2018 Guide to Effective Proxies

2.17.2 Executive summary | 261 6 TH EDITION | GUIDE TO EFFECTIVE PROXIES BIOGEN INC. 5 Executive Compensation Matters (continued) • InMay2017FAMPYRAwasapprovedforwalkingimprovementinpeoplewithMSbytheEC. • InAugust2017IMRALDI,anadalimumabbiosimilarreferencingHUMIRAdevelopedthroughourjointventure,Samsung Bioepis,wasapprovedbytheEC. ClinicalTrials • InJanuary2017weinitiatedaPhase1trialofBIIB076,ananti-taumonoclonalantibody,inhealthyvolunteersandpartic- ipantswithAlzheimer’sdisease. • InJune2017wedosedourfirstpatientinourPhase2studyofBIIB092,anantibodytargetingtau,forPSP. • InJuly2017wecompletedenrollmentinthePhase1studyofBIIB054inbothhealthyvolunteersandpatientswithearly onsetParkinson’sdisease. • InOctober2017weinitiatedthePhase2bclinicaltrialAFFINITY,designedtoevaluateopicinumab,anti-LINGO-1,asan investigationaladd-ontherapyinpeoplewithrelapsingMS. • In October 2017 we initiated the Phase 2 OPUS study evaluating the efficacy, safety and tolerability of natalizumab, α 4-integrininhibitor,indrug-resistantfocalepilepsy. BusinessDevelopment • In January 2017 we entered into a settlement and license agreement with Forward Pharma A/S (Forward Pharma). Pursuant to this agreement, we obtained U.S. and rest of world licenses to Forward Pharma’s intellectual property, includingForwardPharma’sintellectualpropertyrelatedtoTECFIDERA. • In May 2017 we completed an asset purchase of the Phase 3-ready candidate BIIB093 (intravenous glibencamide) (formerly known as CIRARA) from Remedy Pharmaceuticals Inc. The target indication for BIIB093 is large hemispheric infarction, a severe form of ischemic stroke where brain swelling (cerebral edema) often leads to a disproportionately large share of stroke-related morbidity and mortality. The U.S. Food and Drug Administration (FDA) recently granted BIIB093 Orphan Drug Designation for severe cerebral edemain patientswith acuteischemic stroke.The FDA has also grantedBIIB093FastTrackdesignation. • In June 2017 we completed an exclusive license agreement with Bristol-Myers Squibb Company for BIIB092 (formerly known as BMS-986168), a Phase 2-ready experimental medicine with potential in Alzheimer’s disease and PSP. BIIB092 is an antibody targeting tau, the protein that forms the deposits, or tangles, in the brain associated with Alzheimer’sdiseaseandotherneurodegenerativetauopathiessuchasPSP. • InOctober2017weenteredintoanewcollaborationagreementwithEisaiCo.Ltd.(Eisai)forthejointdevelopmentand commercialization of aducanumab, our anti-amyloid beta antibody candidate for Alzheimer’s disease. Under this agree- ment, we will continue to lead the ongoing Phase 3 development of aducanumab and will remain responsible for 100% of development costs for aducanumab until April 2018. Eisai will then reimburse us for 15% of aducanumab develop- ment expenses for the period April 2018 through December 2018, and 45% thereafter. Upon commercialization, both companieswillco-promoteaducanumabwitharegion-basedprofitsplit. • In October 2017 we amended the terms of our collaboration and license agreement with Neurimmune Subone AG (Neurimmune). Under the amended agreement, we made a $150.0 million payment to Neurimmune in exchange for a 15% reduction in royalty rates payable on products developed under the agreement, including on potential commercial sales of aducanumab. Our royalty rates payable on products developed under the agreement, including on potential commercialsalesofaducanumab,willnowrangefromthehighsingledigitstolow-teens. • In November 2017 we entered into an exclusive license and collaboration agreement with Alkermes Pharma Ireland Limited, a subsidiary of Alkermes plc, for BIIB098 (formerly known as ALKS 8700), an oral monomethyl fumarate pro- druginPhase3developmentforthetreatmentofrelapsingformsofMS. • In December 2017 we entered into a new collaboration agreement with Ionis to identify new antisense oligonucleotide (ASO)drugcandidatesforthetreatmentofSMA.Underthisagreement,wehavetheoptiontolicensetherapiesarising outofthiscollaborationandwillberesponsibleforthedevelopmentandcommercializationofthesetherapies. CapitalAllocation • In February 2017 we completed the spin-off of our hemophilia business, Bioverativ Inc., as an independent, publicly tradedcompany. • Returnedapproximately$1.4billiontostockholdersin2017throughsharerepurchases. • Announcedacorporaterestructuringprogramintendedtostreamlineouroperationsandreallocateresources. 31 Total of 02 pages in section 5 Executive Compensation Matters (continued) ExecutiveSummary 2017Highlights We had a productive and successful 2017. We generated record revenues of $12.3 billion fortheyear,performedwell across our MS portfolio and successfully launched SPINRAZAworldwide,thefirstandonlyapprovedtreatment forSMA. We announced an updated strategic framework to drive long-termgrowthwiththeaimofmaximizingthevalueofour core business while building our future growth engines. To thatend,wearefocusedonthefollowingstrategicpriorities: • MaximizingtheresilienceofourcoreMSbusiness; • Accelerating efforts in SMA as a significant new growth opportunity; • Developingandexpandingourneuroscienceportfolio; • Focusingourcapitalallocationeffortstodriveinvestment forfuturegrowth;and • Creatingaleanerandsimpleroperatingmodeltostream- line our operations and reallocate resources towards prioritized research and development and commercial valuecreationopportunities. We added seven new clinical stage programs across our strategic core and emerging growth areas and had one of ourmostproductiveyearsforbusinessdevelopment. We provided value to our stockholders through the return of approximately $1.4 billion in capital through share repurchases and we continued our leading efforts in environmental,sustainabilityanddiversitymatters. Our executive compensation programs for 2017 were aligned with stockholder interests as compensation earned under them was closely-linked to the achi vement of our corporateperformancegoals. We achieved or exceeded the vast majority of these corpo- rate performance goals that we set at the beginning of the year under our incentive compensation plans and, accord- ingly, the payouts under these plans for 2017 were above targetpayoutlevels. A brief summary of our 2017 business, financial and execu- tivecompensationhighlightsareasfollows: FinancialPerformance Thefollowingchartprovidesasummaryofourfinancialperformancefor2017comparedto2016: Revenues ($B) GAAPNet Income Attributable toBiogen Inc. ($B) Non-GAAPNet Income Attributable toBiogen Inc. ($B) GAAPDilutedEPS Non-GAAPDilutedEPS 2016 2017 $12.3 $2.5 $4.6 $11.92 $21.81 $3.7 $4.4 $20.22 $16.93 $11.4 AreconciliationofourGAAPtoNon-GAAPfinancialmeasuresisprovidedinAppendixAtothisProxyStatement. ProductandPipelineDevelopments Approvals • SPINRAZA • In April 2017 SPINRAZA was approved for the treatment of 5q SMA in pediatric and adult patients by the European Commission(EC). • InJune2017SPINRAZAwasapprovedinCanadaforthetreatmentof5qSMA. • The Japanese Ministry of Health, Labor and Welfare approved SPINRAZA for the treatment of infantile SMA in July 2017andforthetreatmentofpediatricandadultpatientswithSMAinSeptember2017. • InAugust2017SPINRAZAwasapprovedinBrazilforthetreatmentofSMA. • In February 2017 the Committee for Medicinal Products for Human Use of the European Medicines Agency adopted a positive opinion to update the TYSABRI European Union (E.U.) label with pediatric information to remove the contra- indicationinpediatricsandtodescribetheresultsofthepost-marketingmeta-analysisofpediatricdata. 30 BOSTON PROPERTIES, INC. COMPENSATIONDISCUSSIONANDANALYSIS I. EXECUTIVESUMMARY 2017PerformanceHighlights Inadditiontomanagementmeetingorexceedingthesetofcorporategoalsestablishedatthe beginningoftheyear,asdetailedin“ –III.AssessingPerformance – 2017CorporateGoals ”below, highlightsofour2017performanceincludethefollowing: 6.4M square feet ➣ completedapproximately6.4millionsquarefeetofleasing,including2.5million squarefeetfordevelopmentproperties; 6 development starts ➣ commenceddevelopmentofsixprojectsin2017totalingapproximately2.7million squarefeetandcommittedtothreeadditionaldevelopmentprojectsforan aggregateof1.7millionsquarefeet; +3.2% increase in FFO per share ➣ increaseddilutedFFOpershareby3.2%from$6.03to$6.22,whichincludesthe unbudgetedlossfromearlyextinguishmentofdebtofapproximately$13.9million, or$0.08pershare,resultingfromtheearlyredemptionofour3.700%unsecured seniornotesdue2018;excludingthisloss,ourFFOpershareincreasedby4.5%; +6.7% dividend increase ➣ increasedourregularquarterlydividendby$0.05pershare,or6.7%,inthefourth quarter; reduced borrowing costs ➣ reducedouroverallborrowingcosts,includinganapproximately$38.4million decreaseininterestexpense,andextendedourdebtmaturitiesbyrefinancing $850millionof3.700%unsecuredseniornotesthatwerescheduledtomaturein November2018withtheproceedsfromtheissuanceof$850millionof3.200% unsecuredseniornotesmaturinginJanuary2025; 5.9% TSR ➣ generatedatotalshareholderreturn(“TSR”)of5.9%comparedto5.3%forthe Cohen&SteersRealtyMajorsIndex(“C&SRealtyIndex”)and3.2%fortheFTSE NAREITOfficeIndex(the“NAREITOfficeIndex”)(asadjusted);and #2 ➣ ranked#2amongU.S.OfficeREITsinthe2017GlobalRealEstateSustainability Benchmarkassessmentandinthetop5%ofglobalparticipants(with88outof100 overallpoints)earninga“GreenStar”recognitionforthesixthconsecutiveyear. Highlightsof2017CompensationDecisions TheCommitteeconcludedthattheCompany,ledbyitsmanagementteam,hadastrongyearin2017, noting,inparticular,ourachievementsinleasing,executionofthekeyNOIdrivers,development economicsanddevelopmentstarts.(See“– III.AssessingPerformance – 2017CorporateGoals.” )Inlight oftheobjectiveandsubjectiveassessmentsofperformancerelativetothecorporategoals, performanceagainstourOfficePeersandindividualperformance,andreportedandrealizedNEO compensation,theCommitteedeterminedtoaward2017totalcompensationfortheNEOs,asagroup, atalevelthatreflectsanincreaseofapproximately11%over2016totalcompensation,whichbasedon advicefromFPL,theCommitteeexpectswillresultinthetotalcompensationawardedtoourNEOs rankingslightlyabovethemedianofourBenchmarkingPeerGroup. Aspartofitsbenchmarkingreview,FPLanalyzedtheallocationbetweenperformance-basedandtime- basedLTIsand,for2017,theCommitteedeterminedthatitwouldbeadvisabletomigrateovertimeto 32 BOSTONPROPERTIES,INC. ❘ 2018ProxyStatement Total of 04 pages in section COMPENSATIONDISCUSSIONANDANALYSIS I. EXECUTIVESUMMARY • consideringprojectionsforcompensationincreasesanddecreasesamongourpeersandthe marketgenerally,andotherinputreceivedfromFPLand; • establishingadollaramountfortotalcompensationforeachNEOandthenallocatingit amongbasesalary,cashbonusandlong-termincentive(“LTI”)equityawards(includingtime- basedLTIawardsandperformance-basedLTIawardsthatuserelativeTSRoveroverlappin three-yearmeasurementperiodsastheprimaryperformancemetric,tofurtheralign management’sobjectiveswiththeinterestsofourinvestors). Wedonotrelyonastrictformulaicframeworkformeasuringperformanceagainstshort-termgoalsto determinecompensationawardsforaparticularyear.TheCommitteebelievesthatcombininga quantitativeandaqualitativeassessmentagainstpre-establishedgoalsallowsitto: • evaluatemanagement’sperformanceannuallywhiletakingintoaccountourfocusonvalue creationoverthelong-termandthedifficultyofmakingcomparisonstopeerswithshorter- termobjectives(see“– III.AssessingPerformance–FocusonLong-TermValueCreation” ); • striketheappropriatebalancebetweenshort-termobjectivesandlong-termstrategies;and • properlyemphasizeobjectiveresultswhilealsoconsideringsubjectivefactorswhenassessing management’sperformance. InvestorOutreachandResultsof2017“Say-on-Pay”AdvisoryVote ThefollowingisasnapshotofourinvestoroutreachandtheresultsofourrecentSay-on-Payvotes: Continuedour ongoingdialogue with investors throughout the yearon awide rangeof topics. Received more than92%of stockholder support in 2017 “Say-on-Pay” advisory vote (90% in 2016) Contacted representatives of stockholders that collectively ownmore than 30% ofour outstanding common stock Inadditiontoourusualinvestoroutreach,ourBoardinvitedbuy-sideandsell-siderepresentativesto makepresentationstoourBoardontheREITcapitalmarkets,investinginREITsgenerally,andfund flows,aswellastoprovidecommentaryonourCompanyanditsperceptionamonganalystsand investors. BOSTONPROPERTIES,INC. ❘ 2018ProxyStatement 31 COMPENSATION DISCUSSION AND ANALYSIS Inthis“CompensationDiscussionandAnalysis,”or“CD&A,”references to(1)the“Committee”mean theCompensationCommitteeoftheBoard ofDirectorsofBostonProperties, Inc.and(2)“executive compensation”meanprimarilytheCommittee’s decisionsregarding thecompensationofournamed executive officers (“NEOs”).OurNEOs for 2017 were Messrs. Thomas,Linde,Ritchey,LaBelleandKoop. I. EXECUTIVE SUMMARY Introduction We are oneofthelargest owners, managers anddevelopers ofofficeproperties intheUnitedStates, concentrated inBoston,New York,SanFrancisco,Washington,D.C.andLosAngeles.We have a demonstrated historyofcreatinglong-termshareholder valueinlarge part because we takeon complex,technicallychallengingdevelopment projects,leveraging theskillsofourmanagement team tosuccessfullydevelop andrepositionproperties thatother organizationsmaynothave thecapacityor resources topursue. Someofourmostsuccessfuldevelopment projects have takenlongerthana decade toacquire,constructandlease-up tostabilization.Inaddition,we seektosignlong-termleases withcreditworthy tenants,andwe generally seeklong-termfixed-rate financinginorder tolockinour interest expense andproactively manage ourdebt maturities.We recognizethatourbusinessisthus long-terminnature, andoursuccessrequires thatwe makebusinessdecisionswithafocusonour long-termobjectives,even ifthey have short-term negative implications. Asaresult,ourCommitteestrives tomakecompensationdecisionsthatreward management for executingourstrategy andpromotingthebest interests oftheCompanyanditsstockholdersover the longterm.Ourmarket focusandstrategy for creatinglong-termvaluefor investors differ frommanyof ourcompetitorsintheofficeREITsegment, whichmakesdirectcomparisonsinperformance and compensationdifficult.We therefore donotrely onastrictformulaicframework for measuring performance againstshort-term goalstodetermine compensationawards for aparticular year, but instead aimfor abalancedquantitative andqualitativeapproach, asoutlinedbelow,thatour Committeebelieves isappropriate toensure ourcontinuedsuccess. ProcessforDeterminingExecutiveCompensation Followingstrong stockholdersupport in2017 onour“Say-on-Pay”advisory vote,andtheoverall positivefeedback we received inourcommunicationswithinvestors throughouttheyear, our Committeecontinuestousethesamegeneral process whensetting executive compensation,which includes: • usingthemedian(50 th percentile)ofapeer group of16REITsthatare constituentsoftheS&P 500 Index(the“BenchmarkingPeer Group”)asthebeginningreference pointandasan indicatorofcompetitivemarket trends; • consideringananalysisprepared by FPLAssociatesL.P.(“FPL”),theCommittee’s independent compensationconsultant,thatbenchmarkseachexecutive officer,andthenamedexecutive officers (“NEOs”)asagroup,againsttheBenchmarkingPeer Grouptodetermine theirrelative placementwithrespect tocompensationfor theprior year; • assessing performance notonlyagainstourownpre-established management goals,butalso againstthesameperformance metricsfor five officeREITsthatwe considerdirectcompetitors (the“OfficePeers”); • consideringtotalNEOcompensationover time,bothonanawarded basisandonarealized basisafter forfeitures; 30 BOSTONPROPERTIES,INC. ❘ 2018ProxyStatement