Aerie Pharmaceuticals (AERI) DEF 14ADefinitive proxy

Dear Stockholder:

On behalf of the Board of Directors and the employees of Aerie Pharmaceuticals, Inc., we thank you for your continued support and look forward to you joining the Annual Meeting.

Sincerely yours,

You are cordially invited to attend the meeting in person. Whether or not you expect to attend the meeting, please vote your shares promptly by following the instructions that you have received. Submitting a proxy or voting instructions will not prevent you from attending the Annual Meeting and voting in person. Please note, however, that if your shares are held of record by a broker, bank or other nominee and you wish to vote at the meeting, you must obtain a proxy issued in your name from that record holder.

IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE STOCKHOLDER MEETING TO BE HELD ON JUNE 17, 2021:

We are developing AR-15512, our product candidate for the treatment of dry eye disease, for which we initiated a large Phase 2b clinical trial in October 2020. Furthermore, we are also developing three sustained-release implants focused on retinal diseases, AR-1105, AR-13503 SR and AR-14034 SR. For AR-1105, we reported topline results of the Phase 2 clinical trial for patients with macular edema due to retinal vein occlusion (“RVO”) in July 2020, indicating sustained efficacy of up to six months, an important achievement in validating the potential capabilities of Aerie’s sustained release platform. With respect to future plans for AR-1105, we are currently evaluating next steps regarding advancement into a Phase 3 clinical trial along with commercialization prospects in both Europe and the United States.

For AR-13503 SR, we initiated a first in-human clinical safety study in the third quarter of 2019 for the treatment of wet age-related macular degeneration (age-related macular degeneration, “AMD”) and diabetic macular edema (“DME”), which is currently ongoing. We are still evaluating different formulations of this early stage product candidate.

We are dedicated to the principles of environmental stewardship, social responsibility, good corporate governance and human capital. We consider these principles to be among our most important values and therefore integrate them in our ongoing and strategic activities. We believe incorporating these values and practices into our operations not only improves our performance but also creates a sustainable and growth-oriented culture that benefits our employees, our customers and our investors.

Our Nominating and Corporate Governance Committee of the Board of Directors regularly reviews our operations with senior management to assess our progress in realizing these values. With our Board of Directors’ leadership, we plan on continuing to evaluate our ESG practices and to integrate sustainability into our business.

As we continue to build our company, we will continue to keep these principles at top of mind.

In accordance with rules of the U.S. Securities and Exchange Commission (“SEC”), we use the Internet as the primary means of furnishing proxy materials to stockholders. Accordingly, we are sending a Notice of Internet Availability of Proxy Materials (the “Notice”) to our stockholders with instructions on how to access the proxy materials over the Internet (or request a printed copy of the materials) and for voting over the Internet. The proxy materials are also available at www.aeriepharma.com. The inclusion of our website address here and elsewhere in this proxy statement does not incorporate by reference the information on our website into this proxy statement.

Only stockholders of record as of the close of business on April 19, 2021, will be entitled to vote at the Annual Meeting. As of April 19, 2021, there were 46,890,091 shares of common stock issued and outstanding and entitled to vote.

If on April 19, 2021, your shares were registered directly in your name with our transfer agent, American Stock Transfer & Trust Company, LLC, then you are a stockholder of record and the Notice was sent directly to you. As a stockholder of record, you may vote in person at the meeting or vote by proxy.

A quorum of stockholders is necessary to hold a valid meeting. A quorum will be present if the holders of a majority in voting power of our issued and outstanding shares and entitled to vote at the Annual Meeting are present in person or represented by proxy at the Annual Meeting.

If you are a stockholder of record, you may (a) vote in person at the Annual Meeting as described under “Who can vote at the Annual Meeting?” or (b) vote by proxy. Whether or not you plan to attend the meeting, we urge you to fill out and return a proxy card by mail or vote by proxy over the telephone or the Internet as instructed below to ensure your vote is counted. You may still attend the

meeting and vote in person even if you have already voted by proxy, as described under “May I change my vote after submitting my proxy card?” below.

You are entitled to attend the Annual Meeting only if you were a stockholder of record as of April 19, 2021 or you hold a valid proxy for the Annual Meeting as described in the previous question. Since seating is expected to be limited, admission to the meeting will be on a first-come, first-served basis. You should be prepared to present photo identification for admittance. You may contact us via the Internet or by telephone at (919) 237-5300 to obtain directions on how to vote in person at the Annual Meeting.

