ImmunoGen, Inc.
IMMUNOGEN INC (Form: DEF 14A, Received: 04/28/2017 09:35:00)

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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)

 

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No fee required.

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

 

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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.

 

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IMGN

 

 

830 Winter Street, Waltham, MA 02451

TEL: (781) 895-0600

FAX: (781) 895-0610

 

April 28, 2017

 

Dear Shareholder:

 

You are cordially invited to attend the 2017 Annual Meeting of Shareholders of ImmunoGen, Inc. to be held on Tuesday,  June 13, 2017, beginning at 9:00 a.m., local time, at the University of Massachusetts Club, One Beacon Street, 32 nd 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 nine members to our Board of Directors, to increase the number of shares issuable pursuant to our 2016 Employee, Director and Consultant Equity Incentive Plan, and to increase the maximum number of shares that can be subject to awards granted to a participant under that plan in a single year, to amend our Restated Articles of Organization to increase the number of authorized shares of our common stock, to hold an advisory vote on executive compensation, to hold an advisory vote on the frequency of advisory shareholder votes 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, 2017.  The Board of Directors recommends that you vote FOR its proposal to fix the number of members of our Board of Directors at nine,  FOR the election of its slate of directors, FOR the proposed increase in the number of shares issuable under our 2016 Plan, and to the maximum number of shares that can be subject to awards granted to a participant under that plan in a single year, FOR the proposed increase in the number of authorized shares of our common stock, FOR approval of the compensation of our named executive officers as disclosed in the proxy statement, FOR its recommendation on the frequency of advisory shareholder votes on executive compensation, 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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IMGN

 

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS

To Be Held On June 13, 2017

 

To Shareholders:

 

NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of ImmunoGen, Inc. will be held on Tuesday,  June 13, 2017, beginning at 9:00 a.m., local time, at the University of Massachusetts Club, One Beacon Street, 32 nd Floor, Boston,  Massachusetts, for the following purposes:

 

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

2.       To elect nine 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 amendments our 2016 Employee, Director and Consultant Equity Incentive Plan to increase the number of shares authorized for issuance thereunder by 1,000,000, and to increase the maximum number of shares that can be subject to awards granted to a participant under that plan in a single year to 2,000,000.

4.       To approve an amendment to our Restated Articles of Organization to increase the number of authorized shares of common stock from 150,000,000 to 200,000,000.

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

6.       To vote, on an advisory basis, on the frequency of advisory shareholder votes on the compensation paid to our executive officers.

7.       To ratify the appointment of Ernst & Young LLP as our independent registered public accounting firm for the year ending December 31, 2017.

8.       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  17, 2017 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 28, 2017.  Our proxy materials, including this proxy statement and our 2016 transition report, will also be available on or about April 28, 2017 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 28, 2017

 

 

 


 

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TABLE OF CONTENTS

 

 

Page

QUESTIONS AND ANSWERS ABOUT THESE PROXY MATERIALS AND VOTING  

1

VOTING SECURITIES  

6

ELECTION OF DIRECTORS (Notice Item 1 and Item 2)  

9

CORPORATE GOVERNANCE  

13

DIRECTOR COMPENSATION  

21

AMENDMENTS TO OUR 2016 EMPLOYEE, DIRECTOR AND CONSULTANT EQUITY INCENTIVE PLAN TO INCREASE THE NUMBER OF SHARES AUTHORIZED FOR ISSUANCE THEREUNDER BY 1,000,000 ,   AND TO INCREASE THE MAXIMUM NUMBER OF SHARES THAT CAN BE SUBJECT TO AWARDS GRANTED TO A PARTICIPANT THEREUNDER IN A SINGLE YEAR TO 2,000,000 (Notice Item 3)

25

AMENDMENT TO OUR RESTATED ARTICLES OF ORGANIZATION TO INCREASE THE  NUMBER OF AUTHORIZED SHARES OF OUR COMMON STOCK FROM 150,000,000  TO 200,000,000 (Notice Item 4)  

35

EXECUTIVE OFFICERS  

37

EXECUTIVE COMPENSATION  

37

REPORT OF THE COMPENSATION COMMITTEE  

65

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

66

ADVISORY VOTE ON FREQUENCY OF ADVISORY SHAREHOLDER VOTES ON  COMPENSATION PAID TO OUR NAMED EXECUTIVE OFFICERS (Notice Item 6)  

66

RATIFICATION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM (Notice Item 7)  

67

REPORT OF THE AUDIT COMMITTEE  

69

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE  

69

SHAREHOLDER PROPOSALS FOR THE 2018 ANNUAL MEETING  

70

CERTAIN MATTERS RELATING TO PROXY MATERIALS  

70

OTHER MATTERS  

71

TRANSITION REPORT ON FORM 10-K  

71

EXHIBIT A – 2016 EMPLOYEE, DIRECTOR AND CONSULTANT EQUITY INCENTIVE PLAN (as amended March 29, 2017)  

A-1

 

 

 

 

 


 

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IMGN

 

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 28, 2017, in connection with the solicitation of proxies by the Board of Directors of ImmunoGen, Inc. (“ImmunoGen”) for our 2017 annual meeting of shareholders, and any adjournment or postponement of that meeting.  The meeting will be held on Tuesday,  June 13, 2017, beginning at 9:00 a.m., local time, at the University of Massachusetts Club, One Beacon Street, 32 nd 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 28, 2017. 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 seven matters scheduled for a vote:

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

   To elect nine members of our Board of Directors;

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   To approve amendments to our 2016 Employee, Director and Consultant Equity Incentive Plan, or the 2016 Plan, to increase the number of shares of common stock authorized for issuance by 1,000,000, and to increase the maximum number of shares that can be subject to awards granted to a participant thereunder in a single year to 2,000,000.

   To approve an amendment to our Restated Articles of Organization to increase the number of authorized shares of our common stock from 150,000,000 to 200,000,000;

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

   To vote, on an advisory basis, on the frequency of advisory shareholder votes on the compensation paid to our named executive officers; and

   To ratify the appointment of Ernst & Young LLP as our independent registered public accounting firm for the year ending December 31, 2017.

 

Who can attend and vote at the meeting?

 

Shareholders of record at the close of business on April 17, 2017 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  17, 2017, the record date, will constitute a quorum for purposes of the meeting.  On the record date, 89,348,389 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 May 30, 2017 to ensure that they will be received in time for you to cast your vote on a timely basis.  Please note that the

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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 12, 2017, 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 nine;

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

   FOR approval of the amendments to the 2016 Plan to increase the number of shares authorized for issuance thereunder by 1,000,000, and to increase the maximum number of shares that can be subject to awards granted to a participant thereunder in a single year to 2,000,000.

   FOR approval of the amendment to our Restated Articles of Organization to increase the number of authorized shares of our common stock from 150,000,000 to 200,000,000;

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

   FOR the Board’s recommendation that “one year” be the frequency of the advisory shareholder votes on the compensation paid to our named executive officers; and

   FOR the ratification of the appointment of Ernst & Young LLP as our independent registered public accounting firm for the year ending December 31, 2017.

 

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 generally 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

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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 advisory proposals on executive compensation or the frequency of advisory shareholder votes on executive compensation without sufficient 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

   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 12, 2017); 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 nine:  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 nine 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 –  Amendments to the 2016 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.

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    Notice Item 4  –  Amendment of Restated Articles of Organization: Approval of this proposal requires the favorable vote of a majority of the shares of our common stock outstanding and entitled to vote as of the record date.  Abstentions will have the same effect on the outcome of voting on this matter as votes against the proposal.

    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, which are described above, will have no effect on the outcome of voting on this matter.

    Notice Item 6 – Advisory (non-binding) vote on frequency of “say-on-pay” votes: This proposal also calls for a non-binding advisory vote.  This proposal provides for a choice among three frequency periods (one, two or three years) for future say-on-pay advisory votes.  The choice that receives the highest number of votes will be deemed the choice of the shareholders.  The vote on the frequency of say-on-pay votes is not binding on our Board.  However, the Board will take into account the result of the vote when determining the frequency of future say-on-pay votes.  Abstentions and broker non-votes, which are described above, will have no effect on the outcome of voting on this matter.

    Notice Item 7  -   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.

 

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.

 

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VOTING SECURITIES

 

Who owns more than 5% of our stock?

 

On April 17, 2017, there were 89,348,389  shares of our common stock outstanding.  To our knowledge there were three 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)

13,544,332

15.2%

Orbimed Advisors LLC (2)

8,834,147

9.9%

Orbimed Capital LLC

 

 

Samuel D. Isaly

 

 

BlackRock, Inc. (3)

5,259,864

5.9%


1)    Based on a Schedule 13G/A filed with the SEC on February 14, 2017 reporting beneficial ownership as of December 31, 2016.  The Schedule 13G/A filing reported that the reporting entity had sole voting power with respect to 12,954,885 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/A filed with the SEC on February 13, 2017 reporting beneficial ownership as of December 31, 2016.  The Schedule 13G/A filing reported that Orbimed Advisors LLC had shared voting and investment power with respect to 3,510,945 shares, Orbimed Capital LLC had shared voting and investment power with respect to 5,323,202 shares, and that Samuel D. Isaly, through his control of Orbimed Advisors LLC and Orbimed Capital LLC, had shared voting and investment power with respect to all the shares reported.  The reporting entities’ address is 601 Lexington Avenue, 54 th Floor, New York, New York 10022.

3)    Based on a Schedule 13G/A filed with the SEC on January 25, 2017 reporting beneficial ownership as of December 31, 2016.  The Schedule 13G/A filing reported that the reporting entity had sole voting power with respect to 5,048,174 shares and sole or shared investment power with respect to all of the shares reported.  The reporting entity’s address is 55 East 52 nd Street, New York, New York 10022.

 

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

 

The following information is furnished as of April 17, 2017, 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)

Mark J. Enyedy (2)

675,100

**

Mark Goldberg, MD (3)

103,012

**

Daniel M. Junius (4)

1,617,305

1.78%

Stephen C. McCluski (5)

96,429

**

Dean J. Mitchell (6)

71,951

**

Kristine Peterson (7)

58,915

**

Howard H. Pien (8)

121,405

**

Joseph J. Villafranca, PhD (9)

135,816

**

Richard J. Wallace (10)

93,297

**

Anna Berkenblit, MD (11)

325,501

**

Richard J. Gregory, PhD (12)

515,898

**

David B. Johnston (13)

490,001

**

Sandra E. Poole (14)

99,167

**

All directors, director nominees and executive officers as a group (17 persons) (15)

6,046,567

6.51%


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

**Less than 1.0%.

 

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 17, 2017 are outstanding.

2)    Includes (a) 25,100 shares owned by Mr. Enyedy individually, (b) 75,000 shares which may be acquired by Mr. Enyedy within 60 days of April 17, 2017 through the exercise of stock options, and (c) 575,000 time-based restricted shares (as to which Mr. Enyedy has sole voting power, but no investment power).

3)    Includes (a) 23,800 shares owned jointly by Dr. Goldberg and his spouse, (b) 43,510 shares which may be acquired by Dr. Goldberg within 60 days of April 17, 2017 through the exercise of stock options, and (c) 35,702 shares that Dr. Goldberg would receive upon redemption of deferred stock units within 60 days of April 17, 2017.

4)    Includes (a) 196,700 shares owned by Mr. Junius individually, (b) 1,419,855 shares which may be acquired by Mr. Junius within 60 days of April 17, 2017 through the exercise of stock options, and (c) 750 shares that Mr Junius would receive upon redemption of deferred stock units within 60 days of April 17, 2017.

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5)    Includes (a) 49,721 shares which may be acquired by Mr. McCluski within 60 days of April 17, 2017 through the exercise of stock options, and (b) 46,708 shares that Mr. McCluski would receive upon redemption of deferred stock units within 60 days of April 17, 2017.

6)    Includes (a) 42,711 shares which may be acquired by Mr. Mitchell within 60 days of April 17, 2017 through the exercise of stock options, and (b) 19,240 shares that Mr. Mitchell would receive upon redemption of deferred stock units within 60 days of April 17, 2017.

7)    Includes (a) 42,711 shares which may be acquired by Ms. Peterson within 60 days of April 17, 2017 through the exercise of stock options, and (b) 16,204 shares that Ms. Peterson would receive upon redemption of deferred stock units within 60 days of April 17, 2017.

8)    Includes (a) 49,721 shares which may be acquired by Mr. Pien within 60 days of April 17, 2017 through the exercise of stock options, and (b) 71,684 shares that Mr. Pien may receive upon redemption of deferred stock units within 60 days of April 17, 2017.

9)    Includes (a) 49,721 shares which may be acquired by Dr. Villafranca within 60 days of April 17, 2017 through the exercise of stock options, and (b)  86,095 shares that Dr. Villafranca may receive upon redemption of deferred stock units within 60 days of April 17, 2017.

10)  Includes (a) 49,721 shares which may be acquired by Mr. Wallace within 60 days of April 17, 2017 through the exercise of stock options, and (b) 43,576 shares that Mr. Wallace may receive upon redemption of deferred stock units within 60 days of April 17, 2017.

11)  Includes (a) 6,000 shares held by Ms. Berkenblit individually, (b) 67,501 shares which may be acquired by Ms. Berkenblit within 60 days of April 17, 2017 through the exercise of stock options, (c) 157,300 time-based  restricted shares (as to which Ms. Berkenblit has sole voting power, but no investment power); and (d)  94,700 performance-based restricted shares (as to which Ms. Berkenblit has sole voting power, but no investment power).

12)  Includes (a) 26,731 shares held by Mr. Gregory individually, (b) 91,667 shares which may be acquired by Mr. Gregory within 60 days of April 17, 2017 through the exercise of stock options, (c)  249,750  time-based restricted shares (as to which Mr. Gregory has sole voting power, but no investment power), and (d) 147,750 performance-based restricted shares (as to which Mr. Gregory has sole voting power, but no investment power).

13)  Includes (a) 10,000 shares held by Mr. Johnston individually, (b)  165,001 shares which may be acquired by Mr. Johnston within 60 days of April 17, 2017 through the exercise of stock options,  (c) 191,750 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).

14)  Includes 99,167 shares which may be acquired by Ms. Poole within 60 days of April 17, 2017 through the exercise of stock options.

15)  See footnotes (2) – (15).  Also includes (a) 34,600 shares owned by our non-named executive officers in the aggregate, (b) 961,170 shares which many be acquired by our non-named executive officers in the aggregate within 60 days of April 17, 2017 through the exercise of stock options, (c) 397,670 time-based restricted shares (as to which each of the holders has sole voting power, but no investment power), and (d)  249,330 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).

 

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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 2016 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 nine.    We are nominating the nine current directors listed below for re-election at the meeting.  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.

 

Recommendation

 

The Board recommends a vote “FOR” the proposal fixing the number of directors at nine, 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.

 

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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

53

2016

President and Chief Executive Officer; Director

Stephen C. McCluski (1)

64

2007

Chairman of the Board; Chairman of the Audit Committee

Mark Goldberg,  MD (2)

62

2011

Director

Daniel M. Junius

64

2008

Director, retired President and Chief Executive Officer

Dean J. Mitchell (3)

61

2012

Director

Kristine Peterson (1) (3)

57

2012

Director

Howard H. Pien (3)

59

2009

Director; Chairman of the Compensation Committee

Joseph J. Villafranca, PhD (2)

73

2004

Director; Chairman of the Governance and Nominating Committee

Richard J. Wallace (1) (2)

65

2007

Director


1)    Member of the Audit Committee.

2)    Member of the Governance and Nominating Committee.

3)    Member of the Compensation Committee.

 

Mark J. Enyedy has served as our President and Chief Executive Officer since May 2016.    Prior to joining ImmunoGen, he served in various executive capacities at Shire plc, a pharmaceutical company, from 2013 to May 2016, including as Executive Vice President and Head of Corporate Development from 2014 to May 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.    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 Muffler Brake, 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.

 

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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 director of aTyr Pharma, Inc., Blueprint Medicines Corporation, GlycoMimetics, Inc. and Idera Pharmaceuticals, 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.

 

Daniel M. Junius served as our President and Chief Executive Officer from 2009 to this retirement in May 2016 Prior to that he served as our President and Chief Operating Officer in 2008, our Executive Vice President and Chief Financial Officer from 2006 to 2008, and our Senior Vice President and Chief Financial Officer from 2005 to 2006.  Mr. Junius holds a Masters of Management from Northwestern University’s Kellogg School of Management.  Mr. Junius is also a director of GlycoMimetics, Inc. and IDEXX Laboratories, Inc. and, within the past five years, he also served as a director of Vitae Pharmaceuticals, Inc.  We believe that Mr. Junius should serve on our Board in recognition of his consultative role as our recently retired President and Chief Executive Officer.  As a result of past experience as our President and Chief Executive Officer, Mr. Junius has a thorough understanding of all aspects of our business and operations.

 

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 August 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 Ista Pharmaceuticals, Inc., Lux Biosciences, Inc. and Talecris Biotherapeutics Holdings Corp.  We believe that Mr. Mitchell’s qualifications to serve on our Board include his management experience in the

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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 and Paratek Pharmaceuticals, Inc. 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.

 

Howard H. Pien  has most recently served as Chairman of the Board and Chief Executive Officer of Medarex, Inc., a biopharmaceutical company, from 2007 to its acquisition by Bristol-Myers Squibb Company in September 2009.  Prior to that he was a private consultant from 2006 to 2007.  Prior to that he served as President and Chief Executive Officer of Chiron Corporation, a biopharmaceutical company, from 2003 to its acquisition by Novartis AG in 2006.  Prior to that he served in various executive capacities at GlaxoSmithKline plc (GSK), a pharmaceutical company, and its predecessor companies, including as President of GSK’s International Pharmaceuticals business from 2000 to 2003, and as President of Pharmaceutical Operations of SmithKline Beecham plc (a predecessor of GSK).  Mr. Pien also worked for six years at Abbott Laboratories, a diversified health care products company, and for five years at Merck & Co., Inc., a pharmaceutical company, in positions in sales, market research, licensing and product management.  Mr. Pien is also currently an a director of Indivior PLC (as non-executive chairman), Juno Therapeutics, Inc. (as non-executive chairman) and Sage Therapeutics, Inc., and, within the past five years, he also served as a director of Talon Therapeutics, Inc., Vanda Pharmaceuticals, Inc. and ViroPharma Incorporated.    We believe Mr. Pien’s qualifications to serve on our Board include his chief executive officer experience at several biotechnology companies, as well as his earlier experience in roles of increasing responsibility for the commercial operations of a large multinational pharmaceutical company’s worldwide pharmaceuticals business.  As a result of these experiences, Mr. Pien has a wide-ranging understanding of all aspects of biotechnology businesses.  Mr. Pien also has significant corporate governance experience through his service on other company boards.

 

Joseph J. Villafranca , PhD, has served as President of BioPharmaceutical Consultants LLC since 2012.  Prior to that he served as Senior Vice President, SOU Head, Life Sciences, of Tunnell Consulting, a consulting firm focusing on the life sciences industry, from 2009 to his retirement from Tunnell Consulting in April 2012.  Prior to that he served as Senior Vice President – Operations and Principal & Practice Director, Life Sciences, of Tunnell Consulting from 2006 to 2009.  Prior to that he served as President of Biopharmaceutical Consultants LLC from 2005 to 2006.  Prior to that he served as Executive Vice President, Pharmaceutical Development and Operations at Neose Technologies, Inc., a biotechnology

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company, from 2002 to 2005.  Prior to that he served in various executive positions at Bristol-Myers Squibb Company, a pharmaceutical company, over a period of 11 years.  Dr. Villafranca holds a PhD in Biochemistry/Chemistry from Purdue University and completed his postdoctoral work at the Institute for Cancer Research in Philadelphia, Pennsylvania.  We believe Dr. Villafranca’s qualifications to serve on our Board include his current and former experience as an industry consultant as well as his executive positions at both biotechnology and large pharmaceutical companies.  As a result of these experiences, Dr. Villafranca has a wide-ranging understanding of biopharmaceutical businesses, with particular expertise in the area of chemistry, manufacturing and control (CMC).

 

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 Corporation.  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.

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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 May 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 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 were most recently re-elected as directors at our 2016 annual meeting of shareholders.

 

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 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

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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 which 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 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.

 

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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; and

   Making recommendations to the Board with respect to any severance or similar termination payments proposed to be made to any of our current or former executive officers and the extension of any change in control or similar agreements to any of our officers.

 

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

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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 based on 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 or “covered employees” within the meaning of Section 162(m) of the Internal Revenue Code, or the Code, 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 50,000, and the number of restricted shares awarded by the CEO to employees (other than new hires) may not exceed 25,000.  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 5,000.

    Retention.  On September 23, 2016, the Compensation Committee delegated to the CEO the authority to grant stock option awards covering up to an aggregate of 900,000 shares to key employees (other than executive officers) as part of a retention program adopted by the Company in connection with the reengineering of the Company’s operations announced on September 29, 2016.  All awards under this program were granted on September 30, 2016.  On February 16, 2107, 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) as part of a supplemental retention program.  All awards under this 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 has engaged Willis Towers Watson as an independent compensation consultant to provide research and comparative market data on executive and employee compensation.  In connection with its engagement of Willis Towers Watson, the Compensation Committee considered factors relevant to Willis Towers Watson’s independence from company management, as described in applicable SEC regulations and NASDAQ listing standards, in determining whether Willis Towers Watson’s engagement raises any conflict of interest.  Based on information provided by Willis Towers Watson, the Compensation Committee determined that Willis Towers Watson was independent of company management.  This consultant met with the Compensation 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 the six-month transition period ended December 31, 2016?

 

Our Board of Directors met four times during the six-month transition period ended December 31, 2016 (which is referred to elsewhere in this proxy statement as the 2016 Transition Period).  The Audit, Compensation, and Governance and Nominating Committees met or acted by unanimous written consent three, seven and two times, respectively, during the 2016 Transition Period.  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 the 2016 Transition Period, the non-management directors met three times, and the independent directors met two 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 but one of our current directors attended our 2016 annual meeting of shareholders.

 

Compensation Committee Interlocks and Insider Participation in Compensation Decisions

 

During the 2016 Transition Period,  Messrs. Mitchell and Pien and Ms. Peterson served on the Compensation Committee.  No member of the committee is a present or former officer or employee of 

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ImmunoGen or any of its subsidiaries or had any business relationship or affiliation with ImmunoGen or any of its subsidiaries (other than his service as a director) requiring disclosure in this proxy statement.

 

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.

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   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).

 

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.

 

 

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 are initially awarded 6,500 deferred stock units, with each unit relating to one share of our common stock.  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 is awarded 3,000 deferred stock units, 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 vest quarterly over approximately the

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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.

   Thereafter, non-employee directors are annually awarded 3,000 deferred stock units.  These awards vest quarterly over approximately one year from the date of grant, contingent upon the individual remaining a director of ImmunoGen as of each vesting date.

 

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).    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:

    Annual Stock Option Awards.  Non-employee directors receive an annual stock option award covering 10,000 shares of our common stock on the date of our annual meeting of shareholders, which is the grant date.  These awards will have an exercise price equal to the fair market value of our common stock on the grant date, will vest quarterly over approximately one year from the grant date, and will expire on the tenth anniversary of the grant date, contingent upon the individual remaining a director of ImmunoGen during such period.

    Off-Cycle Initial Awards.  If a non-employee director is first elected to the Board other than at an annual meeting of shareholders, such non-employee director will receive 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 day of the month in which such grant date (which will be the date of their initial election to the Board) occurs and the first May 31 following the grant date.  These awards will have an exercise price equal to the fair market value of our common stock on the date of grant, will generally vest quarterly over approximately the period from the grant date to the first June 1 following the date of grant, and will expire on the tenth anniversary of the grant date, contingent upon the individual remaining a director of ImmunoGen during such period.

 

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).

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In connection with the change in our fiscal year-end from June 30 to December 31, effective January 1, 2017, on December 9, 2016, each non-employee director was awarded 1,500 deferred stock units and a stock option covering 5,000 shares of our common stock.  These awards vest quarterly over approximately a six-month period, contingent upon the individual remaining a director of ImmunoGen as of each vesting date.  The stock option 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 grant date, contingent upon the individual remaining a director of ImmunoGen during such period.

 

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.

 

How were the directors compensated for the 2016 Transition Period?

 

The compensation paid to members of our Board of Directors (other than Messrs. Enyedy and Junius) with respect to the 2016 Transition Period was as follows:

 

 

 

 

 

 

 

 

 

 

Director Compensation for 2016 Transition Period

Name

Fees Earned or

Paid in Cash (1)

Stock 

Awards ($) (2)(4)

Option 

Awards ($) (3)(4)

Total

Mark Goldberg

$

23,500

$

2,760

$

5,668

$

31,928

Stephen C. McCluski

 

45,000

 

2,760

 

5,668

 

53,428

Daniel M. Junius

 

20,000

 

2,760

 

5,668

 

28,428

Dean J. Mitchell

 

23,500

 

2,760

 

5,668

 

31,928

Nicole Onetto

 

20,691

 

 —

 

  —

 

20,691

Kristine Peterson

 

28,500

 

2,760

 

5,668

 

36,928

Howard H. Pien

 

27,000

 

2,760

 

5,668

 

35,428

Joseph J. Villafranca

 

27,000

 

2,760

 

5,668

 

35,428

Richard J. Wallace

 

25,418

 

2,760

 

5,668

 

33,846


 

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 fiscal year 2016, all of the outside directors elected to be paid their annual fees in cash, except that Dr. Goldberg, Mr. Pien and Dr. Villafranca elected to be paid $23,500,  $27,000 and $8,100, 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 in the 2016 Transition Period, 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

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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 in the 2016 Transition Period, which has been calculated using the Black-Scholes option pricing model, based on the following assumptions: expected life of option equal to 6.33 years; expected risk-free interest rate of 2.04%, 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 65.48%; and expected dividend yield of 0%.

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, 2016:

 

 

 

(a)

 

Name

Deferred Stock Units

Outstanding at

Fiscal Year-End (#)

Shares Subject to

Outstanding Options at

Fiscal Year-End (#)

Mark Goldberg

33,416

43,510

Stephen C. McCluski

47,458

49,721

Daniel M. Junius

1,500

5,000

Dean J. Mitchell

16,954

42,711

Kristine Peterson

16,954

42,711

Howard H. Pien

70,690

49,721

Joseph J. Villafranca

86,148

49,721

Richard J. Wallace

44,326

49,721


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 have five years from the date of the 2014 annual meeting of shareholders to achieve the ownership requirement, and new outside directors 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.

 

 

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AMENDMENTS TO OUR 2016 EMPLOYEE, DIRECTOR AND CONSULTANT EQUITY INCENTIVE PLA N TO INCREASE THE NUMBER OF SHARES AUTHORIZED FOR ISSUANCE THEREUNDER BY 1,000,000, AND TO INCREASE THE MAXIMUM NUMBER OF SHARES THAT CAN BE SUBJECT TO AWARDS GRANTED TO A PARTICIPANT THEREUNDER IN A SINGLE YEAR TO 2,000,000

(Notice Item 3)

 

In 2016, our Board adopted, and our shareholders subsequently approved the 2016 Plan.  Following shareholder approval of the 2016 Plan, our 2006 Employee, Director and Consultant Equity Incentive Plan, or the 2006 Plan, was terminated.  All outstanding awards under the 2006 Plan remain in effect, but no additional awards may be made under the 2006 Plan after December 9, 2016.

 

There will be presented at the meeting a proposal to approve certain amendments to the 2016 Plan, which amendments were approved by our Board of Directors on March 29, 2017 and are subject to shareholder approval.  The amendments provide as follows:

   an increase in the number of shares of our common stock authorized for issuance thereunder by 1,000,000.

   an increase in the maximum number of shares that can be subject of awards granted to a participant thereunder in a single year to 2,000,000.

 

Recommendation

 

The Board recommends a vote “FOR” the proposal to amend the 2016 Plan to increase the number of shares of our common stock issuable thereunder by 1,000,000, and to increase the maximum number of shares that can be subject to awards granted to a participant in a single year to 2,000,000.

 

Summary of and Reasons for the Amendments to the 2016 Plan

 

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 2016 Plan are intended to attract, retain and motivate key individuals, further align employee and shareholder interests, and to closely link compensation with our corporate performance.  We believe that the 2016 Plan is essential to permit our management to continue to provide long-term, equity-based incentives to present and future employees, consultants and directors.

 

Increase in the number of shares of our common stock authorized or issuance under the 2016 Plan

 

The Board believes that the number of shares currently remaining available for issuance pursuant to future awards under the 2016 Plan (3,112,721 shares as of April 17, 2017) is not sufficient for future granting needs.  Accordingly, the proposed amendments to the 2016 Plan increase the number of shares of common stock authorized for issuance thereunder by 1,000,000.  Based solely on the closing price of our common stock as reported on the NASDAQ Global Select Market on April 17, 2017 ($3.18), the market

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value of the shares currently available for issuance under future awards, plus the additional 1,000,000 shares, would be  $13,078,453.

 

As of April 17, 2017,  14,014,190 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 17, 2017, 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 16.1%.  If the proposed amendments to the 2016 Plan are approved by shareholders, the equity overhang would be 16.9%.  Equity overhang was calculated in each instance above as (a) the sum of (i) all shares issuable under exercise, vesting or redemption of outstanding awards, plus (ii) all shares available for issuance pursuant to future awards, as a percentage of (b) the sum of (i) the number of shares of our common stock outstanding as of April 17, 2017, plus (ii) the number of shares described in clause (a) above.

 

The Compensation Committee of our Board of Directors 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 on this basis, is reasonable for a development stage company 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 competitive market conditions, in evaluating our burn rate.  The following table shows our 3-year burn rate history (excluding new hire awards):

 

 

 

 

 

 

CY16

CY15

CY14

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

4.32%

2.71%

2.48%

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

2.00%

1.75%

1.96%


1)    Adjusted gross burn rate is calculated as a result of (a) 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 the result of (a) 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 proposed amendments to the 2016 Plan are approved by shareholders, the additional shares, when added to the shares currently available for issuance under future awards, will result in an adequate number of shares of common stock being available for future awards under the 2016 Plan for one additional year following the current year.

 

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Increase in the maximum number of shares that can be subject to awards granted to a participant under the 2016 Plan in a single year to 2,000,000

 

Section 162(m) of the Code generally denies a public corporation a deduction for compensation in excess of $1,000,000 paid to each of its “covered employees” unless the compensation qualifies as “performance-based” compensation.  Covered employees include the CEO and the three most highly compensated officers (other than the CFO) whose compensation is reported to shareholders under the Securities Exchange Act of 1934 for the taxable year.  In order for the compensation received upon exercise of stock options continue to be exempt under Section 162(m), shareholders must approve, among other things, a maximum number of shares that may be granted to any one individual in a single year, or any changes to that maximum number.  This limitation can be any specified number.

 

The 2016 Plan currently limits the number of shares that can be subject to awards granted to a single participant in a single year to 500,000, which is a carry-over from the analogous provision in our now-discontinued 2006 Plan.  Accordingly, on February 16, 2017, the Compensation Committee awarded 500,000 time-based restricted shares to our CEO, vesting in thirds over the next three anniversaries of the date of grant, which had an expected value aligning with only 25% of the market median of the peer group of companies considered in determining executive compensation for 2017.  Our stated compensation philosophy is to align or annual equity awards to executives with the market median, and therefore on February 16, 2017, the Compensation Committee also conditionally awarded 239,000 performance-based restricted shares to our CEO, with vesting based on the achievement of certain development milestones for our mirvetuximab soravtansine program described in the “Compensation Discussion and Analysis” elsewhere in this proxy statement.  This award will be effective only if and when shareholders approve the proposed amendment to the 2016 Plan to increase the maximum number of shares that can be subject to awards granted to a participant in a single year to 2,000,000 at this meeting.  The proposed new 2,000,000 share limit was selected by the Board because it is the median share limit set forth in the analogous provisions included in the current equity plans for the peer group of companies considered in determining executive compensation for 2017.

 

Summary of Material Features of the 2016 Plan

 

The following description of the material features of the 2016 Plan is intended to be a summary only.  This summary is qualified in its entirety by the full text of the 2016 Plan that is attached to this proxy statement as Exhibit A.

 

Eligibility.  The 2016 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 305 people as of April 17, 2017) 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 2016 Plan provides for the issuance of up to (i) 5,500,000 (or 6,500,000 if the amendments are approved at the meeting) plus (ii) the number of shares underlying any stock option and other stock-based awards previously granted under the 2006 Plan that are forfeited, canceled, or terminated (other than by exercise) on or after December 9, 2016; provided that no more than

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14,250,000 shares, which is approximately the number of shares subject to currently outstanding stock option and other stock-based awards, may be added to the 2016 Plan pursuant to such forfeitures, cancellations and terminations.  Shares of common stock reserved for awards under the 2016 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.  Any awards under the 2016 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 2016 Plan, as one and one-quarter (1.25) shares for each share subject to such full-value awards.  No participant may receive awards under the 2016 Plan for more than 500,000 (or 2,000,000 if the amendments are approved at the meeting) shares of common stock in any fiscal year.

 

Performance Goals.  In order for us to have the ability to grant awards under the 2016 Plan that qualify as “performance-based compensation” under Section 162(m) of the Code, the 2016 Plan provides that the compensation committee may require that the vesting of certain awards (other than stock options) be conditioned on the satisfaction of performance goals related to our objectives or objectives of one of our affiliates or business units in which the relevant participant is employed, in one or more of the following categories: (i) achievement of research, clinical trial or other drug development objectives; (ii) achievement of regulatory objectives; (iii) achievement of manufacturing and/or supply chain objectives; (iv) sales; (v) revenues; (vi) assets; (vii) expenses; (viii) earnings or earnings per share; (ix) earnings before interest and taxes (EBIT) or EBIT per share, or earnings before interest, taxes, depreciation and amortization (EBITDA) or EBITDA per share; (x) return on equity, investment, capital or assets; (xi) one or more operating ratios; (xii) borrowing levels; (xiii) leverage ratios or credit rating; (xiv) market share; (xv) capital expenditures; (xvi) cash flow or cash flow per share; (xvii) share price; (xviii) shareholder return; (xix) income, pre-tax income, net income, operating income, pre-tax profit, operating profit, or net operating profit; (xx) gross margin, operating margin, profit margin, return on operating revenue, return on operating assets, cash from operations, operating ratio or operating revenue; (xxi) market capitalization; (xxii) customer expansion or retention; (xxiii) acquisitions or divestitures (in whole or in part) and/or integration activities related thereto; (xxiv) joint ventures, collaborations, licenses and strategic alliances, and/or the management and performance of such relationships; (xxv) spin-offs, split-ups or similar transactions; (xxvi) reorganizations; (xxvii) recapitalizations, restructurings, financings (issuance of debt or equity) or refinancings; (xxviii) achievement of litigation-related objectives and/or objectives related to litigation expenses; (xxix) achievement of human resource, organizational and/or personnel objectives; (xxx) achievement of information technology or information services objectives; or (xxxi) achievement of real estate, facilities or space-planning objectives.  In the areas of drug research, development, regulatory affairs and commercialization, if a third party partner that is party to a licensing or collaboration agreement with us accomplishes a development milestone, regulatory achievement, or commercialization or sales target with a partnered asset, then such third party partner’s accomplishment shall constitute our achievement.

 

The above-described performance goals may be determined: (a) on an absolute basis, (b) relative to internal goals or levels attained in prior years, (c) related to other companies or indices, or (d) as ratios expressing the relationship between two or more performance goals.  The performance goals may also be expressed in terms of attaining a specified level of the particular criterion or the attainment of a percentage

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increase or decrease in the particular criterion.  The performance goals may include a threshold level of performance below which no award will be issued or no vesting will occur, and a maximum level of performance above which no additional issuances will be made or at which full vesting will occur.  If we determine to grant awards under the 2016 Plan subject to the attainment of these performance goals, the compensation committee intends that the compensation paid under the 2016 Plan will not be subject to the deductibility limitation imposed by Section 162(m) of the Code.

 

Stock Options.  Stock options granted under the 2016 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 2016 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.

 

Other Stock-Based Awards.  The 2016 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 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 2016 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 December 9, 2016.

 

Except in the case of death, disability or “change of control” (as defined in the 2016 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

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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 2016 Plan may be granted in the aggregate pursuant to such awards.

 

Plan Administration.  In accordance with the terms of the 2016 Plan, our Board of Directors has authorized the Compensation Committee to administer the 2016 Plan.  The Compensation Committee may delegate part of its authority and powers under the 2016 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 or “covered employees” within the meaning of Section 162(m) of the Code. In accordance with the provisions of the 2016 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 2016 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 2016 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.

 

Corporate Transactions.    Upon a merger, consolidation or other reorganization event, our Board of Directors, may, in their sole discretion, take any one or more of the following actions pursuant to the 2016 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;

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   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 2016 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 of Directors which is of a scope that requires shareholder approval as required (1) by 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, (3) in order to continue to comply with Section 162(m) of the Code, to the extent such compliance is deemed desirable, or (4) 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 2016 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 2016 Plan.   The 2016 Plan will expire on September 14, 2026.  No awards may be made after termination of the 2016 Plan, although previously granted awards may continue beyond the termination date in accordance with their terms.

 

Federal Income Tax Consequences

 

The material federal income tax consequences of the issuance and exercise of stock options and other awards under the 2016 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 2016 Plan are exempt from or comply with, the rules under Section 409A of the Code related to nonqualified deferred compensation.

 

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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 2016 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.

 

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

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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.

 

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New Plan Benefits

 

Except as set forth in the table below, none of the shares of common stock subject to the 2016 Plan will be issuable in connection with any award granted prior to shareholder approval of the amendment.  Future options and other awards under the 2016 Plan are subject to the discretion of the Compensation Committee (or, in the case of equity awards to the non-employee directors, the Board of Directors), and therefore it is not possible to identify the persons who will receive options or other awards under the 2016 Plan in the future, nor the amount of any such future options or other awards.

 

New Plan Benefits

2016 Employee, Director and Consultant Equity Incentive Plan

 

 

 

Name and Position

Dollar Value ($)

Number of Units

Mark J. Enyedy (1)

 President and Chief Executive Officer

239,000

David B. Johnston

 Executive Vice President and

 Chief Financial Officer

Anna Berkenblit

 Vice President and Chief Medical

 Officer

Richard J. Gregory

 Executive Vice President and

 Chief Scientific Officer

Sandra E. Poole

 Former Executive Vice President,

 Technical Operations and Commercial

 Development

Executive Group

239,000

Non-Executive Director Group

Non-Executive Officer Group


(1)    As described above under the heading “Increase in the maximum number of shares that can be subject to awards granted to a participant under the 2016 Plan in a single year to 2,000,000,”  on February 16, 2017, the Compensation Committee conditionally awarded 239,000 performance-based restricted shares to our CEO.  This award will be effective only if and when shareholders approve the proposed amendment to the 2016 Plan to increase the maximum number of shares that can be subject to awards granted to a participant in a single year to 2,000,000 at this meeting.

 

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Equity Compensation Plans

 

The following table sets forth information as of December  31, 2016 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)

 

 14,248,280

 

$

10.70

 

5,620,207

 

Equity compensation plans not approved by security holders

 

 —

 

 

 —

 

 —

 

Total

 

 14,248,280

 

$

10.70

 

5,620,207

 


(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.

 

Outstanding Awards under Equity Incentive Plans.    As of April 17, 2017, there were 13,688,231 shares subject to issuance upon exercise of outstanding options under all of our equity compensation plans included in the above table, at a weighted average exercise price of $9.94, and a weighted average remaining life of 6.6 years.  There were a total of 2,186,501 issued and outstanding restricted shares that remain subject to forfeiture  (1,571,471 time-based restricted shares, and 615,030 performance-based restricted shares), 9,000 shares subject to DSUs that remain subject to forfeiture, and 316,959 shares subject to vested DSUs.  All DSUs are held by non-management directors.  As of April 17, 2017, 3,112,721 shares were available for future issuance under those plans.

 

 

AMENDMENT TO OUR RESTATED ARTICLES OF ORGANIZATIO N
TO INCREASE THE NUMBER OF AUTHORIZED SHARES OF COMMON STOCK
FROM 150,000,000 TO 200,000,000
(Notice Item 4)

 

There will be presented at the meeting a proposal to approve an amendment to our Restated Articles of Organization, which amendment was approved by our Board of Directors on March 29, 2017 and is subject to shareholder approval.  The amendment increases the number of authorized shares of our common stock from 150,000,000 to 200,000,000.

 

The additional common stock to be authorized by approval of the amendment will have rights that are identical to our currently authorized common stock.  Approval of the proposed amendment will not

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affect the rights of the holders of currently outstanding shares of our common stock, except for the effects incidental to increasing the number of shares of common stock if and when the additional shares are issued.  If the amendment is approved, it will become effective upon the filing of Articles of Amendment of our Restated Articles of Organization with the Secretary of the Commonwealth of Massachusetts.

 

As of April 17, 2017, there were 89,348,389  shares of our common stock outstanding.  In addition, as of the same date, 17,126,911 shares of common stock were reserved for issuance under our equity compensation plans, and 28,652,390 shares of common stock were reserved for issuance upon conversion of our 4.50% Convertible Senior Notes due 2021.  Accordingly, there were 14,872,310 shares of common stock available for general corporate purposes, prior to the addition of the shares for which we are seeking approval pursuant to this proposal.  If Notice Item 3 is approved by shareholders at the meeting, only 13,872,310 shares of common stock will be available for general corporate purpose, prior to the addition of the shares for which we are seeking approval pursuant to this proposal.

 

Recommendation

 

The Board recommends that you vote “FOR” the proposal to amend our Restated Articles of Organization to increase the number of authorized shares of common stock from 150,000,000 to 200,000,000.

 

Purpose of the Proposed Amendment

 

Although at present the Board has no specific plans to issue shares of common stock in excess of the number currently authorized, the Board believes the availability of additional authorized but unissued shares will provide ImmunoGen with greater flexibility to issue common stock for a variety of corporate purposes, without the delay and expense associated with convening a special meeting of shareholders.  The additional shares may be used for various purposes, including, without limitation, raising capital, expanding our business or research and development programs through the acquisition of other businesses or products, and stock splits and dividends.

 

Possible Effects of the Proposed Amendment

 

If the shareholders approve the proposed amendment, the Board may cause the issuance of the additional shares of our common stock without further shareholder approval, except as may be required by law, regulatory authorities, or the rules of the NASDAQ Stock Market or any other stock exchange on which our shares may be listed at the time of any proposed issuance.  Under our Restated Articles of Organization, shareholders do not have preemptive rights to subscribe for additional securities that may be issued by us, which means that current shareholders do not have a prior right to purchase any new issue of our securities in order to maintain their proportionate ownership of our common stock.  In addition, if the Board elects to issue additional shares of common stock, such issuance could have a dilutive effect on earnings per share, voting power and holdings of current shareholders.

 

In addition to the corporate purposes discussed above, the proposed amendment could, under certain circumstances, have an anti-takeover effect, although this is not the intent of the Board.  For example, it may be possible for the Board to delay or impede a takeover or transfer of control of ImmunoGen by

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causing such additional authorized shares to be issued to holders who might side with the Board in opposing a takeover bid that the Board determines is not in the best interests of ImmunoGen and our shareholders.  The amendment therefore may have the effect of discouraging unsolicited takeover attempts.  By potentially discouraging initiation of any such unsolicited takeover attempt, the proposed amendment may limit the opportunity for our shareholders to dispose of their shares at the higher price generally available in takeover attempts or that may be available under a merger proposal.  However, the Board is not aware of any attempt to take control of ImmunoGen and the Board has not presented this proposal with the intent that it be utilized as a type of anti-takeover defense.

 

 

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

Anna Berkenblit, MD

Vice President and Chief Medical Officer

Thomas Ryll, PhD

Vice President, Technical Operations

Peter Williams

Vice President, Business Development

Theresa G. Wingrove, PhD

Vice President, Regulatory Affairs and Quality

 

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

 

Biographical information concerning our executive officers and their ages can be found in Item 3.1 entitled “Executive Officers” in our transition report on Form 10-K for the six-month transition period ended December 31, 2016, which is incorporated by reference into this proxy statement.

 

 

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 and immunoconjugate technology and expertise.  In this regard, our objective in setting executive compensation is twofold: first, to align fixed and target incentive compensation with the market median for

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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 under the heading “What committees has the Board established? – Compensation Committee ”.

 

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 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 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 following 21 public biotechnology companies of comparable size were included in this new peer group, which is referred to elsewhere in this proxy statement as the Peer Group:

 

 

 

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.

 

 

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The Peer Group described above differs from the peer group of 16 companies utilized by the Compensation Committee in determining executive compensation for the fiscal year ended June 30, 2016, or fiscal year 2016, by the addition of Aduro BioTech, Inc., Agios Pharmaceuticals, Inc., MacroGenics, Inc., Merrimack Pharmaceuticals, Inc., Nektar Therapeutics, Novavax, Inc. and Theravance Biopharma, Inc., and the omission of Dyax Corp and Synageva BioPharma Corp., both of which were acquired by larger, non-peer companies prior to Willis Towers Watson’s preparation of its competitive review of executive compensation for the Compensation Committee.

 

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 June 2016 of the base salaries for our named executive officers for the 2016 Transition Period and the equity awards granted to our executives in July 2016.

 

At the 2015 annual meeting of shareholders, which was the most recent annual meeting preceding the Compensation Committee’s determination of executive compensation for the 2016 Transition Period, an advisory “say-on-pay” proposal  received the favorable vote of the holders of over 98% 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 the 2016 Transition Period.  At the 2016 annual meeting of shareholders, an advisory “say-on-pay” proposal 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 the 2016 Transition Period had been made prior to the 2016 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.

 

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

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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 the 2016 Transition Period, 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 the 2016 Transition Period between 0% and 3.5%, all as described below.  As further described below, one of our named executive officers received an additional 5% increase in base salary during the period in connection with the expansion of her responsibilities.

 

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 the 2016 Transition Period, target bonuses for our executive officers were as follows:

 

 

 

Title

Target Bonus
(as % of Annual Base Salary)

President & CEO

75%

Executive Vice President

40% – 45%

Vice President

30% – 35%

 

Under our annual bonus program, the Compensation Committee of our Board of Directors annually establishes key performance criteria, based upon the corporate goals and objectives, to be met by ImmunoGen, and evaluates ImmunoGen’s 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 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) effective implementation of

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organizational initiatives.  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.  In past years, but not with respect to the 2016 Transition Period, the key corporate performance criteria have included pre-defined performance criteria that were structured to permit achievement of up to 150% of target.

 

When evaluating ImmunoGen’s performance against the key corporate performance criteria after completion of the performance period, the Compensation Committee evaluates any factors that were unanticipated at the time those criteria were established, such as unexpected results in pre-clinical or clinical development, as well as changes in business conditions and other relevant external circumstances, and has the discretion to adjust payouts based on corporate performance so that they align more appropriately with the changed environment, given the employees’ overall performance during the performance period in furtherance of our future success and creation of long-term shareholder value.  Any such adjustment, however, would not result in the portion of the participants’ bonus tied to corporate performance actually paid out exceeding the 150% maximum described above.

 

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 the 2016 Transition Period, the committee based 100% of the CEO’s target bonus on the achievement of the key corporate performance criteria.  With respect to our other executive officers, 70% of their target bonus is based on the achievement of the key corporate performance criteria, and 30% is based on the achievement of individual performance objectives.    Their achievement of their respective individual performance objectives is evaluated by our CEO, and based on these evaluations, the committee determines the amount of our executive officers’ bonus compensation tied to individual performance.  The individual objectives portion of a participant’s target bonus may be earned irrespective of whether the threshold for payment of the corporate performance bonuses has been achieved or the extent to which the bonuses based on corporate performance are payable.  The committee also has discretion in determining payouts under the portion of our CEO’s annual executive bonus tied to individual performance without regard to previously established objectives, and our CEO is afforded the same discretion in recommending bonus payouts to our other executive officers.

 

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 2014, 2015 and 2016, 98%, 105% and 105%, 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 corporate performance).  As described below, for the 2016 Transition Period,  97% of the portion of our executives’ target bonuses tied to corporate performance was achieved.  The  portion of our executives’ target bonuses tied to individual performance for the 2016 Transition Period that was achieved ranged from 55% to 100%. 

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However, as described below, management has proposed and the Compensation Committee has agreed that payout of bonuses to our executives for the 2016 Transition Period be deferred until ImmunoGen raises additional capital during 2017.

 

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 the 2016 Transition Period, the committee for the first time awarded performance-based restricted stock awards to our executive officers, 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 elsewhere in this proxy statement under the heading “What committees has the Board established? – Compensation Committee ”.

 

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 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.  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 have been granted in July of each year, which aligned the stock option awards 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 determining the size of the annual equity awards for executives, the Compensation Committee has adopted a “fixed share” approach after comparing  such approach to a “fixed value” approach.  Under a “fixed value” approach, the size of an award is based on a pre-determined, competitively-based monetary amount, and the number of shares subject to the award is then calculated, typically using a Black-Scholes

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option pricing model, to have an aggregate grant date fair value that approximates that amount.  Under the “fixed share” approach adopted by the Compensation Committee, the size of an award is first established by determining the number of option shares required to deliver market median expected value based on the Peer Group.  This approach was adopted for the following reasons:

 

   The “fixed share” approach avoids year-over-year changes in the size of awards as a result of share price volatility.  Development stage biopharma companies such as ImmunoGen typically have greater share price volatility than larger, commercial biopharma companies, and such volatility may not always align with actual corporate progress toward long-term, strategic objectives.  Using a “fixed value” approach in this environment could result in equity awards not being appropriately aligned with either the median of the Peer Group or actual corporate performance.  For example, the “fixed value” approach has the unintended consequence of providing executives with a greater number of shares at lower exercise prices in years where share price performance is weak compared to the Peer Group.  In addition, significant year-over-year increases in share value can result in significant year-over-year decreases in the size of equity awards using the “fixed value” approach.  In either case, the “fixed value” approach can result in equity awards not being appropriately aligned with corporate performance.

 

   The “fixed share” approach enables the Compensation Committee to grant equity awards at more predictable levels and manage such awards to an aggregate burn rate cap.  It also results in multiple-year ( e.g. , 3-year) average grant rates being more meaningful for investors who consider such measures in evaluating requests for shareholder approval of additional shares for issuance under our equity incentive plans. 

 

In determining its recommendations for “fixed share” guidelines for consideration by the Compensation Committee, Towers Watson determined the number of option shares required to deliver market median expected value based on the Peer Group as of a measurement date selected by Willis Towers Watson at the time its work was performed in 2013.  The Compensation Committee, in adopting Willis Towers Watson’s recommendation, determined that this number of shares would approximate the midpoint of its equity awards guidelines, although the committee intends to review the guidelines’ competitiveness against the market median of the Peer Group at regular intervals, and to adjust the guidelines as needed to ensure they remain generally aligned with the market median of the Peer Group.  In this regard, for 2016, the Committee determined that, due to a significant decrease in the per share price of ImmunoGen common stock since the “fixed share” guidelines were adopted in 2013, awarding stock options to the executive officers in accordance with the then-current “fixed share” guidelines would not align with the market median.  Accordingly, as described more fully below under the heading “ Equity Awards ,” the Committee supplemented the stock option awards for the executive officers (other than the CEO) in 2016 with performance based restricted stock awards.

