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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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 |
Amneal Pharmaceuticals,
Inc.
(Name of Registrant as Specified in Its Charter)
(Name of Person(s) Filing Proxy Statement, if
other than the Registrant)
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No fee required. |
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Fee paid previously with preliminary materials. |
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Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rules 14a-6(i)(1) and 0-11. |
Notice of
2022
Annual Meeting of Stockholders
and Proxy Statement
You are cordially invited to attend the Amneal
Pharmaceuticals, Inc. 2022 Annual Meeting of
Stockholders.
MONDAY, MAY 9, 2022
9:00 a.m., Eastern Daylight Time
Virtual Meeting at www.virtualshareholdermeeting. com/AMRX2022
Items to be Voted On
| 1. | Elect as directors the 10 nominees named in the accompanying proxy statement; |
| 2. | Approve the compensation of our named executive officers on an advisory basis; |
| 3. | Ratify the appointment of Ernst & Young LLP as our independent registered public accounting
firm for fiscal year 2022; and |
| 4. | Transact such other business as may properly come before the annual meeting or any adjournment
or postponement of the meeting. |
Record Date
You are eligible to vote if you were a
stockholder of record at the close of business on March 11, 2022. A list of stockholders of record will be made available to stockholders
during the meeting at www.virtualshareholdermeeting.com/AMRX2022 when you enter your 16-Digit Control Number.
Voting
Your vote is important, and you are invited
to attend the annual meeting. Whether or not you expect to attend the annual meeting, we encourage you to vote as soon as possible.
To ensure your shares are voted, you may vote your shares in advance of the meeting over the internet, by telephone or, if you
requested to receive printed proxy materials, by mailing a proxy or voting instruction card. Voting over the internet, by telephone
or by mail will ensure your representation at the annual meeting regardless of whether you attend the meeting.
Virtual Annual Meeting
Due to the ongoing COVID-19 pandemic and
to ensure the health and safety of our directors, members of management and stockholders, we are hosting a virtual meeting this
year. The live audio webcast will be available at www.virtualshareholdermeeting.com/AMRX2022.
This proxy statement and the related materials
are first being distributed or made available to stockholders on or about March 25, 2022.
By Order of the Board of Directors,
Jason B. Daly
Senior Vice President, Chief Legal Officer & Corporate
Secretary
Bridgewater, New Jersey
March 25, 2022
| Review your proxy statement and vote in advance of the meeting in one of three ways: |
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| INTERNET |
BY TELEPHONE |
BY MAIL |
| Visit the website on your proxy card |
Call the telephone number
on your proxy card |
Sign, date and return your proxy card in the
enclosed envelope |
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Please refer to the enclosed proxy materials
or the information forwarded by your bank, broker or other holder of record to see which voting methods are available to you.
Important Notice Regarding the Availability
of Proxy Materials for the Annual Meeting of Stockholders to be held on May 9, 2022:
The notice of annual meeting, this proxy
statement and our annual report on Form 10-K for the fiscal year ended December 31, 2021 are available at www.proxyvote.com.
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To
Our Fellow Stockholders, Stakeholders and Colleagues,
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Chintu Patel
Co-Founder,
Co-Chief Executive
Officer and Director |
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Chirag Patel
Co-Founder, Co-Chief
Executive Officer,
President and Director |
2021 was another successful year for Amneal
as we continued to drive strong execution, a robust cadence of new product innovations, enhanced operating efficiencies delivering
margin expansion, and strategic M&A bolstering our core capabilities, pipeline, and portfolio. Today, Amneal is a diversified
and growing pharmaceutical company across Generics, Specialty, Injectables, Biosimilars, Distribution and International. Our mission
– we make healthy possible – is central to our success in improving access to affordable, high-quality, and
innovative medicines. We are deeply grateful for our talented global employee family, which continues to grow stronger in size,
passion, capability, and achievement. It is their hard work and passion for helping others that enables Amneal to impact so many
lives.
2021 Highlights
Across Amneal, there were several notable accomplishments in 2021,
including:
| • | Acquired Kashiv Specialty Pharmaceuticals in January 2021, which is focused on the development of complex generics, innovative
drug delivery platforms and novel 505(b)(2) drugs; |
| • | Launched 28 new Generics products as the portfolio continues to shift towards more complex, non-oral solid products; |
| • | Acquired Puniska Healthcare in November 2021, expanding our Injectables business with additional infrastructure, manufacturing
capabilities and capacity for the U.S. market and building a foundation for international expansion; |
| • | Delivered strong growth in key promoted Specialty products, including Rytary® and Unithroid®,
leveraging an expanded commercial team; |
| • | Advanced our Specialty pipeline, including reporting positive data topline results from our pivotal Phase 3 RISE-PD clinical
trial of IPX-203 for patients with Parkinson’s Disease; |
| • | Added the DHE autoinjector for migraines to our Specialty pipeline, expected to launch in 2022; |
| • | Drove continued growth in our durable AvKARE distribution business in the U.S.; and |
| • | Bolstered key core capabilities in R&D, commercial, and other functional areas. |
These substantial achievements contributed
to our strong 2021 Company results, highlighted by 5% revenue growth and 18% adjusted EBITDA growth. One of the key achievements
in 2021 was higher gross margins driven by new product launches and operating efficiencies. Operational excellence and higher gross
margins were key stated goals since we returned as Co-CEOs in August 2019, and we achieved both in 2021. In addition, we enhanced
our business, particularly the higher growth areas including Specialty, Injectables, and Biosimilars with new commercial products
and additional pipeline assets, and further built key capabilities that we believe will serve the Company well over the long-term.
We closed 2021 with $257 million of cash
and cash equivalents on our balance sheet and continued to fund inorganic investments through cash generated from operations. Our
consistent performance led to an upgrade of our long-term debt by Moody’s in 2021. Over the last few years, Amneal has driven
a significant decrease in net leverage from 7.0x at the end of 2019, to 5.3x at the end of 2020, to 4.6x at the end of 2021, with
our target of 3.0x to 4.0x net leverage.
As we move forward, we look to continue building
our business for long-term success and impact in 2022. This year we expect a number of exciting new product launches, including
our entry into biosimilars. In early 2022, we acquired Saol Therapeutics’s Baclofen franchise, which expanded our neurology
presence into muscle spasticity. We believe that the strategic actions we have prioritized for 2022 will differentiate and position
Amneal to continue creating value for all stakeholders.
A Responsible Commitment to Making Healthy
Possible
At Amneal, we are guided by a deep sense
of purpose: We make healthy possible. To us, “healthy” not only represents our commitment to producing quality,
accessible generic and specialty medicines, but also to elevating our people and our communities, striving for leadership in social
and environmental stewardship, and delivering meaningful value for all who depend on us. We are driving that vision by strengthening
the talent, diversity and capabilities of our employee family. We are deepening our portfolio of innovative Specialty products
focused on Central Nervous System, Movement Disorders and Endocrinology to help address unmet therapeutic needs. We are directing
our strong R&D capabilities to create more affordable generics of complex products that help more patients access essential
medicines. We are focused on driving efficiencies across our global facilities and supply chain that minimize our consumption of
natural resources. And we are enhancing our support for social advocacy, therapeutic communities, employee volunteerism and philanthropic
partnerships.
We invite you to read Amneal Pharmaceuticals’
“At a Glance,” which follows this letter and describes what we do and how we improve access to medications for
patients around the world while creating long-term value for our stockholders.
We also encourage you to read the pages of
this proxy statement to inform your voting decisions. We ask for your voting support, invite you to attend our annual meeting and
encourage you to communicate with us via the various means described in this proxy statement.
Sincerely,
Chintu Patel
Co-Founder, Co-CEO and Director
Chirag K. Patel
Co-Founder, Co-CEO, President and Director
March 25, 2022
AMNEAL PHARMACEUTICALS’ INC. AT-A-GLANCE
WHAT DO WE DO?
We founded Amneal Pharmaceuticals, Inc. (“Amneal”
or the “Company”) in 2002 to provide access to affordable medicines. Amneal is a global, vertically integrated, multi-billion
dollar generics and specialty pharmaceuticals company. We provide over 7,000 high-quality jobs and help consumers obtain access
to the medicines they need.
WHAT IS OUR STRATEGY?
We are focused on providing high-quality,
essential medicines to patients and creating value for all stakeholders. Our strategy is sharply focused, yet we believe provides
the appropriate flexibility needed to navigate an unpredictable healthcare environment where cost pressures are acute. Key elements
supporting our value creation strategy include:
| • | Operating large-scale, in-house best-in-class manufacturing facilities globally; |
| • | Creating a carefully funded research and development platform to feed a large and diverse pipeline
of over 230 products to supplement our current portfolio of more than 250 marketed commercial products; |
| • | Executing on a strategy to steadily move up the value chain to more complex and difficult-to-manufacture
products that offset the steady erosion of our base Generics business and that have higher barriers to entry and more defensible
revenue streams, including: |
| • | Our move into sterile injectables, which typically have more durable revenue streams with institutional
customers; |
| • | Our expansion into the federal healthcare sector through AvKARE, which diversifies our channel
mix; and |
| • | Our Specialty segment, which benefits from a truly differentiated platform in neurology and endocrinology
that helps us serve large populations with unmet needs and leverage our existing commercial infrastructure; |
| • | Maintaining collaborative relationships with regulators and sustaining an excellent track record
within the industry, with no major observations at our sites to date; |
| • | Steadily broadening our scientific and industry expertise through management of and partnership
with adjacent life-sciences areas; |
| • | Making strategic acquisitions in adjacent life sciences areas to enable continual and rapid pivoting
and learning; and |
| • | Driving impact through corporate responsibility and ESG: |
| • | In 2021, the Company advanced these critical efforts by building a formal environmental, social
and governance (“ESG”) framework. We established an ESG function to guide our ESG programs and ongoing reporting. We
published our inaugural Corporate Social Responsibility report highlighting six key areas of focus (Company, People, Products,
Governance, Planet and Impact). Further, consistent with its charter, our Nominating and Governance Committee oversees our extensive
ESG efforts, with management providing regular updates to the Committee regarding the Company’s progress. |
| • | We are pleased with our progress, but we are just getting started. Every year, we aim to review
and enhance our ESG programs and reporting to ensure that we are improving, staying competitive and honoring our commitment to
being a responsible, transparent, and trusted business. We invite stockholder input as we work to enhance how our ESG strategy
drives sustainable value for our stockholders, employees, customers, local communities and the environment. |
| • | Further information on our Responsibility program is available at https://www.amneal.com/about/responsibility.
Please note that this website and our Corporate Responsibility Report are not part of our public disclosures and are not part of
our proxy solicitation materials. |
WHAT DIFFERENTIATES AMNEAL PHARMACEUTICALS?
We combine the best of public company accountability,
large scale vertical integration and a strong track record of agile execution with a long-term vision for the healthcare industry
and Amneal’s leadership role in it. We believe this is a combination that is particularly valuable in the global, affordable
medicines sector in these complex and challenging times.
Safe
Harbor Statement
Certain statements contained herein, regarding
matters that are not historical facts, may be forward-looking statements (as defined in the U.S. Private Securities Litigation
Reform Act of 1995). Such forward-looking statements include statements regarding management’s intentions, plans, beliefs,
expectations or forecasts for the future, including among other things: discussions of future operations; expected operating results
and financial performance; impact of planned acquisitions and dispositions; the Company’s strategy for growth; product development;
regulatory approvals; market position and expenditures. Words such as “plans,” “expects,” “will,”
“anticipates,” “estimates” and similar words are intended to identify estimates and forward-looking statements.
The reader is cautioned not to rely on these
forward-looking statements. These forward-looking statements are based on current expectations of future events. If the underlying
assumptions prove inaccurate or known or unknown risks or uncertainties materialize, actual results could vary materially from
the expectations and projections of Amneal. Such risks and uncertainties include, but are not limited to: our ability to successfully
develop, license, acquire and commercialize new products on a timely basis; the competition we face in the pharmaceutical industry
from brand and generic drug product companies, and the impact of that competition on our ability to set prices; our ability to
obtain exclusive marketing rights for our products; our ability to manage our growth through acquisitions and otherwise; our dependence
on the sales of a limited number of products for a substantial portion of our total revenues; the continuing trend of consolidation
of certain customer groups; our dependence on third-party suppliers and distributors for raw materials for our products and certain
finished goods; legal, regulatory and legislative efforts by our brand competitors to deter competition from our generic alternatives;
the impact of severe weather; the impact of the ongoing COVID-19 pandemic; risks related to federal regulation of arrangements
between manufacturers of branded and generic products; our reliance on certain licenses to proprietary technologies from time
to time; the significant amount of resources we expend on research and development; the risk of product liability and other claims
against us by consumers and other third parties; risks related to changes in the regulatory environment, including U.S. federal
and state laws related to healthcare fraud abuse and health information privacy and security and changes in such laws; changes
to the Food and Drug Administration (“FDA”) product approval requirements; the impact of healthcare reform and changes
in coverage and reimbursement levels by governmental authorities and other third-party payers; our dependence on third-party agreements
for a portion of our product offerings; the impact of global economic conditions, including any economic effects stemming from
adverse geopolitical events; our ability to identify, make and integrate acquisitions or investments in complementary businesses
and products on advantageous terms; our substantial amount of indebtedness and our ability to generate sufficient cash to service
our indebtedness in the future, and the impact of interest rate fluctuations on such indebtedness; our obligations under a tax
receivable agreement may be significant; and the high concentration of ownership of our Class A Common Stock and the fact that
we are controlled by the Amneal Group. The forward-looking statements contained herein are also subject generally to other risks
and uncertainties that are described from time to time in our filings with the Securities and Exchange Commission (the “SEC”),
including under Item 1A, “Risk Factors” in our most recent Annual Report on Form 10-K and in our subsequent reports
on Forms 10-Q and 8-K. Investors are cautioned not to place undue reliance on any such forward-looking statements, which speak
only as of the date they are made, and we undertake no obligation to revise or update such statements to reflect the occurrence
of events or circumstances after the date hereof.
Corporate
Governance
Corporate Structure
The Company is a holding company, whose principal
assets are common units (“Amneal Common Units”) of Amneal Pharmaceuticals, LLC (“Amneal LLC”). In 2018,
Amneal LLC completed the acquisition of Impax Laboratories, Inc. (“Impax”), a generic and specialty pharmaceutical
company (the “Combination”).
The group, together with their affiliates and
certain assignees, who owned Amneal LLC when it was a private company (the “Amneal Group”) held 50.4% of Amneal Common
Units and the Company held the remaining 49.6% as of December 31, 2021. Although the Company has a minority economic interest in
Amneal LLC, it is Amneal LLC’s sole managing member, having the sole voting power to make all of Amneal LLC’s business
decisions and control its management.
Stockholders Agreement
In connection with the Combination, we entered
into a stockholders agreement with the Amneal Group, which was amended and restated in August 2019 (the “Stockholders Agreement”),
that sets forth, among other things, certain rights and obligations of the Company and the Amneal Group with respect to the corporate
governance of the Company.
Board Composition
The Stockholders Agreement provides that, until
the Amneal Group owns less than 10% of the outstanding shares of the Company’s common stock, the Board of Directors of the Company
(the “Board”) will consist of no more than 13 members.
As of the date hereof, the Board has fixed its
size at 10, composed as follows:
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Amneal
Group Directors. Six directors, including the Chairman of the Board, were designated by the Amneal Group. The directors
designated by the Amneal Group, two of whom qualify as and are considered independent under the rules of the New York Stock
Exchange (“NYSE”), are referred to herein as the “Amneal Group Directors.” |
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Non-Amneal
Group Directors. Four directors were designated as the Company Independent Directors (as defined in the Stockholders
Agreement). The directors not designated by the Amneal Group are referred to herein as the “Non-Amneal Group Directors.” |
Pursuant to, and effective as of, the amendment to the Stockholders Agreement in August 2019, the Amneal Group representative
who appoints the Amneal Group Directors will not be (i) an employee of the Company or (ii) an individual controlled, directly
or indirectly, by employees of the Company, a Company subsidiary, or any person controlled by the Company. This change was
made in connection with the appointment of Chirag Patel and Chintu Patel as co-Chief Executive Officers in order to preserve
the independence of those Amneal Group Directors who are intended to be independent.
For so long as the Amneal Group continues to
beneficially own more than 50% of the outstanding shares of the Company, the Amneal Group Directors will have the right to designate
the Chairman or Co-Chairmen of the Board, and the Non-Amneal Group Directors will have the right to designate a lead Independent
Director of the Board (as applicable).
TPG Group Holdings has the right, subject to
certain ownership thresholds and other requirements, to designate a director for appointment to the Company’s Board (which
right TPG currently has not exercised) or to designate an observer to the Board.
There are currently two observers to the Board,
one of whom has been designated by the Board of Directors and one of whom has been designated by TPG Group Holdings.
For so long as the Amneal Group continues to
beneficially own more than 50% of the outstanding shares of the Company, the Amneal Group will have the right to designate for
nomination the lowest number of designees that constitute a majority of the total number of directors comprising the Board. The
Company will cause such nominee(s) to be included in any slate of nominees recommended by the Board to the stockholders of the
Company for election. Seventy-five percent (75%) of the directors serving on the Nominating and Corporate Governance Committee
will be required to approve (i) a decision not to nominate any of the initial directors of the Company as of the closing of the
Combination for re-election to the Board at either of the first two annual meetings of stockholders of the Company following the
completion of the Combination and (ii) until the third annual meeting of stockholders of the Company following the completion of
the Combination, any change to the individuals serving as Chairman or Co-Chairmen of the Company’s Board.
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If the Amneal Group beneficially owns 50% or
less but more than 10% of the outstanding shares of the Company, the Amneal Group will have the right to designate a number of
directors proportionate to the beneficial ownership of outstanding shares of the Company held by the Amneal Group (rounded up to
the nearest whole number); provided, however, that such rounding shall not result in the Amneal Group having the right to designate
a majority of the total number of directors comprising the Board when the Amneal Group beneficially owns 50% or less of the outstanding
shares of the Company’s common stock.
With respect to the Amneal Group
Directors, until the date on which the Amneal Group ceases to beneficially own at least 10% of the outstanding shares of the
Company (the “Trigger Date”), any vacancy will be filled by the Board with a director designated by the Amneal
Group, except when such vacancy is created when the number of the Amneal Group Directors then serving on the Board is in
excess of the number of Amneal Group designees the Amneal Group has the right to designate under the Company’s Bylaws
and the Stockholders Agreement.
With respect to the Non-Amneal Group Directors,
the Nominating and Corporate Governance Committee will recommend to the Company’s Board to fill any vacancy (other than the
CEO of the Company) with a person who satisfies all the qualifications of a Company Independent Director (as defined
in the Stockholders Agreement), subject to the prior written consent of the Conflicts Committee.
Board Committees
The Stockholders Agreement provides that the
Company’s Board shall have the following committees: (i) Audit Committee, (ii) Nominating and Corporate Governance Committee,
(iii) Compensation Committee, and (iv) Conflicts Committee. The formation of, composition of, and amendment to the charter
of any other committee requires the approval of 75% of the directors on the Company’s Board.
Until the Trigger Date, each committee of the
Company’s Board (other than the Conflicts Committee) will include at least one director designated by the Amneal Group, subject
to the applicable NYSE requirements. If at any time, any committee (other than the Conflicts Committee) does not have at least
one such Amneal Group-designated director, the Amneal Group will be entitled to designate a director to have observer rights with
respect to such committee.
Amneal Group Agreement to Vote
Until the Trigger Date, the Amneal Group must
cause its shares to be present for quorum purposes at any stockholders meeting, vote in favor of all director nominees recommended
by the Company’s Board, and not vote in favor of the removal of any Non-Amneal Group Director, unless such removal is recommended
by the Nominating and Corporate Governance Committee.
Amneal Group Consent Rights
For so long as the Amneal Group beneficially
owns more than 25% of the outstanding shares of the Company, the Company will not take the following actions without obtaining
prior consent of the Amneal Group:
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amend, modify, or repeal any provision of the Company’s Certificate of Incorporation
or Bylaws in a manner that adversely impacts any Amneal Group member; |
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effect any change in the authorized number of directors, except pursuant to the Stockholders
Agreement; |
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create or reclassify any new or existing class or series of capital stock to grant rights,
preferences, or privileges with respect to voting, liquidation, redemption, conversion or dividends that are senior to or
on parity with those of the shares held by the Amneal Group; or |
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consummate any transaction as a result of which (a) more than 50% of the outstanding shares
of the Company will be beneficially owned by any persons other than Amneal Group members and (b) any Amneal Group member receives
an amount or form of consideration different from that which is granted to other holders of the Company’s shares. |
Bylaws Amendments
As previously
disclosed and referenced above, in light of the substantial investment of the Amneal Group prior to the Combination, the Company
continues to have certain legacy obligations and corporate governance features that were adopted in connection with the Combination.
In particular, the Bylaws that we adopted following the Combination contained a provision requiring
the vote of not less than two-thirds of the voting power of the issued and outstanding shares entitled to vote at a duly called
and convened annual or special meeting of stockholders in order to amend certain limited Bylaws provisions, including provisions
related to stockholder meetings and proposals as well as to the number, term and removal of and nominating
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process for directors. Given the consent rights
afforded to the Amneal Group described above pursuant to the Stockholders Agreement, coupled with the continued significant ownership
stake of the Company by the Amneal Group, as exemplified by the Company’s designation as a “controlled company”
as further discussed below, we expect that this provision will remain in place for the foreseeable future unless otherwise determined
by the Amneal Group.
Code of Business Conduct; Corporate Governance
Guidelines; Board Committee Charters
We are committed to conducting every aspect
of our business in an ethical, open and honest manner and in full compliance with the law, both in letter and in spirit. Our Code
of Business Conduct applies to all of our employees, officers and directors and lays out guidelines for our employees, officers
and directors to follow as they conduct business on behalf of our Company. We have also adopted Corporate Governance Guidelines,
which, together with our Certificate of Incorporation, Bylaws and Board committee charters, form the framework for the corporate
governance of the Company. In addition, the Stockholders Agreement between the Company and the Amneal Group and the limited liability
company agreement of Amneal LLC set forth a number of corporate governance requirements with respect to the Company.
The full text of the Code of Business Conduct
as well as our Corporate Governance Guidelines, Audit Committee Charter, Compensation Committee Charter, Nominating and Corporate
Governance Committee Charter and Conflicts Committee Charter are available at the investors section of our web site, http://investors.amneal.com.
We intend to satisfy our disclosure obligations, if any, with respect to any amendment to, or waiver from, a provision of the
Code of Business Conduct that applies to our directors or executive officers, including our principal executive officers, principal
financial officer or principal accounting officer, in the investors section of our web site. Stockholders may request free printed
copies of the Code of Business Conduct, Corporate Governance Guidelines and the Board committee charters by writing to: Amneal
Pharmaceuticals, Inc., Attention: Corporate Secretary, 400 Crossing Boulevard, Bridgewater, NJ 08807 or corporatesecretary@amneal.com.
Controlled Company
Status
The Amneal Group
holds a majority of the voting power of our common stock. As a result, we are a “controlled company” as defined by
NYSE listing rules and may elect to avail ourselves of exemptions from certain NYSE corporate governance listing requirements.
Despite our status as a controlled company, we have chosen to govern ourselves without using these exemptions, which we believe
sets the right tone with respect to our approach to corporate governance. Generally speaking, a controlled company is exempt from
the requirements of (a) a majority of the board of directors consisting of independent directors; (b) a nominating and
corporate governance committee composed entirely of independent directors with a written charter addressing specified matters;
and (c) a compensation committee composed entirely of independent directors, with a written charter addressing specified matters.
Although we currently do not avail ourselves of any of these exemptions, if we were to take advantage of any of them, our stockholders
would not have the same protections afforded to stockholders of companies that are subject to all of the NYSE corporate governance
listing requirements.
Board Leadership Structure
Our Board of Directors
is led by an independent Chairman. The Chairman’s responsibilities include, but are not limited to, presiding over all meetings
of the Board at which members of management are not present, including any executive sessions of independent directors, reviewing
Board meeting schedules and agendas and acting as a liaison between the independent directors and the Co-Chief Executive Officers.
Our Co-Chief Executive Officers do not hold leadership positions on the Board, but our Corporate Governance Guidelines do not prohibit
them from doing so, as the Board retains the discretion to modify its leadership structure
in the future as it deems appropriate. The Board has determined that its leadership structure currently is in the best interests
of the Company and our stockholders because it allows our Co-Chief Executive Officers to focus on our day-to-day business and our
Chairman to focus on managing Board operations and effectiveness and other corporate governance matters, while providing independent
Board leadership.
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Meetings of the Board
of Directors
In the fiscal year ended December 31, 2021
(“fiscal 2021”), the Board of Directors held eight meetings. Each of the directors attended at least 75% of the aggregate
of all meetings held by the Board of Directors and each committee of the Board of Directors on which he or she served during fiscal
2021, in each case held during the period for which he or she was a director and committee member. Our independent directors meet
in executive session at least twice annually. The Chairman presides over executive sessions of the independent directors.
Communication with the Board of Directors;
Director Attendance at Annual Meetings
Stockholders,
employees and all other interested parties may communicate with a member or members or a committee of the Board of Directors by
addressing their correspondence to the Board member or members or committee c/o Corporate Secretary, Amneal Pharmaceuticals,
Inc., 400 Crossing Boulevard, Bridgewater, NJ 08807 or by email to corporatesecretary@amneal.com. Our corporate secretary will
review the correspondence and will determine, in his good faith judgment, which stockholder communications will be relayed to the
Board of Directors, any committee or any director. Our corporate secretary has the authority to discard or disregard any
inappropriate communications or to take other appropriate actions with respect to any such inappropriate communications. Subject
to the foregoing, mail addressed to “Board of Directors” or “non-management directors” will be forwarded
to the Chairman.
Recognizing that director attendance at our
annual meetings can provide our stockholders with a valuable opportunity to communicate with Board members about issues affecting
our Company, we encourage and expect our directors to attend each annual meeting of stockholders. All 10 of our directors attended
the 2021 annual meeting.
Director Independence
In making independence determinations, the Board
of Directors observes all criteria for independence established by the SEC, the NYSE, other governing laws and regulations, and
the Stockholders Agreement, and considers all relevant facts and circumstances. In accordance with our Corporate Governance Guidelines,
to be considered independent:
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the director must meet the bright-line independence tests under the listing standards of the
NYSE; and |
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the Board must affirmatively determine that the director otherwise has no
material relationship with our Company either directly or as a partner, stockholder or officer of an organization that has
a relationship with our Company. |
The Board of Directors, through its Conflicts
Committee, annually reviews all relevant business relationships any director may have with our Company. As a result of its annual
review, the Board has affirmatively determined that each of the following directors meets the independence tests under the listing
standards of the NYSE, none of them has a material relationship with the Company and, as a result, such directors are independent:
Paul Meister, J. Kevin Buchi, Jeff George, John Kiely, Ted Nark, and Shlomo Yanai.
In making the foregoing independence determination,
the Board of Directors considered the following relationship in light of the Company’s independence standards and determined
that it does not constitute a material relationship with the Company:
Ted Nark was previously listed on the website
of Tarsadia Investments, a family office investment firm, as an independent senior advisor. Tushar Patel, who is a member of the
Amneal Group and an observer to the Board, is the Chairman and Founder of Tarsadia Investments. Gautam Patel, who is a member of
the Amneal Group and a member of the Board, is a Managing Director of Tarsadia Investments. Mr. Nark does not receive and has never
received any compensation from Tarsadia Investments. Further, Mr. Nark does not maintain an office at, participate in the management
of, or have access to any proprietary or confidential information held by Tarsadia Investments nor does he have any contractual
or legal relationship with Tarsadia or Tushar Patel.
In addition to the director independence standards
described above, the Stockholders Agreement imposes additional independence requirements that apply in certain circumstances. The
Stockholders Agreement defines a “Company Independent Director” as a director who:
| • |
meets the independence standards under the rules of the NYSE; |
| • |
is a non-Amneal Group Director; |
| • |
is not a current or former member of the Board of Directors of any Amneal
Group member or its affiliates or officer or employee of any Amneal Group member or its affiliates; |
| • |
does not have and has not had any other material relationship with the Company
or its affiliates; and |
| • |
is designated as a “Company Independent Director.” |
| |
|
| www.amneal.com |
|
AMNEAL PHARMACEUTICALS,
INC. | 2022 Proxy Statement |
|
12 |
| |
|
Committees of the
Board of Directors
The Board of Directors has five standing committees:
an Audit Committee, a Compensation Committee, a Nominating and Corporate Governance Committee, a Conflicts Committee, and a Technology
and Operational Compliance Committee.
The following table sets forth the members of
each committee and the number of meetings held during fiscal 2021 for each of the Board’s committees, as well as each director’s
status as either independent or not independent and either an Amneal Group Director or Non-Amneal Group Director.
| |
|
Independent |
|
Amneal
Group
Director |
|
Non-Amneal
Group
Director |
|
Audit
Committee |
|
Compensation
Committee |
|
Nominating
and Corporate
Governance
Committee |
|
Conflicts
Committee |
|
Technology
and
Operational
Compliance
Committee |
| Emily Peterson Alva |
|
|
|
 |
|
|
|
|
|
|
|
|
|
|
|
|
| J. Kevin Buchi |
|
 |
|
|
|
|
|
|
|
|
|
|
|
Chair |
|
|
| Jeff George |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Chair |
| John Kiely |
|
|
|
|
|
|
|
Chair |
|
|
|
|
|
|
|
|
| Paul Meister |
|
|
|
|
|
|
|
|
|
|
|
Chair |
|
|
|
|
| Ted Nark |
|
|
|
|
|
|
|
|
|
Chair |
|
|
|
|
|
|
| Chintu Patel |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Chirag Patel |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Gautam Patel |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Shlomo Yanai |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| # of Meetings in 2021 |
|
|
|
|
|
|
|
6 |
|
6 |
|
4 |
|
7 |
|
4 |
Audit Committee
The principal duties and responsibilities of
our Audit Committee are to assist the Board in its oversight of:
| • |
the quality and integrity of the Company’s
financial statements; |
| • |
the Company’s compliance with legal and regulatory
requirements; |
| • |
the implementation of the Company’s enterprise
risk management program and policies with respect to risk assessment and risk management, including cyber risks and information
security; |
| • |
the independent auditor’s qualifications,
performance and independence; and |
| • |
the performance of the Company’s internal
audit function. |
The Audit Committee has the power to investigate
any matter brought to its attention within the scope of its duties. It also has the authority to retain counsel and advisors to
fulfill its responsibilities and duties. Each director who serves on the Audit Committee is independent under the listing standards
of the NYSE and as that term is used in Section 10A(m)(3) of the Securities Exchange Act of 1934, as amended. The Board of Directors
has determined that each member of the Audit Committee meets the financial literacy requirements of the NYSE. Further, the Board
of Directors has determined that John Kiely qualifies as an Audit Committee financial expert as that term is defined by applicable
SEC regulations and has designated Mr. Kiely as the Audit Committee’s financial expert.
The Audit Committee operates under a written
charter adopted by the Board of Directors. A copy of the charter is available at the investor relations section of our website
at https://investors. amneal.com/corporate-governance/policies. The report of the Audit Committee begins on page 58 of this proxy
statement.
| |
AMNEAL PHARMACEUTICALS,
INC. | 2022 Proxy Statement |
|
13 |
| |
|
Compensation Committee
The principal duties and responsibilities of
the Compensation Committee are as follows:
| • |
review and oversee the Company’s
overall compensation philosophy and oversee the development and implementation of compensation programs aligned with the Company’s
business strategy; |
| • |
review and make recommendations to the Board in
overseeing the compensation of the Company’s directors and Co-Chief Executive Officers and review and approve the compensation
of the Company’s other executive officers; |
| • |
oversee the Company’s policies and practices
with respect to managing compensation-related risks; and |
| • |
oversee and approve the management continuity process. |
Each director who serves on the
Compensation Committee is independent under the listing standards of the NYSE and applicable SEC regulations with respect to
Compensation Committees. In addition to satisfying all other applicable independence requirements, all members of the
Compensation Committee qualify as “non-employee directors” for purposes of Rule 16b-3 under the Securities
Exchange Act of 1934, as amended (the “Exchange Act”). The Compensation Committee operates under a written
charter adopted by the Board of Directors, a copy of which is available at the investor relations section of our website at
https://investors.amneal.com/corporate-governance/policies. The report of the Compensation Committee is on page 37 of this
proxy statement.
Pursuant to the Stockholders Agreement, the
Amneal Group has the right to nominate two of the four directors serving on the Compensation Committee for so long as the Amneal
Group beneficially owns more than 50% of the outstanding shares of the Company. The remaining directors are designated by a majority
of the Company Independent Directors of the Company’s Board.
Nominating and Corporate Governance Committee
The principal duties and responsibilities of
the nominating and governance committee are as follows:
| • |
identify individuals qualified to become Board members
consistent with the criteria approved by the Board; |
| • |
recommend to the Board director
nominees for election by stockholders; |
| • |
take leadership role in overseeing
management’s handling of ESG matters of importance to the Company; |
| • |
develop and recommend to the Board
a set of Corporate Governance Guidelines; and |
| • |
oversee the evaluation of the
Board and management. |
Each director who serves on the Nominating and
Corporate Governance Committee is independent under the listing standards of the NYSE. The Nominating and Corporate Governance
Committee operates under a written charter adopted by the Board of Directors, a copy of which is available at the investor relations
section of our website at https://investors.amneal.com/ corporate-governance/policies.
Pursuant to the Stockholders Agreement, the
Amneal Group has the right to nominate two of the four directors serving on the Nominating and Corporate Governance Committee for
so long as the Amneal Group beneficially owns more than 50% of the outstanding shares of the Company. The remaining directors are
designated by a majority of the Company Independent Directors of the Company’s Board.
Conflicts Committee
The principal duties and responsibilities of
the Conflicts Committee are to provide leadership and guidance to the Board and the Company regarding transactions or situations
involving potential conflicts of interest between the Company and its related parties.
The Conflicts Committee operates under a written
charter adopted by the Board of Directors, a copy of which is available at the investor relations section of our website https://investors.
amneal.com/corporate-governance/policies.
Pursuant to the Stockholders Agreement,
until the Trigger Date, the Board will have a Conflicts Committee comprised solely of Company Independent Directors. Any
amendments to the Conflicts Committee Charter will be approved by (i) 75% of the directors of the Company’s Board, (ii)
a majority of the Company Independent Directors, and (iii) a majority of the Conflicts Committee. The responsibilities of the
Conflicts Committee include approval of certain transfers of shares of the Company by an Amneal Group member to third
parties, approval of any related party transactions, and approval of any material amendment to the Stockholders Agreement, as
set forth in the Conflicts Committee Charter.
Technology and Operational Compliance Committee
The principal duties and responsibilities of
the Technology and Operational Compliance Committee are to assist the Board in overseeing the Company’s application of technology
to its manufacturing, research and development and operations and quality compliance functions, and to act as an advisory committee
to management to provide input in connection with the Company’s operations.
| www.amneal.com |
|
AMNEAL PHARMACEUTICALS,
INC. | 2022 Proxy Statement |
|
14 |
| |
|
The Board’s
Role in Risk Oversight
Management is responsible for managing the day-to-day
risks our Company faces. Our Board of Directors is responsible for:
| • |
confirming that management has implemented
an appropriate system to manage these risks, i.e., to identify, assess, mitigate, monitor and communicate about these risks;
and |
| • |
providing effective risk oversight through the Board’s
committee structure and oversight processes. |
Beyond these fundamental responsibilities for
risk oversight, our Board concentrates on the broader implications of our strategic plans and allows the committees to focus on
specific areas of risk. Our directors, through their risk oversight role, are responsible for confirming that the risk management
processes designed and implemented by the Company’s executive officers and other senior managers are consistent with the
Company’s corporate strategy and are functioning as intended.
The Board believes that full and open communication
between management and the Board of Directors is essential for effective risk management and oversight. Our executive officers
attend our quarterly Board meetings. In addition to making quarterly presentations at such meetings regarding our operations, our
executive officers are available to discuss any questions or concerns raised by the Board relating to risk management and any other
matters. In addition, management typically reports on cybersecurity matters to our Audit Committee twice a year.
While the Board is ultimately responsible for
risk oversight at our Company, our Board committees assist the Board in fulfilling its oversight responsibilities in certain areas
of risk.
Audit Committee
In accordance with its charter, the Audit
Committee is required to, among other things, focus on the reasonableness of control processes for identifying and managing
key business, financial and regulatory reporting risks. The Audit Committee is also mandated by its charter to discuss with
management our Company’s major financial risk exposures and the steps management has taken to monitor and control such
exposures, including, as required by the NYSE, our risk assessment and risk management policies. The Audit Committee monitors
our Company’s credit risk, liquidity risk, regulatory risk, operational risk and enterprise risk through regular
reviews with management, external auditors and our Company’s internal audit function. The Audit Committee reviews and
discusses with management the implementation, execution and performance of the Company’s enterprise risk management
program and the strategies, processes and controls pertaining to the management of the company’s information technology
operations, including cyber risks and information security.
Compensation Committee
The Compensation Committee assists the Board
in fulfilling its oversight responsibilities with respect to the evaluation and management of risks arising from our compensation
policies and programs. As a result of its evaluation, the Compensation Committee has concluded that the risks arising from our
compensation policies and practices are not reasonably likely to have a material adverse effect on our Company.
Nominating and Corporate Governance Committee
The Nominating and Corporate Governance
Committee assists the Board in fulfilling its oversight responsibilities with respect to the management of risks associated
with corporate governance, including Board structure, size, membership and succession planning for our directors, as well as
ESG matters of importance to the Company. As discussed in more detail in “Director Nominations--Board and Organizational
Diversity,” and consistent with the Company’s commitment to strong ESG standards and diverse representation on its
Board, the Nominating and Corporate Governance Committee has made it a priority to identify an additional, highly-qualified,
diverse candidate for the Board in advance of the 2023 Annual Meeting of Stockholders.
Conflicts Committee
The Conflicts Committee assists the Board in
fulfilling its oversight responsibilities with respect to the management of the risks associated with the conflicts of interest
that may arise from certain related party transactions.
Technology and Operational Compliance Committee
The Technology and Operational Compliance Committee
assists the Board in fulfilling its oversight responsibilities with respect to the management of the risks associated with the
Company’s use of technology, including in its manufacturing and research and development operations.
| |
AMNEAL PHARMACEUTICALS,
INC. | 2022 Proxy Statement |
|
15 |
| |
|
Director Nominations
The Nominating and Corporate Governance Committee
considers recommendations for directorships submitted by our stockholders on a substantially similar basis as it considers other
nominees. Stockholders who wish the Nominating and Corporate Governance Committee to consider their recommendations for nominees
for the position of director should submit their recommendations, in accordance with the procedures (including the information
requirements) set forth in our Bylaws, in writing to: Corporate Secretary, Amneal Pharmaceuticals, Inc., 400 Crossing Boulevard,
Bridgewater, NJ 08807. For the Nominating and Corporate Governance Committee to have adequate time to consider such candidate,
the stockholder’s notice should be received at the address above within the time period set forth in our Bylaws (see “Director
Nominations and Other Proposals to Be Presented at Our 2023 Annual Meeting” below).
In its assessment of each potential candidate,
the Nominating and Corporate Governance Committee reviews the nominee’s personal and professional integrity, ethics and values
and ability to make mature business decisions. The Nominating and Corporate Governance Committee may also consider the following
criteria, as well as any other factor the committee deems relevant:
| • |
the candidate’s experience in
corporate management, such as serving as an officer of a publicly held company; |
| • |
the candidate’s experience as a board member
of a publicly held company; |
| • |
the candidate’s professional and academic
experience relevant to our industry; |
| • |
the strength of the candidate’s leadership
skills; |
| • |
the candidate’s experience in finance and
accounting and executive compensation practices; |
| • |
diversity of viewpoints, background, experience
and other demographics; and |
| • |
whether the candidate has the time required for
the preparation, participation and attendance at board and committee meetings. |
Nominees may also be recommended by directors,
members of management, or, in some cases, by a third-party firm. In identifying and considering candidates for nomination to the
Board, the Nominating and Corporate Governance Committee may consider, in addition to the requirements described above and set
out in its charter, quality of experience, our needs and the range of knowledge, experience and diversity represented on the Board.
Each director candidate is evaluated by the Nominating and Corporate Governance Committee based on the same criteria and in the
same manner, regardless of whether the candidate was recommended by a stockholder or by others.
The Board of Directors does not have a formal
policy on Board diversity as it relates to the selection of nominees for the Board. That said, the Board believes that diversity
and a variety of experiences and viewpoints should be represented on the Board. In selecting a director nominee, the Nominating
and Corporate Governance Committee focuses on skills, viewpoints, expertise or background that would complement the existing Board.
The Nominating and Corporate Governance Committee seeks to identify candidates representing diverse experience at policy-making
levels in business, management, marketing, finance, human resources, communications and other areas that are relevant to our activities.
In addition, one of the many factors that the Board and the Nominating and Corporate Governance Committee carefully considers is
the importance to the Company of ethnic and gender diversity. The Nominating and Corporate Governance Committee assesses its effectiveness
in this regard when evaluating the composition of the Board.
In the case of a recommendation submitted by
a stockholder, after full consideration, the stockholder proponent will be notified of the decision of the Nominating and Corporate
Governance Committee.
The Nominating and Corporate Governance Committee
conducts the appropriate and necessary inquiries with respect to the backgrounds and qualifications of all director nominees. Diversity
is essential to Amneal’s success. It starts at the top, with five out of ten of our executives identifying as diverse by
race, ethnicity, or gender, and permeates through the organization of Amneal employees. In 2021, women represented 19% of our global
workforce of Amneal employees. In the United States, they represented 39% of our workforce and held 27% of leadership roles at
the level of Director and above for Amneal employees. Approximately 69% of our U.S. workforce of Amneal employees identified as
diverse by race or ethnicity. The Nominating and Corporate Governance Committee also reviews the independence of each candidate
and other qualifications of all director candidates, as well as considers questions of possible conflicts of interest between director
nominees and our Company. After the Nominating and Corporate Governance Committee has completed its review of a nominee’s
qualifications and conducted the appropriate inquiries, the Nominating and Corporate Governance Committee makes a determination
whether to recommend the nominee for approval by the Board of Directors. If the Nominating and Corporate Governance Committee decides
to recommend the director nominee for nomination by the Board of Directors and such recommendation is accepted by the Board, the
form of our proxy solicitation will include the name of the director nominee.
Board and Organizational Diversity
The Company also places a high priority on creating
a Board that reflects expanded experiences and perspectives, including experiences and perspectives arising out of diversity related
to race, gender, and areas of expertise. Consistent with this philosophy, our Board reflects a mix of ethnic and gender diversity.
We are committed to expanding that diversity
further. To that end, the Nominating and Corporate Governance Committee and the Board have made it a priority to identify an additional,
highly-qualified candidate for the Board in advance of the 2023 Annual Meeting of Stockholders.
| www.amneal.com |
|
AMNEAL PHARMACEUTICALS,
INC. | 2022 Proxy Statement |
|
16 |
| |
|
Director Compensation
Each of our non-employee directors
receives an annual fee payable in cash. In addition, so that our non-employee directors have an ownership interest aligned
with our stockholders, each non-employee director also receives an annual grant of restricted stock units. Board members also
receive an initial equity grant when they join the Board. Members of our Board committees receive an additional annual fee
for each committee on which they serve. In addition to the annual grant of restricted stock units that all non-employee
directors are eligible to receive, our Chairman receives an additional annual award of restricted stock units with a grant
date fair value of $100,000 in connection with his increased duties. From time to time, the Compensation Committee reviews
the compensation of our non-employee directors with our independent compensation consultant and makes recommendations to the
Board with respect to any changes; our non-employee director compensation program was last reviewed in May 2021. In
connection with this update, and as recommended by the independent compensation consultant based on market practices, the
non-employee directors received an increase to their annual grant of restricted stock units and members of the Conflicts
Committee received an increase to their annual cash fee.
| Our director compensation
program is summarized in the table below. |
|
|
| |
|
|
| Annual Cash Retainer |
|
$75,000 |
| Annual Equity Grant |
|
|
| Restricted stock units (target value) |
|
$205,000/$305,000 for Chairman |
| Vesting Schedule |
|
1 year cliff vesting |
| Additional Cash Fees for Committee Service |
|
|
| Audit Committee (Chair/Member) |
|
$25,000/$15,000 |
| Compensation Committee (Chair/Member) |
|
$20,000/$10,000 |
| Nominating and Corporate Governance Committee (Chair/Member) |
|
$15,000/$7,500 |
| Conflicts Committee (Chair/Member) |
|
$20,000/$10,000 |
| Technology and Operational Compliance Committee (Chair/Member) |
|
$15,000/$5,000 |
During fiscal 2021, our non-employee directors received the following
compensation:
| Name | |
Fees
Earned or Paid in Cash | | |
Stock
Awards(9) | | |
Total | |
| Emily Peterson Alva(1) | |
$ | 80,000 | | |
$ | 205,001 | | |
$ | 285,001 | |
| J. Kevin Buchi(2) | |
$ | 114,533 | | |
$ | 205,001 | | |
$ | 319,534 | |
| Jeff George(3) | |
$ | 123,516 | | |
$ | 205,001 | | |
$ | 328,517 | |
| John Kiely(4) | |
$ | 116,016 | | |
$ | 205,001 | | |
$ | 321,017 | |
| Paul Meister(5) | |
$ | 105,000 | | |
$ | 305,000 | | |
$ | 410,000 | |
| Ted Nark(6) | |
$ | 103,601 | | |
$ | 205,001 | | |
$ | 308,602 | |
| Gautam Patel(7) | |
$ | 80,000 | | |
$ | 205,001 | | |
$ | 285,001 | |
| Shlomo Yanai(8) | |
$ | 98,516 | | |
$ | 205,001 | | |
$ | 303,517 | |
| (1) |
As of December 31, 2021, Ms. Alva had 35,406 RSUs outstanding
and 53,021 options outstanding. |
| (2) |
As of December 31, 2021, Mr. Buchi had 35,406 RSUs outstanding and 81,397
options outstanding. |
| (3) |
As of December 31, 2021, Mr. George had 35,406 RSUs outstanding and 28,506
options outstanding. |
| (4) |
As of December 31, 2021, Mr. Kiely had 35,406 RSUs outstanding and 28,506
options outstanding. |
| (5) |
As of December 31, 2021, Mr. Meister had 52,677 RSUs outstanding and
115,156 options outstanding. |
| (6) |
As of December 31, 2021, Mr. Nark had 35,406 RSUs outstanding and 53,021
options outstanding. |
| (7) |
As of December 31, 2021, Mr. Patel had 35,406 RSUs outstanding and 53,021
options outstanding. |
| (8) |
As of December 31, 2021, Mr. Yanai had 35,406 RSUs outstanding and 28,506
options outstanding. |
| (9) |
The dollar amounts represent the value of RSUs granted in 2021 based
on the closing market price on the NYSE of our common stock on the grant date. |
| |
|
| |
AMNEAL PHARMACEUTICALS,
INC. | 2022 Proxy Statement |
|
17 |
| |
|
Employee directors
do not receive any separate compensation for their Board activities. Prior to their appointment in August 2019 as Co-Chief Executive
Officers, Chintu Patel and Chirag Patel received compensation for their service as non-employee directors in accordance with the
program described above. Following these appointments, they no longer receive compensation
for service as directors. See “Compensation Discussion and Analysis” beginning on page 30 for information about their
compensation as Co-Chief Executive Officers.
Director Stock Ownership Guidelines
In order to further align the interests of our
non-employee directors with the interests of our stockholders, we require our non-employee directors to own our stock as set forth
below.
| Position |
Minimum Ownership Guideline |
| Non-employee directors |
3x annual cash retainer |
We adopted our stock ownership guidelines in
May 2018, and we expect our non-employee directors to be able to achieve the required ownership thresholds by five years from the
date of adoption of the guidelines. Newly elected directors will have five years from the date of their appointment or election.
For the purpose of determining stock ownership levels, we include shares underlying restricted stock and restricted stock units
(whether or not vested) and shares underlying “in-the-money” vested stock option awards. All of our non-employee directors
have achieved the minimum ownership thresholds.
| www.amneal.com |
|
AMNEAL PHARMACEUTICALS,
INC. | 2022 Proxy Statement |
|
18 |
| |
|
Proposal 1 Election
of Directors
Introduction
Our Company’s Bylaws provide for the annual election of directors.
Upon the recommendation of our Nominating and Corporate Governance Committee, our Board of Directors has nominated for election
each of our current directors.
At the annual meeting, the 10 nominees for director are to be elected
to hold office until the next annual meeting of stockholders and until their successors have been elected and qualified. Each of
the nominees has consented to serve as a director if elected. If any of the nominees shall become unable or unwilling to stand
for election as a director (an event not now anticipated by the Board of Directors), proxies will be voted for such substitute
as designated by the Board of Directors, or, alternatively, the Board of Directors may reduce the number of directors on the Board,
subject to the provisions of the Stockholders Agreement.
Director Nominees
For each of the 10 director nominees standing for election, the following
sets forth certain biographical information, including a description of their business experience during at least the past five
years and the specific experience, qualifications, attributes or skills that qualify them to serve as directors of the Company
and/or members of the Board committees on which they serve. Each of the nominees was previously elected by stockholders at the
2021 annual meeting.
| |
AMNEAL PHARMACEUTICALS,
INC. | 2022 Proxy Statement |
|
19 |
| |
|
| |
|
|
PAUL
MEISTER
Age 69
Chairman
Paul Meister has served as the Chairman
of the Board since August 2019. Mr. Meister is a partner in Novalis LifeSciences LLC, a life science-focused venture firm,
and is co-founder and CEO of Liberty Lane Partners, LLC, a private investment company with investment holdings in healthcare,
technology and distribution-related industries. From 2014 to 2018, Mr. Meister was President of MacAndrews &
Forbes Incorporated, a private company that owns or controls a diverse set of businesses. During 2018, Mr. Meister also
served, on an interim basis, as Executive Vice Chairman of Revlon, Inc. a leading beauty products company, and acted as
Revlon’s principal executive officer. From 2010 to 2014, Mr. Meister served as Chairman and CEO of inVentiv Health
(now Syneos Health), a leading provider of commercial, consulting and clinical research services to the pharmaceutical
and biotech industries. Mr. Meister was Chairman of Thermo Fisher Scientific, Inc., a scientific instruments equipment
and supplies company, from November 2006 to April 2007. He was previously an executive officer of Fisher Scientific International,
Inc., a predecessor of Thermo Fisher Scientific, Inc., from 1991 to 2006. Mr. Meister holds a B.A. degree from the University
of Michigan and an M.B.A. from Northwestern University. He currently serves as a director on the boards of Aptiv PLC,
Quanterix Corporation, Oaktree Acquisition Corp. and Scientific Games Corporation. He previously served as a director
of vTv Therapeutics and LKQ Corporation until 2018 and as a director of Revlon until 2019.
Skills and Qualifications:
• CEO,
General Management, Commercial
• Corporate
Development, Business Development, M&A
• R&D,
Scientific
• Investment,
Venture Capital
• International
|
|
CHINTU PATEL
Age 50
Co-Chief Executive Officer
Chintu Patel has served as Co-Chief Executive Officer and director of the Company
since August 2019. Mr. Patel served as a Co-Chairman of the Board from May 2018 to August 2019, and previously served
as Co-Chairman and Co-Chief Executive Officer of Amneal from 2002 until the Combination. With his brother, Chirag Patel,
Mr. Patel also co-founded and invested in several independent biopharmaceutical companies including Asana Biosciences,
Kashiv BioSciences and Prolong Pharmaceuticals, each of which specializes in innovative science and drug delivery technologies.
Before founding Amneal, Mr. Patel was a pharmacist and senior-level manager with Eckerd Pharmacy from 1994 to 2002, where
he won numerous awards. Mr. Patel has been a featured speaker at the Hauppauge Industrial Association in New York and
serves on the boards of the Long Island Association, Long Island University, and the Make-a-Wish Foundation®,
and is a recipient of the 2011 Ernst & Young National Entrepreneur of the Year Life Sciences Award®. Mr. Patel
and his wife, Falguni Patel, run the Irada International Foundation, which focuses on health, education, and community
outreach projects in India and the United States. Mr. Patel holds a bachelor’s degree in Pharmacy from Rutgers College
of Pharmacy.
Skills and Qualifications:
• CEO,
General Management, Commercial
• Manufacturing
• R&D,
Scientific
• Regulatory
|
| www.amneal.com |
|
AMNEAL PHARMACEUTICALS,
INC. | 2022 Proxy Statement |
|
20 |
| |
|
| |
|
|
CHIRAG
PATEL
Age 55
Co-Chief Executive Officer
and President
Chirag Patel has served as Co-Chief Executive
Officer, President and director of the Company since August 2019. Mr. Patel served as a Co-Chairman of the Board from May 2018
to August 2019, and previously was Co-Founder of Amneal and served as Co-Chairman and Co-Chief Executive Officer of Amneal from
2005 to October 2017. With his brother, Chintu Patel, Mr. Patel has also invested in several independent biopharmaceutical companies
including Asana Biosciences, Kashiv Biosciences and Prolong Pharmaceuticals, each of which specializes in innovative science and
drug delivery technologies. Earlier in his career, Mr. Patel co-founded technology companies NextGen Technologies and Veriprise
Wireless. Mr. Patel also serves as a Managing Trustee for the Liberty Science Center of New Jersey, a Director for the New Jersey
City University Foundation and a Trustee for the Foundation for Morristown Medical Center. He is also a recipient of the 2011 Ernst &
Young National Entrepreneur of the Year Life Sciences Award®. Mr. Patel supports various philanthropic causes and,
together with his wife, Priti Patel, established the Niswarth International Foundation in 2013. The Foundation aims to bring fresh
water, sanitation, nutrition and education to underprivileged children. Mr. Patel received his bachelor’s degrees in Commerce
from H.A. College of Commerce, India, and in Business Administration from New Jersey City University. He also holds an honorary
Doctorate of Humane Letters from New Jersey City University in recognition of his efforts to serve others.
Skills and Qualifications:
• CEO, General Management,
Commercial
• Corporate Development,
Business Development, M&A
• Investment, Venture
Capital
• International
• Regulatory |
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EMILY
PETERSON ALVA
Age 47
Emily Peterson Alva has served on our Board of
Directors since the Combination in 2018. Ms. Alva is also an independent director of the Atlanta Life Insurance Company. Ms. Alva
is an experienced public company director and a finance and corporate strategy executive. As a former Lazard Partner, her professional
experience includes almost twenty years as an M&A investment banker and board advisor at Lazard advising industry-leading companies
across industries. Currently, Ms. Alva advises founders, leadership teams and corporate boards of directors of growth companies
and has focused on private company advisory work and investing since 2013. Ms. Alva is a frequent speaker on topics related to
corporate governance and M&A among others. Ms. Alva is a faculty member and leadership board member of the Herndon Directors
Institute. During her Lazard tenure, Ms. Alva led corporate boards and leadership teams on matters affecting corporate strategy
including business development and financial planning, as well as corporate transformations including mergers and acquisitions,
capital markets, capital structure and other significant partnership and restructuring transactions. While at Lazard, Ms. Alva
held leadership roles both with clients and internally. Ms. Alva advised some of Lazard’s most important clients over many
years and was one of the youngest professionals promoted to the role of Partner at Lazard and one of the first women to be promoted
to the level of Managing Director. Before embarking on a Wall Street career, Ms. Alva worked in various operating roles at a development
stage company focused on engineering-based solutions to improve industrial waste processing and remediation. Ms. Alva received
a B.A. in Economics from Barnard College, Columbia University. Ms. Alva’s financial acumen together with her experience navigating
complex strategic, transactional and governance matters for public companies including those focused on many sectors of healthcare,
provide the Amneal Board with insight into a variety of matters including corporate strategy and business development, M&A,
capital structure, corporate finance, and ESG related topics.
Skills and Qualifications:
• Corporate Strategy,
Business Development, M&A
• Corporate Finance,
Capital Structure and Accounting
• Investment, Venture
Capital
• ESG |
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J.
KEVIN BUCHI
Age 66
J. Kevin Buchi has served on our Board
of Directors since the Combination. He currently serves as the CEO and a member of the board of directors of Biospecifics
Technologies Corp., a biopharmaceutical company. He previously served as Impax’s Interim President and Chief Executive
Officer from December 2016 until March 2017, and as a member of the board of directors of Impax from 2016 until the
completion of the Combination. From August 2013 to December 2016, Mr. Buchi served as President and CEO and a member of
the board of directors of TetraLogic Pharmaceuticals Corporation, a biopharmaceutical company, whose assets were subsequently
acquired by Medivir AB in December 2016. Prior to TetraLogic Pharmaceuticals, Mr. Buchi served as Corporate Vice President,
Global Branded Products of Teva Pharmaceutical Industries Ltd., from October 2011 to May 2012. Prior to Teva, Mr. Buchi
served as CEO of Cephalon, Inc., which was subsequently acquired by Teva, from December 2010 to October 2011, and held
various positions at Cephalon, including Chief Operating Officer from January 2010 to December 2010 and Chief Financial
Officer from 1996 to 2009. Since September 2020, Mr. Buchi has served as director and chairman of the Audit Committee
of Ziopharm Oncology Inc. Since April 2013, Mr. Buchi has served as a director and member of the remuneration and nominating
committee, and audit committee of the board of Benitec Biopharma Ltd., a biotechnology company headquartered in Australia.
Since November 2021 he has served as a director of Ampeo Pharmaceuticals. From August 2018 until December 2021, Mr. Buchi
served as a director and chairman of the board of Dicerna Pharmaceuticals. Mr. Buchi previously served as a director of
Ziopharm Oncology. Mr. Buchi received his BA degree from Cornell University and a Masters of Management degree from the
J.L. Kellogg Graduate School of Management at Northwestern University. Mr. Buchi’s extensive experience as a senior
executive and board member in the pharmaceutical industry provides the Board with unique insights into our business.
Skills and Qualifications:
• CEO,
General Management, Commercial
• Corporate
Development, Business Development, M&A
• Finance
and Accounting
• International
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JEFF
GEORGE
Age 48
Jeff George has served on our Board
of Directors since December 2019. Mr. George has over 20 years of global healthcare and corporate leadership experience.
He is currently the Managing Partner of Maytal Capital, a healthcare-focused private equity investment and advisory firm
he founded in 2017, and an Operating Partner at Revival Healthcare Capital, a medical device-focused private equity firm.
Between 2008 and 2016, he served on the Executive Committee of Novartis Group AG, one of the largest global pharmaceutical
companies, first as Division Head and CEO of Sandoz, Novartis’ $10 billion generic pharmaceuticals and biosimilars
subsidiary, and then as Division Head and CEO of Alcon, Novartis’ then $10 billion branded eye care subsidiary.
In both roles, he was responsible for leading over 25,000 associates globally across more than 160 countries. He then
served as CEO and a board member of Performance Health, the largest global manufacturer and distributor of products to
the physical therapy and rehabilitation markets. Mr. George previously headed Emerging Markets for the Middle East,
Africa, Southeast Asia and CIS at Novartis Pharmaceuticals and served as Vice President and Head of Western and Eastern
Europe for Novartis Vaccines. Prior to this, he held leadership roles at Gap Inc. and McKinsey & Co. Mr. George
serves on the boards of 908 Devices, a pioneer in life science diagnostics, Dorian Therapeutics, a cell therapy biotech
spun out of Stanford University, and Wishbone Medical, a leader in pediatric orthopedic medical devices. He also serves
on several non-profit boards including Education Opens Doors, where he is Chairman, the North Texas Food Bank, and YPO
of Dallas. He previously served on the board of directors of AdvaMed, the medical device industry association, and Roam
Analytics, an AI-driven healthcare software firm. He holds an M.B.A. from Harvard Business School, an M.A. from Johns
Hopkins University’s School of Advanced International Studies, and a B.A. degree from Carleton College.
Skills and Qualifications:
• CEO,
General Management, Commercial
• Corporate
Development, Business Development, M&A
• Investment,
Private Equity
• International
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JOHN
KIELY
Age 63
John Kiely has served on our Board of
Directors since December 2019. Mr. Kiely has more than 35 years of financial leadership and advisory experience serving
public companies, including multinational corporations. From July 1991 until July 2019, when he retired, he served as
a Senior Assurance Partner at Pricewaterhouse Coopers, a multinational professional services firm, where he focused on
the pharmaceutical, manufacturing, chemical, medical device and private equity sectors. He held various roles of increasing
responsibility at Pricewaterhouse Coopers, including as Private Equity Assurance Leader, U.S. Pharmaceutical Leader and
Global Pharmaceutical Assurance Leader. Mr. Kiely is currently and has been since July 2019 on the board of directors
of Zovio, Inc., an education technology services company. In addition, Mr. Kiely has served on the board of directors
of Covis Pharmaceutical, Inc. since April 2020. Mr. Kiely holds a B.S. degree from Saint Francis University.
Skills and Qualifications:
• General
Management, Commercial
• Finance
and Accounting
• M&A
• International
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TED
NARK
Age 63
Ted Nark has served on our Board of
Directors since the Combination. Mr. Nark has served as a Managing Director of KRG Capital Partners, a Denver-based $2
billion private equity fund, since 2007. In that role, he has led the identification, negotiation and due diligence of
new acquisitions and has worked with portfolio companies and maintained relationships with limited partners. While at
KRG, Mr. Nark has led the acquisition and successful monetization of companies, including Convergint Technologies, Diversified
Food Services and Petrochoice. From 2006 to 2007, Mr. Nark was Partner at Leonard Green & Partners and, from
2002 to 2006, served as CEO and Chairman of the Board of White Cap Construction Supply, a Leonard Green-owned distributor
of construction hardware, tools and materials to professional contractors in the United States. Previously, Mr. Nark served
as CEO of Corporate Express Australia and Group President at Corporate Express, Inc. Mr. Nark is currently a board member
of several private companies such as Convergint Technologies, Resource Label Group, and Coastal Farm and Ranch Supply.
Mr. Nark has previously served on the boards of Corporate Express Australia, Fort Dearborn, White Cap Construction Supply,
FTD, Leslies Pools, Gaiam, Real Goods Solar, Western Windows, SavAtree, Trafficware, the Maroon Group, and Claim Jumper.
Mr. Nark received a B.S. degree from Washington State University. Mr. Nark’s strong background in finance and corporate
development combined with his service in executive leadership roles within complex corporate organizations contribute
strategic and management insight to our Board.
Skills and Qualifications:
• CEO,
General Management, Commercial
• Corporate
Development, Business Development, M&A
• Investment,
Venture Capital
• International
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GAUTAM
PATEL
Age 49
Gautam Patel has served on our Board
of Directors since the Combination. Mr. Patel has been Managing Director of Tarsadia Investments, a private investment
firm based in Newport Beach, California, since 2012. In that role, he has led a team of investment professionals to identify,
evaluate and execute principal control over equity investments across sectors including life sciences, financial services
and technology. Prior to joining Tarsadia, Mr. Patel served as Managing Director at Lazard from 2008 to 2012, where he
led financial and strategic advisory efforts in sectors including transportation and logistics, private equity, and healthcare.
Prior to that, Mr. Patel served in a variety of advisory roles at Lazard from 1999 to 2008, including multiple restructuring,
bankruptcy and corporate reorganization assignments in 2001 and 2008. From 1994 to 1997, Mr. Patel was an Analyst at Donaldson,
Lufkin & Jenrette, where he worked on M&A as well as high-yield and equity financings. Mr. Patel is currently
a Board Member of Spectrum Brands and several private companies such as Kashiv, Asana Biosciences, Prolong Pharmaceuticals,
Envisics and AIONX Antimicrobial Technologies. Mr. Patel also serves on the board of Casita Maria Center for Arts &
Education, a New York based non-profit organization that aims to empower children through arts-based education. Mr. Patel
received a Bachelor of Arts degree from Claremont McKenna College, a Bachelor of Science degree from Harvey Mudd College,
an MSc from the London School of Economics and an M.B.A. from the University of Chicago. Mr. Patel brings an extensive
knowledge of the Company’s business and operations combined with deep experience in finance, corporate development
and healthcare investing to the Board.
Skills and Qualifications:
• Corporate
Development, Business Development, M&A
• Finance
and Accounting
• Investment,
Venture Capital
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SHLOMO
YANAI
Age 69
Shlomo Yanai has served on our Board
of Directors since December 2019. Mr. Yanai has more than 17 years of corporate leadership experience, primarily in the
pharmaceutical industry. Mr. Yanai served as President and Chief Executive Officer at Teva Pharmaceutical Industries Ltd.
from 2007 to 2012. Prior to that, Mr. Yanai was the CEO of Adama Industries from 2002 to 2006. Mr. Yanai currently serves
as the Chairman of the Board of Lumenis Ltd., a Board member at W.R. Grace and a senior advisor to Moelis & Company.
Mr. Yanai previously served as Vice Chairman of the Rothschild Caesarea Foundation, Chairman of the Board of Cambrex
Corporation and Protalix Biotherapeutics, PDL BioPharma Inc., Perrigo Company, Sagent Pharmaceuticals, Elisra, Bank Leumi
Lelsreal, and I.T.L. Optronics Ltd. Mr. Yanai also held various leadership positions in the Israel Defense Forces. Mr.
Yanai is a graduate of Harvard Business School’s AMP program. He holds a Master of Public Administration degree
from George Washington University and a B.A. degree from Tel Aviv University and is also a graduate of the U.S. National
Defense University – War College.
Skills and Qualifications:
• CEO, General Management, Commercial
• Investment, Venture Capital
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Required Vote
Our Bylaws provide for a majority vote standard in uncontested elections
of directors. Therefore, to be elected at our 2022 annual meeting, which is an uncontested election, each nominee for director
must receive the affirmative vote of a majority of the votes cast with respect to such nominee by the holders of the shares of
voting common stock voting by remote communication or by proxy at the annual meeting. A majority of the votes cast means that the
number of votes cast “for” a nominee must exceed the number of votes cast “against” that nominee.
Recommendation of the Board of Directors
 |
THE BOARD
OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE “FOR” EACH
OF THE BOARD OF DIRECTORS’ NOMINEES SET FORTH IN PROPOSAL NO. 1. |
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Our Management
Executive Officers and Directors
Our executive officers and directors, their positions and their
ages as of March 11, 2022, are as set forth in the table below. Each of our directors holds office until the next annual meeting
of our stockholders or until his or her successor has been elected and qualified. Our executive officers serve at the discretion
of the Board of Directors.
| Name |
Age |
Position |
| Chintu
Patel |
50 |
Co-Chief
Executive Officer, Director |
| Chirag
Patel |
55 |
Co-Chief
Executive Officer and President, Director |
| Andrew
Boyer |
56 |
Executive
Vice President, Chief Commercial Officer-Generics |
| Anastasios
Konidaris |
55 |
Executive
Vice President, Chief Financial Officer |
| Jason
B. Daly |
48 |
Senior
Vice President, Chief Legal Officer and Corporate Secretary |
| Nikita
Shah |
44 |
Executive
Vice President, Chief Human Resources Officer & Strategic Planning Officer |
| Joseph
Todisco |
46 |
Executive
Vice President, Chief Commercial Officer-Specialty |
| Paul
Meister |
69 |
Chairman
of the Board of Directors |
| Emily
Peterson Alva |
47 |
Director |
| J.
Kevin Buchi |
66 |
Director |
| Jeff
George |
48 |
Director |
| John
Kiely |
63 |
Director |
| Ted
Nark |
63 |
Director |
| Gautam
Patel |
49 |
Director |
| Shlomo
Yanai |
69 |
Director |
For a description of the business experience of the above individuals
who are director nominees standing for election, see “Proposal No. 1-Election of Directors.”
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ANDREW BOYER
Executive Vice President, Chief Commercial Officer-Generics
Andrew Boyer has served as our Executive Vice President, Chief
Commercial Officer – Generics since August 2020. Prior to that, he served as our Senior Vice President, Commercial Operations
since the Combination, and from February 2018, to the completion of the Combination, as Executive Vice President, Commercial Operations
of Amneal. Prior to joining Amneal, Mr. Boyer served as President & CEO of North America Generics, Teva Pharmaceutical Industries
Ltd., a multinational pharmaceuticals company, from August 2016 to February 2018. Before that, Mr. Boyer was Senior Vice President
of Sales and Marketing for the U.S. Generics Division at Allergan, a global pharmaceutical company, from September 2006 to August
2016. Mr. Boyer joined Allergan (then known as Watson Pharmaceuticals) in 1998 as Associate Director of Marketing in Generics.
Before joining Allergan, Mr. Boyer served as National Accounts Manager for Lederle/American Cyanamid as well as Marketing Manager
for Barr Laboratories. Mr. Boyer received his degree in Business Administration and Management from State University of New York
at Albany.
ANASTASIOS KONIDARIS
Executive Vice President, Chief Financial Officer
Anastasios Konidaris has served as our Executive Vice President
and Chief Financial Officer since August 2020. Prior to that, he was Senior Vice President and Chief Financial Officer since March,
2020. Mr. Konidaris previously served as Executive Vice President and Chief Financial Officer of Alcresta Pharmaceuticals, a specialty
pharmaceutical company, since March 2016. Prior to joining Alcresta, Mr. Konidaris served as Senior Vice President and Chief Financial
Officer of Ikaria, a biotherapeutics company, from October 2011 to May 2015. From 2007 to May 2015, Mr. Konidaris served as
Senior Vice President and Chief Financial Officer at Dun & Bradstreet Corporation, a leading commercial information services
company, where he also served as Principal Accounting Officer and led the Global Finance Operations from 2005 to 2007. Earlier
in his career, Mr. Konidaris held senior financial and operational positions of increasing responsibility at Schering-Plough, Pharmacia,
Rhone-Poulenc Rorer, Novartis, and Bristol-Myers Squibb. Since 2015, Mr. Konidaris has served as a director and chairman of the
audit committee of Zep, Inc. He previously served as chairman of Kadmon Holdings, director of Pernix Therapeutics and Delcath
Systems. Mr. Konidaris received an MBA from Drexel University and a B.S. from Gwynedd Mercy College.
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JASON B. DALY
Senior Vice President, Chief Legal Officer and Corporate
Secretary
Jason Daly is our Senior Vice President, Chief Legal Officer and
Corporate Secretary, a position he has held since January 2022. Mr. Daly is responsible for leading Amneal’s global legal
and corporate compliance strategies with a focus on delivering value as Amneal drives into more complex commercial categories.
Mr. Daly brings substantial experience leading the legal and commercial strategies for global pharmaceutical & medical device
companies, including Teva Pharmaceuticals, Inc., where he most recently served as Senior Vice President, U.S. Market Access and
previously as Vice President & Chief of Staff, North American Commercial as well as General Counsel – U.S. Generics &
North American Commercial. In his seven-year tenure with Teva, Mr. Daly was responsible for driving the company’s multi-billion-dollar
U.S. managed-care customer accounts, including go-to-market tactics for biosimilars and expanding formulary access for key branded
products. He also served as a key executive, overseeing a team of commercial attorneys responsible for legal strategies related
to patent settlements and authorized generics, pricing policies, REMS programs, the commercialization of the company’s brand
and generic medicines, and government affairs. Prior to Teva, Mr. Daly served nearly a decade in various legal and commercial leadership
roles with Straumann Group. Mr. Daly previously worked for law firms HinckleyAllen LLP and WilmerHale LLP and was a law clerk to
Judge Mary Lisi in the United States District Court in Providence, Rhode Island. Mr. Daly holds academic degrees from the University
of Pennsylvania Law School as well as the University of Rhode Island. He holds professional certificates from The Wharton School
of Business, The Kellogg School of Management and the Boston University School of Management. He is also a member of the Massachusetts
and Rhode Island Bar Associations.
NIKITA SHAH
Executive Vice President, Chief Human Resources Officer &
Strategic Planning Officer
Nikita Shah has served as our Executive Vice President, Chief
Human Resources Officer & Strategic Planning Officer since August 2020. Ms. Shah is responsible for overseeing Amneal’s
Human Resources, Internal Communications and Corporate Social Responsibility functions, and partners with the Co-CEOs to lead the
creation and execution of the Company’s long-term Corporate Strategy. Prior to this position, Ms. Shah served as the Company’s
Senior Vice President, Chief Human Resources Officer from May 2018 to July 2020 and as Senior Vice President, Human Resources and
Corporate Affairs from January 2014 to May 2018. Prior to joining Amneal, Ms. Shah led the internal audit and human resources functions
for Warner Chilcott, a global specialty pharmaceutical company. She also supported corporate Mergers & Acquisitions, process
improvements and systems efficiencies across the organization. Prior to Warner Chilcott, Ms. Shah held roles of increasing responsibilities
at AT&T and Deloitte. Ms. Shah received her Master’s degrees in Accounting and Auditing from Gujarat University, India.
She is a certified public accountant.
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JOSEPH TODISCO
Executive Vice President, Chief Commercial Officer-Specialty
Joseph Todisco has served as Executive Vice President, Chief Commercial
Officer-Specialty since August 2020, and previously served as Senior Vice President, Specialty Commercial, since May 2018. Mr.
Todisco joined Amneal in 2011 as the head of Corporate Development and has been an integral part of the management team that executed
the Combination, as well as multiple other business development, licensing and mergers & acquisitions. In addition to his role
in Corporate Development, Mr. Todisco held management oversight responsibility for Gemini Laboratories, LLC, a subsidiary of the
Company, building it from inception to a highly profitable specialty pharmaceutical platform, as well as oversight for all of Amneal’s
international commercial operations from 2013 to 2018. Prior to joining Amneal, Mr. Todisco spent more than five years leading
Ranbaxy’s North American Commercial Strategy and Business Development, and held various leadership roles with Par Pharmaceuticals.
Prior to working in the pharmaceutical industry, Mr. Todisco was an investment banker for Oppenheimer & Co. and also worked
in financial services for Marsh & McLennan Companies. Mr. Todisco holds a degree in Economics from Georgetown University and
an M.B.A. from Fordham University School of Business.
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Executive Compensation
Compensation Discussion and Analysis
The following Compensation Discussion and Analysis contains
statements regarding historical and future Company performance targets or goals. We have disclosed these targets or goals in the
limited context of our compensation programs and they should not be understood to be statements of management’s expectations
or estimates of results. We specifically caution investors not to apply these statements to other contexts.
Executive Summary
In the paragraphs that follow, we provide an overview and analysis
of our compensation programs and policies, the material compensation decisions we have made under those programs and policies,
and the material factors that we considered in making those decisions. Following this section you will find a series of tables
containing specific information about the compensation earned or paid in fiscal 2021 to the following executive officers:
2021 NAMED EXECUTIVE OFFICERS
| Name |
|
Position |
| Chirag Patel |
|
Co-Chief Executive Officer and President |
| Chintu Patel |
|
Co-Chief Executive Officer |
| Anastasios Konidaris |
|
Executive Vice President and Chief Financial Officer |
| Andrew Boyer |
|
Executive Vice President, Chief Commercial Officer - Generics |
| Joseph Todisco |
|
Executive Vice President, Chief Commercial Officer - Specialty |
| Nikita Shah |
|
Executive Vice President, Chief Human Resources Officer and Strategic Planning
Officer |
Throughout this proxy statement we refer to these individuals
as our “named executive officers” or “NEOs.” The discussion below is intended to help you understand the
detailed information provided in those tables and put that information into context within our overall compensation program.
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The primary objective of our executive compensation program is
to provide compensation designed to:
| • |
attract, motivate and retain executive officers of outstanding ability and potential; |
| • |
reinforce the execution of our business strategy and the achievement of our business objectives; and |
| • |
align the interests of our executive officers with the interests of our stockholders, with the ultimate objective of increasing
stockholder value. |
The Compensation Committee aims to provide incentives for superior
performance in a given year and over a sustained period by paying fair, reasonable and competitive compensation, and by basing
a significant portion of our total compensation package upon achieving that performance (i.e., “pay for performance”).
We also aim for simplicity in our compensation program so that
it is easy for our employees and our stockholders to understand the various components of our compensation program and the incentives
designed to drive Company performance. The three key components of our executive compensation program are base salary, annual
cash performance-based incentive and equity-based long-term incentive awards.
We believe that the compensation program has been instrumental
in helping the Company achieve financial and strategic goals, as evidenced by the following:
2021 Financial Performance*
| • |
Net revenue of $2,094 |
| • |
Net income of $11 and diluted EPS of $0.07 |
| • |
Adjusted net income of $258 |
| • |
Adjusted EBITDA of $538 |
| • |
Adjusted diluted EPS of $0.85 |
2021 was a year of strong operational performance and broad-based
growth across our business. Adjusted net income, adjusted EBITDA and adjusted diluted EPS are not financial measures in conformity
with U.S. generally accepted accounting principles (“GAAP”). Please see “Appendix A – Non-GAAP Measures”
for more information, including reconciliations to the most directly comparable GAAP measures along with an explanation for why
we use these measures and how they are useful to investors.
| * |
(In millions, except per share data). |
Operational Execution
| • |
During fiscal 2021, we launched 28 new Generics segment products. |
| • |
As of February 2022, we had approximately 114 Generics segment products with ANDAs submitted and 128 Generics segment
products in the development pipeline. We achieved strong net sales growth with our Rytary® and Unithroid®
products in our Specialty segment. |
Role of the Compensation Committee
The Compensation
Committee of our Board of Directors is responsible for setting and administering the policies that govern salary, annual and long-term
incentive programs and other compensation and benefits for our executive officers. The Compensation Committee annually evaluates
the performance of, and evaluates the compensation of, our Co-Chief Executive Officers based upon a combination of the achievement
of corporate goals and individual performance. As part of its performance review process, the Compensation Committee solicits the
input of the full Board of Directors and makes recommendations to the full Board, which makes compensation decisions with respect
to our Co-Chief Executive Officers on the basis of those recommendations. The Compensation Committee oversees various executive
and employee compensation plans and programs, and it has responsibility for continually monitoring these plans and programs to
confirm that they adhere to our compensation philosophy and objectives.
Our Compensation Committee determines the appropriate compensation levels of executives, evaluates officer and director compensation
plans, policies and programs, and reviews benefit plans for officers. Our Compensation Committee believes that the total compensation
paid to our named executive officers should be fair, reasonable and competitive, and that a significant portion of the total compensation
should be tied to our Company’s annual and long-term performance.
The Compensation Committee has the authority to engage the services
of outside advisers, experts and others to assist the Compensation Committee, and believes that it is important to do so from time
to time. See “Peer Group Surveys and the Role of Our Compensation Consultant” below.
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Role of Our Co-Chief Executive Officers in
Compensation Decisions
Regarding most compensation matters, including executive compensation
and our annual and long-term incentive plans, Chirag Patel, our Co-Chief Executive Officer and President and Chintu Patel,
our Co-Chief Executive Officer, evaluate the performance of our other executive officers and make recommendations to the Compensation
Committee on the basis of these reviews, including with respect to salary adjustments and incentive plan award amounts for the
other executive officers. The Compensation Committee, however, does not delegate any of its functions to others in setting compensation
for our named executive officers and exercises its judgment to make final compensation determinations.
Neither of the Co-Chief Executive Officers participates in the
decision making regarding his own compensation, and neither is present when his compensation is discussed. Our Compensation Committee
reports the compensation decisions it has made with respect to our executive officers other than our Co-Chief Executive Officers
to the Board of Directors.
Peer Group Surveys and the Role of Our Compensation
Consultant
The Compensation Committee reviews and evaluates the independence
of its Compensation Consultant each year and has the final authority to hire and terminate the consultant. During fiscal year
2021 the Compensation Committee initiated an RFP (Request for Proposal) and evaluated proposals from five consulting firms to act
as the Compensation Committee’s independent consultant. Based on the Compensation Committee evaluation against predefined
criteria, the Compensation Committee selected to re-engage Aon’s Human Capital Solutions practice, a division of Aon plc.
Aon’s services are limited to advising the Compensation Committee with respect to executive compensation and non-employee
director compensation.
The Compensation Committee has assessed the independence of Aon
considering applicable SEC and NYSE standards and has concluded AON is independent, and AON’s engagement presented no conflicts
of interest in 2021.
The Compensation Committee reviews the composition of our peer
group annually to ensure that the companies constituting the peer group continue to provide meaningful and relevant compensation
comparisons, including the appropriate industry and sub-industry (i.e., generic pharmaceuticals), financial metric comparisons
(such as revenue, EBITDA, market capitalization and financial growth), number of employees and location. In considering these factors
for 2021, and based on the recommendation of its independent compensation consultant, the Compensation Committee removed Akorn,
Inc., Mylan N.V. and Teva Pharmaceutical Industries Ltd. from the prior peer group and added Lannett Company.
Our Compensation Committee finds comparative data from our peer
group to be useful in setting and adjusting executive compensation, but it does not target our programs or any particular element
of compensation to be at or within a particular percentile or range compared to our peers. Our Compensation Committee uses the
peer group data along with other relevant compensation survey sources to ensure that our executive compensation program and its
constituent elements are and remain competitive in relation to our peers, and applies judgment and discretion in establishing targeted
compensation levels taking into account not only competitive market data but also the experience of the executive, scope of responsibility,
critical skill sets and expertise.
Our 2021 peer group consisted of the following publicly traded
companies:
| • Alkermes plc |
|
• Jazz Pharmaceuticals plc |
| • Amphastar Pharmaceuticals, Inc. |
|
• Lannett Company |
| • Catalent, Inc. |
|
• Mallinckrodt plc |
| • Emergent BioSolutions Inc. |
|
• Perrigo Company plc |
| • Endo International plc |
|
• Prestige Consumer Healthcare Inc. |
| • Horizon Pharma plc |
|
• United Therapeutics Corporation |
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AMNEAL PHARMACEUTICALS,
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Components of Executive Compensation
Consistent
with its pay for performance philosophy, the Compensation Committee believes that it is important to place a greater percentage
of executives’ and senior managers’ compensation at risk than that of non-executives and non-senior managers. This
is done by tying executives’ and senior managers’ compensation
directly to the performance of the Company. Accordingly, as set forth in the charts below, a significant portion of executive compensation
consists of annual and long-term incentives linked to the Company’s financial performance and/or the performance of the Company’s
stock.
Base Salaries
In August 2019, the Board appointed Chirag and Chintu Patel as
Co-Chief Executive Officers and Chirag Patel as President at which time Messrs. Patel requested, and the Board approved for
each of the Messrs. an annual salary of $1.00.
In December 2020, given that the Co-CEOs were not receiving cash
compensation, the Compensation Committee evaluated market practices and made a recommendation to the Board to align the Co-CEO
compensation structure with market practice. Consideration was given to our Co-CEO structure including aggregating data for the
market’s top two executives as a comparator. Effective January 1, 2021. the Board approved an annual base salary of $750,000 for
each of Mr. Chirag Patel and Mr. Chintu Patel. Changes to base salaries for both Mr. Todisco and Ms. Shah are consistent with their
employment agreements.
For each of the other named executives, the Compensation Committee
reviewed peer group as well as other compensation survey data as an independent measure to confirm that base salary levels remain
fair, reasonable and competitive.
The base salaries of our named executive officers as of December 31,
2020 and December 31, 2021, respectively, are set forth below.
| Name | |
2020 Base
Salary | | |
2021 Base
Salary | |
| Chirag Patel | |
$ | 1.00 | | |
$ | 750,000 | |
| Chintu Patel | |
$ | 1.00 | | |
$ | 750,000 | |
| Anastasios Konidaris | |
$ | 550,000 | | |
$ | 550,000 | |
| Andrew Boyer | |
$ | 600,000 | | |
$ | 600,000 | |
| Joseph Todisco | |
$ | 485,000 | | |
$ | 525,000 | |
| Nikita Shah | |
$ | 450,000 | | |
$ | 485,000 | |
Annual and Long-Term Incentive Awards
In order
to align the interests of our stockholders with our compensation plans, we tie significant portions of our named executive officers’
compensation to our annual and long-term financial, operating and stock price performance through annual cash and long-term equity
incentives. The Compensation Committee’s philosophy is that named executive
officers should expect the level of their compensation to vary with performance, with compensation increasing when performance
exceeds our internal targets and budgets and compensation decreasing when performance falls below these expectations.
Annual Performance-Based Cash Incentive Compensation
The Compensation Committee believes that, to reward performance
and overall Company success, a portion of an executive officer’s annual cash compensation should be tied to the achievement
of the Company’s goals and that individual’s performance goals. The annual incentive program is designed as a pay-for
performance plan and includes components for both Company and individual performance.
Company performance is based on achievement of adjusted EBITDA
with minimum, target and maximum milestones from which a Company performance multiplier is derived. The minimum performance threshold
is 85% and the maximum performance level is 125%; the associated company multiplier ranges from 50% to 150%.
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Individual performance is also a component of the annual incentive
program measured based on achievement of personal/team performance goals and assessment against the Company’s core values. The
individual performance multiplier can range from 0-150%. This annual cash incentive payment is calculated as set forth below.
Annual
Incentive
Target Amount |
x |
Company
Performance
Multiplier |
x |
Individual
Performance
Multiplier |
= |
Incentive
Payment |
Targets vary based on level and
are expressed as a percentage
of base salary |
|
Full year 2021 Company
performance is measured based
on achievement against adjusted
EBITDA goal |
|
Individual performance multiplier
can range from 0%-150% |
|
|
The Compensation Committee historically
has chosen adjusted EBITDA as the target performance objective for the payment of awards under our annual cash incentive
plan. Adjusted EBITDA is not a term defined under U.S. GAAP. We define adjusted EBITDA as net income before net interest expense,
income taxes, depreciation and amortization (“EBITDA”), as adjusted for certain other items described in our SEC filings,
including stock-based compensation expense, acquisition, site closure and idle facility expenses, restructuring and other charges,
inventory-related charges, charges related to legal matters, asset impairment charges, foreign exchange losses or gains, losses
or gains on sale of international operations, and R&D milestone payments.
The Compensation Committee continued using adjusted EBITDA as
the performance measure for the annual cash incentive plan for 2021 as the Compensation Committee believes that adjusted EBITDA
growth most closely reflects our operating performance and is a key metric for driving the long-term strategic direction that the
Board of Directors has set for our Company. Further, adjusted EBITDA growth is highly correlated to or reflective of our Company’s
financial and operational improvements, ability to generate cash flow from operations, growth and return to stockholders. We believe
that adjusted EBITDA is helpful in assessing the overall performance of our business and is helpful in highlighting trends in our
overall business because the items excluded in calculating adjusted EBITDA have little or no bearing on our day-to-day operating
performance. We also believe that adjusted EBITDA is an important non-GAAP valuation tool that potential investors use to measure
our profitability against other companies in our industry.
Our adjusted EBITDA target for a given
year is determined by the Compensation Committee based upon recommendations from and discussions with management, a review of
current economic conditions and recent acquisition activity and aligns with our external targets. Factors used by the Compensation
Committee in setting adjusted EBITDA targets include, among others, the following:
| • |
reasonable growth expectations taking into account a variety of circumstances faced by our Company; |
| • |
market conditions, including the related impact on cost and our ability to offset any cost
increases with pricing increases or other cost savings measures; and |
| • |
prior fiscal year adjusted EBITDA. |
After the Compensation Committee reviews the final full year financial
results of our Company, the Compensation Committee approves annual cash incentive payouts for the prior year. Annual cash incentive
awards are generally paid in March.
No annual cash incentive payments are made unless the threshold
adjusted EBITDA target has been achieved. Adjusted EBITDA targets under the annual cash incentive plan may be reset periodically
within a fiscal year by the Compensation Committee to take into account acquisitions, divestitures and other unplanned events.
No such adjustments were made for 2021. Subject to the provisions of an applicable employment agreement, executives generally must
be employed at the time of payout to receive an annual cash incentive award. The Compensation Committee may, however, at its discretion,
prorate awards in the event of certain circumstances such as the executive’s promotion, demotion, death or retirement.
The Company performance component of the annual award each executive
is eligible to receive is based upon a percentage of the executive’s annualized base salary, with such percentage varying
depending upon the level of adjusted EBITDA as compared to threshold, target and maximum adjusted EBITDA performance objectives
as set forth in the table below.
| |
|
Company
Performance Component of Annual
Bonus Award as a Percentage of Base Salary |
| Name |
|
Threshold |
|
Target |
|
Maximum |
| Chirag Patel |
|
50% |
|
100% |
|
150% |
| Chintu Patel |
|
50% |
|
100% |
|
150% |
| Anastasios Konidaris |
|
27.5% |
|
55% |
|
82.5% |
| Andrew Boyer |
|
40% |
|
80% |
|
120% |
| Joseph Todisco |
|
30% |
|
60% |
|
90% |
| Nikita Shah |
|
27.5% |
|
55% |
|
82.5% |
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INC. | 2022 Proxy Statement |
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The fiscal 2021 combined adjusted EBITDA threshold, target and
maximum performance objectives were $454.75 million, $535 million and $668.75 million, respectively. Our Company’s fiscal
2021 combined adjusted EBITDA was $538 million, or 100.5% of target which resulted in 101% funding for the Annual Incentive Program.
The 2021 annual performance-based cash incentive program also
provides for an individual performance multiplier, which ranges from 0% to 150% based on an individual’s performance during
the year.
| Name | |
2021
Base
Salary | |
AIP
Target % | |
AIP
Target
$ | |
Final
AIP Payout
$ | |
AIP
Payout %
of Target |
| Chirag K. Patel | |
$ | 750,000 | |
| 100 | % | |
$ | 750,000 | |
$ | 757,500 | |
| 101 | % |
| Chintu Patel | |
$ | 750,000 | |
| 100 | % | |
$ | 750,000 | |
$ | 757,500 | |
| 101 | % |
| Anastasios Konidaris | |
$ | 550,000 | |
| 55 | % | |
$ | 302,500 | |
$ | 326,912 | |
| 108 | % |
| Andrew Boyer | |
$ | 600,000 | |
| 80 | % | |
$ | 480,000 | |
$ | 484,800 | |
| 101 | % |
| Joseph Todisco | |
$ | 525,000 | |
| 60 | % | |
$ | 315,000 | |
$ | 318,150 | |
| 101 | % |
| Nikita Shah | |
$ | 485,000 | |
| 55 | % | |
$ | 266,750 | |
$ | 307,136 | |
| 115 | % |
Long-Term Incentive Compensation
Our long-term incentive compensation program is designed to promote
a balanced focus on driving performance, retaining talent and aligning the interests of our executives with those of our other
stockholders. The Amneal Pharmaceuticals, Inc. 2018 Incentive Award Plan authorizes the grant of stock options, stock appreciation
rights, restricted stock awards, restricted stock unit awards, other stock or cash-based awards and dividend equivalent awards
to employees, non-employee directors and consultants.
Our long-term incentive compensation program for 2021 for the
named executive officers was comprised of two components: performance-based restricted stock units (“PSUs”) and restricted
stock units.
| • |
Performance-based restricted stock
units. We grant PSUs, which vest upon the attainment of certain performance metrics, in order to further incentivize
our executive officers to deliver superior long-term results. |
| • |
Restricted stock units. We grant restricted
stock unit awards as a retention tool as they provide the opportunity to receive stock only if the recipient is still employed
by us on the date the restrictions lapse. |
In 2021, the total value of each named executive officer’s
equity grants was divided between restricted stock units and PSUs, other than the Co-Chief Executive Officers who received all
their long-term incentive compensation in PSUs. The mix of different types of awards is intended to combine the retention and downside
risk benefits inherent in restricted stock units with the incentive and stockholder-value-creation benefits inherent in performance-based
restricted stock units, while mitigating the perceived excessive risk that potentially manifests itself through a single type of
award approach.
The following table sets forth the total grant value and components
mix determined for issuance to our named executive officers in 2021:
| Name | |
Value of 2021
Awards(1) | |
%
PSUs | |
%
RSUs |
| Chirag Patel | |
$ | 2,400,000 | |
| 100 | % | |
| | |
| Chintu Patel | |
$ | 2,400,000 | |
| 100 | % | |
| | |
| Anastasios Konidaris | |
$ | 1,500,000 | |
| 50 | % | |
| 50 | % |
| Andrew Boyer | |
$ | 1,300,000 | |
| 50 | % | |
| 50 | % |
| Joseph Todisco | |
$ | 1,100,000 | |
| 50 | % | |
| 50 | % |
| Nikita Shah | |
$ | 1,200,000 | |
| 50 | % | |
| 50 | % |
| (1) |
Values in the table represent the determined grant value. Actual awards were based on this value
using the stock price on the grant date of March 1, 2021, which was $5.18. |
Restricted Stock Unit Awards
In 2021, annual restricted stock unit grants were made in March
for all of the named executive officers, other than our Co-Chief Executive Officers, who received no restricted stock unit grants
in 2021. All of the restricted stock unit awards vest in four equal installments on the first, second, third and fourth anniversary
of the grant date subject to cancellation or acceleration as provided in the individual restricted stock unit award agreements.
The number of restricted stock unit awards granted to each named executive officer is based upon the grant date fair value of the
restricted stock units. For additional details on this award, see “Executive Compensation— Management Employment &
Separation Agreements” below.
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Performance-Based Restricted Stock Unit Awards
In 2021, our named executive officers
were granted PSU awards in March. These awards will be earned at a rate of 0% and 200% of the target award amounts based on the
Company’s achievement of certain average closing stock prices for 60 consecutive days during the performance period
from March 1, 2021 until February 29, 2024, with a payout of 50% of the target award with if the average closing stock price
is $8.00 and a payout of 200% of the target award if the average closing stock price is $20.00 or greater during any 60 consecutive
day period. Any earned awards vest in full at the end of such performance period, subject to cancellation or acceleration as provided
in the individual performance-based restricted stock unit award agreements. The number of PSUs granted to each named executive
officer is based upon the closing price on the grant date.
In 2019, Messrs. Boyer and Todisco and Ms. Shah were granted Performance-Based
Restricted Stock based on total shareholder return (TSR) relative to the TSR of a group of companies in the S&P Pharmaceuticals
Select Industry Index. Actual performance during the 3 year performance period of January 1, 2019 through December 31, 2021
fell below the 25th percentile threshold resulting in a zero payout.
Other Compensation and Benefits
Benefits offered to our named executive officers serve a different
purpose than do the other elements of total compensation. In general, they are provided for the convenience of the Company or are
designed to provide a safety net of protection against the financial catastrophes that can result from illness, disability or death.
Most benefits offered to our named executive officers are generally the same as those offered to the general employee population.
Under the Company’s 401(k) plan, the Company makes a 100%
matching contribution with respect to each participant’s elective contributions, up to 5% percent of such participant’s
compensation (provided that for fiscal 2021, matching contributions were based only on the first $290,000 of such participant’s
compensation in accordance with Internal Revenue Code limitations). Matching contributions generally become fully vested after
three years of employment with the Company.
Executive Severance and Change in Control Severance Benefits
For a discussion of executive severance and change in control
severance benefits, our rationale for offering those benefits and the triggers for payments, see “Management Employment &
Separation Agreements—Severance Upon a Change in Control” below.
Consideration of 2021 Say-on-Pay Vote
At the 2021 Annual Meeting of Stockholders, our “say-on-pay”
advisory vote received 99.6% support. The Compensation Committee regarded this vote, as well as feedback from our engagement with
stockholders, as demonstrating strong support for our executive compensation program and did not make any significant changes to
our compensation programs as a result of this vote. There was no change to our PSU award design or metric in 2021.
Accounting and Tax Considerations
Financial reporting and income tax consequences to our Company
of individual compensation elements are important considerations for our Compensation Committee when it is analyzing the overall
level of compensation and the mix of compensation. Overall, the Compensation Committee seeks to balance its objective of maintaining
a fair, reasonable and competitive compensation package for our named executive officers with enabling the deductibility of compensation.
| www.amneal.com |
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Executive Compensation Clawback Policy
The Compensation Committee adopted in December 2021 a policy pursuant
to which the Board may require the reimbursement and/or cancellation of all or a portion of any incentive cash bonus or equity-based
incentive compensation awarded to any current or former executive officer subject to Section 16 of the Exchange Act in specified
circumstances relating to a restatement of Company financial results involving fraud or misconduct. After the SEC issues final
rules implementing the clawback provisions set forth in the Dodd-Frank Wall Street Reform and Consumer Protection Act, the Compensation
Committee intends to evaluate the final rule and take appropriate action with respect to the existing policy at such time.
Stock Ownership Guidelines for Executive
Officers
In order to further align the interests of our management with
the interests of our stockholders, we require our executive officers to own shares of our stock as set forth below.
| Position |
|
Minimum
Ownership Guideline |
| Co-Chief Executive Officers |
|
6x base salary |
| Other Executive Officers |
|
2x base salary |
We adopted our stock ownership guidelines in May 2018, and we expect our executive
officers to be able to achieve the required ownership thresholds by five years from the date of adoption of the guidelines. Newly
appointed officers will have five years from the date they became subject to the stock ownership guidelines to comply with them.
For the purpose of determining stock ownership levels, we include shares underlying restricted stock and restricted stock units
(whether or not vested) and shares underlying “in-the-money” vested stock option awards. Currently, all of our named
executive officers have met these requirements.
See “Corporate Governance—Director Compensation—Director
Stock Ownership Guidelines” above for a description of stock ownership guidelines we have adopted for our non-employee directors.
Anti-Hedging Policy
To prevent
speculation or hedging, our insider trading policy prohibits our named executive officers (and our directors and all other employees)
from engaging in short sales of our Company’s stock. Company policy also prohibits our directors, executive officers and
certain other employees from purchasing or selling any financial instrument that is designed to hedge or offset any decrease in
the market value of our Company’s stock, including prepaid variable forward contracts, equity swaps, collars
and other derivative securities that are directly linked to our Company’s stock. All other employees are discouraged, but
not expressly prohibited, from entering into hedging transactions related to Company stock. In addition, pursuant to our Corporate
Governance Guidelines, directors and executive officers who are not Amneal Group Members (as defined in the Stockholders Agreement)
are prohibited from pledging Company stock as collateral for a loan.
Report of the Compensation Committee
The Compensation Committee of the Board of Directors has reviewed
and discussed the foregoing Compensation Discussion and Analysis with management. Based on this review and discussion, the committee
recommended to our Board of Directors that the Compensation Discussion and Analysis be included in this proxy statement and incorporated
by reference into the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2021. This report is provided
by the following directors, who comprise the committee.
Compensation Committee:
Ted Nark (Chair)
Jeff George
Paul Meister
Shlomo Yanai
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AMNEAL PHARMACEUTICALS,
INC. | 2022 Proxy Statement |
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37 |
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Summary Compensation Table
The following table shows the compensation of our named executive officers
for the periods presented.
Name and
Principal Position | |
Year | |
Salary
($) | |
Bonus
($) | |
Stock
Awards(1)
($) | |
Option
Awards
($) | |
Non-Equity
Incentive Plan
Compensation
($) | |
All Other
Compensation(3)
($) | |
Total
($) |
Chirag Patel
Co-Chief
Executive Officer and President | |
2021 | |
724,038 | |
— | |
3,266,406 | |
— | |
757,500 | |
37,172 | |
4,785,116 |
| |
2020 | |
1 | |
— | |
2,298,679 | |
— | |
— | |
22,036 | |
2,320,716 |
| |
2019 | |
44,226 | |
— | |
90,749 | |
184,249 | |
— | |
18,743 | |
337,967 |
Chintu Patel
Co-Chief
Executive Officer | |
2021 | |
724,038 | |
— | |
3,266,406 | |
— | |
757,500 | |
50,881 | |
4,798,825 |
| |
2020 | |
1 | |
— | |
2,298,679 | |
— | |
— | |
29,848 | |
2,328,528 |
| |
2019 | |
44,226 | |
— | |
90,749 | |
184,249 | |
— | |
20,376 | |
339,600 |
Anastasios Konidaris
EVP &
Chief Financial Officer | |
2021 | |
550,000 | |
— | |
1,770,757 | |
— | |
326,912 | |
16,327 | |
2,663,996 |
| |
2020 | |
427,308 | |
— | |
1,747,367 | |
— | |
327,608 | |
6,216 | |
2,508,499 |
Andrew Boyer
EVP, Chief Commercial Officer -
Generics | |
2021 | |
600,000 | |
— | |
1,534,657 | |
— | |
484,800 | |
16,406 | |
2,635,863 |
| |
2020 | |
638,103 | |
— | |
1,239,735 | |
— | |
492,480 | |
16,213 | |
2,386,531 |
| |
2019 | |
660,084 | |
— | |
1,391,119 | |
1,046,868 | (2) |
— | |
15,008 | |
3,113,079 |
Joseph Todisco
EVP, Chief
Commercial Officer - Specialty | |
2021 | |
523,615 | |
— | |
1,298,557 | |
— | |
318,150 | |
16,287 | |
2,156,610 |
| |
2020 | |
458,539 | |
— | |
881,006 | |
— | |
315,153 | |
16,431 | |
1,671,129 |
Nikita Shah
EVP, CHRO &
Strategic Planning Officer | |
2021 | |
483,789 | |
— | |
1,416,601 | |
— | |
307,136 | |
16,169 | |
2,223,694 |
| |
2020 | |
422,491 | |
— | |
1,057,202 | |
— | |
282,150 | |
15,877 | |
1,777,720 |
| |
2019 | |
402,613 | |
— | |
1,321,567 | |
802,741 | (2) |
— | |
15,008 | |
2,541,929 |
| (1) |
These amounts reflect the aggregate grant date fair value of each restricted stock unit award and PSU award
granted during the fiscal year, computed in accordance with FASB ASC Topic 718. The valuation assumptions used in determining such
amounts are described in Note 23 to the financial statements included in our Annual Report on Form 10-K for the year ended December
31, 2021. For the PSU awards granted in 2021, the value of the awards as of the grant date, assuming that the highest level of performance
achievement would be achieved (which is 200% of target), for Mr. Chirag Patel, Mr. Chintu Patel, Mr. Konidaris, Mr. Boyer, Mr.
Todisco and Ms. Shah would be $6,532,812, $6,532,812, $2,041,511, $1,769,310, $1,497,110 and $1,633,203, respectively. |
| (2) |
These amounts include the incremental fair value associated with a one-time option repricing. On October 10, 2019, the Compensation
Committee and stockholders of the Company approved a one-time option repricing pursuant to which the exercise price of each relevant
option was amended to reduce such exercise price to $2.75. “Relevant Options” were all outstanding stock options as of
October 10, 2019 (vested or unvested) that were granted between May 7, 2018 and July 15, 2019 to acquire shares of our Class A common
stock that have exercise prices above $3.51, the closing price of a share of the Class A common stock as reported on the New York
Stock Exchange on November 13, 2019. The incremental fair value, computed as of the repricing date in accordance with FASB ASC Topic
718 for the Relevant Options held by Mr. Boyer and Ms. Shah, totaled $380,201 and $169,411, respectively. |
| (3) |
The amounts shown in this column for 2021 consist of the following components: |
| Name | |
Company
401(k)
Match
($) | | |
Life and
Disability
Insurance
Premiums Paid
by Company
($) | | |
Cost
for
Personal
Use
of Driver and
Company
Car(1)
($) | | |
Total
($) | |
| Chirag Patel | |
| 14,500 | | |
| 2,143 | | |
| 20,529 | | |
| 37,172 | |
| Chintu Patel | |
| 14,500 | | |
| 2,143 | | |
| 34,238 | | |
| 50,881 | |
| Anastasios Konidaris | |
| 14,500 | | |
| 1,827 | | |
| — | | |
| 16,327 | |
| Andrew Boyer | |
| 14,500 | | |
| 1,906 | | |
| — | | |
| 16,406 | |
| Joseph Todisco | |
| 14,500 | | |
| 1,787 | | |
| — | | |
| 16,287 | |
| Nikita Shah | |
| 14,500 | | |
| 1,669 | | |
| — | | |
| 16,169 | |
| (1) |
We own a car and employ a driver for the exclusive use of each of Mr. Chirag Patel and Mr. Chintu Patel. Although the majority
of the driver’s services (and, therefore, the costs associated with the car) are for business purposes, we allow for use of the car
and driver for personal purposes - generally for daily commute - as we believe this accommodation enables increased productivity
during this time. |
| www.amneal.com |
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AMNEAL PHARMACEUTICALS,
INC. | 2022 Proxy Statement |
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Grants of Plan Based Awards in 2021
The following tables set forth information about non-equity and equity
awards granted to the named executive officers in fiscal 2021.
| | |
| |
Estimated
Future Payouts
Under Non-Equity Incentive
Plan
Awards(1) | |
Estimated
Future Payouts Under
Equity Incentive Plan Awards(2) | |
All Other
Stock
Awards:
Number of
Shares of
Stock or
Units(3)
(#) | |
Grant
Date Fair
Value of
Stock and
Option
Awards(4)
($) |
| Name | |
Grant
Date | |
Threshold
($) | |
Target
($) | |
Maximum
($) | |
Threshold
(#) | |
Target
(#) | |
Maximum
(#) | |
| Chirag Patel | |
| |
| |
| |
| |
| |
| |
| |
| |
|
| 2021 Annual Cash Incentive | |
| |
375,000 | |
750,000 | |
1,125,000 | |
| |
| |
| |
| |
|
| PSU Grant | |
3/1/21 | |
| |
| |
| |
231,660 | |
463,320 | |
926,640 | |
| |
3,266,406 |
| Chintu Patel | |
| |
| |
| |
| |
| |
| |
| |
| |
|
| 2021 Annual Cash Incentive | |
| |
375,000 | |
750,000 | |
1,125,000 | |
| |
| |
| |
| |
|
| PSU Grant | |
3/1/21 | |
| |
| |
| |
231,660 | |
463,320 | |
926,640 | |
| |
3,266,406 |
| Anastasios Konidaris | |
| |
| |
| |
| |
| |
| |
| |
| |
|
| 2021 Annual Cash Incentive | |
| |
151,250 | |
302,500 | |
453,750 | |
| |
| |
| |
| |
|
| PSU Grant | |
3/1/21 | |
| |
| |
| |
72,394 | |
144,788 | |
289,576 | |
| |
1,020,755 |
| RSU Grant | |
3/1/21 | |
| |
| |
| |
| |
| |
| |
144,788 | |
750,002 |
| Andrew Boyer | |
| |
| |
| |
| |
| |
| |
| |
| |
|
| 2021 Annual Cash Incentive | |
| |
240,000 | |
480,000 | |
720,000 | |
| |
| |
| |
| |
|
| PSU Grant | |
3/1/21 | |
| |
| |
| |
62,742 | |
125,483 | |
250,966 | |
| |
884,655 |
| RSU Grant | |
3/1/21 | |
| |
| |
| |
| |
| |
| |
125,483 | |
650,002 |
| Joseph Todisco | |
| |
| |
| |
| |
| |
| |
| |
| |
|
| 2021 Annual Cash Incentive | |
| |
157,500 | |
315,000 | |
472,500 | |
| |
| |
| |
| |
|
| PSU Grant | |
3/1/21 | |
| |
| |
| |
53,089 | |
106,178 | |
212,356 | |
| |
748,555 |
| RSU Grant | |
3/1/21 | |
| |
| |
| |
| |
| |
| |
106,178 | |
550,002 |
| Nikita Shah | |
| |
| |
| |
| |
| |
| |
| |
| |
|
| 2021 Annual Cash Incentive | |
| |
133,375 | |
266,750 | |
400,125 | |
| |
| |
| |
| |
|
| PSU Grant | |
3/1/21 | |
| |
| |
| |
57,915 | |
115,830 | |
231,660 | |
| |
816,602 |
| RSU Grant | |
3/1/21 | |
| |
| |
| |
| |
| |
| |
115,830 | |
599,999 |
| (1) |
The amounts shown in these columns reflect the corporate performance targets under our annual performance-based cash incentive
plan. “Threshold” equals 50% of Target, “Target” equals 100% and “Maximum” equals 150% of Target. |
| (2) |
The number of shares shown reflects the “Threshold,” “Target” and “Maximum” payout levels
under the 2021 performance-based restricted stock unit awards granted under the 2018 Incentive Award Plan. “Threshold”
equals 50% of Target, “Target” equals 100% of Target and “Maximum” equals 200% of Target. |
| (3) |
The number of shares shown reflects the 2021 restricted stock unit awards under the 2018 Incentive Award Plan. The restricted
stock unit awards made in 2021 vest in four equal installments on the first, second, third and fourth anniversary of the date of
grant, assuming continued employment. |
| (4) |
These amounts reflect the aggregate grant date fair value of each stock award granted during the fiscal year, computed in
accordance with FASB ASC Topic 718. The valuation assumptions used in determining such amounts are described in Note 23 to the financial
statements included in our Annual Report on Form 10-K for the year ended December 31, 2021. As the PSUs were subject to market-based
vesting conditions, the grant date fair value was determined using a Monte-Carlo simulation model, which is a probabilistic approach
for estimating the grant date fair value of the PSUs for purposes of accounting under FASB ASC Topic 718. |
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AMNEAL PHARMACEUTICALS,
INC. | 2022 Proxy Statement |
|
39 |
| |
|
Outstanding Equity
Awards at December 31, 2021
| | Option Awards | |
Stock
Awards |
| Name | |
Number of
Securities
Underlying
Options
that are
Exercisable
(#) | |
Number of
Securities
Underlying
Options
that are
Unexercisable
(#) | |
Option
Exercise
Price
($) | |
Option
Expiration
Date | |
Number
of Shares
or Units of
Stock that
Have Not
Vested
(#) | |
Market
Value
of Shares or
Units of Stock
that Have Not
Vested(1)
($) | |
Equity
Incentive
Plan Awards:
Number of
Unearned
Shares, Units,
or Other
Rights that
Have Not
Vested
(#) | |
Equity
Incentive
Plan Awards:
Market or
Payout Value
of Unearned
Shares, Units,
or Other
Rights that
Have Not
Vested
($) |
| Chirag Patel | |
24,977 | |
— | |
15.01 | |
5/7/28 | |
| |
| |
| |
|
| | |
28,044 | |
— | |
14.05 | |
5/6/29 | |
| |
| |
| |
|
| | |
| |
| |
| |
| |
| |
| |
316,623 | (11) |
1,516,624 |
| | |
| |
| |
| |
| |
| |
| |
231,660 | (12) |
1,109,651 |
| Chintu Patel | |
24,977 | |
— | |
15.01 | |
5/7/28 | |
| |
| |
| |
|
| | |
28,044 | |
— | |
14.05 | |
5/6/29 | |
| |
| |
| |
|
| | |
| |
| |
| |
| |
| |
| |
316,623 | (11) |
1,516,624 |
| | |
| |
| |
| |
| |
| |
| |
231,660 | (12) |
1,109,651 |
| Anastasios | |
| |
| |
| |
| |
263,158 | (4) |
1,260,527 | |
175,439 | (11) |
840,353 |
| Konidaris | |
| |
| |
| |
| |
144,788 | (5) |
693,535 | |
72,394 | (12) |
346,767 |
| Andrew Boyer | |
204,360 | |
68,120 | (2) |
2.75 | |
5/7/28 | |
16,656 | (6) |
79,782 | |
| |
|
| | |
50,276 | |
50,277 | (3) |
2.75 | |
3/1/29 | |
24,692 | (7) |
118,275 | |
0 | (10) |
— |
| | |
| |
| |
| |
| |
94,987 | (8) |
454,988 | |
63,325 | (11) |
303,327 |
| | |
| |
| |
| |
| |
46,189 | (9) |
221,245 | |
| |
|
| | |
| |
| |
| |
| |
125,483 | (5) |
601,064 | |
62,742 | (12) |
300,534 |
| Joseph Todisco | |
18,165 | |
18,166 | (2) |
2.75 | |
5/7/28 | |
4,442 | (6) |
21,277 | |
| |
|
| | |
45,249 | |
45,249 | (3) |
2.75 | |
3/1/29 | |
22,222 | (7) |
106,443 | |
0 | (10) |
— |
| | |
| |
| |
| |
| |
89,051 | (8) |
426,554 | |
59,367 | (11) |
284,368 |
| | |
| |
| |
| |
| |
106,178 | (5) |
508,593 | |
53,089 | (12) |
254,296 |
| Nikita Shah | |
18,165 | |
18,166 | (2) |
2.75 | |
5/7/28 | |
4,442 | (6) |
21,277 | |
| |
|
| | |
47,762 | |
47,763 | (3) |
2.75 | |
3/1/29 | |
23,457 | (7) |
112,359 | |
0 | (10) |
— |
| | |
| |
| |
| |
| |
106,860 | (8) |
511,859 | |
71,240 | (11) |
341,240 |
| | |
| |
| |
| |
| |
115,830 | (5) |
554,826 | |
57,915 | (12) |
277,413 |
| (1) |
Based on the closing price of our Class A Common Stock of $4.79 on December 31 2021, the last trading day
of the year. |
| (2) |
Stock options vest in one installment on May 7, 2022. |
| (3) |
Stock options vest in two equal installments on March 1, 2022 and March 1, 2023. |
| (4) |
Restricted stock units vest in three equal installments on March 12, 2022, March 12, 2023 and March 12, 2024. |
| (5) |
Restricted stock units vest in four equal installments on March 1, 2022, March 1, 2023, March 1, 2024 and March 1, 2025. |
| (6) |
Restricted stock units vest in one installment on May 7, 2022. |
| (7) |
Restricted stock units vest in two equal installments on March 1, 2022 and March 1, 2023. |
| (8) |
Restricted stock units vest in three equal installments on February 27, 2022, February 27, 2023 and February 27, 2024. |
| (9) |
Restricted stock units vest in two equal installments on June 30, 2022 and June 30, 2023. |
| (10) |
The performance-based restricted stock units vest following the conclusion of the January 1, 2019 through December 31, 2021
performance period based upon the level of attainment of our TSR compared to the TSR of companies that comprise the S&P Pharmaceuticals
Select Industry Index. Payouts for this performance period are calculated at 0% of the target level. |
| www.amneal.com |
|
AMNEAL PHARMACEUTICALS,
INC. | 2022 Proxy Statement |
|
40 |
| |
|
| (11) |
The performance-based restricted stock units vest following the conclusion of the March 1, 2020 through
February 28, 2023 performance period based upon the level of attainment of absolute stock price (based on the closing stock price
of the Company’s stock on the New York Stock Exchange). The amounts listed represent the threshold number of units under each
award. Total shares earned under the performance-based restricted stock units will range from 0% to 200% of the target number of
units based on actual performance. |
| (12) |
The performance-based restricted stock units vest following the conclusion of the March 1, 2021 through February 29, 2024
performance period based upon the level of attainment of absolute stock price (based on the closing stock price of the Company’s
stock on the New York Stock Exchange). The amounts listed represent the threshold number of units under each award. Total shares
earned under the performance-based restricted stock units will range from 0% to 200% of the target number of units based on actual
performance. |
2021 Option Exercises
and Stock Vested
| | |
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)
($) | |
| Chirag Patel | |
| — | | |
| — | | |
| — | | |
| — | |
| Chintu Patel | |
| — | | |
| — | | |
| — | | |
| — | |
| Anastasios
Konidaris | |
| — | | |
| — | | |
| 87,719 | | |
| 528,068 | |
| Andrew Boyer | |
| — | | |
| — | | |
| 83,758 | | |
| 439,463 | |
| Joseph Todisco | |
| 36,330 | | |
| 147,960 | | |
| 45,235 | | |
| 240,640 | |
| Nikita
Shah | |
| 36,330 | | |
| 149,584 | | |
| 51,790 | | |
| 275,841 | |
| (1) |
Value realized on exercise is based on the difference between the aggregate exercise price and the fair market value of the
shares acquired on the date of exercise. |
| (2) |
Amounts reported are based on the closing price of our Class A Common Stock on the NYSE on the vesting date. |
Management Employment & Separation
Agreements
Among our named executive officers, we have or had employment agreements
with Andrew Boyer, Anastasios Konidaris, Nikita Shah and Joseph Todisco.
Andrew Boyer
Andrew Boyer is party to an Employment Agreement, effective as of February
5, 2018, with Amneal (the “Boyer Employment Agreement”).
The initial term of the Boyer Employment Agreement began on February
5, 2018 and was scheduled to expire on June 30, 2022, unless further extended or earlier terminated as provided in the Boyer Employment
Agreement.
On July 31, 2020, the Company entered into Modification No. 1 to the
Boyer Employment Agreement, effective as of August 1, 2020 (the “Effective Date”). Pursuant to the Modification,
the term of Mr. Boyer’s Employment Agreement was extended until June 30, 2023 (the “Term”) and will automatically
be renewed thereafter for single one-year periods unless written notice of non-renewal is provided by any party at least 90 days prior
to the end of the Term or the agreement is earlier terminated in accordance with its terms. Under the Modification, as of the Effective
Date, Mr. Boyer began serving as the Executive Vice President, Chief Commercial Officer – Generics and receiving an annual
base salary of $600,000 (reduced from $661,917), which amount is subject to increase by the Company’s Board of Directors. Further,
in connection with the Modification, Mr. Boyer received an award of restricted stock units having a grant date fair value equal to $300,000
with a third of such units vesting on each of June 30, 2021, June 30, 2022 and June 30, 2023, subject to Mr. Boyer’s continued
employment through the applicable vesting date.
Mr. Boyer is also eligible to receive an annual bonus targeted at 80%
of his base salary under the annual bonus program, and such amount may be between zero and 150% of Mr. Boyer’s base salary.
| |
AMNEAL PHARMACEUTICALS,
INC. | 2022 Proxy Statement |
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41 |
| |
|
Severance
The Boyer Employment Agreement provides for severance payments and benefits
if (i) Mr. Boyer resigns for “good reason” (as defined in the Boyer Employment Agreement) or (ii) the Board of Directors terminates
Mr. Boyer’s employment without “cause” (as defined in the Boyer Employment Agreement), in each case other than during
the period that is within three months preceding or 24 months following a “change in control” (as defined in the Boyer Employment
Agreement). In addition to payment of earned and vested payments and benefits, these severance payments and benefits include: (A) two
times his base salary as then in effect; (B) a pro rata portion of his annual bonus for the fiscal year in which the termination occurs,
based on actual performance for such fiscal year, and the prior year’s bonus to the extent not then already paid (based on the higher
of target or actual performance of the relevant goals); (C) continuation of healthcare benefits until the second anniversary of his termination
date; (D) the vesting and, if applicable, exercisability of each outstanding equity award granted to Mr. Boyer will be accelerated
to the extent such equity award would have vested had Mr. Boyer’s employment continued until the first anniversary of his termination
date (and, to the extent applicable, each outstanding equity award granted to Mr. Boyer will remain exercisable until the first anniversary
of his termination date); and (E) outplacement services by a reputable national outplacement service for up to two years following his
termination date.
Severance Upon a Change in Control
The Boyer Employment Agreement also provides for severance payments and
benefits if (i) Mr. Boyer resigns for good reason, (ii) the Board of Directors terminates Mr. Boyer’s employment without cause
or (iii) Mr. Boyer’s employment terminates by reason of death or disability (as defined in the Boyer Employment Agreement), in each
case within three months preceding or 24 months following a change in control. In addition to payment of earned and vested payments
and benefits, these severance payments and benefits include: (A) the sum of (x) two times his base salary as then in effect plus (y) two times
his target annual bonus as then in effect; (B) a pro rata portion of his annual bonus for the fiscal year in which the termination occurs,
based on actual performance for such fiscal year, and the prior year’s bonus to the extent not then already paid (based on the higher
of target or actual performance of the relevant goals); (C) continuation of healthcare benefits until the second anniversary of his termination
date; (D) the vesting and, if applicable, exercisability of each equity award granted to Mr. Boyer will be fully accelerated (and, to
the extent applicable, each outstanding equity award granted to Mr. Boyer will remain exercisable until the first anniversary of his termination
date); and (E) outplacement services by a reputable national outplacement service for up to two years following his termination date.
The Boyer Employment Agreement requires Mr. Boyer to maintain the confidentiality
of information relating to the Company during and after the term of such agreement and also contains non-competition, non-solicitation
and non-disparagement covenants as well as other provisions customary for this type of employment agreement.
Anastasios Konidaris
Anastasios Konidaris is party to an Employment Agreement, dated March
11, 2020, by and among Amneal, the Company and Mr. Konidaris (the “Konidaris Employment Agreement”).
The Konidaris Employment Agreement provides that Mr. Konidaris will be
employed as the Company’s Senior Vice President and Chief Financial Officer at an annual base salary of $550,000. Further, Mr. Konidaris
is eligible to earn annual incentive compensation under the Company’s annual bonus plan, in an amount ranging from 0% of his base
salary to 150% of his base salary, with the target amount of his annual bonus being equal to 55% of his base salary. Pursuant to the Konidaris
Employment Agreement, not later than 30 days following the effective date of the agreement, the Company granted to Mr. Konidaris an award
of restricted stock units having a value equal to $1,000,000 and an award of PSUs having a value equal to $1,000,000. Subject to Mr. Konidaris’s
continuous services to the Company through each vesting date, the restricted stock units will vest in four equal installments beginning
on the first anniversary of the effective date of the Konidaris Employment Agreement, and the PSUs will be earned and will vest based
on the same vesting and performance conditions as the performance-based restricted stock units awarded to the Company’s other named
executive officers in 2020.
Severance
In the case of termination by the Company without cause or a termination
by Mr. Konidaris for good reason (each as defined in the Konidaris Employment Agreement), Mr. Konidaris will be entitled to receive the
following severance benefits: (1) an amount equal to 150% of his then-current annual base salary; (2) a pro-rated portion of the annual
bonus award for the year during which the termination occurs; (3) benefits continuation for a period of 18 months following the date of
termination; and (4) outplacement assistance for a period of 12 months following the date of termination.
Severance Upon a Change in Control
In the case of a termination by the Company without cause or a termination
by Mr. Konidaris for good reason within three months prior to or 12 months following a change in control (as defined in the Konidaris
Employment Agreement), Mr. Konidaris will be entitled to receive the severance benefits described above. In addition, the vesting and
exercisability of each equity award granted to Mr. Konidaris will accelerate effective as of the date of termination, with any performance
conditions determined based on actual achievement as of the date of termination, and, if applicable, will remain exercisable for a period
of not less than 12 months following the termination.
| www.amneal.com |
|
AMNEAL PHARMACEUTICALS,
INC. | 2022 Proxy Statement |
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42 |
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|
Nikita Shah
Nikita Shah is party to an Employment Agreement, dated July 29,
2020, by and among Amneal, the Company and Ms. Shah (the “Shah Employment Agreement”).
The Shah Employment Agreement provides that Ms. Shah will be employed
as the Company’s Executive Vice President, Chief Human Resources Officer and Strategic Planning Officer at an annual base salary
of (i) $450,000 beginning on August 1, 2020; and (ii) $485,000 beginning on January 1, 2021. Further, Ms. Shah is eligible to earn
annual incentive compensation under the Company’s annual bonus plan, in an amount ranging from 0% to 150% of her base salary, with
the target amount of her annual bonus being equal to 55% of her base salary. Ms. Shah will be eligible to participate in the Company’s
long term incentive plan.
Severance
In the case of termination by the Company without cause or a termination
by Ms. Shah for good reason (each as defined in the Shah Employment Agreement), Ms. Shah will be entitled to receive the following severance
benefits: (1) an amount equal to 150% of her then-current annual base salary; (2) a pro-rated portion of the annual bonus award for the
year during which the termination occurs; (3) benefits continuation for a period of 18 months following the date of termination; and (4)
outplacement assistance for a period of 12 months following the date of termination.
Severance Upon a Change in Control
In June 2020, the Compensation Committee approved severance benefits
for Ms. Shah in the case of a termination by the Company without cause or a termination by Ms. Shah for good reason within three months
prior to or 12 months following a change in control (as defined in the Shah Employment Agreement); in such case, Ms. Shah will be
entitled to receive the severance benefits described above. In addition, the vesting and exercisability of each outstanding equity award
granted to Ms. Shah will accelerate effective as of the date of termination, with any performance conditions determined based on actual
achievement as of the date of termination, and, if applicable, will remain exercisable for a period of not less than 12 months following
the termination.
Joseph Todisco
Joseph Todisco is party to an Employment Agreement, dated July 29, 2020,
by and among Amneal, the Company and Mr. Todisco (the “Todisco Employment Agreement”).
The Todisco Employment Agreement provides that Mr. Todisco will be employed
as the Company’s Executive Vice President, Chief Commercial Officer - Specialty at an annual base salary of (i) $485,000 beginning
on August 1, 2020; and (ii), $525,000 beginning on January 1, 2021. Further, Mr. Todisco is eligible to earn annual incentive compensation
under the Company’s annual bonus plan, in an amount ranging from 0% to 150% of his base salary, with the target amount of his annual
bonus being equal to 60% of his base salary. Mr. Todisco will be eligible to participate in the Company’s long term incentive plan.
On March 15, 2022, Mr. Todisco informed the Company of his decision to
step down from his role to pursue another opportunity outside of the Company. Mr. Todisco will remain with the Company for a transition
period expected to last through May 15, 2022.
Severance
In the case of termination by the Company without cause or a termination
by Mr. Todisco for good reason (each as defined in the Todisco Employment Agreement), Mr. Todisco will be entitled to receive the following
severance benefits: (1) an amount equal to 150% of his then-current annual base salary; (2) a pro-rated portion of the annual bonus award
for the year during which the termination occurs; (3) benefits continuation for a period of 18 months following the date of termination;
and (4) outplacement assistance for a period of 12 months following the date of termination.
Severance Upon a Change
in Control
In June 2020, the Compensation Committee approved severance benefits
for Mr. Todisco in the case of a termination by the Company without cause or a termination by Mr. Todisco for good reason within three
months prior to or 12 months following a change in control (as defined in the Todisco agreement); in such case, Mr. Todisco will be entitled
to receive the severance benefits described above. In addition, the vesting and exercisability of each outstanding equity award granted
to Mr. Todisco will accelerate effective as of the date of termination, with any performance conditions determined based on actual achievement
as of the date of termination, and, if applicable, will remain exercisable for a period of not less than 12 months following the termination.
Severance Plan
On June 17, 2020, the Compensation Committee adopted the Amneal Pharmaceuticals
LLC Severance Plan (the “Severance Plan”). The Severance Plan is intended to constitute an “employee welfare benefit
plan” under Section 3(1) of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”). Under the Severance
Plan, in the event of (a) a participant’s involuntary termination of employment without Cause (as defined below) due to (i)
a reduction-in-force; (ii) a layoff; (iii) the elimination of a participant’s role; (iv) the reorganization of the Company, or a
business unit, division, or department of the Company; (v) a change in business plan or structure that results in the participant’s
separation from employment; or (vi) any other reason
| |
AMNEAL PHARMACEUTICALS,
INC. | 2022 Proxy Statement |
|
43 |
| |
|
as determined by the Company in its sole discretion or (b) a mandatory
relocation of a participant’s primary workplace to a location that is more than fifty (50) miles from a participant’s prior
primary workplace, on an individualized basis the participant will be eligible to receive up to a maximum of (depending on his or her
position) (A) a lump sum payment of 52 weeks of his or her base pay, (B) a prorated portion of his or her incentive award, (C) fully subsidized
COBRA premiums for 52 weeks, and (D) outplacement services for 52 weeks. Under the Severance Plan, in the event of a participant’s
termination in connection with a change of control, the participant will be eligible to receive up to a maximum of (depending on his or
her position) (A) a lump sum payment of 64 weeks of his or her base pay, (B) prorated target bonus, (C) fully subsidized COBRA premiums
up to a maximum of 64 weeks, and (D) outplacement services up to a maximum for 64 weeks.
Executive officers who are subject to an individual employment agreement
or contract with the Company or any member of the Company Group are excluded from participation in Severance Plan.
As used in the Severance Plan, “Cause” means (i) any failure
or neglect by the participant to perform his or her duties or responsibilities to the Company or any of its subsidiaries (the “Company
Group”), (ii) any act of fraud, embezzlement, theft, misappropriation, or material dishonesty by the participant relating to the
Company Group or its business or assets, (iii) the participant’s commission of a felony or other crime involving moral turpitude,
(iv) any gross negligence or intentional misconduct on the part of the participant in the conduct of his or her duties and responsibilities
or services, as applicable, with the Company Group or its affiliates or that adversely affects the image, reputation or business
of the Company Group or its affiliates, or (v) any material breach by the participant of any written agreement between the Company Group
and the participant or any written policy applicable generally to employees of the Company Group.
Potential Payments Upon
Termination or Change in Control
To enable us to offer a competitive executive compensation program, we
believe it is important to provide reasonable severance benefits to our executive officers.
In addition to the employment agreements between the Company and certain
of our named executive officers and the Severance Plan, discussed above, from time to time, we may explore potential transactions that
could result in a change in control of our Company. We believe that when a transaction is perceived as imminent, or is taking place, we
should be able to receive and rely on the disinterested service of our executive officers, without them being distracted or concerned
by the personal uncertainties and risks associated with such a situation. We further believe that our stockholders are best served if
their interests are aligned with the interests of our executives, and providing change in control benefits should eliminate, or at least
reduce, the reluctance of senior management to pursue potential transactions that may enhance the value of our stockholders’ investments.
Consistent with this, we provide change-in-control benefits to our named executive officers only if the officer’s employment terminates
in connection with the change in control (often referred to as “double-trigger” change-in-control benefits).
The estimated severance and other benefits for each named executive officer,
either pursuant to the Severance Plan or an applicable employment agreement, in the event of a termination of employment are set forth
below. The amounts assume that the termination was effective as of December 31, 2021 (the last business day of fiscal 2021) and thus are
based upon amounts earned through such date and are only estimates of the amounts that would actually be paid to such named executive
officers upon their termination. Since many factors (e.g., the time of year when the event occurs, the Company’s stock price) could
affect the nature and amount of benefits a named executive officer could potentially receive, any amounts paid or distributed upon a future
termination may be different from those shown in the table below. The amounts shown are in addition to benefits generally available to
salaried employees.
Under our performance-based restricted stock unit agreements, upon an
NEO’s termination of employment for any reason (not in connection with a change in control), each NEO would immediately forfeit
any and all performance-based restricted stock units which have not vested as of the date of the NEO’s termination of employment.
In connection with a Change in Control (as defined in the respective agreements), if a performance-based restricted stock unit continues
in effect, is assumed, or an equivalent award is substituted and a NEO is terminated without Cause (as such term is defined in the sole
discretion of the Compensation Committee or as set forth in the award agreement) by the Company upon or within 12 months following a Change
in Control, then all of the performance-based restricted stock units will fully vest. In the event of a Change in Control prior to the
end of the three-year performance period, the number of performance-based restricted stock units earned will be determined as of the date
of the Change in Control at a level equal to the sum of (i) the product of (A) the level based on actual performance through the date
of the Change in Control (treating such date as the end of the performance period solely for purposes of this clause (A)) and (B) a fraction
equal to (x) the number of days elapsed between the beginning of the performance period and the date of the Change in Control, divided
by (y) the total number of days in the performance period and (ii) the product of (A) 100% and (B) a fraction equal to (x) the number
of days between the date of the Change in Control and the end of the performance period, divided by (y) the total number of days in the
performance period.
| www.amneal.com |
|
AMNEAL PHARMACEUTICALS,
INC. | 2022 Proxy Statement |
|
44 |
| |
|
| | |
| |
Without
Cause or for Good
Reason Termination | |
| Name | |
Benefit | |
Without Change in Control | | |
With Change in
Control | |
| Chirag Patel | |
Cash | |
$ | — | | |
$ | — | |
| | |
Accelerated options(1) | |
$ | — | | |
$ | — | |
| | |
Accelerated RSUs(2) | |
$ | — | | |
$ | — | |
| | |
PSUs(3) | |
$ | 0 | | |
$ | 0 | |
| | |
Health Care | |
$ | — | | |
$ | — | |
| | |
TOTAL | |
$ | — | | |
$ | — | |
| Chintu Patel | |
Cash | |
$ | — | | |
$ | — | |
| | |
Accelerated options(1) | |
$ | — | | |
$ | — | |
| | |
Accelerated RSUs(2) | |
$ | — | | |
$ | — | |
| | |
PSUs(3) | |
$ | 0 | | |
$ | 0 | |
| | |
Health Care | |
$ | — | | |
$ | — | |
| | |
TOTAL | |
$ | — | | |
$ | — | |
| Anastasios Konidaris | |
Cash | |
$ | 1,127,500 | | |
$ | 1,127,500 | |
| | |
Accelerated options(1) | |
$ | — | | |
$ | — | |
| | |
Accelerated RSUs(2) | |
$ | — | | |
$ | 1,954,061 | |
| | |
PSUs(3) | |
$ | 0 | | |
$ | 0 | |
| | |
Health Care | |
$ | 42,623 | | |
$ | 42,623 | |
| | |
TOTAL | |
$ | 1,170,123 | | |
$ | 3,124,185 | |
| Andrew Boyer | |
Cash | |
$ | 1,680,000 | | |
$ | 2,640,000 | |
| | |
Accelerated options(1) | |
$ | 190,247 | | |
$ | 241,530 | |
| | |
Accelerated RSUs(2) | |
$ | 551,471 | | |
$ | 1,475,354 | |
| | |
PSUs(3) | |
$ | 0 | | |
$ | 0 | |
| | |
Health Care | |
$ | 90,011 | | |
$ | 90,011 | |
| | |
TOTAL | |
$ | 2,511,729 | | |
$ | 4,446,895 | |
| Joseph Todisco | |
Cash | |
$ | 1,102,500 | | |
$ | 1,102,500 | |
| | |
Accelerated options(1) | |
$ | 83,213 | | |
$ | 129,367 | |
| | |
Accelerated RSUs(2) | |
$ | 343,832 | | |
$ | 1,062,867 | |
| | |
PSUs(3) | |
$ | 0 | | |
$ | 0 | |
| | |
Health Care | |
$ | 42,623 | | |
$ | 42,623 | |
| | |
TOTAL | |
$ | 1,572,168 | | |
$ | 2,337,358 | |
| Nikita Shah | |
Cash | |
$ | 994,250 | | |
$ | 994,250 | |
| | |
Accelerated options(1) | |
$ | 85,777 | | |
$ | 134,495 | |
| | |
Accelerated RSUs(2) | |
$ | 386,783 | | |
$ | 1,200,321 | |
| | |
PSUs(3) | |
$ | 0 | | |
$ | 0 | |
| | |
Health Care | |
$ | 42,623 | | |
$ | 42,623 | |
| | |
TOTAL | |
$ | 1,509,433 | | |
$ | 2,371,690 | |
| (1) |
Represents unvested options that would accelerate in connection with the applicable termination
event valued based on the closing price of our Class A common stock on December 31, 2021, which was $4.79. |
| (2) |
Represents unvested restricted stock units that would accelerate in connection with the applicable
termination event valued based on the closing price of our Class A common stock on December 31, 2021, which was $4.79. |
| (3) |
Represents unvested performance-based restricted stock units that would be earned in connection
with the applicable termination event valued based on the closing price of our Class A common stock on December 31, 2021, which was
$4.79. These amounts reflect probable achievement as of December 31, 2021. |
Release
The obligation of the Company to provide the salary continuation and
other severance benefits described above is contingent upon and subject to the execution and delivery by the executive officer of a general
release of claims against the Company.
| |
AMNEAL PHARMACEUTICALS,
INC. | 2022 Proxy Statement |
|
45 |
| |
|
Pay Ratio Disclosure
The 2021 annual total compensation of the median compensated of all our
employees who were employed as of December 1, 2021, other than our Co-CEOs, Mr. Chintu Patel and Mr. Chirag Patel, was $12,169. The median
employee is located in India. Since the Company operated with Co-CEOs for 2021, the annual total compensation of $4,798,825 for Mr. Chintu
Patel, which was moderately higher that Mr. Chirag Patel, was used. Had we used Mr. Chirag Patel, our pay ratio would not have significantly
changed. The ratio of Mr. Chintu Patel’s compensation to the median was 1 to 394.
The SEC’s rules for identifying the median compensated employee
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. As a result, the pay ratio reported by other companies may not be comparable to the pay ratio reported above, as other companies
have different employee populations and compensation practices and may utilize different methodologies, exclusions, estimates and assumptions
in calculating their own pay ratios.
The pay ratio reported above is a reasonable estimate calculated in a
manner consistent with SEC rules based on our payroll and employment records and the methodology described below.
As of December 1, 2021, we employed approximately 2,340 U.S.-based employees
and 4,700 non-U.S. employees. In addition to our Co-Chief Executive Officers, we excluded all 56 employees from Ireland using the de minimus
exception, which accounted for less than 1% of our total employee population. For these purposes, we identified the median compensated
employee among an employee population of approximately 2,340 U.S. employees and 4,151 Indian employees. The number of employees based
in India excludes approximately 500 employees who became employees of Amneal through our November 2021 acquisition of Puniska Healthcare.
We identified the median compensated employee using target total cash compensation (comprised of base salary equivalent and target bonus),
which we annualized for any employee, other than temporary or seasonal employees, who did not work for the entire year. The average annual
exchange rate as of December 1, 2021 was used to convert amounts paid in foreign currencies to U.S. Dollars in order to identify the median
employee, while the average annual exchange rate as of December 31, 2021 was used to calculate the 2021 annual total compensation of the
median employee.
| www.amneal.com |
|
AMNEAL PHARMACEUTICALS,
INC. | 2022 Proxy Statement |
|
46 |
| |
|
Proposal 2
Advisory Vote on Executive Compensation
Introduction
The Dodd-Frank Wall Street Reform and Consumer
Protection Act of 2010 enables our stockholders to vote to approve, on an advisory (non-binding) basis, the compensation of our
named executive officers as disclosed in this proxy statement in accordance with the SEC’s rules.
As described in detail under the heading
“Compensation Discussion and Analysis,” our executive compensation programs, which are guided by the principle of “pay
for performance,” are designed to attract, motivate, and retain our named executive officers, reinforce the execution
of our business strategy and the achievement of our business objectives, and align the interests of our executive officers with
the interests of our stockholders, with the ultimate objective of improving stockholder value. Under these programs, our named
executive officers are rewarded for the achievement of annual and long-term goals and the realization of increased stockholder
value. Please read the “Compensation Discussion and Analysis” beginning on page 30 for additional details about our
executive compensation programs, including information about the fiscal 2021 compensation of our named executive officers.
We believe that our compensation program
has been instrumental in helping the Company achieve strong financial performance. Therefore, we are asking our stockholders to
indicate their support for our named executive officer compensation as described in this proxy statement. This proposal, commonly
known as a “say on pay” proposal, gives our stockholders the opportunity to express their views on our named executive
officers’ compensation. This vote is not intended to address any specific item of compensation, but rather the overall compensation
of our named executive officers and the philosophy, policies and practices described in this proxy statement.
The say on pay vote is advisory, and therefore
not binding on our Company, the Compensation Committee or our Board of Directors. However, our Board of Directors and our Compensation
Committee value the opinions of our stockholders and will consider the outcome of the vote and the concerns of our stockholders
when making future decisions on the compensation of our named executive officers and our Company’s compensation principles,
policies and procedures.
In accordance with the Board’s policy
of holding annual say on pay votes, we expect that the next advisory vote to approve executive compensation will occur at our 2023
Annual Meeting.
Required Vote
Approval of this proposal requires the affirmative
vote of a majority of the shares of voting common stock present by remote communication or by proxy at the annual meeting and entitled
to vote on the proposal.
Recommendation
of the Board of Directors
 |
THE
BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE “FOR”
THE PROPOSAL TO APPROVE, IN AN ADVISORY MANNER, THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS, AS DISCLOSED IN THIS PROXY
STATEMENT PURSUANT TO THE COMPENSATION DISCLOSURE RULES OF THE SEC. |
| |
AMNEAL PHARMACEUTICALS,
INC. | 2022 Proxy Statement |
|
47 |
| |
|
Security Ownership
of Certain Beneficial Owners and Management
Beneficial Ownership
The following table sets forth information
as of March 11, 2022, with respect to the beneficial ownership of our Class A common stock and Class B common stock, and shows
the number of and percentage owned by:
| • | each person or entity our Company believes to be the beneficial owner of more than
five percent of any class of our common stock based solely on management’s review of SEC filings; |
| • | each named executive officer listed in the summary compensation table; |
| • | each director; and |
| • | all of our current directors and executive officers as a group. |
Beneficial ownership of shares is determined
under the rules of the SEC and generally includes any shares over which a person exercises sole or shared voting or investment
power. Except as indicated by footnote, and subject to applicable community property laws, each person identified in the table
possesses sole voting and investment power with respect to all shares of stock held by such person. As of March 11, 2022, 150,639,171
shares of Class A common stock and 152,116,890 shares of Class B common stock were outstanding.
| | |
Class
A | | |
Class
B | | |
All Common | |
| Name(1) | |
Shares | | |
Options(2) | | |
RSUs(2) | | |
Total | | |
%
of
Class | | |
Shares | | |
%
of
Class | | |
%
of All
Classes | |
| Emily Peterson Alva | |
| 58,784 | | |
| 53,021 | | |
| 35,406 | | |
| 147,211 | | |
| * | | |
| — | | |
| — | | |
| * | |
| Andrew Boyer | |
| 188,281 | | |
| 347,895 | | |
| 16,656 | | |
| 552,832 | | |
| * | | |
| — | | |
| — | | |
| * | |
| J. Kevin Buchi | |
| 70,085 | | |
| 81,397 | | |
| 35,406 | | |
| 186,888 | | |
| * | | |
| — | | |
| — | | |
| * | |
| Jeff George | |
| 77,550 | | |
| 28,506 | | |
| 35,406 | | |
| 141,462 | | |
| * | | |
| — | | |
| — | | |
| * | |
| John Kiely | |
| 63,740 | | |
| 28,506 | | |
| 35,406 | | |
| 127,652 | | |
| * | | |
| — | | |
| — | | |
| * | |
| Anastasios Konidaris | |
| 123,916 | | |
| — | | |
| 87,719 | | |
| 211,635 | | |
| * | | |
| — | | |
| — | | |
| * | |
| Paul Meister | |
| 455,802 | | |
| 115,156 | | |
| 52,677 | | |
| 623,635 | | |
| * | | |
| — | | |
| — | | |
| * | |
| Ted Nark | |
| 108,784 | | |
| 53,021 | | |
| 35,406 | | |
| 197,211 | | |
| * | | |
| — | | |
| — | | |
| * | |
| Chintu Patel | |
| 512,566 | | |
| 53,021 | | |
| — | | |
| 565,587 | | |
| * | | |
| 24,753,252 | | |
| 16.27 | | |
| 8.36 | |
| Chirag Patel | |
| 512,566 | | |
| 53,021 | | |
| — | | |
| 565,587 | | |
| * | | |
| 21,269,420 | | |
| 13.98 | | |
| 7.21 | |
| Gautam Patel | |
| 13,146,217 | | |
| 53,021 | | |
| 35,406 | | |
| 13,234,644 | | |
| 8.79 | | |
| 17,497,336 | | |
| 11.50 | | |
| 10.15 | |
| Nikita Shah | |
| 265,094 | | |
| 144,304 | | |
| 4,442 | | |
| 413,840 | | |
| * | | |
| — | | |
| — | | |
| | |
| Joseph Todisco | |
| 324,314 | | |
| 140,536 | | |
| 4,442 | | |
| 469,292 | | |
| * | | |
| — | | |
| — | | |
| | |
| Shlomo Yanai | |
| 53,740 | | |
| 28,506 | | |
| 35,406 | | |
| 117,652 | | |
| * | | |
| — | | |
| — | | |
| | |
| Total Current Directors and Executive Officers as a Group (15 Persons) | |
| 15,961,439 | | |
| 1,179,911 | | |
| 413,778 | | |
| 17,555,128 | | |
| 11.65 | | |
| 63,520,008 | | |
| 41.76 | | |
| 26.78 | |
| www.amneal.com |
|
AMNEAL PHARMACEUTICALS,
INC. | 2022 Proxy Statement |
|
48 |
| |
|
| | |
Amneal
Group(8) | |
| | |
Class
A | | |
Class
B | | |
|
|
|
|
|
All Common | |
| Name(1) | |
| Shares(2) | | |
| %
of Class | | |
| Shares | | |
| %
of Class | | |
|
|
|
|
|
| %
of Class | |
| Tushar Patel(3) | |
| — | | |
| — | | |
| 53,578,209 | | |
| 35.22 | % | |
|
|
|
|
|
| 17.70 | % |
| Gautam Patel(4) | |
| 13,234,644 | | |
| 8.79% | | |
| 17,497,336 | | |
| 11.50 | % | |
|
|
|
|
|
| 10.15 | % |
| Dipan Patel(5) | |
| — | | |
| — | | |
| 26,905,073 | | |
| 17.69 | % | |
|
|
|
|
|
| 8.89 | % |
| Chintu Patel(6) | |
| 565,587 | | |
| * | | |
| 24,753,252 | | |
| 16.27 | % | |
|
|
|
|
|
| 8.36 | % |
| Chirag Patel(7) | |
| 565,587 | | |
| * | | |
| 21,269,420 | | |
| 13.98 | % | |
|
|
|
|
|
| 7.21 | % |
| Other Members of the Amneal Group | |
| N/A | (8) | |
| N/A | (8) | |
| 8,113,600 | | |
| 5.33 | % | |
|
|
|
|
|
| 2.69 | % |
| TOTAL AMNEAL GROUP | |
| 14,356,818 | | |
| 9.53% | | |
| 152,116,890 | | |
| 100.00 | % | |
|
|
|
|
|
| 54.99 | % |
| | |
Certain
Other Beneficial Owners | |
| | |
Class
A | | |
Class
B | |
|
|
|
|
| |
All Common | |
| Name | |
Shares | | |
%
of Class | | |
Shares | | |
%
of Class | |
|
|
|
|
| |
%
of Class | |
| Funds affiliated with Fosun International
Limited(9) | |
| 16,438,356 | | |
| 10.91 | % | |
| — | | |
| — | |
|
|
|
|
| |
| 5.43 | % |
| Funds affiliated with TPG Inc.(10) | |
| 16,213,367 | | |
| 10.66 | % | |
| — | | |
| — | |
|
|
|
|
| |
| 5.36 | % |
| The Vanguard Group, Inc. and affiliated or advised entities(11) | |
| 11,574,895 | | |
| 7.68 | % | |
| — | | |
| — | |
|
|
|
|
| |
| 3.82 | % |
| * |
Less than 1% |
| (1) |
Unless otherwise noted, the address for each beneficial owner listed
on the table is Amneal Pharmaceuticals, Inc., 400 Crossing Boulevard, Bridgewater, NJ 08807. |
| (2) |
Column includes shares underlying exercisable stock options and
stock options and restricted stock unit awards that will vest within 60 days of March 11, 2022. |
| (3) |
c/o Tarsadia Investments, LLC, 520 Newport Center Drive, Twenty-First
Floor, Newport Beach, CA 92660. Tushar Patel may be deemed to beneficially own 53,578,209 shares of Class B common stock held
of record by Tushar Patel Family Trust. |
| (4) |
Gautam Patel may be deemed to beneficially own 12,887,433 shares
of Class A common stock held of record by T-Twelve Legacy Trust and 17,497,336 shares of Class B common stock held of record
by Falcon Trust, Puja Patel Trust, Ishani Patel Trust, Niam Patel Trust and Mayur Patel Legacy Trust. Mr. Patel does
not have a pecuniary interest in these shares of Class A Common Stock, Common Units or Class B common stock. The Falcon Trust
pledged to Credit Suisse AG 14,821,537 common units (including the shares of Class A common stock issued upon any redemption
thereof) and the 14,821,537 shares of Class B common stock associated therewith to secure the Falcon Trust’s obligations
under that certain Promissory Note and Collateral Agreement dated September 15, 2021. |
| (5) |
c/o Buckhead America Hospitality, 2855 Springhill Parkway, Smyrna,
GA 30080. Dipan Patel may be deemed to beneficially own 26,905,073 shares of Class B common stock held of record by Dipan
Patel Living Trust, AP-1 Trust, AP-2 Trust, AP-3 Trust, AP-5 Trust, AP-7 Trust, and AP-9 Trust. |
| (6) |
Chintu Patel may be deemed to beneficially own 24,753,252 shares
of Class B common stock held of record by The Chintu Patel Revocable Trust and The Falguni Patel Revocable Trust. |
| (7) |
Chirag Patel may be deemed to beneficially own 21,269,420 shares
of Class B common stock held of record by The Chirag Patel Revocable Trust and The Priti Patel Revocable Trust. Mr. Patel
has pledged to Credit Suisse AG 15,024,197 common units (including the shares of Class A common stock issued upon any redemption
thereof) and 15,024,197 shares of Class B common stock associated therewith to secure the obligations of those certain borrowers
to the Promissory Note and Collateral Agreement dated December 10, 2021. |
| (8) |
See “Corporate Governance – Corporate Structure”
above for a discussion of the relationship between the Amneal Group and the Company. The Amneal Group holds 100% of our outstanding
Class B shares. Certain members of the Amneal Group may also hold Class A shares. Messrs. Chintu Patel, Chirag Patel and Gautam
Patel are members of the Amneal Group and also members of our Board, and their shares are reported in the “Executive
Officers and Directors” table above. Shares of Class A common stock held by members of the Amneal Group other than Messrs. Chintu Patel,
Chirag Patel, Gautam Patel, Dipan Patel and Tushar Patel are not reported in this table. |
| (9) |
Fosun International Limited, Room 808, ICBC Tower, 3 Garden Road,
Central, Hong Kong. As reported in the Form 13G/A filed on February 14, 2020 with respect to its holdings as of December 31,
2019, Fosun has the shared power to vote or direct the vote and the shared power to dispose or direct the disposition of 16,438,356
shares. |
| (10) |
TPG Inc., 301 Commerce Street, Suite 3300, Fort Worth, TX 76102.
As reported in the Form 13D/A filed by TPG GP A, LLC on January 19, 2022 with respect to its holdings as of December 31, 2021,
the reporting persons have the shared power to vote or direct the vote and the shared power to dispose or direct the disposition
of 16,213,367 shares. |
| (11) |
The Vanguard Group, 100 Vanguard Boulevard, Malvern, PA 19355.
As reported in the Schedule 13G/A filed by The Vanguard Group on February 9, 2022, The Vanguard Group has the sole
power to vote or direct the vote of 0 shares, the shared power to vote or direct the vote of 206,683 shares, the sole power
to dispose or direct the disposition of 11,291,322 shares and the shared power to dispose or direct the disposition of 283,573
shares. |
| |
AMNEAL PHARMACEUTICALS,
INC. | 2022 Proxy Statement |
|
49 |
| |
|
To our knowledge, except as noted above,
no person or entity is the beneficial owner of more than five percent of the voting power of the Company’s stock.
Delinquent Section
16(a) Reports
Section 16(a) of the Securities Exchange
Act of 1934, as amended (the “Exchange Act”), requires our directors and executive officers and any persons who own
more than ten percent of our common stock to file with the SEC various reports as to ownership of and changes of ownership in any
class of equity securities of our Company. As a practical matter, the Company assists its directors and officers by monitoring
transactions and completing and filing Section 16 reports on their behalf. Based solely on a review of the reports filed for fiscal
2021 and related written representations, we believe that all of our directors and executive officers and any persons who own more
than ten percent of our common stock filed the required reports on a timely basis during fiscal 2021.
| www.amneal.com |
|
AMNEAL PHARMACEUTICALS,
INC. | 2022 Proxy Statement |
|
50 |
| |
|
Certain
Related Parties and Related Party Transactions
Review and Approval
of Related Party Transactions
Our Board of Directors recognizes that transactions
involving our Company and related parties present heightened risk of potential or actual conflicts of interest that may interfere—or
even appear to interfere—with the interests of our Company. Therefore, it is the policy of our Company (as set forth in our
written Related Person Transaction Policy and Procedures and Conflicts Committee Charter) that the Conflicts Committee of the Board
of Directors shall review, approve or ratify any transaction with related parties required to be reported by our Company under
the applicable rules and regulations governing related party transactions promulgated by the SEC. As discussed more fully in our
Related Person Transaction Policy, in determining whether to approve a transaction, the Conflicts Committee considers all relevant
facts and circumstances, including, among other factors, the material terms of the transaction, the approximate dollar value of
the amount involved in the transaction, the nature of the related person’s interest in the transaction, the approximate dollar
value of the amount of the related person’s direct or indirect interest in the transaction, whether the transaction is on
terms comparable to those that could be obtained in arm’s length dealings with an unrelated third party, the importance of
the transaction both to the Company and to the Related Person and whether the transaction would likely impair the judgment of a
director or executive officer to act in the best interest of the Company. Copies of our Related Person Transaction Policy and Procedures
and Conflicts Committee Charter are available on our website.
Related Party
Transactions
See the footnotes to the tables in the section
entitled “Security Ownership of Certain Beneficial Owners and Management” for a discussion of related party transactions
between the Company and trusts controlled by Gautam Patel and Chirag Patel relating to pledging arrangements.
Fosun International Limited
Fosun is a Chinese international conglomerate
and investment company that is a stockholder of the Company. On June 6, 2019, the Company entered into a license and supply agreement
with a subsidiary of Fosun, which is a Chinese pharmaceutical company. Under the terms of the agreement, the Company will hold
the import drug license required for pharmaceutical products manufactured outside of China and will supply Fosun with finished,
packaged products for Fosun to then sell in the China market. Fosun will be responsible for obtaining regulatory approval in China
and for shipping the product from Amneal’s facility to Fosun’s customers in China. In consideration for access to the
Company’s U.S. regulatory filings to support its China regulatory filings and for the supply of product, Fosun paid the Company
a $1 million non-refundable fee, net of tax, in July 2019 and will be required to pay the Company $0.3 million for each of eight
products upon the first commercial sale of each in China in addition to a supply price and a profit share. For the year ended December
31, 2021, the Company did not earn any revenue from this agreement.
On August 12, 2021, the Company entered into
a license and development agreement with a subsidiary of Fosun, pursuant to which the Company granted Fosun an exclusive license
to two active pharmaceutical ingredients (“APIs”) for manufacture and commercialization outside of the U.S. Fosun will
be responsible for obtaining regulatory approvals outside of the U.S. Fosun paid the Company a $0.2 million non-refundable
fee, which was recognized in 2021 as revenue and will be required to pay the Company $0.1 million for each of the two products
upon the first commercial sale of each in China in addition to a profit share.
TPG Operations LLC
TPG Operations LLC (“TPG”) is
a private investment firm that provides financial services and is a significant stockholder of the Company. Jeff Schilling, an
observer of our Board, is a managing director of TPG. TPG offers capital and strategic support for companies with substantial growth
potential primarily in the healthcare, financial services, real estate, and clean technology sectors. In March 2020,
the Company entered into an agreement in which TPG provided financial consulting services for a period of 7 months. The agreement
was subsequently extended until March 2022. Services provided totaled $0.25 million for the year ended December 31, 2021. The services
are not expected to have a material impact to the Company’s financial statements.
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Transactions Involving Our Co-CEOs (Mr.
Chirag Patel and Mr. Chintu Patel)
Kanan, LLC
Kanan, LLC (“Kanan”) is an independent
real estate company and the landlord of Amneal’s leased manufacturing facilities located at 65 Readington Road, Branchburg,
New Jersey, 131 Chambers Brook Road, Branchburg, New Jersey and 1 New England Avenue, Piscataway, New Jersey, pursuant to certain
lease agreements entered into by Amneal and Kanan (the “New Jersey Lease Agreements”). Pursuant to the New Jersey Lease
Agreements, rent expense paid to Kanan for the year ended December 31, 2021 was approximately $2 million.
Chirag Patel and Chintu Patel beneficially
own, through certain revocable trusts, 28.0% in the aggregate of the equity securities of Kanan. In addition, each of Chintu Patel
and Chirag Patel serves on the Board of Managers of Kanan.
Kashiv Biosciences,
LLC
Kashiv Biosciences, LLC (“Kashiv”)
is an independent contract development organization that has historically been focused primarily on the development of 505(b)(2)
NDA products utilizing its own proprietary technology platforms, particularly in the areas of abuse deterrence and bioavailability
enhancement. Kashiv possesses deep knowledge and patented novel technologies for developing complex generic and specialty products,
and Amneal has collaborated with Kashiv to develop a number of those products.
On January 11, 2021, Amneal entered into
a Membership Interest Purchase Agreement (the “Purchase Agreement”) with Kashiv, pursuant to which, among other matters
and on the terms and subject to the conditions of the Purchase Agreement, Amneal purchased from Kashiv 98% of the outstanding membership
interests of Kashiv Specialty, a direct subsidiary of Kashiv (the “Acquisition”). Pursuant to the Purchase Agreement,
Amneal is required to pay Kashiv an upfront purchase price comprised of (i) a cash payment of $70 million at the closing of the
Acquisition, which is subject to certain customary purchase price adjustments, and (ii) a cash payment of $30 million at the one-year
anniversary of the execution of the purchase agreement. Kashiv is also eligible to receive up to an additional $8 million in contingent
payments upon the achievement of certain regulatory milestones. In addition to the foregoing contingent payments, the Company has
agreed to pay Kashiv certain royalty payments equal to an escalating percentage (from high single-digits to mid double-digits,
depending on the net sales amount) of aggregate annual net sales for certain pharmaceutical products. The Purchase Agreement contains
customary representations, warranties and covenants. The Acquisition closed on April 2, 2021, and the initial upfront payment was
financed with cash on hand. The second cash payment of $30 million was paid to Kashiv on January 11, 2022 as per the terms of the
Purchase Agreement.
In connection with the Acquisition, the Company
and Kashiv entered into a Transition Services Agreement, pursuant to which Kashiv agreed to provide certain transition services
to the Company in the areas of information technology, financial and operational accounting and R&D services for a period of
up to six months post-Acquisition unless otherwise agreed. Total payments to Kashiv for the year ended December 31, 2021 was $0.2
million.
In connection with the Acquisition, the Company
and Kashiv entered into a Storage Agreement pursuant to which the Company agreed to provide storage and inventory transfer services
at the KSP-acquired facility for a period of one year post-Acquisition, which has been extended for an additional one year period.
Amneal and Kashiv were party to a multi-product
development agreement, dated as of August 1, 2011, that was amended and restated in February 2020, pursuant to which Amneal and
Kashiv have agreed to collaborate on the development and commercialization of a number of generic pharmaceutical products. This
agreement was terminated in connection with the Acquisition as these products comprised part of the assets purchased by the Company.
The Company and Kashiv were party to a binding
term sheet, dated November 5, 2019, for the development and commercialization of Kashiv’s orphan drug K127 (pyridostigmine)
for the treatment of Myasthenia Gravis. This agreement was terminated in connection with the Acquisition as K127 comprised one
of the assets purchased by the Company.
In May 2020, Amneal and Kashiv entered into
a product development agreement for the development and commercialization of Posaconazole. This agreement was terminated in connection
with the Acquisition as these assets comprised part of the assets purchased by the Company.
The Company and Kashiv are party to a master
services agreement, dated February 20, 2020, covering certain services that Kashiv provides the Company for commercial product
support, with such services charged at an hourly rate of $100 per hour for actual time spent plus third party costs. Total payments
to Kashiv for the year ended December 31, 2021 was $1.02 million.
The Company and Kashiv are also negotiating
a consulting arrangement whereby Kashiv will provide advice relating to its Specialty programs, with such services to be charged
at an hourly rate of $200 per hour for clinical consulting and $240 per hour for non-clinical consulting.
In late 2018, Adello Biologics, LLC (“Adello”)
contributed substantially all of its assets to Kashiv as of January 1, 2019, and transferred all agreements to Kashiv, including
agreements between Amneal and Adello. The following agreements are now between Kashiv and Amneal.
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Amneal and Kashiv are party to a license
and commercialization agreement (the “Kashiv License Agreement”) pursuant to which Kashiv and Amneal have agreed to
cooperate with respect to certain development activities in connection with two biologic pharmaceutical products (the “Kashiv
Products”). In addition, under the Kashiv License Agreement, Kashiv has appointed Amneal as its exclusive marketing partner
for the Kashiv Products in the United States. In connection with the Kashiv License Agreement, Kashiv received an upfront payment
of $1.5 million from Amneal in October 2017 and is entitled to share in Amneal’s net profits on the products if and when
commercialized. In addition, Kashiv is eligible to receive from Amneal payments of (i) up to $21 million in milestones relating
to obtaining regulatory approval for the Kashiv Products, (ii) up to $43 million in milestones for the successful manufacture
and delivery of the Kashiv Products, (iii) between $20 million and $50 million in milestones depending on the number
of competitors for one of the Kashiv Products at launch and (iv) between $15 million and $67.5 million for the achievement
of cumulative combined net sales levels for the Kashiv Products, subject to certain conditions and the achievement of specific
development and commercial objectives.
In August 2020, Amneal and Kashiv entered
into a product development agreement for the development and commercialization of two generic peptide products, Ganirelix Acetate
and Cetrorelix Acetate. Under the agreement, the intellectual property and ANDA for these products are owned by Amneal, and Kashiv
is to receive a profit share for all sales of the products made by Amneal.
Pursuant to the agreements described above,
the total profit share paid to Kashiv for the year ended December 31, 2021 was $2.7 million, and total payments for milestones,
services and reimbursement of expenses paid to Kashiv for the year ended December 31, 2021 was $6.6 million.
The Company and Kashiv are also party to
an arrangement whereby the Company leases parking spaces from Kashiv, pursuant to which the Company pays to Kashiv approximately
$99,000 per year.
Chirag Patel and Chintu Patel beneficially
own, directly and through certain revocable or irrevocable trusts for the benefit of their immediate families, 50% in the aggregate
of the outstanding equity securities of Kashiv. In addition, each of Chintu Patel and Chirag Patel serve on the Board of Managers
of Kashiv.
Nava Pharma, LLC
and PharmaSophia, LLC
PharmaSophia, LLC (“PharmaSophia”)
is a joint venture formed by Nava Pharma, LLC (“Nava”) and Oakwood Laboratories, LLC for the purpose of developing
certain products. PharmaSophia is currently actively developing one injectable product. PharmaSophia and Nava are parties to a
research and development agreement pursuant to which Nava provides research and development services to PharmaSophia. Nava subcontracted
this obligation to Amneal. Amneal, PharmaSophia and Oakwood also entered into a manufacturing agreement whereby Amneal agreed to
manufacture exhibit and commercial batches of products under development. The total amount of income earned from these agreements
by Amneal for the year ended December 31, 2021 was $0.3 million. As of December 31, 2021, a receivable of $1.1 million was due
to Amneal from PharmaSophia.
PharmaSophia and Amneal are currently negotiating
an agreement for Amneal to obtain worldwide commercial rights to the injectable product under development. Amneal would incur development
costs up to an agreed cap and PharmaSophia would receive a 50% net profit share upon commercial sale of the product.
Chirag Patel and Chintu Patel beneficially
own, directly and through certain revocable trusts, equity securities in Nava. Nava beneficially owns 50% of the outstanding equity
securities of PharmaSophia. In addition, each of Chintu Patel and Chirag Patel serve on Nava and PharmaSophia’s Board of
Managers.
Avtar Investments,
LLC and Avtar Enterprise, LLC
Avtar Investments, LLC is a private investment
firm and Avtar Enterprise, LLC is a private portfolio company (collectively, “Avtar”). Chirag Patel and Chintu Patel
beneficially own, directly and through certain revocable trusts, outstanding equity securities of Avtar. In April 2020, the Company
entered into an agreement with Avtar Investments under which Avtar provided certain financial consulting services. The agreement
expired in April 2021 and was not renewed. In July 2020, the Company entered into an agreement with Avtar Enterprise under which
Avtar agreed to provide consulting services relating to certain clinical studies and regulatory advice for generic pharmaceutical
products in development by the Company. The agreement was expanded in February 2022 to include several inhalation products and
other programs. Avtar and Amneal are currently in negotiations to expand this consulting arrangement to include clinical consulting
advice for certain of Amneal’s specialty programs. As of December 31, 2021, less than $0.1 million was due to Avtar.
Employment and
Stockholder Arrangements with Immediate Family Members
Kanubhai Patel, the father of Chirag and
Chintu Patel, is employed by us as the Chairman of Amneal Pharmaceuticals India Private Limited. During the fiscal year ended December
31, 2021, Mr. Kanubhai Patel had total compensation of approximately $454,642. In addition, he received an equity grant in 2021
with a grant date fair value of $150,000.
Bindu Patel, a sister of Chirag and Chintu
Patel, is employed by us as a manager in the information technology department. During the fiscal year ended December 31, 2021,
Ms. Bindu Patel had total compensation of approximately $125,143.
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Agreements Entered into in Connection
with the Combination and the PIPE Investment
In 2018, Amneal entered into an important
strategic transaction that we refer to as the Combination. The Combination was a transformative event that established Amneal as
an industry leader with high-value generic product pipelines and a growing specialty business. The following summarizes the agreements
we entered in connection with the Combination.
Stockholders Agreement
See the “Corporate Governance”
section of this proxy statement for a summary of the material terms of the Stockholders Agreement.
PIPE Investment
In connection with the Combination, on May
4, 2018, members of the Amneal Group entered into definitive purchase agreements (the “PIPE Purchase Agreement”) that
provided for a private placement of certain shares of Class A common stock and Class B-1 common stock (the “PIPE Investment”)
with select institutional investors (the “PIPE Investors”). Pursuant to the PIPE Purchase Agreement, upon the closing
of the Combination (the “Closing”), members of the Amneal Group exercised their right to cause Amneal LLC to redeem
units held by such members pursuant to the LLC Agreement (defined herein). In connection with such redemption, such members of
the Amneal Group received shares of Class A common stock or shares of Class B-1 common stock in exchange for such redeemed units,
in each case pursuant to the LLC Agreement (such redemption and issuance of Class A common stock and Class B-1 common stock to
the members of the Amneal Group, the “Redemption”). Following the Redemption, the members of the Amneal Group sold
such shares of Class A common stock and Class B-1 common stock to the PIPE Investors at a per share purchase price of $18.25 for
gross proceeds of approximately $855,000,000. Following the PIPE Investment, the PIPE Investors owned collectively approximately
15% of the Company’s shares on a fully diluted and as converted basis, with TPG owning all outstanding shares of Class B-1
common stock. As a result of the Conversion in 2019, there are no longer any shares of Class B-1 common stock outstanding.
In connection with the Combination and in
furtherance of the PIPE Investment, TPG, the Amneal Group and the Company entered into the PIPE Side Letter providing for certain
rights and obligations of each in connection with the PIPE Investment. Pursuant to the PIPE Side Letter, TPG has customary registration
rights with respect to the Company’s shares owned by TPG. The PIPE Side Letter also provides TPG the right to designate a
Board observer with respect to the Company’s Board of Directors, as well as the right, subject to certain ownership thresholds
discussed herein, to designate a director for appointment to the Company’s Board of Directors.
Registration Rights
Agreement
We entered into a Registration Rights Agreement
with the PIPE Investors in connection with the Closing. The Registration Rights Agreement provides the PIPE Investors certain registration
rights whereby the Company and Impax were required to jointly prepare and file with the SEC a shelf registration statement on Form
S-1 with respect to resales of all shares of Class A common stock beneficially owned by the Amneal Group. We agreed to use our
reasonable best efforts to become eligible to use Form S-3 and, upon becoming eligible, we agreed to promptly file a shelf registration
statement on Form S-3.
Tax Receivable
Agreement
Pursuant to the LLC Agreement, the Amneal
Group and its permitted transferees have the right to redeem all or a portion of their Amneal Common Units (defined herein) for
Class A common stock. In connection with such redemption, the Company will receive a “step-up” in its share of the
tax basis in the Amneal LLC assets and possibly certain other tax benefits, and the Company will pay the Members (as defined below)
for the value of such benefits.
The following summary of the terms of the
Tax Receivable Agreement is not a complete description thereof and is qualified in its entirety by the full text thereof.
At the Closing, the Company, Amneal LLC and
the Amneal Group entered into the Tax Receivable Agreement. The Tax Receivable Agreement governs the administration and allocation
between the parties of tax liabilities and benefits arising prior to, as a result of, and subsequent to the Combination, and the
respective rights, responsibilities and obligations of the Members and the Company with respect to various other tax matters. The
term “Members” includes the then existing members of Amneal LLC at Closing (other than the Company) and any persons
who have executed and delivered a joinder in accordance with the Tax Receivable Agreement. Chirag Patel, Chintu Patel and Gautam
Patel are Members.
Determination of Realized Tax Benefit
Under the Tax Receivable Agreement, the Company
will ensure that Amneal LLC and its subsidiaries that are treated as a partnership for U.S. federal income tax purposes will have
in effect an election under Section 754 of the Code.
Basis Schedules
Within 90 days after the filing of the U.S.
federal income tax return of the Company for each relevant taxable year, the Company will at its own expense deliver to the Members
a schedule that shows (a) the basis adjustments with respect to the reference assets as a result of the relevant exchanges effected
in such taxable year, calculated (i) in the aggregate and (ii) solely with respect to exchanges by the applicable Member; (b) the
period (or periods) over which the reference assets are amortizable and/ or depreciable; and (c) the period (or periods) over which
each basis adjustment is amortizable and/or depreciable.
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Tax Benefit Schedules
Within 90 days after the filing of the U.S.
federal income tax return of the Company for any taxable year in which there is a realized tax benefit or realized tax detriment,
the Company shall, at its own expense, deliver to the Members a schedule showing the calculation of the realized tax benefit or
realized tax detriment for such taxable year.
Tax Benefit Payments
Each Member is entitled to receive an amount
equal to the sum of (1) 85% of the cumulative net realized tax benefit attributable to such Member as of the end of such taxable
year over the aggregate amount of all tax benefit payments previously made to such Member, and (2) the interest calculated at the
agreed rate from the due date for filing the U.S. federal income tax return of the Company for such taxable year until the date
on which the Company makes a timely tax benefit payment to the Member.
Approvals by the Amneal Group
The Company and its subsidiaries must obtain
prior written consent from the Amneal Group before (i) making a disposition of any assets held by Amneal LLC or its subsidiaries
prior to the Closing if the cumulative “amount realized” (as such term is defined for U.S. federal income tax purposes)
for all such dispositions in any 12-month period would be in excess of $40,000,000 unless the Company agrees to use its best efforts
to ensure that each Member receives tax distributions equal to its assumed tax liability, (ii) making certain acquisitions that
would reasonably be expected to materially adversely affect any member’s rights or obligations under the Tax Receivable Agreement,
or (iii) entering into certain additional agreements with other persons that are similar to the Tax Receivable Agreement.
Termination
The Company may terminate the Tax Receivable
Agreement with the written approval of a majority of the independent directors of the Company’s Board of Directors by making
a payment to the Members, equal to the present value of the tax benefit payments to be paid to each such Member, discounted at
the lesser of ICE LIBOR plus 100 basis points or 6.50% per annum, compounded annually (an “Early Termination Payment”).
The Tax Receivable Agreement will also be deemed to be terminated by the Company and an Early Termination Payment by the Company
will be required in the event of either (a) a Change of Control (as defined below) or (b) a material breach by the Company of any
of its material obligations under the Tax Receivable Agreement.
A “Change of Control” includes
(a) any person other than the Amneal Group and their permitted transferees beneficially owning more than 50% of the combined voting
power of the Company; (b) the liquidation or dissolution of the Company, or the sale of all or substantially all of the assets
of the Company, unless the sale is to an entity of which at least 50% of the combined voting power is owned by the Company’s
Stockholders who owned the Company immediately prior to such sale in substantially the same proportions; (c) a business combination
of the Company or any of its subsidiaries with any other entity, after which the Company’s Board of Directors immediately
prior to such combination does not constitute at least a majority of the Board of Directors of the surviving company or its parent,
or all of the beneficial owners of the voting securities of the Company prior to such combination do not beneficially own more
than 50% of the combined voting power of the surviving entity; and (d) the following individuals ceasing to constitute a majority
of the Company’s Board of Directors: (i) the directors of the Company as of the Closing (“Initial Directors”)
and (ii) any new director whose appointment or nomination was approved by at least two-thirds of the directors who were (x) Initial
Directors or (y) whose appointment or nomination was approved by at least two-thirds of the Initial Directors.
LLC Agreement
In connection with the Combination, Amneal
LLC, the Company and the Existing Amneal Members (and the Amneal Group following the assignment and transfer by the Existing Amneal
Members (as defined in the LLC Agreement) of Amneal Common Units to the Amneal Group) entered into and are governed by the LLC
Agreement, which sets forth, among other things, certain transfer restrictions on Amneal Common Units, and rights to redeem Amneal
Common Units in certain circumstances. The following summary of the terms of the LLC Agreement is not a complete description thereof
and is qualified in its entirety by the full text thereof. Undefined capitalized terms in this section have the meaning ascribed
to them in the LLC Agreement.
Appointment of the Company as Manager
Under the LLC Agreement, the Company is admitted
as the sole managing member of Amneal LLC. As the managing member, the Company will conduct, direct and exercise full control over
all activities of Amneal LLC, including day-to-day business affairs and decision-making of Amneal LLC, without the approval of
any other member. As such, the Company, through Amneal’s LLC officers, will be responsible for all operational and administrative
decisions of Amneal LLC and the day-to-day management of Amneal’s LLC business.
Pursuant to the terms of the LLC Agreement,
the Company will not be permitted, under any circumstances, to be removed as managing member by the members of Amneal LLC. The
Company will not resign or cease to be the managing member unless proper provision is made for the obligations of the Company to
remain in full force and effect.
The managing member may cause Amneal LLC
to contract with the managing member or any affiliate of the managing member as long as the contracts are on terms comparable to
those available to others dealing at arm’s length or are approved by the members (other than the managing member and its
controlled affiliates) holding a majority of the Amneal Common Units.
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Officers
The managing member will appoint the officers
of Amneal LLC to implement the day-to-day business and operations of Amneal LLC. In the event of a vacancy, the managing member
has the right to appoint a new officer to fill the vacancy.
Compensation
The Company will not be entitled to compensation
for its services as managing member. It will be entitled to reimbursement by Amneal LLC for reasonable fees and expenses incurred
on behalf of Amneal LLC, except for payment obligations of the Company under the Tax Receivable Agreement.
Units
The LLC Agreement provides that at the Closing
there will be one class of Amneal Common Units. In accordance with the Business Combination Agreement, all Amneal Common Units
held by the Existing Amneal Members prior to the execution of the LLC Agreement were converted into Amneal Common Units. The managing
member may establish additional securities of Amneal in its discretion in accordance with the terms, and subject to the restrictions
of, the LLC Agreement. The managing member may create one or more classes or series of Amneal Common Units or preferred units solely
to the extent they are in the aggregate substantially equivalent to a class of common stock of Amneal LLC or class or series of
preferred stock of Amneal LLC.
Allocations and Distributions
Allocations
Pursuant to the LLC Agreement, items of income,
gain, loss or deduction of Amneal LLC generally will be allocated among the members for capital accounts on a pro rata basis in
accordance with each member’s percentage interest, except that partner nonrecourse deductions attributable to partner nonrecourse
debt will be allocated in the manner required by the Treasury Regulations Section 1.704-2(i). Nonrecourse deductions for any taxable
year will be allocated pro rata among the members in accordance with their percentage interests.
Distributions
Amneal LLC may make distributions out of
distributable cash and other funds or property to its members from time to time at the discretion of the Company. Such distributions
generally will be made to the members on a pro rata basis in proportion to the number of Amneal Common Units held by each member
on the record date for the distribution. Amneal LLC will not be required to make distributions to the extent that such distributions
would render Amneal LLC insolvent or if such distribution would violate any applicable law or the terms of the any credit agreement
in existence at Closing.
Tax Distributions
In connection with any tax period, Amneal
LLC is required to make distributions to its members, on a pro rata basis in proportion to the number of Amneal Common Units held
by each member, of cash until each member (other than the Company) has received an amount at least equal to its assumed tax liability
and the Company has received an amount sufficient to enable it to timely satisfy all of its U.S. federal, state and local and non-U.S.
tax liabilities, and meet its obligations pursuant to the Tax Receivable Agreement. To the extent that any member does not receive
its percent interest of the aggregate tax distribution, the tax distribution for such member will be increased to ensure that all
distributions are made pro rata in accordance with such member’s percentage interest.
Redemption of Amneal Common Units
Upon written notice to Amneal LLC and the
Company, each member of Amneal LLC is entitled to effectuate a redemption (a “Redemption”) of all or any portion of
its Amneal Common Units in exchange for the number of shares of Class A common stock equal to the number of redeemed Amneal Common
Units (the “Share Settlement”) or, at the Company’s sole election, in cash, which shall be equal to the per share
purchase price received by the Company pursuant to a sale of Class A common stock. If the Amneal Group, at the time of such cash
election, owns greater than 50% of the voting power of the Common Stock, then the per share purchase price shall be net of any
underwriter discounts or commissions and brokers fees or commissions.
Transfer Restrictions
No interest in Amneal LLC may be transferred
except as permitted under the LLC Agreement. The LLC Agreement permits transfers:
| • | by
a member to an affiliate of such member; |
| • | by the Existing Amneal Members or any direct or indirect transferee of such members (including the Amneal Group): |
| • | with the prior written consent of the Conflicts Committee, |
| • | in response to a tender or exchange offer that has been approved or recommended
by the Company Board; |
| • | in connection with any Company Sale; |
| • | that is an individual, (1) to such Existing Amneal Member’s (or
such transferee’s) spouse, (2) to such Existing Amneal Member’s (or such transferee’s)
lineal ancestors, lineal descendants, siblings, cousins or the spouses thereof, (3) to trusts
for the benefit of such Existing Amneal Member (or such transferee) or such persons, (4) to foundations
established by such Existing Amneal Member (or such transferee) or such persons or affiliates thereof
or (5) by way of bequest or inheritance upon death; |
| • | that is an entity, to such Existing Amneal Member’s (or such transferee’s)
members, partners or other equity holders; or |
| • | of up to a total of 60,000,000 Amneal Common Units; or |
| • | pursuant
to a Redemption or direct exchange as described above. |
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Dissolution
The LLC Agreement provides that the unanimous
consent of at least 75% of all members holding Amneal Common Units will be required to voluntarily dissolve Amneal LLC. In addition
to a voluntary dissolution, Amneal LLC may be dissolved upon the entry of a decree of judicial dissolution or upon other circumstances
in accordance with Delaware law. Upon a dissolution event, the proceeds of liquidation will be distributed in the following order:
(i) to pay the expenses of winding up Amneal LLC; (ii) to pay debts and liabilities owed to creditors of Amneal LLC; and (iii)
to the members pro rata in accordance with their respective percentage ownership interests in Amneal.
Corporate Opportunities and Waiver of
Fiduciary Duty
The LLC Agreement provides that, notwithstanding
any duty, including fiduciary duty, otherwise applicable at law or in equity, the doctrine of corporate opportunity, or any analogous
doctrine, will not apply to any member or related person of such member, and no member or related person of such member who acquires
knowledge of a potential transaction, agreement, arrangement or other matter that may be an opportunity for Amneal LLC or the members
will have any duty to communicate or offer such opportunity to Amneal LLC or the members, or to develop any particular investment,
and such person will not be liable to Amneal LLC or the members for breach of any fiduciary or other duty (other than fiduciary
duties owed to the Company) by reason of the fact that such person pursues or acquires for, or directs such opportunity to, another
person or does not communicate such investment opportunity to the members.
Indemnification and D&O Insurance
Amneal LLC will indemnify any member or affiliate,
the managing member or any of its affiliates, any officer, or individual serving at the request of Amneal LLC as an officer, director,
principal, member, employee or agent of another corporation, partnership, joint venture, limited liability company, trust or other
enterprise. Such persons will be entitled to payment in advance of expenses, including attorneys’ fees, that they incur in
defending a proceeding, but they will be required to repay any such advance if it is ultimately determined that they were not entitled
to indemnification by Amneal LLC. Indemnification will not be available for any expenses, liabilities, damages and losses suffered
that are attributable to any such person’s or its affiliates’ gross negligence, willful misconduct or knowing violation
of the law or for any present or future breaches of any representations, warranties or covenants contained in the LLC Agreement
or in other agreements with Amneal LLC.
Tax Classification
The members intend that Amneal LLC be treated
as a partnership for U.S. federal and, if applicable, state or local income tax purposes. Each member and Amneal LLC will file
all tax returns and will take all tax and financial reporting positions in a manner consistent with such tax treatment.
Amendments
The LLC Agreement may only be amended in
writing by the manager with the written consent of the holders of at least 75% of the Amneal Common Units then outstanding.
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Report of the
Audit Committee
Under the guidance of a written charter adopted by our Board of
Directors, the Audit Committee oversees our management’s conduct of the financial reporting process on behalf of the Board
of Directors. A copy of the charter is available at the investor relations section of our company’s website, http://investors.amneal.com.
The Audit Committee also appoints the independent registered public accounting firm to be retained to audit our company’s
consolidated financial statements and internal control over financial reporting, and once retained, the independent registered
public accounting firm reports directly to the Audit Committee. The Audit Committee is responsible for pre-approving both audit
and non-audit services to be provided by the independent registered public accounting firm. The Audit Committee’s charter
reflects the above-mentioned responsibilities, and the Audit Committee and the Board of Directors periodically review and revise
the charter.
Management is responsible for our company’s financial reporting
process, including the system of internal controls, and for the preparation of consolidated financial statements in accordance
with accounting principles generally accepted in the United States of America. Our company’s independent registered public
accounting firm is responsible for auditing those consolidated financial statements and expressing an opinion on the conformity
of the consolidated financial statements with accounting principles generally accepted in the United States of America. In addition,
our company’s independent registered public accounting firm will express its own opinion on the effectiveness of the company’s
internal control over financial reporting. The Audit Committee’s responsibility is to monitor and review these processes.
It is not the Audit Committee’s duty or responsibility to conduct auditing or accounting reviews.
The Audit Committee meets at least four times annually, or more
frequently as circumstances dictate. During fiscal 2021, the Audit Committee met six times. The Audit Committee also met with management
periodically to consider the adequacy of our company’s internal controls, and discussed these matters and the overall scope
and plans for the audit of our company with our independent registered public accounting firm, Ernst & Young LLP. The
Audit Committee met with the independent registered public accounting firm, with and without management present, to discuss the
results of its examination, its evaluation of the effectiveness of our internal control over financial reporting, and the overall
quality of our financial reporting. The Audit Committee also discussed with senior management our company’s disclosure controls and procedures and the certifications by our co-chief
executive officers and chief financial officer, which are required by the SEC under the Sarbanes-Oxley Act of 2002 for certain
of our company’s filings with the SEC. The Audit Committee also met separately from time to time with our chief financial
officer and, at least quarterly, the Audit Committee met in executive session.
In fulfilling its oversight responsibilities, the Audit Committee
reviewed and discussed with management and the independent registered public accounting firm the audited consolidated financial
statements in the Annual Report on Form 10-K for the fiscal year ended December 31, 2021, management’s assessment of the
effectiveness of our company’s internal control over financial reporting and the independent registered public accounting
firm’s evaluation of the effectiveness of our company’s internal control over financial reporting as of December 31,
2021. The Audit Committee reviewed with the independent registered public accounting firm, who is responsible for expressing an
opinion on the conformity of the consolidated financial statements with accounting principles generally accepted in the United
States of America, its judgments as to the quality, not just the acceptability, of our company’s accounting principles, the
reasonableness of significant judgments and the clarity of disclosures in the financial statements and such other matters as are
required to be discussed with the Audit Committee under auditing standards of the Public Company Accounting Oversight Board (PCAOB).
In addition, the Audit Committee has discussed with the independent registered public accounting firm its independence from our
company and our management, including the matters in the written disclosures and letter which were received by the Audit Committee
from the independent registered public accounting firm as required by the applicable requirements of the PCAOB, and considered
the compatibility of non-audit services with Ernst & Young LLP’s independence. In reliance on the reviews and discussions
referred to above, the Audit Committee recommended to the Board of Directors (and the board approved) that the audited consolidated
financial statements be included in the Annual Report on Form 10-K for the fiscal year ended December 31, 2021 for filing with
the SEC.
Audit Committee:
John Kiely (Chair)
J. Kevin Buchi
Jeff George
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Proposal 3 Appointment
of Independent Registered Public Accounting Firm
Introduction
The Audit Committee has appointed Ernst & Young LLP
as the independent registered public accounting firm to audit our consolidated financial statements and the effectiveness of our
internal control over financial reporting for the fiscal year ending December 31, 2022.
We are asking our stockholders to ratify the selection of Ernst &
Young as our independent registered public accounting firm. Although ratification is not required by our Bylaws or otherwise, our
Board of Directors is submitting the selection of Ernst & Young to our stockholders for ratification as a matter of good
corporate practice. If the selection is not ratified, the Audit Committee will consider whether it is appropriate to select another
registered public accounting firm. Even if the selection is ratified, the Audit Committee in its discretion may select a different
registered public accounting firm at any time during the year if it determines that such a change would be in the best interests
of the Company and our stockholders.
One or more representatives of Ernst & Young are expected
to be present at the annual meeting. They will have an opportunity to make a statement if they desire to do so and are expected
to be available to respond to appropriate stockholder questions.
Independent Registered Public Accounting
Firm Fees
In addition to performing the audit of our consolidated financial
statements, Ernst & Young has provided various other services during fiscal 2021 and 2020. The aggregate fees billed or
expected to be billed for fiscal 2021 and 2020 for each of the following categories of services are as follows:
| Type
of Fees |
|
Fiscal
2021 |
|
|
Fiscal
2020 |
| Audit Fees |
$ |
4,918,200 |
|
$ |
4,725,800 |
| Audit-Related Fees |
|
375,000 |
|
|
— |
| Tax Fees |
|
334,000 |
|
|
296,100 |
| All Other
Fees |
|
2,585 |
|
|
3,600 |
| TOTAL |
$ |
5,629,785 |
|
$ |
5,025,500 |
In accordance with the SEC’s definitions and rules, the
terms in the above table have the following meanings:
“Audit Fees” are the aggregate fees billed or
expected to be billed for each of fiscal 2021 and 2020 for professional services rendered by Ernst & Young for the
audit of our consolidated financial statements included in our annual reports on Form 10-K and review of the unaudited
consolidated financial statements included in our quarterly reports on Form 10-Q; SEC registration statements, including
consents and review of documents filed with the SEC, consultation on accounting standards or transactions, and for services
in connection with statutory or regulatory filings or engagements; and for services that are normally provided by
Ernst & Young in connection with statutory and regulatory filings or engagements for fiscal 2021 and 2020.
“Audit-Related Fees” are the aggregate fees billed in fiscal 2020 for assurance and related services by Ernst &
Young that are reasonably related to the performance of the audit or review of our consolidated financial statements. There
were no audit-related fees in 2020.
“Tax Fees” are the aggregate fees billed in each of
fiscal 2021 and 2020 for professional services rendered by Ernst & Young for tax compliance, tax advice and tax planning.
“All Other Fees” are the aggregate fees billed in
each of fiscal 2021 and 2020 for products and services provided by Ernst & Young not included in the first three categories.
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The Audit Committee has reviewed summaries of the services provided
by Ernst & Young and the related fees, and the Audit Committee has determined that the provision of the non-audit services
described above is compatible in maintaining the independence of Ernst & Young.
All of the services described above that required pre-approval
were pre-approved by the Audit Committee in accordance with its pre-approval policy. The Audit Committee pre-approval policy provides
that all auditing services and all non-audit services to be provided by Ernst & Young be pre-approved by the Audit Committee,
provided that the Audit Committee shall not approve any non-audit services prohibited by Section 10A(g) of the Exchange Act.
Required Vote
Ratification of the appointment of our independent registered
public accounting firm requires the affirmative vote of a majority of the shares of voting common stock present by remote communication
or by proxy at the annual meeting and entitled to vote on the proposal.
Recommendation of the Board of Directors
 |
THE BOARD OF DIRECTORS RECOMMENDS THAT
THE STOCKHOLDERS VOTE “FOR” THE RATIFICATION OF THE APPOINTMENT OF
ERNST & YOUNG LLP AS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR THE FISCAL YEAR ENDING DECEMBER 31, 2022. |
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Other Matters
Our management is not aware of any other matters to be presented
for action at the annual meeting; however, if any such matters are properly presented for action, it is the intention of the proxy
appointees to vote in accordance with their best judgment on such matters.
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About the Meeting
Why am I receiving these materials?
This proxy statement is provided to the stockholders of the Company
as of the close of business on March 11, 2022 (the “Record Date”) in connection with the solicitation of proxies by
our Board of Directors to be voted at our annual meeting of stockholders to be held virtually at www.virtualshareholdermeeting.com/AMRX2022
at 9:00 a.m., Eastern Daylight Time, on Monday, May 9, 2022, and at any adjournment or postponement of the meeting. This proxy
statement provides important information that you should consider in deciding how to vote on the matters to be voted on at the
annual meeting.
Why is the annual meeting being webcast online?
Due to the continued impact of the coronavirus (COVID-19) pandemic
and to support the health and well-being of our stockholders and other participants at the annual meeting, this year the annual
meeting will be a virtual meeting of stockholders held via a live audio webcast. The format of the virtual meeting has been designed
to ensure that our stockholders who attend our annual meeting will be afforded the same rights and opportunities to participate
as they would at an in-person meeting and to enhance stockholder access, participation and communication through online tools.
Stockholders will be able to present questions online during the meeting through www.virtualshareholdermeeting.com/AMRX2022, providing
our stockholders with the opportunity for meaningful engagement with the Company. In addition, stockholders will be permitted to
submit a question in advance of the meeting at www.proxyvote.com after logging in with your 16-digit Control Number.
How do I participate in the virtual meeting?
Our annual meeting will be a completely virtual meeting of stockholders,
which will be conducted exclusively by live audio webcast. No physical in-person meeting will be held.
The online meeting will begin promptly at 9:00 a.m. EDT. We encourage
you to access the meeting prior to the start time leaving ample time for the check in. To participate in the meeting, you must
have your 16-digit Control Number that is shown on your Notice or, if you received a printed copy of the proxy materials, on your
proxy card or the instructions that accompanied your proxy materials. You may access the annual meeting online, vote and submit
your questions during the meeting by visiting www.virtualshareholdermeeting.com/AMRX2022. Stockholders will be able to submit questions
during the meeting by typing in your question into the “ask a question” box on the meeting page. If you lose your 16-digit
Control Number, you may join the annual meeting as a “guest” but you will not be able to vote, ask questions or access
the list of stockholders as of the close of business on the Record Date.
Will I be able to participate in the virtual meeting on the
same basis as I would be able to participate in a live meeting?
The virtual meeting format for the annual meeting will enable
full and equal participation by all of our stockholders from any place in the world at little to no cost. We believe that holding
the annual meeting online will help support the health and well-being of our stockholders and other participants at the annual
meeting as we continue to navigate the ongoing COVID-19 pandemic.
The format of the virtual meeting has been designed to ensure
that our stockholders who attend our annual meeting will be afforded the same rights and opportunities to participate as they would
at an in-person meeting and to enhance stockholder access, participation and communication through online tools. We will take the
following steps to ensure such an experience:
| • |
providing stockholders with the ability to submit appropriate questions in advance of the meeting to ensure thoughtful responses; |
| • |
providing stockholders with the ability to submit appropriate questions real-time via the meeting website, limiting questions to one per stockholder unless time otherwise permits; and |
| • |
answering as many questions submitted in accordance with the meeting rules of conduct as possible in the time allotted for the meeting without discrimination. |
Questions pertinent to meeting matters will be answered during
the meeting, subject to time constraints. Questions regarding personal matters, including those related to employment issues, are
not pertinent to meeting matters and therefore will not be answered.
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What if during the check-in time or during the meeting I have
technical difficulties or trouble accessing the virtual meeting website?
Should you require technical assistance, support will be available
by dialing 1-844-986-0822 (U.S.) or 1-303-562-9302 (International) during the meeting; these telephone numbers will also be displayed
on the meeting webpage. If there are any technical issues in convening or hosting the meeting, we will promptly post information
to our website, including information on when the meeting will be reconvened.
What items will be voted on at the annual meeting?
At the annual meeting, the stockholders will consider and vote
upon:
| • |
the election of 10 directors named in this proxy statement to hold office until the next annual meeting of stockholders (Proposal No. 1); |
| • |
an advisory vote to approve executive compensation, commonly referred to as a “say on pay” proposal (Proposal No. 2); and |
| • |
the ratification of the appointment of Ernst & Young LLP as our independent registered public accounting firm for fiscal 2022 (Proposal No. 3). |
If you received a paper copy of these materials by mail, the proxy
materials also include a proxy card or a voting instruction card for the annual meeting.
What is a proxy statement? What information is contained in
this proxy statement?
It is a document that SEC regulations require us to give you when
we ask you to designate proxies to vote on your behalf. The information in this proxy statement relates to the proposals to be
voted on at the annual meeting, the voting process, the Company’s Board of Directors and Board committees, the compensation
of our directors and executive officers for fiscal 2021 and other required information.
Why did I receive a notice in the mail regarding the Internet
availability of the proxy materials instead of a paper copy of the proxy materials?
We are pleased to be using the SEC rule that allows companies
to furnish their proxy materials to stockholders over the Internet. As a result, we are mailing to most of our stockholders a Notice
of Internet Availability of the proxy materials instead of a paper copy of the proxy materials. We believe that this process allows
us to provide our stockholders with the information they need in a timelier manner, while reducing the environmental impact and
lowering the costs of printing and distributing our proxy materials. All stockholders receiving the notice will have the ability
to access the proxy materials over the Internet and request to receive a paper copy of the proxy materials by mail.
How can I access the proxy materials over the Internet?
The notice of annual meeting, proxy statement and annual report
are available at www.proxyvote.com. Instead of receiving future copies of the proxy materials by mail, most beneficial owners can
elect to receive an email that will provide electronic links to these documents. Opting to receive your proxy materials online
will save us the cost of producing and mailing documents to your home or business and will also give you an electronic link to
the proxy voting site. If you received a Notice of Internet Availability, that notice will contain additional instructions on how
to view our proxy materials on the Internet.
How may I obtain a paper copy of the proxy materials?
Stockholders receiving a Notice of Internet Availability will
find instructions about how to obtain a paper copy of the proxy materials on that notice. All stockholders who do not receive a
notice will receive a copy of the proxy materials by mail or email.
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What is the difference between holding shares as a stockholder
of record and as a beneficial owner?
If your shares are registered directly in your name with the Company’s
registrar and transfer agent, Computershare, you are considered a stockholder of record with respect to those shares.
If your shares are held in a brokerage account or with a bank
or other nominee, you are considered the “beneficial owner” of those shares.
Who is entitled to vote at the annual meeting?
Each holder of record of our Class A common stock and Class B
common stock at the close of business on the Record Date is entitled to vote at the annual meeting (Class A common stock and Class
B common stock are referred to herein as the “voting common stock”). Holders of Class A common stock and Class B common
stock vote as a single class. As of the Record Date, a total of 150,639,171 shares of Class A common stock and 152,116,890 shares
of Class B common stock were outstanding and are eligible to vote at the annual meeting. Each share of our Class A common stock
and Class B common stock is entitled to one vote per share on all matters with respect to which holders are entitled to vote.
How do I vote during the meeting?
We will be hosting the annual meeting live online. You can participate
in the annual meeting live online at www.virtualshareholdermeeting.com/AMRX2022. The webcast will start at 9:00 a.m. EDT. Stockholders
may vote and submit questions while attending the meeting online. You will need the 16-digit Control Number included on your Notice
or, if you received a printed copy of the proxy materials, on your proxy card or the instructions that accompanied your proxy materials
in order to be able to vote and submit questions during the meeting.
Your shares may only be voted at the annual meeting if you are
present by remote communication or are represented by proxy. Whether or not you plan to attend the annual meeting, we encourage
you to vote by proxy in advance of the annual meeting to assure that your shares will be represented. Voting by proxy will in no
way limit your right to vote at the annual meeting if you later decide to participate in the online meeting. Only your latest executed
vote will count.
How do I vote my shares in advance without attending the Annual
Meeting?
If you are a stockholder of record, you may vote by granting a
proxy. Specifically, you may vote:
| • |
By Internet: If you have Internet access, you may submit your proxy by going to www.proxyvote.com and by following the instructions on how to complete an electronic proxy card. You will need the 16-digit number included on your Notice of Internet Availability or your proxy card in order to vote by Internet. |
| • |
By Telephone: You may submit your proxy by dialing 1-800-690-6903 and by following the recorded instructions. You will need the 16-digit number included on your Notice of Internet Availability or your proxy card in order to vote by telephone. |
| • |
By Mail: You may vote by mail by requesting a proxy card from us, indicating your vote by completing, signing and dating the card where indicated and by mailing or otherwise returning the card in the envelope that will be provided to you. You should sign your name exactly as it appears on the proxy card. If you are signing in a representative capacity (for example, as guardian, executor, trustee, custodian, attorney or officer of a corporation), indicate your name and title or capacity. |
If you hold your shares in street name, you may submit voting
instructions to your broker, bank or other nominee. In most instances, you will be able to do this over the Internet, by telephone
or by mail. Please refer to information from your bank, broker or other nominee on how to submit voting instructions.
What can I do if I change my mind after I vote my shares?
Stockholders of Record
If you are a stockholder of record, you may revoke your proxy
at any time before it is exercised by timely submission of a written revocation to our corporate secretary at our principal executive
offices located at 400 Crossing Boulevard, Bridgewater, New Jersey 08807, submission of a properly executed later-dated proxy,
or by voting online at the annual meeting. Attendance at the annual meeting will not by itself constitute a revocation of a proxy.
Beneficial Owners
If your shares are held in the name of a broker, bank or other
holder of record, that institution will instruct you as to how your vote may be changed and the deadline for doing so.
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If I am a stockholder of record, how will my shares be voted
if I sign, date and return my proxy card? What if I do not specify a choice for a matter when returning my signed proxy card?
All shares entitled to vote that are represented by properly completed
proxy cards received prior to the annual meeting and not revoked will be voted at the meeting in accordance with your instructions.
If you sign and return a proxy card but do not indicate how your shares should be voted, the shares represented by your proxy card
will be voted in accordance with the Board of Directors’ recommendations on Proposals 1-3 and in the discretion of the persons
designated as proxies as to any other matter that may properly come before the annual meeting.
What if I am a beneficial owner and do not give voting instructions
to my broker?
As a beneficial owner, to make sure your shares are voted in the
way you would like, you must provide voting instructions to your bank, broker or other nominee by the deadline provided in the
materials you receive from your bank, broker or other nominee.
If you do not provide voting instructions to your bank, broker
or other nominee, your shares cannot be voted on any “non-routine” matters, which is commonly referred to as a “broker
non-vote.”
Under current NYSE interpretations that govern broker non-votes,
Proposal Nos. 1 and 2 are considered non-routine matters, and a broker will lack the authority to vote uninstructed shares at their
discretion on such proposals. Proposal No. 3 is considered a routine matter, and a broker will be permitted to exercise its discretion
to vote uninstructed shares on the proposal.
What constitutes a quorum?
The presence by remote communication or represented by proxy of
the holders of a majority of the issued and outstanding shares of stock entitled to vote at the meeting shall constitute a quorum
for the transaction of business. Abstentions and broker non-votes will be counted as present and entitled to vote for purposes
of determining a quorum. A broker “non-vote” occurs when a nominee, such as a bank or broker, holding shares for a
beneficial owner, does not vote on a particular proposal because the nominee does not have discretionary voting power with respect
to that item and has not received instructions from the beneficial owner (see “What if I am a beneficial owner and do not
give voting instructions to my broker?” above).
How will votes be counted?
With respect to Proposal No. 1, to be elected, a nominee for director
must receive the affirmative vote of a majority of the votes cast with respect to such nominee. Approval of each of Proposal Nos.
2, and 3 requires the affirmative vote of a majority of the shares of voting common stock present by remote communication or by
proxy at the annual meeting and entitled to vote. Abstentions will not affect the outcome of the vote for Proposal No. 1 but will
have the same effect as a vote “AGAINST” for Proposal Nos. 2 and 3. Broker non-votes will not affect the outcome of
the vote for Proposal Nos. 1 through 3.
Who will count the votes?
A representative of American Election Services LLC will tally
the vote and serve as inspector of the annual meeting.
How are proxies being solicited and who will pay for the solicitation
of proxies?
We will bear the expense of the solicitation of proxies. In addition
to the solicitation of proxies by mail, solicitation may be made by our directors, officers and employees by other means, including
telephone, over the Internet or in person. No special compensation will be paid to our directors, officers or employees for the
solicitation of proxies. To solicit proxies, we will also request the assistance of brokerage houses, banks and other custodians,
nominees or fiduciaries, and, upon request, will reimburse such organizations or individuals for their reasonable expenses in forwarding
soliciting materials to beneficial owners and in obtaining authorization for the execution of proxies.
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Additional
Information
Stockholder Proposals for Inclusion in Our
2023 Annual Meeting Proxy Statement and Proxy Card
Under Exchange Act Rule 14a-8 (“Rule 14a-8”),
any stockholder proposal to be considered by us for inclusion in our 2023 proxy statement and form of proxy card for next year’s
annual meeting of stockholders, expected to be held in May 2023, must be received by our corporate secretary at our principal executive
offices located at 400 Crossing Boulevard, Bridgewater, New Jersey 08807, not later than November 25, 2022 and must otherwise comply
with Rule 14a-8. While the Board will consider stockholder proposals that we receive, we reserve the right to omit from our proxy
statement stockholder proposals that do not satisfy applicable SEC rules.
Director Nominations and Other Proposals
to Be Presented at Our 2023 Annual Meeting
In addition, our Bylaws establish advance notice
and other procedures with regard to stockholder nominations for director or any other stockholder proposals to be brought before
an annual meeting of stockholders that will not be included in our proxy statement. In general, notice must be received by our
corporate secretary not less than 90 days nor more than 120 days prior to the first anniversary of the preceding year’s annual
meeting of stockholders and must contain specified information concerning the matters to be brought before the meeting and concerning
the stockholder making the proposal. If no annual meeting was held in the previous year or if the annual meeting is called for
a date that is more than 30 calendar days earlier or more than 60 calendar days later than such anniversary date, notice must
be received not later than close of business on the 90th day prior, nor earlier than close of business on the 120th
day prior, to the date of such annual meeting or, if the first public disclosure of the date of such annual meeting is less than
100 calendar days prior to the date of such annual meeting, the 10th calendar day following the day on which public disclosure
of the date of such annual meeting is first made by the Company. Therefore, to be presented at next year’s annual meeting,
director nominations and stockholder proposals that will not be included in our proxy statement must be received by our corporate
secretary at the address above on or after close of business on January 9, 2023 but not later than close of business on February
8, 2023 and must contain the information specified in our Bylaws. A nomination or proposal also must comply with the additional
procedures set forth in our Bylaws.
In addition to satisfying the foregoing requirements
under our Bylaws, to comply with the universal proxy rules (once effective), stockholders who intend to solicit proxies in support
of director nominees other than the Company’s nominees must provide notice that sets forth the information required by Rule
14a-19 under the Exchange Act no later than March 10, 2023.
Householding
Some brokers, banks and other nominee record
holders may be participating in the practice of “householding” proxy statements and annual reports or notices of Internet
availability of proxy materials, as applicable. This means that only one copy of such items may have been sent to multiple stockholders
in your household. We will promptly deliver, without charge, a separate copy of these documents to you if you so request by
writing or calling as follows: Amneal Pharmaceuticals, Inc., Attention: Corporate Secretary, 400 Crossing Boulevard, Bridgewater,
NJ 08807; telephone, (908) 947-3120. If you want to receive separate copies of the annual report and proxy statement or notice
of Internet availability of proxy materials, as applicable, in the future, or if you are receiving multiple copies and would like
to receive only one copy for your household, you should contact your broker, bank or other nominee record holder, or you may contact
us at the above address and phone number.
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Appendix
A Non-GAAP Financial Measures
Non-GAAP Financial Measures
This Proxy Statement includes certain non-GAAP
financial measures, including EBITDA, adjusted EBITDA, adjusted net income and adjusted diluted earnings per share, which are intended
as supplemental measures of the Company’s performance that are not required by or presented in accordance with GAAP. Management
uses these non-GAAP historical measures internally to evaluate and manage the Company’s operations and to better understand
its business because they facilitate a comparative assessment of the Company’s operating performance relative to its performance
based on results calculated under GAAP. These non-GAAP measures also isolate the effects of some items that vary from period to
period without any correlation to core operating performance and eliminate certain charges that management believes do not reflect
the Company’s operations and underlying operational performance. The Compensation Committee of the Company’s Board
of Directors also uses certain of these measures to evaluate management’s performance and set its compensation. The Company
believes that these non-GAAP measures also provide useful information to investors regarding certain financial and business trends
relating to the Company’s financial condition and operating results. Providing this information therefore allows investors
to make independent assessments of the Company’s financial performance, results of operations and trends while viewing the
information through the eyes of management.
The calculation of non-GAAP adjusted diluted
earnings per share assumes the conversion of all outstanding shares of Class B common stock to shares of Class A common stock.
These non-GAAP measures are subject to limitations.
The non-GAAP measures presented herein may not be comparable to similarly titled measures used by other companies because other
companies may not calculate one or more in the same manner.
Additionally, the non-GAAP performance measures
exclude significant expenses and income that are required by GAAP to be recorded in the Company’s financial statements; do
not reflect changes in, or cash requirements for, working capital needs; and do not reflect interest expense, or the requirements
necessary to service interest or principal payments on debt. To compensate for these limitations, management presents and considers
these non-GAAP measures in conjunction with the Company’s GAAP results; no non-GAAP measure should be considered in isolation
from or as alternatives to net income, diluted earnings per share or any other measure determined in accordance with GAAP. Readers
should review the reconciliations included below, and should not rely on any single financial measure to evaluate the Company’s
business.
This Proxy Statement also includes certain non-GAAP
forward-looking information. The Company cannot, however, provide a reconciliation between non-GAAP targets and the most directly
comparable GAAP measures without unreasonable efforts because it is unable to predict with reasonable certainty the ultimate outcome
of certain significant items required for the reconciliation. The items include, but are not limited to, pandemic-related expenses,
gains or losses related to changes in our tax receivable agreement liability, acquisition and site closure expenses, restructuring
and other charges, inventory-related charges, charges related to legal matters, gains and losses on the sale of assets, impairment
charges, and foreign exchange gains or losses. These items are uncertain, depend on various factors, and could have a material
impact on U.S. GAAP reported results.
A reconciliation of each non-GAAP measure to
the most directly comparable GAAP measure is set forth below.
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Reconciliation of Net
Income to Adjusted Net Income and Calculation of Adjusted Diluted EPS
| (Unaudited;
In thousands, Except per Share Amounts) | Year
ended
December 31, 2021 | |
| Net income | |
$ | 20,170 | |
| Adjusted to add (deduct): | |
| | |
| Non-cash interest | |
| 8,355 | |
| GAAP Income tax expense | |
| 11,196 | |
| Amortization | |
| 164,069 | |
| Stock-based compensation expense | |
| 28,412 | |
| Acquisition, site closure, and idle facility expenses(1) | |
| 20,003 | |
| Restructuring and other charges(2) | |
| 788 | |
| Inventory related charges(3) | |
| 261 | |
| Charges related to legal matters, net(4) | |
| 25,000 | |
| Asset impairment charges(5) | |
| 24,105 | |
| Research and Development milestone payments | |
| 25,795 | |
| Change in fair value of contingent consideration(6) | |
| 200 | |
| Property losses and related expenses, net(7) | |
| 5,368 | |
| Other | |
| 6,680 | |
| Income tax at 21% | |
| (75,777 | ) |
| Net income attributable to Non-controlling interests not associated with our Class B shares | |
| (6,582 | ) |
| ADJUSTED NET INCOME (NON-GAAP) | |
$ | 258,043 | |
| ADJUSTED
DILUTED EPS (NON-GAAP)(8) | |
$ | 0.85 | |
| (1) |
Acquisition, site closure, and idle facility expenses primarily included (i)
transaction and integration costs associated with the acquisition of Kashiv Specialty Pharmaceuticals, LLC; (ii) integration
costs associated with the acquisition of AvKARE; (iii) site closure costs associated with the planned cessation of manufacturing
at our Hauppauge, NY facility; (iv) transaction and integration costs associated with the acquisition of Puniska Healthcare
Pvt. Ltd. and (v) site closure expenses associated with damage from Tropical Storm Ida to two of our facilities in New Jersey. |
| (2) |
Restructuring and other charges primarily consisted of cash severance charges associated
with cost of benefits for former senior executives and management employees. |
| (3) |
Inventory related charges primarily represented inventory obsolescence and related expenses
associated with recalls. |
| (4) |
Charges related to legal matters, net were primarily associated with legal claims in our
Corporate segment. |
| (5) |
Asset impairment charges were primarily associated with the write-off of intangible assets
and equipment, except for equipment discussed in (7) below. |
| (6) |
Contingent consideration was recorded in connection with the acquisition of Kashiv Specialty
Pharmaceuticals, LLC. |
| (7) |
Property losses and related expenses, net were associated with damage from Tropical Storm
Ida to two of our facilities in New Jersey, net of insurance recoveries. Expenses consisted of impairment of equipment and
inventory, and repairs and maintenance and salaries and benefits. |
| (8) |
Utilizes weighted average diluted shares outstanding of 303.9 million, which consists of
Class A shares and Class B shares under the if-converted method. |
| |
|
| www.amneal.com |
|
AMNEAL PHARMACEUTICALS,
INC. | 2022 Proxy Statement |
|
68 |
| |
|
Reconciliation of Net
Income to EBITDA and Adjusted EBITDA
| (Unaudited; In thousands) | Year ended
December 31, 2021 | |
| Net income | |
$ | 20,170 | |
| Adjusted to add: | |
| | |
| Interest expense, net | |
| 136,325 | |
| Income tax benefit | |
| 11,196 | |
| Depreciation and amortization | |
| 233,406 | |
| EBITDA (Non-GAAP) | |
$ | 401,097 | |
| Adjusted to add: | |
| | |
| Stock-based compensation expense | |
| 28,412 | |
| Acquisition, site closure, and idle facility expenses(1) | |
| 20,003 | |
| Restructuring and other charges(2) | |
| 788 | |
| Inventory related charges(3) | |
| 261 | |
| Charges related to legal matters, net(4) | |
| 25,000 | |
| Asset impairment charges(5) | |
| 24,105 | |
| Foreign exchange loss | |
| 355 | |
| Research and Development milestone payments | |
| 25,795 | |
| Change in fair value of contingent consideration(6) | |
| 200 | |
| Property losses and related expenses, net(7) | |
| 5,368 | |
| Other | |
| 6,680 | |
| ADJUSTED EBITDA (NON-GAAP) | |
$ | 538,064 | |
| (1) |
Acquisition, site closure, and idle facility expenses primarily included (i)
transaction and integration costs associated with the acquisition of Kashiv Specialty Pharmaceuticals, LLC; (ii) integration
costs associated with the acquisition of AvKARE; (iii) site closure costs associated with the planned cessation of manufacturing
at our Hauppauge, NY facility; (iv) transaction and integration costs associated with the acquisition of Puniska Healthcare
Pvt. Ltd. and (v) site closure expenses associated with damage from Tropical Storm Ida to two of our facilities in New Jersey. |
| (2) |
Restructuring and other charges primarily consisted of cash severance charges associated
with cost of benefits for former senior executives and management employees. |
| (3) |
Inventory related charges primarily represented inventory obsolescence and related expenses
associated with recalls. |
| (4) |
Charges related to legal matters, net were primarily associated with legal claims in our
Corporate segment. |
| (5) |
Asset impairment charges were primarily associated with the write-off of intangible assets
and equipment, except for equipment discussed in (7) below. |
| (6) |
Contingent consideration was recorded in connection with the acquisition of Kashiv Specialty
Pharmaceuticals, LLC. |
| (7) |
Property losses and related expenses, net were associated with damage from Tropical Storm
Ida to two of our facilities in New Jersey, net of insurance recoveries. Expenses consisted of impairment of equipment and
inventory, and repairs and maintenance and salaries and benefits. |
| |
|
| |
AMNEAL PHARMACEUTICALS,
INC. | 2022 Proxy Statement |
|
69 |
| |
|
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