If you are not a stockholder of record but hold shares as a beneficial owner, you should provide proof of beneficial ownership as of April 19, 2021, such as your most recent account statement prior to April 19, 2021, a copy of the voting instruction card provided by your broker, bank or other nominee, or other similar evidence of ownership.

Yes. You can revoke your proxy at any time before the final vote at the Annual Meeting. If you are the stockholder of record of your shares, you may revoke your proxy in any one of the following four ways:

If you are a beneficial owner of shares but not the record holder, you may submit new voting instructions by contacting your broker, bank or other nominee. You will need the appropriate documentation from the stockholder of record to vote in person at the Annual Meeting. If your shares are held by your broker, bank or another party as a nominee or agent, you should follow the instructions provided by such party.

The terms of our Class II directors, Mechiel (Michael) M. du Toit and David W. Gryska, will expire at the Annual Meeting, and the terms of our Class III and Class I directors will expire at the annual meeting of stockholders to be held in 2022 and 2023, respectively.

The Nominating and Corporate Governance Committee periodically determines the qualifications, qualities, skills and other expertise required to be considered in selecting director-nominees. Among other things, the Nominating and Corporate Governance Committee considers whether the Board reflects the balance of knowledge, experience, skills, expertise, integrity, ability to make analytical inquiries and diversity as a whole that the committee deems appropriate. The process followed by the Nominating and Corporate Governance Committee to identify and evaluate director candidates includes requests to current directors and others for recommendations, meetings from time to time to evaluate biographical information and background material relating to potential candidates and interviews of selected candidates by members of the committee and the Board. The Nominating and Corporate Governance Committee may use outside consultants to assist in identifying or evaluating candidates. Final approval of director candidates is determined by the full Board.

The Board and its committees conduct annual self-evaluations to assess the effectiveness of the Board and its committees. The self-evaluations focus on the Board’s and each committee’s and their respective members’ performance and contribution to the governance of the Company. The Nominating and Corporate Governance Committee is responsible for developing the framework for such annual self-evaluations. The full Board discusses the results of its self-evaluation and each committee also provides the full Board with a summary of the results of their respective self-evaluations. This process is designed to ensure that the Board and each committee receive constructive feedback from our directors and that each committee evaluates, on an annual basis, whether it is adequately fulfilling the responsibilities set forth in its charter.

Pursuant to the Company’s non-employee director compensation policy, each non-employee director is eligible to receive a prorated annual cash retainer, as well as additional retainers for service as our Lead Independent Director or service on committees of the Board, as detailed below.

All amounts are paid in quarterly installments. We reimburse each of our directors for their travel expenses incurred in connection with their attendance at Board and committee meetings.

In addition, newly appointed non-employee directors shall be eligible to receive a one-time initial option award to purchase 25,000 shares of common stock, which will vest quarterly over a three-year period subject to the director’s continued service on the Board.

The following table sets forth the compensation paid to our non-employee directors for the year ended December 31, 2020, for their service on our Board.

Our corporate governance guidelines provide a framework for the governance of the Company as a whole and describe the principles and practices that our Board follows in carrying out its responsibilities.

In accordance with our corporate governance guidelines, the Board does not involve itself in the day-to-day operations of the Company. The Board directs and oversees the management of the business and affairs of the Company in a manner consistent with the best interests of the Company and its stockholders. In this oversight role, the Board serves as the ultimate decision-making body of the Company, except for those matters reserved to or shared with the Company’s stockholders. The Board selects and oversees the members of senior management, who are charged by the Board with conducting the business of the Company.

Our directors fulfill their duties and responsibilities by attending meetings of the Board, which are held from time to time, and, as applicable, meetings of the three standing committees of the Board (the Audit Committee, the Nominating and Corporate Governance Committee and the Compensation Committee), which are also held from time to time.

The Board held eleven meetings during the year ended December 31, 2020. Of the eleven meetings held during such period, four meetings were held in person and seven meetings were held telephonically or via video teleconference. Except for Dr. Cagle, who attended ten of the eleven meetings of the Board during the year ended December 31, 2020, each incumbent director attended one hundred percent (100%) of the meetings of the Board held during the period for which he or she served as a director during the year ended December 31, 2020. In addition, each incumbent director attended one hundred percent (100%) of the meetings of the committee(s) on which that director served during such period. With respect to the single Board meeting during the year ended December 31, 2020 which Dr. Cagle did not attend, Dr. Cagle notified the Company in advance of the absence and discussed the applicable meeting agenda and materials with Company management and other directors prior to and subsequent to such meeting.

