Shield of Massachusetts Foundation. Mr. Dreyfus also previously served as executive vice president of the Massachusetts Hospital
Association and held a
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number
of senior positions in Massachusetts state government, including undersecretary of consumer affairs and business regulation.
Mr. Dreyfus
is chair of the board of the National Institute for Health Care Management and serves on the board of directors of BCBSMA, Blue Cross Blue Shield Association, Jobs for
Massachusetts, and the advisory board of Ariadne Labs. Mr. Dreyfus received a B.A. in English from Connecticut College. Mr. Dreyfus brings to our board of directors significant expertise
in the healthcare payer and reimbursement market, and broad management and executive leadership experience, providing valuable insight as we continue to develop and commercialize medicines in an
evolving healthcare landscape.
Peter M. Hecht, 54, Chief Executive Officer
Director and chief executive officer since founding in 1998
Under
Dr. Hecht's leadership, Ironwood has grown from nine Ph.D. scientists to a commercial biotechnology company. Prior to founding Ironwood, Dr. Hecht was a research
fellow at Whitehead Institute for Biomedical Research. Dr. Hecht serves on the advisory board of Ariadne Labs. Dr. Hecht earned a B.S. in mathematics and an M.S. in biology from Stanford
University, and holds a Ph.D. in molecular biology from the University of California at Berkeley. Dr. Hecht's experiences as one of our founders and his tenure as our chief executive officer
make him a valuable member of our board of directors.
Julie H. McHugh, 53, Independent
Director since 2014
Ms. McHugh
most recently served as chief operating officer for Endo Health Solutions, Inc., from March 2010 through May 2013, where she was responsible for the specialty
pharmaceutical and generic drug businesses. Prior to joining Endo, Ms. McHugh was the chief executive officer of Nora Therapeutics, Inc., a venture capital backed biotech start-up
company focused on developing novel therapies for the treatment of infertility disorders. Before that she served as company group chairman for Johnson & Johnson's (J&J) worldwide virology
business unit, and previously she was president of Centocor, Inc., a J&J subsidiary. While at J&J, Ms. McHugh oversaw the development and launches of several products, including
Remicade® (infliximab), Prezista® (darunavir) and Intelence® (etravirine), and she was responsible for oversight of a research and development portfolio including
compounds for HIV, hepatitis C, and tuberculosis. Prior to joining Centocor, Ms. McHugh led the marketing communications for gastrointestinal drug Prilosec® (omeprazole) at
Astra-Merck Inc.
She
currently serves on the board of visitors for the Smeal College of Business of the Pennsylvania State University as well as on the board of directors of Aerie
Pharmaceuticals, Inc., Lantheus Holdings, Inc. and Trevena, Inc., all publicly held companies, and The New Xellia Group, a privately held company. She previously served on the
board of directors for ViroPharma Inc., Epirus Biopharmaceuticals, Inc., the Biotechnology Industry Organization (BIO), the Pennsylvania Biotechnology Association and the New England
Healthcare Institute (NEHI).
Ms. McHugh
received her masters of business administration degree from St. Joseph's University and her Bachelor of Science degree from Pennsylvania State University.
Ms. McHugh's experience as a chief executive officer and a chief operating officer at large multinational pharmaceutical companies make her a valuable member of our board of directors,
particularly as we evolve as a company and seek to maximize our current products and execute on our corporate strategy and associated pipeline.
Director Independence
Under NASDAQ Rule 5605, a majority of a listed company's board of directors must be comprised of independent directors. In addition,
NASDAQ rules require that, subject to specified exceptions, each member of a listed company's audit, compensation and governance and nominating committees be
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independent
and that audit and compensation committee members satisfy the additional independence criteria set forth in Rule 10A-3 and 10C-1, respectively, under the Exchange Act. Under NASDAQ
Rule 5605(a)(2), a director will only qualify as an "independent director" if, in the opinion of that company's board of directors, that person does not have a relationship that would interfere
with the exercise of independent judgment in carrying out the responsibilities of a director.
Our
governance and nominating committee determined that none of Messrs. Dreyfus, McGuire and Owens, Mses. Fanucci, McHugh and Schulman, and Drs. Olanoff and Williams, representing
all of our non-employee directors and eight of our nine current directors, has a relationship that would interfere with the exercise of independent judgment in carrying out the responsibilities of a
director and that each of these directors is "independent" as that term is defined under NASDAQ Rule 5605(a)(2). Our governance and nominating committee also determined that each of the current
members of our audit committee, our governance and nominating committee, and our compensation and HR committee satisfies the independence standards for such committee established by Rule 10A-3
and 10C-1 under the Exchange Act, the SEC rules and the NASDAQ rules, as applicable. In making such determinations, our governance and nominating committee considered the information requested from
and provided by each director concerning their background, employment and affiliations, including family relationships, the relationships that each such non-employee director has with Ironwood and all
other facts and circumstances the committee deemed relevant in determining their independence. As part of such determination, the committee considered: (a) Dr. Olanoff's service on our
Pharmaceutical Advisory Committee, or the PAC, and any payments for such services (however, his service on the PAC has since concluded and he currently serves as the board representative to the PAC,
and receives no compensation for such representation); (b) the volume of business between BCBSMA, the company in which Mr. Dreyfus serves as president and chief executive officer, and
Ironwood, which amounted to less than 1% of the annual revenues of each company; and (c) Ms. Schulman's position with a biotechnology company with which Ironwood had previously
collaborated on a research program and no further services are expected to be performed or payments to be made in connection with such collaboration.
Risk Oversight
Our board retains ultimate responsibility for risk oversight, and our management retains the responsibility for risk management. In carrying out
its risk oversight responsibilities, our board reviews the long- and short-term internal and external risks facing the company through its participation in long-range strategic planning, and the
annual review and evaluation of corporate risks that the audit committee reports. Our board also believes that separating the roles of chair of the board and chief executive officer enhances the
board's ability to oversee risk in an objective manner.
We
have implemented and continue to refine a formalized enterprise risk management process. On an ongoing basis, we identify key risks, assess their potential impact and likelihood, and,
where appropriate, implement operational measures and controls or purchase insurance coverage in order to help ensure adequate risk mitigation. On a quarterly basis, key risks, status of mitigation
activities, and potential new or emerging risks are reported to and discussed with senior management and further addressed with our board, as necessary. On at least an annual basis, a long-term
comprehensive enterprise risk management update is provided to our board. The long-term goal of our enterprise risk management process is to ingrain a culture of risk awareness and mitigation
throughout the organization that can be applied to our current business activities as well as our assessment and pursuit of future business opportunities.
As
set forth in its charter, our audit committee discusses with management and our independent registered public accounting firm any significant risks or exposures facing Ironwood,
evaluates the steps management has taken or proposes to take to mitigate such risks, and reviews our compliance with such mitigation plans. As part of fulfilling these responsibilities, the audit
committee meets regularly
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with
Ernst & Young LLP, our independent registered public accounting firm, and members of our management, including our chief executive officer, chief operating officer, chief financial
officer, chief accounting officer, and chief legal officer. In addition, our audit committee reviews the risk factors presented in our annual reports on Form 10-K and our quarterly reports on
Form 10-Q that we file with the SEC.
As
part of our board's risk oversight role, our compensation and HR committee reviews and evaluates the risks associated with our compensation programs and succession plans, as it is
responsible under its charter for approving the compensation of all of our executive officers and overseeing succession planning for members of our senior management. Likewise, our governance and
nominating committee is responsible for evaluating the performance, operations and composition of our board and the sufficiency of our corporate governance guidelines, either of which may impact our
risk profile from a governance perspective.
In
performing their risk oversight functions, each committee of our board has full access to management, as well as the ability to engage outside advisors.
Hedging Policy
As part of our insider trading prevention policy, our directors and executive officers are prohibited from engaging in any hedging or
monetization transactions of our common stock, including through the use of financial instruments such as prepaid variable forwards, equity swaps, collars and exchange funds.
Corporate Governance Guidelines
We have adopted corporate governance guidelines which are accessible through the Investors section of our website at
www.ironwoodpharma.com
, under the heading Corporate Governance, and which also are available in print to any stockholder who requests them from our
Secretary. Our board believes that sound governance practices and policies provide an important framework to assist it in fulfilling its duties to stockholders, and relies on these guidelines to
provide that framework. Among other things, the guidelines help to ensure that our board is independent from management, that our board adequately performs its oversight functions, and that the
interests of our board and management align with the interests of our stockholders.
Sunset of Dual Class Voting Structure
Since our initial public offering, or IPO, we have had a dual class equity voting structure (which provides holders of our Class B common
stock with significant influence over certain limited matters requiring stockholder approval, including a merger involving Ironwood, a sale of substantially all Ironwood assets and a dissolution or
liquidation of Ironwood). This structure was designed to ensure that long-term focused owners who have a history of experience with us would have the opportunity to carefully consider change of
control decisions. We expect that, in accordance with the terms of our certificate of incorporation, all outstanding shares of Class B common stock will automatically convert into one share of
Class A common stock on December 31, 2018.
Board Meetings
Our board of directors held five meetings during 2017. As stated in our corporate governance guidelines, we expect our board members to
rigorously prepare for, attend and participate in all board and applicable committee meetings. Each board member is expected to ensure that other existing and planned future commitments do not
materially interfere with his or her service as a director. We also expect that all of our board members up for election at, or who have a term that continues after, an annual meeting of stockholders
will attend such annual meeting. In 2017, each incumbent director
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attended
at least 75% of all meetings of the board and all committees of the board on which he or she served that were held during the period that such director was a member of the board or the
applicable committee. Eight of our nine directors at the time of our 2017 annual meeting of stockholders attended such meeting. Christopher Walsh did not attend our 2017 annual meeting of
stockholders, as his term on our board ended effective at such meeting.
Committees
Our board of directors has established an audit committee, a governance and nominating committee and a compensation and HR committee. Each
committee operates under a charter that has been approved by our board. Copies of each charter are accessible through the Investors section of our website at
www.ironwoodpharma.com
, under the heading
Corporate Governance, and are also available in print to any stockholder who requests them from our Secretary.
The chair of each of our committees is expected to rotate approximately every three to five years, unless the governance and nominating committee recommends otherwise.
Audit Committee.
We have a separately designated standing audit committee established by our board for the purpose of overseeing
our accounting and
financial reporting processes and audits of our financial statements. The members of our audit committee are Mses. Fanucci and McHugh and Mr. Dreyfus. Ms. Fanucci chairs the audit
committee. Our audit committee met five times during 2017. Our audit committee assists our board of directors in its oversight of significant risks facing Ironwood, the
integrity of our financial statements and our independent registered public accounting firm's qualifications, independence and performance.
Our
audit committee's responsibilities include:
-
-
reviewing and discussing with management and our independent registered public accounting firm our annual and quarterly financial statements,
earnings releases and related disclosures;
-
-
reviewing and discussing with management and our independent registered public accounting firm our internal controls and internal auditing
procedures, including any material weaknesses in either;
-
-
discussing our accounting policies and all material correcting adjustments with our management and our independent registered public accounting
firm;
-
-
discussing with our management and our independent registered public accounting firm any significant risks facing the company and the related
mitigation plans, as well as monitoring our internal control over financial reporting and disclosure controls and procedures;
-
-
appointing, overseeing, and approving the compensation for and, when necessary, terminating our independent registered public accounting firm;
-
-
approving all audit services and all permitted non-audit, tax and other services to be performed by our independent registered public
accounting firm, in each case, in accordance with the audit committee's pre-approval policy;
-
-
discussing with the independent registered public accounting firm its independence and ensuring that it receives the written disclosures
regarding these communications required by the Public Company Accounting Oversight Board;
-
-
reviewing and approving all transactions or series of similar transactions to which we were or are a party in which the amount involved
exceeded or exceeds $120,000 and in which any of our directors, executive officers, holders of more than 5% of any class of our voting securities, or any member of the immediate family of any of the
foregoing persons, had or will have a direct
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Ms. Fanucci
is an audit committee financial expert, as defined in Item 407(d)(5) of Regulation S-K.
In the course of our oversight of Ironwood's financial reporting process, we have (i) reviewed and discussed with management the
company's audited financial statements for the fiscal year ended December 31, 2017, (ii) discussed with Ernst & Young LLP, the company's independent registered public
accounting firm, the matters and communications required to be discussed pursuant to applicable auditing standards, and (iii) received the written disclosures and the letter from the company's
independent registered public accounting firm required by applicable requirements of the Public Company Accounting Oversight Board regarding the independent registered public accounting firm's
communications with us concerning independence, discussed with the independent registered public accounting firm its independence, and considered whether the provision of non-audit services by the
independent registered public accounting firm is compatible with maintaining its independence.
Based
on the foregoing review and discussions, we recommended to the board of directors of the company that the audited financial statements be included in the company's Annual Report on
Form 10-K for the year ended December 31, 2017 for filing with the SEC.
|
|
|
|
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By the Audit Committee,
|
|
|
Marsha H. Fanucci, Chair
Andrew Dreyfus
Julie H. McHugh
|
Governance and Nominating Committee.
The members of our governance and nominating committee are Ms. McHugh,
Dr. Olanoff and
Mr. McGuire. Ms. McHugh chairs the governance and nominating committee. Dr. Walsh previously chaired the governance and nominating committee until he transitioned off of our board
effective as of our 2017 annual meeting of stockholders, at which time Ms. McHugh rotated onto this committee as its chair. Our governance and nominating committee met two times during 2017.
Our
governance and nominating committee's responsibilities include:
-
-
identifying individuals qualified to become members of our board of directors;
-
-
recommending to our board of directors the persons to be nominated for election as directors;
-
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assisting our board of directors in recruiting such nominees;
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recommending to our board of directors qualified individuals to serve as committee members;
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performing an annual evaluation of our board of directors;
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-
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evaluating the need and, if necessary, creating a plan for the continuing education of our directors;
-
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assessing and reviewing our corporate governance guidelines and recommending any changes to our board of directors; and
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evaluating and approving any requests from our executives to serve on the board of directors of another for-profit company.
Compensation and HR Committee.
The members of our compensation and HR committee are Mr. Owens, Ms. Schulman and
Dr. Williams.
Mr. Owens chairs our compensation and HR committee. Our compensation and HR committee met three times during 2017. Our compensation and HR committee assists our board in fulfilling its
responsibilities relating to the compensation of our board and our executive officers.
Our
compensation and HR committee's responsibilities include:
-
-
reviewing and approving corporate goals and objectives relevant to executive officer compensation and evaluating the performance of executive
officers in light of those goals and objectives;
-
-
reviewing and approving executive officer compensation, including salary, bonus and incentive compensation, deferred compensation, perquisites,
equity compensation, benefits provided upon retirement, severance or other termination of employment, and any other forms of executive compensation;
-
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reviewing and approving our chief executive officer's compensation based on its evaluation of the chief executive officer's performance;
-
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reviewing and approving our peer companies for the purpose of evaluating our compensation competitiveness and mix of compensation elements;
-
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overseeing and administering our incentive compensation plans and equity-based plans and recommending the adoption of new incentive
compensation plans and equity-based plans to our board of directors;
-
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making recommendations to our board of directors with respect to director compensation;
-
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reviewing and discussing with management the compensation discussion and analysis required to be included in our filings with the SEC and
recommending whether the compensation discussion and analysis should be included in such filings;
-
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preparing the compensation and HR committee report required by the SEC; and
-
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making recommendations to our board of directors with respect to management succession planning, including planning with respect to our chief
executive officer.
None of the members of our compensation and HR committee is or has at any time during the past fiscal year been an officer or employee of
Ironwood. None of the members of our compensation and HR committee has formerly been an officer of Ironwood. None of our executive officers serve, or in the past fiscal year has served, as a member of
the board of directors or compensation committee of any other entity that has one or more executive officers serving as a member of our board of directors or compensation and HR committee. None of the
members of our compensation and HR committee had any relationship with us that requires disclosure under any paragraph of Item 404 of Regulation S-K under the Exchange Act.
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BACKGROUND OF THE SOLICITATION
On
February 14, 2018, Sarissa filed a Schedule 13F with the SEC disclosing beneficial ownership of 1,650,000 shares of the company's outstanding Class A common stock
by certain Sarissa funds, which was the first time Sarissa had filed a Schedule 13F disclosing its ownership of Ironwood stock.
On
February 20, 2018, Meredith Kaya, the company's vice president of investor relations and communications, sent an email to a representative of Sarissa to inform Sarissa that
Ironwood was aware of Sarissa's recent acquisition of Ironwood common stock and welcomed a dialogue with Sarissa, as Ironwood does with many new holders of its common stock. On February 22,
2018, a representative of Sarissa acknowledged Ms. Kaya's email and agreed that Sarissa and Ironwood should open a dialogue soon.
On
March 13, 2018, a representative from Sarissa called Ms. Kaya requesting that Dr. Hecht, the company's chief executive officer, meet with Dr. Alex Denner,
the chief investment officer of Sarissa, at or near Sarissa's offices in Greenwich, Connecticut. Dr. Hecht and Ms. Kaya accepted the invitation from Sarissa.
On
March 27, 2018, Dr. Hecht, Ms. Kaya and William Huyett, the company's chief operating officer, met with Dr. Denner and other representatives of Sarissa
near Sarissa's offices in Greenwich, Connecticut. At the meeting, Dr. Denner provided some background on himself, Sarissa, his general investment philosophy and his views on the healthcare
industry. Regarding Ironwood, Dr. Denner commented that Ironwood has a strong board of directors and said that he believed Dr. Hecht, the management team and the board have done a great
job building the company. Dr. Denner stated that he was of the belief that the company had opportunities to improve its stock performance. While he did not request the company take specific
courses of action, Dr. Denner suggested that he could help the company improve value creation and asked if Ironwood would be open to Sarissa having board representation as he believed they
could be more helpful working from inside of the company. Dr. Hecht responded that Ironwood has a strong board and a vigorous nominating and governance process for evaluating new director
nominees and that he would prefer to have any new director candidates be evaluated through that process. Dr. Hecht and Dr. Denner agreed that they should continue to have an open and
ongoing discussion about Ironwood and its strategy, as the management team does on a continual basis with its stockholders.
On
March 29, 2018, Dr. Denner called Dr. Hecht and Ms. Kaya and notified them that Sarissa was considering submitting an official notice of its intent to
nominate Dr. Denner to the board of directors at the annual meeting. Dr. Hecht reiterated the points he made in the March 27, 2018 meeting, including the rigor of Ironwood's
nominating and governance process, the regular refreshment of Ironwood's board and the experience and effectiveness of each Ironwood director. He added that the company has a strong slate of
independent directors nominated for election in 2018. Dr. Hecht also reiterated the company's willingness to maintain an open and ongoing dialogue with Sarissa, and offered Dr. Denner
the opportunity to share his perspective not only with management but directly to the full Ironwood board of directors. Dr. Denner agreed and stated his intent to come to Cambridge,
Massachusetts soon to meet with Ironwood.
On
March 29, 2018, following the call between Dr. Denner, Dr. Hecht and Ms. Kaya, Sarissa delivered a notice of its intent to nominate Dr. Denner to
stand for election to the board of directors of the company at the annual meeting and stated that Sarissa would solicit proxies in support of such election. In addition, Sarissa's notice indicated its
intent to make a stockholder proposal to repeal any provision of the company's bylaws not included in the bylaws publicly filed as of March 27, 2018.
On
March 29, 2018, after receiving Sarissa's notice of intent to nominate Dr. Denner to stand for election to the board of the company at the annual meeting,
Ms. Kaya reached out to a representative of Sarissa suggesting Dr. Hecht and Dr. Denner continue the dialogue. Sarissa representatives
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responded
on April 2, 2018 that Dr. Denner would not be available until April 13, 2018. Ms. Kaya scheduled a time for them to speak on April 13, 2018.
On
April 9, 2018, the company issued a press release announcing that it had received Sarissa's notice of intent to nominate Dr. Denner to stand for election to the board of
directors of the company at the annual meeting to allow the company to consider the views of its stockholders before making a recommendation in the company's definitive proxy statement. Also on
April 9, 2018, a letter was sent to Sarissa requesting additional information regarding Sarissa and Dr. Denner, consistent with the company's director nominee evaluation process.
On
April 10, 2018, members of the board of the company and members of management began speaking with Ironwood stockholders to hear feedback on Sarissa's proposal that
Dr. Denner join the company's board. Members of the board of the company and members of management also began seeking perspectives from individuals who have been with companies where
Dr. Denner served as a director.
On
April 10, 2018, Sarissa responded to the company's April 9 request with additional information about Dr. Denner and Sarissa, including a questionnaire completed
by Dr. Denner.
