Celgene Corporation
CELGENE CORP /DE/ (Form: DEF 14A, Received: 04/30/2015 09:03:17)
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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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   Soliciting Material Pursuant to Section 240.14a-12
CELGENE CORPORATION
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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CELGENE CORPORATION
86 Morris Avenue
Summit, New Jersey 07901
April 30, 2015​
Dear Stockholders:
On behalf of the Board of Directors, you are cordially invited to attend the 2015 Annual Meeting of Stockholders of Celgene Corporation. The Annual Meeting will be held on Wednesday, June 17, 2015, at 1:00 p.m. Eastern Time at the offices of Celgene Corporation, 86 Morris Avenue, Summit, New Jersey 07901. The formal Notice of Annual Meeting is set forth in the enclosed material.
The matters expected to be acted upon at the Annual Meeting are described in the attached Proxy Statement. During the Annual Meeting, stockholders will have the opportunity to ask questions and comment on our business operations.
We are pleased to once again offer our proxy materials over the Internet. We are mailing to our stockholders a Notice of Internet Availability of Proxy Materials instead of a paper copy of the Notice of Annual Meeting, proxy statement and proxy card. The Notice of Internet Availability contains instructions on how to access those documents over the Internet and how each of our stockholders can receive a paper copy of our proxy materials, if desired. By furnishing proxy materials over the Internet, we are lowering the costs and reducing the environmental impact of the Annual Meeting.
It is important that your views be represented. If you request a proxy card, please mark, sign and date the proxy card when received and return it promptly in the self-addressed, stamped envelope we will provide. No postage is required if this envelope is mailed in the United States. You also have the option of voting your proxy via the Internet at www.proxyvote.com or by calling toll free via a touch-tone phone at 1-800-690-6903. Proxies submitted by telephone or over the Internet must be received by 11:59 p.m. Eastern Time on June 16, 2015. Although we encourage you to complete and return a proxy prior to the Annual Meeting to ensure that your vote is counted, you can attend the Annual Meeting and cast your vote in person. If you vote by proxy and also attend the Annual Meeting, there is no need to vote again at the Annual Meeting unless you wish to change your vote.
We appreciate your investment in Celgene and urge you to cast your vote as soon as possible.
Sincerely,
[MISSING IMAGE: SG_ROBERTJ-HUGIN.JPG]
Robert J. Hugin
Chairman and Chief Executive Officer

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CELGENE CORPORATION
86 Morris Avenue
Summit, New Jersey 07901
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
The 2015 Annual Meeting of Stockholders of Celgene Corporation (the “Company”) will be held at the offices of the Company, 86 Morris Avenue, Summit, New Jersey 07901, on June 17, 2015, beginning at 1:00 p.m. Eastern Time for the following purposes:
      1. to elect nine directors;
      2. to ratify the appointment of KPMG LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2015;
      3. to approve an amendment and restatement of our 2008 Stock Incentive Plan;
      4. to hold an advisory vote on 2014 named executive officer compensation;
      5. to consider a stockholder proposal, if properly presented, described in more detail in the proxy statement; and
      6. to transact such other business as may properly come before the Annual Meeting and at any adjournment or postponement thereof.
The Board of Directors has fixed the close of business on April 20, 2015 as the record date for determining stockholders entitled to notice of and to vote at the Annual Meeting.
By order of the Board of Directors,
[MISSING IMAGE: SG_LAWRENCEV-STEIN.JPG]
Lawrence V. Stein
Executive Vice President, General Counsel and
Corporate Secretary
April 30, 2015
YOUR VOTE IS IMPORTANT
Please vote via the Internet or telephone.
Internet: www.proxyvote.com
Phone: 1-800-690-6903
If you request a proxy card, please mark, sign and date the proxy card when received and
return it promptly in the self-addressed, stamped envelope we will provide.
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CELGENE CORPORATION
86 Morris Avenue
Summit, New Jersey 07901
PROXY STATEMENT
 
General Information
This Proxy Statement is furnished in connection with the solicitation by the Board of Directors of Celgene Corporation, a Delaware corporation (the “Company,” “Celgene,” “we,” “our” or “us”), of proxies to be voted at our 2015 Annual Meeting of Stockholders (the “Annual Meeting” or the “Meeting”) and at any adjournment or postponement of the Meeting. The Annual Meeting will take place on June 17, 2015, beginning at 1:00 p.m., Eastern Time, at our offices, 86 Morris Avenue, Summit, New Jersey 07901. For directions, please contact Investor Relations at (908) 673-9000.
This Proxy Statement, the Notice of Annual Meeting, our Annual Report on Form 10-K for fiscal 2014 and accompanying proxy card, are being mailed to holders of our common stock, par value $0.01 per share (“Common Stock”), on or about April 30, 2015. When we refer to our fiscal year, we mean the 12-month period ended December 31 of the stated year. Web links and addresses contained in this Proxy Statement are provided for convenience only, and the content on the referenced websites does not constitute a part of this Proxy Statement.
Frequently Asked Questions About the Annual Meeting and Voting
1.
I want to attend the Annual Meeting. What procedures must I follow?
Admission to the Annual Meeting is limited to stockholders of record as of the close of business on April 20, 2015 and one immediate family member; one individual designated as a stockholder’s authorized proxy holder; or one representative designated in writing to present a stockholder proposal properly brought before the Annual Meeting. In each case, the individual must have proof of ownership of Celgene Common Stock, as well as a valid government-issued photo identification, to be admitted to the Annual Meeting.
Proof of Ownership
If you hold your shares in your name as a stockholder of record, you will need proof of ownership of Celgene Common Stock.
If your shares are held in the name of a broker, bank or other holder of record and you plan to attend the Annual Meeting, you must present proof of your ownership of Celgene Common Stock, such as a bank or brokerage account statement, to be admitted to the Annual Meeting.
A stockholder may appoint a representative to attend the Annual Meeting and/or vote on his/her behalf. Valid proof of appointment of a representative, such as a power of attorney or notarized letter, must be presented along with proof of ownership of Celgene Common Stock from the holder, in order for your representative to be admitted to the Annual Meeting. If you have questions, contact Investor Relations at (908) 673-9000.
Proponent of Stockholder Proposal
The proponent of a stockholder proposal included in this Proxy Statement should notify the Company in writing of the individual authorized to present the proposal at the Annual Meeting; this notice should be received at least two weeks before the Annual Meeting.

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2.
Who is entitled to vote at the Annual Meeting?
Holders of Celgene Common Stock at the close of business on April 20, 2015 are entitled to receive the Notice of Annual Meeting and to vote their shares at the Meeting. Each share of Common Stock is entitled to one vote on each matter properly brought before the Annual Meeting.
3.
How many shares of Celgene Common Stock are “outstanding”?
As of April 20, 2015, there were 793,187,229 shares of Celgene Common Stock outstanding and entitled to be voted at the Annual Meeting.
4.
What is the difference between holding shares as a stockholder of record and as a beneficial owner?
If your shares are registered in your name with Celgene’s transfer agent, American Stock Transfer & Trust Company, LLC, you are the “stockholder of record” of those shares. This Notice of Annual Meeting and Proxy Statement and any accompanying materials have been provided directly to you by Celgene.
If your shares are held through a broker, bank or other holder of record, you hold your shares in “street name” and you are considered the “beneficial owner” of those shares. This Notice of Annual Meeting and Proxy Statement and any accompanying documents have been provided to you by your broker, bank or other holder of record. As the beneficial owner, you have the right to direct your broker, bank or other holder of record how to vote your shares by using the voting instruction card they have provided you or by following their instructions for voting by telephone or on the Internet. Absent instructions from you, under applicable regulatory requirements, your broker may vote your shares on the ratification of the appointment of our independent registered public accounting firm for fiscal 2015, but may not vote your shares on the election of directors or any of the other proposals to be voted on at the Annual Meeting.
5.
How do I vote?
You may vote using any of the following methods:
By mail
Complete, sign and date the accompanying proxy or voting instruction card and return it in the prepaid envelope. If you are a stockholder of record and return your signed proxy card but do not indicate your voting preferences, the persons named in the proxy card will vote the shares represented by your proxy card as recommended by the Board of Directors.
By telephone or on the Internet
Celgene has established telephone and Internet voting procedures for stockholders of record. These procedures are designed to authenticate your identity, to allow you to give your voting instructions and to confirm that those instructions have been properly recorded. Telephone and Internet voting facilities for stockholders of record will be available 24 hours a day until 11:59 p.m., Eastern Time, on June 16, 2015.
The availability of telephone and Internet voting for beneficial owners will depend on the voting processes of your broker, bank or other holder of record. We therefore recommend that you follow their voting instructions.
If you vote by telephone or on the Internet, you do not have to return your proxy or voting instruction card.
Telephone .   You can vote by calling the toll-free telephone number on your proxy card. Please have your proxy card handy when you call. Easy-to-follow voice prompts will allow you to vote your shares and confirm that your instructions have been properly recorded.
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Internet .   The website for Internet voting is www.proxyvote.com. Please have your proxy card handy when you go to the website. As with telephone voting, you can confirm that your voting instructions have been properly recorded. If you vote on the Internet, you also can request electronic delivery of future proxy materials. You can also scan the QR Barcode below (or on your proxy card) with your smart device to access the website for Internet voting.
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In person at the Annual Meeting
Stockholders who attend the Annual Meeting may vote in person at the Meeting. You may also be represented by another person at the Meeting by executing a proper proxy designating that person. If you are a beneficial owner of shares, you must obtain a legal proxy from your broker, bank or other holder of record and present it to the inspector of election with your ballot to be able to vote at the Annual Meeting.
Your vote is important. Please complete your proxy card promptly to ensure that your vote is received timely.
6.
What can I do if I change my mind after I vote?
If you are a stockholder of record, you can revoke your proxy before it is exercised by:

giving written notice to the Corporate Secretary of the Company;

delivering a valid, later-dated proxy, or a later-dated vote by telephone or on the Internet, in a timely manner; or

voting by ballot at the Annual Meeting.
If you are a beneficial owner of shares, you may submit new voting instructions by contacting your broker, bank or other holder of record. All shares for which proxies have been properly submitted and not revoked will be voted at the Annual Meeting.
7.
Why did I receive a “Notice of Internet Availability of Proxy Materials” but no proxy materials?
We distribute our proxy materials to certain stockholders via the Internet under the “Notice and Access” approach permitted by rules of the Securities and Exchange Commission (SEC). This approach conserves natural resources and reduces our cost of printing and distributing the proxy materials, while providing a convenient method of accessing the materials and voting. On or about April 30, 2015, we mailed a “Notice of Internet Availability of Proxy Materials” to our stockholders, containing instructions on how to access the proxy materials on the Internet.
You may also request paper or e-mail delivery of the proxy materials on or before the date provided in the Notice of Internet Availability by calling 1-800-579-1639. We will fill your request within three business days. You will also have the option to establish delivery preferences that will be applicable for all future mailings of proxy materials. We encourage stockholders to take advantage of the availability of the proxy materials on the Internet to help reduce the environmental impact and costs of our annual meetings. If you choose to receive future proxy materials by e-mail, you will receive an e-mail message next year with instructions containing a link to those materials and a link to the proxy voting website. Your election to receive proxy materials by e-mail will remain in effect until you terminate it.
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8.
Can I access the proxy materials and the fiscal 2014 Annual Report on the Internet?
This Notice of Annual Meeting and Proxy Statement and the fiscal 2014 Annual Report are available on our website at www.celgene.com. Instead of receiving future proxy statements and accompanying materials by mail, most stockholders can elect to receive an e-mail that will provide electronic links to them. Opting to access your proxy materials online will conserve natural resources, will save us the cost of reproducing documents and mailing them to you, and will give you an electronic link directly to the proxy voting site.
Stockholders of Record:    If you vote on the Internet at www.proxyvote.com, simply follow the prompts to enroll in the electronic proxy delivery service.
Beneficial Owners:    You also may be able to receive copies of these documents electronically. Please check the information provided in the proxy materials sent to you by your broker, bank or other holder of record regarding the availability of this service.
9.
What is a broker non-vote?
If you are a beneficial owner whose shares are held of record by a broker, you must instruct the broker how to vote your shares. If you do not provide voting instructions, your shares will not be voted on any proposal on which the broker does not have discretionary authority to vote. This is called a “broker non-vote.” In these cases, the broker can register your shares as being present at the Annual Meeting for purposes of determining the presence of a quorum but will not be able to vote on those matters for which specific authorization is required under the rules of the New York Stock Exchange (NYSE) or the Nasdaq Stock Market (Nasdaq).
If you are a beneficial owner whose shares are held of record by a broker, your broker has discretionary voting authority under NYSE or Nasdaq rules to vote your shares on the ratification of KPMG, even if the broker does not receive voting instructions from you. However, without specific instructions from you, your broker does not have discretionary authority to vote on the election of directors, approval of the amendment and restatement of our 2008 Stock Incentive Plan, the advisory vote on 2014 executive compensation, or on the stockholder proposal, in which case a broker non-vote will occur and your shares will not be voted on these matters.
10.
What is a quorum for the Annual Meeting?
The presence of the holders of Common Stock representing a majority of the voting power of all shares of Common Stock issued and outstanding and entitled to vote at the Annual Meeting, in person or represented by proxy, is necessary to constitute a quorum. Abstentions and broker non-votes are counted as present and entitled to vote for purposes of determining a quorum.
11.
What are the voting requirements to elect the directors and to approve each of the proposals discussed in this Proxy Statement?
Proposal
Vote
Required
Broker
Discretionary
Voting
Allowed
Election of Directors
Majority of
Votes Cast
No
Ratification of KPMG
Majority of
Votes Cast
Yes
Amendment and Restatement of our 2008 Stock Incentive Plan
Majority of
Votes Cast
No
Advisory Approval of Executive Compensation (non-binding)
Majority of
Votes Cast
No
Stockholder Proposal (non-binding)
Majority of
Votes Cast
No
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If you abstain from voting or there is a broker non-vote on a matter requiring a majority of the votes cast, your abstention or the broker non-vote will not affect the outcome of such vote, because abstentions and broker non-votes are not considered to be votes cast. If you abstain from voting or there is a broker non-vote on a matter requiring a majority of the outstanding stock entitled to vote your abstention or the broker non-vote will count as a vote against the proposal because a majority of the outstanding shares entitled to vote at the Annual Meeting is required to approve such matter.
Election of Directors
Directors must be elected by a majority of the votes cast in uncontested elections, such as the election of directors at the Annual Meeting. This means that the number of votes cast “for” a director nominee must exceed the number of votes cast “against” that nominee. Abstentions and broker non-votes are not counted as votes “for” or “against” a director nominee. In a contested election, the required vote would be a plurality of votes cast.
Ratification of KPMG
The votes cast “for” must exceed the votes cast “against” to approve the ratification of KPMG as our independent registered public accounting firm. Abstentions are not counted as votes “for” or “against” this proposal.
Amendment and Restatement of 2008 Stock Incentive Plan
The votes cast “for” must exceed the votes cast “against” to approve an amendment and restatement of our 2008 Stock Incentive Plan. Abstentions and broker non-votes are not counted as votes “for” or “against” this proposal.
Advisory Vote on 2014 Executive Compensation
The votes cast “for” must exceed the votes cast “against” to approve, on an advisory basis, the compensation of our Named Executive Officers. Abstentions and broker non-votes are not counted as votes “for” or “against” this proposal.
Stockholder Proposal
The votes cast “for” must exceed the votes cast “against” to approve a stockholder proposal. Abstentions and broker non-votes are not counted as votes “for” or “against” the stockholder proposal.
12.
How will my shares be voted at the Annual Meeting?
At the Meeting, the Board of Directors (through the persons named in the proxy card or, if applicable, their substitutes) will vote your shares as you instruct. If you sign your proxy card and return it without indicating how you would like to vote your shares, your shares will be voted as the Board of Directors recommends, which is:

FOR the election of each of the director nominees named in this Proxy Statement;

FOR the ratification of the appointment of KPMG LLP as our independent registered public accounting firm for fiscal 2015;

FOR the amendment and restatement of our 2008 Stock Incentive Plan;

FOR the approval, on an advisory basis, of the 2014 compensation of our Named Executive Officers; and