 

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

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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 have five years from the effective date of the guidelines to achieve the ownership requirement, and new executive officers 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 the heading  “Corporate Governance – Does ImmunoGen have a written policy prohibiting certain transactions in its shares, such as hedging transactions?”

 

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

 

Section 162(m) of the Code limits the deduction a public company is permitted for compensation paid to our “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 cannot be deducted, unless the compensation is paid pursuant to a plan which is performance related, non-discretionary and has been approved by shareholders.  In its deliberations the Compensation Committee considers ways to maximize deductibility of executive compensation, but nonetheless retains the discretion to compensate executive officers at levels the Compensation Committee considers commensurate with their responsibilities and achievements.  We have not adopted a policy that all executive compensation be fully deductible.

 

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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, Willis Towers Watson’s predecessor 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.

 

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

 

   payment of the cost for 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.

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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;

 

   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 insurance coverage under 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 change in control) for up to 18 months (or, in the case of the CEO, up to 24 months); and

 

   effective March 31, 2017, payment of the cost of out-placement 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.

 

More details concerning our severance pay plan and change in control severance agreements are described elsewhere in this proxy statement under the heading  “Potential Payments Upon Termination or Change in Control.”

 

Executive Compensation Determinations for the 2016 Transition Period

 

The following discussion describes the Compensation Committee’s executive compensation determinations for the 2016 Transition Period, beginning with a description of the portion of the annual executive bonus program tied to corporate performance.

 

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The corporate performance criteria were focused on specific actions that could be achieved during the shortened six-month 2016 Transition Period and 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 antibody-drug conjugates (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.

 

In order to achieve the above-described strategic priorities, management and our Board agreed that a reengineering of ImmunoGen’s business would be required to improve operating performance, extend our cash position, and enable ImmunoGen to create value on a sustainable basis.  In light of this imperative, management was directed to develop a comprehensive plan, referred to as the reengineering plan, to achieve these objectives.

 

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In light of the foregoing strategic priorities and in furtherance of the need for a reengineering plan, the Compensation Committee established the specific corporate objectives for the 2016 Transition Period as described in the following table, together with the relative weighting of those objectives.  As in past years, unless corporate objectives representing at least a 50% payout of the target corporate bonus were achieved, no bonuses would have been paid based on corporate performance.  Unlike in past years, the committee did not provide for pre-defined “stretch” goals that, to the extent met, would have entitled participants to receive more than 100% of the portion of their target bonuses tied to corporate objectives, although as described above, the committee had discretion to adjust the portion of the bonus payout tied to the achievement of corporate objectives.  As shown in the table, the Compensation Committee determined that 97% of the portion of the participants’ target bonuses tied to corporate performance had been earned for the 2016 Transition Period.

 

 

 

 

 

Corporate Performance Criteria

Target

 

Actual

Submit and  obtain Board approval of the reengineering plan; hold expenses flat for the first quarter of the 2016 Transition Period; and execute on the transition from fiscal to calendar year financial reporting

30%

 

35%

Enroll first patient in mirvetuximab soravtansine pivotal trial (FORWARD I)

25%

 

20%

Meet pre-defined patient accruals in the combination clinical trials for mirvetuximab soravtansine (FORWARD II) and in clinical trials for IMGN779 band IMGN529

25%

 

22%

Enter into  a definitive co-development collaboration with a third party for ADCs directed to a new target

5%

 

5%

Achieve a  pre-defined pre-clinical milestone for internal ADC program employing proprietary technology licensed from CytomX

5%

 

5%

Drive initiatives that reinforce our cultural attributes of innovation, patient focus, accountability, and teamwork through communication, change management, and learning and development

5%

 

5%

Advance our environmental, health and safety (EH&S) system though program enhancements, with a pre-defined target reduction in our corporate EHS risk profile

5%

 

5%

Total

100%

 

97%

 

The Compensation Committee’s determination of the executives’ bonuses for the 2016 Transition Period, including the portion, if any, tied to individual performance, is discussed below on an individual-by-individual basis.  The following discussion should be understood in the context of the recommendation by management and endorsed by the committee that, in light of our current financial condition, payment of our executives’ bonuses for the 2016 Transition Period will be deferred until ImmunoGen raises additional capital during 2017.

 

Cash Compensation

 

Mr. Enyedy.  The committee set Mr. Enyedy’s annual base salary at $650,000 as part of an overall compensation package negotiated with Mr. Enyedy as an inducement for him to join ImmunoGen in May 2016.  At the same time, the committee fixed Mr. Enyedy’s target bonus at 75% of base salary, beginning

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with the 2016 Transition Period.  No adjustment to Mr. Enyedy’s base salary or target bonus was made for the 2016 Transition Period.  Mr. Enyedy’s base salary, together with his target bonus, resulted in Mr. Enyedy’s target total cash compensation being aligned with the 50 th  percentile of target total cash compensation for comparable positions at the Peer Group.

 

For the 2016 Transition Period, 100% of Mr. Enyedy’s target bonus was tied to corporate performance.  Accordingly, if the additional capital raising condition is met,  Mr. Enyedy’s bonus for the 2016 Transition Period would constitute 73% of his base salary earned in the 2016 Transition Period.

 

Mr. Johnston.  In June 2016, the committee set Mr. Johnston’s annual base salary at $397,991, effective July 1, 2016, which represented a 3.35% increase over his base salary for the previous fiscal year.  Mr. Johnston’s target bonus of 40% of base salary remained unchanged from the previous fiscal year.  The new base salary, together with his target bonus, resulted in Mr. Johnston’s target total cash compensation being aligned with the 50 th  percentile of target total cash compensation for comparable positions at the Peer Group.

 

For the 2016 Transition Period, 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.

 

 

 

 

 

Performance Criteria

Target

 

Actual

Hold operating expenses to less than a pre-established maximum amount

40%

 

40%

Hold year-end cash balance to pre-established minimum

20%

 

20%

Enhance inventor relations strategy

20%

 

20%

Implement business reengineering initiative within facilities organization

10%

 

10%

Implement business reengineering initiative within IT organization

10%

 

10%

Total

100%

 

100%

 

Based on the foregoing, if the additional capital raising condition is met, Mr. Johnston’s  bonus for the 2016 Transition Period would constitute approximately 39.2% of his base salary earned in the 2016 Transition Period.

 

Dr. Berkenblit .  Dr. Berkenblit’s annual base salary was set at $400,516, effective July 1, 2016, and her target bonus was fixed at 35% of base salary.  Dr. Berkenblit had not been designated by our Board as an executive officer as of July 1, 2016, and therefore the Compensation Committee was not involved in determining her cash compensation.  However, based on data from the 2016 Global Life Sciences Survey prepared by Radford Surveys + Consulting, Dr. Berkenblit’s base salary, together with her target bonus, resulted in Dr. Berkenblit’s target total cash compensation being aligned with the 50 th  percentile of target total cash compensation for comparable positions at the Peer Group.

 

On September 30, 2016, we adopted a retention program in connection with the implementation of a program to reengineer our business.  Under this program, Dr. Berkenblit will be entitled to receive a one-

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time retention bonus equal to 40% of her then-current annual base salary upon satisfaction of the following conditions:

 

   she remains actively and continuously employed by ImmunoGen through April 6, 2018, which is referred to as the retention date;

 

   she performs her assigned duties in a professional and satisfactory manner through the retention date;

 

   she is not terminated for any of the following reasons before the retention date: poor performance or attendance after being put on notice and given an opportunity to improve; serious misconduct; violation of ImmunoGen policy; or conviction of any crime other than a minor traffic violation; and

 

   she continues to comply with the terms of any agreement with ImmunoGen concerning confidentiality, intellectual property, noncompetition, non-solicitation, and any other agreement between her and ImmunoGen.

 

Under the terms of the retention program, we also granted a stock option award covering 27,500 shares to Dr. Berkenblit, as described below under “Equity Awards” .  At the time this retention program was adopted, Dr. Berkenblit had not been designated by our Board as an executive officer, and therefore, while the scope of the overall retention program had been reviewed and approved by the Compensation Committee, the terms of the specific arrangement with Dr. Berkenblit were set by Mr. Enyedy.

 

For the 2016 Transition Period, 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.

 

 

 

 

 

Performance Criteria

Target

 

Actual

Enrolling first patient in mirvetuximab soravtansine pivotal trial (FORWARD I)

50%

 

40%

Clinical development organizational development

20%

 

20%

Meeting pre-defined patient accruals in Phase 1 clinical trials for IMGN779

20%

 

20%

Meeting pre-defined patient accruals in Phase 1b/2 clinical trial for IMGN529

10%

 

10%

Total

100%

 

90%

 

Based on the foregoing, if the additional capital raising condition is met, Dr. Berkenblit’s bonus for the 2016 Transition Period would constitute approximately 31.5% of her base salary earned in the 2016 Transition Period.

 

Dr. Gregory.  In June 2016, the committee set Dr. Gregory’s annual base salary at $446,473, effective July 1, 2016, which represented a 3.5% increase over his base salary for the previous fiscal year.  Dr. Gregory’s target bonus of 40% of base salary remained unchanged from the previous fiscal year. 

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

 

For the 2016 Transition Period, 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.

 

 

 

 

 

Performance Criteria

Target

 

Actual

Implementation of business reengineering initiative within research organization

20%

 

20%

Supporting advancement of development portfolio

20%

 

20%

Supporting advancement of research portfolio

20%

 

20%

Supporting business development activities to strategically enhance our leadership position in ADCs

20%

 

20%

Research organizational development

10%

 

10%

Advancing our environmental, health and safety (EH&S) system though program enhancements, with a pre-defined target reduction in our corporate EHS risk profile

10%

 

10%

Total

100%

 

100%

 

Based on the foregoing, if the additional capital raising condition is met, Dr. Gregory’s bonus for the 2016 Transition Period would constitute approximately 39.2% of his base salary earned in the 2016 Transition Period.

 

Ms. Poole.  In June 2016, the committee set Ms. Poole’s annual base salary at $419,193, effective July 1, 2016, which represented a 3.5% increase over her base salary for the previous fiscal year.  Ms. Poole’s target bonus of 40% of base salary remained unchanged from the previous fiscal year.  The new base salary, together with her target bonus, resulted in Ms. Poole’s target total cash compensation being aligned with the 50 th  percentile of target total cash compensation for comparable positions at the Peer Group.

 

In October 2016,  the committee increased Ms. Poole’s annual base salary to $440,000 in connection with the expansion of her responsibilities to include oversight of transition management in connection with the implementation of a program to reengineer our business, and of commercial development activities.  The new base salary, together with her target bonus, which remained unchanged, resulted in Ms. Poole’s target total cash compensation continuing to be aligned with the 50 th  percentile of target total cash compensation for comparable positions at the Peer Group.

 

Ms. Poole left ImmunoGen on January 31, 2017, and therefore, in accordance with the terms of our annual bonus program, she was not eligible to receive a bonus for the 2016 Transition Period.

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Equity Awards

 

In light of the timing and size of the equity awards granted to Mr. Enyedy in connection with his appointment as our President and Chief Executive Officer in May 2016, the Compensation Committee determined not to grant Mr. Enyedy any additional equity awards for the 2016 Transition Period.

 

On July 18, 2016, we granted annual stock option awards covering 110,000 shares to each of Dr. Gregory, Mr. Johnston and Ms. Poole, and covering 50,000 shares to Dr. Berkenblit.  The  per share exercise price for each of these awards ($3.05) is the per share fair market value of our common stock on the date of grant (July 18, 2016), and each award vests in three equal annual installments, beginning on the first anniversary of the date of grant.  Ms. Poole’s award was forfeited in connection with her resignation, effective January 31, 2017.

 

In determining the size of the annual stock option awards, the committee considered equity award histories for each of the named executive officers and the “fixed share” equity grant guidelines adopted by the committee starting in fiscal year 2014.  The fixed share target, which had been 100,000 for certain Executive Vice Presidents and 110,000 for others, was fixed at 110,000 for all Executive Vice Presidents in July 2016.  Dr. Berkenblit’s stock option award in July 2016 was granted prior to her designation as an executive officer, and was greater than awards granted at the same time to other non-executive officer vice presidents, as determined by our fixed share guidelines, to reflect her position as our chief medical officer.

 

In connection with the foregoing stock option awards, the Compensation Committee had been advised by Willis Towers Watson that, in light of the significant decline in ImmunoGen’s stock price since the beginning of 2016, the current fixed share guidelines would deliver expected value below the 25 th  percentile of long-term equity compensation  for comparable positions at the Peer Group.  Willis Towers Watson recommended that the committee consider supplementing the annual stock option awards to the executive officers with performance-based restricted stock awards as a one-time “bridge” grant to 2017, by which time (1) the fixed share guidelines could be recalibrated in light of ImmunoGen’s strategic direction set by management under our new CEO, and (2) the 2016 Plan would have been approved by shareholders.

 

After giving consideration to Willis Towers Watson’s recommendations, on August 12, 2016, the Compensation Committee granted performance-based restricted stock awards covering 20,000 shares  to each of Dr. Gregory, Mr. Johnston and Ms. Poole, and covering 10,000 shares to Dr. Berkenblit.  A performance based restricted stock award covering 20,000 share had originally been planned to be granted to Dr. Charles Q. Morris, our former Executive Vice President and Chief Development Officer, but upon receipt of his notice of resignation prior to the date of grant, that award was reallocated evenly between Dr. Berkenblit, who at the time had not been designated as an executive officer, and another non-executive officer vice president formerly reporting to Dr. Morris.

 

These awards vest in three equal installments upon the achievement, within the performance period, which is the five-year period following the date of grant, 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

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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.

 

In connection with the retention program described above, on  September 30, 2016, we granted a stock option award covering 50,000 shares to Dr. Berkenblit.  The per share exercise price of this award ($2.68) is the per share fair market value of our common stock on the date of grant (September 30, 2016), and the award vests in three equal annual installments, beginning on the first anniversary of the date of grant.

 

On October 19, 2016, we granted a stock option award covering 27,500 shares to Ms. Poole.  The award represents 25% of Ms. Poole’s annual fixed share target, and was granted in connection with the expansion of her responsibilities to include oversight of transition management in connection with the implementation of a program to reengineer our business, and of commercial activities.  The per share exercise price of this award ($2.26) is the per share fair market value of our common stock on the date of grant (October 19, 2016), and the award would have vested in three equal annual installments, beginning on the first anniversary of the date of grant.  This award was forfeited in connection with Ms. Poole’s resignation, effective January 31, 2017.

 

Each of the foregoing awards is described in more detail in the Grants of Plan-Based Awards table and Outstanding Awards at Fiscal Year-End table elsewhere in this proxy statement.

 

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How were the executive officers compensated for the 2016 Transition Period?

 

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 the 2016 Transition Period (2016TP) and the preceding three fiscal years.

 

Summary Compensation Table

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Name and

Principal Position

Year

Salary

Bonus(1)

Stock

Awards(2)

Option

Awards(2)

Non-Equity

Incentive Plan

Compensation(3)

All Other

Compensation(4)

Total

Mark J. Enyedy (5)

2016TP

$

325,000

 

 

 

 

$
236,438

$

7,542

$

568,980

President and Chief

2016

 

80,357

$

430,000

$

423,750

$

1,015,157

 

 

836

 

1,950,100

Executive Officer

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

David B. Johnston (6)

2016TP

 

198,996

 

 

 

203.634

 

77,927

 

2,516

 

483,072

Executive Vice President

2016

 

385,091

 

 

 

1,045,067

 

159,428

 

9,604

 

1,599,189

and Chief Financial Officer

2015

 

355,250

 

4,974

 

 

624,943

 

146,220

 

9,459

 

1,140,846

 

2014

 

175,000

 

70,000

 

 

1,315,783

 

67,550

 

1,934

 

1,630,267

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Anna Berkenblit (7)

2016TP

 

200,258

 

 

 

174,060

 

66,516

 

2,459

 

443,293

Vice President and Chief

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Medical Officer

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Richard J. Gregory (8)

2016TP

 

223,237

 

 

 

203,634

 

87,419

 

1,821

 

516,111

Executive Vice President

2016

 

431,375

 

5,177

 

 

522,533

 

178,589

 

7,645

 

1,145,319

and Chief Scientific Officer

2015

 

206,597

 

152,892

 

163,250

 

564,995

 

85,532

 

342

 

1,173,608

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sandra E. Poole (9)

2016TP

 

213,894

 

 

 

241,136

 

 

2,217

 

457,247

Executive Vice President,

2016

 

405,017

 

4,860

 

 

1,149,573

 

167,677

 

9,009

 

1,736,137

Technical Operations and

2015

 

300,833

 

204,212

 

 

798,333

 

124,545

 

8,405

 

1,436,328

Commercial Development

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


1)    The amount shown in this column for fiscal year 2016 for Mr. Enyedy represents his sign-on bonus.  If, within 12 months of Mr. Enyedy’s hire date (May 16, 2016), his employment is terminated by us for cause or is terminated by Mr. Enyedy for any reason other than death or disability, Mr. Enyedy will be required to reimburse us for a portion of the sign-on bonus equal to $430,000 multiplied by a fraction, (a) the numerator of which is 365 minus the number of days Mr. Enyedy was employed by us, and (b) the denominator of which is 365. The amount shown in this column for fiscal year 2016 for Ms. Poole represents the discretionary bonus paid to her 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 Ms. Poole, her $200,000 sign-on bonus which is described in more detail in our proxy statement for the 2015 annual meeting of shareholders.  The amount shown in this column for Mr. Johnston for fiscal year 2014 represents his sign-on bonus which is described in more detail in our proxy statements for the 2014 annual meeting of shareholders.  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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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 fiscal year ended June 30, 2016.

3)    The amounts shown in this column represent payments under our annual executive bonus program for each of the fiscal years shown.  As described in the Compensation Discussion and Analysis elsewhere in this proxy statement, management has proposed and the Compensation Committee has agreed that payout of bonuses to our executives for the 2016 Transition Period be deferred until ImmunoGen raises additional capital during 2017.

4)    The table below shows the components of this column for the 2016 Transition Period:

 

 

 

 

 

 

 



Name

401(k)

Plan Matching

Contribution (a)

Term Life Insurance

Premiums

Total All Other

Compensation

Mark J. Enyedy

$

7,200

$

342

$

7,542

David B. Johnston

 

2,174

 

342

 

2,516

Anna Berkenblit

 

2,117

 

342

 

2,459

Richard J. Gregory

 

1,479

 

342

 

1,821

Sandra W. Poole

 

1,875

 

342

 

2,2176


a)    The amounts in this column represent our matching contributions allocated to each of the named executive officers who participates in our 401(k) retirement savings plan.  All such matching contributions were fully vested upon contribution.

5)    Mr. Enyedy joined ImmunoGen on May 16, 2016.

6)    Mr. Johnston joined ImmunoGen on December 30, 2013.

7)    Dr. Berkenblit was designated an executive officer by our Board of Directors on December 9, 2016.

8)    Dr. Gregory joined ImmunoGen on January 5, 2015.

9)    Ms. Poole joined ImmunoGen on September 15, 2014, and resigned from ImmunoGen effective January 31, 2017.

 

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Grants of Plan-Based Awards

 

The following table shows all awards granted to each of the named executive officers during the 2016 Transition Period.

 

Grants of Plan-Based Awards

 

 

Estimated Future Payouts Under Non- Equity Incentive Plan Awards

Estimated Future Payouts Under Equity Incentive Plan Awards

All Other Stock

Awards: Number

of Shares

of Stock (#)

All Other Option

Awards: Number

of Securities

Underlying

Options (#)

Exercise or

Base Price

of Option

Awards

($/sh)

Grant Date

Fair Value

of Stock and

Option Awards (1)

 

Name

 

Grant Date

 

Threshold ($)

 

Target ($)

Maximum ($)

Threshold (#)

 

Target (#)

 

Maximum (#)

Mark J. Enyedy

(2)

$121,875

$243,750

$243,750

David B. Johnston

(2)

79,598

79,598

 

7/18/2016 (3)

110,000

3.05

203,634

 

8/12/2016 (4)

6,667

20,000

20,000

Anna Berkenblit

(2)

70,090

70,090

 

 

 

 

7/18/2016 (3)

 

50,000

3.05

92,561

 

9/30/2016 (3)

50,000

2.68

81,499

 

8/12/2016 (4)

3,334

10,000

10,000

Richard J. Gregory

(2)

89,295

89,295

 

7/18/2016 (3)

 

110,000

3.05

203,634

 

8/12/2016 (4)

6,667

20,000

20,000

Sandra E. Poole

(2)

85,557

85,557

 

 

 

 

7/18/2016 (3)

 

110,000

3.05

203,634

 

8/12/2016 (4)

6,667

20,000

20,000

 

10/19/2016(5)

27,500

2.26

37,502


1)    The amounts shown in this column have been calculated in accordance with FASB ASC Topic 718.  Additional information can be found in Note B to the consolidated financial statements in ImmunoGen’s Transition Report on Form 10-K for the six-month transition period ended December 31, 2016.

2)    The amounts shown in these rows reflect the possible cash amounts that could have been earned upon achievement of the threshold, target and maximum performance objectives for the annual executive bonus program for fiscal year 2016.  In the case of Mr. Enyedy, whose bonus was tied solely to corporate performance, the threshold amount represents 50% of his target bonus, reflecting the minimum achievement required for any payout based on corporate performance.  In

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the case of the remaining executive officers, for whom 30% of their respective target bonuses was tied to individual performance, there was effectively no threshold payment since the compensation committee reserved the discretion to determine payouts under the portion of the bonus tied to individual performance without regard to any minimum achievement of previously-established goals.

3)    These stock option awards were granted under our 2006 Plan.  The grant date fair value of these awards has been calculated using the Black-Scholes option pricing model, based on the following assumptions: expected life of option equal to 6.33 years; expected risk-free interest rate of 1.26%, 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 65.60%; and expected dividend yield of 0%.  These awards are also described in the Outstanding Equity Awards at Transition Period-End table.

4)    These performance based restricted stock awards were granted under our 2006 Plan.  The grant date fair value of this award has been calculated based upon the probable outcome of the performance goals, consistent with the estimate of aggregate compensation cost to be recognized over the service period determined as of the grant date under FASB ASC Topic 718, excluding the effect of estimated forfeitures.  These awards are also described in the Compensation Discussion and Analysis and the Outstanding Equity Awards at Transition Period-End table.

5)    This stock option award was granted to Ms. Poole in recognition of her taking on increased responsibilities, including our commercial and pivotal Product Team operations oversight.  The grant date fair value of these awards has been calculated using the Black-Scholes option pricing model, based on the following assumptions: expected life of option equal to 6.33 years; expected risk-free interest rate of 1.38%, 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 64.86%; and expected dividend yield of 0%.

 

Outstanding Equity Awards at 2016 Transition Period-End

 

The following table shows information on all outstanding stock options and unvested restricted stock awards held by the named executive officers at the end of the last fiscal year.  The table also shows the market value of unvested time-based restricted shares and unearned performance-based restricted shares at the end of the last fiscal year. The amounts shown represent the number of unvested or unearned restricted shares at the end of the 2016 Transition Period, multiplied by the closing price ($2.04) of our common stock on the NASDAQ Global Select Market on December 30, 2016.

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Outstanding Equity Awards at 2016 Transition Period-End

 

 

Option Awards (1)

 

Stock Awards (1)

 

Name

 

Number of

Securities

Underlying

Unexercised

Options (#)

Exercisable

 

Number of

Securities

Underlying

Unexercised

Options (#)

Unexercisable

 

Option

Exercise

Price ($)

 

Option

Expiration

Date

(mm/dd/yyyy)

 

Number of

Shares of

Stock That

Have Not

Vested (#)

 

Market Value

of Shares of

Stock That

Have Not

Vested ($)

 

Equity

Incentive

Plan

Awards:

Number of

Unearned

Shares, Units

or Other

Rights That

Have Not

Vested ($)

 

Equity

Incentive

Plan Awards:

Market or

Payout Value

of Unearned

Shares, Units

or Other

Rights That

Have Not

Vested ($)

 

Mark J. Enyedy

300,000   (2)

$ 5.65

05/16/2026

 

 

 

75,000 (3)

$ 153,000

David B. Johnston

112,500

37,500   (4)

15.08

12/30/2023

 

56,667

33,333   (5)

10.79

07/17/2024

 

33,334

66,666   (6)

16.72

07/13/2025

 

 

110,000   (7)

3.05

07/18/2026

 

 

20,000 (8)

$40,800

Anna Berkenblit

31,250

93,750   (9)

8.94

04/01/2025

 

3,667

7,333   (6)

16.72

07/13/2025

 

4,000 (10)

5.75

06/01/2026

 

50,000   (7)

3.05

07/18/2026

 

50,000 (11)

2.68

09/30/2026

 

10,000 (8)

20,400

Richard J. Gregory

37,500

112,500 (12)

6.53

01/05/2025

 

18,750 (13)

38,250

 

16,667

33,333   (6)

16.72

07/13/2025

 

110,000   (7)

3.05

07/18/2026

 

20,000 (8)

40,800

Sandra E. Poole

62,500

62,500 (14)

10.99

09/15/2024

 

36,667

73,333   (6)

16.72

07/13/2025

 

110,000  (7)

3.05

07/18/2026

 

20,000 (8)

40,800

 

27,500 (15)

2.26

10/19/2026


1)    All option awards granted by ImmunoGen are subject to time-based vesting.  Accordingly, there are no unearned option awards outstanding.  Securities underlying options are shares of our common stock.

2)    This option award vests in four equal installments on each of the first four anniversaries of the grant date (May 16, 2016), contingent on Mr. Enyedy remaining an employee, director or consultant of ImmunoGen as of each such date.

3)    This restricted stock award vests in four equal installments on each of the first four anniversaries of the grant date (May 16, 2016), contingent on Mr. Enyedy remaining an employee, director or consultant of ImmunoGen as of each such date.

4)    This option award vests in four equal installments on each of the first four anniversaries of the grant date (December 30, 2013), contingent on Mr. Johnston remaining either an employee (in the case of an

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incentive stock option) or an employee, director or consultant (in the case of a non-qualified stock option) of ImmunoGen as of each such date.

5)    These option awards vest in three equal installments on each of the first three anniversaries of the grant date (July 17, 2014), contingent in each case on the executive remaining either an employee (in the case of an incentive stock option) or an employee, director or consultant (in the case of a non-qualified stock option) of ImmunoGen  as of each such date.

6)    These option awards vest in three equal installments on each of the first three anniversaries of the grant date (July 13, 2015), contingent in each case on the executive remaining either an employee (in the case of an incentive stock option) or an employee, director or consultant (in the case of a non-qualified stock option) of ImmunoGen as of each such date.

7)    These option awards vest in three equal installments on each of the first three anniversaries of the grant date (July 18, 2016), contingent in each case on the executive remaining an employee, director or consultant of ImmunoGen as of each such date.

8)    These performance based restricted stock awards vest in three equal installments upon the achievement, within the performance period, which is the five-year period following the grant date (August 12, 2016), of certain performance goals, which are more fully described in the Compensation and Discussion Analysis elsewhere in this proxy statement.

9)    This option award vests in four equal installments on each of the first four anniversaries of the grant date (April 1, 2015), contingent on Dr. Berkenblit remaining either an employee (in the case of an incentive stock option) or an employee, director or consultant (in the case of a non-qualified stock option) of ImmunoGen as of each such date.

10)  This option award vests in three equal installments on each of the first three anniversaries of the grant date (June 1, 2016), contingent on Dr. Berkenblit remaining an employee, director or consultant of ImmunoGen as of each such date.

11)  This option award vests in three equal installments on each of the first three anniversaries of the grant date (September 30, 2016), contingent on Dr. Berkenblit remaining an employee, director or consultant of ImmunoGen as of each such date.

12)  This option award vests in four equal installments on each of the first four anniversaries of the grant date (January 5, 2015), contingent on Dr. Gregory remaining either an employee (in the case of an incentive stock option) or an employee, director or consultant (in the case of a non-qualified stock option) of ImmunoGen as of each such date.

13)  This restricted stock award vests in four equal installments on each of the first four anniversaries of the grant date (January 5, 2015), contingent on Dr. Gregory remaining an employee, director or consultant of ImmunoGen as of each such date.

14)  This option award vests in four equal installments on each of the first four anniversaries of the grant date (September 15, 2014), contingent on Ms. Poole remaining either an employee (in the case of an incentive stock option) or an employee, director or consultant (in the case of a non-qualified stock option) of ImmunoGen as of each such date.

15)  This option award would have vested in three equal installments on each of the first three anniversaries of the grant date (October 19, 2016, contingent on Ms. Poole remaining an employee, director or consultant of ImmunoGen as of each such date.

 

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Options Exercised and Stock Awards Vested

 

The following table shows information regarding stock option exercises and stock award vesting by the named executive officers during the 2016 Transition Period.

 

Option Exercises and Stock Vested

 

 

Option Awards

 

Stock Awards

 

Name

 

Number of Shares Acquired on Exercise (#)

 

Value Realized on Exercise ($)

 

Number of Shares Acquired on Vesting (#)

 

Value Realized on Vesting ($)

 

Mark J. Enyedy

David B. Johnston

Anna Berkenblit

Richard J. Gregory

Sandra E. Poole

 

 

 

Potential Payments Upon Termination or Change in Control

 

Termination of Employment Not Following a Change in Control

 

Prior to the adoption of our severance pay plan for vice presidents and higher, we had entered into written agreements with certain of our executive officers to provide severance benefits in addition to those required by applicable law in connection with the termination of the executive’s employment with us outside the context of a change in control.  In connection with the adoption of this plan, each of those executive officers terminated those written agreements.

 

All of our named executive officers whose employment is terminated by us without cause are eligible to participate in our severance pay plan for vice presidents and higher.  “Cause” is defined to include an executive’s willful act or omission that materially harms ImmunoGen, willful failure or refusal to follow the lawful and proper directives of our CEO or our Board, conviction of the executive for a felony, commission of an act of moral turpitude that is reasonably expected to be injurious to ImmunoGen or its reputation, material fraud or theft relating to ImmunoGen, or breach of our Code of Corporate Conduct, Senior Officer and Financial Personnel Code of Ethics or other contractual obligation to ImmunoGen.

 

Severance benefits under the plan 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 named executive officers;

   payment of a portion of the named executive officer’s annual cash bonus for the fiscal year in which termination occurs as follows: 100% of the portion of the named executive officer’s bonus tied to personal objectives, if any; and with respect to the portion of the named executive officer’s bonus tied to corporate objectives, the named 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

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reflect the actual number of days the named executive officer was employed during the applicable fiscal year;

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

   payment of the cost for outplacement services lasting not less than six months.

 

Payment of the above-described severance benefits is subject to the named executive officer releasing all of his or her claims against ImmunoGen other than claims that arise from our obligations under the plan.  In addition, no benefits are payable under the plan in circumstances where the named executive officer is entitled to receive severance compensation under the terms of any separate written agreement, including the change in control severance agreements described below.

 

The following table illustrates the potential benefits that would have been received by the named executive officers under our severance pay plan for vice presidents and higher, assuming we had terminated each executive’s employment without cause on December 31, 2016 outside the context of a change in control.

 

Potential Payments Upon Termination of Employment Not Following a Change in Control
(Without Cause and Not for a Disability)

 

Name

 

Salary Continuation

 

Bonus Lump Sum (1)

 

Healthcare
Continuation (2)

 

Total

 

Mark. J. Enyedy

$

975,000

$

472,875

$

31,660

$

1,479,535

David B. Johnston

385,091
155,853
21,107
574,951

Anna Berkenblit

400,516
137,237
21,107
558,860

Richard J. Gregory

446,473
174,839
21,107
642,419

Sandra E. Poole

440,000
168,987
21,107
630,094

1)    Amounts represent 100% of the portion of each named executive officer’s bonus tied to personal objectives and 100% of each named executive officer’s bonus tied to corporate objectives, based on achievement of 97% of the corporate objectives achieved for the 2016 Transition Period.

2)    Amounts represent payments equal to each executive’s COBRA premiums for  12 months (or in the case of Mr. Enyedy,  18 months) for the type of healthcare coverage ImmunoGen carried for each named executive officer as of December 31, 2016.

 

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Termination of Employment Following a Change in Control

 

We have entered into change in control severance agreements with each named executive officer providing for certain benefits in the event of a change in control of ImmunoGen.  A change in control includes any of the following events:

   the acquisition by any person of 50% or more of our outstanding common stock pursuant to a transaction which our Board of Directors does not approve;

   a merger or consolidation of ImmunoGen, whether or not approved by our Board, where our voting securities remain outstanding and continue to represent, or are converted into securities of the surviving corporation (or its parent) representing, less than 50% of the total voting power of the surviving entity (or its parent) following such transaction;

   our shareholders approve an agreement for the sale of all or substantially all of ImmunoGen’s assets; or

   the “incumbent directors” cease to constitute at least a majority of the members of our Board.  “Incumbent directors” include the current members of our Board, plus any future members who are elected or nominated for election by at least a majority of the incumbent directors at the time of such election or nomination, with certain exceptions relating to actual or threatened proxy contests relating to the election of directors to our Board.

 

Each named executive officer is entitled to severance benefits if, within the period of two months before or 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.  “Cause” is defined to include the executive’s willful act or omission that materially harms ImmunoGen; willful failure or refusal to follow the lawful and proper directives of the Board; conviction of the executive for a felony; commission of an act of moral turpitude that is reasonably expected to be injurious to ImmunoGen or its reputation; material fraud or theft relating to ImmunoGen; or breach of our Code of Corporate Conduct, Senior Officer and Financial Personnel Code of Ethics or other contractual obligation to ImmunoGen.  “Good reason” is defined in each agreement to include the occurrence of the following events without the executive’s consent: a change in the principal location at which the executive performs his duties for us to a new location that is at least 40 miles from the prior location; a material change in the executive’s authority, functions duties or responsibilities as compared to his highest position with ImmunoGen; or a material reduction in the executive’s base salary or target annual bonus.

 

Severance benefits under each agreement include the following:

   a lump sum payment equal to 1.5 times (or in the case of Mr. Enyedy, 2 times) the sum of the executive officer’s then current annual base salary and the executive’s target annual bonus for the fiscal year in which the termination occurs;

   if the executive officer elects to continue medical insurance coverage under 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 change in control) for up to 18 months (or in the case of Mr. Enyedy, up to 24 months); and

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   vesting of 100% of the executive officer’s unvested stock options and unvested restricted stock awards and other similar rights (stock option awards granted to executives under the 2006 Plan prior to June 20, 2012 provide for 100% vesting of the executive officer’s unvested stock options immediately upon the occurrence of a change in control); and

   effective March 31, 2017, payment of the cost of out-placement services up to a maximum of $40,000.

 

Payment of the above-described severance benefits is subject to the named executive officer releasing all his or her claims against ImmunoGen other than claims that arise from ImmunoGen’s obligations under the severance agreement.  In addition, the severance benefits will replace any similar compensation that may be provided to the executive under any other agreement or arrangement in relation to termination of employment, with certain exceptions.

 

Each agreement provides for a reduction of payments and benefits to be received by the named executive officer pursuant to a change in control to a level where the executive would not be subject to the excise tax pursuant to section 4999 of the Code, but only if such reduction would put the executive in a better after-tax position than if the payments and benefits were paid in full.  In addition, each agreement provides for the payment by ImmunoGen of the executive’s legal fees and expenses incurred in connection with the agreement.

 

Each agreement continues in effect for two years from its effective date, subject to automatic one-year extensions thereafter unless notice is given of our or the executive’s intention not to extend the term of the agreement; provided, however, that the agreement continues in effect for 12 months following a change in control that occurs during the term of the agreement.

 

The following table illustrates the potential benefits that would have been received by the named executive officers under the severance agreements described above, assuming we had terminated each executive’s employment without cause on December 31, 2016, following a change in control occurring on that date, and using the closing price ($2.04) of our common stock on the NASDAQ Global Select Market on December 30, 2016.

 

Potential Payments Upon Termination of Employment Following a Change in Control
(Without Cause and Not for a Disability)

 

Name

 

Salary/Bonus
Lump Sum (1)

 

Stock Option Acceleration (2)

 

Restricted Stock Acceleration

 

Healthcare
Continuation (3)

 

Total

 

Mark J. Enyedy

$
2,275,000

$
153,000
$
42,214
$
2,470,214

David B. Johnston

835,781

40,800
31,660
908,241

Anna Berkenblit

811,045

20,400
31,660
863,105

Richard J. Gregory

937,593

79,050
31,660
1,048,303

Sandra E. Poole

924,000

40,800
31,660
996,460

1)    Amounts represent the salary and target bonus-based lump sum payments described above.

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2)    Any amounts shown in this column would have represented payment of the difference between $2.04 and the exercise price of any in-the-money unvested stock option that would have become exercisable upon termination of the executive’s employment without cause following a change in control, multiplied in each case by the number of shares subject to such option.  The per share exercise prices of all unvested stock options held by the named executive officers were in each case greater than $2.04, and therefore no payment is shown for the accelerated vesting of those options.

3)    Amounts represent payments equal to each executive’s COBRA premiums for 18 months (or in the case of Mr. Enyedy, 24 months) for the type of healthcare coverage ImmunoGen carried for each named executive officer as of December 31, 2016.

 

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REPORT OF THE COMPENSATION COMMITTEE

 

The Compensation Committee has reviewed and discussed with management the Compensation Discussion and Analysis included in this proxy statement, and based on such review and discussion, the Compensation Committee recommended to ImmunoGen’s Board that the Compensation Discussion and Analysis be included in this proxy statement and be incorporated by reference into ImmunoGen’s Transition Report on Form 10-K for the six-month transition period ended December 31, 2016.

 

By the Compensation Committee of the Board of Directors of ImmunoGen, Inc.

 

Howard H. Pien, Chairman

Dean J. Mitchell

Kristine Peterson

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

 

We are providing our shareholders with the opportunity to cast an advisory (non-binding) vote on executive compensation, or a “say-on-pay” vote.  Under Section 14A of the Securities Exchange Act of 1934, as amended, we must hold this advisory vote at least once every three years.  At the 2011 annual meeting of shareholders, we asked shareholders to vote on an advisory basis with respect to whether future say-on-pay votes should be held once every year, or once every two or three years (the “say-on-frequency” vote).  Shareholders indicated by their advisory vote their preference to hold say-on-pay votes on an annual basis.  After taking into consideration the results of the say-on-frequency vote at the 2011 annual meeting, our Board determined to include say-on-pay advisory votes in our proxy materials on an annual basis until the next required “say-on-frequency” vote by shareholders.

 

The say-on-pay vote is a non-binding vote on the compensation paid to our named executive officers, as described elsewhere in this proxy statement under the heading “Executive Compensation,” and includes the “Compensation Discussion and Analysis,” or “CD&A,” tabular disclosure regarding such compensation and accompanying narrative disclosure set forth elsewhere in this proxy statement.  The Executive Compensation section describes our compensation philosophy and objectives, how we determine executive compensation, the elements of total compensation and the actual compensation of our named executive officers identified in that section.  The Compensation Committee and our Board believe that the policies and practices described in the CD&A are effective in implementing our compensation philosophy and objectives and that the compensation of our named executive officers for the 2016 Transition Period reflects and supports those policies and practices.

 

The say-on-pay vote is not binding on the Compensation Committee or our Board.  However, the committee and the Board will take into account the result of the vote when determining future executive compensation arrangements.

 

Recommendation

 

The Board recommends a vote “FOR” the proposal to approve, on an advisory basis, the compensation paid to our named executive officers, as described in this proxy statement.

 

 

ADVISORY VOTE ON FREQUENCY OF ADVISORY SHAREHOLDER VOTE ON COMPENSATIO N
PAID TO OUR NAMED EXECUTIVE OFFICERS
(Notice Item 6)

 

At the 2011 annual meeting of shareholders, the holders of a majority of our shares present and voting on the matter voted, on an advisory basis, to hold “say-on-pay” votes, as described in the immediately preceding proposal, on an annual basis.  After taking into consideration the results of this “say-on-frequency” vote, our Board determined to include “say-on-pay” votes in management’s proxy

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materials on an annual basis until the next required “say-on-frequency” vote.  Under Section 14A of the Securities Exchange Act of 1934, as amended, we are required to solicit shareholder advisory votes on the frequency of future “say-on-pay” votes at least once every six years.  Accordingly, we are providing shareholders with the opportunity to cast an advisory vote on whether they would prefer future “say-on-pay” votes on an annual basis, or once every two or once every three years.

 

Our Board recommends that that future say-on-pay votes continue to be conducted on an annual basis.  Based on the results of our previous “say-on-frequency” vote, as well as the “say-on-frequency” votes of other companies in our industry,  we believe an annual “”say-on-pay” vote best meets the expectations of our shareholders.

 

Shareholders have three choices for voting on this proposal, as well as the option of abstaining.  The choice that receives the highest number of votes will be deemed the choice of the shareholders.

 

The vote on the frequency of say-on-pay votes is not binding on our Board.  However, the Board will take into account the result of the vote when determining the frequency of future say-on-pay votes.

 

Recommendation

 

The Board recommends that shareholders vote for a “say-on-pay” vote on an annual basis.

 

 

RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIR M
(Notice Item 7)

 

Our Audit Committee has appointed Ernst & Young LLP as our independent registered public accounting firm for the year ending December 31, 2017.  The Audit Committee is directly responsible for the appointment, retention, compensation and oversight of the work of our independent registered public accounting firm (including resolution of disagreements between management and the independent registered public accounting firm regarding financial reporting) for the purpose of preparing or issuing an audit report or related work.     In making its determination regarding whether to appoint or retain a particular independent registered public accounting firm, the Audit Committee takes into account the views of management, and will take into account the vote of our shareholders with respect to the ratification of the appointment of our independent registered public accounting firm.

 

Ernst & Young LLP served as our independent registered public accounting firm for the six-month transition period ended December 31, 2016.  We expect that a representative of Ernst & Young LLP will be present at the meeting and will have the opportunity to make a statement if he or she desires and to respond to appropriate questions.

 

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Recommendation

 

The Board recommends a vote “FOR” the proposal to ratify the appointment of Ernst & Young LLP as our independent registered public accounting firm for the year ending December 31, 2017.

 

What were the fees of our independent registered public accounting firm for services rendered to us during the last two fiscal years?

 

The aggregate fees for professional services rendered to us by Ernst & Young LLP for the 2016 Transition Period and the fiscal years ended June 30, 2016 and 2015 were as follows:

 

 

 

2016 Transition

 

 

 

 

 

 

Period

 

2016

 

2015

Audit

 

$
778,313

 

$
867,528

 

$
797,410

Audit-Related

 

 

 

Tax

 

 

 

All Other

 

 

 

 

 

$
778,313

 

$
867,528

 

$
797,410

 

Audit fees for  all periods shown above were for professional services provided for the audits of our consolidated financial statements and our internal control over financial reporting as well as reviews of the financial statements included in each of our quarterly reports on Form 10-Q.  Audit fees for fiscal year 2016 also include amounts related to our issuance of convertible senior notes.  Audit fees for the 2016 Transition Period and fiscal year 2015 also include amounts related to consents relating to registration statements.

 

What is the Audit Committee’s pre-approval policy?

 

The Audit Committee pre-approves all auditing services and the terms of non-audit services provided by our independent registered public accounting firm, but only to the extent that the non-audit services are not prohibited under applicable law and the committee determines that the non-audit services do not impair the independence of the independent registered public accounting firm.  In situations where it is impractical to wait until the next regularly scheduled quarterly meeting, the chairman of the committee has been delegated authority to approve audit and non-audit services to be provided by our independent registered public accounting firm.  Fees payable to our independent registered public accounting firm for any specific, individual service approved by the chairman pursuant to the above-described delegation of authority may not exceed $100,000, plus reasonable and customary out-of-pocket expenses, and the chairman is required to report any such approvals to the full committee at its next scheduled meeting.

 

The pre-approval requirement is waived with respect to the provision of non-audit services by our independent registered public accounting firm if (1) the aggregate amount of all such non-audit services provided to us constitutes not more than five percent of the total fees paid by us to our independent registered public accounting firm during the fiscal year in which such non-audit services were provided,

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(2) such services were not recognized at the time of the engagement to be non-audit services, and (3) such services are promptly brought to the attention of the Audit Committee and approved by the committee or by one or more of its members to whom authority to grant such approvals has been delegated by the committee prior to the completion of the independent registered public accounting firm’s audit.  Ernst & Young LLP did not provide non-audit services during the 2016 Transition Period or during fiscal years 2016 and 2015.

 

 

REPORT OF THE AUDIT COMMITTEE

 

The Audit Committee has reviewed ImmunoGen’s audited financial statements for the six-month transition period ended December 31, 2016, and discussed these financial statements with ImmunoGen’s management.  The Audit Committee also has reviewed and discussed the audited financial statements and the matters required to be discussed by Public Company Accounting Oversight Board (“PCAOB”) Audit Standards No. 16 (“Communication with Audit Committees”) with Ernst & Young LLP, ImmunoGen’s independent registered public accounting firm.  In addition, the Audit Committee received the letter from Ernst & Young LLP required by PCAOB Rule 3526 (“Communication with Audit Committees Concerning Independence”), and has discussed with Ernst & Young LLP its independence.

 

Based on its review and the discussions referred to above, the Audit Committee recommended to ImmunoGen’s Board that the audited financial statements be included in ImmunoGen’s Transition Report on Form 10-K for the six-month transition period ended December 31, 2016.

 

By the Audit Committee of the Board of Directors of ImmunoGen, Inc.

 

Stephen C. McCluski, Chairman

Kristine Peterson

Richard J. Wallace

 

 

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

 

Section 16(a) of the Securities Exchange Act of 1934 requires our officers and directors and certain persons beneficially owning more than 10% of our outstanding common stock to file reports of beneficial ownership and changes in beneficial ownership with the SEC.  Officers, directors and beneficial owners of more than 10% of our common stock are required by SEC regulations to furnish us with copies of all Section 16(a) forms they file.

 

Based solely on copies of such forms furnished as provided above, and written representations from our officers and directors that no Forms 5 were required, we believe that during the six-month transition period ended December 31, 2016 all Section 16(a) filing requirements applicable to our officers, directors and beneficial owners of greater than 10% of our common stock were complied with.

 

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SHAREHOLDER PROPOSALS FOR THE 2018 ANNUAL MEETIN G

 

Under regulations adopted by the SEC, any shareholder proposal submitted for inclusion in ImmunoGen’s proxy statement relating to the 2018 annual meeting of shareholders must be received at our principal executive offices on or before December 30, 2017.

 

In addition to the SEC requirements regarding shareholder proposals, our by-laws contain provisions regarding matters to be brought before shareholder meetings.  If shareholder proposals, including proposals relating to the election of directors, are to be considered at the 2018 annual meeting of shareholders, notice of them, whether or not they are included in ImmunoGen’s proxy statement and form of proxy, must be given by personal delivery or by United States mail, postage prepaid, to our corporate secretary no earlier than February 12, 2018 and no later than March 14, 2018.  The notice must include the information set forth in our by-laws.  Proxies solicited by the Board will confer discretionary voting authority with respect to these proposals, subject to SEC rules governing the exercise of this authority.  Our by-laws do not affect any rights of shareholders to request the inclusion of proposals in ImmunoGen’s proxy statement pursuant to Rule 14a-8 under the Securities Exchange Act of 1934.

 

It is suggested that any shareholder proposal be submitted by certified mail, return receipt requested.

 

 

CERTAIN MATTERS RELATING TO PROXY MATERIAL S

 

The SEC has adopted a rule that allows us or your broker to send a single set of proxy materials and annual reports to any household at which two or more of our shareholders reside, if we or your broker believe that the shareholders are members of the same family.  This practice, referred to as “householding,” benefits both you and us.  It reduces the volume of duplicate information received at your household and helps us reduce our expenses.  The rule applies to our annual reports, proxy materials (including the Notice) and information statements.  Once you receive notice from your broker or from us that communications to your address will be “householded,” the practice will continue until you are otherwise notified or until you revoke your consent to the practice.  Each shareholder will continue to receive a separate proxy card or voting instruction card.

 

If, at any time, you no longer wish to participate in “householding” and would prefer to receive a separate Notice and, if applicable, other proxy materials, please notify your broker, or if you are holding a physical stock certificate, direct your written or oral request to Broadridge Corporate Issuer Solutions, Inc., P.O. Box 1342, Brentwood, New York 11717, telephone number 1-877-830-4936.   Shareholders who currently receive multiple copies of the Notice and, if applicable, other proxy materials at their address and would like to request “householding” of their communications should contact their broker or Broadridge Corporate Issuer Solutions, Inc.

 

 

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OTHER MATTERS

 

We know of no matters which may properly be and are likely to be brought before the meeting other than the matters discussed in this proxy statement.  However, if any other matters properly come before the meeting, the persons named in the accompanying proxy card will vote in accordance with their best judgment.

 

 

TRANSITION REPORT ON FORM 10-K

 

You may obtain a copy of our transition report on Form 10-K for the six-month transition period ended December 31, 2016 (without exhibits) without charge by writing to: Investor Relations, ImmunoGen, Inc.,  830 Winter Street,  Waltham, MA 02451.

 

By Order of the Board of Directors

 

Craig  Barrows,   Secretary  

April 28, 2017

 

 

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Exhibit A

IMMUNOGEN, INC.

 

2016 EMPLOYEE, DIRECTOR AND CONSULTANT EQUITY INCENTIVE PLAN
(as amended March 29, 2017
1 )

 

 

1. DEFINITIONS.

 

Unless otherwise specified or unless the context otherwise requires, the following terms, as used in this ImmunoGen, Inc. 2016 Employee, Director and Consultant Equity Incentive Plan, have the following meanings:

 

Administrator means the Board of Directors, unless it has delegated power to act on its behalf to the Committee, in which case the Administrator means the Committee.

 

Affiliate means a corporation which, for purposes of Section 424 of the Code, is a parent or subsidiary of the Company, direct or indirect.

 

Agreement means an agreement between the Company and a Participant delivered pursuant to the Plan, in such form as the Administrator shall approve.

 

Board of Directors means the Board of Directors of the Company.

 

Cause shall include (and is not limited to) dishonesty with respect to the Company or any Affiliate, insubordination, substantial malfeasance or non‑feasance of duty, unauthorized disclosure of confidential information, breach by the Participant of any provision of any employment, consulting, advisory, nondisclosure, non-competition or similar agreement between the Participant and the Company, and conduct substantially prejudicial to the business of the Company or any Affiliate provided, however that any provision in an agreement between the Participant and the Company or an Affiliate, which contains a conflicting definition of “cause” for termination and which is in effect at the time of such termination, shall supersede the definition in this Plan with respect to that Participant.  The determination of the Administrator as to the existence of Cause will be conclusive on the Participant and the Company.

 

Change of Control means the occurrence of any of the following events:

 

(i)

Ownership.  Any “Person” (as such term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended) becomes the “Beneficial Owner” (as defined in Rule 13d-3 under said Act), directly or indirectly, of securities of the Company representing 50% or more of the total voting power represented by the Company’s then outstanding voting securities (excluding for


1 Amendments in Sections 3(a) and 4(c) subject to shareholder approval.

A-1


 

this purpose any such voting securities held by the Company or its Affiliates or by any employee benefit plan of the Company) pursuant to a transaction or a series of related transactions which the Board of Directors