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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of

the Securities Exchange Act of 1934 (Amendment No.          )

 

 

Filed by the Registrant ☒

 

Filed by a Party other than the Registrant ☐

 

Check the appropriate box:

Preliminary Proxy Statement

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

Definitive Proxy Statement

Definitive Additional Materials

Soliciting Material under §240.14a‑12

 

 

 

 

 

ImmunoGen, Inc.

(Name of Registrant as Specified In Its Charter)

 

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

 

Payment of Filing Fee (Check the appropriate box):

No fee required.

 

 

Fee computed on table below per Exchange Act Rules 14a‑6(i)(1) and 0‑11.

 

(1)

Title of each class of securities to which transaction applies:    

 

 

 

 

(2)

Aggregate number of securities to which transaction applies:    

 

 

 

 

(3)

Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0‑11 (set forth the amount on which the filing fee is calculated and state how it was determined):    

 

 

 

 

(4)

Proposed maximum aggregate value of transaction:    

 

 

 

 

(5)

Total fee paid:    

 

 

 

Fee paid previously with preliminary materials.

Check box if any part of the fee is offset as provided by Exchange Act Rule 0‑11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.

 

(1)

Amount Previously Paid:     

 

 

 

 

(2)

Form, Schedule or Registration Statement No.:     

 

 

 

 

(3)

Filing Party:     

 

 

 

 

(4)

Date Filed:

 

 

 

 


 

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830 Winter Street, Waltham, MA 02451

TEL: (781) 895‑0600

FAX: (781) 895‑0610

 

April 30, 2018

Dear Shareholder:

You are cordially invited to attend the 2018 Annual Meeting of Shareholders of ImmunoGen, Inc. to be held on Wednesday, June 20, 2018, beginning at 9:00 a.m., local time, at the University of Massachusetts Club, One Beacon Street, 32nd Floor, Boston, Massachusetts.

The accompanying Notice of Annual Meeting of Shareholders and proxy statement describe the matters that will be presented at our annual meeting.  The agenda for the meeting includes proposals to elect seven members to our Board of Directors, to approve a new 2018 Employee, Director and Consultant Equity Incentive Plan, which will replace our 2016 Employee, Director and Consultant Equity Incentive Plan, to approve a new Employee Stock Purchase Plan, or ESPP, to hold an advisory vote on executive compensation, and to ratify the appointment of Ernst & Young LLP as our independent registered public accounting firm for the year ending December 31, 2018.  The Board of Directors recommends that you vote FOR its proposal to fix the number of members of our Board of Directors at seven, FOR the election of its slate of directors, FOR approval of our 2018 Plan, FOR approval of our ESPP, FOR approval of the compensation of our named executive officers as disclosed in the proxy statement, and FOR the ratification of the appointment of Ernst & Young LLP as our independent registered public accounting firm.

Please refer to the enclosed proxy statement for detailed information on each of the proposals.  Your vote is important. Whether or not you expect to attend the meeting in person, your shares should be represented.  Therefore, we urge you to complete, sign, date and promptly return the enclosed proxy card, or vote via the Internet or telephone, promptly and in accordance with the instructions set forth in either the Notice Regarding the Availability of Proxy Materials that you received or on the proxy card.  This will ensure your proper representation at our annual meeting.

 

 

 

Sincerely

 

 

 

 

C:\Users\cbarrows\AppData\Local\Microsoft\Windows\Temporary Internet Files\Content.Outlook\3R5AICBY\ME Sig EXTREME (8).jpg

 

 

MARK J. ENYEDY                                               

 

President and                                                  

 

Chief Executive Officer                                   

 

YOUR VOTE IS IMPORTANT. PLEASE RETURN YOUR PROXY PROMPTLY.

 

 


 

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NOTICE OF ANNUAL MEETING OF SHAREHOLDERS

To Be Held On June 20, 2018

To Shareholders:

NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of ImmunoGen, Inc. will be held on Wednesday, June 20, 2018, beginning at 9:00 a.m., local time, at the University of Massachusetts Club, One Beacon Street, 32nd Floor, Boston, Massachusetts, for the following purposes:

1.       To fix the number of members of the Board of Directors at seven.

2.       To elect seven members of the Board of Directors to hold office until the next annual meeting of shareholders and until their successors are duly elected and qualified.

3.       To approve the 2018 Employee, Director and Consultant Equity Incentive Plan, which will replace our 2016 Employee, Director and Consultant Equity Incentive Plan.

4.       To approve a new Employee Stock Purchase Plan.

5.       To approve, on an advisory basis, the compensation paid to our named executive officers, as disclosed in this proxy statement.

6.       To ratify the appointment of Ernst & Young LLP as our independent registered public accounting firm for the year ending December 31, 2018.

7.       To transact such other business as may properly come before the meeting or at any adjournments or postponements thereof.

The Board of Directors has fixed the close of business on April 23, 2018 as the record date for the meeting.  All shareholders of record on that date are entitled to notice of and to vote at the meeting.  We began mailing the Notice Regarding the Availability of Proxy Materials on or about April 30, 2018.  Our proxy materials, including this proxy statement and our 2017 annual report, will also be available on or about April 30, 2018 on the website referred to in the Notice Regarding the Availability of Proxy Materials.

You are cordially invited to attend the annual meeting in person, if possible.  Whether or not you expect to attend the meeting in person, please complete, sign and date the enclosed proxy and return it in the envelope enclosed for this purpose, or vote via the Internet or by telephone, as soon as possible.  If you attend the meeting, you may continue to have your shares voted as instructed in the proxy or you may withdraw your proxy and vote your shares in person.

 

 

 

By Order of the Board of Directors

 

Picture 3

 

CRAIG BARROWS

 

Secretary

 

April 30, 2018

 

 


 

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TABLE OF CONTENTS

 

 

 

Page

QUESTIONS AND ANSWERS ABOUT THESE PROXY MATERIALS AND VOTING

1

VOTING SECURITIES

5

ELECTION OF DIRECTORS (Notice Item 1 and Item 2)

8

CORPORATE GOVERNANCE

12

DIRECTOR COMPENSATION

20

APPROVAL OF THE 2018 EMPLOYEE, DIRECTOR AND CONSULTANT EQUITY INCENTIVE PLAN (Notice Item 3)

24

APPROVAL OF THE EMPLOYEE STOCK PURCHASE PLAN (Notice Item 4)

33

EXECUTIVE OFFICERS

36

EXECUTIVE COMPENSATION

37

REPORT OF THE COMPENSATION COMMITTEE

63

ADVISORY VOTE TO APPROVE THE COMPENSATION PAID TO OUR NAMED EXECUTIVE OFFICERS, AS DESCRIBED IN THIS PROXY STATEMENT (Notice Item 5)

63

RATIFICATION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM (Notice Item 6)

64

REPORT OF THE AUDIT COMMITTEE

65

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

66

SHAREHOLDER PROPOSALS FOR THE 2019 ANNUAL MEETING

66

CERTAIN MATTERS RELATING TO PROXY MATERIALS

67

OTHER MATTERS

67

ANNUAL REPORT ON FORM 10K

67

EXHIBIT A – 2018 EMPLOYEE, DIRECTOR AND CONSULTANT EQUITY INCENTIVE PLAN

A-1

EXHIBIT B – EMPLOYEE STOCK PURCHASE PLAN

B-1

 

 


 

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830 Winter Street

Waltham, Massachusetts 02451

781‑895‑0600


PROXY STATEMENT


QUESTIONS AND ANSWERS ABOUT THESE PROXY MATERIALS AND VOTING

Why are these materials being made available to me?

We are making these proxy materials available to you on or about April 30, 2018, in connection with the solicitation of proxies by the Board of Directors of ImmunoGen, Inc. (“ImmunoGen”) for our 2018 annual meeting of shareholders, and any adjournment or postponement of that meeting.  The meeting will be held on Wednesday, June 20, 2018, beginning at 9:00 a.m., local time, at the University of Massachusetts Club, One Beacon Street, 32nd Floor, Boston, Massachusetts.  You are invited to attend the meeting, and we request that you vote on the proposals described in this proxy statement.  You do not need to attend the meeting in person to vote your shares.  Instead, you may have your shares voted at the meeting on your behalf by following the instructions below to submit your proxy on the Internet.  Alternatively, if you requested and received a printed copy of these materials, you may complete, sign and return the accompanying proxy card or submit your proxy by telephone as described below in order to have your shares voted at the meeting on your behalf.

We intend to mail a Notice Regarding the Availability of Proxy Materials (referred to elsewhere in this proxy statement as the “Notice”) to all shareholders of record entitled to vote at the annual meeting on or about April 30, 2018. The Notice will instruct you as to how you may obtain access and review all of the important information contained in the proxy materials. The Notice will also instruct you as to how you may submit your proxy on the Internet. If you received a Notice by mail and would like to receive a printed copy of our proxy materials, you should follow the instructions included in the Notice for requesting such materials.

What am I voting on?

There are six matters scheduled for a vote:

·

To fix the number of members of our Board of Directors at seven;

·

To elect seven members of our Board of Directors;

·

To approve the 2018 Employee, Director and Consultant Equity Incentive Plan, or the 2018 Plan, which will replace our 2016 Employee, Director and Consultant Equity Incentive Plan.

·

To approve a new Employee Stock Purchase Plan, or ESPP;

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·

To approve, on an advisory basis, the compensation paid to our named executive officers, as described in this proxy statement; and

·

To ratify the appointment of Ernst & Young LLP as our independent registered public accounting firm for the year ending December 31, 2018.

Who can attend and vote at the meeting?

Shareholders of record at the close of business on April 23, 2018 are entitled to attend and vote at the meeting.  Each share of our common stock is entitled to one vote on all matters to be voted on at the meeting, and can be voted only if the record owner is present to vote or is represented by proxy.  The Notice you received by mail and the proxy card provided with this proxy statement indicate the number of shares of common stock that you own and are entitled to vote at the meeting.

What constitutes a quorum at the meeting?

The presence at the meeting, in person or represented by proxy, of the holders of a majority of our common stock outstanding on April 23, 2018, the record date, will constitute a quorum for purposes of the meeting.  On the record date, 133,036,946 shares of our common stock were outstanding.  For purposes of determining whether a quorum exists, proxies received but marked “abstain” and so-called “broker non-votes” (described below) will be counted as present.

How do I vote by proxy?

Your vote is very important.  Whether or not you plan to attend the meeting, we urge you to either:

·

vote on the Internet pursuant to the instructions provided in the Notice you received by mail, or

·

request printed copies of the proxy materials by mail pursuant to the instructions provided in the Notice, and either

·

complete, sign, date and return the proxy card you will receive in response to your request, or

·

vote by telephone (toll-free) in the United States or Canada, in accordance with the instructions on the proxy card.

Requests for printed copies of the proxy materials should be made no later than June 6, 2018 to ensure that they will be received in time for you to cast your vote on a timely basis.  Please note that the Notice is not a proxy card or a ballot, and any attempt to vote your shares by marking and returning the Notice will be ineffective.

If you properly complete and deliver your proxy (whether electronically, by mail or by telephone) and it is received by 11:59 p.m. Eastern Time on June 19, 2018, your proxy (one of the individuals named on your proxy card) will vote your shares as you have directed.  If you sign, date and return the proxy card but do not specify how your shares are to be voted, then your proxy will vote your shares as follows:

·

FOR the proposal to fix the number of members of our Board of Directors at seven;

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·

FOR the election of the seven nominees named below under “Election of Directors”;

·

FOR approval of the 2018 Plan;

·

FOR approval of the ESPP;

·

FOR approval, on an advisory basis, of the compensation paid to our named executive officers, as described in this proxy statement; and

·

FOR the ratification of the appointment of Ernst & Young LLP as our independent registered public accounting firm for the year ending December 31, 2018.

If any other matter properly comes before the meeting or at any adjournments or postponements thereof, your proxy will vote your shares in his discretion.  At present we do not know of any other business that is intended to be brought before or acted upon at the meeting.

How do I vote if my shares are held by my broker?

If your shares are held by your broker in “street name,” you will need to instruct your broker concerning how to vote your shares in the manner provided by your broker.  If your shares are held in “street name” and you wish to vote them in person at the meeting, you must obtain from your broker a properly executed legal proxy, identifying you as an ImmunoGen shareholder, authorizing you to act on behalf of the broker at the meeting and specifying the number of shares with respect to which the authorization is granted.

What discretion does my broker have to vote my shares held in “street name”?

A broker holding your shares in “street name” must vote those shares according to any specific instructions it receives from you.  If specific instructions are not received, your broker may vote your shares in its discretion, depending on the type of proposal involved.  There are certain matters on which brokers may not vote without specific instructions from you.  If such a matter comes before the meeting and you have not specifically instructed your broker how to vote your shares, your shares will not be voted on that matter, giving rise to what is called a “broker non-vote.”  Shares represented by broker non-votes will be counted for purposes of determining the existence of a quorum for the transaction of business, but for purposes of determining the number of shares voting on a particular proposal broker non-votes will not be counted as votes cast or shares voting.  Brokers do not have discretion to vote your shares for the election of directors, or on the proposals to approve the 2018 Plan or the ESPP, or on the advisory proposals on executive compensation, without instructions from you, and your failure to instruct your broker how to vote on these items will result in a broker non-vote.

Can I change my vote after I have already voted?

Yes.  You may change your vote at any time before your proxy is exercised.  To change your vote, you may:

·

Deliver to our corporate secretary a written notice revoking your earlier vote; or

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·

Submit a properly completed and signed proxy card with a later date; or

·

Vote again telephonically or electronically (available until 11:59 p.m. Eastern Time on June 19, 2018); or

·

Vote in person at the meeting.

Your last dated proxy card or vote cast will be counted.  Your attendance at the meeting will not be deemed to revoke a previously-delivered proxy unless you clearly indicate at the meeting that you intend to revoke your proxy and vote in person.

If your shares are held in “street name,” you should contact your broker for instructions on changing your vote.

How are votes counted?

·

Notice Item 1 - Proposal fixing the number of members of our Board of Directors at seven: Approval of this proposal requires the favorable vote of a majority of the votes cast on the matter.  Abstentions will have no effect on the outcome of voting on this matter.

·

Notice Item 2 - Election of directors: The seven nominees who receive the highest number of “For” votes will be elected.  If you do not vote for a particular nominee, or you withhold authority for one or all nominees, your vote will have no effect on the outcome of the election.  Broker non-votes, which are described above, will also have no effect on the outcome of the election.

·

Notice Item 3 – Approval of the 2018 Plan: Approval of this proposal requires the favorable vote of a majority of the votes cast on the matter.  Abstentions and broker non-votes will have no effect on the outcome of voting on this matter.

·

Notice Item 4 – Approval of the ESPP: Approval of this proposal requires the favorable vote of a majority of the votes cast on the matter.  Abstentions and broker non-votes will have no effect on the outcome of voting on this matter.

·

Notice Item 5 - Advisory (non-binding) vote on executive compensation, or “say-on-pay”: Because this proposal calls for a non-binding advisory vote, there is no “required vote” that would constitute approval.  However, our Board of Directors and the Compensation Committee will take into account the result of the vote when determining future executive compensation arrangements.  Abstentions and broker non-votes will have no effect on the outcome of voting on this matter.

·

Notice Item 6 - Ratification of the appointment of Ernst & Young LLP as our independent registered public accounting firm: Approval of this proposal requires the favorable vote of a majority of the votes cast on the matter.  Abstentions will have no effect on the outcome of voting on this matter.

·

Other business: All other business that may properly come before the meeting requires the favorable vote of a majority of the votes cast on the matter.  Abstentions and broker non-votes, which are described above, will have no effect on the outcome of voting on these matters.

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How is ImmunoGen soliciting proxies?

We bear the cost of preparing, assembling and mailing the proxy material relating to the solicitation of proxies by the Board of Directors for the meeting, as well as the cost of making such materials available on the Internet.  In addition to the use of the mails and the Internet, certain of our officers and regular employees may, without additional compensation, solicit proxies in person, by telephone or other means of communication.  We will also request brokerage houses, custodians, nominees and fiduciaries to forward copies of the proxy material to those persons for whom they hold shares, and will reimburse those record holders for their reasonable expenses in transmitting this material.  In addition, we have engaged The Proxy Advisory Group, LLC to assist in the solicitation of proxies and provide related advice and informational support, for a services fee and reimbursement of customary disbursements that are not expected to exceed $27,000 in the aggregate.

VOTING SECURITIES

Who owns more than 5% of our stock?

On April 23, 2018, there were 133,036,946 shares of our common stock outstanding.  To our knowledge there were five shareholders who owned beneficially more than 5% of our common stock.  The table below contains information, as of the date noted below, regarding the beneficial ownership of these entities.

 

 

 

 

 

 

Name of Beneficial Owner

    

Number of
Shares
Beneficially
Owned

    

Percent of Class

 

ClearBridge Investments, LLC (1)

 

11,071,365

 

8.3

%

Redmile Group, LLC (2)

 

10,906,962

 

8.2

%

Jeremy C. Green

 

 

 

 

 

The Vanguard Group (3)

 

9,655,527

 

7.3

%

BlackRock, Inc. (4)

 

8,493,975

 

6.4

%

State Street Corporation (5)

 

8,345,380

 

6.3

%


1)

Based on a Schedule 13G/A filed with the SEC on February 14, 2018 reporting beneficial ownership as of December 31, 2017.  The Schedule 13G/A filing reported that the reporting entity had sole voting power with respect to 10,586,790 shares and sole investment power with respect to all the shares reported.  The reporting entity’s address is 620 Eighth Avenue, New York, New York 10018.

2)

Based on a Schedule 13G filed with the SEC on February 14, 2018 reporting beneficial ownership as of December 31, 2017.  The Schedule 13G filing reported that Redmile Group, LLC, and Jeremy C. Green, through his control of Redmile Group, LLC, each had shared voting and investment power with respect to all of the shares reported.  The reporting entities’ address is One Letterman Drive, Building D, Suite D3‑300, San Francisco, California 94129.

3)

Based on a Schedule 13G filed with the SEC on February 8, 2018, reporting beneficial ownership as of December 31, 2017.  The Schedule 13G filing reported that the reporting entity had sole

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voting power with respect to 191,574 shares, shared voting power with respect to 5,200 shares, sole investment power with respect to 9,463,628 shares, and shared investment power with respect to 191,899 shares.  The reporting entity’s address is 100 Vanguard Boulevard, Malvern, Pennsylvania 19355.

4)

Based on a Schedule 13G filed with the SEC on February 1, 2018 reporting beneficial ownership as of December 31, 2017.  The Schedule 13G filing reported that the reporting entity had sole voting power with respect to 8,295,010 shares, sole investment power with respect to 8,470,097 shares, and shared investment power with respect to 23,878 shares.  The reporting entity’s address is 55 East 52nd Street, New York, New York 10022.

5)

Based on a Schedule 13G filed with the SEC on February 14, 2018 reporting beneficial ownership as of December 31, 2017.  The Schedule 13G filing reported that the reporting person had shared voting and investment power with respect to all of the shares reported.  The reporting entity’s address is State Street Financial Center, One Lincoln Street, Boston, Massachusetts 02111.

How many shares do ImmunoGen’s directors and executive officers own?

The following information is furnished as of April 23, 2018, with respect to common stock beneficially owned by: (1) our directors (including our chief executive officer); (2) our other executive officers named in the summary compensation table elsewhere in this proxy statement; and (3) all directors and executive officers as a group. Unless otherwise indicated, the individuals named below held sole voting and investment power over the shares listed.

 

 

 

 

 

Name and Address of Beneficial Owner*

    

Number of Shares
Beneficially Owned
 (1)

    

Percent of
Class
 (1)

Stuart A. Arbuckle (2)

 

4,708

 

**

Mark J. Enyedy (3)

 

921,383

 

**

Mark Goldberg, MD (4)

 

122,900

 

**

Daniel M. Junius (5)

 

1,596,672

 

1.19%

Stephen C. McCluski (6)

 

110,179

 

**

Dean J. Mitchell (7)

 

92,039

 

**

Kristine Peterson (8)

 

72,665

 

**

Joseph J. Villafranca, PhD (9)

 

150,718

 

**

Richard J. Wallace (10)

 

107,047

 

**

Craig Barrows (11)

 

700,903

 

**

Anna Berkenblit, MD (12)

 

376,256

 

**

Richard J. Gregory, PhD (13)

 

569,345

 

**

David B. Johnston (14)

 

637,274

 

**

All directors, director nominees and executive officers as a group (16 persons) (15)

 

6,071,503

 

4.44%


*Unless otherwise indicated, the address is c/o ImmunoGen, Inc., 830 Winter Street, Waltham, Massachusetts 02451.

**Less than 1.0%.

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1)

The number and percent of the shares of common stock with respect to each beneficial owner are calculated by assuming that all shares which may be acquired by such person within 60 days of April 23, 2018 are outstanding.

2)

Includes (a) 4,167 shares which may be acquired by Mr. Arbuckle within 60 days of April 23, 2018 through the exercise of stock options, and (b) 541 shares that Mr. Arbuckle would receive upon redemption of deferred stock units within 60 days of April 23, 2018.

3)

Includes (a) 142,800 shares owned by Mr. Enyedy individually, (b) 150,000 shares which may be acquired by Mr. Enyedy within 60 days of April 23, 2018 through the exercise of stock options, (c) 389,583 time-based restricted shares (as to which Mr. Enyedy has sole voting power, but no investment power), and (d) 239,000 performance-based restricted shares (as to which Mr. Enyedy has sole voting power, but no investment power).

4)

Includes (a) 23,800 shares owned jointly by Dr. Goldberg and his spouse, (b) 53,510 shares which may be acquired by Dr. Goldberg within 60 days of April 23, 2018 through the exercise of stock options, and (c) 45,590 shares that Dr. Goldberg would receive upon redemption of deferred stock units within 60 days of April 23, 2018.

5)

Includes (a) 209,987 shares owned by Mr. Junius individually, (b) 1,382,185 shares which may be acquired by Mr. Junius within 60 days of April 23, 2018 through the exercise of stock options, and (c) 4,500 shares that Mr. Junius would receive upon redemption of deferred stock units within 60 days of April 23, 2018.

6)

Includes (a) 59,721 shares which may be acquired by Mr. McCluski within 60 days of April 23, 2018 through the exercise of stock options, and (b) 50,458 shares that Mr. McCluski would receive upon redemption of deferred stock units within 60 days of April 23, 2018.

7)

Includes (a) 10,000 shares owned by Mr. Mitchell individually, (b) 52,711 shares which may be acquired by Mr. Mitchell within 60 days of April 23, 2018 through the exercise of stock options, and (c) 29,328 shares that Mr. Mitchell would receive upon redemption of deferred stock units within 60 days of April 23, 2018.

8)

Includes (a) 52,711 shares which may be acquired by Ms. Peterson within 60 days of April 23, 2018 through the exercise of stock options, and (b) 19,954 shares that Ms. Peterson would receive upon redemption of deferred stock units within 60 days of April 23, 2018.

9)

Includes (a) 59,721 shares which may be acquired by Dr. Villafranca within 60 days of April 23, 2018 through the exercise of stock options, and (b) 90,997 shares that Dr. Villafranca may receive upon redemption of deferred stock units within 60 days of April 23, 2018.

10)

Includes (a) 59,721 shares which may be acquired by Mr. Wallace within 60 days of April 23, 2018 through the exercise of stock options, and (b) 47,326 shares that Mr. Wallace may receive upon redemption of deferred stock units within 60 days of April 23, 2018.

11)

Includes (a) 75,352 shares held by Mr. Barrows individually, (b) 443,751 shares which may be acquired by Mr. Barrows within 60 days of April 23, 2018 through the exercise of stock options, (c) 93,600 time-based  restricted shares (as to which Mr. Barrows has sole voting power, but no investment power); and (d) 88,200 performance-based restricted shares (as to which Mr. Barrows has sole voting power, but no investment power).

12)

Includes (a) 39,605 shares held by Dr. Berkenblit individually, (b) 137,085 shares which may be acquired by Dr. Berkenblit within 60 days of April 23, 2018 through the exercise of stock options, (c) 104,866 time-based  restricted shares (as to which Dr. Berkenblit has sole voting power, but no investment power); and (d) 94,700 performance-based restricted shares (as to which Dr. Berkenblit has sole voting power, but no investment power).

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13)

Includes (a) 74,678 shares held by Dr. Gregory individually, (b) 182,501 shares which may be acquired by Dr. Gregory within 60 days of April 23, 2018 through the exercise of stock options, (c) 164,416 time-based restricted shares (as to which Dr. Gregory has sole voting power, but no investment power), and (d) 147,750 performance-based restricted shares (as to which Dr. Gregory has sole voting power, but no investment power).

14)

Includes (a) 52,857 shares held by Mr. Johnston individually, (b) 333,334 shares which may be acquired by Mr. Johnston within 60 days of April 23, 2018 through the exercise of stock options, (c) 127,833 time- based restricted shares (as to which Mr. Johnston has sole voting power, but no investment power), and (d) 123,250 performance-based restricted shares (as to which Mr. Johnston has sole voting power, but no investment power).

15)

See footnotes (2) – (14).  Also includes (a) 47,796 shares owned by our non-named executive officers in the aggregate, (b) 300,169 shares which many be acquired by our non-named executive officers in the aggregate within 60 days of April 23, 2018 through the exercise of stock options, (c) 139,099 time-based restricted shares (as to which each of the holders has sole voting power, but no investment power), and (d) 122,350 performance-based restricted shares held by our non-named executive officers in the aggregate (as to which each of the holders has sole voting power, but no investment power).

ELECTION OF DIRECTORS

(Notice Item 1 and Item 2)

Who sits on the Board of Directors?

Our by-laws provide that, at each annual meeting of shareholders, our shareholders will fix the number of directors to be elected to our Board of Directors.  At our 2017 annual meeting of shareholders, the shareholders voted to fix the number of directors at nine and our Board of Directors currently consists of nine members.  The shareholders may increase or decrease the number of directors constituting the full Board of Directors, provided that such number may not be less than three.

We are proposing that shareholders fix the number of directors to be elected at the meeting at seven. Dr. Joseph J. Villafranca, a director since 2004 and the chairman of the Governance and Nominating Committee, will not be standing for re-election in accordance with our corporate governance guidelines, having reached age 74. Mr. Daniel M. Junius, a director since 2008 and our former President and Chief Executive Officer, has also informed the Governance and Nominating Committee that he does not wish to be nominated for re-election.  We are nominating the seven remaining current directors listed below for re-election.  Persons elected as directors at the meeting will serve in office until the next annual meeting of shareholders and until their successors have been elected and qualified or until they die, resign or are removed.

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Recommendation

The Board recommends a vote “FOR” the proposal fixing the number of directors at seven, and “FOR” the election of the nominees listed below.

Information About the Director Nominees

The persons named as proxies in the accompanying proxy card will vote, unless authority is withheld, for the election of the nominees named below.  We have no reason to believe that any of the nominees will be unavailable for election.  However, if any one of them becomes unavailable, the persons named as proxies in the accompanying proxy card have discretionary authority to vote for a substitute chosen by the Board.  Any vacancies not filled at the meeting may be filled by the Board.

The names of our director nominees and certain other information about them are set forth below.

 

 

 

 

 

 

 

Name

    

Age

    

Year First
Elected a
Director

    

Position

Mark J. Enyedy

 

54

 

2016

 

President and Chief Executive Officer; Director

Stephen C. McCluski (1)

 

65

 

2007

 

Chairman of the Board; Chairman of the Audit Committee

Stuart A. Arbuckle (3)

 

52

 

2018

 

Director

Mark Goldberg, MD (2)

 

63

 

2011

 

Director

Dean J. Mitchell (2)

 

62

 

2012

 

Chairman of the Board; Chairman of the Compensation Committee

Kristine Peterson (1) (2)

 

58

 

2012

 

Director

Richard J. Wallace (1) (3)

 

66

 

2007

 

Director


1)

Member of the Audit Committee.

2)

Member of the Compensation Committee.

3)

Member of the Governance and Nominating Committee.

Mark J. Enyedy has served as our President and Chief Executive Officer since 2016.  Prior to joining ImmunoGen, he served in various executive capacities at Shire PLC, a pharmaceutical company, from 2013 to 2016, including as Executive Vice President and Head of Corporate Development from 2014 to 2016, where he led Shire’s strategy, M&A and corporate planning functions and provided commercial oversight of Shire’s pre-Phase 3 portfolio.  Prior to joining Shire he served as Chief Executive Officer and a director of Proteostasis Therapeutics, Inc., a biopharmaceutical company, from 2011 to 2013.  Prior to joining Proteostasis he served for 15 years at Genzyme Corporation, a biopharmaceutical company, most recently as President of the Transplant, Oncology, and Multiple Sclerosis divisions. Mr. Enyedy holds a JD from Harvard Law School and practiced law prior to joining Genzyme. Mr. Enyedy is also a director of Fate Therapeutics, Inc. and Keryx Biopharmaceuticals, Inc.

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We believe that Mr. Enyedy should serve on our Board in recognition of his leadership role as our President and Chief Executive Officer.  As a result of his position, Mr. Enyedy has a thorough understanding of all aspects of our business and operations.

Stephen C. McCluski has served as the Chairman of our Board of Directors since 2009. Mr. McCluski served as Senior Vice President and Chief Financial Officer of Bausch & Lomb Incorporated, a manufacturer of health care products for the eye, from 1995 to his retirement in 2007. Mr. McCluski is also a director of Monro, Inc. and, within the past five years, he also served as a director of Standard Microsystems Corporation.

We believe Mr. McCluski’s qualifications to serve on our Board include his global management experience and knowledge of financial and accounting matters and mergers and acquisitions.  As a result of these experiences, Mr. McCluski has a wide-ranging understanding of business organizations generally and healthcare businesses in particular. Mr. McCluski also has significant corporate governance experience through his service on other company boards.

Stuart A. Arbuckle has served as Executive Vice President and Chief Commercial Officer of Vertex Pharmaceuticals Incorporated, a pharmaceutical company, since 2012.  Prior to that he spent eight years at Amgen Inc., a pharmaceutical company, in multiple commercial leadership roles, including Vice President and General Manager for Amgen’s oncology business unit, where he was responsible for sales and marketing efforts for Aranesp®,  Neulasta® and NEUPOGEN®, and led the successful launches of XGEVA® and Nplate®.  He also served as Vice President and Regional General Manager and led efforts to expand Amgen’s presence in Japan and emerging markets in Asia, the Middle East and Africa.  Prior to joining Amgen, he spent more than 15 years at GlaxoSmithKline plc, a pharmaceutical company, and its predecessors, where he held positions of increasing responsibility in sales and marketing.  Within the past five years,  Mr. Arbuckle served as a director of Cerulean Pharma Inc. prior to its merger with Daré Bioscience, Inc.

We believe Mr. Arbuckle’s qualifications to serve on our Board include his extensive commercial experience in oncology, as well as in the pharmaceutical industry generally.

Mark Goldberg, MD, served in various capacities of increasing responsibility at Synageva BioPharma Corp., a biopharmaceutical company, from 2011 to 2014, including as Executive Vice President, Medical and Regulatory Strategy from January to October 2014.  From October 2014 through the acquisition of Synageva by Alexion Pharmaceuticals, Inc. in 2015, Dr. Goldberg, while no longer an officer, remained employed by Synageva contributing to medical and regulatory strategy.  Prior to joining Synageva he served in various management capacities of increasing responsibility at Genzyme Corporation, a biopharmaceutical company, from 1996 to 2011, most recently as Senior Vice President, Clinical Research and Global Therapeutic Head, Oncology, Genetic Health, and as Chairman of Genzyme’s Early Product Review Board.  Prior to joining Genzyme he was a full-time staff physician at Brigham and Women’s Hospital and the Dana-Farber Cancer Institute, where he still holds appointments. Dr. Goldberg is an Associate Professor of Medicine at Harvard Medical School and currently serves as acting chief medical officer of CANbridge Life Sciences Ltd., a privately held biopharmaceutical company. Dr. Goldberg holds a Doctor of Medicine degree from Harvard Medical School. Dr. Goldberg is also a

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director of Audentes Therapeutics, Inc., Blueprint Medicines Corporation, GlycoMimetics, Inc. and Idera Pharmaceuticals, Inc., and within the past five years, he also served as a director of aTyr Pharma, Inc.

We believe that Dr. Goldberg’s qualifications to serve on our Board include his comprehensive experiences in clinical research and medical affairs, as well as early stage research, at his former employers, which give him a wide-ranging understanding of the drug development process for biopharmaceutical products from the research stage through clinical development.

Dean J. Mitchell has served as Executive Chairman of the Board of Covis Pharma Holdings, a specialty pharmaceutical company, since 2013.  Prior to that he served as President and Chief Executive Officer of Lux Biosciences, Inc., a biotechnology company focusing on the treatment of ophthalmic diseases, from 2010 to 2013.  Prior to that he served as President and Chief Executive Officer of Alpharma, Inc., a publicly traded human and animal pharmaceutical company, from 2006 until its acquisition by King Pharmaceuticals, Inc. in 2008.  Prior to that he served as President and Chief Executive Officer of Guilford Pharmaceuticals, Inc., a publicly traded specialty pharmaceutical company from 2004 until its acquisition by MGI PHARMA, INC. in 2005.  Prior to that he served in various senior executive capacities in the worldwide medicines group of Bristol-Myers Squibb Company, a pharmaceutical company, from 2001 to 2004.  Prior to that he spent 14 years  at GlaxoSmithKline plc, a pharmaceutical company, in assignments of increasing responsibility spanning sales, marketing, general management, commercial strategy and clinical development and product strategy. Mr. Mitchell is also a director of Intrexon, Inc. and Theravance BioPharma, Inc. and, within the past five years, he also served as a director of Lux Biosciences, Inc.

We believe that Mr. Mitchell’s qualifications to serve on our Board include his management experience in the pharmaceutical and biotherapeutics industries, in particular as it relates to later-stage drug development and commercialization, and his experience as a CEO and board member of multiple biotechnology companies.

Kristine Peterson has most recently served as Chief Executive Officer of Valeritas, Inc., a medical technology company focusing on innovative drug delivery systems, from 2009 to 2016.  Prior to that she served as Company Group Chair of Johnson & Johnson’s biotech groups from 2006 to 2009, and as Executive Vice President for J&J’s global strategic marketing organization from 2004 to 2006.  Prior to that she served as Senior Vice President, Commercial Operations for Biovail Corporation, a pharmaceutical company, and President of Biovail Pharmaceuticals from 2003 to 2004.  Prior to that she spent 20 years at Bristol-Myers Squibb Company, a pharmaceutical company, in assignments of increasing responsibility spanning marketing, sales and general management, including running a cardiovascular/metabolic business unit and a generics division. Ms. Peterson is also a director of Amarin Corporation plc, Enanta Pharmaceuticals, Inc.,  Paratek Pharmaceuticals, Inc. and pSivida Corp. and, within the past five years, she also served as a director of Valeritas, Inc.

We believe that Ms. Peterson’s qualifications to serve on our Board include her extensive executive management and sales and marketing experience in both large, multinational pharmaceutical and smaller biotechnology companies, in particular as it relates to later-stage development and commercialization, and her other public company board experience.

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Richard J. Wallace served as a Senior Vice President for Research and Development at GlaxoSmithKline plc (GSK), a pharmaceutical company, from 2004 to his retirement in 2008.  Prior to that he served in various executive capacities for GSK and its predecessor companies and their subsidiaries from 1992 to 2004. Mr. Wallace’s experience prior to joining GSK included eight years with Bristol-Myers Squibb Company, a pharmaceutical company, and seven years at Johnson & Johnson, a healthcare products and pharmaceutical company, in assignments spanning marketing, sales, manufacturing and general management. Mr. Wallace is also a director of GNC Holdings, Inc.

We believe Mr. Wallace’s qualifications to serve on our Board include former experience in various capacities of increasing responsibility at several large pharmaceutical companies.  As a result of these experiences, Mr. Wallace has a wide-ranging understanding of drug development both in the U.S. and internationally. Mr. Wallace also has significant corporate governance experience through his service on other company boards.

CORPORATE GOVERNANCE

Independence

Our Board of Directors has determined that a majority of the members of the Board should consist of “independent directors,” determined in accordance with the applicable listing standards of the NASDAQ Stock Market as in effect from time to time.  Directors who are also ImmunoGen employees are not considered to be independent for this purpose.  For a non-employee director to be considered independent, he or she must not have any direct or indirect material relationship with ImmunoGen.  A material relationship is one which, in the opinion of the Board, would interfere with the exercise of independent judgment in carrying out the responsibilities of a director.  In determining whether a material relationship exists, the Board considers the circumstances of any direct compensation received by a director or a member of a director’s immediate family from ImmunoGen; any professional relationship between a director or a member of a director’s immediate family and ImmunoGen’s independent registered public accounting firm; any participation by an ImmunoGen executive officer in the compensation decisions of other companies employing a director or a member of a director’s immediate family as an executive officer; and commercial relationships between ImmunoGen and other entities with which a director is affiliated (as an executive officer, partner or controlling shareholder).  In addition, the Board has determined that directors who serve on the Audit Committee and the Compensation Committee must qualify as independent under applicable SEC rules and NASDAQ listing standards, which limit the types of compensation a member of the Audit Committee or Compensation Committee may receive directly or indirectly from ImmunoGen and require that Audit Committee members not be “affiliated persons” of ImmunoGen or its subsidiaries.

Consistent with these considerations, the Board has determined that all of the current members of the Board are independent directors, except Mr. Enyedy, who is also an ImmunoGen executive officer, and Mr. Junius, who was an ImmunoGen executive officer until his retirement in 2016.

How are nominees for the Board selected?

Our Governance and Nominating Committee is responsible for identifying and recommending nominees for election to the Board.  The committee will consider nominees recommended by shareholders

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if the shareholder submits the nomination in compliance with applicable requirements.  The committee did not receive any shareholder nominations for election of directors at this year’s meeting.  All of the nominees for director standing for election at the meeting (other than Mr. Arbuckle) were most recently re-elected as directors at our 2017 annual meeting of shareholders. Mr. Arbuckle, who was first elected as a director by the Board on January 23, 2018, was initially introduced to the Governance and Nominating Committee by a third-party search firm engaged to fill the vacancy created by the resignation of Mr. Howard H. Pien after more than eight years of service.  In connection with this engagement by the committee, the third-party search firm assisted the committee in preparing a position description for the new director and identified a list of potential candidates based on that description.  The search firm then assisted the committee in prioritizing the potential candidates and conducted initial evaluations of the prioritized candidates, reporting its findings to the committee.  Based on those evaluations, certain of the candidates met with members of the committee, as well as our CEO and our Chairman of the Board.  Ultimately, the committee determined that Mr. Arbuckle should be recommended for election to the Board, and the search committee then conducted reference reviews of the candidate and reported its findings to the committee.  As noted above, the Board elected Mr. Arbuckle as a director on January 23, 2018.  We paid the search firm a fixed fee in connection with this engagement in an amount that the committee determined was reasonable and customary.  We also agreed to reimburse the search firm for its reasonable out-of-pocket expenses incurred in connection with this engagement.

Director Qualifications

When considering a potential candidate for membership on the Board, the Governance and Nominating Committee examines a candidate’s specific experience, knowledge, skills, expertise, integrity, ability to make independent analytical inquiries, understanding of our business environment and willingness to devote adequate time and effort to Board responsibilities.  In addition to these qualifications, when considering potential candidates for the Board, the committee seeks to ensure that the Board is comprised of a majority of independent directors and that the committees of the Board are comprised entirely of independent directors.  The committee may also consider any other standards that it deems appropriate, including whether a potential candidate’s skill and experience would enhance the ability of a particular Board committee to fulfill its duties.

We do not have a formal diversity policy for selecting members of our Board.  However, we do believe it is important that our Board members collectively bring the experiences and skills appropriate to effectively carry out their responsibilities with respect to our business both as conducted today and as we plan to achieve our longer-term strategic objectives.  We therefore seek as members of our Board individuals with a variety of perspectives and the expertise and ability to provide advice and oversight in the areas of financial and accounting controls; biotechnology research and drug development; business strategy; clinical development and regulatory affairs; compensation practices; and corporate governance.

Potential candidates may come to the attention of the Governance and Nominating Committee from current directors, executive officers, shareholders or other persons.  The committee also, from time to time, engages firms that specialize in identifying director candidates.  Once a person has been identified by the Governance and Nominating Committee as a potential candidate, the committee may collect and review publicly available information regarding the person to assess whether the person should be considered further.  If the committee determines that the candidate warrants further consideration, and the person

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expresses a willingness to be considered and to serve on the Board, the committee requests information from the candidate, reviews the person’s accomplishments and qualifications, compares those accomplishments and qualifications to those of any other candidates that the committee might be considering, and conducts one or more interviews with the candidate.  In certain instances, members of the committee may contact one or more references provided by the candidate or may contact other members of the business community or other persons that may have greater first-hand knowledge of the candidate’s credentials and accomplishments.  The committee’s evaluation process does not vary based on whether a candidate is recommended by a shareholder, although the Board may take into consideration the number of shares held by the recommending shareholder and the length of time that such shares have been held.

Shareholder Nominations

Shareholders who wish to submit director candidates for consideration should send such recommendations to our corporate secretary at ImmunoGen’s executive offices not fewer than 120 days prior to the first anniversary of the date on which ImmunoGen’s proxy statement for the prior year’s annual meeting of shareholders was released.  Such recommendations must include the following information: (1) the name and address of the shareholder submitting the recommendation, as they appear on our books, and of the beneficial owner on whose behalf the recommendation is being submitted; (2) the class and number of our shares that are owned beneficially and held of record by such shareholder and such beneficial owner; (3) if the recommending shareholder is not a shareholder of record, a statement from the record holder (usually a broker or bank) verifying the holdings of the shareholder (or alternatively, a current Schedule 13D or 13G, or a Form 3, 4 or 5 filed with the SEC), and a statement from the recommending shareholder of the length of time that the shares have been held (if the recommendation is submitted by a group of shareholders, the foregoing information must be submitted for each shareholder in the group); (4) a statement from the shareholder as to whether he or she has a good faith intention to continue to hold the reported shares through the date of our next annual meeting of shareholders; (5) as to each proposed director candidate, all information relating to such person or persons that is required to be disclosed in solicitations of proxies for election of directors pursuant to Regulation 14A under the Securities Exchange Act of 1934; (6) a description of the qualifications and background of the proposed director candidate that addresses the minimum qualifications and other criteria for Board membership described above; (7) a description of all arrangements or understandings between the proposed director candidate and the shareholder submitting the recommendation; (8) a description of all relationships between the proposed director candidate and any of our competitors, customers, suppliers or other persons with special interests regarding ImmunoGen; and (9) the consent of each proposed director candidate to be named in the proxy statement and to serve as a director if elected.  Shareholders must also submit any other information regarding the proposed director candidate that SEC rules require to be included in a proxy statement relating to the election of directors.

Can I communicate with ImmunoGen’s directors?

Yes.  Shareholders who wish to communicate with the Board or with a particular director may send a letter to ImmunoGen, Inc., 830 Winter Street, Waltham, MA 02451, attention: General Counsel.  The mailing envelope should contain a clear notation that the enclosed letter is a “Shareholder-Board Communication” or “Shareholder-Director Communication.”  All such letters should clearly state whether

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the intended recipients are all members of the Board or certain specified individual directors.  The general counsel will make copies of all such letters and circulate them to the appropriate director or directors.

What is the Board’s leadership structure?

We do not have a policy on whether the same person should serve as both the principal executive officer and Chairman of the Board or, if the roles are separate, whether the Chairman of the Board should be selected from the non-employee directors or should be an employee.  Our Board believes that it should have the flexibility to make these determinations in the way that it believes best provides appropriate leadership for ImmunoGen at a given time.

Our Board believes that its current leadership structure, with Mr. Enyedy serving as CEO and Mr. McCluski serving as Chairman of the Board, is appropriate for ImmunoGen at this time.  We believe that this separation is appropriate since the CEO has overall responsibility for all aspects of our operations and implementation of our strategy, while the Chairman of the Board has a greater focus on corporate governance, including leadership of the Board, and he facilitates communication between the CEO and the other members of the Board.

What is the Board’s role in risk oversight?

Our Board’s role is to oversee the executive management team to assure that the long-term interests of shareholders are being properly served, including understanding and assessing the principal risks associated with our businesses and operations and reviewing options for the mitigation or management of such risks.  The Board as a whole is responsible for such risk oversight, but administers certain of its risk oversight functions through the Audit Committee and the Compensation Committee.

The Audit Committee is responsible for the oversight of our accounting and financial reporting processes, including our systems of internal accounting control. In addition, the Audit Committee discusses guidelines and policies governing the process by which executive management and the relevant company departments assess and manage ImmunoGen’s exposure to risk, and discuss our major financial risk exposures and the steps management has taken to monitor and control such exposures.

The Compensation Committee evaluates our compensation policies and practices from the perspectives of whether they support organizational objectives and shareholder interests, and whether or not they create incentives for inappropriate risk-taking.

What committees has the Board established?

The Board of Directors has standing Audit, Compensation, and Governance and Nominating Committees.  As described above under the heading “Independence,” all of the members of the Audit, Compensation, and Governance and Nominating Committees are deemed to be independent directors.  Each of these committees acts under a written charter, copies of which can be found on ImmunoGen’s website at www.immunogen.com on the Investor Information page under “Corporate Governance.”

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Audit Committee

The Audit Committee assists the Board in its oversight of:

·

Our accounting and financial reporting principles, policies, practices and procedures;

·

The adequacy of our systems of internal accounting control;

·

The quality, integrity and transparency of our financial statements;

·

Our compliance with all legal and regulatory requirements; and

·

The effectiveness and scope of our Code of Corporate Conduct and Senior Officer and Financial Personnel Code of Ethics.

The Audit Committee also reviews the qualifications, independence and performance of our independent registered public accounting firm and pre-approves all audit and non-audit services provided by such firm and its fees.  The Audit Committee is directly responsible for the appointment, compensation, retention and oversight of the work of our independent registered public accounting firm, which reports directly to the Audit Committee.  The Audit Committee also is responsible for reviewing and approving related person transactions in accordance with our written related person transaction policy.

Our Board has also determined that Mr. McCluski and Ms. Peterson each qualifies as an “audit committee financial expert” under SEC rules.

Compensation Committee

The Compensation Committee is responsible for:

·

Setting the compensation of our executive officers;

·

Overseeing the administration of our incentive compensation plans, including the annual bonus objectives and our equity-based compensation and incentive plans, discharging its responsibilities as provided for under such plans, and approving awards of incentive compensation under such plans;

·

Overseeing the administration of our share ownership guidelines for executive officers;

·

Approving, or where shareholder approval is required, making recommendations to the Board regarding any new incentive compensation plan or any material change to an existing incentive compensation plan;

·

Reviewing and approving any employment agreements, consulting agreements, severance and/or change in control plans, agreements or other arrangements covering any of our current or former executive officers; and

   Periodically reviewing and, as appropriate, approving any severance and/or change in control plans, agreements or other arrangements covering our employees or classes of employees other than current or former executive officers generally.

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All of the non-management directors on our Board annually review the corporate goals and approve the CEO’s individual objectives (if any), and evaluate the CEO’s performance in light of those goals and objectives.  Based on the foregoing, the Compensation Committee sets the CEO’s compensation, including salary, target bonus, bonus payouts, equity-based or other long-term compensation, and any other special or supplemental benefits.  Our CEO annually evaluates the contribution and performance of our other executive officers, and the Compensation Committee sets their compensation after taking into consideration the recommendation of our CEO.

The Compensation Committee has delegated to our CEO the authority to grant stock options and restricted stock awards under our 2016 Plan to individuals who are not subject to the reporting and other requirements of Section 16 of the Securities Exchange Act of 1934, as follows:

·

New hires.  The CEO is authorized to grant stock options to newly-hired individuals within certain guidelines established by the Compensation Committee.

·

Existing employees.  In any fiscal year, the aggregate number of shares subject to options awarded by the CEO to employees (other than new hires) may not exceed 100,000, and the number of restricted shares awarded by the CEO to employees (other than new hires) may not exceed 50,000.  With respect to these CEO-granted awards, no individual may receive in any fiscal year a combination of stock options and restricted shares such that the sum of total restricted shares awarded and .5 times the total shares subject to stock options awarded exceeds 20,000.

·

Retention.  On February 6, 2017, the Compensation Committee delegated to the CEO the authority to grant stock option awards covering up to an aggregate of 220,000 shares to key employees (other than executive officers) to supplement a retention program adopted by the Company in in connection with the reengineering of the Company’s operations announced on September 30, 2016.  All awards under this supplemental authorization were granted on February 21, 2017.

The Compensation Committee is authorized to obtain advice and assistance from independent compensation consultants, outside legal counsel and other advisors as it deems appropriate, at ImmunoGen’s expense.  Over the past several years the Compensation Committee had engaged Willis Towers Watson as an independent compensation consultant to provide research and comparative market data on executive and employee compensation.  Following completion of the 2017 executive compensation planning, the committee changed its independent compensation consultant to Radford for the 2018 executive compensation planning.  In connection with its engagement of both Willis Towers Watson, and then Radford, the Compensation Committee considered factors relevant to Willis Towers Watson’s and Radford’s independence from company management, as described in applicable SEC regulations and NASDAQ listing standards, in determining whether Willis Towers Watson’s or Radford’s engagement raises any conflict of interest.  Based on information provided by each of Willis Towers Watson and Radford, the Compensation Committee determined that both of them were was independent of company management.  The Compensation Committee’s independent compensation consultants met with the committee, with and without members of management in attendance, at the committee’s request.

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Governance and Nominating Committee

The Governance and Nominating Committee is responsible for:

·

Identifying and recommending to the Board individuals qualified to serve as directors;

·

Recommending to the Board directors to serve on committees of the Board;

·

Advising the Board with respect to matters of Board composition and procedures;

·

Reviewing our corporate governance guidelines and making recommendations of any changes to the Board;

·

Overseeing the process by which the Board and its committees assess their effectiveness;

·

Reviewing the compensation for non-employee directors and making recommendations of any changes to the Board; and

·

Overseeing the administration of our share ownership guidelines for outside directors.

The Governance and Nominating Committee is authorized to obtain advice and assistance from independent compensation consultants, outside legal counsel and other advisors as its deems appropriate, at ImmunoGen’s expense.

How often did the Board and committees meet during 2017?

Our Board of Directors met or acted by unanimous written consent eight times during 2017.  The Audit, Compensation, and Governance and Nominating Committees met or acted by unanimous written consent eight, six, and five times, respectively, during 2017.  All of the directors attended at least 75% of the meetings of the Board of Directors and committees of the Board on which they served.

During 2017, the non-management directors and the independent directors each met four times in executive session without management present.

Does ImmunoGen have a policy regarding director attendance at annual meetings of the shareholders?

It is the Board’s policy that, absent any unusual circumstances, all director nominees standing for election will attend our annual meeting of shareholders.  All of our directors attended our 2017 annual meeting of shareholders.

Compensation Committee Interlocks and Insider Participation in Compensation Decisions

During 2017, Mr. Mitchell, Ms. Peterson and former director Mr. Howard H. Pien served on the Compensation Committee.  In January 2018, Dr. Goldberg replaced Mr. Pien on the committee.  No member of the committee is a present or former officer or employee of ImmunoGen or any of its subsidiaries or had any business relationship or affiliation with ImmunoGen or any of its subsidiaries (other than his or her service as a director) requiring disclosure in this proxy statement.

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Does ImmunoGen have a Code of Corporate Conduct?

Yes.  We have adopted a Code of Corporate Conduct applicable to our officers, directors and employees.  We have also adopted a Senior Officer and Financial Personnel Code of Ethics, which sets forth special obligations for senior officers and employees with financial reporting and related responsibilities.  These codes are posted on our website at www.immunogen.com on the Investor Information page under “Corporate Governance.”  We intend to satisfy our disclosure requirements regarding any amendment to, or waiver of, a provision of our Senior Officer and Financial Personnel Code of Ethics by disclosing such matters on our website.  Shareholders may request copies of our Code of Corporate Conduct and our Senior Officer and Financial Personnel Code of Ethics free of charge by writing to ImmunoGen, Inc., 830 Winter Street, Waltham, MA 02451, attention: General Counsel.

Does ImmunoGen have a written policy governing related person transactions?

Yes.  We have adopted a written policy that provides for the review and approval by the Audit Committee of transactions involving ImmunoGen in which a related person is known to have a direct or indirect interest and that are required to be reported under Item 404(a) of Regulation S-K promulgated by the SEC.  For purposes of this policy, a related person includes: (1) any of our directors, director nominees or executive officers; (2) any known beneficial owner of more than 5% of any class of our voting securities; or (3) any immediate family member of any of the foregoing.  In situations where it is impractical to wait until the next regularly-scheduled meeting of the committee or to convene a special meeting of the committee, the chairman of the committee has been delegated authority to review and approve related person transactions.  Transactions subject to this policy may be pursued only if the Audit Committee (or the chairman of the committee acting pursuant to delegated authority) determines in good faith that, based on all the facts and circumstances available, the transactions are in, or are not inconsistent with, the best interests of ImmunoGen and its shareholders.

Does ImmunoGen have a written policy prohibiting certain transactions in its shares, such as hedging transactions?

Yes.  As part of our insider trading policy, we prohibit our directors and employees from engaging in the following transactions:

·

Trading in ImmunoGen shares on a short-term basis.  Any shares purchased in the open market must be held for a minimum of six months. This rule does not apply to sales made within six months before or after the exercise of options that were granted by ImmunoGen.

·

Short sales of ImmunoGen shares.

·

Use of ImmunoGen shares to secure a margin or other loan.

·

Transactions in straddles, collars, or other similar risk reduction devices.

·

Transactions in publicly-traded options relating to ImmunoGen shares (i.e., options that are not granted by ImmunoGen).

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With respect to the last three items described above, the policy does authorize our general counsel to approve such transactions in limited cases.  However, no director or employee has requested approval to engage in any such transaction, nor has our general counsel determined any circumstances under which such approval would be granted.

Does ImmunoGen have a clawback policy related to executive compensation?

Yes.  We have adopted an incentive compensation recoupment policy that is applicable to our executive officers, and such other of our senior executives as may be determined by the Compensation Committee.  If we determine that we must restate our financial results as reported in a periodic or other report filed with the SEC to correct an accounting error due to material noncompliance with any financial reporting requirement under the U.S. securities laws, we will seek to recover, at the direction of the Compensation Committee, after it has reviewed the facts and circumstances that led to the requirement of the restatement and the costs and benefits of seeking recovery, incentive compensation, both cash and equity-based, awarded or paid to an officer covered by the policy whose intentional misconduct caused or contributed to the need for the restatement for a fiscal period if a lower award or payment would have been made to such officer based on the restated financial results.

DIRECTOR COMPENSATION

How are the directors compensated?

Directors who are also ImmunoGen employees receive no additional compensation for serving on the Board of Directors.  Our Compensation Policy for Non-Employee Directors consists of three elements: cash compensation; deferred stock units; and stock options.

Cash Compensation

Each non-employee director receives an annual meeting fee of $40,000.  In addition, the Chairman of the Board (or if the Chairman is not a non-employee director, the lead independent director) receives an additional annual fee of $30,000, the chairman of the Audit Committee receives an additional annual fee of $20,000, and the chairmen of each of the Compensation Committee and the Governance and Nominating Committee receive an additional annual fee of $14,000.  Other members of the Audit Committee receive an additional annual fee of $10,000, and other members of each of the Compensation Committee and the Governance and Nominating Committee receive an additional annual fee of $7,000.  All of these annual fees are paid in quarterly installments in, at each director’s election, either cash or deferred stock units.  Directors are also reimbursed for their reasonable expenses incurred in connection with attendance at Board and committee meetings.

Deferred Stock Units

Non-employee directors receive deferred stock units as follows:

·

New non-employee directors were initially awarded 6,500 deferred stock units, or DSUs, with each unit relating to one share of our common stock.  Effective March 28, 2018, this amount was

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increased to 8,000 DSUs.  These awards vest quarterly over three years from the date of grant, contingent upon the individual remaining a director of ImmunoGen as of each vesting date.

·

On the first anniversary of a non-employee director’s initial election to the Board, such non-employee director was awarded 3,000 DSUs, pro-rated based on the number of whole months remaining between the first day of the month in which such grant date occurs and the first May 31 following the grant date.  These awards generally vested quarterly over approximately the period from the grant date to the first June 1 following the grant date, contingent upon the individual remaining a director of ImmunoGen as of each vesting date.  Effective March 28, 2018, these first anniversary awards were eliminated.

·

Non-employee directors were annually awarded 3,000 DSUs.  Effective March 28, 2018, this amount was increased to 4,000 DSUs.  These awards vest quarterly over approximately one year from the date of grant (generally the date of the annual meeting of shareholders), contingent upon the individual remaining a director of ImmunoGen as of each vesting date.  Effective March 28, 2018, if a non-employee director is first elected to the Board other than at an annual meeting of shareholders, the number of DSUs subject to such non-employee director’s first annual DSU award is pro-rated, based on the number of days between his or her date of election and the date of grant of his or her first annual DSU award.  If a non-employee director is first elected to the Board at an annual meeting of shareholders, he or she is ineligible to receive his or her first annual DSU award until the following year.

Vested deferred stock units are redeemed on the date a director ceases to be a member of the Board, at which time such director’s deferred stock units will generally be settled in shares of our common stock issued under our 2016 Plan (or its predecessor 2006 Employee, Director and Consultant Equity Incentive Plan, or 2006 Plan, depending on the grant date of the deferred stock units) at a rate of one share for each vested deferred stock unit then held.  Any deferred stock units that remain unvested at that time will be forfeited.  All unvested deferred stock units will automatically vest immediately prior to the occurrence of a change of control, as defined in the 2016 Plan (or the substantially identical definition in the 2006 Plan, as applicable).  If the 2018 Plan is approved by shareholders at the meeting, deferred stock unit awards granted after June 20, 2018 will generally be settled in shares of our common stock issued under the 2018 Plan and will be subject to the change of control provisions of the 2018 Plan, which are substantially identical to the analogous provisions in our 2016 Plan. Dr. Villafranca holds 6,380 vested deferred stock units granted under our now-discontinued 2001 Non-Employee Director Stock Plan.  These deferred stock units will be redeemed on the date Dr. Villafranca ceases to be a member of the Board, at which time they will be settled in cash in an amount equal to the then fair market value of our common stock, multiplied by the number of such deferred stock units.  We believe that the requirement that non-employee directors hold their deferred stock units for the duration of their tenure on our Board mitigates excessive risk-taking and directly aligns a substantial portion of director compensation with the creation of long-term shareholder value.

Stock Options

Non-employee directors also receive stock option awards as follows:

·

If a non-employee director was first elected to the Board other than at an annual meeting of shareholders, such non-employee director received a stock option award covering 10,000 shares of our common stock, pro-rated based on the number of whole months remaining between the first

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day of the month in which such date of grant (the date of their initial election to the Board) occurs and the first May 31 following the grant date.  Effective March 28, 2018, non-employee directors will initially receive a stock option award covering 18,000 shares of our common stock, which vests quarterly over three years from the date of grant.  In all cases, these awards have an exercise price equal to the fair market value of our common stock on the date of grant, and will expire on the tenth anniversary of the date of grant, contingent upon the individual remaining a director of ImmunoGen during such period.

·

Non-employee directors received an annual stock option award covering 10,000 shares of our common stock.  Effective March 28, 2018, the number of shares covered by the annual stock option award was increased to 18,000.  These awards will have an exercise price equal to the fair market value of our common stock on the date of grant (generally the date of the annual meeting of shareholders), will vest quarterly over approximately one year from the date of grant, and will expire on the tenth anniversary of the date of grant, contingent upon the individual remaining a director of ImmunoGen during such period.  Effective March 28, 2018, if a non-employee director is first elected to the Board other than at an annual meeting of shareholders, the number of shares covered by such non-employee director’s first annual stock award is pro-rated, based on the number of days between his or her date of election and the date of grant of his or her first annual stock option award.  If a non-employee director is first elected to the Board at an annual meeting of shareholders, he or she is ineligible to receive his or her first annual stock option award until the following year.

All unvested stock option awards granted to non-employee directors will automatically vest immediately as of the date of a change of control, as defined in the 2016 Plan (or, with respect to stock options granted on or before December 9, 2016, the substantially identical definition in the 2006 Plan).  If the 2018 Plan is approved by shareholders at the meeting, stock options granted to non-employee directors after June 20, 2018 will be subject to the change of control provisions of the 2018 Plan, which are substantially identical to the analogous provisions in our 2016 Plan.

The Governance and Nominating Committee will periodically review the size of the foregoing deferred stock unit and stock option awards to ensure that, in light of changes in the market price of our common stock, these awards are generally aligned with equity awards granted to the outside directors of comparable companies.

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How were the directors compensated for 2017?

The compensation paid to members of our Board of Directors (other than Mr. Enyedy) with respect to 2017 was as follows:

 

 

 

 

 

 

 

 

 

 

 

 

 

Director Compensation for Calendar Year 2017

Name

    

Fees Earned or
Paid in Cash
 (1)

    

Stock Awards ($)
(2)(4)

    

Option Awards
($)
 (3)(4)

    

 

Total

Mark Goldberg

 

$

47,000

 

$

13,920

 

$

28,741

 

$

89,661

Stephen C. McCluski

 

 

90,000

 

 

13,920

 

 

28,741

 

 

132,661

Daniel M. Junius

 

 

40,000

 

 

13,920

 

 

28,741

 

 

82,661

Dean J. Mitchell

 

 

47,228

 

 

13,920

 

 

28,741

 

 

89,889

Kristine Peterson

 

 

57,000

 

 

13,920

 

 

28,741

 

 

99,661

Howard H. Pien

 

 

53,772

 

 

13,920

 

 

28,741

 

 

96,433

Joseph J. Villafranca

 

 

54,000

 

 

13,920

 

 

28,741

 

 

96,661

Richard J. Wallace

 

 

57,000

 

 

13,920

 

 

28,741

 

 

99,661


(1)

This column represents the annual fees described above, and includes any amounts which a director has elected to be paid in deferred stock units.  For calendar year 2017, all of the outside directors elected to be paid their annual fees in cash, except that Dr. Goldberg, Mr. Pien,  Mr. Mitchell and Dr. Villafranca elected to be paid $47,000, $26,886, $47,228 and $10,800, respectively, of their annual fees in deferred stock units.

(2)

The amounts shown in this column represent the aggregate grant date fair value of the deferred stock units credited to non-employee directors during 2017, which have been calculated in each case by multiplying the number of units by the closing price of our common stock on the NASDAQ Global Select Market on the date(s) as of which such units were credited to the non-employee director.  This column does not include the deferred stock units described in the preceding footnote.

(3)

The amounts shown in this column represent the aggregate grant date fair value of the stock option awards granted to non-employee directors during 2017, which has been calculated using the Black-Scholes option pricing model, based on the following assumptions: expected life of option equal to 6.0 years; expected risk-free interest rate of 1.87%, which is equal to the U.S. Treasury yield in effect at the time of grant for instruments with a similar expected life; expected stock volatility of 68.29%; and expected dividend yield of 0%.

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(4)

The following table provides details regarding the aggregate number of each non-employee director’s vested and unvested deferred stock units and shares subject to outstanding options as of December 31, 2017:

 

 

 

 

 

 

 

Deferred Stock Units

 

Shares Subject to

 

 

Outstanding at

 

Outstanding Options at

Name

    

Calendar Year-End (#)

    

Calendar Year-End (#) (1)

Mark Goldberg

 

44,472

 

53,510

Stephen C. McCluski

 

50,458

 

59,721

Daniel M. Junius

 

4,500

 

15,000

Dean J. Mitchell

 

28,045

 

52,711

Kristine Peterson

 

19,954

 

52,711

Howard H. Pien

 

78,298

 

59,721

Joseph J. Villafranca

 

90,997

 

59,721

Richard J. Wallace

 

47,326

 

59,721


(1)

Includes only options granted to members of the Board in their capacity as non-employee directors.

Are the outside directors subject to share ownership guidelines?

Yes.  Our Board of Directors has adopted, effective as of July 1, 2014, share ownership guidelines affecting our outside directors.  The guidelines provide that outside directors are expected to own shares of our common stock having an aggregate value equal to at least three times the annual meeting fee (whether such fee is paid in cash or, at the director’s option, in deferred stock units), excluding Lead Director/Chairman of the Board and committee-related fees.  The current outside directors (other than Mr. Arbuckle) have five years from the date of the 2014 annual meeting of shareholders to achieve the ownership requirement, and new outside directors (including Mr. Arbuckle) will have a similar five-year period following their election.  The outside directors may satisfy the guidelines with shares owned directly or indirectly in a trust or by a spouse and/or minor children, vested deferred stock units and vested stock options.  In the case of deferred stock units or stock options, the aggregate exercise price or other cash consideration, if any, required to be paid for such shares is deducted in determining the aggregate value of the shares represented by such awards.

APPROVAL OF THE 2018 EMPLOYEE, DIRECTOR AND CONSULTANT EQUITY INCENTIVE PLAN

(Notice Item 3)

On March 28, 2018, our Board of Directors unanimously approved, subject to shareholder approval at the meeting, the adoption of the 2018 Plan.  The 2018 Plan will initially allow us to issue up to 7,500,000 shares of our common stock pursuant to awards granted under the 2018 Plan.  If the 2018 Plan is approved by shareholders, our 2016 Plan will terminate, and no additional awards will be made thereunder after June 20, 2018.  All outstanding awards under the 2016 Plan, as well as the earlier discontinued 2006 Employee, Director and Consultant Equity Incentive Plan, or the 2006 Plan, will remain in effect.

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Recommendation

The Board recommends a vote “FOR” the proposal to approve the 2018 Plan.

Summary of and Reasons for the Approval of the 2018 Plan

The 2018 Plan is being submitted to shareholders for approval at the meeting in order to ensure favorable federal income tax treatment for grants of incentive stock options under Section 422 of the Internal Revenue Code of 1986, as amended (the “Code”).  Approval of by our shareholders of the 2018 Plan is also required by the listing rules of the NASDAQ Stock Market.

We believe that the effective use of stock-based long-term compensation is vital to our ability to achieve strong performance in the future.  Awards under the 2018 Plan are intended to attract, retain and motivate key individuals, further align employee and shareholder interests, and closely link compensation with our corporate performance.  We believe that the 2018 Plan is essential to permit us to continue to provide long-term, equity-based incentives to present and future employees, consultants and directors.

Our Board believes that the number of shares currently remaining available for issuance pursuant to future awards under the 2016 Plan (858,903) shares as of April 23, 2018) is insufficient for future granting needs.  Accordingly, the 2018 Plan has initially fixes the number of shares of common stock authorized for issuance thereunder at 7,500,000.  Based solely on the closing price of our common stock as reported on the NASDAQ Global Select Market on April 23, 2018 ($10.12), the market value of the 7,500,000 shares that would be available for issuance under the 2018 Plan would be $75,900,000.

As of April 23, 2018, 16,369,079 shares were subject to outstanding stock option and other stock-based awards granted under the 2016 Plan and the discontinued 2006 Plan.  The foregoing number also includes shares of our common stock issuable upon redemption of outstanding deferred share units credited to our non-employee directors under our Compensation Policy for Non-Employee Directors.  Accordingly, as of April 23, 2018, the equity overhang, represented by the sum of all outstanding stock option and other stock-based awards, plus the number of shares available for issuance pursuant to future awards under the 2016 Plan, was 11.5%. If the 2018 Plan is approved by shareholders, the equity overhang would be 15.7%. Equity overhang was calculated in each instance above as (a) the sum of (i) all shares issuable upon exercise, vesting or redemption of outstanding awards, plus (ii) all shares available for issuance pursuant to future awards under the 2016 Plan or 2018 Plan, as applicable, as a percentage of (b) the sum of (i) the number of shares of our common stock outstanding as of April 23, 2018, plus (ii) the number of shares described in clause (a) above.

The Compensation Committee has considered our historical annual burn rate in granting awards under the 2016 Plan and the 2006 Plan, and believes that our burn rate, determined as described below, is reasonable for a company in late-stage drug development that is prudently planning for success.  We also believe that it is appropriate to exclude the impact of new hire awards, which are determined primarily by

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competitive market conditions, in evaluating our burn rate.  The following table shows our 3‑year burn rate history (excluding new hire awards):

 

 

 

 

 

 

 

 

 

 

    

CY17

    

CY16

    

CY15

 

Adjusted Gross Burn Rate as a % of Outstanding Shares (1)

 

3.62

%  

4.32

%  

2.71

%

Adjusted Net Burn Rate as a % of Outstanding Shares (2)

 

0.34

%  

2.00

%  

1.75

%


1)

Adjusted gross burn rate is calculated as (a) the number of shares subject to awards granted during the applicable calendar year (excluding new hire awards), divided by (b) the weighted average common shares outstanding during the applicable calendar year.

2)

Adjusted net burn rate is calculated as (a) the number of shares subject to awards granted during the applicable calendar year (excluding new hire awards), minus shares subject to awards that were forfeited, canceled or terminated (other than upon exercise) during the applicable calendar year, divided by (b) the weighted average common shares outstanding during the applicable calendar year.

Our Board believes that if the 2018 Plan is approved by shareholders, the 7,500,000 shares available for issuance under the 2018 Plan will result in an adequate number of shares of common stock being available for future awards under the 2018 Plan for approximately two additional years following the current year.

The 2018 Plan includes the following provisions:

·

No Liberal Share Recycling:  Shares that are withheld to satisfy any tax withholding obligation related to any award or for payment of the exercise price or purchase price of any award under the 2018 Plan will not again become available for issuance under the 2018 Plan.

·

No Discounted Options or Stock Appreciation Rights:  Stock options and stock appreciation rights may not be granted with exercise prices or measurement prices lower than the fair market value of the underlying shares on the grant date except to replace equity awards due to a corporate transaction.

·

No Repricing without Shareholder Approval:  At any time when the exercise price of a stock option or measurement price of a stock appreciation right is above the fair market value of a share, we will not, without shareholder approval, reduce the exercise price of such stock option or measurement price of such stock appreciation right and will not exchange such stock option or stock appreciation right for a new award with a lower (or no) purchase price or for cash.

·

No Transferability:  Awards generally may not be transferred, except by will or the laws of descent and distribution, unless approved by the Compensation Committee.  In no event shall any award be transferred for value.

·

No Dividends:  The 2018 Plan prohibits, for all award types, the payment of dividends or dividend equivalents before the vesting of the underlying award but permits accrual of such dividends or dividend equivalents to be paid upon vesting.

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·

Limits on Director Grants: The 2018 Plan limits the aggregate grant fair value of shares to be granted to any non-employee director in any calendar year to $500,000, except for grants made pursuant to an election by a non-employee director to receive a grant of equity in lieu of cash for any cash fees to be received for service on our Board or any committee thereof.

·

Provide for a Minimum Vesting Period:  Except in the case of death, disability or “change of control”, no award shall vest, and no right of ImmunoGen to restrict or reacquire shares subject to full value awards shall lapse, less than one year from the date of grant.  However, awards may be granted having time-based vesting of less than one year from the date of grant so long a no more than 5% of the shares reserved for issuance under the 2018 Plan may be granted in the aggregate pursuant to such awards.

·

Clawback:  We may recover from a participant any compensation from any award under the 2018 Plan, or cause a participant to forfeit any such award, in the event our incentive recoupment policy, described elsewhere in this proxy statement, is triggered with respect to such participant.

Summary of Material Features of the 2018 Plan

The following description of the material features of the 2018 Plan is intended to be a summary only.  This summary is qualified in its entirety by the full text of the 2018 Plan that is attached to this proxy statement as Exhibit A.

Eligibility.  The 2018 Plan allows us, under the direction of the Compensation Committee, to make grants of stock options, restricted and unrestricted stock awards and other stock-based awards to employees, directors and consultants (approximately 300 people as of April 23, 2018) who, in the opinion of the Compensation Committee, are in a position to make a significant contribution to our long-term success.

Shares Available for Issuance. The 2018 Plan provides for the issuance of up to (i) 7,500,000 plus (ii) the number of shares underlying any stock option and other stock-based awards previously granted under the 2016 Plan and 2006 Plan that are forfeited, canceled, or terminated (other than by exercise) on or after June 20, 2018; provided that no more than 19,500,000 shares, which is approximately the number of shares subject to currently outstanding stock option and other stock-based awards (excluding vested DSUs), may be added to the 2018 Plan pursuant to such forfeitures, cancellations and terminations.  Shares of common stock reserved for awards under the 2018 Plan that are forfeited, canceled or terminated (other than by exercise) generally are added back to the share reserve available for future awards.  However, shares of common stock tendered in payment for an award or shares of common stock withheld for taxes are not available again for future awards.  In addition, shares purchased by us with the proceeds of the option exercise price of any option award may not be reissued under the 2018 Plan.

Any awards under the 2018 Plan having an intrinsic value that is not solely dependent on appreciation in the price of our common stock after the date of grant, also known as “full-value awards,” will be treated, for purposes of determining the number of shares of our common stock available for issuance under the 2018 Plan, as one and one-quarter (1.25) shares for each share subject to such full-value awards.  In addition, the aggregate grant date fair value of shares to be awarded to any non-employee director in any calendar year may not exceed $500,000, except that this limitation shall not apply to stock-

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based awards made pursuant to an election by a non-employee director to receive such stock-based award in lieu of cash for all or a portion of cash fees to be received for service on our Board of Directors or any committee thereof.

Stock Options.  Stock options granted under the 2018 Plan may be either incentive stock options, which are intended to satisfy the requirements of Section 422 of the Code, or non-qualified stock options, which are not intended to meet those requirements.  The exercise price of a stock option may not be less than 100% of the fair market value of our common stock on the date of grant.  The term of stock options granted under the 2018 Plan may not be longer than ten years. Moreover, if an incentive stock option is granted to an individual who owns more than 10% of the combined voting power of all classes of our capital stock, the exercise price may not be less than 110% of the fair market value of our common stock on the date of grant and the term of the option may not be longer than five years.

Award agreements for stock options include rules for exercise of the stock options after termination of service.  Options may not be exercised unless they are vested, and no option may be exercised after the end of the term set forth in the award agreement.  Generally, stock options will be exercisable for three months after termination of service for any reason other than death or total and permanent disability, and for 12 months after termination of service on account of death or total and permanent disability.  Options, however, will not be exercisable if the termination of service was due to cause.

Restricted Stock.  Restricted stock is common stock that is subject to restrictions, including a prohibition against transfer and a substantial risk of forfeiture, until the end of a “restricted period” during which the grantee must satisfy certain vesting conditions.  If the grantee does not satisfy the vesting conditions by the end of the restricted period, the restricted stock is forfeited.

During the restricted period, the holder of restricted stock has certain of the rights and privileges of a regular shareholder, except that the restrictions set forth in the applicable award agreement apply.  For example, the holder of restricted stock may vote the shares, but he or she may not sell the shares until the restrictions are lifted.  In addition, dividends may accrue but shall not be paid prior to and only to the extent that, the shares subject to the restrictions vest.

Restricted Stock Units and Performance Stock Units.  Restricted stock units and performance stock units provide the grantee with the right to receive a fixed number of shares of common stock in the future based on the grantee providing continuing service for the period specified in the award agreement, in the case of restricted stock units, and if the performance goals are met, in the case of performance stock units.  If the vesting is achieved the grantee shall be entitled to receive such number of shares based on the number of units specified in the award agreement. Dividend equivalents may accrue but shall not be paid prior to and only to the extent that, the grantee receives the shares related to the stock units upon vesting.  If the grantee does not satisfy the vesting conditions by the end of the applicable period specified in the award agreement the award is forfeited and shares are not issued.

Other Stock-Based Awards.  The 2018 Plan also authorizes the grant of other types of stock-based compensation including, but not limited to, stock appreciation rights, phantom stock awards, deferred stock units and unrestricted stock awards.  Under no circumstances may the agreement covering stock appreciation rights (a) have an exercise price per share that is less than 100% of the fair market value per

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share of our common stock on the date of grant or (b) expire more than ten years following the date of grant.  We will issue shares of our common stock under the 2018 Plan to our non-employee directors upon redemption of deferred share units that may be granted to our non-employee directors under our Compensation Plan for Non-Employee Directors after June 20, 2018.

Except in the case of death, disability or “change of control” (as defined in the 2018 Plan), no award shall vest, and no right of ImmunoGen to restrict or reacquire shares subject to full value awards shall lapse, less than one year from the date of grant.  However, awards may be granted having time-based vesting of less than one year from the date of grant so long a no more than 5% of the shares reserved for issuance under the 2018 Plan may be granted in the aggregate pursuant to such awards.

Plan Administration.  In accordance with the terms of the 2018 Plan, our Board of Directors has authorized the Compensation Committee to administer the 2018 Plan.  The Compensation Committee may delegate part of its authority and powers under the 2018 Plan to one or more of our directors, but only the Compensation Committee can make awards to participants who are subject to the reporting and other requirements of Section 16 of the Securities Exchange Act of 1934.  In accordance with the provisions of the 2018 Plan, the Compensation Committee determines the terms of awards, including:

·

which employees, directors and consultants will be granted awards;

·

the number of shares subject to each award;

·

the vesting provisions of each award;

·

the termination or cancellation provisions applicable to awards; and

·

all other terms and conditions upon which each award may be granted in accordance with the 2018 Plan.

In addition, the Compensation Committee may, in its discretion, amend any term or condition of an outstanding award provided (i) such term or condition as amended is permitted by the 2018 Plan, and (ii) any such amendment shall be made only with the consent of the participant to whom such award was made if the amendment is adverse to the participant.

Stock Dividends and Stock Splits.  If our common stock is subdivided or combined into a greater or smaller number of shares or if we issue any shares of common stock as a stock dividend, the number of shares of our common stock thereafter deliverable upon the exercise of an outstanding option or upon issuance under another type of award shall be appropriately increased or decreased proportionately, and appropriate adjustments shall be made in the per share purchase price and performance goals applicable to performance-based awards, if any, to reflect such subdivision, combination or stock dividend.

Other Dividends.  Dividends (other than stock dividends as described above) may accrue but are not payable prior to the time, and only to the extent that, restrictions or rights to reacquire shares subject to awards have lapsed.

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Corporate Transactions.  Upon a merger, consolidation or other reorganization event, our Board of Directors, may, in its sole discretion, take any one or more of the following actions pursuant to the 2018 Plan, as to some or all outstanding awards:

·

provide that all outstanding options shall be assumed or substituted by the successor corporation;

·

upon written notice to a participant provide that the participant’s unexercised options will terminate immediately prior to the consummation of such transaction unless exercised by the participant;

·

in the event of a merger pursuant to which holders of our common stock will receive a cash payment for each share surrendered in the merger, make or provide for a cash payment to the participants equal to the difference between the merger price times the number of shares of our common stock subject to such outstanding options, and the aggregate exercise price of all such outstanding options, in exchange for the termination of such options;

·

provide that outstanding awards shall be assumed or substituted by the successor corporation, become realizable or deliverable, or restrictions applicable to an award will lapse, in whole or in part, prior to or upon the merger or reorganization event; and

·

with respect to stock grants, and in lieu of any of the foregoing, our Board of Directors or an authorized committee may provide that, upon consummation of the transaction, each outstanding stock grant shall be terminated in exchange for payment of an amount equal to the consideration payable upon consummation of such transaction to a holder of the number of shares of common stock comprising such award (to the extent such stock grant is no longer subject to any forfeiture or repurchase rights then in effect or, at the discretion of the Board of Directors or an authorized committee, all forfeiture and repurchase rights being waived upon such transaction).

Amendment and Termination.  The 2018 Plan may be amended by our shareholders.  It may also be amended by our Board of Directors, provided that any amendment approved by our Board which requires shareholder approval (1) under the rules of the NASDAQ Stock Market, (2) in order to ensure favorable federal income tax treatment for any incentive stock options under Section 422 of the Code, or (3) for any other reason, is subject to obtaining such shareholder approval.  However, no such action may adversely affect any rights any outstanding awards without the holder’s consent.  Other than in connection with stock dividends, stock splits and corporate transactions, as summarized above, (i) the exercise price of an option may not be reduced, (ii) an option may not be canceled in exchange for a replacement option having a lower exercise price, or for another award or for cash, and (iii) no other action may be taken that is considered a direct or indirect “repricing,” in each case without shareholder approval.  In addition, except in the case of death, disability or “change of control” (as defined in the 2018 Plan), outstanding awards may not be amended in a manner that would accelerate the exercisability or vesting of, or lapsing of any right by ImmunoGen to restrict or reacquire shares subject to, all or any portion of any award.

Duration of the 2018 Plan.  The 2016 Plan will expire on March 28, 2028.  No awards may be made after termination of the 2018 Plan, although previously granted awards may continue beyond the termination date in accordance with their terms.

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Federal Income Tax Consequences

The material federal income tax consequences of the issuance and exercise of stock options and other awards under the 2018 Plan, based on the current provisions of the Code and regulations are as follows.  Changes to these laws could alter the tax consequences described below.  This summary assumes that all awards granted under the 2018 Plan are exempt from or comply with, the rules under Section 409A of the Code related to nonqualified deferred compensation.

Incentive Stock Options.  Incentive stock options are intended to qualify for treatment under Section 422 of the Code. An incentive stock option does not result in taxable income to the optionee or deduction to us at the time it is granted or exercised, provided that no disposition is made by the optionee of the shares acquired pursuant to the option within two years after the date of grant of the option nor within one year after the date of issuance of shares to the optionee (referred to as the “ISO holding period”).  However, the difference between the fair market value of the shares on the date of exercise and the option price will be an item of tax preference includible in “alternative minimum taxable income” of the optionee.  Upon disposition of the shares after the expiration of the ISO holding period, the optionee will generally recognize long term capital gain or loss based on the difference between the disposition proceeds and the option price paid for the shares.  If the shares are disposed of prior to the expiration of the ISO holding period, the optionee generally will recognize taxable compensation, and we will have a corresponding deduction, in the year of the disposition, equal to the excess of the fair market value of the shares on the date of exercise of the option over the option price.  Any additional gain realized on the disposition will normally constitute capital gain.  If the amount realized upon such a disqualifying disposition is less than fair market value of the shares on the date of exercise, the amount of compensation income will be limited to the excess of the amount realized over the optionee’s adjusted basis in the shares.

Non-Qualified Options.  Options otherwise qualifying as incentive stock options, to the extent the aggregate fair market value of shares with respect to which such options are first exercisable by an individual in any calendar year exceeds $100,000, and options designated as non-qualified options, will be treated as options that are not incentive stock options.

A non-qualified option ordinarily will not result in income to the optionee or deduction to us at the time of grant. The optionee will recognize compensation income at the time of exercise of such non-qualified option in an amount equal to the excess of the then value of the shares over the option price per share.  Such compensation income of optionees may be subject to withholding taxes, and a deduction may then be allowable to us in an amount equal to the optionee’s compensation income.

An optionee’s initial basis in shares so acquired will be the amount paid on exercise of the non-qualified option plus the amount of any corresponding compensation income.  Any gain or loss as a result of a subsequent disposition of the shares so acquired will be capital gain or loss.

Stock Grants.  With respect to stock grants under the 2018 Plan that result in the issuance of shares that are either not restricted as to transferability or not subject to a substantial risk of forfeiture, the grantee must generally recognize ordinary income equal to the fair market value of shares received.  Thus, deferral of the time of issuance will generally result in the deferral of the time the grantee will be liable for income taxes with respect to such issuance.  We generally will be entitled to a deduction in an amount equal to the ordinary income recognized by the grantee.

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With respect to stock grants involving the issuance of shares that are restricted as to transferability and subject to a substantial risk of forfeiture, the grantee must generally recognize ordinary income equal to the fair market value of the shares received at the first time the shares become transferable or are not subject to a substantial risk of forfeiture, whichever occurs earlier.  A grantee may elect to be taxed at the time of receipt of shares rather than upon lapse of restrictions on transferability or substantial risk of forfeiture, but if the grantee subsequently forfeits such shares, the grantee would not be entitled to any tax deduction, including as a capital loss, for the value of the shares on which he previously paid tax.  The grantee must file such election with the Internal Revenue Service within 30 days of the receipt of the shares.  We generally will be entitled to a deduction in an amount equal to the ordinary income recognized by the grantee.

Stock Units.  The grantee recognizes no income until the issuance of the shares.  At that time, the grantee must generally recognize ordinary income equal to the fair market value of the shares received.  We generally will be entitled to a deduction in an amount equal to the ordinary income recognized by the grantee.

New Plan Benefits

None of the shares of common stock subject to the 2018 Plan will be issuable in connection with any award granted prior to shareholder approval of the 2018 Plan.  Future options and other awards under the 2018 Plan are subject to the discretion of the Compensation Committee, and therefore it is not possible to identify the persons who will receive options or other awards under the 2018 Plan in the future, nor the amount of any such future options or other awards.

Equity Compensation Plans

The following table sets forth information as of December 31, 2017 with respect to existing compensation plans under which our equity securities are authorized for issuance.

 

 

 

 

 

 

 

 

 

    

 

    

 

 

    

(c)

 

 

 

 

 

 

 

Number of securities

 

 

(a)

 

(b)

 

remaining available for

 

 

Number of securities to

 

Weighted-average

 

future issuance under

 

 

be issued upon exercise

 

exercise price of

 

equity compensation plans

 

 

of outstanding options,

 

outstanding options,

 

(excluding securities

Plan category

    

warrants and rights (1)

    

warrants and rights (2)

    

reflected in column (a))

Equity compensation plans approved by security holders (3)

 

14,654,324

 

$

9.92

 

5,405,512

Equity compensation plans not approved by security holders

 

 —

 

 

 —

 

 —

Total

 

14,654,324

 

$

9.92

 

5,405,512

(1)

The amount in this column includes the number of shares subject to issuance upon the exercise of stock options, unvested restricted stock awards, and DSUs.

(2)

The amount in this column reflects all outstanding stock options, but does not include restricted stock awards or DSU’s, which do not have an exercise price.

(3)

These amounts consist of our 2006 Plan and 2016 Plan.

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Outstanding Awards under Equity Incentive Plans.  As of April 23, 2018, there were 16,074,426 shares subject to issuance upon exercise of outstanding options under all of our equity compensation plans, at a weighted average exercise price of $10.18, and a weighted average remaining life of 7.1 years. There were a total of 1,834,648 issued and outstanding restricted shares that remain subject to forfeiture (1,019,398 time-based restricted shares, and 815,250 performance-based restricted shares), 5,959 shares subject to DSUs that remain subject to forfeiture, and 288,694 shares subject to vested DSUs.  All DSUs are held by non-management directors.  As of April 23, 2018, 858,903 shares were available for future issuance under those plans.

APPROVAL OF THE EMPLOYEE STOCK PURCHASE PLAN

(Notice Item 4)

On March 28, 2018, our Board of Directors unanimously approved, subject to shareholder approval at the meeting, the adoption of the ESPP.  The ESPP provides eligible employees with the opportunity to purchase shares of our common stock at a discount, on a tax-favored basis, through regular payroll deductions in compliance with Section 423 of the Code.

Recommendation

The Board recommends that you vote “FOR” the proposal to approve the ESPP.

Summary of and Reasons for the Approval of the ESPP

The ESPP is being submitted to shareholders for approval at the meeting in order to ensure favorable federal income tax treatment under Section 423 of the Code for purchases of shares by our employees under the ESPP.

The ESPP allows all full-time and certain part-time employees to purchase shares of  our common stock at a discount to fair market value.  Employees will purchase shares in January and July of each year using funds deducted from their paychecks during the preceding six months. The ESPP is expected to be an important component of the benefits package that we offer to our employees. We believe that the ESPP will aid us in retaining existing employees, recruiting and retaining new employees and aligning and increasing the interest of all employees in our success.

Our Board of Directors believes it is in the best interest of ImmunoGen and its shareholders that the ESPP be approved. If approved, eligible employees who elect to participate in the ESPP will first be granted options to purchase common stock under the ESPP on July 1, 2018.

Summary of Material Features of the ESPP

The following description of the material features of the ESPP is intended to be a summary only.  This summary is qualified in its entirety by the full text of the ESPP that is attached to this proxy statement as Exhibit B.

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Administration. The ESPP will be administered under the direction of the Compensation Committee. The Compensation Committee has authority to interpret the ESPP and to make all other determinations necessary or advisable in administering it.

Eligibility. All full-time employees and certain part-time employees who have been continuously employed for at least 90 days prior to an offering date will be eligible to participate in the ESPP. For part-time employees to be eligible, they must have customary employment of more than five months in any calendar year and more than 20 hours per week. However, no employee shall be eligible to participate to the extent that, immediately after the grant, (i) that employee would own stock and/or options or securities to purchase stock possessing 5% or more of the combined voting power or the value of all classes of our stock, or (ii) his or her rights to purchase stock under all of our employee stock purchase plans accrues at a rate that exceeds $25,000 for each calendar year in which such rights are outstanding and exercisable.  Approximately 300 employees will be eligible to participate in the ESPP. Participation in the ESPP is at the election of each eligible employee and the amounts received by a participant under the ESPP depend on the fair market value of our common stock on future dates; therefore, the benefits or amounts that will be received by any participant if the ESPP is approved by our shareholders, are not currently determinable.

Shares Available for Issuance. Assuming the ESPP is approved by our shareholders at the meeting, there will be 1,000,000 shares of our common stock available for issuance under the ESPP, plus an annual increase on the first day of each of year beginning in 2019 and ending on the first day of 2028, equal to the lesser of (i) 1,000,000 shares, (ii) 1% percent of the shares of our common stock outstanding on the last day of the immediately preceding year, or (iii) such lesser number of shares as is determined by our Board.

Participation. To participate in the ESPP, an eligible employee authorizes payroll deductions in an amount not less than 1% nor greater than 15% of his or her “eligible earnings” (i.e., regular base pay, including overtime pay but not including bonuses, employee benefit plans or other additional payments) for each full payroll period in the offering period. The maximum number of shares of common stock that may be purchased by any participant during an offering period shall equal $25,000 divided by the fair market value of our common stock on the first day of an offering period.  To ensure that IRS share limitations are not exceeded, we do not accept contributions from an individual participant in excess of $25,000 per calendar year.

Purchases. Eligible employees enroll in a six-month offering period during the open enrollment period prior to the start of that offering period. A new offering period begins approximately every July 1 and January 1.  At the end of each offering period, the accumulated deductions, are used to purchase shares of our common stock from us during an offering period.  Shares are purchased at a price equal to 85% of the lower of the fair market value of our common stock on the first business day or the last business day of an offering period. On April 23, 2018, the closing market price per share of our common stock was $10.12 as reported by the Nasdaq Stock Market.

Termination of Employment. If a participating employee voluntarily resigns or is terminated by ImmunoGen prior to the last day of an offering period, the employee’s option to purchase terminates and the amount in the employee’s account is returned to the employee.

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Transferability. Neither contributions credited to a participant’s account nor any rights with regard to the exercise of an option or to receive shares under the ESPP may be assigned, transferred, pledged or otherwise disposed of in any way (other than by will, the laws of descent or distribution to a designated beneficiary upon the participant’s death) by the participant.

Adjustments upon Change in Capitalization. Subject to any required action by our shareholders, the number of shares of common stock covered by unexercised options under the ESPP, the number of shares of common stock which have been authorized for issuance under the ESPP but are not yet subject to options and the annual increase (collectively, the "Reserves"), as well as the price per share of common stock covered by each unexercised option under the ESPP, shall be proportionately adjusted for any increase or decrease in the number of issued shares of common stock resulting from a stock split, reverse stock split, stock dividend, combination or reclassification of the common stock.

In the event of the proposed dissolution or liquidation of ImmunoGen, any offering period then in progress will terminate immediately prior to the consummation of such proposed action, unless otherwise provided by our Board.  In the event of a proposed sale of all or substantially all of the assets of ImmunoGen, or merger, consolidation or other capital reorganization of ImmunoGen with or into another corporation, each option outstanding under the ESPP shall be assumed or an equivalent option shall be substituted by such successor corporation unless our Board determines, in its sole discretion and in lieu of assumption or substitution, to shorten an offering period then in progress.

Participation Adjustment. If the number of unsold shares that are available for purchase under the ESPP is insufficient to permit exercise of all rights deemed exercised by all participating employees, a participation adjustment will be made, and the number of shares purchasable by all participating employees is reduced proportionately. Any funds remaining in a participating employee’s account after such exercise are refunded to the employee, without interest.

Amendment. Our Board of Directors may amend the ESPP at any time and in any respect unless shareholder approval of the amendment in question is required under Section 423 of the Code, any national securities exchange or system on which our common stock is then listed or reported, or under any other applicable laws, rules, or regulations.

Termination. Our Board of Directors may terminate the ESPP at any time and for any reason or for no reason, provided that no termination shall impair any rights of participating employees that have vested at the time of termination. Without further action of our Board of Directors, the ESPP shall terminate on June 30, 2028 or, if earlier, at such time as all shares of our common stock that may be made available for purchase under the ESPP have been issued.

Federal Income Tax Consequences

The ESPP, and the rights of participant employees to make purchases thereunder, qualify for treatment under the provisions of Sections 421 and 423 of the Code. Under these provisions, no income will be taxable to a participant until the shares purchased under the ESPP are sold or otherwise disposed of.

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Upon sale or other disposition of the shares, the participant will generally be subject to tax and the amount of the tax will depend upon the holding period. If the shares are sold or otherwise disposed of more than two years from the first day of the relevant offering period (and more than one year from the date the shares are purchased), then the participant generally will recognize ordinary income measured as the lesser of:

(i)

the excess of the fair market value of the shares at the time of such sale or disposition over the purchase price, or

(ii)

an amount equal to 15% of the fair market value of the shares as of the first day of the applicable offering period.

Any additional gain should be treated as long-term capital gain.

If the shares are sold or otherwise disposed of before the expiration of this holding period, the participant will recognize ordinary income at the time of such disposition generally measured as the excess of the fair market value of the shares on the date the shares are purchased over the purchase price. Any additional gain or loss on such sale or disposition will be long-term or short-term capital gain or loss, depending on the holding period.

We are not entitled to a deduction for amounts taxed as ordinary income or capital gain to a participant except to the extent ordinary income is recognized by participants upon a sale or disposition of shares prior to the expiration of the holding period(s) described above.  In all other cases, no deduction is allowed to us.

The foregoing tax discussion is a general description of certain expected federal income tax results under current law. No attempt has been made to address any state, local, foreign or estate and gift tax consequences that may arise in connection with participation in the ESPP.

EXECUTIVE OFFICERS

Who are ImmunoGen’s executive officers?

The following persons are our executive officers as of the date of this proxy statement:

 

 

 

Name

    

Position

Mark J. Enyedy

 

President and Chief Executive Officer

Craig Barrows

 

Executive Vice President, General Counsel and Secretary

Richard J. Gregory, PhD

 

Executive Vice President and Chief Scientific Officer

David B. Johnston

 

Executive Vice President and Chief Financial Officer

Blaine H. McKee, PhD

 

Executive Vice President and Chief Business Officer

Theresa G. Wingrove, PhD

 

Sr. Vice President, Regulatory Affairs and Quality

Anna Berkenblit, MD

 

Vice President and Chief Medical Officer

Thomas Ryll, PhD

 

Vice President, Technical Operations

 

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Where can I obtain more information about ImmunoGen’s executive officers?

Biographical information concerning our executive officers (other than Dr. McKee) and their ages can be found in Item 3.1 entitled “Executive Officers” in our annual report on Form 10‑K for the year ended December 31, 2017, which information is incorporated by reference into this proxy statement.

Dr. McKee, age 52, joined ImmunoGen in April 2018, and has served as our Executive Vice President and Chief Business Officer since that date.  Prior to joining ImmunoGen, he served in various executive capacities at Shire PLC, a pharmaceutical company, from 2014 to 2018, including as Senior Vice President, Head of Corporate Development, from 2016 to 2018, and as Senior Vice President, Head of Transactions, from 2014 to 2016.  Prior to that he served as Executive Vice President and Chief Business Officer at 480 Biomedical, Inc., a biotechnology company, from 2011 to 2014.  Prior to that he served for 15 years at Genzyme Corporation, a biopharmaceutical company, most recently as Senior Vice President, Strategic Development of the Transplant, Oncology, and Multiple Sclerosis divisions. Dr. McKee holds a PhD in organic chemistry from Massachusetts Institute of Technology (MIT), and a Masters of Business Administration from MIT’s Sloan School of Management. Dr. McKee is also a director of BioStage, Inc.

EXECUTIVE COMPENSATION

Compensation Discussion and Analysis

Compensation Philosophy and Objectives

Our executive compensation philosophy is to enable ImmunoGen to attract, retain and motivate key executives to achieve our long-term objective of creating significant shareholder value through our antibody-drug conjugate (ADC) technology and expertise.  In this regard, we set executive compensation with two principal goals: first, to align fixed compensation and target incentive compensation with the market median for our peer group; and second, to align a substantial portion of that compensation with the creation of long-term value for our shareholders.  Attracting and retaining key executives is particularly challenging in the biotechnology industry where executives are required to remain focused and committed throughout years of product development, regulatory approvals and, at times, financial instability.  The market for executive talent in our industry is highly competitive, with many biotechnology companies that are at a similar stage of development as ImmunoGen located in general proximity to our corporate offices.

How We Determine Executive Compensation

The Compensation Committee has responsibility for our executive compensation philosophy and the design of executive compensation programs, as well as for setting actual executive compensation.  Information about the Compensation Committee, including its composition, responsibilities and processes, can be found elsewhere in this proxy statement.

In addition to evaluating our executives’ contributions and performance in light of corporate objectives and individual performance, we also base our compensation decisions on market considerations.  The Compensation Committee benchmarks our cash and equity incentive compensation against programs available to employees in comparable roles at peer companies.  All forms of compensation are evaluated

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relative to the market median for our peer group.  Individual compensation pay levels may vary from this reference point based on recent individual performance and other considerations, including breadth of experience, the anticipated out-of-pocket costs and level of difficulty in replacing an executive with someone of comparable experience and skill, and the initial compensation levels required to attract qualified new hires.  We do not believe that our compensation policies and practices encourage excessive risk-taking by our executives or are otherwise reasonably likely to have a material adverse effect on our business.

In December 2016, the Compensation Committee engaged the services of Willis Towers Watson, independent compensation consultants, to assist us in redefining the appropriate peer group of companies. The peer group used earlier in 2016 in connection with the Compensation Committee’s determination of executive compensation for the six-month transition period from July 1 to December 31, 2016, or the 2016 Transition Period, consisted of the following 21 public biotechnology companies:

 

 

Acorda Therapeutics, Inc.

Ironwood Pharmaceuticals, Inc.

Aduro BioTech, Inc.

Lexicon Pharmaceuticals, Inc.

Aegerion Pharmaceuticals, Inc.

MacroGenics, Inc.

Agios Pharmaceuticals, Inc.

Merrimack Pharmaceuticals, Inc.

Alnylam Pharmaceuticals, Inc.

Momenta Pharmaceuticals, Inc.

Arena Pharmaceuticals, Inc.

Nektar Therapeutics

ARIAD Pharmaceuticals, Inc.

Novavax, Inc.

Celldex Therapeutics, Inc.

Sarepta Therapeutics, Inc.

Exelixis, Inc.

Seattle Genetics, Inc.

Halozyme Therapeutics, Inc.

Theravance Biopharma, Inc.

Infinity Pharmaceuticals, Inc.

 

 

In December 2016, Willis Towers Watson employed the following approach in reevaluating the existing peer group:

·

It used ImmunoGen’s 6‑digit GICS industry classification (Biotechnology) to identify 659 public companies.

·

Within that large group, it identified 128 public companies with market capitalizations between 0.5x and 3x ImmunoGen’s market capitalization ($87 million to $521 million), and 10 public companies with revenues between 0.5x and 3x ImmunoGen’s revenues ($30 million to $180 million).  Willis Towers Watson also considered headcount in evaluating whether a company should be removed from the existing peer group or added to the redefined peer group.

·

From the two smaller groups it developed a recommendation to remove from the existing peer group 13 specific companies that no longer met the screening criteria described above, and consider the addition of up to 10 specific companies that were more aligned with those criteria.

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In determining the new peer group, the Compensation Committee generally adopted Willis Towers Watson’s recommendations, removing 11 companies from the then-existing peer group, and adding eight new companies, resulting in the following new peer group of 18 companies, which is referred to elsewhere in this proxy statement as the Peer Group:

 

 

Acorda Therapeutics, Inc.

MacroGenics, Inc.

Aduro BioTech, Inc.

Merrimack Pharmaceuticals, Inc.

Arena Pharmaceuticals, Inc.

Momenta Pharmaceuticals, Inc.

ARIAD Pharmaceuticals, Inc.

NewLink Genetics Corporation

Celldex Therapeutics, Inc.

Novavax, Inc.

CTI BioPharma Corp.

Rigel Pharmaceuticals, Inc.

Enanta Pharmaceuticals, Inc.

Sangamo Therapeutics, Inc.

Epizyme, Inc.

Spectrum Pharmaceuticals, Inc.

Inovio Pharmaceuticals, Inc.

Theravance Biopharma, Inc.

 

Using Peer Group data, together with the 2016 Global Life Sciences Survey prepared by Radford Surveys + Consulting, Willis Towers Watson prepared for the Compensation Committee a competitive market assessment of total cash, equity and total compensation for our five most highly-compensated executives.  This review contributed to the Compensation Committee’s determination in February 2017 of the annual base salaries, target bonuses and equity awards for 2017.

At the 2016 annual meeting of shareholders, which was the most recent annual meeting preceding the Compensation Committee’s determination of executive compensation for 2017, a proposal to approve, on an advisory basis, the compensation paid to our named executive officers, as disclosed in the proxy statement for that meeting (a “say-on-pay” vote), received the favorable vote of the holders of over 96% of the shares voting on that proposal.  The Compensation Committee considered these results to be a ratification of our executive compensation policies and decisions in its determination of executive compensation for 2017.  At the 2017 annual meeting of shareholders, a similar say-on-pay vote received the favorable vote of the holders of over 96% of the shares voting on that proposal.  Although the Compensation Committee’s decisions regarding executive compensation for 2017 had been made prior to the 2017 annual meeting, the Compensation Committee has considered these results in connection with its regular assessment of our executive compensation programs.

Elements of Total Compensation

Our total compensation program consists of fixed elements, such as base salary and benefits, and variable performance-based elements, such as annual and long-term incentives.  Our fixed compensation elements are designed to provide a predictable source of income to our executives.  Our variable performance-based elements are designed to reward performance at three levels: individual performance, actual corporate performance compared to annual business goals, and long-term shareholder value creation.

We compensate our executives principally through base salary, performance-based annual cash incentives and equity awards.  The objective of this three-part approach is to remain competitive with other companies in our industry, while ensuring that our executives are given the appropriate incentives to achieve near-term objectives and at the same time create long-term shareholder value.

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Base Salary

We provide our executive officers with a level of assured cash compensation in the form of a base salary that reflects their scope of responsibility and organizational impact, as well as individual performance.  In setting salaries for our executive officers, the Compensation Committee reviews independently prepared surveys of biotechnology industry compensation as well as other available information on base salaries of executive officers in comparable positions in the most current peer group analysis available to the committee.  Comparative factors considered include, but are not limited to, the number of a company’s employees, a company’s annual operating expense, a company’s market capitalization, and the stage of development of a company’s products.  For 2017, the committee utilized the collected data contained in the competitive review of executive compensation prepared by Willis Towers Watson described above.

The committee uses the collected data as well as the managerial experience of the members of the committee to set salaries.  As described above, our compensation philosophy allows the committee to take into account, for both current and new executive officers, recent individual performance (evaluated, in the case of the CEO, by all of the non-management directors on our Board), breadth of experience, alignment with the market median, the anticipated level of difficulty in replacing an executive with someone of comparable experience and skill, and the compensation levels required to attract qualified new hires.  In setting base salaries for our executive officers (other than the CEO), the Compensation Committee also considers the recommendation of the CEO based on the CEO’s evaluation of their respective individual performance and promotion increases.  Based on the foregoing considerations, the committee increased the base salaries for our named executive officers for 2017 between 2% and 3%, all as described below.

Annual Cash Bonus Program

Our executive officers participate in an annual bonus program applicable to all our employees.  Each participant in our annual bonus program is eligible to receive a target bonus expressed as a percentage of his or her annual base salary which, once set, remains at that level for each subsequent year unless specifically changed, in the case of our executive officers, by the Compensation Committee.  A participant’s annual base salary and target bonus as of the last day of the bonus period are generally used in calculating bonus payouts.  For 2017, target bonuses for our executive officers were as follows:

 

 

 

Title

    

Target Bonus
(as % of Annual Base Salary)

President & CEO

 

75%

Executive Vice President

 

40%

Vice President

 

35%

 

Under our annual bonus program, the Compensation Committee annually establishes key performance criteria, based upon the corporate goals and objectives, to be met by ImmunoGen, and evaluates our actual performance against those criteria in its determination of whether annual bonuses will be paid to our employees, including our executives.  Key corporate performance criteria may include any or all of the following: (1) our actual financial performance against specified metrics in our operating plan for the applicable fiscal year;  (2) achievement of certain research and development milestones, including

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internal product development advancement; (3) achievement of key targets associated with our collaborations with third parties, including support of partner programs; (4) the creation and achievement of business development opportunities; and (5) execution of organizational initiatives designed to strengthen our corporate culture and better align it with our strategic objectives.  In establishing annual key performance criteria for the annual bonus program, the committee selects specific corporate objectives directed primarily to the future success of our business and the creation of long-term shareholder value. Payments under our annual bonus program currently consist entirely of cash.

The Compensation Committee has set a 50% threshold aggregate percentage of achievement against the key corporate performance criteria below which the portion of participants’ annual bonus payable based on corporate performance will not be payable.  Prior to the 2016 Transition Period, the pre-established key corporate performance criteria were individually weighted to permit achievement of up to 150% of target.

For 2017, the Compensation Committee established the key corporate performance criteria to be used in determining annual cash bonuses; however, similar to the 2016 Transition Period, it did not assign weights to specific criteria, preferring to take a more holistic view of the Company’s achievements against the corporate objectives, as well as considerations, where warranted, of exemplary performance.  Any upward adjustment, however, would not result in the portion of the participants’ bonus tied to corporate performance exceeding 150% of target.

The Compensation Committee generally also considers an executive’s individual performance in its determination of whether payments should be made to the executive under our annual bonus program.  For 2017, the committee based 100% of our CEO’s target bonus on corporate performance.  With respect to our other executive officers, 70% of their target bonus was based on corporate performance, and 30% was based on individual performance objectives.  Their achievement of their respective individual performance objectives was evaluated by our CEO, and based on these evaluations, the committee determined the amount of our executive officers’ bonus compensation tied to individual performance.  The committee also agreed that executive officers were eligible to receive more than 100% of the portion of their bonus tied to individual performance objectives for exemplary achievement.  The individual objectives portion of a participant’s target bonus could be earned irrespective of the extent to which the bonuses based on corporate performance were payable.  Our CEO was afforded discretion in recommending bonus payouts for our other executive officers tied to individual performance without regard to previously established objectives for exemplary achievement.

The Compensation Committee establishes the corporate performance bonus objectives and individual performance bonus objectives, if any, with the expectation that ImmunoGen and our executives can achieve 100% of the target; however, the objectives are sufficiently difficult that such achievement is not assured at the time they are set.  For fiscal years 2015, 2016, and the 2016 Transition Period, 105%, 105% and 97%, respectively, of the portion of our executives’ target bonuses tied to corporate performance were earned (plus, for fiscal year 2015, a discretionary additional 5% of the portion of the target bonus tied to exemplary corporate performance).  As described below, for 2017, the portion of our executives’ target bonuses tied to corporate performance was awarded at 150% of target.  The portion of our executives’ target bonuses tied to individual performance for 2017 was, in each case, awarded at 100% of target.

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Equity Compensation

Consistent with our approach described above for allocating overall targeted compensation among the three components of compensation, the Compensation Committee has the authority under our equity incentive plan to determine the form(s) of equity incentive awards, the terms under which equity incentive awards are granted and the individuals to whom such awards are granted.  While we have historically awarded only stock options, the Compensation Committee has the ability under our equity incentive plan to award other forms of equity incentive compensation including, but not limited to, restricted stock awards, which it has done in connection with the new hire awards for certain of our named executive officers.  During 2017, the committee awarded both time-based and performance-based restricted stock awards to our executive officers in lieu of stock options, which awards are further described below.  All equity incentive awards to our executive officers are granted by the Compensation Committee.  The committee has delegated authority to our CEO to grant stock options to other newly hired individuals, and stock options and restricted shares to other existing employees, subject to certain limitations described under the heading “What committees has the Board established? – Compensation Committee” elsewhere in this proxy statement.

We believe that equity participation is a key component of our executive compensation program.  Our equity incentive plans are designed to retain our executive officers and other employees and align their long-term interests with the creation of long-term value for our shareholders.  We believe, as a general matter, that stock options provide an effective long-term incentive for all employees to create shareholder value as the benefit of the options cannot be realized unless there is an appreciation in the price of our common stock.  Stock option awards are commonly provided to a broad range of employees in the biotechnology industry due to the competitive nature of the industry.  Historically, our executive officers have participated in our equity incentive plans in the same manner as all of our full-time employees.  For the reasons described below, in 2017 we awarded our executive officers full-value awards, although we reverted to 100% stock options for executive officers in 2018.

Initial stock option awards for new employees, which are individually determined prior to and/or negotiated in conjunction with the commencement of employment, reflect the new employee’s anticipated contribution to our success and are designed to be competitive with awards granted by other biotechnology companies.  Subsequent annual stock option awards take into consideration competitive practices and an individual’s position, individual performance and potential for future impact on our business.  All stock options have been granted with an exercise price equal to the fair market value of our common stock on the date of grant as determined in accordance with the terms of our equity incentive plans.  For initial awards to new employees, the grant date is the first day of employment.  Historically, annual stock option awards  were granted in July of each year, which aligned with the determination of annual bonuses for the previous fiscal year ended June 30.  In connection with the change in our fiscal year to a calendar year basis, effective January 1, 2017, we began granting annual equity awards in the first quarter of the year.

In 2013, the Compensation Committee adopted a “fixed share” approach for determining the size of annual equity awards for executives. In determining its recommendations for “fixed share” guidelines for consideration by the Compensation Committee, Towers Watson (predecessor to Willis Towers Watson) determined, and the Compensation Committee adopted, the number of option shares required to deliver market median expected value based on the Peer Group as of a measurement date selected by Towers

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Watson at the time its work was performed in 2013.  Although the committee intended to  periodically review and adjust the guidelines as needed to ensure they remain generally aligned with the market median, it did not do so.

In 2017, Willis Towers Watson noted that, given the depressed share price at the time it prepared its competitive assessment for that year, adherence to the then-current “fixed share” guidelines would result in equity awards being below the market 25th percentile on an expected value basis.  Willis Towers Watson presented the committee with two alternative proposals for the 2017 annual equity awards: (1) grant options under the then-current “fixed share” guidelines, and supplement those awards with time-based restricted stock awards that would result in the overall equity awards having an expected value aligned with the market 25th percentile; or (2) in a one-time departure from the existing guidelines, grant time-based restricted stock awards having an expected value aligned with the market 25th percentile, and supplement those awards with performance-based restricted stock awards that would result in the overall equity awards having an expected value aligned with the market 50th percentile, pro-rated to 60% of the annual amounts to reflect the grants made in the 2016 Transition Period.

The Compensation Committee viewed each of the alternatives as necessitated by our then-depressed share value, which eliminated any retention value of the executive officers’ cumulative long-term incentives, and the need, at that juncture, to retain and incentivize the existing management team.  The committee concluded that the first alternative described above would be substantially inconsistent with our compensation philosophy of compensating executives at the market median.  Accordingly, as more fully described under the heading “Equity Awards” below, the committee adopted the second alternative described above, and determined that the performance-based restricted stock awards would have the same performance criteria as the performance-based restricted stock awards granted in August 2016.

Share Ownership Guidelines

We also believe that executive compensation will be better aligned with the creation of long-term value for our shareholders if our executive officers maintain a meaningful investment in our shares.  In this regard, our Board of Directors adopted, effective as of July 1, 2014, share ownership guidelines affecting our executive officers.  The guidelines provide that executive officers are expected to own shares of our common stock having an aggregate value equal to at least two times (or in the case of our CEO, five times) their annual base salary.  Our current executive officers (other than Dr. Berkenblit, Mr. Enyedy, Dr. Gregory and Dr. McKee) have five years from the effective date of the guidelines to achieve the ownership requirement, and new executive officers (including Dr. Berkenblit, Mr. Enyedy, Dr. Gregory and Dr. McKee) will have a similar five-year period following their date of hire or of designation as an executive officer, whichever is later.  Our executive officers may satisfy the guidelines with shares owned directly or indirectly in a trust or by a spouse and/or minor children and with vested stock options.  In the case of vested stock options, the aggregate exercise price required to be paid for such shares is deducted in determining the aggregate value of the shares represented by such awards.  We also have a policy that prohibits employees and directors from engaging in transactions that are designed to or have the effect of hedging or offsetting any decrease in the market value of ImmunoGen shares owned by such employees or directors, a description of which can be found elsewhere in this proxy statement under “Corporate Governance – Does ImmunoGen have a written policy prohibiting certain transactions in its shares, such as hedging transactions?”

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Employee Benefits

We offer employee benefit programs that are intended to provide financial protection and security for our employees and to reward them for the total commitment we expect from them in service to ImmunoGen.  All of our named executive officers are eligible to participate in these programs on the same basis as our other employees.  These benefits include the following: medical, dental and vision insurance; company-paid group life and accident insurance of two times base salary (up to $750,000); employee-paid supplemental group life and accident insurance (up to $500,000); short- and long-term disability insurance; and a qualified 401(k) retirement savings plan with a 50% company match of the first 6% of the participant’s eligible bi-weekly compensation contributed by the participant to the plan.

Tax Deductibility of Compensation

At the time the Compensation Committee made its compensation decisions for 2017, Section 162(m) of the Internal Revenue Code limited the deduction a public company was permitted for compensation paid to “covered employees”, who are our chief executive officer and our three other most highly compensated executive officers (other than the chief financial officer).  Generally, amounts paid in excess of $1,000,000 to a covered employee could not be deducted, unless the compensation was paid pursuant to a plan which is performance related, non-discretionary and has been approved by shareholders.  However, this exception for performance-based compensation was repealed effective for taxable years beginning after December 31, 2017, such that compensation paid to our “covered employees” in excess of $1 million will not be deductible unless it meets the performance-based exception and qualifies for transition relief applicable to certain arrangements in place as of November 2, 2017.

In its deliberations the Compensation Committee has considered ways to maximize deductibility of executive compensation, but nonetheless the committee retains the discretion to compensate executive officers at levels it considers commensurate with their responsibilities and achievements.  In light of the recent tax reform it is uncertain whether compensation that the Compensation Committee intended to structure as performance-based compensation under Section 162(m) will be deductible.  We have not adopted a policy that all executive compensation be fully deductible as we believe that it is important for the committee to retain maximum flexibility in designing compensation programs that are in the best interests of ImmunoGen and our shareholders.

Severance Pay Plan for Vice Presidents and Higher

We maintain a severance pay plan for vice presidents and higher.  The Compensation Committee has noted that, in order to induce candidates for executive positions to join ImmunoGen, it has been necessary to offer them certain severance benefits in the event their employment with us was involuntarily terminated without cause outside the context of a change in control.  In addition, Towers Watson provided data to the committee in 2014, when the plan was established, showing that this type of benefit was consistent with prevalent market practice for comparable companies.

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An executive is entitled to severance benefits under this plan if the executive’s employment is terminated by us without cause.  Severance benefits include:

·

salary continuation for the following specified periods: 18 months in the case of the CEO; and 12 months in the case of our other executive officers;

·

payment of a portion of the executive officer’s annual cash bonus for the bonus period in which termination occurs as follows: 100% of the portion of the executive officer’s bonus tied to personal objectives, if any, and with respect to the portion of the executive officer’s  bonus tied to corporate objectives, the executive officer would be entitled to receive the same percentage as the other participants in our annual bonus program, in both cases pro-rated to reflect the actual number of days the executive officer was employed during the applicable bonus period;

·

if an executive officer elects to continue medical coverage in accordance with COBRA, a subsidy of the executive officer’s COBRA premium at the same percentage as we subsidize coverage for similarly situated active employees, for the duration of the salary continuation period; and

·

outplacement services lasting not less than six months.

Change in Control Severance Agreements

We recognize that ImmunoGen, as a publicly-traded company, may become the target of a proposal which could result in a change in control, and that such possibility and the uncertainty and questions which such a proposal may raise among management could cause our executive officers to leave or could distract them in the performance of their duties, to the detriment of ImmunoGen and our shareholders.  We have entered into severance agreements with each of our executive officers that are designed to compensate them for the loss of their positions and the loss of anticipated benefits under their unvested equity compensation awards following a change in control of ImmunoGen.  The agreements are intended to reinforce and encourage the continued attention of our executive officers to their assigned duties without distraction and to ensure the continued availability to ImmunoGen of each of our executive officers in the event of a proposed change in control transaction.  We believe that these objectives are in the best interests of ImmunoGen and our shareholders.  We also believe that it is in the best interests of ImmunoGen and our shareholders to offer such agreements to our executive officers insofar as ImmunoGen competes for executive talent in a highly competitive market in which companies routinely offer similar benefits to senior executives.

An executive officer is entitled to severance benefits if, within 12 months after a change in control of ImmunoGen, the executive’s employment is terminated (1) by us other than for cause or disability or (2) by the executive for good reason.  Severance benefits include:

·

a lump sum cash payment equal to 1.5 times (or in the case of our CEO, 2 times) the sum of the executive officer’s annual base salary and target annual bonus for the bonus period in which the termination occurs;

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·

vesting of 100% of the executive officer’s unvested stock options and unvested restricted stock awards and other similar rights.

·

if the executive officer elects to continue medical coverage in accordance with COBRA, a subsidy of the executive officer’s COBRA premium at the same percentage as we subsidized health insurance premiums for the executive officer immediately prior to the date of termination of the executive officer’s employment (or, if more favorable to the executive officer, immediately prior to the consummation of the change in control), for up to 18 months (provided that following the expiration of the CEO’s COBRA coverage period, we will pay a taxable amount to the CEO equal to the COBRA premium subsidy on a monthly basis for a period ending 24 months from the CEO’s termination date); and

·

payment of the cost of outplacement services up to a maximum of $40,000.

We believe these severance benefits are reasonable and appropriate for our executive officers in light of the anticipated time it takes high-level executives to secure new positions with responsibilities and compensation that are commensurate with their experience.  We further believe that the equity awards granted to our executive officers have been reasonable in amount and that, in the event of a loss of employment within a year following a change in control, it is appropriate that our executive officers receive the full benefit under their equity compensation awards of the increase in ImmunoGen’s value attributable to the performance of the current management team.

For more details concerning our severance pay plan and change in control severance agreements, please refer to “Potential Payments Upon Termination or Change in Control” elsewhere in this proxy statement.

Executive Compensation Determinations for 2017

The following discussion describes the Compensation Committee’s executive compensation determinations for 2017, beginning with a description of the portion of the annual bonus program tied to corporate performance.

The corporate performance criteria were focused on specific actions that furthered the four strategic priorities described below:

·

Execute on a speed-to-market strategy to complete development and obtain full approval for mirvetuximab soravtansine in platinum-resistant ovarian cancer;

·

Accelerate the development of our earlier-stage portfolio, with an emphasis on ADCs deploying our new “IGN” DNA-acting payloads;

·

Continue to drive innovation in ADCs through our expertise in new payloads, linkers, and methods of conjugation; and

·

Lever our platform to support our existing partnerships and pursue new collaborations that generate revenue, mitigate expenses, enhance our capabilities and expand the reach of our innovation to more patients.

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In light of the foregoing strategic priorities, the Compensation Committee established specific corporate objectives for 2017 as described in the following table.

 

 

Corporate Objective

Achievement

Achieve accrual targets for key studies

    FORWARD I patient accrual target substantially met; full enrollment expected to be achieved in first half of 2018 per previously established timeline

    FORWARD II patient accrual target exceeded

    IMGN779 Phase 1 study accrued rapidly without reaching determination of maximum tolerated dose due to absence of dose limiting toxicities

Sign material co-development, co-commercialization partnership for IMGN779 and IMGN632

    Partnered IMGN779 and IMGN632 with Jazz Pharmaceuticals with option to co-commercialize at least one product in the US

Secure cash balance at year-end sufficient to fund planned operations for at least the next 12 months

    Divested IMGN529 program for $55 million

    Granted Sanofi paid up licenses to collaboration programs for $30 million

    Partnered IMGN779 and IMGN632 programs with Jazz Pharmaceuticals for $75 million upfront payment, plus R&D funding up to $100 million over the research term and the opportunity for milestones and royalties

    Raised $101.6 million net proceeds from secondary public offering

    Converted $98 million in debt to equity

    Cash balance at year-end was sufficient to fund planned operations into the fourth quarter of 2019 with approximately $2 million in debt on the balance sheet

Execute comparability effort to enable bridging of pivotal material into FORWARD I study by end of Q2

    Introduced pivotal material into FORWARD I in June 2017

File IND for IMGN632 in Q3

    Filed IND for IMGN632 in September 2017

Reach go/no go decision on ADAM9 program by end of Q2

    “Go” decision made in May; transition to further development in Q4

Execute culture transformation initiatives

    Enacted defined cultural initiatives, including an enhanced performance management process, service award programs, professional development series, and our first day of service, with over 80% of our employees participating

 

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In addition to considering our achievements toward each corporate objective, the Compensation Committee also considered the overall impact of these achievements as a reflection of the year-over-year improvement in our progress and prospects.  In this regard, the committee considered that during the 12 months since the 2017 corporate objectives had been established, our share price had increased almost four-fold and its market capitalization had increased almost six-fold, reflecting positive investor sentiment that we had effectively executed our business plan and, correspondingly, were better positioned to realize our strategic objectives and generate value for shareholders.  Based on the foregoing, the committee determined the portion of the annual bonus program tied to achievement of the corporate objectives would be based on 150% achievement.

The Compensation Committee’s determination of the executives’ salaries and bonuses for 2017, including the portion, if any, tied to individual performance, is discussed below on an individual-by-individual basis.

Cash Compensation

Mr. Enyedy.  In February 2017, the committee set Mr. Enyedy’s annual base salary at $670,000, effective March 1, 2017, which represents a 3% increase over his annual base salary for the 2016 Transition Period. Mr. Enyedy’s target bonus of 75% of base salary remained unchanged from the 2016 Transition Period.  The new base salary, together with his target bonus, resulted in Mr. Enyedy’s target total cash compensation being aligned with the 50th percentile of target total cash compensation for comparable positions at the Peer Group.

For 2017, Mr. Enyedy’s target bonus was tied solely to our achievement of the corporate objectives.  Accordingly, Mr. Enyedy’s bonus for 2017, as shown in the Summary Compensation Table below, constituted 112.5% of his base salary earned in 2017.

Mr. Johnston.  In February 2017, the committee set Mr. Johnston’s annual base salary at $405,951, effective March 1, 2017, which represents a 2% increase over his annual base salary for the 2016 Transition Period. Mr. Johnston’s target bonus of 40% of base salary remained unchanged from the 2016 Transition Period.  The new base salary, together with his target bonus, resulted in Mr. Johnston’s target total cash compensation being aligned with the 50th percentile of target total cash compensation for comparable positions at the Peer Group.

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For 2017, 70% of Mr. Johnston’s target bonus was tied to corporate performance, and 30% was tied to individual performance.  With respect to the portion tied to individual performance, the committee’s determination was based on Mr. Enyedy’s evaluation of Mr. Johnston’s accomplishment of specific actions in the areas identified in the following table.

 

 

 

 

 

 

 

    

Target

    

Actual

 

Secure a cash balance at year end sufficient to fund planned operations for at least the next 12 months

 

50 

%  

50 

%

Execute investor communications strategy

 

20 

%  

20 

%

Convert financial reporting to calendar year from fiscal year

 

10 

%  

10 

%

Implement or begin preparations for upgrading of specific support functions

 

10 

%  

10 

%

Continue improvement within specified areas of the financial organization

 

10 

%  

10 

%

Total

 

100 

%  

100 

%

 

Based on the foregoing, Mr. Johnston’s  bonus for 2017, as shown in the Summary Compensation Table below, constituted approximately 54% of his base salary earned in 2017.

Dr. Gregory.  In February 2017, the committee set Dr. Gregory’s annual base salary at $455,403, effective March 1, 2017, which represents a 2% increase over his annual base salary for the 2016 Transition Period. Dr. Gregory’s target bonus of 40% of base salary remained unchanged from the 2016 Transition Period. Dr. Gregory’s base salary, together with his target bonus, resulted in Dr. Gregory’s target total cash compensation being aligned with the 50th percentile of target total cash compensation for comparable positions at the Peer Group.

For 2017, 70% of Dr. Gregory’s target bonus was tied to corporate performance, and 30% was tied to individual performance.  With respect to the portion tied to individual performance, the committee’s determination was based on Mr. Enyedy’s evaluation of Dr. Gregory’s accomplishment of specific actions in the areas identified in the following table.

 

 

 

 

 

 

 

    

Target

    

Actual

 

Support advancement of development portfolio

 

20 

%  

20 

%

Maintain strong pipeline of pre-clinical candidates

 

20 

%  

20 

%

Advance platform research to enable next generation of ADC products

 

20 

%  

20 

%

Support collaboration partners and partnering business development activities

 

20 

%  

20 

%

Sponsor organizational excellence initiative

 

10 

%  

10 

%

Ensure STAT organization’s participation in our environmental, health and safety (EH&S) goals and objectives

 

10 

%  

10 

%

Total

 

100 

%  

100 

%

 

Based on the foregoing, Dr. Gregory’s bonus for 2017, as shown in the Summary Compensation Table below, constituted approximately 54% of his base salary earned in 2017.

Mr. Barrows.  In February 2017, the committee set Mr. Barrows’s annual base salary at $397,800, effective March 1, 2017, which represents a 2% increase over his base salary for the 2016 Transition Period. Mr. Barrows’s target bonus of 40% of annual base salary remained unchanged from the 2016

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Transition Period. Mr. Barrows’s base salary, together with his target bonus, resulted in Mr. Barrows’s target total cash compensation being aligned with the 50th percentile of target total cash compensation for comparable positions at the Peer Group.

For 2017, 70% of Mr. Barrows’s target bonus was tied to corporate performance, and 30% was tied to individual performance.  With respect to the portion tied to individual performance, the committee’s determination was based on Mr. Enyedy’s evaluation of Mr. Barrows’s accomplishment of specific actions in the areas identified in the following table.

 

 

 

 

 

 

 

    

Target

    

Actual

 

Provide legal support for business development activities

 

25 

%  

25 

%

Provide legal support for all financing transactions

 

25 

%  

25 

%

Provide legal support for creation of mirvetuximab soravtansine commercial supply chain

 

25 

%  

25 

%

Provide legal support for financial reporting and human resources functions

 

20 

%  

20 

%

Support corporate objective for culture transformation initiatives

 

%  

%

Total

 

100 

%  

100 

%

 

Based on the foregoing, Mr. Barrows’s bonus for 2017, as shown in the Summary Compensation Table below, constituted approximately 54% of his base salary earned in 2017.

Dr. Berkenblit.  In February 2017, the committee set Dr. Berkenblit’s annual base salary was set at $408,526, effective March 1, 2017, which represents a 2% increase over her annual base salary for the 2016 Transition Period. Dr. Berkenblit’s target bonus of 35% of base salary remained unchanged from the 2016 Transition Period. Dr. Berkenblit’s base salary, together with her target bonus, resulted in Dr. Berkenblit’s target total cash compensation being aligned with the 50th percentile of target total cash compensation for comparable positions at the Peer Group.

For 2017, 70% of Dr. Berkenblit’s target bonus was tied to corporate performance, and 30% was tied to individual performance.  With respect to the portion tied to individual performance, the committee’s determination was based on Mr. Enyedy’s evaluation of Dr. Berkenblit’s accomplishment of specific actions in the areas identified in the following table.

 

 

 

 

 

 

 

    

Target

    

Actual

 

Support corporate objective for patient enrollment in FORWARD I

 

35 

%  

35 

%

Support corporate objective for IND filing for IMGN632

 

15 

%  

15 

%

Support corporate objective for dose escalation of IMGN779

 

15 

%  

15 

%

Support corporate objective for culture transformation initiatives

 

15 

%  

15 

%

Set strategy to advance mirvetuximab soravtansine into earlier lines of therapy and other indications as appropriate

 

15 

%  

15 

%

Support investor relations through participation in earnings calls and analyst meetings

 

%  

50 

%

Total

 

100 

%  

100 

%

 

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Based on the foregoing, Dr. Berkenblit’s bonus for 2017, as shown in the Summary Compensation Table below, constituted approximately 47.25% of her base salary earned in 2017.

Equity Awards

On February 16, 2017, the Compensation Committee granted time-based restricted stock awards to the named executive officers in the following amounts: Mr. Enyedy – 500,000 shares; Mr. Johnston – 191,750 shares; Dr. Gregory – 237,250 shares; Dr. Berkenblit – 157,300 shares; and Mr. Barrows – 140,400 shares.  Each award vests in three equal annual installments, beginning on the first anniversary of the effective date of grant (February 21, 2017).

Also on February 16, 2017, the committee granted performance-based restricted stock awards to the named executive officers in the following amounts: Mr. Enyedy – 239,000 shares; Mr. Johnston – 103,250 shares; Dr. Gregory – 127,750 shares; Dr. Berkenblit – 84,700; and Mr. Barrows – 75,600 shares.

The performance-based restricted stock awards vest in three equal installments upon the achievement, within the performance period, which ends on August 12, 2021, of the following performance goals:

·

Mirvetuximab soravtansine meeting its primary endpoint in a registration trial (i.e., a clinical trial designed to (i) ascertain efficacy and safety of mirvetuximab soravtansine that is needed to evaluate the overall benefit-risk relationship of the drug and to provide an adequate basis for physician labeling and (ii) support the preparation and submission of a biologics license application, or BLA, for the indication under investigation in the study as and to the extent defined in 21 C.F.R. §312.21(c), or its successor regulation.

·

Acceptance of a BLA for mirvetuximab soravtansine by the U.S. Food and Drug Administration (FDA).

·

Receipt of marketing approval for mirvetuximab soravtansine from the FDA.

The determination of achievement of the performance goals will be based on certification of achievement of a performance goal by the Compensation Committee.  Any shares subject to these awards that have not vested by the expiration of the performance period, or the date on which the executive ceases to be an employee, director or consultant of ImmunoGen, if earlier, are forfeited.  As of the date of this proxy statement, none of the performance objectives has been achieved.

The foregoing awards were granted under our 2016 Employee, Director and Consultant Equity Incentive Plan, or the 2016 Plan.  At the time of the awards, the maximum number of shares that could be subject of awards granted under the 2016 Plan to an individual in a single year was 500,000.  As a consequence, the grant of 239,000 performance-based restricted shares to Mr. Enyedy was made contingent on shareholder approval of an amendment to the 2016 Plan raising that maximum limit.  At the 2017 annual meeting, shareholders approved amendments to the 2016 Plan providing, among other things, for an increase in the maximum number of shares that can be subject to awards granted to participants under the 2016 Plan in a single year to 2,000,000.  Accordingly, Mr. Enyedy’s award of 239,000 performance-based shares became effective on the business day immediately following the date of the annual meeting (June 14, 2017).

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Additional detail regarding each of the foregoing awards can be found in the Grants of Plan-Based Awards table and Outstanding Awards at Fiscal Year-End table elsewhere in this proxy statement.

How were the executive officers compensated for 2017?

The following table sets forth all compensation paid to our principal executive officer, our principal financial officer and each of our other three most highly compensated executive officers, who are collectively referred to as the “named executive officers,” in all capacities for 2017, the 2016 Transition Period (2016TP) and the preceding two fiscal years.

Summary Compensation Table

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-Equity

 

 

 

 

 

 

Name and

 

 

 

 

 

 

 

 

 

Stock

 

Option

 

Incentive Plan

 

All Other

 

 

 

Principal Position

    

Year

    

Salary

    

Bonus (1)

    

Awards (2)

    

Awards (2)

    

Compensation (3)

    

Compensation (4)

    

Total

Mark J. Enyedy (5)

 

2017

 

$

670,000

 

 

 -

 

$

1,235,000

 

 

 -

 

$

753,750

 

$

8,784

 

$

2,667,534

President and Chief

 

2016TP

 

 

325,000

 

 

 -

 

 

 -

 

 

 -

 

 

236,438

 

 

7,542

 

 

568,980

Executive Officer

 

2016

 

 

80,357

 

$

430,000

 

 

423,750

 

$

1,015,157

 

 

 -

 

 

836

 

 

1,950,100

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

David B. Johnston

 

2017

 

 

405,951

 

 

 -

 

 

473,623

 

 

 -

 

 

219,214

 

 

8,604

 

 

1,107,392

Executive Vice President

 

2016TP

 

 

198,996

 

 

 -

 

 

 -

 

 

203,634

 

 

77,927

 

 

2,516

 

 

483,073

and Chief Financial Officer

 

2016

 

 

385,091

 

 

 -

 

 

 -

 

 

1,045,067

 

 

159,428

 

 

9,604

 

 

1,599,190

 

 

2015

 

 

355,250

 

 

4,974

 

 

 -

 

 

624,943

 

 

146,220

 

 

9,459

 

 

1,140,846

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Richard J. Gregory (6)

 

2017

 

 

455,403

 

 

 -

 

 

586,008

 

 

 -

 

 

245,918

 

 

8,784

 

 

1,296,113

Executive Vice President

 

2016TP

 

 

223,237

 

 

 -

 

 

 -

 

 

203,634

 

 

87,419

 

 

1,821

 

 

516,111

and Chief Scientific Officer

 

2016

 

 

431,375

 

 

5,177

 

 

 -

 

 

522,533

 

 

178,589

 

 

7,645

 

 

1,145,319

 

 

2015

 

 

206,597

 

 

152,892

 

 

163,250

 

 

564,995

 

 

85,532

 

 

342

 

 

1,173,608

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Craig Barrows

 

2017

 

 

397,800

 

 

 -

 

 

346,788

 

 

 -

 

 

214,812

 

 

8,784

 

 

968,184

Executive Vice President,

 

2016TP

 

 

195,000

 

 

 -

 

 

 

 

 

191,933

 

 

76,362

 

 

2,966

 

 

466,261

General Counsel and

 

2016

 

 

355,103

 

 

 -

 

 

 -

 

 

731,547

 

 

128,636

 

 

9,173

 

 

1,224,459

Secretary

 

2015

 

 

344,093

 

 

 -

 

 

 -

 

 

437,460

 

 

127,418

 

 

8,254

 

 

917,225

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Anna Berkenblit (7)

 

2017

 

 

408,526

 

 

 -

 

 

388,531

 

 

 -

 

 

193,029

 

 

8,784

 

 

998,870

Vice President and Chief

 

2016TP

 

 

200,258

 

 

 -

 

 

 -

 

 

174,060

 

 

66,516

 

 

2,459

 

 

443,293

Medical Officer

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


1)

The amount shown in this column for fiscal year 2016 for Mr. Enyedy represents his sign-on bonus.  The amount shown in this column for Mr. Gregory for fiscal year 2016 represents the discretionary bonus paid to him for that fiscal year. The amounts shown in this column for fiscal year 2015 represent the discretionary bonuses paid for that fiscal year and, for Dr. Gregory, his $150,000 sign-on bonus.

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Table of Contents

2)

The amounts shown in these columns represent the aggregate grant date fair value of the time-based restricted stock awards and stock option awards for the years indicated, computed in accordance with FASB ASC Topic 718.  Additional information can be found in the footnotes to the Grants of Plan-Based Awards table elsewhere in this proxy statement and in Note B to the consolidated financial statements included in our annual report on Form 10‑K for the year ended December 31 2017.

3)

The amounts shown in this column represent payments under our annual bonus program for each of the fiscal years shown.

4)