Under the listing requirements and rules of the NASDAQ Global Market (“NASDAQ”) independent directors must compose a majority of a listed company’s board of directors. In addition, applicable NASDAQ rules require that, subject to specified exceptions, each member of a listed company’s audit, compensation and nominating committees must be independent within the meaning of applicable NASDAQ rules. Audit committee members must also satisfy the independence criteria set forth in Rule 10A-3 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”).

The Board has three committees: an Audit Committee, a Compensation Committee and a Nominating and Corporate Governance Committee. The following table provides membership information at December 31, 2020 and lists the number of meetings held during 2020, for each committee:

The members of our Audit Committee include Mr. Gryska, Mr. Croarkin and Ms. McHugh. Mr. Gryska serves as chair of the Audit Committee. The Audit Committee held eight meetings during the year ended December 31, 2020. Of the eight meetings held during such period, two meetings were held in person and six meetings were held telephonically or via video teleconference. The Audit Committee operates under a written charter that satisfies the applicable standards of the SEC and NASDAQ and which is available on our website at www.aeriepharma.com. The inclusion of our website address here and elsewhere in this proxy statement does not incorporate by reference the information on our website into this proxy statement.

Our Board has determined that Mr. Gryska, Mr. Croarkin and Ms. McHugh are independent as independence is currently defined in Rule 5605 of the NASDAQ listing standards and Rule 10A-3 under the Exchange Act. In addition, our Board has determined that each member of the Audit Committee is financially literate and that Mr. Gryska and Mr. Croarkin each qualifies as an “audit committee financial expert” as defined in applicable SEC rules. In making this determination, our Board has considered the formal education and nature and scope of their previous professional experience, coupled with past and present service on various audit committees.

The Audit Committee has reviewed and discussed the audited consolidated financial statements for the fiscal year ended December 31, 2020, with management and our independent registered public accounting firm, PricewaterhouseCoopers LLP. The Audit Committee has discussed with PricewaterhouseCoopers LLP the matters required to be discussed by Statement on Auditing Standards No. 61, as amended (AICPA, Professional Standards, Vol. 1. AU Section 380), as adopted by the PCAOB in Rule 3200T and the Commission. The Audit Committee has also received the written disclosures and the letter from PricewaterhouseCoopers LLP required by applicable requirements of the PCAOB regarding PricewaterhouseCoopers LLP’s communication with the Audit Committee concerning independence, and has discussed with PricewaterhouseCoopers LLP the firm’s independence. Based on the foregoing, the Audit Committee recommended to the Board of Directors that the audited consolidated financial statements be included in our Form 10-K for the fiscal year ended December 31, 2020, for filing with the Securities and Exchange Commission.

The members of our Nominating and Corporate Governance Committee are Mr. du Toit, Dr. Cagle, Dr. McDonnell and Ms. McHugh. Mr. du Toit serves as chair of the Nominating and Corporate Governance Committee. The Nominating and Corporate Governance Committee held five meetings during the year ended December 31, 2020. Of the five meetings held during such period, two meetings were held in person and three meetings were held telephonically or via video teleconference. In addition to such meetings, during the year ended December 31, 2020, the members of the Nominating and Corporate Governance Committee engaged in periodic informal discussion amongst themselves regarding the responsibilities of the Nominating and Corporate Governance Committee.

Our Board has determined that all members of our Nominating and Corporate Governance Committee are independent as independence is currently defined in Section 5605 of the NASDAQ listing standards. The Nominating and Corporate Governance Committee operates under a written charter that satisfies the applicable standards of NASDAQ and which is available on our website at www.aeriepharma.com. The inclusion of our website address here and elsewhere in this proxy statement does not incorporate by reference the information on our website into this proxy statement.

In fulfilling its responsibilities, the Compensation Committee may delegate any or all of its responsibilities to a subcommittee of the Compensation Committee, but only to the extent consistent with our amended and restated certificate of incorporation, amended and restated by-laws, Section 162(m) of the Code, NASDAQ rules and other applicable law.