AGAINST the stockholder proposal.
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13.
Could other matters be decided at the Annual Meeting?
As of the date of this Proxy Statement, we did not know of any matters to be raised at the Annual Meeting other than those referred to in this Proxy Statement.
If you return your signed and completed proxy card or vote by telephone or on the Internet and other matters are properly presented at the Annual Meeting for consideration, the individuals named as proxies on the enclosed proxy card will have the discretion to vote for you on those matters.
14.
Who will pay for the cost of the Annual Meeting and this proxy solicitation?
The Company will pay the costs associated with the Annual Meeting and solicitation of proxies, including the costs of mailing the proxy materials. In addition to solicitation by mail, our directors, officers and regular employees (who will not be specifically compensated for such services) may solicit proxies by telephone or otherwise. Arrangements will be made with brokerage houses and other custodians, nominees and fiduciaries to forward proxies and proxy materials to their principals, and we will reimburse them for their expenses.
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MATTERS TO COME BEFORE THE ANNUAL MEETING
PROPOSAL ONE:
Election of Directors
Nominees
At the Annual Meeting, nine directors, who have been nominated by our Board of Directors, based on the recommendation of the Nominating, Governance and Compliance Committee of the Board of Directors (referred to as the Nominating Committee), are to be elected, each to hold office (subject to our By-Laws) until the next annual meeting and until his or her successor has been elected and qualified. All of the nominees for director currently serve as directors and, except for Michael Bonney, were elected by the stockholders at the 2014 Annual Meeting.
Each nominee has consented to being named as a nominee in this proxy statement and to serve if elected. If any nominee listed in the table below should become unavailable for any reason, which the Board of Directors does not anticipate, the proxy will be voted for any substitute nominee or nominees who may be selected by the Board of Directors prior to or at the Annual Meeting, or, if no substitute is selected by the Board of Directors prior to or at the Annual Meeting, for a motion to reduce the membership of the Board of Directors to the number of nominees available. Directors will be elected by an affirmative vote of a majority of the votes cast at the Annual Meeting in person or by proxy. There are no family relationships between any of our directors and executive officers. The information concerning the nominees and their security holdings has been furnished by them to us.
Our directors are nominated by our Board of Directors, based on the recommendations of the Nominating Committee. As discussed elsewhere in this proxy statement, in evaluating director nominees, the Nominating Committee considers characteristics that include, among others, integrity, business experience, financial acumen, leadership abilities, familiarity with our businesses and businesses similar or analogous to ours, and the extent to which a candidate’s knowledge, skills, background and experience are already represented by other members of our Board of Directors. Listed below are our director nominees with their biographies. In addition, we have summarized for each director the reasons why such director has been chosen to serve on our Board of Directors.
Name
Age(1)
Position
Robert J. Hugin
60
Chairman of the Board and Chief Executive Officer
Richard W. Barker, D.Phil.
66
Director
Michael W. Bonney
56
Director
Michael D. Casey
69
Director
Carrie S. Cox
57
Director
Michael A. Friedman, M.D.
71
Director
Gilla Kaplan, Ph.D.
68
Director
James J. Loughlin
72
Director
Ernest Mario, Ph.D.
77
Director
(1)
As of June 17, 2015
Robert J. Hugin was elected as Chairman by our Board of Directors in June 2011, and has served as our Chief Executive Officer since June 16, 2010 and as President from May 1, 2006 to July 31, 2014. He also served as our Chief Operating Officer from May 1, 2006 until June 16, 2010 and Senior Vice President and Chief Financial Officer from June 1999 until May 1, 2006. Mr. Hugin has served as one of our directors since December 2001. Previously, Mr. Hugin had been a Managing Director at J.P. Morgan & Co. Inc., which he joined in 1985. Mr. Hugin received an A.B. degree from Princeton University and an M.B.A. from the University of Virginia. Mr. Hugin is also a director of The Medicines Company, Atlantic Health System, Inc., a non-profit health care system, and Family Promise, a national non-profit network assisting homeless families.
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Mr. Hugin brings to his role as a director his extensive executive and leadership experience at Celgene and his previous business experience, as well as his leadership roles on the boards of a public company and a non-profit health care company. In particular, his experience as our President, Chief Operating Officer and Chief Financial Officer and his current role as our Chief Executive Officer enable him to provide leadership and unique insight on complex business and financial matters and guidance with respect to the strategic goals and operating framework of a high growth company such as ours. Additionally, Mr. Hugin served as Chairman of the Board of Directors of the Pharmaceutical Research and Manufacturers of America (PhRMA) from April 2013 until April 2014, is a past Chairman of the HealthCare Institute of New Jersey and is a member of the Board of Trustees of Princeton University. In these roles, he has gained valuable knowledge of regulatory, legal and legislative issues affecting our industry.
Richard W. Barker, D.Phil., OBE , has served as one of our directors and a member of the Audit Committee of our Board of Directors since January 20, 2012. Dr. Barker was formerly Director General of the Association of the British Pharmaceutical Industry (ABPI), a pharmaceutical industry trade association in the United Kingdom, from 2004 to 2011, and served on the Board and Executive Committee of the European Federation of Pharmaceutical Industries and Associations (EFPIA) and as a Council Member of the International Federation of Pharmaceutical Manufacturers & Associations (IFPMA). Dr. Barker is currently director of the Centre for Accelerating Medical Innovations, chairman of the Health Innovation Network of South London, UK, a member of the Board of iCO Therapeutics, Inc., a Canadian biotech company, Chairman of Stem Cells for Safer Medicine, a public-private partnership using technology to improve drug safety, and chairman of International Health Partners, a UK charity providing donated medicines to crisis situations.
As an experienced healthcare leader and strategist with a distinguished career in the healthcare sector, Dr. Barker brings to his service as a director more than 20 years’ experience in the healthcare industry in which he held a range of senior leadership roles in the United States, the United Kingdom and elsewhere internationally. His career has spanned the pharmaceutical, biotechnology and medical informatics sectors, thus giving him a broad perspective on the issues facing both healthcare systems and the pharmaceutical industry.
Michael W. Bonney was elected to our Board of Directors and Audit Committee on April 14, 2015. Mr. Bonney served as Chief Executive Officer and a member of the Board of Directors of Cubist Pharmaceuticals Inc. (Cubist) (a subsidiary of Merck & Co., Inc. as of January 2015) from June 2003 until his retirement on December 31, 2014. From January 2002 to June 2003, Mr. Bonney served as Cubist’s President and Chief Operating Officer, and from 1995 to 2001, he held various positions of increasing responsibility at Biogen, Inc., a biopharmaceutical company, including Vice President, Sales and Marketing from 1999 to 2001. Prior to joining Biogen, Mr. Bonney held various positions of increasing responsibility in sales, marketing and strategic planning at Zeneca Pharmaceuticals, ending his eleven-year career there serving as National Business Director. Since 2014, Mr. Bonney has been a director of Alynylam Pharmaceuticals, Inc., a biopharmaceutical company, where he serves on the audit committee. He is also a trustee of the Tekla complex of life sciences and healthcare dedicated funds, where he serves on the valuation committee and chairs the governance committee and the nominating committee; and chairs the board of trustees of Bates College. Mr. Bonney was a Director of NPS Pharmaceuticals, Inc., a biopharmaceutical company from 2005 until its sale to Shire plc in February 2015, where he was a member of the audit and compensation committees and chaired the governance committee. Mr. Bonney received a B.A. in Economics from Bates College.
Mr. Bonney brings to his service as a director his extensive operational, commercial, and senior management experience in the biopharmaceutical industry, as well as his experience serving on the Board of Directors (and certain of their key standing committees) of other companies and trade organizations within our industry.
Michael D. Casey has served as one of our directors since August 2002, and has been our independent Lead Director since June 2007, the Chairman of the Nominating Committee and a member of the Executive Committee since December 2006, and a member of the Management Compensation and Development Committee (referred to as the Compensation Committee) since April 2006. Mr. Casey was a member of the Audit Committee from August 2002 through December 2006. From September 1997 to
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February 2002, Mr. Casey served as the Chairman, President, Chief Executive Officer and a director of Matrix Pharmaceutical, Inc. From November 1995 to September 1997, Mr. Casey was Executive Vice President at Schein Pharmaceutical, Inc. In December 1996, he was appointed President of the retail and specialty products division of Schein Pharmaceutical, Inc. From June 1993 to November 1995, he served as President and Chief Operating Officer of Genetic Therapy, Inc. Mr. Casey was President of McNeil Pharmaceutical (a unit of Johnson & Johnson) from 1989 to June 1993 and Vice President, Sales and Marketing for Ortho Pharmaceutical Corp. (a subsidiary of Johnson & Johnson) from 1985 to 1989. Mr. Casey is also a director of Abaxis Inc. Mr. Casey served as a director of Allos Therapeutics, Inc. through January 2010, AVI BioPharma (now Sarepta Therapeutics, Inc.) through June 2010 and Durect Corporation through December 2013.
Mr. Casey brings to his service as a director his significant experience and leadership as President, Chief Executive Officer and senior officer of several national pharmaceutical companies. In addition to those listed above, he has previously served as a director of several other pharmaceutical/biotech companies.
Carrie S. Cox has served as one of our directors since December 2009 and a member of the Audit Committee since March 2010. Ms. Cox currently serves as the Chairman of the Board of Directors and Chief Executive Officer of Humacyte, Inc., a privately-held regenerative medicine company primarily focused in developing products for vascular disease and for therapeutic filling and soft tissue repair. Ms. Cox served as Executive Vice President of Schering-Plough and President of Schering-Plough’s Global Pharmaceutical Business until November 3, 2009 when Schering-Plough merged with Merck & Co., Inc. Prior to joining Schering-Plough, Ms. Cox served as President of Pharmacia Corporation’s pharmaceutical business until its merger with Pfizer Inc. in 2003. Ms. Cox is a member of the Board of Directors of Texas Instruments and has served on their audit and compensation committees, and is a member of the Board of Directors of Cardinal Health, Inc. and sits on its compensation committee, and the Board of Overseers of the University of Pennsylvania Museum of Archaeology and Anthropology. Ms. Cox is a graduate of the Massachusetts College of Pharmacy.
Ms. Cox brings to her service as a director her distinguished career in global healthcare and her significant experience and leadership serving in executive positions of some of the largest and most successful multi-national healthcare companies in the world, including with responsibility for those companies’ financial performance and significant capital and research and development investments.
Michael A. Friedman , M.D . has served as one of our directors since February 2011 and a member of the Nominating Committee since April 2011. Dr. Friedman is the emeritus Chief Executive Officer of City of Hope, a leading cancer research, treatment and education institution, as well as Director of the organization’s Comprehensive Cancer Center and holder of the Irell & Manella Cancer Center Director’s Distinguished Chair. Before leading City of Hope, Dr. Friedman was Senior Vice President of Research and Development, Medical and Public Policy for Pharmacia Corporation and Chief Medical Officer for biomedical preparedness at PhRMA. Additionally, Dr. Friedman has served as Deputy Commissioner for the U.S. Food and Drug Administration (FDA), later serving as Acting Commissioner, and as Associate Director of the National Cancer Institute, National Institutes of Health. Since 2004, Dr. Friedman serves on the Independent Citizens’ Oversight Committee which governs the California Institute for Regenerative Medicine and oversees the implementation of California’s stem cell research effort. Dr. Friedman is a member of the Board of Directors of MannKind Corporation and Smith & Nephew plc. He also serves on the Board of Trustees for Tulane University and the California State Stem Cell Initiative.
Dr. Friedman brings to his service as a director valuable scientific and operational expertise and leadership skills from his extensive background in cancer research and public health as a senior officer of a leading research institution, deputy and acting commissioner of the FDA, and as an executive officer of a major pharmaceutical company.
Gilla Kaplan , Ph.D . has served as one of our directors since April 1998 and is a member of the Nominating Committee and, until April 2015, was a member of the Audit Committee. Dr. Kaplan was appointed Director of the Global Health Program, Tuberculosis, at the Bill and Melinda Gates Foundation in January 2014. She previously served as Senior Advisor to the Global Health Program, Tuberculosis and member of the International Scientific Advisory Committee for the Global Health Program of the Bill and
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Melinda Gates Foundation. Dr. Kaplan was head of the Laboratory of Mycobacterial Immunity and Pathogenesis at The Public Health Research Institute Center at the New Jersey Medical School, Newark, New Jersey, where she was appointed full Member in 2002 and Assistant Director in 2006. Dr. Kaplan also was previously appointed, in 2005, Professor of Medicine at the University of Medicine and Dentistry of New Jersey. Prior to that, Dr. Kaplan was an immunologist in the Laboratory at Cellular Physiology and Immunology at The Rockefeller University in New York where she was an Associate Professor.
Dr. Kaplan brings to her service as a director valuable scientific expertise and leadership skills from her distinguished career in medical research, including her current role as Director of the Global Health Program, Tuberculosis at the Bill and Melinda Gates Foundation and her past roles and experiences in the field of immunology.
James J. Loughlin has served as one of our directors since January 2007, as Chairman of the Audit Committee since June 2008 and a member of the Compensation Committee since June 2008. Mr. Loughlin served as the National Director of the Pharmaceuticals Practice at KPMG LLP (KPMG), and a five-year term as member of the Board of Directors of KPMG. Additionally, Mr. Loughlin served as Chairman of the Pension and Investment Committee of the KPMG Board from 1995 through 2001. He also served as Partner in charge of Human Resources, Chairman of the Personnel and Professional Development Committee, Secretary and Trustee of the Peat Marwick Foundation and a member of the Pension, Operating and Strategic Planning Committees. Mr. Loughlin serves as a member of the Board of Directors and the Audit Committee of Edge Therapeutics, Inc., a privately-held biopharmaceutical company, and InspireMD, Inc., a publicly-traded medical device manufacturer.
Mr. Loughlin brings to his service as a director his valuable experiences as National Director of the Pharmaceuticals Practice at KPMG, his service as Chairman of the Pension and Investment Committee of the KPMG Board and his service on various other committees and foundations. In particular, through his professional association with KPMG, including a five-year term as member of the Board of Directors of KPMG, Mr. Loughlin brings to our Board of Directors an extensive background in accounting and financial reporting, qualifying him as an audit committee financial expert (as that term is defined in the regulations of the SEC).
Ernest Mario, Ph.D . has served as one of our directors since August 2007 and is a member of the Nominating Committee since August 2007, the Executive Committee since June 2008 and Chairman of the Compensation Committee since August 2014. Dr. Mario is a former Deputy Chairman and Chief Executive of Glaxo Holdings plc and a former Chairman and Chief Executive Officer of ALZA Corporation. Dr. Mario also serves as a director of publicly-traded healthcare companies: Capnia, Inc. (chairman of the board), Boston Scientific Corporation (member of audit committee and chair of compensation committee), Chimerix Inc. (chairman of the board and member of the nominating and governance committee), Kindred Biosciences Inc. (chairman of the audit committee and member of the compensation committee), XenoPort Inc. (member of the nominating and governance committee) and Tonix Pharmaceuticals Holding Corp. (member of the compensation committee). He is Chairman of the American Foundation for Pharmaceutical Education and serves as an advisor to The Ernest Mario School of Pharmacy at Rutgers University. In 2007, Dr. Mario was awarded the Remington Medal by the American Pharmacists Association, pharmacy’s highest honor.
Dr. Mario brings to his service as a director his significant executive leadership experience, including his experience leading several pharmaceutical companies, as well as his membership on public company boards and foundations. He also has extensive experience in financial and operations management, risk oversight, and quality and business strategy.
RECOMMENDATION OF THE BOARD OF DIRECTORS
THE BOARD OF DIRECTORS UNANIMOUSLY
RECOMMENDS A VOTE FOR THE ELECTION OF EACH NOMINEE UNDER PROPOSAL ONE
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Security Ownership of Certain Beneficial Owners and Management
The table below sets forth the beneficial ownership of Common Stock as of April 20, 2015 (except as otherwise noted) by (i) each director, (ii) each Named Executive Officer for fiscal 2014 (as defined below), (iii) all of our current directors and executive officers as a group and (iv) all persons known by the Board of Directors to be beneficial owners of more than five percent of the outstanding shares of Common Stock. Shares of Common Stock subject to options that are exercisable or that will become exercisable within 60 days after April 20, 2015 and restricted stock units (RSUs) that will vest within 60 days of April 20, 2015 are deemed outstanding and reflected in the amount of beneficial ownership column and for computing the ownership percentage of the stockholder holding such securities, but are not deemed outstanding for computing the ownership percentage of any other stockholder. Vested RSUs are included as Common Stock. Shares underlying Performance Stock Units (PSUs) are not deemed outstanding until earned and are not included in the table. As of April 20, 2015, there were 793,187,229 shares of Common Stock outstanding. Unless otherwise noted, the address of each stockholder listed in the table is c/o Celgene Corporation, 86 Morris Avenue, Summit, New Jersey 07901.
Name and Address of Beneficial Ownership
Amount and Nature of
Beneficial Ownership
Percent
of Class
Robert J. Hugin
3,840,755 (1) *
Peter N. Kellogg
132,173 (2) *
Mark J. Alles
351,994 (3) *
Thomas O. Daniel, M.D.
415,242 (4) *
Jacqualyn A. Fouse, Ph.D.
725,511 (5) *
Perry A. Karsen
334,962 (6) *
Scott A. Smith
239,113 (7) *
Richard W. Barker, D.Phil.
88,157 (8) *
Michael W. Bonney
10,000 (9) *
Michael D. Casey
365,335 (10) *
Carrie S. Cox
104,480 (11) *
Michael A. Friedman, M.D.
124,349 (12) *
Gilla Kaplan, Ph.D.
322,799 (13) *
James J. Loughlin
238,968 (14) *
Ernest Mario, Ph.D.
220,233 (15) *
All directors and executive officers as a group (16 persons)
7,641,615 (1)-(15) *
BlackRock, Inc.
50,495,857 (16) 6.4 %
55 East 52nd Street
New York, New York 10022
The Vanguard Group.
42,954,327 (17) 5.4 %
100 Vanguard Blvd.
Malvern, PA 19355
*
Less than one percent (1%)
(1)
Consists of 1,184,131 shares of Common Stock, 2,524,000 shares of Common Stock underlying stock options, 27,355 shares of Common Stock held in our 401(k) Plan for the benefit of Mr. Hugin, 95,669 shares of Common Stock held by a family foundation of which Mr. Hugin is a trustee, and 9,600 shares of Common Stock owned by Mr. Hugin’s children.
(2)
Consists of 132,110 shares of Common Stock underlying stock options, and 63 shares of Common Stock held in our 401(k) Plan for the benefit of Mr. Kellogg.
(3)
Consists of 111,447 shares of Common Stock, 234,908 shares of Common Stock underlying stock options, and 5,639 shares of Common Stock held in our 401(k) Plan for the benefit of Mr. Alles.
(4)
Consists of 55,532 shares of Common Stock, 356,510 shares of Common Stock underlying stock options, and 3,200 shares of Common Stock held in our 401(k) Plan for the benefit of Dr. Daniel.
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(5)
Consists of 54,128 shares of Common Stock, 670,070 shares of Common Stock underlying stock options, and 1,313 shares of Common Stock held in our 401(k) Plan for the benefit of Ms. Fouse.
(6)
Consists of 81,523 shares of Common Stock, 251,800 shares of Common Stock underlying stock options, and 1,639 shares of Common Stock held in our 401(k) Plan for the benefit of Mr. Karsen.
(7)
Consists of 19,054 shares of Common Stock, 217,556 shares of Common Stock underlying stock options, and 2,503 shares of Common Stock held in our 401(k) Plan for the benefit of Mr. Smith.
(8)
Consists of 8,857 shares of Common Stock and 79,300 shares of Common Stock underlying stock options.
(9)
Consists of shares of Common Stock underlying stock options.
(10)
Consists of 84,753 shares of Common Stock held by a family trust of which Mr. Casey is a trustee and 280,582 shares of Common Stock underlying stock options. Mr. Casey disclaims beneficial ownership over the shares of Common Stock held by the family trust.
(11)
Consists of 15,480 shares of Common Stock and 89,000 shares of Common Stock underlying stock options.
(12)
Consists of 10,333 shares of Common Stock held by a family trust of which Dr. Friedman is a trustee and 114,016 shares of Common Stock underlying stock options.
(13)
Consists of 87,753 shares of Common Stock and 235,046 shares of Common Stock underlying stock options.
(14)
Consists of 19,086 shares of Common Stock, 218,082 shares of Common Stock underlying stock options and 1,800 shares of Common Stock owned by family trusts of which Mr. Loughlin’s spouse is a trustee.
(15)
Consists of 141,159 shares of Common Stock, 76,500 shares of Common Stock underlying stock options and 2,574 shares of Common Stock owned by Dr. Mario’s spouse.
(16)
Information regarding BlackRock, Inc., as of December 31, 2014, was obtained from an amendment to Schedule 13G filed by BlackRock, Inc. with the SEC on February 9, 2015.
(17)
Information regarding The Vanguard Group, as of December 31, 2014, was obtained from a Schedule 13G filed by The Vanguard Group with the SEC on February 10, 2015.
Board Independence
No director will be deemed to be independent unless the Board of Directors affirmatively determines that the director has no other material relationship with us, directly or as an officer, stockholder or partner of an organization that has such a relationship with us. The Board of Directors observes all criteria for independence established by Nasdaq under its applicable Listing Rules. The Board of Directors has determined that all of our Non-Employee Directors, constituting all but one of our directors, may be classified as “independent” within the meaning of Rule 5605(a)(2) of the Nasdaq Listing Rules. Executive sessions of our independent directors are convened in conjunction with each regularly scheduled Board of Directors meeting.
Board Meetings; Committees and Membership
General
The Board of Directors held seven meetings during fiscal 2014, five of which meetings were held over a period of two consecutive days. During fiscal 2014, each of the directors then in office attended more than 75% of the aggregate of  (i) the total number of meetings of the Board of Directors and (ii) the total number of meetings of all committees of the Board on which such director served. Our policy is to encourage our Board members to attend all annual meetings and any special meetings of stockholders. All of our directors attended the 2014 Annual Meeting.
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We maintain the following standing committees of the Board of Directors: the Executive Committee, the Compensation Committee, the Nominating Committee and the Audit Committee. Except for the Executive Committee, each committee is comprised entirely of directors who are “independent” within the meaning of Rule 5605(a)(2) of the Nasdaq Listing Rules. Other than the Executive Committee, each committee acts pursuant to a separate written charter, and each such charter has been adopted and approved by the Board of Directors. A copy of the Amended and Restated Charters of the Audit Committee, the Compensation Committee and the Nominating Committee, as well as our Corporate Governance Guidelines, are available on our website at www.celgene.com by choosing the “Investor Relations” link and clicking on the “Corporate Governance” section.
The Executive Committee
The Executive Committee’s current members are Robert J. Hugin (Chairman), Michael D. Casey and Ernest Mario, Ph.D. The Executive Committee held one meeting during fiscal 2014 at which all members were present. The Executive Committee has and may exercise all of the powers and authority of our full Board of Directors, subject to certain exceptions.
The Management Development and Compensation Committee (the “Compensation Committee”)
The Compensation Committee’s current members are Ernest Mario, Ph.D. (Chairman), Michael D. Casey and James J. Loughlin. The Compensation Committee held nine formal meetings and a number of informal meetings during fiscal 2014. The Compensation Committee annually reviews and approves the total compensation packages for all executive officers, including the Chief Executive Officer, considers modification of existing compensation and benefit programs and the adoption of new compensation and benefit plans, administers the plans and reviews and makes recommendations to the Board of Directors regarding the compensation of non-employee members of the Board of Directors. Additionally, the Compensation Committee periodically reviews our leadership development plans and succession planning with the Chief Executive Officer. The Compensation Committee has (i) the full power and authority to interpret the provisions and supervise the administration of the Anthrogenesis Corporation Qualified Employee Incentive Stock Option Plan, the Signal Pharmaceuticals, Inc. 2000 Equity Incentive Plan, our 1992 Long-Term Incentive Plan, our 2008 Stock Incentive Plan and the Pharmion Corporation (Pharmion) 2000 Stock Incentive Plan, (ii) the full power and authority to administer and interpret the Celgene Corporation 2005 Deferred Compensation Plan (the “Nonqualified Plan”) and (iii) the authority to review all matters relating to our personnel.
Compensation Committee Consultant
The Compensation Committee has retained Radford, an Aon Hewitt Company, which we refer to as “Radford,” as its outside compensation consultant since 2004. Radford was retained by the Compensation Committee as a result of a competitive bidding process conducted by the Compensation Committee. Radford regularly meets with the Compensation Committee and provides advice regarding the design and implementation of our executive compensation programs, as well as our director compensation programs. In particular, Radford:

reviews and makes recommendations regarding executive and director compensation (including amounts and forms of compensation);

provides market data and performs competitive market analyses;

advises the Compensation Committee as to best practices; and

assists in the preparation of our compensation-related disclosures included in this proxy statement.
In providing its services to the Compensation Committee, with the Compensation Committee’s knowledge, Radford may contact our management from time to time to obtain data and other information from us and to work together in the development of proposals and alternatives for the Compensation Committee to review and consider. In fiscal 2014, the cost of Radford’s executive compensation and director compensation consulting services was $108,738.
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In addition, in fiscal 2014, with the knowledge and consent of the Compensation Committee, (i) Aon Consulting, an affiliate of Radford, was retained by us to provide global employee benefits consulting services, (ii) Aon Risk Services, an affiliate of Radford, was retained by us for various insurance-related consulting services, and (iii) Radford Surveys, an affiliate of Radford, was retained by us for various compensation surveys. In fiscal 2014, the aggregate cost of such other consulting services was $142,103.
The Compensation Committee regularly evaluates the nature and scope of the services provided by Radford. The Compensation Committee approved the fiscal 2014 executive and director compensation consulting services of Radford described above. Although the Compensation Committee was aware of the nature of the services performed by Aon Consulting, Aon Risk Services and Radford Surveys, the Compensation Committee did not review and approve such services as those services were reviewed and approved by management in the ordinary course of business.
In order to ensure that Radford is independent, Radford is only engaged by, takes direction from, and reports to, the Compensation Committee and, accordingly, only the Compensation Committee has the right to terminate or replace Radford at any time. Further, Radford maintains certain internal controls within Aon which include, among other things:

Radford is managed separately from Aon and performance is measured solely on the Radford business;

no commissions or cross revenue is provided to Aon in the event that Aon introduces Radford to an account, and no Aon staff member is paid commissions or incentives for Radford services;

Radford is not rewarded for selling Aon services nor is Radford required to cross-sell services;

Radford maintains its own account management structure, contact database and IT network and its survey data is on a separate IT platform from Aon; and

no member of Radford’s team is involved in, or sits on, any Aon committee for purposes of selling Aon services.
The Nominating, Governance and Compliance Committee (the “Nominating Committee”)
The Nominating Committee’s current members (as of April 15, 2015) are Michael D. Casey (Chairman), Gilla Kaplan, Ph.D., Ernest Mario, Ph.D. and Michael A. Friedman, M.D. The Nominating Committee’s members during fiscal 2014 were Michael D. Casey (Chairman), Rodman L. Drake (through June 17, 2014), Ernest Mario, Ph.D. (since October 14, 2014) and Michael A. Friedman, M.D. The Nominating Committee held six meetings in fiscal 2014. The Nominating Committee determines the criteria for nominating new directors, recommends to the Board of Directors candidates for nomination to the Board of Directors, oversees the evaluation of the Board of Directors, develops and recommends to the Board of Directors appropriate corporate governance guidelines, reviews on a periodic basis the Company’s leadership development plans and succession planning with respect to the position of Chief Executive Officer, and oversees certain of the Company’s corporate compliance efforts (excluding financial compliance and reporting and overseeing compliance with the requirements of the U.S. Foreign Corrupt Practices Act, which are the responsibilities of the Audit Committee). The Nominating Committee’s process to identify and evaluate candidates for nomination to the Board of Directors includes consideration of candidates for nomination to the Board of Directors recommended by stockholders. Such stockholder recommendations must be delivered to our Corporate Secretary, together with the information required to be filed in a proxy statement with the SEC regarding director nominees, and each such nominee must consent to serve as a director if elected, no later than the deadline for submission of stockholder proposals as set forth in our By-Laws and under the section of this proxy statement entitled “Stockholder Nominations.” In considering and evaluating such stockholder proposals that have been properly submitted, the Nominating Committee will apply substantially the same criteria that the Nominating Committee believes must be met by a Nominating Committee-recommended nominee as described below. To date, we have not received any recommendation from stockholders requesting that the Nominating Committee consider a candidate for inclusion among the Nominating Committee’s slate of nominees in our proxy statement.
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In evaluating director nominees, the Nominating Committee currently considers the following factors:

our needs with respect to the particular competencies and experience of our directors;

familiarity with our business and businesses similar to ours;

financial acumen and corporate governance experience; and

our desire that our Board reflect diversity with respect to, among other matters, professional and operational experience, scientific and academic expertise, international background, gender, race and ethnicity.
The Nominating Committee identifies nominees first by evaluating the current members of the Board of Directors willing to continue in service. If any member of the Board does not wish to continue in service or if the Nominating Committee or the Board of Directors decides not to re-nominate a member for re-election, the Nominating Committee will identify the required skills, background and experience of a new nominee, in tandem with prevailing business conditions, and will source relevant candidates and present to the Board of Directors suggestions as to individuals who meet the required criteria. The Nominating Committee utilizes the services of an outside search firm to assist it in finding appropriate nominees for the Board of Directors.
The Audit Committee
The Audit Committee’s current members (as of April 15, 2015) are James J. Loughlin (Chairman), Richard W. Barker, D.Phil., Michael W. Bonney and Carrie S. Cox. The Audit Committee’s members during fiscal 2014 were James J. Loughlin (Chairman), Richard W. Barker, D.Phil., Gilla Kaplan, Ph.D. and Carrie S. Cox. The Audit Committee held nine meetings in fiscal 2014. Mr. Loughlin is an “audit committee financial expert” within the meaning of the rules of the SEC and, as such, he satisfies the requirements of Rule 5605(c)(2) of the Nasdaq Listing Rules. The Audit Committee oversees our financial reporting process on behalf of the Board of Directors. In fulfilling its responsibility, the Audit Committee appoints, subject to stockholder ratification, our independent registered public accounting firm. The Audit Committee also reviews our consolidated financial statements and the adequacy of our internal controls. The Audit Committee meets at least quarterly with our management and our independent registered public accounting firm to review and discuss the results of audits or reviews of our consolidated financial statements, the evaluation of the effectiveness of our internal control over financial reporting and disclosure controls and procedures, the overall quality of our financial reporting and appropriate application of our critical accounting policies and to approve any related person transactions (as defined below). The Audit Committee’s responsibility is to monitor and oversee these processes, including the activities of our internal audit function. The Audit Committee meets separately, at least quarterly, with the independent registered public accounting firm. In addition, the Audit Committee oversees our existing procedures for the receipt, retention and handling of complaints related to auditing, accounting and internal control issues, including the confidential, anonymous submission by employees, vendors, customers or others of concerns on questionable accounting and auditing matters.
Related Person Transaction Policies and Procedures
At the beginning of each calendar year, each member of our Board of Directors and each executive officer is required to complete an extensive questionnaire that we utilize when preparing our annual proxy statement, as well as our Annual Report on Form 10-K. The purpose of the questionnaire is to obtain information from directors and executive officers to verify disclosures about them that are required to be made in these documents. Regarding related person transactions, it serves two purposes: first, to remind each executive officer and director of their obligation to disclose any related person transactions entered into between themselves (or family members or entities in which they hold an interest) and us that in the aggregate exceed $120,000 (“related person transaction”) that might arise in the upcoming year; and second, to ensure disclosure of any related person transaction that is currently proposed or that occurred since the beginning of the preceding year. When completing the questionnaire, each director and executive officer is required to report any such transaction.
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Compensation Committee Interlocks and Insider Participation
Each member of the Compensation Committee is an independent director within the meaning of the Nasdaq Listing Rules. There were no interlocks among any of the members of the Compensation Committee and any of our executive officers.
Financial Officer Code of Ethics
We have adopted a Financial Officer Code of Ethics that applies to our Chief Executive Officer, Chief Financial Officer and other financial professionals. This Financial Officer Code of Ethics is posted on our website at www.celgene.com and may be accessed by choosing the “Investor Relations” link and clicking on the “Corporate Governance” section. We intend to satisfy the disclosure requirements regarding any amendment to, or a waiver of, a provision of the Financial Officer Code of Ethics by posting such information on our website. We undertake to provide to any person a copy of this Financial Officer Code of Ethics upon request to our Corporate Secretary at our principal executive offices.
Stockholder Nominations
Our By-Laws provide that nominations for the election of directors may be made at an annual meeting: (a) by or at the direction of the Board of Directors (or any duly authorized committee thereof); or (b) by any stockholder who (i) is a stockholder of record on the date of the giving of the notice and on the record date for the determination of stockholders entitled to vote at such annual meeting and (ii) complies with the notice procedures set forth below.
In addition to any other applicable requirement for a nomination to be made by a stockholder, such stockholder must have given timely notice thereof in proper written form to our Corporate Secretary. To be timely, a stockholder’s notice to the Corporate Secretary must be delivered to or mailed and received at our principal executive offices not less than 60 days nor more than 90 days prior to the date of the annual meeting; provided that in the event that less than 70 days’ notice or prior public disclosure of the date of the annual meeting is given or made to stockholders, notice by the stockholder (in order to be timely) must be so received not later than the close of business on the 10th day following the day on which such notice of the date of the annual meeting was mailed or such public disclosure of the date of the annual meeting was made, whichever first occurs.
To be in proper written form, a stockholder’s notice to the Corporate Secretary must set forth (a) as to each person whom the stockholder proposes to nominate for election as a director: (i) the name, age, business address and residence address of the person; (ii) the principal occupation or employment of the person; (iii) the class or series and number of shares of our capital stock which are owned beneficially or of record by the person; and (iv) any other information relating to the person that would be required to be disclosed in a proxy statement or other filing required to be made in connection with solicitations of proxies for election of directors pursuant to Section 14 of the Securities Exchange Act of 1934, as amended (the Exchange Act), and the rules and regulations promulgated thereunder; and (b) as to the stockholder giving the notice: (i) the name and record address of such stockholder; (ii) the class or series and number of shares of our capital stock which are owned beneficially or of record by such stockholder; (iii) a description of all arrangements or understandings between such stockholder and each proposed nominee and any other person or persons (including their names) pursuant to which the nomination(s) are to be made by such stockholder; (iv) a representation that such stockholder intends to appear in person or by proxy at the annual meeting to nominate the persons named in his or her notice and; (v) any other information relating to such stockholder that would be required to be disclosed in a proxy statement or other filing required to be made in connection with solicitations of proxies for election of directors pursuant to Section 14 of the Exchange Act and the rules and regulations promulgated thereunder. Such notice must be accompanied by a written consent of each proposed nominee to being named as a nominee and serving as a director if elected.
Stockholder Communications
Our Board of Directors has determined that, to facilitate communications with the Board of Directors, or any individual member or any Committee of the Board of Directors, stockholders should direct all communication in writing to our Corporate Secretary at our principal executive offices. Our Corporate
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Secretary will forward all such correspondence to the Board of Directors, individual members of the Board of Directors or applicable chairpersons of any Committee of the Board of Directors, as appropriate.
Board Leadership Structure
The Board of Directors has concluded that, consistent with past practice and in the Company’s best interests and the interests of our stockholders, the positions of Chairman and Chief Executive Officer should be combined.
Accordingly, assuming that the director nominees are elected to the Board at the Annual Meeting, Mr. Hugin will continue to hold the positions of both Chairman and Chief Executive Officer.
The independent directors believe that each of the possible leadership structures for a board has its particular pros and cons, which must be considered in the context of the specific circumstances, culture and challenges facing a company. The independent directors believe that our current model of the combined Chairman/CEO role in conjunction with the independent Lead Director position is the appropriate leadership structure that has served our stockholders well in the past and will continue to do so in the future. Additionally, given the abilities and strengths of each of our Board members, their varied organizational backgrounds and wide range of leadership and management experience, we believe that the concentration of functions will continue to promote a culture of transparency and accountability that has guided, and will continue to guide, our successful performance.
Our leadership structure is periodically reviewed to ensure that it is appropriate for us given the facts and circumstances at the time of review. The independent directors believe that the combined Chairman/​CEO position, together with the independent Lead Director, has certain advantages over other board leadership structures and continue to best meet our current needs, including:

ensuring efficient communication between management and the Board;

clearly delineating the independent Lead Director’s and other independent directors’ oversight roles from the Chairman/CEO’s and other management’s strategic and operational roles;

ensuring that all key and appropriate issues are discussed by the Board in a timely and constructive manner;

providing clarity for our key stakeholders on corporate leadership and accountability; and

augmenting the Chairman’s knowledge of our strategy, operations and financial condition and, in turn, communicating that to external stakeholders.
As Chief Executive Officer, Mr. Hugin is accountable directly to the full Board of Directors and has day-to-day responsibility for our business operations and for general oversight over our business and the various management teams that are responsible for our day-to-day operations.
We believe that the combined Chairman/CEO leadership structure is appropriate for us as it enhances our Board’s oversight by leveraging the knowledge of our Chief Executive Officer who has also served, in the past, as our President, Chief Financial Officer and Chief Operating Officer.
Independent Lead Director
In June 2007, Michael D. Casey was designated independent Lead Director. In accordance with our corporate governance guidelines, as adopted by the Board of Directors on December 16, 2010, the independent Lead Director provides guidance concerning the agenda for each Board meeting, presides over executive sessions of the independent directors that are held on a regular basis, communicates with the Chairman/CEO after each executive session of the independent directors to provide feedback and to effectuate the decisions and recommendations of the independent directors, acts as liaison between the independent directors and management on a regular basis and when communication out of the ordinary course is appropriate.
Mr. Casey is actively involved with the Company and devotes a significant amount of time and energy to fulfilling his responsibilities as Lead Director. He reviews and provides guidance with respect to establishing the agenda and the materials for each meeting of our Board of Directors and certain of the
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committees of our Board. He meets regularly, and works closely, with our CEO, Mr. Hugin, and other senior members of management, as well as with other management and non-management employees. He also facilitates communication among the directors on our Board and speaks regularly with the independent chairs of our other Board committees and with each of our Non-Employee Directors and promotes the candid exchange of ideas among the Board members. Moreover, in his capacity as Lead Director and Chair of our Nominating, Governance and Compliance Committee, Mr. Casey provides leadership in the areas of corporate governance, Board composition, succession planning and other governance-related matters.
Board of Directors Role in Risk Oversight
In connection with its oversight responsibilities, the Board of Directors, including through the Audit Committee, Nominating Committee and Compensation Committee, periodically assesses the significant risks that we face. These risks include financial, legal, technological, competitive, operational and compensation-related risks. The Board, together with the Chief Executive Officer, the Chief Financial Officer, management representatives of the relevant functional areas ( e.g . internal audit, legal, regulatory and compliance groups, operational management, human resources, etc. ) and representatives of each of our primary operating subsidiaries, reviews and monitors the identification, assessment and mitigation of the material risks affecting our operations.
Section 16(a) Beneficial Ownership Reporting Compliance
Pursuant to Section 16(a) of the Exchange Act, each of our directors, executive officers and any person beneficially owning more than 10 percent of Common Stock is required to report his, her or its ownership of Common Stock and any change in that ownership, on a timely basis, to the SEC. We believe that all applicable acquisitions and dispositions of Common Stock, including grants of options under our 2008 Stock Incentive Plan, were filed on a timely basis for fiscal 2014.
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EXECUTIVE COMPENSATION
Compensation Discussion and Analysis
This Compensation Discussion and Analysis (CD&A) provides an overview of the compensation philosophy of the Company, which serves as the foundation of our executive compensation programs. In this CD&A, we also describe our compensation plans and programs, under which key compensation decisions were made regarding the following individuals, who we collectively refer to as our Named Executive Officers (NEOs), for fiscal 2014:
Name
Title
Robert J. Hugin
Chief Executive Officer and Chairman of the Board
Peter N. Kellogg
Executive Vice President, Chief Financial Officer
Mark J. Alles
President and Chief Operating Officer
Thomas O. Daniel, M.D.
President, Research and Early Development
Jacqualyn A. Fouse, Ph.D.
President Hematology and Oncology; formerly Executive Vice President and Chief Financial Officer
Perry A. Karsen
Chief Executive Officer, Celgene Cellular Therapeutics
Scott A. Smith
President, Inflammation & Immunology
Each of our NEOs is fully engaged in company-wide strategic planning and decision-making aimed at ensuring our long-term success through delivering on short- and long-term financial goals and through continuing to innovate, develop and commercialize life-changing drugs for our patients. The full biographies for Ms. Fouse, Dr. Daniel and Messrs. Alles, Karsen, Kellogg and Smith are provided elsewhere in this proxy statement under “Additional Information Regarding Executive Officers — Executive Officers.”
We believe the design of our executive pay programs will lead to continued stockholder support of our executive compensation programs. Our fiscal 2014 compensation programs and consequent payouts continued to reflect our compensation philosophy and guiding principles that align competitive pay to performance. In fiscal 2014, our executive compensation programs were structured such that 92% of our NEOs’ total compensation was delivered in the form of short- and long-term incentives, both of which are highly variable and tied to achievement of Company goals, objectives and stock price performance.
Highlights of 2014 Company Performance and Alignment of Pay to Performance
Across the metrics used to determine performance versus our objectives under our compensation plans and programs, fiscal 2014 was a strong year for us that we believe will contribute to securing sustained growth in the future for the benefit of the Company, our stockholders and the patients we serve.
Financial Performance
Revenue :   Adjusted (non-GAAP (generally accepted accounting principles) total revenue of  $7.670 billion, an 18% increase year over year. Contributing to this was:

REVLIMID ® sales of  $4.980 billion, an increase of 16%

ABRAXANE ® sales of  $848 million, an increase of 31%

POMALYST ® /IMNOVID ® sales of  $680 million

OTEZLA ® sales of  $70 million
Earnings Per Share (EPS) :   Adjusted (non-GAAP) diluted EPS of  $3.71, a 24% increase year over year (on a stock split-adjusted basis).
These and other 2014 accomplishments are reflected in our above-target score of 109.75% under our annual cash bonus, or Management Incentive Plan (MIP).
For more information, please see the description of non-GAAP financial achievements in “Key 2014 Compensation Actions and Program Highlights — Annual Bonus (MIP) Payout for Fiscal 2014” and Appendix A — Reconciliation of GAAP to Non-GAAP Net Income.
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Delivering Value to Our Stockholders
Our stock price increased over 32% in fiscal 2014, reflecting our strong financial performance. Our three-year Total Shareholder Return (TSR)* through December 31, 2014 was 254%, which approximates the 75 th percentile of our peer group determined by our Compensation Committee. Relative Total Shareholder Return and its role in our pay-for-performance philosophy under our Long-Term Incentive Plan (“LTIP”) are further described in “Highlights of Best Practices of Our Compensation Programs” and “Long-Term Incentives.”
*
Under our LTIP, TSR is calculated as the percent change in our common stock price at the beginning and the end of each performance cycle, calculated as the difference between the average closing price of our common stock in the 30 trading days preceding the commencement of each performance cycle and the average closing price of our common stock in the final 30 trading days of each performance cycle.
Advisory Vote on Executive Compensation
We conducted our fourth annual non-binding advisory vote on executive compensation at our 2014 Annual Meeting of Stockholders. At the 2014 Annual Meeting of Stockholders, 96.0% of the votes cast on the advisory vote on executive compensation proposal were in favor of our NEO compensation as described in the proxy statement. The Compensation Committee reviewed these final vote results and determined that the structure of our executive compensation policies continues to be appropriately aligned to the achievement of Company goals and objectives and stockholder expectations.
Despite the affirmative vote, however, the Compensation Committee believes that continual review of our executive compensation programs and their alignment to Company and stock price performance is in the best interests of our stockholders. In fiscal 2014, the Compensation Committee made changes to long-term incentives to further align our executive compensation to the interests of our stockholders, and to reinforce our pay for performance philosophy. These and other practices are described in “Highlights of Best Practices of Our Compensation Programs.”
Our Compensation Philosophy
Our executive compensation philosophy is centered on the concept that compensation programs must be designed to focus executives on delivering both short- and long-term value to our stockholders and patients. The objectives against which executives’ performance is measured (and pay is subsequently delivered) require our NEOs not only to balance their focus between short- and long-term business strategies, but also to maintain a balanced and appropriate risk profile.
In order to provide a consistent framework within which the Compensation Committee sets objectives, measures performance and decides compensation actions for our NEOs, we design our plans and deliver compensation according to the following principles:

Value Creation :   In setting target pay and making compensation decisions, the Compensation Committee balances historical performance of each NEO with expected future contributions to his/​her functional areas and to the broader management of the Company.

Pay for Performance :   Our compensation programs are designed to deliver compensation that is commensurate with the level of performance achieved and to align the interest of our executives with the interests of our stockholders. Further, weighting our NEOs’ pay mix more heavily on performance-based incentives ensures that payouts under our compensation plans appropriately reflect the achievement of financial and strategic goals.

Team-Based :   The Compensation Committee reviews and approves objectives and makes compensation decisions based on the NEOs’ performance not only against the specific strategy and objectives of the function(s) for which he/she is responsible, but also against each NEO’s engagement in our broader, longer-range management as a whole. Aligning each NEO’s variable pay to overall
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Company objectives reinforces our team-based management approach and encourages decision-making that is in the interest of the broader organization. As part of this team-based approach, we also strive to create and maintain internal equity in our compensation arrangements.

Competitive Positioning :   We actively monitor compensation in relation to our industry and peer group. The Compensation Committee does not target a specific percentile within our peer group; rather, benchmark data is used as a reference point when making compensation determinations. The Compensation Committee periodically reviews our peer group and with the input of Radford, makes changes based on an analysis of several factors. Given that eight of the nine companies in our peer group also list us as a peer, we believe this further demonstrates the appropriateness and relevance of this peer group. We also consider various surveys, including the Radford Global Life Sciences Survey, SIRS Executive Compensation Survey and Towers Watson U.S. CDB Pharmaceutical Executive Database. Throughout fiscal 2014, our peer group consisted of the following companies:
AbbVie Inc. Bristol-Myers Squibb Company
Allergan, Inc.* Eli Lilly and Company
Amgen Inc. Forest Laboratories, Inc.**
Baxter International Inc. Gilead Sciences Inc.
Biogen Idec Inc. Valeant Pharmaceuticals International, Inc.
*
In March 2015, Actavis plc completed the acquisition of Allergan, Inc.
**
In July 2014, Actavis plc completed the acquisition of Forest Laboratories, Inc.
Highlights of Best Practices of Our Compensation Programs
We continue to maintain leading governance practices in our compensation programs for our NEOs. Below is a summary that highlights key features and decisions with respect to our compensation plans and programs.
Compensation Recovery
In the event of an executive’s fraud or misconduct that results in a material negative restatement of our financial statements, with respect to the year to which the restatement applies (excluding any year before January 1, 2013 for our CEO and before January 1, 2014 for our other NEOs) and for any single year prior to the year in which the Company is required to prepare the restatement, we may recoup any or all of the incentive compensation paid to that executive in excess of the amounts that would have been paid to that executive based on the restated results. We may also cancel unvested incentive compensation or require the executive to repay any gains realized by the executive in excess of the amount that would have been paid to that executive based on the restated results.
Risk Mitigation
We proactively review our compensation programs and policies to ensure they are reflective of our philosophy with regard to risk. The plan features below are designed to promote each NEO’s focus on making decisions that promote a responsible and balanced risk profile:

Diversification and balance of short- and long-term rewards

Multiple metrics within each variable pay program that are balanced and weighted so as not to encourage focus on a single metric to the exclusion of others

Maximum payout caps for all variable and performance-based plans

Share ownership requirements for our NEOs

Holding requirements on shares earned under our Long-Term Incentive Plan (LTIP) of at least one year and one day
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One year and one day holding requirement on all vested, earned Performance Stock Units (PSUs), which were introduced in 2015, as described elsewhere in this proxy statement
Share Ownership Requirements
In order to ensure that our NEOs continue to have a significant stake in our long-term performance and to align executives’ compensation to the interest of stockholders, our NEOs have share ownership requirements. As CEO, Mr. Hugin’s share ownership requirement is an amount equal in value to six times his annual base salary. Our guidelines also provide for target stockholdings in an amount equal in value to three times annual base salary for Messrs. Alles, Karsen, Kellogg, and Smith, Dr. Daniel and Ms. Fouse. These guidelines will be satisfied if the NEO holds, by the end of the applicable five-year period, at least the number of shares of our Common Stock equal to the value of the target amount divided by our stock price on the date the NEO becomes subject to the guidelines. Owned shares, vested restricted or deferred stock units, and vested shares held in the NEO’s 401(k) plan account are included in ownership calculations, but stock options are not. With the exception of Mr. Kellogg, who was hired in fiscal 2014, and Mr. Smith, who became subject to ownership requirements in fiscal 2014, our NEOs met and exceeded their stock ownership guidelines ahead of the required time frame.
Holding Periods
In addition to share ownership requirements, there is a holding period on all shares granted to NEOs under the LTIP of at least one year and one day, and a one year and one day holding period on all vested, earned PSUs. These holding periods further align compensation and value delivered to stock performance and long-term value to our stockholders.
No Repricing
Our 2008 Stock Incentive Plan prohibits us from modifying stock options to reduce the exercise price, substituting a new stock option at a lower price for a surrendered stock option or repurchasing stock options if the per share exercise price is less than the fair market value of a share of Common Stock, unless such action is approved by our stockholders.
Securities Trading Policy
We maintain a comprehensive securities trading policy which provides, among other things, that our employees who possess material non-public information regarding us may not disclose, or trade while in possession of, such information or buy or sell our securities during any designated blackout period. Further, the policy prohibits all employees from short-selling our securities, transacting in derivative securities relating to Celgene without prior written consent of our Chief Executive Officer or holding our stock in a margin account or pledging our stock as collateral for a loan without prior approval of an appropriate officer of the Company. Individuals classified as “insiders” (which includes our NEOs) and related persons (as defined in the policy) generally may not buy or sell our securities at any time without prior approval, except under approved Rule 10b5-1 trading plans.
No Golden Parachute Gross-Up Payments
In April 2014, at Mr. Hugin’s suggestion, his employment agreement was amended to eliminate his golden parachute excise tax gross-up provision. Accordingly, none of our NEOs currently have an agreement with the Company whereby we would be obligated to pay a gross-up for excise taxes in excess of parachute payments as defined in Internal Revenue Code (IRC) Section 280G.
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Change in Control Double-Trigger
In 2011, we amended our 2008 Stock Incentive Plan to eliminate the “single-trigger” change in control vesting provision for equity awards granted on or after July 1, 2011 and to provide that, unless otherwise determined at grant, such equity awards vest upon an involuntary termination without cause that occurs within two years following a change in control ( i.e. , a “double trigger”).
Relative Total Stockholder Return (R-TSR)
A portion of each NEOs long-term compensation is based on R-TSR, either through our active LTIP performance cycles or, beginning in fiscal 2015, through PSUs. R-TSR is calculated as the percent change in our stock price at the beginning and the end of a measurement period compared to an identified peer group of companies for the same period, which is then expressed as a percentile. This measure ensures that executive pay realized through long-term compensation is aligned to our stock performance and value delivered to our stockholders as compared to our identified peer group.
NEO Compensation Cost Analysis
To ensure that our compensation programs remain aligned with the interests of our stockholders and to further reinforce a team-based approach to management, we measure our NEOs’ collective compensation in relation to the collective compensation paid to named executive officers of companies within our peer group as an additional data point when making compensation decisions for our NEOs.
Roles & Responsibilities
   Overview of the Compensation Committee
The Compensation Committee is responsible for, among other things, overseeing our executive compensation and benefit programs, establishing base salary, incentive compensation, including equity awards, and any other compensation for NEOs, including reviewing and approving the CEO’s recommendations for the compensation of NEOs and other officers of the Company who are determined to be subject to the reporting requirements of Section 16 of the Exchange Act. In addition, the Compensation Committee, in conjunction with the Board, reviews and approves the CEO’s performance and compensation levels. The Compensation Committee also ensures that the total compensation paid to our NEOs is reasonable, competitive and achieves the goal of delivering results and long-term value to our stockholders.
   Role of the CEO
The CEO makes recommendations to the Compensation Committee regarding setting of performance objectives for the Company. After the Company’s objectives are established, the CEO works with each NEO to determine how his/her respective function(s) will contribute to the overall short- and long-term goals of the Company. To this end, at the beginning of each fiscal year, the CEO establishes goals and objectives with each NEO that are designed to advance his/her functional areas, while promoting achievement of overall corporate performance goals. At the conclusion of each fiscal year, the CEO evaluates the actual performance of each NEO via our performance management process and recommends appropriate salary adjustments and incentive awards to the Compensation Committee via our compensation review process.
At the request of the Compensation Committee, the CEO participates in Compensation Committee meetings and provides relevant assessment and explanation supporting his recommendations. Other members of our management, as well as certain advisors, including Radford, also attend Compensation Committee meetings by request.
   Role of the Compensation Consultant
The Compensation Committee has retained Radford as its independent compensation consultant to assist in the continual development and evaluation of compensation plans and programs and the Compensation Committee’s determinations of compensation awards. The Compensation Committee’s consultant attends Compensation Committee meetings and provides third-party data, independent analyses, advice and industry expertise on plan design, best practices, and proposes executive compensation levels within our plans.
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At the request of the Compensation Committee, Radford reviews briefing materials prepared by management and outside advisers to management and advises the Compensation Committee on matters covered in the materials, ensuring the consistency of proposals with the Compensation Committee’s compensation philosophy and comparisons to programs at peer companies. Also at the request of the Compensation Committee, Radford prepares its own analyses and reports, including positioning of plans and programs within the context of competitive market analyses designed to ensure that our plans and programs reinforce the principles within our compensation philosophy.
The Compensation Committee has assessed the independence of Radford pursuant to SEC rules and concluded that no conflict of interest exists that would prevent it from serving as an independent consultant to the Compensation Committee. For more information about the Compensation Committee’s engagement of Radford, please see “Board Meetings; Committees and Membership — Compensation Committee Consultant.”
Elements of Our Compensation Programs for NEOs
The goal of our compensation plans and programs is to deliver appropriate, fiscally responsible compensation to NEOs that focuses their efforts on delivering results against short- and long-term objectives, provides sustained value to stockholders and encourages taking responsible, appropriate and balanced risks. Accordingly, we have designed our compensation programs to include the following components:
   Pay Mix
The Compensation Committee believes that compensation for our NEOs must be a mix of variable compensation (both short- and long-term) and fixed compensation (base salary) in order to reinforce our executives’ responsibility to balance short- and long-term performance while maintaining focus on delivering value for our stockholders. As such, our programs offer opportunity for higher compensation for successful performance and lower compensation in the absence of success. The Compensation Committee also believes in minimal use of perquisites as they do not reinforce our pay-for-performance philosophy. For our NEOs, the mix of compensation is weighted toward long-term, performance-based pay that correlates awards to the overall delivery of corporate performance and stockholder value, as reflected in the 2014 charts below.
Fixed vs. Performance-Based
Performance-Based
Short-Term vs. Long-Term
[MISSING IMAGE: T1500787_FIXED-VS.JPG]
[MISSING IMAGE: T1500787_SHORTTERM-VS.JPG]
Fixed compensation includes base salary;
Performance-based compensation includes bonus,
LTIP and equity awards.
Short-term compensation includes annual bonus;
Long-term compensation includes the value of LTIP
and equity awards.
Cash vs. Equity
[MISSING IMAGE: T1500787_CASH-VS.JPG]
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Cash compensation includes base salary and bonus for fiscal 2014; equity compensation includes
all equity grants awarded in fiscal 2014 and LTIP awards paid in shares for the 2012–2014 performance cycle.
   Base Salary
Base salaries for our NEOs provide a fixed rate of pay and serve as the basis for calculating targets in certain variable pay programs (as discussed below). Starting salaries and subsequent increases are determined based on the following factors:

performance, experience, expected future contribution and ability to deliver value to stockholders;

analysis of internal pay relationships; and

market conditions and competitive positioning.
   Annual Bonus
Our Management Incentive Plan (MIP) is a variable pay plan designed to focus NEOs on annual goals and objectives that are established in order to contribute to the short- and long-term health of our business. The Compensation Committee reviews and approves each plan year’s targets and metrics under the MIP to ensure that they are challenging and commensurate with our short- and long-term business plan. Actual payments made under the MIP are calculated based on performance in relation to the Compensation Committee-approved goals. For all of our NEOs (with the exception of Mr. Kellogg, who received a bonus at target due to his mid-year hire date), the maximum potential bonus payout under the MIP for fiscal 2014 was 200% of their annual bonus targets and the minimum potential bonus payout was zero. Awards generally are payable at the end of February following the year to which the performance goals relate. Payments under our MIP are made in cash and are deferrable under our Nonqualified Plan.
   Long-Term Incentives
    Equity Grants
The Compensation Committee maintains that equity awards must align the interests of our NEOs with those of our stockholders through rewarding exceptional corporate performance, stockholder returns and ensuring that decisions made in the short-term solidify a strong future for us. As such, awards granted pursuant to the 2008 Stock Incentive Plan are an essential component of our total compensation strategy. The equity pool of awards available to grant to all employees (including our NEOs) in any given year is approved at the end of the prior year by the Compensation Committee, subject to the overall maximum amount of shares of our stock available under the 2008 Stock Incentive Plan.
 We issue long-term, equity-based compensation via the following vehicles:
Type
General Terms
Stock Options
Granted quarterly, upon hire and once annually, based on achievement of performance objectives and value creation
Service-based vesting over four years (25% per year)
Ten-year term
Subject to recovery
Restricted Stock Units (RSUs)
Granted annually with the possibility of a subsequent grant on achievement of performance objectives and value creation
Service-based cliff vesting (100% vested on third anniversary of grant date)
Subject to recovery
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Type
General Terms
LTIP
LTIP awards can be paid in cash, restricted shares of our Common Stock or a combination thereof, as determined by the Compensation Committee
If shares are awarded at the conclusion of a three-year performance cycle, they are based on attainment of performance metrics, weighted as follows:

Adjusted Revenue (37.5% weighting)

Adjusted Earnings Per Share (37.5% weighting)

R-TSR (25% weighting)
All earned shares are subject to holding periods of at least one year and one day
Subject to recovery
Commencing in 2015, NEOs no longer participate in new LTIP performance cycles
Performance Stock Units (PSUs)
Granted annually, commencing with the 2015 grant
Three-year vesting and measurement period, subject to attainment of defined, weighted metrics established by the Compensation Committee prior to the grant (see Equity Award Mix —  2015 for details)
Maximum award is 200% of target
All earned PSUs must be held for one year and one day from the vesting date
Subject to recovery
General Provisions for Death, Disability, Termination and Retirement for Stock Options, RSUs and PSUs
In the event of death, permanent disability or termination within two years as a result of a change in control (double-trigger), the vesting of stock options, RSUs and PSUs will accelerate
If the NEO attains retirement as defined in the 2008 Stock Incentive Plan and has given at least six months’ notice of the intent to retire, as of the date of retirement:

RSUs granted on or after April 29, 2013 will vest on retirement, but will be payable on the earliest of death, disability or the originally scheduled vesting date following retirement (except with respect to our CEO, whose equity awards will immediately vest and become payable in accordance with his employment agreement)

Unvested RSUs granted prior to April 29, 2013 cancel upon retirement unless a prior arrangement has been approved by the Compensation Committee

PSUs will continue to vest and a pro rata portion (based on number of completed months of employment during the vesting period) will be payable based on achievement of defined performance metrics on the earliest of death, disability or the originally scheduled vesting date following retirement (except with respect to our CEO, whose equity awards will immediately vest and become payable in accordance with his employment agreement)

