Table of Contents

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No.            )

Table of Contents

Table of Contents

100 Summer Street, Suite 2300
Boston, Massachusetts 02110

NOTICE OF 2020 ANNUAL MEETING OF STOCKHOLDERS OF
IRONWOOD PHARMACEUTICALS, INC.

We will also consider action on any other matter that may be properly brought before the meeting or any postponement(s) or adjournment(s) thereof.

Our board of directors recommends you vote "for" each of the nominees for Class I director (proposal no. 1), "for" on an advisory vote on named executive officer compensation (proposal no. 2), and "for" ratification of our selection of auditors (proposal no. 3). Only stockholders of record at the close of business on April 13, 2020 are entitled to notice of and to vote at the meeting.

We are pleased to take advantage of the Securities and Exchange Commission rules that allow us to furnish proxy materials to our stockholders on the internet. We believe these rules allow us to provide you with the information that you need while lowering the costs of delivery and reducing the environmental impact of the annual meeting.

The safety of our stockholders is important to us and given the current guidance by public health officials and protocols that federal, state and local governments have imposed surrounding the coronavirus (COVID-19) pandemic, at the time of this filing we believe it is not advisable to hold our annual meeting in person. Our virtual stockholder format uses technology designed to provide our stockholders rights and opportunities to participate in the virtual meeting similar to an in-person meeting. You may attend the meeting, vote and submit questions electronically during the meeting via live webcast by visiting the website provided above. A list of shareholders of record will be available electronically during the meeting. The website can be accessed on a computer, tablet, or phone with internet connection. To be admitted to the meeting at www.virtualshareholdermeeting.com/IRWD2020, you must enter the 16-digit control number found on your proxy card, voting instruction form or notice that you received.

Proxy Material Mailing Date: April 21, 2020		Sincerely, Chief Executive Officer

Table of Contents

2020  Proxy Statement    i

Table of Contents

Letter From Our CEO

2020  Proxy Statement    1

Table of Contents

But LINZESS is only the first installment of the Ironwood story. We have two innovative GI product candidates in our pipeline that we believe, if approved, could make a huge difference in improving the lives of millions of patients. IW-3718 is our bile sequestering agent designed to treat the eight to 10 million adult patients suffering from refractory gastroesophageal reflux disease despite treatment on proton pump inhibitors. MD-7246 is our delayed release formulation of linaclotide that, together with Allergan, is being evaluated as an oral, non-opioid, pain-relieving agent for patients suffering from abdominal pain associated with certain GI diseases.

The company achieved strong financial results in 2019, reporting full year net income for the first time in Ironwood's history. We also met or exceeded all of our 2019 financial guidance metrics and took several important actions post-Separation, including relocating our headquarters to Boston, restructuring our debt and amending our ex-U.S. linaclotide partnerships for China (including Hong Kong and Macau) and Japan.

We have a remarkable team, that as of April 21, 2020, includes approximately 137 employees based in our Boston headquarters and another 170 customer-facing employees based around the country. I am proud of what this team accomplished in 2019 and believe strongly in the opportunities we have in front of us.

I encourage you to read the pages that follow that tell you more about our board, our team, our strategy, our pay, and our culture—all of the things that contributed to our strong results in 2019 and, we believe, position us well for the future. We ask for your voting support on the items described in this proxy statement so we can have the opportunity to continue to deliver for you and for all of our stockholders.

Sincerely,

Mark Mallon
Chief Executive Officer and Director

2    Ironwood

Table of Contents

About Ironwood

2019 was a transformational year for Ironwood.

We are a gastrointestinal, or GI, healthcare company dedicated to advancing the treatment of GI diseases and redefining the standard of care for millions of GI patients. We are focused on the development and commercialization of innovative GI product opportunities in areas of large unmet need, leveraging our demonstrated expertise and capabilities in GI diseases. Our flagship product is linaclotide, which is trademarked under the names LINZESS® and CONSTELLA®, and is approved to treat adult patients suffering from IBS-C or CIC in more than 35 countries around the world.

We also have two innovative late-stage development programs that we believe, if approved, could be important treatment options for millions of patients. MD-7246 is our delayed release formulation of linaclotide that we are advancing with our partner Allergan, as an oral, intestinal, non-opioid, pain-relieving agent for patients with abdominal pain associated with certain GI diseases. IW-3718 is our gastric retentive formulation of a bile acid sequestrant that we are developing for the potential treatment of refractory gastroesophageal reflux disease, or refractory GERD.

On April 1, 2019, we completed a tax-free spin-off of our soluble guanylate cyclase, or sGC, business into a separate publicly traded company, Cyclerion Therapeutics, Inc., or Cyclerion. In completing the separation of our sGC business into Cyclerion, or the Separation, in 2019 we advanced our vision of becoming the leader in U.S. GI healthcare, building on our commercial success with LINZESS and advancing our GI development portfolio. Our strategy is focused on three core priorities: drive LINZESS growth, advance our GI development portfolio and strengthen our financial profile. We made significant progress on each of these priorities in 2019:

1.

Drive LINZESS Growth

•

We grew our share of collaborative arrangements revenue related to sales of LINZESS in the U.S. by over 20% to $325.5 million for the year ended December 31, 2019.

•

We reported positive topline data from our Phase IIIb clinical trial evaluating LINZESS 290 mcg on overall abdominal symptoms (bloating, pain and discomfort) in adult patients with IBS-C. We and Allergan began communicating these additional benefits of LINZESS to healthcare practitioners in July 2019 and submitted a Supplemental New Drug Application, or sNDA, with the U.S. Food and Drug Administration, or U.S. FDA, in November 2019 to seek a more comprehensive description of the effects of LINZESS on its approved label.

2.

Advance GI Development Portfolio

•

We continued enrollment in our two pivotal Phase III clinical trials of IW-3718 for the potential treatment of refractory GERD.

•

We initiated a Phase II clinical trial with Allergan to evaluate the safety and efficacy of MD-7246 in adult patients with abdominal pain associated with IBS-D. The trial completed enrollment in December 2019 and completed patient dosing in March 2020.

•

We expanded our GI development organization through key roles including Chief Medical Officer, Head of Regulatory and Head of Biostatistics.

3.

Strengthen Financial Profile

•

We restructured our debt by issuing $200.0 million in 0.75% Convertible Senior Notes due 2024 and $200.0 million in 1.50% Convertible Senior Notes due 2026. The proceeds of these issuances were used to pay

2020  Proxy Statement    3

Table of Contents

approximately $25.2 million in connection with associated capped call transactions, repurchase $215.0 million aggregate principal amount of our outstanding 2.25% Convertible Senior Notes due 2022 and redeem all of our outstanding 8.375% Notes due 2026.

•

We amended and restated our ex-U.S. linaclotide partnerships with Astellas Pharma Inc., or Astellas, for Japan and AstraZeneca AB (together with its affiliates), or AstraZeneca, for China (including Hong Kong and Macau). As a result, we recognized $10.0 million in revenue from Astellas related to upfront payments and approximately $32.4 million in revenue from AstraZeneca related to non-contingent payments in 2019.



•

We announced a new U.S. GI disease education and promotional agreement for Alnylam Pharmaceuticals, Inc.'s GIVLAARI™ (givosiran), an RNAi therapeutic targeting aminolevulinic acid synthase 1 for the treatment of adults with acute hepatic porphyria.



•

We relocated our headquarters to a new office at 100 Summer Street in downtown Boston, Massachusetts from our previous location in Cambridge, Massachusetts. Monthly base rent payments to our landlord were contractually reduced in connection with the execution of the 100 Summer Street lease.

We demonstrated strong progress across our corporate goals in 2019, exceeding some goals and achieving certain stretch goals. As a result, our 2019 company performance achievement multiplier, which we used as a key consideration in determining executive compensation for 2019 performance, was 130%, as determined by the compensation and HR committee of our board of directors. Please see the Compensation Discussion and Analysis section included elsewhere in this proxy statement for detailed information on compensation to our 2019 named executive officers.

In this proxy statement, references to "the company" or "Ironwood" and, except within the Audit Committee Report and the Compensation Committee Report, references to "we", "us" or "our" mean Ironwood Pharmaceuticals, Inc. LINZESS® and CONSTELLA® are trademarks of Ironwood Pharmaceuticals, Inc. Any other trademarks referred to in this proxy statement are the property of their respective owners. All rights reserved. The contents of our website are not incorporated into this document and you should not consider information provided on our website to be part of this document.

4    Ironwood

Table of Contents

Our Board of Directors

The following table sets forth certain information, as of April 21, 2020, with respect to each of our directors:

2020  Proxy Statement    5

Table of Contents

Class I Directors (nominated for election at the 2020 annual meeting)

6    Ironwood

Table of Contents

2020  Proxy Statement    7

Table of Contents

Class II Directors (term expires at the 2021 annual meeting)

8    Ironwood

Table of Contents

Class III Directors (term expires at the 2022 annual meeting)

2020  Proxy Statement    9

Table of Contents

10    Ironwood

Table of Contents

We believe that our board of directors should be comprised of individuals with sophistication and experience in many substantive areas that will help us achieve our vision of becoming a leading GI company dedicated to advancing treatments for GI diseases and advancing care for millions of GI patients.

The core criteria that we use in evaluating each nominee to our board consists of the following: (a) an owner-oriented attitude and a commitment to represent the interests of our stockholders, demonstrated, in part, through ownership of our capital stock; (b) strong personal and professional ethics, integrity and values; (c) strong business acumen and savvy; (d) a deep, genuine passion for our business and the patients whom we serve; (e) demonstrated achievement in the nominee's field of expertise; (f) the absence of conflicts of interest that would impair the nominee's ability to represent the interests of our stockholders; (g) the ability to dedicate the time necessary to regularly participate in meetings of the board and committees of our board; and (h) the potential to contribute to the diversity of our board of directors, as a result of the nominee's professional background, expertise, gender, age or ethnicity.

As illustrated in the matrix below, we believe our directors possess the professional and personal qualifications and necessary expertise both within and outside of the healthcare industry to maintain a diverse and experienced board of directors that can effectively represent stockholders.

Director Succession Planning

We refresh our board of directors and assess our board succession plans regularly. As of April 21, 2020, the average age of our independent directors' was 61 years, and the average tenure of our independent directors was approximately 3.5 years. Five of our nine directors (including Mr. Mallon) joined our board of directors in 2019.

Annual Evaluations

Our directors conduct annual evaluations to assess the performance and effectiveness of the board of directors and each committee in which they are a member. In addition, each director completes a self-evaluation as well as a peer evaluation of each other director. For 2019, each director completed a written questionnaire which solicited open-ended and candid feedback on an anonymous basis. In addition to the director evaluations, we also solicit annual feedback from senior management concerning the board's performance on an anonymous basis. After the collective board and

2020  Proxy Statement    11

Table of Contents

committee evaluations and comments (including those from senior management) and the self and peer evaluations and comments were compiled, the chair of the governance and nominating committee met with our chair of the board and chief executive officer to discuss the board and committee evaluations and individual evaluations for directors. The chair of the committee also conducted individual feedback sessions with each director to discuss the results of his or her individual evaluation and then provided the committee with a summary of the individual evaluations for the Class I directors up for election at the 2020 annual meeting of stockholders. The chair of the committee then presented a summary of the collective board and committee evaluations and comments (including those from senior management) to the governance and nominating committee and full board of directors.

Director Nomination Process

Our governance and nominating committee identifies potential director candidates through referrals and recommendations, including from incumbent directors, management and stockholders, as well as through business and other organizational networks. We and our board of directors retained and paid third party firms to assist in identifying and evaluating potential director nominees to join our board of directors upon the completion of the Separation, including our chief executive officer. Stockholders who wish to recommend candidates may contact the governance and nominating committee in the manner described in Stockholder Communications, Proposals and Nominations for Directorships—Communications. Stockholder-recommended candidates whose recommendations comply with these procedures will be evaluated by the governance and nominating committee in the same manner as candidates identified by the governance and nominating committee.

Board Size and Terms

Our Eleventh Amended and Restated Certificate of Incorporation, as amended, or our Certificate of Incorporation, states that our board of directors shall consist of between one and 15 members, and the precise number of directors shall be fixed by a resolution of our board of directors. Our board of directors currently consists of nine members. Each director holds office until his or her successor is duly elected and qualified or until his or her death, resignation or removal. Any vacancy on the board of directors, including a vacancy that results from an increase in the number of directors, may be filled by a vote of the majority of the directors then in office. Any additional directorships resulting from an increase in the number of directors will be apportioned by our board of directors among the three classes until the declassification of our board of directors, as described further below.

In accordance with the terms of our Certificate of Incorporation, our board of directors is currently divided into three classes, which has resulted in staggered elections. Upon the expiration of the term of a class of directors, directors in that class will be eligible to be nominated and elected for a new term at the annual meeting in the year in which their term expires. The current members of each class are set forth in the table above under Who We Are.

On the recommendation of our board of directors, our stockholders voted at our 2019 annual meeting of stockholders to amend our Certificate of Incorporation to declassify our board of directors to allow the company's stockholders to vote on the election of the entire board of directors on an annual basis, rather than on a staggered basis. Consistent with the amendment to our Certificate of Incorporation that was approved by our stockholders, the declassification of the board of directors will be phased in as follows:

•

at our 2020 annual meeting of stockholders, the Class I directors will stand for election for a one-year term;



•

at our 2021 annual meeting of stockholders, the Class I and Class II directors will stand for election for a one-year term; and



•

at our 2022 annual meeting of stockholders, and at each annual meeting of stockholders thereafter, all directors will stand for election for one-year terms.

12    Ironwood

Table of Contents

For so long as our board of directors is classified, directors may be removed by our stockholders only for cause. Following the declassification of our board of directors, our directors will be removable with or without cause by our stockholders.

We separate the roles of chair of the board of directors and chief executive officer and rotate the chair approximately every five years, unless the governance and nominating committee recommends otherwise. Our board of directors believes that this structure enhances the board of directors' oversight of, and independence from, management, and enables the board of directors to carry out its responsibilities on behalf of our stockholders. This leadership structure also allows Mr. Mallon, our chief executive officer, to focus his time and energy on operating and managing the company, while leveraging the experience and perspective of Ms. McHugh, the current chair of our board of directors. We expect the next chair rotation will take place in 2024.

Director Independence

Under Nasdaq Rule 5605, a majority of a listed company's board of directors must be comprised of independent directors. In addition, Nasdaq rules require that, subject to specified exceptions, each member of a listed company's audit, compensation and governance and nominating committees be independent, and that audit and compensation committee members satisfy the additional independence criteria set forth in Rule 10A-3 and 10C-1, respectively, under the Securities Exchange Act of 1934, as amended, or the Exchange Act. Under Nasdaq Rule 5605(a)(2), a director will only qualify as an "independent director" if, in the opinion of that company's board of directors, that person does not have a relationship that would interfere with the exercise of independent judgment in carrying out the responsibilities of a director.