Our Board selects a chair based on what it believes is in the best interests of the Company and our stockholders. The Board does not have a fixed policy on whether the role of chair and chief executive officer should be separate or combined, and if it is to be separate, whether the chair should be selected from the independent directors or should be an employee of the Company.

Dr. Anido, our Chief Executive Officer, currently serves as chair of our Board. Our Board believes that this leadership structure is presently appropriate for the Company given Dr. Anido’s extensive experience with and knowledge of the pharmaceutical industry and his ability to effectively identify strategic priorities for the Company. Furthermore, our Board believes that Dr. Anido’s combined role of chief executive officer and chair promotes effective execution of strategic goals and facilitates information flow between management and our Board. Dr. Anido chairs all Board meetings, except for executive sessions at which only independent directors are present. Our corporate governance guidelines require that whenever the chair of the Board is also the chief executive officer or is otherwise a director who does not qualify as an independent director that the independent directors of the Board elect from among themselves a lead independent director. When and as required pursuant to our corporate governance guidelines, a lead independent director is to be elected at least once annually following the nomination of an independent director as a lead independent director nominee by our Nominating and Corporate Governance Committee and the election, by a majority vote of the Board’s independent directors, of such nominee or another independent director of the Board.

Risk assessment and oversight are an integral part of our governance and management processes. Our Board encourages management to promote a culture that incorporates risk management into the Company’s corporate strategy and day-to-day business operations. Management discusses strategic and operational risks at regular management meetings, and conducts specific strategic planning and review sessions during the year that include a focused discussion and analysis of the risks facing the Company. Throughout the year, senior management reviews these risks with the Board at regular Board meetings as part of management presentations that focus on particular business functions, operations or strategies and presents the steps taken by management to mitigate or eliminate such risks.

Our Board does not have a standing risk management committee, but rather administers this oversight function directly through our Board as a whole, as well as through various standing committees of our Board that address risks inherent in their respective areas of oversight. In particular, our Board is responsible for monitoring and assessing strategic risk exposure, and our Audit

Committee is responsible for overseeing our significant financial and operational risk exposures and the steps our management has taken to monitor and control these exposures.

Stockholders wishing to communicate directly with our Board may send correspondence to Richard J. Rubino, Secretary, c/o Aerie Pharmaceuticals, Inc., 4301 Emperor Boulevard, Suite 400, Durham, North Carolina 27703. Stockholders may also visit our website at www.aeriepharma.com and select “Contact Us” to communicate online with us.

We are dedicated to the principles of environmental stewardship, social responsibility, good corporate governance and human capital. We consider these ESG principles to be among our most important values and therefore integrate them in our ongoing and strategic activities. We believe incorporating these values and practices into our operations not only improves our performance but also creates a sustainable and growth-oriented culture that benefits our employees, our customers and our investors. Our Nominating and Corporate Governance Committee of the Board of Directors regularly reviews our operations with senior management to assess our progress in realizing these values. With our Board of Directors’ leadership, we plan on continuing to evaluate our ESG practices and to integrate sustainability into our business.

We recognize our responsibility to be environmentally conscious and to contribute to the global effort of tackling climate change, moving toward a low-carbon economy and expanding the use of renewable energy. Renewable energy is an important part of our commitment to sustainability, and where feasible we operate our manufacturing facilities using renewable energy. At our Athlone manufacturing plant in Ireland we purchase 100% of our electricity from renewable sources and the electric supply is 100% carbon neutral.

We employ green processes, materials, practices, equipment and technologies where feasible throughout our operations to foster conservation and reduce waste. We minimize energy consumption using various power-saving technologies designed to consume electrical power only when needed. The majority of our office space in the U.S. is Leadership in Energy and Environmental Design (“LEED”) certified, and both our manufacturing plant in Athlone, Ireland, and our implant manufacturing facility in Durham, North Carolina, were built from end-to-end with sustainability and good manufacturing practices in mind. We have also instituted environmentally conscious programs into the work environment for our employees by implementing recycling and composting programs, offering water dispensers to reduce plastic bottle waste, and providing electric automobile charging stations in our employee parking areas, as examples. In 2020, we recycled 63% of the non-hazardous waste produced at our Athlone manufacturing plant. Through these programs and continuous improvement, we strive to reduce our waste while maximizing the proportion that may be recycled. Looking to the future, we plan to continue to further enhance our sustainability posture through detailed monitoring and management of our energy, water and waste management practices.

From a social responsibility perspective, as an ophthalmic pharmaceutical company, we are focused on the needs of patients, physicians and the communities we serve, including supporting patient advocacy through philanthropic donations. Although we have not yet attained profitability as a company, we have donated hundreds of thousands of dollars to causes that we believe are important to society. These donations were directed to support glaucoma research and glaucoma patient education through ongoing collaborations with the Glaucoma Research Foundation, help fund free cataract surgery for 750 indigent patients in the United States over the past three years through a continuing match program with the American Society of Cataract Refractive Surgery Foundation and promote the empowerment of women in ophthalmology as a lead sponsor of Women in Ophthalmology. In addition, these donations were also directed to accelerate treatments and cures for retinal diseases for the next generation through the Foundation Fighting Blindness and expand opportunities for ophthalmology residents from groups that are underrepresented in medicine or who want to work in underserved communities through support of the National Medical Association’s Rabb-Venable Excellence in Ophthalmology Research Program. We have also made other donations as well as supported causes of interest to areas beyond our immediate scope in eye care, such as our long-standing relationship with Northside Center for Child Development (“NCCD”) and their work with New York City children in need, in order to support the communities we serve. Our Chief Financial Officer, currently President of the Board of NCCD, has served as a Director there since 2009. NCCD has become a pioneer of behavioral health programs for low-income children of color and their families located in Harlem, Brooklyn and the Bronx, New York.

We also strive to be socially conscious in our employment practices. We support diversity in our hiring practices and follow a management philosophy that integrates social responsibility and the highest governance standards. We established an Affirmative Action Plan in 2018 in compliance with the requirements of the Office of Federal Contract Compliance Programs. We are committed to making a good faith effort to improve our current practices over time when the opportunity is available. All managers

are trained in Equal Employment Opportunity compliant recruiting and interviewing practices. See “Human Capital—Diversity and Inclusion” below.

In order to successfully attract and retain highly professional and skilled employees, it is crucial that we offer a diverse, inclusive and safe workplace. Our recruitment process begins with hiring individuals that we believe meet our strong culture for respect, commitment, integrity and honesty. We have a philosophy of investing in our employees by providing the necessary resources to grow professionally through our training and development programs, which will ultimately help drive company success. We reward our employees by offering a competitive compensation and benefits package, including incentive-based awards, which we believe motivates our employees and drives company performance.

As of December 31, 2020, we employed approximately 365 full-time employees, of which 299 were employed in the United States and 66 were employed outside the United States. The majority of our employees outside of the United States primarily support our manufacturing operations in Athlone, Ireland. Of our total employee population, there were 145 sales force and marketing employees, 111 in research and development and medical affairs, 56 in product manufacturing and 53 in general and administrative support roles such as human resources, finance, legal and information technology. We are committed to providing our employees with a positive work environment that helps them realize their full potential and helps them contribute to the success of our company. None of our employees are represented by any collective bargaining unit. We believe that we maintain good relations with our employees.

We have a strong commitment to continue to build a diverse and inclusive work environment that fosters a positive culture. We believe our diverse workforce brings a wide array of skills and experiences that help increase innovation and strategic thinking and ultimately contribute to the success of our company.

Our hiring practices reflect our commitment to increase diversity and inclusion among our employees, as shown below:

The success of our company is highly dependent on the performance, skills and industry knowledge of our employees. A significant proportion of our employee base is comprised of professionals who have had prior experience with pharmaceutical and biotechnology companies. In order to attract and retain such highly qualified talent, we invest significant resources to further develop our employees and provide opportunities that help them achieve career goals and lead our organization.

We maintain a robust training curriculum for all our employees and executives based on function. These curricula incorporate training addressing specific regulatory requirements germane to the performance of specific functions. The training for our scientific and quality personnel, for example, includes modules focusing on our good manufacturing and laboratory practices as well

as proper documentation and reporting. In addition to specific function-based training, all of our employees are required to regularly train on our code of business conduct and ethics, receive cyber security training and receive harassment training. We believe a well-trained employee base is the best way to ensure proper business operations and to best ensure the establishment of a collaborative and supportive corporate culture.

We are dedicated to creating and maintaining a work environment where our employees feel safe to carry on their responsibilities. We regularly review health and safety legislation to ensure compliance with current standards; we identify and monitor potential health and safety hazards; we coordinate emergency and fire drills; and we train our employees to avoid or minimize any potential risks within the workplace. The health and safety of our employees, patients, prescribers, and community are of utmost importance to us and we strive to comply with good manufacturing practices and with all requirements and mandates from various agencies and governments. We value the patient volunteers who participate in clinical trials and we are committed to protecting their rights and well-being. As such, we have policies and procedures in place to ensure our clinical trial practices comply with laws and regulations in all countries in which we operate clinical trials and meet our high ethical standards. We also have protocols in place to obtain informed consent from patients participating in our clinical trials.

In our research and manufacturing facilities, we maintain a safety culture and seek to eliminate workplace incidents and minimize risks and hazards. We have created and implemented processes to help eliminate safety events by reducing their frequency and severity. These programs include an illness and injury prevention program and a safety committee. The safety committee oversees the implementation of our safety program. We also review and monitor our performance closely. We monitor and continuously seek to reduce safety incidents each year. Through our efforts, we had a recordable incident rate of 1.3 (recordable incidents per 100 employees, as defined by the U.S. Occupational Safety and Health Administration, “OSHA”) at our Athlone manufacturing plant in 2020. This compares to an OSHA incident rate of 1.6 for the U.S. pharmaceutical and medicine manufacturing industry in 2019.

To compete in a highly competitive job market and attract, retain and reward outstanding talent, we offer our employees a comprehensive compensation package that includes competitive salaries and benefit programs.

Our well-designed compensation package includes the following:

Upon the recommendation of the Nominating and Corporate Governance Committee, our Board has nominated Mr. du Toit and Mr. Gryska for re-election as Class II directors at the Annual Meeting.

There are no arrangements or understandings between any director, or nominee for directorship, pursuant to which such director or nominee was selected as a director or nominee. We know of no reason why any nominee may be unable to serve as a director. If any nominee is unable to serve, your proxy may vote for another nominee proposed by the Board. If for any reason these nominees prove unable or unwilling to stand for election, the Board will nominate alternates or reduce the size of the Board to eliminate the vacancy. The Board has no reason to believe that its nominees would prove unable to serve if elected. Proxies cannot be voted for a greater number of persons than the number of nominees named in this proxy statement.

If the nominees listed above are elected, they will hold office until the annual meeting of stockholders to be held in 2024 or until their successors have been duly elected and qualified.

Directors are elected by a plurality of the votes cast at the meeting by the holders of shares present in person or represented by proxy at the Annual Meeting and entitled to vote on the election of directors. We will count shares represented by executed proxies, if authority to do so is not withheld, as voting for the election of the two nominees named above. If any nominee becomes unavailable for election because of an unexpected occurrence, your shares will be voted for the election of a substitute nominee proposed by our Board.

The Company’s stockholders are being asked by the Audit Committee of the Board to ratify the appointment of PricewaterhouseCoopers LLP to serve as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2021. The Audit Committee is solely responsible for selecting the Company’s independent registered public accounting firm, and stockholder approval is not required to appoint PricewaterhouseCoopers LLP as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2021. However, the Board believes that submitting the appointment of PricewaterhouseCoopers LLP to the stockholders for ratification is good corporate governance. If the stockholders do not ratify this appointment, the Audit Committee will reconsider whether to retain PricewaterhouseCoopers LLP. If the selection of PricewaterhouseCoopers LLP is ratified, the Audit Committee, in its discretion, may direct the appointment of a different independent registered public accounting firm at any time it decides that such a change would be in the best interest of the Company and its stockholders.

Representatives of PricewaterhouseCoopers LLP are expected to participate in the Annual Meeting. These representatives will be provided an opportunity to make a statement at the Annual Meeting if they desire to do so and will be available to respond to appropriate questions from stockholders.

This proposal requires an affirmative vote of a majority of the votes cast at the Annual Meeting by the holders of shares present in person or represented by proxy at the Annual Meeting and entitled to vote on the proposal.

Our Audit Committee pre-approves all audit and permissible non-audit services provided by PricewaterhouseCoopers LLP. These services may include audit services, audit-related services, tax services and other services. Pre-approval may be given as part of the Audit Committee’s approval of the scope of the engagement of the independent registered public accounting firm or on an individual case-by-case basis. All of the services described below were approved by our Audit Committee.

The following table sets forth certain information about our executive officers.

Set forth and described below is certain information about our executive officers (in addition to Dr. Anido).

Although we believe strongly that our executive pay program adheres to market best practices and reflects our pay-for-performance strategy, we recognize that this vote presents another opportunity for us to further engage with our stockholders on important matters. We communicate with our stockholders regularly and share feedback we receive with our Board of Directors to ensure our practices align with our stockholders’ interests. Our Chief Financial Officer and our Chief Executive Officer lead our engagement efforts with stockholders, including regular stockholder engagement through our quarterly earnings calls, company presentations, investor conferences and other investor meetings where investors have an opportunity to discuss incentive compensation matters, among other topics.

Our compensation philosophy is to pay for performance. We believe firmly that our executives’ interests should be aligned with our stockholders’ interests. To accomplish this we:

In so doing, we feel we provide competitive compensation opportunities that further our goals of attracting, motivating and retaining talented executives and that align with our overall business model and emphasize a long-term view of Company performance and strategic execution.

Our Chief Executive Officer informs our Compensation Committee on the individual performance and contributions of each of the other NEOs, and annually makes recommendations to the Compensation Committee regarding base salary, non-equity incentive plan compensation and equity awards. The Compensation Committee reviews and takes into account such recommendations, but ultimately retains full discretion and authority over the final compensation decisions for the NEOs.

Pursuant to its charter, the Compensation Committee has the sole authority to retain compensation consultants to assist in its evaluation of executive and director compensation. At the beginning of the 2020 fiscal year, Pearl Meyer was serving as the Compensation Committee’s independent compensation advisor. In the second quarter of the 2020 fiscal year, the Compensation Committee engaged ClearBridge as its independent compensation advisor for the remainder of the fiscal year ended December 31, 2020. ClearBridge conducted various market studies and advised the Compensation Committee on general executive compensation matters to assist the Compensation Committee in fulfilling its duties.

As was the case with Pearl Meyer, ClearBridge reports directly to the Compensation Committee, participates in meetings, communicates with the Committee Chair between meetings as necessary and works with management at the direction of the Compensation Committee.

The Compensation Committee reviewed ClearBridge’s independence and concluded that it is an independent and conflict-free advisor to the Company pursuant to standards under the Dodd-Frank Wall Street Reform and Consumer Protection Act and NASDAQ’s independence standards.

In the third quarter of fiscal year 2019, the Compensation Committee approved the peer group that would be used to determine 2020 pay opportunity levels for the NEOs (our “2019 peer group”). For 2020, we referenced the 2019 peer group in our annual executive compensation benchmarking assessment, reviewing market employment arrangement practices, evaluating our

aggregate equity usage and dilution and reviewing non-executive director compensation. In developing the 2019 peer group we balanced removing companies that were no longer appropriate peer companies (e.g., due to mergers and acquisitions activity) with minimizing year-over-year turnover within the group to provide consistency in the data. The primary screening characteristics for evaluation included utilizing companies that are:

We set base salaries that are competitive in the marketplace and reflect each individual’s duties, responsibilities, experience and performance. Base salaries are reviewed annually and adjusted periodically to take into account inflation, market movement, promotions, increased responsibility and performance. We do not provide for automatic salary increases.

At the beginning of each fiscal year, the Compensation Committee establishes a non-equity incentive compensation plan that is tied to critical short-term business goals. Our annual bonus program is an important incentive tool used to motivate achievement of our short-term goals for the forthcoming fiscal year. Each NEO participates in the plan and has a target bonus opportunity amount that is stated as a percentage of base salary. Participants can earn between 0% and 200% of their targeted payout level based upon actual Company and individual performance as reviewed and assessed by the Compensation Committee.

Bonus payouts are made in cash and paid in arrears on an annual basis if the performance goals are met, or at the Board’s discretion after taking into account various subjective factors, including individual performance and execution on our long-term plans. We do not provide for guaranteed bonus payouts.

Our Compensation Committee established five core goals to assess short-term Company performance in 2020 (the “Core Goals”), which span across a balance of meaningful financial and non-financial categories. As a recently commercial pharmaceutical company, we focused on goals that are important to our investors and stockholders. Our financial goals were to achieve an aggressive net revenue goal, as well as to achieve our net income after taxes, ending cash balance and our strategic goals. Strategic goals for 2020 were related to specific pipeline, globalization and manufacturing considerations, as outlined further below. We believe these goals were set at appropriately aggressive levels that were neither certain to be met, nor unachievable at the onset of the year. Although we may use different financial performance measures in the future, the Compensation Committee believes that net revenue, net income after taxes and ending cash balance were the most meaningful financial measures to assess the Company’s performance in 2020. Our non-financial goals reflect prospective opportunities that we believe can drive future stockholder value.

Overall, the Compensation Committee strives to set objective, measurable goals for the bonus plan each year, but like many recently commercial biotechnology or pharmaceutical companies, recognizes that the dynamic nature of drug development and approval requires some subjectivity and qualitative assessment to arrive at the final bonus funding. That qualitative assessment can manifest itself in partial achievement for a goal that is substantially met but not completely met for a particular reason, or reduction in the achievement level if the goal is met but there were suboptimal aspects of the achievement. Based on the Core Goals performance described above, the Compensation Committee determined the corporate goals were achieved at 93.6% of target for NEOs.

In addition to the achievement of the Core Goals, adjustments to individual incentive payouts may be made below or above target achievement based on the Compensation Committee’s assessment of individual performance that may be outside of the Core Goals. Ultimately, the Compensation Committee’s objective is to arrive at bonus payouts that reflect both performance against the set of Core Goals articulated at the onset of the year, as well as an overall evaluation of the Company’s performance and individual performance in that given year. For 2020, the CEO’s annual incentive was awarded in line with the corporate funding factor for the Core Goals. Drs. Kopczynski and Hollander and Mr. LaRocca were also awarded bonuses that were in line with the corporate funding factor. Mr. Rubino’s bonus was adjusted upward to 96.0%, reflecting his successful efforts related to cash management and business development activities. Mr. Mitro’s bonus was adjusted upward to 95.0%, reflecting his significant efforts in successfully driving the commercial business and re-negotiating with wholesalers and managed care organizations.

The Compensation Committee approves the grant of equity awards under our stock incentive plans to our NEOs. Our stock incentive plans afford the Compensation Committee flexibility to determine the specific award types and parameters that it believes are in the best long-term interests of the Company. We believe that long-term incentive awards provide the strongest alignment with stockholder interests and as such have a general philosophy of emphasizing long-term incentives as part of our total compensation program. Further, we believe that properly structured awards are a valuable motivating incentive and strong retention tool.

The terms of our equity awards generally provide time-based vesting provisions that require the recipient remain an employee of the Company to obtain such awards on the vesting date(s), and in certain instances are also subject to the achievement of performance-based goals. Time-vested equity awards are subject to double-trigger acceleration upon a change in control of the Company, whereby outstanding awards are only subject to accelerated vesting or other enhanced vesting in the event that there is a change in control event and the executive is terminated without “Cause” or for “Good Reason” within twelve months following the change in control event.

We do not provide for automatic awarding of equity awards. Grants are typically made by the Compensation Committee to the NEOs on an annual basis after considering factors such as Company and individual performance, current equity ownership by the individual, our total equity usage and dilution and our available share pool. From time-to-time, we may grant equity awards to our NEOs outside of our annual grant cadence when the Committee believes it is in the best interests of the Company, reflects Company performance and further aligns the interests of our NEOs with those of our stockholders.

Our primary approach for sizing equity awards is to consider the award as a percentage of shares outstanding. Since public reporting requirements stipulate disclosures of equity awards as a grant date fair value, our Compensation Committee evaluates the implied grant date fair value of these awards as another parameter. We believe that our approach is best for the Company as it allows us to better manage our equity pool, but recognize that it can lead to sizable year-to-year swings in the grant date fair value of awards to any particular NEO. Our Compensation Committee continues to evaluate this process.

In February 2020, the Compensation Committee approved equity awards to our NEOs following a review of competitive market data and Company and individual performance. Our approach to these annual awards was to provide a mix of 60% stock options and 40% restricted stock awards (when measured on an option-equivalent basis using a 3.0 stock option to 1.0 restricted stock conversion ratio), as follows:

The structure of the grants was the same as the annual grants provided in 2019, but the value of the grants was substantially lower reflecting stock price performance, given our approach of sizing equity awards as a percentage of shares outstanding rather than as a grant value. Consistent with last year, the Compensation Committee considered whether to award grants that vest on the basis of achieving performance targets as part of the Company’s annual long term incentive program and ultimately determined not to implement this type of award at this time. This decision was underpinned by the following: