Alexion Pharmaceuticals, Inc.
ALEXION PHARMACEUTICALS INC (Form: DEF 14A, Received: 03/31/2017 17:13:02)


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ALEXIONLOGOCOLORA06.JPG
100 College Street
New Haven, Connecticut 06510
March 31, 2017
Dear Fellow Shareholder:
You are cordially invited to attend Alexion's 2017 Annual Meeting of Shareholders on Wednesday, May 10, 2017 , at The Study at Yale, 1157 Chapel Street, New, Haven, CT 06511, at 5:30 p.m. local time.
We are once again using the "Notice and Access" method of providing proxy materials to you via the Internet. We are mailing to you a Notice of Internet Availability of Proxy Materials instead of a paper copy of the proxy materials and 2016 annual report.  Notice and Access provides a convenient way for you to access Alexion's proxy materials and vote your shares on the Internet, and also allows us to reduce costs and conserve resources. The Notice includes instructions on how to access our proxy statement and our 2016 annual report and how to vote your shares. The Notice also contains instructions on how to receive a paper copy of the proxy materials and our 2016 annual report, if you prefer.
Our proxy statement describes the business to be considered at the meeting. Whether or not you plan to be with us, your vote is extremely important. I urge you to vote your shares and be represented at the meeting. If you are viewing the proxy statement on the Internet, you may submit your proxy electronically via the Internet by following the instructions on the Notice and the instructions listed on the Internet site. If you have received a paper copy of the proxy statement and proxy card, you may submit your proxy by completing and mailing the proxy card enclosed with the proxy statement, or you may submit your proxy electronically via the Internet or by telephone by following the instructions on the proxy card.
On behalf of Alexion, I thank you for supporting Alexion's mission of transforming patients' lives. I hope you can attend our annual meeting and look forward to seeing you there.
Very truly yours,
LHANTSONSIGNATURE.JPG
Ludwig N. Hantson, Ph.D.
Chief Executive Officer




ALEXIONLOGOCOLORA05.JPG
100 College Street
New Haven, Connecticut 06510
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
May 10, 2017
Alexion's 2017 Annual Meeting of Shareholders will be held on Wednesday, May 10, 2017 , at The Study at Yale, 1157 Chapel Street, New, Haven, CT 06511, at 5:30 p.m. local time. This year, we are asking shareholders:
(1)
To elect ten members of the Board of Directors named in the proxy statement, each to serve until the next Annual Meeting and until his or her successor has been duly elected and qualified.
(2)
To approve Alexion's 2017 Incentive Plan.
(3)
To ratify the appointment of PricewaterhouseCoopers LLP as Alexion's independent registered public accounting firm.
(4)
To consider a non-binding advisory vote on 2016 compensation paid to Alexion's named executive officers.
(5)
To vote upon the frequency of the non-binding advisory vote on annual compensation paid to Alexion's named executive officers.
(6)
To vote upon a shareholder proposal, if properly presented at the 2017 Annual Meeting, requiring confidential voting on executive compensation matters.
(7)
To transact such other business as may properly come before the 2017 Annual Meeting or any adjournment thereof.
Shareholders of record at the close of business on March 14, 2017 will be entitled to notice of and to vote at the 2017 Annual Meeting or any adjournment of the meeting.
Whether or not you plan to attend the 2017 Annual Meeting, please vote by voting on the Internet, completing and returning a proxy card, or voting by phone at your earliest convenience so that your shares may be represented at the meeting. A lexion will begin mailing its Notice of Internet Availability of Proxy Materials to shareholders on March 31, 2017 .
Important Notice Regarding the Availability of Proxy Materials for the Shareholder Meeting to be Held on May 10, 2017 :

The Notice of Internet Availability of Proxy Materials, Notice of Annual Meeting of Shareholders, Proxy Statement and the 2016 Annual Report and the means to vote by Internet are available free of charge at: www.proxyvote.com.

March 31, 2017
MGRECOSIGNATURE.JPG
Michael V. Greco
Senior Vice President of Law and Corporate Secretary




Table Of Contents
 
 
 

 
Page
 





ALEXION PHARMACEUTICALS, INC. PROXY STATEMENT
Proxy Summary
The summary below highlights information that is described in more detail elsewhere in this proxy statement. This summary does not contain all of the information you should consider, and we urge you to read the entire proxy statement carefully before voting.
General Information (see “General Information” on page 5 for more information)
Date:
Wednesday, May 10, 2017
Time:
5:30 p.m. local time
Place:
The Study at Yale, 1157 Chapel Street, New Haven, CT 06511
Record Date:
March 14, 2017

Voting Matters and Vote Recommendation
Voting Matter
Board Recommendation
Page Number for More Detail
Proposal 1
Election of Directors
FOR ALL Nominees
Proposal 2
Approval of 2017 Incentive Plan
FOR
Proposal 3
Ratification of PricewaterhouseCoopers as Independent Auditors
FOR
Proposal 4
Non-binding Advisory Vote to Approve Executive Compensation
FOR
Proposal 5
Non-binding Advisory Vote on the Frequency of the Vote on Executive Compensation
EVERY YEAR
Proposal 6
Shareholder Proposal
AGAINST

Corporate Governance
We strive to maintain strong corporate governance practices that protect and enhance accountability for the benefit of Alexion and all of Alexion's shareholders. We regularly review and continually refine our governance policies to align with evolving practices and issues raised by our shareholders. We believe that our corporate governance structure, with its strong emphasis on Board independence, a lead independent director and strong Board and committee involvement, provides sound and robust oversight of management. Detailed information about our corporate governance practices begins on page 19. The following chart summarizes key information regarding our corporate governance.

2017 Proxy Statement Alexion Pharmaceuticals, Inc.
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Board and Board Committees*
 
Number of independent directors
9
Average age of directors
63.9
All Board Committees consist of independent directors
Yes
Risk oversight by Board and Committees
Yes
Separate Risk Committee
Yes
Separate Chairman and CEO
Yes
Lead Independent Director
Yes
Regular executive sessions of independent directors
Yes
Annual Board and Committee evaluations
Yes
Size of the Board
11
Average director tenure (in years)
7.9
Shareholder Rights, Accountability and Other Governance Practices
 
Annual elections for all directors
Yes
Majority voting for directors
Yes
Proxy access bylaw (3%-3 years)
Yes
Annual advisory vote on executive compensation
Yes
Stockholder Ability to call special meetings (25% threshold)
Yes
Stockholder ability to act by written consent
Yes
Stock ownership guidelines for directors and executives
Yes
Prohibition from hedging and pledging securities or otherwise engaging in derivative transactions
Yes
Absence of Rights Plan, or “Poison Pill”
Yes
Absence of supermajority voting provisions
Yes
* The information in the table above is presented for the Board of Directors as of March 31, 2017. Dr. Bell will retire from the Board at the end of his term at the 2017 Annual Meeting. If all nominees are elected to the Board: the Board will have 10 directors, 9 of whom are independent, with average tenure of 6.2 years and average age of 64.4 years. The Board expects to appoint Mr. Brennan Chairman of the Board, subject to his reelection at the 2017 Annual Meeting, and Mr. Norby will no longer serve as lead independent director.

Our Director Nominees
Proposal 1 - Election of Directors
You are being asked to vote on the election of the following ten nominees for director. All directors are elected annually by the affirmative vote of a majority of votes cast. Detailed information about each director’s background, skill sets and areas of expertise can be found beginning on page 9.

2017 Proxy Statement Alexion Pharmaceuticals, Inc.
2



Nominee, Experience
Age
Director Since
Committees
Other Public Boards
AF
LC
NG
QC
SI
SR
Felix Baker
Co-Managing Member of Baker Bros. Advisors
48
2015
 
 
 
X
C
X
2
David R. Brennan
Former Interim Chief Executive Officer, Former Chief Executive Officer of AstraZeneca PLC
63
2014
 
 
 
X
X
X
2
M. Michele Burns
Former Chief Executive Officer , Retirement Policy Center, Marsh & McLennan Companies Inc.
59
2014
 
X
X
 
 
C
4
Christopher J. Coughlin
Former Executive Vice President and Chief Financial Officer, Tyco
64
2014
C, F
 
X
X
 
 
2
Ludwig N. Hantson
Chief Executive Officer
54
2017
 
 
 
 
 
 
_
John T. Mollen
Former Executive Vice President, Human Resources of EMC Corp.
66
2014
X
C
X
 
 
 
_
R. Douglas Norby
Retired Chief Financial Officer of Tessera Technologies, Inc.
81
1999
X, F
X
X
 
 
 
1
Alvin S. Parven
Former Vice President at Aetna Health Plans
76
1999
X
X
X
 
 
 
_
Andreas Rummelt
Chief Executive Officer of InterPharmaLink AG and former Group Head,Quality Assurance and Technical Operations of Novartis
60
2010
 
 
 
C
X
X
_
Ann M. Veneman
Former Executive Director of UNICEF and former Secretary of U.S. Department of Agriculture
67
2010
 
 
C
X
 
X
1
AF - Audit and Finance Committee; LC - Leadership and Compensation Committee; NG - Nominating and Corporate Governance Committee; QC - Quality Compliance Committee; SI - Science and Innovation Committee; SR - Strategy and Risk Committee     
X - Committee Member; C - Committee Chair; F - Financial Expert         

Incentive Plan
Proposal 2 - Approval of Alexion's 2017 Incentive Plan
You are being asked to vote to approve Alexion's 2017 Incentive Plan. Detailed information about this proposal can be found beginning on page 67.
Our Auditors
Proposal 3 - Ratification of PricewaterhouseCoopers as independent auditors
You are being asked to vote to ratify the selection of PricewaterhouseCoopers LLP as our independent registered public accounting firm for the year ending December 31, 2017. Below is summary information about PricewaterhouseCoopers LLP’s fees for services provided in 2016 and 2015. Detailed information about this proposal can be found beginning on page 76.
Fees
2016
2015
Audit fees
$5,433,482
$4,238,635
Audit related fees
$—
$—
Tax fees
$305,019
$346,624
All other fees
$9,000
$11,996
 Total fees
$5,747,501
$4,597,255

2017 Proxy Statement Alexion Pharmaceuticals, Inc.
3




Executive Compensation Matters
Proposal 4 - Non-Binding Advisory Vote on Executive Compensation
Our Board of Directors recommends that shareholders vote to approve, on an advisory basis, the 2016 compensation paid to Alexion’s named executive officers (NEOs) as described in this proxy statement. Detailed information about the compensation paid to our NEOs can be found beginning on page 77. Highlights of our compensation program for 2016 and our compensation best practices follow.
Pay-for-Performance
Compensation tied to the achievement of the Company’s short- and long-term financial, operational and strategic objectives
We set rigorous goals and hold our NEOs accountable for results as evidenced by our below target payout of 2016 annual cash incentive awards and forfeiture of 80% of 2016 performance stock unit (PSU) awards
Less discretion was exercised in making 2016 annual cash bonus determinations than in prior years and the maximum bonus opportunity was reduced - see page 25
In 2017, the majority of the long-term incentive mix will consist of PSUs and stock options will make up a smaller portion of the overall long-term incentive grant - see page 25
Other Compensation Best Practices
Clawback policy under which cash and equity-based incentive compensation of our CEO and his direct reports may be recovered by Alexion in the event of a financial restatement
All employees, including the NEOs, are prohibited from entering into any hedging, pledging or derivative transactions in our stock
Equity incentive plan prohibits the repricing or exchange of stock options without shareholder approval
The Leadership and Compensation Committee regularly reviews share utilization levels and Alexion's burn rate
We provide limited perquisites to executives, and these perquisites are also available to certain other employees
NEOs are expected to acquire and hold Alexion stock worth three to six times their base salary within five years of appointment
Long-term incentive awards granted in 2016 provide for accelerated vesting only if the executive's employment is terminated without cause or resigns for “good reason” in connection with or during a specified period following a change of control of the Company
No Alexion employment agreement includes a 280G tax gross-up
The Leadership and Compensation Committee retains an independent compensation consultant

Proposal 5 - Frequency of Non-Binding Advisory Vote on Executive Compensation
Our Board of Directors recommends that shareholders vote in favor of holding future shareholder advisory votes on executive compensation every year, on an advisory basis. Detailed information about the proposal and the Board's recommendation can be found beginning on page 78.
Shareholder Proposal
Proposal 6 - Shareholder Proposal
Our Board of Directors recommends that shareholders vote against the shareholder proposal. Detailed information about the proposal and the Board’s recommendation can be found beginning on page 79.

2017 Proxy Statement Alexion Pharmaceuticals, Inc.
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General Information Regarding the Meeting
The Board of Directors of Alexion Pharmaceuticals, Inc. is soliciting your proxy to vote at our 2017 Annual Meeting of Shareholders (Annual Meeting) to be held at 5:30 p.m. local time, on Wednesday, May 10, 2017 for the purposes summarized in the accompanying Notice of 2017 Annual Meeting of Shareholders. Our 2016 Annual Report is also available with this proxy statement.
References in this proxy statement to “Alexion” or the “Company,” “we,” “us,” and “our” refer to Alexion Pharmaceuticals, Inc.
The mailing address of our principal executive offices is Alexion Pharmaceuticals, Inc., 100 College Street, New Haven, CT 06510. We will begin
mailing the Notice of Internet Availability of Proxy Materials to shareholders on March 31, 2017. We will make arrangements with brokerage houses and other custodians, nominees and fiduciaries to send proxies and proxy materials to the beneficial owners of shares and will reimburse them for their expenses in so doing.
Why are we soliciting proxies?
We are furnishing this proxy statement and form of proxy to the holders of Alexion's common stock, par value $0.0001 per share, in connection with the solicitation by our Board of Directors of proxies for use at our 2017 Annual Meeting.
When and where is the 2017 Annual Meeting?
The 2017 Annual Meeting will be held on Wednesday, May 10, 2017 , at The Study at Yale, 1157 Chapel Street, New Haven, CT 06511, at 5:30 p.m. local time, or at any future date and time following an adjournment or postponement of the meeting.
What business will be conducted at the 2017 Annual Meeting?
The business to be considered at the 2017 Annual Meeting is described in the accompanying Notice of Annual Meeting of Shareholders. Alexion's Board of Directors is not currently aware of any other business that will come before the meeting.
Who can vote?
The record date for voting is March 14, 2017 . Only shareholders of record at the close of business on March 14, 2017 are entitled to notice of and to vote at the 2017 Annual Meeting and any adjournment or postponement of the meeting. On March 14, 2017 , there were 225,149,098 shares of our common stock outstanding. Each share is entitled to one vote on each of the matters to be presented at the 2017 Annual Meeting.
Who can attend the 2017 Annual Meeting?
Attendance at the 2017 Annual Meeting will be limited to record or beneficial owners of Alexion common stock as of March 14, 2017 (or their authorized representatives). When you arrive at the meeting, you must present photo identification, such as a driver's license. If your shares are held by a bank, broker or other nominee, you must also present your bank or broker statement evidencing your beneficial ownership of Alexion common stock to gain admission to the 2017 Annual Meeting. Alexion reserves the right to deny admittance to anyone who cannot show sufficient proof of share ownership as of March 14, 2017 .

2017 Proxy Statement Alexion Pharmaceuticals, Inc.
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Why did I receive a "Notice of Internet Availability of Proxy Materials" but no proxy materials?
We are distributing our proxy materials to certain shareholders via the Internet under the “Notice and Access” approach permitted by rules of the Securities and Exchange Commission, or SEC. This approach conserves natural resources and reduces our distribution costs, while providing a timely and convenient method of accessing the materials and voting. On March 31, 2017, we will begin mailing a “Notice of Internet Availability of Proxy Materials” to participating shareholders, containing instructions on how to access the proxy materials on the Internet.
What does it mean if I receive more than one Notice of Annual Meeting of Shareholders?
If you receive more than one Notice of Annual Meeting of Shareholders, your shares may be registered in more than one name or in different accounts. Please follow the voting instructions on each Notice of Annual Meeting of Shareholders to ensure that all of your shares are voted.
Can I access the proxy materials on the Internet?
This Notice of Annual Meeting of Shareholders and proxy statement and our 2016 Annual Report are available at www.proxyvote.com. Instead of receiving future proxy statements and accompanying materials by mail, most shareholders can elect to receive an email that will provide electronic links to them. Opting to receive your proxy materials online will conserve natural resources and will save us the cost of producing documents and mailing them to you, and will also give you an electronic link to the proxy voting site.
How do I vote?
Whether or not you plan to attend the 2017 Annual Meeting, it is important that you vote.
If you own shares in your own name (a record owner), you can vote any one of four ways:
n
By Internet: Go to the Internet website – www.proxyvote.com – and follow the instructions. You must vote by 11:59 P.M. Eastern on May 9, 2017 .
n
By Telephone: Call the toll-free number 800-690-6903 to vote by telephone. You must follow the instructions on your proxy card and the recorded telephone instructions. You must vote by 11:59 P.M. Eastern on May 9, 2017 .
n
By Mail: Mark, sign and date the proxy card and return it promptly in the self-addressed, stamped envelope. If a proxy card is signed and returned without instructions, your shares will be voted in the manner recommended by our Board of Directors. Your proxy card must be received by May 9, 2017 .
n
In Person: You can attend the 2017 Annual Meeting to vote by ballot.
If your shares are held in a brokerage account in your broker's name , you will receive voting instructions from your bank, broker or other nominee that you must follow in order for your shares to be voted. Internet and telephone voting also will be offered to shareholders owning shares through most banks and brokers.
If you vote via the Internet or by telephone, your electronic vote authorizes the named proxies in the same manner as if you signed, dated and returned your proxy card. If you vote via the Internet or by telephone, you should not mail a proxy card.

2017 Proxy Statement Alexion Pharmaceuticals, Inc.
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How can I change or revoke my vote?
You may revoke the authority granted by your execution of a proxy at any time prior to the 2017 Annual Meeting by:
n
filing a timely written notice of revocation with the Corporate Secretary, Alexion Pharmaceuticals, Inc., 100 College Street, New Haven, CT 06510;
n
mailing a duly executed proxy bearing a later date;
n
re-voting by phone or the Internet prior to the date and time described in this proxy statement; or
n
voting in person at the 2017 Annual Meeting.
Only your latest vote will be counted.
What constitutes a quorum?
The holders of a majority of the outstanding shares of common stock entitled to vote must be present in person or represented by proxy to constitute a quorum at the 2017 Annual Meeting. Abstentions and "broker non-votes" will be counted for purposes of determining the presence or absence of a quorum.
What vote is required for each proposal?
 
 
Board's Recommendation
Broker Discretionary Voting Allowed
Abstentions
Required Vote
Proposal 1
Election of Directors
FOR ALL Nominees
No
No effect
Majority of votes cast
Proposal 2
2017 Incentive Plan
FOR
No
No effect
Majority of votes cast
Proposal 3
Ratification of PricewaterhouseCoopers as independent auditors
FOR
Yes
No effect
Majority of votes cast
Proposal 4
Non-binding Advisory Vote on Executive Compensation
FOR
No
No effect
Majority of votes cast
Proposal 5
Frequency of Non-binding Advisory Vote on Executive Compensation
FOR AN ADVISORY VOTE EVERY YEAR
No
No effect
Highest number of votes
Shareholder Proposal
 
 
 
 
Proposal 6
Executive Pay Confidential Voting
AGAINST
No
No effect
Majority of votes cast

How do I make sure my vote will be counted?
If you are a record holder you must vote by telephone, by Internet, by signing, dating and returning a printed proxy card, or by attending the 2017 Annual Meeting.

2017 Proxy Statement Alexion Pharmaceuticals, Inc.
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If you are the beneficial owner of shares held in "street name," your bank, broker or other nominee, as the record holder of the shares, is required to vote those shares in accordance with your instructions. If instructions are not provided, the broker's ability to vote the shares depends on the proposal. Your bank, broker or other nominee has discretionary authority to vote your shares on "routine" matters, even absent instructions. A broker may not, however, vote on "non-routine" matters without receiving specific voting instructions from you. Uninstructed shares whose votes cannot be counted on non-routine matters result in what are commonly referred to as "broker non-votes."
If you do not give your broker voting instructions, your broker (1) will be entitled to vote your shares on the ratification of our independent accounting firm and (2) will not be entitled to vote your shares on the election of directors, the 2017 Incentive Plan, the advisory vote on executive compensation, the advisory vote on the frequency of say-on-pay, or the shareholder proposal.
We urge you to provide instructions to your bank, broker or other nominee so that your votes may be counted on all of these important matters.
Who solicits proxies and bears the costs of solicitation?
Proxies may be solicited, without extra compensation, by officers, agents and employees of Alexion who may communicate with shareholders, banks, brokerage houses and others by telephone, facsimile, email or in person to request that proxies be furnished. All expenses incurred in connection with this solicitation will be paid for by Alexion.

2017 Proxy Statement Alexion Pharmaceuticals, Inc.
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Proposal No. 1 – Election Of Directors
 
Ten directors have been nominated for election at the 2017 Annual Meeting to serve until the next annual meeting of shareholders and until their successors have been duly elected and qualified. In the event any of the nominees are unable to serve as a director, the shares represented by the proxy will be voted for such other candidate, if any, who is nominated by the Board to replace the nominee. All nominees have consented to be named in the proxy statement and have indicated their intent to serve if elected. The Board has no reason to believe that any of the nominees will be unable to serve. Alexion's directors are elected by majority vote in uncontested director elections, such as this one. The voting standard for contested director elections is a plurality standard. The majority voting standard provides that a nominee for director in an uncontested election will be elected to Alexion's Board if the votes cast "for" such nominee's election exceed the votes cast "against" such nominee's election. In an uncontested election, an incumbent director nominee who does not receive the required votes for re-election is required to tender his or her resignation and the Nominating and Corporate Governance Committee will recommend to the Board whether to accept or reject the resignation. Within 90 days following certification of the election results, the Board will act on the committee's recommendation and publicly disclose the Board's decision regarding the tendered resignation, including the rationale for the decision.
The number of candidates for election as directors at the 2017 Annual Meeting is the same as the number of directors to be elected at the meeting. Therefore, this is an uncontested election and directors will be elected by the affirmative vote of a majority of the votes cast by the shares present or represented and entitled to vote at the 2017 Annual Meeting, in person or by proxy.
THE BOARD OF DIRECTORS DEEMS "PROPOSAL NO. 1 – ELECTION OF DIRECTORS" TO BE IN THE BEST INTERESTS OF ALEXION AND OUR SHAREHOLDERS AND RECOMMENDS A VOTE "FOR" EACH NOMINEE.

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General Information About The Board Of Directors
Each director nominee, if elected, will serve until the next annual meeting of shareholders and until his or her successor has been duly elected and qualified. Each officer of the Company serves at the discretion of the Board.
On March 27, 2017, Alexion announced the appointment of Dr. Ludwig Hantson as Chief Executive Officer and a director, effective immediately. Dr. Hantson is a director nominee for election at the Annual Meeting. In connection with Dr. Hantson’s appointment, Alexion entered into an employment agreement with Dr. Hantson.
Upon Dr. Hantson's appointment as CEO, Mr. Brennan resigned as Interim CEO and his employment agreement with the Company terminated. Mr. Brennan served as Interim CEO of the Company from December 11, 2016 through March 27, 2017. Following his resignation as Interim CEO, the Board determined that Mr. Brennan is an independent director.
The Board seeks independent directors who represent a range of viewpoints, backgrounds, skills, experience and expertise. Directors should possess the attributes necessary to be an effective member of the Board, including the following: personal and professional integrity, high ethical values, sound business judgment, demonstrated exceptional business and professional skills and experience, teamwork and a commitment to the long-term interests of Alexion and its shareholders. In evaluating candidates, the Nominating and Corporate Governance Committee also considers potential conflicts of interest, diversity, the requirement to maintain a Board that is composed of a majority of independent directors, and the extent to which a candidate would fill a present or anticipated need. In any particular situation, the Nominating and Corporate Governance Committee may focus on individuals possessing a particular background, experience or qualifications which the committee believes would be important to enhance the effectiveness of the Board.
The current Alexion directors represent a desirable range of viewpoints, backgrounds, skills, experience and expertise. The biography of each director nominee and a description of certain specific experiences, qualifications, attributes and skills of each director that led the Board to conclude that the individual should serve as a director are described below.
On March 2, 2017, Dr. Leonard Bell notified the Board that he would not stand for re-election and would retire from the Board at the 2017 Annual Meeting. Dr. Bell's consulting agreement with Alexion expired on March 31, 2017.
 


2017 Proxy Statement Alexion Pharmaceuticals, Inc.
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Felix J. Baker, Ph.D.
 
 
Age:  48
 
Dr. Baker is Co-Managing Member of Baker Bros. Advisors LP, an investment advisor focused on investments in life science and biotechnology companies. Dr. Baker and his brother, Julian Baker, started their fund management careers in 1994 when they co-founded a biotechnology investing partnership with the Tisch Family. Dr. Baker holds a B.S. and a Ph.D. in Immunology from Stanford University, where he also completed two years of medical school.
Alexion Director Since:  2015
 
Committee Memberships: Quality Compliance, Science and Innovation (Chair), Strategy and Risk
 
Other Public Company Directorships
 
Current: Genomic Health, Inc., Seattle Genetics, Inc.
 
Past 5 Years : Synageva BioPharma Corp., Ardea Bioscience, Inc.
 
 
 
Qualifications
 
n      Broad experience serving as both a director and investor of biotechnology companies providing a strategic perspective of the industry
 
n      Extensive experience evaluating and developing strategic business plans and transactions in the biotechnology industry
 
David R. Brennan
 
Age:  63
 
Mr. Brennan served as Interim Chief Executive Officer of Alexion from December 11, 2016 to March 27, 2017. From 2006 to 2012 he was Chief Executive Officer and Executive Director of AstraZeneca PLC, one of the world’s largest pharmaceutical companies. Mr. Brennan worked for AstraZeneca in increasing roles of responsibility from 1992 through 2012, including as Executive Vice President of North America from 2001 to 2006, and as Senior Vice President of Commercialization and Portfolio Management from 1999 to 2001. Prior to the merger of Astra AB and Zeneca Plc, he served as Senior Vice President of Business Planning and Development of Astra Pharmaceuticals LP, the American subsidiary of Astra AB. Mr. Brennan began his career at Merck and Co. Inc., where he rose from Sales Representative in the U.S. Division to General Manager of Chibret International, a French subsidiary of Merck. He received a BA in business administration from Gettysburg College, where he is a member of the Board of Trustees.
Alexion Director Since: 2014
 
Committee Memberships:  Quality Compliance, Science and Innovation, Strategy and Risk
 
Other Public Company Directorships
 
Current: Innocoll Holdings plc, Insmed Incorporated
 
Past 5 Years: AstraZeneca plc, Reed Elsevier plc
 
 
 
Qualifications
 
n      Extensive experience as an executive leader in the pharmaceutical industry, serving as chief executive officer of one of the largest multinational pharmaceutical companies in the world
 
n      Significant industry and regulatory knowledge from a more than 39 year career in the pharmaceutical industry and serving as a director on multiple public company and industry trade group boards
 
n      Extensive experience evaluating and developing complex strategic business plans
 
n      Brings valued operational perspectives to the Board on matters of talent recruiting and development, executive compensation, benefits and leadership
 
n      Extensive global and M&A experience
 


2017 Proxy Statement Alexion Pharmaceuticals, Inc.
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M. Michele Burns
 
 
Age:  59
 
From 2006 to 2012, Ms. Burns served as the Chairwoman and Chief Executive Officer of Mercer LLC, a subsidiary of Marsh & McLennan Companies, Inc. (MMC), a global professional services and consulting firm. She currently serves as Center Fellow and Strategic Advisor, Stanford University Center on Longevity. She served in senior executive roles with MMC, including as Chief Executive Officer, Retirement Policy Center sponsored by MMC from 2012 to 2014, Chief Executive Officer of Mercer from 2006 to 2012, and Executive Vice President and Chief Financial Officer of MMC in 2006. From 2004 to 2006, Ms. Burns served as Executive Vice President, Chief Financial and Chief Restructuring Officer for Mirant Corporation. From 1999 to 2004 she worked in increasing roles of responsibility at Delta Air Lines, serving as Executive Vice President and Chief Financial Officer of Delta from 2000 to 2004. Michele began her career with Arthur Andersen, and over an 18-year tenure rose to Senior Partner, leading Andersen's Southern Region Federal Tax Practice, heading its U.S. Healthcare Tax Practice and its Southeastern Region Financial Services Tax Practice, and serving on its Global Advisory Council. Ms. Burns also serves on the Executive Board and as Treasurer of the Elton John Aids Foundation. She received a BBA in business administration and a Master of Accountancy from the University of Georgia.
Alexion Director Since:  2014
 
Committee Memberships:  Leadership and Compensation, Nominating and Corporate Governance, Strategy and Risk (Chair)
 
Other Public Company Directorships
 
Current:  The Goldman Sachs Group, Cisco Systems, Inc., Etsy, Inc., AB InBev
 
Past 5 Years:  Wal-Mart Stores, Inc.
 
 
 
Qualifications
 
n      Extensive experience and expertise in executive management, human resources, finance, strategy and operations of global organizations
 
n      Broad experience serving on public company and non-profit boards provides valued perspective on corporate governance, executive compensation and strategic matters
 
n      Extensive experience in financial accounting and reporting
 
 
 
 
 
Christopher J. Coughlin
 
 
Age:  64
 
Mr. Coughlin served as Advisor to the Chairman and CEO of Tyco International Ltd., a global provider of diversified products, services and industries, from 2010 to 2012, and as Executive Vice President and Chief Financial Officer of Tyco from 2005 to 2010, during a period of significant international growth and restructuring. Mr. Coughlin previously served at the Interpublic Group of Companies, Inc. as Executive Vice President, Chief Operating Officer from 2003 to 2004. From 1998 to 2003, he served as Executive Vice President and Chief Financial Officer of Pharmacia Corporation. From 1997 to1998 he was President, International at Nabisco Group Holdings and from 1996 to 1997 was Executive Vice President and Chief Financial Officer of Nabisco. From 1981 to 1996, Mr. Coughlin held various positions with Sterling Winthrop Incorporated, including Chief Financial Officer. Mr. Coughlin received a BS in accounting from Boston College.
Alexion Director Since: 2014
 
Committee Memberships:  Audit and Finance (Chair), Nominating and Corporate Governance, Quality Compliance
 
Other Public Company Directorships
 
Current:  Allergan plc, Dun & Bradstreet Corp.
 
Past 5 Years:  Covidien Ltd., Dipexium Pharmaceuticals, Forest Laboratories, Hologic Inc.
 
 
 
Qualifications
 
n      Extensive experience in complex financial and accounting matters, including public accounting and reporting
 
n      Extensive experience evaluating and developing strategic goals for global organizations
 
n      Broad experience serving on public international and domestic company boards provides valued perspective on corporate governance and financial matters
 

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Ludwig N. Hantson
 
 
Age:  54
 
Dr. Hantson became Chief Executive Officer of Alexion on March 27, 2017. Prior to joining Alexion, Dr. Hantson was President and Chief Executive Officer of Baxalta Incorporated. He led Baxalta’s successful spin-off as a public company from Baxter International Inc. in July 2015 where he was President of Baxter BioScience. He joined Baxter in May 2010 and established the BioScience division as an innovative specialty and rare disease company with a pipeline of 25 new product candidates, and 13 products launches. Prior to Baxter, from 2001 - 2010, Dr. Hantson held several leadership roles at Novartis AG, including CEO of Pharma North America, CEO of Europe, and President of Pharma Canada. Prior to Novartis, Dr. Hantson spent 13 years with Johnson & Johnson in roles of increasing responsibility in marketing and research and development. Dr. Hantson received his Ph.D. in motor rehabilitation and physical therapy, Master’s degree in physical education, and a certification in high secondary education, all from the University of Louvain in Belgium.

Alexion Director Since: 2017
 
Committee Memberships:  None
 
Other Public Company Directorships
 
Current:  None
 
Past 5 Years:  Baxalta Incorporated, Baxter International Inc.
 
 
 
Qualifications
 
n     More than 30 years of experience in the biopharmaceutical industry
 
n      Extensive experience as an executive leading global, innovative organizations
 
 
 
John T. Mollen
 
 
Age:  66
 
Mr. Mollen served as Executive Vice President, Human Resources of EMC Corporation from May 2006 until his retirement in February 2014, including two years as special advisor to the President. He joined EMC as Senior Vice President, Human Resources in September 1999. Prior to joining EMC, Mr. Mollen was Senior Vice President of Human Resources with Citigroup Inc., a financial services company, from July 1997 - September 1999. Prior to Citigroup, he held a number of positions of increasing responsibility with Harris Corp., an international communications and technology company, including Vice President of Administration. Mr. Mollen serves as a director for a number of not-for-profit and professional boards, including the New England Healthcare Institute, the HR Policy Association, and the Center on Executive Compensation, and is an advisory board member for Working Mother magazine, and he is Chairman of the Board of Trustees of Worcester Polytechnic Institute. Mr. Mollen received a B.A. in Economics from St. John Fisher College, and a Master's degree in Labor Relations from St. Francis College in Pennsylvania.
Alexion Director Since:  2014
 
Committee Memberships:  Audit and Finance, Leadership and Compensation (Chair), Nominating and Corporate Governance
 
Other Public Company Directorships
 
Current: None
 
Past 5 Years: None
 
 
 
Qualifications
 
n      Significant experience in executive compensation policy and administration
 
n      More than 30 years as chief human resources senior executive
 
n      Extensive operational experience leading human resource function for large, public, complex, global organizations, including a Fortune 200 company
 
n      Brings valued operational perspectives to the Board on matters of talent recruiting and development, executive compensation, benefits and leadership
 
n      Extensive global and deep M&A experience
 

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R. Douglas Norby
 
Age:  81
 
Mr. Norby served as Sr. Vice-President and Chief Financial Officer of Tessera Technologies, Inc., a provider of intellectual property for advanced semiconductor packaging from July 2003 until January 31, 2006. From March 2002 to February 2003, Mr. Norby served as Senior Vice President and Chief Financial Officer of Zambeel, Inc., a data storage systems company. From December 2000 to March 2002, Mr. Norby served as Senior Vice President and Chief Financial Officer of Novalux, Inc., a manufacturer of lasers for optical networks. From 1996 until December 2000, Mr. Norby served as Executive Vice President and Chief Financial Officer of LSI Logic Corporation, a semiconductor company. From July 1993 until November 1996, he served as Senior Vice President and Chief Financial Officer of Mentor Graphics Corporation, a software company. Mr. Norby served as President of Pharmetrix Corporation, a drug delivery company, from July 1992 to September 1993, and from 1985 to 1992, he was President and Chief Operating Officer of Lucasfilm, Ltd., an entertainment company. From 1979 to 1985, Mr. Norby was Senior Vice President and Chief Financial Officer of Syntex Corporation, a pharmaceutical company. Mr. Norby received a B.A. in Economics from Harvard University and an M.B.A. from Harvard Business School.
Alexion Director Since: 1999, Lead Independent Director since 2014 and through the 2017 Annual Meeting
 
Committee Memberships: Audit and Finance, Leadership and Compensation, Nominating and Corporate Governance
 
Other Public Company Directorships
 
Current: None
 
Past 5 Years:  Ikanos Communications, Inc., InveSense Inc., MagnaChip Semiconductor Corporation, Stats ChipPAC, Ltd,
 
 
 
Qualifications
 
n      Extensive experience in financial and accounting matters, including public accounting and reporting
 
n      40 year career, served in executive management positions at several multinational organizations, including as president, chief operating officer and chief financial officer
 
n      Extensive experience in financial and accounting reporting processes and internal control systems
 
n      Experience serving on public company boards provides valued perspective on corporate governance and financial matters
 
Alvin S. Parven
 
 
Age: 76
 
 Mr. Parven has been President of ASP Associates, a management and strategic consulting firm, since 1997. From 1994 to 1997, Mr. Parven was Vice President at Aetna Business Consulting, reporting to the Office of the Chairman of Aetna. From 1987 to 1994, Mr. Parven was Vice President, Operations at Aetna Health Plans. Prior to 1987, he served in various capacities at Aetna including Vice President, Pension Services from 1983 to 1987. Mr. Parven is a trustee of the Employee Retirement Board of the Town of Palm Beach and a director of the Palm Beach Civic Association. Mr. Parven received his B.A. from Northeastern University.
Alexion Director Since:  1999
 
Committee Memberships:  Audit and Finance, Leadership and Compensation, Nominating and Corporate Governance
 
Other Public Company Directorships
 
Current: None
 
Past 5 Years: None
 
 
 
Qualifications
 
n      More than 30 years in executive management positions at a multinational insurance company
 
n      Extensive experience in managing developed organizations that provide specialized and technical services, particularly in the areas of health insurance and benefits
 
n      Possesses extensive experience in provider operations, which brings an important perspective to the Board and to management on matters of reimbursement
 
n      Brings valued operational perspectives to the Board on matters of talent recruiting and development, executive compensation, benefits and leadership
 
n      Extensive global and deep M&A experience
 

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Andreas Rummelt
 
 
Age:  60
 
Dr. Rummelt has served as the Chief Executive Officer of InterPharmaLink AG, a management consulting firm focused on advising companies in the healthcare industry, since July 2011. From December 2008 until January 2010, Dr. Rummelt was Group Head of Quality Assurance and Technical Operations at Novartis. He had been a member of the Executive Committee of Novartis from January 2006 until his resignation in January 2010. He joined Sandoz Pharma Ltd. in 1985 and held various positions of increasing responsibility in development. In 1994, he was appointed Head of Worldwide Technical Research and Development, a position he retained following the merger that created Novartis in 1996. From 1999 to 2004, Dr. Rummelt served as Head of Technical Operations of the Novartis Pharmaceuticals Division and from 2004 to 2008 as Head of Sandoz. Dr. Rummelt graduated with a Ph.D. in pharmaceutical sciences from the University of Erlangen-Nuernberg, Germany.
Alexion Director Since: 2010
 
Committee Memberships:  Quality Compliance (Chair), Science and Innovation, Strategy and Risk
 
Other Public Company Directorships
 
Current: None
 
Past 5 Years: None
 
 
 
Qualifications
 
n      More than 25 years in the areas of pharmaceutical manufacturing, quality and technical development, providing an important perspective to the Board and to management
 
n      More than 20 years in executive management positions in the pharmaceutical industry, including as a chief executive officer and as a senior executive of a large, multinational pharmaceutical company
 
n      Possesses a broad understanding of international business operations, particularly with respect to manufacturing, quality and technical matters
 
Ann M. Veneman, J.D.
 
 
Age: 67
 
Ms. Veneman served as Executive Director of UNICEF, appointed by the United Nations Secretary General, from May 2005 until April 2010. As Executive Director, Ms. Veneman worked on behalf of the United Nations children's agency to help children around the world by advocating for and protecting their rights. Ms. Veneman was responsible for more than 11,000 UNICEF staff members in more than 150 countries. Prior to joining UNICEF, Ms. Veneman served as Secretary of the U.S. Department of Agriculture, or USDA, from January 2001 until January 2005. From 1986 until 1993, she served in various positions at the USDA, including Deputy Secretary, Deputy Undersecretary for International Affairs and Commodity Programs, and Associate Administer of the Foreign Agricultural Service. From 1995 until 1999, Ms. Veneman served as Secretary of the California Department of Food and Agriculture. Ms. Veneman has also practiced law in Washington, DC and California in both the private and public sectors. Ms. Veneman serves on the not-for-profit boards of the Global Health Innovative Technology Fund and Just Capital. Ms. Veneman received a B.A. from the University of California, Davis, a Master's degree in Public Policy from the University of California, Berkeley, and a J.D. from the University of California, Hastings College of Law.
Alexion Director Since:  2010
 
Committee Memberships:  Nominating and Corporate Governance (Chair), Quality Compliance, Strategy and Risk
 
Other Public Company Directorships:
 
Current: Nestle SA
 
Past 5 Years: S&W Seed Company
 
 
 
Qualifications
 
n      An attorney who has dedicated more than 25 years to government service, including senior national and international positions
 
n      Led state and federal government agencies and an international organization
 
n      Possesses extensive experience working with government leaders and organizations
 
n      Worked closely with national governments throughout the world and possesses a deep understanding of international political organizations
 
n      Public service experience brings an important perspective to the Board and an important understanding of state and federal government and international organizations
 
Meetings and Committees
During the year ended December 31, 2016 , the Board of Directors held 12 meetings. No incumbent director attended fewer than 75% of the total number of meetings of the Board and the committees of the Board on which he or she served. Members of the Board of Directors are expected to attend and be present at the annual shareholders meeting and all incumbent directors, except Dr. Hanston who was elected to the Board in March 2017, attended the 2016 Annual Meeting.

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The Board of Directors has determined that nine of the ten nominees (Dr. Baker, Mr. Brennan, Ms. Burns, Mr. Coughlin, Mr. Mollen, Mr. Norby, Mr. Parven, Dr. Rummelt and Ms. Veneman) are "independent directors" as that term is defined under the NASDAQ Stock Market Listing Standards and the SEC rules and regulations. In 2016 , the Board of Directors met in executive session where only the independent directors were present without any members of Alexion's management, including during a majority of the four regularly scheduled meetings.
Neither we nor any of our subsidiaries are party to any material proceedings to which any of our directors, officers, affiliates, 5% or more shareholders, or any of their respective associates are a party. We do not believe that any of our directors, officers, affiliates, 5% or more shareholders, or any of their respective associates are adverse to us or any of our subsidiaries or have a material interest that is adverse to us or any of our subsidiaries.
Our Board of Directors has 6 standing committees. A description of each standing committee is provided below. Each committee operates pursuant to a charter that has been approved and adopted by our Board of Directors. Each committee charter is posted on our website, www.alexion.com , under the “Corporate Governance” subsection of the “Investors” section.
All members of each standing committee are independent. Upon Mr. Brennan's appointment as Interim CEO on December 11, 2016, he no longer served on any standing committees of the Board. Mr. Brennan served as Interim CEO through March 27, 2017. Prior to and during Mr. Brennan's service as Interim CEO, all standing committees of the Board were comprised of independent directors. Upon Dr. Hantson's appointment as Chief Executive Officer on March 27, 2017, the Board determined that Mr. Brennan is independent and he was appointed to the same standing committees on which he previously served - the Quality Compliance Committee, the Science and Innovation Committee, and the Strategy and Risk Committee.
Audit and Finance
The Audit and Finance Committee reviews the internal accounting procedures of Alexion, consults with our independent registered public accounting firm and reviews the services provided by the independent registered public accounting firm. The Audit and Finance Committee oversees and assesses risks related to financial statements, accounting and financial reporting processes, internal controls, the independence and qualifications and performance of the Company’s independent registered public accounting firm, and other finance-related matters including but not limited to the Company’s tax strategy, capital structure and financing strategy and significant capital investments. The Committee oversees that management has established, documented, maintained and periodically re-evaluates its ethics and compliance program. Our Board of Directors has determined that Mr. Coughlin and Mr. Norby are each an "audit committee financial expert" as that term is defined under the NASDAQ Stock Market Listing Standards and the SEC rules and regulations.
Current Members (all independent) :
Mr. Coughlin (Chair)
Mr. Mollen
Mr. Norby
Mr. Parven
 
No. of Meetings during 2016:
15
 
Charter:
http://www.alexion.com/documents/audit_finance_Comm_charter  

 
 

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Leadership and Compensation
The Leadership and Compensation Committee assists the Board in oversight and risk evaluation for executive level talent management and succession planning, determines and approves compensation of our chief executive officer and all other executive officers, and administers our equity compensation and incentive plans. For more information on the responsibilities and activities of the Leadership and Compensation Committee, including the committee's processes for determining executive compensation, see the Compensation Discussion and Analysis below in this proxy statement.
Current Members (all independent) :
Mr. Mollen (Chair)
Ms. Burns
Mr. Norby
Mr. Parven
 
No. of Meetings during 2016:
6
 
 
Charter:
http://www.alexion.com/documents/leadership_comp_comm_charter

 
 
Quality Compliance
The Quality Compliance Committee oversees risks related to all aspects of Alexion's quality compliance and quality management systems and related regulatory matters. The Quality Compliance Committee also offers leadership and guidance with respect to managing Alexion's compliance systems for manufacturing, supply and distribution activities.
 
Current Members (all independent) :
Dr. Rummelt (Chair)
Dr. Baker
Mr. Brennan
Mr. Coughlin
Ms. Veneman
 
No. of Meetings during 2016:
4
 
Charter:
http://www.alexion.com/documents/quality_compliance_comm_charter

 
Nominating and Corporate Governance
The Nominating and Corporate Governance Committee reviews and recommends new directors to the Board of Directors, establishes the necessary Board committees to provide oversight to Alexion, and makes recommendations regarding committee membership. The Committee oversees risks related to director independence, board succession and corporate governance.
 
Current Members (all independent) :
Ms. Veneman (Chair)
Ms. Burns
Mr. Coughlin
Mr. Mollen
Mr. Norby
Mr. Parven
 
No. of Meetings during 2016:
4
Charter:
http://www.alexion.com/documents/nom_corp_gov_comm_charter

 

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Science and Innovation
In July 2016, the Board of Directors established the Science and Innovation Committee to provide leadership and guidance concerning the research, development and technology aspects of Alexion's business. The Committee also advises the Board on risks related to Alexion's research and development activities, its pipeline and technology.

 
Current Members (all independent) :
Dr. Baker (Chair)
Mr. Brennan
Dr. Rummelt
 
No. of Meetings during 2016:
1
 
Charter:
http://www.alexion.com/documents/science_innov_comm_charter


 
 
Strategy and Risk
The Strategy and Risk Committee oversees Alexion's strategic planning process and risk management processes. The Committee assesses risks related to Alexion's long-term growth, profitability, activities to enhance shareholder value and oversight and implementation of Alexion's risk management system.

 
Current Members (all independent) :
Ms. Burns (Chair)
Dr. Baker
Mr. Brennan
Dr. Rummelt
Ms. Veneman
 
No. of Meetings during 2016:
4
 
Charter:
 
 
 
 
 
http://www.alexion.com/documents/strategy_risk_comm_charter




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Corporate Governance
We strive to maintain strong corporate governance practices that protect and enhance accountability for the benefit of Alexion and all of Alexion's shareholders. We regularly review and continually refine our governance practices and policies to align with evolving practices and issues raised by our shareholders. We believe that our corporate governance structure, with its strong emphasis on Board independence, an active lead independent director and strong Board and committee involvement, provides sound and robust oversight of management.
Our Board believes that sound governance practices and policies provide an important framework to assist it in fulfilling its duty to shareholders. The Board has adopted Corporate Governance Guidelines and relies on the guidelines to provide that framework. The guidelines are not absolute rules, and can be modified to reflect changes in Alexion's organization or business environment. The Board reviews the guidelines on an annual basis and if necessary, modifies the guidelines to reflect current good governance practices and policies.
Alexion's Corporate Governance Guidelines, the charters of the committees of our Board and our Code of Ethics and Business Conduct described below may be found in the Corporate Governance section of the Investors section of our website at www.alexion.com or in print upon written request to ATTN: Investor Relations, Alexion Pharmaceuticals, Inc., 100 College Street, New Haven, CT 06510.
We believe part of effective corporate governance includes active engagement with our shareholders. We value the views of our shareholders and other stakeholders, and we communicate with them regularly and solicit input on a number of topics such as business strategy, capital allocation, corporate governance, and executive compensation.
This section describes key corporate governance facts about our Company and practices that we have adopted.
Process for Selecting Nominees and Shareholder Nominations
The Nominating and Corporate Governance Committee considers candidates for Board membership recommended by Nominating and Corporate Governance Committee members and other Board members, management, our shareholders, third party search firms, and any other appropriate sources. If a shareholder submits a nominee, the Nominating and Corporate Governance Committee will evaluate the qualifications of such shareholder nominee using the same selection criteria the committee uses to evaluate other potential nominees.
Our Bylaws contain provisions addressing the process by which a shareholder may recommend a person for consideration as a nominee for director at an annual meeting. A shareholder must give timely notice of the nomination in proper form, including a completed and signed questionnaire, representation and agreement required by Alexion's Bylaws and timely updates and supplements relating to the nomination.
Shareholder Nominations Not for Inclusion in Alexion's Proxy Statement . To nominate a director for consideration at an annual meeting, a nominating shareholder must provide the information required by our Bylaws and give timely notice of the nomination to our Corporate Secretary in accordance with our Bylaws, and each nominee must meet the qualifications required by our Bylaws. To be timely, assuming the date of the 2018 Annual Meeting is not more than 30 days before or more than 60 days after the

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anniversary of the 2017 Annual Meeting, a shareholder’s notice and recommendation must be received no earlier than the close of business on December 1, 2017, and not later than the close of business on December 31, 2017.
In addition, to be considered timely, a shareholder’s notice must further be updated and supplemented, if necessary, so that the information provided or required to be provided in the notice is true and correct as of the record date for the meeting and as of the date that is ten business days prior to the meeting or any adjournment or postponement thereof, and such update and supplement must be delivered to our Corporate Secretary at our principal executive offices not later than five business days after the record date for the meeting in the case of the update and supplement required to be made as of the record date, and not later than eight business days prior to the date for the meeting or any adjournment or postponement thereof in the case of the update and supplement required to be made as of ten business days prior to the meeting or any adjournment or postponement thereof.
Our Bylaws provide that a shareholder's advance notice of a nomination must contain the following information for each person whom the shareholder proposes to nominate for election or reelection to the Board: (1) all information relating to such person that would be required to be disclosed in a proxy statement or other filings required to be made in connection with solicitations of proxies for election of directors in a contested election pursuant to Section 14 of the Securities Exchange Act of 1934, as amended (the Exchange Act), and the rules and regulations promulgated thereunder, including such person’s written consent to being named in the proxy statement as a nominee and to serving as a director if elected, (2) a detailed description of all direct and indirect compensation and other monetary agreements, arrangements and understandings during the prior three (3) years, and any other material relationships, between or among such shareholder and beneficial owner, if any, and their respective affiliates and associates, or others acting in concert, on the one hand, and each proposed nominee, and his or her respective affiliates and associates, or others acting in concert, on the other hand, including, without limitation all information that would be required to be disclosed pursuant to Rule 404 promulgated under Regulation S-K, (3) a completed and signed questionnaire, provided by the Corporate Secretary upon written request, with respect to the background and qualification of such person and the background of any other person or entity on whose behalf the nomination is being made, and (4) a written representation and agreement, provided by the Corporate Secretary upon written request, that such person (a) is not and will not become a party to (i) any agreement, arrangement or understanding with, and has not given any commitment or assurance to, any person or entity as to how such person, if elected as a director, will act or vote on any issue or question (a Voting Commitment) that has not been disclosed to Alexion or (ii) any Voting Commitment that could limit or interfere with such person’s ability to comply, if elected as a director, with such person’s fiduciary duties under applicable law, (b) is not and will not become a party to any agreement, arrangement or understanding with any person or entity other than Alexion with respect to any direct or indirect compensation, reimbursement or indemnification in connection with service or action as a director that has not been disclosed in accordance with our Bylaws, (c) in such person’s individual capacity and on behalf of any person or entity on whose behalf the nomination is being made, would be in compliance, if elected as a director, and will comply, with all applicable corporate governance, conflict of interest, confidentiality and stock ownership and trading policies and guidelines of Alexion publicly disclosed from time to time, and (d) will abide by the requirements of the director voting provisions of our Bylaws. In addition, we may require any proposed nominee to furnish such other information as may reasonably be required by us to determine the eligibility of such proposed nominee to serve as an independent director or that could affect a reasonable shareholder’s understanding of the independence, or lack thereof, of such nominee.

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In addition, our Bylaws provide that to be in proper form, a shareholder’s notice must set forth, with respect to the shareholder, beneficial owner and their respective affiliate or associate acting in concert, giving notice of the nomination: (1) the name and address of the shareholder, as they appear on our books, or such beneficial owner, if any, and of their respective affiliates or associates or others acting in concert, (2) (a) the class or series and number of shares of Alexion which are, directly or indirectly, owned beneficially and of record by such shareholder, beneficial owner and their respective affiliates or associates or others acting in concert, (b) any "derivative instrument" directly or indirectly owned beneficially by such shareholder, the beneficial owner, if any, or any affiliates or associates or others acting in concert, (c) any proxy, contract, arrangement, understanding, or relationship pursuant to which such shareholder has a right to vote any class or series of shares of Alexion, (d) any "short interest" involving such shareholder, the beneficial owner, if any, or any affiliates or associates or others acting in concert, (e) any rights to dividends on the shares of Alexion owned beneficially by such shareholder that are separated or separable from the underlying shares of Alexion, (f) any proportionate interest in shares of Alexion or "derivative instruments" held, directly or indirectly, by a general or limited partnership in which such shareholder is a general partner or, directly or indirectly, beneficially owns an interest in a general partner of such general or limited partnership, (g) any performance-related fees (other than an asset-based fee) that such shareholder is entitled to based on any increase or decrease in the value of Alexion's shares or "derivative instruments," (h) any significant equity interests or any "derivative instruments" or "short interests" in any principal competitor of Alexion held by such shareholder, and (i) any direct or indirect interest of such shareholder in any contract with Alexion, any affiliate of Alexion or any principal competitor of Alexion, and (3) any other information relating to such shareholder and beneficial owner, if any, that would be required to be disclosed in a proxy statement and form or proxy or other filings required to be made in connection with solicitations of proxies for the election of directors in a contested election pursuant to Section 14 of the Exchange Act and the rules and regulations promulgated thereunder.
You may write to our Corporate Secretary at our principal executive office - Alexion Pharmaceuticals, Inc., 100 College Street, New Haven, Connecticut 06510, ATTN: Corporate Secretary - to deliver the notices discussed above and for a copy of the relevant Bylaw provisions regarding the requirements for nominating director candidates pursuant to our Bylaws.
Shareholder Nominations Under Proxy Access Bylaw . Our Bylaws provide that under certain circumstances, a shareholder, or group of up to 20 shareholders, who have maintained continuous ownership of at least three percent of our common stock for at least three years, may nominate and include a specified number of director nominees in our annual meeting proxy statement.
The number of shareholder-nominated candidates appearing in our annual meeting proxy statement cannot exceed the greater of 20% of the number of directors then serving on the Board and two directors. If 20% is not a whole number, the maximum number of shareholder-nominated candidates would be the closest whole number below 20%. The following persons will be considered shareholder-nominated candidates and counted against the 20% maximum: (i) shareholder-nominated candidates that the Board determines to include in the Company’s proxy materials as Board-nominated candidates, (ii) any shareholder-nominated candidate that is subsequently withdrawn, and (iii) any director who had been a shareholder-nominated candidate at any of the two preceding annual meetings of shareholders and whose reelection at the upcoming annual meeting is being recommended by the Board. Nominating shareholders are required to provide a list of their proposed nominees in rank order. If the number of shareholder-nominated candidates exceeds 20%, the highest ranking qualified individual from the list proposed by each nominating shareholder, beginning with the nominating shareholder with the largest qualifying

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ownership and proceeding through the list of nominating shareholders in descending order of qualifying ownership, will be selected for inclusion in the Company proxy materials until the maximum number is reached. If the maximum number of shareholder-nominated candidates is not reached after the highest ranking qualified individual has been selected, this process will continue as many times as necessary, following the same order each time, until the maximum number is reached.
The nominating shareholder or group of shareholders also must deliver the information required by our Bylaws, and each nominee must meet the qualifications required by our Bylaws.
Requests to include shareholder-nominated candidates in the Company’s proxy materials must be received no earlier than 120 days and no later than 90 days before the anniversary of the date that we Company issued our proxy statement for the previous year’s annual meeting of shareholders. However, if no annual meeting of shareholders was held in the previous year or the date of the annual meeting of shareholders is more than 30 days before or later than the first anniversary of the previous year’s annual meeting of shareholders, we must receive the request not later than the close of business on the earlier of (i) the 60th day prior to the date we issue our proxy statement in connection with such annual meeting of shareholders or (2) the 10th day after public announcement of the date of such annual meeting of shareholders is first made. The nominating shareholder or group of shareholders also must deliver the information required by our Bylaws, and each nominee must meet the qualifications required by our Bylaws.
Nominating shareholders are permitted to include in the proxy statement a 500-word statement in support of their nominee(s). The Company may omit any information or statement that it, in good faith, believes would violate any applicable law or regulation.
Director Criteria, Qualifications and Experience; Diversity
We are committed to diversified Board membership and we seek nominees who represent a range of viewpoints, backgrounds, skills, experience and expertise, both within and outside our industry. The Nominating and Corporate Governance Committee evaluates candidates identified from a number of sources and reviews Board composition regularly. The Board expects each of our directors to have personal and professional integrity, high ethical values, sound business judgment, demonstrated exceptional business and professional skills and experience, teamwork and a commitment to the long-term interests of Alexion and its shareholders. In evaluating candidates, the Nominating and Corporate Governance Committee also considers potential conflicts of interest, diversity, the requirement to maintain a Board that is composed of a majority of independent directors, and the extent to which a candidate would fill a present or anticipated need. In any particular situation, the Nominating and Corporate Governance Committee may focus on individuals possessing a particular background, experience or qualifications which the committee believes would be important to enhance the effectiveness of our Board.
The Nominating and Corporate Governance Committee is responsible for advising our Board on diversity, including gender, ethnic background, country of citizenship and professional experience and it seeks to recommend diverse nominees for the Board. The committee assesses the effectiveness of its responsibilities concerning diversity at least once each year, and takes action as warranted. Our Board is diverse, and our nominees reflect a Board of diverse gender, age, skills, experiences and points of view. Our Board believes that diversity enhances the overall effectiveness of our Board by presenting different perspectives inside the boardroom and to management, and we encourage diversity within all levels of our global organization. Although the Nominating and Corporate Governance Committee does not maintain a formal diversity policy, the committee considers diversity in its determinations.

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Board Refreshment and Evaluations
We have been deliberate in our approach to succession planning and Board refreshment. We appointed four independent directors in 2014 and another independent director in 2015. Five of the Board's nine independent directors have tenure of less than three years on the Board. These recent appointments bring significant commercial, financial, risk management and operational expertise to the Board. Their global operational expertise and experience serving on the boards of other multinational organizations have been important for our growing business.
The Nominating and Corporate Governance Committee and the Board are committed to maximizing Board effectiveness, which requires periodic assessments and regular dialogue, both during and outside of meetings.
Regular evaluations are an important tool in determining continued tenure. Our Nominating and Corporate Governance Committee oversees an annual assessment of the effectiveness of each Committee and the Board. Our Board and each Committee complete written evaluations to evaluate its own performance on an annual basis. Directors discuss the results of these evaluations during Committee meetings and in executive sessions of the Board. Our directors have demonstrated their willingness to refresh the Board and to conduct open and honest evaluations of its performance.
Board Leadership Structure
We have chosen to separate the roles of Chairman of the Board and Chief Executive Officer. Our Lead Independent Director Charter provides that if the Chairman is not independent, the independent members of our Board will elect a lead independent director. As set forth in the Lead Independent Director Charter, the Lead Independent Director is selected annually by the independent directors, presides at meetings of the Board at which the Chairman is not present, including executive sessions of our independent directors, serves as a liaison and supplemental channel of communication between directors and the Chairman, serves as an independent point of contact for shareholders wishing to communicate with the Board other than through the Chairman, and has other duties described in the charter. A detailed description of the responsibilities of the Lead Independent Director is included in our Lead Independent Director Charter, which is available on our website at http://www.alexion.com/documents/lead_independent_Director_charter.
Dr. Bell has served as Chairman of the Board since October 2014. Dr. Bell is not deemed independent and Mr. Norby currently serves as Lead Independent Director. Following Dr. Bell's retirement from the Board at the end of his term, effective as of the Annual Meeting, the Board intends to appoint Mr. Brennan as the independent Chairman of the Board, subject to his re-election. At the same time, Mr. Norby will no longer serve as Lead Independent Director.
Board's Role in Risk Oversight
The Board has ultimate responsibility for overseeing Alexion's risk management processes including effective oversight of management. The Board and each committee of the Board oversees material company risks within their areas of general oversight, as described above under "General Information About the Board of Directors." The Strategy and Risk Committee evaluates management's processes for reviewing, refreshing and modifying its enterprise risk management system and processes, and reviews with management and external advisors the identification, prioritization and management of risks, the accountabilities and roles of the company functions involved with enterprise risk management, the risk portfolio and the corresponding actions implemented by management. The standing committees of the Board regularly inform the full Board of Alexion's most significant risks and how these risks are managed.

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The Board believes it is important to align Alexion's strategic priorities with the Company's risk management program. By designating a single Board committee - the Strategy and Risk Committee - to oversee both strategy and enterprise risk, the Board can execute its oversight and decision-making responsibilities as the Company's strategic priorities and risks evolve with the business and external conditions. Alexion is committed to fostering a company culture of risk-adjusted decision-making without constraining reasonable risk-taking and innovation.
Board's Role in Strategy
Our Board designated the Strategy and Risk Committee to o versee that management has established and periodically re-evaluates a corporate strategic plan. Our strategic planning process is dynamic and evolves throughout any given year, culminating in a review and approval of the proposed plan by the full Board at least annually. Throughout the year, the Strategy and Risk Committee reviews the planning process with management and monitors progress, advising management on a variety of matters involving both process and strategy. Following approval of the strategic plan by the Board, the Strategy and Risk Committee and sometimes the full Board regularly receive updates from management concerning implementation of the plan. The Strategy and Risk Committee evaluates our progress, and suggests modifications. The Strategy and Risk Committee also reviews on a regular basis specific proposed transactions or opportunities, and supports and advises management as it deems appropriate. Both the Board and the Strategy and Risk Committee are regularly informed of factors affecting our implementation of our strategic plan, including our performance and progress against the plan, enterprise risks, and the impact of industry and global developments.
Succession Planning
An important responsibility of the Board and the CEO is to ensure long term continuity of leadership. The Nominating and Corporate Governance Committee annually reviews and makes recommendations to the Board relating to management succession planning. In addition, our senior executives discuss future candidates for leadership positions at all levels within Alexion's global organization. On a regular basis, the Board and its committees review and discuss leadership succession plans, leader development and organizational capabilities across all functions of the Company. We consider succession planning to be an important factor in managing the long term planning and success of our business.
Code of Ethics and Business Conduct
We have adopted a code of ethics that applies to directors, officers and employees of Alexion and its subsidiaries and complies with SEC rules and regulations and the listing standards of the NASDAQ Global Select Market. The Alexion Pharmaceuticals, Inc. Code of Ethics and Business Conduct (Code) is located on our website at http://www.alexion.com/documents/alexion_Code_of_ethics. Our directors, officers and employees are required to comply with the Code. The Code is intended to focus our directors, officers and employees on individual ethical and professional accountability to ensure they follow appropriate standards and comply with legal requirements concerning Alexion's business. The Code covers areas of professional conduct relating to individual's service to Alexion, including conflicts of interest, ethical conduct, anti-bribery and anti-corruption, gifts, workplace matters, and oversight of ethics and compliance by employees of the Company. We will disclose any future amendments to the Code, or waivers from a provision of the Code to any executive officer or director, on our website as promptly as practicable, as may be required under applicable laws, rules and regulations of the SEC and NASDAQ.


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Executive Compensation
LETTER FROM THE LEADERSHIP AND COMPENSATION COMMITTEE CHAIR
 
Dear Fellow Shareholders:
As you may be aware, 2016 was a year of significant leadership change at Alexion. On December 11, 2016, the Board appointed David R. Brennan, a member of our Board and the former Chief Executive of AstraZeneca Plc, as Interim Chief Executive Officer, and David J. Anderson, as Chief Financial Officer. Mr. Brennan replaced David Hallal, the Company’s former Chief Executive Officer, and Mr. Anderson replaced Vikas Sinha, the Company’s former Chief Financial Officer, both of whom left the Company on December 11, 2016. On March 27, 2017, we announced the appointment of Ludwig Hantson as Alexion's new Chief Executive Officer.
Alexion achieved many of its operational and financial objectives in 2016 - see 2016 Business Performance below - and these achievements will have long-term benefits for Alexion, our shareholders and patients. We also experienced disappointments in 2016, including the filing delay of our third quarter Quarterly Report on Form 10-Q. For the first time since the launch of our first product, Soliris, in 2007, the Leadership and Compensation Committee (the Committee) decided to fund annual cash bonuses at less than 100%. The Committee's decision reflected a recognition of our underlying stock performance and our assessment of overall 2016 performance that despite strong operational and financial performance, certain events weighed on the Company's achievements.
The Committee is committed to a pay-for-performance philosophy that ties compensation to the achievement of the Company’s short- and long-term financial, operational and strategic objectives that ultimately drive the creation of sustainable shareholder value. Historically, our shareholders have overwhelmingly supported the Company’s annual “say-on-pay” resolution and the Committee has viewed the level of support as strong affirmation of our compensation philosophy and approach. We recognized that while our 2014 and 2015 say-on-pay support was almost 99%, our 2016 say-on-pay support was approximately 89%. We value the views of our shareholders and strive to maintain a compensation framework that is responsive to shareholder expectations.
Based on shareholder feedback and our review of our existing compensation framework and best practices, we implemented key changes in 2017 that I would like to highlight.



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Practice
Discussion
Committee Action
Discretionary Annual Cash Bonus
Historically, we operated the annual cash bonus program on a discretionary basis to allow the Committee to qualitatively and holistically evaluate performance achievement by the named executive officers (NEOs) based on a variety of business and individual factors
Investors indicated a preference for a more formulaic bonus structure with pre-established metrics
We also considered the maximum bonus opportunity, 300% of target, and concluded the maximum should be reduced
For the 2017 performance year, the annual cash incentive award program will be:
- Weighted 50% on pre-established financial factors

- Weighted 50% on a scorecard of strategic factors that are structured to drive performance to achieve specific milestones that are integral to Alexion's operations and require exceptional cross-functional performance and execution to achieve

- Capped at 200% of target for all participants

Furthermore, as fully described in the CD&A, the Committee also determined to proactively implement the above formulaic structure to its 2016 annual cash incentive award determination
Proportion of Performance Stock Units (PSUs) in Annual LTI Mix
High PSU Upside Leverage
Our historical annual long-term incentive (LTI) award mix consisted of:

In 2017, 50% of the LTI mix will consist of PSUs and the proportion of stock options will be reduced
The 2017 LTI mix is targeted as follows:
- 20% stock options

- 30% restricted stock units (with performance thresholds)

- 50% performance stock units

- Maximum upside leverage on the operational PSUs will be capped at 250% of target


 
2015
2016
Stock Options
50%
50%
Restricted Stock Units
38%
25%
Performance Stock Units
12%
25%
In 2016, we (i) doubled the proportion of PSUs in the LTI mix from 2015 and (ii) reduced the maximum upside leverage to 450% of target for operational PSUs (our PSUs are eligible to be earned based on operational and TSR performance metrics)
 “Single-trigger” Vesting of Equity Awards
Historically, our equity awards provided for immediate vesting if there is a change-in-control of the Company
In early 2016 we eliminated “single trigger” equity acceleration upon a change-in-control for equity awards granted in 2016 and thereafter
Section 280G Excise Tax Gross-up
Certain “grandfathered” legacy employment agreements entitled some executives to a gross-up for excise taxes incurred in connection with a change-in-control of the Company (Section 280G gross-up)
In early 2016 we eliminated legacy Section 280G gross-up entitlements in all employment agreements
Improve Tax Efficiency of Incentive Awards
Historically, we have granted annual cash incentives and certain LTI awards that were not structured to be fully deductible under IRC Section 162(m)

For 2017, it is our intent to structure annual cash incentives and a greater portion of our LTI awards in a manner intended to qualify them as performance-based compensation under IRC Section 162(m)

We invite you to read our Compensation Discussion and Analysis that follows for further information on our executive compensation philosophy and decisions. As we position Alexion for continued success as one of the world’s most innovative biopharmaceutical companies, we expect our compensation programs to support and reinforce our strategy, secure our talent, and drive shareholder value creation.
Thank you for your support and we look forward to maintaining ongoing dialogue.
Sincerely,
Jack T. Mollen
Chair
The Leadership and Compensation Committee

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COMPENSATION DISCUSSION AND ANALYSIS
Who are the Named Executive Officers
This Compensation Discussion and Analysis section (CD&A) discusses the principles underlying our policies and decisions used to determine the compensation of our executive officers who are named in the “Summary Compensation Table”, referred to as our named executive officers (NEOs). For 2016, they are:
Name
Position
David R. Brennan
Interim Chief Executive Officer, effective December 11, 2016
David J. Anderson, M.B.A.
Executive Vice President and Chief Financial Officer, effective December 11, 2016
Martin Mackay, Ph.D.
Executive Vice President and Global Head of Research and Development
Julie O'Neill, M.B.A.
Executive Vice President, Global Operations
Carsten Thiel, Ph.D.
Executive Vice President and Chief Commercial Officer
David Hallal
Former Chief Executive Officer and Chief Operating Officer
Vikas Sinha, M.B.A., C.A.
Former Executive Vice President and Chief Financial Officer

CEO and CFO Transition
On December 11, 2016, the Board appointed David R. Brennan, a member of the Board, as Interim Chief Executive Officer (CEO), and David J. Anderson, as Chief Financial Officer (CFO). Mr. Brennan replaced David Hallal, our former CEO and director, who terminated employment on December 11, 2016. Mr. Anderson replaced Vikas Sinha, our former Chief Financial Officer, who also terminated employment on December 11, 2016. The compensation arrangements with each of Mr. Brennan and Mr. Anderson in respect of their appointments are described below in this CD&A. Mr. Brennan’s service as Interim Chief Executive Officer ended on March 27, 2017 upon the appointment of Dr. Hantson as CEO, and Mr. Brennan continues to serve as a member of the Board.
Executive Summary
Alexion’s executive compensation program is designed to attract, retain, incentivize and reward performance. The Leadership and Compensation Committee (for purposes of this CD&A, the "Committee") seeks to deliver competitive compensation to help us retain and motivate our key talent, and to recognize our executives for their contributions to Alexion and our patients, and for the value they create for all of our shareholders.
2016 Business Performance Highlights
We achieved many of our 2016 operational and financial goals, including the following:
Soliris revenue of $2.843 billion
Total revenue and Non-GAAP earnings-per-share - $3.084 billion and $4.62. See Appendix A attached to this proxy statement for a full reconciliation of non-GAAP results
Strong Strensiq performance with revenues of $210 million in first full year of launch
Initiated ALXN 1210 Phase 3 studies for PNH and aHUS
Submitted sBLA in the U.S. and Europe for Soliris for the treatment of gMG

Company challenges included missing the primary endpoint of the REGAIN study for the treatment of gMG, the delayed filing of our third quarter Quarterly Report on Form 10-Q, and slower than expected launch for Kanuma.

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Compensation Objectives and Key 2016 Compensation Actions
The primary elements of our total direct compensation program for the NEOs and a summary of the actions taken by the Committee with respect to 2016 compensation are set forth below. 
Compensation Component
Link to Business
and Talent Strategies
2016 Compensation Actions
Base Salary
(Page 36)
- Competitive base salaries help attract and retain executive talent.
- Merit-based increases ranging from 3.5% to 6.5% were approved for 2016.
Annual Cash Incentive Compensation
(Page 37)
- Focus executives on achieving annual financial and strategic results.
- Annual cash incentive awards were earned below target at an average of 92% of target primarily due to failure to achieve the revenue and adjusted EPS incentive targets.
Long-Term Equity
Incentive Compensation
(Page 39 )
- An nual equity-based awards consist of PSUs (25%), stock options (50%) and restricted stock units (25%)

-PSUs are earned based on achievement of operational and TSR goals that are key indicators of Company performance and creation of shareholder value.

- Stock options provide focus on stock price growth, and direct alignment with the interests of our shareholders.

- RSUs provide focus on stock price growth and serve our talent retention objectives.
- 80% of the PSUs (all of the operational PSUs) granted in February 2016 were forfeited, due to failure to achieve the Revenue and adjusted EPS goals. The remaining 20% of the PSUs granted in February 2016 will vest ate the end of a 3-year performance period subject to TSR performance measured against the Nasdaq Biotechnology Index and continued employment.

- Stock options and RSUs were granted in 2016. Stock options and RSUs vest over four years, with RSUs vesting in equal annual installments and stock options vesting 25% on the first anniversary of the grant date and 1/16th every three months thereafter, subject to continued employment. 
 
Pay-For-Performance Summary
We believe that a significant portion of each executive's compensation should be variable and tied to the achievement of pre-established company and/or individual performance metrics, or an increase in our stock price. Accordingly, we have designed our incentive programs with the goal of ensuring that actual realized pay varies above or below targeted compensation opportunities based on achievement of challenging performance goals and demonstration of outstanding commitment and contribution to our performance. The Committee measures performance using several corporate, business and individual measures, as more fully described below. The specific metrics that we use to measure our performance in evaluating and implementing our executive compensation program were selected because we believe that they are important to Alexion’s financial and operational success over the short- or long-term, as applicable.
For illustration, the targeted total direct compensation mix we established at the beginning of 2016 for our then CEO Mr. Hallal and the other NEOs is set forth below. In general, we believe this type of mix of short- and long-term compensation components provides appropriate incentives to motivate near-term performance, while at the same time providing significant incentives to keep our executives focused on longer-term corporate goals that drive shareholder value.
CEO Targeted Pay Mix
Salary
Annual Cash Incentive
PSU
Stock Options
RSU
Total
% of Total Compensation
8%
10%
21%
41%
20%
100%
Cash vs. Equity
18%
82%
100%
Short-Term vs. Long-Term Incentives
-
11%
89%
100%
Fixed vs. Performance-Based
8%
92%
100%

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Other Named Executives Targeted Pay Mix (average)
Salary
Annual Cash Incentive
PSU
Stock Options
RSU
Total
% of Total Compensation
15%
11%
17%
34%
23%
100%
Cash vs. Equity
26%
74%
100%
Short-Term vs. Long-Term Incentives
-
13%
87%
100%
Fixed vs. Performance-Based
16%
84%
100%

2016 Say-On-Pay Vote
At the 2016 Annual Meeting, approximately 89% of the votes cast on the advisory vote on executive compensation were in favor of Alexion's executive compensation disclosed in the proxy statement. While our shareholders have consistently supported our compensation decisions, the Committee continues to regularly review, assess, and when appropriate adjust Alexion's compensation programs based on feedback from our shareholders or otherwise based on best practices and trends.
Based on shareholder feedback and our review of the existing compensation framework and best practices, we implemented several key changes in 2017, which are described below.

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Practice
Discussion
Committee Action
Discretionary Annual Cash Bonus
Historically, we operated the annual cash bonus program on a discretionary basis to allow the Committee to qualitatively and holistically evaluate performance achievement by the named executive officers (NEOs) based on a variety of business and individual factors
Investors indicated a preference for a more formulaic bonus structure with pre-established metrics
We also considered the maximum bonus opportunity, 300% of target, and concluded the maximum should be reduced
For the 2017 performance year, the annual cash incentive award program will be:
- Weighted 50% on pre-established financial factors

- Weighted 50% on a scorecard of strategic factors that are structured to drive performance to achieve specific milestones that are integral to Alexion's operations and require exceptional cross-functional performance and execution to achieve

- Capped at 200% of target for all participants

Furthermore, as fully described in the CD&A, the Committee also determined to proactively implement the above formulaic structure to its 2016 annual cash incentive award determination
Proportion of Performance Stock Units (PSUs) in Annual LTI Mix
High PSU Upside Leverage
Our historical annual long-term incentive (LTI) award mix consisted of:

In 2017, 50% of the LTI mix will consist of PSUs and the proportion of stock options will be reduced
The 2017 LTI mix is targeted as follows:
- 20% stock options

- 30% restricted stock units (with performance thresholds)

- 50% performance stock units

- Maximum upside leverage on the operational PSUs will be capped at 250% of target


 
2015
2016
Stock Options
50%
50%
Restricted Stock Units
38%
25%
Performance Stock Units
12%
25%
In 2016, we (i) doubled the proportion of PSUs in the LTI mix from 2015 and (ii) reduced the maximum upside leverage to 450% of target for operational PSUs (our PSUs are eligible to be earned based on operational and TSR performance metrics)
 “Single-trigger” Vesting of Equity Awards
Historically, our equity awards provided for immediate vesting if there is a change-in-control of the Company
In early 2016 we eliminated “single trigger” equity acceleration upon a change-in-control for equity awards granted in 2016 and thereafter
Section 280G Excise Tax Gross-up
Certain “grandfathered” legacy employment agreements entitled some executives to a gross-up for excise taxes incurred in connection with a change-in-control of the Company (Section 280G gross-up)
In early 2016 we eliminated legacy Section 280G gross-up entitlements in all employment agreements
Improve Tax Efficiency of Incentive Awards
Historically, we have granted annual cash incentives and certain LTI awards that were not structured to be fully deductible under IRC Section 162(m)

For 2017, it is our intent to structure annual cash incentives and a greater portion of our LTI awards in a manner intended to qualify them as performance-based compensation under IRC Section 162(m)


The Committee will continue to take into account the results of the advisory vote at the 2017 Annual Meeting, as well as direct shareholder feedback, when making executive compensation decisions in the future.
Compensation Practices - What We Do And Don't Do
Below is a description of some of our other compensation practices that further highlight our commitment to compensation governance and paying for performance:
n Clawback Policy. We have adopted a clawback policy under which cash and equity-based incentive compensation of our CEO and his direct reports may be recovered by Alexion in the event of a financial restatement - see page 44.

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n No Hedging or Pledging of Stock. All employees, including the NEOs, are prohibited from entering into any hedging, pledging or derivative transactions in our stock - see page 43.
n No Re-Pricing of Underwater Stock Options. Our equity incentive plan, including the proposed 2017 Incentive Plan, prohibits the repricing or exchange of underwater stock options without shareholder approval.
n Regular Review of Share Utilization . The Committee regularly reviews share utilization levels and Alexion's burn rate.
n Perquisites. We provide limited perquisites to executives, and these perquisites are also available to certain other employees.
n Stock Ownership Guidelines. Our NEOs are expected to acquire and hold Alexion stock worth three to six times their base salary within five years of appointment. Other executives and our directors are also expected to comply with stock ownership guidelines. Our requirements are in the highest range of our peers - see page 43. All NEOs and directors are currently in compliance with the guidelines.
n No Excise Tax Gross-Ups Upon Change of Control . Since 2013, we have had a policy of not entering into new agreements that include 280G gross up provisions. In 2016, we took the further step of eliminating all existing 280G gross-ups in all employment agreements.
n Equity Acceleration Upon Change in Control. Our executive employment agreements provide for accelerated vesting only if the executive experiences a termination of employment without cause or resigns for “good reason” in connection with or during a specified period following a change of control of the Company with respect to awards granted in and after 2016. Previously, our executive employment agreements provided for automatic single-trigger acceleration for all awards following a change of control.
n Independent Compensation Adviser. The Committee retains an independent compensation consulting firm.
n Review of Compensation Peer Group. Our peer group is reviewed annually by the Committee and adjusted, when necessary, to ensure that the peer group remains an appropriate comparison for our executive compensation program.
n Review of Committee Charter . The Committee reviews its charter regularly to incorporate evolving governance practices.
Executive Compensation Philosophy
The primary objective of Alexion's executive compensation programs is to attract, retain and incentivize the key executives necessary for Alexion's short- and long-term successful performance. As it relates to our executive compensation programs, the Committee views performance as operating performance, return to shareholders and individual contributions.
The Committee considers and approves compensation programs based on our compensation philosophies, which include the following:
Attract, retain and incentivize
n We are deeply committed to attracting and retaining industry-leading talented individuals

n Well-designed compensation programs incentivize our employees to achieve rigorous corporate and individual objectives that are important to our business and success

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n Our executive compensation program should reinforce our succession planning processes

Pay for performance; align with shareholders
n Performance is measured by operating and strategic performance, return to shareholders and individual contributions

n We establish competitive opportunities to incentivize high performance and deliver greater rewards when corporate and individual performance exceed expectations and lower compensation when corporate or individual performance falls short

n The interests of our executives are linked to those of our shareholders through ownership of Alexion stock and holding Alexion-based equity awards

Competitive with peer group
n We believe that compensation paid by market peers matters

n When we set targets, we evaluate the practices of our peers to validate that Alexion is competitive with other companies who compete with us for talent

n We carefully review our peer group each year, including an assessment of the companies from which we have recently hired executive-level employees

Balanced combination of compensation elements
n We strive for an appropriate balance between cash and equity incentives

n The annual cash incentive is intended to motivate individuals to successfully execute on short-term operational and strategic objectives

n Equity incentives are intended to focus executives on the long-term success of the organization, as well as, in the case of PSUs, the achievement of pre-established financial and operational performance metrics

n The actions of an executive can and should influence the ultimate value of an LTI award and greater value should be realized by the executive if he or she is focused on long-term outcomes - decisions and actions today may impact Alexion's performance years from now. LTIs are intended to drive executive accountability for Alexion's long-term performance by delivering greater, or lesser, value in the future

n In general, w e do not provide special perquisites to executives that are not also available to other employees (e.g. relocation costs)

Fair and consistent
n We are committed to making the overall structure of our compensation programs similar across our global organization, taking into account level, geography and local considerations

n We strive to develop compensation and reward opportunities for all employees based on responsibility and performance

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Our Process
Key 2016 Compensation Decisions
As further described below, the Committee approved 2016 (i) base salaries, (ii) annual cash incentive targets, and (iii) LTI awards, including PSUs, stock options and restricted stock units in February 2016 for the NEOs. In December, 2016, the Committee also approved the compensation arrangements for Mr. Brennan and Mr. Anderson in connection with their appointments as Interim CEO and CFO, respectively. In February, 2017, the Committee evaluated the Company’s achievement of the applicable performance metrics to make determinations with regard to annual cash incentive awards for 2016 and the earning of the operational portion of 2016 PSUs.
Role of the Leadership and Compensation Committee
The Committee determines the compensation of Alexion's executive officers and approves and evaluates Alexion's compensation programs. The Committee makes its executive compensation decisions based on many factors, including:
n Its review of corporate results against financial and strategic corporate objectives, assigning a performance rating versus 100% of target

n As a general matter, the Board's rating of the CEO's performance is also considered. The CEO's objectives are typically substantially based on the corporate objectives and take into consideration TSR performance as well as the CEO's accomplishments addressing unforeseen events which contribute to our overall performance; given the CEO transition during 2016, CEO performance was not a significant factor in evaluating 2016 performance

n An annual benchmarking exercise to obtain competitive market information and compare each executive's compensation to that of individuals in similar positions at Alexion's self-selected peer group of companies

n The CEO's assessment of the performance of his direct reports measured against their objectives

n The CEO's compensation recommendations for his direct reports

Role of Executives in 2016 Compensation Decisions
No NEO participated in discussions about or made recommendations with respect to his or her own compensation.
A small number of executives typically attended Committee meetings, including our CEO, and Chief Human Resources Officer, or CHRO.
The CEO, with limited staff and management support, worked with the Committee and its compensation adviser to develop compensation recommendations for the NEOs other than himself. The CEO discussed his evaluation of the individual performance of the other NEOs. The Committee, however, was responsible for making all decisions regarding the compensation of the other NEOs.
The Committee was responsible for evaluating and determining the CEO's compensation and worked directly with the compensation adviser, as discussed below, with limited support from Alexion staff. The CEO was not present when the Committee discussed and approved his compensation.
Role of the Compensation Adviser
According to its charter, the Committee is authorized to retain and terminate consultants to assist it in any aspect of the evaluation of CEO or executive officer compensation, and to approve such consultant's

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fees and retention terms. The Committee also has authority to obtain advice from internal or external legal and other advisors. In 2016, the Committee retained Radford, the Life Sciences Compensation Consulting practice of Aon Hewitt, a business unit of Aon plc (“Radford”), as its compensation adviser, and Radford advised the Committee with respect to the Committee’s decisions in February 2016 regarding 2016 (i) base salaries, (ii) annual cash incentive targets, and (iii) LTI awards. In February 2017, when the Committee approved annual cash incentive payments based on Alexion’s 2016 performance, the Committee retained FW Cook & Co., Inc. (“FW Cook”) to advise the Committee as its compensation adviser.
During 2016, the Committee's compensation advisers provided analysis, research, data, peer and competitive information, survey information and program-design experience in evaluating and developing Alexion's compensation programs for executives as well as incentive programs. The compensation adviser also kept the Committee informed of market trends and developments. Representatives of the compensation adviser generally attended meetings of the Committee and communicated with the Committee chairman between meetings. The Committee, however, made all decisions regarding the compensation of our executive officers.
The Committee assessed the independence of each of Radford and FW Cook, taking into account the relevant SEC and NASDAQ independence factors. The Committee believes that both Radford and FW Cook are independent and that there are no conflicts of interest that would impact the advice the Committee received from either consultant.
Assessing the Competitive Marketplace and Alexion's Peer Group
In 2016, Radford assisted the Committee in its compensation decisions by, among other things, providing market compensation information reflecting the executive compensation practices and levels across similar positions and a large sampling of companies. Radford utilized compensation surveys to assess market information, including compensation surveys prepared by Towers Watson, US Mercer SIRS and also by Radford. In addition, the Committee considered the pay and practices at a peer group of companies when making executive compensation decisions.
How the Peer Group is Used
The Committee uses the peer group in the following ways:
As input to determine base salary, annual cash incentive target, awards actually paid and the approximate grant-date value and form of long-term incentive awards;
n As input to determine total direct compensation;

n As input for designing the compensation programs;

n As input to develop the form and mix of equity awards;

n To assess whether Alexion’s executive compensation programs are aligned with Company performance; and

n To assess incentive plan burn rate, overhang and equity expense.

The peer group information is a key reference point for the Committee. The Committee compares the compensation of each NEO to similar positions within the peer group. The Committee also takes into account various factors such as the unique characteristics of the individual's position, and any succession and retention considerations. The Committee, however, does not adopt peer group compensation levels as strict boundaries when making its decisions, and will award amounts greater or lower than the peer

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group. The Committee allocates the level of opportunity and the mix of compensation elements to determine total direct compensation opportunities in a way that it believes is the right level to incentivize exceptional performance.
Peer Group Selection Criteria
The Committee develops the peer group based on the criteria listed below, together with input from the compensation adviser. The Committee strives to select companies that are of similar size (revenues, market capitalization, number of employees), are organized like Alexion, and operate similarly (global presence, orphan disease focus). While the Committee endeavors to select peer companies that exhibit all criteria set forth below, it recognizes that it cannot develop a peer group in which all companies satisfy all criteria.
Consideration
Purpose
Recruiting
A peer company should operate in the biotechnology or pharmaceutical industry and should compete with Alexion for talent.
Annual Revenues
Generally, companies with similar revenues to Alexion (between 0.3x and 3x Alexion revenues) are operating businesses of a similar commercial complexity.
Market Capitalization
Generally, companies with market capitalizations similar to Alexion’s (between 0.3x and 3x Alexion's market capitalization) are established, mature businesses that have expected revenue growth and anticipated pipeline achievements.
Global Presence
A peer company should conduct global commercial operations. We look at the percent of revenues attributed to non-U.S. sales and consider companies with worldwide operations.
Number of Employees
The number of individuals employed by a peer company tends to be a reflection of the organization’s operational complexity. We target between 500 and 5,000 employees.
Orphan Disease Focus
A peer company should be exclusively focused on the development and commercialization of therapeutic products for rare diseases.

Radford and the Committee reviewed the list of companies identified using the above parameters to determine which companies are most similar to Alexion. The lack of similarity of a peer company to Alexion with respect to any single factor stated above is not by design, but rather because there is not a sufficient number of companies that are similar to Alexion with respect to such factor. For example, not all companies in Alexion's peer group have a rare disease focus. The Committee believes that it is not possible to eliminate differences entirely and recognizes the possibility that shifts in Alexion's peer group selection could influence executive compensation decisions. The Committee seeks to mitigate this risk by not relying entirely on any one or two factors, such as revenue and market capitalization. The Committee believes that reliance on one or two factors alone would result in selecting a number of peers with little else in common with Alexion.
Peer Group
The Committee compares the compensation of each NEO to similar positions within the peer group. The Committee also takes into account various factors such as the unique characteristics of the individual's position, and any succession and retention considerations.
The Committee analyzed the peer group in 2015 to assist in its 2016 decision-making. The Committee used the 2015 Peer Group to determine 2016 base salaries, targets for annual incentive awards, and LTI awards.
In evaluating the 2015 peer group, the Committee endeavored to increase the size of the peer group in light of past and anticipated industry consolidations. The Committee considered each company in the existing peer group and 17 additional companies in its review. Two companies from the existing peer group of 13 were removed due to acquisitions and the Committee decided to add five companies - Abbvie, Alkermes, Allergan plc (formerly Actavis), Amgen and Incyte - which were a mix of larger (3) and smaller peers (2). As a result of these changes, the peer group was increased to 16, with all but two reporting

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revenues outside the US. In addition, all peers but two met at least one of the revenue and market capitalization criteria.
The peer group used by the Committee as one factor when it determined 2016 base salaries, targets for annual cash incentive awards, and LTI awards included the following 16 companies:
AbbVie
BioMarin Pharmaceutical, Inc.
Shire plc
Alkermes
Celgene Corporation
United Therapeutics Corporation
Allergan Inc.
Gilead Sciences, Inc.
Valeant Pharmaceuticals, Inc.
Allergan plc (formerly Actavis)
Incyte Corporation
Vertex Pharmaceuticals, Inc.
Amgen
Jazz Pharmaceuticals, Inc.
 
Biogen Idec, Inc.
Regeneron Pharmaceuticals, Inc.
 
Elements of 2016 Named Executive Officer Compensation
As a baseline for awarding compensation and prior to making annual executive compensation decisions, the Committee evaluates Alexion's performance for the prior year by assessing if, and the extent to which, Alexion achieved or failed to achieve the corporate goals approved by the Committee and the Board for that year. To assist in the determination of (a) 2016 base salaries, (b) 2016 targets for annual cash incentives, and (c) the target value of 2016 LTIs, including PSUs, the Committee evaluated Alexion's 2015 performance in February of 2016. Annual cash incentive payouts for 2016 for the NEOs were determined in February 2017, following the Committee's and Board's assessment of 2016 performance.
2016 Compensation for Mr. Brennan and Mr. Anderson
On December 11, 2016, the Board appointed Mr. Brennan as Interim CEO, and Mr. Anderson as CFO. In connection with his interim appointment, we entered into an employment agreement with Mr. Brennan, pursuant to which he received an annualized base salary of $6 million, a housing allowance of $5,000 per month, and reimbursement for transportation expenses. Mr. Brennan’s base salary also represented his total direct compensation for his services as Interim CEO. The Committee believed that, in light of the CEO transition and Mr. Brennan's interim role, it was important to provide a competitive level of total direct compensation as well as fixed, guaranteed compensation during the period of service. Mr. Brennan did not receive a long-term incentive award in 2016 in respect of his service as interim CEO because his service was expected to be temporary, and the long-term nature and purpose of LTIs would not be achieved. Under his agreement, Mr. Brennan was entitled to receive a grant of restricted stock units upon his reelection to the Board at the annual meeting, in accordance with our non-employee director compensation program, but was not otherwise entitled to participate in the long-term incentive award program for senior executives. Mr. Brennan’s employment agreement and the foregoing compensation arrangements are no longer in effect following the appointment on March 27, 2017 of Dr. Hantson as our new CEO. Mr. Brennan continues to serve as a member of the Board.
In connection with Mr. Anderson’s appointment as CFO, the Committee approved an employment agreement with Mr. Anderson, which provided for an annualized base salary of $4.55 million, and an allowance of $5,000 per month for lodging, transportation and related expenses. Mr. Anderson also received a grant of restricted stock units with a grant date value of $1 million. The Committee did not change Mr. Anderson's base salary at the time it approved 2017 compensation for the NEOs in February 2017, and did not award Mr. Anderson an annual cash incentive award with respect to 2016. The Committee endeavored to deliver competitive and fixed compensation to Mr. Anderson in light of the CFO transition and management changes. The Committee also believed that Mr. Anderson should be awarded long-term incentives for retention purposes and to incentivize long-term success.

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The employment agreements with Messrs. Brennan and Anderson are described in further detail under “Narrative Disclosure to the Summary Compensation Table and Grants of Plan-Based Awards Table” below.
Base Salaries
Base salary represents a secure, fixed component of an executive's compensation. Determinations of base salary levels for our executives are established based on the position, the scope of responsibilities, and the prior relevant background, training and experience of each individual. Base salaries are evaluated annually for possible merit increases and take into account an annual review of marketplace competitiveness as compared to the peer group. The Committee believes that the merit and other increases approved for 2016 base salaries for the NEOs reflects strong operational performance, both company and individual, as well as market competitiveness.
Consistent with previous annual base salary evaluations, the Committee determined that if merit increases are appropriate, 2016 base salaries for the NEOs should be within approximately 10% of the market median of Alexion's peer group. The merit and other increases in base salary for the NEOs, detailed in the table below, were approved by the Committee in February 2016 to achieve this desired level.

Named Executive Officer
 
2015 Base Salary (1)
 
2016 Base Salary (1)
 
% Change
David R. Brennan (2)
 
N/A
 
$6,000,000
 
N/A
David J. Anderson, M.B.A. (2)
 
N/A
 
$4,550,000
 
N/A
Martin Mackay, Ph.D.
 
$670,000
 
$693,000
 
3.4
Julie O'Neill, M.B.A.
 
€457,000
 
€484,000
 
5.9
Carsten Thiel, Ph.D.
 
CHF 675,000
 
CHF 699,000
 
3.6
David Hallal
 
$1,100,000
 
$1,200,000
 
9.1
Vikas Sinha, M.B.A., C.A.
 
$670,000
 
$714,000
 
6.6

(1) Amounts represent the executive's annual base salary as approved by the Committee. Amounts may not reflect actual earnings.
(2) See "2016 Compensation for Mr. Brennan and Mr. Anderson" on page 35 for a description of the decisions for Mr. Brennan and Mr. Anderson. Unlike other NEOs, Mr. Brennan's total direct compensation does not include LTIs or annual cash incentives. Mr. Anderson's 2016 compensation also did not include an annual cash incentive award.

Annual Cash Incentives
For each of the NEOs (other than Mr. Brennan and Mr. Anderson), the Committee established the following annual cash incentive targets as a percentage of base salary for 2016.

We pay annual cash incentive bonuses to drive the achievement of strong annual performance. The Committee endeavors to deliver a meaningful portion of cash compensation in the form of performance-based annual cash incentives. The Committee believes that doing so is critical because the opportunity for a meaningful cash award will, together with strong management and accountability, drive executives to individually and collectively achieve and exceed Alexion's annual objectives.

The Committee established the following annual cash incentive targets as a percentage of base salary for 2016. In evaluating decisions for 2016, the Committee seeks to deliver a minimum of 50% of target for threshold level performance and a maximum of 200% of target for achieving the highest level of performance:

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Named Executive Officer
2016 Target Cash Incentive as Percent of Base Salary
2016 Target Cash Incentive  
David R. Brennan
N/A
N/A
David J. Anderson, M.B.A.
N/A
N/A
Martin Mackay, Ph.D.
70%
$485,100
Julie O'Neill, M.B.A.
70%
€338,800
Carsten Thiel, Ph.D.
70%
CHF 489,300
David Hallal
120%
$1,440,000
Vikas Sinha, M.B.A., C.A.
70%
$499,800

As discussed in the Committee Chairman’s letter, the Committee determined the 2016 annual cash incentive awards for our named executive officers using the following framework:
BONUSFORMULAPIC2017PROXY.JPG
Based on the applied framework, the Committee determined that Financial Performance was achieved at a level of 86% and Strategic Performance was achieved at a level of 91.6%. Because Financial Performance and Strategic Performance were each weighted 50% by the Committee, overall funding for annual cash incentives was determined to be 88.8%.

2016 Financial Performance
For 2016, the financial performance measures used by the Committee were Revenue (weighted 65%) and Non-GAAP EPS (weighted 35%). See Appendix A attached to this proxy statement for a full reconciliation of non-GAAP results. The Committee selected the following target levels to align with our 2016 objective of driving both top line and bottom line performance across the Company. As shown in the table below, actual growth was below target growth with respect to each financial measure. As a result, the financial performance payout percentage for the NEOs was below target for 2016.  
Goal
2015
Actual
Performance Range
2016
Results
% of Target Performance
% of Target Funding
Threshold
Target
Maximum
Revenue (65%)
$2.604B
$2.883B
$3.100B
$3.275B
$3.039B
98%
85.9%
Non-GAAP EPS (35%)
$4.99
$4.65
$5.10
$5.75
$4.97
97.5%
85.8%
Financial Performance Funding: 86%
50% of Financial Performance Funding: 43%

Alexion’s 2016 Revenue goal was designed to drive strong Soliris performance as well as successful launches of both Strensiq and Kanuma. The amounts reported in the table above are provided on constant currency basis.

2016 Strategic Performance
The 2016 strategic performance measures covered all aspects of Alexion's business, and focused on three key areas: (1) research and development, (2) quality, manufacturing, supply and distribution, and (3) global execution. Most measures were detailed and granular, structured to drive performance to achieve a specific milestone which had been identified as integral to Alexion's operations. The Company establishes objectives that are set at targets and levels that the Committee believes require exceptional cross-

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functional performance and execution to achieve. The Committee weighted each factor and the overall assessment of achievement was made by the Committee in its collective business judgment:
  Strategic Objectives (1)
Weight
% of Target Funding
Research and Development
 
 
Regulatory submissions for eculizimab in Refractory Generalized Myasthenia Gravis (gMG) in the U.S., EU and Japan; enrollment targets in multiple studies, including phase 3 study for Relapsing Neuromyelitis Optica Spectrum Disorder (NMOSD); data read outs for multiple studies, including gMG and NMOSD; initiate multiple studies, including for ALXN 1210 and ALXN 6000
40%
82.6%
Quality, Manufacturing, Supply, and Distribution
 
 
Ensure ongoing supply for clinical programs; increase inventory levels for commercial products; support previous product recalls and investigations
30%
110%
Global Execution
 
 
Enact process efficiencies; launch corporate values initiative; ongoing implementation to align the organization, leaders and people to a consistent corporate culture; prepare and file new patent applications and advance patent strategy; ensure full cooperation with SEC/DOJ investigation; launch new Code of Ethics and Business Conduct, Quality Policy and related training programs
30%
85%
Strategic Performance Funding:
 
91.6%
50% Strategic Performance Funding:
 
45.8%
  We have not disclosed the target numbers or actual performance against each target. We believe that disclosing such detail will result in competitive harm to us. Such information represents confidential business information that could place us at a competitive disadvantage because it provides insight into our long-term strategic plan and financial objectives.
Individual Performance and Contribution
In addition to considering Company performance, the Committee also considered the individual performance of each NEO and the NEO's contributions in achieving the corporate objectives.
Generally, the currently employed NEOs received payouts at the level of funding determined by the Committee, approximately 88% of target funding.
Dr. Mackay
Dr. Mackay led research and development initiatives that are expected to support long-term programs and commercial opportunities, including ALXN1210 and ALXN6000. The Committee also considered clinical study readouts during 2016, including gMG, and enrollment objectives. Dr. Mackay received an annual cash incentive award consistent with the Committee's approved funding levels.
Ms. O'Neill
Ms. O'Neill's actual cash incentive, above funding levels, was in recognition of her strong performance. Specifically, Ms. O'Neill met or exceeded inventory and supply objectives, including clinical study supply objectives.
Dr. Thiel
Dr. Thiel was awarded an annual cash incentive at the Committee's approved funding levels, which took into account 2016 commercial performance.

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Determination of 2016 Annual Cash Incentive Awards
Based on the achievement of the 2016 financial and strategic goals, the annual cash incentive awards paid to our NEOs for 2016 were as follows.
Named Executive Officer
2016 Target
Annual Cash
Incentive Paid
% of Target
David Brennan (1)
N/A
N/A
N/A
Dave Anderson (1)
N/A
N/A
N/A
Martin Mackay, Ph.D
$485,100
$426,000
88%
Julie O'Neill
€338,800
€339,000
100%
Carsten Thiel, Ph.D.
CHF 489,000
CHF 430,000
88%
David Hallal (2)
$1,440,000
$0
0%
Vikas Sinha, M.B.A., C.A. (2)
$499,800
$0
0%

(1)
Mr. Brennan and Mr. Anderson were appointed Interim CEO and CFO, respectively, in December 2016, and did not receive a cash incentive awards for 2016.
(2)
As a result of his departure in December 2016, Mr. Hallal did not receive a cash incentive award with respect to 2016 performance. Mr. Sinha was not paid a cash incentive award in respect of 2016, but received severance in connection with his departure in December 2016 according to the terms of his existing employment agreement, which included payment of a severance amount equal to 1.5 times the sum of his annual base salary and his target 2016 annual cash incentive award.
2016 Long-Term Incentive Awards
The Committee believes that long-term incentive awards (LTIs) are a critical element of compensation. Each LTI award is a variable component of compensation and no individual, including any NEO, is guaranteed to receive an award or a certain value in respect of his awards. The Committee believes that its practice of granting LTI awards to Alexion executives has contributed to our long-term successful performance.
The Committee has not established formal guidelines for LTI award grants to our executives, including our NEOs. In determining LTI awards for executives, the Committee considers:
n peer group market data;

n the individual's contribution and potential contribution to Alexion's growth and financial results;

n the value of proposed awards;

n corporate performance; and

n the individual's level of responsibility within Alexion.

As is the case when the amount of base salary and annual cash incentive opportunity is determined, when determining LTI grant values, a review of all the executive's compensation is conducted to ensure that an executive's total compensation conforms to our overall philosophy and objectives.
In 2016, the Committee sought to deliver LTI awards in a combination of performance share units, or "PSUs" (25% of the aggregate LTI value at grant), stock options (50%) and restricted stock units, or "RSUs" (25%). The Committee approved LTI awards for the NEOs in the amounts set forth in the table under the heading "Grants of Plan-Based Awards." Generally, RSUs vest over four years in equal annual

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installments and stock options vest 25% on the first anniversary of the grant date and 1/16th every three months thereafter. PSU awards are subject to a variety of performance criteria (as described below). Operational PSUs are earned based on a one-year performance period, and once earned, vest over three years in equal annual installments, while TSR PSUs vest at the end of a three-year performance period. The Committee believes that the combination of stock options, PSUs and RSUs effectively balances the goals of incentivizing and rewarding shareholder value creation while supporting our talent retention objectives:
n Stock options and PSUs inherently incentivize shareholder value creation, since option holders realize no value unless our stock price rises after the option grant date and the value of PSUs is tied directly to Alexion's financial performance and TSR performance.

n For 2016, the Committee weighted stock options most heavily because it believed our stock option award program in particular has contributed significantly to our strong performance record, which in turn has generally made our stock option awards valuable over the long-term and effective in recruiting, motivating and retaining skilled executives.

n RSUs offer more modest upside potential than stock options but align pay and company performance as reflected in our share price. In addition, during periods of stock market declines or modest or no growth, RSUs are more likely to support our talent retention objectives.

As highlighted in the letter from the Chairman of the Committee, in 2017, the mix of LTI awards was re-allocated by the Committee as follows: PSUs (50%), stock options (20%) and RSUs (30%).
Performance Share Units (PSUs)
The Committee introduced PSUs to our compensation program in 2013 to supplement Alexion’s performance-based compensation. In 2016, the Committee reviewed the PSU program and decided to maintain the existing overall design. The PSUs granted in 2016 had the following features:
n The 2016 PSUs are only earned if pre-established financial targets are achieved and the Company's share performance is aligned with or exceeds the performance of the Nasdaq Biotechnology Index, which the Committee viewed as a relevant and appropriate benchmark.

n Eighty percent (80%) of the PSUs that could be earned had a one-year performance period with the amount actually earned dependent upon the achievement of Alexion's revenue and non-GAAP EPS targets, which were equally weighted. We refer to these PSUs as the "operational PSUs." See Appendix A attached to this proxy statement for a full reconciliation of non-GAAP results.

n Upon satisfaction of one to four R&D milestones, an additional number of PSUs, ranging from 1.25 to 4.5 of the operational PSUs, could be earned. The milestones were each selected to incentivize executives to achieve aggressive R&D milestones. In order to earn additional shares for achievement of R&D milestones, threshold performance must be achieved for one or both of the operational PSU metrics (Revenue or non-GAAP EPS).

n Twenty percent (20%) of the PSUs that could be earned had a three-year performance period with the amount actually earned dependent on Alexion's relative TSR performance compared to the Nasdaq Biotechnology Index over the three-year period. We refer to these PSUs as the "TSR PSUs."


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We place significant weight on corporate revenue and non-GAAP EPS to measure Alexion's performance. We also believe that our shareholders and analysts rely heavily on the same financial metrics to understand the underlying condition, and the performance of, our business. The Committee believed revenue and non-GAAP EPS were the best metrics to incentivize executive performance for our PSU awards, because:
n Commensurate with our commercial success and investment in Alexion's future, almost all aspects of our business are growing and how effectively we execute financial planning and financial discipline is a strong indicator of company performance, measured in its impact on non-GAAP EPS.

n The Committee decided that setting performance objectives using these metrics would be reliable indicators of company performance, since based on past experience revenues would grow commensurate with growth in the number of patients receiving our products and non-GAAP EPS would increase commensurate with execution of a financial plan and financial discipline taking into account the capital necessary to operate our expanding global business.

n At the time when the PSUs were granted, the Committee chose a one-year performance period and revenue and non-GAAP EPS metrics for 80% of the PSUs because the Committee believed that shareholders emphasized these same operational metrics when evaluating our performance on a year-to-year basis. Successful achievement would also be expected to result in improved stock performance and value to our shareholders.

The R&D milestones were goals that if achieved or achieved on an accelerated basis, would deliver significant and meaningful value to shareholders.
The Committee believed that a PSU Award that is tied to relative TSR further aligns our executives’ interests with the interests of our shareholders. The Committee selected a three-year performance period to ensure that stock performance incentives were aligned with a longer-term view, and that fluctuations during any single year would not disproportionately impact results for the benefit or detriment of the program.
2016 Operational PSUs     
The following table shows the performance metrics and weighting that the Committee set for our 2016 operational PSUs and our degree of attainment of the goals and resulting outcome. As indicated below, all 2016 operational PSUs were forfeited based on actual 2016 performance levels.
Goal
2015
Actual
Performance Range
2016
Actual
Performance Level % of Target
Result
Threshold
Target
Maximum
Revenue (1)
$2.604B
$3.050B
$3.110B
$3.275B
$3.039B
Below Threshold
All Operational PSUs Forfeited
Non-GAAP EPS (1)
$4.99
$5.00
$5.25
$5.75
$4.97
Below Threshold
(1) The metrics exclude certain events to ensure that performance levels are not distorted by one-time or out of the ordinary events, such as an acquisition or net revenues generated from an acquisition.
2016 R&D Milestones
The Committee selected four aggressive R&D milestones that aimed to prioritize Alexion's resources across the Company. The milestones related to ALXN1210 (2 milestones), Soliris for the treatment of gMG and SBC-103. The Committee recognized that each milestone would be achieved during 2016 and the additional shares would only be earned as a result of exceptional performance, leadership and execution. Further, if any one of the four milestones were achieved, the Committee believed that significant value would be created for our shareholders.

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None of the R&D milestones were achieved in 2016, and the threshold targets for the operational PSUs were not achieved. Accordingly, no PSUs were earned with respect to the R&D milestones.
2016 TSR PSUs
The TSR PSUs are based on the Company’s three-year TSR performance relative to the median three-year TSR performance of the companies in the Nasdaq Biotechnology Index. The number of TSR PSUs that can be earned will be determined as follows (with interpolation between points):
Alexion TSR Performance vs. Peer Group Median
Payout as a % of Target
> Median + 100%
200%
For every 1% achieved above median
+1%
Alexion TSR performance equals the median
100%
For every 1% decline below median, up to - 25%
-2%
Below median by - 25%
50%
<  Median - 25%
-%
2014 TSR PSUs
In 2014, the Committee granted TSR PSUs based on the Company’s three-year TSR performance, from January 1, 2014 to December 31, 2016, relative to the median three-year TSR performance of the companies in the Nasdaq Biotechnology Index. The Committee determined that the Company's TSR outperformed the Index by approximately .2%. As a result, Dr. Mackay earned the target award, or 460 shares. No other NEOs earned 2014 TSR PSUs.
Termination and Change of Control-Based Compensation
We provide severance payments and other benefits to our executives under written employment agreements if their employment is terminated without cause or in certain other instances, including in connection with a change of control. In February 2016, the Committee approved new executive employment agreements, including for certain of our NEOs, to among other things, eliminate all 280G gross-up provisions and increase cash severance terms based on market practices. Severance provisions related to a change of control assist in retaining high quality executives and keeping them focused on their responsibilities during any period in which a change of control may be contemplated or pending. We also provide for accelerated vesting of outstanding equity awards upon a change of control for awards granted prior to January 1, 2016. In 2016, the Committee eliminated automatic single-trigger equity acceleration upon a change of control in executive employment agreements. With respect to awards granted in 2016 and thereafter, our executive employment agreements now provide for double-trigger acceleration of vesting only in the event of a qualifying termination of employment following a change of control. More details on the severance payments and benefits our continuing NEOs are entitled to receive are provided under "Potential Payments Upon Termination or Change of Control" on page 56.
Departures of and Separation Agreements with Mr. Hallal and Mr. Sinha
In connection with Mr. Hallal's resignation in December 2016, he entered into a separation agreement with the Company under which he received a cash payment of approximately $3.65 million, payable in quarterly installments over two years beginning in January 2017. All of Mr. Hallal's unvested LTI awards were cancelled as of the date of his departure, having a value at such time of approximately $12.2 million. The separation agreement with Mr. Hallal contains provisions concerning noncompetition and indemnification, and covenants not to solicit or disparage, and to cooperate with the Company.
In connection with Mr. Sinha's departure in December 2016, he received severance compensation in accordance with the terms of his employment agreement providing for compensation in the event of his

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termination by the Company without cause. His employment agreement provided for the acceleration of any then outstanding stock options and restricted stock units, and payments for 18 months of COBRA coverage plus a severance payment of $1,820,700 equal to 1.5 times the sum of (a) Mr. Sinha's then current base salary and (b) Mr. Sinha's 2016 target bonus. Mr. Sinha's unearned PSU awards were forfeited. Mr. Sinha's employment agreement also contains provisions concerning noncompetition and indemnification, and covenants not to solicit or disparage, and to cooperate with the Company.
Personal Benefits
Our NEOs are eligible for the benefit programs we provide to all employees, such as medical, dental, vision, life and disability insurance benefits. Our U.S.-based named executive officers are eligible to participate in our tax-qualified 401(k) plan on the same basis as other U.S. eligible employees. Dr. Thiel is entitled to participate in our Swiss Pension Plan, which is a retirement plan for eligible Swiss employees and Ms. O'Neill is entitled to participate in an Irish defined contribution pension plan that we maintain for our eligible Irish employees. In general, we only provide limited perquisites to executives that are also available to other employees, such as relocation costs. In connection with his expatriate assignment to the United States, Dr. Thiel entered into a letter agreement with the Company that described certain benefits to which he is entitled to during the assignment and his relocation to the U.S. for this assignment, including temporary housing and a housing allowance, educational and cultural assistance, the movement of household goods, and tax equalization payments. In connection with his assuming the position of our Interim CEO, we provided Mr. Brennan with a housing allowance of $5,000 a month and reimbursement for transportation expenses due to the fact that he lives outside of Connecticut and would need to be close to the Company’s headquarters to serve the Company in this role. We also provide Mr. Anderson with a monthly allowance of $5,000 for lodging, transportation and related expenses. The amounts reimbursed to Dr. Thiel and the allowances and reimbursements for Mr. Brennan and Anderson during 2016 are included in the “Summary Compensation Table” below and a description of each executive’s agreement is included under “Narrative Disclosure to the Summary Compensation Table and Grants of Plan-Based Awards Table” below.
Stock Ownership Guidelines
Our executives and directors are subject to stock ownership guidelines. Shares owned by the individual, unvested restricted stock and unvested restricted stock units count towards the ownership goal. Unearned PSUs do not count towards the ownership goal. Directors and officers are required to meet these guidelines within five years of becoming subject to them. All of our executives and directors currently satisfy the guidelines.

Executive Officers. Our current policy requires Alexion's executives to own shares with a value equal to a specific multiple of such executive's base salary as indicated in the table below:
Officer Level
Market Value as a
Multiple of
Base Salary
Chief Executive Officer
6x
Executive Vice Presidents and Senior Vice Presidents reporting to the CEO
3x
Other Senior Vice Presidents
1x
Directors . Directors are required to own shares with a value equal to 5 times the annual director cash retainer, which was $95,000 for 2016.

Anti-hedging and Anti-pledging Policy
Our insider trading policy prohibits all directors and employees, including our executives, from pledging or engaging in hedging or similar transactions in Alexion's stock, such as prepaid variable forwards, equity swaps, collars, puts, calls, and short sales.

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Recoupment Policy
We have adopted an executive compensation recoupment policy, or "clawback," that requires our independent directors to consider whether to seek reimbursement of any bonus or incentive awarded to a Section 16 officer if and to the extent: (a) the amount of the bonus or incentive compensation was calculated based upon the achievement of certain financial results that were subsequently the subject of a restatement, (b) the executive engaged in intentional misconduct that caused or partially caused the need for the restatement, and (c) the amount of the bonus or incentive compensation that would have been awarded to the executive had the financial results been properly reported would have been lower than the amount actually awarded. In July 2015, the SEC proposed rules that would require US public companies to adopt broad clawback policies and make new related disclosures. These rules are not yet final. The Board will monitor the status of these rules and will adopt a new recoupment policy, or amend its existing one, once the rules become final.
Compensation Risk Assessment
The Committee oversees an annual risk assessment of the Company’s compensation programs to determine whether such programs are reasonably likely to have a material adverse effect on the Company. For 2016, the Committee concluded that the Company’s compensation programs were appropriately balanced to mitigate compensation-related risk with cash and stock elements, financial and non-financial goals, formal goals and discretion, and short-term and long-term rewards. The Company also has policies to mitigate compensation-related risk, including stock ownership guidelines, clawback provisions, and prohibitions on employee pledging and hedging activities. Furthermore, the Committee believes the Company’s policies on ethics and compliance along with its internal controls also mitigate against unnecessary or excessive risk taking.
Section 162(m) Policy
Under Section 162(m) of the Internal Revenue Code, publicly held corporations are denied deducting as an expense for federal income tax purposes total compensation in excess of $1 million paid to certain executive officers. However, Section 162(m) provides an exception for certain qualifying "performance-based" compensation. The Committee believes that its primary responsibility is to provide a compensation program that attracts, retains and rewards the executive officers necessary for the company’s success, as described above. As a result, we currently and may in the future award compensation that is not fully deductible under Section 162(m) in order to ensure competitive levels of total compensation for our executive officers and when we otherwise view such compensation as consistent with our compensation policies. We have structured our stock option grants and certain of our PSUs in a manner that is intended to qualify them as "performance-based" compensation under Section 162(m). Our annual cash incentives and time-based restricted stock units do not qualify as performance-based under Section 162(m). The Committee reserves the right to grant compensation that is not eligible performance-based compensation.
Report of Leadership and Compensation Committee
The Committee of the Board reviewed and discussed the Compensation Discussion and Analysis required by Item 402(b) of Regulation S-K with management and, based on such review and discussions, the Committee recommended to the Board that the Compensation Discussion and Analysis be included in this proxy statement.
The Leadership and Compensation Committee
Jack T. Mollen, Chairman
M. Michele Burns
R. Douglas Norby
Alvin S. Parven

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Summary Compensation Table
The following table sets forth information regarding the compensation awarded to, earned by or paid to each of our NEOs during the fiscal years ended December 31, 2016 , and (where applicable) 2015 and 2014 .
Name and Principal Position
Year
Salary
($)
Other Bonus
 
Stock  
Awards
($) (2)
Option Awards
($) (2)
Non-Equity Incentive Plan Compen-sation
($) (3)
Change in
Pension Value
($) (4)
All Other Compen-sation
($) (5)(6)
Total
($)
David R. Brennan
12/31/2016
230,769
 
115,948
112,726
92,337
551,780
Former Interim Chief Executive Officer (1)
 
 
 
 
 
 
 
 
 

 
 
 
 
 
 
 
 
 

David J. Anderson, M.B.A.
12/31/2016
175,000
 
999,930
2,500
1,177,430
Executive Vice President and Chief Financial Officer (1)
 
 
 
 
 
 
 
 
 

 
 
 
 
 
 
 
 
 

Martin Mackay, Ph.D.
12/31/2016
693,000
 
1,716,538
1,302,919
426,000
31,524
4,169,981
Executive Vice President, Global Head of Research and Development
12/31/2015
670,000
 
1,907,736
1,378,254
700,000
24,000
4,679,990
12/31/2014
650,000
 
2,738,030
2,740,620
690,000
23,000
6,841,650
Julie O'Neill, M.B.A.
12/31/2016
509,023
 
1,716,538
1,302,919
357,000
213,443
4,098,923
Executive Vice President of Global Operations (7)(10)
 
 
 
 
 
 
 
 
 

Carsten Thiel,
 Ph.D
12/31/2016
686,069
 
1,436,218
1,302,919
438,000
324,746
4,187,952
Executive Vice President and Chief Commercial Officer (10)
12/31/2015
676,864
252,248
(8)  
1,747,557
1,362,630
620,000
1,269,193
306,648
6,235,140
12/31/2014
218,768
504,850
(9)  
4,195,620
1,547,257
135,000
331,638
56,188
6,989,321
David Hallal
12/31/2016
1,153,846
 
5,947,361
5,505,882
529,252
13,136,341
Former Chief Executive Officer and Chief Operating Officer (1)

12/31/2015
1,048,461
 
6,926,092
4,906,068
1,815,000
24,165
14,719,786
12/31/2014
696,058
 
3,268,430
2,740,620
792,000
17,500
7,514,608
Vikas Sinha, M.B.A., C.A.
12/31/2016
686,539
 
1,856,698
1,302,919
1,875,063
5,721,219
Former Executive Vice President and Chief Financial Officer (1)
12/31/2015
670,000
50,000
(8)  
1,907,736
1,378,254
700,000
30,464
4,736,454
12/31/2014
640,000
 
2,914,830
2,740,620
690,000
23,000
7,008,450

(1)
The appointments of Mr. Brennan and Mr. Anderson occurred on December 11, 2016. The employment of each of Mr. Hallal and Mr. Sinha terminated on December 11, 2016. Mr. Hallal's unvested equity awards, including all 2016 equity

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awards reported in the table, were forfeited upon his termination of employment on December 11, 2016. Mr. Brennan and Mr. Anderson were not named executive officers in 2015 or 2014 therefore their compensation related to 2015 and 2014 is not disclosed.
(2)
Amounts represent the grant date fair value of equity awards granted to the named executive officer in each of 2016 , 2015 , and 2014 (where applicable) calculated in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718 ("FASB ASC Topic 718"), disregarding the effect of estimated forfeitures. See Notes 1 and 12 to our audited consolidated financial statements in our Annual Report on Form 10-K for the year ended December 31, 2016 for details as to the assumptions used to determine the fair value of the awards. See our audited consolidated financial statements in our Annual Reports on Form 10-K for the years ended December 31, 2016 , 2015 and 2014 for details as to the assumptions used to determine the fair value of the awards. The stock awards reported include the grant dat e fair value of RSUs and PSUs, including TSR PSUs, each of which is more fully discussed in the Compensation Discussion and Analysis. For PSUs, the amounts represent the grant date fair value based on the probable outcome of the performance conditions. For 2016, the grant date fair value of PSUs (other than TSR PSUs) was $532,608 for each of Dr. Mackay, Ms. O’Neill, Mr. Sinha and Dr. Thiel and $2,312,640 for Mr. Hallal, which amounts would be $5,087,808 and $21,956,204, respectively, if the highest level of performance conditions were achieved. 80% of such PSUs were forfeited without consideration due to failure to achieve the operational performance metrics associated with such awards, as described in more detail under "Performance Share Units (PSUs)" on page 40. The grant date fair value for TSR PSUs included for 2016 is $202,810 for each of Dr. Mackay, Ms. O’Neill, Mr. Sinha and Dr. Thiel and $831,521 for Mr. Hallal, which amounts would be $405,620 and $1,663,042, respectively, if the highest level of performance conditions were achieved. Messrs. Brennan and Anderson were not granted PSUs in 2016.
(3)
Amounts represent the annual incentive bonus earned by each of the named executive officers for services performed in 2016 , 2015 , and 2014 (where applicable). The annual incentive bonuses were paid in February or March of the calendar year following the year to which the bonus relates ( e.g., the 2016 annual incentive bonus was paid in February 2017). Neither Mr. Brennan nor Mr. Anderson received an annual incentive bonus for 2016. Messrs. Hallal and Sinha did not receive an annual incentive bonus for 2016 due to their termination of employment.
(4)
Amounts represent the aggregate change in actuarial present value of accumulated pension benefits under our Swiss Pension Plan in excess of the plan asset investments for Dr. Thiel , calculated in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 715 ("FASB ASC Topic 715"). In 2016 the change in the actuarial present value of the accumulated pension benefit did not exceed the change in plan assets for Dr. Thiel, and as such no compensation is included in the table above.
(5)
Amounts represented in this column include the following: for 2016, Alexion's 401(k) matching contributions of $15,900 for Dr. Mackay. and Messrs. Hallal and Sinha, and Alexion's matching contributions of $132,609 for Ms. O'Neill 's for her participation in the Irish defined contribution plan. Amounts also include Alexion's matching contributions under our non-qualified deferred compensation (NQDC) plan of $8,100 for each of Messrs. Hallal and Sinha, and Dr. Mackay. Amounts for 2016 also include $124,215 and $54,543 paid to Dr. Thiel and Ms. O'Neill for housing allowances, respectively, $124,118 on behalf of Dr. Thiel for tax gross ups and support associated with his expat status, $34,169 for relocation costs, $6,772 for car allowances, $9,471 of child care allowances, $1,000 of tax preparation fees, and $25,000 of home leave allowance for Dr. Thiel. Other mounts also include $2,521 for Mr. Hallal and Sinha and $7, 524 for Dr. Mackay for group term life insurance premiums paid by Alexion, $380 of gym reimbursements for Mr. Sinha, $46,154 and $27,461 for vacation payouts of Mr. Hallal and Sinha respectively, $26,291 for car allowances paid for Ms. O'Neill, and $2,500 for housing allowances for Mr. Anderson and Brennan. Amounts in 2016 also include pro-rated Director fees of $89,837 that Mr. Brennan was paid for his service as a Director prior to his appointment of Interim CEO on December 11, 2016; Amounts represented in this column for 2015 include: Alexion's 401(k) matching contributions of $15,900 for each of Dr. Mackay, and Messrs. Hallal and Sinha. Amounts also include Alexion's matching contributions under our non-qualified deferred compensation (NQDC) plan of $2,100 for Mr. Hallal and $8,100 for each of Dr. Mackay and Mr. Sinha. Other compensation in 2015 includes $122,241 paid to Dr. Thiel for relocation expenses, $27,848 paid to Dr. Thiel for car allowance, and $36,672 paid to Dr. Thiel related to tax gross up payments. Amounts represented in this column for 2014 include: Alexion's 401(k) matching contributions of $15,600 for each of Dr. Mackay and Messrs. Hallal and Sinha, and Alexion's matching contributions under our NQDC plan of $7,400 for each of Dr. Mackay and Mr. Sinha, and $1,900 for Mr Hallal, $43,911 for Alexion's employer contribution to the Swiss Pension Plan for Dr. Thiel.
(6)
Included within "All Other Compensation" for 2016 are the following amounts payable to Mr. Sinha and Mr. Hallal according to the terms of their separation agreements executed December 11, 2016. Mr. Hallal's amounts include the first quarterly installment of his separation agreement payment.
Participant
Total Separation Amounts
Vikas Sinha
$1,820,700
David Hallal
$456,577

(7)
Ms. O'Neill was not a named executive officer in 2015 or 2014 therefore her compensation related to 2015 and 2014 is not disclosed.
(8)
Amounts represent a special bonus award paid to Mr. Sinha for his contribution to the Company’s acquisition of Synageva in 2015.
(8)
Amount represents the second installment of Mr. Thiel's sign-on bonus paid in 2015.
(9)
Amount represents the first installment of Mr. Thiel's sign-on bonus paid in 2014.
(10)
Dr. Thiel's figures for salaries, bonus, and all other compensation were converted from Swiss Francs to U.S. dollars using the conversion rate of .9815, 1.00899, and 1.0097 for 2016, 2015, and 2014 compensation, respectively. Dr. Thiel's figures for non-equity incentive plan bonus are at his Board approved USD amounts for years 2016, 2015, and 2014 respectively. Ms. O'Neill's figures for salaries, bonus, and all other compensation were converted from Euro to U.S. dollar using the conversion rate of 1.0517 for 2016. Ms. O'Neill's figures for non-equity incentive plan bonus are at her Board approved USD amounts for 2016.


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Grants Of Plan-Based Awards In Fiscal 2016
The following table sets forth information regarding plan-based awards made to each of our NEOs during the fiscal year ended December 31, 2016 .
 
 
 
Estimated Possible Payouts Under Non-Equity Incentive Plan Awards

Target ($)
Estimated Possible Payouts Under Non-Equity Incentive Plan Awards

Maximum ($)
Estimated Possible Payouts Under Equity Incentive Plan Awards
All Other Stock Awards:
All Other Option Awards:
 
 
Name
Grant Date
 
Threshold (#)
Target (#)
Maximum (#)
Number of shares of stock or units
(#)
Number of Securities Underlying Options (#)
Exercise or Base Price of Option Awards ($/Sh)
Grant Date Fair Value of Stock and Option Awards
($) (7)
David R. Brennan
5/11/16
(1)  
835
112,726
 
5/11/16
(1)  
2,294
138.86
115,948
David J. Anderson, M.B.A
12/12/16
(4)  
 
8,689
999,930
Martin Mackay, Ph.D
2/26/16
(2)  
485,100
970,200
 
2/26/16
(3)  
 
31,000
140.16
1,302,919
 
2/26/16
(4)  
 
7,000
981,120
 
2/26/16
(5)  
 
1,900
3,800
17,100
532,608
 
2/26/16
(6)  
 
500
1,000
2,000
202,810
Julie O'Neill M.B.A.
2/26/16
(2)  
356,316
712,632
 
2/26/16
(3)  
 
31,000
140.16
1,302,919
 
2/26/16
(4)  
 
7,000
981,120
 
2/26/16
(5)  
 
1,900
3,800
17,100
532,608
 
2/26/16
(6)  
 
500
1,000
2,000
202,810
Carsten Thiel, Ph.D
2/26/16
(2)  
480,248
960,496
 
2/26/16
(3)  
 
31,000
140.16
1,302,919
 
2/26/16
(4)  
 
5,000
700,800
 
2/26/16
(5)  
 
1,900
3,800
17,100
532,608
 
2/26/16
(6)  
 
500
1,000
2,000
202,810
David Hallal
2/26/16
(2)  
1,440,000
2,880,000
 
2/26/16
(3)  
 
131,000
140.16
5,505,882
 
2/26/16
(4)  
 
20,000
2,803,200
 
2/26/16
(5)  
 
8,251
16,500
74,251
2,312,640
 
2/26/16
(6)  
 
2,050
4,100
8,200
831,521
Vikas Sinha, M.B.A., C.A.
2/26/16
(2)  
499,800
999,600
 
2/26/16
(3)  
 
31,000
140.16
1,302,919
 
2/26/16
(4)  
 
8,000
1,121,280
 
2/26/16
(5)  
 
1,900
3,800
17,100
532,608
 
2/26/16
(6)  
 
500
1,000
2,000
202,810

(1) Mr. Brennan's 2016 grants are due to his position as a Director and are not related to his position as Interim CEO that he was appointed as on December 11, 2016.
(2)
The amount represents the annual incentive bonus target for the NEO for 2016 multiplied by such individual's base salary. See "Annual Cash Incentives – Drive Performance" in the Compensation Discussion and Analysis. Actual amounts paid to the NEO for 2016 are included in the "Non-Equity Incentive Plan Compensation" column under the "Summary Compensation Table" above. The maximum amount an NEO may earn is 200% of his target bonus amount. Ms. O'Neill's figures are converted from EUR to USD at a rate of 1.0517.

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(3)
The amount includes the number of shares of common stock subject to option awards granted to the NEO in 2016 .
(4)
The amount includes the number of shares of common stock underlying awards of RSUs granted to the NEO in 2016 .
(5)
The amount represents the estimated possible payouts for PSUs, other than TSR-PSU Awards, granted to the NEO in 2016 . Mr. Hallal had the opportunity to earn between 8,240 and 82,400 additional awards based on the achievement of four different research and development (R&D) milestones in 2016. Mr. Sinha, Ms. O'Neill, Dr. Mackay and Dr. Thiel had the opportunity to earn between 1,920 and 19,200 additional awards based on the achievement of four different R&D milestones in 2016. These PSUs were forfeited without consideration due to failure to achieve the specified performance metrics, as described in more detail under "Performance Share Units (PSUs)" on page 40.
(6)
The amount represents the estimated possible payouts for TSR PSUs granted to the NEO in 2016 . See "Performance Share Units (PSUs)" on page 40. TSR Awards are fully vested when earned.
(7)
The amount represents the grant date fair value of options, RSUs and PSUs granted in 2016 calculated in accordance with FASB ASC Topic 718, disregarding the effect of estimated forfeitures. For PSUs, including TSR PSUs, the amounts represent the grant date fair value based on the probable outcome of the performance conditions. See footnote 2 to the “Summary Compensation Table” above for the amounts included in respect of PSUs and the amounts that would be included if the highest level of performance conditions were achieved. See Notes 1 and 12 to our audited consolidated financial statements in our Annual Report on Form 10-K for the year ended December 31, 2016 for details as to the assumptions used to determine the fair value of the awards.


Narrative Disclosure to the Summary Compensation Table and Grants of Plan-Based Awards Table

Employment Agreements
We have entered into employment agreements with each of our NEOs, which were in effect during fiscal year 2016. The material terms of the employment agreements with Mr. Brennan, Mr. Anderson, Dr. Mackay, Ms. O’Neill and Dr. Thiel are described below. In addition, the employment agreements with Mr. Anderson, Dr. Mackay, Ms. O’Neill and Dr. Thiel provide for certain payments and benefits upon terminations of employment, as described below under “-Potential Payments Upon Termination or Change of Control.” As discussed above, the employment agreements with Messrs. Hallal and Sinha were terminated prior to the end of fiscal year 2016.
David Brennan
On December 12, 2016, Mr. Brennan entered into an employment agreement upon his appointment as Interim CEO. Mr. Brennan's agreement included a term expiring 26 weeks from the effective date or earlier upon the hiring of a permanent CEO, with automatic 1-month extensions if neither party gave written notice of non-renewal 30 days before end of term. Either party could terminate the agreement for any reason with 30-days’ written notice. Pursuant to the employment agreement, Mr. Brennan was entitled to a $6 million annual base salary, and was eligible to receive stock-based awards equal to the amount of awards he would be entitled to receive as a non-employee director. The agreement also entitled Mr. Brennan to a monthly housing allowance of $5,000. Under the agreement, Mr. Brennan was not entitled to participate in our annual cash incentive program. The agreement with Mr. Brennan terminated on March 27, 2017, following the appointment of Mr. Hantson as CEO, and Mr. Brennan continues to serve as a director of the Board. The agreement provides for recoupment of compensation in accordance with the Company's recoupment policy. The agreement with Mr. Brennan did not provide for any payments or benefits in connection with a termination of employment.

David Anderson
On December 12, 2016, Mr. Anderson entered into an employment agreement upon his appointment as Executive Vice President and CFO. Mr. Anderson's agreement includes a one year term, which automatically extends for 3-month periods if neither party gives written notice of non-renewal 30 days before the end of the term. Mr. Anderson is entitled to a $4.55 million annual base salary. Under the

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agreement, Mr. Anderson is not eligible for an annual incentive bonus, unless the Committee determines otherwise. The agreement entitles Mr. Anderson to receive an allowance for lodging, transportation and similar costs of $5,000 per month. Mr. Anderson is eligible to receive stock-based awards under the Company’s equity incentive plan in the discretion of the Board or the Committee and to participate in the Company’s employee benefit plans as in effect for employees generally. The agreement provides for recoupment of compensation in accordance with the Company's recoupment policy.
Martin Mackay
On February 26, 2016, Dr. Mackay entered into an employment agreement with the Company. The agreement includes a three- year term, which automatically extends at the end of such term for additional one- year periods unless 60 days prior notice is given by either party. The agreement entitles Dr. Mackay to an annual base salary of $693,000, which is subject to increase in the discretion of the Company. The agreement also entitles Dr. Mackay to a target annual performance bonus of 70% of his annual base salary, with the actual amount of the bonus earned determined by the Board or the Committee and paid in accordance with the Company’ s management incentive bonus plan. Under the agreement, Dr. Mackay is eligible to receive stock-based awards under the Company’s equity incentive plan in the discretion of the Board or the Committee and to participate in the Company’s employee benefit plans as in effect for employees generally. The agreement provides for recoupment of any incentive-based compensation in accordance with the Company's recoupment policy.
Julie O’Neill
Ms. O’Neill is party to an employment agreement with Alexion Pharma International Operations Unlimited Company dated as of February 4, 2014, which governs the terms and conditions of her employment in Ireland. Under this agreement, Ms. O’Neill is entitled to receive an annual base salary, which has subsequently been increased, and a target annual bonus equal to 70% of her annual base salary, the amount of which will be determined by the Company, based on the Company’s performance and the performance of the executive and her department. The agreement also provides for certain other benefits for Ms. O’Neill, including an annual car allowance of approximately 2,100 Euros a month, participation in an Irish defined contribution pension plan and other benefit plans of the company and tax equalization payments for any work done outside of Ireland.
Carsten Thiel
Dr. Thiel is party to an employment agreement with Alexion Pharma GmbH dated as of August 12, 2014, which governs the terms and conditions of his employment in Switzerland. Under this agreement, Dr. Thiel is entitled to receive an annual base salary, which has subsequently been increased, and a target annual bonus equal to 50% of his annual base salary, the actual amount of which will be determined by the Company, based on the Company’s performance and the performance of the executive and his department. Dr. Thiel is also entitled to an annual car allowance of 2,300 Swiss Francs a month.
On December 4, 2015, Dr. Thiel also entered into a letter agreement with the Company that governs the terms and conditions of his temporary expatriate assignment to the company in the U.S. Under the letter agreement, Dr. Thiel’s annual base salary was set at 675,000 Swiss Francs and he is entitled to a target annual bonus of 70% of his eligible earnings, with the actual amount of the bonus determined by the company based on company and individual performance. Under this agreement, Dr. Thiel is entitled to certain relocation benefits, including immigration support and reimbursement for a discovery trip to the U.S. for him and his spouse, a home finding trip for him and his spouse, cross-cultural and language training, air travel to the U.S. for him and his family at the start of the assignment and temporary accommodations,

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not to exceed 120 days in length, the use of a rental car, the movement of his household goods and temporary storage and certain education costs for his children and his spouse. He is also entitled to a lump sum payment of $20,000 to purchase or lease a car in the U.S., together with a gross-up for applicable taxes, a general moving allowance of $100,000, an annual housing allowance of $10,000 with respect to his home in Switzerland and $110,000 with respect to his home in the U.S. and an annual home leave allowance of $25,000. Dr. Thiel is also entitled to tax equalization payments, intended to place him in the same position with respect to his taxes as if he had not accepted the assignment, and tax consultation services. Dr. Thiel will be required to repay covered relocation benefits if his employment is terminated for cause or if he voluntarily terminates employment before the first anniversary of the date he commenced his expatriate assignment and will be required to repay 50% of them if such termination occurs after the first anniversary and before the second anniversary of the date of such assignment.

Fiscal Year 2016 Equity Awards
All of the PSUs, stock options and RSUs disclosed in the Grants of Plan-Based Awards table were granted under our Amended and Restated 2004 Incentive Plan, or 2004 Incentive Plan. All options were granted with an exercise price per share equal to the fair market value of our common stock on the date of grant, as determined by the Board in accordance with the terms of the 2004 Incentive Plan. Subject to the terms of our 2004 Incentive Plan and the option agreements issued in connection with these grants, all of the options are generally scheduled to vest 25% on the first anniversary of the grant date, and one-sixteenth every three months thereafter until fully vested over four years, RSUs are generally scheduled to vest 25% on each anniversary of the grant date, and all PSUs, to the extent earned in 2016, by the NEOs vest one-third in February 2016, and are scheduled to vest one-third on each of the next two anniversaries thereafter. TSR-PSU awards vest at the end of a three year performance period. Vesting of the awards, in each case, is generally subject to the NEO’s continued employment or other service with Alexion through the applicable vesting date.



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Outstanding Equity Awards At 2016 Fiscal Year-End
The following table sets forth information regarding equity awards held by our NEOs as of December 31, 2016 .
 
 
Option Awards
Stock Awards
Name
Grant Date
Number of Securities Underlying Unexercised Options (#) Exercisable
Number of Securities Underlying Unexercised Options (#) Unexercisable
 
Option Exercise Price ($)
Option Expiration
Date
Number of Shares or Units of Stock That Have Not Vested (#)
 
Market Value of Shares or Units of Stock That Have Not Vested ($)
(1)
Equity Incentive Plan Awards: Number of Unearned Shares, Units, or Other Rights That Have Not Vested (#)
 
Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares or Units or Other Rights of Stock That Have Not Vested ($)
(1)
David R. Brennan (10)
07/22/14
2,706
 
167.97
07/22/24
 
 
 
05/06/15
2,343
 
155.01
05/06/25
 
 
 
05/11/16
2,294
(11)  
138.86
05/11/26
835
(11)  
102,162
 
David J. Anderson
12/12/16
 
8,689
(4)  
1,063,099
 
Martin Mackay Ph.D
05/13/13
37,500
 
104.86
05/13/23
 
 
 
02/28/14
18,450
15,375
(3)  
176.80
02/28/24
1,500
(4)  
183,525
 
 
02/28/14
 
3,896
(5)  
476,676
 
 
02/28/14
 
 
460
(6)  
56,281
 
02/27/15
10,675
13,725
(3)  
180.37
02/27/25
3,825
(4)  
467,989
 
 
08/12/15
 
7,842
(7)  
959,469
 
 
08/12/15
 
 
430
(6)  
52,611
 
02/26/16
31,000
(3)  
140.16
02/26/26
7,000
(4)  
856,450
 
 
 
 
02/26/16
 
 
1,000
(6)  
122,350
Julie O'Neill M.B.A.
02/28/14
 
1,450
(5)  
177,408
 
 
03/01/14
13,750
6,250
(8)  
176.80
03/01/24
3,750
(2)  
458,813
 
 
03/01/14
45,000
(9)  
176.80
03/01/24
 
 
 
02/27/15
10,675
13,725
(3)  
180.37
02/27/25
3,825
(4)  
467,989
 
 
08/12/15
 
7,842
(7)  
959,469
 
 
08/12/15
 
 
430
(6)  
52,611
 
02/26/16
31,000
(3)  
140.16
2/26/26
7,000
(4)  
856,450
 
 
 
 
02/26/16
 
 
1,000
(6)  
122,350




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Option Awards
Stock Awards
Name
Grant Date
Number of Securities Underlying Unexercised Options (#) Exercisable
Number of Securities Underlying Unexercised Options (#) Unexercisable
 
Option Exercise Price
($)
Option Expiration
Date
Number of Shares or Units of Stock That Have Not Vested (#)
 
Market Value of Shares or Units of Stock That Have Not Vested
($) (1)
Equity Incentive Plan Awards: Number of Unearned Shares, Units, or Other Rights That Have Not Vested (#)
 
Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares or Units or Other Rights of Stock That Have Not Vested
($) (1)
Carsten Thiel, Ph.D
09/09/14
16,875
13,125
(3)  
161.37
09/09/24
8,000
(4)  
978,800
 
 
02/27/15
8,006
10,294
(3)  
180.37
02/27/25
2,873
(4)  
351,512
 
 
08/12/15
 
5,864
(7)  
717,460
 
 
08/12/15
 
 
330
(6)  
40,376
 
10/01/15
1,675
5,025
(3)  
157.82
10/01/25
1,500
(4)  
183,525
 
 
02/26/16
31,000
(3)  
140.16
2/26/26
5,000
(4)  
611,750
 
 
02/26/16
 
 
1,000
(6)  
122,350
David Hallal
01/28/10
84,336
 
22.90
01/28/20
 
 
 
02/02/11
100,000
 
42.66
02/02/21
 
 
 
02/03/12
77,000
 
78.88
02/03/22
 
 
 
02/06/13
68,437
 
93.83
02/06/23
 
 
 
02/28/14
33,825
 
176.80
02/28/24
 
 
 
02/27/15
16,628
 
180.37
02/27/25
 
 
 
03/31/15
18,478
 
173.30
03/31/25
 
</