DEF 14A
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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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Check the appropriate box:

 

Preliminary Proxy Statement

 

Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))

 

Definitive Proxy Statement

 

Definitive Additional Materials

 

Soliciting Material Pursuant to § 240.14a-12

Horizon Therapeutics Public Limited Company

(Name of Registrant as Specified In Its Charter)

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

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No fee required

 

Fee paid previously with preliminary materials

 

Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rules 14a-6(i)(1) and 0-11

 

 

 


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LOGO

HORIZON THERAPEUTICS PUBLIC LIMITED COMPANY

ANNUAL GENERAL MEETING OF SHAREHOLDERS

April 28, 2022

 

 

NOTICE AND PROXY STATEMENT


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LOGO

March 17, 2022

Dear Fellow Shareholder:

2021 was a milestone year for Horizon. We significantly expanded our pipeline, generated top-tier growth and continued to make a difference in the lives of people impacted by rare, autoimmune and severe inflammatory diseases. Our continued strong strategic execution resulted in record full-year total net sales of $3.2 billion, representing year-over-year growth of 47 percent, and record full-year adjusted EBITDA(1) of $1.3 billion, representing year-over-year growth of 33 percent. We ended 2021 with cash and cash equivalents of $1.6 billion, giving us the flexibility to pursue future business development initiatives, supporting our strategy to further expand our pipeline. Our strong performance translated into significant shareholder returns, with our one-, three- and five-year total shareholder returns of 47 percent, 451 percent and 566 percent, respectively, far exceeding those of our peer group(2) and the Nasdaq Biotechnology Index.

One of our key strategic goals is to expand our pipeline, through business development as well as maximizing the potential of our existing medicines and candidates. 2021 was a year of tremendous progress on both fronts. Our acquisition of Viela Bio in March dramatically expanded our pipeline, with Viela’s mid-stage biologics pipeline of four candidates in nine development programs. We also welcomed Viela’s talented R&D team with deep early-stage research and clinical development capabilities. In September, at our inaugural R&D day, in addition to discussing our R&D strategy and showcasing our team, we announced new development programs in five additional indications for two of our candidates, further expanding our pipeline. In addition, during the year we announced two collaborations to advance our early-stage research and innovation capabilities. We successfully completed two clinical trials and initiated seven clinical trials. This year we plan to initiate seven clinical trials and have already initiated two of them, our Phase 2b trial for HZN-825 for the treatment of idiopathic pulmonary fibrosis, in January, and our Phase 3 clinical trial for TEPEZZA in thyroid eye disease (TED) in Japan (OPTIC-J), in February. Our pipeline, balanced across the development life cycle, now includes more than 20 programs, with the majority of them added in 2021. With a focus on addressing critical unmet needs for patients, our pipeline is designed to drive long-term sustainable growth for Horizon.

Our excellence in commercial execution is evidenced by the progress we made during the year with our three key growth drivers TEPEZZA®, KRYSTEXXA® and UPLIZNA®. We more than doubled the full-year net sales of TEPEZZA, our biologic approved for the treatment of TED, to $1.7 billion in its second year post-launch, representing impressive growth of 103 percent. We achieved this strong performance, despite the continued impact of the COVID-19 pandemic, as well as a supply disruption that resulted from government-mandated COVID-19 vaccine production at our manufacturing partner’s facilities. The government-mandated order resulted in a total disruption of TEPEZZA supply from the end of 2020 to April 2021. Through the outstanding execution of our commercial team, we rapidly overcame the impact of the disruption with a highly successful relaunch beginning once supply resumed in April. We see strong growth prospects for TEPEZZA and we continue to invest to support that growth, from our initiatives to drive increased awareness of TEPEZZA and TED, to our clinical trials in chronic TED and TED in Japan. We are well on our way to achieve our projected peak global annual net sales of greater than $3.5 billion.

Record annual net sales for KRYSTEXXA, our biologic for uncontrolled gout, grew 39 percent year-over-year to $565.5 million – impressive growth for a 12-year-old medicine. Driving much of the growth is the increasing use of KRYSTEXXA plus immunomodulation. Since 2017, to make the medicine available to more patients, we focused on increasing the response rate to KRYSTEXXA through our clinical immunomodulation strategy. In 2021, we announced positive topline data from our MIRROR randomized controlled trial, which demonstrated that 71 percent of patients who received KRYSTEXXA plus the immunomodulator methotrexate achieved a complete response compared to 39 percent who received KRYSTEXXA plus placebo. In January we submitted a Supplemental Biologics License Application (sBLA) to the U.S. Food and Drug Administration (FDA) to expand the label for KRYSTEXXA to include co-treatment with methotrexate. We believe KRYSTEXXA plus immunomodulation is redefining the standard of care for KRYSTEXXA, which is on track to achieve our projected peak U.S. annual net sales estimate of greater than $1 billion.

UPLIZNA, our third key growth driver, came to us with the Viela acquisition. UPLIZNA, which was approved in 2020 by the U.S. Food and Drug Administration for neuromyelitis optica spectrum disorder (NMOSD), was launched by Viela during the peak of the COVID-19 pandemic in June 2020, with relatively minimal resources. We successfully relaunched the medicine in the fourth quarter of 2021, backed by our expertise in commercializing rare disease medicines. Internationally, we made strides in building out the infrastructure and capabilities necessary to support the potential 2022 launch of UPLIZNA in Europe, as well as other global markets in the coming years. We have Phase 3 clinical trials underway evaluating UPLIZNA for myasthenia gravis (MG) and IgG4-related disease. We estimate potential peak global annual net sales of greater than $1 billion for UPLIZNA in NMOSD, MG and IgG4-related disease.(3)


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At Horizon, our mission is simple and powerful: to improve people’s lives. We go to incredible lengths to make the world a better place by addressing unmet medical needs; by building healthier communities, urgently and responsibly; and by giving back to our communities. Behind all of our efforts are the people who make up Horizon and their dedication to making a difference in the lives of others. Our employees are highly engaged, evidenced by the 15 workplace-related awards we received in 2021 – including ranking as the Number 1 biotech/pharmaceutical company in FORTUNE’s 100 Best Companies to Work For®. We believe our high employee engagement – important in an industry as competitive as ours – is partly due to the many ways we strive to make working at Horizon attractive and rewarding. We were very pleased in 2021 to demonstrate continued gender and ethnicity pay equity in the second study conducted by Aon, after the dramatic growth in our workforce since the 2019 study, including the addition of a significant number of employees with the Viela acquisition.

Horizon today is a leading, high-growth, innovation-driven, profitable biotech company. One of the people who has been instrumental in our transformation is Paul Hoelscher, our executive vice president, chief financial officer. In October 2021, Paul notified us of his intention to retire in May 2022, continuing on as an advisor through May 2023. Paul has served as our CFO since 2014 and has been a valued partner to me these past seven years. Speaking for all of us at Horizon, I thank him for his leadership, his dedication and his commitment to our mission – and especially for the many successful initiatives he has spearheaded to build Horizon’s strong financial position. Aaron Cox, executive vice president, finance, will succeed Paul as CFO. Aaron, with his extensive knowledge of the business and strong financial background, has been a leader in many of our major strategic efforts and has led our corporate development and capital markets initiatives. I am confident that Aaron, along with our deeply experienced financial leadership team that Paul put in place, will continue to support our long-term strategy.

In summary, 2021 was a year of significant progress, multiple milestones and record financial results. With our highly focused strategy, strong execution and business development and R&D capabilities, we believe we are well positioned to deliver sustainable top-tier growth and shareholder value going forward.

You are cordially invited to attend our Annual General Meeting of Shareholders on Thursday, April 28, 2022, at 3:00 p.m. local time at our new corporate headquarters, located at 70 St. Stephen’s Green, Dublin 2, D02 E2X4, Ireland. Whether or not you plan to attend, it is important that your shares be represented and voted. Please take a moment now to vote your shares using the instructions found in the Notice of Internet Availability of Proxy Materials and in this Proxy Statement. Your vote is important, and we appreciate your continued support.

Sincerely,

 

LOGO

Timothy P. Walbert

Chairman, President and Chief Executive Officer

 

 

 

(1)

In 2021, GAAP net income and non-GAAP net income were $0.54 billion and $1.09 billion, respectively. Non-GAAP net income and adjusted earnings before interest, taxes, depreciation and amortization and other amounts (adjusted EBITDA) are non-GAAP measures. We use and provide these non-GAAP financial measures so that our investors have a more complete understanding of our financial performance. In addition, these non-GAAP financial measures are among the indicators we use for planning and forecasting purposes and for measuring our financial performance. Please refer to the discussion of non-GAAP financial measures and the reconciliations thereof to GAAP measures beginning on page 113 of our Annual Report on Form 10-K for the year ended December 31, 2021, which discussion and reconciliations are incorporated herein by reference.

(2)

The peer group used for total shareholder return calculations for the one- three- and five-year periods ended December 31, 2021 is our peer group shown on page 45 of our Proxy Statement. Total shareholder return is shown on page 41 of our Proxy Statement.

(3)

UPLIZNA is not approved for MG and IgG4-RD; we are currently conducting clinical trials in these indications.


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LOGO

Horizon Therapeutics Public Limited Company

70 St. Stephen’s Green, Dublin 2, D02 E2X4, Ireland

NOTICE OF ANNUAL GENERAL MEETING OF SHAREHOLDERS TO BE HELD ON APRIL 28, 2022

Dear Shareholder:

We will be holding the Annual General Meeting of Shareholders of Horizon Therapeutics Public Limited Company on Thursday, April 28, 2022, at 3:00 p.m. local time at our corporate headquarters located at 70 St. Stephen’s Green, Dublin 2, D02 E2X4, Ireland, for the following purposes:

 

  1.

Proposal 1: To elect, by separate resolutions, the three nominees for Class II directors named herein to hold office until the 2025 Annual General Meeting of Shareholders.

 

  2.

Proposal 2: To approve the appointment of PricewaterhouseCoopers LLP as our independent registered public accounting firm for our fiscal year ending December 31, 2022, and to authorize the Audit Committee of our Board of Directors (Board) to determine the auditors’ remuneration.

 

  3.

Proposal 3: To approve, on an advisory basis, the compensation of our named executive officers, as disclosed in this Proxy Statement.

 

  4.

Proposal 4: To authorize us and/or any of our subsidiaries to make market purchases or overseas market purchases of our ordinary shares.

 

  5.

Proposal 5: To approve the Amended and Restated 2020 Equity Incentive Plan.

 

  6.

To conduct any other business properly brought before the meeting.

These items of business are more fully described in the Proxy Statement accompanying this Notice.

The Board recommends that you vote FOR each of the nominees for director named herein and FOR Proposals 2, 3, 4 and 5. The accompanying Proxy Statement contains additional information and should be carefully reviewed by shareholders.

Our Irish statutory financial statements for the fiscal year ended December 31, 2021, including the reports of the directors and statutory auditors thereon, will be presented at the Annual General Meeting. There is no requirement under Irish law that such statements be approved by the shareholders and no such approval will be sought at the Annual General Meeting.

For the purposes of our Articles of Association, Proposals 1 and 2 and the receipt and consideration of the Irish statutory financial statements by us at the Annual General Meeting are deemed to be ordinary business and Proposals 3, 4 and 5 are deemed to be special business. The Annual General Meeting will also include a review of the Company’s affairs. Shareholders of record as of February 24, 2022, the record date for the Annual General Meeting, are entitled to notice of the Annual General Meeting and to vote at the Annual General Meeting or any adjournment or postponement thereof.

As permitted by the U.S. Securities and Exchange Commission, we are making this Proxy Statement and Horizon’s Annual Report to shareholders available to our shareholders electronically through the internet, accessible at http://materials.proxyvote.com/ G46188 and also on the Annual Reports/Proxy Statements page of our website at www.horizontherapeutics.com. We believe this electronic distribution model, known as Notice and Access, provides our shareholders a convenient and expedited method to access the proxy materials and vote, while allowing us to conserve natural resources and reduce the environmental impact of our Annual General Meeting. In addition, it reduces the costs of printing and distributing the proxy materials.

By Order of the Board of Directors

 

LOGO

David Caraher

Company Secretary

Dublin, Ireland

March 17, 2022


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If you are a shareholder of record on February 24, 2022, you are cordially invited to attend the Annual General Meeting in person. Whether or not you expect to attend the meeting, please complete, date, sign and return the proxy mailed to you, or vote over the telephone or the internet as instructed in these materials, as promptly as possible in order to ensure your representation at the meeting. Even if you have voted by proxy, you may still vote in person if you attend the meeting. Please note, however, that if your shares are held of record by a broker, bank or other nominee and you wish to vote at the meeting, you must obtain a proxy issued in your name from that record holder.

We are closely monitoring developments related to COVID-19. It could become necessary to change the date, time, location and/ or means of holding the Annual General Meeting (including by means of remote communication). If such a change is made, we will announce the change in advance, and details on how to participate will be issued by press release, posted on our website and filed as additional proxy materials.

 

YOUR VOTE IS IMPORTANT. WE ENCOURAGE YOU TO VOTE.

 


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TABLE OF CONTENTS

 

PROXY STATEMENT SUMMARY

     1  

SUMMARY OF VOTING ITEMS

     11  

KEY ENVIRONMENTAL, SOCIAL AND GOVERNANCE (ESG) FACTORS

     12  

QUESTIONS AND ANSWERS ABOUT THESE PROXY MATERIALS AND VOTING

     15  

PROPOSAL 1—ELECTION OF DIRECTORS

     20  

THE BOARD OF DIRECTORS AND ITS COMMITTEES

     26  

Overview

     26  

Independence of the Board of Directors

     26  

Code of Conduct and Ethics

     26  

Board Leadership Structure

     26  

Role of the Board in Risk Oversight

     27  

Director Assessment and Board Refreshment

     28  

Director Selection

     28  

Director Commitments

     29  

Diversity Policy

     29  

Executive Management Succession Planning

     29  

Committees of the Board of Directors

     30  

Shareholder Communications with the Board of Directors

     33  

NON-EMPLOYEE DIRECTOR COMPENSATION

     34  

EXECUTIVE OFFICERS AND SIGNIFICANT EMPLOYEES

     37  

COMPENSATION DISCUSSION AND ANALYSIS

     39  

Executive Summary

     40  

Objectives and Philosophy

     43  

Compensation Determination Process

     44  

Elements of Executive Compensation

     46  

Additional Compensation Policies and Practices

     55  

EXECUTIVE COMPENSATION

     59  

Summary Compensation Table

     59  

Grants of Plan-Based Awards

     62  

Pay Ratio

     65  

Outstanding Equity Awards at December 31, 2021

     66  

Option Exercises and Stock Vested

     68  

Pension Benefits

     69  

Nonqualified Deferred Compensation

     69  

Potential Payments Upon Termination or Change in Control

     70  

EQUITY COMPENSATION PLAN INFORMATION

     72  

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     74  

Policies and Procedures for Transactions with Related Persons

     74  

Certain Related-Person Transactions

     74  
PROPOSAL 2—APPROVE APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM AND AUTHORIZE THE AUDIT COMMITTEE TO DETERMINE THE AUDITORS’ REMUNERATION      76  

PROPOSAL 3—ADVISORY VOTE ON EXECUTIVE COMPENSATION

     77  
PROPOSAL 4—AUTHORIZE US AND/OR ANY OF OUR SUBSIDIARIES TO MAKE MARKET PURCHASES OR OVERSEAS MARKET PURCHASES OF OUR ORDINARY SHARES      78  

PROPOSAL 5—APPROVE THE AMENDED AND RESTATED 2020 EQUITY INCENTIVE PLAN

     79  

OTHER INFORMATION

     90  

Security Ownership of Certain Beneficial Owners and Management

     90  

Householding of Proxy Materials

     91  

Shareholder Proposals

     92  

Presentation of Irish Statutory Financial Statements

     93  

Special Note Regarding Forward-Looking Statements

     93  

OTHER MATTERS

     94  


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Index of Frequently Requested Information      Page  

2021 Executive Compensation at a Glance

     46  

2021 Pay-for-Performance Overview

     42  

Board Refreshment

     28  

Board Leadership Structure

     26  

Board Meeting Attendance

     26  

Clawback Policy

     56  

Code of Conduct and Ethics

     26  

Compensation Consultant

     44  

Corporate Governance Highlights

     8  

Cybersecurity

     27  

Director Assessment

     28  

Director Biographies

     20  

Director Commitments / “Overboarding”

     29  

Director Compensation

     34  

Director Independence

     26  

Director Selection / Qualifications

     28  

Diversity Policy

     29  

Environmental, Social and Governance (ESG)

     12  

Executive Compensation Overview

     8  

Executive Officers

     37  

Executive Share Ownership Guidelines

     55  

Hedging and Pledging Policies

     56  

Independent Accountant Fees

     76  

Majority Voting for Directors

     20  

Peer Group Companies

     45  

Related Party Transactions

     74  

Risk Oversight

     27  

Severance and Change in Control Benefits

     57  

Shareholder Communications with the Board

     33  

Shareholder Engagement

     9  

Shareholder Proposals and Director Nominations for the 2023 Annual General Meeting

     92  

Succession Planning

     29  

Summary of Voting Items

     11  

Total Shareholder Return

     41  

Year at a Glance

     2  


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PROXY STATEMENT SUMMARY

This summary highlights certain information contained elsewhere in this Proxy Statement and does not contain all of the information that you should consider. You should read the entire Proxy Statement carefully before voting. For more complete information regarding our business and 2021 performance, please review our Annual Report on Form 10-K for the year ended December 31, 2021 and our subsequent filings with the Securities and Exchange Commission (SEC).

 

Annual General Meeting and Voting Information
Time and Date:       3:00 p.m. local time on April 28, 2022
Place:       Our corporate headquarters: 70 St. Stephen’s Green, Dublin 2, D02 E2X4, Ireland
Record Date:       February 24, 2022
How to Vote:      

Shareholders as of the record date are entitled to vote and may do so in person at the Annual General Meeting.

 

You may also vote by electronic proxy by:

•   voting your shares over the internet by going to www.proxyvote.com and using the instructions found in the Notice that will be mailed to shareholders on or about March 17, 2022; or by

•   voting your shares by telephone at +1.800.690.6903 within the United States, U.S. territories or Canada using a touch-tone phone and following the recorded instructions.

 

Alternatively, you may request a printed set of the materials and vote using the toll-free telephone number on the proxy card or by marking, signing, dating and mailing your proxy form in the provided postage-paid envelope should you request a printed copy. Instructions on how to request a printed set of the proxy materials may be found in the Notice.

 

Voting Items and Board Recommendations

 

     

Proposal

   Page
Number
  

Board

  Recommendations  

1

   Election of Directors    20    FOR All Nominees

2

   Approval of the Appointment of Independent Registered Public Accounting Firm and Authorization of the Audit Committee to Determine the Auditors’ Remuneration    76    FOR

3

   Approval, on an Advisory Basis, of Executive Compensation    77    FOR

4

   Authorization to Make Market Purchases or Overseas Market Purchases of Our Ordinary Shares    78    FOR

5

   Approval of the Amended and Restated 2020 Equity Incentive Plan    79    FOR

Director Nominees and Continuing Directors

 

           

Name

  Age    

Director

Since

    Principal Position   Independent    

Other Current

Public Boards

 
   

2022 Director Nominees:

           

Michael Grey

    69       2011     Chairman, Mirum Pharmaceuticals, Inc.     Yes       3  

Jeff Himawan, Ph.D.

    56       2007    

Managing Director, Essex Woodlands

Health Ventures, L.P.

    Yes       1  

Susan Mahony, Ph.D.

    57       2019     Director, Zymeworks Inc.     Yes       3  
   

Continuing Directors:

           

William F. Daniel

    70       2014     Chairman, Malin Corporation plc     Yes       1  

Gino Santini

    65       2012     Director, Intercept Pharmaceuticals, Inc.     Yes       3  

James Shannon, M.D.

    65       2017     Chairman, MannKind Corporation     Yes       2  

Timothy P. Walbert

    54       2008     Chairman, President and Chief Executive Officer, Horizon Therapeutics plc     No       1  

H. Thomas Watkins

    69       2014     Lead Independent Director, Vanda Pharmaceuticals Inc.     Yes       1  

Pascale Witz

    55       2017     Director, PerkinElmer, Inc.     Yes       3  

 

Horizon  |  2022 Proxy Statement 1


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2021 – Year at a Glance

 

LOGO

 

(1)

Uses 2018 net sales and adjusted EBITDA and 2021 net sales and adjusted EBITDA. Adjusted EBITDA is a non-GAAP measure; please refer to the discussion of non-GAAP financial measures and the reconciliations to GAAP measures on page 113 of our Annual Report on Form 10-K for the year ended December 31, 2021.

Net sales and adjusted EBITDA growth percentages represent year-over-year growth over full-year 2020.

Prior TSR results are not intended to forecast or be indicative of possible future performance of our ordinary shares.

EBITDA: Earnings before interest, taxes, depreciation and amortization. | TSR: Total shareholder return through December 31, 2021. | NBI: Nasdaq Biotechnology Index.

A Milestone Year in Our Transformation

 

LOGO

 

Horizon  |  2022 Proxy Statement 2


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Business Overview

Horizon at a Glance

 

LOGO

 

(1)

Horizon estimate of TEPEZZA, KRYSTEXXA and UPLIZNA peak annual net sales of greater than $3.5 billion, greater than $1 billion and greater than $1 billion, respectively. UPLIZNA peak annual net sales estimate assumes three global indications in neuromyelitis optica spectrum disorder, myasthenia gravis (MG) and IgG4-RD. UPLIZNA is not approved for MG and IgG4-RD; we are currently conducting clinical trials in these potential indications.

(2)

Uses 2018 net sales and adjusted EBITDA and 2021 net sales and adjusted EBITDA. Adjusted EBITDA is a non-GAAP measure. Please refer to the discussion of non-GAAP financial measures and the reconciliations to GAAP measures beginning on page 113 of our Annual Report on Form 10-K for the year ended December 31, 2021.

(3)

At December 31, 2021.

(4)

Total shareholder return (TSR) at December 31, 2021; our peer group is shown on page 45. Prior TSR results are not intended to forecast or be indicative of possible future performance of our ordinary shares.

What Sets Us Apart

 

LOGO

KRYSTEXXA exemplifies our excellence in commercial execution. An underperforming and undervalued medicine when we acquired it in 2016, with our investment, expertise and deep knowledge of the rheumatology space, we executed on the right commercial strategy for KRYSTEXXA to jump start its growth trajectory. We know how to effectively market rare disease medicines, demonstrated by the fact that we have increased the annual net sales of KRYSTEXXA nearly ten-fold since acquiring it, and we are well on our way toward our projected peak U.S. annual net sales of more than $1 billion.

The returns we have generated to date also attest to the success of our business development efforts. For example, we acquired TEPEZZA for an upfront payment of $145 million plus milestones in 2017; in the two years since its launch, we have generated cumulative net sales of $2.5 billion, despite the negative impact of the COVID-19 pandemic, representing exceptional value creation for our shareholders – and we see opportunities for continued growth for TEPEZZA, projecting peak global annual net sales of more than $3.5 billion. Importantly, TEPEZZA has brought hope for patients with thyroid eye disease (TED), who before TEPEZZA had no approved treatment options. Our strong business development acumen also resulted in the transformational acquisition of Viela Bio in 2021. It significantly expanded our pipeline with the addition of Viela’s four development candidates across nine development programs and three new therapeutic areas. It also expanded our commercial portfolio with the addition of UPLIZNA, a recently approved biologic for the treatment of neuromyelitis optica spectrum disorder (NMOSD).

The Viela acquisition also augmented our strong research and development capabilities. Viela’s talented R&D team, with its early-stage research and clinical development capabilities, highly complements our proven late-stage development capabilities.

 

Horizon  |  2022 Proxy Statement 3


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Leveraging our combined strengths has already driven innovation. In September 2021, we announced pipeline programs in five additional indications for two of the Viela biologic candidates. In addition to adding depth to our pipeline, these programs aim to address high unmet medical needs for patients living with the rare diseases the programs target. Our R&D capabilities also drive innovation of our on-market medicines to maximize their benefit. Our successful MIRROR registrational trial is a testament to this: 71 percent of patients receiving KRYSTEXXA plus the immunomodulator methotrexate achieved a complete response, a more than 30-percentage-point improvement compared to patients who received KRYSTEXXA plus placebo.

Our Pipeline: A Top Strategic Priority to Drive Long-Term Growth

One of our key strategic goals to support our ambitious growth objectives is to expand our pipeline, which we are doing through internal investment and external business development. 2021 was a year of tremendous progress in this regard – we significantly expanded our pipeline with the Viela acquisition, we added five new clinical programs and we augmented our early-stage discovery efforts with two collaborations for novel therapeutics.

A key part of our R&D strategy is maximizing the full potential of our pipeline. In determining new indications to pursue, we evaluate four major areas to identify the disease states that have the most overall potential for success: scientific rationale, unmet need, the competitive landscape and feasibility. We are also building out our discovery pipeline of novel programs by using a balanced approach of internal research and external collaborations while aligning with our core focus areas: rheumatology, nephrology, ophthalmology, endocrinology, neuroimmunology, dermatology and respiratory. Our goal is to generate high-quality investigational new drug applications (INDs) over the coming years.

Our pipeline is balanced across the development life cycle, with early- to late-stage programs. Currently with more than 20 programs – the majority of which were added in 2021 – the pipeline is designed to support sustainable growth over the long-term. We plan to initiate seven clinical trials this year, two of which have already been initiated.

Underscoring all of our pipeline – and our commercial and business development – initiatives is our focus is on addressing the unmet medical needs of patients with rare, autoimmune and severe inflammatory diseases. This is part of our purpose – to make a meaningful difference in the lives of patients, their caregivers, their physicians and the communities we serve.

 

LOGO

 

(1)   Planned program expected to initiate in 2022. Of these programs, the HZN-825 IPF clinical trial initiated in January 2022 and the TEPEZZA TED in Japan (OPTIC-J) initiated in February 2022.

 

We also have four Phase 4 programs: TEPEZZA chronic TED trial, KRYSTEXXA shorter infusion duration trial, KRYSTEXXA monthly dosing trial and KRYSTEXXA retreatment trial. | TED: Thyroid Eye Disease.

   LOGO

 

Horizon  |  2022 Proxy Statement 4


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Our Key Growth Drivers: TEPEZZA, KRYSTEXXA and UPLIZNA

Our biologic TEPEZZA is the first and only medicine indicated for the treatment of thyroid eye disease (TED), a serious, progressive and potentially vision-threatening, rare autoimmune disease. Launched shortly after approval in January 2020, TEPEZZA is one of the most successful rare disease medicine launches ever. Our significant pre-launch investment in educating physicians and key stakeholders about TED, as well as our teams’ superlative execution, have driven cumulative net sales of $2.5 billion since launch, despite the impact of the COVID-19 pandemic and an over-three-month supply disruption in 2021 due to government-mandated COVID-19 vaccine production orders. We expect continued growth for TEPEZZA in the years ahead, driven by three key growth opportunities: increasing new prescribers while driving additional uptake in our existing prescriber base; increasing the use of TEPEZZA in patients with chronic TED; and maximizing the medicine’s potential through global expansion. We are supporting our efforts in chronic TED with a Phase 4 clinical trial and supporting global expansion with a Phase 3 trial in TED in Japan. We remain confident about the prospects for helping more patients living with this debilitating disease and estimate TEPEZZA peak global annual net sales of more than $3.5 billion.

Since acquiring KRYSTEXXA, our biologic medicine for uncontrolled gout, in 2016, we have transformed its growth trajectory through our strong strategic execution, our deep knowledge of both rheumatology and rare disease medicines, and by investing commercially to support future growth. We’ve also invested significantly to maximize the benefit of KRYSTEXXA so more patients can benefit from the medicine. We announced positive topline data in 2021 from our MIRROR randomized controlled trial, which evaluated KRYSTEXXA plus the immunomodulator methotrexate. We recently submitted a supplemental biologics license application (sBLA) to expand the label for KRYSTEXXA to include co-treatment with methotrexate. We expect the use of KRYSTEXXA plus immunomodulation, which has been steadily increasing, to redefine the standard of care. We see several additional growth opportunities for KRYSTEXXA: expanding uptake in rheumatology and nephrology; elevating the urgency to treat and investing to improve the patient experience. We are well on track toward achieving our projected KRYSTEXXA peak U.S. annual net sales of more than $1 billion.

Our growth driver UPLIZNA is approved for NMOSD, a rare, severe, relapsing, neuroinflammatory autoimmune disease that attacks the optic nerve, spinal cord, brain and brain stem. UPLIZNA was launched by Viela in June 2020, during the height of the COVID-19 pandemic, with relatively minimal resources. Since acquiring Viela, we’ve executed a full relaunch of UPLIZNA, putting the commercial infrastructure and team in place to best support an infused rare disease medicine, launching a new brand campaign and investing to develop a scientific leadership position in NMOSD. We are also building the infrastructure and capabilities necessary to launch UPLIZNA in Europe, where approval is pending, as well as other global markets in the coming years. We see additional development opportunities for UPLIZNA and are pursuing two other indications: myasthenia gravis (MG) and IgG4-related disease. We project peak global annual net sales of more than $1 billion for UPLIZNA in NMOSD and the MG and IgG4-related disease indications we are pursuing.

Total Shareholder Return

Our disciplined approach, clear strategy, business development capabilities, and strong commercial and R&D execution have all worked together to generate consistent above-market returns for our shareholders. Our total shareholder return (TSR) significantly outperformed both our peer group and the Nasdaq Biotechnology Index (NBI) over the one-, three- and five-year periods ended December 31, 2021. With our expanded pipeline and key growth medicines, we believe Horizon is well positioned for sustainable long-term growth.

 

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Our Total Shareholder Returns Significantly Surpassed Our Peers(1) and NBI

1-, 3- and 5-Year Periods Ended December 31, 2021

 

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(1)

The peer group used for the TSR calculations for the 1-, 3- and 5-year periods ended December 31, 2021 is the peer group approved for purposes of making 2021 compensation decisions and comparative performance analysis, as shown on page 45.

Board Highlights

The Nominating and Corporate Governance Committee of our Board examines multiple factors when evaluating directors, including their knowledge, skills and experience, including experience in our industry and with respect to clinical development, sales and marketing, business development, finance, management and public service. The table below highlights the extensive experience of our directors as well as the balance of skills on our Board:

Our Board of Directors: Skills and Experience Matrix

 

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Our Board is predominantly independent and includes a range of expertise, experience, diversity, as well as newer and longer-tenured directors. As is set forth in its diversity policy, the Board values diversity and believes that maintaining a diverse membership enhances the Board’s deliberations and enables it to better represent all of Horizon’s constituents. As such, the Nominating and Corporate Governance Committee works to ensure that the Board represents a diversity of experience and perspectives, as well as race, gender, geography and areas of expertise. A strong, annual director assessment process has resulted in periodic refreshment, enhancing the Board’s effectiveness. Board committee memberships are also refreshed periodically.

 

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Our Board of Directors: Gender and Ethnicity Diversity Matrix

As of March 15, 2022

 

 

Board Size

 

Total Number of Directors

     9  
         

Gender

   Male      Female      Non-Binary      Gender
Undisclosed
 

Number of Directors Based on Gender Identity

     7        2          
 

Number of Directors Who Identify with Any of the Categories Below:

 

African American or Black

     -        -        -        -  

Alaskan Native or American Indian

     -        -        -        -  

Asian

     1        -        -        -  

Hispanic or Latinx

     -        -        -        -  

Native Hawaiian or Pacific Islander

     -        -        -        -  

White

     6        2        -        -  

Two or More Races or Ethnicities

     -        -        -        -  

LGBTQ+

     -  

Undisclosed

     -  

 

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Corporate Governance Highlights

 

       

Independent Oversight

 

        

Continuous Improvement

 

     
     

•    Eight of our nine directors are independent

 

•    Independent directors solely comprise all Board committees

 

•    Lead independent director with clearly delineated duties

 

•    Diverse Board in terms of gender, ethnicity, experience, education and talents, supported by the Board’s diversity policy

 

     

•    Annual Board and committee self-evaluations

 

•    Risk oversight by the Board and committees

 

•    Ongoing shareholder engagement efforts

    
       

Strong Governance Practices

 

        

Shareholder Rights

 

     
     

•    Regular executive sessions of independent directors

 

•    Independent compensation consultant reporting directly to the Compensation Committee

 

•    Board and committees may engage outside advisors independently of management

 

•    Share ownership guidelines for directors and executive officers; director ownership requirement increased in 2021

 

•    Annual advisory shareholder vote on executive compensation

 

•    Incentive compensation recoupment “clawback” policy on performance-based cash and equity incentives

 

•    One-year holding period for shares issued at vesting for all post-2017 restricted stock unit and performance share unit grants for executive officers

 

       

•    Majority voting for elections of directors

 

•    Shareholder ability to call extraordinary general meeting

 

•    Directors may be removed by ordinary resolution with majority vote of the shareholders

 

•    No blank check preferred stock issuance without shareholder approval

    

Executive Compensation Overview

Our executive compensation program emphasizes three major pay considerations: long-term performance, executive and shareholder alignment and risk mitigation. Here is how we currently achieve them:

 

 

Pay Considerations

 

Long-Term
Performance
   Executive and Shareholder
Alignment
   Risk Mitigation
   
What We Do   What We Don’t Do

•    Align executive compensation with corporate and individual performance

 

•    Maintain strong share ownership guidelines for our directors and executives

 

•    Maintain appropriate balance between short- and long-term compensation, which discourages short-term risk-taking at the expense of long-term results

 

•    Seek annual shareholder advisory approval on our executive compensation

 

•    Engage an independent advisor reporting directly to the Compensation Committee

 

•    Apply anti-pledging and anti-hedging policy for our shares

 

•    Cap short- and long-term incentive payouts

 

•    Require a one-year holding period for shares issued at vesting for all post-2017 restricted stock unit and performance share unit grants for executive officers

 

•    Provide retiree medical benefits for our executives and employees to support orderly succession

 

•    Apply an incentive compensation recoupment “clawback” policy

 

•    Conduct annual compensation risk assessments

 

•    Actively engage with our shareholders

 

 

•    No guaranteed bonuses or salary increases

 

•    No repricing of stock options without shareholder approval

 

•    No dividends or dividend equivalents paid on unearned shares

 

•    No named executive officer excise tax gross-ups

 

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With a strategic focus on growing the business over the long term, it is imperative that our executive compensation program motivates our talented management team in a manner that encourages – and rewards – successful execution of this business strategy. We utilize the following compensation elements to achieve this:

 

       
Element    Form    Performance
Period
   Objective
Base Salary    Cash
(fixed)
   N/A   

•    Recognition of an individual’s role and responsibilities

 

•    Provides competitive pay for retention purposes

Short-Term Incentive

(Annual Bonus Plan)

   Cash
(variable)
   Annual   

•    Variable pay designed to reward achievement of annual financial and strategic objectives

Long-Term Incentives   

PSU Awards
(variable)

 

RSU Awards

(variable)

   Multi-year

 

 

N/A

  

•    Promotes an ownership culture

 

•    Aligns the interests of executives with those of shareholders

 

•    Provides meaningful incentives for management to execute on longer-term financial and strategic goals that drive shareholder value creation and support our retention strategy

 

Please see our Compensation Discussion and Analysis on page 39 for additional information on our compensation philosophy.

Shareholder Engagement

We value the views of our shareholders. During the outreach we conduct each year, generally led by a member of the Board of Directors, we have had significant and meaningful dialogue with our shareholders regarding our compensation and governance. Feedback from our outreach informs the Compensation Committee’s thinking when evaluating our current compensation program and considering potential modifications going forward. It also informs the Nominating and Corporate Governance Committee’s thinking when evaluating our corporate governance as well as social and environmental (ESG) matters.

Changes to our compensation program and corporate governance over the past several years that were heavily influenced by shareholder feedback include:

 

   

Longer-term performance metrics focused on long-term shareholder value creation. We have continued to use performance-based equity compensation in our annual long-term incentive plan, influenced by feedback from our ongoing engagement with shareholders regarding executive compensation. Most recently, shareholder feedback informed our decision to update the design of our performance share unit (PSU) awards for 2021 to include longer-term (two- or three-year) performance periods across all PSU performance goal components, each of which is meaningfully linked to our long-term business strategy and designed to drive shareholder value creation. We made this change to avoid potential duplication of the performance goals for our annual bonus plan and in line with feedback received from shareholders during our outreach.

 

   

Board diversity. Diversity is an important principle for us at Horizon as it is for many of our investors. Given that our business and operations are diverse and global in nature, our Nominating and Corporate Governance Committee takes into account a broad range of diversity considerations when assessing potential candidates, including diversity of experience and perspectives as well as gender, race, geography and areas of expertise. Our Board also maintains a diversity policy, which is posted on our website. We have further diversified our Board over the past several years, including the addition in 2019 of Susan Mahony, Ph.D., who brings more than three decades of broad cross-functional and global pharmaceutical experience to the Board, and the addition in 2017 of Pascale Witz, with her extensive global healthcare management experience and James Shannon, M.D., with his significant clinical development and management experience.

 

   

Incentive compensation recoupment policy. This policy enables us to recover performance-based cash and equity compensation if it is determined not to have been earned by our executive officers, in the event of restatement of financial results.

 

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Annual long-term incentive grants. Our philosophy on granting equity has changed as a result of shareholder feedback. In January 2018, we shifted from “front-loaded” awards covering a multi-year period to regular, annual grants of long-term incentives.

During our shareholder engagement cycle before our Annual General Meeting in April 2021, as well as during our off-season shareholder engagement cycle in late 2021/early 2022, we offered engagement opportunities to shareholders who represented approximately 60 percent of our shares outstanding. Shareholder feedback from the subsequent engagement was positive. At our 2021 Annual General Meeting, our say-on-pay proposal received the support of approximately 96 percent of the shares voted. We believe this high level of support is partly a result of our comprehensive shareholder outreach and engagement program to solicit feedback, understand investor viewpoints and incorporate their feedback into future evaluations of our compensation programs.

In addition to our outreach on compensation and governance, we have also engaged with shareholders on ESG matters. During this ongoing ESG-related outreach, which we started in 2019, we discuss ESG factors and matters of interest to our shareholders. The feedback we have received has informed and enhanced our ESG disclosures and initiatives.

We greatly value the dialogue we have with our shareholders and remain committed to continued engagement going forward.

 

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Summary of Voting Items and Board Recommendations

 

 
Proposal 1: Election of Directors

We are asking our shareholders to vote, by separate resolutions, on the election of each of the following Class II directors to hold office until the 2025 Annual General Meeting of Shareholders:

•    Michael Grey

•    Jeff Himawan, Ph.D.

•    Susan Mahony, Ph.D.

 

Each of the nominees listed is currently one of our directors who was nominated for election by the Board, upon the recommendation of the Nominating and Corporate Governance Committee. Our Board believes that each nominee has the specific experience, qualifications, attributes and skills to serve as a member of the Board. Detailed information about each nominee can be found beginning on page 20.

   The Board of Directors recommends a vote “FOR” each of the nominees.
   A majority of votes cast is required for approval.
   See page 20.

 

 
Proposal 2: Appointment of Independent Registered Public Accounting Firm and Authorization of the Audit Committee to
Determine the Auditors’ Remuneration

Our statutory auditor is PricewaterhouseCoopers (Ireland). We are asking our shareholders to:

•    approve the appointment of PricewaterhouseCoopers LLP (United States) (PricewaterhouseCoopers) as our independent registered public accounting firm for the year ending December 31, 2022; and

•    authorize the Audit Committee of our Board to determine the remuneration of our independent registered public accounting firm and our statutory auditor.

   The Board of Directors recommends a vote “FOR” this proposal.
   A majority of votes cast is required for approval.
   See page 76.

 

 
Proposal 3: Approval, on an Advisory Basis, of Executive Compensation

We are asking our shareholders for advisory approval of our named executive officers’ compensation. Our Compensation Committee’s philosophy continues to be based on attracting and retaining top talent with experience in building and leading a successful biotech company, while providing competitive compensation and benefits packages that create a direct, meaningful link between business results and compensation opportunities. In doing so, we believe we can align interests of management, employees and shareholders to set priorities and focus on executing our long-term business strategy.

 

Our executive compensation program is aligned with our business strategy and priorities. We align our executive officers’ interests with our shareholders’ interests by rewarding our executive officers for both near- and longer-term performance, measured both by financial performance and milestones for the advancement of our long-term development programs and strategic initiatives.

   The Board of Directors recommends a vote “FOR” this proposal.
   A majority of votes cast is required for approval.
   See page 77.

 

 
Proposal 4: Authorization to Make Market Purchases or Overseas Market Purchases of our Ordinary Shares

Consistent with prior years, we are asking our shareholders to authorize us, or any of our subsidiaries, to make open market purchases of up to 10 percent of our issued ordinary shares as of December 31, 2021.

 

If adopted, the authority will expire at the close of business on October 28, 2023, unless renewed at the 2023 Annual General Meeting of Shareholders.

 

Such purchases would be made only at price levels the Board considers to be in the best interest of shareholders generally, after taking into account our overall financial position.

   The Board of Directors recommends a vote “FOR” this proposal.
   A majority of votes cast is required for approval.
   See page 78.

 

 
Proposal 5: Approval of the Amended and Restated 2020 Equity Incentive Plan

We are asking our shareholders to vote on a proposal to approve the amended and restated 2020 Equity Incentive Plan (Amended 2020 EIP). We are seeking shareholder approval of the Amended 2020 EIP, primarily to increase the number of ordinary shares available for the grant of equity awards to our employees by an additional 4,800,000 shares.

 

The Amended 2020 EIP will allow us to continue using a broad array of time-based and performance-based equity incentives in order to secure and retain the services of employees of Horizon and its subsidiaries and to provide long-term incentives that align the interests of employees with the interests of our shareholders.

   The Board of Directors recommends a vote “FOR” this proposal.
   A majority of votes cast is required for approval.
   See page 79.

 

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Fostering a Sustainable Future for Horizon, Our Stakeholders and Communities: Key Environmental, Social and Governance (ESG) Factors

Making a difference is ingrained in our corporate culture and integral to our purpose – we go to incredible lengths at Horizon to impact lives and make the world a better place. What we do extends beyond the innovative medicines we deliver; we support patients and their caregivers, physicians, advocacy groups, our communities and beyond. We know that our efforts contribute not just to Horizon’s long-term success and sustainability but also to the broader world.

Key ESG factors that support Horizon’s long-term sustainability include: our governance; our purpose and our focus on ethics and integrity; access to medicines and our patient-centric focus; employee engagement and corporate culture; our product supply chain and environmental sustainability.

Our Governance:

We employ strong corporate governance principles and practices.

 

   

Our Board of Directors is 89 percent independent with a balance of skills and experience and an emphasis on independent oversight and continuous improvement.

 

   

Our Board is diverse in gender, ethnicity, experience, geography, education and talents.

 

   

We employ an annual director assessment and refreshment process. In the past five years, three new directors joined the Board, including two female directors, replacing two directors who did not stand for re-election.

 

   

We are committed to frequent and active shareholder engagement. Shareholder feedback has influenced improvements to our governance, compensation programs and ESG disclosure.

 

   

The Nominating and Corporate Governance Committee oversees ESG matters important to Horizon’s business and its sustainability. The Nominating and Corporate Governance Committee and the Board are briefed on ESG matters on a quarterly basis.

 

   

We are committed to protecting our information technology. We have systems, protocols, policies and tools in place designed to mitigate cybersecurity risk, accompanied by robust cybersecurity training for our employees. The Audit Committee and Board of Directors are briefed at least twice a year by our chief information officer on our cybersecurity risk management programs and the overall cybersecurity risk environment.

Our Purpose and Our Focus on Ethics and Integrity:

We build healthier communities, urgently and responsibly.

 

   

Underscoring all we do is our dedication to making the world a better place. Ours is a culture of commitment to making a difference in the lives of others by developing and marketing medicines, supporting patient advocacy efforts, combatting racism and fostering inclusion, and giving back to the community.

 

   

Integrity, honesty and doing the right thing are integral to everything we do at Horizon. We value the trust and reputation behind Horizon’s name and promote high standards of integrity, conducting our business in an honest and ethical manner, supported by our strong ethics and compliance leadership.

 

   

Attesting to our strong compliance culture, the rate of anonymous investigation reports submitted in 2021 was considerably lower than the industry average, according to the 2021 benchmark report of our third-party compliance provider, indicating to us that our employees are not afraid to speak up and do not fear retaliation.

 

   

We introduced a revised, principles-based Code of Conduct & Ethics in 2021 that provides an instructive set of principles, guidelines and tools for operating our business in an ethical and compliant way. We trained 100 percent of our employees on the revised Code.

 

   

We are committed to upholding anti-bribery and anti-money laundering laws in all markets in which we operate and do business.

 

   

A 2019 independent assessment by Deloitte found that our ethics and compliance (E&C) program exceeds the core element requirements of an E&C program, with a variety of unique enhancements that make our program particularly effective.

 

   

We continue to work to combat racism and foster inclusion, supporting community organizations that are addressing racial inequality and racism and funding scholarships for students of color and economically disadvantaged students. Our donations for these efforts in 2021 totaled approximately $750,000.

 

   

Horizon is a proud member of Pledge 1%, a movement empowering companies to donate 1% of product, 1% of equity, 1% of profit or 1% of employee time to improve communities around the world.

 

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Access to Medicines and Our Patient-Centric Focus:

We make health a priority, not a privilege.

 

   

We work to ensure that patients have access to our medicines, regardless of ability to pay. We supported patients in 2021 with $600 million in assistance, approximately 12 percent of our gross sales.

 

   

Patients are at the heart of everything we do. In addition to improving lives by identifying and bringing innovative medicines to market that address unmet medical needs, we advocate for patients with underrepresented diseases, their caregivers and communities. We actively partner with over 100 patient advocacy groups to raise awareness for many underrepresented diseases.

 

   

We run RAREis™, our rare disease awareness program designed to elevate the voices, faces and experiences of the rare disease community. We’ve launched several partnerships in conjunction with RAREis, including partnerships with Sing Me a Story Foundation, Gift of Adoption and EveryLife Foundation.

 

   

In 2021, we launched Horizon Prize, a global innovation challenge, in partnership with MIT Solve, a marketplace for social impact innovation. We awarded $150,000 in funding to the 2021 recipients to continue evolving their solutions for reducing the time it takes to be diagnosed with a rare disease.

 

   

In 2021, we were included in PatientView’s annual U.S. Corporate Reputation survey of 1,920 patient groups worldwide for the first time. We received top rankings in integrity, patient information and services by patient groups partnering with Horizon.

Our Employee Engagement and Corporate Culture:

For us it’s personal – we want to make a difference and are consistently recognized for our engaged employees.

 

   

We continue to be consistently recognized as a best workplace in multiple categories, demonstrating a high level of employee engagement, receiving 15 workplace awards in 2021, exceeding the 13 awards we received in 2020. We were very proud to rank as the Number 1 biotech/pharmaceutical company in FORTUNE’s 2021 100 Best Companies to Work For®.

 

   

We continued to outscore average biotech companies in employee loyalty and engagement in 2021, surpassing the benchmarks of a leading consultant firm and achieving a voluntary turnover rate below the industry average.

 

   

In 2021, we achieved scores above top-quartile benchmarks from our employee surveys, including our employee net promoter score (a measure of the likelihood that employees would recommend Horizon as a place to work), inclusion and diversity scores and leadership ratings.

 

   

Our commitment to inclusion, diversity, equity and allyship starts at the top. Horizon’s chairman, president and chief executive officer Timothy P. Walbert was one of the first signatories of the CEOAction for Diversity and Inclusion pledge. We believe that people with different backgrounds and life experiences fuel innovation and success. Our strong emphasis on an inclusive culture influences how we recruit employees and treat one another.

 

   

Our diversity talent program aims to promote inclusive leadership behaviors and hiring and developing more diverse talent.

 

   

We continue to demonstrate gender and ethnicity pay equity, based on a second Aon study conducted in 2021, after the dramatic growth in our workforce since the first study in 2019. The second study also found no pay discrepancy among men, women and employees of different ethnic backgrounds.

 

   

Our percentage of female employees is over 50 percent and above industry standards.

 

   

We continued to advance RiSE, our strategic program initiated in 2020 to further embed inclusion, diversity, equity and allyship throughout Horizon. RiSE has 20-plus volunteer employee leaders working together in diverse working groups, and in 2021 we held more than 10 RiSE diverse employee community events.

 

   

We have a robust employee development program. In 2021, we launched new leadership-focused programs including our Enterprise Leadership, Management Development, and Aspiring Leaders programs. We also held our first Global Leadership Summit for our top 75 leaders. All our employees are encouraged to participate in “Growing Your Career at Horizon,” a series of learning events focused on providing guidance around leadership development, and employees have unlimited access to multiple online learning resources.

 

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Our Product Supply Chain:

We work stringently to ensure the safety and quality of our medicines.

 

   

We work with highly reputable, global contract manufacturing organizations (CMOs) for the manufacturing and testing of our products.

 

   

More than 175 team members oversee the quality and compliance of our medicines.

 

   

We have a robust oversight program with a fully documented quality management system in place to direct and control all product quality activities.

 

   

In 2021, we acquired a drug product manufacturing facility in Waterford, Ireland to support the growth of our on-market and development-stage biologics. It is expected to play an important role in our global expansion and enhance our ability to meet unmet needs of patients with rare diseases around the world.

 

   

We periodically conduct CMO/vendor audits, measuring performance against quality, compliance, process and delivery standards and take action to improve unsatisfactory performance.

 

   

In 2021, we conducted an extensive review of our CMOs’ human capital management and environmental practices, using the Pharmaceutical Supply Chain Initiative (PSCI) survey as the basis for the survey we used.

 

   

We provide a support line on our website for pharmacovigilance and patient support.

Environmental Sustainability:

We aim to conduct our business in a responsible way that minimizes environmental impacts.

 

   

We are committed to furthering sustainable practices across our business, including:

 

   

minimizing and, if practicable, eliminating the use of any substance or material that may cause environmental damage;

 

   

reducing waste generation and disposing of all waste through safe and responsible methods;

 

   

minimizing environmental risks by employing safe technologies and operating procedures; and

 

   

being prepared to respond appropriately to accidents and emergencies.

 

   

We made significant progress in 2021, including:

 

   

Relocating our global headquarters in Dublin to a near-zero-emission building constructed to LEED Gold standard, joining our LEED Gold certified Deerfield, Illinois campus;

 

   

Building a team dedicated to developing and managing our global energy and sustainability strategy, practices and initiatives as well as implementing related workplace strategies and guidelines;

 

   

Incorporating environmental and climate-change risk in our annual enterprise risk management assessment; and

 

   

Embarking on the process of adopting a sustainability strategy to drive our environmental initiatives and support the development of our environmental performance goals and metrics.

Horizon Is Consistently Recognized as a Best Place to Work

 

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QUESTIONS AND ANSWERS ABOUT THESE PROXY MATERIALS AND VOTING

This Proxy Statement contains important information regarding the Annual General Meeting of Shareholders, the proposals on which you are being asked to vote, information you may find useful in determining how to vote and voting procedures. You are invited to attend the Annual General Meeting to vote on the proposals described in this Proxy Statement. However, you do not need to attend the meeting to vote your shares.

Why did I receive a notice regarding the availability of proxy materials on the internet?

We have sent you a Notice of Internet Availability of Proxy Materials (the Notice) because our Board is soliciting your proxy to vote at the Annual General Meeting, including at any adjournments or postponements of the meeting. As permitted by the U.S. Securities and Exchange Commission, we are making this Proxy Statement, Horizon’s Annual Report to shareholders, and our Irish statutory financial statements available to our shareholders electronically via the internet. We believe that using this form of distribution provides a convenient and expedited method for our shareholders to access the proxy materials and vote, while allowing us to conserve natural resources and reduce the environmental impact of our Annual General Meeting. In addition, it reduces the costs of printing and distributing the proxy materials. Accordingly, we have sent a Notice to our shareholders of record. All shareholders can access the proxy materials on the website referred to in the Notice or may request a printed set of the proxy materials. Instructions on how to access the proxy materials over the internet or to request a print or email copy may be found in the Notice. We intend to mail the Notice on or about March 17, 2022 to all shareholders of record as of February 24, 2022, who are entitled to vote at the Annual General Meeting.

How do I attend the Annual General Meeting?

The meeting will be held on Thursday, April 28, 2022, at 3:00 p.m. local time at our corporate headquarters located at 70 St. Stephen’s Green, Dublin 2, D02 E2X4, Ireland. Directions to the Annual General Meeting may be found at https://www.google.com/maps/place/70+St+Stephen’s+Green,+Saint+Kevin’s,+Dublin,+Ireland. Information on how to vote in person at the Annual General Meeting is provided below. However, you do not need to attend the Annual General Meeting to vote your ordinary shares.

We are closely monitoring developments related to COVID-19. It could become necessary to change the date, time, location and/or means of holding the Annual General Meeting (including by means of remote communication). If such a change is made, we will announce the change in advance, and details on how to participate will be issued by press release, posted on our website and filed as additional proxy materials.

Who can vote at the Annual General Meeting?

Only shareholders of record at the close of business on February 24, 2022, will be entitled to vote at the Annual General Meeting. On this record date, there were 229,167,259 of our ordinary shares outstanding and entitled to vote.

Shareholder of Record (shares registered in your name). If on February 24, 2022 your shares were registered in your name in our Register of Members, which is maintained by our transfer agent, Computershare Shareowner Services LLC, then you are a shareholder of record. As a shareholder of record, you may vote in person at the meeting or vote by proxy. Whether or not you plan to attend the meeting, we urge you to vote by proxy over the telephone or on the internet as instructed in the Notice or as discussed below to ensure your vote is counted, or if you request a printed copy, vote by completing and returning the proxy card.

Beneficial Owner (shares registered in the name of a broker or bank). If on February 24, 2022, your shares were not registered in your name in our Register of Members, but rather held in an account at a brokerage firm, bank, dealer or other similar organization, then you are the beneficial owner of shares held in “street name” and the Notice is being forwarded to you by that organization. The organization holding your account is considered to be the shareholder of record for purposes of voting at the Annual General Meeting. As a beneficial owner, you have the right to direct your broker or other agent regarding how to vote the shares in your account. You are also invited to attend the Annual General Meeting. However, since you are not the shareholder of record, you may not vote your shares in person at the meeting unless you request and obtain a valid proxy from your broker or other agent.

What am I voting on?

There are five matters scheduled for a vote:

 

   

Election of three Class II directors (Proposal 1)

 

   

Approval of the appointment of independent registered public accounting firm and authorization of the Audit Committee to determine the auditors’ remuneration (Proposal 2)

 

   

Approval, on an advisory basis, of executive compensation (Proposal 3)

 

   

Authorization to make market purchases or overseas market purchases of our ordinary shares (Proposal 4)

 

   

Approval of the Amended and Restated 2020 Equity Incentive Plan (Proposal 5)

 

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What if another matter is properly brought before the meeting?

The Board knows of no other matters that will be presented for consideration at the Annual General Meeting. If any other matters are properly brought before the meeting, it is the intention of the persons named in the accompanying proxy to vote on those matters in accordance with their best judgment.

How do I vote?

You may vote “For” or “Against” each Class II director nominee or you may abstain from voting for all or any of the nominees. For each of the other matters to be voted on, you may vote “For” or “Against” or abstain from voting.

The procedures for voting are fairly simple:

Shareholder of Record. If you are a shareholder of record, you may vote in person at the Annual General Meeting, by electronic proxy over the telephone or the internet as instructed below, or by proxy using the proxy card you receive if you request a set of printed materials. Whether or not you plan to attend the meeting, we urge you to vote by proxy to ensure your vote is counted. You may still attend the meeting and vote in person even if you have already voted by proxy.

 

   

To vote in person, come to the Annual General Meeting and we will give you a ballot when you arrive. Please bring our admission ticket or proof of ownership, as discussed below under “Do I Need a Ticket to Attend the Annual General Meeting?”

 

   

You may vote by electronic proxy in the following ways:

 

   

To vote through the internet, go to www.proxyvote.com to complete an electronic proxy card. You will be asked to provide the company number and control number from the Notice or proxy card. Your vote must be received by 11:59 p.m. Eastern Time on April 27, 2022, to be counted.

 

   

To vote over the telephone, dial toll-free 1.800.690.6903 within the United States, U.S. territories and Canada using a touch-tone phone and follow the recorded instructions. You will be asked to provide the company number and control number from the Notice or proxy card. Your vote must be received by 11:59 p.m., Eastern Time on April 27, 2022, to be counted.

 

   

Alternatively, you may request a printed set of the materials and vote using the toll-free telephone number on the proxy card or by marking, signing, dating and mailing your proxy form in the postage-paid envelope provided. Proxy cards submitted through the mail must be received by 11:59 p.m. Eastern Time on April 27, 2022. If you return your signed proxy card to us before this deadline, we will vote your shares as you direct. Instructions on how to request a printed set of the proxy materials may be found in the Notice.

We provide internet proxy voting to allow you to vote your shares online, with procedures designed to ensure the authenticity and correctness of your proxy vote instructions. However, please be aware that you must bear any costs associated with your internet access, such as usage charges from internet access providers and telephone companies.

Beneficial Owner. If you are a beneficial owner of shares registered in the name of your broker, bank or other agent, you should have received a Notice containing voting instructions from that organization. Simply follow the voting instructions in the Notice to ensure that your vote is counted. Alternatively, you may vote by telephone or through the internet as instructed by your broker, bank or other agent. To vote in person at the Annual General Meeting, you must obtain a valid proxy from your broker, bank or other agent. Follow the instructions in the Notice you receive from your broker, bank or other agent, or contact that organization to request a proxy form.

Joint Holders. In the case of joint holders of record, any one of such holders may vote either in person or by proxy in respect thereof as if he or she were the sole holder thereof, but the vote of the senior holder who tenders a vote, whether in person or by proxy, shall be accepted to the exclusion of the votes of the other joint holders, and for this purpose seniority shall be determined by the order in which the names stand in our Register of Members.

How many votes do I have?

On each matter to be voted upon, you have one vote for each ordinary share you own as of February 24, 2022.

What happens if I do not vote?

Shareholder of Record. If you are a shareholder of record and do not vote by completing your proxy card, by telephone, through the internet or in person at the Annual General Meeting, your shares will not be voted.

 

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Beneficial Owner. If you are a beneficial owner and do not instruct your broker, bank, or other agent how to vote your shares, the question of whether your broker or nominee will still be able to vote your shares depends on whether the New York Stock Exchange (NYSE) deems the particular proposal to be a “routine” matter. Brokers and nominees can use their discretion to vote “uninstructed” shares with respect to matters that are considered to be “routine,” but not with respect to “non-routine” matters. Under the rules and interpretations of the NYSE, “non-routine” matters are matters that may substantially affect the rights or privileges of shareholders, such as mergers, shareholder proposals, elections of directors (even if not contested), executive compensation (including any advisory shareholder votes on executive compensation) and certain corporate governance proposals, even if management-supported. We have been advised by the NYSE that your broker or nominee may not vote your shares on Proposals 1, 3 or 5 without your instructions, but may vote your shares on Proposals 2 and 4.

What if I return a proxy card or otherwise vote but do not make specific choices?

If you return a signed and dated proxy card or otherwise vote without marking voting selections, then our designated proxy holders (one of the individuals named on your proxy card) will vote your shares in the manner recommended by our Board on all matters presented in this Proxy Statement and as the proxy holders may determine in their discretion regarding any other matters properly presented for a vote at the meeting. If any other matter is properly presented at the meeting, your proxy holder will vote your shares using his or her best judgment.

Who is paying for this proxy solicitation?

We have retained Alliance Advisors, a proxy solicitation firm, to solicit proxies in connection with the Annual General Meeting at a cost of approximately $23,500 plus expenses. The cost of soliciting proxies incurred by us and Alliance Advisors, including the preparation, assembly and mailing of the proxies and soliciting material, as well as the cost of forwarding such material to beneficial owners of our ordinary shares, will be borne by us. Our directors, officers and other employees may, without compensation other than their regular remuneration, solicit proxies personally or by telephone.

What does it mean if I receive more than one Notice?

If you receive more than one Notice, your shares may be registered in more than one name or in different accounts. Please follow the voting instructions on the Notices to ensure that all of your shares are voted.

Can I change my vote after submitting my proxy?

Shareholder of Record. Yes, you may revoke your proxy at any time before the final vote at the meeting. If you are the record holder of your shares, you may revoke your proxy in any one of the following ways:

 

   

You may submit another properly completed proxy card with a later date.

 

   

You may grant a subsequent proxy by telephone or through the internet.

 

   

You may send a timely written notice that you are revoking your proxy to our Company Secretary at 70 St. Stephen’s Green, Dublin 2, D02 E2X4, Ireland.

 

   

You may attend the Annual General Meeting and vote in person. Simply attending the meeting will not, by itself, revoke your proxy.

Your most current proxy card or telephone or internet proxy is the one that is counted.

Beneficial Owner. If your shares are held by your broker or bank as a nominee or agent, you should follow the instructions provided by your broker or bank.

Do I need a ticket to attend the Annual General Meeting?

Yes, you will need an admission ticket or proof of ownership of ordinary shares to enter the Annual General Meeting. If you are a shareholder of record, your admission ticket is the Notice that was sent to you. Please bring your Notice and valid photo identification with you to the Annual General Meeting. If your shares are held in the name of a bank, broker or other holder of record, your admission ticket is your Notice, or if you are a beneficial owner, the ticket is on your voting instruction form. If you do not bring your admission ticket, you will need proof of ownership of ordinary shares to be admitted to the Annual General Meeting. A recent brokerage statement or letter from a bank or broker is an example of proof of ownership. If you arrive at the Annual General Meeting without an admission ticket or proof of ownership of ordinary shares, we will admit you only if we are able to verify that you are one of our shareholders.

 

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How are votes counted?

Votes will be counted by the inspector of election appointed for the meeting, who will separately count, with respect to the proposal to elect directors, votes “For,” “Against,” abstentions and broker non-votes; and, with respect to other proposals, votes “For” and “Against,” abstentions and, as applicable, broker non-votes. Abstentions and broker non-votes will be treated as shares present for the purpose of determining the presence of a quorum for the transaction of business at the Annual General Meeting. Abstentions and broker non-votes will not, however, be considered votes cast at the Annual General Meeting. Because the approval of all of the proposals is based on the votes cast at the Annual General Meeting, abstentions and broker non-votes will not have any effect on the outcome of voting on the proposals.

What are “broker non-votes”?

As discussed above, when a beneficial owner of shares held in “street name” does not give instructions to the broker or nominee holding the shares as to how to vote on matters deemed by the NYSE to be “non-routine,” the broker or nominee cannot vote the shares. These un-voted shares are counted as “broker non-votes.”

What is the quorum requirement?

A quorum of shareholders is necessary to hold a valid meeting. A quorum will be present if shareholders holding a majority of the issued and outstanding ordinary shares entitled to vote are present at the meeting in person or represented by proxy. On the record date, there were 229,167,259 ordinary shares outstanding and entitled to vote. Thus, the holders of 114,583,630 ordinary shares must be present in person or represented by proxy at the meeting to have a quorum.

Your shares will be counted towards the quorum only if you submit a valid proxy (or one is submitted on your behalf by your broker, bank or other nominee) or, provided that you are a shareholder of record, if you vote in person at the meeting. Abstentions and broker non-votes will be counted towards the quorum requirement. If there is no quorum, within one hour of the time appointed for the Annual General Meeting, the Annual General Meeting will stand adjourned to May 5, 2022 at 3:00 p.m. local time at the same location, or such other time or place as the Board may determine.

Assuming there is a quorum of shares present at the Annual General Meeting, how many votes are needed to approve each proposal?

 

   

Proposal

   Vote Required
1.  

Election of Directors

   Majority of votes cast
2.  

Approval of the Appointment of Independent Registered Public Accounting Firm and Authorization of the Audit Committee to Determine the Auditors’ Remuneration

   Majority of votes cast
3.  

Approval, on an Advisory Basis, of Executive Compensation

   Majority of votes cast
4.  

Authorization to Make Market Purchases or Overseas Market Purchases of Our Ordinary Shares

   Majority of votes cast
5.  

Approval of our Amended and Restated 2020 Equity Incentive Plan

   Majority of votes cast

How can I find out the results of the voting at the Annual General Meeting?

Preliminary voting results will be announced at the Annual General Meeting. In addition, final voting results will be published in a current report on Form 8-K that we expect to file within four business days after the Annual General Meeting. If final voting results are not available to us in time to file a Form 8-K within four business days after the meeting, we intend to file a Form 8-K to publish preliminary results and, within four business days after the final results are known to us, file an additional Form 8-K to publish the final results.

What are the Irish statutory financial statements?

We are presenting our Irish statutory financial statements, including the reports of the directors and the statutory auditors thereon, at the Annual General Meeting and are making a copy available for download on the Annual Reports / Proxy Statements page in the Investors section of our website (www.horizontherapeutics.com) on or before April 6, 2022. As an Irish company, we are required to prepare Irish statutory financial statements under applicable Irish company law and to deliver those accounts to shareholders of record in connection with our Annual General Meetings. The Irish statutory financial statements cover the results of our operations and financial position for the year ended December 31, 2021.

 

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Irish law requires the directors to prepare financial statements for each financial year giving a true and fair view of the state of the group’s and parent company’s affairs at the end of the financial year and of the group’s profit or loss for the financial year. Under that law, the directors have prepared the group’s consolidated financial statements in accordance with U.S. accounting standards, as defined in Section 279 of the Irish Companies Act 2014, to the extent that the use of those accounting standards in the preparation of the consolidated financial statements does not contravene any provision of the Irish Companies Act 2014 or of any regulations made thereunder and have prepared Horizon’s parent company’s Irish statutory financial statements in accordance with accounting standards issued by the Financial Reporting Council and promulgated by the Institute of Chartered Accountants in Ireland (Generally Accepted Accounting Practice in Ireland).

What proxy materials are available on the internet?

The Proxy Statement and the Annual Report are available at https://materials.proxyvote.com/G46188. The Irish financial statements will be available in the Investors section of our website (www.horizontherapeutics.com) on or before April 6, 2022. We will mail without charge, upon written request, a copy of these materials to shareholders of record or beneficial owners of our ordinary shares. Requests should be sent to: Horizon Therapeutics plc, Attention: Company Secretary, 70 St. Stephen’s Green, Dublin 2, D02 E2X4, Ireland.

 

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PROPOSAL 1

ELECTION OF DIRECTORS

The Board is divided into three classes. Each class consists, as nearly as possible, of one-third of the total number of directors and each class has a three-year term. The Board currently consists of nine members, as follows:

 

•   Class I:

   William F. Daniel, H. Thomas Watkins and Pascale Witz, whose terms will expire at our 2024 Annual General Meeting of Shareholders;

•   Class II:

   Michael Grey, Jeff Himawan, Ph.D. and Susan Mahony, Ph.D., whose terms will expire at our 2022 Annual General Meeting of Shareholders; and

•   Class III:

   Gino Santini, James Shannon, M.D. and Timothy P. Walbert, whose terms will expire at our 2023 Annual General Meeting of Shareholders.

The authorized number of directors may be changed only by resolution of the Board. Any additional directorships resulting from an increase in the number of directors will be distributed between the three classes so that, as nearly as possible, each class will consist of one-third of the directors. This classification of the Board may have the effect of delaying or preventing changes in our control or management. Our directors may be removed by ordinary resolution with majority vote of our shareholders at a general meeting provided that notice of such resolution has been given in accordance with Section 146 of the Irish Companies Act 2014. Vacancies on the Board may be filled only by persons elected by a majority of the directors then in office, provided that a quorum is present. A director elected by the Board to fill a vacancy in a class, including vacancies created by an increase in the number of directors, shall serve for the remainder of the full term of that class and until the director’s successor is duly elected and qualified.

Majority Voting: In order to be elected as a director, each nominee must receive the affirmative vote of a majority of the votes cast by the holders of ordinary shares represented at the Annual General Meeting in person or by proxy.

Directors Whose Term of Office Expires in 2022: There are currently three directors in Class II whose term of office expires in 2022. Each of the nominees listed below in Class II is currently a director who was nominated for election by the Board, upon the recommendation of the Nominating and Corporate Governance Committee. If elected, each of these nominees would serve until the 2025 Annual General Meeting of Shareholders and until his or her successor has been duly elected and qualified, or, if sooner, until the director’s death, resignation, disqualification or removal.

The biographical information for our directors that follows is as of March 15, 2022.

 

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Class II – Directors Whose Terms Expire at the 2022 Annual General Meeting of Shareholders
and Are Nominees for Election

 

 

Michael Grey

Chairman, Mirum Pharmaceuticals, Inc.

Mr. Grey has served as chairman of the board of directors of Mirum Pharmaceuticals, Inc., a public biotechnology company, since January 2020, and as executive chairman from March 2019 to December 2019. Before that he served as chief executive officer of Mirum from the company’s inception in March 2018. He has served as executive chairman of Spruce Biosciences, Inc., a public biotechnology company, since April 2017; as executive chairman of Reneo Pharmaceuticals, Inc., a public pharmaceutical company, since December 2017; as chairman of Plexium, Inc., a private biotechnology company, since August 2020 and as chairman of Sorriso Pharmaceuticals, Inc., a private biotechnology company, since June 2021. He has also served as a venture partner at Pappas Ventures since January 2010. Mr. Grey served from October 2015 to January 2017 as the president and chief executive officer of Amplyx, a private pharmaceutical company, from September 2014 to December 2017 and then as executive chairman from January 2018 until April 2021; as chairman and chief executive officer of Reneo from May 2019 until April 2020 and as executive chairman of Curzion Pharmaceuticals, Inc., a private pharmaceutical company, from May 2019 to April 2020. From February 2011 to June 2014, Mr. Grey served as president and chief executive officer of Lumena Pharmaceuticals, Inc., a biotechnology company, which was acquired by Shire plc in June 2014. He has more than 45 years of experience in the pharmaceutical and biotechnology industries and has held senior positions at a number of companies, including president and chief executive officer of SGX Pharmaceuticals, Inc. (sold to Eli Lilly and Company in 2008); president and chief executive officer of Trega Biosciences, Inc. (sold to LION Bioscience, Inc. in 2001) and president of BioChem Therapeutic Inc. Prior to these, Mr. Grey served in various roles with Glaxo, Inc. and Glaxo Holdings PLC, culminating in his position as vice president, corporate development and director of international licensing. Mr. Grey served on the boards of directors of BioMarin Pharmaceutical Inc. from December 2005 until May 2021, and Mirati Therapeutics, Inc. from November 2014 to June 2021, both public biotechnology companies. Mr. Grey received a bachelor of science degree in chemistry from the University of Nottingham in the United Kingdom.

 

Qualifications:

The Nominating and Corporate Governance Committee and the Board believe that Mr. Grey is qualified to serve as a director on the basis of his extensive experience managing pharmaceutical and biopharma companies, which brings important strategic insight to the Board as it plans our future growth.

 

Age: 69

 

Director Since: Sept. 2011

 

Lead Independent Director Since: Aug. 2012

 

Board Committees:

•  Audit

•  Nominating and Corporate Governance

 

Current Public Company Directorships:

•  Mirum Pharmaceuticals, Inc. (Chair)

•  biotechnology company

•  Spruce Biosciences, Inc. (Executive Chair)

•  biotechnology company

•  Reneo Pharmaceuticals, Inc. (Executive Chair)

•  pharmaceutical company

 

 

Jeff Himawan, Ph.D.

Managing Director, Essex Woodlands Health Ventures, L.P.

Dr. Himawan has been a managing director of Essex Woodlands Health Ventures, a venture capital firm, since 2004. Prior to that, he was an adjunct partner at Essex Woodlands from 1999 to 2001, and he was a venture partner from 2001 to 2004. Dr. Himawan co-founded Seed-One Ventures, an early-stage venture capital firm, where he served as a managing director from 1996 to 2001. Dr. Himawan also currently serves on the board of directors of MediciNova, Inc., a public biopharma company, and NexEos Bio, Inc., a private biotechnology company. Previously, Dr. Himawan served on the board of directors of Catalyst Biosciences, Inc., a public biopharma company, from 2010 to 2020. He received a bachelor of science degree in biology from the Massachusetts Institute of Technology and a doctorate in biological chemistry and molecular pharmacology from Harvard University.

 

Qualifications:

The Nominating and Corporate Governance Committee and the Board believe that, with his doctorate in biological chemistry and molecular pharmacology and as a successful venture capitalist, Dr. Himawan brings important scientific and strategic insight to the Board as well as experience working with the investment community.

 

Age: 56

 

Director Since: July 2007

 

Board Committees:

•  Compensation

•  Transaction

 

Current Public Company Directorships:

•  MediciNova, Inc.

•  biopharma company

 

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Susan Mahony, Ph.D.

Director, Zymeworks Inc.

Dr. Mahony serves on the board of directors of Zymeworks Inc., a public biopharma company; Vifor Pharma AG, a public pharmaceutical company; Assembly Biosciences, Inc., a public biotechnology company; Cereius Inc., a private biotechnology company, and Altis Biosystems, a private biotechnology company. Previously, Dr. Mahony served as senior vice president and president of Lilly Oncology and was a member of the executive committee at Eli Lilly and Company from 2009 until her retirement in August 2018. Prior to that, Dr. Mahony served in a variety of leadership roles at Eli Lilly and Company, including senior vice president, human resources and diversity; president and general manager, Lilly Canada; and executive director, global brand development. Dr. Mahony worked in sales and marketing at Bristol-Myers Squibb Company from 1995 to 2000, at Amgen Limited from 1991 to 1995, and at Schering Plough from 1989 to 1991. Dr. Mahony also serves on the board of Chordoma Foundation, a nonprofit organization dedicated to improving the lives of those affected by chordoma. She earned bachelor of science and doctor of philosophy degrees in pharmacy, as well as a master of business administration degree from London Business School. She was awarded an honorary doctorate from Aston University.

 

Qualifications:

The Nominating and Corporate Governance Committee and the Board believe that Dr. Mahony is qualified to serve as a director on the basis of her industry and leadership expertise, which brings important strategic insight to the Board as it plans our future growth.

 

Age: 57

 

Director Since: Aug. 2019

 

Board Committees:

•  Compensation (Chair)

•  Transaction

 

Current Public Company Directorships:

•  Zymeworks Inc.

•  biopharma company

•  Vifor Pharma AG

•  pharmaceutical company

•  Assembly Biosciences, Inc.

•  biotechnology company

THE BOARD RECOMMENDS

A VOTE IN FAVOR OF EACH NAMED NOMINEE ABOVE

 

Class III – Directors Continuing in Office until the 2023 Annual General Meeting of Shareholders

 

 

Gino Santini

Director, Intercept Pharmaceuticals, Inc.

Mr. Santini currently serves on the board of directors of Intercept Pharmaceuticals, Inc., Collegium Pharmaceutical, Inc. and Allena Pharmaceuticals, Inc., all of which are public biopharma companies. Mr. Santini also serves on the boards of directors of Artax Biopharma Inc. and Enalare Therapeutics, Inc., each a private biopharma company, and is retired from a distinguished career with Eli Lilly and Company. He served as chairman of the board of directors of AMAG Pharmaceuticals, Inc., previously a public biopharma company, from February 2012 until November 2020, when AMAG was acquired by Covis Group S. à r.l. Mr. Santini also previously served on the board of directors of Sorin SpA, a public medical products group, from 2012 to 2015, when it was acquired by LivaNova PLC, and also on the board of directors of Vitae Pharmaceuticals, Inc., a public biotechnology company, from 2014 to 2016, when it was acquired by Allergan plc. During his tenure at Eli Lilly and Company from June 1983 to December 2010, Mr. Santini held various leadership positions. Mr. Santini, fluent in four languages, holds an undergraduate degree in mechanical engineering from the University of Bologna and a master of business administration degree from the University of Rochester.

 

Qualifications:

The Nominating and Corporate Governance Committee and the Board believe that Mr. Santini’s extensive international and domestic commercial and business development experience brings important insight to the Board as it plans our future growth.

  

Age: 65

 

Director Since: March 2012

 

Board Committees:

•  Compensation

•  Transaction

 

Current Public Company Directorships:

•  Intercept Pharmaceuticals, Inc.

•  biopharma company

•  Collegium Pharmaceutical, Inc.

•  biopharma company

•  Allena Pharmaceuticals, Inc.

•  biopharma company

 

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James Shannon, M.D.

Chairman, MannKind Corporation

Dr. Shannon currently serves as chairman of the board of directors of MannKind Corporation, a public biopharma company focused on treatments for diabetes, and on the board of directors of ProQR Therapeutics NV, a public biotechnology company. From May 2012 to March 2015, Dr. Shannon served as the chief medical officer of GlaxoSmithKline (GSK), a public biopharma company, where he was responsible for matters of patient safety, general medical governance, medical ethics and integrity, medical information as well as investigations involving human subjects relating to any GSK medicine in development or on the market. Prior to that, Dr. Shannon spent more than a decade with Novartis, a public pharmaceutical company. In his last role with the company, as global head of pharma development, he was responsible for all of Novartis’s development activities, from pre-clinical through Phase 4, and oversaw an annual development budget of approximately $4 billion. Dr. Shannon received his science and medical degrees from Queen’s University in Belfast, Northern Ireland. He also serves as chairman of the board of directors of Kyowa Kirin (NA), a private biopharma company and subsidiary of Kyowa Kirin, and on the boards of directors of Leyden Labs, a private biopharma company, and MyTomorrows, a private health-based platform that collaborates with drug developers to provide early access to treatments for patients who have exhausted all other options.

 

Qualifications:

The Nominating and Corporate Governance Committee and the Board believe that Dr. Shannon is qualified to serve as a director on the basis of his extensive clinical development experience, which brings important insight to the Board as it plans our future growth.

  

Age: 65

 

Director Since: August 2017

 

Board Committees:

•  Transaction (Chair)

•  Nominating and Corporate
Governance

 

Current Public Company Directorships:

•  MannKind Corporation (Chair)

•  biopharma company

•  ProQR Therapeutics NV

•  biotechnology company

 

 

Timothy P. Walbert

Chairman, President and Chief Executive Officer, Horizon Therapeutics plc

Mr. Walbert has served as our president, chief executive officer and director of Horizon since June 2008 and served as our chairman since March 2010. From May 2007 to June 2009, Mr. Walbert served as president, chief executive officer and director of IDM Pharma, Inc., a public biotechnology company that was acquired by Takeda America Holdings, Inc. in June 2009. Prior to that, he served as executive vice president, commercial operations of NeoPharm, Inc., a public biotechnology company. From June 2001 to August 2005, Mr. Walbert served as divisional vice president and general manager of immunology, where he built and led the global development and launch of the multi-indication biologic HUMIRA, and divisional vice president, global cardiovascular strategy at Abbott, now AbbVie. From 1998 to 2001, he served as director, CELEBREX North America and arthritis team leader, Asia Pacific, Latin America and Canada at G.D. Searle & Company. Mr. Walbert serves on the board of Aurinia Pharmaceuticals, Inc., also a public biotechnology company. He sits on the board of directors of the Illinois Biotechnology Innovation Organization (iBIO). Mr. Walbert is also a member of the National Organization for Rare Disorders (NORD) Advisory Board and serves on the Board of Trustees of Muhlenberg College. He previously served as chairman of the board of directors of Exicure, Inc., a public clinical-stage biotechnology company, from July 2019 to February 2022; Assertio Holdings, Inc., a public specialty pharmaceutical company, from May 2020 to December 2020 (and before that at Zyla Life Sciences, a public pharmaceutical company, from April 2014 until May 2020, when it was acquired by Assertio); Sucampo Pharmaceuticals, Inc., a public biopharma company, from 2016 to 2018, when it was acquired by Mallinckrodt; XOMA Corporation, a public biotechnology company, from 2011 to 2017 and Raptor Pharmaceutical Corp. (Raptor), a public biopharma company, from 2010 to 2014. Mr. Walbert received his bachelor of arts degree in business from Muhlenberg College, in Allentown, Pennsylvania.

 

Qualifications:

The Nominating and Corporate Governance Committee and the Board believe that Mr. Walbert is qualified to serve as a director on the basis of his valuable biopharma industry experience, which brings important strategic insight to the Board as it plans our future growth.

  

Age: 54

 

Chair Since: March 2010

 

Director Since: June 2008

 

Board Committees:

•  None

 

Current Public Company Directorships:

•  Aurinia Pharmaceuticals, Inc.

•  biotechnology company

 

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Class I – Directors Continuing in Office Until the 2024 Annual General Meeting of Shareholders

 

 

William F. Daniel

Chairman, Malin Corporation plc

Mr. Daniel, a chartered director and chartered accountant, is currently chairman of the board of directors of Malin Corporation plc, an Ireland-based public global life sciences company. Mr. Daniel was president of the Institute of Directors of Ireland from May 2013 to May 2015, and he was originally elected to the board of the Institute of Directors in Ireland in June 2010. Prior to that, Mr. Daniel was executive vice president and company secretary of Elan Corporation plc, a public biotechnology company, and served in that role from December 2001 to December 2013, until the merger of Elan with Perrigo Company plc. He was previously an executive director of Elan between 2003 and 2007, having joined the organization as financial controller in 1994. Mr. Daniel graduated with a degree in commerce from University College Dublin.

 

Qualifications:

The Nominating and Corporate Governance Committee and the Board believe that Mr. Daniel is qualified to serve as a director on the basis of his valuable financial and corporate governance expertise, which brings important strategic insight to the Board as it plans our future growth.

  

Age: 70

 

Director Since: Sept. 2014

 

Board Committees:

•  Audit (Chair)

•  Compensation

 

Current Public Company Directorships:

•  Malin Corporation plc (Chair)

•  global life sciences company

 

 

H. Thomas Watkins

Lead Independent Director, Vanda Pharmaceuticals Inc.

Mr. Watkins currently serves as the lead independent director of Vanda Pharmaceuticals Inc., a public biopharma company. Prior to that, he was director, president and chief executive officer of Human Genome Sciences, Inc. (HGS), a public biopharma company, from 2004 until HGS was acquired by GlaxoSmithKline in 2012. Before leading HGS, Mr. Watkins spent over twenty years in senior roles at Abbott and its affiliates in the United States and Asia, most recently serving as the president of TAP Pharmaceutical Products, Inc. (TAP), which was jointly owned by Abbott and Takeda Pharmaceutical Company, Inc. During his tenure, he led the growth of TAP from approximately $2 billion to over $4 billion in annual revenue. Mr. Watkins began his career in 1974 with Arthur Andersen & Co. From 1979 to 1985, he was a management consultant with McKinsey and Company, Inc., working with multinational companies in the United States, Europe and Japan. Mr. Watkins holds a bachelor’s degree from William and Mary, and a master of business administration degree from the University of Chicago Graduate School of Business. Mr. Watkins is a member of the board of directors of HemoShear Therapeutics, LLC, a private biotechnology company.

 

Qualifications:

The Nominating and Corporate Governance Committee and the Board believe that Mr. Watkins is qualified to serve as a director on the basis of his valuable industry experience, which brings important strategic insight to the Board as it plans our future growth.

 

Age: 69

 

Director Since: April 2014

 

Board Committees:

•  Nominating and Corporate Governance (Chair)

•  Audit

 

Current Public Company Directorships:

•  Vanda Pharmaceuticals Inc. (Lead Independent Director)

•  biopharma company

 

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Pascale Witz

Director, PerkinElmer, Inc.

Ms. Witz founded PWH Advisors, a strategic consultancy firm advising healthcare and investment companies, in November 2016 and has served as its president since that time. From September 2015 to May 2016, Ms. Witz served as executive vice president, global diabetes and cardiovascular at Sanofi, a pharmaceutical company, which she joined in July 2013 as executive vice president, pharma and CHC divisions. During her tenure at Sanofi, she launched multiple medicines across three continents and strengthened the pipeline through licensing and partnerships. Prior to Sanofi, Ms. Witz served more than 17 years at GE Healthcare where, in her final role as president and chief executive officer of its pharmaceutical diagnostics business, she ran a $2 billion integrated pharmaceutical organization that encompassed research and development through commercialization. Ms. Witz also serves on the boards of directors of Fresenius Medical Care AG & Co. KGaA, a public medical supply company; Regulus Therapeutics Inc., a public biotechnology company; PerkinElmer, Inc., a public company focused on diagnostics and life science tools; PWH Advisors; Arkuda Therapeutics, Inc., a private biopharma company; CellCarta Biosciences, a private biopharma services company; WGC Clinical Services, a private biopharma services company; and Value Demonstration Group Holdings, a private healthcare consulting company. She also serves as chair of RTI Surgical, Inc., a private biologics implants company. Ms. Witz previously served on the board of directors of Savencia SA, a public food and dairy company, from 2016 to 2018, and of Tesaro, Inc., then a public biopharma company, from 2018 to January 2019. Ms. Witz received her master of business administration degree in economics and marketing from INSEAD and her Master of Science in biochemistry from INSA Lyon.

 

Qualifications:

The Nominating and Corporate Governance Committee and the Board believe that Ms. Witz is qualified to serve as a director on the basis of her valuable industry experience, which brings important strategic insight to the Board as the Board plans our future growth.

 

Age: 55

 

Director Since: Aug. 2017

 

Board Committees:

•  Audit

•  Nominating and Corporate Governance

 

Current Public Company Directorships:

•  Fresenius Medical Care AG & Co. KGaA

•  medical supply company

•  Regulus Therapeutics Inc.

•  biotechnology company

•  PerkinElmer, Inc.

•  human and environmental health company

 

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THE BOARD OF DIRECTORS AND ITS COMMITTEES

 

Overview

In 2021, the Board held six meetings and did not act by unanimous written consent without a meeting. Each Board member attended 100 percent of the aggregate number of meetings of the Board and of the committees on which he or she served that were held during the portion of the last fiscal year for which he or she was a director or committee member. It is our policy to encourage directors and nominees for director to attend annual general meetings of shareholders. All current directors attended our 2021 Annual General Meeting of Shareholders.

The Board is committed to exercising good corporate governance practices. As part of this commitment, the Board regularly monitors developments in corporate governance and reviews processes, policies and procedures in light of such developments. Key information regarding our corporate governance initiatives can be found on our website, www.horizontherapeutics.com, including our Memorandum and Articles of Association, Code of Conduct and Ethics, Corporate Governance Guidelines, and the charters for the Audit, Compensation, Nominating and Corporate Governance and Transaction Committees. The Board believes that its strong corporate governance policies and practices, including the substantial percentage of independent directors on the Board and the robust duties of its lead independent director, empower the Board to effectively oversee our chief executive officer and provide an effective and appropriately balanced Board governance structure.

 

Independence of the Board of Directors

Other than Mr. Walbert, our chairman, president and chief executive officer, all members of the Board are independent, and all members of committees of the Board are independent. The Board has affirmatively determined that the following eight directors are independent directors within the meaning of the applicable Nasdaq Stock Market (Nasdaq) listing standards: Mr. Daniel, Mr. Grey, Dr. Himawan, Dr. Mahony, Mr. Santini, Dr. Shannon, Mr. Watkins and Ms. Witz. In making these determinations, the Board found that none of these directors or nominees for director had a material or other disqualifying relationship with us. Mr. Walbert is not an independent director by virtue of his current employment with us. To determine independence, the Board reviewed all relevant identified transactions or relationships between each director, or any of his or her family members, and us, our senior management and our independent registered public accounting firm.

As required under applicable Nasdaq listing standards, our independent directors met four times in regularly scheduled executive sessions in 2021, at which only independent directors were present.

 

Code of Conduct and Ethics

We have adopted a Code of Conduct and Ethics (the Code) that applies to all officers, directors and employees, including our principal executive officer, principal financial officer, principal accounting officer and persons performing similar functions. We introduced a revised, principles-based Code in 2021 that provides an instructive set of principles, guidelines and tools to operate our business in an ethical and compliant way. In addition to promptly publishing the revised Code on our website, we conducted employee training, including 45 live sessions, on the revised Code, with 100 percent participation. The Code is available in the investor relations section of our website at www.horizontherapeutics.com. If we make any substantive amendments to the Code or grant any waiver from a provision of the Code to any executive officer or director, we will promptly disclose the nature of the amendment or waiver on our website or in a current report on Form 8-K.

 

Board Leadership Structure

The Board has determined that the current leadership structure, in which the offices of chairman and chief executive officer are held by one individual and an independent director acts as lead independent director, ensures that the appropriate level of oversight, independence and responsibility is applied to all Board decisions, including risk oversight, and is in our best interests and those of our shareholders.

Chairman/Chief Executive Officer

The Board is currently chaired by our president and chief executive officer, Mr. Walbert. We believe that combining the positions of chief executive officer and chairman of the Board helps to ensure that the Board and management act with a common purpose for the following reasons:

 

   

coherent leadership and direction for the Board and executive management;

 

   

clear accountability and a single focus for the chain of command to execute our strategic initiatives and business plans;

 

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Mr. Walbert’s extensive industry expertise, external public board experience, leadership experience and history and knowledge of our business; and

 

   

by leading management and chairing the Board, we benefit from Mr. Walbert’s strategic and operational insights, enabling a focused vision encompassing the full range, from long-term strategic direction to day-to-day execution.

Lead Independent Director

We require the election, by the independent directors of the Board, of a lead independent director to serve during any period when there is no independent chairman of the Board. Because Mr. Walbert is currently serving as chief executive officer and chairman of the Board, the independent directors of the Board elected Mr. Grey as the lead independent director. The lead independent director serves as the liaison between the chairman of the Board and the independent directors. The responsibilities of the lead independent director include:

 

   

facilitating communication with the Board and presiding over regularly conducted executive sessions of the independent directors and sessions where the chairman of the Board is not present;

 

   

establishing the agenda for meetings of the independent directors, and reviewing and approving matters, schedule sufficiency, and, where appropriate, information provided to other Board members;

 

   

having the authority to call meetings of the independent directors and, if requested by major shareholders, ensuring that he is available for consultation and direct communication; and

 

   

conveying messages from meetings of the independent directors to the chief executive officer and making himself available to discuss with other directors any concerns they may have about us or our performance.

 

Role of the Board in Risk Oversight

One of the Board’s key functions is informed oversight of our risk management process. The Board does not have a standing risk management committee, but rather administers this oversight function directly through the Board as a whole, as well as through various Board standing committees that address risks inherent in their respective areas of oversight. In particular, the Board is responsible for monitoring and assessing strategic risk exposure, including a determination of the nature and level of risk appropriate for Horizon.

Our Audit Committee has the responsibility to consider and discuss our major financial risk exposures and the steps our management has taken to monitor and control these exposures, including guidelines and policies to govern the process by which financial risk assessment and management is undertaken and provides oversight of the performance of our internal audit function and external auditors. The Audit Committee also reviews and receives regular briefings concerning information security and technology risks.

Our Nominating and Corporate Governance Committee reviews our key enterprise risks and risk-management strategies, as well as monitors the effectiveness of our corporate governance guidelines, including whether they are successful in preventing illegal or improper liability-creating conduct, and monitors compliance with legal, regulatory and ethical requirements.

Our Compensation Committee assesses and monitors whether any of our compensation policies and programs has the potential to encourage excessive risk-taking.

Our Transaction Committee evaluates potential strategic transactions and financing opportunities, including the risks that such transactions could pose to Horizon.

Cybersecurity

Horizon is committed to protecting our company’s information technology systems. We manage information technology (IT) systems that facilitate commercial, supply chain and regulatory activities; maintain our financial data; and store employee and customer data. We have protocols, policies and tools in place to mitigate cybersecurity risk. They also provide the administrative, technical, and physical safeguards to ensure the security, confidentiality, integrity and availability of confidential information and personal information from unauthorized access, use, disclosure, alteration, destruction or theft. In addition, we engage an independent third party annually to assess our IT general controls and IT security.

The Audit Committee and full Board is briefed by our chief information officer at least twice a year on our cybersecurity risk management programs and the overall cybersecurity risk environment. The briefing includes discussions on topics such as information security and technology risks, cybersecurity, information risk management strategies and progress and cybersecurity and data protection training initiatives for employees, among others. To our knowledge, we have not experienced a material information security breach nor incurred any penalties or settlements regarding information security.

 

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Director Assessment and Board Refreshment

The Nominating and Corporate Governance Committee believes that a strong director assessment process and periodic Board refreshment enhances the effectiveness of the Board and is an essential element of sound corporate governance.

Director assessment is conducted on an annual basis at both the full Board and individual director level:

Annual Board Member Self-Assessment: The director self-assessment process typically begins in August, when a telephonic survey is conducted with each director by a third party, generally a partner from our external legal counsel. The telephonic survey, which is updated annually, allows the interviewer to more fully assess and understand the needs, comments and patterns resulting from the individual conversations. This interview process elicits each director’s opinions on the overall effectiveness of the Board and its committees, the information the Board receives, the conduct of Board meetings, communication among directors and management, the oversight of key business risks and environmental, social and governance issues, Board composition, and any other matters that any director wishes to raise. The results are summarized in an anonymous matter and reviewed by the Nominating and Corporate Governance Committee during its fourth-quarter meeting and key findings and observations are reported to the full Board for discussion and action, if appropriate. This process has resulted in several meaningful improvements to the effectiveness of our Board meetings and timing and means of providing information to the Board.

Annual Board Member Review: A thorough and in-depth review is conducted for the directors whose term will expire at the next annual general meeting of shareholders. The review assesses each director based on his or her Board and committee experience to date and the skills and experiences deemed appropriate to meet the current and future needs of Horizon and the Board. The review consists of a three-part process to determine if each director should seek another three-year term.

 

   

The Chair of the Nominating and Corporate Governance Committee conducts one-on-one reviews with each director to ensure maximum frankness, confidentiality and respect for the individual. These meetings are designed to gain the directors’ perspective on their contributions to the Board and whether they believe continuing for another term is appropriate and advisable.

 

   

The Chair of the Nominating and Corporate Governance Committee then meets individually with the members of the Nominating and Corporate Governance Committee to seek their views on the directors.

 

   

Finally, the Chair of the Nominating and Corporate Governance Committee meets with the Chairman of the Board and lead independent director to share the results of the reviews and determine the outcome.

As a result of our Board assessment process, since 2017, two prior directors did not stand for re-election and three new directors have been added to the Board. Each of our new directors, two of whom are female, have brought new and different skills, experience and qualifications to the Board. This refreshment of the Board serves to better meet the current and expected future needs of Horizon given the evolution of our business and strategy over the last several years.

 

Director Selection

The Nominating and Corporate Governance Committee employs a rigorous, thorough and in-depth process to identify director candidates and recommend the strongest possible director nominees to the full Board.

First, the Nominating and Corporate Governance Committee deliberates on and determine the skills and experience that would best serve the Board and Horizon and that would address any gaps identified in the annual assessment process.

An executive search firm is then retained to assist in identifying prospective candidates. In addition, the Nominating and Corporate Governance Committee considers director candidates recommended by shareholders, directors and other sources.

When selecting candidates for recommendation to the Board, the Nominating and Corporate Governance Committee consider the attributes of the candidates and the needs of the Board and reviews all candidates in the same manner, regardless of the source of the recommendation. In evaluating director nominees, a candidate is expected to have certain minimum qualifications, including being able to read and understand basic financial statements, having familiarity with our business and industry, having high moral character and mature judgment and being able to work collegially with others. In addition, factors such as the following may be considered:

 

   

the independence standards as set forth in the applicable Nasdaq listing standards, the presence of any material interests that could cause a conflict between our interests and the interests of the director nominee, and the director nominee’s ability to exercise his or her best business judgment in the interest of all shareholders;

 

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the knowledge, skills and experience of the director nominee, including experience in the industry in which Horizon operates, as well as in the general areas of clinical development, business, finance, management and public service, in light of prevailing business conditions and the knowledge, skills and experience already possessed by other members of the Board;

 

   

the director nominee’s ability to devote sufficient time to the business of the Board and at least one of the standing committees of the Board, in light of the number of other boards on which the director nominee serves (for profit and not-for-profit) and the other business and professional commitments of the director nominee;

 

   

the appropriate size and the diversity of the Board;

 

   

how the director nominee’s skills and experience would complement and enhance the Board’s overall mix of skills and experience; and

 

   

the director nominee’s experience with accounting rules and practices.

Before the Nominating and Corporate Governance Committee recommends a qualified director nominee to the Board for consideration, the nominee is interviewed by each Board member and meets with the chief executive officer and other senior executives.

 

Director Commitments

The Nominating and Corporate Governance Committee and the Board believe that all directors should have sufficient time and attention to devote to Board duties and to otherwise fulfill the responsibilities required of directors. In assessing whether directors and nominees for director have sufficient time and attention to devote to Board duties, the Nominating and Corporate Governance Committee considers, among other things, whether directors may be “overboarded,” which refers to the situation where a director serves on an excessive number of boards. Our Corporate Governance Guidelines also require that non-employee directors seek approval from the Chairman or the lead independent director in advance of accepting an invitation to serve on any additional corporate boards or board committee of another company. Management members of the Board must advise the lead independent director and consult with the Chair of the Nominating and Corporate Governance Committee in advance of accepting an invitation to serve on the board of another company and should only do so to the extent such service would not detract from his or her ability to fulfill his or her management functions at the Company. The Nominating and Corporate Governance Committee and our Board believe that each of our directors has demonstrated the ability to devote sufficient time and attention to Board duties and to otherwise fulfill the responsibilities required of directors.

 

Diversity Policy

The Board believes that maintaining a diverse membership enhances the Board’s deliberations and enables the Board to better represent all of Horizon’s constituents, and as such has a formal diversity policy. As part of the policy, the Nominating and Corporate Governance Committee annually reviews the tenure, performance and contributions of existing Board members to the extent they are candidates for re-election and considers all aspects of each candidate’s qualifications and skills with the goal of ensuring the Board has diversity of experience and perspectives as well as race, gender, geography, and areas of expertise. To further this goal, the Board is committed to including in each director search highly qualified candidates who reflect diverse experiences and backgrounds, including diversity of gender and race. The diversity policy is available on our website at www.horizontherapeutics.com.

Shareholders who wish to recommend individuals for consideration by the Nominating and Corporate Governance Committee to become nominees for election to the Board at an Annual General Meeting of Shareholders must do so by delivering a written recommendation to the Nominating and Corporate Governance Committee. See “Other Information – Shareholder Proposals” in this Proxy Statement for additional information.

 

Executive Management Succession Planning

A key responsibility of the Board and critical to our success is ensuring that Horizon has the continuity of leadership and appropriate talent to lead the company and drive the execution of our strategy. We have a robust succession planning process, overseen by the Nominating and Corporate Governance Committee, which facilitates periodic Board executive sessions to discuss succession and development matters. On an annual basis, the Nominating and Corporate Governance Committee reviews and approves the succession and development plans for our chief executive officer, which includes selection criteria and the evaluation of potential internal candidates. In addition, the Nominating and Corporate Governance Committee reviews succession plans of other members of executive management, as well as their attributes, qualifications and development plans.

 

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In November 2021, Paul Hoelscher, our executive vice president, chief financial officer (CFO), notified us of his intention to retire in May 2022, continuing on as an advisor through May 2023 to ensure a smooth transition. Mr. Hoelscher, who has served as our CFO since 2014, will be succeeded by Aaron Cox, executive vice president, finance, who has been with Horizon since 2016. The process followed for Mr. Hoelscher’s leadership succession planning, as well as the transition period, illustrates the value of our robust succession planning process for the CFO role over the past several years. Mr. Cox, with his extensive knowledge of our business and his strong financial background, is well equipped to succeed Mr. Hoelscher: during his tenure with Horizon, he has been a leader in many of our major strategic efforts, including corporate development, and he has led our capital markets initiatives.

The Board is also regularly apprised of high-leadership potential candidates at Horizon and the plans for their development and potential roles. Board members have the chance to meet with these individuals at Board meetings, at dinners with Board members or in individual meetings as appropriate. We arrange for Board members to meet with key talent when they visit our offices. At each Board meeting, our chief human resources and chief diversity officer updates the Board on different key human capital management matters such as diversity, equity and inclusion, recruitment, development and retention. The Board also reviews our annual employee surveys and is briefed on the responses and targeted actions generated from the survey results.

 

Committees of the Board of Directors

The Board has four standing committees:

 

   

Audit Committee

 

   

Compensation Committee

 

   

Nominating and Corporate Governance Committee

 

   

Transaction Committee

All committees comprise independent directors within the meaning of the applicable Nasdaq listing standards. A description of each committee of the Board is provided below.

The following table provides membership and meeting information for 2021 for each of the Board committees:

 

         
      Audit      Compensation     

Nominating and

Corporate

Governance

     Transaction  

Timothy P. Walbert

                                   

William F. Daniel

     LOGO        LOGO                    

Michael Grey ( LOGO )

     LOGO                 LOGO           

Jeff Himawan, Ph.D. (1)

              LOGO                 LOGO  

Susan Mahony, Ph.D.(2)

              LOGO                 LOGO  

Gino Santini(3)

              LOGO                 LOGO  

James Shannon, M.D.(4)

                       LOGO        LOGO  

H. Thomas Watkins

     LOGO                 LOGO           

Pascale Witz

     LOGO                 LOGO           

Total meetings in 2021

     5        8        4        5  

 

LOGO = Chair    LOGO = Member    LOGO = Lead Independent Director

 

(1)

Dr. Himawan served as the Chair of the Compensation Committee until July 2021.

(2)

Dr. Mahony has served as the Chair of the Compensation Committee since July 2021.

(3)

Mr. Santini served as the Chair of the Transaction Committee until July 2021.

(4)

Dr. Shannon has served as the Chair of the Transaction Committee since July 2021.

 

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Audit Committee

The Audit Committee assists the Board in fulfilling its oversight responsibility with respect to, among other things:

 

   

our corporate accounting and financial reporting practices;

 

   

the system of internal control over financial reporting;

 

   

the audit process;

 

   

the quality and integrity of our financial statements;

 

   

the qualifications, independence and performance of our independent registered public accounting firm;

 

   

the qualifications, independence and performance of our internal audit function; and

 

   

major financial risk exposures, information security and technology risks (including cybersecurity).

The independent registered public accounting firm, internal audit and management each periodically meet privately with the Audit Committee.

The Board has determined that each of Mr. Daniel, Mr. Grey, Mr. Watkins and Ms. Witz qualify as “audit committee financial experts” within the meaning of applicable SEC rules. In making this determination, the Board has considered their formal education, the nature and scope of their previous experience and their financial and corporate governance expertise.

Report of the Audit Committee of the Board of Directors

The material in this report is not “soliciting material,” is not deemed “filed” with the SEC and is not to be incorporated by reference in any of our filings under the Securities Act of 1933, as amended (the Securities Act), or the Securities Exchange Act of 1934, as amended (Exchange Act), whether made before or after the date hereof and irrespective of any general incorporation language in any such filing.

The Audit Committee has reviewed and discussed the audited financial statements for the year ended December 31, 2021, with Horizon management. The Audit Committee has discussed with the independent registered public accounting firm the matters required to be discussed by Auditing Standard No. 1301, Communications with Audit Committees, as adopted by the Public Company Accounting Oversight Board (PCAOB). The Audit Committee has also received the written disclosures and the letter from the independent registered public accounting firm required by applicable requirements of the PCAOB regarding the independent registered public accounting firm’s communications with the Audit Committee concerning independence and has discussed with the independent registered public accounting firm the accounting firm’s independence. Based on the foregoing, the Audit Committee has recommended to the Board that the audited financial statements be included in Horizon’s Annual Report on Form 10-K for the fiscal year ended December 31, 2021.

Audit Committee

William F. Daniel, Chair

Michael Grey

H. Thomas Watkins

Pascale Witz

Compensation Committee

The Compensation Committee:

 

   

oversees, reviews and approves or recommends for adoption our compensation policies, plans and programs;

 

   

reviews and approves or recommends to the full Board, as appropriate, the compensation to be paid to our executive officers and directors;

 

   

conducts compensation risk assessments; and

 

   

prepares and reviews the Compensation Committee report included in our annual Proxy Statement.

In making its compensation decisions and recommendations, the Compensation Committee may take into account the recommendations of the chief executive officer and other senior management. Other than giving such recommendations, however, the chief executive officer and other senior management have no formal role and no authority to determine the amount or form of executive and director compensation. The processes and procedures used by the Compensation Committee for the consideration and determination of executive compensation are described in the section of this Proxy Statement captioned, ‘‘Compensation Discussion and Analysis – Compensation Determination Process.’’

 

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The Compensation Committee may, at our expense, retain legal counsel (which may, but need not be, our regular corporate counsel) and other consultants and advisors, other than in-house legal counsel and certain other types of advisors, to assist it with its functions only after taking into consideration six factors, prescribed by the SEC and Nasdaq, that bear upon the advisor’s independence; however, there is no requirement that any advisor be independent. The Compensation Committee has authority to approve such advisors’ fees and other retention terms and to terminate its relationship with any advisor that it retains. In addition, the Compensation Committee has authority to delegate its responsibilities to subcommittees or individual committee members.

The Compensation Committee has engaged Aon’s Human Capital Solutions practice, a division of Aon plc (Aon), as its independent consultant since 2016. For additional information regarding our processes and procedures for the consideration and determination of executive and director compensation, including the role of Aon in determining and recommending executive and director compensation and the aggregate cost of Aon’s executive and director compensation consulting services during 2021, see the sections of this Proxy Statement entitled “Compensation Discussion and Analysis – Compensation Determination Process” and “Non-Employee Director Compensation.” With respect to non-employee director compensation matters, our Compensation Committee recommends to our Board and our Board determines and sets non-employee director compensation. Our compensation arrangements for our non-employee directors are described under the section of this Proxy Statement entitled “Non-Employee Director Compensation.”

Compensation Committee Interlocks and Insider Participation

No member of our Compensation Committee has ever been an executive officer or employee of Horizon. None of our executive officers currently serves, or has served during the last completed year, on the compensation committee or board of directors of any other entity that has one or more officers serving as a member of our Board or Compensation Committee.

Nominating and Corporate Governance Committee

The Nominating and Corporate Governance Committee oversees all aspects of our corporate governance functions on behalf of the Board, including, but not limited to:

 

   

making recommendations to the Board regarding corporate governance issues;

 

   

identifying, reviewing and evaluating candidates to serve as our directors consistent with criteria approved by the Board and reviewing and evaluating incumbent directors;

 

   

serving as a focal point for communication between such candidates, non-committee directors and our management;

 

   

nominating candidates to serve as directors;

 

   

overseeing our key enterprise risks and risk-management strategies;

 

   

making other recommendations to the Board regarding affairs relating to our directors;

 

   

overseeing environment, social and governance (ESG) matters relevant to Horizon’s business, including company policies and public disclosures; and

 

   

providing oversight assistance in connection with our legal, regulatory and ethical compliance programs, policies and procedures as established by management and the Board.

The process used by the Nominating and Corporate Governance Committee to identify a nominee to serve as a member of the Board depends on the qualities being sought. The Board engages an executive search firm to assist the Nominating and Corporate Governance Committee in identifying individuals qualified to be Board members. The process used by the Nominating and Corporate Governance Committee to identify nominees is described in the section of this Proxy Statement captioned, ‘‘Director Selection.”’

Transaction Committee

The functions of the Transaction Committee include, but are not limited to:

 

   

reviewing, considering and evaluating proposed product or business acquisitions or divestitures, licensing, distribution, promotion, collaboration and other commercial agreements and arrangements, joint ventures, and any other business development transactions;

 

   

reviewing, considering and evaluating proposed financing opportunities, including the issuance of equity, debt and convertible securities;

 

   

reviewing, considering and evaluating proposed modifications to Existing Debt Dealings (as defined in the charter of the Transaction Committee);

 

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monitoring negotiations and other communications with third parties in connection with potential business development transactions, financing opportunities and debt discharge opportunities;

 

   

meeting with management to identify and develop Board focus on issues and opportunities that will further our business development strategy;

 

   

periodically reviewing and evaluating prior transactions and financings for consistency with, and achievement of, our strategic business goals, objectives or plans; and

 

   

authorizing potential business development transactions, other business growth and diversification opportunities, general financing opportunities and opportunities for Existing Debt Dealings that the Transaction Committee determines to fall within the scope of our goals and business development strategy and that are in the best interest of our shareholders.

 

Shareholder Communications with the Board of Directors

Shareholders who wish to communicate with the Board may do so by sending written communications addressed to the Company Secretary of Horizon Therapeutics plc at 70 St. Stephen’s Green, Dublin 2, D02 E2X4, Ireland or by communicating online to the Board as a group. This information and an online communications form are available on our website at www.horizontherapeutics.com. Each communication will be reviewed by our Company Secretary to determine whether it is appropriate for presentation to the Board or such director on a periodic basis. Examples of inappropriate communications include advertisements, solicitations or hostile communications.

 

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NON-EMPLOYEE DIRECTOR COMPENSATION

Our directors perform a critical role in guiding Horizon’s strategic direction and overseeing management. Being a director entails many responsibilities and a substantial time commitment. Our compensation program for our non-employee directors reflects the critical function they perform and enables us to attract and retain highly qualified directors.

All current non-employee members of the Board are independent. Non-employee directors receive a combination of annual cash retainers and restricted stock unit (RSU) grants in amounts that correlate to their responsibilities and levels of Board participation, including service on Board committees. Our only employee director, Mr. Walbert, receives no separate compensation for his service as a director or chair.

Highlights

 

   

The Compensation Committee works to ensure that our non-employee director compensation is in line with compensation offered by peer companies that compete with us for director talent.

 

   

Our non-employee director compensation is designed to address the time, effort, expertise and accountability required of active Board membership. It also takes into consideration the substantial travel commitment on the part of our directors as a result of being an Irish headquartered company.

 

   

The annual cash compensation we pay our non-employee directors is based on their positions on the Board or the committees of the Board. We do not compensate Board members on a per-meeting basis.

 

   

The annual equity award granted to non-employee directors is made in RSUs only and does not include stock options.

 

   

The Compensation Committee reviews our non-employee director compensation annually.

 

   

Our non-employee director share ownership guidelines are industry-competitive.

Peer Groups

As an Irish headquartered company traded in the United States, we consider our non-employee director compensation, both in amount and structure, against two peer groups:

 

   

15 U.S.-traded, biotech and pharmaceutical companies we use for executive compensation comparative purposes (please see “Compensation Discussion and Analysis—Peer Group”); and

 

   

six Irish-domiciled, U.S.-listed biotech and pharmaceutical companies: Alkermes plc, Amarin Corporation plc, Endo International plc, Jazz Pharmaceuticals plc, Perrigo Company and Prothena Corporation plc.

Alkermes plc and Jazz Pharmaceuticals plc are in both peer groups.

Compensation Program

The Compensation Committee reviews the compensation for our non-employee directors annually. To assist with the review, Aon, an independent compensation consultant, prepares a comprehensive assessment of our non-employee director compensation program, which includes:

 

   

benchmarking director compensation against the same peer group used for executive compensation purposes;

 

   

reviewing any feedback received during our shareholder engagement program;

 

   

reviewing recent director compensation trends; and

 

   

reviewing related corporate governance best practices.

As part of the most recent review, conducted in October 2021, the Compensation Committee determined that:

 

   

our non-employee director compensation philosophy is aligned with that of our peers;

 

   

our mix of cash and equity appropriately balances short- and long-term needs;

 

   

our annual cash compensation paid to the members of our Nominating and Corporate Governance Committee and to the chair of our Nominating and Corporate Governance Committee was at the 25th percentile of our peers and should be increased to $10,000 and $20,000, respectively; and

 

   

our average director pay otherwise approximates the 50th to 75th percentile of our peers.

 

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As a result of this review, in October 2021, the Compensation Committee amended our compensation policy for non-employee directors to provide that the annual cash compensation paid to the members of our Nominating and Corporate Governance Committee and to the chair of our Nominating and Corporate Governance Committee would be $10,000 and $20,000, respectively.

Cash Compensation

Our compensation policy for non-employee directors who are not affiliated with any holder of more than 5 percent of our ordinary shares provides for annual cash compensation as set forth in the following table. The cash compensation is generally payable in equal quarterly installments at the end of each quarter in which the services are provided. For any independent director who joins after the beginning of the quarter, the cash compensation is pro-rated based on days served in that first partial quarter.

 

   

Director Position

  

Annual Cash  

Compensation  

 

Non-executive chairman or lead independent director

   $ 100,000      

All other non-employee directors

   $ 60,000  

Committee chair fees

    

Audit

   $ 30,000  

Compensation

   $ 20,000  

Nominating and Corporate Governance(1)

   $ 20,000  

Transaction

   $ 20,000  

Non-chair committee member fees

    

Audit

   $ 15,000  

Compensation

   $ 10,000  

Nominating and Corporate Governance(2)

   $ 10,000  

Transaction

   $ 12,500  

 

(1)

In October 2021, the Compensation Committee increased the amount to $20,000 from the previous amount of $15,000.

 

(2)

In October 2021, the Compensation Committee increased the amount to $10,000 from the previous amount of $7,500.

Under our compensation policy, we reimburse our directors for their travel-related expenses, including lodging and other reasonable expenses incurred in attending meetings of the Board and committees of the Board.

We also reimburse eligible non-employee directors up to $15,000 annually for financial planning and tax services.

Equity Compensation

On the date of each Annual General Meeting of Shareholders that coincides with or follows the non-employee director’s initial appointment or election to the Board, eligible non-employee directors will automatically be granted RSUs with an aggregate value of $400,000, which will vest in full upon the earlier of the (i) first anniversary of the date of grant and (ii) date of the next Annual General Meeting of Shareholders.

Any eligible non-employee director who is first elected or appointed to the Board on any date other than an Annual General Meeting of Shareholders will automatically be granted RSUs on the date that they are first elected or appointed to the Board with a value equal to the annual RSU grant, prorated based on the number of days between such non-employee director’s start date and the one-year anniversary of the date of the Annual General Meeting of Shareholders that most recently preceded such start date, which will vest in full upon the earlier of (i) the first anniversary of the date of the Annual General Meeting of Shareholders that most recently preceded such director’s start date and (ii) the date of the next Annual General Meeting of Shareholders.

 

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Non-Employee Director Compensation Summary

The following table sets forth compensation information for our non-employee directors who earned or received compensation under our compensation policy for non-employee directors or otherwise in 2021:

 

         

Name

  

Fees Earned

or Paid in Cash

     Stock Awards (1)(2)     

All Other

Compensation(3)

     Total  

William F. Daniel

   $ 100,000      $ 399,918      $ 12,870 (4)     $ 512,788  

Michael Grey

   $ 123,125      $ 399,918      $ 4,918      $ 527,961  

Jeff Himawan, Ph.D.

   $ 87,500      $ 399,918      $ 25,065      $ 512,483  

Susan Mahony, Ph.D.

   $ 87,500      $ 399,918      $ 23,556      $ 510,974  

Gino Santini

   $ 86,250      $ 399,918      $ 24,974      $ 511,142  

James Shannon, M.D.

   $ 84,375      $ 399,918      $ 24,659      $ 508,952  

Thomas H. Watkins

   $ 91,250      $ 399,918      $ 24,974      $ 516,142  

Pascale Witz

   $ 83,125      $ 399,918      $ 18,746      $ 501,789  

 

(1)

The amounts shown in this column reflect the grant date fair value of the awards issued to our non-employee directors during 2021, calculated in accordance with the provisions of ASC Topic 718. See the assumptions used in Note 18 — “Share-Based and Long-Term Incentive Plans” in the Notes to our consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2021.

 

(2)

The aggregate number of shares subject to outstanding stock options and RSU awards held as of December 31, 2021, by the non-employee directors who are listed in the table above, which includes grants made to the non-employee directors in 2021 and prior calendar years, are as follows: 108,240 shares subject to outstanding stock options and 4,223 shares subject to outstanding RSUs for Mr. Daniel; 114,954 shares subject to outstanding stock options and 4,223 shares subject to outstanding RSUs for Mr. Grey; 86,406 shares subject to outstanding stock options and 4,223 shares subject to outstanding RSUs for Dr. Himawan; 4,223 shares subject to outstanding RSUs for Dr. Mahony; 114,954 shares subject to outstanding stock options and 4,223 shares subject to outstanding RSUs for Mr. Santini; 52,161 shares subject to outstanding stock options and 4,223 shares subject to outstanding RSUs for Dr. Shannon; 154,954 shares subject to outstanding stock options and 4,223 shares subject to outstanding RSUs for Mr. Watkins; and 84,393 shares subject to outstanding stock options and 4,223 shares subject to outstanding RSUs for Ms. Witz.

 

(3)

Represents financial planning services payments, including tax gross-up.

 

(4)

Includes a $10,000 annual fee paid to Mr. Daniel in 2021 associated with his service as a non-executive director on the board of one of our wholly owned subsidiaries, Horizon Therapeutics Ireland DAC.

Non-Employee Director Share Ownership Guidelines

We have share ownership guidelines for our non-employee directors. The share ownership guidelines were amended in October 2021 and require that each director accumulate an ownership interest in our ordinary shares with a value equal to at least 5x the annual cash board service retainer within five years of the date the non-employee director first becomes subject to the guidelines.

Individual ownership interest versus the guidelines is reviewed annually using an average share price for a calendar quarter prior to the review date. Shares that count toward satisfaction of these guidelines include: shares owned outright by the individual (including stock units that have vested but not yet settled); shares subject to RSUs that have not vested; and shares held in trust for the benefit of the individual or his/her spouse.

All of our non-employee directors subject to the share ownership guidelines met the guidelines as of March 31, 2021.

 

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EXECUTIVE OFFICERS AND SIGNIFICANT EMPLOYEES

The following table sets forth information regarding executive officers and significant employees as of March 15, 2022:

 

     

Name

  

Age

  Position with the Company

Executive Officers

      

Timothy P. Walbert

   54   Chairman, President and Chief Executive Officer

Sean M. Clayton(1)

   43   Executive Vice President, General Counsel

Michael A. DesJardin

   64   Executive Vice President, Technical Operations and Corporate Quality

Paul W. Hoelscher(2)

   57   Executive Vice President, Chief Financial Officer

Andy Pasternak

   51   Executive Vice President, Chief Strategy Officer

Jeffrey W. Sherman, M.D., FACP

   67   Executive Vice President, Chief Medical Officer

Elizabeth H.Z. Thompson, Ph.D.

   47   Executive Vice President, Research and Development

Significant Employees

      

Aaron L. Cox(3)

   39   Executive Vice President, Finance

 

(1)

Mr. Clayton joined us on February 28, 2022.

 

(2)

In October 2021, Mr. Hoelscher notified us of his intention to retire from his position as our executive vice president, chief financial officer, effective May 16, 2022.

 

(31)

In November 2021, we announced that Mr. Cox would succeed Mr. Hoelscher as our executive vice president, chief financial officer upon Mr. Hoelscher’s retirement on May 16, 2022.

The following biographical information for our executive officers and significant employees other than Mr. Walbert, whose biographical information is included in Proposal 1, is as of March 15, 2022.

Executive Officers

Sean M. Clayton. Mr. Clayton has served as our executive vice president, general counsel since February 2022. Prior to joining Horizon, Mr. Clayton was a partner at Cooley LLP, a global law firm, where he practiced from October 2004 until February 2022, most recently as the head of the firm’s San Diego corporate practice. Before that, Mr. Clayton served as a law clerk to Judge Irma E. Gonzalez (Ret.) of the U.S. District Court for the Southern District of California. Mr. Clayton received a bachelor of arts degree in political science and economics from the University of California, San Diego and a juris doctorate degree from Stanford Law School.

Michael A. DesJardin. Mr. DesJardin has served as our executive vice president, technical operations and corporate quality since February 2017. Mr. DesJardin previously served as our senior vice president, technical operations from October 2016 to November 2016 and as our senior vice president, life cycle management from December 2016 to January 2017. Mr. DesJardin joined Horizon from Raptor in October 2016 as part of the Raptor acquisition. While at Raptor, Mr. DesJardin was the senior vice president of technical operations from April 2015 to October 2016. Prior to that, Mr. DesJardin served as senior vice president of product development at Jazz Pharmaceuticals plc (formerly Jazz Pharmaceuticals, Inc.) (Jazz) from July 2004 to March 2015. Mr. DesJardin spent nine years as an executive director and engineering fellow at ALZA Corporation and spent 15 years at the Dow Chemical Company working in pharmaceutical and agricultural chemical development for Marion Merrill Dow. Mr. DesJardin has over 40 years of experience in pharmaceutical development. Mr. DesJardin received a bachelor of science degree in chemical engineering from the University of California, Berkeley, and is a registered professional engineer in the State of California.

Paul W. Hoelscher. Mr. Hoelscher has served as our executive vice president, chief financial officer since October 2014. Previously, Mr. Hoelscher was our executive vice president, finance from June 2014 through September 2014. Prior to joining Horizon, Mr. Hoelscher served as senior vice president, finance-treasury and corporate development of OfficeMax, Inc., from August 2013 to May 2014, and as vice president, finance-treasury and corporate development of OfficeMax from August 2012 to July 2013. Prior to that, Mr. Hoelscher served in various finance roles at Alberto Culver Company from 1992 to 2012 and in various positions in the audit practice at KPMG LLP from 1986 to 1993. He serves on the board of Reneo Pharmaceuticals, Inc., a public pharmaceutical company; on the board of trustees of the Illinois Region of The Leukemia and Lymphoma Society and on the Chicago Regional Advisory Committee of the Ireland Funds. Mr. Hoelscher received his bachelor of science degree in accountancy from the University of Illinois at Urbana-Champaign and is a certified public accountant.

 

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Andy Pasternak. Mr. Pasternak has served as our executive vice president, chief strategy officer since March 2020 and previously served as our executive vice president, chief business officer from November 2019 until March 2020. Prior to joining Horizon, Mr. Pasternak served as a partner of Bain & Company, Inc., a global management consulting firm, from 2008 until October 2019, where he most recently led Bain & Company’s healthcare practice in the Americas and was a member of the mergers and acquisition practice. Mr. Pasternak earned a master of business administration degree from the University of Chicago and a bachelor of arts degree in economics from Northwestern University.

Jeffrey W. Sherman, M.D., FACP. Dr. Sherman has served as our executive vice president, chief medical officer since January 2018. From September 2014 to January 2018, Dr. Sherman served as our executive vice president, research and development and chief medical officer. He joined Horizon in 2009 as our executive vice president, development, manufacturing, regulatory affairs and chief medical officer. Prior to joining Horizon, Dr. Sherman served as president and board member of the Drug Information Association (DIA), a nonprofit professional association of members who work in government regulatory, academia, patient advocacy and the pharmaceutical and medical device industry. Before that he held other management roles at IDM Pharma, Inc., Takeda Global Research & Development, NeoPharm, Inc. and G.D. Searle, LLC/Pharmacia. Dr. Sherman serves on the board of directors of Xeris BioPharma Holdings, previously two public biopharma companies, Strongbridge Biopharma plc (Stonebridge) and Xeris Pharmaceuticals Inc. (Xeris) until October 2021, when Xeris acquired Strongbridge. Dr. Sherman previously served on the boards of directors of both Strongbridge and Xeris. He also serves on the board of directors of the Biotechnology Innovation Organization (BIO) Health Section Governing Board and the board of advisors of the Center for Information and Study on Clinical Research Participation (CISCRP). He is an adjunct assistant professor of Medicine at the Northwestern University Feinberg School of Medicine and a diplomat of the National Board of Medical Examiners and the American Board of Internal Medicine. Dr. Sherman received his medical degree from the Rosalind Franklin University/ Chicago Medical School.

Elizabeth H.Z. Thompson, Ph.D. Dr. Thompson has served as our executive vice president, research and development since March 2021. Previously she served as our group vice president, development and external search from January 2020 to March 2021, and as our vice president, clinical development (rare disease) from June 2018 to January 2020. Prior to joining Horizon, she was with AbbVie as group scientific director, clinical development from April 2017 to May 2018 and senior scientific director, clinical development, from September 2015 to April 2017. While at AbbVie, she was the clinical lead for risankizumab (SKYRIZI), supporting global submissions and approvals. Before AbbVie, Dr. Thompson held roles at Raptor, InterMune and Amgen in a career spanning clinical development, business development and medical communications. Dr. Thompson received a bachelor of science degree in chemistry from Harvey Mudd College and a doctorate in macromolecular and cellular structure and chemistry from The Scripps Research Institute.

Significant Employees

Aaron L. Cox. Mr. Cox has served as our executive vice president, finance since November 2021. Mr. Cox previously was senior vice president, corporate development, in addition to serving as chief of staff for Timothy P. Walbert, from July 2017 to November 2021; as senior director, business development, from May 2017 to July 2017 and as director, business development from April 2016 to May 2017. Prior to joining Horizon in April 2016, Mr. Cox served as vice president, capital markets at BMO Capital Markets from July 2012 to April 2016, and before that, he held investment banking roles at Stout from 2007 to 2010 and JMP Securities from 2005 to 2006. Mr. Cox received a master of business administration from the University of Chicago and a bachelor of business administration in finance from the University of Notre Dame.

 

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COMPENSATION DISCUSSION AND ANALYSIS

This Compensation Discussion and Analysis (CD&A) discusses the compensation philosophy, policies and principles underlying our executive compensation decisions made for 2021 compensation. This CD&A provides qualitative information on the factors relevant to these decisions and the manner in which compensation is awarded to the following executive officers who have been named in the Summary Compensation Table included in this Proxy Statement and whom we refer to as our named executive officers (NEOs).

 

   

Timothy P. Walbert

   Chairman, President and Chief Executive Officer
   

Paul W. Hoelscher(1)

   Executive Vice President, Chief Financial Officer
   

Andy Pasternak

   Executive Vice President, Chief Strategy Officer
   

Jeffrey W. Sherman, M.D., FACP

   Executive Vice President, Chief Medical Officer
   

Barry J. Moze(2)

   Former Executive Vice President, Chief Administrative Officer
   

Brian K. Beeler(3)

   Former Executive Vice President, General Counsel

 

  (1)

In October 2021, Mr. Hoelscher notified us of his intention to retire from his position as our executive vice president, chief financial officer effective May 16, 2022.

 

  (2)

Mr. Moze retired from Horizon effective January 6, 2022.

 

  (3)

Mr. Beeler’s employment terminated effective January 6, 2022.

Quick CD&A Reference Guide

 

   

Executive Summary

         Page 40      
   

2021 Pay-for-Performance Overview

         Page 42      
   

Objectives and Philosophy

         Page 43      
   

Compensation Determination Process

         Page 44      
   

Elements of Executive Compensation

         Page 46      
   

Base Salary

         Page 47      
   

Short-Term Incentives: Annual Bonus Plan

         Page 47      
   

Long-Term Incentives

         Page 52      
   

Additional Compensation Policies and Practices

         Page 55      

 

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Executive Summary

2021 – Year at a Glance

 

LOGO

 

(1)

Uses 2018 net sales and adjusted EBITDA and 2021 net sales and adjusted EBITDA. Adjusted EBITDA is a non-GAAP measure; please refer to the discussion of non-GAAP financial measures and the reconciliations to GAAP measures on page 113 of our Annual Report on Form 10-K for the year ended December 31, 2021.

Net sales and adjusted EBITDA growth percentages represent year-over-year growth over full-year 2020.

EBITDA: Earnings before interest, taxes, depreciation and amortization. | TSR: Total shareholder return through December 31, 2021. | NBI: Nasdaq Biotechnology Index.

Prior TSR results are not intended to forecast or be indicative of possible future performance of our ordinary shares.

A Milestone Year in Our Transformation

 

LOGO

 

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For additional discussion about our business, our key differentiators, our pipeline and our key growth drivers TEPEZZA, KRYSTEXXA and UPLIZNA, see the discussion under the heading “Business Overview” in the Proxy Statement Summary on page 3.

Total Shareholder Return

Our disciplined approach, clear strategy, business development capabilities and strong commercial and R&D execution have all worked together to generate consistent above-market returns for our shareholders. Our TSR significantly outperformed both our peer group and the NBI over the one-, three- and five-year periods ended December 31, 2021. With our expanded pipeline and key growth medicines, we believe Horizon is well positioned for sustainable long-term growth.

Our Total Shareholder Returns Significantly Exceed Our Peers(1) and the NBI

1-, 3- and 5-Year Periods Ended December 31, 2021

 

LOGO

 

(1)

The peer group used for the TSR calculations for the 1-, 3- and 5-year periods ended December 31, 2021 is the peer group approved for purposes of making 2021 compensation decisions and comparative performance analysis, as shown on page 45.

Our Pay Program

Our executive compensation program continues to be based on attracting and retaining top talent with experience in building and leading a successful rare disease biotech company, while providing competitive compensation and benefits packages that create a direct, meaningful link between business results and compensation opportunities. In doing so, we believe our thoughtful approach aligns the interests of management, employees, patients, shareholders and other stakeholders in setting priorities and executing our long-term business strategy.

Say-on-Pay Results and Shareholder Engagement

We value the views of our shareholders and we continue to have significant and meaningful engagement each year with our shareholders regarding our compensation and governance practices, generally led by a member of the Board of Directors, and we plan to continue this practice. Our shareholder outreach and engagement program is used to solicit feedback, understand investor viewpoints and incorporate their feedback into future evaluations of our compensation program. In particular, feedback from these outreach efforts informs the Compensation Committee’s thinking when evaluating our current executive compensation program and when considering potential modifications to the program on a go-forward basis.

During our shareholder engagement cycle before our 2021 Annual General Meeting of Shareholders, as well as during our off-season shareholder engagement cycle in late 2021 and early 2022, we offered engagement opportunities to shareholders who represented approximately 60 percent of our shares outstanding. Shareholder feedback from our most recent engagement efforts was positive. At our 2021 Annual General Meeting of Shareholders, our say-on-pay proposal received the support of approximately 96 percent of the shares voted. We believe this high level of support is a result of our appropriately designed executive compensation program, which is designed to pay for performance, as well as our comprehensive shareholder outreach and engagement program.

 

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Changes to our compensation program over the past several years that were heavily influenced by shareholder feedback include:

 

   

Longer-term performance metrics focused on long-term shareholder value creation. We have continued to use performance-based equity compensation in our annual long-term incentive plan, influenced by feedback from our ongoing shareholder engagement regarding executive compensation. Most recently, shareholder feedback informed our decision to update the design of our performance share unit (PSU) awards for 2021 to include longer-term (two- and three-year) performance periods across all PSU performance goal components, each of which is meaningfully linked to our long-term business strategy and designed to drive shareholder value creation. This change also serves to avoid potential duplication of the performance goals for our annual bonus plan, in line with additional feedback received from shareholders during our outreach.

 

   

Incentive compensation recoupment policy. This policy, which the Compensation Committee approved in January 2018, enables us to recover performance-based cash and equity compensation in the event of a restatement of financial results if it is determined not to have been earned by our executive officers.

 

   

Annual long-term incentive grants. Our philosophy on granting equity has changed as a result of shareholder feedback. In January 2018, we shifted from “front-loaded” awards covering a multi-year period to regular, annual grants of long-term incentives.

We greatly value the dialogue we have with our shareholders and remain committed to conducting consistent engagement going forward.

2021 Pay-for-Performance Overview

A significant portion of total target compensation for our chief executive officer (CEO) and other NEOs is structured in the form of “at-risk” compensation, consisting of annual performance-based incentives and PSUs.

In line with our compensation objectives, including linking executive pay with performance, short-term performance-based incentives and PSUs are dependent on Horizon’s performance, aligning our executives’ interests with those of our shareholders for near- and long-term performance. In addition, the restricted share unit (RSU) portion of the total target compensation has a time-based vesting component so that the total potential value realized from the RSU portion is dependent on our long-term share price performance.

Total target compensation for 2021, as shown below, consists of annual base salary, target annual bonus, and target PSU and RSU grant values. Approximately 56 percent of our CEO’s total target compensation for 2021 was tied to the achievement of pre-established performance goals, with time-based equity awards making up approximately 38 percent of the total.

 

CEO 2021 Pay Mix at Target    NEO 2021 Pay Mix at Target
LOGO    LOGO

 

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Compensation Program and Governance

Our Compensation Committee is responsible for oversight of our executive compensation program. A significant part of this oversight entails aligning management interests with our business strategies and goals, as well as the interests of our shareholders, employees and patients, while also mitigating excessive risk-taking. We continually take steps to strengthen and improve our executive compensation policies and practices. Highlights of our current policies and practices include:

 

   
What We Do    What We Don’t Do

  Align executive compensation with corporate and individual performance

  

×   No guaranteed bonuses or salary increases

   

  Maintain strong share ownership guidelines for our directors and executives

  

×   No repricing of stock options without shareholder approval

   

  Maintain appropriate balance between short- and long-term compensation, which discourages short-term risk taking at the expense of long-term results

  

×   No dividends or dividend equivalents paid on unearned shares

   

  Seek annual shareholder advisory approval on our executive compensation

  

×   No NEO excise tax gross-ups

   

  Engage an independent consultant reporting directly to the Compensation Committee

    
   

  Apply anti-pledging and anti-hedging policy for our shares

    
   

  Cap short- and long-term incentive payouts

    
   

  Require a one-year holding period for shares issued at vesting for all post-2017 RSU and PSU grants for executive officers

    
   

  Provide retiree medical benefits for our executives and employees to support orderly succession

    
   

  Apply an incentive compensation recoupment “clawback” policy on performance-based cash and equity incentives

    
   

  Conduct annual compensation risk assessments

    
   

  Actively engage with our shareholders

    

 

Compensation Program Objectives and Philosophy

We believe in providing a competitive total compensation package to our executive officers through a combination of base salary, short-term performance-based cash incentives, long-term performance-based equity incentives, and severance and change-in-control benefits. Our executive compensation program is designed to achieve the following objectives:

 

   

align the interests of our executive officers, employees, patients and shareholders by motivating executive officers to achieve performance objectives that are intended to benefit the Company, our employees and patients impacted by the diseases our medicines treat, as well as increase shareholder value;

 

   

attract and retain talented and experienced executives to manage our business to meet our long-term objectives;

 

   

motivate and reward executives whose knowledge, skills and performance are critical to our success;

 

   

provide a competitive compensation package in which total compensation is determined in part by market factors, key performance objectives and milestones and the achievement level of these performance objectives and milestones by our executive officers; and

 

   

reward the achievement of key corporate and individual performance measures.

Our Compensation Committee believes that our executive compensation program should include short- and long-term performance incentive components, including cash and equity-based compensation, and should reward consistent performance

 

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that meets or exceeds expectations. The Compensation Committee evaluates both performance and compensation to make sure that the total compensation provided to our executive officers remains competitive relative to compensation paid by companies of similar size and stage of development that operate in the biotech industry and appropriately reflects our relative performance and our own strategic objectives.

 

Compensation Determination Process

Role of Compensation Committee

The Compensation Committee seeks to ensure that our executive compensation program is properly rewarding and motivating our executive officers while aligning their goals with our business strategy and the interests of our shareholders. To do this, our Compensation Committee conducts an annual review of the aggregate level of our executive compensation, the mix of elements used to compensate our executive officers and historic compensation levels, including prior equity awards.

When setting executive compensation opportunities, the Compensation Committee considers several factors, including:

 

   

each NEO’s role and responsibilities;

 

   

achievement of key performance objectives and milestones;

 

   

market factors, such as compensation practices of peer companies;

 

   

compensation survey data, as applicable, such as the Aon Radford Global Life Sciences Survey; and

 

   

retention concerns.

Role of Chief Executive Officer in Compensation Decisions

Our CEO typically evaluates the performance of other executive officers and other employees, along with the performance of the Company as a whole, against previously determined objectives, on an annual basis and makes recommendations to the Compensation Committee with respect to annual base salary adjustments, short-term performance-based cash incentives and annual equity grants for the other executives. The Compensation Committee exercises its own independent discretion in approving compensation for all executive officers and assessing corporate performance against the pre-established objectives. The CEO is not present during deliberations or voting with respect to his own compensation.

Risk Analysis

The Compensation Committee has reviewed our compensation policies applicable to our executive officers and other employees and believes that our policies do not encourage excessive and unnecessary risk-taking, and that the level of risk that they do encourage is not reasonably likely to have a material adverse effect on us. The design of our compensation policies and programs encourages our executive officers and other employees to remain focused on both our short- and long-term goals. For example, while our short-term incentive plan (our annual bonus plan) measures performance on an annual basis, our long-term incentive equity grants, which consist of time-based equity awards (RSUs) and performance-based equity awards (PSUs) vest over a number of years. Furthermore, our PSUs require that we achieve a specified level of performance over multi-year periods, which we believe encourages our executives and employees to focus on execution of our long-term strategy, thus limiting the potential value of excessive risk-taking.

Role of Independent Consultant

The Compensation Committee retains the services of third-party, independent executive compensation consultants from time to time, as it sees fit, in connection with the establishment of compensation programs and related policies. The Compensation Committee has engaged Aon’s Human Capital Solutions practice, a division of Aon plc (Aon), as its independent consultant since 2016. Total fees paid to Aon in 2021 were approximately $652,000. Aon was engaged to assist and advise on all aspects of compensation program design and pay setting, including, but not limited to, the following services:

 

   

providing the Compensation Committee information on compensation-related trends and developments in the marketplace;

 

   

informing the Compensation Committee of regulatory developments relating to executive compensation practices;

 

   

advising the Compensation Committee on appropriate peer companies for compensation pay levels and design practices, as well as relative performance comparisons;

 

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assessing the executive compensation structure to confirm that no design elements encourage excessive risk taking;

 

   

assessing the relationship between executive compensation and corporate performance;

 

   

conducting a total awards study and pay equity study in 2021; and

 

   

advising on market trends in the industry, including the continued impact of the COVID-19 pandemic, on compensation program design.

The Compensation Committee periodically assesses the independence of Aon under the applicable SEC and Nasdaq standards.

Peer Group

Although our Compensation Committee has historically used survey data from Aon as a tool in determining executive compensation, it typically has not used a formula or “benchmark” to set our executives’ compensation in relation to this data. Instead, the Compensation Committee generally references the 50th percentile of comparable peer companies in combination with multiple other factors, such as the executives’ respective levels of experience, tenure and responsibility in determining the total target compensation for all executives. The peer group used for making 2021 compensation decisions and comparative performance analysis is shown below and was updated by our Compensation Committee in July 2020, with a focus on publicly traded commercial biotech and pharmaceutical companies.

 

Alexion Pharmaceuticals, Inc.(1)

   Exelixis, Inc.    Sarepta Therapeutics, Inc.    

Alkermes plc

   Incyte Corporation    Seagen, Inc.    

Alnylam Pharmaceuticals, Inc.

   Ionis Pharmaceuticals, Inc.    Ultragenyx Pharmaceutical Inc    

BioMarin Pharmaceutical Inc.

   Jazz Pharmaceuticals plc    United Therapeutics Corporation    

bluebird bio, Inc.

   Neurocrine Biosciences, Inc.    Vertex Pharmaceuticals Inc.    

 

  (1)

Alexion was acquired in July 2021 by AstraZeneca plc and therefore is no longer a publicly traded company. However, because Alexion’s most recent fiscal year executive compensation was used in making 2021 compensation decisions and comparative performance analysis, Alexion remained in the 2021 proxy peer group.

The selection criteria used, as well as Horizon’s position relative to each criterion at the time of the peer group review process, were:

 

   
Criteria Used to Select Peer Group in July 2020     
     

 

Selection Criteria

 

  

 

Horizon Position

 

    

 

Headcount

 

  

 

between 450 and 4,200 employees

 

  

 

46th percentile

 

   

 

Revenue

 

  

 

between $600 million and $5.5 billion

 

  

 

62nd percentile

 

   

 

Market Capitalization

 

  

 

between $2.0 billion and $20.0 billion

 

  

49th percentile

(based on a
30-day average)

 

   

 

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Elements of Executive Compensation

Our executive compensation program primarily consists of base salary, annual cash incentives and long-term incentives delivered through equity and cash awards. Employees in more senior roles have an increasing proportion of their total pay package at risk and tied to performance given that their position has greater influence on our performance results.

 

       
Element    Form    Performance
Period
   Objective
Base Salary    Cash
(fixed)
   N/A   

•  Recognition of an individual’s role, responsibilities and experience

•  Provides competitive pay for retention purposes

Short-Term Incentive
(Annual Bonus Plan)
   Cash
(variable)
   Annual   

•  Variable pay designed to reward achievement of annual financial and strategic objectives

Long-Term Incentives   

PSU awards (variable)

 

RSU awards

(variable)

   Multi-year

 

N/A

  

•  Promotes an ownership culture

•  Aligns the interests of executives with those of shareholders

•  Provides meaningful incentives for management to execute on longer-term financial and strategic goals that drive shareholder value creation and support our retention strategy

2021 Executive Compensation at a Glance

 

         
Element   Form   Performance
Period
  2021
Metrics
  2021 Performance Levels
(% of Target Achieved)
Base Salary   Cash
(fixed)
  N/A   N/A   N/A
Short-Term Incentive (Annual Bonus Plan)   Cash
(variable)
  Annual  

Financial (60%):

•   Net Sales (35%)

•   Internal Adjusted EBITDA (25%)

 

Strategic (40%):

•   Culture and Compliance (10%)

•   Business Development (10%)

•   R&D and Technical Operations (10%)

•   Integration, Strategy and Financing Initiatives (10%)

 

Financial:                      120%

•   200%

•   200%

 

Strategic:                        76%

•   200%

•   180%

•   180%

•   200%

 

Total Payout:                196%

Long-Term Incentives   PSU awards
(variable)

 

 

RSU awards

(variable)

  Multi-year

 

 

N/A

 

Strategic Goals (50%):

•   Technical Operations (25%)

•   Research and Development and Business Development (25%)

 

3-Year Relative TSR (50%)

 

N/A

 

 

•   N/A(1)

 

•   N/A(2)

 

•   N/A(1)

 

(1)

Not applicable given three-year (2021-2023) performance period.

 

(2)

Not applicable given two-year (2021-2022) performance period.

 

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“Variable” compensation is compensation in which the ultimate value received is contingent either 1) on performance, typically measured as financial, operational, or stock price performance, such as for PSUs or 2) on the stock price value at the vesting date, such as for RSUs.

Base Salary

Base salaries for our executive officers are established based on the individual’s scope of responsibilities, experience and market factors. Base salaries are generally reviewed annually, typically in connection with our annual executive compensation review process. The Compensation Committee references survey and peer group data to understand the marketplace for individuals in similar positions at the peer group companies. Based on the survey and peer group data, the Compensation Committee determined that a 3.5 percent increase to the base salaries of our NEOs, with the exception of Mr. Hoelscher, was appropriate and was consistent with industry trends. Mr. Hoelscher received a more significant increase to his base salary, 9.3 percent, to reflect his broader responsibilities and contribution, as well as to align his base salary more closely with market data and other Horizon executives.

The annual base salaries of our NEOs as of March 1, 2021, and the increase from their prior base salary levels, were as follows:

 

     
Executive   

2021

Base

Salary

    

%

Increase

 

Timothy P. Walbert

   $ 1,193,286        3.5

Paul W. Hoelscher

   $ 660,000        9.3

Andy Pasternak

   $ 696,296        3.5

Jeffrey W. Sherman, M.D., FACP

   $ 602,326        3.5

Barry J. Moze

   $ 654,602        3.5

Brian K. Beeler

   $ 556,094        3.5

Short-Term Incentives: Annual Bonus Plan

Individual Performance-Based Bonus Opportunities

We provide performance-based cash annual bonuses as an incentive for our executives to achieve defined, corporate financial goals, as well as certain corporate strategic objectives. These bonuses may range in payout from 0 percent to 200 percent of targeted payout levels.

The general structure of this program has remained unchanged since 2014. The 2021 target bonus opportunities as a percentage of base salary for our NEOs, which remained unchanged from 2020, were as follows:

 

       
Executive    Threshold      Target      Maximum  

Timothy P. Walbert

     86.25      115      230

Paul W. Hoelscher

     45      60      120

Andy Pasternak

     45      60      120

Jeffrey W. Sherman, M.D., FACP

     45      60      120

Barry J. Moze

     45      60      120

Brian K. Beeler

     37.5      50      100

Our annual bonus plan provides our executives the opportunity to earn performance-based cash awards based on the achievement of a combination of financial goals (60 percent weighting) and strategic goals (40 percent weighting). The Compensation Committee increased the strategic goal weighting component of the annual bonus plan for 2021 by 5 percent, resulting in a weighting of 40 percent, to provide additional incentives for achieving the broader scope of the Integration, Strategy and Financing Initiatives goal to include integration initiatives.

 

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Timing Considerations in Establishing the 2021 Financial Goals and Strategic Goals

While the Compensation Committee has generally finalized annual bonus plan goals in February, two significant contingencies influenced the timing of the establishment of the final 2021 financial and strategic goals. In mid-December 2020, we experienced a supply disruption of TEPEZZA due to U.S. government-mandated COVID-19 vaccine production orders. At that time, we anticipated that the supply shortage of TEPEZZA could continue throughout the first quarter of 2021. In addition, on February 1, 2021, we announced that we had entered into a definitive agreement to acquire Viela Bio. At the time, the transaction was expected to close by the end of the first quarter of 2021. Given these two developments, which were each expected to have a significant impact on 2021 goals, in accordance with provisions of the annual bonus plan program, the Compensation Committee determined to defer finalization of the annual bonus program goals until April 2021, by which time the Viela transaction was expected to have closed and supply of TEPEZZA was expected to have resumed.

The Viela acquisition was completed in mid-March 2021, and in late March we announced that we would be able to resume supply of TEPEZZA beginning in April. In April 2021, after considering factors associated with the Viela acquisition and the TEPEZZA supply disruption and reviewing the financial impact of both developments on our projected full-year 2021 net sales and internal adjusted earnings before interest, tax, depreciation and amortization (adjusted EBITDA) performance, the Compensation Committee finalized the annual bonus plan goals for 2021.

Financial Goals

The 60 percent weighting of the financial goals is allocated between the total net sales goal, weighted at 35 percent, and the internal adjusted EBITDA goal, weighted at 25 percent.

Total Net Sales

The Compensation Committee established a total net sales goal for our 2021 annual bonus program rather than separate weighted net sales goals for our individual business units, which were used for our 2020 annual bonus plan. The Compensation Committee made this determination to reinforce collaboration across our business units. The performance targets for the total net sales goal are set forth below.

 

     
            Performance Levels

Total Net Sales

($ millions)

  

Percentage

of Target

Bonus

  

Threshold

75%

  

Target

100%

     125%      150%     

Maximum

200%

     35%    $2,600    $ 2,700      $ 3,000      $ 3,100      $3,200

Internal Adjusted EBITDA

The performance targets for the internal adjusted EBITDA goal are set forth below:

 

     
            Performance Levels

Internal Adjusted

EBITDA

($ millions)(1)

  

Percentage

of Target

Bonus

  

Threshold

75%

  

Target

100%

   125%    150%   

Maximum

200%

     25%    $   950    $1,000    $1,150    $1,200    $1,250

 

(1)

Internal adjusted EBITDA used in our performance targets for compensation purposes differs from the adjusted EBITDA that we report as part of our non-GAAP financial results and elsewhere in this Proxy Statement. Adjusted EBITDA represents adjusted earnings before interest, taxes, depreciation and amortization and other amounts (EBITDA) and is used and provided as a non-GAAP financial measure so our investors have a more complete understanding of our financial performance. Internal adjusted EBITDA contains additional adjustments to adjusted EBITDA to exclude upfront and milestone payments related to collaboration and license agreements. Please refer to the discussion of non-GAAP financial measures and the reconciliations to GAAP measures beginning on page 113 of our Annual Report on Form 10-K for the year ended December 31, 2021, and to the section entitled “Reconciliation of Internal Adjusted EBITDA to Adjusted EBITDA” in Annex B to this Proxy Statement for a reconciliation of internal adjusted EBITDA to adjusted EBITDA.

Strategic Goals

The Compensation Committee established four strategic goals (with a total weighting of 40 percent) for 2021:

 

   

Culture and Compliance (10%)

 

    •

Ensure a corporate culture of compliance by ensuring effective processes and training are in place and roll out our revised Code of Ethics and Conduct

 

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    •

Achieve compliance scores in employee surveys at or above industry standards

 

    •

Continue to foster Horizon as a great place to work, achieving employee survey scores at or above best-in-class benchmarks and achieving recognition as a great place to work

 

    •

Continue to support diversity, equity and inclusion initiatives

 

    •

Further establish key leadership development programs to help drive retention of key employees and achieve voluntary turnover below industry benchmarks

 

   

Research and Development and Technical Operations Milestones (10%)

 

    •

Achieve key clinical, regulatory and technical operations milestones for TEPEZZA, KRYSTEXXA and HZN-825 trials

 

   

Business Development (10%)

 

    •

Continue to grow and diversify the product portfolio and pipeline by announcing new acquisition(s) and/or licensing transactions that advance our strategic goals

 

    •

Complete at least two transactions to further expand our pipeline

 

    •

Complete at least one meaningful venture capital investment to broaden our access and awareness of early-stage acquisition and licensing opportunities

 

   

Integration, Strategy and Financing Initiatives (10%)

 

 

Successfully integrate Viela into the Company

 

 

Subject to business development activities and market conditions, complete financing transactions that continue to support our long-term business strategy

 

 

Develop and begin implementing strategy to build a global commercial infrastructure and operating model

The Compensation Committee chose these four strategic goals because it believed these were the best indicators of the achievement of our operating plan, and they represented the factors most critical to increasing total shareholder value in 2021.

How Did We Do?

In February 2022, based on management’s recommendations and the Compensation Committee’s review, deliberation and determination of achievement of the corporate financial and strategic goals described above, the Compensation Committee approved the achievement levels for the financial and strategic goals as shown below.

Financial Goals

Actual results in 2021 for each financial goal were as follows:

 

     

Financial Goal

(60% Weighting)

($ millions)

 

          2021 Performance  
   Percentage of Target
Bonus
     Actual      % Achieved     

% of Total

(Target x
% Achieved)

 

Net Sales

     35    $ 3,226        200      70

Internal Adjusted EBITDA(1)

     25    $ 1,374        200      50

Aggregate Financial Performance Achieved: 

 

     120

 

(1)

Internal adjusted EBITDA used in our performance targets for compensation purposes differs from the adjusted EBITDA that we report as part of our non-GAAP financial results and elsewhere in this Proxy Statement. Adjusted EBITDA represents adjusted earnings before interest, taxes, depreciation and amortization and other amounts (EBITDA) and is used and provided as a non-GAAP financial measure so our investors have a more complete understanding of our financial performance. Internal adjusted EBITDA contains additional adjustments to adjusted EBITDA to exclude upfront and milestone payments related to collaboration and license agreements. Please refer to the discussion of non-GAAP financial measures and the reconciliations to GAAP measures beginning on page 113 of our Annual Report on Form 10-K for the year ended December 31, 2021, and to the section entitled “Reconciliation of Internal Adjusted EBITDA to Adjusted EBITDA” in Annex B to this Proxy Statement for a reconciliation of internal adjusted EBITDA to adjusted EBITDA.

 

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Strategic Goals

In addition, the Compensation Committee considered the strategic goals (as described above) to be achieved at 190 percent of the 40 percent strategic goal target, or 76 percent, for the year. This achievement level was determined based on numerous factors for each of the strategic goals:

 

   

Culture and Compliance (10%)

 

    •

Ensured a corporate culture of compliance by ensuring effective processes and training are in place; trained 100 percent of our employees, including more than 45 live trainings on our revised Code of Conduct and Ethics;

 

    •

Achieved a continued strong compliance culture. Voluntary employee participation in ethics and compliance initiatives, such as workshops, monitoring and training videos, was robust. We did not conduct an annual survey in 2021 due to the ongoing COVID-19 pandemic, but the rate of anonymous investigation reports submitted in 2021 was considerably lower than the industry average, according to the 2021 benchmark report of our third-party compliance provider, indicating to us that our employees are not afraid to speak up and do not fear retaliation, underscoring the strength of our compliance culture;

 

    •

Achieved employee net promoter score (a measure of the likelihood that employees would recommend a company as a place to work), inclusion and diversity scores and leadership ratings from our employee surveys above top-quartile benchmarks;

 

    •

Achieved recognition as a great place to work in 15 well-known published workplace rankings, two more than in 2020, including four diversity-related workplace awards. We ranked as the Number 1 company in the biotech/pharmaceutical category of FORTUNE’s 2021 100 Best Companies to Work For®;

 

    •

Continued to support diversity, equity and inclusion initiatives, including launching a sponsorship program focused on mid-career, high achieving Black or Hispanic talent; conducted multiple diverse employee events as part of our RiSE program designed to further embed inclusion, diversity, equity and allyship at all levels of the Company; achieved diversity and inclusion scores from our employee surveys above top-quartile benchmarks; and we continued to demonstrate gender and ethnicity pay equity in a second study conducted in 2021 by Aon, after dramatic growth in our workforce in the ensuing period since the first study in 2019; and

 

    •

Established additional key leadership development programs, launching our Enterprise Leadership, Management Development and Aspiring Leaders programs; held our first Global Leadership Summit and achieved a voluntary turnover below the industry average.

The Compensation Committee considered the culture and compliance goal to be achieved at 200 percent.

 

   

Research and Development and Technical Operations Milestones (10%)

 

    •

Initiated our TEPEZZA clinical trial for chronic thyroid eye disease (TED);

 

    •

Advanced our clinical program evaluating use of subcutaneous delivery options for TEPEZZA;

 

    •

Announced positive data for our KRYSTEXXA MIRROR registrational immunomodulation trial and prepared a supplemental biologics application license to expand the KRYSTEXXA label;

 

    •

Initiated our HZN-825 diffuse cutaneous systemic sclerosis clinical trial;

 

    •

Began enrollment of our KRYSTEXXA monthly dosing and retreatment trials;

 

    •

Received FDA approval to manufacture TEPEZZA at a second drug product manufacturer, part of the strategy we adopted early in 2020 to support TEPEZZA supply; and

 

    •

Acquired a drug product manufacturing facility in Waterford, Ireland, to support growth of our on-market and development-stage biologics.

In addition, in 2021 we expanded our pipeline with the addition of five new clinical programs and announced positive data for our KRYSTEXXA PROTECT trial.

The Compensation Committee considered the research and development and technical operations milestones goal to be achieved at 180 percent.

 

   

Business Development (10%)

 

    •

Acquired Viela Bio in March 2021, significantly expanding our pipeline with Viela’s deep, mid-stage biologics pipeline; expanding our commercial portfolio with UPLIZNA, a recently approved on-market biologic medicine, and enhancing our R&D capabilities with Viela’s experienced R&D team; and

 

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    •

Entered into two global collaboration and license agreements for novel therapeutic programs, one as a potential treatment for gout and the other for immunology-focused targets.

The Compensation Committee considered the business development goal to be achieved at 180 percent.

 

   

Integration, Strategy and Financing Initiatives (10%)

 

    •

Successfully completed the integration of Viela Bio;

 

    •

Successfully financed the Viela acquisition with low-cost debt while achieving our overall leverage target by the end of the third quarter of 2021; and

 

    •

Developed and began implementing our strategy to build a global commercial infrastructure and operating model, including hiring key personnel.

The Compensation Committee considered the integration, strategy and financing goal to be achieved at 200 percent.

In summary, the results in 2021 for each strategic goal were as follows:

 

   

Strategic Goal

(40% Weighting)

   2021 Performance  
  

Percentage of Target

Bonus

     % Achieved     

% of Total

(Target x
% Achieved)

 

Culture and Compliance

     10      200      20

R&D and Technical Operations Milestones

     10      180      18

Business Development

     10      180      18

Integration, Strategy and Financing

     10      200      20

Aggregate Strategic Performance Achieved: 

 

     76 % 

Annual Bonus Plan Total Achievement – 2021 Determined Cash Bonus Awards

With the achievement percentage for the financial goals of 120 percent and the achievement percentage for the strategic goals of 76 percent, the total achievement percentage for both the financial and strategic goals was 196 percent.

The Compensation Committee determined that a payout at the 196 percent level was appropriate as the result of the outstanding financial performance in 2021 with year-over-year net sales growth of 47 percent and adjusted EBITDA growth of 33 percent, exceeding the maximum goals for both net sales and internal adjusted EBITDA, while managing through the continued COVID-19 pandemic, effectively managing the resupply of TEPEZZA following the supply disruption caused by government-mandated COVID-19 vaccine production orders, and successfully integrating Viela into Horizon.

Based on the above described review, deliberation and determination by the Compensation Committee of achievement of the corporate financial and strategic objectives, the Compensation Committee approved cash bonus awards for our NEOs as follows, which were paid in March 2022:

 

       
Executive   

2021 Target
Bonus

Opportunity

    

Total % of Target

Bonus Earned

    

2021 Earned

Annual Bonus

 

Timothy P. Walbert

   $ 1,364,777        196    $ 2,674,963  

Paul W. Hoelscher

   $ 390,561        196    $ 765,500  

Andy Pasternak

   $ 415,494        196    $ 814,368  

Jeffrey W. Sherman, M.D., FACP

   $ 359,420        196    $ 704,463  

Barry J. Moze

   $ 390,615        196    $ 765,605  

Brian K. Beeler

   $ 276,527        196    $ 541,993  

 

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Long-Term Incentives

Our Compensation Committee believes in a strong pay-for-performance program and culture that encourages a long-term focus from the executive officers and aligns their interests with those of our shareholders. To achieve this, the Compensation Committee utilizes two vehicles for our long-term awards:

 

   

Time-based equity awards: RSUs

 

   

Performance-based equity awards: PSUs

2021 Long-Term Incentive Grants

We have adopted a regular, annual long-term incentive grant schedule awarding equity awards in the form of RSUs and PSUs to our executive officers. To further align the interests of our executive officers with those of our shareholders, we award a higher percentage of performance-based equity compensation than the majority of our industry peers. In addition, our performance-based equity compensation is aligned with all of our stated compensation objectives, including the linking of executive pay with performance. Further, we believe that annual grant cycles allow us to more easily manage shareholder dilution and burn rate, while still providing market-competitive incentive opportunities.

We believe these equity grants align the interests of our executive officers and shareholders in two ways:

 

   

a large portion of the equity grants vest contingent on performance and have a continued service requirement; and

 

   

RSU and PSU grants have a one-year holding period after any vested shares are issued.

As part of our annual long-term incentive plan, we awarded our NEOs an equal mix of PSUs and time-vested RSUs on January 4, 2021. The components of the long-term incentive plan were as follows:

 

 

 

                 2021 Long-Term Incentive Components

      PSUs    RSUs
   

Performance Criteria/Period

  

•   3-year Relative TSR (50%)

(2021-2023)

 

•   Technical Operations Goals
over a 3-year period (25%)

(2021-2023)

 

•   R&D and Business Development Goals
over a 2-year period (25%)

(2021-2022)

 

   N/A
   

Maximum Award

  

Relative TSR PSUs:

•   200% of target award(1)

 

Technical Operations PSUs:

•   200% of target award

 

R&D and Business Development PSUs:

•   200% of target award

 

   N/A
   

Service Vesting Period

  

Relative TSR PSUs:

•   At the end of the 2021-2023
performance period

 

Technical Operations PSUs:

•   At the end of the 2021-2023
performance period

 

R&D and Business Development PSUs:

•   2/3 vest on January 5, 2023

•   1/3 vest on January 5, 2024

 

   Vest one-third annually
over 3 years
   

Post-Issuance Holding Period

 

  

1 year

 

  

1 year

 

 

  (1)

If our absolute TSR is negative for the three-year period of 2021 to 2023, the maximum award is 100% of target award.

 

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Our NEOs received RSU and PSU grants in January 2021 for the following share amounts:

 

     

Executive

  

Time-Vested

RSUs

    

Performance-Based

PSUs

 

Timothy P. Walbert

     104,785        104,785  

Paul W. Hoelscher

     34,928        34,928  

Andy Pasternak

     34,928        34,928  

Jeffrey W. Sherman, M.D., FACP(1)

     27,942        27,943  

Barry J. Moze(1)

     27,942        27,943  

Brian K. Beeler(1)

     24,449        24,450  

 

(1)

The performance-based PSUs were rounded such that the combined total equity award properly reflects the aggregate amount approved by the Board.

Time-Vested RSUs

The time-vested RSUs are generally subject to three-year annual vesting over the service period beginning on January 5, 2021 and ending on January 5, 2024.

Pursuant to the agreement we entered into with Mr. Moze in connection with his retirement in January 2022, Mr. Moze’s time-vested RSUs will continue to vest as if his employment had continued during the vesting period. Pursuant to Mr. Beeler’s amended employment agreement and in exchange for a release of claims and a non-competition agreement in connection with the termination of his employment in January 2022, Mr. Beeler’s time-vested RSUs will become vested as if his employment had continued through January 6, 2023.

Performance-Based PSUs

Overall, the performance-based PSUs use three long-term performance metrics: the first component is tied to relative TSR over a three-year period; the second component is tied to the number of pre-determined technical operations and manufacturing goals achieved over a three-year period and the third component is tied to the number of pre-determined R&D and business development goals achieved over a two-year period. The Compensation Committee’s decision to include all longer-term (two- or three-year) metrics in the PSU award design was made in line with shareholder feedback and to avoid potential duplication of the performance goals for our annual bonus plan.

The performance-based PSUs consist of a grant based on the achievement of specific relative TSR goals (Relative TSR PSUs) and the number of pre-determined technical operations and manufacturing goals (Technical Operations PSUs) and R&D and business development goals (R&D and Business Development PSUs) that are achieved during the applicable performance period.

The performance-based PSUs are determined by the following criteria:

 

   

Relative TSR (50%): Our relative TSR performance over a three-year period ending December 31, 2023, as measured against the components of NBI

 

   

Technical Operations (25%): Successful achievement securing additional drug product supply through additional sites with existing suppliers as well as the addition of alternative suppliers, which is critical to executing our current and future strategy, during the three-year period ending December 31, 2023

 

   

R&D and Business Development (25%): The addition of new clinical-stage programs, whether internally generated or through programs externally generated by business development, achieved during the two-year period ending December 31, 2022

How Did We Do?

2021 PSUs

Determination of the attainment level of the Relative TSR PSUs will be made following the three-year performance period ending December 31, 2023. Determination of the attainment level of the Technical Operations PSUs will be made following the three-year performance period ending December 31, 2023. Determination of the attainment level of the R&D and Business Development PSUs will be made following the two-year performance period ending December 31, 2022.

 

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2020 KRYSTEXXA PSUs

We granted performance-based PSUs tied to the net sales of KRYSTEXXA (KRYSTEXXA PSUs) in January 2020. A one-year performance period was set for the KRYSTEXXA PSUs, with eligibility to vest in three equal installments on January 1, 2021, January 1, 2022 and January 1, 2023. As previously described in the proxy statement for our 2021 Annual General Meeting of Shareholders under the heading “COVID-19 Related Modification of KRYSTEXXA PSUs”, in July 2020, in order to adjust for the unanticipated impact of the COVID-19 pandemic on the executive team’s ability to achieve the KRYSTEXXA PSUs performance goal for the 2020 calendar year, the Compensation Committee approved an extension of the performance period for the KRYSTEXXA PSUs by an additional six months to June 30, 2021, and extended the vesting to vest in three equal installments on July 1, 2021, January 1, 2022 and January 1, 2023. In addition, in light of the extended performance period and its potential benefit to the executive team, the Compensation Committee also determined to reduce the maximum performance payout level for the KRYSTEXXA PSUs from 200 percent to 150 percent of the target award. The 18-month performance period ended on June 30, 2021.

 

 
Net Sales PSU Performance Goals ($ millions)  
             
Multiplier    0%      50%      100%      125%      150%      200%  

KRYSTEXXA

   <$ 400      $ 400      $ 415      $ 450      $ 500        N/A  

In July 2021, the Compensation Committee determined that, during the performance period, our KRYSTEXXA net sales were $642.9 million, which exceeded the maximum performance target of $500 million. The eligible executives therefore each vested in the number of KRYSTEXXA PSUs set forth in the table below, which represents 150 percent (the maximum payout percentage) of their target number of KRYSTEXXA PSUs:

 

         
Executive   

KRYSTEXXA PSUs

(Target Number)

         

Determined

KRYSTEXXA PSUs

      

Timothy P. Walbert

     69,667          104,501      

Paul W. Hoelscher

     17,417               26,126         

Andy Pasternak

     17,417          26,126      

Jeffrey W. Sherman, M.D., FACP

     14,514          21,771      

Barry J. Moze

     14,514          21,771      

Brian K. Beeler

     11,612            17,418      

2020 TEPEZZA PSUs

We granted performance-based PSUs tied to the net sales of TEPEZZA (TEPEZZA PSUs) in January 2020. The criteria for achievement of the TEPEZZA PSUs was the highest quarterly net sales amount for TEPEZZA during the two-year period ending December 31, 2021 (2020-2021), with a maximum performance goal of 200 percent, or quarterly net sales of $120 million.

 

 
Net Sales PSU Performance Goals ($ millions)  
             
Multiplier    0%      50%      100%      125%      150%      200%  

TEPEZZA (Highest Quarter)

   <$ 40      $ 40      $ 60      $ 80      $ 100      $  120  

 

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In February 2021, the Compensation Committee determined that our TEPEZZA net sales in the second quarter of 2020 were $165.9 million, which exceeded the maximum performance target of $120 million. The eligible executives therefore each vested in the number of TEPEZZA PSUs set forth in the table below, which represents 200 percent (the maximum payout percentage) of their target number of TEPEZZA PSUs:

 

         
Executive   

TEPEZZA PSUs

(Target Number)

         

Determined

TEPEZZA PSUs

      

Timothy P. Walbert

     34,833          69,666      

Paul W. Hoelscher

     8,708               17,416         

Andy Pasternak

     8,708          17,416      

Jeffrey W. Sherman, M.D., FACP

     7,526          14,512      

Barry J. Moze

     7,526          14,512      

Brian K. Beeler

     5,805            11,610      

Two-thirds of the determined TEPEZZA PSUs vested on January 5, 2022 and one-third will vest on January 5, 2023, subject to the executive’s continued service through each vesting date.

2019 Relative TSR PSUs

In 2019, we granted three-year TSR PSUs relative to the TSR of the components of the NBI over the performance period from January 1, 2019 to December 31, 2021. Mr. Pasternak did not receive a TSR PSU because he joined the company in September 2019, after the awards were granted. The number of 2019 Relative TSR PSUs that an executive was eligible to earn was determined as follows, with linear interpolation between performance levels:

 

 
2019 3-Year TSR PSU Payout as a Percent of the Target (50th Percentile)  
             
Percentile Rank    <25th      25th      50th      60th      75th      90th  

Percentage Payout

     0      50      100      125      150      200

In January 2022, the Compensation Committee determined that, at the end of the three-year performance period, Horizon’s absolute TSR was 451.5 percent, which was determined to be at the 98.8th percentile of the NBI components for the performance period. The eligible executives therefore each vested in the number of 2019 Relative TSR PSUs set forth in the table below, which represents 200 percent (the maximum payout percentage) of their target number of 2019 Relative TSR PSUs:

 

         
Executive   

Relative TSR PSUs

(Target Number)

         

Relative TSR PSUs

(Vested Number)

      

Timothy P. Walbert

     52,232          104,464      

Paul W. Hoelscher

     16,184               32,368         

Barry J. Moze

     16,184          32,368      

Jeffrey W. Sherman, M.D., FACP

     11,034          22,068      

Brian K. Beeler

     11,034            22,068      

 

Additional Compensation Policies and Practices

Executive Share Ownership Guidelines

We have share ownership guidelines that establish the following minimum ownership levels within five years of the adoption of the guidelines (or within five years of the date an executive officer first becomes subject to them):

 

   
Position    Guideline

 

CEO

 

  

 

5x base salary

 

 

Executive Officers

 

  

 

2x base salary

 

Individual ownership interest versus the guidelines is reviewed annually using an average share price for a calendar quarter prior to the review date. Shares that count toward satisfaction of these guidelines include: shares owned outright by the individual

 

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(including stock units that have vested but not yet settled); shares retained after an option exercise or issuance under another type of equity award granted under our equity incentive plans; shares retained after purchase under our Employee Share Purchase Plan; shares subject to RSUs that have not vested and shares held in trust for the benefit of the individual or his/her spouse. Any unvested PSUs and unexercised stock options, whether vested or unvested, are not counted toward satisfaction of these ownership guidelines.

All of our executive officers subject to the share ownership guidelines met the guidelines as of March 31, 2021.

Holding Period Policy

Any shares issued in settlement of a RSU or PSU award granted to any executive officers on or after January 5, 2018 are subject to a minimum holding period of one year before the shares may be sold or transferred. RSU and PSU awards granted to Dr. Sherman prior to his becoming an executive officer in February 2020 are not subject to the one-year holding period requirement.

Hedging and Pledging Policies

Our Insider Trading Policy prohibits our executive officers, other employees, non-employee directors and consultants from engaging in short sales, transactions in put or call options, hedging transactions or other inherently speculative transactions with respect to our ordinary shares at any time. In addition, no officer, director, other employee or consultant of Horizon may margin or pledge, or make any offer to margin or pledge, any of our ordinary shares, including without limitation, borrowing against the value of such ordinary shares, at any time.

Clawback Policy

As a public company, if we are required to restate our financial results due to our material noncompliance with any financial reporting requirements under the federal securities laws as a result of misconduct, our chief executive officer and chief financial officer may be legally required to reimburse us for any bonus or other incentive-based or equity-based compensation they receive in accordance with the provisions of section 304 of the Sarbanes-Oxley Act of 2002. Additionally, in January 2018 the Compensation Committee approved our Incentive Compensation Recoupment Policy, which provides for recoupment of certain compensation paid to executive officers of the Company under certain circumstances involving material financial restatements. Any cash and equity incentive compensation that is paid, awarded or vested based on the achievement of reported financial results and that is approved, granted or awarded on or after January 5, 2018 is subject to potential recoupment in accordance with the terms of the Incentive Compensation Recoupment Policy, including but not limited to any compensation approved, granted or awarded under our annual cash bonus plan and PSUs under our long-term incentive plan.

Timing of Equity Awards

Grants of equity awards to our executive officers are generally determined and approved at our pre-scheduled quarterly Compensation Committee meetings whenever practicable. However, the Compensation Committee may otherwise approve the grant of equity awards in advance of its next scheduled meeting in connection with a new hire, promotion, and other circumstances where the Compensation Committee deems it appropriate to make such grants. Starting in 2018, our equity program has included performance vesting metrics for a performance period that begins in January. Given that, since 2018 our process has been to approve the final grants for our equity program at a special meeting of the Compensation Committee in January. We expect to continue having a significant portion of our executive officer equity compensation be performance based and believe it is likely that future-year grants will be approved at special Compensation Committee meetings in January.

To the extent we grant stock options, the exercise price would not be less than the closing price of our ordinary shares on Nasdaq on the grant date. It is our policy not to purposely accelerate or delay the public release of material information in consideration of a pending equity grant to allow the grantee to benefit from a more favorable exercise price. We recognize that a release of information by the Company in close proximity to an equity grant may appear to be an effort to time the announcement to a grantee’s benefit (even if no such benefit was intended). Accordingly, it is our policy that our management team makes a good faith effort to advise the Compensation Committee whenever it is aware that material non-public information is planned to be released to the public in close proximity to the grant of equity awards.

Accounting and Section 162(m) Tax Considerations

We account for share-based awards exchanged for employee services in accordance with the provisions of Financial Accounting Standards Board Accounting Standards Codification Topic 718 Compensation — Stock Compensation (ASC Topic 718). Assumptions used in the calculation of these awards are included in Note 18 – Share-Based and Long-Term Incentive Plans in the Notes to our consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2021. These amounts do not necessarily correspond to the actual value recognized or that may be recognized by the NEOs.

 

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Under Section 162(m) of the Internal Revenue Code (Section 162(m)), compensation paid to any publicly held corporation’s “covered employees” that exceeds $1 million per taxable year for any covered employee is generally non-deductible unless it qualifies as “performance-based compensation” under Section 162(m) and is paid pursuant to a written binding contract which was in effect on November 2, 2017 and which is not modified in any material respect on or after such date.

Compensation paid to each of our “covered employees” in excess of $1 million per taxable year generally will not be deductible unless it qualifies for the performance-based compensation exception under Section 162(m) pursuant to the transition relief described above. Because of certain ambiguities and uncertainties as to the application and interpretation of Section 162(m), as well as other factors beyond the control of the Compensation Committee, no assurance can be given that any compensation paid by Horizon will be eligible for such transition relief and be deductible by us in the future. Although the Compensation Committee will continue to consider tax implications as one factor in determining executive compensation, the Compensation Committee also looks at other factors in making its decisions and retains the flexibility to provide compensation for the Company’s named executive officers in a manner consistent with the goals of our executive compensation program and the best interests of Horizon and its shareholders, which may include providing for compensation that is not deductible by Horizon due to the deduction limit under Section 162(m). The Compensation Committee also retains the flexibility to modify compensation that was initially intended to be exempt from the deduction limit under Section 162(m) if it determines that such modifications are consistent with our business needs.

Severance and Change-in-Control Benefits Summary

Our NEOs are provided with certain severance benefits in order to assist us in recruiting and retaining talented individuals and align the executives’ interests with the best interests of the shareholders. We believe these severance benefits are consistent with those provided by our peer group and are an essential element of our overall executive compensation package due to the competitive market for executive talent in our industry. The Compensation Committee believes that the severance benefits are an important element of the NEOs’ retention and motivation and that the benefits of such severance rights agreements, including generally requiring a release of claims against us and entering into a non-competition agreement as a condition to receiving any severance benefits, are in our best interests. Enhanced severance benefits are provided for a qualifying termination that occurs in connection with a change in control because the severance benefits are also intended to eliminate, or at least reduce, the reluctance of our executive officers to diligently consider and pursue potential change-in-control transactions that may be in the best interests of our shareholders.

A description of the severance benefits provided under our executive officer employment agreements is provided below under the heading “Potential Payments Upon Termination or Change in Control.”

Barry J. Moze Retirement Benefits

Barry J. Moze, our former executive vice president, chief administrative officer, notified us in April 2021 of his intent to retire in January 2022 and retired effective January 6, 2022. In consideration of Mr. Moze remaining with us until January to support a smooth transition and in exchange for a release of claims, we agreed to provide benefits to Mr. Moze consisting of (i) continued health benefits for 18 months, (ii) an amendment to his existing stock options to extend the exercise period through the term of the options and (iii) vesting of his previously granted RSUs and PSUs (contingent upon meeting the pre-established performance metrics) as if his employment had continued through the applicable performance and vesting periods of such awards. Mr. Moze’s planned retirement and the benefits we agreed to provide him were disclosed in a Current Report on Form 8-K we filed on May 5, 2021.

Brian K. Beeler Separation Benefits

Employment of Brian K. Beeler, our former executive vice president, general counsel, terminated effective January 6, 2022. The decision to terminate Mr. Beeler was made in October 2021 and Mr. Beeler agreed to remain with us until early January 2022 in order to support a smooth transition. Pursuant to his employment agreement, Mr. Beeler was entitled to receive (i) continued base salary payments for 12 months, (ii) continued health benefits for 12 months and (iii) vesting of his previously granted RSUs as if his employment had continued through January 6, 2023. In addition, pursuant to the agreement we entered into with Mr. Beeler in connection with the termination of his employment and in exchange for a release of claims, a non-competition agreement and his agreement to remain with us until early January 2022 to support a smooth transition, we agreed to provide additional separation benefits to Mr. Beeler consisting of (i) the extension of his continued health benefits from 12 months to 18 months and (ii) vesting of his previously-granted PSUs (contingent upon meeting the pre-established performance metrics) as if his employment had continued through January 6, 2023.

Deferred Compensation Plan

All of our executive officers are eligible to participate in our non-qualified Deferred Compensation Plan, which allows the participants to defer receipt of their compensation and recognition of associated income taxes without being subject to the deferral contribution limits of our 401(k) Plan, which provides additional tax and financial planning flexibility. Our policy is to

 

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match Deferred Compensation Plan deferrals under the same matching contribution formula that we apply to our 401(k) Plan. Accordingly, the matching contribution formula for our Deferred Compensation Plan is 100 percent of the first 6 percent of salary deferrals, which is the same “safe harbor” matching contribution formula that applies to our 401(k) Plan. Matching contributions to our Deferred Compensation Plan are immediately fully vested contingent upon completion of one year of employment in order to closely align to the vesting schedule of our safe harbor matching contributions to our 401(k) Plan, which are immediately fully vested when made. A description of our Deferred Compensation Plan is provided below under the heading “Nonqualified Deferred Compensation.”

Other Benefits

All of our executive officers are eligible to receive our standard employee benefits, such as participation in our 401(k) Plan, medical, dental, vision coverage, short-term disability insurance, long-term disability insurance, group life insurance, retiree medical benefits, paid time off, holiday, and the Employee Share Purchase Plan, in each case on the same basis as our other employees. Our Paid-Time-Off Policy for employees generally allows no more than 40 paid-time-off hours to be carried over to the following year, except in cases where a carry-over limit is not legally permitted.

We reimburse our executive officers for any travel expenses and related tax gross ups they incur in connection with any business-related travel which does not meet the strict eligibility requirements to be treated as a non-taxable business expense reimbursement in accordance with applicable tax guidelines. We believe that the cost of providing these benefits is reasonable in light of the benefit to our business of having our executive officers more focused on attaining our business objectives in connection with any business-related travel. We also reimburse our executive officers up to $15,000 of personal financial planning services incurred annually and related tax gross ups. We believe that financial planning by experts reduces the time our executives spend on that topic and assists our executives in making the most of the financial rewards provided by the Company. We also cover costs related to comprehensive annual executive physical health examinations for our executives. We believe the cost of providing these health examinations is reasonable in light of the benefit to our business of facilitating the health of our executives.

Our security team regularly evaluates the level of security appropriate for our senior executives, specifically our CEO and CFO, taking into account their public profile and the critical role they play in our organization. As a result of these assessments, and based on our security team’s recommendation, our Board of Directors requires that our CEO use the aircraft we fractionally own through a third-party operator for all business and personal travel. Personal use of such aircraft by other executives is permitted only in limited circumstances and requires CEO approval. Additionally, based upon the recommendation of our security team and approval by our Board of Directors, beginning in March 2022, our CEO is also provided with a car and driver to ensure his individual safety and security. Based on ongoing analyses of security, use of a car and driver may also be provided to a select number of other executives from time to time. Lastly, beginning in 2022, reimbursement for the installation and maintenance of residential security systems is provided to our CEO, CFO and potentially other senior executives when deemed appropriate by our security team. We consider these security measures to be reasonable and appropriate expenses for the benefit of Horizon and not a personal benefit to our executives. However, in accordance with SEC disclosure rules, the aggregate incremental cost of these services is reported in the “Summary Compensation Table.”

The Compensation Committee periodically reviews the levels of benefits provided to executive officers to ensure they remain reasonable and consistent with its compensation philosophy.

Compensation Committee Report

The material in this report is not “soliciting material,” is furnished to, but not deemed “filed” with, the SEC and is not to be incorporated by reference in any of our filings under the Securities Act or Exchange Act whether made before or after the date hereof and irrespective of any general incorporation language in any such filing.

The Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis contained in this Proxy Statement with the management of the Company. Based on this review and discussions, the Compensation Committee has recommended to the Board that the Compensation Discussion and Analysis be included in this Proxy Statement and incorporated into the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2021.

This report has been furnished by the members of the Compensation Committee:

Susan Mahony, Ph.D., Chair

William F. Daniel

Jeff Himawan, Ph.D.

Gino Santini

 

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EXECUTIVE COMPENSATION

 

Summary Compensation Table

The following table provides information regarding the compensation earned during the years ended December 31, 2021, 2020 and 2019 by our named executive officers (NEOs).

 

                 

Name and Principal Position

   Year      Salary      Bonus    

Total Stock

Awards(1)(2)(3)

   

Option

Awards(4)

    

Non-Equity

Incentive

Plan(5)

    

All Other

Compensation(6)

     Total  
   

Timothy P. Walbert

     2021      $ 1,186,561      $     $ 15,818,363     $      $ 4,174,963      $ 173,571      $ 21,353,458  

    Chairman, President and

     2020      $ 1,146,542      $     $ 16,149,668     $      $ 4,137,046      $ 199,548      $ 21,632,803  

    Chief Executive Officer

     2019      $ 1,108,700      $     $ 9,139,117     $      $ 3,398,483      $ 226,871      $ 13,873,172  
   

Paul W. Hoelscher

     2021      $ 650,653      $     $ 5,272,731     $      $ 1,215,500      $ 204,773      $ 7,343,656  

    Executive Vice President,

     2020      $ 600,569      $     $ 4,037,409     $      $ 1,170,683      $ 106,485      $ 5,915,146  

    Chief Financial Officer

     2019      $ 580,748      $     $ 2,773,866     $      $ 968,840      $ 120,135      $ 4,443,588  
   

Andy Pasternak(7)

     2021      $ 692,372      $     $ 5,272,731     $      $ 814,368      $ 167,855      $ 6,947,326  

    Executive Vice President,

     2020      $ 669,021      $ 250,000 (8)    $ 4,037,409     $      $ 802,825      $ 66,872      $ 5,826,126  

    Chief Strategy Officer

     2019      $ 108,333      $ 500,000 (10)    $ 1,099,974 (9)    $ 1,099,996      $ 97,050      $ 19,188      $ 2,924,542  
   

Jeffrey W. Sherman, M.D., FACP

     2021      $ 598,931      $     $ 4,218,190     $      $ 891,963      $ 155,299      $ 5,864,383  

    Executive Vice President,

     2020      $ 578,731      $     $ 3,708,048     $      $ 881,977      $ 92,545      $ 5,261,300  

    Chief Medical Officer

     2019      $ 559,630      $     $ 2,226,172     $      $ 687,473      $ 95,222      $ 3,568,497  
   

Barry J. Moze(11)

     2021      $ 650,913      $     $ 8,431,748     $ 226,095      $ 1,015,605      $ 145,044      $ 10,469,404  

    Former Executive Vice President,

     2020      $ 628,960      $     $ 3,364,507     $      $ 1,004,752      $ 75,659      $ 5,073,877  

    Chief Administrative Officer

     2019      $ 608,201      $     $ 3,202,198     $      $ 793,367      $ 58,744      $ 4,662,510  
   

Brian K. Beeler(12)

     2021      $ 552,960      $     $ 6,496,096     $      $ 841,993      $ 123,527      $ 8,014,576  

    Former Executive Vice President,

     2020      $ 534,261      $     $ 2,310,746     $      $ 834,310      $ 75,519      $ 3,754,837  

    General Counsel

     2019      $ 516,600      $     $ 1,917,066     $      $ 684,665      $ 103,722      $ 3,222,053  

 

(1)

Amounts shown in this column do not reflect actual compensation received by our NEOs. The amounts reflect the grant date fair value of the awards and are calculated in accordance with the provisions of ASC Topic 718. Assumptions used in the calculation of these awards are included in Note 18 –“Share-Based and Long-Term Incentive Plans” in the Notes to our consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2021. These amounts do not necessarily correspond to the actual value recognized or that may be recognized by the NEOs. The amounts shown in this column include RSUs and PSUs granted in 2019, 2020 and 2021. For further information regarding such equity awards, please see the “Grants of Plan-Based Awards” and “Outstanding Equity Awards at December 31, 2021” tables and related footnotes below and “2021 Long-Term Incentive Grants” in our “Compensation Discussion and Analysis” above. Values for the performance-based Strategic/TSR PSUs in the table above reflect values less than the maximum potential value of the awards. For Mr. Moze, the amount shown for 2021 also includes the incremental fair value associated with the modification of his previously granted RSUs and PSUs to provide for vesting of such awards as if his employment had continued through the applicable performance and vesting periods of such awards, which was provided to Mr. Moze in connection with his retirement as described in our “Compensation Discussion and Analysis” above. For Mr. Beeler, the amount shown for 2021 also includes the incremental fair value associated with the modification of his previously granted PSUs to provide for vesting of such awards as if his employment had continued through January 6, 2023, which was provided to Mr. Beeler in connection with his additional separation benefits as described in “Compensation Discussion and Analysis” above.

 

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(2)

The table below presents the aggregate grant date fair value of the stock awards for the periods presented assuming achievement at the maximum level for any performance-based vesting stock awards:

 

         

Name and Principal Position

   Year      RSU Awards      PSU Awards at
Maximum Level
     Total Stock
Awards at
Maximum Level
   

Timothy P. Walbert

       2021        $         6,901,140        $         12,367,760        $         19,268,900

    Chairman, President and

       2020        $ 5,712,612        $ 12,573,289        $ 18,285,901

    Chief Executive Officer

       2019        $ 3,549,981        $ 9,593,013        $ 13,142,994
   

Paul W. Hoelscher

       2021        $ 2,300,358        $ 4,122,552        $ 6,422,910

    Executive Vice President,

       2020        $ 1,428,145        $ 3,143,293        $ 4,571,438

    Chief Financial Officer

       2019        $ 1,100,000        $ 2,914,505        $ 4,014,504
   

Andy Pasternak

       2021        $ 2,300,358        $ 4,122,552        $ 6,422,910

    Executive Vice President,

       2020        $ 1,428,145        $ 3,143,293        $ 4,571,438

    Chief Strategy Officer

       2019        $ 1,099,974        $        $ 1,099,974
   

Jeffrey W. Sherman, M.D., FACP

       2021        $ 1,840,260        $ 3,298,126        $ 5,138,386

    Executive Vice President,

       2020        $ 1,309,852        $ 2,888,090        $ 4,197,942

    Chief Medical Officer

       2019        $ 749,985        $ 2,163,428        $ 2,913,413
   

Barry J. Moze (a)

       2021        $ 2,858,515        $ 6,636,012        $ 9,494,527

    Former Executive Vice President,

       2020        $ 1,190,115        $ 2,619,440        $ 3,809,555

    Chief Administrative Officer

       2019        $ 1,507,800        $ 2,935,037        $ 4,442,836
   

Brian K. Beeler (b)

       2021        $ 1,610,211        $ 5,691,090        $ 7,301,301

    Former Executive Vice President,

       2020        $ 952,086        $ 2,266,073        $ 3,218,159

    General Counsel

       2019        $ 749,985        $ 1,692,083        $ 2,442,068

 

  (a)

The amounts shown for 2021 also include the incremental fair value associated with the modification of Mr. Moze’s previously granted RSUs and PSUs to provide for vesting of such awards as if his employment had continued through the applicable performance and vesting periods of such awards, which was provided to Mr. Moze in connection with his retirement as described in our “Compensation Discussion and Analysis” above.

 

  (b)

The amounts shown for 2021 also include the incremental fair value associated with the modification of Mr. Beeler’s previously granted PSUs to provide for vesting of such awards as if his employment had continued through January 6, 2023, which was provided to Mr. Beeler in connection with his additional separation benefits as described in our “Compensation Discussion and Analysis” above.

 

(3)

As discussed in more detail in “2021 Long-Term Incentive Grants” in our “Compensation Discussion and Analysis” above, and in the “Narrative Disclosure to Summary Compensation Table” and “Grants of Plan-Based Awards Table” below, the 2020 KRYSTEXXA PSUs were modified in July 2020. Under SEC reporting requirements, we are required to include in the “Stock Awards” column for our NEOs for 2020 the fair value of these PSUs on the original grant date, plus the incremental fair value of any of those same awards that were modified as of the modification date.

 

(4)

For Mr. Pasternak, the amount shown in this column represents an option to purchase 69,752 ordinary shares granted to Mr. Pasternak in connection with his commencement of employment with us in November 2019 pursuant to the terms of his employment agreement. For Mr. Moze, the amount shown in this column represents the incremental fair value associated with the modification of his existing stock options to extend the exercise period through the term of such options, which was provided to Mr. Moze in connection with his retirement as described in our “Compensation Discussion and Analysis” above. For further information, please see the “Grants of Plan-Based Awards” and “Outstanding Equity Awards at December 31, 2021” tables and related footnotes below.

 

(5)

As applicable, reflects performance incentives for fiscal years 2021, 2020 and 2019 that were earned and paid in March 2022, March 2021 and March 2020, respectively, pursuant to our annual bonus plan in effect for such fiscal year. For further information please see the “Compensation Discussion and Analysis” above. Amounts in 2021, 2020 and 2019 include the following amounts earned under our 2018 cash incentive plan (2018 CIP), which were earned and paid to certain of our NEOs in each of January 2021, 2020 and 2019: $1,500,000 paid to Mr. Walbert, $450,000 paid to Mr. Hoelscher, $187,500 paid to Dr. Sherman, $250,000 paid to Mr. Moze, and $300,000 paid to Mr. Beeler.

 

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(6)

Amounts shown in this column include the following items:

 

               
    

Year

 

Life Insurance

Benefits Imputed
Income and

Additional

Exec Coverage(a)

 

401(k)

Matching
Contributions

  Deferred
Compensation
Plan Matching
Contributions
 

Financial Planning/

Legal Fee

Reimbursements
(including tax
gross up)

 

Personal

Travel

Expenses(b)

  Total
   

Timothy P. Walbert

      2021     $ 13,091     $ 17,400     $ 71,194     $ 26,930     $ 44,957     $ 173,571
        2020     $ 16,533     $ 11,400     $ 121,797     $ 26,930     $ 22,888     $ 199,548
        2019     $ 6,005     $ 11,200     $ 125,399     $ 26,930     $ 57,337     $ 226,871
   

Paul W. Hoelscher

      2021     $ 18,092     $ 17,400     $ 82,280     $ 26,930     $ 60,070     $ 204,773
        2020     $ 17,094     $ 11,400     $ 44,774     $ 26,930     $ 6,287     $ 106,485
        2019     $ 6,048     $ 11,200     $ 45,379     $ 20,653     $ 36,855     $ 120,135
   

Andy Pasternak

      2021     $ 14,573     $ 17,400     $ 89,712     $ 17,953     $ 28,217     $ 167,855
        2020     $ 438     $ 11,400     $ 26,758     $ 27,554     $ 721     $ 66,872
        2019     $ 57     $     $     $ 19,132     $     $ 19,188
   

Jeffrey W. Sherman, M.D., FACP

      2021     $ 21,977     $ 17,400     $ 70,660     $ 17,953     $ 27,308     $ 155,299
        2020     $ 19,130     $ 11,400     $ 43,146     $ 17,953     $ 915     $ 92,545
        2019     $ 3,842     $ 11,200     $ 39,178     $ 17,953     $ 23,048     $ 95,222
   

Barry J. Moze

      2021     $ 23,921     $ 17,400     $ 76,792     $ 26,930     $     $ 145,044
        2020     $ 20,233     $ 11,400     $ 25,156     $ 17,953     $ 916     $ 75,659
        2019     $ 7,855     $ 8,148     $     $ 17,953     $ 24,788     $ 58,744
   

Brian K. Beeler

      2021     $ 13,092     $ 17,400     $ 59,893     $ 26,930     $ 6,212     $ 123,527
        2020     $ 8,039     $ 8,550     $ 36,757     $ 21,257     $ 916     $ 75,519
        2019     $ 4,143     $ 8,400     $ 37,012     $ 17,953     $ 36,214     $ 103,722

 

  (a)

Represents life insurance benefits imputed income, executive disability insurance premiums and annual executive physical health examination.

 

  (b)

Represents travel and/or other miscellaneous expenses and related tax gross ups which do not meet the strict eligibility requirements to be treated as a non-taxable business expense reimbursement in accordance with applicable tax guidelines. The reported amount also includes $24,865 for Mr. Walbert, $29,377 for Mr. Hoelscher and $18,515 for Mr. Pasternak for certain personal use of the aircraft we fractionally own through a third-party operator, with such amount representing the aggregate incremental cost to Horizon, less any reimbursements by the executives. This cost is calculated based on the applicable hourly rate charged to us by the third-party operator. As part of its assessment of executive security, in 2021, our Board of Directors implemented a policy that requires Mr. Walbert to use Company-provided private aircraft for all business and personal travel and permits other executive officers to use such aircraft for personal travel on a limited basis as discussed in “Other Benefits” in our “Compensation Discussion and Analysis” above.

 

(7)

Mr. Pasternak joined Horizon in November 2019.

 

(8)

Represents a sign-on bonus of $250,000 paid to Mr. Pasternak in November 2020 in connection with his commencement of employment with us in November 2019. Pursuant to the terms of his employment agreement, Mr. Pasternak received a sign-on bonus of $500,000 in November 2019 as well as the additional sign-on bonus of $250,000 in November 2020.

 

(9)

The amounts show in this column include an RSU award in respect of 37,262 ordinary shares granted to Mr. Pasternak in connection with his commencement of employment with us in November 2019 pursuant to the terms of his employment agreement. For further information regarding such equity award, please see the “Grants of Plan-Based Awards” and “Outstanding Equity Awards at December 31, 2021” tables and related footnotes below.

 

(10)

Represents a sign-on bonus of $500,000 paid to Mr. Pasternak in November 2019 in connection with his commencement of employment. Pursuant to the terms of his employment agreement, Mr. Pasternak received the sign-on bonus of $500,000 in November 2019 and an additional sign-on bonus of $250,000 in November 2020.

 

(11)

Mr. Moze retired from Horizon on January 6, 2022.

 

(12)

Mr. Beeler’s employment terminated effective January 6, 2022.

 

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Grants of Plan-Based Awards

The following table sets forth certain information regarding grants of non-equity incentive plan and equity incentive plan-based awards to our NEOs for 2021:

 

           
                   

Estimated Future Payouts Under

Non-Equity Incentive Plan Awards ($)

    

All Other

Stock Awards:

Number of

Shares
of Stock

or Units

   

Grant Date Fair  

Value of Stock  

and Option  
Awards  

 
   

Name

   Award Type      Grant Date      Threshold      Target     Maximum      (#)     ($)(1)    

Timothy P. Walbert

     Annual Cash        N/A      $ 1,177,120      $ 1,364,777 (2)    $ 2,729,554         
       RSU        1/4/2021                104,785 (8)    $ 6,901,140  
       PSU        1/4/2021                104,785 (9)    $ 8,917,223  
   

Paul W. Hoelscher

     Annual Cash        N/A      $ 292,921      $ 390,561 (3)    $ 781,122         
       RSU        1/4/2021                34,928 (8)    $ 2,300,358  
       PSU        1/4/2021                34,928 (9)    $ 2,972,373  
   

Andy Pasternak

     Annual Cash        N/A      $ 311,621      $ 415,494 (4)    $ 830,988         
       RSU        1/4/2021                34,928 (8)    $ 2,300,358  
       PSU        1/4/2021                34,928 (9)    $ 2,972,373  
   

Jeffrey W. Sherman, M.D., FACP

     Annual Cash        N/A      $ 269,565      $ 359,420 (5)    $ 718,840         
       RSU        1/4/2021                27,942 (8)    $ 1,840,260  
       PSU        1/4/2021                27,943 (9)    $ 2,377,930  
   

Barry J. Moze

     Annual Cash        N/A      $ 292,961      $ 390,615 (6)    $ 781,230         
       RSU        1/4/2021                27,942 (8)    $ 1,840,260  
       PSU        1/4/2021                27,943 (9)    $ 2,377,930  
       Stock Option        9/12/2014                443     $ 97 (10) 
       Stock Option        3/23/2015                237,481     $ 225,997 (10) 
       RSU        1/3/2020                12,095     $ 646,720 (11) 
       RSU        1/4/2021                18,628     $ 371,535 (11) 
       PSU        1/4/2019                5,821     $ 350,890 (12) 
       PSU        1/3/2020                24,943     $ 1,815,487 (12) 
       PSU        1/4/2021                27,943     $ 1,028,925 (12) 
   

Brian K. Beeler

     Annual Cash        N/A      $ 207,395      $ 276,527 (7)    $ 553,054         
       RSU        1/4/2021                24,449 (8)    $ 1,610,211  
       PSU        1/4/2021                24,450 (9)    $ 2,080,657  
       PSU        1/4/2019                4,120     $ 335,368 (13) 
       PSU        1/3/2020                19,955     $ 2,131,225 (13) 
       PSU        1/4/2021                                  4,077     $ 338,636 (13) 

 

(1)

Amounts shown in this column do not reflect dollar amounts actually received by our NEOs. Instead, these amounts reflect the grant date fair value of such awards and are calculated in accordance with the provisions of ASC Topic 718. Assumptions used in the calculation of these amounts and further information on our stock options, RSUs, PSUs and cash long-term incentive plan are included in Note 18 –“Share-Based and Long-Term Incentive Plans” in the Notes to our consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2021. These amounts do not necessarily correspond to the actual value realized or that may be realized by the NEOs.

(2)

Mr. Walbert’s target bonus for 2021 was $1,364,778, or 115 percent of his base salary as of December 31, 2021, pro-rated for a salary change that took effect March 1, 2021. In February 2022, the Compensation Committee approved Mr. Walbert’s bonus in the amount of $2,674,963, or 196 percent of his target bonus, which was paid in March 2022.

(3)

Mr. Hoelscher’s target bonus for 2021 was $390,561, or 60 percent of his base salary as of December 31, 2021, pro-rated for a salary change that took effect March 1, 2021. In February 2022, the Compensation Committee approved Mr. Hoelscher’s bonus in the amount of $765,500, or 196 percent of his target bonus, which was paid in March 2022.

(4)

Mr. Pasternak’s target bonus for 2021 was $415,494, or 60 percent of his base salary as of December 31, 2021, pro-rated for a salary change that took effect March 1, 2021. In February 2022, the Compensation Committee approved Mr. Pasternak’s bonus in the amount of $814,368, or 196 percent of his target bonus, which was paid in March 2022.

(5)

Dr. Sherman’s target bonus for 2021 was $359,420, or 60 percent of his base salary as of December 31, 2021, pro-rated for a salary change that took effect March 1, 2021. In February 2022, the Compensation Committee approved Dr. Sherman’s bonus in the amount of $704,463, or 196 percent of his target bonus, which was paid in March 2022.

(6)

Mr. Moze’s target bonus for 2021 was $390,614, or 60 percent of his base salary as of December 31, 2021, pro-rated for a salary change that took effect March 1, 2021. In February 2022, the Compensation Committee approved Mr. Moze’s bonus in the amount of $765,605, or 196 percent of his target bonus, which was paid in March 2022.

(7)

Mr. Beeler’s target bonus for 2021 was $390,614, or 60 percent of his base salary as of December 31, 2021, pro-rated for a salary change that took effect March 1, 2021. In February 2022, the Compensation Committee approved Mr. Beeler’s bonus in the amount of $541,993, or 196 percent of his target bonus, which was paid in March 2022.

(8)

The RSUs vest in three equal annual installments on January 5, 2022, 2023 and 2024.

(9)

The PSU award is divided into three components. 25 percent of the award is determined by achieving certain technical operations goals during the three-year period ending December 31, 2023. 25 percent of the award is determined by achieving certain research and development goals during the two-year period ending December 31, 2022. The remaining 50 percent of the award is determined by our relative total shareholder return (TSR) performance over a three-year period ending December 31, 2023, as measured against the TSR of each company included in the Nasdaq Biotechnology Index (NBI) during such three-year period.

 

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(10)

Represents the incremental fair value associated with modification of previously granted stock options to provide for vesting of such awards as if Mr. Moze’s employment had continued through the applicable performance and vesting periods of such awards, which was provided to Mr. Moze in connection with his retirement as described in our “Compensation Discussion and Analysis” above.

(11)

Represents the incremental fair value associated with modification of previously granted RSUs to provide for vesting of such awards as if Mr. Moze’s employment had continued through the applicable performance and vesting periods of such awards, which was provided to Mr. Moze in connection with his retirement as described in our “Compensation Discussion and Analysis” above.

(12)

Represents the incremental fair value associated with modification of previously granted PSUs to provide for vesting of such awards (contingent upon meeting the pre-established performance metrics) as if Mr. Moze’s employment had continued through the applicable performance and vesting periods of such awards, which was provided to Mr. Moze in connection with his retirement as described in our “Compensation Discussion and Analysis” above.

(13)

Represents the incremental fair value associated with modification of previously granted PSUs to provide for vesting of such awards (contingent upon meeting the pre-established performance metrics) as if Mr. Beeler’s employment had continued through January 6, 2023, which was provided to Mr. Beeler in connection with his additional separation benefits as described in our “Compensation Discussion and Analysis” above.

Narrative Disclosure to Summary Compensation Table and Grants of Plan-Based Awards Table

Employment Agreements. Each of our NEOs has entered into a written employment agreement with us that provides for payment of base salary, target annual cash incentive compensation, eligibility for employee benefit programs and potential severance benefits. Following the retirement of Barry Moze and termination of Brian Beeler on January 6, 2022, each of Mr. Moze and Mr. Beeler ceased to be eligible for benefits under their respective employment agreements, except for the severance benefits described below. For further information regarding the base salaries, bonuses and incentive compensation payable to our NEOs and their eligibility for our employee benefit programs, please see our “Compensation Discussion and Analysis” above. For further information regarding the severance benefits provided under the employment agreements, please see “Potential Payments Upon Termination or Change in Control” below.

In connection with Mr. Moze’s retirement, in consideration of Mr. Moze remaining with us until January to support a smooth transition and in exchange for a release of claims in favor of the company, we agreed to provide benefits to Mr. Moze consisting of (i) continued health benefits for 18 months, (ii) an amendment to his existing stock options to extend the exercise period through the term of the options and (iii) vesting of his previously granted RSUs and PSUs (contingent upon meeting the pre-established performance metrics) as if his employment had continued through the applicable performance and vesting periods of such awards.

Pursuant to Mr. Beeler’s employment agreement, upon his termination of employment effective January 6, 2022, he was entitled to receive separation benefits of (i) continued base salary payments for 12 months, (ii) continued health benefits for 12 months and (iii) vesting of his previously granted RSUs as if his employment had continued through January 6, 2023. In addition, pursuant to the agreement we entered into with Mr. Beeler in connection with the termination of his employment and in exchange for a release of claims, the execution of a non-competition agreement and his agreement to remain with us until early January 2022 to support a smooth transition, we agreed to provide additional separation benefits to Mr. Beeler consisting of (i) extending his continued health benefits from 12 months to 18 months and (ii) vesting of his previously-granted PSUs (contingent upon meeting the pre-established performance metrics) as if his employment had continued through January 6, 2023.

Equity Awards. We have granted equity awards to our NEOs under our current and previous equity incentive plans. For further information regarding such equity awards, including the vesting schedules, please see the “Grants of Plan-Based Awards” table and related footnotes above and “2021 Long-Term Incentive Grants” in our Compensation Discussion and Analysis” above. The fair values reported for Dr. Sherman’s equity awards in the Summary Compensation Table for 2019 and 2020 reflect a higher per-share fair value upon grant than the equity awards for our other NEOs because Dr. Sherman was not an executive officer on the date of the grant and therefore was not subject to our one-year holding period policy for shares issued pursuant to executive officer RSU and PSU awards.

Option Repricings. Under the terms of our equity incentive plans, option repricing is not permitted without prior shareholder approval, and we did not reprice any outstanding equity awards during the year ended December 31, 2021 for our NEOs or other equity award holders.

Modifications to Equity Awards. In connection with Mr. Moze’s retirement and Mr. Beeler’s termination in January 2022, we modified certain of their previously granted equity awards to provide for vesting of such awards as if their employment had continued through a specified date (with respect to Mr. Beeler) or the applicable performance and vesting periods of such awards (with respect to Mr. Moze), as well as the continued ability to exercise vested stock options (with respect to Mr. Moze). For further information regarding these modifications, as well as other benefits provided to Messrs. Moze and Beeler in connection with their respective retirement and separation agreements, please see our “Compensation Discussion and Analysis” above. We did not make any other modifications to any of our NEOs’ outstanding equity awards during the year ended December 31, 2021.

 

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The aggregate incremental fair value resulting from the modifications to certain of Messrs. Moze and Beeler’s respective equity awards is below:

 

         

Executive Officer

   Outstanding Stock
Options Subject to
Modification
     RSUs Subject to
Modification
     PSUs Subject to
Modification,
at Target
     Incremental Fair Value Due
to Modification
 

Barry J. Moze

     237,924        30,723        58,707      $ 4,439,652  

Brian K. Beeler

                   28,152      $ 2,805,229  

Salary and Annual Incentive Bonus Compared to Total Compensation. The ratio of salary and annual incentive bonus to total compensation in 2021 (each as set forth in the Summary Compensation Table above) is set forth below for each NEO.

 

   

Executive Officer

   Ratio of Salary and Annual Incentive Bonus
to Total Compensation(1)
 

Timothy P. Walbert

     18.1

Paul W. Hoelscher

     19.3

Andy Pasternak

     21.7

Jeffrey W. Sherman, M.D., FACP

     22.2

Barry J. Moze

     13.5

Brian K. Beeler

     13.7

 

  (1)

The annual incentive bonus amounts used to determine the ratios below exclude amounts earned under our 2018 CIP

 

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Pay Ratio

As required by Section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act), and Item 402(u) of Regulation S-K, we are providing the following information about the ratio of the annual total compensation of our principal executive officer to the total annual compensation of our median employee. The pay ratio included in this information is a reasonable estimate calculated in a manner consistent with Item 402(u) of Regulation S-K.

The purpose of this disclosure is to provide a measure of the equitability of pay within Horizon. We believe our compensation philosophy and process yield an equitable result for all of our employees. During fiscal 2021, the principal executive officer of Horizon was our chairman, president and chief executive officer, Mr. Walbert.

For 2021:

 

   

The annual total compensation for Mr. Walbert was $21,353,458.

 

   

The annual total compensation for our median employee was $298,200.

 

   

This results in an estimated pay ratio of 72:1.

Consistent with our prior year pay ratio disclosure, to identify our median compensated employee for 2021 we estimated all employees’ compensation as of October 31, 2021 (the median employee determination date). For each employee, we aggregated: (a) base salary as of October 31, 2021, (b) the target bonus for 2021 and (c) the estimated accounting value of any equity awards granted during 2021; and we ranked this compensation measure for our employees from lowest to highest. Amounts paid in foreign currencies were converted to U.S. Dollars based on the average annual exchange rate as of the median employee determination date. This calculation was performed for all employees, except as identified below and excluding Mr. Walbert, whether employed on a full-time, part-time or seasonal basis.

For purposes of this disclosure, all Canadian employees, totaling five individuals, were excluded from the employee population pursuant to the de minimis exemption, which permits us to exclude foreign employees, up to 5 percent of our total employee population, on a whole-country basis. As of October 31, 2021, we had 1,628 U.S. employees (excluding our CEO) and 168 non-U.S. employees, irrespective of the de minimis exemption. Applying the de minimis exemption, the total number of U.S. employees totaled 1,628, and the number of non-U.S. employees totaled 163.

The pay ratio reported above is a reasonable estimate calculated in a manner consistent with the SEC rules and based on our internal records and the methodology described above. Because the SEC rules for identifying the median compensated employee and calculating the pay ratio based on that employee’s annual total compensation allow companies to adopt a variety of methodologies, to apply certain exclusions and to make reasonable estimates and assumptions that reflect their employee populations and compensation practices, the pay ratio reported by other companies may not be comparable to the pay ratio for us reported above, as other companies have different employee populations and compensation practices and may utilize different methodologies, exclusions, estimates and assumptions in calculating their own pay ratios.

 

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Outstanding Equity Awards at December 31, 2021

The following table sets forth certain information regarding outstanding stock options, RSUs and PSUs held by our NEOs on December 31, 2021.

 

         
           Option Awards           Stock Awards  
   
  Name  

Award

Grant Date

   

Number of

Securities

Underlying

Unexercised

Options

Exercisable

(#)

   

Number of

Securities

Underlying

Unexercised

Options

Unexercisable

(#)

   

Option

Exercise

Price ($)

   

Option

Expiration

Date

         

Number of

Shares or

Units of

Stock that

Have Not

Vested (#)

   

Market

Value of

Stock that

Has Not

Vested ($)(1)

   

Number of

Units of

Stock that

are

Unearned

and Have

Not Vested

(#)

   

Market Value

of Unearned

Stock that Has

Not Vested ($)(1)

 

  Timothy P. Walbert

    3/23/2015       1,017,565           $ 22.14       3/22/2025              
      5/6/2015       1,650,000           $ 28.53       5/5/2025              
      1/4/2019                 58,035 (2)    $ 6,253,852        
      1/4/2019                 68,768 (3)    $ 7,410,440       52,232 (4)    $ 5,628,520  
      1/3/2020                 116,110 (2)    $ 12,512,014        
      1/3/2020