On
April 13, 2018, Dr. Hecht, Mr. Huyett and Ms. Kaya met with Dr. Denner in Boston to discuss the company's business and strategy, including its in-market products and drug
development programs. They also discussed Sarissa's proposed nomination of Dr. Denner to the board of the company.
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PROPOSAL NO. 1ELECTION OF DIRECTORS
Our board recommends that you vote for each of the
Class II directors up for election.
Our
board has nominated each of our current class II directorsMs. Schulman and Drs. Olanoff and Williamsfor election at the 2018 annual meeting.
Each of Ms. Schulman and Drs. Olanoff and Williams has indicated his or her willingness to serve if elected. Should any nominee become unavailable for election at the annual meeting, the
persons named on the enclosed
WHITE
proxy card as proxy holders may vote all proxies given in response to this solicitation for the election of a
substitute nominee chosen by our board.
Sarissa has notified the company of its intention to nominate an individual for election as director at the annual meeting. Our board of directors unanimously
recommends that you vote FOR the election of each of the nominees proposed by our board of directors. As previously disclosed, the board's Governance and Nominating Committee has a thorough process
for evaluating prospective directors and is carefully reviewing and considering the Sarissa nominee. Subject to the completion of this evaluation and review, our board of directors urges you not to
sign or return any proxy card sent to you by Sarissa. Voting to "withhold" with respect to the Sarissa nominee on its proxy card is not the same as voting for our board's nominees, because a vote to
"withhold" with respect to the Sarissa nominee on its proxy card will revoke any previous proxy submitted by you. If you have already voted using a proxy card sent to you by Sarissa, you have every
right to change it and we urge you to revoke that proxy by voting in favor of our board's nominees by using the enclosed WHITE proxy card. Only the latest validly executed proxy that you timely submit
will be counted.
Annex A
sets forth information relating to our directors, including nominees for directors at the annual meeting, and certain of our officers and employees who are considered
"participants" in our solicitation under the rules of the SEC by reason of their position as directors of the company, as nominees for directors or because they may be soliciting proxies on our
behalf.
If
you have any questions or require any assistance with voting your shares, please contact our proxy solicitor, MacKenzie Partners, toll-free at (800) 322-2885 or at
(212) 929-5500 or via email to proxy@mackenziepartners.com.
Vote Required
The three nominees for director with the highest number of affirmative votes will be elected as directors to serve for three years and until
their successors are duly elected and qualified or until their death, resignation or removal. Because there is no minimum vote required, abstentions and broker non-votes, if any, will not affect the
outcome of this proposal.
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EXECUTIVE AND DIRECTOR COMPENSATION
Compensation Discussion and Analysis
Executive Summary
We are a commercial biotechnology company, and
we and our named executive officers are committed to our
mission
of creating and commercializing medicines that make a difference for patients, building value for our fellow stockholders, and empowering our passionate team.
Our
executive officer compensation program is designed to
attract and motivate the owner-oriented employees we seek and align their interests with those of our
fellow stockholders and to create long-term stockholder value
. The three primary elements of our executive officer compensation program are base salary, cash bonus and long
term equity incentive compensation. Long term equity incentive compensation represents a significant percentage of each named executive officer's total direct compensation. By linking the ultimate
value of their compensation to our stockholders' returns, we believe this emphasis on equity strongly reinforces the concept of "pay for performance."
Our
current named executive officers have modeled this owner-oriented mindset through their own actions. In aggregate, during the five-year period from 2013 through 2017, they either
held or exercised and held more than 80% of their total vested stock options. Further, the majority of options exercised by our named executive officers during this period were exercised because the
options were expiring.
In
addition, the pay opportunity of our chief executive officer, Dr. Hecht, demonstrates the strong alignment of our compensation program with our stock's performance. Pay
opportunity includes base salary, target bonuses and grant-date fair value of stock options awarded in this time frame, while realizable pay includes actual salary received, bonuses paid and
in-the-money value of stock options granted during the period. Dr. Hecht has also consistently declined annual cash bonuses and increases in his base salary, including for 2017, and he
continues to earn the salary of $100,000 per year that he was first awarded 20 years ago in 1998.
Our
performance in 2017 included the following achievements:
-
-
Irritable Bowel Syndrome with Constipation, or IBS-C, and Chronic Idiopathic Constipation, or CIC
-
-
Grew LINZESS® (linaclotide) U.S. net sales, as reported by Ironwood's U.S. collaboration partner Allergan plc,
to $701.2 million for the full year 2017, an increase of 12% compared to the full year 2016.
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Received U.S. FDA approval for a 72 mcg dose of LINZESS for the treatment of CIC in adult patients in February 2017 and introduced
the LINZESS 72 mcg dose into the market in March 2017.
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Updated the linaclotide life cycle management strategy in the U.S., which includes (1) identification of a development path
with LINZESS intended to obtain abdominal symptom claims including bloating and discomfort, two highly bothersome symptoms associated with IBS-C, through a single Phase III trial, and
(2) advancement of linaclotide delayed release as a potential visceral, non-opioid, pain-relieving agent for patients suffering from all forms of IBS.
-
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Our partner Astellas Pharma Inc. launched LINZESS for adults with IBS-C in Japan, and submitted a Supplemental New Drug
Application with the Pharmaceuticals and Medical Devices Agency in Japan for approval for the additional indication of chronic constipation.
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Uncontrolled Gout
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Received U.S. FDA approval for DUZALLO® (lesinurad and allopurinol) for patients who have not achieved target serum
uric acid levels with a medically appropriate dose of allopurinol alone. We began commercializing DUZALLO in October 2017. DUZALLO is the first FDA-approved fixed-dose combination treatment that
addresses both causes of hyperuricemia in gout, over-production and under-excretion of serum uric acid, in a single pill.
-
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Uncontrolled Gastroesophageal Reflux Disease, or uGERD
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Reported positive top-line data from a Phase IIb clinical trial of IW-3718 in adult patients with uGERD, supporting
potential advancement into a Phase III program.
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Diabetic Nephropathy and Heart Failure with Preserved Ejection Fraction, or HFpEF
-
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Advanced our lead sGC stimulator, praliciguat (IW-1973), into Phase II trials for the potential treatment of diabetic
nephropathy and of HFpEF.
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Reported top-line data from two Phase IIa trials of praliciguat, demonstrating positive cardiovascular, metabolic and
endothelial effects in patients with type 2 diabetes and hypertension.
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Sickle Cell Disease and Achalasia
-
-
Advanced our second clinical sGC stimulator, IW-1701, into Phase II trials for the potential treatment in patients with
sickle cell disease and patients with achalasia.
-
-
Financial Highlights
-
-
Recorded Ironwood collaborative arrangements revenue of $298.3 million for the full year 2017, driven primarily by
$258.0 million in our share of the net profits from the sales of LINZESS in the U.S., $29.7 million in linaclotide active pharmaceutical ingredient to Astellas in Japan,
$3.1 million in ZURAMPIC and DUZALLO product revenue, and $7.5 million in linaclotide royalties, co-promotion and other revenue.
-
-
Demonstrated strong financial performance, meeting all financial guidance set out at the beginning of 2017.
In
determining compensation for our named executive officers, our compensation and HR committee emphasizes the achievement of our corporate goals designed to drive and maximize
stockholder value. We made strong progress in 2017. However, we did not achieve all of the aggressive corporate goals that we set in the beginning of the year and, as a result,
our company performance achievement multiplier
for 2017 was 84% as determined by the compensation and HR committee
. Accordingly, payments made to our
named executive officers under our annual cash bonus program in 2018 for performance in 2017 were below their target payments.
We
highly value the insights and feedback we obtain from our stockholders. Based on the 2017 recommendation of our stockholders, our board determined to provide our stockholders the
opportunity to cast an advisory (non-binding) vote on named executive officer compensation, or a "say-on-pay" vote, every year. We believe this will allow our stockholders to provide us with regular,
timely and direct input on executive compensation philosophy, policies and practices in order to further align our compensation programs with our stockholders' interests, and to enhance our ability to
take timely stockholder feedback into consideration as part of our compensation review process.
Therefore,
this year our stockholders have an opportunity to vote on say-on-pay. The last time we sought stockholder input with the say-on-pay vote was at our 2017 annual meeting of
stockholders, and
over 98% of votes cast by our stockholders voted in support of our named executive officer compensation
.
26
Table of Contents
In
addition to the formal say-on-pay vote, our senior management frequently meets with stockholders informally through regular investor relations channels to discuss topics important to
our business, including Ironwood's corporate strategy, capital allocation, governance and executive compensation. In 2017, senior management met with nearly all of Ironwood's top 25 stockholders,
representing more than 70% of our outstanding shares. We believe that these discussions are essential to understanding
the topics that are most important to our stockholders, and our learnings play a critical role in developing and executing our strategy.
Named Executive Officers
This section discusses the principles underlying our policies and decisions with respect to the compensation of our executive officers who are
named in the
Summary Compensation Table
, or our "named executive officers". Provided below are all material factors we believe are relevant to an
analysis of these policies and decisions. Our named executive officers are:
-
-
Peter M. Hecht, Ph.D., chief executive officer;
-
-
Gina Consylman, chief financial officer and senior vice president;
-
-
Mark G. Currie, Ph.D., senior vice president, chief scientific officer, and president of research and development;
-
-
Halley E. Gilbert, senior vice president, chief legal officer, and secretary;
-
-
Thomas A. McCourt, senior vice president, marketing and sales, and chief commercial officer; and
-
-
Tom Graney, former chief financial officer and senior vice president, finance and corporate strategy.
SEC
rules require that we discuss the compensation of all individuals serving in the role of chief financial officer during 2017. As a result, Ms. Consylman, who became chief financial officer
effective November 27, 2017, and Mr. Graney, who served as our chief financial officer until September 13, 2017, are discussed in such capacity. Ms. Consylman was
previously our interim chief financial officer from September 13, 2017 through November 26, 2017. The only compensation paid to Mr. Graney in connection with his departure was for
unused but accrued vacation time.
Compensation Philosophy
The objective of our compensation policies is to provide compensation and incentives that align employee actions and motivations with the
interests of our stockholders; attract, motivate and reward outstanding talent across Ironwood through well-communicated programs that are aligned with our core values and business mission; and
support a positive company culture.
Our
core values are:
-
-
Ownership:
drive outstanding long-term value.
-
-
Collaboration:
achieve more together.
-
-
Innovation:
make a difference for patients.
-
-
Excellence:
foster greatness in each other.
-
-
Humanity:
act with honesty, integrity and respect.
-
-
Have fun.
In
addition, we have incorporated the concept of "critical success factors" into our performance management and compensation philosophy that we believe provide a useful framework for
being a
27
Table of Contents
productive
and successful member of our team. Among other uses, these success factors enable managers to use a common language of expected behaviors upon which individual performance can be managed
and evaluated.
We
are guided by the following principles with respect to our compensation determinations:
-
-
design compensation and incentive programs that align employee actions and motivations with the interests of our stockholders, support our
business objectives and hold employees accountable for the achievement of key goals and milestones;
-
-
foster and support our performance-driven culture by setting clear, high-value, aggressive goals, rewarding outstanding performers to the
extent these goals are achieved, and making sure our best performers know clearly that we value their contributions;
-
-
as with all spending, serve as careful stewards of our stockholders' assets when making compensation decisions;
-
-
maximize our employees' sense of ownership so that they have a long-term owner's perspective, can see the impact of their efforts on our
success, and can share in the benefits of that success through the opportunity to become stockholders of Ironwood via stock options, restricted stock units (RSUs) and other equity awards;
-
-
recognize that compensation is one of a number of tools to stimulate and reward productivity, great drug making, and successful
commercialization, together with recognizing individual growth potential, providing a great workplace culture, and sharing in our success;
-
-
foster a strong team culture, focused on our principles of great drug making and commercializing those drugs that we discover or in-license and
develop, which is reinforced through our compensation and incentive programs;
-
-
design compensation and incentive programs that are fair, equitable and competitive; and
-
-
design compensation and incentive programs that are simple and understandable.
Highlighted
procedures and tools that we use to ensure effective governance of compensation plans and decisions include:
-
-
our compensation and HR committee has the authority to hire independent counsel and other advisors;
-
-
our compensation and HR committee conducts a regular review and assessment of risk as it relates to our compensation policies and practices;
-
-
as part of our insider trading prevention policy, our executive officers and directors are prohibited from engaging in any hedging or
monetization transactions of our common stock, including through the use of financial instruments such as prepaid variable forwards, equity swaps, collars and exchange funds;
-
-
we have no perquisites other than broad-based health and welfare benefits, transportation and fitness stipends, a 401(k) plan and a relocation
program that we make available to all of our employees; under our relocation program, participants are required to pay back the full amount of all relocation benefits in connection with their
departure from Ironwood in certain circumstances;
-
-
our Amended and Restated 2010 Employee, Director and Consultant Equity Incentive Plan, or our 2010 Plan, prohibits options' repricing (absent
stockholder approval) and options' backdating;
28
Table of Contents
-
-
our executive severance arrangements and our change of control severance benefit plan, which applies to all of our employees including our
executive officers, do not provide for tax gross-ups;
-
-
our change of control severance benefit plan contains double-trigger requirements for equity acceleration and other benefits in the event of a
change of control;
-
-
eight of our nine directors are independent, including all members of our compensation and HR committee, and, subject to certain limited
exceptions, no director may transfer any shares of restricted stock while such person is a director of Ironwood; and
-
-
if we are required to restate our financial results due to our material noncompliance with any financial reporting requirements under the
federal securities laws as a result of misconduct, 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 accordance with the provisions of section 304 of the Sarbanes-Oxley Act of 2002. Additionally, we intend to implement a Dodd-Frank Wall Street Reform
and Consumer Protection Act-compliant clawback policy after the SEC issues final rules regarding such requirements.
Basis for Our Compensation Policies and Decisions
Our compensation policies and individual compensation determinations are evaluated annually, and we take into consideration our results of
operations, our long- and short-term goals, individual goals, market data, the competitive market for our executive officers and general economic factors. As set forth in our compensation and HR
committee's written charter, our compensation and HR committee has the responsibility of reviewing and approving the compensation of our executive officers; annually reviewing and determining our
chief executive officer's compensation
based on the committee's evaluation of his performance; recommending to the full board the adoption of new compensation plans; administering our existing plans; recommending director and committee
compensation to the full board; and overseeing succession planning for our senior management. In addition, our compensation and HR committee is responsible for ensuring that our compensation policies
are aligned with our compensation philosophy and guiding principles.
Our
compensation and HR committee makes all of the compensation determinations with respect to each of our executive officers. In making its determinations with respect to
Dr. Hecht, our compensation and HR committee takes into account the feedback from the other members of our board, as well as the feedback from each of our other executive officers, and a number
of other members of our management team. In making its determinations with respect to each of our executive officers other than Dr. Hecht, our compensation and HR committee takes into account
the feedback and recommendations from Dr. Hecht, the executive officer's direct reports and other members of our management team.
The
components of each of our executive officer's initial compensation package was based on numerous factors, including:
-
-
the individual's particular background and circumstances, including prior relevant work experience and compensation paid prior to joining us;
-
-
the individual's role with us and the compensation paid to similar persons in the companies represented in the compensation data that we
reviewed;
-
-
the demand for people with the individual's specific expertise and experience at the time of hire;
-
-
performance goals and other expectations for the position;
29
Table of Contents
-
-
comparison to other executive officers within Ironwood having similar levels of expertise and experience; and
-
-
uniqueness of industry skills.
Our
compensation and HR committee has the authority to select and retain independent advisors and consultants to assist it with carrying out its responsibilities, and we are required to
pay any related expenses approved by the committee. For 2017, our compensation and HR committee exercised its authority to engage Pearl Meyer & Partners, LLC, or PM, as a compensation
consultant. PM reported directly to our compensation and HR committee and did not provide us with any services other than those requested by our compensation and HR committee and the review of this
Compensation Discussion and
Analysis
for conformance with best practices. Based on the scope of our compensation and HR committee's engagements with PM,
it was determined that PM does not have a conflict of interest in its role as compensation consultant under applicable rules.
In
order to assist us in setting 2017 compensation, PM conducted a competitive assessment of 2016 compensation for our executive officers, which reflected that Dr. Hecht's target
total cash compensation was well below market median, and while his equity-based compensation bridged some of the gap, his target total direct compensation was below the market median. The assessment
also reflected that target total direct compensation for our other executive officers was also below the market median in aggregate. PM's assessment
analyzed:
-
-
base salary;
-
-
target total cash compensation (which is base salary plus the target bonus);
-
-
long-term equity incentives (which are valued based on grant date fair value); and
-
-
target total direct compensation (which is target total cash compensation plus the value of the most recent long-term incentive grant).
The
table below reflects our 2016 target compensation in comparison to the competitive assessment data.
|
|
|
|
|
|
|
|
|
|
2016 Target Compensation vs.
Composite Competitive Market
Positioning (pay as percent of
median)
|
|
|
|
Chief Executive
Officer
|
|
Average for Other
Executive Officers
|
|
Base Salary
|
|
|
13
|
%
|
|
103
|
%
|
Target Total Cash Compensation
|
|
|
11
|
%
|
|
103
|
%
|
Equity
|
|
|
100
|
%
|
|
75
|
%
|
Target Total Direct Compensation
|
|
|
80
|
%
|
|
82
|
%
|
In
performing this competitive assessment, PM used two data sourcesour peer group and data from the Radford Global Life Sciences Survey employing the appropriate industry,
headcount and executive role perspectives. Our peer group is comprised of publicly traded companies in the pharmaceutical, biotechnology and life sciences industries that represent competitors for
executive talent and capital. In recognition that our peer group companies tend to be larger than us (including with respect to revenues), while the Radford Global Life Sciences Survey includes
companies that represent a broader market perspective and may not share our growth prospects, PM combined peer group data and broad industry data for companies our size weighing each source equally,
to enable a composite competitive assessment of executive compensation. Our compensation and HR committee reviewed the 25th, 50th and 75th percentiles for these market composite pay
positions to better understand how competitive pay varied with company size and other factors. PM also prepared an analysis of incentive program market trends, including analyses of the short- and
long-term elements of
30
Table of Contents
compensation
as compared to those in our peer group, and a detailed equity usage and dilution analysis of Ironwood as compared with the companies in our peer group.
Our
compensation and HR committee considered the results of PM's competitive assessment in evaluating compensation for 2017, and determined that no significant changes to the design of
our
executive officers' compensation were warranted. The results of PM's assessment have been, and will continue to be, taken into consideration when making compensation decisions, but will not be used to
mandate any specific actions.
Our
peer group, which was compiled by PM with input from our management team, our board, and our compensation and HR committee, is reviewed annually by our compensation and HR committee
for composition and appropriateness. We take a rules-based approach in reviewing and setting our peer group and apply a qualitative lens to the result to help focus the group on the companies with
which we are competing for talent. We first identify a potential pool of peer companies from a number of sources, including the companies listing Ironwood in their peer groups and the other companies
listed in such peer companies' peer groups, as well as companies included in third-party peer group assessments. We then apply certain size filters including revenue, number of employees and research
and development expense, as well as certain business model filters including product focus, market capitalization and growth.
As
a result of the 2017 peer group assessment, our compensation and HR committee, with input from our management team and PM, removed Medivation, Inc. because it was acquired and
was no longer a standalone public company, in addition to Arena Pharmaceuticals, Inc. and Merrimack Pharmaceuticals, Inc. because they were determined to be different in size or business
model from Ironwood. Our compensation and HR committee added Agios Pharmaceuticals, Inc., Intercept Pharmaceuticals, Inc. and Tesaro, Inc., each of which met all or most of the
business model and size filters at the time of our review. As a result, our peer group is composed of the following 15 companies, which at the time of our review had a median market capitalization of
approximately $3.3 billion, a median of approximately 545 employees, and a commercial drug or drug candidate in later stage development:
|
|
|
Acorda Therapeutics, Inc.
|
|
Incyte Corporation
|
Agios Pharmaceuticals, Inc.
|
|
Intercept Pharmaceuticals, Inc.
|
Alkermes plc
|
|
Momenta Pharmaceuticals, Inc.
|
Alnylam Pharmaceuticals, Inc.
|
|
Nektar Therapeutics
|
AMAG Pharmaceuticals, Inc.
|
|
Seattle Genetics, Inc.
|
Depomed, Inc.
|
|
Tesaro, Inc.
|
Horizon Pharma plc
|
|
United Therapeutics Corporation
|
|
|
Vertex Pharmaceuticals Incorporated
|
Process for Determining Individual Compensation and Role of Executive Officers
Each January, our compensation and HR committee, in conjunction with our senior management, finalizes its assessment of our corporate
performance for the prior year. Upon completion of our goal assessment, our bonus and equity pools are calibrated for corporate performance and approved by our compensation and HR committee. Our
compensation and HR committee assigns a portion of each of these pools to all of our employees other than our executive officers, and delegates the allocation of these portions to our chief executive
officer and our chief financial officer. Our compensation and HR committee also approves any salary increase, cash bonus and equity awards for our chief executive officer and, in consultation with our
chief executive officer, for each of our other executive officers. In making these compensation-related decisions for 2017, our compensation and HR committee and senior management considered the
competitive assessment prepared by PM and described in more detail above, as well as the other factors described in this
Compensation Discussion and
Analysis
.
31
Table of Contents
Additionally, our compensation and HR committee may decide, as appropriate, to modify the mix or amount of base salary, bonus, and long-term incentives to best
fit an executive officer's specific circumstances or, if required by competitive market conditions, to attract and motivate skilled personnel. For example, our compensation and HR committee may decide
to grant additional equity awards to an executive officer if that officer receives a base salary or cash bonus award significantly below that of his or her counterparts in our peer group or other
market data reviewed by our compensation and HR committee, despite successful attainment of our corporate or his or her individual goals. We believe that this discretion and flexibility allows our
compensation and HR committee to better achieve our compensation objectives.
Corporate and Individual Goals for 2017
For 2017, allocations of cash and equity awards were, in large part, dependent upon us meeting certain weighted corporate performance goals. We
work thoughtfully with our
compensation and HR committee and other members of our board of directors to establish what we believe are challenging corporate goals. In early 2017, our compensation and HR committee approved the
following corporate performance goals for 2017:
-
-
maximizing the impact of our products, including successfully driving appropriate growth of our IBS/CIC franchise and our gout franchise in the
United States according to certain financial and commercial performance metrics, obtaining approval of a new dose of LINZESS, and obtaining approval of and launching DUZALLO;
-
-
accessing value-creating assets;
-
-
advancing our mid- and late-stage pipeline programs by achieving clinical and other milestones;
-
-
meeting certain financial goals; and
-
-
leveraging our talent, team and culture by further embedding quality into our culture, evolving our dynamic culture as a source of competitive
advantage, improving capabilities, and enhancing value through communications.
In
addition to the foregoing corporate performance goals, our compensation and HR committee also approved certain challenging stretch goals directly related to our corporate goals, and
which were intended to inspire innovation, creativity and strong performance. Dr. Hecht's performance evaluation was based primarily on the achievement of our corporate goals. Our other
executive officers were evaluated on the achievement of corporate goals and additional individual goals which contribute toward, and relate directly to, the accomplishment of our corporate goals.
Our
performance against 2017 corporate goals was used to determine compensation awards and adjustments in early 2018. In January 2018, our compensation and HR committee determined that
we
32
Table of Contents
achieved
84% of our 2017 corporate goals. These goals and our actual level of achievement of these goals in 2017, are as follows:
|
|
|
|
|
|
|
|
Corporate Goal
|
|
Target
Percentage (%)
|
|
Actual Level of
Achievement (%)
|
|
Maximize the impact of our products: successfully drive appropriate growth of our IBS/CIC franchise and our gout franchise in the United
States according to certain financial and commercial performance metrics, obtain approval of a new dose of LINZESS, and obtain approval of and launch DUZALLO
|
|
|
35
|
%
|
|
26
|
%
|
Access value-creating assets
|
|
|
5
|
%
|
|
5
|
%
|
Advance our mid- and late-stage pipeline programs by achieving clinical and other milestones
|
|
|
30
|
%
|
|
28
|
%
|
Meet certain financial goals
|
|
|
15
|
%
|
|
11
|
%
|
Leverage our talent, team and culture
|
|
|
15
|
%
|
|
14
|
%
|
|
|
|
|
|
|
|
|
Totals
|
|
|
100
|
%
|
|
84
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
In
addition to the 2017 corporate goals identified above, for which each of our named executive officers was directly accountable, the following is a summary of the 2017 individual goals
for our named executive officers set in early 2017, other than Dr. Hecht, who is compensated primarily on the basis of the achievement of our corporate goals.
|
|
|
Name
|
|
Summary of Individual Goals
|
Gina Consylman
|
|
Serve as an enterprise
leader and strategic partner to the chief executive officer in all parts of our business
|
|
|
Lead and guide the company
on all financial decisions, including managing a strong balance sheet to enable the company to meet its objectives and be positioned to achieve its long-term goals
|
|
|
Drive value creation in the
evaluation and, when appropriate, pursuit of business development opportunities for the organization through effective cross-functional collaboration and strategic guidance
|
|
|
Represent Ironwood within
the investment community
|
|
|
Ensure company compliance
with financial regulations and standards, including those related to The Sarbanes-Oxley Act of 2002, as well as SEC reportingEvolve our culture of ownership, collaboration and innovation to drive incremental value for the company
|
|
|
Create integrated workforce,
talent and capability plans that position us to execute our goals and longer-term strategy
|
Mark G. Currie, Ph.D.
|
|
Serve as an enterprise
leader and strategic partner to the chief executive officer in all parts of our business
|
|
|
Serve as strategic leader
on all research and development decisions and manage investments and expenses to enable the company to meet its objectives and be positioned to achieve its long-term goals
|
|
|
Advance our products and
product candidates and further our discovery efforts through pipeline investments in the key value drivers of our business, including with respect to our mid to late stage pipeline
|
|
|
Enhance the clinical
profile of LINZESS and drive linaclotide development programs to advance in additional indications, populations and formulations
|
|
|
Leverage internal research
and development capability to support the advancement of our uncontrolled gout program
|
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Table of Contents
|
|
|
Name
|
|
Summary of Individual Goals
|
|
|
Drive value creation in the
evaluation and, when appropriate, pursuit of business development opportunities for the organization through effective cross functional collaboration and strategic guidance
|
|
|
Evolve our culture of
ownership, collaboration and innovation to drive incremental value for the company
|
|
|
Create integrated workforce,
talent and capability plans that position us to execute our goals and longer-term strategy
|
Halley E. Gilbert
|
|
Serve as an enterprise
leader and strategic partner to the chief executive officer in all parts of our business
|
|
|
Lead and guide the company
on all legal decisions and appropriately manage investments and expenses to enable the company to meet its objectives and be positioned to achieve its long-term goals
|
|
|
Provide the highest quality
advice on all legal, intellectual property and compliance matters, serving the company's priority business objectives while ensuring financial management and discipline and managing and mitigating risk
|
|
|
Ensure legal preparedness
for the in-license of ZURAMPIC and for the advancement of the gout franchise
|
|
|
Drive value creation in the
evaluation and, when appropriate, pursuit of business development opportunities for the organization through effective cross functional collaboration and strategic guidance
|
|
|
Evolve our culture of
ownership, collaboration and innovation to drive incremental value for the company
|
|
|
Create integrated workforce,
talent and capability plans that position us to execute our goals and longer-term strategy
|
Thomas A. McCourt
|
|
Serve as an enterprise
leader and strategic partner to the chief executive officer in all parts of our business
|
|
|
Serve as strategic leader
on all commercial decisions and appropriately manage investments and expenses to enable the company to meet its objectives and be positioned to achieve its long-term goals
|
|
|
Build brand awareness and
appropriate growth, while enhancing the global brand for linaclotide through close collaboration with partners and other members of senior management
|
|
|
Drive demand for LINZESS
and build Gout franchise through sales of ZURAMPIC and DUZALLO
|
|
|
Lead the commercial field
sales force in successfully commercializing our products, while maintaining a culture of compliant, patient centered care
|
|
|
Drive value creation in the
evaluation and, when appropriate, pursuit of business development opportunities for the organization through effective cross functional collaboration and strategic guidance
|
|
|
Evolve our culture of
ownership, collaboration and innovation to drive incremental value for the company
|
|
|
Create integrated workforce,
talent and capability plans that position us to execute our goals and longer-term strategy
|
Tom Graney
|
|
Serve as an enterprise
leader and strategic partner to the chief executive officer in all parts of our business
|
|
|
Lead and guide the company
on all financial decisions, including managing a strong balance sheet to enable the company to meet its objectives and be positioned to achieve its long term goals
|
|
|
Lead corporate strategy and
business development functions to drive Ironwood's growth and long term success
|
|
|
Drive value creation in the
evaluation and, when appropriate, pursuit of business development opportunities for the organization through effective cross functional collaboration and strategic guidance
|
|
|
Guide the company on
strategic portfolio investment decisions focused on delivering value
|
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Table of Contents
|
|
|
Name
|
|
Summary of Individual Goals
|
|
|
Drive long-range planning
based on the corporate strategy, portfolio opportunities and risks, financing needs, valuation models and organizational capabilities
|
|
|
Evolve our culture of
ownership, collaboration and innovation to drive incremental value for the company
|
|
|
Create integrated workforce,
talent and capability plans that position us to execute our goals and longer-term strategy
|
In
early 2018, Dr. Hecht evaluated each named executive officer's individual performance and provided feedback and made recommendations to our compensation and HR committee, which
approved the named executive officers' compensation, taking into account Ironwood's level of achievement of its corporate goals as well as the fact that each named executive officer met or exceeded
all or substantially all of his or her respective individual goals for 2017.
Compensation Actions in 2017 and 2018
The following table summarizes the compensation actions taken by our compensation and HR committee for each of our named executive officers in
recognition of the
company's and his or her performance in 2017 and to motivate him or her toward achievement of our goals in 2018.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Peter M. Hecht, Ph.D.
|
|
Gina Consylman
|
|
Mark G. Currie, Ph.D.
|
|
Halley E. Gilbert
|
|
Thomas A. McCourt
|
|
Tom Graney
|
|
Title
|
|
Chief Executive
Officer
|
|
Chief
Financial
Officer,
and Senior
Vice President
|
|
Senior
Vice President,
Chief Scientific
Officer,
and President of R&D
|
|
Senior
Vice President,
Chief Legal
Officer,
and Secretary
|
|
Senior
Vice President,
Marketing and
Sales, and Chief
Commercial Officer
|
|
Former Chief
Financial
Officer
and Senior
Vice President,
Finance and
Corporate
Strategy(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Base salary increase
|
|
|
|
(2)
|
$
|
|
(3)
|
$
|
15,000
|
|
$
|
20,000
|
|
$
|
15,000
|
|
|
|
|
2017 base salary
|
|
$
|
100,000
|
|
$
|
415,000
|
|
$
|
470,000
|
|
$
|
440,000
|
|
$
|
450,000
|
|
$
|
445,000
|
|
2018 base salary
|
|
$
|
100,000
|
|
$
|
415,000
|
|
$
|
485,000
|
|
$
|
460,000
|
|
$
|
465,000
|
|
|
|
|
Cash bonus(4)
|
|
|
|
(2)
|
$
|
185,000
|
|
$
|
210,000
|
|
$
|
195,000
|
|
$
|
191,000
|
|
|
|
|
Annual restricted stock units awarded(5)
|
|
|
|
|
|
30,000
|
(6)
|
|
|
|
|
35,000
|
|
|
21,875
|
|
|
|
|
Annual stock options awarded(7)
|
|
|
390,000
|
|
|
60,000
|
(6)
|
|
215,000
|
|
|
70,000
|
|
|
131,250
|
|
|
|
|
Stock options awarded in lieu of base salary increase and cash bonus(7)
|
|
|
190,000
|
(8)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
(1)
-
Mr. Graney
departed from Ironwood in September 2017.
-
(2)
-
Our
compensation and HR committee recommended a salary increase and a cash bonus for Dr. Hecht, but he declined to accept either.
-
(3)
-
Ms. Consylman's
base salary, reviewed and approved by the compensation and HR committee in November 2017 in connection with her promotion to chief financial
officer, remained $415,000 for 2018 due to the substantial completion of calendar year 2017 at the time of her promotion. Ms. Consylman's salary as Vice President of Finance and Chief
Accounting Officer prior to her promotion in 2017 was $325,700.
-
(4)
-
Consists
of payments made under our annual cash bonus program in 2018 for performance in 2017.
-
(5)
-
These
RSUs for shares of our Class A common stock were awarded on February 21, 2018 under our 2010 Plan and vest over four years as to 25% of the award
on each approximate anniversary of the grant thereof.
-
(6)
-
The
equity grant Ms. Consylman received in 2018 connection with her 2017 promotion is excluded from the table above, as it was not part of our annual
compensation process, and is discussed elsewhere in this proxy statement.
-
(7)
-
These
stock options for shares of our Class A common stock were granted under our 2010 Plan and have an exercise price of $14.55 per share (the closing price
of our Class A common stock on the NASDAQ Global Select Market on the grant date of February 21, 2018). Such stock options vest over four years as to 1/48th of the award on each
monthly anniversary of January 1, 2018.
-
(8)
-
Our
compensation and HR committee consulted with PM to understand competitive market trends for chief executive officer total direct compensation and elected to
grant Dr. Hecht an additional annual stock option award, which is discussed further below, in order to keep his overall compensation competitive with that of our peers while accounting for his
declination of a salary increase or a cash bonus.
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Table of Contents
Dr. Hecht's salary of $100,000 represents the salary that he has been receiving since he began serving as chief executive officer in
1998, and his compensation is reviewed and approved annually by our compensation and HR committee. In January 2018, our compensation and HR committee recommended an increase to Dr. Hecht's base
salary to be market competitive with his peers, as well as a bonus based on our achievement of 84% of our corporate goals, but Dr. Hecht declined to accept either. Since co-founding Ironwood in
1998, Dr. Hecht has declined both cash bonuses and increases to base salary each year. Dr. Hecht has further indicated to our compensation and HR committee that he would not expect or
desire his cash compensation to increase in the future.
We
recognize that Dr. Hecht's cash compensation is well below his market peers, but believe that the emphasis on stock ownership significantly aligns his interests with those of
our fellow stockholders' and the creation of long-term stockholder value. In lieu of cash bonuses or salary increases, our
compensation and HR committee has granted Dr. Hecht stock options to keep his overall compensation competitive with that of our peers. In January 2017, Dr. Hecht was granted an annual
stock option award of 530,000 shares based primarily on 123% achievement of our 2016 corporate goals, and an additional stock option award of 230,000 shares in lieu of a cash bonus or salary increase.
In February 2018, Dr. Hecht was granted an annual stock option award of 390,000 shares based primarily on the achievement of 84% of our 2017 corporate goals, as well as an additional stock
option award of 190,000 shares in lieu of a cash bonus or salary increase. We expect that Dr. Hecht's total compensation mix will continue to be focused more heavily on equity than our other
executive officers.
We
believe that time-based stock options are inherently performance-based, as they provide value to the recipient only if there is future stock price appreciation and do not provide any
value if the stock price declines below the exercise price. This results in a close alignment of chief executive officer compensation with the value of our long-term stockholders' investment in
Ironwood. Dr. Hecht has long been a substantial stockholder in the company, currently beneficially owning nearly 5% of our total outstanding stock as of March 31, 2018 (as calculated in
the beneficial ownership table beginning on page 6). In addition, in the five-year period from 2013 through 2017, Dr. Hecht either held or exercised and held approximately 90% of his
total vested stock options, demonstrating his commitment to Ironwood and his alignment with our stockholders. Further, nearly all stock options exercised by Dr. Hecht during this period were
exercised because they were expiring and the vast majority of stock options exercised and sold during this period were to cover the tax liabilities arising out of the exercises of such stock options
as well as prior exercises in which Dr. Hecht paid the exercise price and held the underlying shares at the time of exercise.
In the past five years, applying a Black-Scholes valuation methodology of the stock option grants issued to Dr. Hecht, because of our
stock price performance, Dr. Hecht's realizable pay has significantly trailed his disclosed pay opportunities as shown in the chart below. Dr. Hecht's realizable
36
Table of Contents
pay
is approximately 30% of the pay opportunity provided from 2013 through 2017, significantly driven by the value of the stock options granted to him during this period.
-
-
Pay opportunity
is defined as planned base salary, target bonuses and grant-date fair value of
stock options granted from 2013 through 2017.
-
-
Realizable pay
is defined as actual salary received, bonuses paid and in-the-money value of
stock options granted from 2013 through 2017 calculated by determining the difference between the December 29, 2017 closing price of our Class A common stock on the NASDAQ Global Select
Market and the exercise price of each stock option.
Three-year Realizable Pay vs. Three-year Total Shareholder Return
Further, Dr. Hecht's total realizable pay from 2015 through 2017 shows a strong connection to our total shareholder return, or TSR,
relative to our peer group, as shown in the graph below. Data points that are within the shaded area designate peer group companies that exhibit pay-for-performance alignment (meaning less than
25 percentage point difference between CEO realizable pay percentile and company TSR percentile).
37
Table of Contents
-
-
Realizable pay percentile rank
was determined using Dr. Hecht's realizable pay for 2015
through 2017 and comparing it to realizable pay for the CEOs of our peer group companies for 2014 through 2016, which is the most recent period for which data was available as of December 31,
2017, in each case as reported by the applicable company in its proxy statement.
-
-
TSR percentile rank
was determined using the actual TSR for Ironwood from 2015 through 2017 and
for each of the companies in our peer group for the period from 2014 through 2016, which is the most recent period for which data was available as of December 31, 2017.
This
analysis shows appropriate alignment of Dr. Hecht's compensation with our TSR for 2015 through 2017. We believe this is a complete depiction of pay and performance alignment
for the following reasons:
-
-
The analysis is based on the peer group set by the compensation and HR committee and described above;
-
-
It takes into account stock price movement after the grant date (as opposed to grant date fair value reported in the Summary Compensation
Table);
-
-
For performance-based equity, the number of shares or units actually vesting is used for time periods where the performance period has been
completed; and
-
-
It excludes Other Compensation reported in the Summary Compensation Table which includes items that are not part of total direct compensation.
For Ironwood, All Other Compensation is typically a small portion (
i.e.
, 2-3% for) of Summary Compensation Table pay for Dr. Hecht for the entire
year. However, at our peer group companies, items related to executive turnover such as severance payments, vacation payouts to former executives and relocation payments are reported as All Other
Compensation, which can be significant and can skew pay levels.
In January 2017, our compensation and HR committee reviewed and approved the following base salaries for 2017 for our named executive officers
other than Dr. Hecht: Dr. Currie received a $16,000 increase in base salary from $454,000 to $470,000, Ms. Gilbert received a $17,000 increase in base salary from $423,000 to
$440,000, Mr. McCourt received a $15,000 increase in base salary from $435,000 to $450,000, and Mr. Graney received a $10,000 increase in base salary from $435,000 to $445,000. The
increase in base salary for each of Dr. Currie, Ms. Gilbert, Mr. McCourt and Mr. Graney was in recognition of their meeting or exceeding all or substantially all of their
respective individual performance goals in 2016, and took into account peer group and other market data from the PM competitive assessment discussed above. Ms. Consylman became chief financial
officer of the company in November 2017, at which time, our compensation and HR committee reviewed and approved a base salary of $415,000 for Ms. Consylman, a $89,300 increase in base salary
from $325,700, her salary as Vice President of Finance and Chief Accounting Officer prior to her promotion. In setting Ms. Consylman's base salary, our compensation and HR committee considered
a number of factors, including Ms. Consylman's background, the compensation paid to chief financial officers at our peer group companies and other benchmark data, and executive compensation
parity within Ironwood, as well as input from PM.
In
January 2018, our compensation and HR committee reviewed and approved the following base salaries for 2018 for our named executive officers other than Dr. Hecht:
Dr. Currie received a $15,000 increase in base salary from $470,000 to $485,000, Ms. Gilbert received a $20,000 increase in base salary from $440,000 to $460,000; and Mr. McCourt
received a $15,000 increase from $450,000 to $465,000. Ms. Consylman's base salary, reviewed and approved by the compensation and HR committee
38
Table of Contents
in
November 2017, remained $415,000 for 2018 due to the substantial completion of calendar year 2017 at the time of her promotion.
In January 2018, our compensation and HR committee reviewed and approved the following bonuses for 2017 performance for our named executive
officers other than Dr. Hecht: Ms. Consylman$185,000, Dr. Currie$210,000, Ms. Gilbert$195,000 and
Mr. McCourt$191,000. Seventy percent of such bonus amounts for Ms. Consylman, Dr. Currie, Ms. Gilbert and Mr. McCourt was tied solely to the achievement
of 84% of our corporate goals (as described above), and 30% of such amounts was tied to corporate and individual goal achievement. Each of Ms. Consylman, Dr. Currie, Ms. Gilbert
and Mr. McCourt met or exceeded all or substantially all of their respective individual goals for 2017. Mr. Graney did not receive a bonus for 2017 performance because he departed from
Ironwood in September 2017.
Our compensation and HR committee has set the equity pool each year based on achievement of our corporate goals. Individual equity award amounts
are then determined based on peer group and market data, and our compensation and HR committee has adjusted these amounts after considering relative company performance and, in the case of our
executive officers other than Dr. Hecht, individual performance.
Our
compensation and HR committee determined that we achieved 123% of our 2016 corporate goals. Ms. Consylman, Dr. Currie, Ms. Gilbert, Mr. McCourt and
Mr. Graney met or exceeded all or substantially all of their respective individual goals in 2016. Accordingly, in January 2017, each of our named executive officers other than Dr. Hecht
was awarded the following stock option and RSU awards for Class A common stock based on performance during 2016:
|
|
|
|
|
|
|
|
Executive Officer*
|
|
2017 Annual Stock Option
Grant for 2016
Performance
(# of Shares of Class A
Common Stock
Subject to Stock
Options)
|
|
2017 Annual RSU
Grant for 2016
Performance
(# of Shares of Class A
Common Stock
Subject to RSUs)
|
|
Gina Consylman
|
|
|
|
|
|
26,250
|
*
|
Mark G. Currie, Ph.D.
|
|
|
250,000
|
|
|
|
|
Halley E. Gilbert
|
|
|
80,000
|
|
|
40,000
|
|
Thomas A. McCourt
|
|
|
157,500
|
|
|
26,250
|
|
Tom Graney
|
|
|
127,500
|
|
|
21,250
|
|
-
*
-
Ms. Consylman
became chief financial officer of the company in November 2017, and her annual equity award in 2017 for 2016 performance reflected her prior role
as Vice President of Finance and Chief Accounting Officer.
These
stock options and RSUs were granted on February 27, 2017 under our 2010 Plan. The stock options have an exercise price of $16.77 per share (the closing price of our
Class A common stock on the NASDAQ Global Select Market on the grant date).
Our
compensation and HR committee determined that we achieved 84% of our 2017 corporate goals. Ms. Consylman, Dr. Currie, Ms. Gilbert and Mr. McCourt met or
exceeded all or substantially all of their respective individual goals in 2017. Accordingly, in February 2018, each of our named
39
Table of Contents
executive
officers other than Dr. Hecht was awarded the following stock option and RSU awards for Class A common stock based on performance during 2017:
|
|
|
|
|
|
|
|
Executive Officer*
|
|
2018 Annual Stock Option
Grant for 2017
Performance
(# of Shares of Class A
Common Stock
Subject to Stock
Options)
|
|
2018 Annual RSU
Grant for 2017
Performance
(# of Shares of Class A
Common Stock
Subject to RSUs)
|
|
Gina Consylman
|
|
|
60,000
|
|
|
30,000
|
|
Mark G. Currie, Ph.D.
|
|
|
215,000
|
|
|
|
|
Halley E. Gilbert
|
|
|
70,000
|
|
|
35,000
|
|
Thomas A. McCourt
|
|
|
131,250
|
|
|
21,875
|
|
-
*
-
Mr. Graney
did not receive an annual equity award in 2018 because he departed from Ironwood in September 2017.
These
stock options and RSUs were granted on February 21, 2018 under our 2010 Plan. The stock options have an exercise price of $14.55 per share (the closing price of our
Class A common stock on the NASDAQ Global Select Market on the grant date).
In
addition, in connection with Ms. Consylman's promotion to chief financial officer in November 2017, Ms. Consylman received an additional grant of 15,000 stock options
and 7,500 RSUs, each for shares of our Class A common stock under our 2010 Plan, on January 2, 2018. Subject to Ms. Consylman's continued employment with the company,
(i) such stock options will vest over four years as to 1/48th of the total shares on each monthly anniversary of Ms. Consylman's promotion, and (ii) such RSUs will vest as
to 25% of the shares on each approximate anniversary of the grant.
We maintain broad-based benefits, such as health and welfare benefits, transportation and fitness stipends and a 401(k) plan with a 75% matching
company contribution on the first $8,000 of an employee's annual contribution, that are provided to all employees. We also maintain a relocation program under which we make certain benefits available
to newly hired and existing employees, including executive officers, who are relocating to accept a new position with Ironwood. Under our relocation program, participants are required to pay back the
full amount of all relocation benefits in connection with their departure from Ironwood in certain circumstances.
Elements of Executive Compensation and Determination of Amounts
Base salaries serve to provide our executive officers with a stable source of income. They are determined at commencement of employment and are
generally re-evaluated annually and adjusted, if warranted, to realign salaries with market levels and to reflect the performance of the executive officer. In determining whether to adjust an
executive officer's base salary, our compensation and HR committee takes into consideration factors such as our performance in prior years, general economic factors and compensation parity among our
executive officers, as well as the abilities, performance and experience of our executive officers. Our compensation and HR committee also reviews our executive officers' past compensation at Ironwood
and market data.
Our cash bonus program is designed to reward the achievement of our annual corporate goals and, in the case of our executive officers other than
Dr. Hecht, individual goals. The program is also
40
Table of Contents
intended
to foster and support our performance-driven culture by setting clear, high-value goals, rewarding outstanding performers, and making sure our employees know clearly that we value their
contributions. Each cash bonus award is made annually, and is based on whether and to what extent we achieved our corporate goals for the preceding year as well as the employee's individual
performance in that year against his or her individual goals. In 2017, and consistent with 2016, each of our executive officers had an individual bonus target of 50% of his or her base salary. We
believe that these target bonus percentages align the compensation of our executive officers with that of our peers, place appropriate emphasis on achievement of our annual performance objectives and
facilitate both recruiting and motivating our executive officers.
Additionally,
for each of our executive officers other than Dr. Hecht, 70% of each cash bonus award paid in 2018 for 2017 performance was based solely on the achievement of our
corporate goals and 30% was based on the achievement of our corporate goals and our executive officers' individual goals. Therefore, to calculate the bonus amount payable, the bonus target was
multiplied by the company performance achievement multiplier, and 30% of that figure was further modified by multiplying such amount by the executive officers' individual performance achievement
multiplier. This approach was intended to closely align cash bonus awards to the achievement of our corporate goals, while taking into account individual performance and providing structure and
clarity to the calculation of our executive bonuses. As in 2016, in 2017 the company performance achievement multiplier was between 0% and 150% and the individual performance achievement multiplier
was between 0% and 200%. The following summarizes the calculation of our executive officers' cash bonus awards paid in 2018 for 2017 performance, other than Dr. Hecht:
|
|
|
|
|
|
|
|
|
|
|
|
|
50% Bonus Target
|
|
|
|
|
|
|
|
|
×
|
|
|
|
|
50% Bonus Target
×
|
|
|
|
Company Performance
Achievement Multiplier
|
|
|
|
|
Company Performance
|
|
+
|
|
×
|
|
=
|
|
Actual Bonus Payout
|
Achievement Multiplier
×
|
|
|
|
Individual Performance
Achievement Multiplier
|
|
|
|
|
70% Weighting
|
|
|
|
×
|
|
|
|
|
|
|
|
|
30% Weighting
|
|
|
|
|
We use equity awards as our incentive vehicle for long-term compensation to attract, reward and motivate our executive officers in a manner that
best aligns their interests with our stockholders' interests. We believe that equity awards are an effective tool for meeting our compensation goal of increasing long-term stockholder value by tying
the value of this compensation to our future performance. By linking the ultimate value of the award to the performance of our stock price, we believe equity awards strongly reinforce the concept of
"pay for performance." Our equity awards, in the form of stock options and RSUs, generally have either long-term vesting schedules, typically over four years, or vest upon the achievement of major
value-creating milestones. If an employee leaves the company before the completion of the vesting period or the achievement of the milestone, as applicable, then that employee generally does not
receive any benefit from the non-vested
portion of his or her award. Because employees are able to profit from stock options only if our stock price increases relative to the stock option's exercise price, we believe that stock options
provide strong incentives to employees to increase the value of our stock over time. While stock options continue to represent a significant percentage of our equity awards, our compensation and HR
committee believes that offering a portfolio of equity instruments that includes both stock options and RSUs is important to attract top talent to our commercial-stage biotechnology company, to foster
our performance-driven culture aimed at setting and achieving high-value, aggressive goals and to best align our employees' actions and motivations with the interests of our stockholders.
41
Table of Contents
We
do not currently have any security ownership requirements for our executive officers. In addition, we have never had a program or policy in place to coordinate equity grants with the
release of material non-public information. However, as part of our insider trading prevention policy, our executive officers are prohibited from engaging in any hedging or monetization transactions
of our common stock, including through the use of financial instruments such as prepaid variable forwards, equity swaps, collars and exchange funds.
We make an initial equity award to all new employees, including our executive officers, in connection with the commencement of their employment.
These initial grants are intended to provide the employee with the incentive to build value in the organization over an extended period of time and to maintain competitive levels of total
compensation. In 2017, and consistent with recent prior years, these initial grants were in the form of stock options and RSUs, with stock options continuing to make up a significant percentage of
such grants. Since our IPO in February 2010, these awards were for shares of our Class A common stock, and awards made prior to our IPO were for shares of our Class B common stock. Such
stock options have an exercise price equal to the fair market value of our common stock on the grant date and typically vest over four years as to 25% of the shares on the first anniversary of the
date of hire and as to 1/48th of the total shares each month thereafter for the next 36 months. Such RSUs typically vest over four years as to 25% on each approximate anniversary of the
date of grant.
Our practice is to make annual equity awards to all employees, including our named executive officers, as part of our annual compensation
program, and historically we have granted such awards in February or March of each year based on our performance in the prior year. Our named executive officers have a choice of the mix for their
annual equity awards and can select from the following choices: 100% stock options, 75% stock options and 25% RSUs or 50% stock options and 50% RSUs, with the balance of our employees being provided
this or greater equity choice. We believe this equity choice model allows our employees to balance the overall risk profile of their annual equity grants by providing them with the opportunity to
diversify their portfolio of equity awards, and also keeps our compensation practices competitive with our peers with whom we compete for talent, while continuing to align the interests of our
employees with those of our stockholders. Since our IPO in February 2010, these grants were for shares of our Class A common stock, and awards made prior to our IPO were for shares of our
Class B common stock. Such stock option grants have an exercise price equal to the fair market value of our common stock on the grant date and typically vest over four years as to
1/48th of the award on each monthly anniversary of the vesting commencement date, which is January 1 of the applicable year. Such RSUs typically vest over four years as to 25% on each
approximate anniversary of the date of grant.
Our
compensation and HR committee does not apply a rigid formula in allocating equity awards to our executive officers as a group or to any particular executive officer, but does
emphasize the achievement of corporate goals in determining each annual performance award for our named executive officers, other than Dr. Hecht. Substantially all of Dr. Hecht's annual
performance award is based on the achievement of our corporate goals. In addition, our compensation and HR committee leverages its experience, exercising its judgment and discretion, and considers,
among other things, the role and responsibility of the named executive officer, the named executive officer's performance, competitive factors, input from PM and market data, the amount of stock-based
equity compensation already held by the named executive officer, the mix of total direct compensation received by the named executive officer and the total number of awards to be made to all
participants during the year. Based upon these factors, our compensation and HR committee determines the size of the long-term
42
Table of Contents
equity
incentives at levels it considers appropriate to create a meaningful opportunity for reward predicated on the creation of long-term stockholder value. Throughout the year, our compensation and
HR committee may award additional grants as circumstances warrant.
Our named executive officers and a number of our employees have a portion of their incentive compensation in periodic grants of milestone-based
equity awards that vest upon the achievement of major value-creating events which may occur many years from the date of grant. We believe milestone-based equity awards align our employees with our
stockholders' best interests and motivate our employees to apply their best efforts toward the accomplishment of these long-term value-creating events.
Our board, through our compensation and HR committee, periodically assesses our executive severance and change of control arrangements to, among
other things, ensure that such benefits are competitive with those of our peers. As approved by our compensation and HR committee, we have entered into severance arrangements with each of our
executive officers. We believe these arrangements serve to better align our executive severance practices with those of our peers, which is particularly important as we seek out top talent from
companies like our peers and to foster our performance-driven culture aimed at setting and achieving high-value, aggressive goals. Our executive severance arrangements and change of control plan are
described in more detail below.
We have entered into severance arrangements with each of our executive officers. Under the severance arrangements, our executive officers are
eligible to receive certain benefits in the event of an involuntary termination without "cause" or a "constructive termination" (each as defined below under the caption
Potential Payments Upon Termination or Change of
ControlExecutive Severance Arrangements
), including an amount equal to his or her base
salary and target bonus for the current year, a pro rata amount of his or her target bonus for the current year (pro-rated based on the percentage of the year worked prior to the triggering event),
his or her actual bonus for the prior year if not yet paid and 12 months of benefit continuation. These benefits are only payable if the executive officer has complied with all of our rules and
policies, executed a separation agreement that includes a release of claims and complies with his or her post-employment obligations of non-disclosure, non-competition and non-solicitation to
Ironwood. If the triggering event occurs in connection with a change of control of Ironwood, the severance arrangements provide that the executive officer will be entitled to receive the greater of
the benefits
under his or her severance arrangement and the benefits under the change of control plan in effect at the time of such termination, on a payment-by-payment and benefit-by-benefit basis. The severance
arrangements further provide that in connection with the sale of all or substantially all of the assets of Ironwood we will cause the acquirer of such assets to assume the arrangements.
We
believe that offering our executive officers these payments and benefits facilitates the operation of our business, allows them to better focus their time, attention and capabilities
on our business, assists us in recruiting and motivating key executive officers, and provides for a clear and consistent approach to managing involuntary departures with mutually understood separation
benefits. A further description of the severance arrangements is set forth below under the caption
Potential Payments Upon Termination or Change of
ControlExecutive Severance Arrangements
.
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Table of Contents
We have a change of control plan that applies to all of our employees regardless of title or role, including our executive officers, and
provides for certain payments and benefits in connection with or following a termination of employment associated with a "change of control" (as defined below under the caption
Potential Payments Upon Termination or Change of
ControlChange of Control Severance Benefit Plan
). We maintain this change of control plan
on the premise that innovative ideas and the associated intellectual property generated from these ideas are the basis upon which economic value is created in the biopharmaceutical industry and that
our employees are the source of these value-creating ideas. The potential for a change of control or other event that could substantially change the nature and structure of Ironwood could therefore
adversely affect our ability to recruit and motivate employees. The change of control plan is designed to encourage employees to bring forward their best ideas by providing them with the knowledge
that if a change of control occurs, and their employment is terminated as a result thereof, they will have an opportunity to share in the value that they helped create for our stockholders, regardless
of their employment status at Ironwood after the change of control. The key goals of our change of control plan are to recognize the value of employees' contributions to us through the acceleration of
equity awards solely with time-based vesting, and to ensure employees have a reasonable period of time within which to locate suitable employment without undue financial hardship. We believe that our
change of control plan is a positive recruitment tool in attracting top talent to Ironwood and enhances our ability to recruit and motivate management-level employees.
A
further description of the change of control plan and the potential payments to our named executive officers pursuant to the plan is set forth below under the captions
Potential Payments Upon Termination
or Change of ControlChange of Control Severance Benefit Plan
and
Potential Payments Upon Termination or Change of
Control
.
We maintain broad-based benefits that are provided to all employees, including health insurance, life and disability insurance, dental
insurance, fitness and transportation stipends, and a 401(k) plan with a 75% matching company contribution on the first $8,000 of an employee's annual contribution.
We
also maintain a relocation program under which we make certain benefits available to newly hired and existing employees, including executive officers, who are relocating to accept a
new position with Ironwood. Our relocation program covers reasonable expenses associated with the move and certain relocation services, including, as applicable, temporary housing assistance payments
and a lump sum relocation allowance, departure home sale assistance, rental assistance, new home search assistance, home purchase assistance, moving of household goods and vehicles assistance, and
reimbursement of final trip expenses to the new area. We also provide tax assistance to our relocating employees to cover the costs associated with certain non-deductible relocation expenses, as we
believe that this benefit is important to our ability to attract and motivate employees. Under our relocation program, participants are required to pay back the full amount of all relocation
reimbursements in the event that they voluntarily terminate their employment or are terminated for "cause" within 12 months following the payment date of their last relocation reimbursement.
Other
than our broad-based benefits, or as otherwise described herein, none of our named executive officers receive perquisites of any nature.
Tax and Accounting Considerations
While our compensation and HR committee generally considers the tax and accounting implications of its executive compensation decisions, neither
element was a material consideration in the compensation awarded to our named executive officers in 2017.
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Table of Contents
Compensation Practices and Risk
Our compensation and HR committee has reviewed our compensation policies as generally applicable to our employees and believes that our policies
do not encourage excessive and unnecessary risk-taking, and that the level of risk that they do encourage is not reasonably likely to have a material adverse effect on Ironwood. In making this
determination, our compensation and HR committee considered the following:
-
-
our use of different types of compensation vehicles provides a balance of long- and short-term incentives with fixed and variable components;
-
-
we grant equity-based awards with time-based vesting and milestone-based vesting, both of which encourage participants to look to long-term
appreciation in equity values;
-
-
our annual bonus determinations for each employee are dependent on achievement of company goals, which we believe promote long-term value; and
-
-
our system of internal control over financial reporting and code of business conduct and ethics, among other things, reduce the likelihood of
manipulation of our financial performance to enhance payments under any of our incentive plans.
Summary Compensation Table
The following table sets forth information regarding the compensation paid or accrued to, or earned by, each of our named executive officers
during the years ended December 31, 2017, 2016 and 2015.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name and Principal Position
|
|
Year
|
|
Salary
($)
|
|
Stock
Awards
($)(1)
|
|
Option
Awards
($)(1)
|
|
Non-Equity
Incentive Plan
Compensation
($)(2)
|
|
All Other
Compensation
($)(3)
|
|
Total
($)
|
|
Peter M. Hecht, Ph.D.
|
|
|
2017
|
|
|
100,000
|
|
|
|
|
|
5,887,416
|
|
|
|
|
|
8,040
|
|
|
5,995,456
|
|
Chief Executive Officer
|
|
|
2016
|
|
|
100,000
|
|
|
|
|
|
4,135,830
|
|
|
|
|
|
8,065
|
|
|
4,243,895
|
|
|
|
|
2015
|
|
|
100,000
|
|
|
|
|
|
4,017,546
|
|
|
|
|
|
7,440
|
|
|
4,124,986
|
|
Gina Consylman*
|
|
|
2017
|
|
|
334,263
|
(4)
|
|
440,213
|
|
|
|
|
|
185,000
|
|
|
8,040
|
|
|
967,516
|
|
Chief Financial Officer and Senior Vice
|
|
|
2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
President
|
|
|
2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mark G. Currie, Ph.D.
|
|
|
2017
|
|
|
470,000
|
|
|
|
|
|
1,936,650
|
|
|
210,000
|
|
|
8,040
|
|
|
2,624,690
|
|
Senior Vice President, Chief Scientific
|
|
|
2016
|
|
|
454,000
|
|
|
|
|
|
1,092,045
|
|
|
301,000
|
|
|
8,040
|
|
|
1,855,085
|
|
Officer and President of R&D
|
|
|
2015
|
|
|
440,000
|
|
|
341,688
|
|
|
1,380,394
|
|
|
255,200
|
|
|
7,440
|
|
|
2,424,722
|
|
Halley E. Gilbert
|
|
|
2017
|
|
|
440,000
|
|
|
670,800
|
|
|
619,728
|
|
|
195,000
|
|
|
8,040
|
|
|
1,933,568
|
|
Senior Vice President, Chief Legal
|
|
|
2016
|
|
|
423,000
|
|
|
332,800
|
|
|
302,055
|
|
|
280,000
|
|
|
8,040
|
|
|
1,345,895
|
|
Officer and Secretary
|
|
|
2015
|
|
|
410,000
|
|
|
499,075
|
|
|
408,865
|
|
|
225,500
|
|
|
7,440
|
|
|
1,550,880
|
|
Thomas A. McCourt
|
|
|
2017
|
|
|
450,000
|
|
|
440,213
|
|
|
1,220,090
|
|
|
191,000
|
|
|
8,040
|
|
|
2,309,343
|
|
Senior Vice President, Marketing and
|
|
|
2016
|
|
|
435,000
|
|
|
|
|
|
813,225
|
|
|
288,000
|
|
|
8,040
|
|
|
1,544,265
|
|
Sales and Chief Commercial Officer
|
|
|
2015
|
|
|
420,000
|
|
|
253,825
|
|
|
693,293
|
|
|
243,600
|
|
|
7,440
|
|
|
1,618,158
|
|
Tom Graney*
|
|
|
2017
|
|
|
310,890
|
|
|
356,363
|
|
|
987,692
|
|
|
|
|
|
30,050
|
|
|
1,684,995
|
|
Former Chief Financial Officer and
|
|
|
2016
|
|
|
435,000
|
|
|
179,200
|
|
|
487,935
|
|
|
257,000
|
|
|
145,577
|
|
|
1,504,712
|
|
Senior Vice President, Finance and
|
|
|
2015
|
|
|
420,000
|
|
|
89,034
|
|
|
242,475
|
|
|
231,000
|
|
|
113,880
|
|
|
1,096,389
|
|
Corporate Strategy
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
*
-
Mr. Graney
departed from Ironwood on September 13, 2017. Ms. Consylman, became our chief financial officer effective November 27, 2017.
Ms. Consylman was previously our interim chief financial officer from September 13, 2017 through November 26, 2017.
45
Table of Contents
-
(1)
-
For
2017, reflects the fair value of time-based RSU and stock option awards on the date of grant calculated in accordance with Financial Accounting Standards Board
issued Accounting Standards Codification 718,
CompensationStock Compensation
, or ASC 718. For a discussion of the assumptions used in the
valuation of awards made in 2017, see Note 15 to our consolidated financial statements for the year ended December 31, 2017 included in our Annual Report on Form 10-K that we
filed with the SEC on February 22, 2018, or our 2017 Form 10-K, and that accompanies this proxy statement. All values reported exclude the effects of potential forfeitures.
For
Ms. Consylman, reflects an RSU award granted as an annual performance award for her performance as Vice President of Finance and Chief Accounting Officer.
-
(2)
-
Consists
of payments made under our annual cash bonus program in the following year for performance in the identified year, as described above under the caption
Compensation Actions in 2017 and 2018
.
-
(3)
-
For
each executive officer, $6,000 of such amount consists of matching contributions made under our 401(k) plan, as well as an amount attributable to a
transportation stipend and a fitness stipend. For Mr. Graney, such amount for 2017 also includes $22,481 for unused and accrued vacation time paid in connection with his departure from Ironwood
in September 2017. Pursuant to our relocation program, Mr. Graney paid back to Ironwood $50,000 of relocation reimbursements in connection with his departure, which is not reflected as a
deduction in the table above.
-
(4)
-
Reflects
Ms. Consylman's pro-rated salary of $325,700 for the period from January 1, 2017 through November 26, 2017 and her pro-rated salary of
$415,000 for the period from November 27, 2017 through December 31, 2017.
Grants of Plan-Based Awards
The following table sets forth information regarding non-equity and equity awards granted to each of our named executive officers during the
year ended December 31, 2017. All non-equity incentive plan awards were made pursuant to our cash bonus program described in more detail above under the caption
Elements
of Executive Compensation and Determination of AmountsAnnual Bonus
. We granted RSUs and stock option awards to our named executive officers in 2017 in recognition
of performance in 2016. All RSUs granted in 2017 represented the right to receive shares of our Class A common stock and all stock options granted in 2017 consisted of options to purchase
shares of our Class A common stock with an exercise price equal to the fair market value of our Class A common stock on the date of grant. All such equity awards were granted under our
2010 Plan. The vesting schedule of
46
Table of Contents
each
RSU and each option included in the following table is described in the footnotes to the
Outstanding Equity Awards at Fiscal Year-End
table.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Estimated
Future
Payouts
Under
Non-Equity
Incentive
Plan
Awards(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Compensation
and HR
Committee
Approval
Date (if
different
than
Grant Date)
|
|
|
|
All Other
Option
Awards:
Number of
Securities
Underlying
Options
(#)
|
|
|
|
|
|
|
|
|
|
All Other
Stock
Awards:
Number of
Shares of
Stock or
Units(#)
|
|
Exercise
or Base
Price of
Option
Awards
($/Sh)
|
|
Grant Date
Fair Value
of Stock
and Option
Awards
($)(2)
|
|
|
|
Grant
Date
|
|
Name
|
|
Target ($)
|
|
Peter M. Hecht, Ph.D.
|
|
|
2/27/2017
|
|
|
1/25/2017
|
|
|
|
|
|
|
|
|
760,000
|
|
|
16.77
|
|
|
5,887,416
|
|
|
|
|
|
|
|
|
|
|
50,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gina Consylman
|
|
|
2/27/2017
|
|
|
1/25/2017
|
|
|
|
|
|
26,250
|
(3)
|
|
|
|
|
|
|
|
440,213
|
|
|
|
|
|
|
|
|
|
|
207,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mark G. Currie, Ph.D.
|
|
|
2/27/2017
|
|
|
1/25/2017
|
|
|
|
|
|
|
|
|
250,000
|
|
|
16.77
|
|
|
1,936,650
|
|
|
|
|
|
|
|
|
|
|
235,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Halley E. Gilbert
|
|
|
2/27/2017
|
|
|
1/25/2017
|
|
|
|
|
|
|
|
|
80,000
|
|
|
16.77
|
|
|
619,728
|
|
|
|
|
2/27/2017
|
|
|
1/25/2017
|
|
|
|
|
|
40,000
|
|
|
|
|
|
|
|
|
670,800
|
|
|
|
|
|
|
|
|
|
|
220,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Thomas A. McCourt
|
|
|
2/27/2017
|
|
|
1/25/2017
|
|
|
|
|
|
|
|
|
157,500
|
|
|
16.77
|
|
|
1,220,090
|
|
|
|
|
2/27/2017
|
|
|
1/25/2017
|
|
|
|
|
|
26,250
|
|
|
|
|
|
|
|
|
440,213
|
|
|
|
|
|
|
|
|
|
|
225,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tom Graney
|
|
|
2/27/2017
|
|
|
1/25/2017
|
|
|
|
|
|
|
|
|
127,500
|
|
|
16.77
|
|
|
987,692
|
|
|
|
|
2/27/2017
|
|
|
1/25/2017
|
|
|
|
|
|
21,250
|
|
|
|
|
|
|
|
|
356,363
|
|
|
|
|
|
|
|
|
|
|
222,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
(1)
-
Consists
of the target cash bonus payment for 2017 performance under our cash bonus program. As described in more detail above under the caption
Elements of Executive Compensation and Determination of AmountsAnnual
Bonus
, in 2017 each of our named executive officers, other than
Dr. Hecht, had an individual bonus target of 50% of his or her base salary, 70% of which was tied solely to the achievement of our corporate goals for 2017 (which was not determined as of
December 31, 2017) and 30% of which was tied to the achievement of corporate and individual performance goals (the range of which was not determined as of December 31, 2017).
Dr. Hecht's bonus, with an individual bonus target of 50% of his base salary, was to be determined based on the achievement of our corporate goals. Actual bonus payments for 2017 performance
are set forth in the
Summary Compensation Table
above.
-
(2)
-
Reflects
the fair value of time-based RSU and stock option awards on the date of grant calculated in accordance with ASC 718.
For
a discussion of the assumptions used in the valuation of the time-based RSU awards and stock option awards granted to our named executive officers in 2017, see footnote 2 to the
Summary Compensation Table
above.
-
(3)
-
Reflects
an RSU award granted as an annual performance award for Ms. Consylman's performance as Vice President of Finance and Chief Accounting Officer.
47
Table of Contents
Outstanding Equity Awards at Fiscal Year-End
The following table sets forth information regarding outstanding equity awards held by each of our named executive officers on
December 31, 2017 the last day of our last fiscal year.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
Stock Awards
|
|
Name
|
|
Number of
Securities
Underlying
Unexercised
Options (#)
Exercisable
|
|
Number of
Securities
Underlying
Unexercised
Options (#)
Unexercisable
|
|
Equity Incentive
Plan Awards:
Number of
Securities
Underlying
Unexercised
Unearned
Options (#)
|
|
Option
Exercise
Price ($)
|
|
Option to
Purchase
Class
Common Stock
|
|
Option
Expiration
Date
|
|
Number of
Shares or
Units of
Stock That
Have Not
Vested
(#)(1)
|
|
Market
Value of
Shares or
Units of
Stock That
Have Not
Vested
($)(2)
|
|
Peter M. Hecht, Ph.D.
|
|
|
110,000
|
|
|
|
|
|
|
|
|
4.89
|
|
B
|
|
|
2/11/2019
|
(3)
|
|
|
|
|
|
|
|
|
|
20,000
|
|
|
|
|
|
20,000
|
|
|
5.48
|
|
B
|
|
|
7/28/2019
|
(4)
|
|
|
|
|
|
|
|
|
|
125,000
|
|
|
|
|
|
|
|
|
11.25
|
|
A
|
|
|
2/2/2020
|
(3)
|
|
|
|
|
|
|
|
|
|
175,000
|
|
|
|
|
|
|
|
|
11.11
|
|
A
|
|
|
2/1/2021
|
(3)
|
|
|
|
|
|
|
|
|
|
300,000
|
|
|
|
|
|
|
|
|
14.72
|
|
A
|
|
|
2/1/2022
|
(3)
|
|
|
|
|
|
|
|
|
|
375,000
|
|
|
|
|
|
|
|
|
13.08
|
|
A
|
|
|
2/1/2023
|
(3)
|
|
|
|
|
|
|
|
|
|
318,229
|
|
|
6,771
|
|
|
|
|
|
14.11
|
|
A
|
|
|
3/3/2024
|
(5)
|
|
|
|
|
|
|
|
|
|
411,979
|
|
|
153,021
|
|
|
|
|
|
15.62
|
|
A
|
|
|
3/16/2025
|
(5)
|
|
|
|
|
|
|
|
|
|
426,458
|
|
|
463,542
|
|
|
|
|
|
10.24
|
|
A
|
|
|
3/1/2026
|
(5)
|
|
|
|
|
|
|
|
|
|
174,166
|
|
|
585,834
|
|
|
|
|
|
16.77
|
|
A
|
|
|
2/27/2027
|
(5)
|
|
|
|
|
|
|
Gina Consylman
|
|
|
35,000
|
|
|
5,000
|
|
|
|
|
|
15.48
|
|
A
|
|
|
7/01/2024
|
(6)
|
|
|
|
|
|
|
|
|
|
6,197
|
|
|
2,303
|
|
|
|
|
|
15.62
|
|
A
|
|
|
3/16/2025
|
(5)
|
|
|
|
|
|
|
|
|
|
2,812
|
|
|
2,188
|
|
|
|
|
|
11.45
|
|
A
|
|
|
9/16/2025
|
(5)
|
|
|
|
|
|
|
|
|
|
14,375
|
|
|
15,626
|
|
|
|
|
|
10.24
|
|
A
|
|
|
3/1/2026
|
(5)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
48,749
|
|
|
730,748
|
|
Mark G. Currie, Ph.D.
|
|
|
60,000
|
|
|
|
|
|
|
|
|
3.76
|
|
B
|
|
|
1/31/2018
|
(3)
|
|
|
|
|
|
|
|
|
|
50,000
|
|
|
|
|
|
|
|
|
4.89
|
|
B
|
|
|
2/11/2019
|
(7)
|
|
|
|
|
|
|
|
|
|
125,000
|
|
|
|
|
|
|
|
|
4.89
|
|
B
|
|
|
2/11/2019
|
(3)
|
|
|
|
|
|
|
|
|
|
20,000
|
|
|
|
|
|
20,000
|
|
|
5.48
|
|
B
|
|
|
7/28/2019
|
(4)
|
|
|
|
|
|
|
|
|
|
90,000
|
|
|
|
|
|
|
|
|
11.25
|
|
A
|
|
|
2/2/2020
|
(3)
|
|
|
|
|
|
|
|
|
|
110,000
|
|
|
|
|
|
|
|
|
11.11
|
|
A
|
|
|
2/1/2021
|
(3)
|
|
|
|
|
|
|
|
|
|
110,000
|
|
|
|
|
|
|
|
|
14.72
|
|
A
|
|
|
2/1/2022
|
(3)
|
|
|
|
|
|
|
|
|
|
200,000
|
|
|
|
|
|
|
|
|
13.08
|
|
A
|
|
|
2/1/2023
|
(3)
|
|
|
|
|
|
|
|
|
|
83,229
|
|
|
1,771
|
|
|
|
|
|
14.11
|
|
A
|
|
|
3/3/2024
|
(5)
|
|
|
|
|
|
|
|
|
|
95,702
|
|
|
35,548
|
|
|
|
|
|
15.62
|
|
A
|
|
|
3/16/2025
|
(5)
|
|
|
|
|
|
|
|
|
|
25,000
|
|
|
|
|
|
25,000
|
|
|
15.62
|
|
A
|
|
|
3/16/2025
|
(8)
|
|
|
|
|
|
|
|
|
|
112,604
|
|
|
122,396
|
|
|
|
|
|
10.24
|
|
A
|
|
|
3/1/2026
|
(5)
|
|
|
|
|
|
|
|
|
|
57,291
|
|
|
192,709
|
|
|
|
|
|
16.77
|
|
A
|
|
|
2/27/2027
|
(5)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,937
|
|
|
163,946
|
|
Halley E. Gilbert
|
|
|
50,000
|
|
|
|
|
|
|
|
|
4.89
|
|
B
|
|
|
2/11/2019
|
(3)
|
|
|
|
|
|
|
|
|
|
20,000
|
|
|
|
|
|
20,000
|
|
|
5.48
|
|
B
|
|
|
7/28/2019
|
(4)
|
|
|
|
|
|
|
|
|
|
60,000
|
|
|
|
|
|
|
|
|
11.25
|
|
A
|
|
|
2/2/2020
|
(3)
|
|
|
|
|
|
|
|
|
|
60,000
|
|
|
|
|
|
|
|
|
11.11
|
|
A
|
|
|
2/1/2021
|
(3)
|
|
|
|
|
|
|
|
|
|
30,000
|
|
|
|
|
|
|
|
|
11.83
|
|
A
|
|
|
12/12/2021
|
(3)
|
|
|
|
|
|
|
|
|
|
45,000
|
|
|
|
|
|
|
|
|
14.72
|
|
A
|
|
|
2/1/2022
|
(3)
|
|
|
|
|
|
|
|
|
|
30,000
|
|
|
|
|
|
|
|
|
13.08
|
|
A
|
|
|
2/1/2023
|
(3)
|
|
|
|
|
|
|
|
|
|
25,000
|
|
|
|
|
|
|
|
|
11.51
|
|
A
|
|
|
12/2/2023
|
(3)
|
|
|
|
|
|
|
|
|
|
63,646
|
|
|
1,354
|
|
|
|
|
|
14.11
|
|
A
|
|
|
3/3/2024
|
(5)
|
|
|
|
|
|
|
|
|
|
41,927
|
|
|
15,573
|
|
|
|
|
|
15.62
|
|
A
|
|
|
3/16/2025
|
(5)
|
|
|
|
|
|
|
|
|
|
31,145
|
|
|
33,855
|
|
|
|
|
|
10.24
|
|
A
|
|
|
3/1/2026
|
(5)
|
|
|
|
|
|
|
|
|
|
18,333
|
|
|
61,667
|
|
|
|
|
|
16.77
|
|
A
|
|
|
2/27/2027
|
(5)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
78,749
|
|
|
1,180,448
|
|
Thomas A. McCourt
|
|
|
130,000
|
|
|
|
|
|
|
|
|
5.48
|
|
B
|
|
|
9/7/2019
|
(6)
|
|
|
|
|
|
|
|
|
|
120,000
|
|
|
|
|
|
40,000
|
|
|
5.48
|
|
B
|
|
|
9/7/2019
|
(9)
|
|
|
|
|
|
|
|
|
|
20,000
|
|
|
|
|
|
|
|
|
11.25
|
|
A
|
|
|
2/2/2020
|
(3)
|
|
|
|
|
|
|
|
|
|
95,000
|
|
|
|
|
|
|
|
|
11.11
|
|
A
|
|
|
2/1/2021
|
(3)
|
|
|
|
|
|
|
|
|
|
95,000
|
|
|
|
|
|
|
|
|
14.72
|
|
A
|
|
|
2/1/2022
|
(3)
|
|
|
|
|
|
|
|
|
|
110,000
|
|
|
|
|
|
|
|
|
13.08
|
|
A
|
|
|
2/1/2023
|
(3)
|
|
|
|
|
|
|
|
|
|
78,333
|
|
|
1,667
|
|
|
|
|
|
14.11
|
|
A
|
|
|
3/3/2024
|
(5)
|
|
|
|
|
|
|
|
|
|
71,093
|
|
|
26,407
|
|
|
|
|
|
15.62
|
|
A
|
|
|
3/16/2025
|
(5)
|
|
|
|
|
|
|
|
|
|
83,854
|
|
|
91,146
|
|
|
|
|
|
10.24
|
|
A
|
|
|
3/1/20226
|
(5)
|
|
|
|
|
|
|
|
|
|
36,093
|
|
|
121,407
|
|
|
|
|
|
16.77
|
|
A
|
|
|
2/27/2027
|
(5)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
34,374
|
|
|
515,266
|
|
Tom Graney
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
(1)
-
The
RSUs vest over four years as to 25% of the award on each approximate anniversary of the grant thereof.
-
(2)
-
Market
value is calculated by multiplying the number of RSUs that have not vested by the closing price of our common stock on the NASDAQ Global Select Market on
December 29, 2017, which was $14.99.
-
(3)
-
The
options vest as to 1.25% on each monthly anniversary of the vesting commencement date for the first 36 months, and as to 4.5833% of the award on each
monthly anniversary thereafter until fully vested.
48
Table of Contents
-
(4)
-
The
options vested as to (a) 50% of the shares upon acceptance by the FDA of a second NDA for a product from an internal or external development program
(excluding supplemental NDAs for linaclotide, but including NDAs for linaclotide combination products) and vest as to (b) 50% of the shares upon the achievement of $1 billion in annual
(calendar year) net global pharmaceutical product sales (including partnered or licensed product revenue). External development programs shall be pre-qualified for milestone vesting eligibility by our
compensation and HR committee as of the time of program initiation at Ironwood.
-
(5)
-
The
options vest as to 1/48th of the shares on each monthly anniversary of the vesting commencement date until fully vested.
-
(6)
-
The
options vest as to 25% of the shares on the first anniversary of the vesting commencement date and 1/48th of the shares each month thereafter for the next
36 months.
-
(7)
-
The
option vested as to 100% of the shares on the grant date.
-
(8)
-
The
options vest in two equal installments of 25,000 options each. The option vested as to 25,000 shares upon the first-dosing in the first clinical study of the
next phase following achievement of proof of concept for the first internally derived or externally accessed product (other than linaclotide) qualified by our compensation and HR committee as
targeting a new indication, category or market. The option vests as to the remaining 25,000 shares upon the first-dosing in the first clinical study of the next phase following achievement of proof of
concept for the second internally derived or externally accessed product (other than linaclotide) qualified by our compensation and HR committee as targeting a new indication, category or market.
-
(9)
-
The
option vested as to (a) 25% of the shares immediately upon the first acceptance by the FDA of an NDA filed by us; (b) 25% of the shares upon the
first commercial sale of linaclotide; and (c) 25% of the shares upon acceptance by the FDA of a second NDA for a product from an internal or external development program (excluding supplemental
NDAs for linaclotide, but including NDAs for linaclotide combination products); and the remaining portion of the option vests as to (d) 25% of the shares upon the achievement of
$1 billion in annual (calendar year) net global pharmaceutical product sales (including partnered or licensed product revenue).
Options Exercised and Stock Vested Table
The following table sets forth certain information regarding the exercise of options to purchase our common stock and the vesting of RSUs that
were held by our named executive officers during the year ended December 31, 2017.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
Stock Awards
|
|
Name
|
|
Number of Shares
Acquired on
Exercise
(#)
|
|
Value Realized
on Exercise
($)(1)
|
|
Number of Shares
Acquired on
Vesting
(#)
|
|
Value Realized
on Vesting
($)(2)
|
|
Peter M. Hecht, Ph.D.
|
|
|
205,987
|
(3)
|
|
2,430,048
|
|
|
|
|
|
|
|
Gina Consylman
|
|
|
|
|
|
|
|
|
8,063
|
|
|
131,282
|
|
Mark G. Currie, Ph.D.
|
|
|
150,000
|
(4)
|
|
1,923,321
|
|
|
5,469
|
|
|
93,629
|
|
Halley E. Gilbert
|
|
|
72,385
|
(5)
|
|
1,045,281
|
|
|
15,313
|
|
|
262,159
|
|
Thomas A. McCourt
|
|
|
30,000
|
(6)
|
|
381,557
|
|
|
4,063
|
|
|
69,559
|
|
Tom Graney
|
|
|
250,232
|
(7)
|
|
791,690
|
|
|
5,800
|
|
|
99,296
|
|
-
(1)
-
Computed
by determining the difference between the market price of our Class A common stock upon exercise and the exercise price of the exercised stock
option.
-
(2)
-
Computed
by multiplying the number of shares of Class A common stock underlying the vested RSUs by the market price of our Class A stock on the vesting
date. This amount represents the total number of shares that vested; however, a portion of such shares were sold to satisfy tax withholding obligations.
-
(3)
-
Includes
26,595 shares of Class B common stock that Dr. Hecht acquired through an option exercise, as such stock options were expiring, and then held,
thereby increasing his ownership of our Class B common stock by such amount. As of the date hereof, Dr. Hecht continues to hold these shares. Also includes 179,392 shares of our
Class B common stock that Dr. Hecht acquired through option exercises and then sold on the open market, as such stock options were expiring. In order to effect the sales, the shares of
Class B common stock were converted into shares of Class A common stock in accordance with our certificate of incorporation.
-
(4)
-
Includes
90,000 shares of Class B common stock that Dr. Currie acquired through option exercises, as such stock options were expiring, and then held,
thereby increasing his ownership of our Class B common stock by such amount. As of the date hereof, Dr. Currie continues to hold these shares. Also includes 60,000 shares of our
Class B common stock that Dr. Currie acquired through an
49
Table of Contents
option
exercise and then sold on the open market. In order to effect these sales, the shares of Class B common stock were converted into shares of Class A common stock in accordance with
our certificate of incorporation.
-
(5)
-
Represents
72,385 shares of our Class B common stock that Ms. Gilbert acquired through option exercises and then sold on the open market. In order to
effect these sales, the shares of Class B common stock were converted into shares of Class A common stock in accordance with our certificate of incorporation.
-
(6)
-
Represents
30,000 shares of our Class B common stock that Mr. McCourt acquired through option exercises and then sold on the open market. In order to
effect these sales, the shares of Class B common stock were converted into shares of Class A common stock in accordance with our certificate of incorporation.
-
(7)
-
Includes
20,338 shares of Class A common stock that Mr. Graney acquired through an option exercise and then held. Includes 229,894 shares of our
Class A common stock that Mr. Graney acquired through option exercises in connection with the expiration of such options as a result of his departure from Ironwood in September 2017 and
then sold on the open market.
Potential Payments Upon Termination or Change of Control
Except as described below, there are currently no other agreements or arrangements pursuant to which our named executive officers would receive
severance benefits in the event of a separation from Ironwood.
We have entered into severance arrangements with each of our named executive officers. Under the severance arrangements, our named executive
officers are eligible to receive the following benefits in the event of an involuntary termination without Cause or a Constructive Termination (each as defined below), provided the named executive
officer has complied with all of our rules and policies, executed a separation agreement that includes a release of claims and complies with his or her post-employment obligations of non-disclosure,
non-competition and non-solicitation to Ironwood:
-
-
an amount equal to 12 months of his or her current base salary, a pro rata amount of his or her target annual cash incentive award for
the current year (pro-rated based on the percentage of the year worked prior to the triggering event), an amount equal to his or her full target annual cash incentive award for the current year, and
an amount equal to his or her actual annual cash incentive award for the prior year if such amount has not already been paid to him or her; and
-
-
benefit continuation under the Consolidated Omnibus Budget Reconciliation Act, or COBRA, with Ironwood contributing to the cost of such
coverage in the same amount as if the executive officer was actively employed, plus COBRA administrative fees, for 12 months following the triggering event. The named executive officers are
also eligible to receive outplacement assistance consistent with industry standards.
If
the triggering event occurs in connection with a change of control of Ironwood, the severance arrangements provide that the named executive officer will be entitled to receive the
greater of the
benefits under his or her severance arrangement and the benefits under the change of control plan in effect at the time of such termination, on a payment-by-payment and benefit-by-benefit basis. The
severance arrangements further provide that in connection with the sale of all or substantially all of the assets of Ironwood we will cause the acquirer of such assets to assume the arrangements.
For
purposes of the severance arrangements, "Constructive Termination" means termination of employment by the named executive officer for Good Reason (as defined below); provided that
50
Table of Contents
Constructive
Termination shall not include any termination of employment (i) by Ironwood for Cause; (ii) by Ironwood as a result of the permanent disability of the named executive
officer; (iii) as a result of the death of the named executive officer; or (iv) as a result of the voluntary termination of employment by the named executive officer for any reason other
than Good Reason. "Good Reason" means the occurrence of any of the following conditions: (a) a material diminution in the named executive officer's authority, duties or responsibilities;
(b) a material diminution in the named executive officer's total target cash compensation unless such diminution is in connection with a proportional reduction in compensation for all or
substantially all named executive officers; or (c) the relocation of the named executive officer's work place for Ironwood to a location more than 60 miles from the location of the work place
prior to the Constructive Termination. The severance arrangements provide that "Cause" has the same meaning as ascribed to the term in our 2010 Plan, as most recently in effect prior to the time of
termination; provided, however, that this definition of Cause shall be superseded by (I) the definition of Cause contained in an agreement between a participant and Ironwood in effect at the
time of such termination, and (II) the definition of "Cause" contained in the change of control plan to the extent such termination is covered by such plan. Our 2010 Plan defines "Cause" as
(A) dishonesty with respect to Ironwood, (B) insubordination, substantial malfeasance or non-feasance of duty, (C) unauthorized disclosure of confidential information,
(D) breach of any provision of any employment, consulting, advisory, nondisclosure, non- competition or similar agreement with Ironwood, and (E) conduct substantially prejudicial to
Ironwood's business. See
Elements of Executive Compensation and Determination of AmountsSeverance or Change of Control ArrangementsExecutive Severance
Arrangements
for more information about our named executive officer severance arrangements.
We have a change of control plan that applies to all of our employees regardless of title or role, including our named executive officers, and
provides for certain payments and benefits in connection with or following a termination of employment associated with a change of control.
Pursuant to this plan, in the event of a Covered Termination (as defined below), our named executive officers are entitled to receive the following from Ironwood or its
successor:
-
-
a lump-sum payment in an amount equal to 12 months of base salary as of the time of termination;
-
-
a lump-sum payment in an amount equal to the target bonus for the year in which the termination occurred, prorated for the portion of the year
during which the employee was employed;
-
-
acceleration of all outstanding equity awards subject solely to time-based vesting as of the date of termination; and
-
-
continuation of medical, dental and vision benefits for the individual and his or her dependents for 12 months following termination;
provided that if the individual dies or becomes covered by another employer's group health plans during the continuation period, Ironwood is no longer required to provide such group health plans.
A
Covered Termination consists of a "Termination Upon Change of Control" or a "Constructive Termination" in connection with a "Change of Control" of Ironwood. Under the change of control
plan, a Change of Control occurs when:
-
-
any person becomes, pursuant to a transaction or a series of transactions not approved by our board, the beneficial owner, directly or
indirectly, of Ironwood securities representing more than 50% of the total voting power;
51
Table of Contents
-
-
a merger or consolidation of Ironwood, whether or not approved by our board, which results in the holders of our voting securities holding less
50% of the combined voting power of the surviving entity immediately after such merger or consolidation;
-
-
the sale or disposition of more than two-thirds of the assets of Ironwood; or
-
-
the date a majority of members of our board is replaced during any 12-month period by directors whose appointment or election is not endorsed
by a majority of members of our board before the date of the appointment or election.
For
purposes of the change of control plan, "Termination Upon Change of Control" means the actual termination of the employee without Cause (as defined below) by Ironwood during the
period commencing 30 days prior to the earlier of (i) the date that Ironwood first publicly announces that it is conducting negotiations leading to a Change of Control or (ii) the
date that Ironwood enters into a definitive agreement that would result in a Change of Control, and ending on the earlier of (a) the date on which Ironwood announces the definitive agreement
has been terminated or that Ironwood's efforts to consummate the Change of Control have been abandoned or (b) the date that is twenty-four months after the Change of Control, and "Constructive
Termination" means the termination of employment by the employee for Good Reason (as defined below) within twenty-four months after the occurrence of any Change of Control; provided that a Termination
Upon Change of Control or a Constructive Termination shall not include any termination of employment (A) by Ironwood for Cause; (B) by Ironwood as a result of the permanent disability of
the employee; (C) as a result of the death of the employee; or (D) as a result of the voluntary termination of employment by the employee for any reason other than Good Reason. "Good
Reason" means the occurrence of any of the following conditions following a Change of Control: (I) a material diminution in the employee's authority, duties and responsibilities; (II) a
material diminution in the employee's total target cash compensation unless such diminution is in connection with a proportional reduction in compensation for all or substantially all similarly
situated employees; (III) the relocation of the employee's work place for Ironwood to a location more than 60 miles from the location of the work place prior to the Change of Control; or
(IV) any other action or inaction that constitutes a material breach by such employee's employer (after
the Change of Control) of any agreement with the employee under which the employee is then providing services. "Cause" means (aa) theft, a material act of fraud, intentional falsification of
employment or Ironwood records or the commission of any criminal act; (bb) improper disclosure or use of Ironwood's confidential, business or property information; (cc) gross negligence or willful
misconduct in the performance of assigned duties that causes demonstrable harm to Ironwood; or (dd) repeated failure to perform job responsibilities in accordance with written instructions from a
supervisor.
We
will require any successor to assume and agree to perform the change of control plan. Receipt of any payments or benefits under the change of control plan at the time of termination
will be conditioned on the employee executing a written release of Ironwood from any and all claims arising in connection with his or her employment. See
Elements of Executive
Compensation and Determination of AmountsSeverance or Change of Control ArrangementsChange of Control Severance Benefit Plan
for more information
about our change of control plan.
For all employees, including our named executive officers, outstanding stock option and RSU awards subject solely to time-based vesting
accelerate in full in the event of the death of the award holder. This term applies to all outstanding time-based stock option and RSU awards made under our equity incentive plans, including the 2010
Plan. Further, our current form of stock option and RSU agreements for awards issued under our 2010 Plan include similar provision for the acceleration of unvested time-based awards upon the death of
an award holder, including our named executive officers.
52
Table of Contents
The following table presents our estimate of the amount of severance benefits to which each of our named executive officers would be entitled if
a termination occurred on December 29, 2017 under the circumstances set forth in the column headings. The closing price of our common stock as listed on the NASDAQ Global Select Market on
December 29, 2017 was $14.99 per share.
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Executive Payments
and Benefits
upon Termination
|
|
Involuntary
Termination
without Cause or a
Constructive
Termination(1)
|
|
Termination
Following
Change of
Control(2)
|
|
Death(3)
|
|
Peter M. Hecht, Ph.D.
|
|
Cash Severance
|
|
$
|
100,000
|
|
$
|
100,000
|
|
$
|
|
|
|
|
Non-Equity Incentive Plan Compensation
|
|
$
|
100,000
|
|
$
|
100,000
|
|
$
|
|
|
|
|
Equity Acceleration(4)
|
|
|
|
|
|
|
|
|
|
|
|
|
Options
|
|
$
|
|
|
$
|
2,207,783
|
|
$
|
2,207,783
|
|
|
|
RSUs
|
|
$
|
|
|
$
|
|
|
$
|
|
|
|
|
Continuation of Health Benefits
|
|
$
|
21,031
|
|
$
|
21,031
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
221,031
|
|
$
|
2,428,814
|
|
$
|
2,207,783
|
|
Gina Consylman
|
|
Cash Severance
|
|
$
|
415,000
|
|
$
|
415,000
|
|
$
|
|
|
|
|
Non-Equity Incentive Plan Compensation
|
|
$
|
415,000
|
|
$
|
415,000
|
|
$
|
|
|
|
|
Equity Acceleration(4)
|
|
|
|
|
|
|
|
|
|
|
|
|
Options
|
|
$
|
|
|
$
|
81,964
|
|
$
|
81,964
|
|
|
|
RSUs
|
|
$
|
|
|
$
|
730,748
|
|
$
|
730,748
|
|
|
|
Continuation of Health Benefits
|
|
$
|
21,031
|
|
$
|
21,031
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
851,031
|
|
$
|
1,663,743
|
|
$
|
812,712
|
|
Mark G. Currie, Ph.D.
|
|
Cash Severance
|
|
$
|
470,000
|
|
$
|
470,000
|
|
$
|
|
|
|
|
Non-Equity Incentive Plan Compensation
|
|
$
|
470,000
|
|
$
|
470,000
|
|
$
|
|
|
|
|
Equity Acceleration(4)
|
|
|
|
|
|
|
|
|
|
|
|
|
Options
|
|
$
|
|
|
$
|
582,939
|
|
$
|
582,939
|
|
|
|
RSUs
|
|
$
|
|
|
$
|
163,946
|
|
$
|
163,946
|
|
|
|
Continuation of Health Benefits
|
|
$
|
7,787
|
|
$
|
7,787
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
947,787
|
|
$
|
1,694,672
|
|
$
|
746,885
|
|
Halley E. Gilbert
|
|
Cash Severance
|
|
$
|
440,000
|
|
$
|
440,000
|
|
$
|
|
|
|
|
Non-Equity Incentive Plan Compensation
|
|
$
|
440,000
|
|
$
|
440,000
|
|
$
|
|
|
|
|
Equity Acceleration(4)
|
|
|
|
|
|
|
|
|
|
|
|
|
Options
|
|
$
|
|
|
$
|
162,003
|
|
$
|
162,003
|
|
|
|
RSUs
|
|
$
|
|
|
$
|
1,180,448
|
|
$
|
1,180,448
|
|
|
|
Continuation of Health Benefits
|
|
$
|
21,031
|
|
$
|
21,031
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
901,031
|
|
$
|
2,243,482
|
|
$
|
1,342,451
|
|
Thomas A. McCourt
|
|
Cash Severance
|
|
$
|
450,000
|
|
$
|
450,000
|
|
$
|
|
|
|
|
Non-Equity Incentive Plan Compensation
|
|
$
|
450,000
|
|
$
|
450,000
|
|
$
|
|
|
|
|
Equity Acceleration(4)
|
|
|
|
|
|
|
|
|
|
|
|
|
Options
|
|
$
|
|
|
$
|
434,410
|
|
$
|
434,410
|
|
|
|
RSUs
|
|
$
|
|
|
$
|
515,266
|
|
$
|
515,266
|
|
|
|
Continuation of Health Benefits
|
|
$
|
8,244
|
|
$
|
8,244
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
908,244
|
|
$
|
1,857,920
|
|
$
|
949,676
|
|
Tom Graney(5)
|
|
Cash Severance
|
|
$
|
|
|
$
|
|
|
$
|
|
|
|
|
Non-Equity Incentive Plan Compensation
|
|
$
|
|
|
$
|
|
|
$
|
|
|
|
|
Equity Acceleration(4)
|
|
|
|
|
|
|
|
|
|
|
|
|
Options
|
|
$
|
|
|
$
|
|
|
$
|
|
|
|
|
RSUs
|
|
$
|
|
|
$
|
|
|
$
|
|
|
|
|
Continuation of Health Benefits
|
|
$
|
|
|
$
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
|
|
$
|
|
|
$
|
|
|
-
(1)
-
Represents
amounts payable under the terms of the named executive officer severance arrangements. Non-equity incentive plan compensation payment amount assumes no
bonus amounts for 2017 have been paid to the
53
Table of Contents
executive
as of December 31, 2017, and that all 2016 bonus amounts have been paid as of such date, in each case, as would be consistent with Ironwood's historical practice.
-
(2)
-
As
provided under the terms of the named executive officer severance arrangements, represents the greater of the amount payable under the severance arrangements and
the change of control plan on a payment-by-payment and benefit-by-benefit basis.
-
(3)
-
Represents
the value of the accelerated time-based stock option and RSU awards for each named executive officer.
-
(4)
-
With
respect to options, reflects the in-the-money value of the unvested portion of such executive officer's options that have vesting provisions based solely on
time, and not performance milestones. The value is calculated by multiplying the amount (if any) by which $14.99, the closing price of our Class A common stock on the NASDAQ Global Select
Market on December 29, 2017, exceeds the exercise price of the option by the number of shares subject to the accelerated portion of the option. With respect to RSUs, the value is calculated by
multiplying the number of unvested RSUs with vesting provisions based solely on time (if any) by $14.99, the closing price of our Class A common stock on the NASDAQ Global Select Market on
December 29, 2017.
-
(5)
-
Mr. Graney's
employment with us terminated in September 2017, and he did not receive any benefits under his severance arrangement or the change of control
plan in connection with his departure.
CEO Pay Ratio
Under the Dodd-Frank Wall Street Reform and Consumer Protection Act, we are required to disclose the median of the annual total compensation of
our employees, the annual total compensation of our principal executive officer, Dr. Hecht, and the ratio of these two amounts. For 2017, our last completed fiscal
year:
-
-
The estimated median of the annual total compensation of all employees of our company (other than Dr. Hecht) was $162,177; and
-
-
Dr. Hecht's annual total compensation, as reported in the Summary Compensation Table included elsewhere in this proxy statement, was
$5,995,456.
Based
on this information for 2017, we estimate that the ratio of the annual total compensation of Dr. Hecht to the median annual total compensation of all employees was 37 to 1.
We believe this pay ratio is a reasonable estimate calculated in a manner consistent with SEC rules based on our payroll and employment records, and the methodology described below. Because the SEC
rules for identifying the median of the annual total compensation of our employees and calculating the pay ratio based on that employee's annual total compensation allow companies to adopt a variety
of methodologies, to apply certain exclusions, and to make reasonable estimates and assumptions that reflect their employee populations and compensation practices, the pay ratio reported by other
companies may not be comparable to the pay ratio for Ironwood, as other companies have employees based in different locations (including other countries), have different business models and employee
needs, have different employee populations and compensation practices and may utilize different methodologies, exclusions, estimates and assumptions in calculating their pay ratios.
To
identify the median of the annual total compensation of all our employees, as well as to determine the annual total compensation of our median employee and Dr. Hecht, we took
the following steps:
-
-
We determined that, as of October 9, 2017, our employee population consisted of approximately 720 individuals with all of these
individuals located in the United States. This population consisted of our full- and part-time employees. We selected October 9, 2017, which is within the last three months of 2017, as the date
upon which we would identify the "median employee" because it enabled us to make such identification in a reasonably efficient and economical manner.
-
-
To identify the "median employee" from our employee population, we compared the amount of salary and wages (including cash bonuses and
incentives) of our employees as reflected in our
54
Table of Contents
payroll
records as reported to the Internal Revenue Service on Form W-2 for 2017. In addition, since we widely distribute annual equity awards to our employees as part of our owner-oriented
compensation philosophy, we included the grant date fair value of such awards in the compensation measure. In making this determination, we annualized the compensation of approximately 109 full-time
employees who were hired in 2017 but did not work for us for the entire fiscal year.
-
-
We identified our median employee using this compensation measure, which was consistently applied to all our employees included in the
calculation. Since all our employees are located in the United States, as is Dr. Hecht, we did not make any cost-of-living adjustments in identifying the "median employee."
-
-
Once we identified our median employee, we combined all of the elements of such employee's compensation for 2017 in accordance with applicable
SEC rules, resulting in annual total compensation of $162,177. The difference between such employee's salary and wages, bonuses, and the grant date fair value of the employee's equity grants, and the
employee's annual total compensation represents the estimated value of such employee's fitness stipend and 401(k) matching contributions.
-
-
With respect to the annual total compensation of our CEO, we used the amount reported in the "Total" column of the Summary Compensation Table
for 2017.
Director Compensation
As with our executive compensation, our director compensation philosophy emphasizes compensation in the form of equity, as we believe it aligns
our directors' interests with those of our stockholders. As such, the vast majority of the compensation that our non-employee directors receive for service on our board is paid in the form of
restricted stock. Vesting of these shares of restricted stock is contingent on each non-employee director continuing to serve as a member of the board on the last day of each applicable vesting
period. Further, whether the shares of restricted stock are vested or not, no director may transfer any shares of restricted stock while such person is a director of Ironwood, subject to limited
exceptions. We believe these forfeiture and transfer restrictions under our director compensation plan effectively create stock ownership guidelines for our directors in that they ensure that the
interests of our directors, each of whom has equity in the business, are aligned with those of our stockholders and they focus our directors on maximizing long-term value.
Under
our director compensation plan, effective January 1, 2014, at each annual meeting of stockholders our non-employee directors receive an annual grant of the number of
restricted shares of our Class A common stock calculated by dividing (i) the dollar amount for total director compensation approximating the 25th percentile of our current peer
group on the date of grant, by (ii) the average closing price of our Class A common stock on the NASDAQ Global Select Market for the six months preceding the month in which the
applicable annual meeting of stockholders occurs. Such restricted shares vest 25% on each three-month anniversary of the grant date over a nine-month period and the remaining 25% on the day before the
date of the annual meeting of stockholders for the next calendar year. For 2017, our compensation and HR committee determined that the 25
th
percentile for total director
compensation for our peer group was approximately $250,000. Accordingly, on May 31, 2017, the date of our 2017 annual meeting of stockholders, each of our non-employee directors received a
grant of restricted stock consistent with the foregoing terms and valuation.
In
addition, pursuant to our director compensation plan, the chair of our board and each of the committee chairs receives annual compensation of $10,000, payable quarterly in
unrestricted stock or cash at the individual director's election. Shares of our Class A common stock issued to our directors under our director compensation plan are granted under our 2010
Plan, in which our directors are
55
Table of Contents
eligible
to participate. Further, non-employee directors are reimbursed for reasonable travel and other expenses incurred in connection with attending meetings of the board of directors and its
committees.
The
following table sets forth information regarding the compensation earned during the year ended December 31, 2017 by each of our directors other than Dr. Hecht, who does
not receive compensation for his service as a director. Dr. Hecht's compensation for his service as our chief executive officer is described in our
Compensation
Discussion and Analysis
and in the
Summary Compensation Table
and related footnotes included elsewhere in this proxy statement.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Fees Earned or
Paid in Cash
($)
|
|
Stock Awards
($)(1)
|
|
All Other
Compensation ($)
|
|
Total ($)
|
|
Andrew Dreyfus
|
|
|
|
|
|
276,719
|
|
|
|
|
|
276,719
|
|
Marsha H. Fanucci
|
|
|
10,000
|
(2)
|
|
276,719
|
|
|
|
|
|
286,719
|
|
Terrance G. McGuire
|
|
|
9,961
|
(3)
|
|
276,719
|
|
|
|
|
|
286,680
|
|
Julie H. McHugh
|
|
|
5,852
|
(4)
|
|
276,719
|
|
|
|
|
|
282,571
|
|
Lawrence S. Olanoff, M.D., Ph.D.
|
|
|
|
|
|
276,719
|
|
|
12,500
|
(5)
|
|
289,219
|
|
Edward P. Owens
|
|
|
10,000
|
(6)
|
|
276,719
|
|
|
|
|
|
286,719
|
|
Amy W. Schulman
|
|
|
|
|
|
426,454
|
(7)
|
|
|
|
|
426,454
|
|
Christopher T. Walsh, Ph.D.
|
|
|
4,137
|
(8)
|
|
|
|
|
|
|
|
4,137
|
|
Douglas E. Williams, Ph.D.
|
|
|
|
|
|
276,719
|
|
|
|
|
|
276,719
|
|
-
(1)
-
On
May 31, 2017, each non-employee member of our board of directors, except Dr. Walsh who transitioned off of our board of directors on such date,
received a restricted stock grant in the amount of 15,625 shares of Class A common stock for service to Ironwood from the date of our 2017 annual meeting of stockholders to the date of our 2018
annual meeting of stockholders. The amount of this restricted stock grant was determined by dividing (i) $250,000 (the dollar amount for total director compensation approximating the
25th percentile of our current peer group on the date of grant), by (ii) the average closing price of our Class A common stock on the NASDAQ Global Select Market for the six
months preceding the month of the 2017 annual meeting of stockholders. Such award of restricted stock had a grant date fair value of $17.71 per share and was granted pursuant to the terms of our
director compensation plan. As of December 31, 2017, 7,812 shares from each such restricted stock award remained unvested.
-
(2)
-
Ms. Fanucci
received this compensation for her services as the chair of our audit committee in 2017.
-
(3)
-
Mr. McGuire
received this compensation for his service as the chair of our board for 2017. Pursuant to our director compensation plan, Mr. McGuire
elected to receive this compensation in unrestricted shares of our Class A common stock. Mr. McGuire received a total of 596 shares of our Class A common stock for such chair
service in 2017.
-
(4)
-
Ms. McHugh
received this compensation for her service as the chair of our governance and nominating committee for a portion of 2017.
-
(5)
-
Dr. Olanoff
received this compensation for his service as a member of our Pharmaceutical Advisory Committee for 2017.
-
(6)
-
Mr. Owens
received this compensation for his services as the chair of our compensation and HR committee for 2017.
-
(7)
-
Ms. Schulman
was elected a director effective January 1, 2017. On such date, and in connection with her election, Ms. Schulman received an award
of 9,793 restricted shares of our Class A common stock, which award represented a prorated portion of the award of restricted shares made to our other non-employee directors on June 1,
2016, our 2016 annual meeting date. Such award
56
Table of Contents
of
restricted stock had a grant date fair value of $15.29 per share (the closing price of our Class A common stock on the NASDAQ Global Select Market on December 30, 2016) and was
granted pursuant to the terms of our director compensation plan. As of December 31, 2017, all of such restricted shares had vested.
-
(8)
-
Dr. Walsh
received this compensation for his service as the chair of our governance and nominating committee for a portion of 2017. Pursuant to our director
compensation plan, Dr. Walsh elected to receive this compensation in unrestricted shares of our Class A common stock. Dr. Walsh received a total of 236 shares of our
Class A common stock for such chair service in 2017.
Compensation Committee Report
We have:
-
1.
-
reviewed
and discussed with management the Compensation Discussion and Analysis found herein; and
-
2.
-
based
on the review and discussions referred to in paragraph (1) above, we recommended to the board of directors that the Compensation Discussion and Analysis
be included in the company's proxy statement on Schedule 14A for filing with the SEC.
|
|
|
|
|
By the Compensation and HR Committee,
|
|
|
Edward P. Owens, Chair
Amy W. Schulman
Douglas E. Williams
|
57
Table of Contents
PROPOSAL NO. 2ADVISORY VOTE ON NAMED
EXECUTIVE OFFICER
COMPENSATION
Our board recommends that you approve the
compensation of our named executive officers as
disclosed in this proxy statement.
Background
At our 2018 annual meeting, we are providing our stockholders with the opportunity to cast an advisory (non-binding) vote on named executive
officer compensation, or a "say-on-pay" vote. This is a non-binding vote on the compensation of our "named executive officers," as described in the
Compensation Discussion and
Analysis
section, the tabular disclosure regarding such compensation, and the accompanying narrative disclosure, all as set forth in this proxy statement.
The
objective of our compensation policies is to provide compensation and incentives which align employee actions and motivations with the interests of our stockholders, attract,
motivate and reward outstanding talent across our company through well-communicated programs that are aligned with our core values and business mission, and support a positive company culture. In
2017, the compensation program for our named executive officers consisted principally of base salary, cash bonus and long-term equity incentive compensation in the form of stock options and RSUs.
While we offer reasonably competitive base salaries and cash bonuses, our compensation program is weighted toward long-term equity incentive compensation as opposed to short-term or cash-based
compensation as we believe this better aligns our executives with our fellow stockholders' interests and the creation of long-term stockholder value. If we achieve our corporate goals over the long
term, we expect our stock price to reflect our performance and the equity awards currently held by our named executive officers to
become an even more significant component of overall compensation. Our compensation and HR committee believes that this approach to executive compensation links compensation directly to continuous
improvements in corporate performance and, ultimately our stock price, or "pay for performance."
Our
previous say-on-pay vote was at our 2017 annual meeting and was approved by more than 98% of the votes cast on such matter. Under the Dodd-Frank Wall Street Reform and Consumer
Protection Act, as well as the provisions of Section 14A of the Exchange Act, we must hold the advisory (non-binding) vote on named executive officer compensation at least once every three
years. Based on the recommendation of our stockholders in 2017, our board determined to provide our stockholders the opportunity to vote (on an advisory basis) on named executive officer compensation
on an annual basis to allow our stockholders to provide us with regular, timely and direct input on our executive compensation philosophy, policies and practices as disclosed in the proxy statement
each year. We believe this practice allows us to further align our compensation programs with our stockholders' interests as stockholder feedback may be taken into consideration as part of the
compensation review process.
Vote Required
Because this proposal seeks a non-binding, advisory vote, there is no "required vote" that would constitute approval. However, our board,
including our compensation and HR committee, values the opinions of our stockholders and, to the extent there are a substantial number of votes cast against the executive officer compensation as
disclosed in this proxy statement, we will consider our stockholders' concerns and evaluate which actions may be appropriate to address those concerns. Broker nominees do not have discretion to vote
on this proposal without your instruction; if you do not instruct your nominee how to vote on this proposal, your nominee will not vote your shares with respect to this proposal. Any shares that are
not voted, whether by abstention, broker non-votes, if any, or otherwise, will not affect the outcome of this proposal.
58
Table of Contents
PROPOSAL NO. 3RATIFICATION OF OUR SELECTION OF AUDITORS
Our board recommends that you ratify the selection of
Ernst & Young LLP as our auditors for fiscal year 2018.
Our
audit committee has appointed Ernst & Young LLP to serve as our auditors for the fiscal year ending December 31, 2018. The firm of Ernst &
Young LLP, an independent registered public accounting firm, has audited the books and accounts of Ironwood since 1998 and has audited our financial statements for the years ended
December 31, 2017, 2016 and 2015. Detailed disclosure of the audit, audit-related and tax fees we paid to Ernst & Young LLP in 2017 and 2016 are set forth below. Based on these
disclosures and information in the audit committee report beginning on page 20 of this proxy statement, our audit committee is satisfied that our auditors are sufficiently independent of
management to perform their duties properly. Although not legally required to do so, our board considers it desirable to seek, and recommends, stockholder ratification of its selection of auditors for
fiscal year 2018.
Representatives
of Ernst & Young LLP are expected to attend the annual meeting to answer any questions and they will have the opportunity to make a statement if they wish.
The
table below presents aggregate fees for professional audit services rendered by Ernst & Young LLP for the years ended December 31, 2017 and 2016 for the audits
of our annual financial statements, and fees billed for other services rendered by Ernst & Young LLP during those periods. It is the audit committee's policy that all audit and non-audit
services to be performed by Ernst & Young LLP be pre-approved. The audit committee annually reviews and pre-approves the permissible services that may be provided by Ernst &
Young LLP to assure the provision of such services does not impair the auditor's independence. In accordance with the pre-approval policy, our management informs the audit committee of each
service performed by Ernst & Young LLP pursuant to the pre-approval policy. Requests to provide services that require separate approval by the audit committee are submitted to the audit
committee or its designee by both our chief financial officer or chief accounting officer and Ernst & Young LLP. All of the services described in the following fee table were approved in
conformity with the audit committee's pre-approval policy.
|
|
|
|
|
|
|
|
|
|
2017
|
|
2016
|
|
Audit
|
|
$
|
1,027,904
|
|
$
|
1,456,362
|
|
Audit-related
|
|
$
|
65,000
|
|
$
|
|
|
Tax
|
|
$
|
|
|
$
|
3,412
|
|
All other
|
|
$
|
307,700
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
1,400,604
|
|
$
|
1,459,774
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Audit
fees for 2017 and 2016 were for professional services rendered for the audits of our financial statements and internal controls over financial reporting, including accounting
consultation, and reviews of quarterly financial statements, as well as for services that are normally provided in connection with regulatory filings or engagements, including comfort letters.
Audit-related
fees for 2017 were for accounting consultations associated with the anticipated adoption of the Accounting Standards Codification Topic 606,
Revenue
from Contracts with Customers
. All audit-related fees were approved by the audit committee.
Tax
fees for 2016 were for professional services, including the preparation of our federal and state tax returns and tax advice. All tax fees were approved by the audit committee.
59
Table of Contents
Other
services included due diligence activities performed during 2017. All other fees were approved by the audit committee.
Other
than the foregoing, Ernst & Young LLP did not provide any other services to us in 2017 or 2016.
Vote Required
The approval of the proposal to ratify the selection of Ernst & Young LLP as our auditors requires a majority of the votes cast
for or against the proposal. To the extent that a broker nominee provides you with Sarissa's proxy materials, such nominee would not have discretion to vote on this proposal; if you did not instruct
your nominee how to vote on this proposal, your nominee will not vote your shares with respect to this proposal. To the extent that a broker nominee does not provide you with Sarissa's proxy
materials, such nominee may vote on your behalf on the
WHITE
proxy card if you do not otherwise provide instructions. Abstentions and broker non-votes,
if any, will not affect the outcome of this proposal.
60
Table of Contents
PROPOSAL NO. 4STOCKHOLDER PROPOSAL
Our board recommends that you vote against
the adoption of the Sarissa proposal.
Background
The company has received notice from Sarissa of its intention to present the following resolution for approval at the annual meeting, which
would result in the repeal any provision of our bylaws in effect at the time of the annual meeting that was not included in the version of the bylaws publicly filed with the SEC on or prior to
March 27, 2018.
Sarissa Proposal
RESOLVED, that any provision of the Fifth Amended and Restated Bylaws of Ironwood Pharmaceuticals, Inc. as of the effectiveness of this
resolution that was not included in the Fifth Amended and Restated Bylaws of Ironwood Pharmaceuticals, Inc. as publicly filed with the Securities and Exchange Commission on or prior to
March 27, 2018, be and hereby is repealed.
Statement in Opposition of the Sarissa Proposal
Our board of directors recommends that stockholders vote "
Against
" the Sarissa proposal for the
following reasons:
The
Sarissa proposal seeks to repeal any provisions of our bylaws that were not reflected in the version publicly filed as of March 27, 2018, without regard to the subject matter
of any bylaw provisions or amendment in question.
There
have been no amendments to the version of our bylaws filed with the SEC as of March 27, 2018. Although our board of directors does not currently expect to adopt any
amendments to the bylaws prior to the annual meeting, the board could determine that such an amendment is necessary and in the best interest of the stockholders. The automatic repeal of any bylaw
amendment, irrespective of its content, could have the effect of repealing one or more properly adopted bylaw amendments that the board determined to be in the best interests of the company and its
stockholders and adopted in furtherance of its fiduciary duties, including in response to future events not yet known to the company.
As
the board is fully empowered by its governing documents and applicable law to adopt, amend, or repeal provisions of our bylaws in accordance with its fiduciary duties, we believe this
proposal represents no purpose other than to limit board actions otherwise permitted by the company's governing documents and Delaware law.
For
these reasons, the board urges stockholders to vote
AGAINST
the Sarissa proposal.
Our board does not endorse the Sarissa proposal and strongly recommends that you disregard any proxy card that may be sent to you by Sarissa. If you have already
voted using a proxy card sent to you by Sarissa, you have every right to change it and we urge you to revoke that proxy by voting using the enclosed WHITE proxy card. Only the latest validly executed
proxy that you timely submit will be counted.
If
you have any questions or require any assistance with voting your shares, please contact our proxy solicitor, MacKenzie Partners, toll-free at (800) 322-2885 or at
(212) 929-5500 or via email to proxy@mackenziepartners.com.
61
Table of Contents
Vote Required
The approval of the proposal to repeal any provisions of our bylaws not included in the bylaws publicly filed as of March 27, 2018
requires 80% of the votes entitled to be cast at the annual meeting. Abstentions and broker non-votes, if any, will have the same effect as a vote against this proposal.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Our directors, executive officers and beneficial owners of more than 10% of our Class A common stock and Class B common stock,
combined, are required under Section 16(a) of the Exchange Act to file reports of ownership and changes in ownership of our securities with the SEC. Our staff assists our directors and
executive officers in preparing ownership reports and reporting ownership changes, and typically files these reports on their behalf. Based on a review of the copies of reports filed by us or by our
10% stockholders and representations that no other reports were required, we believe that during 2017 our directors, executive officers and 10% stockholders complied with all Section 16(a)
filing requirements.
STOCKHOLDER COMMUNICATIONS, PROPOSALS AND NOMINATIONS FOR DIRECTORSHIPS
Communications
A stockholder may send general communications to our board, any committee of our board or any individual director by directing such
communication to Chief Legal Officer, Ironwood Pharmaceuticals, Inc., 301 Binney Street, Cambridge, Massachusetts 02142. All communications will be reviewed by our chief legal officer and, if
requested by the stockholder, forwarded to our board or an individual director, as applicable. Our chief legal officer reserves the right not to forward to our board or any individual director any
abusive, threatening or otherwise inappropriate materials.
Any
request for materials or other communications directed to our Secretary should be sent to: Secretary, Ironwood Pharmaceuticals, Inc., 301 Binney Street, Cambridge,
Massachusetts 02142.
Proposals and Nominations
Stockholders who wish to present a proposal for inclusion in our proxy materials for our 2019 annual meeting should follow the procedures
prescribed in Rule 14a-8 under the Exchange Act and our bylaws. Those procedures require that we receive a stockholder proposal in writing no later than
[ ], 2018 in order for such proposal to be included in our proxy
materials.
Under
our bylaws, stockholders who wish to nominate a director or include a proposal in our 2018 annual meeting of stockholders (but do not wish to include such proposal in our proxy
materials) must give us timely notice. To be timely, a notice of director nomination or other proposal for the 2018 annual meeting of stockholders must be received by us no earlier than
[ ], 2019 and no later than
[ ], 2019, unless the date of the 2019 annual meeting of stockholders
is more than
30 days from the anniversary date of the 2018 annual meeting of stockholders, in which event the notice must be received by us on or before 15 days after the day on which the date of the
2019 annual meeting of stockholders is first disclosed in a public announcement. The notice must contain specified information that is prescribed in our bylaws about you and the director nominee or
the proposal, as applicable. If any director nomination or stockholder proposal is submitted after
[ ], 2019, our bylaws provide that the nomination or the
proposal shall be disregarded.
SEC FILINGS
We file annual, quarterly and current reports, as well as other information with the SEC. You can obtain any of them from the SEC at its website
at
www.sec.gov
or at its Public Reference Room at 100 F Street, N.E., Washington, DC 20549. The documents are also available from us
without charge by requesting them in writing or by telephone from Ironwood Pharmaceuticals, Inc., 301 Binney Street, Cambridge, Massachusetts 02142, Attention: Corporate
Communications, telephone: (617) 621-7722.
62
Table of Contents
Annex A
SUPPLEMENTAL INFORMATION REGARDING PARTICIPANTS
The following tables ("Nominees" and "Officers and Employees") set forth the name and business address of all of our directors and the name,
present principal occupation and business address of our officers and employees who, under the rules of the SEC, are considered to be participants in our solicitation of proxies from our stockholders
in connection with the annual meeting (collectively, the "Participants").
Directors, Including Director Nominees
The principal occupations of our directors, including nominees for directors at the annual meeting, are set forth under the sections above
titled "Directors and Corporate Governance" of this proxy statement. The name of the directors are set forth below and the business addresses for all the directors is c/o Ironwood
Pharmaceuticals, Inc., 301 Binney Street, Cambridge, Massachusetts 02142.
|
|
|
Name
|
|
|
Terrance G. McGuire, Chair
Andrew Dreyfus
Marsha H. Fanucci
Peter M. Hecht, Ph.D., Chief Executive Officer
Julie H. McHugh
Lawrence S. Olanoff, M.D., Ph.D.
Edward P. Owens
Amy W. Schulman
Douglas E. Williams, Ph.D.
|
|
|
Officers and Employees
The principal occupations of our officers and employees who are considered Participants are set forth below. The principal occupation refers to
such person's position with the company, and the business address for each person is c/o Ironwood Pharmaceuticals, Inc., 301 Binney Street, Cambridge, Massachusetts 02142.
|
|
|
Name
|
|
Position
|
Peter M. Hecht, Ph.D.
|
|
Chief Executive Officer, Director
|
Gina Consylman
|
|
Senior Vice President, Chief Financial Officer, and Treasurer
|
Mark G. Currie, Ph.D.
|
|
Senior Vice President, Chief Scientific Officer and President of R&D
|
Halley E. Gilbert
|
|
Senior Vice President, Chief Legal Officer, and Secretary
|
William Huyett
|
|
Chief Operating Officer
|
Thomas A. McCourt
|
|
Senior Vice President, Marketing and Sales and Chief Commercial Officer
|
Meredith Kaya
|
|
Vice President, Investor Relations and Corporate Communications
|
Information Regarding Ownership of Company Securities By Participants
The amount of the company's securities beneficially owned by directors and named executive officers as of March 31, 2018, including the
number of securities for which beneficial ownership can be acquired within 60 days of such date, is set forth in the table appearing under the heading "Security Ownership of Certain Beneficial
Owners and Management" above. The amount of the company's securities beneficially owned as of the same date, including the number of securities for which
A-1
Table of Contents
beneficial
ownership can be acquired within 60 days of such date, for the remaining Participants is set forth in the table below.
The
number of shares beneficially owned by the remaining Participants is determined under rules issued by the SEC. Under these rules, beneficial ownership includes any shares as to which
the individual or entity has sole or shared voting power or investment power. Each of the stockholders listed has sole voting and investment power with respect to the shares beneficially owned by the
stockholder unless noted otherwise, subject to community property laws where applicable.
The
percentage of common stock beneficially owned by each remaining Participant is based on 151,604,044 shares of common stock outstanding on March 31,
2018 137,606,687 shares of Class A common stock and 13,997,357 shares of Class B common stock). Each share of Class B common stock is convertible at any time into one
share of Class A common stock. Shares of common stock that may be acquired within 60 days following March 31, 2018 pursuant to the exercise of options or the vesting of RSUs are
included in the holdings of each stockholder, as applicable, and are deemed to be outstanding for the purpose of computing the percentage ownership of such holder. Such amounts, however, are not
included in the holdings of any other stockholder in the table and are not deemed to be outstanding for computing the percentage ownership of any other holder shown in the table. Beneficial ownership
representing less than one percent is denoted with an "*."
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares Beneficially Owned
|
|
|
|
|
Class A
Common
Stock
|
|
Class B
Common
Stock
|
|
|
|
|
% Total Voting
Power(1)
|
Name of Beneficial Owner
|
|
Shares
|
|
%
|
|
Shares
|
|
%
|
William Huyett(2)
|
|
|
|
|
*
|
|
|
|
|
|
*
|
|
*
|
Meredith Kaya(3)
|
|
|
82,681
|
|
*
|
|
|
|
|
|
|
|
*
|
-
(1)
-
Percentage
total voting power represents voting power with respect to all shares of our Class A common stock and Class B common stock, as a single
class, on matters in which holders of our Class B common stock are entitled to one vote per share. Each share of Class A common stock and each share of Class B common stock has
one vote per share, except (a) on the following matters (on which each share of Class A common stock has one vote per share and each share of Class B common stock has ten votes
per share), if submitted to a vote of stockholders: (i) adoption of a merger or consolidation agreement involving Ironwood; (ii) a sale of all or substantially all of Ironwood's assets;
or (iii) a dissolution or liquidation of Ironwood; and (b) on every matter if and when any individual, entity or "group" (as such term is used in Regulation 13D of the Exchange
Act) has, or has publicly disclosed (through a press release or a filing with the SEC) an intent to have, beneficial ownership of 30% or more of the number of outstanding shares of Class A
common stock and Class B common stock, combined. Holders of shares of Class A common stock and Class B common stock vote together as a single class on all matters (including those
set forth in this proxy statement) submitted to a vote of stockholders, unless otherwise required by our certificate of incorporation or bylaws. The Class B common stock is convertible at any
time by the holder into shares of Class A common stock on a share-for-share basis.
-
(2)
-
Mr.
Huyett joined Ironwood in December 2017.
-
(3)
-
Includes
76,532 shares of Class A common stock issuable to Ms. Kaya upon the exercise of options that are exercisable within 60 days following
March 31, 2018.
Information Regarding Transactions in the Company's Securities by
Participants
The following table sets forth information regarding purchases and sales of the company's securities by each Participant during the past two
years. No part of the purchase price or market value
A-2
Table of Contents
of
these securities is represented by funds borrowed or otherwise obtained for the purpose of acquiring or holding such securities.
Company Securities Purchased or Sold
(April 1, 2016 through March 31, 2018)
|
|
|
|
|
|
|
|
|
|
Name
|
|
Transaction Date
|
|
Number of Shares
|
|
Transaction Description
|
|
Peter M. Hecht, Ph.D.
|
|
01/11/17
|
|
|
32,993
|
|
|
6
|
|
|
|
01/12/17
|
|
|
32,994
|
|
|
6
|
|
|
|
02/27/17
|
|
|
760,000
|
|
|
1
|
|
|
|
12/06/17
|
|
|
26,595
|
|
|
5
|
|
|
|
12/06/17
|
|
|
56,000
|
|
|
6
|
|
|
|
12/07/17
|
|
|
57,405
|
|
|
6
|
|
|
|
02/21/18
|
|
|
580,000
|
|
|
1
|
|
Gina Consylman
|
|
08/19/16
|
|
|
207
|
|
|
7
|
|
|
|
12/16/16
|
|
|
10,500
|
|
|
2
|
|
|
|
02/22/17
|
|
|
1,431
|
|
|
7
|
|
|
|
02/22/17
|
|
|
408
|
|
|
7
|
|
|
|
02/24/17
|
|
|
2,962
|
|
|
9
|
|
|
|
02/27/17
|
|
|
26,250
|
|
|
2
|
|
|
|
08/18/17
|
|
|
207
|
|
|
7
|
|
|
|
11/10/17
|
|
|
864
|
|
|
7
|
|
|
|
01/02/18
|
|
|
15,000
|
|
|
1
|
|
|
|
01/02/18
|
|
|
7,500
|
|
|
2
|
|
|
|
02/21/18
|
|
|
1,298
|
|
|
7
|
|
|
|
02/21/18
|
|
|
376
|
|
|
7
|
|
|
|
02/21/18
|
|
|
1,920
|
|
|
7
|
|
|
|
02/21/18
|
|
|
30,000
|
|
|
2
|
|
|
|
02/21/18
|
|
|
60,000
|
|
|
1
|
|
Mark G. Currie, Ph.D.
|
|
10/31/16
|
|
|
300,000
|
|
|
5
|
|
|
|
12/07/16
|
|
|
2,500
|
|
|
11
|
|
|
|
01/06/17
|
|
|
34,013
|
|
|
5
|
|
|
|
01/18/17
|
|
|
55,987
|
|
|
5
|
|
|
|
02/22/17
|
|
|
1,800
|
|
|
7
|
|
|
|
02/27/17
|
|
|
250,000
|
|
|
1
|
|
|
|
03/14/17
|
|
|
60,000
|
|
|
5
|
|
|
|
03/14/17
|
|
|
60,000
|
|
|
9
|
|
|
|
12/07/17
|
|
|
1,500
|
|
|
11
|
|
|
|
01/24/18
|
|
|
60,000
|
|
|
6
|
|
|
|
02/21/18
|
|
|
1,634
|
|
|
7
|
|
|
|
02/21/18
|
|
|
215,000
|
|
|
1
|
|
Halley E. Gilbert
|
|
05/25/16
|
|
|
4,410
|
|
|
10
|
|
|
|
05/25/16
|
|
|
10,000
|
|
|
6
|
|
|
|
05/25/16
|
|
|
5,865
|
|
|
6
|
|
|
|
06/30/16
|
|
|
930
|
|
|
4
|
|
|
|
11/11/16
|
|
|
14,000
|
|
|
6
|
|
|
|
12/30/16
|
|
|
379
|
|
|
4
|
|
|
|
06/30/17
|
|
|
791
|
|
|
4
|
|
|
|
02/14/17
|
|
|
37,385
|
|
|
6
|
|
|
|
02/22/17
|
|
|
2,365
|
|
|
7
|
|
|
|
02/22/17
|
|
|
2,674
|
|
|
7
|
|
A-3
Table of Contents
|
|
|
|
|
|
|
|
|
|
Name
|
|
Transaction Date
|
|
Number of Shares
|
|
Transaction Description
|
|
|
|
02/27/17
|
|
|
80,000
|
|
|
1
|
|
|
|
02/27/17
|
|
|
40,000
|
|
|
2
|
|
|
|
06/22/17
|
|
|
35,000
|
|
|
6
|
|
|
|
12/29/17
|
|
|
347
|
|
|
4
|
|
|
|
02/21/18
|
|
|
2,987
|
|
|
7
|
|
|
|
02/21/18
|
|
|
2,343
|
|
|
7
|
|
|
|
02/21/18
|
|
|
2,411
|
|
|
7
|
|
|
|
02/21/18
|
|
|
35,000
|
|
|
2
|
|
|
|
02/21/18
|
|
|
70,000
|
|
|
1
|
|
William Huyett
|
|
01/02/18
|
|
|
337,500
|
|
|
1
|
|
|
|
01/02/18
|
|
|
56,250
|
|
|
2
|
|
Thomas A. McCourt
|
|
06/30/16
|
|
|
2,258
|
|
|
4
|
|
|
|
02/22/17
|
|
|
1,520
|
|
|
7
|
|
|
|
02/27/17
|
|
|
157,500
|
|
|
1
|
|
|
|
02/27/17
|
|
|
26,250
|
|
|
2
|
|
|
|
05/15/17
|
|
|
30,000
|
|
|
5
|
|
|
|
05/15/17
|
|
|
30,000
|
|
|
9
|
|
|
|
06/30/17
|
|
|
1,681
|
|
|
4
|
|
|
|
02/21/18
|
|
|
1,917
|
|
|
7
|
|
|
|
02/21/18
|
|
|
1,426
|
|
|
7
|
|
|
|
02/21/18
|
|
|
21,875
|
|
|
2
|
|
|
|
02/21/18
|
|
|
131,250
|
|
|
1
|
|
Meredith Kaya
|
|
11/11/16
|
|
|
607
|
|
|
7
|
|
|
|
12/16/16
|
|
|
2,625
|
|
|
2
|
|
|
|
12/16/16
|
|
|
15,750
|
|
|
1
|
|
|
|
02/22/17
|
|
|
145
|
|
|
7
|
|
|
|
02/22/17
|
|
|
293
|
|
|
7
|
|
|
|
02/27/17
|
|
|
5,000
|
|
|
2
|
|
|
|
02/27/17
|
|
|
10,000
|
|
|
1
|
|
|
|
05/01/17
|
|
|
3,000
|
|
|
2
|
|
|
|
05/01/17
|
|
|
2,000
|
|
|
1
|
|
|
|
11/10/17
|
|
|
218
|
|
|
7
|
|
|
|
11/10/17
|
|
|
618
|
|
|
7
|
|
|
|
12/15/17
|
|
|
6,000
|
|
|
1
|
|
|
|
02/01/18
|
|
|
1,000
|
|
|
2
|
|
|
|
02/01/18
|
|
|
6,000
|
|
|
1
|
|
|
|
02/21/18
|
|
|
266
|
|
|
7
|
|
|
|
02/21/18
|
|
|
134
|
|
|
7
|
|
|
|
02/21/18
|
|
|
442
|
|
|
7
|
|
|
|
02/21/18
|
|
|
270
|
|
|
7
|
|
|
|
02/21/18
|
|
|
3,125
|
|
|
2
|
|
|
|
02/21/18
|
|
|
18,750
|
|
|
1
|
|
Andrew Dreyfus
|
|
04/06/16
|
|
|
2,585
|
|
|
3
|
|
|
|
06/01/16
|
|
|
23,674
|
|
|
3
|
|
|
|
05/31/17
|
|
|
15,625
|
|
|
3
|
|
Marsha H. Fanucci
|
|
06/01/16
|
|
|
23,674
|
|
|
3
|
|
|
|
05/31/17
|
|
|
15,625
|
|
|
3
|
|
Terrance G. McGuire
|
|
06/01/16
|
|
|
23,674
|
|
|
3
|
|
|
|
06/15/16
|
|
|
196
|
|
|
3
|
|
|
|
09/15/16
|
|
|
166
|
|
|
3
|
|
A-4
Table of Contents
|
|
|
|
|
|
|
|
|
|
Name
|
|
Transaction Date
|
|
Number of Shares
|
|
Transaction Description
|
|
|
|
12/15/16
|
|
|
161
|
|
|
3
|
|
|
|
03/15/17
|
|
|
142
|
|
|
3
|
|
|
|
05/31/17
|
|
|
15,625
|
|
|
3
|
|
|
|
06/15/17
|
|
|
142
|
|
|
3
|
|
|
|
09/15/17
|
|
|
153
|
|
|
3
|
|
|
|
12/15/17
|
|
|
159
|
|
|
3
|
|
|
|
03/15/18
|
|
|
162
|
|
|
3
|
|
Julie H. McHugh
|
|
06/01/16
|
|
|
23,674
|
|
|
3
|
|
|
|
05/31/17
|
|
|
15,625
|
|
|
3
|
|
|
|
09/05/17
|
|
|
1,500
|
|
|
10
|
|
|
|
12/04/17
|
|
|
1,500
|
|
|
10
|
|
|
|
03/05/18
|
|
|
1,500
|
|
|
10
|
|
Lawrence S. Olanoff
|
|
06/01/16
|
|
|
23,674
|
|
|
3
|
|
|
|
06/03/16
|
|
|
2,200
|
|
|
10
|
|
|
|
09/06/16
|
|
|
3,200
|
|
|
10
|
|
|
|
12/05/16
|
|
|
3,200
|
|
|
10
|
|
|
|
03/03/17
|
|
|
3,200
|
|
|
10
|
|
|
|
05/31/17
|
|
|
15,625
|
|
|
3
|
|
|
|
06/08/17
|
|
|
3,200
|
|
|
10
|
|
|
|
09/05/17
|
|
|
2,000
|
|
|
10
|
|
|
|
12/04/17
|
|
|
2,000
|
|
|
10
|
|
|
|
03/05/18
|
|
|
2,000
|
|
|
10
|
|
Edward P. Owens
|
|
06/01/16
|
|
|
23,674
|
|
|
3
|
|
|
|
05/31/17
|
|
|
15,625
|
|
|
3
|
|
Amy W. Schulman
|
|
01/01/17
|
|
|
9,793
|
|
|
3
|
|
|
|
05/31/17
|
|
|
15,625
|
|
|
3
|
|
Douglas E. Williams
|
|
06/01/16
|
|
|
23,674
|
|
|
3
|
|
|
|
05/31/17
|
|
|
15,625
|
|
|
3
|
|
Key to Abbreviations Used
|
|
|
|
|
1
|
|
Grant of Stock Options
|
|
2
|
|
Grant of RSUs
|
|
3
|
|
Grant of Director Restricted Stock or Chair Award
|
|
4
|
|
Purchase of Class A Common Stock pursuant to Employee Stock Purchase Plan
|
|
5
|
|
Stock Option Exercise
|
|
6
|
|
Stock Option Exercise and Open Market Sale of Underlying Shares Pursuant to 10b5-1 Plan in Effect at the Time of Sale
|
|
7
|
|
Sale to Cover Taxes upon RSU Vestings Pursuant to 10b5-1 Plan in Effect at the Time of Sale
|
|
8
|
|
Open Market Acquisition
|
|
9
|
|
Open Market Sale
|
|
10
|
|
Sale Pursuant to 10b5-1 Plan
|
|
11
|
|
Gift
|
A-5
Table of Contents
Miscellaneous Information Regarding Participants
Except as described in this Annex A or otherwise disclosed in this proxy statement, to the company's
knowledge:
-
-
No Participant owns any securities of the company which such Participant owns of record but not beneficially.
-
-
No Participant is, or was within the past year, a party to any contract, arrangements or understandings with any person with respect to any
securities of the company, including, but not limited to joint ventures, loan or option arrangements, puts or calls, guarantees against loss or guarantees of profit, division of losses or profits, or
the giving or withholding of proxies.
-
-
No associate of any Participant owns beneficially, directly or indirectly, any securities of the company. No Participant owns beneficially,
directly or indirectly, any securities of any parent or subsidiary of the company.
-
-
No Participant nor any associate of a Participant is a party to any transaction, since the beginning of the company's last fiscal year, or any
currently proposed transaction, in which (i) the company was or is to be a participant, (ii) the amount involved exceeds $120,000 and (iii) any Participant or any related person
thereof had or will have a direct or indirect material interest.
-
-
No Participant, nor any associate of a Participant, has any arrangement or understanding with any person (i) with respect to any future
employment by the company or its affiliates or (ii) with respect to any future transactions to which the company or any of its affiliate will or may be a party.
-
-
No Participant has any substantial interest, direct or indirect, by security holdings or otherwise, in any matter to be acted upon at the
annual meeting.
A-6
IRONWOOD PHARMACEUTICALS, INC. YOUR VOTE IS IMPORTANT. PLEASE VOTE TODAY. We encourage you to take advantage of Internet or telephone voting. Both are available 24 hours a day, 7 days a week. Internet and telephone voting is available through 11:59 p.m., Eastern Time the day before the annual meeting date. VOTE BY INTERNET WWW.CESVOTE.COM Use the Internet to transmit your voting instructions up until 11:59 p.m., Eastern Time the day before the annual meeting date. Have your WHITE proxy card in hand when you access the website and follow the instructions. OR VOTE BY TELEPHONE 1-888-693-8683 If you are a holder of record, you may use a touch-tone telephone to transmit your voting instructions up until 11:59 p.m., Eastern Time the day before the annual meeting date. Have your WHITE proxy card in hand when you call and follow the instructions. OR VOTE BY MAIL Mark, sign and date your WHITE proxy card and return it in the postage-paid envelope we have provided to: Ironwood Pharmaceuticals, Inc., c/o Corporate Election Services, P.O. Box 3230, Pittsburgh, PA 15230. If you vote your proxy by Internet or by telephone, you do NOT need to mail back your proxy card Your Internet or telephone vote authorizes the named proxies to vote your shares in the same manner as if you marked, signed and returned your WHITE proxy card Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting to be held on [], 2018: Annual Report, Notice & Proxy Statement are available at www.ViewOurMaterial.com/IRWD If submitting a proxy by mail, please sign and date the card below and fold and detach card at perforation before mailing. Ð Ð The Board of Directors recommends you vote FOR the following: 1. Election of Directors: Nominees: The Board of Directors recommends you vote FOR the following proposal: 2. Approval, by non-binding advisory vote, of the compensation paid to the named executive officers. FOR AGAINST ABSTAIN (1) Lawrence S. Olanoff FOR ALL (2) Douglas E. Williams WITHHOLD ALL (3) Amy W. Schulman FOR ALL EXCEPT The Board of Directors recommends you vote FOR the following proposal: 3. Ratification of the selection of Ernst & Young LLP as the Company's independent registered public accounting firm for 2018. FOR AGAINST ABSTAIN To withhold authority to vote for any individual nominee(s), mark For All Except and write the number(s) of the nominee(s) on the line below. The Board of Directors recommends you vote AGAINST the following proposal: 4. Repeal of any provisions of our bylaws not included in the bylaws publicly filed as of March 27, 2018. FOR AGAINST ABSTAIN NOTE: In their discretion, the Proxies are authorized to vote upon such other business as may properly come before the meeting or any adjournment or postponement thereof. Please check here if you plan to attend this meeting. Signature Date Signature (Joint Owner) Date Please sign exactly as your name(s) appear(s) hereon. When signing as attorney, executor, administrator, or other fiduciary, please give full title as such. Joint owners should each sign personally. All holders must sign. If a corporation or partnership, please sign in full corporate or partnership name by authorized officer. CONTROL NUMBER Î PRELIMINARY SUBJECT TO COMPLETION Replacement Proxy Card....BG File buried
TO SUBMIT A PROXY BY MAIL, DETACH ALONG THE PERFORATION, Ð MARK, SIGN, DATE AND RETURN THE BOTTOM PORTION PROMPTLY USING THE ENCLOSED ENVELOPE. Ð IRONWOOD PHARMACEUTICALS, INC. [], 2018 [] [AM/PM] Eastern Time [] WHITE PROXY THIS WHITE PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS The stockholder(s) hereby appoint(s) Peter M. Hecht and William Huyett, or either of them, as proxies, each with the power to appoint his substitute, and hereby authorize(s) them to represent and to vote, as designated on the reverse side of this ballot, all of the shares of common stock of IRONWOOD PHARMACEUTICALS, INC. that the stockholder(s) is/are entitled to vote at the Annual Meeting of Stockholders to be held at [][AM/PM], Eastern Time on [], 2018 at [], and any adjournment or postponement thereof. The stockholder(s) hereby revoke(s) any proxy previously given and acknowledge(s) receipt of the notice and proxy statement for the Annual Meeting of Stockholders. This proxy, when properly executed, will be voted in the manner directed herein. If no such direction is made, this proxy will be voted in accordance with the recommendations of the Board of Directors. PLEASE COMPLETE, DATE, SIGN, AND MAIL THIS PROXY CARD PROMPTLY IN THE ENCLOSED POSTAGE-PAID ENVELOPE OR PROVIDE YOUR INSTRUCTIONS TO VOTE BY THE INTERNET OR BY TELEPHONE. (Continued and to be signed on the reverse side) PRELIMINARY SUBJECT TO COMPLETION
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