Our board of directors determined that none of Messrs. Dreyfus, Duane and Owens, Mses. Kessler, McHugh and Moukheibir, and Dr. Olanoff, representing seven of our eight non-employee directors and seven of our nine directors, has a relationship that would interfere with the exercise of independent judgment in carrying out the responsibilities of a director and that each of these directors is "independent" as that term is defined under Nasdaq Rule 5605(a)(2). Mr. Mallon, our current chief executive officer, and Dr. Currie, who served as our senior vice president, chief scientific officer and president of R&D until the Separation, were not determined to be independent due to their current or recent employment with the company. Our board of directors also determined that each of the current members of our audit committee, our governance and nominating committee, and our compensation and HR committee satisfies the independence standards for such committee established by Rule 10A-3 and 10C-1 under the Exchange Act, the Securities and Exchange Commission, or the SEC, rules and the Nasdaq rules, as applicable. In making such determinations, our board of directors considered the information requested from and provided by each director concerning their background, employment and affiliations, including family relationships, the relationships that each such non-employee director has with Ironwood and all other facts and circumstances the board of directors deemed relevant in determining their independence. As part of such determination, the board of directors considered: (a) the volume of business between BCBSMA, the company in which Mr. Dreyfus serves as president and chief executive officer, and Ironwood, which amounted to less than 1% of the annual revenues of each company in 2019; and (b) payments made by Ironwood to IQVIA, the company in which Ms. Kessler serves as a senior vice president, which amounted to less than 1% of the annual revenues of IQVIA in 2019.

Risk Oversight

Our board of directors retains ultimate responsibility for risk oversight and our management retains the responsibility for risk management. In carrying out its risk oversight responsibilities, our board of directors reviews the long- and short-term internal and external risks facing the company through its participation in long-range strategic planning, and the annual review and evaluation of corporate risks that the audit committee reports. Our board of directors also believes that separating the roles of chair of the board of directors and chief executive officer enhances the board of directors' ability to oversee risk in an objective manner.

We have implemented and continue to refine a formalized enterprise risk management process. On an ongoing basis, we identify key risks, assess their potential impact and likelihood, and, where appropriate, implement operational

2020  Proxy Statement    13

Table of Contents

measures and controls or purchase insurance coverage in order to help ensure adequate risk mitigation. Together with our board of directors, we are closely monitoring the developments and impact of COVID-19 on our business and operations, including employees, and are working to quickly address and mitigate risks in the evolving and dynamic environment.

On a quarterly basis, key risks, status of mitigation activities, and potential new or emerging risks are reported to and discussed with senior management and further addressed with our board of directors, as necessary. On at least an annual basis, a long-term comprehensive enterprise risk management update is provided to our board of directors. The long-term goal of our enterprise risk management process is to ingrain a culture of risk awareness and mitigation throughout the organization that can be applied to our current business activities as well as our assessment and pursuit of future business opportunities.

As set forth in its charter, our audit committee discusses with management any significant risks or exposures facing Ironwood, evaluates the steps management has taken or proposes to take to mitigate such risks, and reviews our compliance with such mitigation plans. As part of fulfilling these responsibilities, the audit committee meets regularly with Ernst & Young LLP, our independent registered public accounting firm, and members of our management, including our chief executive officer and chief financial officer. Our audit committee also discusses with Ernst & Young LLP any significant risks or exposures facing the company to the extent that such risks or exposures relate to accounting and financial reporting, and reviews related mitigation plans with Ernst & Young LLP. In addition, our audit committee reviews the risk factors presented in our annual reports on Form 10-K and our quarterly reports on Form 10-Q that we file with the SEC.

As part of our board of directors' risk oversight role, our compensation and HR committee reviews and evaluates the risks associated with our compensation programs and succession plans, as it is responsible under its charter for approving the compensation of all of our executive officers and overseeing the maintenance and presentation to our board of directors, of succession plans for members of our senior management. Likewise, our governance and nominating committee is responsible for evaluating the performance, operations and composition of our board of directors and the sufficiency of our corporate governance guidelines, either of which may impact our risk profile from a governance perspective.

In performing their risk oversight functions, each committee of our board of directors has full access to management, as well as the ability to engage outside advisors.

Hedging and Pledging Policy

As part of our insider trading prevention policy, our directors and executive officers are prohibited from engaging in any hedging or monetization transactions of our company securities, including through the use of financial instruments such as prepaid variable forwards, equity swaps, collars and exchange funds. In addition, our insider trading prevention policy generally prohibits our directors and executive officers from holding company securities in a margin account or pledging company securities as collateral for a loan.

Corporate Governance Guidelines

We have adopted corporate governance guidelines which are accessible through the Investors section of our website at www.ironwoodpharma.com, under the heading Corporate Governance, and which are available in print to any stockholder who requests them from our secretary. Our board of directors believes that sound governance practices and policies provide an important framework to assist it in fulfilling its duties to stockholders, and relies on these guidelines to provide that framework. Among other things, the guidelines help to ensure that our board of directors is independent from management, that our board of directors adequately performs its oversight functions, and that the interests of our board of directors and management align with the interests of our stockholders.

14    Ironwood

Table of Contents

Board Meetings

Our board of directors held 17 meetings during 2019. As stated in our corporate governance guidelines, we expect our directors to rigorously prepare for, attend, and participate in all board and applicable committee meetings. Each director is expected to ensure that other existing and planned future commitments do not materially interfere with his or her service as a director. We also expect that all of our directors up for election at, or who have a term that continues after, an annual meeting of stockholders will attend such annual meeting. In 2019, each incumbent director attended at least 75% of all meetings of the board of directors and all committees of the board of directors on which he or she served that were held during the period that such director was a member of the board of directors or the applicable committee. All nine of our directors at the time of our 2019 annual meeting of stockholders attended this meeting.

Committees

Our board of directors has established an audit committee, a governance and nominating committee and a compensation and HR committee. In addition, our board of directors established a capital allocation committee in 2018 to oversee and monitor the company's business mix and capital allocation decisions in order to make recommendations to the board of directors, as well as advise on the Separation. This committee was disbanded upon completion of the Separation. Each of the audit committee, the governance and nominating committee and the compensation and HR committee operates under a charter approved by our board of directors. Copies of each charter are accessible through the Investors section of our website at www.ironwoodpharma.com, under the heading Corporate Governance, and are available in print to any stockholder who requests them from our secretary. The chair of each of our committees is expected to rotate approximately every three to five years, unless the governance and nominating committee recommends otherwise.

Audit Committee

We have a separately designated standing audit committee established by our board of directors for the purpose of overseeing our accounting and financial reporting processes and audits of our financial statements. The members of our audit committee are Mses. Moukheibir and McHugh and Mr. Owens. Ms. Moukheibir chairs the audit committee. Our audit committee met six times during 2019. Our audit committee assists our board of directors in its oversight of significant risks facing Ironwood, the integrity of our financial statements and our independent registered public accounting firm's qualifications, independence and performance.

Our audit committee's responsibilities include:

•

reviewing and discussing with management and our independent registered public accounting firm our annual and quarterly financial statements, earnings releases and related disclosures;



•

reviewing and discussing with management and our independent registered public accounting firm and, as needed, internal auditors or any relevant third party, our internal controls and internal auditing procedures, including any material weaknesses in either;



•

discussing our accounting policies and all material correcting adjustments with our management and our independent registered public accounting firm;



•

discussing with our management any significant risks or exposures facing the company and the related mitigation plans, and discussing with our independent registered public accounting firm any significant risks or exposures facing the company to the extent that such risks or exposures relate to accounting and financial reporting and related mitigation plans;



•

monitoring our internal control over financial reporting and disclosure controls and procedures;



•

working with management to formulate a mitigation plan and reviewing the company's compliance with such mitigation plan in the event of a significant breakdown or security breach affecting the information technology systems of the company or a third party;

2020  Proxy Statement    15

Table of Contents

•

appointing, retaining, evaluating, overseeing, and approving the compensation for and, when necessary, terminating our independent registered public accounting firm;



•

approving all audit services and all permitted non-audit, tax and other services to be performed by our independent registered public accounting firm, in each case, in accordance with the audit committee's pre-approval policy;



•

discussing with the independent registered public accounting firm its independence and ensuring that it receives the written disclosures regarding these communications required by the Public Company Accounting Oversight Board, or PCAOB;



•

reviewing with the independent registered public accounting firm, to the extent applicable, any matter arising from the audit of the financial statements that was communicated or required to be communicated that both relates to accounts or disclosures that are material to the financial statements and involves especially challenging, subjective or complex auditor judgment;



•

reviewing and approving all transactions or series of similar transactions to which we were or are a party in which the amount involved exceeded or exceeds $120,000 and in which any of our directors, executive officers, holders of more than 5% of any class of our voting securities, or any member of the immediate family of any of the foregoing persons, had or will have a direct or indirect material interest, other than compensation arrangements with directors and executive officers;



•

recommending whether the audited financial statements should be included in our annual report and preparing the audit committee report required by SEC rules;



•

reviewing with our independent registered public accounting firm all material communications between our management and our independent registered public accounting firm;



•

reviewing, updating and recommending to our board of directors approval of our code of business conduct and ethics; and



•

establishing procedures for the receipt, retention, investigation and treatment of accounting related complaints and concerns.

Our board of directors has determined that Ms. Moukheibir is an audit committee financial expert, as defined in Item 407(d)(5) of Regulation S-K.

16    Ironwood

Table of Contents

Audit Committee Report

In the course of our oversight of Ironwood's financial reporting process, we have (i) reviewed and discussed with management the company's audited financial statements for the fiscal year ended December 31, 2019, (ii) discussed with Ernst & Young LLP, the company's independent registered public accounting firm, the matters required to be discussed by the applicable requirements of the PCAOB and the SEC, and (iii) received the written disclosures and the letter from Ernst & Young LLP, the company's independent registered public accounting firm, required by applicable requirements of the PCAOB regarding the independent registered public accounting firm's communications with us concerning independence, discussed with the independent registered public accounting firm its independence, and considered whether the provision of non-audit services by the independent registered public accounting firm is compatible with maintaining its independence.

Based on the foregoing review and discussions, we recommended to the board of directors of the company that the audited financial statements be included in the company's Annual Report on Form 10-K for the year ended December 31, 2019 for filing with the SEC.

2020  Proxy Statement    17

Table of Contents

Governance and Nominating Committee

The members of our governance and nominating committee are Messrs. Olanoff and Duane and Ms. McHugh. Mr. Olanoff chairs the governance and nominating committee. Our governance and nominating committee met two times during 2019.

Our governance and nominating committee's responsibilities include:

•

assisting our board of directors in identifying and recruiting individuals qualified to become members of our board of directors;



•

recommending to our board of directors the persons to be nominated for election as directors;



•

recommending to our board of directors qualified individuals to serve as committee members;



•

performing an annual evaluation of our board of directors and each committee of the board of directors;



•

evaluating the need and, if necessary, creating a plan for the continuing education of our directors;



•

assessing and reviewing our corporate governance guidelines and recommending any changes to our board of directors;



•

considering any potential conflicts of interest of members of our board of directors;



•

considering our policies with respect to their impact on significant issues of corporate social responsibility; and



•

evaluating and approving any requests from our executives to serve on the board of directors of another for-profit company.

Compensation and HR Committee

The members of our compensation and HR committee are Messrs. Dreyfus and Duane and Ms. Kessler. Mr. Dreyfus chairs our compensation and HR committee. Our compensation and HR committee met seven times during 2019. Our compensation and HR committee assists our board of directors in fulfilling its responsibilities relating to the compensation of our board of directors and our executive officers.

Our compensation and HR committee's responsibilities include:

•

reviewing and approving corporate goals and objectives relevant to executive officer compensation and evaluating the performance of executive officers in light of those goals and objectives;



•

reviewing and approving executive officer compensation, including salary, bonus and incentive compensation, deferred compensation, perquisites, equity compensation, benefits provided upon retirement, severance or other termination of employment, and any other forms of executive compensation;



•

reviewing and approving our chief executive officer's compensation based on its evaluation of the chief executive officer's performance;



•

reviewing and approving our peer companies to evaluate our compensation competitiveness and mix of compensation elements;



•

overseeing and administering our incentive compensation plans and equity-based plans and recommending the adoption of new incentive compensation plans and equity-based plans to our board of directors;



•

reviewing, accessing and making recommendations to our board of directors with respect to director compensation;



•

reviewing and discussing with management the compensation discussion and analysis required to be included in our filings with the SEC and recommending whether the compensation discussion and analysis should be included in such filings;



•

preparing the compensation and HR committee report required by the SEC;



•

making recommendations to our board of directors with respect to management succession planning, including planning with respect to our chief executive officer;

18    Ironwood

Table of Contents

•

overseeing compliance with applicable laws and regulations affecting employee compensation and benefits, including regarding stockholder approval of certain executive compensation matters; and



•

reviewing the risks associated with our compensation policies and practices.

Compensation Committee Interlocks and Insider Participation

None of the members of our compensation and HR committee is or has at any time during the past fiscal year been an officer or employee of Ironwood. None of the members of our compensation and HR committee has formerly been an officer of Ironwood. None of our executive officers serve, or in the past fiscal year has served, as a member of the board of directors or compensation committee of any other entity that has one or more executive officers serving as a member of our board of directors or compensation and HR committee. None of the members of our compensation and HR committee had any relationship with us that requires disclosure under any paragraph of Item 404 of Regulation S-K under the Exchange Act.

The majority of the compensation that our non-employee directors receive for service on our board of directors is paid in the form of restricted shares of our Class A common stock. Vesting of these shares of restricted stock is contingent on each non-employee director continuing to serve as a member of the board of directors on the last day of each applicable vesting period. If a director ceases serving as a member of our board of directors at any time during the vesting period of a restricted stock award, or RSA, unvested shares will be forfeited on the date of such director's termination of service.

Director Compensation Plan, effective January 2014

From January to May 2019, our directors were compensated pursuant to our prior director compensation plan, which became effective January 1, 2014, or the 2014 Director Compensation Plan. Under this plan, at each annual meeting of stockholders, our non-employee directors received an annual grant of the number of restricted shares of our Class A common stock calculated by dividing (i) the dollar amount for total director compensation approximating the 25th percentile of our current peer group on the date of grant, by (ii) the average closing price of our Class A common stock on the Nasdaq Global Select Market for the six months preceding the month in which the applicable annual meeting of stockholders occurs. Such restricted shares vested 25% on each three-month anniversary of the grant date over a nine-month period and the remaining 25% on the day before the date of the annual meeting of stockholders for the next calendar year.

Under our 2014 Director Compensation Plan, if a non-employee director was elected other than at an annual meeting of our stockholders, on the start date of such non-employee directors service on the board of directors, such non-employee director was granted the number of restricted shares of our Class A common stock granted to non-employee directors at the most recent annual meeting of our stockholders, prorated based on the number of days between the last annual meeting of our stockholders and the date on which the non-employee director began service with us. In connection with their election to the board, on April 1, 2019, each of Mses. Kessler and Moukheibir, Dr. Currie and Mr. Duane were issued 2,995 restricted shares of our Class A common stock, which vested in full on the day before the date of our 2019 annual meeting of stockholders.

In addition, pursuant to our 2014 Director Compensation Plan, the chair of our board and each of the committee chairs received annual compensation of $10,000, payable quarterly in unrestricted stock or cash at the individual director's election. Shares of our Class A common stock issued to our directors under our 2014 Director Compensation Plan were granted under our Amended and Restated 2010 Employee, Director and Consultant Equity Incentive Plan, or the 2010 Plan. Further, whether the shares of restricted stock are vested or not, no director may transfer any shares of restricted stock granted pursuant to our 2014 Director Compensation Plan while such person is a director of Ironwood, subject to limited exceptions.

2020  Proxy Statement    19

Table of Contents

Under our 2014 Director Compensation Plan, non-employee directors also were reimbursed for reasonable travel and other expenses incurred in connection with attending meetings of the board of directors and its committees.

Non-Employee Director Compensation Policy, effective May 2019

Following a competitive assessment of market data related to non-executive director compensation provided by Pearl Meyer & Partners, LLC, or Pearl Meyer, our compensation consultant at the time, our compensation and HR committee approved our non-employee director compensation policy, or the 2019 Director Compensation Policy, effective in May 2019. Under our 2019 Director Compensation Policy, at each annual meeting of stockholders, our non-employee directors are granted restricted shares of our Class A common stock with a grant date fair value of $250,000, determined based on the average closing price of our Class A common stock on the Nasdaq Global Select Market (or the stock exchange on which our stock is being actively traded) for the six months preceding the month in which the award is granted, rounded down to the nearest whole share. Such restricted shares vest in full on the date immediately preceding the date of the next annual meeting of stockholders.

Under our 2019 Director Compensation Policy, if a non-employee director is elected other than at an annual meeting of our stockholders, then upon his or her initial election to our board of directors, such director will be granted the number of restricted shares of our Class A common stock granted to non-employee directors at the most recent annual meeting of our stockholders, prorated based on the number of days between the last annual meeting of our stockholders and the date on which the non-employee director began service with us. Such restricted shares will vest in full on the date immediately preceding the date of the next annual meeting of stockholders. In addition, each non-employee director who is first elected to our board of directors will, upon his or her initial election, be granted restricted shares of our Class A common stock with a grant date fair value of $250,000, determined based on the average closing price of our Class A common stock on the Nasdaq Global Select Market (or the stock exchange on which our stock is being actively traded) for the six months preceding the month in which the award is granted, rounded down to the nearest whole share. Such restricted shares vest in three equal installments on the first three anniversaries of the grant date.

Shares of restricted stock that were granted to our directors under our 2019 Director Compensation Policy in connection with our 2019 annual meeting of stockholders were granted under our 2010 Plan. After May 2019, shares of restricted stock granted to directors under our 2019 Director Compensation Policy will be granted under our 2019 Equity Incentive Plan, or our 2019 Plan.

In addition to equity grants, each non-employee director receives an annual retainer under our 2019 Director Compensation Policy for his or her service on our board of directors, as well as additional fees for board chair, committee or committee chair service as follows:

20    Ironwood

Table of Contents

All cash fees are payable quarterly in arrears and will be prorated for any quarter of partial service, and fees payable under our 2019 Director Compensation Policy were retroactive to April 1, 2019. Each non-employee director may elect, prior to January 1 of the year with respect to which such election will be effective, to receive fully vested shares of our Class A common stock at no cost in lieu of his or her annual cash retainer and any additional cash retainers for board chair, committee or committee chair service set forth above. The number of shares of our Class A common stock to be issued will be determined by dividing the applicable cash retainer(s) the director would be eligible to receive by the closing price of our Class A common stock on the Nasdaq Global Select Market (or the stock exchange on which our stock is being actively traded) on the date the cash fees would otherwise be paid, rounded down to the nearest whole share. Further, non-employee directors are reimbursed for reasonable travel and other expenses incurred in connection with attending meetings of the board of directors and its committees.

Director Stock Ownership Guidelines

In May 2019, we instituted stock ownership guidelines that provide that each non-employee director must accumulate and continuously hold shares of our Class A common stock with a value equal to or greater than three times the amount of the then-current annual retainer paid to the non-employee director for service on our board of directors (excluding any additional board chair, committee, or committee chair retainers). Non-employee directors are required to achieve this level of ownership by the later of (a) May 30, 2021 (the date which is two years from the date of our 2019 annual meeting of stockholders) and (b) two years from the date the individual began service with us, or the Ownership Date.

Compliance with the stock ownership requirements will be measured on the date of the annual meeting of stockholders each year based on the annual retainer then in effect. Following the Ownership Date, until a non-employee director holds the required ownership level and if such director does not hold the number of shares of our Class A common stock to meet the stock ownership requirements at any time thereafter, such director will be required to retain 100% of any shares of our Class A common stock held or received upon the vesting or settlement of equity awards or the exercise of stock options, in each case, net of shares sold to cover applicable taxes and the payment of any exercise or purchase price (if applicable). Further, following the Ownership Date, to the extent a non-employee director does not hold the number of shares of our Class A common stock that meets this threshold, such director will be automatically deemed to have elected to receive any cash retainer for service on our board of directors or a committee thereof in the form of shares of our Class A common stock in an amount that satisfies the threshold shortfall.

In addition to the stock ownership guidelines described above, the non-employee director share transfer restrictions described above under our 2014 Director Compensation Plan remain in effect with respect to any shares granted under that plan.

We believe our stock ownership guidelines and other transfer restrictions ensure that the interests of our directors, each of whom has equity in the business, are aligned with those of our stockholders and further focus our directors on maximizing long-term value.

Director Compensation Table

The following table sets forth information regarding the compensation earned during the year ended December 31, 2019 by each of our directors who served in 2019 other than (i) Mr. Mallon, our current chief executive officer and current member of our board of directors, (ii) Peter Hecht, our former chief executive officer and former member of board of directors, and (iii) Mark Currie, our former senior vice president, chief scientific officer and president of R&D and current member of our board of directors. Neither Mr. Mallon nor Dr. Hecht received compensation for his service on our board of directors, and Dr. Currie's compensation for service on our board of directors is included in the Summary Compensation Table available elsewhere in this proxy statement.

2020  Proxy Statement    21

Table of Contents

22    Ironwood

Table of Contents

On April 1, 2019, each of the non-employee directors who was on our board of directors prior to the date of the Separation held 4,056 unvested shares of our Class A common stock, which represented 25% of the annual restricted stock award of 16,223 shares of our Class A common stock granted on the date of our 2018 annual meeting of stockholders. In connection with the Separation, on April 1, 2019, each such director received a dividend of 405 shares of unrestricted shares of Cyclerion common stock, which amount was determined according to a fixed ratio of one share of Cyclerion common stock for every 10 shares of unvested Ironwood Class A common stock. In addition to receiving 405 shares of Cyclerion common stock, the Separation had the following impact on unvested restricted stock held by directors at the time of the Separation:

Furthermore, the directors who joined Ironwood's board of directors in connection with the Separation (Mses. Kessler and Moukheibir, Dr. Currie and Mr. Duane) also received 405 shares of Cyclerion common stock in addition to the award of 2,995 shares of restricted Ironwood Class A common stock granted on April 1, 2019 in connection with joining our board of directors. Further information on the impact of the Separation on directors' equity is available elsewhere in this proxy statement under the caption Compensation Discussion and Analysis—Equity Impact of the Separation.

2020  Proxy Statement    23

Table of Contents

Table of Contents

Our board of directors has nominated each of our current Class I directors—Dr. Currie and Messrs. Duane and Mallon—for election at the 2020 annual meeting. Each of Dr. Currie and Messrs. Duane and Mallon has indicated his willingness to serve if elected and has consented to be named in the proxy statement. Should any nominee become unavailable for election at the annual meeting, the persons named on the enclosed proxy card as proxy holders may vote all proxies given in response to this solicitation for the election of a substitute nominee chosen by our board of directors.

Vote Required

The three nominees for director with the highest number of affirmative votes will be elected as directors to serve for one year and until their successors are duly elected and qualified or until their death, resignation or removal. Because there is no minimum vote required, abstentions and broker non-votes will not affect the outcome of this proposal.

26    Ironwood

Table of Contents

Our Executives

The following table sets forth certain information, as of April 21, 2020, with respect to each of our executive officers, other than Mr. Mallon, whose biographical information is included elsewhere in this proxy statement under the caption Our Board of Directors:

2020  Proxy Statement    27

Table of Contents

28    Ironwood

Table of Contents

2020  Proxy Statement    29

Table of Contents

Executive Compensation

Dear Ironwood stockholders,

2019 was a transformative year for Ironwood, underscored by the clear execution from the Ironwood team in driving forward our mission to advance treatment of GI diseases and redefine the standard of care for millions of GI patients. Ironwood is undeniably a very different company today than it was a little over a year ago.

In line with the changes in the company's focus, strategy and leadership team marked by the Separation, we took the opportunity in 2019 to refresh a number of the company's significant plans and policies. At our 2019 annual meeting of stockholders, our stockholders approved our 2019 Equity Incentive Plan, which, among other features that we believe will advance the interests of our stockholders, did not continue the "evergreen" feature of our prior equity incentive plan and limited share recycling under the plan. Additionally, in early 2019, we adopted a clawback policy that provides that our board of directors may recover from our current and former executive offers certain incentive compensation under certain conditions upon a financial restatement. We also instituted formal stock ownership guidelines for directors to further align our director compensation program with the long-term performance of the company.

We also made several important changes to Ironwood's executive compensation program. As we discuss further below, we developed a competitive compensation package to recruit Mark Mallon, who became our CEO in connection with the Separation. We adopted a new executive compensation peer group that includes similarly sized commercial biopharmaceuticals peers (based on market capitalization, median revenue, number of employees, as well as other factors) to align to our post-Separation profile. In addition, for our 2020 executive equity compensation program, we decided to replace stock option grants with performance-based stock unit awards that are designed to further align executive pay with our performance, including stock price performance. We believe this important adjustment will motivate our executive team and further tie our executives' compensation to stockholder value.

As always, we are open to your feedback. Thank you for the privilege of serving as your compensation and HR committee chair.

Sincerely,

Andrew Dreyfus

Chair, Compensation and HR Committee

30    Ironwood

Table of Contents

Compensation Discussion and Analysis

In 2019 and 2020, our executive compensation program has evolved along with the changes to our business marked by the Separation. Two key highlights, described further below, were: (1) the transition of our chief executive officer in connection with the Separation, and (2) the introduction of performance-based units, or PSUs, into our 2020 equity compensation program for our executive officers in lieu of stock options.

1.

Chief Executive Officer Transition
In January 2019, our board of directors hired Mark Mallon to be our chief executive officer, or CEO, effective upon the Separation. Our previous CEO and founder, Peter Hecht, became the CEO of Cyclerion in connection with the Separation. Compensation for Mr. Mallon in 2019 includes certain one-time cash and equity awards granted to compensate him, in part, for outstanding equity he forfeited by leaving his previous employer and therefore is not representative of our expectations for Mr. Mallon's compensation on a go-forward basis. Additional information on Mr. Mallon's compensation is provided under the caption 2019 CEO Transition Compensation, below.

2.

Introduction of PSUs into 2020 Executive Equity Program
To further tie executive compensation to corporate performance and stockholder value, in 2020, 50% of annual equity-based compensation awarded to our named executive officers was in the form of PSUs, with the remaining 50% of grants in the form of restricted stock units, or RSUs (based on the grant date fair value of equity awards, with PSU awards measured at target). PSUs replaced stock options in our 2020 executive compensation program to further drive accountability to achieve key milestones and deliver stockholder returns. The PSUs awarded in March 2020 to our named executive officers may be earned based on corporate achievement in three categories: (1) completing clinical pipeline new drug application, or NDA, submissions to the U.S. FDA, (2) achieving target cumulative adjusted organic EBITDA, and (3) realizing specified levels of relative stockholder return, or rTSR. Additional information on our PSU program, including the PSU awards granted to our named executive officers in 2020, is provided under the caption 2020 Equity Awards and Shift to 50% Performance-Based Stock Units, below.

Feedback from stockholders is an essential part of our executive compensation decision-making processes. Our company engages with many of our largest stockholders on an annual basis. We invite feedback on a wide variety of topics including corporate strategy, capital allocation, governance, and executive compensation. In 2019, senior management met with nearly all of Ironwood's largest 20 stockholders, which represented over 90% of our outstanding shares as of December 31, 2019.

Our stockholders also have the opportunity to cast a non-binding advisory vote on named executive officer compensation, or a "say-on-pay" vote, every year. This allows our stockholders to provide us with regular, timely and direct input on our executive compensation philosophy, policies and practices. We believe this enables us to further align our compensation programs with our stockholders' interests and to enhance our ability to consider stockholder feedback as part of our annual compensation review process. We sought stockholder input on our executive compensation programs through the say-on-pay vote at our 2019 annual meeting of stockholders and approximately 87% of votes cast by our stockholders voted in support of our named executive officer compensation.

2020  Proxy Statement    31

Table of Contents

Named Executive Officers for 2019

This section discusses the principles underlying our policies and decisions with respect to the compensation of our executive officers who are named in the Summary Compensation Table, or our named executive officers. Provided below are material factors we believe are relevant to an analysis of these policies and decisions. Our named executive officers for 2019, which include executives who served the company prior to the Separation, were:

Ironwood executive officers:

•

Mark Mallon, chief executive officer;



•

Gina Consylman, chief financial officer and senior vice president;



•

Thomas A. McCourt, president; and



•

Halley E. Gilbert, former chief administrative officer and senior vice president, corporate development.

Ironwood executive officers prior to the Separation:

•

Peter M. Hecht, Ph.D., former chief executive officer; and



•

Mark G. Currie, Ph.D., former senior vice president, chief scientific officer, and president of research and development.

Ms. Gilbert resigned from her position with Ironwood effective February 28, 2020. Additional information is provided under the caption Post-Employment Arrangements elsewhere in this proxy statement. Drs. Hecht and Currie each resigned from their respective positions with Ironwood in connection with the Separation in April 2019. Dr. Hecht is no longer an officer or director of Ironwood. Dr. Currie joined our board of directors in April 2019. Additional information is provided under the caption Compensation of Named Executive Officers Who Transitioned to Cyclerion, elsewhere in this proxy statement.

2019 CEO Transition Compensation

Mr. Mallon joined the company as a senior advisor to the board of directors on January 4, 2019 and was named chief executive officer of Ironwood on April 1, 2019 in connection with the completion of the Separation. In order to compensate him, in part, for outstanding equity he forfeited by leaving his previous employer and to align his interests with stockholders, Mr. Mallon's 2019 compensation includes certain one-time cash and equity awards. For this reason, the total compensation that Mr. Mallon received in 2019 is higher than the total compensation that we expect Mr. Mallon will receive on a go-forward basis.

The terms of Mr. Mallon's offer letter provide for the following:

•

an initial base salary of $750,000 per year;



•

an annual bonus target of 75% of his base salary, subject to achievement of individual and corporate goals;



•

a one-time new hire bonus of $880,000, subject to certain clawback provisions if he terminates his employment for any reason or the company terminates his employment for Cause (as defined in his executive severance agreement described below) within two years of his start date;



•

an initial equity grant consisting of:



o

an option to purchase 171,526 shares of our Class A common stock that vest over four years, with 25% of the options vesting on the first anniversary of his start date and 1/48th of the options vesting each month thereafter for the next 36 months;



o

93,036 RSUs that will vest over four years as to 25% of the RSUs on each approximate anniversary of the applicable grant date, and

32    Ironwood

Table of Contents

•

certain relocation benefits, also subject to certain clawback provisions if Mr. Mallon terminates his employment for any reason or the company terminates his employment for Cause, in each case within 12 months following the payment date of his last relocation reimbursement.

For a description of the impact of the Separation on the number of stock options and RSUs, and the exercise price of stock options, awarded to Mr. Mallon in January 2019 in connection with the commencement of his employment with Ironwood, please see Equity Impact of the Separation and the footnotes to the Grants of Plan-Based Awards table elsewhere in this proxy statement.

Per his offer letter, upon becoming CEO on April 1, 2019, Mr. Mallon received an additional option to purchase 423,049 shares of our Class A common stock and an additional grant of 206,873 RSUs. As with his initial equity grant, 25% of the options vested on the first anniversary of his start date, with 1/48th of the options vesting each month thereafter for the next 36 months, and the RSUs vest as to 25% of the RSUs on the approximate first four anniversaries of the date of grant. This grant was made on April 1, 2019, the effective date of the Separation. In addition, the company has entered into an indemnification agreement and an executive severance agreement with Mr. Mallon, the terms of each of which are consistent with the forms of indemnification agreement and executive severance arrangements described elsewhere in this proxy statement. Additional information on the factors considered in determining Mr. Mallon's initial compensation package is available under the caption Role of the Compensation and Human Resources Committee elsewhere in this proxy statement.

The following table presents a summary of the payments made, and value of awards granted, to Mr. Mallon as part of his initial compensation package:

Mr. Mallon was not eligible to receive an annual equity award in fiscal year 2019 and instead received initial equity grants in early 2019 as described above.

For information on the cash bonus award paid to Mr. Mallon in 2020 for 2019 performance, as well as Mr. Mallon's base salary increase in 2020 and equity awards granted to Mr. Mallon in 2020, see NEO Compensation Program, below.

NEO Compensation Program

As in prior years, the three primary elements of our executive compensation program are base salary, cash bonus and long-term equity incentive compensation. Unless the context suggests otherwise, "named executive officers" as used in this section refers to our named executive officers who remained at Ironwood through 2019.

2020  Proxy Statement    33

Table of Contents

Goals and Accomplishments

In 2019, allocations of cash and equity awards to our named executive officers were, in large part, dependent upon our meeting certain weighted corporate performance goals. We work thoughtfully with our compensation and HR committee and other members of our board of directors to establish what we believe are challenging corporate goals that further the accomplishment of our long-term business plan. In early 2019, our compensation and HR committee approved the corporate performance goals for 2019. Our named executive officers (other than our CEO) were evaluated on the achievement of the 2019 corporate goals and additional individual goals that contributed toward, and related directly to, the accomplishment of the 2019 corporate goals. The compensation and HR committee assessed Mr. Mallon's performance based on the full set of corporate goals. Performance measured against the 2019 corporate and individual goals (as applicable) was used in determining compensation awards and adjustments for our named executive officers in early 2020.

The 2019 corporate goals, and the level of achievement against these goals, as determined by our compensation and HR committee, was as follows:

34    Ironwood

Table of Contents

In addition to the above corporate goals, the company achieved certain stretch goals in 2019, including higher LINZESS brand profitability compared to target and outperformance relative to adjusted EBITDA from continuing operations expectations. As a result, our compensation and HR committee determined that the 2019 company performance achievement multiplier, which was used as a key consideration in determining executive compensation awarded for 2019 performance, was 130%.

In support of the 2019 corporate goals identified above, our compensation and HR committee assigned ownership of a specific subset of goals to each of our named executive officers, as follows:

In early 2020, Mr. Mallon evaluated the individual performance in 2019 of each of the named executive officers listed above and provided feedback and made recommendations to our compensation and HR committee. The committee determined the named executive officers' compensation, taking into account Ironwood's level of achievement of its corporate goals as well as the fact that each named executive officer exceeded or far exceeded performance expectations for 2019.

Additional information on the basis for compensation decisions in 2019 relating to our named executive officers is available throughout this section and elsewhere in this proxy statement under the captions Role of the Compensation and Human Resources Committee and Role of the Compensation Consultant: Benchmarking and Peer Group Analysis.

Base Salary

Base salaries are determined at commencement of employment and are generally re-evaluated annually and adjusted, if warranted, to realign salaries with market levels and to reflect the performance of the named executive officer. In determining whether to adjust a named executive officer's base salary, our compensation and HR committee takes into consideration factors such as our performance in prior years, general economic factors and compensation parity among our named executive officers, as well as the abilities, performance and experience of the named executive officer. Our compensation and HR committee also reviews our named executive officers' past compensation at the company and market data. Please see Role of the Compensation Consultant: Benchmarking and Peer Group Analysis for further information.

2020  Proxy Statement    35

Table of Contents

In January 2019, our compensation and HR committee reviewed and approved the following base salaries for 2019 for our named executive officers (other than Mr. Mallon, whose compensation was set when he commenced service with us, as described above): Ms. Consylman received a $65,000 increase in base salary from $415,000 to $480,000, Ms. Gilbert received a $20,000 increase in base salary from $460,000 to $480,000, and Mr. McCourt received a $20,000 increase from $465,000 to $485,000. The increase in base salary for Ms. Consylman, Ms. Gilbert and Mr. McCourt was based on our compensation and HR committee's determination that we achieved 100% of our corporate goals in 2018 and in recognition that each such named executive officer met or exceeded all or substantially all of his or her respective individual goals for 2018. This determination also took into account peer group and other market data from the Pearl Meyer competitive assessment discussed below. In addition, the increase in base salary for Ms. Consylman in 2019 also includes adjustments to better align her base salary with the external market and her internal peers. In May 2019, Mr. McCourt received a $35,000 increase in base salary from $485,000 to $520,000 in connection with his promotion to president, which increase was effective as of April 1, 2019.

In January 2020, our compensation and HR committee reviewed and approved the following base salaries for 2020: Mr. Mallon received a $22,500 increase in base salary from $750,000 to $772,500, Ms. Consylman received a $14,400 increase in base salary from $480,000 to $494,400, and Mr. McCourt received a $36,400 increase from $520,000 to $556,400. The compensation and HR committee did not increase Ms. Gilbert's base salary because Ms. Gilbert had provided notice of her intent to resign from the company in February 2020.

Cash Bonus

Our cash bonus program is designed to reward the achievement of our annual corporate goals and individual goals. The program is also intended to foster and support our performance-driven culture by setting clear, high-value goals, rewarding outstanding performers, and making sure our employees know clearly that we value their contributions. Each cash bonus award is made annually and is based on the extent to which we achieved our corporate goals for the preceding year, as well as the executive's individual performance in that year against his or her individual goals. In 2019, Mr. Mallon's target bonus was 75% of his base salary, Mr. McCourt's target bonus was 60% of his base salary, and Mses. Consylman and Gilbert's target bonus was 50% of their respective base salaries. We believe that these target bonus percentages align the target compensation of our named executive officers with that of our peers, place appropriate emphasis on achievement of our annual performance objectives and facilitate recruiting, retaining and motivating our executive officers.

Additionally, for each of our named executive officers, 70% of each cash bonus award paid in 2020 for 2019 performance was based solely on the achievement of our corporate goals and 30% was based on the named executive officer's achievement of his or her individual goals, which, as described above for named executive officers other than Mr. Mallon, included specific accountability for certain of our corporate goals. In determining Mr. Mallon's cash bonus paid in 2020 for 2019 performance, the compensation and HR committee equated Mr. Mallon's individual performance to the company's 2019 performance achievement multiplier of 130%.

36    Ironwood

Table of Contents

The following summarizes the calculation of our named executive officers' cash bonus awards paid in 2020 for 2019 performance:

This approach was intended to closely align cash bonus awards to the achievement of our corporate goals, while taking into account individual performance and providing equity and transparency to the calculation of our executive bonuses. As described above, the company performance achievement multiplier for 2019 was 130%. In February 2020, our compensation and HR committee determined that each of our named executive officers exceeded or far exceeded performance expectations for 2019, resulting in the following individual performance achievement multipliers: Ms. Consylman, 150%; Ms. Gilbert, 130% and Mr. McCourt, 140%. Our compensation and HR committee also determined that Mr. Mallon's individual performance achievement multiplier was 130% on the basis that such multiplier was equal to the 130% corporate performance achievement multiplier. The compensation and HR committee reviewed and approved the following bonuses for 2019 performance for our named executive officers:

In addition to the annual cash bonus for 2019 performance described above, in May 2019, Mses. Consylman and Gilbert each received a special $250,000 cash award in recognition of their significant contributions to and performance in connection with the Separation and, with respect to Ms. Gilbert, for her expanded role overseeing our corporate development function.

Long-Term Equity Awards

We use equity awards as our incentive vehicle for long-term compensation to attract, reward and motivate our named executive officers in a manner that is intended to align their interests with those of our stockholders. We typically grant equity awards in the first quarter of each year based on our performance in the prior year. Throughout the year, our compensation and HR committee may award additional grants as circumstances warrant. Our compensation and HR committee does not apply a rigid formula in allocating equity awards to our named executive officers as a group or to any particular named executive officer, but sets an equity pool each year based on achievement of our corporate goals for the prior year, which for 2018 was 100% of our corporate goals, including certain stretch goals, and our expectations for future performance. Individual equity award amounts are then determined based on, among other factors, peer

2020  Proxy Statement    37

Table of Contents

group and market data, and our compensation and HR committee adjusts these amounts after considering input from compensation advisors and individual performance.

2019 Equity Awards

In 2019, our named executive officers had a choice of the composition of their annual equity awards and could select from the following choices: 100% stock options; 75% stock options and 25% RSUs; or 50% stock options and 50% RSUs. The size of executive equity grants was determined based on the factors described above and each of our named executive officers, other than Mr. Mallon (who joined Ironwood in January 2019), was awarded the following stock option and RSU awards under our Amended and Restated 2010 Employee, Director and Consultant Equity Incentive Plan, or 2010 Plan, in January 2019:

On the date of grant, the stock options had an exercise price of $12.90 per share (the closing price of our Class A common stock on the Nasdaq Global Select Market on the grant date). Generally subject to the executives' continued employment with the company. The stock options vest monthly over four years as to 1/48th of the options following the date of grant and the RSUs vest as to 25% of the RSUs on each approximate anniversary of the date they were granted. For a description of the impact of the Separation on the number of stock options and RSUs, and the exercise price of stock options, awarded to our named executive officers in January 2019, please see Equity Impact of the Separation and the footnotes to the Grants of Plan-Based Awards table elsewhere in this proxy statement.

In connection with the Separation in April 2019, Mr. McCourt was promoted to president and was granted an additional 45,704 stock options and 22,852 RSUs, each for shares of our Class A common stock under our 2010 Plan. The stock options have an exercise price of $11.78 per share (the closing price of our Class A common stock on the Nasdaq Global Select Market on the grant date). Subject to Mr. McCourt's continued employment with the company, the stock options will vest monthly over four years as to 1/48th of the options following the date of Mr. McCourt's promotion, and the RSUs will vest as to 25% of the RSUs on each approximate anniversary of the date they were granted.

Equity awards granted to Mr. Mallon in 2019 are described above under the caption 2019 CEO Transition Compensation.

Retention Grants

In December 2019, we made special retention awards of RSUs to our named executive officers, other than Mr. Mallon, which vest as to 100% of the RSUs after two years generally subject to the executives' continued employment with the company. Mses. Consylman and Gilbert received 41,150 RSUs and Mr. McCourt received 115,220 RSUs. In establishing the size of these grants, our compensation consultant, Rewards Solutions, Aon (or Aon), presented peer group data and assisted our compensation and HR committee with approximating the value that another organization could potentially offer in a sign-on equity grant to recruit our executive talent. In connection with her resignation from the company in February 2020, the 41,150 RSUs granted to Ms. Gilbert in December 2019 terminated in their entirety.

2020 Equity Awards and Shift to 50% Performance-Based Stock Units

We believe that creating long-term shareholder value requires our executive team to balance their efforts on driving LINZESS growth and advancing our late-stage development programs while at the same time progressing on milestones necessary to expand future product offerings. Accordingly, our 2020 executive equity compensation program is comprised of 50% PSUs and 50% RSUs. In introducing PSUs and providing for an equal mix of PSUs and RSUs by grant

38    Ironwood

Table of Contents

date fair value (with PSUs measured at target), the compensation and HR committee sought to design a 2020 executive equity compensation program that provides the appropriate combination of awards to incentivize performance, align executive interests with those of our stockholders, and encourage executive retention.

As in 2019, long-term equity incentive compensation granted in 2020 is expected to represent a majority of each named executive officer's total compensation for the year (based on the grant date fair value of equity awards, with PSU awards measured at target). We believe this emphasis on equity, and particularly performance-based equity, strongly reinforces the principle of "pay for performance," and closely ties our executives' pay outcomes to stockholder value creation.

Goals underlying 2020 PSU awards were set to be achieved over a two to three-year performance period based, in part, on our long-range operating plan. Our compensation and HR committee selected the following performance goals for our 2020 PSU awards, which we believe drive executive accountability for delivering value to our stockholders:

1)

Gaining the U.S. FDA's acceptance of one or more additional NDAs;

2)

Growing revenue and controlling expenses as measured by cumulative adjusted organic EBITDA; and

3)

Realizing rTSR goals.

The 2020 PSUs use the following metrics, weighting and vesting opportunity:

Our compensation consultant, Aon, assisted our compensation and HR Committee with assessing our profile and market characteristics versus several potential benchmarks and then identifying an expanded peer group of commercial biopharmaceutical companies for purposes of the rTSR measurement goal under these PSUs. Our compensation and HR

2020  Proxy Statement    39

Table of Contents

committee then approved the following custom, rTSR measurement peer group, which includes all of our current executive compensation peers: