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

 

Schedule 14A

 

PROXY STATEMENT PURSUANT TO SECTION 14(A) OF
THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO.                          )

 

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Soliciting Material under §240.14a-12

 

INSMED INCORPORATED

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Fee paid previously with preliminary materials.

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

 

 

 

 

 

 

INSMED INCORPORATED   700 US HIGHWAY 202/206 BRIDGEWATER, NEW JERSEY 08807   (908) 977-9900

 

March 31, 2023

 

To Our Shareholders:

 

 

On behalf of the Board of Directors, I would like to thank you for your ongoing support of Insmed and your belief in our vision to become a globally recognized leading biotechnology company.

 

2022 ACHIEVEMENTS

 

Throughout 2022, we continued to advance the Phase 3 ASPEN study of brensocatib in bronchiectasis and have completed enrollment in adult patients in this study as of March 31, 2023. We also advanced a Phase 2 pharmacokinetics/pharmacodynamics study of brensocatib in patients with cystic fibrosis and reported topline results from this study in early 2023. We continued to advance the Phase 2 development of TPIP and made meaningful progress on our early-stage research programs, encompassing a wide range of technologies and modalities.

 

4       INSMED PROXY STATEMENT

Finally, we strengthened our cash position significantly by completing three strategic financings resulting in aggregate gross proceeds of $775 million. We ended the year with approximately $1.15 billion in cash, cash equivalents, and marketable securities, putting us in a strong financial position that will take us through the key anticipated milestones over the next year and a half.

 

OUR CULTURE

 

At Insmed, we are powered by a shared sense of purpose to serve patients with serious and rare diseases. Driven by our core values of collaboration, accountability, passion, respect, and integrity, we have built a strong and unique culture in which employees feel motivated to do their best work and empowered to deliver on the promise of great science. In 2022, we were honored to be named Science magazine’s No. 1 Top Employer for the second year in a row.

 

ESG STRATEGY

 

Insmed has always held a strong sense of corporate citizenship, and as our company grows, we continuously challenge ourselves to do better. Since 2021, we have advanced a more formal framework to enhance our focus on environmental, social, and governance (ESG) matters, led by an ESG working group and sponsored by members of our Executive Committee. Our Nominations and Governance Committee is tasked with overseeing our ESG strategy and, along with the full Board, receives regular updates on ESG matters. We look forward to publishing our inaugural Responsibility Report in 2023.

 

COMMITMENT TO SHAREHOLDERS

 

We are grateful to you, our shareholders, for your support of Insmed. We are committed to providing long-term, sustainable growth and believe that remaining focused on the needs of our patients and their families will yield these results. We look forward to your continued support and feedback in 2023.

 

Sincerely yours,

 

 

WILLIAM H. LEWIS

Chair of the Board

 

This Proxy Statement is first being mailed to shareholders on or about March 31, 2023.

 

5        INSMED PROXY STATEMENT

INSMED INCORPORATED   700 US HIGHWAY 202/206 BRIDGEWATER, NEW JERSEY 08807   (908) 977-9900

 

Notice of Annual Meeting of Shareholders to be Held on May 11, 2023

 

NOTICE IS HEREBY GIVEN that the 2023 Annual Meeting of Shareholders (the “Annual Meeting”) of Insmed Incorporated (“Insmed”) will be held virtually via the Internet at www.virtualshareholdermeeting.com/INSM2023, on May 11, 2023, at 9:00 a.m. Eastern Time, and at any adjournment or postponement thereof, for the following purposes:

 

1.

To elect three Class II directors, Elizabeth McKee Anderson, Clarissa Desjardins, Ph.D., and David W.J. McGirr, to serve until the 2026 Annual Meeting of Shareholders;

 

2.

To conduct an advisory vote on the 2022 compensation of our named executive officers (“NEOs”);

 

3.

To conduct an advisory vote on the frequency of future shareholder advisory votes on the compensation of our NEOs;

 

4.

To ratify the appointment of Ernst & Young LLP as our independent registered public accounting firm for the year ending December 31, 2023;

 

5.

To approve the Insmed Incorporated Amended and Restated 2019 Incentive Plan; and

 

6.

To transact such other business as may properly come before the Annual Meeting or any adjournment or postponement thereof.

 

The Annual Meeting will be a completely virtual meeting of shareholders. Holders of record of shares of Insmed common stock at the close of business on March 14, 2023 will be entitled to vote at the Annual Meeting.

 

You are requested to vote promptly in advance of the Annual Meeting by telephone by dialing 1-800-690-6903, electronically through the Internet by visiting www.proxyvote.com, or by returning a completed proxy card by mail regardless of whether you expect to attend the Annual Meeting. If you attend the Annual Meeting, you may vote even if you already have sent in your proxy. You may not vote your shares at the Annual Meeting unless you enter the 16-digit control number found on your notice, proxy card, or other proxy materials.

 

By Order of the Board

 

 

MICHAEL A. SMITH

Corporate Secretary

 

March 31, 2023

 

IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE INSMED INCORPORATED ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON MAY 11, 2023: The Proxy Statement and Annual Report on Form 10-K for the year ended December 31, 2022 are available at www.proxyvote.com.

 

6        INSMED PROXY STATEMENT

PROXY STATEMENT FOR ANNUAL MEETING OF SHAREHOLDERS OF INSMED INCORPORATED TO BE HELD MAY 11, 2023

 

Table of Contents

 

Proposal No. 1 Election of Class II Directors		8
Corporate Governance		22
Audit Committee Report and Independent Auditor Fees		32
Certain Relationships and Related Party Transactions		34
Delinquent Section 16(a) Reports		34
Security Ownership of Certain Beneficial Owners, Directors, and Management		34
Proposal No. 2 Advisory Vote on the 2022 Compensation of our Named Executive Officers		38
Compensation Discussion and Analysis		39
Compensation Committee Report		60
Compensation Committee Interlocks and Insider Participation		71
Dodd-Frank Mandated Pay Ratio Disclosure		71
Dodd-Frank Mandated Pay Versus Performance Disclosure		72
Director Compensation		78
Proposal No. 3 Advisory Vote on the Frequency of Future Advisory Votes on Compensation of our Named Executive Officers		80
Proposal No. 4 Ratification of the Appointment of Independent Registered Public Accounting Firm		81
Proposal No. 5 Approval of the Insmed Incorporated Amended and Restated 2019 Incentive Plan		82
Proposals for 2024 Annual Meeting		95
Annual Report on Form 10-K		96
Separate Copies for Beneficial Holders		96
General Information About The Annual Meeting and Voting		97
Appendix A: Insmed Incorporated Amended and Restated 2019 Incentive Plan		A-1

 

In this Proxy Statement, we use the words “Insmed Incorporated” to refer to Insmed Incorporated, a Virginia corporation, and we use the words “Company,” “Insmed,” “we,” “us,” and “our” to refer to Insmed Incorporated and its consolidated subsidiaries. Insmed and ARIKAYCE are trademarks of Insmed Incorporated. This Proxy Statement also contains trademarks of third parties. Each trademark of another company appearing in this Proxy Statement is the property of its owner.

 

7        INSMED PROXY STATEMENT

Proposal No. 1

 

ELECTION OF CLASS II DIRECTORS

 

Our Bylaws currently provide that our Board will consist of not less than six or more than 10 directors. Our Board has adopted resolutions providing for up to 10 directors. The directors are divided into three classes—Class I, Class II, and Class III. Each class of directors serves for three years on a staggered term basis, and the term of our Class II directors will expire at the Annual Meeting. Accordingly, the Board has nominated Elizabeth McKee Anderson, Clarissa Desjardins, Ph.D., and David W.J. McGirr for election as Class II directors.

 

Each of the nominees was recommended for election by the Nominations and Governance Committee, and such recommendation was approved by the Board. If elected, the term of office for these nominees will expire at our 2026 Annual Meeting of Shareholders. If one of these bona fide nominees set forth in this Proxy Statement is unable to serve or for good cause will not serve, proxy holders may vote for another nominee proposed by the Board or, as an alternative, the Board may reduce the number of directors to be elected at the Annual Meeting. The information below describes the primary experience, qualifications and skills of Ms. Anderson, Dr. Desjardins, and Mr. McGirr.

 

Elizabeth McKee Anderson, age 65

 

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Director since November 2018

 

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Chair of the Nominations and Governance Committee

 

Career Highlights: •      Janssen Pharmaceuticals, Inc., a Johnson & Johnson company (2003 - 2014) •      Worldwide Vice President, Global Strategic Marketing and Market Access, Infectious Diseases and Vaccines •      Worldwide Vice President, Global Strategic Marketing and Market Access, Vaccines •      Worldwide Vice President, Immunology, Global Strategic Marketing •      Worldwide Vice President, BIO Strategic Marketing •      Vice President, Global Biologics Strategic Marketing, Centocor •      Vice President, Strategic Planning & Market Research, Centocor •      Wyeth (1997 - 2002) •      Vice President & General Manager, Wyeth Lederle Vaccines •      Rhone-Poulenc Rorer Pharmaceuticals Inc. (1993 - 1997) •      Senior Vice President and General Manager, North America, Centeon LLC •      Vice President and General Manager,

North America, Armour Pharmaceutical Company •      Vice President, Worldwide Business Operations, Armour Pharmaceutical Company •      American National Red Cross (1983 - 1993) •      Mobay Chemical Company (1979 - 1983)   Current Public Board Service: •      Director, GSK plc (LSE/NYSE: GSK) •      Director, BioMarin Pharmaceutical Inc. (Nasdaq: BMRN) •      Director, Revolution Medicines, Inc. (Nasdaq: RVMD)   Current Private Board and Other Service: •      Director, Aro Biotherapeutics Inc. •      Member of the Board of Trustees, The Wistar Institute   Education: •      Loyola University Maryland - M.B.A., finance •      Rutgers University - B.S., engineering

 

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Qualifications:

Qualifications: Ms. Anderson has more than 30 years of leadership in biotechnology, pharmaceuticals, and vaccines. The Board believes that Ms. Anderson’s experience, including extensive global marketing and infectious disease experience, makes her well-suited to guide the Board in commercial and market access matters.

 

Clarissa Desjardins, Ph.D., age 56

 

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Director since November 2019

 

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Chair of the Science and Technology Committee

 

 

 

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David W.J. McGirr, age 68

 

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Director since October 2013

 

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Chair of the Audit Committee

 

 

 

 

VOTE REQUIRED FOR ELECTION OF DIRECTOR NOMINEES

 

Our Class II directors will be elected by a plurality of the votes properly cast on this proposal at the Annual Meeting. Votes withheld and broker non-votes will not have any effect on the outcome of this vote.

 

Recommendation

 

THE BOARD RECOMMENDS THAT YOU VOTE “FOR” EACH OF THE CLASS II DIRECTOR NOMINEES.

 

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OUR REMAINING BOARD MEMBERS

 

The information below describes the primary experience, qualifications, and skills of each of our Class III directors, David R. Brennan, Leo Lee, Carol A. Schafer, and Melvin Sharoky, M.D. and our Class I directors, Alfred F. Altomari and William H. Lewis. The term of the Class III directors will expire at the 2024 Annual Meeting of Shareholders, and the term of the Class I directors will expire at the 2025 Annual Meeting of Shareholders.

 

Incumbent Directors Whose Term Expires at the 2024 Annual Meeting of Shareholders (Class III Directors)

 

David R. Brennan, age 69

 

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Director since May 2014

 

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Lead Independent Director since November 2018

 

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Chair of the Compensation Committee

 

 

 

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Leo Lee, age 53

 

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Director since May 2018

 

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Member of the Compensation Committee

 

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Member of the Science and Technology Committee

 

 

 

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Carol A. Schafer, age 59

 

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Director since April 2020

 

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Member of the Audit Committee

 

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Member of the Nominations and Governance Committee

 

 

 

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Melvin Sharoky, M.D., age 72

 

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Director since May 2001

 

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Chairman from June 2009 - December 2010

 

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Member of the Nominations and Governance Committee

 

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Member of the Science and Technology Committee

 

 

 

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Incumbent Directors Whose Term Expires at the 2025 Annual Meeting of Shareholders (Class I Directors)

 

 

 

 

Alfred F. Altomari, age 64

 

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Director since August 2012

 

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Member of the Compensation Committee

 

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Member of the Audit Committee

 

 

 

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William H. Lewis, age 54

 

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Chair of the Board since November 2018

 

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Director since September 2012

 

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President and CEO since September 2012

 

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Consultant to Board from June-September 2012

 

 

 

16        INSMED PROXY STATEMENT

BOARD DIVERSITY MATRIX (AS OF MARCH 14, 2023)

 

Our Board values the diversity of its members and believes varied perspectives expand the Board’s ability to provide relevant guidance to our business. The table below provides certain self-identified diversity information regarding our Board as of March 14, 2023. Each of the categories listed in the below table has the meaning used in Nasdaq Listing Rule 5605(f).

 

TOTAL NUMBER OF DIRECTORS	9
	FEMALE	MALE	NON- BINARY	DID NOT DISCLOSE GENDER
Part I: Gender Identity
Directors	3	6	0	0
Part II: Demographic Background
African American or Black	0	0	0	0
Alaskan Native or Native American	0	0	0	0
Asian	0	1	0	0
Hispanic or Latinx	1	0	0	0
Native Hawaiian or Pacific Islander	0	0	0	0
White	2	4	0	0
Two or More Races or Ethnicities	0	0	0	0
LGBTQ+	0	0	0	0
Did Not Disclose Demographic Background	0	1	0	0

 

17        INSMED PROXY STATEMENT

EXECUTIVE OFFICERS

 

The following table sets forth our current executive officers, their ages, the positions currently held by each such person as of the date of this Proxy Statement and the period holding such positions.

 

NAME	AGE	POSITION(S)	PERIOD DURING WHICH OFFICER SERVED AT THE COMPANY
William H. Lewis	54	President and CEO	September 2012—Present
Sara Bonstein	42	Chief Financial Officer	January 2020—Present
Roger Adsett	54	Chief Operating Officer	September 2016—Present
Martina Flammer, M.D.	59	Chief Medical Officer	December 2019—Present
S. Nicole Schaeffer	54	Chief People Strategy Officer	January 2013—Present
Michael A. Smith	46	General Counsel, SVP	April 2014—Present
Drayton Wise	48	Chief Commercial Officer	February 2014—Present

 

Mr. Lewis’s biographical information is summarized above under “Incumbent Directors Whose Term Expires at the 2025 Annual Meeting of Shareholders (Class I Directors).”

 

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Ms. Bonstein joined Insmed as Chief Financial Officer in January 2020. Ms. Bonstein brings more than 15 years of operational and financial leadership in the life sciences industry. Prior to joining the Company, Ms. Bonstein was Chief Financial Officer and Chief Operating Officer of OncoSec Medical Incorporated, positions she held since May 2018. From February 2014 to April 2018, Ms. Bonstein served as the Chief Financial Officer, Secretary, Treasurer and Executive Vice President at Advaxis, Inc. Prior to Advaxis, Ms. Bonstein was a Six Sigma Champion & Black Belt at Eli Lilly and Company (Lilly) from January 2012 to February 2014. From August 2004 to December 2011, Ms. Bonstein served in various finance roles at ImClone Systems (acquired by Lilly in 2008), including Director of Development Finance. From 2001 to 2004, Ms. Bonstein served in various roles at Johnson & Johnson. Ms. Bonstein has served on the board of directors of scPharmaceuticals Inc. (Nasdaq: SCPH) since July 2020 and Xilio Therapeutics, Inc. (Nasdaq: XLO) since August 2021. Ms. Bonstein holds a Master of Business Administration from Rider University and a Bachelor of Science in Finance from The College of New Jersey.

 

Mr. Adsett joined Insmed as Chief Commercial Officer in September 2016 and was promoted to Chief Operating Officer in November 2019. Mr. Adsett has more than 25 years of experience in the global biotechnology and pharmaceutical industry. From January 2015 to September 2016, Mr. Adsett was Senior Vice President, Head of Gastrointestinal and Internal Medicine Business Unit at Shire Plc (Shire), a global specialty biopharmaceutical company. From August 2008 to January 2015, Mr. Adsett was Senior Vice President, Gastrointestinal Business Unit Leader at Shire. From October 2005 to August 2008, Mr. Adsett was General Manager, Oral IBD Products of the Gastroenterology Business Unit of Shire. From November 1994 to October 2005, Mr. Adsett held various marketing and commercial roles at AstraZeneca plc, a multinational pharmaceutical and biopharmaceutical company. Mr. Adsett was a senior analyst at Accenture PLC, a global professional services company, from September 1991 to November 1994. Mr. Adsett has served on the board of Landos Biopharma, Inc. (Nasdaq: LABP) since March 2022. Mr. Adsett holds a Master of Business Administration from The Wharton School at the University of Pennsylvania and a Bachelor of Arts in English and Economics from Bucknell University.

 

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Dr. Flammer joined Insmed as Chief Medical Officer in December 2019. Dr. Flammer has over 20 years of experience in both medical and commercial roles in the global biotechnology and pharmaceutical industry. From February 2018 to October 2019, Dr. Flammer was Head of Corporate Division Customer Value, Senior Vice President at Boehringer Ingelheim International. From 2012 to 2018, Dr. Flammer held various positions at Boehringer Ingelheim, including Vice President, Clinical Development and Medical Affairs (2016 - 2018), Vice President of Medicine, Regulatory Affairs & Pharmacovigilance (2014 - 2016), and Senior Global Medical Director, Clinical Development & Medical Affairs Virology (2012 - 2014). Prior to her time at Boehringer Ingelheim, Dr. Flammer served in various roles at Pfizer, Inc. from 2000 to 2011. Dr. Flammer holds a Master of Business Administration from New York University Stern School of Business and an M.D. from University of Vienna Medical School.

 

Ms. Schaeffer joined Insmed as Senior Vice President, Human Resources and Corporate Services in January 2013 and was promoted to Chief People Strategy Officer in January 2018. From October through December 2012, Ms. Schaeffer was a consultant to Insmed. Ms. Schaeffer has more than 25 years of experience in human resources, organizational development, corporate operations, and building life science organizations. From March 2005 to June 2012, Ms. Schaeffer served as Senior Vice President, Administration and Human Resources, for Amicus Therapeutics where she was responsible for the human resources, facilities, and information technology functions. Prior to Amicus, she served as Senior Director, Human Resources, for three portfolio companies of Flagship Ventures (now Flagship Pioneering), a venture capital firm, and in that capacity she managed human resources for three life sciences companies. Ms. Schaeffer also held HR leadership positions with Oak Industries, from 1997 to 2000, and EMC Corporation, from 1994 to 1996. Ms. Schaeffer received her Bachelor of Arts degree from the University of Rochester and her Master of Business Administration degree from Boston University.

 

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Mr. Smith joined Insmed as Corporate Counsel in April 2014 and was promoted several times, including to the positions of Vice President, Corporate Counsel (September 2016 to June 2020) and Senior Vice President, General Counsel – US (July 2020 to July 2021). Most recently, Mr. Smith was promoted to General Counsel, Senior Vice President in July 2021. Mr. Smith served as Associate General Counsel at ViroPharma Incorporated from April 2008 until its acquisition by Shire plc in 2014. Prior to that, Mr. Smith served as Counsel at ConvaTec from June 2006 to April 2008. From May 2005 to June 2006, Mr. Smith was an Associate Attorney at Reed Smith LLP. Mr. Smith received his Bachelor of Science degree in Biology from Duquesne University and his Juris Doctor degree from Duquesne University School of Law.

 

Mr. Wise joined Insmed as Senior Director, Global Commercial Operations in February 2014 and has held several positions within the Company, including Senior Director, Global Marketing & Commercial Operations (October 2014 to October 2015), Vice President, Marketing & Sales (October 2015 to October 2016), Vice President, General Manager – ALIS (October 2016 to November 2019) and Senior Vice President, Head of US & General Manager, ARIKAYCE (November 2019 to May 2022). Most recently, Mr. Wise was promoted to Chief Commercial Officer in May 2022. Prior to joining the Company, Mr. Wise held various sales and commercial roles at Novartis from 1999 to 2014. Mr. Wise holds a Bachelor of Science degree in Business Administration from The Citadel and a Master of Business Administration from Emory University’s Goizueta Business School.

 

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CORPORATE GOVERNANCE

 

Corporate Governance Matters

 

Corporate Governance Materials and Practices.

 

Our written corporate governance materials, including our Bylaws, Corporate Governance Guidelines, Code of Business Conduct and Ethics, Audit Committee Charter, Compensation Committee Charter, Nominations and Governance Committee Charter, Science and Technology Committee Charter, and Director Resignation Policy are posted on our website at www.insmed.com under the heading “Investors—Corporate Governance.” None of the information on or that can be accessed through our website is incorporated by reference in this Proxy Statement. Our corporate governance practices include the following:

 

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The Board currently has a lead independent director, which our Corporate Governance Guidelines require if the positions of Chair and CEO are combined, and all our non-employee directors and Board committee members are independent.

 

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The Board has adopted a director resignation policy for uncontested director elections.

 

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The Board oversees succession planning for executive officers, including the CEO.

 

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Directors have access to all levels of management and are provided with opportunities to meet with members of management on a regular basis.

 

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Directors may retain their own independent advisors, at our expense.

 

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The Board and each committee thereof conduct self-evaluations at least once per year to assess their performance and ways in which performance could be improved.

 

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Our Board addresses the importance of board refreshment and succession planning through the director evaluation and nomination process to incorporate new viewpoints on the Board. Our director composition reflects a mix of tenure on the Board (ranging from approximately two years to over 10 years), which we believe provides an effective balance of historical perspective and an understanding of the evolution of the Company with fresh perspectives and insights.

 

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Directors are limited to four public company boards, including the Company, and CEOs are limited to two public company boards, including the Company.

 

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Share ownership guidelines are in place for our directors and executive officers.

 

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Our Board oversees our environmental, social and governance (“ESG”) sustainability efforts and initiatives and has designated responsibilities for various components of ESG to our Nominations and Governance Committee.

 

Code of Business Conduct and Ethics.

 

We have adopted a Code of Business Conduct and Ethics that applies to all of our directors, officers (including our CEO, chief financial officer, controller and any person performing similar functions) and employees. Our Code of Business Conduct and Ethics contains written standards designed to communicate our expectations of our directors, officers, and employees when making decisions and conducting themselves in corporate activities, including the ethical handling and use of confidential information; actual or apparent conflicts of interest; compliance with applicable governmental laws, rules and regulations; protection of our assets and proprietary information; the ethical handling of payments and gifts received in the normal course of business and of payments made to government personnel; prompt internal reporting of violations of our Code of Business Conduct and Ethics; and accountability for adherence to our Code of Business Conduct and Ethics. We have established a means for individuals to report a violation or suspected violation of the Code of Business Conduct and Ethics anonymously, including those violations relating to accounting, internal controls, or auditing matters, and federal securities laws. We intend to satisfy the disclosure requirements regarding any amendment to, or waiver from, a provision of the Code of Business Conduct and Ethics by making disclosures concerning such matters available on our website at www.insmed.com under the heading “Investors— Corporate Governance.”

 

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Corporate Governance Guidelines.

 

We have adopted Corporate Governance Guidelines to assist and guide the Board in the exercise of its responsibilities and establish a framework for our corporate governance practices. The Corporate Governance Guidelines contain written standards pertaining to director qualifications, director responsibilities, structure of our Board, director access to management and independent advisors, director compensation, and performance evaluation of our Board and committees, among other things. The Corporate Governance Guidelines help to ensure that the Board is independent from management, the Board adequately performs its oversight functions, and the interests of the Board and management align with the interests of our shareholders.

 

Meetings of the Board.

 

The Board held eight meetings during 2022. Each director attended at least 75% of the aggregate number of Board and committee meetings that occurred in 2022 during his or her tenure on the Board.

 

Director Resignation Policy.

 

Any nominee for director in an uncontested election who has a greater number of votes “withheld” from his or her election than votes cast “for” his or her election must submit his or her resignation to the Board promptly following certification of the election results. Within 90 days after the date of the certification of the election results, the Nominations and Governance Committee will make a recommendation to the Board as to whether to accept or reject the submitted resignation. Within 45 days after receiving this recommendation, the Board must accept or reject the resignation or pursue another action unless doing so would cause us to fail to comply with federal or state law or Nasdaq listing standards. If more than a majority of the members of the Nominations and Governance Committee do not receive a greater number of votes cast “for” their election than votes “withheld,” the independent directors whose classes were not nominated for election will appoint a special committee to consider the resignations and make a recommendation to the Board. Any director whose resignation is under consideration will not participate in any deliberation or vote regarding his or her resignation. If the Board accepts a director’s resignation pursuant to this policy, the Board may decrease the size of the Board or fill the resulting vacancy in accordance with the Virginia Stock Corporation Act and our Articles of Incorporation and Bylaws.

 

Independence of our Directors.

 

The Board makes an affirmative determination regarding the independence of each director annually, based on the recommendation of the Nominations and Governance Committee. The Board has determined that the following members of the Board are independent, as that term is defined under the general independence standards of the Nasdaq listing standards: Mr. Altomari, Ms. Anderson, Mr. Brennan, Dr. Desjardins, Mr. Lee, Mr. McGirr, Ms. Schafer, and Dr. Sharoky. Mr. Lewis is not considered independent because he is currently employed by the Company. The Board also determined that Dr. Steinar Engelsen, who did not stand for re-election at the 2022 Annual Meeting of Shareholders (the “2022 Annual Meeting”), was an independent director.

 

23        INSMED PROXY STATEMENT

Board’s Role in Strategy.

 

The Board actively participates in Company strategy decisions and oversight throughout the year. The Board annually reviews the company’s strategic plan, including key risks and decisions facing the Company.

 

Director Nominating Process

 

Our Nominations and Governance Committee, which is described more fully below under “Corporate Governance— Committees of the Board—Nominations and Governance Committee,” serves as an independent and objective party to identify, assess, recruit and recommend to the Board qualified candidates for directorship, consistent with criteria approved by the Board, and establishes and annually reviews such criteria based on factors it considers appropriate. The Board evaluates each nominee in the context of the Board as a whole, with the objective of recommending a group of nominees that can best oversee the business and affairs of the Company and use its diversity of experience to represent shareholder interests through the exercise of sound judgment. The Board seeks director nominees with experience and perspectives in the pharmaceutical and biotechnology industries, as well as business, management, accounting and financial experience, among other areas. Among the factors that the Board and the Nominations and Governance Committee consider are strength of character, sound business judgment, career specialization, relevant technical skills, independence, the ability to commit sufficient time to the Board, and the extent to which the candidate would fill a present need on the Board, along with geographic, gender, age, racial, and ethnic diversity.

 

Nominations and Governance Committee Process for Identifying and Evaluating Director Candidates.

 

The Nominations and Governance Committee evaluates all director candidates in accordance with the director qualification standards described above. The Nominations and Governance Committee evaluates a candidate’s qualifications to serve as a member of the Board based on the skills and characteristics of such individual Board member, as well as the composition of the Board as a whole. In addition, the Nominations and Governance Committee will evaluate a candidate’s independence, diversity, skills and experience in the context of the Board’s needs and its oversight of long-term strategy.

 

Director Candidate Recommendations and Nominations by Shareholders.

 

The Nominations and Governance Committee’s charter provides that the committee will consider director candidate recommendations by shareholders. Shareholders should submit any such recommendations for the Nominations and Governance Committee through the method described below under “Corporate Governance— Communications with the Board.” In accordance with our Bylaws, any person who is a shareholder of record on the record date for the shareholder meeting, on the date of the shareholder meeting, and on the date such person provides required notice to the Company may nominate persons for election to the Board if such shareholder complies with the notice procedures set forth in our Bylaws and summarized in this Proxy Statement under the heading “Proposals for 2024 Annual Meeting.”

 

24        INSMED PROXY STATEMENT

Communications with the Board

 

The Board has approved a process for shareholders to send communications to the Board. Shareholders can send communications to the Board and, if applicable, to the Nominations and Governance Committee or to specified individual directors in writing c/o Mr. Michael A. Smith, Corporate Secretary, Insmed Incorporated, 700 US Highway 202/206, Bridgewater, New Jersey, 08807. All communications sent to Mr. Smith will be forwarded, as appropriate, to the Board, the Nominations and Governance Committee or any specified individual directors.

 

Director Attendance at Annual Meeting

 

Our policy is that directors are expected to make reasonable efforts to attend the annual meeting of shareholders absent unusual circumstances. All directors then on the Board, including Dr. Engelsen, attended the 2022 Annual Meeting.

 

Board Leadership Structure

 

The Board believes that it is in the best interests of the Company to maintain the flexibility to make determinations about the separation of the positions of Board Chair and CEO. The Nominations and Governance Committee considers this structure as part of its annual review of the size, organization, structure, composition, and operations of the Board and its committees. In November 2018, Mr. Lewis, our CEO, was appointed Chair of the Board and Mr. Brennan was elected as Lead Independent Director. The Board believes that its current leadership structure, with Mr. Lewis serving as CEO and Chair and Mr. Brennan serving as our Lead Independent Director, is appropriate for the Company at this time. Both Mr. Lewis and Mr. Brennan are actively engaged on significant matters affecting us, such as long-term strategy. The CEO has overall responsibility for all aspects of our operation, while the Lead Independent Director has a greater focus on governance of the Company, including oversight of the Board. We believe the combined role of CEO and Chair balanced with the shared leadership with the Lead Independent Director is a strength for the Company. As our Lead Independent Director, Mr. Brennan calls and chairs regular and special meetings of the Board and all executive sessions of the independent directors, chairs and presides at annual or special meetings of shareholders, provides meaningful input into the agenda of Board meetings, oversees the retention of outside advisors, consultants and legal counsel who report directly to the Board, consults frequently with committee chairs and management, and has the right to and often does attend Board committee meetings.

 

Committees of the Board

 

Our Bylaws provide that the Board may create one or more committees of the Board. Currently, the Board has four standing committees: the Audit Committee, the Compensation Committee, the Nominations and Governance Committee, and the Science and Technology Committee.

 

25        INSMED PROXY STATEMENT

AUDIT COMMITTEE

Responsibilities and Duties.   The Audit Committee assists our Board in fulfilling its oversight responsibilities relating to the accounting, reporting, and financial practices of the Company as well as overseeing our compliance with applicable legal and regulatory requirements. The Committee reviews and oversees:   ●     the auditing, accounting, and financial reporting processes, including the audits of our financial statements;   ●     our systems of internal controls regarding finance and accounting that we have established;   ●     the qualifications and independence of our independent registered public accounting firm;   ●     the appointment, retention, and performance of our independent registered public accounting firm and the performance of any internal audit functions; and   ●     our compliance with legal and regulatory requirements.   The Audit Committee reviews and reassesses the adequacy of its charter at least annually.   Committee Independence.   Our Board has determined that all three of the current Audit Committee members satisfy the heightened independence requirements of the Nasdaq listing standards and Rule 10A-3 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”).   Financial Literacy and Expertise.   Our Board determined that each of the members of the Audit Committee is able to read and understand fundamental financial statements, including our consolidated balance sheet, consolidated statement of comprehensive income/loss, consolidated statement of cash flows, and consolidated statement of shareholders’ equity. Our Board also has determined that each of Mr. McGirr and Ms. Schafer is an “audit committee financial expert,” as that term is defined in the rules promulgated by the SEC and has accounting or related financial management expertise as required under the Nasdaq listing standards.

Composition and Meetings:   Committee Members:   ●     Mr. McGirr (Chair)   ●     Mr. Altomari   ●     Ms. Schafer   Number of meetings during 2022: 6

 

26        INSMED PROXY STATEMENT

COMPENSATION COMMITTEE

Responsibilities and Duties.   The Compensation Committee develops and oversees the implementation of our compensation philosophy for our executive officers and is responsible for our executive and other compensation plans. The Compensation Committee’s primary objectives are to develop and maintain an executive compensation program that:   ●     creates a direct relationship between pay levels and corporate performance and returns to shareholders;   ●     provides overall competitive pay levels to effectively attract and retain executive talent;   ●     creates proper incentives to enhance shareholder value; and   ●     rewards performance.   The Compensation Committee reviews and reassesses the adequacy of its charter at least annually.   Committee Independence and Related Requirements.   Our Board has determined that all three of the current Compensation Committee members satisfy the heightened independence requirements of the Nasdaq listing standards. In addition, all of the members of our Compensation Committee are “non-employee directors” within the meaning of the rules under Section 16 of the Exchange Act and “outside directors” for purposes of Section 162(m) of the Internal Revenue Code of 1986, as amended (the “Code”).

Composition and Meetings:   Committee Members:   ●     Mr. Brennan (Chair)   ●     Mr. Altomari   ●     Mr. Lee   Number of meetings during 2022: 8

 

27        INSMED PROXY STATEMENT

NOMINATIONS AND GOVERNANCE COMMITTEE

Responsibilities and Duties.   The Nominations and Governance Committee identifies and nominates qualified candidates for directorship and serves in a leadership role in shaping our corporate governance and overseeing the evaluation of the Board and its committees. The Nominations and Governance Committee:   ●     assists the Board by identifying individuals qualified to become Board members and recommending to the Board the director nominees for election at shareholder meetings and to fill vacancies on the Board;   ●     makes recommendations to the Board regarding Board and committee organization, structure, and composition;   ●     evaluates the overall effectiveness of the Board and its committees;   ●     develops and assesses the Company’s corporate governance policies and practices, including risks related to such policies and practices; and   ●     oversees and guides the Company’s strategy and risks related to material ESG matters.   The Nominations and Governance Committee reviews and reassesses the adequacy of its charter at least annually.

Composition and Meetings:   Committee Members:   ●     Ms. Anderson (Chair)   ●     Ms. Schafer   ●     Dr. Sharoky   Number of meetings during 2022: 4

 

SCIENCE AND TECHNOLOGY COMMITTEE

Responsibilities and Duties.   The Science and Technology Committee assists our Board in its oversight of the Company’s preclinical research and development (“R&D”) activities and its clinical development activities and decisions. The Science and Technology Committee:   ●     reviews with the Company the third-party competitive landscape related to the Company’s preclinical R&D and clinical development activities;   ●     monitors and identifies significant new and emerging trends in science and technology, including R&D, and provides strategic advice to the Board regarding such issues and trends;   ●     reviews with the Company current and planned technology initiatives and provides feedback to the Board regarding such initiatives;   ●     advises the Board on the scientific aspects of business development transactions; and   ●     assists the Company in reviewing, as requested, the capabilities of the Company’s current and prospective key scientific personnel and the depth and breadth of the Company’s scientific resources.   The Science and Technology Committee reviews and reassesses the adequacy of its charter at least annually.

Composition and Meetings:   Committee Members:   ●     Dr. Desjardins (Chair)   ●     Mr. Lee   ●     Dr. Sharoky   Number of meetings during 2022: 3

 

28        INSMED PROXY STATEMENT

The Role of the Board in Risk Oversight

 

The Board has primary responsibility for overseeing the Company’s risk management. The Board administers its oversight responsibility for risk management directly and through its committees. Each committee chair reports to the Board regarding the committee’s considerations of management’s processes for identifying, evaluating, and controlling significant risks. In addition, the officers responsible for oversight of particular risks within the Company provide updates and information to our Board. The Board considers specific risk topics, including risks associated with our strategic plan, our capital structure, our R&D activities, our manufacturing and supply chain, and our operations. Our Board believes that full and open communication between management and the Board is essential for effective risk management and oversight. The Board and each of its committees have full access to our senior management, as well as the ability to engage outside advisors and other experts. Management routinely informs the Board of developments that could affect our risk profile or other aspects of our business and development.

 

The Audit Committee is responsible for overseeing the Company’s program for identifying, evaluating, and controlling significant risks. The Audit Committee periodically discusses with management and the independent auditor the Company’s major risk exposures, including financial, legal, regulatory, and cybersecurity risk exposures, and the steps taken to monitor, control and minimize such exposures. The Audit Committee also reviews and evaluates our processes and policies for identifying and assessing key risk areas and for formulating and implementing steps to address such risk areas. The Audit Committee oversees disclosure controls and procedures, including applicable internal control over financial reporting and meets with the Chief Financial Officer, the General Counsel, the Chief Accounting Officer, external audit personnel, and other senior managers as appropriate to review issues regarding compliance with the applicable legal and regulatory requirements.

 

The Compensation Committee assesses and monitors whether any of our compensation policies and programs have the potential to encourage excessive risk taking. Our Compensation Committee engages an independent consultant to advise it on topics related to Board and executive compensation. In 2022, the Compensation Committee, with the assistance of WTW, the Compensation Committee’s independent compensation consultant, conducted an in-depth risk review of the executive compensation program and sales incentive programs, and determined that the design of the compensation policies, including the components, weightings and focus of the elements, do not encourage management or employees that participate in the sales incentive plans to assume excessive or inappropriate risks. When approving the 2022 awards of performance-based restricted stock units (“PSUs”), described in the Compensation Discussion and Analysis, the Compensation Committee gave consideration to whether the conditions and design would promote inappropriate or excessive risk-taking. The Compensation Committee determined that the right governance protocols were in place and that the combination of performance requirements did not promote inappropriate risk-taking. In the first quarter of 2023, the Compensation Committee and WTW reviewed areas that had changed since the 2022 assessment and again found that our executive compensation program and sales incentive plans program do not encourage management to assume excessive or inappropriate risks, and have appropriate safeguards and governance protocols in place.

 

The Nominations and Governance Committee oversees the risks associated with our corporate governance and operating practices, including those relating to the composition of the Board, the structure and function of Board committees, and meeting logistics and policies. The Nominations and Governance Committee regularly reviews the Board’s performance, oversees the self-evaluation of each of the Board’s committees, oversees our corporate governance and formulates and recommends corporate governance standards to our Board. The Nominations and Governance Committee also oversees and guides the Company’s strategy and risks related to material ESG matters.

 

The Science and Technology Committee oversees the Company’s efforts related to clinical activities, R&D, business development and intellectual property. The Science and Technology Committee reviews the competitive landscape related to the Company’s preclinical R&D and research activities and advises the Board on the scientific aspects of business development transactions.

 

29        INSMED PROXY STATEMENT

Environmental, Social, and Governance Considerations

 

As a company driven by its mission to transform patients’ lives, we take our responsibility to patients, employees, the medical community, and the communities in which we live and work very seriously. As we grow, we are enhancing our focus on a variety of ESG considerations. Our Nominations and Governance Committee receives updates on ESG matters from our CEO, General Counsel, and ESG team, a cross-functional group of employees including members from corporate communications, investor relations, and legal. The ESG team works with employees across the organization in addressing ESG initiatives. While we continue to expand our ESG strategy, we already focus on the following areas:

 

30        INSMED PROXY STATEMENT

31        INSMED PROXY STATEMENT

AUDIT COMMITTEE REPORT AND INDEPENDENT AUDITOR FEES

 

Report of the Audit Committee

 

The Audit Committee selects the Company’s independent registered public accounting firm and regularly meets with and holds discussions with management and the Company’s independent registered public accounting firm.

 

The Audit Committee oversees the Company’s financial reporting process on behalf of the Board. Management has the primary responsibility for the financial statements and the reporting process including the systems of internal controls. In fulfilling its oversight responsibilities, the Audit Committee reviewed the audited financial statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022 (the “Annual Report”) with management, including a discussion of the accounting principles, the reasonableness of significant judgments, and the quality and clarity of disclosures in the financial statements.

 

The Audit Committee reviewed with Ernst & Young, which is responsible for expressing an opinion on the conformity of those audited financial statements with generally accepted accounting principles, its judgments as to the overall quality of financial reporting, the Company’s accounting principles, and such other matters as are required to be discussed with the Audit Committee by Public Company Accounting Oversight Board (“PCAOB”) standards.

 

In addition, the Audit Committee discussed with Ernst & Young its independence from management and the Company, including the matters described in the written disclosures and letter required by PCAOB standards from Ernst & Young to the Audit Committee regarding the independent accountant’s communications with the Audit Committee concerning independence, and considered the compatibility of non-audit services with the independence of the independent registered public accounting firm.

 

In reliance on the reviews and discussions referred to above, the Audit Committee recommended to the Board (and the Board approved) that the audited financial statements be included in the Company’s Annual Report for filing with the SEC.

 

The Audit Committee

 

David W.J. McGirr, Chair

 

Alfred F. Altomari

 

Carol A. Schafer

 

32        INSMED PROXY STATEMENT

AUDIT COMMITTEE PRE-APPROVAL POLICY

 

The Audit Committee has adopted an Audit Committee Pre-Approval Policy for the pre-approval of audit services and permitted non-audit services by the Company’s independent registered public accounting firm in an effort to ensure that the provision of such services does not impair the independence of the independent registered public accounting firm from the Company and is consistent with the rules of the SEC. The policy requires pre-approval by the Audit Committee of the terms and fees of all audit, review and attestation engagements and related services. The policy also requires the Audit Committee to pre-approve the provision of any audit-related services or non-audit services and determine they would not impair the independence of our independent registered public accounting firm. The policy prohibits the Audit Committee from retaining our independent registered public accounting firm in connection with a transaction initially recommended by such firm, the purpose of which may be tax deferral or reduction. The policy delegates pre-approval authority to the Chair of the Audit Committee or, if the Chair is not available, to any of the Audit Committee’s members, but any pre-approval decision must be reported to the Audit Committee at its next scheduled meeting. All of the services performed by Ernst & Young in the year ended December 31, 2022 were pre-approved in accordance with the pre-approval policy.

 

INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FEE DISCLOSURE

 

The Audit Committee reviewed the aggregate fees billed by Ernst & Young for professional services rendered for the years ended December 31, 2022 and 2021, which were as follows:

 

		2022	2021
Audit Fees		$2,560,659	$1,912,500
Audit-Related Fees		225,000	—
Tax Fees		—	—
All Other Fees		222,667	—
Total Fees		$3,008,326	$1,912,500

 

Audit fees in 2022 and 2021 include fees for services performed to comply with generally accepted auditing standards. These services include the integrated year-end audit of our consolidated financial statements, attestation services with respect to our internal control over financial reporting, quarterly reviews, accounting consultations on matters addressed during the audit or quarterly reviews, review of documents filed with the SEC, and $225,000 and $300,000 paid to Ernst & Young for consent and comfort letter procedures for registration statements filed in 2022 and 2021, respectively. Audit-related fees in 2022 include fees related to the implementation of the Company’s new global enterprise resource planning system. Amounts reflected in “All Other Fees” included fees related to an expanded/early access and compassionate use assessment and compliance program assessment in 2022.

 

33        INSMED PROXY STATEMENT

CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS

 

Review and Approval of Related Party Transactions

 

Pursuant to our written related party policy, our Audit Committee must review and consider whether to approve or ratify all related party transactions, as defined in Item 404 of Regulation S-K. In determining whether to approve or ratify a related party transaction, the Audit Committee will take into account, among other factors it deems appropriate, the purpose and potential benefits to us of the transaction, the related party’s interest in the transaction, the approximate dollar value involved in the transaction, whether the transaction was undertaken in the ordinary course of business, whether the related party transaction is on terms no less favorable to us than terms generally available to us from an unaffiliated third-party under the same or similar circumstances, and whether, under all the circumstances, the transaction is not inconsistent with our best interests. Any transaction which is deemed to be a related party transaction requires the approval of a majority of the disinterested Audit Committee members.

 

Related Party Transactions

 

Since January 1, 2022, there were no related party transactions, nor are there currently any proposed related party transactions, which in accordance with SEC rules, would require disclosure in this Proxy Statement.

 

DELINQUENT SECTION 16(a) REPORTS

 

Section 16(a) of the Exchange Act requires that our directors, executive officers and holders of more than 10% of our Common Stock report to the SEC their ownership of our Common Stock and changes in that ownership. Directors, executive officers, and beneficial owners of more than 10% of our Common Stock are required by applicable regulations to furnish us with copies of all Section 16(a) forms they file. As a matter of practice, members of our staff assist our executive officers and directors in preparing initial ownership reports and reporting ownership changes and typically file these reports on their behalf. Based solely upon a review of the reports filed pursuant to Section 16(a) of the Exchange Act, we believe that during the year ended December 31, 2022, our executive officers, directors, and beneficial owners of more than 10% of our Common Stock timely filed all reports required under Section 16.

  

Security Ownership of Certain Beneficial Owners, Directors, and Management

 

The following tables set forth information about the beneficial ownership of our Common Stock as of the Record Date (except as otherwise noted), by:

 

●

each person, or group of persons, who beneficially owns more than five percent (5%) of our Common Stock, based on reports filed with the SEC pursuant to Section 13(d) of the Exchange Act;

 

●

each of our directors and director nominees;

 

●

each of our NEOs; and

 

●

all directors and executive officers as a group.

 

34        INSMED PROXY STATEMENT

Beneficial ownership and percentage ownership are determined in accordance with Section 13 of the Exchange Act and related rules and regulations of the SEC. In computing the number of shares beneficially owned by a person and the percentage ownership of that person, shares of Common Stock subject to options held by that person that are currently exercisable or exercisable within 60 days of the Record Date and restricted stock units (“RSUs”) that may vest within 60 days of the Record Date are deemed outstanding. Such shares, however, are not deemed outstanding for the purposes of computing the percentage ownership of any other person. Except as indicated in the footnotes to the following tables or pursuant to applicable community property laws, to our knowledge each shareholder named in the tables has sole voting and investment power with respect to the shares set forth opposite such shareholder’s name. As of the Record Date, there were 136,428,466 shares of Common Stock outstanding.

 

SHARES BENEFICIALLY OWNED1
NAME AND ADDRESS	NUMBER	PERCENTAGE
Greater Than Five Percent (5%) Shareholders
The Vanguard Group2 100 Vanguard Blvd., Malvern, PA 19355	13,040,831	9.6%
BlackRock, Inc.3 55 East 52nd Street, New York, NY 10055	11,113,787	8.1%
T. Rowe Price Associates, Inc.4 100 E. Pratt Street, Baltimore, Maryland 21202	9,977,911	7.3%
T. Rowe Price Investment Management, Inc.5 100 E. Pratt Street, Baltimore, Maryland 21202	8,374,675	6.1%
State Street Corporation6 One Lincoln Street, Boston, MA 02111	6,886,687	5.0%

 

 

1.

All information in this table, including the footnotes thereto, is derived from third-party filings made with the SEC, as described in the footnotes. We have not independently verified this information.

 

2.

Based solely on a Schedule 13G/A filed with the SEC on February 9, 2023, as of December 31, 2022, The Vanguard Group reported an aggregate beneficial ownership of 13,040,831 shares of our Common Stock, with shared voting power over 231,734 shares, sole dispositive power over 12,673,172 shares and shared dispositive power over 367,659 shares.

 

3.

Based solely on a Schedule 13G/A filed with the SEC on February 3, 2023, as of December 31, 2022, BlackRock, Inc. reported an aggregate beneficial ownership of 11,113,787 shares of our Common Stock, with sole voting power over 10,963,344 shares and sole dispositive power over 11,113,787 shares, including shares held by a number of its subsidiaries.

 

4.

Based solely on a Schedule 13G/A filed with the SEC on February 14, 2023, as of December 31, 2022, T. Rowe Price Associates, Inc. reported an aggregate beneficial ownership of 9,977,911 shares of our Common Stock, with sole voting power over 1,950,951 shares and sole dispositive power over 9,977,911 shares.

 

5.

Based solely on a Schedule 13G filed with the SEC on February 14, 2023, as of December 31, 2022, T. Rowe Price Investment Management, Inc. reported an aggregate beneficial ownership of 8,374,675 shares of our Common Stock, with sole voting power over 2,598,627 shares and sole dispositive power over 8,374,675 shares.

 

6.

Based solely on a Schedule 13G filed with the SEC on February 3, 2023, as of December 31, 2022, State Street Corporation reported an aggregate beneficial ownership of 6,886,687 shares of our Common Stock, with shared voting power over 6,602,948 shares and shared dispositive power over 6,886,687 shares.

 

35        INSMED PROXY STATEMENT

SHARES BENEFICIALLY OWNED
NAME	NUMBER	PERCENTAGE
Directors and Executive Officers
Alfred F. Altomari1	43,141	*
Elizabeth M. Anderson1	42,317	*
David R. Brennan1	95,521	*
Clarissa Desjardins, M.D.2	35,595	*
Leo Lee1	98,265	*
David W.J. McGirr1	72,561	*
Carol A. Schafer3	31,905	*
Melvin Sharoky, M.D.4	309,266	*
William H. Lewis5	2,604,150	1.9%
Roger Adsett6	916,156	*
Sara Bonstein7	257,498	*
Martina Flammer, M.D.8	333,112	*
Drayton Wise9	324,462	*
All current directors and executive officers as a group (15 persons)	6,076,590	4.3%

 

 

*Denotes ownership of less than 1% of the outstanding shares of our Common Stock.

 

1.

Includes 14,645 RSUs that will vest within 60 days of the Record Date.

 

2.

Includes 14,645 RSUs that will vest within 60 days of the Record Date and 20,950 shares of our Common Stock that are held by 3669661 Canada Inc., a holding company wholly owned by Dr. Desjardins.

 

3.

Includes 14,645 RSUs that will vest within 60 days of the Record Date and that are held by the Carol A. Schafer Revocable Trust.

 

4.

Includes (a) 14,645 RSUs that will vest within 60 days of the Record Date, (b) 7,714 shares of our Common Stock held by The Sharoky Family Foundation, Inc., (c) 15,900 shares of our Common Stock held by Baby Gator LLC, (d) 1,847 shares of our Common Stock held by Mr. Sharoky’s spouse, (e) 1,184 shares of our Common Stock held by Melvin Sharoky C/F Sophie C. Wink UTMA/FL and (f) 1,600 shares of our Common Stock held by Melvin Sharoky C/F Nolan M. Wink UTMA/FL.

 

36        INSMED PROXY STATEMENT

5.

Includes (a) 1,521,179 shares of our Common Stock that are subject to stock options that are currently exercisable or exercisable within 60 days of the Record Date and 18,985 RSUs that will vest within 60 days of the Record Date, (b) 281,030 shares of our Common Stock that are subject to stock options held by the ARTICLE 4 TRUST UNDER WILLIAM LEWIS FAMILY LEGACY TRUST U/A 11/2/2020 and (c) 536,874 shares of our Common Stock that are subject to stock options held by the ARTICLE 4 TRUST UNDER KATIE PROCTER DYNASTY TRUST.

 

6.

Includes 780,669 shares of our Common Stock that are subject to stock options that are currently exercisable or exercisable within 60 days of the Record Date and 10,408 RSUs that will vest within 60 days of the Record Date.

 

7.

Includes 191,467 shares of our Common Stock that are subject to stock options that are currently exercisable or exercisable within 60 days of the Record Date and 8,577 RSUs that will vest within 60 days of the Record Date.

 

8.

Includes 260,349 shares of our Common Stock that are subject to stock options that are currently exercisable or exercisable within 60 days of the Record Date and 9,035 RSUs that will vest within 60 days of the Record Date.

 

9.

Includes 247,190 shares of our Common Stock that are subject to stock options that are currently exercisable or exercisable within 60 days of the Record Date and 1,927 RSUs that will vest within 60 days of the Record Date.

 

37        INSMED PROXY STATEMENT

Proposal No. 2

 

ADVISORY VOTE ON THE 2022 COMPENSATION

OF OUR NAMED EXECUTIVE OFFICERS

 

Information Regarding the Advisory Vote on the 2022 Compensation of our Named Executive Officers

 

Pursuant to Section 14A of the Exchange Act, we are holding a shareholder advisory vote on the compensation of our named executive officers, as described in the “Compensation Discussion and Analysis” section, the tabular disclosure regarding such compensation, and the accompanying narrative disclosure set forth in this Proxy Statement. At the 2017 Annual Meeting, shareholders voted to hold advisory votes on an annual basis, and the Board subsequently adopted a resolution providing for such an annual vote. At the Annual Meeting, shareholders will be asked to approve the following resolution:

 

RESOLVED, that the shareholders of Insmed Incorporated approve, on an advisory basis, the compensation of the Company’s named executive officers, disclosed pursuant to Item 402 of Regulation S-K in the Company’s Proxy Statement for the 2023 Annual Meeting.

 

The Compensation Committee oversees and administers our executive compensation program, including the evaluation and approval of compensation plans, policies and programs offered to our named executive officers. Our executive compensation program is designed to meet the following objectives:

 

•

align management interests with the interests of our shareholders;

 

•

emphasize the use of “at-risk” and performance-based compensation to motivate executives to advance our interests; and

  

•

provide executive compensation packages that are competitive in order to attract and retain executives whose skills are critical to the current and long-term success of the Company.

 

Please read the “Compensation Discussion and Analysis” section starting on page 39 of this Proxy Statement for a detailed discussion about our executive compensation programs, including information about the 2022 compensation of our named executive officers.

 

Vote Required for Approval of this Proposal

 

The advisory vote on the compensation of our named executive officers will be approved by the affirmative vote of the majority of votes properly cast on this proposal at the Annual Meeting. Abstentions or broker non-votes will not have an effect on the outcome of this proposal.

 

While this vote is being conducted on an advisory basis, and is therefore not binding on us, the vote will be carefully considered by the Compensation Committee and our Board. Both our Compensation Committee and our Board value the opinions of our shareholders and, to the extent there is any meaningful vote against the 2022 compensation of our named executive officers, we will consider our shareholders’ concerns and evaluate what actions, if any, may be appropriate to address those concerns. The outcome of the vote, however, will not be construed as overruling any prior decision by the Company, the Compensation Committee or the Board.

 

Recommendation

 

THE BOARD RECOMMENDS THAT YOU VOTE “FOR” THE APPROVAL, ON AN ADVISORY BASIS, OF THE 2022 COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS.

 

38        INSMED PROXY STATEMENT

COMPENSATION DISCUSSION AND ANALYSIS

 

This Compensation Discussion and Analysis (the “CD&A”) explains our compensation philosophy, policies and decisions for 2022 for the following executives, whom we refer to in this CD&A and in the following tables as our named executive officers:

 

1.

William H. Lewis, President and Chief Executive Officer, responsible for developing, in participation with the Board, our corporate mission and objectives and providing direction and leadership to ensure the execution of our corporate strategy and achievement of our objectives. Mr. Lewis was appointed as our Chair in November 2018.

 

2.

Sara Bonstein, Chief Financial Officer, responsible for managing all financial activities, including internal and external reporting, financial planning and analysis, treasury, accounting, tax, global compliance and investor relations.

 

3.

Roger Adsett, Chief Operating Officer, responsible for oversight of overall business operations, including business development, program management, technical operations and supply chain activities.

 

4.

Martina Flammer, M.D., Chief Medical Officer, responsible for leading global clinical development, clinical operations, regulatory affairs, drug safety and pharmacovigilance, and medical affairs.

 

5.

Drayton Wise, Chief Commercial Officer, responsible for global marketing, sales and commercial activities.

 

Executive Summary of Our 2022 Business and Strategic Achievements

 

We are a global biopharmaceutical company on a mission to transform the lives of patients with serious and rare diseases. Our first commercial product, ARIKAYCE, is approved in the US as ARIKAYCE® (amikacin liposome inhalation suspension), in Europe as ARIKAYCE Liposomal 590 mg Nebuliser Dispersion, and in Japan as ARIKAYCE inhalation 590mg (amikacin sulfate inhalation drug product). ARIKAYCE received accelerated approval in the US in September 2018 for the treatment of Mycobacterium avium complex (“MAC”) lung disease as part of a combination antibacterial drug regimen for adult patients with limited or no alternative treatment options in a refractory setting. In October 2020, the European Commission (“EC”) approved ARIKAYCE for the treatment of nontuberculous mycobacterial (“NTM”) lung infections caused by MAC in adults with limited treatment options who do not have cystic fibrosis (“CF”). In March 2021, Japan’s Ministry of Health, Labour and Welfare (“MHLW”) approved ARIKAYCE for the treatment of patients with NTM lung disease caused by MAC who did not sufficiently respond to prior treatment with a multidrug regimen. NTM lung disease caused by MAC (which we refer to as MAC lung disease) is a rare and often chronic infection that can cause irreversible lung damage and can be fatal.

 

In 2022, our named executive officers played critical roles in the furtherance of our mission. We continued to focus on the execution and successful US commercialization of ARIKAYCE and subsequently have observed strong growth in US sales as compared to 2021. The Company also continued its efforts to advance ARIKAYCE globally and has achieved a 30% year over year increase from 2021 in global ARIKAYCE revenues. In Europe, the Company recently secured a favorable reimbursement approval for ARIKAYCE in England. ARIKAYCE is now commercially available in Germany, France, the Netherlands, the United Kingdom, Italy, and Belgium.

 

In 2022, we also continued to advance the post-marketing confirmatory frontline clinical trial program of ARIKAYCE in patients with NTM lung disease caused by MAC. The ARISE trial, an interventional study of ARIKAYCE designed to validate a patient-reported outcome (“PRO”) tool in MAC lung disease, fully enrolled in 2022. The ENCORE trial is designed to establish the clinical benefits and evaluate the safety of ARIKAYCE in patients with newly diagnosed MAC lung disease using the PRO tool validated in the ARISE trial. The ENCORE study is currently enrolling patients and is expected to complete enrollment by the end of 2023.

 

39        INSMED PROXY STATEMENT

We also have a robust pipeline which includes the following clinical-stage product candidates:

 

PIPELINE STAGE	PRODUCT CANDIDATE	POTENTIAL DISEASE AREA(S)
Clinical Stage (Phase 3)	brensocatib	Therapeutic potential in bronchiectasis and other neutrophil-mediated diseases
Clinical Stage (Phase 2)	TPIP	Formulation that may offer a differentiated product profile for patients with pulmonary arterial hypertension (“PAH”) and pulmonary hypertension associated with interstitial lung disease (“PH-ILD”)
Early Stage (Preclinical)	Various preclinical compounds	Opportunities related to multiple rare diseases of unmet medical need

 

We currently have two parallel Phase 2 studies ongoing: a Phase 2 study in patients with PH-ILD over a 16-week treatment period to assess safety and tolerability and a Phase 2b study in PAH patients over a 16-week treatment period to evaluate the effect of TPIP on pulmonary vascular resistance and six-minute walk distance. In 2022, we continued to advance the Phase 2 development work in both PH-ILD and PAH.

 

Our early-stage research efforts are comprised of our preclinical programs, advanced through internal research and development and augmented through business development activities. In March 2021, we acquired a proprietary protein deimmunization platform, called Deimmunized by Design, focused on the reengineering of therapeutic proteins to evade immune recognition and reaction. In August 2021, we acquired Motus Biosciences, Inc. and AlgaeneX, Inc. preclinical stage companies engaged in the research, development and manufacturing of gene therapies for rare genetic disorders. In January 2023, we acquired Vertuis Bio, Inc., a privately held, preclinical stage company engaged in the research and development of gene therapies for rare genetic disorders. We believe that animal studies may demonstrate the viability of these potential medicines to address serious unmet medical needs in various therapeutic areas. Our initial therapeutic areas of focus include musculoskeletal, CNS, ocular, and rheumatologic diseases. We anticipate submitting our first IND filing in the first half of 2023. Preclinical data in musculoskeletal and CNS indications are also expected in the first half of 2023 and clinical data from the first trial in a musculoskeletal disease are anticipated in the first half of 2024.

 

More broadly from a strategic and operational standpoint, in 2022 we expanded our leadership team with talented executives in key financial, medical, commercial, sales, and clinical roles.

 

40        INSMED PROXY STATEMENT

Compensation Philosophy and Principles

 

We operate in a competitive, rapidly changing, and heavily regulated industry. The long-term success of our business requires us to be resourceful, adaptable, and innovative, and the skills, talent, and dedication of our executive officers are critical components to this success. Therefore, our compensation program for our executive officers, including our named executive officers, is designed to attract, retain, and incentivize the best possible talent. The Company’s compensation program for named executive officers is structured to implement the following guiding principles:

 

Align Executives’ Interests with those of our Shareholders.

 

A significant portion of our named executive officers’ compensation is in the form of equity awards based on our belief that equity awards align management’s interests with the creation of sustainable long-term shareholder value. Executive officers are also subject to share ownership guidelines which require them to maintain a minimum interest in Insmed stock.

 

Use “At-Risk” Compensation to Incentivize Executives.

 

A substantial portion of our named executive officers’ compensation is based on “at risk,” or variable, compensation, such as annual cash incentives and stock options. We believe this mix of compensation best aligns the interests of our named executive officers with those of our shareholders over time and contributes to the achievement of short-term goals and the advancement of our long-term strategy through long-term goals. In 2022, approximately 90% of our CEO’s annual target direct compensation was “at risk,” and 86% of our other named executive officers’ annual target direct compensation was “at risk.” Annual target direct compensation as shown below consists of base salary, the target annual incentive award and the grant date fair value of RSUs and stock options granted in 2022. The pay mix excludes PSUs granted in 2022 (discussed further in this CD&A) given they do not form part of the annual equity award mix.

  

CEO TARGET DIRECT COMPENSATION

 

	90% at-risk pay
10% Salary & Other Comp.	7% AI	83% Equity
100% Cash			75% Stock Options	25% RSUs
Annual incentive (AI) based on achievement of corporate performance			Options and RSUs vest over a four-year period

 

41        INSMED PROXY STATEMENT

OTHER NEO TARGET DIRECT COMPENSATION (AVERAGE)

 

	86% at-risk pay
14% Salary & Other Comp.	5% AI	81% Equity
100% Cash			75% Stock Options	25% RSUs
Annual incentive (AI) based on achievement of corporate and individual performance			Options and RSUs vest over a four-year period

 

Pay for Performance.

 

We reward the named executive officers for attaining established Company and individual goals. The attainment of these goals requires the named executive officer to dedicate his or her time, effort, skills and business experience to the long-term success of the Company and the maximization of shareholder value. A significant portion of the named executive officers’ compensation is based both on Company and individual performance, and our executive compensation program is designed to reward both short-term and long-term performance. Short-term performance of our named executive officers is principally rewarded through annual cash incentives that reflect the achievement of corporate goals and, with respect to named executive officers other than our President and CEO, individual goals. Long-term performance of our named executive officers is largely rewarded through stock option and RSU awards that are eligible to vest based on continued service and have a value tied to share price appreciation. In 2022, to align a select group of senior leaders, that includes our NEOs, and retain them through a critical period for the company in relation to the brensocatib clinical trials, an incremental award of PSUs was also made. The vesting of these awards is subject to robust goals based on the achievement of key milestones within a defined window, and a total shareholder return (“TSR”) assessment relative to the Nasdaq Biotechnology Index (the “Nasdaq Biotech Index”). If the milestone conditions are not achieved, if TSR is negative or below the 25th percentile relative to the Nasdaq Biotech Index constituents, or if an executive does not remain in continuous employment for a defined period, no PSUs will vest. This further aligns the compensation of our executives with the performance of Insmed, and our success in unlocking long-term value for our shareholders in a timely manner. If the milestones are not achieved, none of the PSUs will vest. Further details on the PSUs can be found in “2022 Performance-Based Restricted Stock Units”.

  

Pay Competitively to Attract and Retain Skilled Executive Officers.

 

Our executive compensation program is designed to allow the Company to attract and retain individuals whose skills are critical to the current and long-term success of the Company. Because competition for top talent is intense in our industry, institutional knowledge is of material value, and loss of critical talent can be highly disruptive, retention is a key objective of our executive compensation program. The compensation program is designed to appropriately compensate our executive officers for the success of the Company from a competitive standpoint, so that they remain with the Company and continue to contribute to the Company’s long-term success. We seek to achieve this objective by setting target compensation levels appropriately relative to market, granting equity that vests based on continued service, and, in respect of the PSU awards, the additional achievement of performance milestones. Stock options further enhance retention given their alignment with long-term stock price performance, and provisions that reduce exercise periods to no longer than three months on separation.

  

42        INSMED PROXY STATEMENT

Say on Pay.

 

At our 2022 Annual Meeting, we held an advisory vote on the compensation of our named executive officers. Approximately 95% of the shares voted were voted in favor of our say-on-pay proposal. Additionally, the Company has discussed executive compensation matters with certain of our investors. The Compensation Committee considered these voting results and discussions and believes they affirm the Company’s compensation philosophy and the principles discussed above.

  

Corporate Governance Perspectives on our Executive

Compensation Program

 

We believe the following aspects of our executive compensation program reflect our commitment to strong corporate governance:

 

•

Our Compensation Committee has overall responsibility for executive compensation plans, policies, and programs, although our independent Board members approve recommendations made by our Compensation Committee regarding the compensation of our President and CEO;

 

•

Performance metrics that govern incentive compensation are established by our Compensation Committee at the start of each fiscal year and are reviewed by our Compensation Committee at the end of the year;

 

•

Our executive compensation program, in the aggregate, rewards performance and aims to drive the Company’s strategic objectives;

 

•

Payouts made pursuant to individual and corporate multiplier ranges are capped at a predetermined maximum amount, irrespective of performance that exceeds objectives;

 

•

Our Compensation Committee has the ability to exercise its discretion to reduce or eliminate incentive compensation payouts;

 

•

We have several risk mitigation policies, detailed below, including an annual compensation risk review that includes sales plans below the executive level, share ownership guidelines, a compensation recoupment policy, and an insider trading policy with anti- hedging and -pledging provisions;

 

•

Our Compensation Committee regularly meets in executive sessions without members of management present;

 

•

Our independent compensation consultant reports directly to the Compensation Committee and meets regularly with the Compensation Committee without members of management present;

 

•

The employment agreements for our named executive officers do not provide for tax “gross-ups” or payments on a change in control absent termination of the named executive officer’s employment; and

 

•

Our executive compensation program seeks to balance short-term pay opportunities through annual cash incentives with long-term incentive opportunities through equity awards and employs both fixed compensation components (base salary) and variable compensation components (annual cash incentives and equity awards).

 

43        INSMED PROXY STATEMENT

Risk Mitigation Policies and Practices

 

Insmed recognizes the importance of a robust risk management environment, and our compensation programs are an important part of this.

 

Annual Compensation Risk Review.

 

Each year the Compensation Committee receives an update on the global incentive compensation programs and executive compensation program to identify potential areas of risk and actions taken to mitigate that risk. These reviews seek to determine whether each risk is appropriate, and that sufficient controls are in place from a governance standpoint. The 2022 update confirmed that no inappropriate risks were identified. The Compensation Committee does not believe that our executive compensation program is reasonably likely to have a material adverse effect on the Company based on our compensation philosophy and principles and the governance principles described above.

 

Stock Ownership Guidelines.

 

Senior executives, including all of our named executive officers, are subject to stock ownership guidelines which require them to maintain a minimum interest in Insmed Common Stock. These guidelines further align the interests of our executives with those of our shareholders, encourage them to think like long-term owners and stewards of the company, and discourage decisions focused only on the short-term.

 

Minimum ownership requirement	•  President & CEO: 300% of base salary •  Other named executive officers: 100% of base salary
Equity interests considering in assessing compliance	•  Common Stock held by the executive (directly or indirectly) •  Stock options that are fully vested and in-the-money •  Restricted stock units that are unvested
Time horizon for compliance	•  Five years from date of appointment as a named executive officer

 

Compliance with the guidelines is assessed annually, and to the extent an executive is not meeting their requirement or showing sufficient progress within the defined window, the Compensation Committee may take action. As of the Record Date, all named executive officers had satisfied their respective requirements.

  

Compensation Recoupment Policy.

 

Our recoupment policy allows our Board to recover cash incentive or equity-based compensation paid to an executive officer, including pursuant to the Insmed Incorporated 2019 Incentive Plan (the “2019 Incentive Plan”), in the three-year period preceding any year in which we are required to restate our financial results filed with the SEC as a result of the executive officer’s intentional misconduct.

 

Insider Trading Policy.

 

Our insider trading policy prohibits our employees, including officers and directors, from (i) engaging in hedging transactions (whether through the use of financial instruments such as prepaid variable forwards, equity swaps, collars, exchange funds, or otherwise) involving the Company’s securities and (ii) pledging the Company’s securities as collateral for loans of any type without the prior approval of the Chief Financial Officer or General Counsel. Executive officers seeking to pledge the Company’s securities as collateral must receive approval from the Compensation Committee. No such pledges were approved during 2022.

 

44        INSMED PROXY STATEMENT

Executive Compensation Determination Process

 

Role of the Compensation Committee and the Board in Making Compensation Decisions.

 

Our Compensation Committee has been delegated the authority to make determinations regarding all elements of compensation for our executive officers, except for Mr. Lewis, our President and CEO. Our Compensation Committee recommends to our independent Board members the individual elements of total compensation for Mr. Lewis for approval. The independent Board members review this recommendation and determine the compensation for Mr. Lewis. As discussed in further detail below, in assessing executive compensation, our Compensation Committee engages an outside independent compensation consultant to assess the competitiveness of our programs and periodically conducts a peer group review.

 

Role of Management.

 

The Compensation Committee, in making executive compensation decisions, may solicit input from management as appropriate with respect to individual and Company performance and results. The Compensation Committee receives recommendations and evaluations from the President and CEO with respect to the compensation and performance of our named executive officers (aside from his own compensation and performance) and Company performance. The Compensation Committee considered the President and CEO’s assessment along with the input of its independent compensation consultant when making 2022 compensation decisions for our named executive officers (other than our President and CEO).

 

Role of the Compensation Consultant.

 

The Compensation Committee is authorized to select and retain its own independent compensation consultant and has routinely sought the advice of an independent compensation consultant regarding our executive compensation practices. During 2022, WTW, in addition to attending meetings, provided support on matters including long-term incentive design, executive officer and director compensation, investor engagement, and regulatory updates. The Compensation Committee evaluates the independence of its compensation consultant on an annual basis and has concluded that WTW was independent during its tenure in 2022.

 

Shareholder Feedback.

 

At our 2022 Annual Meeting, we held an advisory vote on the compensation of our named executive officers. Of the shares voted, approximately 95% were voted in favor of our say-on-pay proposal which indicates continued strong support for the design and operation of our executive compensation program. Additionally, as part of ongoing engagement between the Company and investors, we provide a forum for direct feedback on executive compensation matters. The Compensation Committee considers the say-on-pay outcome, proxy advisor views, and any feedback received from investors annually when reviewing the compensation program.

 

Taking into account the sustained high voting outcome and feedback received, the Compensation Committee believes this reaffirms the Company’s compensation philosophy, design, and operation as disclosed in this Compensation Discussion and Analysis.

 

45        INSMED PROXY STATEMENT

Compensation Evaluation Processes and Criteria.

 

Given the high demand for the experienced and well-qualified executives we seek to employ, the Compensation Committee reviews data and information from a variety of sources such as outside surveys of compensation and benefits for executive officers in the biotechnology industry, as well as public information regarding executive compensation at peer biotechnology companies. The Compensation Committee also draws upon the personal knowledge of its members with respect to executive compensation at comparable companies.

 

In determining the amount and composition of compensation elements (cash and non-cash elements and short- and long-term elements) for each named executive officer other than the President and CEO, our Compensation Committee reviews the performance of each executive officer holistically. In setting compensation levels for such officers for 2022, our Compensation Committee considered many factors, including, but not limited to, the following factors:

 

•

our achievement of certain product development, financial, strategic planning, and other goals;

 

•

for each named executive officer other than the President and CEO, such officer’s individual performance against pre-established goals, as discussed in more detail below;

 

•

the scope and strategic impact of each executive officer’s responsibilities;

 

•

our past business performance;

 

•

our long-term goals and strategies;

 

•

the experience of each executive officer;

 

•

past compensation levels of each executive officer and of the executives as a group;

 

•

internal equity and the relative levels of pay among executive officers;

 

•

the amount of each element of compensation in the context of the executive officer’s total compensation and other benefits;

 

•

for each executive officer other than the President and CEO, the evaluations and recommendations of our President and CEO; and

 

•

the competitiveness of our compensation relative to selected peer group companies and other survey data, which are described below.

 

Consideration of these factors is subjective. No relative weights or rankings are assigned to them except as otherwise discussed in this CD&A.

 

For the President and CEO’s compensation, the Compensation Committee reviews and evaluates the performance of the President and CEO and recommends to the independent Board members the individual elements of his total compensation. This takes into consideration, among other things, individual performance, experience, prior compensation levels, alignment of compensation outcomes and potential compensation with Company performance, retention concerns, our general performance objectives, and the compensation practices of peer companies and the markets in which we compete for executive talent. The Board then must approve the President and CEO’s compensation. The President and CEO may not be present during voting or deliberations on his compensation.

 

46        INSMED PROXY STATEMENT

 

Selection of Peer Companies and Benchmarking.

 

The Compensation Committee, with the support of its independent compensation consultant, conducts an annual review of the peer group used for benchmarking compensation levels. The peer group used to inform 2022 compensation was approved by the Compensation Committee in August 2021. In assessing potential peers, consideration is given to publicly traded biopharmaceutical companies that are similar to the Company in terms of market capitalization, revenue, research and development expense, pipeline profile, and headcount. There is a focus on maintaining stability in peers over time, while ensuring the group remains sufficiently robust and relevant. The 2022 peer group reflects the following changes from our 2021 peer group: (i) the removal of Immunomedics, Inc. following the completion of Gilead’s acquisition in 2020, and (ii) the addition of the companies that are marked by an asterisk below. The table below depicts our 2022 peer group:

 

Acadia Pharmaceuticals Inc.	Corcept Therapeutics Incorporated	Omeros Corporation
Acceleron Pharma Inc.	Editas Medicine, Inc.*	PTC Therapeutics, Inc.
Agios Pharmaceuticals, Inc.	Halozyme Therapeutics, Inc.	Sangamo Therapeutics, Inc.
Amicus Therapeutics, Inc.	Heron Therapeutics, Inc.	Sarepta Therapeutics, Inc.
bluebird bio, Inc.*	Intercept Pharmaceuticals, Inc.	Ultragenyx Pharmaceutical Inc.
Clovis Oncology, Inc.	Nektar Therapeutics

 

The number of employees at the companies in our 2022 peer group ranged from 136 to 1,201, with a median of 483 employees, and these companies had market capitalizations that ranged from approximately $578 million to $9.8 billion, with a median of approximately $3.2 billion. Employee numbers were as of the most recently reported fiscal year-end prior to August 2021 and market capitalizations were the trailing twelve-month average as of June 1, 2021. The peer group was identified assuming an estimated 521 Company employees, and an estimated market capitalization for the Company of $2.9 billion to $3.4 billion (reflecting spot and trailing twelve-month average references, respectively, as of June 1, 2021). Insmed was positioned at the 53^rd percentile on trailing twelve-month market capitalization and the 58^th percentile on headcount.

 

The Compensation Committee concluded that this adjustment to the peer group was appropriate given the number of employees, market capitalization, stage of development, and merger-and-acquisition activity of the Company and historical and potential peer companies.

 

WTW provided comparative data regarding base salaries, short-term cash incentives, and long-term equity incentives for relevant executive officer roles at companies in the 2022 peer group. Using this compensation data and relevant survey data, the Compensation Committee established benchmarks for the purpose of evaluating compensation ranges for base salary, annual cash incentive targets, and long-term equity incentives for each of our named executive officers.

 

47        INSMED PROXY STATEMENT

Components of Compensation

 

In summary, the compensation paid to our executive officers in 2022 included the following components:

 

COMPONENT	PURPOSE OF COMPONENT
Base Salary	Provide our executive officers with a level of stability and certainty each year based on role, evolving responsibilities, experience, and competitive market positioning.
Annual Cash Incentives	Motivate and reward executive officers for short-term corporate performance and, other than our President and CEO, individual performance.
Long-term Equity Incentives	Motivate and reward executive officers for long-term corporate performance.   Align the interests of management and shareholders, thereby enhancing shareholder value.   Attract, motivate, and retain talented employees.
Health, Welfare, and Retirement Programs	Provide market competitive benefits to protect employees’ and their covered dependents’ health and welfare. Provide a program to foster retirement savings.
Severance and Change in Control Benefits	Discourage turnover and mitigate the influence of a potential change in control on an executive officer’s decision-making due to concerns regarding job security.

 

48        INSMED PROXY STATEMENT

The components of our compensation program and compensation decisions for 2022 for each named executive officer are described in more detail below:

 

Base Salary.

 

The Compensation Committee reviews and sets base salaries for executives, other than the President and CEO, on an annual basis during the first quarter of each year. The Board annually determines the base salary for our President and CEO based on the recommendation of our Compensation Committee.

 

Our Board and Compensation Committee seek to establish and maintain base salaries for each position and level of responsibility that (i) are competitive with those of executive officers in our peer group and (ii) reflect individual performance contributions. Our Compensation Committee reviews variances between the salary levels for each of our executive officers and the executive officers of the companies included in our peer group and determines, in its discretion, individual salary adjustments after considering the factors described above, although no relative weights or rankings are assigned to these factors. In setting the base salary for our named executive officers other than our President and CEO, the Compensation Committee also considers the recommendations of our President and CEO.

 

Our named executive officers received increases to their base salaries in January 2022, as shown in the table below.

 

	BASE SALARIES
	ANNUAL RATE	ANNUAL RATE
NAME	APPROVED	APPROVED	% INCREASE
	IN 2021	IN 2022
William H. Lewis	$710,000	$734,850	3.50%
Sara Bonstein1	$460,320	$477,580	3.75%
Roger Adsett2	$529,730	$560,190	5.75%
Martina Flammer, M.D.	$517,500	$534,320	3.25%
Drayton Wise3	$430,550	$500,000	16.13%

 

 

1.

The Compensation Committee approved a 0.5% increase as a market adjustment for Ms. Bonstein in 2022 to position her compensation closer to the market median, in addition to the 3.25% merit increase on her base salary.

 

2.

The Compensation Committee approved a 2.5% increase as a market adjustment for Mr. Adsett in 2022 to position his compensation closer to the market median, in addition to the 3.25% merit increase on his base salary.

 

3

Mr. Wise received a 3.5% merit increase to his base salary, effective in January 2022. In May 2022, the Compensation Committee approved an increase to Mr. Wise’s base salary from $445,620 to $500,000 in connection with his promotion from SVP, Head of US and General Manager, ARIKAYCE to Chief Commercial Officer.

 

49        INSMED PROXY STATEMENT

 

Annual Cash Incentives.

 

We maintain an annual cash incentive program for all of our employees to motivate and reward the attainment of annual corporate goals and individual goals. In establishing targets for the cash incentive awards for our executive officers, the Compensation Committee (and the Board, in the case of our President and CEO) considers target annual cash incentive opportunities extended to executive officers in similar positions at companies included in our peer group.

 

Target cash incentive award percentages in 2022 were unchanged for all named executive officers except Mr. Wise, whose target increased to reflect his promotion to Chief Commercial Officer.

 

	TARGET CASH INCENTIVE
	AWARD OPPORTUNITY AS A
	PERCENTAGE OF BASE SALARY
NAME	2021	2022
William H. Lewis	70%	70%
Sara Bonstein	40%	40%
Roger Adsett	50%	50%
Martina Flammer, M.D.	40%	40%
Drayton Wise	35%	40%

 

The cash incentive award for our named executive officers other than Mr. Lewis is determined by reference to both corporate and individual goals, with 75% tied to corporate goals and 25% tied to individual goals. The Compensation Committee believes that including a component linked to individual goals is important to appropriately reflect their achievements in areas of focused accountability relative to goals established in the first quarter of the year. Given Mr. Lewis’s substantial influence on and accountability for the overall performance of the Company, the Compensation Committee and Board believe it is appropriate and in the best interests of our shareholders to have Mr. Lewis’s cash incentive award based solely upon the achievement of corporate objectives.

 

Payouts for corporate goals were based upon the product of each named executive officer’s respective target award and an overall corporate multiplier (ranging between 0% and 200%), which was determined based on Company performance during 2022. For each named executive officer other than the CEO, payouts for individual objectives were based on the product of each named executive officer’s respective target award times an individual multiplier (ranging between 0% and 175%), which was determined based on achievement of individual goals for 2022.

 

50        INSMED PROXY STATEMENT

Corporate Goals.

 

At the beginning of each year, management recommends annual corporate objectives to the Compensation Committee for approval. These objectives serve as the basis for determining our performance against key strategic and operating parameters for the year.

 

The Compensation Committee (and the Board, with respect to our President and CEO) approved the following corporate objectives and weightings for 2022. While each area had specific goals, the goals themselves are not disclosed below due to commercial sensitivity.

  

CORPORATE OBJECTIVES		WEIGHTING (% OF CORPORATE OBJECTIVES)
Advance commercial operations		45%
Advance pipeline		45%
Enhance corporate operations		10%
Total		100%

 

51        INSMED PROXY STATEMENT

The following achievements were factors taken into consideration when assessing Company performance relative to the pre-set performance goals for 2022:

 

CORPORATE OBJECTIVE	KEY ACHIEVEMENTS
Advance Commercial Operations	Achieved 30% global revenue growth for ARIKAYCE in 2022 compared with 2021   Exceeded US revenue expectations   ARIKAYCE commercially launched in all parts of the UK, as well as in Germany, the Netherlands, Italy, and Belgium
Advance Pipeline	Continued to advance the post-marketing confirmatory, frontline clinical trial program for ARIAKYCE, consisting of the ARISE trial and the ENCORE trial. Completed enrollment in the ARISE trial and randomized 90% of ENCORE patients in 2022   Advanced the Phase 3 ASPEN trial, a global, randomized, double-blind, placebo-controlled Phase 3 study to assess the efficacy, safety, and tolerability of brensocatib in patients with bronchiectasis   Received topline data from the Phase 2 pharmacokinetic/pharmacodynamic study of brensocatib in patients with CF and observed a clear dose-dependent and exposure-dependent inhibition of blood neutrophil serine proteases in patients treated with brensocatib across all doses in the study
Improve Corporate Operations	Completed three strategic financings resulting in aggregate gross proceeds of $775 million   Stayed within operating expense budget   Ensured adequate clinical trial supplies for all programs   Implemented a new global enterprise resource planning (“ERP”) system, which went live in the third quarter of 2022, to facilitate better transactional processing, enhanced reporting and oversight, and function as an important component of our transactional and reporting controls and procedures   Ranked as the top company to work for in the biopharma industry in Science’s 2022 Top Employers Survey for second year in a row and certified again in the United States by Great Place To Work

 

52        INSMED PROXY STATEMENT

The following table provides a breakdown of how the Board, with respect to our President and CEO, and the Compensation Committee, with respect to our remaining named executive officers, determined that we performed against each of these corporate objectives during 2022:

 

CORPORATE OBJECTIVES	WEIGHTING (% OF CORPORATE OBJECTIVES)	ACTUAL PERFORMANCE	ACTUAL % OF CORPORATE OBJECTIVES EARNED
Advance commercial operations	45%	95%	42%
Advance pipeline	45%	105%	47%
Improve corporate operations	10%	110%	11%
Total	100%		100%

 

53        INSMED PROXY STATEMENT

Individual Goals

 

In consultation with our named executive officers, Mr. Lewis established individual goals for each of our other named executive officers at the beginning of 2022 that (i) were specific to each named executive officer’s area of responsibility and (ii) were intended to support our corporate objectives for 2022. These individual goals were then recommended to and approved by our Compensation Committee. At the time these goals were established, the Compensation Committee believed they were challenging but attainable, and attainment was uncertain.

 

NAMED EXECUTIVE OFFICER	INDIVIDUAL GOALS
Sara Bonstein	Ensure accurate and timely production of financial statements and reporting thresholds are met   Lead key Company functions and programs, including the Company’s procurement process, implementation of the new global ERP system, and ESG initiatives   Oversee the Company’s compliance program to ensure the Company is meeting high standards of integrity and ethics while conducting business   Access capital as needed and evaluate continuously the optimal balance sheet and cash reserves to support the Company’s programs   Promote a culture of inquiry within our finance team that pushes us to question assumptions about acceptable levels of expenditures and enhances our financial decision-making
Roger Adsett	Guide each program’s General Manager to become more effective and to likewise empower and increase the accountability of each program’s global project team   Continue to direct the cross functional cooperation between the technical operations and research teams with specific attention to the San Diego organization   Advance program management efforts around enrollment patterns with the aim of successful achievement of timelines   Advise senior leaders on the effective management of their teams and functional responsibilities
Martina Flammer, M.D.	Ensure clinical trials enroll and advance with quality in a timely fashion   Prioritize management of leadership as Company initiates additional clinical trials   Ensure Medical Affairs support for ARIKAYCE launch in Japan and potential frontline launch in the US   Ensure pharmacovigilance and drug safety functions are operating effectively   Scale clinical development function within the organization to support additional program capacity

 

54        INSMED PROXY STATEMENT

 

NAMED EXECUTIVE OFFICER	INDIVIDUAL GOALS
Drayton Wise	Drive ARIKAYCE revenue growth globally and by region with the highest standards of ethics, integrity, and compliance   Transform the organization to ensure the successful launches of ARIKAYCE in front-line MAC and brensocatib in bronchiectasis   Ensure appropriate pricing and market access for ARIKAYCE in each region   Elevate the Company’s presence and reputation in NTM and bronchiectasis

 

With input from Mr. Lewis, the Compensation Committee made a qualitative determination following the end of the year as to the level of achievement by each of these named executive officers with regard to his or her respective individual performance objectives.

 

Based upon our achievement of the corporate goals summarized above, as well as the achievement of individual goals set by the Compensation Committee, our named executive officers earned the following cash incentive awards for 2022:

 

						ALLOCATION OF BONUS				ACTUAL BONUS ACHIEVEMENT
NAME		BASE SALARY		TARGET BONUS %		CORPORATE GOALS		INDIVIDUAL GOALS		CORPORATE GOALS		INDIVIDUAL GOALS		2022 CASH BONUS
William H. Lewis		$734,850		70%		100%		—		100%		—		$514,400
Sara Bonstein		$477,580		40%		75%		25%		100%		100%		$191,100
Roger Adsett		$560,190		50%		75%		25%		100%		75%		$262,600
Martina Flammer, M.D.		$534,320		40%		75%		25%		100%		100%		$213,800
Drayton Wise		$500,000		40%		75%		25%		100%		100%		$200,000

 

55        INSMED PROXY STATEMENT

Annual Long-term Equity Incentives.

 

One of the guiding principles of our executive compensation program is pay for performance, and we believe that a significant portion of our executives’ compensation should be performance-based to create appropriate incentives and rewards for achieving strategic goals that are critical drivers of shareholder value. In addition, the Compensation Committee believes and considers the following in approving equity plan design and award values:

 

●

Equity-based compensation creates an ownership culture that rewards our executives for maximizing shareholder value sustainably over time, and, in combination with stock ownership, aligns our executives’ interests with those of our shareholders

 

●

Equity incentives reward our executives for their contributions to the long-term success of the Company

 

●

The combination of stock options and RSUs drives performance and a long-term mindset while encouraging retention

 

●

We believe stock options are a form of performance-based incentive compensation because they require stock price appreciation to deliver value to the holder, thereby aligning compensation earned with value shareholders receive over the same period of time

 

In determining the equity compensation awards to grant to our named executive officers in 2022, the Board, with respect to our President and CEO, and the Compensation Committee, with respect to our remaining named executive officers, considered each named executive officer’s role, the advice of our independent compensation consultant, and information regarding comparative equity compensation awards received by the executives in our peer group in the context of total compensation. Individual performance prior to the grant date was also considered. Generally, 75% of the award value is made in the form of stock options and 25% of the award value is made in the form of RSUs.

 

The Board, with respect to our President and CEO, and the Compensation Committee, with respect to our remaining named executive officers, may also grant equity awards from time to time in recognition of a named executive officer’s expanded duties and responsibilities or continuing contributions to the Company’s performance. In connection with Mr. Drayton’s promotion to Chief Commercial Officer, an additional award of stock options and RSUs was made to reflect his expanded role and to better align total compensation for his new role relative to market.

 

Based on these considerations, our named executive officers received the following annual equity incentive awards in 2022.

 

56        INSMED PROXY STATEMENT

NAME	DATE OF GRANT	OPTIONS GRANTED1,2	RSUs GRANTED3
William H. Lewis	1/6/2022 5/11/2022	148,540 224,450	30,741 47,598
Sara Bonstein	1/6/2022 5/11/2022	62,840 94,960	13,006 20,137
Roger Adsett	1/6/2022 5/11/2022	85,690 129,490	17,735 27,460
Martina Flammer, M.D.	1/6/2022 5/11/2022	68,560 103,590	14,188 21,968
Drayton Wise4	1/6/2022 5/11/2022 5/23/2022	14,850 22,440 164,580	3,074 4,759 26,236

 

 

1.

Options granted on January 6, 2022 and May 11, 2022 have an exercise price of $26.43 and $17.07, respectively, the per-share closing price of our Common Stock on that date.

 

2.

Shares of our Common Stock underlying these options vest over a four-year period, with 25% of the shares vesting on the first anniversary of the date of grant and 12.5% of the shares vesting every six months thereafter until the fourth anniversary of the date of grant.

 

3.

The RSUs vest 25% on each anniversary of the date of grant through the fourth anniversary of the date of grant.

 

4.

On May 23, 2022, Mr. Wise received an award of options and RSUs in connection with his promotion to Chief Commercial Officer. Options granted on May 23, 2022 have an exercise price of $20.01, the per-share closing price of our Common Stock on that date.

 

2022 Performance-Based Restricted Stock Units.

 

In January 2022, select senior leaders, including our named executive officers, also received an award of PSUs. These awards reflected a combination of objectives to complement the existing annual awards of stock options and RSUs, which included retaining senior leaders through a critical period related to brensocatib and aligning senior leaders with unlocking value for our shareholders on an appropriately aggressive timeline.

 

The PSUs can vest upon the achievement of performance conditions based on brensocatib milestones, our TSR relative to the Nasdaq Biotech Index constituents, and service, as summarized below. The Compensation Committee and Board believe these goals to be appropriately challenging with strong alignment to shareholder interests as it relates to the time horizon, total shareholder return modifier and final vesting being tied to the FDA accepting a new drug application (“NDA”) from Insmed for brensocatib. If the milestone conditions are not achieved, if Insmed’s TSR is negative or below the 25^th percentile relative to the Nasdaq Biotech Index constituents, if an executive does not remain in continuous employment as explained below, or if the FDA does not accept the NDA, no PSUs will vest.

 

 

57        INSMED PROXY STATEMENT

Milestone Conditions	The issuance of a press release announcing certain top-line results from the ASPEN trial within a defined time horizon and the acceptance of an NDA by the FDA for brensocatib.   If the milestone conditions are achieved, the PSUs would vest subject to the two further requirements summarized below.
Relative TSR Modifier	To ensure any results related to brensocatib align with the creation of value for our long-term shareholders, a relative TSR modifier will be applied to any PSUs that vest as a result of achieving the milestone conditions. TSR will be assessed through the 30-days following a press release filing, with comparisons made to the Nasdaq Biotech Index constituents as follows:   ●    If Insmed’s TSR is negative, or if Insmed’s TSR ranks below the 25th percentile, no PSUs will vest regardless of milestone and service achievements   ●    If Insmed’s TSR is at or above the 25th percentile and less than the 50th percentile, a 0.5x modifier will apply, reducing the number of PSUs that vest by 50%   ●    If Insmed’s TSR is at or above the 50th percentile and less than the 75th percentile, a 1.0x modifier will apply   ●    If Insmed’s TSR is at or above the 75th percentile, and less than the 90th percentile, a 2.0x modifier will apply   ●    If Insmed’s TSR is at or above the 90th percentile, indicating significant value has been created for our shareholders relative to peers, a 2.5x modifier will apply
Service Conditions	●    To ensure PSUs meet the objective of retaining senior leaders during this period, a recipient must remain in continuous employment with the Company through the later of the third anniversary of the grant date and the date an NDA for brensocatib is accepted by the FDA.   ●    If Insmed does not file an NDA due to the clinical trial results, or the FDA does not accept an NDA, for brensocatib, PSUs will not vest.

 

58        INSMED PROXY STATEMENT

 

In determining the value of these incremental awards, the Compensation Committee considered the objectives of the award, the challenging nature of the performance goals and the target values for the annual equity grants. Based on these considerations, our named executive officers received the following PSU awards in 2022.

  

NAME	DATE OF GRANT	NUMBER OF PSUs GRANTED
William H. Lewis	1/6/2022	61,484
Sara Bonstein	1/6/2022	26,013
Roger Adsett	1/6/2022	35,472
Martina Flammer, M.D.	1/6/2022	28,377
Drayton Wise	1/6/2022	6,149

 

On the date the PSUs were granted, the performance conditions necessary for vesting were not deemed probable given the nature of the milestone goals. Accordingly, and reflecting the required accounting treatment for the PSUs, no value is attributed to them in the Summary Compensation Table at this time. In approving the awards, the Compensation Committee considered the potential value of the awards under various scenarios and determined that an appropriate “target” value would be 25% of a named executive officer’s annual equity grant value if both the milestone goals and a 1.0 relative TSR modifier were achieved.

  

Other Benefits.

 

We maintain several other benefit programs that are offered to all employees including executives on an equivalent basis, which include coverage for health insurance, dental insurance, life and disability insurance, and a 401(k) plan. With respect to our 401(k) plan, the Company will deposit a matching contribution of 100% of deferrals up to 4% of an employee’s eligible compensation (subject to any maximum applicable limits under the Internal Revenue Service regulations). We also maintain an Employee Stock Purchase Plan whereby eligible employees, including executives, are given the opportunity to purchase Common Stock at a discounted price through payroll deductions. We do not have any defined benefit plans or non-qualified deferred compensation plans. From time to time, we may also provide employees with certain other limited perquisites.

 

Severance and Change in Control Benefits.

 

As discussed in further detail in “Potential Payments Upon Termination,” we have entered into employment agreements with each of our named executive officers that, in addition to other items, provide for certain severance and change in control payments. We believe that the existence of these potential benefits will discourage turnover and mitigate the influence of a potential change in control on an executive officer’s decision-making due to concerns regarding job security. The employment agreements with our named executive officers do not provide for single-trigger vesting on a change in control or tax gross-up payments. See “Potential Payments Upon Termination” for additional information.

 

59        INSMED PROXY STATEMENT

COMPENSATION COMMITTEE REPORT

 

The Compensation Committee has reviewed and discussed the CD&A required by Item 402(b) of Regulation S-K with management and based on the review and discussions with management of the CD&A, the Compensation Committee recommended to the Board that the CD&A be included in this Proxy Statement and incorporated by reference in the Company’s Annual Report.

 

The Compensation Committee

 

David R. Brennan, Chair

 

Alfred F. Altomari

 

Leo Lee

 

Summary Compensation Table.

 

The following table sets forth information regarding compensation earned by the named executive officers in 2022, 2021 and 2020.

 

To improve readability, the following columns have been removed from the table as there is no reportable information with respect to these items: “Change in Pension Value” and “Nonqualified Deferred Compensation Earnings.”

  

NAME AND PRINCIPAL POSITION	YEAR	SALARY ($)	BONUS ($)	STOCK AWARDS ($)1	OPTION AWARDS ($)2	NON-EQUITY INCENTIVE PLAN COMPENSATION ($)3	ALL OTHER COMPENSATION ($)4	TOTAL ($)
William H. Lewis	2022	$734,850	—	$1,624,982	$4,872,967	$514,400	$42,699	$7,789,898
President and	2021	$710,000	—	$1,499,969	$4,499,673	$601,400	$11,600	$7,322,642
CEO	2020	$659,720	—	$1,249,986	$3,749,998	$514,600	$11,400	$6,185,704
Sara Bonstein	2022	$477,580	—	$687,487	$2,061,581	$191,100	$15,500	$3,433,248
Chief Financial	2021	$460,320	—	$687,489	$2,062,368	$227,000	$14,900	$3,452,077
Officer	2020	$386,615	$75,000	—	$2,024,075	$224,700	$11,400	$2,721,791
Roger Adsett	2022	$560,190	—	$937,478	$2,811,222	$262,600	$71,905	$4,643,395
Chief Operating	2021	$529,730	—	$749,968	$2,249,837	$326,500	$14,900	$3,870,935
Officer	2020	$514,300	—	$624,981	$1,875,065	$264,900	$14,700	$3,293,946
Martina Flammer, M.D. Chief Medical Officer	2022 2021 2020	$534,320 $517,500 $500,000	— — $150,000	$749,983 $749,968 $249,993	$2,249,087 $2,249,837 $2,749,964	$213,800 $255,200 $267,600	$15,500 $14,900 $16,813	$3,762,690 $3,787,405 $3,934,370
Drayton Wise Chief Commercial Officer	2022	$478,563	—	$687,464	$2,580,651	$200,000	$71,436	$4,018,114

 

60        INSMED PROXY STATEMENT

  

1

Amounts in this column reflect grant date fair values of RSUs granted each year, calculated in accordance with FASB ASC Topic 718. Amounts are based on the closing price of our Common Stock on the Nasdaq Global Select Market on the date of grant. On January 6, 2022, PSUs were granted to each of our named executive officers, the vesting of which are subject to performance conditions. On the grant date, the performance conditions were deemed not probable and, therefore, no value is included in the Stock Awards or Total columns for the PSUs. Assuming the highest level of performance conditions will be achieved, the grant date fair values of the PSUs granted on January 6, 2022, calculated in accordance with FASB ASC Topic 718, are as follows: Mr. Lewis, $6,013,135; Ms. Bonstein, $2,544,091; Mr. Adsett, $3,469,162; Dr. Flammer, $2,775,290; and Mr. Wise, $601,392.

 

2.

Amounts in this column reflect grant date fair values of stock option awards granted each year, calculated in accordance with FASB ASC Topic 718. The stock options expire 10 years from the date of grant, and the exercise price equals the closing price of our Common Stock on the date of grant. See Note 10, “Stock-Based Compensation” of the consolidated financial statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022, regarding assumptions underlying valuation of all equity awards.

 

3.

Amounts in this column represent annual cash incentive awards paid to each executive officer under our annual cash incentive program. For further information, see “Components of Compensation—Annual Cash Incentives.”

 

4.

The amounts in the “All Other Compensation” column consist of the following amounts:

 

•

In 2020, 2021, and 2022, Mr. Lewis received $11,400, $11,600 and $12,200, respectively, pursuant to our 401(k) plan. In 2022, we also paid $30,499 in travel expenses on Mr. Lewis’ behalf.

 

•

In 2020, 2021, and 2022, Ms. Bonstein received $11,400, $11,600 and $12,200, respectively, pursuant to our 401(k) plan. In 2021, and 2022, Ms. Bonstein also received an additional $3,300 per year in health savings account (“HSA”) contributions pursuant to her participation in a tax qualified HSA.

 

•

In 2020, 2021, and 2022, Mr. Adsett received $11,400, $11,600, and $12,200, respectively, pursuant to our 401(k) plan. In 2020, 2021, and 2022, Mr. Adsett also received an additional $3,300 per year in HSA contributions pursuant to his participation in a tax qualified HSA. In 2022, we also paid $56,405 in travel expenses on Mr. Adsett’s behalf.

 

•

In 2020, 2021, and 2022, Dr. Flammer received $11,400, $11,600, and $12,200, respectively, pursuant to our 401(k) plan. In 2020, 2021, and 2022, Dr. Flammer also received an additional $3,300 in HSA contributions pursuant to her participation in a tax qualified HSA. In 2020, Dr. Flammer was reimbursed $2,113 in relocation expenses.

 

•

In 2022, Mr. Wise received $12,200, pursuant to our 401(k) plan. In 2022, we also paid $59,236 in travel expenses on Mr. Wise’s behalf.

 

61        INSMED PROXY STATEMENT

2022 Grants of Plan-Based Awards

 

The following table sets forth certain information regarding the annual cash incentive awards and equity grants made to our named executive officers during the year ended December 31, 2022. No other plan-based awards were granted to any of our named executive officers during 2022.

 

 

		ESTIMATED POSSIBLE PAYOUTS UNDER NON-EQUITY INCENTIVE PLAN AWARDS1			ESTIMATED POSSIBLE PAYOUTS UNDER EQUITY INCENTIVE PLAN AWARDS2
NAME	GRANT DATE	THRESHOLD ($)	TARGET ($)	MAXIMUM ($)	THRESHOLD (#)	TARGET (#)	MAXIMUM (#)	ALL OTHER STOCK AWARDS: NUMBER OF SHARES OF RESTRICTED STOCK UNITS (RSUS) (#)3	ALL OTHER OPTION AWARDS: NUMBER OF SECURITIES UNDERLYING OPTIONS (#)4	EXERCISE OR BASE PRICE OF OPTION AWARDS ($/SH)	GRANT DATE FAIR VALUE OF STOCK AND OPTION AWARDS ($)5
	—	—	514,395	1,028,790	—	—	—	—	—	—	—
	1/6/2022 (options)	—	—	—	—	—	—	—	148,540	26.43	2,437,437
William	1/6/2022 (RSUs)	—	—	—	—	—	—	30,741	—	—	812,485
H. Lewis	1/6/2022 (PSUs)	—	—	—	—	61,484	153,710	—	—	—	—
	5/11/2022 (options)	—	—	—	—	—	—	—	224,450	17.07	2,435,529
	5/11/2022 (RSUs)	—	—	—	—	—	—	47,598	—	—	812,498
	—	—	191,032	417,883	—	—	—	—	—	—	—
	1/6/2022 (options)	—	—	—	—	—	—	—	62,840	26.43	1,031,160
Sara	1/6/2022 (RSUs)	—	—	—	—	—	—	13,006	—	—	343,749
Bonstein	1/6/2022 (PSUs)	—	—	—	—	26,013	65,033	—	—	—	—
	5/11/2022 (options)	—	—	—	—	—	—	—	94,960	17.07	1,030,420
	5/11/2022 (RSUs)	—	—	—	—	—	—	20,137	—	—	343,739
	—	—	280,095	612,708	—	—	—	—	—	—	—
	1/6/2022 (options)	—	—	—	—	—	—	—	85,690	26.43	1,406,113
Roger	1/6/2022 (RSUs)	—	—	—	—	—	—	17,735	—	—	468,736
Adsett	1/6/2022 (PSUs)	—	—	—	—	35,472	88,680	—	—	—	—
	5/11/2022 (options)	—	—	—	—	—	—	—	129,490	17.07	1,405,109
	5/11/2022 (RSUs)	—	—	—	—	—	—	27,460	—	—	468,742
Martina Flammer, M.D.	— 1/6/2022 (options) 1/6/2022 (RSUs) 1/6/2022 (PSUs) 5/11/2022 (options) 5/11/2022 (RSUs)	— — — — — —	213,728 — — — — —	467,530 — — — — —	— — — — — —	— — — 28,377 — —	— — — 70,943 — —	— — 14,188 — — 21,968	— 68,560 — — 103,590 —	— 26.43 — — 17.07 —	— 1,125,022 374,989 — 1,124,065 374,994
	—	—	200,000	437,500	—	—	—	—	—	—	—
	1/6/2022 (options)	—	—	—	—	—	—	—	14,850	26.43	243,678
	1/6/2022 (RSUs)	—	—	—	—	—	—	3,074	—	—	81,246
Drayton	1/6/2022 (PSUs)	—	—	—	—	6,149	15,373	—	—	—	—
Wise	5/11/2022 (options)	—	—	—	—	—	—	—	22,440	17.07	243,499
	5/11/2022 (RSUs)	—	—	—	—	—	—	4,759	—	—	81,236
	5/23/2022 (options)	—	—	—	—	—	—	—	164,580	20.01	2,093,474
	5/23/2022 (RSUs)	—	—	—	—	—	—	26,236	—	—	524,982

 

62        INSMED PROXY STATEMENT

 

 

1

Constitutes threshold, target, and maximum award opportunities for our named executive officers under our annual cash incentive program. See “Components of Compensation—Annual Cash Incentives” for information regarding the criteria applied in determining the amounts payable under the awards. The actual amounts paid with respect to these awards are included in the “Non-Equity Incentive Plan Compensation” column in the Summary Compensation Table.

 

2.

PSUs were granted to our named executive officers on January 6, 2022 pursuant to the 2019 Incentive Plan. The PSUs vest upon the achievement of two performance conditions, a service condition, and a market condition. The performance conditions are the issuance of a press release announcing certain top-line results from the ASPEN trial within a defined time horizon and the acceptance of an NDA by the FDA for brensocatib. The service condition is continuous employment with the Company through the later of (i) the third anniversary of the grant date of the PSU award and (ii) the date an NDA for brensocatib is accepted by the FDA. The potential payout of the awards ranges from 0% to 250% of the target, dependent on a market condition that is based on the Company’s TSR compared to Nasdaq Biotech Index constituents.

 

3.

The amounts shown in this column reflect RSUs granted to our named executive officers pursuant to our equity incentive plans. The vesting schedule for these grants is 25% on each anniversary of the date of grant through the fourth anniversary of the date of grant.

 

4.

The amounts shown in this column reflect stock options granted to our named executive officers pursuant to our 2019 Incentive Plan. The vesting schedule for these grants is 25% on the first anniversary of the date of grant and 12.5% of the shares vesting on each six-month anniversary thereafter until the fourth anniversary of the date of grant.

 

5.

Reflects grant date fair values of option, RSU and PSU and option awards granted during the applicable year, calculated in accordance with FASB ASC Topic 718. See Note 10, “Stock-Based Compensation” of the consolidated financial statements in the Company’s Annual Report on Form 10-K for year ended December 31, 2022, regarding assumptions underlying valuation of all equity awards.

 

Narrative Disclosure to Summary Compensation Table and 2022 Grants of Plan-Based Awards Table

 

The employment agreements for our named executive officers generally provide for no fixed termination or other expiration dates. See “Potential Payments Upon Termination” for information regarding the terms of these agreements that would be relevant in the event of the executive’s termination or upon a change in control.

 

63        INSMED PROXY STATEMENT

Outstanding Equity Awards at 2022 Fiscal Year End

 

The following table sets forth certain information regarding the equity awards held by each of our named executive officers as of December 31, 2022.

 

	OPTION AWARDS					STOCK AWARDS
NAME	NUMBER OF SECURITIES UNDERLYING UNEXERCISED OPTIONS (#) EXERCISABLE	NUMBER OF SECURITIES UNDERLYING UNEXERCISED OPTIONS (#) UNEXERCISABLE	EQUITY INCENTIVE PLAN AWARDS: NUMBER OF SECURITIES UNDERLYING UNEXERCISED UNEARNED OPTIONS (#)	OPTION EXERCISE PRICE ($)	OPTION EXPIRATION DATE1	NUMBER OF SHARES OR UNITS OF STOCK THAT HAVE NOT VESTED (#)	MARKET VALUE OF SHARES OR UNITS OF STOCK THAT HAVE NOT VESTED (#)2	EQUITY INCENTIVE PLAN AWARDS: NUMBER OF UNEARNED SHARES, UNITS OR OTHER RIGHTS THAT HAVE NOT VESTED (#)	EQUITY INCENTIVE PLAN AWARDS: MARKET OR PAYOUT VALUE OF UNEARNED SHARES, UNITS OR OTHER RIGHTS THAT HAVE NOT VESTED (#)
William H. Lewis	45,120	—	—	$20.49	01/10/2024	—	—	—	—
	150,000	—	—	$22.76	05/21/2025	—	—	—	—
	142,080	—	—	$17.16	05/17/2027	—	—	—	—
	200,290	—	—	$30.46	01/04/2028	—	—	—	—
	485,747	69,393	—	$13.91	01/03/2029	—	—	—	—
	176,619	105,971	—	$23.75	01/03/2030	—	—	—	—
	41,040	68,400	—	$34.03	01/07/2031	—	—	—	—
	51,480	85,800	—	$26.46	05/12/2031	—	—	—	—
	—	148,540	—	$26.43	01/06/2032	—	—	—	—
	—	224,450	—	$17.07	05/11/2032	—	—	—	—
	—	—	—	—	—	155,3773	$3,104,432	—	—
	—	—	—	—	—	61,4844	$1,228,450	—	—
	55,500(5)	—	—	$14.24	10/31/2023	—	—	—	—
	50,000(5)	—	—	$12.58	6/2/2024	—	—	—	—
	175,530(5)	—	—	$13.67	1/5/2027	—	—	—	—
	67,257(6)	—	—	$12.44	5/23/2023	—	—	—	—
	83,334(6)	—	—	$12.44	5/23/2023	—	—	—	—
	83,333(6)	—	—	$12.44	5/23/2023	—	—	—	—
	57,000(6)	—	—	$14.24	10/31/2023	—	—	—	—
	245,950(6)	—	—	$10.85	5/19/2026	—	—	—	—
	57,275	34,365	—	$28.88	02/03/2030	—	—	—	—
	21,806	13,084	—	$24.70	05/12/2030	—	—	—	—
	17,100	28,500	—	$34.03	01/07/2031	—	—	—	—
Sara Bonstein	25,740	42,900	—	$26.46	05/12/2031	—	—	—	—
	—	62,840	—	$26.43	01/06/2032	—	—	—	—
	—	94,960	—	$17.07	05/11/2032	—	—	—	—
	—	—	—	—	—	50,6603	$1,012,187	—	—
	—	—	—	—	—	26,0134	$519,740	—	—
	88,060	—	—	$14.56	10/03/2026	—	—	—	—
	82,280	—	—	$13.67	01/05/2027	—	—	—	—
	76,600	—	—	$17.16	05/17/2027	—	—	—	—
	80,970	—	—	$30.46	01/04/2028	—	—	—	—
	202,396	28,914	—	$13.91	01/03/2029	—	—	—	—
Roger Adsett	88,312	52,988	—	$23.75	01/03/2030	—	—	—	—
	20,520	34,200	—	$34.03	01/07/2031	—	—	—	—
	25,740	42,900	—	$26.46	05/12/2031	—	—	—	—
	—	85,690	—	$26.43	01/06/2032	—	—	—	—
	—	129,490	—	$17.07	05/11/2032	—	—	—	—
	—	—	—	—	—	82,6353	$1,651,047	—	—
	—	—	—	—	—	35,4724	$708,731	—	—

 

64        INSMED PROXY STATEMENT

	OPTION AWARDS					STOCK AWARDS
NAME	NUMBER OF SECURITIES UNDERLYING UNEXERCISED OPTIONS (#) EXERCISABLE	NUMBER OF SECURITIES UNDERLYING UNEXERCISED OPTIONS (#) UNEXERCISABLE	EQUITY INCENTIVE PLAN AWARDS: NUMBER OF SECURITIES UNDERLYING UNEXERCISED UNEARNED OPTIONS (#)	OPTION EXERCISE PRICE ($)	OPTION EXPIRATION DATE1	NUMBER OF SHARES OR UNITS OF STOCK THAT HAVE NOT VESTED (#)	MARKET VALUE OF SHARES OR UNITS OF STOCK THAT HAVE NOT VESTED (#)2	EQUITY INCENTIVE PLAN AWARDS: NUMBER OF UNEARNED SHARES, UNITS OR OTHER RIGHTS THAT HAVE NOT VESTED (#)	EQUITY INCENTIVE PLAN AWARDS: MARKET OR PAYOUT VALUE OF UNEARNED SHARES, UNITS OR OTHER RIGHTS THAT HAVE NOT VESTED (#)
	94,369	56,621	—	$23.66	01/02/2030	—	—	—	—
	35,325	21,195	—	$23.75	01/03/2030	—	—	—	—
	20,520	34,200	—	$34.03	01/07/2031	—	—	—	—
Martina Flammer	25,740	42,900	—	$26.46	05/12/2031	—	—	—	—
	—	68,560	—	$26.43	01/06/2032	—	—	—	—
	—	103,590	—	$17.07	05/11/2032	—	—	—	—
	—	—	—	—	—	60,3123	$1,205,034	—	—
	—	—	—	—	—	28,3774	$566,972	—	—
	20,071	—	—	$19.11	02/10/2024	—	—	—	—
	6,250	—	—	$12.58	06/02/2024	—	—	—	—
	10,000	—	—	$16.07	01/08/2025	—	—	—	—
	7,000	—	—	$22.76	05/21/2025	—	—	—	—
	20,000	—	—	$19.25	10/27/2025	—	—	—	—
	11,500	—	—	$16.16	01/07/2026	—	—	—	—
	20,500	—	—	$10.85	05/19/2026	—	—	—	—
	17,000	—	—	$13.67	01/05/2027	—	—	—	—
	19,040	—	—	$17.16	05/17/2027	—	—	—	—
Drayton Wise	18,110	—	—	$30.46	01/04/2028	—	—	—	—
	36,435	5,205	—	$13.91	01/03/2029	—	—	—	—
	28,256	16,954	—	$23.75	01/03/2030	—	—	—	—
	4,275	7,125	—	$34.03	01/07/2031	—	—	—	—
	5,362	8,938	—	$26.46	05/12/2031	—	—	—	—
	—	14,850	—	$26.43	01/06/2032	—	—	—	—
	—	22,440	—	$17.07	05/11/2032	—	—	—	—
	—	164,580	—	$20.01	05/23/2032	—	—	—	—
	—	—	—	—	—	45,7723	$914,525	—	—
	—	—	—	—	—	6,1494	$122,857	—	—

 

 

1.

These stock options have a vesting schedule of 25% on the first anniversary of the date of grant and 12.5% on each six-month anniversary thereafter until the fourth anniversary of the date of grant.

 

2.

Reflects the closing price of $19.98 per share of the Company’s Common Stock on the Nasdaq Global Select Market on December 30, 2022.

 

3.

RSUs have a vesting schedule of 25% on each anniversary of the date of grant through the fourth anniversary of the date of grant.

 

4.

PSUs vest upon the achievement of two performance conditions, a service condition, and a market condition. The performance conditions are the issuance of a press release announcing certain top-line results from the ASPEN trial within a defined time horizon and the acceptance of an NDA by the FDA for brensocatib. The service condition is continuous employment with the Company through the later of (i) the third anniversary of the grant date of the PSU award and (ii) the date an NDA for brensocatib is accepted by the FDA. The potential payout of the awards ranges from 0% to 250% of the target, dependent on a market condition that is based on the Company’s TSR compared to Nasdaq Biotech Index constituents.

 

5

Awards are held indirectly by William H. Lewis through Article 4 Trust under William Lewis Family Legacy Trust U/A 11/2/2020.

 

6

Awards are held indirectly by William H. Lewis through Article 4 Trust under Katie Procter Dynasty Trust.

 

65        INSMED PROXY STATEMENT

Option Exercises and Stock Vested During 2022

 

The following table sets forth information with respect to stock options exercised and stock vested during the year ended December 31, 2022.

 

	OPTION AWARDS		STOCK AWARDS
NAME	NUMBER OF SHARES ACQUIRED ON EXERCISE (#)	VALUE REALIZED ON EXERCISE ($)	NUMBER OF SHARES ACQUIRED ON VESTING (#)	VALUE REALIZED ON VESTING ($)
William H. Lewis	410,028	6,480,258	48,331	1,138,609
Sara Bonstein	—	—	5,838	120,000
Roger Adsett	—	—	47,027	1,008,709
Martina Flammer	—	—	8,929	205,858
Drayton Wise	—	—	22,082	458,108

 

Potential Payments Upon Termination

 

Our named executive officers are entitled to payments and other benefits under their employment agreements in connection with their termination under certain circumstances. We believe that the existence of these potential benefits will discourage turnover and mitigate the influence of a potential change in control on an executive officer’s decision-making due to concerns regarding job security.

 

If Mr. Lewis’s employment is terminated by us without cause or by Mr. Lewis for good reason within two years after a change in control of the Company, Mr. Lewis will receive payment of accrued obligations (including any unpaid bonus for any completed fiscal year ending on or prior to his termination date and any accrued but unused vacation pay), a lump sum severance payment equal to two times the sum of his then applicable annual base salary plus two times his annual target bonus plus a pro-rata portion of his annual target bonus (calculated as the target bonus for the year of termination multiplied by the following fraction: (i) the number of days that Mr. Lewis was employed by the Company during that fiscal year, divided by (ii) 365), full vesting of all equity awards (other than any PSUs, which will vest in accordance with the applicable award agreement), and continuation for up to 18 months of health benefits provided he elects continued coverage under COBRA. Should Mr. Lewis’s employment be terminated by us without cause or by Mr. Lewis for good reason prior to the date of a change in control or more than two years after a change in control, he would be entitled to receive all of the foregoing benefits provided that his severance payment would instead be limited to one and one-half times his then applicable annual base salary and one times his target bonus for the year of termination (payable over an 18-month period), his pro-rata bonus would be based on actual performance for the year of termination, and his accelerated vesting would be limited to full vesting of all time-based equity awards granted at least one year prior to his termination date. Should Mr. Lewis’s employment be terminated due to his death or disability, Mr. Lewis or his estate would receive payment of accrued obligations, a pro-rata portion of his annual target bonus based on actual performance for the year of termination, and any insurance benefits to which he and his beneficiaries were entitled as a result of his death or disability.

 

66        INSMED PROXY STATEMENT

If Ms. Bonstein’s, Mr. Adsett’s, Dr. Flammer’s, or Mr. Wise’s employment is terminated by us without cause or by the departing executive for good reason within two years after a change in control of the Company, the departing executive will receive payment of accrued obligations, any earned but unpaid bonus for any completed fiscal year ending on or prior to his or her termination date, a lump sum severance payment equal to one and one-half times his or her then applicable annual base salary plus one and one-half times his or her annual target bonus plus a pro-rata portion of his or her annual target bonus (calculated as the target bonus for the year of termination multiplied by the following fraction: (i) the number of days that the Executive was employed by the Company during that fiscal year, divided by (ii) 365), full vesting of all equity awards (other than any PSUs, which will vest in accordance with the applicable award agreement), and a continuation of up to 18 months of health benefits provided he or she elects continued coverage under COBRA. Should Ms. Bonstein’s, Mr. Adsett’s, Dr. Flammer’s, or Mr. Wise’s employment be terminated by us without cause or by the departing executive for good reason prior to the date of a change in control or more than two years after a change in control, the departing executive would be entitled to receive all of the foregoing benefits provided that his or her severance payment would be limited to his or her then applicable annual base salary and instead be payable over a 12-month period, his or her pro-rata bonus would be based on actual performance for the year of termination, his or her equity award vesting would be limited to accelerated vesting of all time-based equity awards that would otherwise have vested within 12 months following his or her termination date, and his or her continuation of health benefits under COBRA would be limited to up to 12 months. Should the departing executive’s employment be terminated due to his or her death or disability, the executive or his or her estate would receive payment of accrued obligations, a pro-rata portion of his or her annual target bonus based on actual performance for the year of termination, any earned but unpaid bonus for any completed fiscal year ending on or prior to his or her termination date, and any insurance benefits to which he or she and his or her beneficiaries were entitled as a result of his or her death or disability.

 

67        INSMED PROXY STATEMENT

For purposes of the employment agreements, the term “cause” generally includes:

 

a.

a conviction of the executive, or a plea of nolo contendere, to a felony involving moral turpitude;

 

b.

willful misconduct or gross negligence by the executive resulting, in either case, in material economic harm to the Company or any related entities;

 

c.

a willful failure by the executive to carry out the reasonable and lawful directions of the Board and failure by the executive to remedy such willful failure within 30 days after receipt of written notice from the Board;

 

d.

fraud, embezzlement, theft or dishonesty of a material nature by the executive against the Company or any related entity, or a willful material violation by the executive of a policy or procedure of the Company or any related entity, resulting, in any case, in material economic harm to the Company or any related entity; or

 

e.

a willful material breach by the executive of his or her employment agreement and failure by the executive to remedy the material breach within 30 days after receipt of written notice from the Board.

 

For purposes of the employment agreements, the term “good reason” generally includes:

 

a.

a material diminution in the executive’s base compensation;

 

b.

a material diminution in the executive’s authority, duties, or responsibilities;

 

c.

a material diminution in the authority, duties, or responsibilities of the supervisor to whom the executive is required to report (including, for Mr. Lewis, a requirement that Mr. Lewis report to a corporate officer or executive instead of reporting directly to the Board);

 

d.

the Company’s or related entity’s requiring the executive to be based at any office or location outside of 50 miles from the location of employment or service as of the effective date of his or her employment agreement, except for travel reasonably required in the performance of the executive’s responsibilities; or

 

e.

any other action or inaction that constitutes a material breach by the Company of the executive’s employment agreement.

 

For purposes of the employment agreements, the term “change in control” generally includes:

 

a.

the acquisition by another person of beneficial ownership of 40% or more of our Common Stock;

 

b.

a proxy contest that results in the replacement of a majority of the members of our Board;

 

c.

a reorganization, merger, statutory share exchange, or consolidation or similar corporate transaction involving the Company or any of its subsidiaries, a sale or disposition of all or substantially all of the assets of the Company, or the acquisition of assets or stock of another entity by the Company or any of its subsidiaries, after which our shareholders change in proportion by more than 40%, or after which half or more of our Board has changed; or

 

d.

approval by our shareholders of a complete liquidation or dissolution of our Company.

 

To protect our business and goodwill, during the employment term and for a period of 12 months after the termination of an executive’s employment with us, each executive has agreed that he or she will not:

 

1.

engage in any activity in material competition with the business in which we engaged while the executive was employed by us;

 

2.

directly or indirectly recruit or solicit any person who is then our employee or was our employee at any time within six months prior to such solicitation; or

 

3.

solicit, divert or take away, or attempt to divert or to take away, the business or patronage of any of our clients or customers, or prospective clients or customers.

 

68        INSMED PROXY STATEMENT

The severance benefits that executives may be entitled to receive under these agreements and other benefits that the executives are entitled to receive under other plans may constitute parachute payments that are subject to the “golden parachute” rules of Section 280G of the Code and the excise tax of Section 4999 of the Code. If these payments are determined to be parachute payments, as calculated by our independent registered public accounting firm, the parachute payments will be reduced to the extent necessary to avoid any payments becoming nondeductible under Section 280G of the Code or subject to the excise tax under Section 4999 of the Code. All severance benefits (other than accrued obligations and certain insurance benefits to which the executive may be entitled upon death or disability) are also subject to the execution and non-revocation of a general release of claims against the Company.

 

The table below summarizes the hypothetical payments that could have been made by us with respect to each of the named executive officers below, assuming that a qualified termination under the applicable agreement had occurred on December 31, 2022 as a result of termination without cause or for good reason during the two-year period immediately following a change in control.

  

	CASH SEVERANCE1	PRO-RATA BONUS2	VALUE OF ACCELERATED EQUITY3	TOTAL
William H. Lewis	$2,498,490	$514,395	$5,407,248	$8,420,133
Sara Bonstein	$1,002,918	$191,032	$1,808,264	$3,002,214
Roger Adsett	$1,260,428	$280,095	$2,912,102	$4,452,625
Martina Flammer, M.D.	$1,122,072	$213,728	$2,073,457	$3,409,257
Drayton Wise	$1,050,000	$200,000	$1,134,280	$2,384,280

 

 

1.

These payments would be payable to the executive upon a qualified termination under the applicable agreement. The cash severance figure for Mr. Lewis includes salary for two years plus two times the target bonus. The cash severance figures for Ms. Bonstein, Mr. Adsett, Dr. Flammer, and Mr. Wise include one and one-half times their salary and one and one-half times their target bonus.

 

2.

The value used in the table assumes the full target bonus for the year.

 

3.

The value represents the acceleration of all applicable equity awards outstanding as of December 31, 2022. The value realized upon the accelerated vesting of (i) stock options is calculated by multiplying the number of stock options subject to accelerated vesting by the difference between $19.98 the closing price of our Common Stock on December 30, 2022, and the exercise price of the options, and (ii) RSUs is calculated by multiplying the number of RSUs subject to accelerated vesting by $19.98.

 

69        INSMED PROXY STATEMENT

The following table summarizes the hypothetical payments that could have been made by us with respect to each of the named executive officers below assuming that a qualified termination under the applicable agreement had occurred on December 31, 2022 as a result of termination without cause or for good reason prior to the date of a change in control or following the two-year period after a change in control.

 

	CASH SEVERANCE1	PRO-RATA BONUS2	VALUE OF ACCELERATED EQUITY3	TOTAL
William H. Lewis	$1,616,670	$514,395	$1,960,435	$4,091,500
Sara Bonstein	$477,580	$191,032	$385,823	$1,054,435
Roger Adsett	$560,190	$280,095	$907,500	$1,747,785
Martina Flammer, M.D.	$534,320	$213,728	$472,043	$1,220,091
Drayton Wise	$500,000	$200,000	$365,572	$1,065,572

 

 

1.

These payments and other benefits would be payable to the executive upon a qualified termination under the applicable agreement. The cash severance figure for Mr. Lewis consists of one and one-half times his base salary plus target bonus for one year, while the figures for Ms. Bonstein, Mr. Adsett, Dr. Flammer, and Mr. Wise consist of their respective base salaries for one year.

 

2.

The value used in the table assumes the full target bonus for the year.

 

3.

For Mr. Lewis, the value represents the acceleration of all time-based vesting equity outstanding as of December 31, 2022 granted at least one year prior to the termination date. For Ms. Bonstein, Mr. Adsett, Dr. Flammer, and Mr. Wise, the value represents accelerated vesting of all time-based equity that would have otherwise vested within 12 months following the termination date. The value realized upon the accelerated vesting of (i) stock options is calculated by multiplying the number of stock options subject to accelerated vesting by the difference between $19.98, the closing price of our Common Stock on December 30, 2022, and the exercise price of the options, and (ii) RSUs is calculated by multiplying the number of RSUs subject to accelerated vesting by $19.98.

 

70        INSMED PROXY STATEMENT

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

 

The Compensation Committee is comprised entirely of independent directors, and none of our executive officers served on the Compensation Committee or on the board of any company that employed any member of our Compensation Committee or our Board during the year ended December 31, 2022.

 

Dodd-Frank Mandated Pay Ratio Disclosure

 

As required by Section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act, and Item 402(u) of Regulation S-K, we are providing the following information about the relationship of the median annual total compensation of our employees and the annual total compensation of Mr. Lewis, our President and CEO. Registrants may identify the median employee once every three years unless there has been a change in their employee population or employee compensation arrangements that the registrant reasonably believes would result in a significant change in pay ratio disclosure. The pay ratio included in this section is calculated in a manner consistent with Item 402(u) of Regulation S-K.

 

●

In 2022, we determined the median of the annual total compensation of all employees of our company (other than Mr. Lewis) for 2022 was $256,516.

 

●

For 2022, the annual total compensation of Mr. Lewis, as reported in the Summary Compensation Table, is $7,789,898.

 

Based on this information, the ratio of the median of the annual total compensation of all employees (other than Mr. Lewis) to the annual total compensation of Mr. Lewis was 1 to 30.37.

 

To identify the median of the annual total compensation of all of our employees (other than Mr. Lewis), as well as to determine the annual total compensation of our median employee, we took the following steps:

 

1.

We determined that, as of December 31, 2022, our employee population, excluding Mr. Lewis, consisted of approximately 735 individuals working either at Insmed Incorporated or one of our consolidated subsidiaries. This population consisted of our full-time, part-time, and temporary employees and, as permitted by SEC rules, excluded independent contractors or similar non-employee workers during 2022. We did not exclude any non-US employees from these calculations.

 

2.

To identify the “median employee” from our employee population, we compared the sum of each employee’s wages, aggregate fair value of equity awards, and target cash bonus for 2022. In doing so, we annualized the salary of all permanent employees who were hired in 2022 but did not work for us the entire fiscal year. The fair value of option awards granted during 2022 was calculated using the Black-Scholes valuation model pursuant to the assumptions described in Note 10, “Stock-Based Compensation” of the consolidated financial statements included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022. We did not make any cost-of-living adjustments in identifying the median employee.

 

3.

After identifying the median employee, we calculated annual total compensation for the employee using the same methodology we use for our named executive officers, as set forth in the Summary Compensation Table. This process resulted in a median employee with annual total compensation of $256,516 for 2022.

 

The SEC’s rules for identifying the median employee and calculating the pay ratio based on that employee’s annual total compensation allow companies to adopt a variety of methodologies, to apply certain exclusions, and to make reasonable estimates and assumptions that reflect their employee populations and compensation practices. As a result, the pay ratios reported by other companies may not be comparable to our pay ratio, reported above, as other companies have different employee populations and compensation practices and may utilize different methodologies, exclusions, estimates, and assumptions in calculating their own pay ratios.

 

71        INSMED PROXY STATEMENT