Stock options will continue to vest and will remain exercisable until the earlier of three years after retirement or the original expiration date (except with respect to our CEO, whose equity awards will immediately vest in accordance with his employment agreement)
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    Mix of Equity Awards
As part of the ongoing review of our compensation strategy and practices, the Compensation Committee determines equity awards, based in part on recommendations from Radford, including the appropriate mix of equity vehicles. The Compensation Committee decides on targets and actual award amounts based upon relative contribution to our performance, individual performance, demonstrated leadership, and expected future contributions to the achievement of Company goals and objectives.
    Equity Award Mix — 2014
In fiscal 2014, annual awards granted (based on the value of such awards) were an approximate mix of 2/3 stock options and 1/3 RSUs. The Compensation Committee believes that this deliberate mix of equity ensures that wealth creation remains tied to stock performance (via stock options), and our financial performance on both an absolute and relative basis (via performance-based equity, including shares earned under our current LTIP performance cycles).
    Equity Award Mix — 2015
In December 2014, the Compensation Committee decided to remove our NEOs from future LTIP performance cycles and deliver all long-term incentives through our annual equity program. The Compensation Committee determined that PSUs would be added to the annual equity program for our NEOs, as they are common among our peers, and solidify the Compensation Committee’s intent to deliver significant at-risk pay via long-term incentives. This philosophy maintains and furthers alignment of our compensation programs to financial performance and the long-term performance of our stock. Each of our NEOs’ 2015 equity awards, with the exception of Mr. Karsen, will be granted based on a targeted value determined by the Compensation Committee (based in part on data presented by Radford) and will be granted in the form of 50% stock options (to be granted quarterly), 30% PSUs (granted in February 2015) and 20% RSUs (to be granted once annually). Mr. Karsen’s award will also be based on a targeted value, but will be granted in the form of 70% stock options (to be granted quarterly) and 30% PSUs (granted in February 2015). The performance measurements for the PSUs and February 2015 grant amounts are as follows:
Award & Year
Measurements & Weights
Threshold, Target & Maximum
of Financial Measures
Peer Group
PSU 2015
Adjusted Revenue
37.5%​
90% – 100% – 110%
S&P 500 Biotechnology & Pharmaceutical Index Companies
Adjusted EPS
37.5%​
90% – 100% – 110%
R-TSR
25%​
35 th – 50 th – 80 th
(percentiles)
Performance Stock Unit
Awards
Name
Threshold
(50% of target)
Target
Maximum
(200% of target)
Robert J. Hugin
14,700 29,400 58,800
Peter N. Kellogg
3,100 6,200 12,400
Mark Alles
3,100 6,200 12,400
Thomas Daniel
3,100 6,200 12,400
Jacqualyn Fouse
3,100 6,200 12,400
Perry A. Karsen
3,100 6,200 12,400
Scott A. Smith
3,100 6,200 12,400
This mix of equity vehicles maintains balance between each NEO’s ability to drive attainment of key financial metrics (Adjusted Revenue and Adjusted EPS) and delivery of value to our stockholders (as measured primarily through R-TSR).
The Compensation Committee has weighted the awards deliberately to emphasize stock options, as these awards accrue value only when the market price of our Common Stock is above the exercise price, aligning compensation to stock performance. The weighting of RSUs and (commencing in 2015) PSUs
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allows the Compensation Committee to deliver equivalent value while using fewer authorized shares, emphasizes employment longevity (through time-vested RSUs) and focuses on the overall financial health of the Company (through PSUs). The Compensation Committee may adjust the mix of award types or approve different award types as part of the overall long-term incentive award strategy. Awards made in connection with a new, extended or expanded employment relationship may involve a different mix of equity awards, depending on the Compensation Committee’s assessment of the total compensation package being offered.
    Long-Term Incentive Plan (LTIP)
The LTIP is a three-year plan designed to focus executives on achievement of longer-term objectives that are intended to ensure our long-term strength financially, commercially and in our research and development programs. An additional objective of the LTIP is to promote management continuity in key functional areas. Prior to the commencement of each three-year plan (a “performance cycle”), the Compensation Committee establishes three key corporate-wide metrics against which performance will be measured. These objectives are weighted and awards earned under the LTIP are calculated based on actual performance in relation to these weighted objectives.
The threshold, target and maximum cash payout levels under the current LTIP performance cycles are calculated as a percentage of each NEO’s base salary at the time the LTIP was approved by the Compensation Committee. Share-based payout levels are calculated using the cash-based threshold, target and maximum levels, divided by the average closing price of Celgene stock for the 30 trading days prior to the commencement of each performance cycle. For new entrants into current performance cycles, the threshold, target and maximum cash payout levels are determined using the salary at the time of approved plan participation and are prorated according to full months of participation in the plan. Share-based payout levels are calculated using the cash-based targets, divided by the average closing price of Celgene stock for the 30 trading days prior to the effective date of plan participation.
Payments under the LTIP may be made in cash or restricted shares of our common stock, or a combination thereof, as determined by the Compensation Committee in its sole discretion at the end of each performance cycle. Share-based payout levels remain constant throughout the performance cycle. Therefore, final award values are reflective of the stock price at the end of the measurement period. Specific data pertaining to performance targets, individual targets and resulting payments under the LTIP can be found elsewhere in this proxy statement under “Key 2014 Compensation Actions and Program Highlights.” Payments, if made, are deferrable for our U.S.-based plan participants. For the current LTIP plan cycles, it is the intention of the Compensation Committee to settle in shares of our Common Stock. If the LTIP for either of the 2013–2015 or 2014–2016 performance cycles settles in shares of our Common Stock, such shares will be subject to a holding period of one year and one day from the day after the conclusion of the applicable performance cycle.
For our NEOs, there are two performance cycles running concurrently for 2013–2015 and 2014–2016 that will end December 31, 2015 and 2016, respectively. In December 2014, the Compensation Committee determined that, beginning with the 2015–2017 performance cycle, selected executives, including our NEOs, will no longer participate in the LTIP and that their long-term equity awards will be granted solely via a combination of stock option, RSU and PSU awards. The Compensation Committee believes that the LTIP performance measures described below properly align executive pay with the interests of our stockholders and achieves a balanced approach to performance-based long-term incentives through focusing executive pay on internal financial measures, and on the external measurement of stock performance in relation to industry peers.
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Performance Cycle
Measurements & Weights
Threshold, Target & Maximum
of Financial Measures
Peer Group
2013–2015
Adjusted Revenue
37.5%​
90% – 100% – 125%
Top 35
biopharmaceutical peers
according to market
capitalization prior to
the commencement of
the performance cycle
Adjusted EPS
37.5%​
90% – 100% – 125%
R-TSR
25%​
50 th – 70 th – 90 th
(percentiles)
2014–2016
Adjusted Revenue
37.5%​
90% – 100% – 110%
Top 35
biopharmaceutical peers
according to market
capitalization prior to
the commencement of
the performance cycle
Adjusted EPS
37.5%​
90% – 100% – 110%
R-TSR
25%​
35 th – 50 th – 80 th
(percentiles)
   Other Elements of Compensation
    Retirement Benefits
We do not offer pension benefits to our U.S.-based employees, including our NEOs. Instead, we provide the opportunity to accumulate retirement income through:

Equity awards (described elsewhere in this proxy statement).

Nonqualified Deferred Compensation Plan (Nonqualified Plan):   An unfunded plan to which certain U.S.-based management-level employees and each of our NEOs may elect to defer up to 90% of their base salary and up to 100% of their MIP and LTIP payments. For further discussion of the Nonqualified Plan, see “Employer Contributions to the Nonqualified Deferred Compensation Plan” and “Additional Information Regarding Executive Officers — Nonqualified Deferred Compensation Table” elsewhere in this proxy statement.

401(k) Plan:   We make matching contributions under our 401(k) Plan in the form of shares of our Common Stock to the Plan accounts of all eligible employees who participate in the 401(k) Plan and are active employees on the final day of the Plan calendar year, including our NEOs. Matching contributions for all employees, including our NEOs, vest 20% per year for the first five years of employment, after which all current and future contributions are 100% vested.
    Other Benefits
We provide our NEOs health and welfare benefits that are consistent with the plans, programs and eligibility provided to other employees. Additionally, we offer our NEOs reimbursement for professional tax and financial counseling of up to $15,000 per calendar year, which alleviates concerns with respect to tax preparation and financial planning, with the goal of minimizing distractions to the effective management of our business. We also offer excess liability insurance to our NEOs, consistent with those offered to other senior-level employees. The Company pays the premium for all participating employees, including our participating NEOs, and the employee is taxed on the value of the premium paid on his/her behalf.
    Employment Agreements
We entered into an employment agreement with Mr. Hugin effective May 1, 2006, which was amended to comply with the deferred compensation rules under Section 409A of the Internal Revenue Code of 1986, as amended (the Code), effective on December 31, 2008. Effective on June 16, 2010, Mr. Hugin’s employment agreement was further amended to reflect his appointment as Chief Executive Officer. We also entered into letter agreements with each of Messrs. Kellogg, Alles, Karsen and Smith, Dr. Daniel and Ms. Fouse. In April 2014, at Mr. Hugin’s suggestion, his employment agreement was amended to eliminate his golden parachute (Code Section 280G) excise tax gross-up provision and to provide that if Mr. Hugin becomes entitled to any amounts subject to the excise tax under Section 4999 of the Code relating to golden parachute payments, such amounts will be reduced to the extent necessary to avoid such excise tax if such
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reduction would result in a greater after-tax payment (commonly referred to as a “contingent cutback”). Our other NEOs are not entitled to golden parachute (Code Section 280G) excise tax gross-ups. If Ms. Fouse or Messrs. Kellogg or Smith become entitled to any amounts subject to the excise tax under Code Section 4999 relating to golden parachute payments, such amounts will be subject to a contingent cutback. We discuss the terms and conditions of these agreements elsewhere in this proxy statement under the heading “Additional Information Regarding Executive Officers — Agreements with our Named Executive Officers.”
Key 2014 Compensation Actions and Program Highlights
In fiscal 2014, the Compensation Committee approved adjustments to compensation equity grants and award payouts for each NEO based on performance in relation to pre-approved objectives established under each compensation program as described elsewhere in this proxy statement.
   Base Salary
In its capacity as consultant, each year, Radford provides an analysis of the competitive landscape within our industry and our peer group as additional context in which the Compensation Committee approves salaries for our NEOs. In addition to external market conditions, when deciding on base salary increases, the Compensation Committee also considers performance value creation and internal alignment. The table below outlines the salary adjustments determined for our NEOs in each fiscal year, reflective of the prior year’s performance, value creation and current competitive positioning.
Name
2013 Salary
2014 Salary
Effective Date of
Salary
Adjustment(1)
2015 Salary
Effective Date of
Salary
Adjustment
Robert J. Hugin
$ 1,280,000 $ 1,400,000 3/1/2014 $ 1,500,000 3/1/2015
Peter Kellogg
$ $ 800,000 7/1/2014 $ 824,000 3/1/2015
Mark J. Alles
$ 670,000 $ 850,000 8/1/2014 $ 875,500 3/1/2015
Thomas O. Daniel, M.D.
$ 649,000 $ 700,000 3/1/2014 $ 721,000 3/1/2015
Jacqualyn A. Fouse, Ph.D.
$ 757,000 $ 825,000 8/1/2014 $ 849,800 3/1/2015
Perry A. Karsen
$ 649,000 $ 670,000 3/1/2014 $ 690,100 3/1/2015
Scott A. Smith
$ 490,000 $ 600,000 8/1/2014 $ 650,000 3/1/2015
(1)
Messrs. Alles and Smith and Ms. Fouse were promoted to their current roles effective August 1, 2014. Their new salaries, as reflected above, were also effective on this date.
   Annual Bonus (MIP) Payout for Fiscal 2014
In December 2013, the Compensation Committee determined that adjusted (non-GAAP) diluted EPS, adjusted (non-GAAP) total revenue and certain non-financial measures continued to be appropriate measures for use in connection with the fiscal 2014 MIP and approved these targets for the fiscal 2014 MIP. The Compensation Committee believes that these measures, balanced with our long-term objective of maintaining a significant research and development reinvestment rate, fuel our long-term growth, best serve our patients and reflect true operating performance. In setting these objectives, the Compensation Committee considered our fiscal 2013 performance and established the fiscal 2014 targets, not based on the prior year’s targets, but based on actual performance, which was significantly higher than the established targets. This approach, balanced with our long-term strategic plan, was intended to deliver strong financial results to our stockholders.
For fiscal 2014, Messrs. Hugin, Alles and Karsen, Dr. Daniel and Ms. Fouse received cash bonus payments determined entirely by the achievement of corporate goals. Due to his mid-year hire, Mr. Kellogg received a bonus at 100% of target. Mr. Smith’s bonus was calculated based on a weighted blend of corporate goals and goals specific to the building of the global Inflammation and Immunology franchise and the U.S. launch of OTEZLA ® . The corporate performance measures for fiscal 2014 were based on the following components and associated weights:
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56% Financial Objectives

28% on adjusted (non-GAAP) total revenue — Target of  $7.5 billion; and

28% on adjusted (non-GAAP) diluted EPS — Target of  $7.10 per share ($3.55 on a stock-split adjusted basis)
44% Non-Financial Objectives (Selected Strategic Corporate Objectives)

advancement of our hematology clinical and regulatory pipeline: REVLIMID ® in newly diagnosed multiple myeloma; POMALYST ® /IMNOVID ® in relapsed refractory multiple myeloma;

advancement of our oncology clinical and regulatory pipeline: ABRAXANE ® in pancreatic cancer and lung cancer;

advancement of our inflammation and immunology clinical and regulatory pipeline: OTEZLA ® in psoriasis, ankylosing spondylitis, and Behçet’s disease; and

clinical advancement of early stage product candidates, both internally and through external collaborations.
We have not disclosed all of the non-financial targets or performance in relation to targets for the fiscal 2014 MIP performance period because we believe that disclosing such information that represents confidential business information could place us at a competitive disadvantage by providing detailed insight into our strategic and financial goals.
Based on our full year financial results, the Compensation Committee determined that the MIP score for fiscal 2014 was 109.75% of target, which includes both financial and non-financial performance, with weighted scores of 74% and 35.75%, respectively. These fiscal 2014 financial achievements include adjusted (non-GAAP) diluted EPS of  $3.71 on a stock split-adjusted basis and adjusted (non-GAAP) total revenue (which was the same as GAAP total revenue) of  $7.670 billion. Among the achievements in the clinical area were the progression of multiple key strategic studies both domestically and internationally, and the deepening of our pipeline through strategic external collaborations.
Financial measures that are not defined by GAAP provide investors and management with supplemental measures of operating performance and trends that facilitate comparisons between periods before, during and after certain items that would not otherwise be apparent on a GAAP basis. For purposes of calculating our adjusted (non-GAAP) financial measures, we exclude certain items that management and the Compensation Committee do not believe affect our basic operations and do not meet the GAAP definition of unusual or non-recurring items. Adjusted (non-GAAP) total revenue, adjusted (non-GAAP) net income and adjusted (non-GAAP) diluted earnings per share are not, and should not be viewed as, a substitute for similar GAAP items. The following is a discussion of the differences between each adjusted (non-GAAP) financial measure included in this proxy statement with the most comparable financial measure calculated and presented in accordance with GAAP:

Adjusted (non-GAAP) total revenue of  $7.670 billion was the same as GAAP total revenue in fiscal 2014.

Adjusted (non-GAAP) net income of  $3.099 billion vs. GAAP net income of  $2.000 billion in fiscal 2014. The difference between the two figures is primarily attributable to (i) the effects of charges for share-based employee compensation expense, (ii) upfront payment expense for research and development collaboration arrangements, (iii) in-process research and development impairment recorded as a result of changes in estimated probability-weighted cash flows related to CC-292, (iv) the settlement of a contingent obligation to make matching contributions to a non-profit organization, (v) the amortization of intangible assets and other charges resulting from the acquisitions of Abraxis BioScience Inc. (Abraxis), Pharmion, Gloucester Pharmaceuticals, Inc. (Gloucester), and Avila Therapeutics, Inc. (now known as Celgene Avilomics Research, Inc.) (Avila), (vi) changes in the fair value of contingent consideration issued as part of the Abraxis, Gloucester, Avila, and Nogra Pharma Limited acquisitions, and (vii) the estimated tax effect of the above adjustments and the impact of certain other non-operating tax adjustments, including the effects of
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acquisition related matters, adjustments to the amount of unrecognized tax benefits, and nonrecurring items connected with the launch of new products. Each of items (i) through (vii) are excluded from the adjusted (non-GAAP) figure, but included in the GAAP figure.

Adjusted (non-GAAP) diluted earnings per share of  $3.71 vs. GAAP diluted earnings per share of $2.39 in fiscal 2014, on a stock split-adjusted basis. The difference between the two figures is primarily attributable to the effect of net income items (i) through (vii) listed above. Each of such items (i) through (vii) above are excluded from the adjusted (non-GAAP) figure but included in the GAAP figure.
For a reconciliation of the adjusted (non-GAAP) financial measures to the most comparable financial measure calculated and presented in accordance with GAAP for fiscal 2014, see Appendix A to this proxy statement.
Under the MIP, the Compensation Committee may adjust, modify or amend the performance measures and targets in the plan to reflect certain events that affect such performance measures and targets, including (i) restructurings, discontinued operations, extraordinary items or events, corporate transactions (including dispositions or acquisitions) and other unusual or non-recurring items, and (ii) changes in tax law or accounting standards required by GAAP.
   Fiscal 2014 MIP — Payouts for NEOs
NEO
Bonus
Target for
Fiscal 2014(1)
Corporate
Weighting
X
Corporate Score
Other Weighting
X
Other Score
Bonus Paid
2/27/2015
2015
Target
Robert J. Hugin
150 %
100% x 109.75%
$ 2,271,825 150 %
Peter Kellogg
70 %
$ 560,000 (2) 70 %
Mark J. Alles
79 %
100% x 109.75%
$ 667,692 90 %
Thomas O. Daniel, M.D.
70 %
100% x 109.75%
$ 531,245 70 %
Jacqualyn A. Fouse, Ph.D.
74 %
100% x 109.75%
$ 654,823 80 %
Perry A. Karsen
70 %
100% x 109.75%
$ 512,039 70 %
Scott A. Smith
61 %
20% x 109.75%
80% x 120.4%
$ 396,941 (3) 75 %
(1)
For Messrs. Alles and Smith and Ms. Fouse, the target used to calculate their 2014 MIP bonus represents a weighted blend of their targets before and after their August 1, 2014 promotions as follows: Mr. Alles: 70% to 90%, Ms. Fouse: 70% to 80%, Mr. Smith 50% to 75%.
(2)
Due to his July 1, 2014 date of hire, Mr. Kellogg received a bonus at target.
(3)
Mr. Smith’s 2014 bonus was calculated using 20% weighting on the Company score and 80% on the Inflammation and Immunology Global Franchise Score.
   Fiscal 2015 MIP
Consistent with prior years, the annual incentive bonus for fiscal 2015 will be based on a percentage of annual base salary earnings for each NEO. Below are the financial and selected non-financial targets for the fiscal 2015 MIP:
56% Financial Objectives (1)

28% on adjusted (non-GAAP) total revenue — Target range of  $9.0 to $9.5 billion; and

28% on adjusted (non-GAAP) diluted EPS — Target range of  $4.60 to $4.75 per share.
44% Non-Financial Objectives (Selected Strategic Corporate Objectives) (1)

advancement of our hematology clinical and regulatory pipeline: REVLIMID ® in newly diagnosed multiple myeloma, mantle cell lymphoma and non-Hodgkin’s lymphoma; POMALYST ® /​IMNOVID ® in relapsed refractory multiple myeloma;
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advancement of our oncology clinical and regulatory pipeline: ABRAXANE ® in pancreatic cancer and breast cancer;

advancement of our inflammation and immunology clinical and regulatory pipeline: OTEZLA ® in psoriasis, Crohn’s disease and Behçet’s disease; and

clinical advancement of early stage product candidates, both internally and through external collaborations.
(1)
Matters discussed in this proxy statement, including financial targets, may constitute forward-looking statements that are subject to certain risks and uncertainties that could cause actual results to differ materially from any future results, performance or achievements expressed or implied by such statements. No forward-looking statement can be guaranteed. Risks and uncertainties include risks associated with current or pending research and development activities, actions by the U.S. Food and Drug Administration and other regulatory authorities, and those other factors detailed in our filings with the SEC.
   Equity Compensation
Pursuant to the philosophy and approach described elsewhere in this proxy statement, for fiscal 2014, Radford recommended, and the Compensation Committee approved, the following equity awards for our NEOs, the amounts of which have been updated to reflect the two-for-one stock split in June 2014:
Name
Stock Options(1)
RSUs(2)
Robert J. Hugin
356,000 (3) 44,500 (4)
Peter N. Kellogg
121,935 (5)(8) 65,510 (5)(8)
Mark J. Alles
69,845 (6)(8) 8,750 (7)(8)
Thomas O. Daniel, M.D.
65,935 (6)(8) 7,610 (7)(8)
Jacqualyn A. Fouse, Ph.D.
69,845 (6)(8) 8,750 (7)(8)
Perry A. Karsen
69,845 (6)(8) 4,200 (7)
Scott A. Smith
36,760 (9) 8,410 (9)
(1)
Stock options are awarded in equal amounts on a quarterly basis, vest 25% per year over four years from the date of grant and have an exercise price equal to the fair market value of our Common Stock on the date of grant. In the event of death, permanent disability or involuntary termination without cause during the two year period commencing on a change in control, vesting of stock options will accelerate. In the event of retirement as defined under the 2008 Stock Incentive Plan, stock options will continue to vest for three years from the NEO’s retirement date (except for Mr. Hugin, the details of which are described under “Agreements with our Named Executive Officers — Employment Agreement with Mr. Hugin”).
(2)
RSUs are subject to three-year, service-based cliff vesting. In the event of death, permanent disability or involuntary termination without cause during the two year period commencing on a change in control, RSUs will accelerate. In the event of retirement as defined under the 2008 Stock Incentive Plan, RSUs granted on or after April 29, 2013 will vest on retirement, but will be payable on the earlier of death, permanent disability or the originally scheduled vesting dates following the NEO’s retirement date (except for Mr. Hugin, the details of which are described under “Agreements with our Named Executive Officers — Employment Agreement with Mr. Hugin”).
(3)
In 2014, Mr. Hugin was granted 117,500 stock options in the first quarter, 159,000 stock options in the third quarter and 79,500 stock options in the fourth quarter.
(4)
Mr. Hugin was granted 44,500 RSUs on July 28, 2014.
(5)
Mr. Kellogg was granted 100,000 stock options and 60,000 RSUs on August 1, 2014 as his new hire grant. Mr. Kellogg was also granted 10,175 stock options and 2,100 RSUs in the fourth quarter of 2014.
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(6)
In 2014, Messrs. Alles and Karsen, Dr. Daniel, and Ms. Fouse were granted 23,650 stock options in the first quarter, 20,350 stock options in the third quarter and 10,175 stock options in the fourth quarter.
(7)
Messrs. Alles and Karsen, Dr. Daniel, and Ms. Fouse were granted 4,200 RSUs on July 28, 2014.
(8)
In February 2014, the Compensation Committee approved an additional pool of equity to grant in the fourth quarter of 2014 of up to 168,000 (post-split) shares of Common Stock to be delivered as stock options and RSUs. This pool was used to award one-time grants to Ms. Fouse, and Mr. Alles of 15,670 stock options and 4,550 RSUs, 11,760 stock options and 3,410 RSUs to Dr. Daniel and Mr. Kellogg, and 15,670 stock options to Mr. Karsen, to recognize their contributions in fiscal 2014 and their expected future value creation. These grants were made on December 19, 2014.
(9)
Mr. Smith was granted 10,000 stock options in the first quarter, 10,000 stock options and 5,000 RSUs in the third quarter, and 5,000 stock options in the fourth quarter of fiscal 2014. In addition, on December 19, 2014, Mr. Smith was granted 11,760 stock options and 3,410 RSUs to recognize contributions in fiscal 2014 and his expected future value creation.
   LTIP
During fiscal 2014, our eligible NEOs received an award for the 2011–2013 performance cycle, based on overall achievement under the plan of 149.8% of target, the details of which have been disclosed in other public filings. We have not disclosed the specific performance targets under the LTIP because these targets represent confidential business information that could place us at a competitive disadvantage by providing insight into our long-term performance and financial goals. After the conclusion of the 2012–2014 performance cycle, the Compensation Committee approved the performance in relation to the pre-established measures, consisting of three financial performance objectives: (1) non-GAAP total revenue (weighting of 37.5%), (2) non-GAAP EPS (weighting of 37.5%), and (3) R-TSR (weighting of 25%). With the exception of Mr. Smith, who was paid in cash, the 2012–2014 LTIP payouts were made in restricted shares of common stock based on achievement of 161.5% of performance objectives as determined by the Compensation Committee.
Our NEOs are also eligible to receive an award for each of the three-year performance cycles that have not been completed ( i.e., 2013–2015 and 2014–2016) and it is the intention of the Compensation Committee to settle these awards through the issuance of shares (except for Mr. Smith, who will be paid in cash), which will be subject to a holding period of one year and one day from the day after the conclusion of the applicable performance cycle. As previously discussed, our NEOs will not participate in the 2015–2017 LTIP cycle. The targets under the LTIPs are expressed as a percentage of the NEO’s annual base salary at the time their participation was approved by the Compensation Committee, as detailed in the tables below.
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    2013–2015 Performance Period
The potential payouts (in either cash or shares, as determined by the Compensation Committee), expressed as the NEO’s base salary multiplied by the applicable percentage (threshold, target or maximum), under the LTIP for the 2013–2015 performance period are reflective of the June 2014 two-for-one stock split and are as follows:
Name
Threshold(1)(4)
Target(2)(4)
Maximum(3)(4)
Robert J. Hugin
$ 587,500 $ 1,468,750 $ 2,350,000
14,888 shares 37,222 shares 59,554 shares
Peter N. Kellogg
$ 200,000 $ 400,000 $ 800,000
2,493 shares 4,986 shares 9,973 shares
Mark J. Alles
$ 325,000 $ 650,000 $ 1,300,000
8,236 shares 16,472 shares 32,944 shares
Thomas O. Daniel, M.D.
$ 315,000 $ 630,000 $ 1,260,000
7,982 shares 15,966 shares 31,932 shares
Jacqualyn A. Fouse, Ph.D.
$ 367,500 $ 735,000 $ 1,470,000
9,314 shares 18,626 shares 37,252 shares
Perry A. Karsen
$ 315,000 $ 630,000 $ 1,260,000
7,982 shares 15,966 shares 31,932 shares
Scott A. Smith
$ 118,750 $ 237,500 $ 475,000
(1)
The threshold cash payout is 50% of December, 2012 base salary for all of our NEOs except Messrs. Kellogg and Smith. Mr. Kellogg’s threshold cash payout is 50% of his July 1, 2014 base salary and is prorated for the number of full months of participation in the performance cycle. Mr. Smith’s threshold cash payout is 25% of his December, 2012 base salary.
(2)
The target cash payout is 125% of December, 2012 base salary for Mr. Hugin and 100% for Messrs. Alles and Karsen, Dr. Daniel, and Ms. Fouse. Mr. Kellogg’s target cash payout is 100% of his July 1, 2014 base salary and is prorated for the number of full months of participation in the performance cycle. Mr. Smith’s target cash payout is 50% of his December, 2012 base salary.
(3)
The maximum cash payout is 200% of the aforementioned base salary for all of our NEOs except Messrs. Kellogg and Smith. Mr. Kellogg’s maximum cash payout is 200% of his July 1, 2014 base salary and is prorated for the number of full months of participation in the performance cycle. Mr. Smith’s maximum cash payout is 100% of his December, 2012 base salary.
(4)
Share-based threshold, target and maximum payout levels for the applicable NEOs (except Mr. Kellogg) are determined using the average closing price of our Common Stock for the 30 trading days immediately prior to the commencement of the performance cycle which began on January 1, 2013. For Mr. Kellogg, the share-based threshold, target and maximum payout levels were determined using the average closing price of our Common Stock for the 30 trading days preceding his hire date of July 1, 2014.
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    2014–2016 Performance Period
The potential payouts (in either cash or shares, as determined by the Compensation Committee), expressed as the NEO’s base salary multiplied by the applicable percentage (threshold, target or maximum), under the LTIP for the 2014–2016 performance period are reflective of the June 2014 two-for-one stock split and are as follows:
Name
Threshold(1)(4)
Target(2)(4)
Maximum(3)(4)
Robert J. Hugin
$ 640,000 $ 1,600,000 $ 2,560,000
7,810 shares 19,526 shares 31,240 shares
Peter N. Kellogg
$ 333,333 $ 666,667 $ 1,333,333
4,155 shares 8,310 shares 16,621 shares
Mark J. Alles
$ 335,000 $ 670,000 $ 1,340,000
4,088 shares 8,176 shares 16,352 shares
Thomas O. Daniel, M.D.
$ 324,500 $ 649,000 $ 1,298,000
3,960 shares 7,920 shares 15,840 shares
Jacqualyn A. Fouse, Ph.D.
$ 378,500 $ 757,000 $ 1,514,000
4,618 shares 9,238 shares 18,476 shares
Perry A. Karsen
$ 324,500 $ 649,000 $ 1,298,000
3,960 shares 7,920 shares 15,840 shares
Scott A. Smith
$ 122,500 $ 245,000 $ 490,000
(1)
The threshold cash payout is 50% of December, 2013 base salary for all of our NEOs except Messrs. Kellogg and Smith., Mr. Kellogg’s threshold cash payout is 50% of his July 1, 2014 base salary and is prorated for the number of full months of participation in the performance cycle. Mr. Smith’s threshold cash payout is 25% of his December, 2013 base salary.
(2)
The target cash payout is 125% of December, 2013 base salary for Mr. Hugin and 100% for Messrs. Alles and Karsen, Dr. Daniel and Ms. Fouse. Mr. Kellogg’s target cash payout is 100% of his salary at the time of hire and is prorated for the number of full months of participation in the performance cycle. Mr. Smith’s target cash payout is 50% of his December, 2013 base salary.
(3)
The maximum cash payout is 200% of the aforementioned base salary for all of our NEOs except Mr. Kellogg and Mr. Smith. Mr. Kellogg’s maximum cash payout is 200% of his July 1, 2014 base salary and is prorated for the number of full months in the plan. Mr. Smith’s maximum cash payout is 100% of his December, 2013 base salary.
(4)
Share-based threshold, target and maximum payout levels for the applicable NEOs (except Mr. Kellogg) are determined using the average closing price of our Common Stock for the 30 trading days immediately prior to the commencement of the performance cycle which began on January 1, 2014. For Mr. Kellogg, the share-based threshold, target and maximum payout levels was determined using the average closing price of our Common Stock for the 30 trading days preceding his hire date of July 1, 2014.
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   Matching Contributions
Our 401(k) Plan is a tax-qualified retirement savings plan available to all of our eligible employees, including our NEOs. Under the 401(k) Plan, we make discretionary matching contributions to participants (including our NEOs) in the form of shares of our Common Stock to such participant’s plan account of up to 6% of their eligible earnings or the maximum permitted by law. For fiscal 2014, we made matching contributions to our NEOs (deposited in the first quarter of 2015) under the 401(k) Plan as follows:
Name
Matching Contributions under the 401(k) Plan(1)
Robert J. Hugin
177.97299 shares of Common Stock (fair value of  $19,908)
Peter Kellogg
62.74696 shares of Common Stock (fair value of  $7,019)
Mark J. Alles
177.97299 shares of Common Stock (fair value of  $19,908)
Thomas O. Daniel, M.D
177.97299 shares of Common Stock (fair value of  $19,908)
Jacqualyn A. Fouse, Ph.D.
177.97299 shares of Common Stock (fair value of  $19,908)
Perry A. Karsen
177.97299 shares of Common Stock (fair value of  $19,908)
Scott A. Smith
177.97299 shares of Common Stock (fair value of  $19,908)
(1)
The matching 401(k) Plan amounts reflect the fair value of the shares as of December 31, 2014 and are included in the Summary Compensation Table, column (i), which is included elsewhere in this proxy statement.
   Employer Contributions to the Nonqualified Deferred Compensation Plan
For fiscal 2014, we made semi-monthly cash matching contributions to the Nonqualified Plan on behalf of Mr. Hugin in the amount of 15% of gross base salary earnings for an aggregate annual contribution of  $207,000. Our other NEOs were not eligible to receive matching contributions under the Nonqualified Plan. For further discussion of the Nonqualified Plan, see “Additional Information Regarding Executive Officers — Nonqualified Deferred Compensation Table” elsewhere in this proxy statement.
   Other Benefits
Each of the NEOs is eligible for medical, dental, vision, disability and life insurance coverage on the same terms as other employees. Our executive compensation program also includes limited perquisites and other benefits. Each of our NEOs is eligible for reimbursement of reasonable expenses incurred in obtaining professional tax and financial counseling, up to a maximum of  $15,000 annually.
In addition, we provide an excess liability insurance policy to certain senior-level eligible employees. The premiums for such policies are taxable income for our employees, including our NEOs. For fiscal 2014, we made premium payments of  $2,330 on behalf of Messrs. Hugin, Karsen and Smith and Ms. Fouse, $1,364 on behalf of Mr. Alles and $518 on behalf of Dr. Daniel.
Mr. Hugin also received Company contributions to a health savings account in fiscal 2014 equal to $2,178, the same rate as other employees who enroll in this plan. Attributed costs of the perquisites and other personal benefits described above for our NEOs for fiscal 2012, fiscal 2013 and fiscal 2014 are included in column (i) of the Summary Compensation Table included elsewhere in this proxy statement.
   Policy with respect to Compensation Deductibility
Our policy with respect to the deductibility limit of Section 162(m) of the Code generally is to preserve the federal income tax deductibility of compensation paid when it is appropriate and is in our best interest. We reserve the right to authorize the payment of non-deductible compensation if we deem that it is appropriate to do so under the circumstances.
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COMPENSATION COMMITTEE REPORT TO STOCKHOLDERS
The Compensation Committee of our Board of Directors has reviewed and discussed the Compensation Discussion and Analysis required by Item 402(b) of Regulation S-K with management and, based on such review and discussions, the Compensation Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this proxy statement.
Respectfully submitted,
THE COMPENSATION COMMITTEE
Ernest Mario, Ph.D., Chairman
Michael D. Casey
James J. Loughlin
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ADDITIONAL INFORMATION REGARDING EXECUTIVE OFFICERS
Executive Officers
Our current executive officers are set forth in the table below along with their ages and positions. Each executive officer holds the offices set forth opposite his or her name until his or her successor is chosen and qualified at the regular meeting of the Board of Directors to be held on the date of the Annual Meeting.
Name
Age(1)
Position
Robert J. Hugin
60 Chief Executive Officer and Chairman of the Board
Peter N. Kellogg
59 Executive Vice President and Chief Financial Officer
Mark J. Alles
56 President and Chief Operating Officer
Thomas O. Daniel, M.D.
61 President, Research and Early Development
Jacqualyn A. Fouse, Ph.D.
54 President Hematology and Oncology; formerly Executive
Vice President and Chief Financial Officer
Perry A. Karsen
60 Chief Executive Officer of Celgene Cellular Therapeutics
Scott A. Smith
53 President, Inflammation & Immunology
Lawrence V. Stein
65
Executive Vice President, General Counsel and Corporate Secretary
(1)
As of June 17, 2015
Robert J. Hugin is our Chief Executive Officer and Chairman of the Board of Directors. See “Proposal One: Election of Directors — Nominees” for a discussion of Mr. Hugin’s business experience.
Peter N. Kellogg was named Executive Vice President, Chief Financial Officer and Chief Accounting Officer in August 2014. Mr. Kellogg joined Celgene as Executive Vice President in July 2014. Previously, he was Chief Financial Officer and Executive Vice President of Merck & Co. Inc. since August 2007. From 2000 to 2007, Mr. Kellogg served as Chief Financial Officer and Executive Vice President of Finance (since 2003) at Biogen Idec Inc. and the former Biogen, Inc. Before that, he served as Senior Vice President, PepsiCo E-Commerce at PepsiCo Inc. from March to July 2000 and as Senior Vice President and Chief Financial Officer, Frito-Lay International, from March 1998 to March 2000. From 1987 to 1998, he served in a variety of senior financial, international and general management positions at PepsiCo and the Pepsi-Cola International, Pepsi-Cola North America, and Frito-Lay International divisions. Prior to joining PepsiCo, Mr. Kellogg was a senior consultant with Arthur Andersen & Co. and Booz Allen & Hamilton. Since March 2007, Mr. Kellogg has been a Director of Metabolix, Inc., a public bioscience and engineering company focused on providing sustainable solutions to the plastics and chemicals industries. He received a BSE from Princeton University in 1978 and an MBA from The Wharton School in 1982.
Mark J. Alles is our President and Chief Operating Officer. Mr. Alles served as Executive Vice President and Global Head of Hematology and Oncology from December 2012 until July 2014, following his promotion to Executive Vice President and Chief Commercial Officer on February 15, 2012. Mr. Alles joined us in April 2004 and served as Vice President, Global Marketing until March 2009 when he became President of the Americas Region. Responsibility for commercial operations in Japan and the Asia Pacific Region was added in July 2011. Mr. Alles previously served as Vice President for the U.S. Oncology Business Unit of Aventis Pharmaceuticals and in other commercial sales and marketing management roles over an 11-year period with Aventis. After earning his B.S. degree from Lock Haven University of Pennsylvania and serving as a Captain in the United States Marine Corps, Mr. Alles started his 28-year career in the pharmaceutical industry at Bayer and worked at Centocor before its acquisition by Johnson & Johnson. Mr. Alles currently serves as a Director for Gilda’s Club NYC, a not-for-profit organization helping people with cancer, and as a trustee of The Healthcare Institute of New Jersey.
Thomas O. Daniel, M.D. has been President, Research and Early Development since December 2006 and served as Executive Vice President and President, Research and Early Development from February 15, 2012 until July 31, 2014. He served as the Chief Scientific Officer and Director at Ambrx Inc., a biotechnology company focused on discovering and developing protein-based therapeutics since September 2003. Dr. Daniel served as Vice President, Research at Amgen Inc., where he was Research Site
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Head of Amgen Washington and Therapeutic Area Head of Inflammation. Prior to Amgen’s acquisition of Immunex, Dr. Daniel served as Senior Vice President of Discovery Research at Immunex. Dr. Daniel has been a member of the Therapeutic Advisory Board of aTyr Pharma, Inc. since March 1, 2011, and is a director of Ferrumax, a privately-held biotechnology company. Dr. Daniel serves as a member of the Biomedical Science Advisory Board of Vanderbilt University Medical Center and the Biomedical Advisory Council of PhRMA. A nephrologist and former academic investigator, Dr. Daniel was previously the K.M. Hakim Professor of Medicine and Cell Biology at Vanderbilt University, and Director of the Vanderbilt Center for Vascular Biology. He formerly conducted research in the Howard Hughes Medical Institute at UC San Francisco, earned an M.D. from the University of Texas, Southwestern, and completed medical residency at Massachusetts General Hospital.
Jacqualyn A. Fouse, Ph.D . is our President Hematology and Oncology. Ms. Fouse joined the Company in September 2010 as Senior Vice President and Chief Financial Officer. Ms. Fouse assumed the role of Chief Accounting Officer on November 15, 2011 and became Executive Vice President and Chief Financial Officer on February 15, 2012 and held each position until July 31, 2014. Prior to joining our Company, Ms. Fouse had served as Chief Financial Officer of Bunge Limited, a leading global agribusiness and food company (Bunge), since July 2007. Prior to joining Bunge, Ms. Fouse served as Senior Vice President, Chief Financial Officer and Corporate Strategy at Alcon Laboratories, Inc. since 2006, and as its Senior Vice President and Chief Financial Officer since 2002. Ms. Fouse served as Chief Financial Officer from 2001 to 2002 at Swissair Group. Previously, Ms. Fouse held a variety of senior finance positions at Alcon and its then majority owner Nestlé S.A. Ms. Fouse worked at Nestlé from 1993 to 2001, including serving as Group Treasurer of Nestlé from 1999 to 2001. Ms. Fouse worked at Alcon from 1986 to 1993 and held several positions, including Manager Corporate Investments and Domestic Finance. Earlier in her career, she worked at Celanese Chemical and LTV Aerospace and Defense. Ms. Fouse earned a B.A. and an M.A. in Economics and a Ph.D. in Finance from the University of Texas at Arlington. Ms. Fouse also serves as a member of the Board of Directors of Dick’s Sporting Goods (chairperson of the audit committee) and Perrigo Company (member of the audit committee), both NYSE-listed companies.
Perry A. Karsen became Chief Executive Officer of Celgene Cellular Therapeutics (CCT), the placental stem cell research and development division of the Company, in May 2013. He also served as Executive Vice President (since February 2012) and Chief Operations Officer from July 2010 until July 2014. Mr. Karsen served as President and Chief Executive Officer at Pearl Therapeutics, a privately-held biotechnology company, from February 2009 until July 2010. From 2004 to 2009, Mr. Karsen was Senior Vice President and Head of Worldwide Business Development for us and was also responsible for emerging businesses as President, Asia/Pacific Region. Prior to his tenure with us, Mr. Karsen held executive positions at Human Genome Sciences, Bristol-Myers-Squibb, Genentech and Abbott Laboratories. In addition, Mr. Karsen served as a General Partner at Pequot Ventures. Mr. Karsen serves as a member of the Board of Directors of the Biotechnology Industry Organization (BIO); a member of the Board of Directors of BayBio; and a member of the Board of Directors for the Life Sciences Foundation. In addition, Mr. Karsen is a member of the Board of Directors of Agios Pharmaceuticals, a publicly-held biotechnology company, Alliqua Biomedical, a publicly-held advanced wound management company, and Navidea Biopharmaceuticals (member of the audit committee, compensation committee and nominating and governance committee), a publicly-held precision diagnostics company. Mr. Karsen has a Masters of Management degree from Northwestern University’s Kellogg Graduate School of Management, a Masters in Teaching of Biology from Duke University, and a B.S. in Biological Sciences from the University of Illinois, Urbana-Champaign.
Scott A. Smith was named President, Inflammation & Immunology (I & I) in August 2014. Previously he was Senior Vice President, Global Head of I & I. He joined Celgene in 2008 as Vice President, Global Marketing Inflammation and Immunology. From 2003 to 2008, Mr. Smith was with Biovail, holding positions of General Manager Biovail U.S., General Manager Biovail Canada and Global Commercial Head. As Global Commercial Head for Biovail, he was responsible for global revenue generation, global commercial strategies, business development strategy, and input into global regulatory and clinical development strategies. Prior to Biovail, Mr. Smith was with Pharmacia/Upjohn for 16 years where he held various positions including Vice President U.S. Sales, Vice President Marketing Europe based in Paris, Vice President and Commercial Lead for Canada based in Toronto, and Commercial and Regulatory Head for South East Asia based in Hong Kong. Mr. Smith holds a BSc in Chemistry and an HBSc in Pharmacology
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and Toxicology from the University of Western Ontario and a Masters of International Business Management from the American Graduate School of International Management (Thunderbird).
Lawrence V. Stein joined us as Executive Vice President, General Counsel and Corporate Secretary on November 26, 2012. Mr. Stein serves on our Executive Committee, Management Committee and Corporate Market Access Committee. From March 2010 through March 2011, Mr. Stein served as Counsel to Reed Smith LLP. He joined Wyeth’s legal team in 1997 and served as Senior Vice President and General Counsel from 2003 until its merger with Pfizer, Inc. in 2009. While at Wyeth, he served on the Board of Directors of Immunex Corporation and until December 2012 served on the Board of Trustees of the Wistar Institute. Prior to joining Wyeth, he was Senior Vice President, General Counsel and Secretary of Genetics Institute, Inc. Mr. Stein started his legal career with the law firm of Arnold & Porter where he specialized in the representation of pharmaceutical and medical device companies with respect to regulatory matters and product liability litigation. He received his J.D. from the University of Pennsylvania Law School, an A.B. from Columbia College and an M.A. from Cornell University. Mr. Stein will retire from the Company effective June 1, 2015.
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SUMMARY COMPENSATION TABLE
The following table sets forth information regarding compensation earned by our NEOs for the fiscal years ended December 31, 2014, 2013, and 2012.
Name and Principal Position
Year
Salary
Bonus(1)
Stock
Awards(2)
Option
Awards(2)
Non-Equity
Incentive Plan
Compensation(3)
Change in
Pension
Value and
Nonqualified
Deferred
Compensation
Earnings(4)
All Other
Compensation(5)
Total
(a)
(b)
(c)
(d)
(e)
(f)
(g)
(h)
(i)
(j)
Robert J. Hugin
Chief Executive Officer
and Chairman of the Board(6)
2014
$ 1,380,000 $ 3,899,980 $ 9,614,448 $ 9,110,269 $ 231,416 $ 24,236,113
2013
$ 1,262,500 $ 3,554,100 $ 8,729,638 $ 7,236,693 $ 212,854 $ 20,995,785
2012
$ 1,158,333 $ 2,333,760 $ 3,658,941 $ 3,229,303 $ 193,685 $ 10,574,022
Peter N. Kellogg
Executive Vice President and Chief Financial Officer(7)
2014
$ 400,000 $ 5,815,094 $ 3,313,252 $ 560,000 $ 9,098 $ 10,097,444
Mark J. Alles
President and Chief Operating Officer
2014
$ 767,917 $ 901,257 $ 2,077,620 $ 4,278,167 $ 21,272 $ 8,046,233
2013
$ 666,667 $ 1,186,586 $ 2,440,484 $ 3,188,449 $ 20,511 $ 7,502,697
2012
$ 641,667 $ 1,185,800 $ 1,088,350 $ 770,988 $ 18,285 $ 3,705,090
Thomas O. Daniel, M.D.
President, Research and Early Development
2014
$ 691,500 $ 767,672 $ 1,921,324 $ 4,141,720 $ 148,364 $ 7,670,580
2013
$ 645,833 $ 1,059,360 $ 2,269,123 $ 3,165,006 $ 100,434 $ 7,239,756
2012
$ 625,000 $ 1,018,083 $ 957,823 $ 859,993 $ 97,685 $ 3,558,584
Jacqualyn A. Fouse, Ph.D.
President Hematology and Oncology(7)
2014
$ 803,250 $ 901,257 $ 2,077,620 $ 4,867,123 $ 22,238 $ 8,671,488
2013
$ 753,333 $ 1,059,360 $ 2,269,123 $ 3,692,296 $ 21,829 $ 7,795,941
2012
$ 729,167 $ 1,018,083 $ 1,178,617 $ 505,951 $ 18,285 $ 3,450,103
Perry A. Karsen
Chief Executive Officer, CCT
2014
$ 666,500 $ 368,088 $ 2,077,620 $ 4,122,514 $ 24,440 $ 7,259,162
2013
$ 645,833 $ 1,008,796 $ 2,200,579 $ 3,165,006 $ 31,129 $ 7,051,343
2012
$ 625,000 $ 1,018,083 $ 957,823 $ 1,224,969 $ 18,285 $ 3,844,160
Scott A. Smith
President, I&I
2014
$ 546,246 $ 837,784 $ 1,141,664 $ 719,941 $ 22,238 $ 3,267,873
(1)
No bonuses are reportable under column (d) but rather are included as non-equity incentive plan compensation under column (g).
(2)
The value of RSU awards in column (e) and stock options in column (f) equals the fair value at date of grant, disregarding for this purpose the estimate of forfeitures related to service-based vesting conditions. The value is calculated in accordance with FASB ASC 718. Amounts reflected in columns (e) and (f) of the Summary Compensation Table include awards with time-based vesting. The assumption used in determining the grant date fair values of these RSU and option awards for their respective years are set forth in Note 14 to our Consolidated Financial Statements included in our Annual Report on Form 10-K for fiscal 2014 filed with the SEC.
(3)
The amounts in column (g) reflect the aggregate cash awards to the NEOs under the fiscal 2014, fiscal 2013 and fiscal 2012 MIP and the 2010–2012, 2011–2013 and 2012–2014 performance cycles under the LTIP. The 2012–2014 LTIP was paid in shares of our Common Stock with a three-year hold and the dollar value of that stock award on the share delivery date is reflected in this amount. The payouts of the cash compensation awards under the fiscal 2014 MIP and the 2012–2014 performance cycle under the LTIP were approved by the Compensation Committee on January 28, 2015 and paid shortly thereafter. The MIP and the LTIP are discussed in further detail under the heading “Key 2014 Compensation Actions and Program Highlights” and which, for purposes of this Summary Compensation Table, have been characterized as “Non-Equity Incentive Plan Compensation” under this column (g) rather than “Bonus” under column (d).
(4)
We do not have a pension plan for our NEOs. Under our Nonqualified Plan, there are no above-market or preferential earnings.
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(5)
The amounts in column (i) reflect the following:
Name
Year
Value of
Employer
Contributions
to the
Nonqualified
Plan*
Value of
Matching
Contributions
To the 401(k)
Plan in
Shares of
Common
Stock**
Professional
Tax and
Financial
Counseling
Excess
Liability
Insurance
Premiums
Contributions
to Health
Savings
Account
Other***
Total
Robert J. Hugin
2014
$ 207,000 $ 19,908 $ 2,330 $ 2,178 $ 231,416
2013
$ 189,375 $ 19,597 $ 2,232 $ 1,650 $ 212,854
2012
$ 173,750 $ 16,064 $ 2,221 $ 1,650 $ 193,685
Peter Kellogg
2014
$ 7,019 $ 2,079 $ 9,098
Mark J. Alles
2014
$ 19,908 $ 1,364 $ 21,272
2013
$ 19,597 $ 914 $ 20,511
2012
$ 16,064 $ 2,221 $ 18,285
Thomas O. Daniel, M.D.
2014
$ 19,908 $ 518 $ 127,938 $ 148,364
2013
$ 19,597 $ 2,232 $ 78,605 $ 100,434
2012
$ 16,064 $ 2,221 $ 79,400 $ 97,685
Jacqualyn A. Fouse, Ph.D.
2014
$ 19,908 $ 2,330 $ 22,238
2013
$ 19,597 $ 2,232 $ 21,829
2012
$ 16,064 $ 2,221 $ 18,285
Perry A. Karsen
2014
$ 19,908 $ 2,202 $ 2,330 $ 24,440
2013
$ 19,597 $ 9,300 $ 2,232 $ 31,129
2012
$ 16,064 $ 2,221 $ 18,285
Scott A. Smith
2014
$ 19,908 $ 2,330 $ 22,238
  *
Reflects company matching contributions for Mr. Hugin.
 **
The value of the matching contributions to the 401(k) Plan is based on the number of shares of Common Stock multiplied by the closing price of our Common Stock on December 31 of the respective year.
***
Reflects Company-paid costs in the amount of  $62,792 and a tax gross-up in the amount of  $65,146 provided to Dr. Daniel in fiscal 2014 in conjunction with housing accommodations. In fiscal 2013, reflects Company paid costs in the amount of  $51,919 and a tax gross-up in the amount of  $26,686 provided to Dr. Daniel in conjunction with housing accommodations. In fiscal 2012, reflects Company paid costs in the amount of  $50,276 and a tax gross-up in the amount of  $29,124 provided to Dr. Daniel in connection with housing accommodations.
(6)
Mr. Hugin serves as a member of the Board of Directors but does not receive any compensation in such capacity.
(7)
Ms. Fouse was our Executive Vice President and Chief Financial Officer through July 31, 2014 and the table includes compensation received for that position as well as her position as President Hematology and Oncology. The table includes compensation delivered to Mr. Kellogg based on his hire date of July 1, 2014.
Agreements with our Named Executive Officers
Employment Agreement with Mr. Hugin
Effective as of May 1, 2006, we entered into a new employment contract with Mr. Hugin, which was subsequently amended effective December 31, 2008 solely for the purpose of addressing the deferred compensation requirements under Section 409A of the Code, and effective on June 16, 2010 in connection with Mr. Hugin’s becoming Chief Executive Officer. In April 2014, at Mr. Hugin’s suggestion, his employment agreement was amended to eliminate his golden parachute (Code Section 280G) excise tax
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gross-up provision and to provide that if Mr. Hugin becomes entitled to any amounts subject to the excise tax under Section 4999 of the Code relating to golden parachute payments, such amounts will be reduced to the extent necessary to avoid such excise tax if such reduction would result in a greater after-tax payment.
The employment agreement had an initial term of three years and will automatically extend for successive one-year terms unless either we or Mr. Hugin provide written notice to the other, at least six months prior to the expiration of the then term, of such party’s intention to terminate his employment at the end of such term, unless terminated sooner as provided in Mr. Hugin’s employment agreement.
The following is a summary of other provisions of Mr. Hugin’s employment agreement, which is qualified in its entirety by reference to the full employment agreement (as amended):

If Mr. Hugin’s employment is terminated due to his disability or incapacitation or for any reason other than by us for “cause,” or due to his death, Mr. Hugin is entitled to receive a lump sum payment equal to Mr. Hugin’s then annual base salary, a pro rata share of Mr. Hugin’s annual target bonus (based on the assumption that all performance or other criteria had been met) and certain accrued benefits. Further, if Mr. Hugin’s employment is terminated by us without “cause” or because of disability or incapacitation or by Mr. Hugin for “good reason” at any time during the two-year period following or during the 90-day period prior to a “change in control,” Mr. Hugin is entitled to receive a lump sum payment equal to three times Mr. Hugin’s then annual base salary plus three times Mr. Hugin’s highest annual bonus paid within the three years prior to the change in control, certain accrued benefits, payment of health and welfare premiums for Mr. Hugin and his dependents for three years or, in certain instances, substitute arrangements on a similar tax basis and, upon the occurrence of a “change in control,” full and immediate vesting of all stock options and equity awards; provided that such payment will be reduced by any payment made to Mr. Hugin prior to the “change in control” on account of Mr. Hugin’s termination.

Mr. Hugin is subject to a non-competition provision which applies during the period he is employed by us and until the first anniversary after the date his employment terminates (or, if change in control payments and benefits are paid, generally the second anniversary of the later of the date his employment terminates or the change in control date). In addition, the employment agreement contains a patent/inventions assignment provision and a perpetual confidentiality provision.
For purposes of Mr. Hugin’s employment agreement, “cause” generally means:

the conviction of a crime involving moral turpitude or a felony;

acts or omissions taken in bad faith and to the detriment of the Company; or

a breach of any material term of such agreement.
For purposes of Mr. Hugin’s employment agreement, “good reason” generally means, without Mr. Hugin’s consent:

the failure to elect or appoint Mr. Hugin to, or re-elect or reappoint Mr. Hugin to, or removal of Mr. Hugin from, his position with the Company or as a member of the Board of Directors;

a significant change in the nature or scope of the authorities, powers, functions, duties or responsibilities normally attached to Mr. Hugin’s position;

a determination by Mr. Hugin made in good faith that, as a result of a change in control, he is unable effectively to carry out the authorities, powers, functions, duties or responsibilities attached to his position;

a breach by the Company of any material provision of the employment agreement;

a reduction in annual base salary;

a 50-mile or greater relocation of the Company’s principal office;
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the failure of the Company to continue any health or employee benefit plan, in which Mr. Hugin is participating immediately prior to a change in control, unless Mr. Hugin is provided substantially comparable benefits at no greater after-tax cost, or the Company’s taking any action which adversely affects Mr. Hugin’s participation in or which reduces Mr. Hugin’s benefits under any such plan; or

the failure of a successor to assume the employment agreement.
For purposes of Mr. Hugin’s employment agreement, “change in control” generally means:

any person becomes the beneficial owner of Company securities which represent 30% of the total combined voting power of the Company’s then outstanding securities;

a merger, consolidation or other business combination of the Company;

the persons who are members of the Board of Directors during any consecutive two year period cease to constitute at least a majority of the Board of Directors; or

the approval by the stockholders of the Company of any plan of complete liquidation of the Company or an agreement for the sale of all or substantially all of the Company’s assets.
The definition of  “change in control” that applies if Mr. Hugin is terminated by the Company without cause or by Mr. Hugin for good reason during the 90-day period prior to a “change in control” is the definition provided in the Treasury regulations under Section 409A of the Code, which eliminates, among other things, the approval by the Company’s stockholders of any plan of complete liquidation.
   Letter Agreement with Mr. Kellogg
Mr. Kellogg’s employment letter agreement, effective July 1, 2014, provides for an initial base salary of $800,000 and a target incentive under the MIP equal to 70% of eligible base salary earnings (as defined in the MIP) up to a maximum of 200% based on achievement of corporate performance objectives. Mr. Kellogg received a one-time grant of stock options to purchase 100,000 shares of Common Stock and 60,000 RSUs (in each case, adjusted to reflect the two-for-one stock split in June 2014). The stock options are subject to service-based vesting over four years and the RSUs are subject to a three year service-based cliff vesting schedule. Mr. Kellogg is entitled to participate in our Nonqualified Plan and is eligible for reimbursement for reasonable expenses incurred in obtaining professional tax and financial counseling up to a maximum of  $15,000 annually. Mr. Kellogg is entitled to participate in our U.S. health and welfare benefit programs. If Mr. Kellogg’s employment is terminated by us for any reason other than for cause, he would be entitled to receive a lump sum payment equal to 12 months’ base salary and bonus at target, plus continuation of health benefits, less applicable taxes. Further, in the event of a change in control, Mr. Kellogg would be entitled to receive a lump sum payment equal to 18 months’ base salary and bonus plus continuation of benefits, less applicable taxes, and his unvested stock options and RSUs would become fully vested if his employment is terminated within two years of a change in control. If Mr. Kellogg becomes entitled to any amounts subject to the excise tax under Code Section 280G relating to golden parachute payments, such amounts will be reduced to the extent necessary to avoid such excise tax if such reduction would result in a greater payment amount to Mr. Kellogg.
   Letter Agreement with Mr. Alles
During 2012, Mr. Alles was elevated to the roles of Executive Vice President and Chief Commercial Officer (and later in 2012 to Executive Vice President and Global Head, Hematology and Oncology) responsible for the commercial operations of the Company. Commensurate with that promotion, we amended the terms of an earlier employment letter agreement with Mr. Alles. Under the amended terms, Mr. Alles is entitled to an annual base salary of  $650,000 and a target incentive under the MIP equal to 60% of eligible base salary earnings (as defined in the MIP) (up to a maximum of 200% of target). Mr. Alles also received, on March 1, 2012, a one-time grant of options to purchase 25,000 shares of Common Stock and a grant of 8,334 RSUs, and a fiscal 2012 grant of options to purchase 66,600 shares of Common Stock and a grant of 11,200 RSUs (in each case, adjusted to reflect the two-for-one stock split in June 2014). The stock options are subject to service-based vesting over four years and the RSUs are subject to three-year service-based cliff vesting. Mr. Alles is also entitled to participate in our Nonqualified Plan. If Mr. Alles’
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employment is terminated by us for any reason other than for cause, he would be entitled to receive a lump sum payment equal to 12 months’ base salary, less applicable taxes, and per the terms of the MIP, if his employment is terminated by us for reasons other than cause, he would be entitled to a prorated MIP bonus at target. Mr. Alles is entitled to participate in our U.S. health and welfare benefit programs. We do not have any separate change in control agreements or arrangements with Mr. Alles.
   Letter Agreement with Dr. Daniel
During 2012, Dr. Daniel was elevated to the roles of Executive Vice President and President, Research and Early Development. Commensurate with that promotion, we amended the terms of an earlier employment letter agreement with Dr. Daniel. Under the amended terms, Dr. Daniel is entitled to an annual base salary of  $630,000 and a target incentive under the MIP equal to 60% of eligible base salary earnings (as defined in the MIP) (up to a maximum of 200% of target). Dr. Daniel also received, on March 1, 2012, a one-time grant of options to purchase 25,000 shares of Common Stock and a grant of 8,334 RSUs, and a fiscal 2012 grant of options to purchase 66,600 shares of Common Stock and a grant of 11,200 RSUs (in each case, adjusted to reflect the two-for-one stock split in June 2014). The stock options are subject to service-based vesting over four years and the RSUs are subject to three-year service-based cliff vesting. Dr. Daniel is also entitled to participate in our Nonqualified Plan. If Dr. Daniel’s employment is terminated by us for any reason other than for cause, he would be entitled to receive a lump sum payment equal to 12 months’ base salary and bonus, less applicable taxes. Dr. Daniel is entitled to participate in our U.S. health and welfare benefit programs. We do not have any separate change in control agreements or arrangements with Dr. Daniel.
   Letter Agreement with Ms. Fouse
Ms. Fouse’s employment letter agreement, effective September 27, 2010, provides for an initial base salary of  $700,000 and a target incentive under the MIP equal to 65% of eligible base salary earnings (as defined in the MIP) (up to a maximum of 200%). The letter agreement provided that Ms. Fouse would receive a one-time grant of options to purchase 250,000 shares of Common Stock and 33,000 RSUs and an initial annual grant of options to purchase 90,000 shares of Common Stock and 15,600 RSUs (in each case, adjusted to reflect the two-for-one stock split in June 2014). The stock options are subject to service-based vesting over four years and the RSUs are subject to a three year service-based cliff vesting schedule. Ms. Fouse is entitled to participate in our Nonqualified Plan and she received a one-time cash contribution into her Nonqualified Plan account of  $1,000,000 with a three-year ratable vesting schedule. Ms. Fouse also is entitled to reimbursement for reasonable expenses incurred in obtaining professional tax and financial counseling up to a maximum of  $15,000 annually. Ms. Fouse is entitled to participate in our U.S. health and welfare benefit programs. If Ms. Fouse’s employment is terminated by us for any reason other than for cause, she would be entitled to receive a lump sum payment equal to 12 months’ base salary and bonus plus continuation of health benefits, less applicable taxes. In the event of a change in control, Ms. Fouse would be entitled to receive a lump sum payment equal to 18 months’ base salary and bonus plus continuation of benefits, less applicable taxes, and that her unvested stock options and RSUs would become fully vested if her employment is terminated in connection with a change in control. If Ms. Fouse becomes entitled to any amounts subject to the excise tax under Code Section 280G relating to golden parachute payments, such amounts will be reduced to the extent necessary to avoid such excise tax if such reduction would result in a greater payment amount to Ms. Fouse.
   Letter Agreement with Mr. Karsen
During 2012, Mr. Karsen was elevated to the roles of Executive Vice President and Chief Operations Officer. Commensurate with that promotion, we amended the terms of an earlier employment letter agreement with Mr. Karsen. Under the amended terms, Mr. Karsen is entitled to an annual base salary of $630,000 and a target incentive under the MIP equal to 60% of eligible base salary earnings (as defined in the MIP) (up to a maximum of 200% of target). Mr. Karsen also received, on March 1, 2012, a one-time grant of options to purchase 25,000 shares of Common Stock and a grant of 8,334 RSUs, and a 2012 grant of options to purchase 66,600 shares of Common Stock and a grant of 11,200 RSUs (in each case, adjusted to reflect the two-for-one stock split in June 2014). The stock options are subject to service-based vesting over four years and the RSUs are subject to three-year service-based cliff vesting. Mr. Karsen is also
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entitled to participate in our Nonqualified Plan and, for the LTIP 2010–2012 performance cycle was entitled to a target of 100% of base salary with a maximum payout of 200% of base salary. If Mr. Karsen’s employment is terminated as a result of a change of control or by us for any reason other than for cause, he would be entitled to receive a lump sum payment equal to 12 months’ base salary and 12 months’ bonus at target plus continuation of benefits, less applicable taxes. In the event of a change of control, if Mr. Karsen becomes entitled to any amounts subject to the excise tax under Code Section 4999 280G relating to golden parachute payments, such amounts will be reduced to the extent necessary to avoid such excise tax if such reduction would result in a greater payment amount to Mr. Karsen. Mr. Karsen is entitled to participate in our U.S. health and welfare benefit programs. We do not have any separate change in control agreements or arrangements with Mr. Karsen.
   Letter Agreement with Mr. Smith
During 2014, Mr. Smith was elevated to the role of President Inflammation & Immunology. Commensurate with that promotion, we amended the terms of an earlier employment letter agreement with Mr. Smith. Under the amended terms, Mr. Smith was entitled to a base salary of  $600,000 and a target incentive under the MIP equal to 75% of eligible base salary earnings (as defined in the MIP) up to a maximum of 200% of target. In April 2015, Mr. Smith’s employment letter agreement was further amended to provide that in the event his employment is terminated as a result of a change of control or by us for any reason other than for cause, he would be entitled to receive a lump sum payment equal to 12 months’ base salary and 12 months’ bonus at target plus continuation of benefits, less applicable taxes. Additionally, in the event of a change of control, if Mr. Smith becomes entitled to any amounts subject to the excise tax under Code Section 280G relating to golden parachute payments, such amounts will be reduced to the extent necessary to avoid such excise tax if such reduction would result in a greater payment amount to Mr. Smith. Mr. Smith is entitled to participate in our U.S. health and welfare benefit programs and is also eligible to participate in our Nonqualified Plan. We do not have any separate change in control agreements or arrangements with Mr. Smith.
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GRANTS OF PLAN-BASED AWARDS TABLE*
The following table provides information about equity and non-equity awards granted to NEOs eligible to participate in fiscal 2014: (a) the name; (b) the grant date; (c), (d) and (e) the estimated future potential payouts under: (1) our LTIP non-equity incentive plan awards, which consist of estimated future payouts under the LTIP for the fiscal 2014–2016 performance period granted in fiscal 2014 and payable after the three-year performance period if either the threshold, target or maximum goal is satisfied and (2) the target and maximum potential MIP payouts that could have been earned in fiscal 2014; (i) all stock awards, which consist of RSUs awarded to NEOs in fiscal 2014; (j) all stock option awards, which consist of the number of shares underlying stock options awarded to NEOs in fiscal 2014; (k) the exercise price of the stock option awards, which reflects the closing price of the shares of our Common Stock on the date of grant; and (l) the grant date fair value of each equity award, computed in accordance with FASB ASC 718. Columns (f), (g) and (h) relating to estimated future payouts under equity incentive plan awards have been omitted because no such awards have been granted for the periods presented.
*Award amounts, exercises prices and grant date fair values in (i), (j), (k) and (l) in the table below have been adjusted to reflect the two-for-one stock split in June 2014.
Name
Grant
Date
Comm
Action(1)
Estimated Potential/Future
Payouts Under Non-Equity
Incentive Plan Awards(2)(3)
Stock
Awards
Number of
Shares of
Stock or
Units(4)
Awards
Number of
Securities
Underlying
Options
(#)(4)
Exercise
or
Base Price
of Option
Awards
($/Sh)(5)
Grant
Date Fair
Value of
Stock and
Options(6)
Threshold
Target
Maximum
(a)
(b)
(c)
(d)
(e)
(i)
(j)
(k)
(l)
Robert J. Hugin
12/11/2013 (2) $ 640,000 $ 1,600,000 $ 2,560,000
2/11/2014 (3) $ $ 2,070,000 $ 4,140,000
2/3/2014 2/12/2013 117,500 $ 74.30 $ 3,011,472
7/28/2014 2/11/2014 159,000 $ 87.64 $ 3,974,396
7/28/2014 2/11/2014 44,500 $ 87.64 $ 3,899,980
10/27/2014 2/11/2014 79,500 $ 103.10 $ 2,628,580
Peter N. Kellogg
5/13/2014 $ 333,333 $ 666,667 $ 1,333,333
5/13/2014 $ $ 560,000 $ 560,000
8/1/2014 5/13/2014 100,000 $ 86.65 $ 2,506,740
8/1/2014 5/13/2014 60,000 $ 86.65 $ 5,199,000
10/27/2014 2/11/2014 10,175 $ 103.10 $ 336,425
10/27/2014 2/11/2014 2,100 $ 103.10 $ 216,510
12/19/2014 2/11/2014 11,760 $ 117.18 $ 470,087
12/19/2014 2/11/2014 3,410 $ 117.18 $ 399,584
Mark J. Alles
12/11/2013 (2) $ 335,000 $ 670,000 $ 1,340,000
2/11/2014 (3) $ $ 608,375 $ 1,216,750
2/3/2014 2/12/2013 23,650 $ 74.30 $ 606,139
7/28/2014 2/11/2014 20,350 $ 87.64 $ 508,673
7/28/2014 2/11/2014 4,200 $ 87.64 $ 368,088
10/27/2014 2/11/2014 10,175 $ 103.10 $ 336,425
12/19/2014 2/11/2014 15,670 $ 117.18 $ 626,383
12/19/2014 2/11/2014 4,550 $ 117.18 $ 533,169
Thomas O. Daniel, M.D.
12/11/2013 (2) $ 324,500 $ 649,000 $ 1,298,000
2/11/2014 (3) $ $ 484,050 $ 968,100
2/3/2014 2/12/2013 23,650 $ 74.30 $ 606,139
7/28/2014 2/11/2014 20,350 $ 87.64 $ 508,673
7/28/2014 2/11/2014 4,200 $ 87.64 $ 368,088
10/27/2014 2/11/2014 10,175 $ 103.10 $ 336,425
12/19/2014 2/11/2014 11,760 $ 117.18 $ 470,087
12/19/2014 2/11/2014 3,410 $ 117.18 $ 399,584
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TABLE OF CONTENTS
Name
Grant
Date
Comm
Action(1)
Estimated Potential/Future
Payouts Under Non-Equity
Incentive Plan Awards(2)(3)
Stock
Awards
Number of
Shares of
Stock or
Units(4)
Awards
Number of
Securities
Underlying
Options
(#)(4)
Exercise
or
Base Price
of Option
Awards
($/Sh)(5)
Grant
Date Fair
Value of
Stock and
Options(6)
Threshold
Target
Maximum
(a)
(b)
(c)
(d)
(e)
(i)
(j)
(k)
(l)
Jacqualyn A. Fouse, Ph.D.
12/11/2013 (2) $ 378,500 $ 757,000 $ 1,514,000
2/11/2014 (3) $ $ 596,650 $ 1,193,300
2/3/2014 2/12/2013 23,650 $ 74.30 $ 606,139
7/28/2014 2/11/2014 20,350 $ 87.64 $ 508,673
7/28/2014 2/11/2014 4,200 $ 87.64 $ 368,088
10/27/2014 2/11/2014 10,175 $ 103.10 $ 336,425
12/19/2014 2/11/2014 15,670 $ 117.18 $ 626,383
12/19/2014 2/11/2014 4,550 $ 117.18 $ 533,169
Perry A. Karsen
12/11/2013 (2) $ 324,500 $ 649,000 $ 1,298,000
2/11/2014 (3) $ $ 466,550 $ 933,100
2/3/2014 2/12/2013 23,650 $ 74.30 $ 606,139
7/28/2014 2/11/2014 20,350 $ 87.64 $ 508,673
7/28/2014 2/11/2014 4,200 $ 87.64 $ 368,088
10/27/2014 2/11/2014 10,175 $ 103.10 $ 336,425
12/19/2014 2/11/2014 15,670 $ 117.18 $ 626,383
Scott A. Smith
12/11/2013 (2) $ 122,500 $ 245,000 $ 490,000
2/11/2014 (3) $ $ 335,623 $ 671,246
2/3/2014 2/12/2013 10,000 $ 74.30 $ 256,296
7/28/2014 2/11/2014 10,000 $ 87.64 $ 249,962
7/28/2014 2/11/2014 5,000 $ 87.64 $ 438,200
10/27/2014 2/11/2014 5,000 $ 103.10 $ 165,320
12/19/2014 2/11/2014 11,760 $ 117.18 $ 470,087
12/19/2014 2/11/2014 3,410 $ 117.18 $ 399,584
    
(1)
“Comm Action” refers to the date the Compensation Committee voted to approve the fiscal 2014 stock option and RSU grants listed in column (b), with respect to stock options and RSUs granted under the 2008 Stock Incentive Plan and the threshold, target and maximum LTIP targets listed in (c), (d) and (e).
(2)
The amounts reflected in columns (c), (d) and (e) represent the estimated target range of the future payout for the LTIP for each NEO, which was established by the Compensation Committee on December 11, 2013 with the exception of Mr. Kellogg’s target range which was established by the Compensation Committee on May 13, 2014. These amounts may be earned after completion of the 2014–2016 LTIP performance cycle, due to the NEO’s status as an eligible participant in 2014 if the threshold, target or maximum goals are satisfied for at least one performance measure. The potential payouts are performance-driven and therefore completely at risk. Awards under the 2014–2016 cycle are payable in cash or shares at the discretion of the Compensation Committee. For additional information regarding LTIP awards, see “Key 2014 Compensation Actions and Program Highlights — LTIP Plan — 2014–2016 Performance Period” under the “Compensation Discussion and Analysis.” See footnote 3 to the Summary Compensation Table for the value pursuant to awards of restricted shares that were approved by the Compensation Committee on January 28, 2015 and paid to the NEOs shortly thereafter under the 2012–2014 LTIP performance cycle.
(3)
The amounts reflected in columns (c), (d) and (e) include the potential target and maximum payouts of the awards granted in fiscal 2014 to each NEO under the MIP, which were established by the Compensation Committee on February 11, 2014. See “Key 2014 Compensation Actions and Program Highlights — Annual Bonus (MIP) Payout for Fiscal 2014” under the heading “Compensation Discussion and Analysis” for more information regarding the bonus targets under the MIP. See footnote 3 to the Summary Compensation Table for the actual amounts that were approved by the Compensation Committee on January 28, 2015 and paid to the NEOs shortly thereafter under the MIP. The maximum MIP for each of our NEOs is 200% of the annual bonus target. Mr. Kellogg’s MIP amounts were established by the Compensation Committee on May 13, 2014.
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TABLE OF CONTENTS
(4)
All stock options and RSUs granted in fiscal 2014 were granted pursuant to our 2008 Stock Incentive Plan. All options were granted at the fair market value of Common Stock on the effective date of grant. All RSUs vest in full on the third anniversary of the grant date.
(5)
This column reflects the closing price of the shares of our Common Stock on the date of the grant, which equals the exercise price for the stock options granted and the grant date fair value per share of RSUs granted.
(6)
This column reflects the full grant date fair value of stock options and RSUs computed in accordance with FASB ASC 718, disregarding for this purpose the estimate of forfeitures related to service-based vesting conditions, granted to the NEO in fiscal 2014. The actual value, if any, that a NEO may realize upon exercise of stock options will depend on the excess of the stock price over the base value on the date of exercise, so there is no assurance that the value realized by a NEO will be at or near the value computed in accordance with FASB ASC 718. The assumptions used in determining the grant date fair values of these awards are set forth in note 14 to our consolidated financial statements, which are included in our Annual Report on Form 10-K for fiscal 2014 filed with the SEC.
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OUTSTANDING EQUITY AWARDS VALUE AT FISCAL YEAR-END TABLE
The following tables provide information on holdings of stock options and stock awards as of December 31, 2014, by our Named Executive Officers and are reflective of the two-for-one stock split in June 2014. Each equity grant is shown separately for each NEO. For additional information about the option awards, see “Compensation Discussion and Analysis — Equity Grants under our 2008 Stock Incentive Plan” elsewhere in this proxy statement.
Robert J. Hugin
Option Awards
Stock Awards
Name
Number of
Securities
Underlying
Unexercised
Options (#)
Exercisable(1)
Number of
Securities
Underlying
Unexercised
Options (#)
Unexercisable(2)
Equity
Incentive
Plan
Awards:
Number of
Securities
Underlying
Unexercised
Unearned
Options
(#)
Option
Exercise
Price
Option
Expiration
Date
Number
of Shares
or Units of
Stock
That Have
Not Vested
(#)(3)
Market
Value of
Shares or
Units of
Stock
That Have
Not Vested
($)(4)
Equity
Incentive
Plan
Awards:
Number of
Unearned
Shares,
Units or
Other
Rights
That Have
Not Vested
(#)
Equity
Incentive Plan
Awards:
Market or
Payout Value
of Unearned
Shares,
Units or Other
Rights That
Have Not
Vested
($)
(a)
(b)
(c)
(d)
(e)
(f)
(g)
(h)
(i)
(j)
Robert J. Hugin
64,000 $ 7,159,040
60,000 $ 6,711,600
44,500 $ 4,977,770
1 $ 103.10 10/27/2024
79,499 $ 103.10 10/27/2024
159,000 $ 87.64 07/28/2024
29,374 88,126 $ 78.12 10/28/2023
1,344 $ 74.30 02/03/2024
116,156 $ 74.30 02/03/2024
29,374 88,126 $ 71.33 07/29/2023
29,374 88,126 $ 59.24 04/29/2023
2,020 $ 49.48 01/28/2023
24,250 70,730 $ 49.48 01/28/2023
60,000 $ 36.78 10/09/2017
48,500 48,500 $ 36.68 10/31/2022
48,500 48,500 $ 36.47 04/30/2022
2,750 $ 36.36 01/30/2022
45,000 42,250 $ 36.36 01/30/2022
45,000