| SEC

PRE 14C Form - Other preliminary information statements - Amneal Pharmaceuticals, Inc. (0001723128) (Filer)

PRE 14C1d726114dpre14c.htmPRELIMINARY INFORMATION STATEMENTPreliminary Information Statement
Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14C INFORMATION

Information Statement Pursuant to Section 14(c) of the Securities

Exchange Act of 1934 (Amendment No.    )

 

Check the appropriate box:
  
       

Preliminary InformationStatement

  
   

Confidential, for Use of theCommission Only (as permitted by Rule 14c-5(d)(2))

  
   

Definitive InformationStatement

LOGO

Amneal Pharmaceuticals, Inc.

(Name of Registrant as Specified In Its Charter)

 

Payment of Filing Fee (Check the appropriate box):
       No fee required.
   Fee computed on table below per Exchange Act Rules 14c-5(g) and0-11.
  

(1)  Title of each class of securities to which transaction applies:

  

(2)  Aggregate number of securities to which transaction applies:

  

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

  

(4)  Proposed maximum aggregate value of transaction:

  

(5)  Total fee paid:

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

(1)  Amount Previously Paid:

  

(2)  Form, Schedule or Registration Statement No.:

  

(3)  Filing Party:

  

(4)  Date Filed:

 

 


Table of Contents

PRELIMINARY INFORMATION STATEMENT—SUBJECT TO COMPLETION

AMNEAL PHARMACEUTICALS, INC.

NOTICE OF STOCKHOLDER ACTION BY WRITTEN CONSENT

Dear Stockholders:

This Noticeand the accompanying Information Statement are being furnished to the stockholders of Amneal Pharmaceuticals, Inc., a Delaware corporation (“Amneal,” the “Company,” “we,” “us,” or “our”), to notifystockholders of the actions taken on October 10, 2019 by the Compensation Committee of the Company’s Board of Directors, and by written consent of certain stockholders holding a majority of the voting power of the issued and outstandingshares of Class A common stock, par value $0.01 per share (“Class A Common Stock”), of the Company, and Class B common stock, par value $0.01 per share, of the Company, voting together as a single class (the “MajorityStockholders”), approving a one-time stock option repricing (the “Option Repricing”).

Pursuant to the Option Repricing, the exercise price of each Relevant Option (as defined in the accompanying Information Statement) will beamended to reduce such exercise price to the closing price of a share of the Class A Common Stock as reported on the New York Stock Exchange (the “NYSE”) on the date on which the Option Repricing becomes effective. The OptionRepricing will become effective on the 20th calendar day after the completion of the mailing to the Company’s stockholders of this Notice and Information Statement. The effective date is currently expected to be November 13, 2019. In theevent that the 20th calendar day is not a trading day for the NYSE, the Option Repricing will become effective on the first NYSE trading day thereafter.

As the matters set forth in this Information Statement have been duly authorized and approved by the Majority Stockholders, your vote orconsent is not requested or required to approve these matters. The accompanying Information Statement is provided solely for your information, and also serves the purpose of informing stockholders of the matters described herein pursuant toSection 14(c) of the Securities Exchange Act of 1934, as amended, and the rules and regulations prescribed thereunder, including Regulation 14C, and serves as the notice required by Section 228 of the Delaware General Corporation Law ofthe taking of a corporate action without a meeting by less than unanimous written consent of our stockholders. You do not need to do anything in response to this Notice and the accompanying Information Statement.

WE ARE NOT ASKING YOU FOR A PROXY OR CONSENT, AND YOU ARE REQUESTED NOT TO SEND US A PROXY OR CONSENT.

Sincerely,

David A. Buchen

Corporate Secretary

Bridgewater, New Jersey

October [_], 2019

 


Table of Contents


Table of Contents

INFORMATION STATEMENT

WE ARE NOT ASKING YOU FOR A PROXY OR CONSENT, AND

YOU ARE REQUESTED NOT TO SEND US A PROXY OR CONSENT

General

Amneal Pharmaceuticals, Inc., aDelaware corporation (“Amneal,” the “Company,” “we,” “us,” or “our”), is sending you this Information Statement solely for the purpose of informing our stockholders as of the record date,October 10, 2019, of actions taken by our stockholders by less than unanimous written consent in lieu of a meeting of stockholders. No action is requested or required on your part.

This Information Statement is first being distributed to Amneal stockholders on or about October [_], 2019. The Company’s principalexecutive offices are located at 400 Crossing Boulevard, 3rd Floor, Bridgewater, New Jersey 08807, and the Company’s telephone number is 908-947-3120.

Safe Harbor Statement

Certainstatements contained herein, regarding matters that are not historical facts, may be forward-looking statements (as defined in the Private Securities Litigation Reform Act of 1995). Such forward-looking statements include statements regardingmanagement’s intentions, plans, beliefs, expectations or forecasts for the future. The reader is cautioned not to rely on these forward-looking statements. These forward-looking statements are based on current expectations of future events. Ifthe underlying assumptions prove inaccurate or known or unknown risks or uncertainties materialize, actual results could vary materially from the expectations and projections of the Company. These risks and uncertainties can be found in theCompany’s most recently filed Annual Report on Form 10-K for the fiscal year ended December 31, 2018, as supplemented by any subsequently filed Quarterly Reports on Form 10-Q. Copies of these filings are available online at www.sec.gov, www.amneal.com or on request from the Company. Forward-looking statements included herein speak only as of the date hereof, and we undertake noobligation to revise or update such statements to reflect the occurrence of events or circumstances after the date hereof.

Summary of the CorporateActions

On October 10, 2019, the Compensation Committee (the “Compensation Committee”) of the Company’s Board ofDirectors (the “Board”) approved, and the stockholders holding a majority of the voting power of the issued and outstanding shares of Class A common stock, par value $0.01 per share (“Class A Common Stock”), of theCompany, and Class B common stock, par value $0.01 per share (“Class B Common Stock”), of the Company, voting together as a single class (the “Majority Stockholders”), took action by written consent to approve, a one-time stock option repricing (the “Option Repricing”) as described in more detail below. The Compensation Committee believes that the Option Repricing is in the best interests of stockholders and theCompany, as the amended stock options will continue to retain and motivate key contributors of the Company, which is necessary for the Company’s future success and growth in the value of its shares.

 

 

1


Table of Contents

Pursuant to the Option Repricing, the exercise price of each Relevant Option (as definedbelow) will be amended to reduce such exercise price to the closing price of a share of the Class A Common Stock as reported on the New York Stock Exchange (the “NYSE”) on the date on which the Option Repricing becomes effective.“Relevant Options” are all outstanding stock options as of October 10, 2019 (vested or unvested) granted between May 7, 2018 and July 15, 2019 to acquire shares of Class A Common Stock granted under the AmnealPharmaceuticals, Inc. 2018 Incentive Award Plan (the “2018 Plan”) with an exercise price at or above $3.51 per share and held by all individuals employed by the Company on the effective date of the Option Repricing, but not including(1) members of the Board, (2) the co-Chief Executive Officers, and (3) employees who have notified the Company of their intended separation, and employees who have been notified by the Companyof their anticipated termination date, in either case on or before the effective date of the Option Repricing. Legacy Impax (defined below) stock options that the Company assumed in connection with the Combination (defined below) also are noteligible for the Option Repricing. The Option Repricing will become effective on the 20th calendar day after the completion of the mailing to the Company’s stockholders of this Notice and Information Statement. The effective date is currentlyexpected to be November 13, 2019. In the event that the 20th calendar day is not a trading day for the NYSE, the Option Repricing will become effective on the first NYSE trading day thereafter. Participation in the Option Repricing is notvoluntary or discretionary. Accordingly, the exercise price of each Relevant Option will be automatically amended, without any action required by the holder thereof.

Our Class A Common Stock has traded on the NYSE under the symbol “AMRX” since the business combination of AmnealPharmaceuticals LLC, a Delaware limited liability company, and Impax Laboratories, Inc., a Delaware corporation (“Impax”), was consummated on May 7, 2018 (the “Combination”). We have two classes of common stock outstanding:Class A Common Stock and Class B Common Stock. There is currently no established public trading market for our Class B Common Stock. The rights (including voting rights) of Class A Common Stock and Class B Common Stock areidentical, except that Class B Common Stock has no economic rights. As a result of the Company’s mandatory conversion of all of the then-outstanding shares of Class B-1 common stock into sharesof Class A Common Stock during the second quarter of 2019 (the “Conversion”), there are no longer any shares of Class B-1 common stock outstanding.

Voting and Vote Required

Stockholderapproval is required for the Option Repricing under the listing rules of the NYSE (“NYSE Rules”) and the terms of the 2018 Plan. In accordance with the Delaware General Corporation Law (the “DGCL”), the Company’s Amended andRestated Bylaws and NYSE Rules, the Option Repricing may be approved, without a meeting of stockholders, by the written consent of stockholders representing a majority of the voting power of the issued and outstanding shares of Class A CommonStock and Class B Common Stock, voting together as a single class. Such approval was received by the Company from the Majority Stockholders by written consent dated October 10, 2019. As of such date, the Company had

 

2


Table of Contents

134,090,020 shares of Class A Common Stock and 165,004,323 shares of Class B Common Stock outstanding and entitled to vote. Each share of Class A Common Stock and Class BCommon Stock is entitled to one vote per share. The written consent was executed by stockholders holding 18,321 shares of Class A Common Stock and 156,890,723 shares of Class B Common Stock, representing 52% of the voting power.Accordingly, the written consent was executed by stockholders holding sufficient voting power to approve the Option Repricing by written consent, no further stockholder action is required, and the Company is not seeking consent, authorizations orproxies from you. The DGCL does not provide appraisal rights with respect to the Option Repricing.

Notice Pursuant to the Company’s Bylaws andDelaware General Corporation Law

Pursuant to Article 2, Section 10 of the Company’s Amended and Restated Bylaws andSection 228(e) of the DGCL, the Company is required to provide prompt notice of the taking of a corporate action by written consent to the Company’s stockholders who have not consented in writing to such action. This Information Statementserves as the required notice.

APPROVAL OF A ONE-TIME OPTION REPRICINGPROGRAM

On October 10, 2019, the Compensation Committee approved, and the Majority Stockholders approved by written consent, theOption Repricing, under which all Relevant Options will be amended to reduce their exercise price, as described below.

Introduction

The Company maintains the 2018 Plan for the benefit of certain directors, officers and employees of the Company and its subsidiaries, as wellas for others performing consulting or advisory services for the Company. The purpose of the 2018 Plan is to promote the success and enhance the value of the Company by linking the individual interests of the members of the Board, employees, andconsultants to those of Company stockholders and by providing such individuals with an incentive for outstanding performance to generate superior returns to Company stockholders. The 2018 Plan is further intended to provide the Company withflexibility in its ability to motivate, attract and retain the services of these individuals upon whose judgment, interest and special effort the successful conduct of the Company’s operation is largely dependent.

The Company has granted stock options under the 2018 Plan consistent with the view that stock-based incentive compensation opportunities playa key role in the Company’s ability to recruit, motivate and retain qualified individuals. While the Company’s compensation packages generally include a number of different components, the Company believes that equity compensation is keyto linking pay to performance as it encourages employees to work toward the Company’s success and aligns their interests with those of the Company’s stockholders by providing them with a means by which they can benefit from increasing thevalue of the Company’s stock.

 

3


Table of Contents

Over the past year, the share price of the Class A Common Stock has declinedsignificantly, and as of October 10, 2019, all of the Relevant Options had exercise prices at or above the recent closing prices of our Class A Common Stock on the NYSE. As of such date, the closing price of our Class A Common Stockwas $2.89, whereas the weighted average exercise price of the Relevant Options was $13.21. Although the Company continues to believe that stock options are an important component of the Company’s compensation program, the underwater stockoptions may be perceived by their holders as having little or no incentive and retention effect due to the difference between the exercise prices and the current stock price.

The Compensation Committee believes that the Option Repricing, as designed, is in the best interests of stockholders and the Company, as therepriced stock options will restore the incentive and retentive benefit of the affected stock options, and reduce the need to grant replacement equity incentives, which would deplete the available share reserve under the 2018 Plan, or to grantreplacement cash incentives, which could put an undue strain on the Company’s cash resources.

Summary of Material Terms of Option Repricing

Pursuant to the approved Option Repricing, the exercise price of each Relevant Option will be amended to reduce such exercise priceto the closing price of a share of the Class A Common Stock as reported on the NYSE on the effective date of the Option Repricing. The Option Repricing will become effective on the 20th calendar day after the completion of the mailing to theCompany’s stockholders of this Notice and Information Statement. The effective date is currently expected to be November 13, 2019. In the event that the 20th calendar day is not a trading day for the NYSE, the Option Repricing will becomeeffective on the first NYSE trading day thereafter. Participation in the Option Repricing is not voluntary or discretionary. Accordingly, the exercise price of each outstanding stock option as of October 10, 2019 (vested or unvested) grantedbetween May 7, 2018 and July 15, 2019 under the 2018 Plan with an exercise price at or above $3.51 per share and held by all individuals employed by the Company on the effective date of the Option Repricing, but not including(1) members of the Board, (2) the co-Chief Executive Officers, and (3) employees who have notified the Company of their intended separation, and employees who have been notified by the Companyof their anticipated termination date, in either case on or before the effective date of the Option Repricing (i.e., Relevant Options), will be automatically amended as described above, without any action required by the holder thereof. Legacy Impaxstock options that the Company assumed in connection with the Combination also are not eligible for the Option Repricing.

Excluding thelegacy Impax stock options, as of October 10, 2019, an aggregate of 5,877,254 stock options with a weighted average exercise price of $13.50 were outstanding under the 2018 Plan and held by 296 employees and directors. Of these options,3,698,410 (approximately 63%)—with a weighted average exercise price of $13.21 and held by 200 employees—are Relevant Options and eligible for amendment pursuant to the Option Repricing. Under the Option Repricing, the exercise price of aRelevant Option will not be amended in a manner that increases the exercise price above that in effect as of the date hereof. No additional stock options will be granted by the Company in connection with the Option Repricing.

Except for the reduction in the exercise price of the Relevant Options described above, all outstanding stock options under the 2018 Plan willcontinue to remain outstanding in accordance with all of the current terms and conditions set forth in the 2018 Plan and the applicable award agreements. As of the date of this Information Statement, the 2018 Plan is the only equity plan under whichthe Company has stock options outstanding (other than the legacy Impax stock options).

 

4


Table of Contents

Accounting Treatment of the Option Repricing

Under Financial Accounting Standards Codification Topic 718, the Company will recognize any incremental compensation cost of the RelevantOptions subject to the Option Repricing. The incremental compensation cost will be measured as the excess, if any, of the fair value of the Relevant Options immediately following the Option Repricing over the fair value of the Relevant Optionsimmediately prior to the Option Repricing. The Company does not expect that the Option Repricing will have a material impact on its statement of operations.

Certain U.S. Federal Income Tax Consequences

The following discussion is intended only as a general summary of the material U.S. federal income tax consequences of the Option Repricing,based upon the provisions of the U.S. Internal Revenue Code of 1986, as amended (the “Code”), as of the date of this Information Statement. It is not intended as tax guidance to participants in the 2018 Plan. This summary does not takeinto account certain circumstances that may change the income tax treatment of awards for individual participants, and it does not describe the consequences under any other federal tax law (such as employment taxes), state income tax consequences ofany award or the taxation of awards in jurisdictions outside of the United States.

For income tax purposes, the repricing of an option istreated as a new option granted as of the effective date of the repricing. The grant of a stock option generally has no income tax consequences for a participant or the Company. Likewise, the exercise of an incentive stock option generally does nothave income tax consequences for a participant or the Company, except that it may result in an item of adjustment for alternative minimum tax purposes for the participant. For purposes of applying Section 422(d) of the Code, which generallyprovides an incentive stock option may only become exercisable for the first time in a single calendar year to the extent of $100,000 (based on the fair market value of the Company’s common stock on the date of grant), the prior option and therepriced option shall be treated as two separate options, and the exercisability of both options shall be applied against the $100,000 annual limit. A participant usually recognizes ordinary income upon the exercise of a nonqualified stock optionequal to the fair market value of the shares or cash payable (without regard to income or employment tax withholding) minus the exercise price, if applicable. We should generally be entitled to a deduction for federal income tax purposes equal tothe amount of ordinary income recognized by the participant as a result of the exercise of a nonqualified stock option.

If a participantholds the shares acquired under an incentive stock option for the time specified in the Code (at least two years measured from the grant date and one year measured from the exercise date), any gain or loss arising from a subsequent disposition ofthe shares will be taxed as long-term capital gain or loss. If the shares are disposed of before the holding period is satisfied, the participant will recognize ordinary income equal to the lesser of (i) the amount realized upon thedisposition, and (ii) the fair market value of such shares on the date of exercise minus the exercise price paid for the shares. Any ordinary income recognized by the participant

 

5


Table of Contents

on the disqualifying disposition of the shares generally entitles us to a deduction by us for federal income tax purposes. Any disposition of shares acquired under a nonqualified stock optionwill generally result only in capital gain or loss for the participant, which may be short- or long-term, depending upon the holding period for the shares. For a repriced option, the two-year holding periodmeasured from the grant date is reset to the effective date of the repricing.

Except as explained below, the Company generally isentitled to a deduction equal to the amount included in the ordinary income of participants and does not receive a deduction for amounts that are taxable to participants as capital gain. The Code denies publicly held corporations a deduction forcompensation that is in excess of $1,000,000 paid to the corporation’s chief executive officer, chief financial officer and to any of its three other most highly compensated executive officers.

Section 409A of the Code provides special tax rules applicable to programs that provide for a deferral of compensation. Failure to complywith those requirements will result in accelerated recognition of U.S. federal income tax purposes along with an additional tax equal to 20% of the amount included in U.S. federal income, and interest on deemed underpayments in certaincircumstances. While certain awards under the 2018 Plan could be subject to Section 409A, the 2018 Plan and awards are intended to comply with the requirements of Section 409A, where applicable.

New Plan Benefits

The following tablesummarizes the outstanding stock options eligible for the Option Repricing (i.e., Relevant Options) held by our Co-Chief Executive Officers, Chief Financial Officer, each of the named executive officers (asdefined in the Company’s proxy statement for the 2019 annual meeting of stockholders (the “2019 Proxy Statement”), which was filed with the Securities and Exchange Commission (“SEC”) on March 22, 2019), all currentexecutive officers as a group, all current non-employee directors as a group and all other employees, respectively.

 

    Name and Position  Number of Shares
Underlying Options Eligible
for Options Repricing
 

    Weighted Average Exercise Price of    

Options Eligible for the Option    

Repricing ($)    

CurrentOfficers

Chirag Patel, President,Co-CEO & Director

  0 

Chintu Patel,Co-CEO & Director

  0 

Andrew Boyer, Executive Vice President, CommercialOperations

  373,033 14.60

Todd P. Branning, Senior Vice President &CFO

  163,666 12.44

Nikita Shah, Senior Vice President, Chief Human ResourcesOfficer

  168,186 14.15

All current executive officers as a group

  1,021,890 13.91

All currentnon-employee directors as a group

  0 

All other employees as a group

  2,676,520 12.94

Former Officers

Paul Bisaro, Former Executive Chairman

  0 

Sheldon Hirt, Former Senior Vice President &General Counsel

  0 

Bryan Reasons, Former Senior Vice President &CFO

  0 

Robert A. Stewart, Former President, CEO &Director

  0 

 

6


Table of Contents

The Company will not grant any additional stock options or other awards in connection withthe Option Repricing. The Compensation Committee will determine the terms and number of stock options or other awards to be granted in the future under the 2018 Plan in its discretion. Since no determinations regarding awards or grants to be grantedin the future have yet been made, the benefits or amounts that will be received by or allocated to the Company’s executive officers or other eligible employees or non-employee directors cannot bedetermined at this time.

Equity Compensation Plan Information

The following table summarizes information, as of December 31, 2018, relating to the 2018 Plan, which was approved by the Company’sstockholders and which authorizes the grant of stock options, stock appreciation rights, restricted stock awards, restricted stock unit awards (“RSUs”), other stock or cash based awards and dividend equivalent awards to employees, non-employee directors and consultants.

 

    Plan Category  Number of Securities to Be
Issued Upon Exercise of
Outstanding Options,
Warrants and Rights
(a)
 

    Weighted-Average Exercise    
Price of Outstanding
    Options, Warrants and

Rights

(b)

 

Number of
Remaining Available for

Future Issuance Under

    Equity Compensation Plans    
    (Excluding Securities

Reflected in Column (a))
(c)

Equity compensation plans approved by security holders

  7,145,205(1) 17.73(2) 18,292,841

Equity compensation plans not approved by security holders

    

Total

  7,145,205 17.73 18,292,841

(1) Equity compensation plans approved by security holders which are included in column (a) of the tableare the 2018 Plan (including 3,376,535 shares of Class A Common Stock to be issued for options and 1,330,624 shares of Class A Common Stock to be issued for RSUs subject to continued employment) and 2,438,046 of options remaining from theImpax option conversion associated with the Combination on May 4, 2018. RSUs included in column (a) of the table represent the full number of RSUs awarded and outstanding whereas the number of shares of Class A Common Stock to beissued upon vesting will be lower than what is reflected on the table because the value of shares required to meet employee tax withholding requirements is not issued.

(2) Column (b) relates to stock options and does not include any exercise price for RSUs because an RSU’s value is dependent uponattainment of continued employment or service and they are settled for shares of Common Stock on a one-for-one basis.

Interest of Certain Persons in Matters Acted Upon

The following table sets forth certain information as of October 10, 2019 about the outstanding options granted under the 2018 Plan heldby each listed individual who was or has been an executive officer or director of the Company since the Combination. Other than as set forth in the table, none of our officers or directors, nor any of their associates, has any interest in theactions approved by the Majority Stockholders and described in this Information Statement except in their capacity as holders of our Class A or Class B Common Stock (which interest does not differ from that of the other holders of ourCommon Stock).

As of October 10, 2019, our current non-employee directors (7 persons) andexecutive officers (8 persons) as a group held unexercised stock options to purchase an aggregate of 1,788,487 shares of our Class A Common Stock under the 2018 Plan, which represented approximately 30% of the shares subject to all outstandingoptions under the 2018 Plan. None of the Company’s co-Chief Executive Officers, executive officers named in the 2019 Proxy

 

7


Table of Contents

Statement (other than Andrew Boyer and Nikita Shah) or directors, and none of the members of the Amneal Group (see “Security Ownership of Certain Beneficial Owners and Management”below), are eligible to participate in the Option Repricing.

 

  Name Title Number of
Options
Outstanding
 Percentage of
Total
Outstanding
Options(1)
 Number of
Relevant
Options
Outstanding
 Percentage of
    Total Relevant    
Options
Outstanding(2)

  Current Officers

  Chirag Patel(3)

 President, Co-CEO & Director 53,021 1% 0 

  Chintu Patel(3)

 Co-CEO & Director 53,021 1% 0 

  Andrew S. Boyer

 EVP, Commercial Operations 373,033 6% 373,033 10%

  Pradeep Bhadauria

 SVP, Chief Scientific Officer 153,846 3% 153,846 4%

  Todd P. Branning

 Senior Vice President & CFO 163,666 3% 163,666 4%

  David A. Buchen

 SVP, Chief Legal Officer & Secretary 227,273 4% 0 

  Nikita Shah

 SVP, Chief Human Resources Officer 168,186 3% 168,186 5%

  Joseph Todisco

 SVP, Specialty Commercial 163,159 3% 163,159 4%

  FormerOfficers

  Paul Bisaro(4)

 Executive Chairman 102,179 2% 0 

  Sheldon Hirt

 SVP, General Counsel & Secretary 0  0 

  Bryan Reasons(4)

 SVP & CFO 0  0 

  Robert A. Stewart

 President, CEO & Director 1,083,411 18% 0 

  Directors

  Current & former non-employee directors as a group(4)

 508,213 9% 0 

(1) Determined by dividing the number of stock options held by the individual or group, as applicable, by5,877,254, which is the total number of outstanding stock options as of the date of the table (excluding the legacy Impax stock options).

(2) Determined by dividing the number of stock options held by the individual or group, as applicable, that are eligible for the OptionRepricing by 3,698,410, which is the total number of outstanding stock options that as of the date of the table are eligible for the Option Repricing.

(3) On August 3, 2019, the Board appointed Messrs. Chirag Patel and Chintu Patel as Co-ChiefExecutive Officers and Chirag Patel as President. In connection with their service in these roles, Messrs. Patel requested and the Board approved that they both receive an annual salary of $1.00. In addition, neither receive any annual incentivecompensation or any long-term incentive compensation. While Messrs. Patel continue to serve as directors, they are no longer entitled to any separate compensation in respect of their service on the Board.

(4) Messrs. Bisaro, Reasons and our non-employee directors as a group additionally hold 850,000,273,827 and 221,526 legacy Impax stock options, respectively, which are not eligible for the Option Repricing.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND

MANAGEMENT

The following table sets forth certain information as of September 30, 2019, with respect to the beneficial ownership ofthe Company’s Class A Common Stock and Class B Common Stock, and shows the number of and percentage owned by:

 

  

each person or entity our Company believes to be the beneficial owner of more than five percent of any classof our common stock based solely on management’s review of SEC filings;

  

each executive officer named in the Summary Compensation Table;

  

each director; and

  

all of our current directors and executive officers as a group.

 

8


Table of Contents

Beneficial ownership of shares is determined under the rules of the SEC and generallyincludes any shares over which a person exercises sole or shared voting or investment power. Except as indicated by footnote, and subject to applicable community property laws, each person identified in the table possesses sole voting and investmentpower with respect to all shares of stock held by such person. As of September 30, 2019, 134,090,020 shares of Class A Common Stock and 165,004,323 shares of Class B Common Stock were outstanding. No shares of Class B-1 Common Stock were outstanding due to the Conversion.

 

   Officers and Directors 
   Class A     Class B     

All

Common

 
  Name(1)  Shares   Options(2)   RSUs(2)   Total   % of
Class
      Shares   % of
Class
      % of All
Classes
 

Emily Peterson Alva

   6,107    24,977    0    31,084    *              * 

Paul Bisaro

   29,454    952,180    0    981,634    *              * 

Andrew Boyer

   95,968    68,120    0    164,088    *              * 

Todd Branning

   0    0    0    0    *              * 

J. Kevin Buchi

   17,408    53,353    0    70,761    *              * 

Jean Selden Greene

   6,107    24,977    0    31,084    *              * 

Sheldon V. Hirt

   34,993    0    0    34,993    *              * 

Paul Meister

   0    0    0    0    *              * 

Ted Nark

   56,107    24,977    0    81,084    *              * 

Chintu Patel

   6,107    24,977    0    31,084    *     24,753,252    15.00%     8.29% 

Chirag Patel

   6,107    24,977    0    31,084    *     21,269,420    12.89%     7.12% 

Gautam Patel

   6,107    24,977    0    31,084    *     30,384,769    18.41%     10.17% 

Bryan M. Reasons

   82,986    273,827    0    356,813    *              * 

Nikita Shah

   169,111    18,165    0    187,276    *              * 

Robert A. Stewart

   78,668    170,300    0    248,968    *              * 

Peter R. Terreri

   76,299    106,927    0    183,226    *              * 

All Current Directors and Executive Officers as a Group (15 Persons)

   689,518    414,593    0    1,104,111    *      76,407,441    46.31%      25.92% 

 

   Amneal Group 
   Class A     Class B     All
Common
 
  Name(1)  Shares(2)   % of Class      Shares   % of Class      % of Class 

Tushar Patel(3)

            53,578,209    32.47%     17.91% 

Gautam Patel(4)

   31,084    *     30,384,769    18.41%     10.17% 

Dipan Patel(5)

            26,905,073    16.31%     9.00% 

Chintu Patel(6)

   31,084    *     24,753,252    15.00%     8.29% 

Chirag Patel(7)

   31,084    *     21,269,420    12.89%     7.12% 

Other Members of the Amneal Group

   n/a(8)    n/a(8)      8,113,600    4.92%      2.71% 
    93,252    *      165,004,323    100%      55.17% 

 

9


Table of Contents
   Certain Other Beneficial Owners
   Class A     Class B           All Common        
  Name  Shares   % of Class      Shares   % of Class      % of Class

Funds affiliated with Fosun International Limited(9)

   18,407,656    13.73%     —      —      6.15%

T. Rowe Price Associates, Inc.(10)

   13,069,855    9.75%     —      —      4.37%

Funds affiliated with TPG Global, LLC(11)

   16,213,367    12.09%     —      —      5.42%

Wellington Management Company LLP and affiliated or advisedentities(12)

   16,022,533    11.95%     —      —      5.36%

The Vanguard Group, Inc. and affiliated or advisedentities(13)

   9,105,062    6.79%     —      —      3.04%

FMR LLC and affiliated or advised entities(14)

   7,310,823    5.45%     —      —      2.44%

Vanguard Specialized Funds–Vanguard Health CareFund(15)

   7,242,047    5.40%     —      —      2.42%

BlackRock, Inc. and affiliated or advised entities(16)

   6,053,727    4.51%      —      —       2.02%

 

 *

Less than 1%.

 (1)

Unless otherwise noted, the address for each beneficial owner listed on the table is AmnealPharmaceuticals, Inc., 400 Crossing Boulevard, Bridgewater, NJ 08807.

 (2)

Column includes shares underlying exercisable stock options and stock options and restricted stock unitawards that will vest within 60 days of September 30, 2019.

 (3)

c/o Tarsadia Investments, LLC, 520 Newport Center Drive, Twenty-First Floor, Newport Beach, CA 92660.Tushar Patel may be deemed to beneficially own 53,578,209 shares of Class B Common Stock held of record by Tushar Patel Family Trust. The Tushar Patel Family Trust pledged to JPMorgan Chase Bank, N.A. 53,578,209 common units (including theshares of Class A Common Stock issued upon any redemption thereof) and the 53,578,209 shares of Class B Common Stock associated therewith to secure the obligations of those certain borrowers to the Second Amended and Restated Line ofCredit Note dated May 31, 2019. Information with respect to this pledge is taken from the Schedule 13D/A filed on August 26, 2019.

 (4)

Gautam Patel may be deemed to beneficially own 30,384,769 shares of Class B Common Stock held ofrecord by Falcon Trust, T-Twelve Legacy Trust, Puja Patel Trust, Ishani Patel Trust, Niam Patel Trust and Mayur Patel Legacy Trust. Mr. Patel does not have a pecuniary interest in these shares ofClass B Common Stock. The Falcon Trust pledged to Credit Suisse AG 15,221,537 common units (including the shares of Class A Common Stock issued upon any redemption thereof) and the 15,221,537 shares of Class B Common Stock associatedtherewith to secure the Falcon Trust’s obligations under that certain Promissory Note and Collateral Agreement dated May 15, 2019. The T-Twelve Trust pledged to Morgan Stanley Private Bank, NationalAssociation 12,887,433 common units (including the shares of Class A Common Stock issued upon any redemption thereof) and the 12,887,433 shares of Class B Common Stock associated therewith to secure theT-Twelve Trust’s obligations under that certain Line of Credit Agreement dated May 13, 2019. Information with respect to these pledges is taken from the Schedule 13D/A filed on August 26, 2019.

 (5)

c/o Buckhead America Hospitality, 2855 Springhill Parkway, Smyrna, GA 30080. Dipan Patel may be deemed tobeneficially own 26,905,073 shares of Class B Common Stock held of record by Dipan Patel Living Trust, AP-1 Trust, AP-2 Trust,AP-3 Trust, AP-5 Trust, AP-7 Trust, and AP-9 Trust.

 (6)

Chintu Patel may be deemed to beneficially own 24,753,252 shares of Class B Common Stock held ofrecord by The Chintu Patel Revocable Trust and The Falguni Patel Revocable Trust.

 (7)

Chirag Patel may be deemed to beneficially own 21,269,420 shares of Class B Common Stock held ofrecord by The Chirag Patel Revocable Trust and The Priti Patel Revocable Trust. Mr. Patel has pledged to Credit Suisse AG 21,269,420 common units (including the shares of Class A Common Stock issued upon any redemption thereof) and21,269,420 shares of Class B Common Stock associated therewith to secure the obligations of those certain borrowers to the Promissory Note and Collateral Agreement dated June 10, 2019. Information with respect to this pledge is taken fromthe Schedule 13D/A filed on September 11, 2019.

 (8)

The Amneal Group holds 100% of our outstanding Class B Common Stock. Certain members of the AmnealGroup may also hold Class A Common Stock. Messrs. Chintu Patel, Chirag Patel and Gautam Patel are members of the Amneal Group and also members of our Board, and their shares are reported in the “Officers and Directors” table above.Shares of Class A Common Stock held by members of the Amneal Group other than Messrs. Chintu Patel, Chirag Patel, Gautam Patel, Dipan Patel and Tushar Patel are not reported in this table.

 (9)

Room 808, ICBC Tower, 3 Garden Road, Central, Hong Kong. Shares reported includes 16,438,356 sharesacquired by the beneficial owner in connection with its PIPE investment and 3,854,995 shares the beneficial owners received upon the conversion of Impax common stock in connection with the Combination.

 (10)

c/o T. Rowe Price Associates, Inc., 100 East Pratt Street, Baltimore, MD 21202. As reported in theSchedule 13G/A filed jointly by T. Rowe Price Associates, Inc. and T. Rowe Price Mid-cap Growth Fund, Inc. on September 10, 2019. T. Rowe Price Associates, Inc. has the sole power to vote or direct thevote of 4,732,326 shares and the sole power to dispose or direct the disposition of 13,069,855 shares, and T. Rowe Price Mid-cap Growth Fund, Inc. has the sole power to vote or direct the vote of 6,000,000shares.

 (11)

c/o TPG Global, LLC, 301 Commerce Street, Suite 3300, Fort Worth, TX 76102. As reported in the Schedule13G/A filed jointly by TPG Group Holdings (SBS) Advisors, Inc., David Bonderman and James G. Coulter on July 19, 2019. The reporting persons have the shared power to vote or direct the vote and the shared power to dispose or direct thedisposition of the 16,213,367 shares.

 

10


Table of Contents
 (12)

c/o Wellington Management Company LLP, 280 Congress Street, Boston, MA 02210. Wellington ManagementCompany LLP is an investment adviser registered under the Investment Advisers Act of 1940, as amended, and is an indirect subsidiary of Wellington Management Group LLP. Wellington Management Company LLP and Wellington Management Group LLP may eachbe deemed to share beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Securities Exchange Act of 1934) of the shares indicated in the table. As reported in the Schedule 13G/A filed byWellington Management Group LLP on February 14, 2019. Wellington Management Group LLP, Wellington Group Holdings LLP, and Wellington Investment Advisors Holdings LLP have the shared power to vote or direct the vote of 6,316,095 shares and theshared power to dispose or direct the disposition of 16,022,533 shares. Wellington Management Company LLP has the shared power to vote or direct the vote of 5,583,535 shares and the shared power to dispose or direct the disposition of 14,216,984shares.

 (13)

c/o Vanguard Specialized Funds – Vanguard Health Care Fund, 100 Vanguard Boulevard, Malvern, PA19355. As reported in the Schedule 13G filed by The Vanguard Group on February 11, 2019. The Vanguard Group has the sole power to vote or direct the vote of 174,182 shares, the shared power to vote or direct the vote of 10,300 shares, the solepower to dispose or direct the disposition of 8,924,466 shares and the shared power to dispose or direct the disposition of 180,596 shares.

 (14)

c/o FMR LLC, 245 Summer Street, Boston, MA 02210. As reported in the Schedule 13G filed by FMR LLC onFebruary 13, 2019. FMR LLC has the sole power to vote or direct the vote of 446,389 shares and the sole power to dispose or direct the disposition of 7,310,823 shares.

 (15)

c/o Vanguard Specialized Funds – Vanguard Health Care Fund, 100 Vanguard Boulevard, Malvern, PA19355. As reported in the Schedule 13G filed by Vanguard Specialized Funds on January 31, 2019. Vanguard Specialized Funds has the sole power to vote or direct the vote of 7,242,047 shares.

 (16)

c/o BlackRock, Inc., 55 East 52nd Street, New York, NY 10055. As reported in the Schedule 13G filed byBlackRock, Inc. on February 7, 2019. BlackRock, Inc. has the sole power to vote or direct the vote of 5,883,029 shares and the sole power to dispose or direct the disposition of 6,053,727 shares.

To our knowledge, except as noted above, no person or entity is the beneficial owner of more than 5% of the voting power of the Company’s stock.

EXECUTIVE COMPENSATION

All of the information contained in the sections below generally relates to 2018 compensation and was included in the 2019 Proxy Statement. In2019, there have been several developments that you should keep in mind when reading the following sections:

 

 

As disclosed in a Form 8-K filed with the SEC on August 5, 2019, theCompany named Chirag and Chintu Patel, co-founders of the Company and Co-Chairmen of the Board, as Co-Chief Executive Officers,appointed Chirag Patel as President, and appointed Paul M. Meister, Chief Executive Officer of Liberty Lane Partners, LLC, to the Board and as the Board’s independent Chairman.

In connection with their service in these roles, Messrs. Patel requested and the Board approved that they both receive an annual salary of$1.00. In addition, neither will receive any annual incentive compensation or any long-term incentive compensation. Messrs. Patel also resigned as Co-Chairmen of the Board. Messrs. Patel are eligible toparticipate in the Company’s health and welfare benefits offered to all full-time employees, but will no longer be entitled to any separate compensation in respect of their service on the Board. Mr. Meister participates in all non-employee director compensation and benefit programs in which the Company’s other non-employee directors participate pursuant to the Company’s Non-Employee Director Compensation Policy, as described below, including an initial award of stock options with a target fair value of $184,250 and an initial award of restricted stock units with a target fair valueof $90,750, each as of the date of appointment to the Board.

The leadership transition follows the resignations of Robert Stewart fromhis positions as President and Chief Executive Officer and as a director, Paul M. Bisaro from his position as Executive Chairman and as a director and each of Robert L. Burr, Dharmendra “DJ” Rama and Janet S. Vergis as directors. Inconnection with Mr. Stewart’s resignation, which was treated as a termination of employment by the Company without cause, Mr. Stewart became entitled to certain salary continuation and other severance benefits in accordance with theterms of his employment agreement. In consideration for Mr. Stewart providing transition

 

11


Table of Contents
 

services to the Company through November 2, 2019 and for extending the non-solicitation and non-competitionprovisions of Mr. Stewart’s employment agreement, Mr. Stewart will be eligible to receive an additional $1,000,000 payable in monthly installments during the 24-month period following histermination. In connection with Mr. Bisaro’s resignation, the Board waived the requirement under Mr. Bisaro’s employment agreement that Mr. Bisaro provide written notice to the Board at least 60 days prior to the effectivedate of his resignation without good reason. As a result, Mr. Bisaro’s resignation was immediately effective.

 

 

As disclosed in a Form 8-K filed with the SEC on May 7, 2019, theCompensation Committee adopted the Amneal Pharmaceuticals LLC 2019 Severance Plan (the “Severance Plan”), which provides specified cash and in-kind severance benefits to all of the Company’sexecutive officers in the event of their involuntary termination of employment under specified circumstances; provided, however, that if an executive officer is party to an employment agreement that provides for greater severance benefits, theexecutive officer will not be eligible for the severance payments under the Severance Plan.

 

 

As disclosed in a Form 8-K filed with the SEC on January 24, 2019,the Board appointed Todd P. Branning as Senior Vice President and Chief Financial Officer, and the Company and Mr. Branning entered into an employment agreement that provides Mr. Branning with, among other things: (1) a base salary of$530,000; (2) a target annual bonus opportunity equal to 50% of base salary; (3) sign-on awards of restricted stock units and stock options, each with a grant date fair value equal to $1,000,000 anda four-year vesting period; and (4) severance and change in control benefits in connection with specified circumstances.

Compensation Discussion and Analysis

Introduction

In the paragraphs that follow, we will give an overview and analysis of our compensation program and policies, the materialcompensation decisions we have made under those programs and policies, and the material factors that we considered in making those decisions. Following this section you will find a series of tables containing specific information about thecompensation earned or paid in fiscal 2018 to the following executive officers:

 

  2018 NAMED EXECUTIVE OFFICERS
  Name  Position
  Robert A. Stewart(1)  Former President and Chief Executive Officer
  Bryan Reasons(2)  Former Senior Vice President and Chief Financial Officer
  Paul Bisaro(3)  Executive Chairman, former Chief Executive Officer
  Andrew Boyer(4)  Executive Vice President, Commercial Operations
  Sheldon Hirt(5)  Former Senior Vice President, General Counsel and Corporate Secretary
  Nikita Shah(6)  Senior Vice President, Chief Human Resources Officer
 (1)

Mr. Stewart was hired by Amneal in January 2018 in anticipation of the Combination and assumed hisrole as President and Chief Executive Officer of the Company upon the completion of the Combination.

 (2)

Mr. Reasons had been the Chief Financial Officer of Impax prior to the Combination and became theChief Financial Officer of the Company upon its formation in October 2017, at which point the Company was a subsidiary of Impax. Mr. Reasons continued in his role as Senior Vice President and Chief Financial Officer of the Company upon thecompletion of the Combination. Mr. Reasons stepped down from his position as Chief Financial Officer as of January 22, 2019, and left the Company on February 28, 2019.

 

12


Table of Contents
 (3)

Mr. Bisaro had been the Chief Executive Officer of Impax prior to the Combination and became theChief Executive Officer of the Company upon its formation in October 2017, at which point the Company was a subsidiary of Impax. Upon the completion of the Combination, Mr. Bisaro assumed his role as Executive Chairman of the Company.

 (4)

Mr. Boyer was hired by Amneal in February 2018 in anticipation of the Combination and assumed hisrole as Executive Vice President, Commercial Operations of the Company upon the completion of the Combination.

 (5)

Mr. Hirt had been the Senior Vice President, General Counsel and Corporate Secretary of Amneal priorto the Combination and assumed his role as Senior Vice President, General Counsel and Corporate Secretary of the Company upon the completion of the Combination. Mr. Hirt left the Company on January 31, 2019.

 (6)

Ms. Shah had been the Senior Vice President, Corporate Affairs & Human Resources of Amnealprior to the Combination and assumed her role as Senior Vice President, Chief Human Resources Officer of the Company upon the completion of the Combination.

Throughout this Information Statement we refer to these individuals as our “named executive officers.” The discussion below isintended to help you understand the detailed information provided in those tables and put that information into context within our overall compensation program.

Executive Summary

The primary objectiveof our executive compensation program is to provide compensation designed to:

 

 

attract, motivate and retain executive officers of outstanding ability and potential;

 

reinforce the execution of our business strategy and the achievement of our business objectives; and

 

align the interests of our executive officers with the interests of our stockholders, with the ultimate objectiveof increasing stockholder value.

The Compensation Committee aims to provide incentives for superior performance in agiven year and over a sustained period by paying fair, reasonable and competitive compensation, and by basing a significant portion of our total compensation package upon achieving that performance (i.e., “pay for performance”).

We also aim for simplicity in our compensation program so that it is easy for our employees and our stockholders to understand the variouscomponents of our compensation program and the incentives designed to drive Company performance. The three key components of our executive compensation program are base salary, annual cash performance based incentive and equity-based long-termincentive awards.

Although our compensation program has only been in place since May 2018, when we completed the Combination and became anew publicly traded company, we believe that the compensation program has been instrumental in helping the Company achieve financial and strategic goals.

Role of the Compensation Committee

TheCompensation Committee of our Board is responsible for setting and administering the policies that govern salary, annual and long-term incentive programs and other compensation and benefits for our executive officers. With respect to thecompensation of our Executive Chairman and Chief Executive Officer, the Compensation Committee makes recommendations to the Board, which makes decisions on the basis of those recommendations. The Compensation

 

13


Table of Contents

Committee oversees various executive and employee compensation plans and programs, and it has responsibility for continually monitoring these plans and programs to confirm that they adhere to ourcompensation philosophy and objectives. Our Compensation Committee determines the appropriate compensation levels of executives, evaluates officer and director compensation plans, policies and programs, and reviews benefit plans for officers. OurCompensation Committee believes that the total compensation paid to our named executive officers should be fair, reasonable and competitive, and that a significant portion of the total compensation should be tied to our Company’s annual andlong-term performance.

The Compensation Committee has the authority to engage the services of outside advisers, experts and others toassist the Compensation Committee, and believes that it is important to do so from time to time. See “Peer Group Surveys and the Role of Our Compensation Consultant” below.

Role of our Chief Executive Officer in Compensation Decisions

Regarding most compensation matters, including executive compensation and our annual and long-term incentive plans, our Chief ExecutiveOfficer provides recommendations to the Compensation Committee. The Compensation Committee, however, does not delegate any of its functions to others in setting compensation for our named executive officers and directors.

The Compensation Committee makes all compensation decisions for the named executive officers other than our Executive Chairman and ChiefExecutive Officer, for whom the Board makes compensation decisions with the advice of the Compensation Committee. The Compensation Committee annually evaluates the performance of, and evaluates the compensation of, our Executive Chairman and ChiefExecutive Officer based upon a combination of the achievement of corporate goals and individual performance. As part of its performance review process, the Compensation Committee solicits the input of the full Board. Our Chief Executive Officerannually reviews the performance of the other executive officers, other than our Executive Chairman. Our Chief Executive Officer makes recommendations on the basis of these reviews, including with respect to salary adjustments and incentive planaward amounts for the other executive officers, other than our Executive Chairman, and he presents his conclusions and recommendations to the Compensation Committee. The Compensation Committee then exercises its judgment to make final compensationdeterminations. Neither the Executive Chairman nor Chief Executive Officer participates in the decision making regarding his own compensation and neither is present when his compensation is discussed. Our Compensation Committee reports thecompensation decisions it has made with respect to our executive officers other than our Executive Chairman and Chief Executive Officer to the Board. With respect to the compensation of our Executive Chairman and Chief Executive Officer, theCompensation Committee makes recommendations to the Board, and the Board makes compensation decisions.

 

14


Table of Contents

Peer Group Surveys and the Role of Our Compensation Consultant

Our Compensation Committee does not rely solely on surveys of compensation paid to similar executives in order to determine annual andlong-term compensation for our named executive officers. However, in light of the compensation objectives described above, the Compensation Committee does from time to time review peer group surveys as an independent measure to confirm that thecompensation being set is fair, reasonable and competitive.

During fiscal 2018, the Compensation Committee engaged Radford, a businessunit of Aon Plc, an independent executive compensation consulting firm, to prepare a peer group compensation survey based upon publicly available information prior to setting fiscal 2018 compensation for our executive officers. Radford’sservices to us are limited to advising the Compensation Committee with respect to executive compensation and non-employee director compensation. The Compensation Committee reviews and evaluates theindependence of its consultant each year and has the final authority to hire and terminate the consultant. In considering Radford’s independence, the Compensation Committee reviewed various factors relating to Radford and the individualsactually providing services to the Company, including those factors required by the SEC and the New York Stock Exchange. Based on a review of these factors, the Compensation Committee has determined that Radford is independent and thatRadford’s engagement presented no conflicts of interest for 2018.

The peer group in 2018 consisted of 15 publicly tradedpharmaceutical companies with revenues of $730 million to $6.5 billion and market capitalizations of $2 billion to $18.5 billion. The companies comprising our peer group are set forth below.

 

• Akorn, Inc.

  

• Lannett Company, Inc.

• Alkermes plc

  

• Mallinckrodt plc

• Catalent, Inc.

  

• Mylan N.V.

• BioMarin Pharmaceutical Inc.

  

• Perrigo Company plc

• Emergent BioSolutions Inc.

  

• Prestige Consumer Healthcare Inc.

• Endo International plc

  

• Teva Pharmaceutical Industries Ltd.

• Horizon Pharma plc

  

• United Therapeutics Corporation

• Jazz Pharmaceuticals plc

   

Components of Executive Compensation

Consistent with its pay for performance philosophy, the Compensation Committee believes that it is important to place at risk a greaterpercentage of executives’ and senior managers’ compensation than that of non-executives and non-senior managers by tying executives’ and seniormanagers’ compensation directly to the performance of the Company. Accordingly, as set forth in the charts below, a significant portion of executive compensation consists of annual and long-term incentives linked to the Company’s financialperformance and/or the performance of the Company’s stock.

Base Salaries

We have entered into employment agreements with all of our named executive officers other than Mr. Hirt and Ms. Shah. For each ofthe named executive officers, including our Chief Executive Officer, the executive officer’s base salary is subject to annual increase at the discretion of the Compensation Committee or Board. Base salaries for our named executive officersreflect the scope and nature of each officer’s responsibilities. Adjustments to base salary are based upon the named executive officer’s past performance, expected future contributions,

 

15


Table of Contents

changes in responsibilities and internal pay equity. As discussed above, the Compensation Committee also from time to time reviews peer group surveys as an independent measure to confirm that anyadjustments are fair, reasonable and competitive. The 2018 base salaries for Messrs. Stewart, Bisaro and Boyer were negotiated in connection with the employment agreements that were entered into in anticipation of the Combination. The 2018 basesalaries for Messrs. Reasons and Hirt and Ms. Shah were unchanged from the base salaries they earned as pre-Combination employees of Impax (for Mr. Reasons) and Amneal (for Mr. Hirt andMs. Shah).

The 2018 base salaries of our named executive officers are set forth below.

 

  Name      2018 Base    
Salary
 

  Robert A. Stewart

      $    1,000,000     

  Bryan Reasons

      $529,461     

  Paul Bisaro

      $750,000     

  Andrew Boyer  

      $650,000     

  Sheldon Hirt

      $422,300     

  Nikita Shah

      $387,845     

Annual and Long-Term Incentive Awards

In order to align the interests of our stockholders with our compensation plans, we tie significant portions of our named executiveofficers’ compensation to our annual and long-term financial, operating and stock price performance through annual cash and long-term equity incentives. The Compensation Committee’s philosophy is that named executive officers should expectthe level of their compensation to vary with performance, with compensation increasing when performance exceeds our internal targets and budgets and compensation decreasing when performance falls below these expectations.

Annual Performance-Based Cash Incentive Compensation

The Compensation Committee believes that, in order to reward performance and overall Company success, a portion of an executive officer’scompensation should be tied to the achievement of the Company’s goals and that individual’s performance goals in the form of an annual cash incentive payment. The cash incentive payment is calculated as set forth below.

 

Annual Incentive
Target Amount
  x    Company Performance
Achievement Level
  x    Individual Performance
Modifier
  =   

        Incentive         

Payment

Targets vary based on level and
are expressed as a percentage
of base salary
    2018 Company performance is
measured based on achievement
against adjusted EBITDA goal, up
to 150% of target
    Incentive payouts may be
adjusted up or down (0%-150%)
based on individual performance
   

 

16


Table of Contents

The Compensation Committee has chosen combined adjusted EBITDA (which we define as netincome before net interest expense, income taxes, depreciation and amortization (EBITDA), as adjusted for certain other items described in our SEC filings, including stock-based compensation expense, acquisition and site closure expenses,restructuring and asset-related charges, loss on extinguishment of debt, inventory related charges, litigation, settlements and related charges, losses or gains on sales of assets, asset impairment charges, amortization of upfront payments, royaltyexpenses, foreign exchange losses or gains, loss on sale of international operations, R&D milestone payments, and change in value of contingent consideration), calculated on a combined basis to include the results of acquisitions during the yearas if the transaction closing dates had occurred on the first day of 2018, as the target performance objective for the payment of awards under our annual cash incentive plan.

The Compensation Committee has selected adjusted EBITDA as the performance measure for the annual cash incentive plan because adjusted EBITDAgrowth most closely reflects our operating performance and is a key metric for driving the long-term strategic direction that the Board has set for our Company. Further, adjusted EBITDA growth is highly correlated to or reflective of ourCompany’s financial and operational improvements, ability to generate cash flow from operations, growth and return to stockholders. We believe that EBITDA, as adjusted, is helpful in assessing the overall performance of our business, and ishelpful in highlighting trends in our overall business because the items excluded in calculating adjusted EBITDA have little or no bearing on our day-to-day operatingperformance. We also believe that Adjusted EBITDA is an important non-GAAP valuation tool that potential investors use to measure our profitability against other companies in our industry.

Our adjusted EBITDA target for a given year is determined by the Compensation Committee based upon recommendations from and discussions withmanagement, a review of current economic conditions and recent acquisition activity, and aligns with our external targets. Factors used by the Compensation Committee in setting adjusted EBITDA targets include, among others, the following:

 

  

reasonable growth expectations taking into account a variety of circumstances faced by our Company;

  

market conditions, including the related impact on cost and our ability to offset any cost increases withpricing increases or other cost savings measures; and

  

prior fiscal year adjusted EBITDA.

Adjusted EBITDA is not a term defined under U.S. generally accepted accounting principles (“GAAP”).

After the Compensation Committee reviews the final full year financial results of our Company, the Compensation Committee approves annual cashincentive payouts for the prior year. Annual cash incentive awards are generally paid in March.

No annual cash incentive payments aremade unless the threshold adjusted EBITDA target has been achieved. Adjusted EBITDA targets under the annual cash incentive plan may be reset periodically within a fiscal year by the Compensation Committee to take into account acquisitions,divestitures and other unplanned events. No such adjustments were made for 2018. Subject to the provisions of an applicable employment agreement, executives generally must be employed on the last day of a plan year to receive an annual cashincentive award. The Compensation Committee may, however, at its discretion, prorate awards in the event of certain circumstances such as the executive’s promotion, demotion, death or retirement.

 

17


Table of Contents

The Company performance component of the annual award each executive is eligible to receiveis based upon a percentage of the executive’s annualized base salary, with such percentage varying depending upon the level of adjusted EBITDA as compared to threshold, target and maximum adjusted EBITDA performance objectives as set forth inthe table below.

 

   Company Performance Component of Annual
Bonus Award as a Percentage of Base Salary
 
  

 

 

 
  Name  Threshold   Target   Maximum     

Robert A. Stewart

   50%    100%    150%     

Bryan Reasons

   30%    60%    90%     

Paul Bisaro

   50%    100%    150%     

Andrew Boyer

   40%    80%    120%     

Sheldon Hirt

   25%    50%    75%     

Nikita Shah

   25%    50%    75%     

The fiscal 2018 combined adjusted EBITDA threshold, target and maximum performance objectives were$312.5 million, $625 million and $937.5 million. Our Company’s fiscal 2018 combined adjusted EBITDA was $584.3 million, or 94% of the target amount.

The 2018 annual performance-based cash incentive program also provides for an individual performance modifier which may adjust up or down from0% to 150% based on an individual’s performance during the year.

Therefore, as reflected in thenon-equity incentive plan compensation column in the summary compensation table below and consistent with our pay for performance philosophy, the named executive officers received the incentive awards setforth below.

 

   2018 Annual Performance-Based Cash Incentive
Compensation
     
  

 

 

   
  Name  2018 Target
Cash Incentive
Award
   Company
Performance
Achievement
Level
   Individual
Performance
Modifier
   

Cash    

Incentive    
Award    

 

Robert A. Stewart(1)

      $1,000,000    94%    106%   $    1,000,000     

Bryan Reasons

      $317,677    94%    100%   $298,616     

Paul Bisaro

      $750,000    94%    106%   $750,000     

Andrew Boyer

      $    476,684(2)    94%    100%   $448,083(2)     

Sheldon Hirt(3)

      $211,150           $—     

Nikita Shah

      $193,922    94%    125%   $227,859     
 (1)

Mr. Stewart’s Incentive Award for 2018 was not prorated on the basis of his hire date.

 

 (2)

Mr. Boyer’s Cash Incentive Target Award for 2018 was prorated on the basis of his hire date byAmneal of February 5, 2018.

 

 (3)

Mr. Hirt stepped down from the Company on January 31, 2019 and did not receive cash basedincentive compensation for 2018. Pursuant to a separation agreement between the Company and Mr. Hirt, however, Mr. Hirt received, among other things, an amount equal to his target cash incentive award for 2018, which is reflected in thebonus column in the summary compensation table below.

 

18


Table of Contents

Long-Term Incentive Compensation

Our long-term incentive compensation program is designed to promote a balanced focus on driving performance, retaining talent and aligning theinterests of our executives with those of our other stockholders. The 2018 Plan authorizes the grant of stock options, stock appreciation rights, restricted stock awards, restricted stock unit awards, other stock or cash based awards and dividendequivalent awards to employees, non-employee directors and consultants. For 2018, our long-term incentive compensation program was comprised of two components: restricted stock units and stock options. Wegrant stock options to incentivize stock price performance as they have value only to the extent that the price of our common stock rises between the grant date and the exercise date, and we grant restricted stock unit awards as a retention tool asthey provide the opportunity to receive stock only if the recipient is still employed by us on the date the restrictions lapse. For those named executive officers with employment agreements (as discussed below), the specific ratio of stock optionsand restricted stock units awarded in 2018 was the result of individual negotiations. For our other named executive officers, in 2018 stock options constituted 67% of the long-term incentive awards and restricted stock units constituted 33% of thelong-term incentive awards. Half of Mr. Stewart’s restricted stock units were granted as a sign on bonus to compensate him for lost compensation from his previous employer and thus his mix of award types is different from the other namedexecutive officers.

The mix of different types of awards was intended to combine the retention and downside risk benefits inherent inrestricted stock units with the shareholder-value-creation benefits inherent in stock options, while mitigating the perceived excessive risk that potentially manifests itself through a single type of award approach. Option awards produce value onlyif the price of the Company’s stock appreciates, and then only to the extent of the excess of the Company’s stock price over the exercise price of the option.

In February 2019, the Compensation Committee added performance-based restricted stock units to the mix of grants that ourexecutive officers receive, and the total value of each executive officer’s equity grants was, for 2019, divided evenly between stock options, restricted stock units and performance restricted stock units.

Subject to adjustment as provided in the plan, the total number of shares of common stock available for awards under the plan is 23,000,000.As of February 28, 2019, 5,092,040 shares of common stock have been issued under the plan since it was originally adopted in 2018 and 17,907,960 shares remain available for issuance.

Annual Stock Option Grants

Our Compensation Committee has made annual and new hire grants of stock options to our named executive officers and certainother members of senior management. The stock options have an exercise price equal to the closing market price of the Company’s Class A Common Stock on the date of grant. In 2018, stock option grants were made in May, following the closingof the Combination. We expect to make future annual stock option grants in March. New hire stock option grants are made within a certain amount of time after commencement of employment. The stock options vest in four equal installments on the first,second, third and fourth anniversary of the date of grant, subject to cancellation or acceleration as provided in the individual stock option agreements. The number of stock options granted to each executive officer and senior manager is based uponthe grant date fair value of the stock options.

 

19


Table of Contents

Other Compensation and Benefits

Benefits offered to our named executive officers serve a different purpose than do the other elements of total compensation. In general, theyare provided for the convenience of the Company or are designed to provide a safety net of protection against the financial catastrophes that can result from illness, disability or death. Benefits offered to our named executive officers are the sameas those offered to the general employee population, except for the car service provided to our Chief Executive Officer, which is reflected in the “all other compensation” column in the summary compensation table below.

The following table sets forth the grant date fair market value of stock options granted in 2018 for each of the namedexecutive officers:

 

  Name      Grant Date Fair    
Value of 2018
Option Grant
 

Robert A. Stewart

          $    5,000,001     

Bryan Reasons

          $1,000,002     

Paul Bisaro

          $2,999,997     

Andrew Boyer

          $2,000,003     

Sheldon Hirt

          $533,332     

Nikita Shah

          $533,332     

Restricted Stock Unit Awards

Our Compensation Committee has made annual and new hire grants of restricted stock unit awards to our named executive officers and certainother members of senior management. In 2018, restricted stock unit grants were made in May, following the closing of the Combination. We expect to make future annual restricted stock unit grants in March. New hire restricted stock unit awards aremade within a certain amount of time after commencement of employment. The restricted stock unit awards vest in four equal installments on the first, second, third and fourth anniversary of the grant date, subject to cancellation or acceleration asprovided in the individual restricted stock unit award agreements. The number of restricted stock unit awards granted to each executive officer and senior manager is based upon the grant date fair value of the restricted stock units.

The following table sets forth the grant date fair market value of restricted stock unit awards granted in 2018 for each of the namedexecutive officers:

 

  Name  

    Grant Date Fair    

Value of 2018

RSU Awards

 

Robert A. Stewart

          $    4,999,996     

Bryan Reasons

          $499,998     

Paul Bisaro

          $1,499,994     

Andrew Boyer

          $999,996     

Sheldon Hirt

          $266,668     

Nikita Shah

          $266,668     

 

20


Table of Contents

Under the Company’s 401(k) plan, the Company makes a 100% matching contribution withrespect to each participant’s elective contributions, up to 5% of such participant’s compensation (provided that for fiscal 2018, matching contributions were based only on the first $275,000 of such participant’s compensation).Matching contributions become fully vested after 3 years of employment with the Company.

The Company also has a deferred compensationplan for certain former executives and employees of Impax, some of whom are currently employed by the Company. In December 2018, we announced that we will no longer accept contributions from employees or make matching contributions for the deferredcompensation plan. Of our named executive officers, only Mr. Reasons participated in the deferred compensation plan.

Chief Executive OfficerCompensation

The Board remains responsible for reviewing and approving the corporate goals and objectives relevant to our ChiefExecutive Officer’s compensation and evaluating our Chief Executive Officer’s performance in light of those goals and objectives. Mr. Stewart served as our President and Chief Executive Officer from the Company’s inception in May2018 until August 2, 2019, when Mr. Stewart resigned as the Company’s President and Chief Executive Officer and as a member of the Board. Mr. Stewart’s compensation during fiscal 2018 was based upon his employment agreementand the other factors set forth above under “Components of Executive Compensation.”

Accounting and Tax Considerations

Financial reporting and income tax consequences to our Company of individual compensation elements are important considerations for ourCompensation Committee when it is analyzing the overall level of compensation and the mix of compensation. Overall, the Compensation Committee seeks to balance its objective of maintaining a fair, reasonable and competitive compensation package forour named executive officers with enabling the deductibility of compensation.

Executive Compensation Clawback Policy

We do not currently have an executive compensation clawback policy. However, the Compensation Committee plans to adopt aclawback policy after the SEC issues final rules implementing the clawback provisions set forth in the Dodd-Frank Wall Street Reform and Consumer Protection Act. As of the end of 2018, the SEC had not yet issued final rules.

Stock Ownership Guidelines for Executive Officers

In order to further align the interests of our management with the interests of our stockholders, we require our executive officers to own ourstock as set forth below.

 

Position  Minimum Ownership Guideline

Chief Executive Officer

  

6x base salary

Executive Chairman

  

6x base salary

Other Executive Officers

  

2x base salary

 

21


Table of Contents

We adopted our stock ownership guidelines in May 2018, and we expect our executive officersto be able to achieve the required ownership thresholds by five years from the date of adoption of the guidelines. Newly appointed officers will have five years from the date they became subject to the stock ownership guidelines to comply with them.For the purpose of determining stock ownership levels, we include shares underlying restricted stock and restricted stock units (whether or not vested) and shares underlying“in-the-money” vested stock option awards.

Anti-HedgingPolicy

To prevent speculation or hedging, our insider trading policy prohibits our named executive officers (and our directors andall other employees) from engaging in short sales of our Company’s stock. Company policy also prohibits our directors, executive officers and certain other employees from purchasing or selling any financial instrument that is designed to hedgeor offset any decrease in the market value of our Company’s stock, including prepaid variable forward contracts, equity swaps, collars and other derivative securities that are directly linked to our Company’s stock. All other employees arediscouraged from entering into hedging transactions related to Company stock.

Summary Compensation Table

The following table shows the compensation of our named executive officers for the periods presented. For Messrs. Stewart, Boyer and Hirt andMs. Shah, we report compensation from the completion of the Combination to the end of 2018. For Messrs. Bisaro and Reasons, because they were named executive officers in our previous SEC filings that required compensation disclosure, we reportcompensation for periods prior to the completion of the Combination.

 

22


Table of Contents
 Name and Principal Position  Year   Salary
($)
  Bonus
($)
  Stock
Awards(1)
($)
   Option
Awards(1)
($)
   

Non-

Equity
Incentive

Plan
Compensation
($)

  All Other
Compensation(2)
($)
   Total
($)
 

 Robert A. Stewart

   2018    634,615    (3)    4,999,996    5,000,001    1,000,000   49,193    11,683,805 
 Former President and Chief Executive Officer                                     
 Bryan Reasons   2018    528,286    (5)    499,998    1,000,002    298,616   37,369    2,364,271 
 Former Senior Vice President and Chief Financial   2017    512,712    217,593    251,151    283,119   49,459    1,314,034 
 Officer   2016    496,620       868,780    826,545       56,579    2,248,524 
 Paul Bisaro   2018    802,885    (4)    1,499,994    2,999,997    750,000   13,148    6,066,025 

 Executive Chairman, Former President

 and Chief Executive Officer

   2017    621,154           5,287,000    624,358       6,532,512 
 Andrew Boyer   2018    412,500    (6)    999,996    2,000,003    448,083    (7)   924    3,861,506 

 Executive Vice President, Commercial

 Operations

                                     
 Sheldon Hirt   2018    267,998    (8)   211,150    (9)   266,668    533,332       13,277    1,292,425 

 Former Senior Vice President, General

 Counsel and Corporate Secretary

                                     
 Nikita Shah   2018    246,132    (10)    266,668    533,332    227,859   11,359    1,285,349 

 Senior Vice President, Chief Human

 Resources Officer

                                     

 

 (1)

These amounts reflect the aggregate grant date fair value of each option award and stock award grantedduring the fiscal year, computed in accordance with FASB ASC Topic 718. The valuation assumptions used in determining such amounts are described in Note 20 to the financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2018.

 

 (2)

The amounts shown in this column for 2018 consist of the following components:

 Name  

Company

401(k) Match
($)

       Life and
Disability
Insurance
Premiums
Paid by
Company
($)
  Company
Nonqualified
Deferred
Compensation
Plan Match
($)
        Cost for
personal use
of Driver
and
Company
Car
($)
        Imputed
Income for
personal use of
Driver and
Company Car
($)
        

Total    

($)    

 

 Robert A. Stewart

  12,269    924         19,800      16,200      49,193     

 Bryan Reasons

  6,115    600   30,654                  37,369     

 Paul Bisaro

  12,548    600                     13,148     

 Andrew Boyer

      924                     924     

 Sheldon Hirt

  12,269    1,008                     13,277     

 Nikita Shah

  10,351       1,008                              11,359     
 (3)

Represents Mr. Stewart’s salary from the closing of the Combination through December 31,2018.

 

 (4)

Represents Mr. Bisaro’s salary from January 1, 2018 through December 31, 2018.

 

 (5)

Represents Mr. Reasons’ salary from January 1, 2018 through December 31, 2018.

 

 (6)

Represents Mr. Boyer’s salary from the closing of the Combination through December 31,2018.

 

 (7)

Pro-rated based on hire date by Amneal.

 

 (8)

Represents Mr. Hirt’s salary from the closing of the Combination through December 31, 2018.

 

 (9)

Represents Mr. Hirt’s target annual bonus equal to fifty percent of his annual base salary.Mr. Hirt stepped down from the Company in January 2019 and this amount was paid pursuant to a separation agreement between the Company and Mr. Hirt.

 

 (10)

Represents Ms. Shah’s salary from the closing of the Combination through December 31, 2018.

 

 

23


Table of Contents

Grants of Plan Based Awards in 2018

The following table sets forth information about non-equity and equity awards granted to the namedexecutive officers in fiscal 2018.

 

    

Estimated Future PayoutsUnder

Non-Equity Incentive Plan Awards(1)

   All Other
Stock
Awards:
Number
of Shares
ofStock
or
Units(2)
(#)
   All Other
Option
Awards:
Number of
Securities
Underlying
Options
(#)
   Exercise
or Base
Price of
Option
Awards
($/share)
   Grant
Date Fair
Value of
Stock and
Option
Awards(3)
($)
 
 Name Grant Date 

Threshold

($)

  

Target

($)

  

Maximum

($)

                     

 Robert A. Stewart

             

 2018 Annual Cash Incentive Plan

  

500,000

   1,000,000   1,500,000         

 2018 RSU Grant

 May 7, 2018       333,111        4,999,996 

 2018 Stock Option Grant

 May 7, 2018                   681,199    15.01    5,000,001 

 Bryan Reasons

             

 2018 Annual Cash Incentive Plan

  

158,838

   317,677   476,515         

 2018 RSU Grant

 May 7, 2018       33,311        499,998 

 2018 Stock Option Grant

 May 7, 2018                   136,240    15.01    1,000,002 

 Paul Bisaro

             

 2018 Annual Cash Incentive Plan

  

375,000

   750,000   1,125,000         

 2018 RSU Grant

 May 7, 2018       99,933        1,499,994 

 2018 Stock Option Grant

 May 7, 2018                   408,719    15.01    2,999,997 

 Andrew Boyer

             

 2018 Annual Cash Incentive Plan

  

238,342

   476,684    (4)   715,026         

 2018 RSU Grant

 May 7, 2018       66,622        999,996 

 2018 Stock Option Grant

 May 7, 2018                   272,480    15.01    2,000,003 

 Sheldon Hirt

             

 2018 Annual Cash Incentive Plan

  

105,575

   211,150   316,725         

 2018 RSU Grant

 May 7, 2018       17,766        266,668 

 2018 Stock Option Grant

 May 7, 2018                   72,661    15.01    533,332 

 Nikita Shah

             

 2018 Annual Cash Incentive Plan

  

96,961

   193,922   290,884         

 2018 RSU Grant

 May 7, 2018       17,766        266,668 

 2018 Stock Option Grant

 May 7, 2018                   72,661    15.01    533,332 

 

24


Table of Contents
 (1)

The amounts shown in these columns reflect the corporate performance targets under our annual performancebased cash incentive plan. “Threshold” equals 50% of Target, “Target” equals 100% and “Maximum” equals 150% of target.

 

 (2)

The number of shares shown reflects the 2018 restricted stock unit awards under the 2018 Plan. Therestricted stock unit awards made in 2018 vest in four equal installments on the first, second, third and fourth anniversary of the date of grant, assuming continued employment.

 

 (3)

These amounts reflect the aggregate grant date fair value of each option award and stock award grantedduring the fiscal year, computed in accordance with FASB ASC Topic 718. The valuation assumptions used in determining such amounts are described in Note 20 to the financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2018.

 

 (4)

Prorated based on hire date by Amneal.

Outstanding Equity Awards at December 31, 2018

 

   Option Awards                 Stock Awards             
 Name  Number of
Securities
Underlying
Options that
are
Exercisable
(#)
      Number of
Securities
Underlying
Options that
are
Unexercisable
(#)
      Option
Exercise
Price
($)
   Option
Expiration
Date
     

Number

of Shares
or Units of
Stock that
Have Not
Vested (#)

      

        Market        
Valueof

Shares or

Units of
Stock that

HaveNot
Vested(1)
($)

 

 Robert A. Stewart

        681,199  (2)    15.01    5/7/28     333,111  (3)    4,506,992   

 Bryan Reasons

        136,240  (2)    15.01    5/7/28     33,311  (3)    450,698   
   52,000  (4)       17.99    5/15/23       
   55,000  (4)       25.24    5/14/24       
   47,500  (4)       40.70    2/26/25       
   63,095  (4)       33.27    2/26/26       
   56,232  (4)       9.35    3/2/27       

 Paul Bisaro

        408,719  (2)    15.01    5/7/28     99,933  (3)    1,352,093   
   850,000  (4)       12.70    3/27/27       

 Andrew Boyer

        272,480  (2)    15.01    5/7/28     66,622  (3)    901,396   

 Sheldon Hirt

        72,661  (2)    15.01    5/7/28     17,766  (3)    240,374   

 Nikita Shah

         72,661  (2)    15.01    5/7/28      17,766  (3)    240,374   

 

 (1)

Based on the closing price of our Class A common stock of $13.53 on December 31, 2018, the lasttrading day of the year.

 

 (2)

Stock options vest in four equal installments on May 7, 2019, May 7, 2020, May 7, 2021 andMay 7, 2022. All unvested stock options held by Mr. Hirt and Mr. Reasons were forfeited upon their separation from the Company in January and February 2019, respectively.

 

 (3)

Restricted stock units vest in four equal installments on May 7, 2019, May 7, 2020, May 7,2021 and May 7, 2022. All restricted stock units held by Mr. Hirt and Mr. Reasons were forfeited upon their separation from the Company in January and February 2019, respectively.

 

 (4)

Exercisable options held by Mr. Bisaro and Mr. Reasons were granted by Impax prior to theCombination and assumed by the Company pursuant to the Combination.

Nonqualified Deferred Compensation for 2018

 

 Name  Executive
Contributions
in Last FY
($)
   Company
Contributions
in Last FY
($)
   Aggregate
Earnings in
Last FY
($)
  Aggregate
Withdrawals/
Distributions
($)
   

    Aggregate    
Balance a

Last FY
($)

 

 Robert A. Stewart

                  —   

 Bryan Reasons

   61,308    30,654    (70,026      879,961   

 Paul Bisaro

                  —   

 Andrew Boyer

                  —   

 Sheldon Hirt

                  —   

 Nikita Shah

                  —   

The Company has a deferred compensation plan for certain former executives and employees of Impax, some ofwhom are currently employed by the Company. In December 2018, the Company announced that it will no longer accept contributions from employees or make matching contributions for the deferred compensation plan. Of the named executive officers, onlyMr. Reasons, who stepped down from the Company in February 2019, participated in the non-qualified deferred compensation plan.

 

 

25


Table of Contents

The Company’s non-qualified deferredcompensation plan permitted highly compensated individuals to receive a similar level of benefits (in terms of the overall percentage of their income eligible for tax deferral and employer matching contributions) as were available to employees withlower levels of income. Each participant could defer up to 75% of the participant’s base salary and up to 100% of the amount of the participant’s bonus or cash incentive awards. The Company made a matching contribution for each participantequal to 50% of the participant’s contribution up to 10% of base salary and bonus and cash incentive awards per year. A participant’s account was notionally invested in one or more investment funds and the value of the account wasdetermined with respect to such investment allocations. Participants were fully vested in their contributions when made. The Company’s matching contributions vested depending on the number of years of service, with participants being fullyvested after five years of service. No contributions were forfeited as a result of a separation due to death, disability, termination of the plan or a change in control.

Benefits attributable to a participant were valued as if they were invested in one or more investment funds, as directed by participants inwriting. The investment funds and their annual rates of return for the fiscal year ended December 31, 2018 are contained in the table below. Participants could change their selection of investment funds from time to time in writing inaccordance with the procedure established by the plan administrator. Changes took effect as soon as administratively practicable.

 

 Valuation Fund  Rate of Return in
2018
 

 Fidelity VIP Money Market

   1.42%   

 MFS/Sun Life Govt. Securities

   0.47%   

 PIMCO Total Return

   -0.53%   

 MFS VIT I Total Return

   -5.61%   

 MFS VIT I Value Series Initial

   -10.09%   

 Dreyfus Stock Index

   -4.63%   

 T. Rowe Price Blue Chip Growth

   1.92%   

 AllianceBernstein Small/Mid Cap Val

   -15.03%   

 Fidelity VIP Mid Cap

   -14.54%   

 Delaware VIP Small Cap Value

   -16.72%   

 AllianceBernstein Internal Value

   -22.79%   

If a participant terminated his or her employment for any reason, including death, Impax would pay theparticipant an amount equal to the value of the vested balance credited to the participant’s plan account. If the participant died, the balance of that account would be paid to one or more beneficiaries designated by the participant.

Management Employment Agreements

Wehave entered into employment agreements with Robert A. Stewart, Bryan Reasons, Paul Bisaro and Andrew Boyer.

 

26


Table of Contents

Robert A. Stewart

Robert A. Stewart is party to an Employment Agreement dated as of December 16, 2017, by and among Amneal, the Company andMr. Stewart (the “Stewart Employment Agreement”).

The initial term of the Stewart Employment Agreement began onJanuary 25, 2018 and expires on the third anniversary of such date, unless further extended or earlier terminated as provided in the Stewart Employment Agreement. The Stewart Employment Agreement automatically renews for single one-year periods unless either party provides a written notice of non-renewal at least 90 days prior to the end of the applicable term or unless it is terminated earlier.

Under the Stewart Employment Agreement, Mr. Stewart receives an annual base salary of at least $1.0 million. Mr. Stewart isalso eligible to receive an annual bonus targeted at 100% of his base salary under the annual bonus program, and such amount may be between zero and 150% of Mr. Stewart’s base salary.

As provided under the Stewart Employment Agreement, following the closing of the Combination, the Company granted to Mr. Stewart(i) an award of restricted stock units having a grant date fair value equal to $2.5 million (the “Sign-on RSUs”); (ii) an option to purchase the number of shares of the Company’sClass A common stock necessary for the option to have a grant date fair value of $5.0 million (the “Stewart Option”); and (iii) an award of restricted stock units having a grant date fair value equal to $2.5 million(the “Additional RSUs” and with the Sign-on RSUs, the “Stewart RSUs”).

Severance

The Stewart Employment Agreement provides for severance payments and benefits if (i) Mr. Stewart resigns for “good reason”(as defined in the Stewart Employment Agreement) or (ii) the Board terminates Mr. Stewart’s employment without “cause” (as defined in the Stewart Employment Agreement), in each case other than during the period that iswithin three months preceding or 24 months following a “change in control” (as defined in the Stewart Employment Agreement). In addition to payment of earned and vested payments and benefits, these severance payments and benefits include:(A) two times his base salary as then in effect; (B) a pro rata portion of his annual bonus for the fiscal year in which the termination occurs, based on actual performance for such fiscal year; (C) continuation of healthcare benefitsuntil the second anniversary of his termination date; (D) the vesting and if applicable, exercisability of each outstanding equity award granted to Mr. Stewart will be accelerated to the extent such equity award would have vested hadMr. Stewart’s employment continued until the first anniversary of his termination date; and (E) outplacement services by a reputable national outplacement service for up to two years following his termination date.

Severance Upon a Change in Control

TheStewart Employment Agreement also provides for severance payments and benefits if (i) Mr. Stewart resigns for good reason, (ii) the Amneal Board terminates Mr. Stewart’s employment without cause or(iii) Mr. Stewart’s employment terminates by reason of death or

 

27


Table of Contents

disability (as defined in the Stewart Employment Agreement), in each case within three months preceding or 24 months following a change in control. In addition to payment of earned and vestedpayments and benefits, these severance payments and benefits include: (A) the sum of (x) two times his base salary as then in effect plus (y) two times his target annual bonus as then in effect; (B) a pro rata portion of hisannual bonus for the fiscal year in which the termination occurs, based on actual performance for such fiscal year; (C) continuation of healthcare benefits until the second anniversary of his termination date; (D) the vesting and ifapplicable, exercisability of each equity award granted to Mr. Stewart will be fully accelerated; and (E) outplacement services by a reputable national outplacement service for up to two years following his termination date.

The Stewart Employment Agreement requires Mr. Stewart to maintain the confidentiality of information relating to the Company, asapplicable, during and after the term of such agreement and also contains non-competition, non-solicitation and non-disparagementcovenants as well as other provisions customary for this type of employment agreement.

Bryan M. Reasons

Bryan Reasons is party to an Employment Agreement dated as of December 12, 2012, by and among Impax and Mr. Reasons, as amended (the“Reasons Employment Agreement”). The Reasons Employment Agreement automatically renews for a one-year period unless either party provides at least 90 days written notice of non-renewal prior to the end of the applicable term or unless it is terminated earlier.

The ReasonsEmployment Agreement provides for (i) an annual base salary of at least $385,000; (ii) participation in the Company’s annual cash incentive bonus program; (iii) grants of stock options and restricted stock in an amount and on theterms determined by the Compensation Committee of the Board; and (iv) other compensation that may be awarded by the Board or the Compensation Committee of the Board.

Severance

The Reasons EmploymentAgreement provides for severance payments and benefits if (i) the Company terminates Mr. Reasons’ employment without “cause” (as defined in the Reasons Employment Agreement) or (ii) Mr. Reasons resigns for“good reason” (as defined in the Reasons Employment Agreement), of (A) the sum of (x) the balance of the base salary due under the Reasons Employment Agreement or one and one half times his base salary as then in effect,whichever is greater, plus (y) an amount equal to one and one half times the average of the annual cash bonus awards received by Mr. Reasons for all fiscal years during the term of the Reasons Employment Agreement; (B) a pro rataportion of his cash bonus award for the fiscal year in which the termination occurs; (C) continuation of healthcare benefits for 24 months from the termination date; and (D) acceleration by 12 months of all of Mr. Reasons’unvested stock options and restricted stock, with such stock options remaining exercisable for 12 months following his termination date.

 

28


Table of Contents

Severance Upon a Change in Control

The Reasons Employment Agreement also provides for severance payments and benefits if (a) Mr. Reasons resigns for good reason within60 days preceding or 12 months following a “change in control” (as defined in the Reasons Employment Agreement), (b) the Company terminates Mr. Reasons’ employment without cause within 60 days preceding or 12 months following thechange in control or (c) the employment term expires or is not renewed by the Company and Mr. Reasons’ employment is then terminated without cause within 12 months following the change in control, of (1) the sum of (x) thebalance of the base salary due under the Employment Agreement or two and one quarter times his base salary as then in effect, whichever is greater, plus (y) an amount equal to two and one quarter times the average of the annual cash bonusawards received by Mr. Reasons for all fiscal years during the term of the Reasons Employment Agreement; (2) a pro rata portion of his cash bonus award for the fiscal year in which the termination occurs; (3) continuation of benefitsfor 24 months from the termination date; and (4) acceleration of all of Mr. Reasons’ unvested stock options and restricted stock, with such stock options remaining exercisable for 12 months following his termination date.

The Reasons Employment Agreement requires Mr. Reasons to maintain the confidentiality of information relating to the Company during andafter the term of such agreement and also contains non-competition, non-solicitation and non-disparagement covenants as well asother provisions customary for this type of Employment Agreement.

Separation Agreement

As previously announced, Bryan M. Reasons stepped down from his role as Senior Vice President and Chief Financial Officer of the Companyeffective as of January 22, 2019. On February 28, 2019, in connection with his termination of employment with the Company as of such date, the Company and Mr. Reasons entered into a separation agreement (the “SeparationAgreement”). Pursuant to the Separation Agreement, and in consideration of Mr. Reasons’ execution of a release of claims in favor of the Company and his continued compliance with certain restrictive covenants, Mr. Reasonsreceived or will receive (i) severance payments totaling $1,947,549.70, $374,528.79 of which is payable on May 3, 2019 and the remainder is to be paid in 21 substantially equal installments thereafter on the Company’s regular payrolldates; (ii) a payment of $298,616.23, less payroll deductions and withholdings, on March 8, 2019, which constitutes Mr. Reasons’ annual incentive bonus for fiscal year 2018 based on actual performance for the year, as determinedby the Company’s Board, and (iii) additional monthly payments or reimbursement in an amount of the cost of monthly premiums for Mr. Reasons’ and his covered dependents’ coverage under the Company’s group health plansduring the period beginning on February 28, 2019 and ending on the earlier of (a) February 28, 2021, (b) the date Mr. Reasons becomes eligible for comparable coverage under another employer’s group health plan(s) or(c) the date Mr. Reasons is no longer eligible for COBRA. The Separation Agreement also provides for the exercisability of Mr. Reasons’ vested options until February 28, 2020.

 

29


Table of Contents

Paul Bisaro

Paul Bisaro is party to an Employment Agreement dated as of May 4, 2018, by and among Amneal, the Company and Mr. Bisaro (the“Bisaro Employment Agreement”).

The initial term of the Bisaro Employment Agreement began on the closing of the Combination andwill expire on the third anniversary of the closing, unless further extended or earlier terminated as provided in the Bisaro Employment Agreement. The Bisaro Employment Agreement automatically renews for singleone-year periods unless either party provides a written notice of non-renewal at least 90 days prior to the end of the applicable term or unless it is terminatedearlier.

Under the Bisaro Employment Agreement, Mr. Bisaro will receive an annual base salary of at least $750,000. Mr. Bisarois also eligible to receive an annual bonus targeted at 100% of his base salary under the annual bonus program, and such amount may be between zero and 150% of Mr. Bisaro’s base salary.

As provided under the Bisaro Employment Agreement, following the effective date of the Bisaro Employment Agreement, the Company granted toMr. Bisaro (i) an option to purchase the number of shares of the Company’s Class A common stock necessary for the option to have a grant date fair value of $3.0 million (the “Initial Bisaro Option”) and(ii) an award of restricted stock units having a grant date fair value equal to $1.5 million (the “Initial Bisaro RSUs”).

Severance

The Bisaro EmploymentAgreement provides for severance payments and benefits if (i) Mr. Bisaro resigns for “good reason” (as defined in the Bisaro Employment Agreement) or (ii) the Company terminates Mr. Bisaro’s employment withoutcause (as defined in the Bisaro Employment Agreement), in each case other than during the period that is within three months preceding or 24 months following a change in control (as defined in the Bisaro Employment Agreement). In addition to paymentof earned and vested payments and benefits, these severance payments and benefits include: (A) two times his base salary as then in effect; (B) continuation of healthcare benefits until the second anniversary of his termination date; and(C) the vesting and if applicable, exercisability of each outstanding equity award granted to Mr. Bisaro will be accelerated to the extent such equity award would have vested had Mr. Bisaro’s employment continued until the firstanniversary of his termination date and each stock option held by Mr. Bisaro will remain exercisable for a period of 12 months following his termination date (or until the original expiration date of the option, if earlier).

The Bisaro Employment Agreement also provides for severance payments and benefits if Mr. Bisaro’s employment terminates as a resultof Mr. Bisaro’s death or disability (as defined in the Bisaro Employment Agreement), in each case other than during the period that is within three months preceding or 24 months following a change in control. In addition to payment ofearned and vested payments and benefits, these severance payments and benefits include: (A) a prorated annual bonus based on actual performance for the fiscal year during which such termination occurs; (B) accelerated vesting of 100% ofthe then-unvested restricted stock and restricted stock

 

30


Table of Contents

units previously granted to Mr. Bisaro (or, upon a termination as a result of Mr. Bisaro’s disability, accelerated vesting of 50% of such then-unvested restricted stock andrestricted stock units); (C) accelerated vesting and exercisability of the portion of the stock options previously granted to Mr. Bisaro that are scheduled to vest in the calendar year of Mr. Bisaro’s death or disability, asapplicable; and (D) solely in the event of a termination as a result of Mr. Bisaro’s disability, continuation of healthcare benefits for six months.

Severance Upon a Change in Control

TheBisaro Employment Agreement also provides for severance payments and benefits if (i) Mr. Bisaro resigns for good reason, (ii) the Company terminates Mr. Bisaro’s employment without cause or (iii) Mr. Bisaro’semployment terminates by reason of death or disability, in each case within three months preceding or 24 months following a change in control. In addition to payment of earned and vested payments and benefits, these severance payments and benefitsinclude: (A) the sum of (x) two times his base salary as then in effect plus (y) an amount equal to two times his target annual bonus as then in effect; (B) continuation of healthcare benefits until the second anniversary of histermination date; and (C) the vesting and if applicable, exercisability of each equity award granted to Mr. Bisaro will be fully accelerated and each stock option held by Mr. Bisaro will remain exercisable for a period of 12 monthsfollowing his termination date (or until the original expiration date of the option, if earlier).

The Bisaro Employment Agreementrequires Mr. Bisaro to maintain the confidentiality of information relating to the Company during and after the term of such agreement and also contains non-competition,non-solicitation and non-disparagement covenants as well as other provisions customary for this type of employment agreement.

Andrew Boyer

Andrew Boyer is party toan Employment Agreement, effective as of February 5, 2018, by and among Amneal, Amneal Holdings, LLC and Mr. Boyer (the “Boyer Employment Agreement”).

The initial term of the Boyer Employment Agreement began on February 5, 2018 and expires on June 30, 2021, unless further extendedor earlier terminated as provided in the Boyer Employment Agreement. The Boyer Employment Agreement automatically renews for single one-year periods unless either party provides a written notice of non-renewal at least 90 days prior to the end of the applicable term or unless it is terminated earlier.

Under the Boyer Employment Agreement, Mr. Boyer receives an annual base salary of at least $650,000. Mr. Boyer is also eligible toreceive an annual bonus targeted at 80% of his base salary under the annual bonus program, and such amount may be between zero and 150% of Mr. Boyer’s base salary.

As provided under the Boyer Employment Agreement, following the closing of the Combination, the Company granted to Mr. Boyer (i) anaward of restricted stock units having a grant date fair value equal to $1.0 million (the “Boyer RSUs”) and (ii) an option to purchase the number of shares of the Company’s Class A common stock necessary for the optionto have a grant date fair value of $2.0 million (the “Boyer Option”).

 

31


Table of Contents

Severance

The Boyer Employment Agreement provides for severance payments and benefits if (i) Mr. Boyer resigns for “good reason” (asdefined in the Boyer Employment Agreement) or (ii) the Board terminates Mr. Boyer’s employment without “cause” (as defined in the Boyer Employment Agreement), in each case other than during the period that is within threemonths preceding or 24 months following a “change in control” (as defined in the Boyer Employment Agreement). In addition to payment of earned and vested payments and benefits, these severance payments and benefits include: (A) twotimes his base salary as then in effect; (B) a pro rata portion of his annual bonus for the fiscal year in which the termination occurs, based on actual performance for such fiscal year, and the prior year’s bonus to the extent not thenalready paid (based on the higher of target or actual performance of the relevant goals); (C) continuation of healthcare benefits until the second anniversary of his termination date; (D) the vesting and if applicable, exercisability of eachoutstanding equity award granted to Mr. Boyer will be accelerated to the extent such equity award would have vested had Mr. Boyer’s employment continued until the first anniversary of his termination date (and, to the extentapplicable, each outstanding equity award granted to Mr. Boyer will remain exercisable until the first anniversary of his termination date); and (E) outplacement services by a reputable national outplacement service for up to two yearsfollowing his termination date.

Severance Upon a Change in Control

The Boyer Employment Agreement also provides for severance payments and benefits if (i) Mr. Boyer resigns for good reason,(ii) the Board terminates Mr. Boyer’s employment without cause or (iii) Mr. Boyer’s employment terminates by reason of death or disability (as defined in the Boyer Employment Agreement), in each case within three monthspreceding or 24 months following a change in control. In addition to payment of earned and vested payments and benefits, these severance payments and benefits include: (A) the sum of (x) two times his base salary as then in effect plus(y) two times his target annual bonus as then in effect; (B) a pro rata portion of his annual bonus for the fiscal year in which the termination occurs, based on actual performance for such fiscal year, and the prior year’s bonus tothe extent not then already paid (based on the higher of target or actual performance of the relevant goals); (C) continuation of healthcare benefits until the second anniversary of his termination date; (D) the vesting and if applicable,exercisability of each equity award granted to Mr. Boyer will be fully accelerated (and, to the extent applicable, each outstanding equity award granted to Mr. Boyer will remain exercisable until the first anniversary of his terminationdate); and (E) outplacement services by a reputable national outplacement service for up to two years following his termination date.

The Boyer Employment Agreement requires Mr. Boyer to maintain the confidentiality of information relating to the Company during and afterthe term of such agreement and also contains non-competition, non-solicitation and non-disparagement covenants as well as otherprovisions customary for this type of employment agreement.

 

32


Table of Contents

Potential Payments Upon Termination or Change in Control

To enable us to offer a competitive executive compensation program, we believe it is important to provide reasonable severance benefits to ourexecutive officers.

In addition to the employment agreements between the Company and certain of our named executive officers, discussedabove, the Company has a severance plan that provides for severance benefits to our employees (the “Severance Plan”). Under the Severance Plan, in the event of a participant’s termination of employment without cause (as defined in theSeverance Plan) or for good reason (as defined in the Severance Plan), in either case on or within 12 months after the date of the completion of the Combination, the participant will be eligible to receive up to a maximum of (depending on his or herposition) (i) a lump sum payment of 52 weeks of his or her base pay, (ii) his or her annual target bonus, (iii) partially subsidized COBRA premiums for 52 weeks and (iv) outplacement services for 26 weeks.

Moreover, from time to time, we may explore potential transactions that could result in a change in control of our Company. We believe thatwhen a transaction is perceived as imminent, or is taking place, we should be able to receive and rely on the disinterested service of our executive officers, without them being distracted or concerned by the personal uncertainties and risksassociated with such a situation. We further believe that our stockholders are best served if their interests are aligned with the interests of our executives, and providing change in control benefits should eliminate, or at least reduce, thereluctance of senior management to pursue potential transactions that may enhance the value of our stockholders’ investments. Consistent with this, we providechange-in-control benefits to our named executive officers only if the officer’s employment terminates in connection with the change in control (often referred toas “double-trigger” change-in-control benefits).

The estimated severance and other benefits for each named executive officer, either pursuant to the Severance Plan or an applicable employmentagreement, in the event of a termination of employment are set forth below. The amounts assume that the termination was effective as of December 31, 2018 (the last business day of fiscal 2018) and thus are based upon amounts earned through suchdate and are only estimates of the amounts that would actually be paid to such named executive officers upon their termination. Since many factors (e.g., the time of year when the event occurs, the Company’s stock price) could

 

33


Table of Contents

affect the nature and amount of benefits a named executive officer could potentially receive, any amounts paid or distributed upon a future termination may be different from those shown in thetable below. The amounts shown are in addition to benefits generally available to salaried employees.

 

 Name Benefit  

Without Cause

or for Good

Reason

Termination

   

Without Cause,

for Good

Reason, Death

or Disability
Termination in
Connection

with a Change

in Control

   

Termination

for Death

   

Termination

for Disability

 

 Robert A. Stewart

 Cash      $3,000,000       $5,000,000     
 Accelerated Vesting of Stock Options(1)      $    —       $    —     
 Accelerated Vesting of RSUs(2)      $1,126,738       $    4,506,992                 
  Health Care      $53,674       $53,674           
  TOTAL      $4,180,412       $9,560,666           

 Bryan Reasons(3)

 Cash      $1,596,983       $2,246,166     
 Accelerated Vesting of Stock Options        
 Accelerated Vesting of RSUs        
  Health Care      $53,674       $53,674           
  TOTAL      $1,650,657       $2,299,840           

 

34


Table of Contents
 Name  Benefit  Without Cause
or
for Good
Reason
Termination
   Without Cause,
for Good
Reason, Death
or Disability
Termination in
Connection
with a Change
in Control
   Termination
for Death
   Termination
for Disability
 

 Paul Bisaro

  Cash      $1,500,000       $3,000,000   $750,000   $750,000 
  Accelerated Vesting of Stock Options(1)      $       $     
  Accelerated Vesting of RSUs(2)      $338,020       $1,352,093   $1,352,093   $676,047 
   Health Care                    
   TOTAL      $1,838,020       $4,352,093   $2,102,093   $1,426,047 

 Andrew Boyer

  Cash      $1,748,083       $2,788,084     
  Accelerated Vesting of Stock Options(1)      $       $     
  Accelerated Vesting of RSUs(2)      $225,342       $901,396     
   Health Care      $53,674       $53,674           
   TOTAL      $2,027,099       $3,743,154           

 Sheldon Hirt(4)

  Cash      $633,450       $633,450     
  Accelerated Vesting of Stock Options        
  Accelerated Vesting of RSUs        
   Health Care      $26,833       $26,833           
   TOTAL      $660,283       $660,283           

 Nikita Shah

  Cash      $581,768       $581,768     
  Accelerated Vesting of Stock Options        
  Accelerated Vesting of RSUs        
   Health Care      $17,624       $17,624           
   TOTAL      $599,392       $599,392           
 (1)

No value is listed for accelerated vesting of options because all of the unvested options held by the namedexecutive officers were granted with exercise prices greater than the closing market price of our Class A common stock on December 31, 2018.

 

 (2)

Includes unvested restricted stock units that would accelerate in connection with the applicable terminationevent valued based on the closing price of our Class A common stock on December 31, 2018, which was $13.53.

 

 (3)

Mr. Reasons stepped down from the Company in February 2019.

 

 (4)

Mr. Hirt stepped down from the Company in January 2019. Pursuant to a separation agreement betweenMr. Hirt and the Company, Mr. Hirt received, among other things, an amount equal to $60,000, which was intended by the parties to compensate Mr. Hirt for the portion of his RSUs that would have vested in May 2019.

Release

Theobligation of the Company to provide the salary continuation and other severance benefits described above is contingent upon and subject to the execution and delivery by the executive officer of a general release of claims against the Company.

 

35


Table of Contents

Compensation Committee Interlocks and Insider Participation

No member of the Compensation Committee is now, or was during fiscal 2018 or at any time prior thereto, an officer or employee of our Companyor any of our subsidiaries. In addition, none of the executive officers of our Company currently serves or has served in the past on the board of directors or compensation committee of another company at any time during which an executive officer ofsuch other company served on our Board or Compensation Committee.

Report of the Compensation Committee

The Compensation Committee of the Board has reviewed and discussed the foregoing Compensation Discussion and Analysis with management. Basedon this review and discussion, the committee recommended to our Board that the Compensation Discussion and Analysis be included in the 2019 Proxy Statement and incorporated by reference into the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2018. This report is provided by the following directors, who comprised the committee as of the filing of the 2019 Proxy Statement.

Compensation Committee:

TedNark (Chair)

Janet S. Vergis

Robert L. Burr

Gautam Patel

DIRECTOR COMPENSATION

All of the information contained in this section generally relates to 2018 compensation and was included in the 2019 Proxy Statement.Subsequent to the filing of the 2019 Proxy Statement, on August 5, 2019, the Company named Chirag and Chintu Patel, co-founders of the Company and Co-Chairmen ofthe Board, as Co-Chief Executive Officers, appointed Chirag Patel as President, and appointed Paul M. Meister, Chief Executive Officer of Liberty Lane Partners, LLC, to the Board and as the Board’sindependent Chairman, and each of Robert L. Burr, Dharmendra “DJ” Rama and Janet S. Vergis resigned as directors.

Each of our non-employee directors receives an annual fee payable in cash. In addition, so that our non-employee directors have an ownership interest aligned with our stockholders, each non-employee director also receives an annual grant of stock options and restricted stock units. Board members also receive an initial equity grant when they join the Board. Members of our Board committees receivean additional annual fee for each committee on which they serve, other than the Integration Committee. Our directors are entitled to reimbursement of their reasonableout-of-pocket expenses in connection with their travel to and attendance at Board and committee meetings. The compensation of ournon-employee directors was reviewed by our independent compensation consultant in May 2018.

 

36


Table of Contents

Our director compensation program is summarized in the table below.

 

 Compensation Element                  2018 Compensation                

 Annual Fee – Lead Independent Director (cash)

  $110,000

 Annual Fee – Other Members (cash)

  $75,000

 General Board Service Fee – Equity

  

 Targeted value of initial stock option grant

  $184,250

 Targeted value of initial restricted stock unit grant

  $90,750

 Targeted value of stock options granted annually

  $184,250

 Targeted value of restricted stock units granted annually

  $90,750

 Vesting Schedule

  1 year cliff vesting

 Additional Fees for Committee Service – Cash

  

 Audit Committee (Chair/Member)

  $25,000/$15,000

 Compensation Committee (Chair/Member)

  $20,000/$10,000

 Nom. & Corp. Gov. Com. (Chair/Member)

  $15,000/$7,500

 Integration Committee (Chair/Member)

  Nothing additional

 Conflicts Committee (Chair/Member)

  $15,000/$7,500

During fiscal 2018, our non-employee directors at thetime received the following compensation:

 

 Name(1)  Fees Earned or Paid in Cash(2)   RSU
Awards
   Option
Awards
   Total   

 Emily Peterson Alva

   $    60,000   $    91,667   $    183,333   $    335,000   

 J. Kevin Buchi

   $    70,000   $91,667   $183,333   $345,000   

 Robert L. Burr

   $    95,000   $91,667   $183,333   $370,000   

 Jean Selden Greene

   $    55,000   $91,667   $183,333   $330,000   

 Ted Nark

   $    63,333   $91,667   $183,333   $338,333   

 Chintu Patel

   $    50,000   $91,667   $183,333   $325,000   

 Chirag Patel

   $    50,000   $91,667   $183,333   $325,000   

 Gautam Patel

   $    56,667   $91,667   $183,333   $331,667   

 Dharmendra Rama

   $    55,000   $91,667   $183,333   $330,000   

 Peter R. Terreri

   $    71,667   $91,667   $183,333   $346,667   

 Janet S. Vergis

   $    66,667   $91,667   $183,333   $341,667   
 (1)

On August 2, 2019, the Board appointed Paul M. Meister as a director, Messrs. Chintu and Chirag Patelwere appointed Co-Chief Executive Officers, and Messrs. Burr and Rama and Ms. Vergis resigned as directors.

 (2)

Amounts have been pro-rated to reflect fees earned from thecompletion of the Combination to the end of 2018.

Employee directors do not receive any separatecompensation for their Board activities.

In order to further align the interests of ournon-employee directors with the interests of our stockholders, we require our non-employee directors to own our stock as set forth below.

 

 Position  Minimum Ownership Guideline
 Non-employee directors  3x annual cash retainer

We adopted our stock ownership guidelines in May 2018, and we expect ournon-employee directors to be able to achieve the required ownership thresholds by five years from the date of adoption of the guidelines. Newly elected directors will have five years from the date they becamesubject to the stock ownership guidelines to comply with them. For the purpose of determining stock ownership levels, we include shares underlying restricted stock and restricted stock units (whether or not vested) and shares underlying “in-the-money” vested stock option awards.

 

37


Table of Contents

WHERE YOU CAN FIND ADDITIONAL INFORMATION

We are subject to the reporting and information requirements of the Securities Exchange Act of 1934, as amended, and as a result file reports,proxy statements and other information with the SEC. The SEC maintains a website at www.sec.gov that contains reports, proxy and information statements and other information regarding registrants, such as Amneal Pharmaceuticals, Inc., that fileelectronically with the SEC. We also maintain a website at www.amneal.com, at which you may access these materials free of charge as soon as reasonably practicable after they are electronically filed with, or furnished to, the SEC. The informationcontained in, or that can be accessed through, our website is not part of this Information Statement.

OTHERMATTERS

Other Business

TheBoard knows of no other matters other than those described in this Information Statement that have been approved or considered by the Majority Stockholders.

Stockholders Sharing an Address

Somebrokers, banks and other nominee record holders may be participating in the practice of “householding” information sent to stockholders. This means that only one copy of this Information Statement may have been sent to multiplestockholders in your household. We will promptly deliver, without charge, a separate copy of this document to you if you so request by writing or calling as follows: Amneal Pharmaceuticals, Inc., Attention: Corporate Secretary, 400 CrossingBoulevard, Bridgewater, NJ 08807; telephone, (908) 947-3120. If you want to receive separate copies of information statements in the future, or if you are receiving multiple copies and would like to receiveonly one copy for your household, you should contact your broker, bank or other nominee record holder, or you may contact us at the above address and phone number.

 

38

Comments

ChartMill-profile-image
ChartMill @ChartMill - 8 hours ago
Looking at the last year, $AMRX shows a very strong growth in Revenue. The Revenue has grown by 93.01%.… https://t.co/Xl5kuqFnin
intercooleronli-profile-image
InterCooler @intercooleronli - 8 hours ago
Zacks Investment Research Lowers Amneal Pharmaceuticals $AMRX to Sell https://t.co/ijQEDCed7X #investingnews
ledgerzette-profile-image
The Ledger Gazette @ledgerzette - 8 hours ago
Zacks Investment Research Lowers Amneal Pharmaceuticals $AMRX to Sell https://t.co/b0atySi1l6 #stocks
dakotafinancial-profile-image
Dakota Financial @dakotafinancial - 8 hours ago
Zacks Investment Research Lowers Amneal Pharmaceuticals $AMRX to Sell https://t.co/H1jnaJ91NI
SwingTradeBot-profile-image
SwingTradeBot @SwingTradeBot - 14 hours ago
20 DMA Support today: $SJI $CNX $IR $RRC $NEM $USD $TIF $ZBH $ARKW $XHE $VER $FPAY $QTT $DWTR $USMV $ORGO $X $NEO… https://t.co/Splb5Hrqc4
stocknewstimes-profile-image
Stock News Times @stocknewstimes - 2 days ago
Amneal Pharmaceuticals Inc $AMRX Given Average Recommendation of “Hold” by Analysts https://t.co/XOCPPwmBP5
dakotafinancial-profile-image
Dakota Financial @dakotafinancial - 2 days ago
Brokerages Set Amneal Pharmaceuticals Inc $AMRX Price Target at $8.00 https://t.co/z8kMiYsbpU
confcalltran-profile-image
Conf Call Tran @confcalltran - 2 days ago
Other definitive information statements https://t.co/wHAtcllAdd $AMRX
SwingTradeBot-profile-image
SwingTradeBot @SwingTradeBot - 2 days ago
Fell Below 50 DMA today: $AMRX $AVDR $TGE ... https://t.co/j2lcQOTpfA
russurban-profile-image
Russ Urban @russurban - 3 days ago
The *largest gainers in the premarket* for you to watch at the open: $BIMI $MDR $AMRX $SES and $OPK. https://t.co/Mps5J1Cnn0
newswithvalue-profile-image
Breaking News Now @newswithvalue - 3 days ago
$AMRX $MYGN: Is Amneal Pharmaceuticals, Inc. (AMRX) Going To Burn These …: https://t.co/e87IlIbJKt
NewsToDesk-profile-image
Stock News @NewsToDesk - 3 days ago
$RNST $AMRX: Hedge Funds Are Selling Renasant Corporation (RNST): https://t.co/9wyWc9XpUy
newswelldone-profile-image
Breaking News @newswelldone - 3 days ago
$FIZZ $AMRX: Is National Beverage Corp. (FIZZ) A Good Stock To Buy?: https://t.co/9CAdrmD6wI