AKAO 2018 Proxy Statement

29 2017, Mr. Loeb received no adjustment to compensation from 2016 because he began employment in the final quarter of 2016. In setting executive compensation, the Compensation Committee generally seeks to set total compensation with reference to the market median, but considers a number of factors, including the recommendations of our Chief Executive Officer (other than with respect to himself), current and past total compensation, competitive market data and analysis provided by the Compensation Committee’s independent compensation consultant, Company performance and each executive’s impact on performance, each executive’s relative scope of responsibility and potential, each executive’s individual performance and demonstrated leadership, each executive’s experience, tenure and criticality of position, internal equity pay considerations and the demand for talent. Our Chief Executive Officer’s recommendations are based on his evaluation of each other NEO’s individual performance and contributions, of which he has direct knowledge. Our Board makes decisions regarding our Chief Executive Officer’s compensation, following recommendation from the Compensation Committee. Competitive Market Data and Independent Compensation Consultant In order to design a competitive executive compensation program that will continue to attract top executive talent, we retained Radford, an AonHewitt company, as an independent compensation consultant to provide a competitive review of executive compensation, including base salary, annual incentives and equity compensation as compared with market data. In consultation with Radford, in September 2016, our Compensation Committee selected our peer group based on the following criteria: (i) pre-commercial/late stage of development companies located in biotechnology hubs; (ii) market capitalization generally under $500 million; and (iii) headcount generally under 150 employees. In December 2016, following the Company’s release of news of positive data for its key clinical trials, the Company’s stock price increased significantly, and the Company determined that it was appropriate to re-examine the September 2016 peer group. Following review of the Company’s then-current profile, Radford recommended a peer group based on a revised market capitalization criterion of approximately $150 million to $1.5 billion and a revised headcount criterion of under 200 employees. The other criteria remained the same. Based on these criteria, the Compensation Committee approved the following adjusted peer group in January 2017: • Adamas Pharmaceuticals • ChemoCentryx • Otonomy • Zogenix • Aerie Pharmaceuticals • Cytokinetics • Portola Pharmaceuticals • Aimmune Therapeutics • Dermira • Rigel Pharmaceuticals • Akebia Therapeutics • Enanta Pharmaceuticals • Versartis • Ardelyx • Intra-Cellular Therapies • Xencor In February 2017, Radford performed an executive compensation assessment based on data from the most recent public filings for the Company’s peer group, as well as the Radford 2016 Global Life Sciences Survey, which includes public U.S. pre-commercial bio/pharma companies with market capitalization between $150 million and $1.5 billion, with such information updated to April 1, 2017 using a 3% annual update factor. Based on this assessment, Radford found that our executive officers’ 2016 compensation, updated assuming a 3% increase to base salary, target bonuses of 40% for executives below CEO and equity award values at 50%, were generally positioned between the 50 th and 60 th percentiles, with competitiveness varying by role. This assessment found that our CEO’s total compensation, as adjusted, was between the 25 th and 50 th percentile of market, with target total cash compensation below the 25 th percentile.