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tm231836-3_nonfiling - block - 28.1251105s
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
​
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No.     )
​
Filed by the Registrant ☒
Filed by a Party other than the Registrant ☐
Check the appropriate box:
​
☐
Preliminary Proxy Statement
​
☐
Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
​
​
☒
Definitive Proxy Statement
​
☐
Definitive Additional Materials
​
☐
Soliciting Material Pursuant to Section § 240.14a-12
​
THERAVANCE BIOPHARMA, INC.
(Name of Registrant as Specified in its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)​
Payment of Filing Fee (Check all boxes that apply):
☒   No fee required
☐
Fee paid previously with preliminary materials
​
☐
Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rules 14a-6(i)(1) and 0-11
​
 
[MISSING IMAGE: lg_theravanbiopharma-4c.jpg]
March 28, 2023
To the shareholders of Theravance Biopharma, Inc.:
The 2023 Annual General Meeting of Theravance Biopharma, Inc. (the “Annual Meeting”) will be held on May 2, 2023 at 12:00 p.m. Irish Standard Time, at The Merrion Hotel, Upper Merrion St., Dublin 2, Ireland.
Details regarding admission to the Annual Meeting and the business to be conducted are described in the accompanying proxy materials. Also included is a copy of our 2022 Annual Report on Form 10-K. We encourage you to read this information carefully.
Your vote is important. Whether or not you plan to attend the Annual Meeting, please date, sign, and return your white proxy card in the enclosed envelope, or vote via telephone or the Internet according to the instructions in the accompanying proxy materials, as soon as possible to ensure that your shares will be represented and voted at the Annual Meeting. Voting by proxy does not preclude you from voting in person if you choose to attend the Annual Meeting.
Thank you for your ongoing support of Theravance Biopharma.
Very truly yours,
[MISSING IMAGE: sg_rickewinningham-bw.jpg]
Rick E Winningham
Chief Executive Officer and Chairman
 
 
THERAVANCE BIOPHARMA, INC.
P.O. Box 309, Ugland House
Grand Cayman, KY1-1104
Cayman Islands
NOTICE OF 2023 ANNUAL GENERAL MEETING
​
​ Time and Date: ​ ​ May 2, 2023 at 12:00 p.m. Irish Standard Time ​
​ Place: ​ ​ The Merrion Hotel, Upper Merrion St., Dublin 2, Ireland ​
​ Items of Business: ​ ​
(1)
To elect the following two Class III directors to serve as members of the board of directors until the annual general meeting held in 2026 and until their successors are duly elected and qualified: Dean J. Mitchell and Deepika R. Pakianathan.
​
(2)
To ratify the appointment of Ernst & Young LLP as Theravance Biopharma, Inc.’s independent registered public accounting firm for the fiscal year ending December 31, 2023.
​
(3)
To vote on a non-binding advisory resolution regarding the compensation of our named executive officers.
​
(4)
To vote on a non-binding advisory resolution regarding the frequency of shareholder votes on the compensation of our named executive officers.
​
(5)
To approve our Amended and Restated 2013 Equity Incentive Plan.
​
(6)
To approve an amendment to our Amended and Restated Memorandum and Articles of Association to declassify our board of directors over time.
​
 ​
​ ​ ​ ​ These items of business are more fully described in the proxy statement accompanying this notice. ​
​ Adjournments: ​ ​ Any action on the items of business described above may be considered at the annual general meeting at the time and on the date specified above or at any time and date to which the annual general meeting may be properly adjourned. ​
​ Record Date: ​ ​ You are entitled to vote if you were a shareholder of record as of the close of business on March 6, 2023. ​
​ Voting: ​ ​ Your vote is very important. We encourage you to read the proxy statement and vote on the Internet or by telephone or submit your white proxy card as soon as possible. For specific instructions on how to vote your shares, please refer to the section entitled “Questions and Answers About Procedural Matters.” ​
If you have any questions about submitting your proxy or require assistance, please contact our proxy solicitor, Innisfree M&A Incorporated. Shareholders may call (877) 717-3936 (toll-free from the U.S. and Canada). Banks and brokers may call (212) 750-5687.
All shareholders are invited to attend the annual general meeting; however, even if you plan to attend in person, we urge you to complete, sign and return the enclosed white proxy card, or vote via telephone or on the Internet as instructed in these materials.
By order of the board of directors,
[MISSING IMAGE: sg_rickewinningham-bw.jpg]
Rick E Winningham
Chief Executive Officer and Chairman
March 28, 2023
 
 
You are invited to attend the annual general meeting in person. Whether or not you expect to attend the annual general meeting, please complete, date, sign and return the enclosed white proxy card, or vote via telephone or the Internet as instructed in these materials, as promptly as possible to ensure your representation at the annual general meeting. A return envelope (which is postage prepaid if mailed in the U.S.) is enclosed for your convenience. Even if you have voted by proxy, you may still vote in person if you attend the annual general meeting. Please note, however, that if your shares are held of record by a broker, bank or other agent and you wish to vote at the annual general meeting, you must provide a valid, legal proxy issued in your name from that record holder.
Important Notice Regarding the Availability of Proxy Materials for the
Annual General Meeting to be held on Tuesday, May 2, 2023:
The proxy statement and annual report are available at http://investor.theravance.com/proxy
 
 
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ii
 
THERAVANCE BIOPHARMA, INC.
P.O. Box 309, Ugland House
Grand Cayman, KY1-1104
Cayman Islands
PROXY STATEMENT FOR
2023 ANNUAL GENERAL MEETING
​
This proxy statement is furnished in connection with a solicitation of proxies by our board of directors for use at the 2023 Annual General Meeting (the “Annual Meeting”) to be held at 12:00 p.m. Irish Standard Time (“IST”) on May 2, 2023, and any adjournments thereof. The Annual Meeting will be held at The Merrion Hotel, Upper Merrion St., Dublin 2, Ireland. We urge you to vote your shares by completing, dating, signing and returning the enclosed white proxy card, or following the instructions on the enclosed white proxy card to submit your proxy via telephone or on the Internet. We intend to commence mailing this proxy statement and accompanying white proxy card on or about March 29, 2023 to all shareholders of record entitled to vote at the Annual Meeting.
As used in this proxy statement, the terms “Theravance Biopharma,” the “Company,” “we,” “us,” and “our” mean Theravance Biopharma, Inc. and its subsidiaries unless the context indicates otherwise. All references to “elect”, “elected” or “election” with respect to directors shall be construed as “appoint”, “appointed” or “appointment” under Cayman Islands law.
Special Note regarding Forward-Looking Statements
This proxy statement contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Such forward-looking statements involve risks, uncertainties and assumptions. All statements in this proxy statement, other than statements of historical facts, including statements regarding our strategy, future operations, the implementation of our capital return program, projected costs, plans, intentions, designs, expectations and objectives are forward-looking statements. The words “aim,” “anticipate,” “assume,” “believe,” “contemplate,” “continue,” “could,” “designed,” “developed,” “drive,” “estimate,” “expect,” “forecast,” “goal,” “indicate,” “intend,” “may,” “mission,” “opportunities,” “plan,” “possible,” “potential,” “predict,” “project,” “pursue,” “represent,” “seek,” “suggest,” “should,” “target,” “will,” “would,” and similar expressions (including the negatives thereof) are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. These statements reflect our current views with respect to future events, are based on assumptions, and involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward- looking statements. We may not actually achieve the plans, intentions, expectations or objectives disclosed in our forward-looking statements and the assumptions underlying our forward-looking statements may prove incorrect. Therefore, you should not place undue reliance on our forward-looking statements. Actual results or events could differ materially from the plans, intentions, expectations and objectives disclosed in the forward- looking statements that we make. Factors that we believe could cause actual results or events to differ materially from our forward-looking statements include, but are not limited to, those discussed in “Risk Factors,” in Item 1A, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Item 7 and elsewhere in our Annual Report on Form 10 K for the year ended December 31, 2022. Our forward-looking statements in this proxy statement are based on current expectations and we do not assume any obligation to update any forward-looking statements for any reason, even if new information becomes available in the future. In addition, while the effects of COVID-19, including new variants, may continue to adversely impact our business operations and financial results, the extent of the impact on our ability to generate revenue from YUPELRI® (revefenacin), our clinical development programs, and the value of and market for our ordinary shares, will depend on future developments that are highly uncertain and cannot be predicted with confidence at this time. These potential future developments include, but are not limited to, the ultimate duration of the COVID-19 pandemic, travel restrictions, quarantines, vaccination levels, social distancing and business closure requirements in the United States and in other countries, other measures taken by us and those we work with to help protect individuals from contracting COVID-19, and the effectiveness of actions taken globally to manage and treat the disease, including vaccine availability, distribution, acceptance and effectiveness.
 
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Non-GAAP Financial Measure
We provide a non-GAAP profitability target in this proxy statement. We believe that the non-GAAP profitability target provides meaningful information to assist investors in assessing prospects for future performance as it provides a better metric for analyzing the future potential performance of our business by excluding items that may not be indicative of core operating results and our cash position. Because non-GAAP financial targets, such as non-GAAP profitability, are not standardized, it may not be possible to compare this target with other companies’ non-GAAP targets or measures having the same or a similar name. Thus, our non-GAAP target should be considered in addition to, not as a substitute for, or in isolation from, our actual GAAP results and other targets.
 
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QUESTIONS AND ANSWERS ABOUT PROCEDURAL MATTERS
Annual Meeting
Q:
Why am I receiving these proxy materials?
​
A:
Our board of directors is providing these proxy materials to you in connection with our solicitation of proxies for use at the Annual Meeting to be held on May 2, 2023 at 12:00 p.m. IST, and at any adjournment thereof, for the purpose of considering and acting upon the matters set forth herein. You may attend the Annual Meeting to vote on the proposals described in this proxy statement. However, you do not need to attend the meeting to vote your shares. Instead, you may simply complete, sign and return the enclosed white proxy card or follow the instructions on the enclosed white proxy card to submit your proxy via telephone or on the Internet.
​
Q:
What information is contained in this proxy statement?
​
A:
The information in this proxy statement relates to the proposals to be voted on at the Annual Meeting, the voting process, the compensation of our directors and certain of our executive officers, corporate governance, and certain other information.
​
Q:
Where is the Annual Meeting?
​
A:
The Annual Meeting will be held at The Merrion Hotel, Upper Merrion St., Dublin 2, Ireland. You may attend the Annual Meeting in person; however, we urge you to vote your shares by completing, signing and returning the enclosed white proxy card, or following the instructions on the enclosed white proxy card to submit your proxy via telephone or on the Internet. We intend to hold a short Annual Meeting that covers only required formal business. We will not be providing a general business update at the Annual Meeting.
​
Q:
Can I attend the Annual Meeting?
​
A:
We will hold a physical meeting, which you may attend if you were a shareholder of record or a beneficial owner as of March 6, 2023 (the “Record Date”). For admission to the Annual Meeting, you must present valid picture identification such as a driver’s license or passport and, if asked, provide proof of share ownership as of the Record Date. In addition, you must comply with all applicable pandemic-related requirements in place at the time of the Annual Meeting, including those set forth by the Republic of Ireland, the City of Dublin, and for admission to The Merrion Hotel. The Annual Meeting will be held at The Merrion Hotel, Upper Merrion St., Dublin 2, Ireland and shareholders may request directions to the location of our Annual Meeting by calling (650) 808-4045. However, you do not need to attend the Annual Meeting to vote your shares and we urge you to vote your shares by completing, signing and returning the enclosed white proxy card, or following the instructions on the enclosed white proxy card to submit your proxy via telephone or on the Internet. We intend to hold a short Annual Meeting that covers only required formal business. We will not be providing a general business update at the Annual Meeting.
​
Share Ownership
Q:
What is the difference between holding shares as a shareholder of record and as a beneficial owner?
​
A:
Shareholders of record — If your shares are registered directly in your name with our transfer agent, Computershare Trust Company, N.A., you are considered the “shareholder of record” with respect to those shares and this notice was provided to you directly by us. As the shareholder of record, you have the right to grant your voting proxy directly to the individuals listed on the white proxy card or to vote in person at the Annual Meeting.
​
Beneficial owners — Many Theravance Biopharma shareholders hold their shares through a bank, broker, trustee or other nominee, rather than directly in their own name. If your shares are held in a brokerage account or by a bank, trustee or another nominee, you are considered the “beneficial owner” of shares held in “street name” and a notice was forwarded to you by your bank, broker, trustee or other nominee, which is considered the shareholder of record with respect to those shares.
 
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As the beneficial owner, you have the right to direct your bank, broker, trustee or other nominee on how to vote your shares. Beneficial owners are also invited to attend the Annual Meeting. Beneficial owners are also invited to attend the Annual Meeting. However, since beneficial owners are not shareholders of record, you may not vote your shares in person at the Annual Meeting unless you follow your bank’s, broker’s, trustee’s or other nominee’s procedures for obtaining a legal proxy. If you request a printed copy of the proxy materials by mail, your bank, broker, trustee or other nominee will provide a voting instruction card for you to use.
Quorum and Voting
Q:
How many shares must be present or represented to conduct business at the Annual Meeting?
​
A:
A quorum is the minimum number of shares required to be present at the Annual Meeting for the meeting to be properly held under our Amended and Restated Memorandum and Articles of Association and Cayman Islands law. The presence, in person or by proxy, of shareholders that represent in aggregate not less than a majority of the shares of all voting share capital of Theravance Biopharma in issue and entitled to vote will constitute a quorum at the meeting. Except as otherwise expressly provided by the Amended and Restated Memorandum and Articles of Association or by law, the holders of ordinary shares will vote together as a single class on all matters submitted to a vote or for the consent of the shareholders of Theravance Biopharma. Each holder of ordinary shares will have the right to one vote per ordinary share. A proxy submitted by a shareholder may indicate that the shares represented by the proxy are not being voted with respect to a particular matter.
​
Abstentions and broker “non-votes” are counted as present and entitled to vote and are therefore included for purposes of determining whether a quorum is present at the Annual Meeting.
A broker non-vote occurs when a nominee holding shares for a beneficial owner submits a completed white proxy card but does not vote on a particular proposal because the nominee does not have discretionary voting power with respect to that item and has not received instructions from the beneficial owner.
Q:
Who is entitled to vote at the Annual Meeting?
​
A:
Holders of record of our ordinary shares at the close of business on March 6, 2023, the Record Date, are entitled to receive notice of and to vote their shares at the Annual Meeting. As of the Record Date, we had 63,225,611 ordinary shares in issue. In deciding all matters at the Annual Meeting, each holder of ordinary shares of Theravance Biopharma will be entitled to one vote per ordinary share held as of the close of business on the Record Date. We do not have cumulative voting rights for the election of directors.
​
Q:
How can I vote my shares in person at the Annual Meeting?
​
A:
Shares held in your name as the shareholder of record may be voted in person at the Annual Meeting. Shares held beneficially in street name may be voted in person at the Annual Meeting only if you obtain legal proxy from the broker, trustee or other nominee that holds your shares giving you the right to vote the shares. Even if you plan to attend the Annual Meeting, we recommend that you also submit your white proxy card or follow the voting directions described below, so that your vote will be counted if you later decide not to attend the meeting.
​
Q:
How can I vote my shares without attending the Annual Meeting?
​
A:
Shareholder of record — If you are a shareholder of record, there are three ways to vote without attending the Annual Meeting:
​
•
Via the Internet — You may vote by proxy via the Internet by following the instructions provided in the white proxy card.
​
•
By Telephone — You may vote by proxy by telephone by calling the toll-free number found on the white proxy card.
​
 
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•
By Mail — You may vote by proxy by filling out the white proxy card and returning it in the envelope provided.
​
Beneficial owners — If you are a beneficial owner holding shares through a bank, broker, trustee or other nominee, please refer to the information forwarded by your bank, broker, trustee or other nominee to see which voting options are available to you.
If you have any questions about submitting your proxy or require assistance, please contact our proxy solicitor at:
Innisfree M&A Incorporated
501 Madison Avenue, 20th Floor
New York, NY 10022
Shareholders may call toll-free: (877) 717-3936
Banks and brokers may call collect: (212) 750-5833
Q:
What proposals will be voted on at the Annual Meeting?
​
A:
At the Annual Meeting, shareholders will be asked to vote:
​
(1)
To elect the two Class III directors identified in this proxy statement to serve as Class III directors until the annual general meeting held in 2026 and until their successors are duly elected and qualified;
​
(2)
To ratify the appointment of Ernst & Young LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2023;
​
(3)
To vote on a non-binding advisory resolution regarding the compensation of our named executive officers;
​
(4)
To vote on a non-binding advisory resolution regarding the frequency of shareholder votes on the compensation of our named executive officers;
​
(5)
To approve our Amended and Restated 2013 Equity Incentive Plan; and
​
(6)
To approve an amendment to our Amended and Restated Memorandum and Articles of Association to declassify our board of directors over time.
​
Q:
What is the voting requirement to approve each of the proposals?
​
A:
Proposal One — An ordinary resolution, being a majority of the votes duly cast at the annual general meeting, is required for the election of each director. If the number of shares voted “FOR” a director nominee exceeds the number of votes cast “AGAINST,” the nominee will be elected as a director. You may vote “FOR,” “AGAINST” or “ABSTAIN” on each of the nominees for election as director. Abstentions and broker non-votes will not affect the outcome of Proposal One, other than counting towards the quorum of the meeting.
​
Proposal Two — An ordinary resolution, being a majority of the votes duly cast at the annual general meeting, is required to ratify the appointment of Ernst & Young LLP as our independent registered public accounting firm. If the number of shares voted “FOR” the ratification of the appointment of Ernst & Young LLP as our independent registered public accounting firm exceeds the number of votes cast “AGAINST,” the appointment of Ernst & Young LLP as our independent registered public accounting firm will be ratified. You may vote “FOR,” “AGAINST” or “ABSTAIN.” Abstentions and broker non-votes, if any, will not affect the outcome of Proposal Two, other than counting towards the quorum of the meeting.
Proposal Three — An ordinary resolution, being a majority of the votes duly cast at the annual general meeting is required for the non-binding advisory resolution regarding the compensation of our named executive officers. If the number of shares voted “FOR” the non-binding advisory resolution regarding the compensation of our named executive officers exceeds the number of votes cast “AGAINST,” such resolution will be approved. You may vote “FOR,” “AGAINST” or
 
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“ABSTAIN.” Abstentions and broker non-votes will not affect the outcome of Proposal Three, other than counting towards the quorum of the meeting.
Proposal Four — The frequency alternative that receives a plurality of the total votes cast on Proposal Four will be considered approved as the frequency alternative preferred by shareholders. You may vote for a frequency of future shareholder votes on the compensation of our named executive officers of every “1 YEAR,” “2 YEARS,” “3 YEARS” or “ABSTAIN.” Abstentions and broker non-votes will not affect the outcome of Proposal Four, other than counting towards the quorum of the meeting.
Proposal Five — An ordinary resolution, being a majority of the votes duly cast at the annual general meeting, is required to approve our Amended and Restated 2013 Equity Incentive Plan. If the number of shares voted “FOR” Proposal Five exceeds the number of votes cast “AGAINST,” our Amended and Restated 2013 Equity Incentive Plan will be approved. You may vote “FOR,” “AGAINST” or “ABSTAIN.” Abstentions and broker non-votes will not affect the outcome of Proposal Five, other than counting towards the quorum of the meeting.
Proposal Six — A special resolution, being not less than two thirds of the votes duly cast at the annual general meeting, is required to approve the amendment of our Amended and Restated Memorandum and Articles of Association to declassify our board of directors over time. If the number of shares voted “FOR” Proposal Six is equal to or greater than two thirds of the number of votes cast “AGAINST,” the amendment to declassify our board of directors over time will be approved. You may vote “FOR,” “AGAINST” or “ABSTAIN.” Abstentions and broker non-votes will not affect the outcome of Proposal Six, other than counting towards the quorum of the meeting.
Q:
How does the board of directors recommend that I vote?
​
A:
Our board of directors unanimously recommends that you vote your shares:
​
(1)
“FOR” each of the Class III nominees for director identified in Proposal One; and
​
(2)
“FOR” the ratification of the appointment of Ernst & Young LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2023 as included in Proposal Two;
​
(3)
“FOR” the approval of the non-binding advisory resolution regarding the compensation of our named executive officers as included in Proposal Three;
​
(4)
“1 YEAR” for the frequency of future non-binding advisory shareholder votes on the compensation of our named executive officers as included in Proposal Four;
​
(5)
“FOR” the approval of our Amended and Restated 2013 Equity Incentive Plan as included in Proposal Five; and
​
(6)
“FOR” the approval of the amendment of our Amended and Restated Memorandum and Articles of Association as included in Proposal Six.
​
Q:
What happens if I do not give specific voting instructions?
​
A:
Shareholder of record — If you are a shareholder of record and you:
​
•
Indicate when voting on the Internet or by telephone that you wish to vote as recommended by our board of directors; or
​
•
Sign and return a white proxy card without giving specific voting instructions,
​
then the persons named as proxy holders will vote your shares in the manner recommended by the board of directors on all matters presented in this proxy statement and as the proxy holders may determine in their discretion with respect to any other matters properly presented for a vote at the Annual Meeting.
 
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Beneficial owners — If you are a beneficial owner of shares held in street name and do not provide the bank, broker, trustee or other nominee that holds your shares with specific voting instructions then, under applicable rules, the bank, broker, trustee or other nominee that holds your shares may generally vote on “routine” matters but cannot vote on “non-routine” matters. If the bank, broker, trustee or other nominee that holds your shares does not receive instructions from you on how to vote your shares on a non-routine matter, that bank, broker, trustee or other nominee will inform the inspector of election that it does not have the authority to vote on this matter with respect to your shares. This is generally referred to as a “broker non-vote.”
Q:
How may my bank, broker, trustee or other nominee vote my shares if I fail to provide timely directions?
​
A:
Banks, brokers, trustees or other nominees holding ordinary shares in street name for customers are generally required to vote such shares in the manner directed by their customers. In the absence of timely directions, your bank, broker, trustee or other nominee will have discretion to vote your shares on our sole routine matter — the proposal to ratify the appointment of Ernst & Young LLP. Your bank, broker, trustee or other nominee will not have discretion to vote on any of the other matters absent direction from you as they are each “non-routine” matters.
​
Please note that banks, brokers, trustees or other nominees may not vote your shares on Proposals One, Three, Four, Five or Six in the absence of your specific instructions as to how to vote, so we encourage you to provide instructions to your bank, broker, trustee or other nominee regarding the voting of your shares.
Q:
What happens if additional matters are presented at the Annual Meeting?
​
A:
If any other matters are properly presented for consideration at the Annual Meeting, including, among other things, consideration of a motion to adjourn the Annual Meeting to another time or place (including, without limitation, for the purpose of soliciting additional proxies), the persons named in the white proxy card and acting thereunder will have discretion to vote on those matters in accordance with their best judgment. We do not currently anticipate that any other matters will be raised at the Annual Meeting.
​
Q:
Can I change or revoke my vote?
​
A:
If you are a shareholder of record, you may change your vote by (1) filing with our Secretary, prior to your shares being voted at the Annual Meeting, a written notice of revocation or a duly executed proxy card, in either case dated later than the prior proxy card relating to the same shares, or (2) by attending the Annual Meeting and voting in person (although attendance at the Annual Meeting will not, by itself, revoke a proxy). A shareholder of record that has voted on the Internet or by telephone may also change his or her vote by later making a timely and valid Internet or telephone vote.
​
If you are a beneficial owner of shares held in street name, subject to any rules your bank, broker, trustee or other nominee may have, you may change your vote by submitting new voting instructions to your bank, broker, trustee or other nominee.
Any written notice of revocation or subsequent proxy card must be received by our Secretary prior to the taking of the vote at the Annual Meeting. Such written notice of revocation or subsequent proxy card should be hand delivered to our Secretary or should be sent to us care of our U.S. subsidiary, Theravance Biopharma US, Inc., at 901 Gateway Boulevard, South San Francisco, California 94080, Attention: Secretary.
We urge you to vote your shares by completing, dating, signing and returning the enclosed white proxy card, or following the instructions on the enclosed white proxy card to submit your proxy via telephone or on the Internet. Changing your vote prior to the Annual Meeting is most easily accomplished if you submit your proxy via telephone or on the Internet, as your vote may then be changed by simply submitting a new vote via telephone or on the Internet.
 
7
 
Q:
Who will bear the cost of soliciting votes for the Annual Meeting?
​
A:
We will bear all expenses of this solicitation, including the cost of preparing and mailing these proxy materials. We will bear the cost of reimbursing banks, brokerage firms, custodians, nominees, fiduciaries and other persons representing beneficial owners of ordinary shares for their reasonable expenses in forwarding solicitation material to such beneficial owners. Directors, officers and employees of Theravance Biopharma may also solicit proxies in person or by other means of communication. Such directors, officers and employees will not be additionally compensated but may be reimbursed for reasonable out-of-pocket expenses in connection with such solicitation. In addition, we have retained Innisfree M&A Incorporated at a fee estimated to be approximately $50,000, plus reasonable out-of-pocket expenses, to act as our proxy solicitor in connection with the proposals to be acted upon at the Annual Meeting. Pursuant to our agreement with Innisfree M&A Incorporated, Innisfree M&A Incorporated has agreed to solicit proxies from our shareholders on our behalf in connection with the Annual Meeting.
​
If you have any questions about submitting your proxy or require assistance, please contact our proxy solicitor at:
Innisfree M&A Incorporated
501 Madison Avenue, 20th Floor
New York, NY 10022
Shareholders may call toll free: (877) 717-3936
Banks and Brokers may call collect: (212) 750-5833
Q:
Where can I find the voting results of the Annual Meeting?
​
A:
We intend to announce preliminary voting results at the Annual Meeting and will disclose the final results in a current report on Form 8-K within four business days after the Annual Meeting.
​
Shareholder Proposals and Director Nominations
Q:
What is the deadline to propose actions for consideration at next year’s annual general meeting or to nominate individuals to serve as directors?
​
A:
You may submit proposals, including director nominations, for consideration at future shareholder meetings.
​
Requirements for shareholder proposals to be considered for inclusion in our proxy materials — Shareholders may present proper proposals for inclusion in our proxy statement and for consideration at our next annual general meeting by submitting their proposals in writing to our Secretary in a timely manner. In order to be considered for inclusion in the proxy statement for the 2024 annual general meeting, shareholder proposals must be received at our principal executive offices no later than November 30, 2023 (that is, not less than 120 calendar days before the one year anniversary of the date this proxy statement was released to shareholders in connection with the 2023 Annual Meeting), and must otherwise comply with the requirements of Rule 14a-8 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). A copy of all notices of proposals by shareholders should also be sent to us care of our U.S. subsidiary, Theravance Biopharma US, Inc., at 901 Gateway Boulevard, South San Francisco, California 94080, Attention: Secretary.
Requirements for shareholder proposals to be brought before an annual general meeting — Our Amended and Restated Memorandum and Articles of Association establish an advance notice procedure for shareholders who wish to present certain matters before an annual general meeting. Under our Amended and Restated Memorandum and Articles of Association, the only business that may be conducted at an annual general meeting is business that is (i) specified in the notice of meeting (or any supplement thereto) given by or at the direction of our board of directors (or any duly authorized committee thereof), (ii) otherwise properly brought before the annual general meeting by or at the direction of our board of directors (or any duly authorized committee thereof) or (iii) properly brought before the annual general meeting by a shareholder who has
 
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delivered written notice to our Secretary no later than the Notice Deadline (as defined below) and otherwise complied with the provisions of our Amended and Restated Memorandum and Articles of Association; provided, however, that our board of directors may, subject to Rule 14a-8 of the Exchange Act, resolve not to include any proposal for business made by a shareholder other than a proposal related to the nomination of a director made in accordance with Nomination Notice Deadline. The “Notice Deadline” is defined as that date which is at least 45 days and not more than 75 days prior to the one year anniversary of the date on which we first mailed proxy materials for the prior year’s annual general meeting; provided, however, that if our annual general meeting occurs on a date more than 25 days earlier or later than the prior year’s annual general meeting, then our board shall determine a date a reasonable period prior to our annual general meeting by which date the shareholder’s notice must be delivered and publicize such date in a filing pursuant to the Exchange Act, or via press release. Such publication shall occur at least ten days prior to the date set by our board. As a result, we anticipate that the Notice Deadline for the 2024 annual general meeting will be between January 14, 2024 and February 13, 2024.
In general, nominations for the election of directors may be made by (i) our board of directors or any committee thereof or (ii) any shareholder who (a) is a shareholder of record on the date of the giving of such notice and on the record date for the determination of shareholders entitled to vote at such meeting and (b) has delivered written notice to our Secretary no later than the Nomination Notice Deadline (as defined below), which notice must contain specified information concerning the nominees and concerning the shareholder proposing such nominations. The “Nomination Notice Deadline” is defined as that date that is not less than 120 days and not more than 150 days prior to the meeting; provided, however, that in the event less than 130 days’ notice or prior public disclosure of the date of the meeting is given or made to shareholders, notice by the shareholder to be timely must be so received not later than the close of business on the 10th day following the earlier of the day on which such notice of the date of the meeting was mailed or such public disclosure was made.
In addition to satisfying the foregoing requirements under our Amended and Restated Memorandum and Articles of Association, to comply with the SEC’s universal proxy rules, stockholders who intend to solicit proxies in support of director nominees other than our nominees must generally provide notice that sets forth the information required by Rule 14a-19 under the Exchange Act no later than March 3, 2024.
Recommendation of director candidates — You may recommend candidates to our board of directors for consideration by our nominating/corporate governance committee by following the procedures set forth below in “Corporate Governance — Shareholder Recommendations for Nominations to the Board of Directors.”
Q:
How may I obtain a copy of the provisions of the Amended and Restated Memorandum and Articles of Association regarding shareholder proposals and director nominations?
​
A:
A copy of the full text of the provisions discussed above may be obtained by writing to our Secretary. A copy of our Amended and Restated Memorandum and Articles of Association is posted on the Investor Relations portion of our website at www.theravance.com. A copy of all requests should also be sent to us care of our U.S. subsidiary, Theravance Biopharma US, Inc., at 901 Gateway Boulevard, South San Francisco, California 94080, Attention: Secretary.
​
Additional Information about the Proxy Materials
Q:
What does it mean if multiple members of my household are shareholders but we only received one set of proxy materials in the mail?
​
A:
We have adopted a procedure called “householding,” which the United States Securities and Exchange Commission (the “SEC”) has approved. Under this procedure, we deliver a single copy of the proxy materials to multiple shareholders who share the same address unless we received contrary instructions from one or more of the shareholders. This procedure reduces our printing costs, mailing costs, and fees. Shareholders who participate in householding will continue to be able
​
 
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to access and receive separate proxy cards. Upon written request, we will deliver promptly a separate copy of the proxy materials to any shareholder at a shared address to which we delivered a single copy of any of these documents. To receive a separate copy of the proxy materials, shareholders should send their requests to us care of our U.S. subsidiary, Theravance Biopharma US, Inc., at 901 Gateway Boulevard, South San Francisco, California 94080, Attention: Secretary. Shareholders who share an address who receive separate copies of their proxy materials may use the same contact information to request a single copy of our proxy materials. Shareholders who hold shares in street name (as described above) may contact their brokerage firm, bank, broker-dealer, trustee or other nominee to request information about householding.
Q:
What is the mailing address for Theravance Biopharma’s principal executive offices?
​
A:
The mailing address for our principal executive offices and our registered office is P.O. Box 309, Ugland House, Grand Cayman, KY1-1104, Cayman Islands. A copy of all shareholder correspondence provided to our Secretary should also be sent to us care of our U.S. subsidiary, Theravance Biopharma US, Inc., at 901 Gateway Boulevard, South San Francisco, California 94080. The telephone number at that location is (650) 808-6000.
​
Any written requests for additional information, copies of the proxy materials and 2022 Annual Report, notices of shareholder proposals, recommendations for candidates to our board of directors, communications to our board of directors or any other communications should be sent to the U.S. subsidiary address above.
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE ANNUAL GENERAL MEETING TO BE HELD ON MAY 2, 2023.
The proxy statement and annual report are available at http://investor.theravance.com/proxy.
 
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PROPOSAL ONE: ELECTION OF DIRECTORS
General
Our board of directors may establish the authorized number of directors from time to time by resolution. Our board of directors is currently comprised of nine members, and from and after the Annual Meeting will be comprised of eight members, who are currently divided into three classes with staggered three-year terms. A director serves in office until his or her respective successor is duly elected and qualified or until his or her earlier death, resignation or removal. The classification of our board of directors may have the effect of delaying or preventing changes in our control or management. If Proposal Six is approved by shareholders at the Annual Meeting, our board of directors will be declassified on a phased-in basis: the Class III directors elected at this year’s Annual Meeting would be elected for a three-year term, and the Class I and Class II directors would complete the remainder of their current terms. Upon expiration of their terms, the Class I directors elected at our annual general meeting in 2024 would be elected for a two-year term, and the class II directors elected at our annual general meeting in 2025 would be elected for a one-year term. Commencing with the election of directors at our annual general meeting in 2026 and at each annual general meeting thereafter, our board of directors would no longer be classified and all directors would be elected to serve one-year terms. See Proposal Six for further information.
Our Amended and Restated Memorandum and Articles of Association authorize only our board of directors to fill vacancies on our board of directors created by death or resignation of a director. Any director appointed by our board of directors shall hold office for the remaining term of the class of director to which he or she is appointed and shall then be eligible for re-election. Any additional directorships resulting from an increase in the authorized number of directors would be distributed among the three classes while our board of directors remains classified so that, as nearly as possible, each class would consist of one-third of the authorized number of directors. Your proxy cannot be voted for a greater number of persons than the number of nominees named in this proxy statement.
Nominees
Two Class III directors have been nominated for election at the Annual Meeting, each for a three-year term expiring in 2026. Upon the recommendation of our nominating/corporate governance committee, our board of directors has nominated Dean J. Mitchell and Deepika R. Pakianathan, each a current Class III director, for election as Class III directors. The term of office of each person elected as director will continue until such director’s term expires in 2026 and until such director’s successor has been duly elected and qualified or until his or her earlier death, resignation or removal.
Information Regarding the Nominees and Other Directors
The following is a brief biography of each nominee nominated for election at the Annual Meeting, each director who will continue as a director after the Annual Meeting and one director who is not standing for reelection. Also listed below are the nominees’ and directors’ respective ages as of March 28, 2023. We have determined that each of these director nominees possesses the requisite communication skills, personal integrity, business judgment, ability to make independent analytical inquiries, and willingness to devote adequate time and effort necessary to serve as an effective member of the board of directors. Other specific experiences, qualifications, attributes or skills of nominees that contributed to our board’s conclusion that the nominees should serve as directors are noted below.
Nominees for Class III Directors
Name
​ ​
Age
​ ​
Principal Occupation and Business Experience
​
Dean J. Mitchell ​ ​ 67 ​ ​ Dean J. Mitchell has served as a director since June 2014. Mr. Mitchell has been on the board of directors ImmunoGen Inc. since 2012, Precigen, Inc. (formerly Intrexon Corporation) since 2009, Praxis Precision Medicines, Inc. since August 2020, and Kinnate Biopharma, Inc. since August 2020, all of which are public biopharmaceutical companies. He served as Executive Chairman of the board of directors of Covis Pharma ​
 
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Name
​ ​
Age
​ ​
Principal Occupation and Business Experience
​
​ ​ ​ ​ ​ ​ Holdings, a specialty pharmaceutical company, from August 2013 until its sale in March 2020 and was Chairman of PaxVax Corporation from January 2016 until its sale in October 2018. Mr. Mitchell served as President and Chief Executive Officer of Lux Biosciences, Inc., a biotechnology company focusing on the treatment of ophthalmic diseases, from July 2010 to August 2013. Prior to Lux Biosciences, he served as President and Chief Executive Officer of both Alpharma, Inc., a publicly- traded specialty pharmaceutical company, from 2006 until its acquisition by King Pharmaceuticals, Inc. in 2008, and Guilford Pharmaceuticals, Inc., a publicly-traded pharmaceutical company focused in oncology and acute care, from 2004 until its acquisition by MGI Pharma Inc. in 2005. From 2001 to 2004 he served in various senior executive capacities in the worldwide medicines group of Bristol Myers Squibb Company, a pharmaceutical company. Prior to Bristol Myers Squibb Company, he spent 14 years at GlaxoSmithKline plc, in assignments of increasing responsibility spanning sales, marketing, general management, commercial strategy and clinical development and product strategy. Mr. Mitchell holds an M.B.A. from City University London and a B.Sc. in biology from Coventry University. We believe that Mr. Mitchell’s qualifications to serve as our director include his management experience in the pharmaceutical and biotherapeutics industries, in particular as it relates to later stage drug development and commercialization, his transactional experience, and his experience as a President, Chief Executive Officer and board member of multiple biotechnology companies. ​
Deepika R. Pakianathan
​ ​ 58 ​ ​ Deepika R. Pakianathan, Ph.D., has served as a director since July 2020. Since 2001, Dr. Pakianathan has served as a Managing Member at Delphi Ventures, a venture capital firm. She is also the Chief Executive Officer of Redd Pharmaceuticals, Inc., a privately held pharmaceuticals company, since September 2019. From 2007 to 2019, Dr. Pakianathan served on the board of directors of Alder Pharmaceuticals, Inc. and from 2004 to 2016, Dr. Pakianathan served on the board of directors of Alexza Pharmaceuticals, Inc. From 1998 to 2001, Dr. Pakianathan served as a Vice President in the healthcare group at JP Morgan Chase & Company. From 1993 to 1997, Dr. Pakianathan served as a postdoctoral scientist in the Immunology Department at Genentech Corporation. Dr. Pakianathan currently serves on the board of directors of publicly- listed companies Calithera Biosciences, Inc., Karyopharm Therapeutics, Inc. and Mereo Biopharma Group PLC. Dr. Pakianathan holds an M.S. and a Ph.D. from Wake Forest University, a B.Sc. from the University of Bombay, India and an M.Sc. from The Cancer Research Institute at the University of Bombay, India. We believe that Dr. Pakianathan’s qualifications to serve as our director include her experience as a biotech investor and portfolio manager, scientific experience, experience as board member of multiple biotechnology companies, broad transactional experience, knowledge of our industry and knowledge of financial and financing matters. ​
 
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Incumbent Class I Directors Whose Term Expires in 2024
Name
​ ​
Age
​ ​
Principal Occupation and Business Experience
​
Eran Broshy ​ ​ 64 ​ ​ Eran Broshy has served as a director since June 2014. Mr. Broshy has been working since June 2009 with multiple private equity firms supporting their healthcare investment efforts and on the board of select portfolio companies, including with Nordic Capital (July 2016 — December 2021), Tailwind Capital (September 2015 — December 2021), Linden Capital Partners (2013 — 2015), CourtSquare Capital (March 2013 — August 2015), and Providence Equity Partners (June 2009 — December 2012). Mr. Broshy previously served for over a decade as the chief executive officer (until 2008) and chairman of the board of directors (until 2010) of inVentiv Health, Inc., a privately-held company (and from 1999 to August 2010 a Nasdaq listed company) that delivers a broad range of clinical and commercialization services to pharmaceutical and life sciences companies globally and is today Syneos. Prior to joining inVentiv (Syneos), Mr. Broshy was a management consultant with The Boston Consulting Group (BCG) for 15 years, including as the managing partner responsible for BCG’s healthcare practice across the Americas. He also served as president and chief executive officer of Coelacanth Corporation, a privately held biotechnology company. Mr. Broshy currently serves on the board of Certara, as chairman of Thirty Madison, a privately-held digital healthcare company, as a member of the Corporation of the Massachusetts Institute of Technology (“MIT”), as chairman of the American Friends of the Open University of Israel, and on the board of governors of the American Jewish Committee. Within the previous five years, Mr. Broshy has also served on the board of directors of Magellan Health, and as chairman of the board of Clario (previously ERT), a privately-held healthcare technology company. Mr. Broshy holds an M.B.A. from Harvard University, an M.S. in civil engineering from Stanford University, and a B.S. in civil engineering from the Massachusetts Institute of Technology. Mr. Broshy’ s demonstrated leadership and strategic experience across the healthcare industry in general, and the pharmaceutical technology and services industries in particular, and experience in healthcare investing and portfolio management, contributed to our board’s conclusion that he should serve as a director. ​
Laurie Smaldone Alsup
​ ​ 69 ​ ​ Laurie Smaldone Alsup, M.D. has served as a director since February 2018. Dr. Smaldone Alsup is Chief Medical and Chief Scientific Officer of NDA Group, a regulatory and product development consultancy firm, a position she has held since March 2019. Dr. Smaldone Alsup served as Chief Operating Officer and Chief Scientific Officer of NDA Group from March 2016 until March 2019. Dr. Smaldone Alsup served as President and Chief Scientific Officer of PharmApprove, LLC, a regulatory communications consultancy firm and division of Taft Communications, from August 2011 to March 2016. Dr. Smaldone Alsup served in clinical and regulatory roles of increasing responsibility and scope while at Bristol Myers Squibb, including Senior Vice President of Global Regulatory Science and Vice President of Corporate Strategy and Business Risk Management. In addition, she served as Chief Executive Officer of Phytomedics, Inc., an early-stage company focused on arthritis and inflammation. Dr. Smaldone Alsup is a member of the board of directors of BlackBerry Limited, a cybersecurity software and services ​
 
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Name
​ ​
Age
​ ​
Principal Occupation and Business Experience
​
​ ​ ​ ​ ​ ​ company, a position she has held since June 2015, Arvinas, Inc., a biotechnology company, a position she has held since November 2019 and Kinnate Biopharma, Inc, a precision oncology company, a position she has held since August 2020 and Pardes Bioscience since 2022. Dr. Smaldone Alsup was a member of the board of directors of KaloBios Pharmaceuticals, Inc., a biotechnology company, from October 2013 to November 2015. Dr. Smaldone Alsup received a B.A. in biology from Fordham College and an M.D. at Yale University School of Medicine, where she completed her residency in Internal Medicine and fellowship in Medical Oncology. Dr. Smaldone Alsup’s extensive regulatory and clinical experience in the life sciences industry, senior management experience in several companies in our industry and demonstrated leadership in her field contributed to our board’s conclusion that she should serve as a director. ​
Burton G. Malkiel ​ ​ 90 ​ ​ Burton G. Malkiel, Ph.D., has served as a director since October 2013. Prior to our spin-off from Innoviva, Inc. (“Innoviva”) in June 2014 and since July 2007, Dr. Malkiel served as a director of Innoviva. Dr. Malkiel is the Chief Investment Officer and chair of the Investment Committee at Wealthfront, Inc., a private investment company, a position he has held since November 2012, and the Chemical Bank Chairman’s Professor of Economics, Emeritus, and Senior Economist at Princeton University, a position he has held since July 2011 following positions as a senior research economist and professor at Princeton University since 1988. Dr. Malkiel is the author of A Random Walk Down Wall Street and over 125 articles and is the author or co-author of nine other books. From 1981 to 1988 he was dean of the Yale University School of Management and also served as the William S. Beinecke Professor of Management Studies. He is a past appointee to the President’s Council of Economic Advisors. In addition, Dr. Malkiel currently serves on the board of directors of several private corporations and served on the board of directors of The Vanguard Group Ltd. until March 2015 and Genmab AS until June 2018. He also serves on several investment management boards including the Investment Committees for the American Philosophical Association and Alpha Shares, LLC. He is a past president of the American Finance Association and the International Atlantic Economic Association. He holds a B.A. and M.B.A. degree from Harvard University and a Ph.D. degree from Princeton University. Dr. Malkiel’s demonstrated leadership in his field, his knowledge of financial markets, finance and financing matters, his ability to serve as a financial expert on our audit committee and experience with investments and investment management contributed to our board’s conclusion that he should serve as a director. ​
Nominees for Class II Directors for a Term Expiring in 2025
Name
​ ​
Age
​ ​
Principal Occupation and Business Experience
​
Rick E Winningham ​ ​ 63 ​ ​ Rick E Winningham has served as Chairman of the board of directors since July 2013. He has served as our Chief Executive Officer since our spin-off from Innoviva in June 2014. From October 2001 to August 2014, Mr. Winningham served as Chief Executive Officer of Innoviva, where he also served as Chairman of the board of directors from April 2010 to October 2014. From 1997 to 2001 he served as President, Bristol Myers Squibb Oncology/ Immunology/Oncology Therapeutics Network (OTN) and also as President of Global Marketing from 2000 to 2001. In addition to operating responsibility for U.S. Oncology/Immunology/OTN at ​
 
14
 
Name
​ ​
Age
​ ​
Principal Occupation and Business Experience
​
​ ​ ​ ​ ​ ​ Bristol Myers Squibb (BMS), Mr. Winningham also had full responsibility for Global Marketing in the Cardiovascular, Infectious Disease, Immunology, Oncology/ Metabolics and GU/GI/Neuroscience therapeutic areas. Over a fifteen-year period beginning in 1986 with BMS and its predecessor, Bristol Myers, Mr. Winningham held various U.S. and global management positions. Mr. Winningham is a member of Biotechnology Industry Organization’s board of directors and serves on the Health Section Governing Board Standing Committee on Reimbursement. Mr. Winningham served as a Director on the board of directors of the California Healthcare Institute (“CHI”) from November 2011 to March 2015. He was elected Chairman of CHI in January 2014, a position he held until CHI merged with Baybio to become the California Life Sciences Association (“CLSA”) in March 2015. Mr. Winningham is on the board of CLSA, and served as its chairman from March 2015 to November 2015. He is a member of the board of directors of Jazz Pharmaceuticals plc. a public biopharmaceutical company, and served as a member of the board of directors of Retrotope, Inc., a private biopharmaceutical company, from February 2021 until January 2022 and OncoMed Pharmaceuticals, Inc. from June 2015 until April 2019. Mr. Winningham holds an M.B.A. from Texas Christian University and a B.S. degree from Southern Illinois University. We believe that it is appropriate and desirable for our Chief Executive Officer to serve on our board of directors. Mr. Winningham’s demonstrated leadership in his field, his prior senior management experience in our industry and his experience as our Chief Executive Officer contributed to our board’s conclusion that he should serve as a director. ​
Donal O’Connor ​ ​ 72 ​ ​ Donal O’Connor has served as a director since October 2015. Mr. O’Connor is the Chairman of Galco Steel Limited and Huttonread Unlimited Company, having been appointed to their boards in September 2010 and March 2011, respectively, and has been a nonexecutive Director of Perrigo Company plc since November 2014. He was a non-executive director of Malin Corporation plc from July 2017 (appointed chairman in January 2018) until July 2018. He was a non-executive Director of Elan Corporation, plc, from May 2008 until it was acquired by Perrigo in December 2013. He was a non-executive Director and senior independent director of Readymix plc from December 2008 until May 2012. He was appointed by the Irish Government as Chairman of Anglo-Irish Bank from December 2008 until June 2010. He was the Irish High Court appointed Administrator of Icarom plc from 1995 until February 2013. Mr. O’Connor was a member of the Board of the Irish Auditing and Accountancy Supervisory Authority from its inception as an Interim Board in 2001 until 2009. He was a member of PricewaterhouseCoopers’ (“PwC”) Global Board from 2003 until 2008 and is a former Chairman of the PwC Eurofirms Board. Mr. O’Connor originally joined PwC in 1972 and was appointed partner in 1983. He was later appointed partner in charge of the PwC Financial Services practice in 1988 and leader of the Audit Practice in 1992. He was elected Senior Partner in 1994 and was re-elected in 1998 and 2003. He served as Senior Partner of PwC Ireland for over twelve years until 2007. Mr. O’Connor obtained a Bachelor of Commerce degree from University College Dublin and is a Fellow of the Institute of Chartered Accountants in Ireland. Mr. O’Connor’s senior management experience and demonstrated leadership in his field, his experience as a director of numerous ​
 
15
 
Name
​ ​
Age
​ ​
Principal Occupation and Business Experience
​
​ ​ ​ ​ ​ ​ companies, including Irish entities, and his knowledge of financial and financing matters contributed to our board’s conclusion that he should serve as a director. ​
Susannah Gray ​ ​ 62 ​ ​ Susannah Gray served as the Executive Vice President and Chief Financial Officer of Royalty Pharma from January 2005 to December 2018. She was promoted to Executive Vice President of Finance and Strategy in December 2018 and retired from Royalty Pharma in September 2019. Prior to Royalty Pharma, Ms. Gray served as a managing director and senior analyst covering the healthcare sector in CIBC World Markets’ high yield group from 2002 to 2004, and also previously served in similar roles at Merrill Lynch and Chase Securities (predecessor of J.P. Morgan Securities). She has served on the Boards of Directors of Maravai LifeSciences from November 2020 to the present, 4D Molecular Therapeutics from July 2020 to the present and Morphic Therapeutic from April 2021 to the present. Previously, Ms. Gray served on the Board of Directors of Apria, Inc. from May 2021 until its sale to Owens & Minor in March 2022. Ms. Gray received a BA in social studies, with honors, from Wesleyan University and an MBA from Columbia University. Ms. Gray’s senior management experience and demonstrated leadership in her field, her experience as a director of numerous companies, her experience as a Chief Financial Officer, her knowledge of financial and financing matters, her extensive transactional, operational, and value creation expertise within the healthcare and biopharmaceutical industry and experience with biotech investments and markets contributed to our board’s conclusion that she should serve as a director. ​
There are no family relationships among any of our directors or executive officers. See “Corporate Governance” below for additional information regarding our board of directors.
Resolution to be Voted Upon
An ordinary resolution, being a majority of the votes duly cast at the Annual Meeting, is required for the election of each director. Abstentions and broker non-votes will not affect the outcome of Proposal One, other than counting towards the quorum of the meeting.
The full text of the resolutions to be proposed is as follows:
“RESOLVED, as an ordinary resolution, that Dean J. Mitchell be appointed as a director of the Company, to hold office as a Class III Director for a three-year term in accordance with the Amended and Restated Memorandum and Articles of Association of the Company.”
“RESOLVED, as an ordinary resolution, that Deepika R. Pakianthan be appointed as a director of the Company, to hold office as a Class III Director for a three-year term in accordance with the amended and Restated Memorandum and Articles of Association of the Company.”
OUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE “FOR” EACH OF THE CLASS III NOMINEES NAMED ABOVE.
 
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PROPOSAL TWO:
RATIFICATION OF THE APPOINTMENT OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Our audit committee has appointed the firm of Ernst & Young LLP, independent registered public accounting firm, to audit our financial statements for the year ending December 31, 2023. Notwithstanding its selection and even if our shareholders ratify the selection, our audit committee, in its discretion, may appoint another independent registered public accounting firm at any time during the year if the audit committee believes that such a change would be in the best interests of Theravance Biopharma and its shareholders. At the Annual Meeting, the shareholders are being asked to ratify the appointment of Ernst & Young LLP as our independent registered public accounting firm for the year ending December 31, 2023. Our audit committee is submitting the selection of Ernst & Young LLP to our shareholders because we value our shareholders’ views on our independent registered public accounting firm and as a matter of good corporate governance. Representatives of Ernst & Young LLP are expected to attend the Annual Meeting and they will have an opportunity to make statements and will be available to respond to appropriate questions from shareholders. If this proposal does not receive the affirmative approval of a majority of the votes cast on the proposal, the audit committee would reconsider the appointment.
Principal Accounting Fees and Services
The following table sets forth all fees for invoices received or accrued by us for professional audit services and other services rendered by Ernst & Young LLP during the years ended December 31, 2022 and 2021.
​ ​ ​
Year Ended December 31
​
​ ​ ​
2022
​ ​
2021
​
​ ​ ​
(in thousands)
​
Audit Fees(1)
​ ​ ​ $ 2,218 ​ ​ ​ ​ $ 1,711 ​ ​
Audit-Related Fees
​ ​ ​ ​ — ​ ​ ​ ​ ​ — ​ ​
Tax Fees(2)
​ ​ ​ ​ 1,116 ​ ​ ​ ​ ​ 956 ​ ​
All Other Fees(3)
​ ​ ​ ​ — ​ ​ ​ ​ ​ 2 ​ ​
Total Fees .
​ ​ ​ $ 3,334 ​ ​ ​ ​ $ 2,669 ​ ​
​
(1)
For the years ended December 31, 2021 and 2022, this category represents fees for professional services provided in connection with the audit of our financial statements, review of our quarterly financial statements, and audit services provided in connection with other regulatory filings for which only the independent registered public accounting firm can reasonably be expected to provide.
​
(2)
For the years ended December 31, 2021 and 2022, this category represents fees related to tax consulting and planning services.
​
(3)
For the year ended December 31, 2021, this category represents subscription fees for online research tools.
​
Pre-Approval of Audit and Non-Audit Services
Consistent with requirements of the Exchange Act, applicable SEC rules and the Public Company Accounting Oversight Board regarding auditor independence, our audit committee is responsible for the appointment, compensation and oversight of the work of our independent registered public accounting firm. In recognition of this responsibility, our audit committee (or the chair if such approval is needed on a time urgent basis) pre-approves all audit and permissible non-audit services provided by the independent registered public accounting firm. These services may include audit services, audit-related services, tax services and other services. All services rendered by Ernst & Young LLP for the years ended December 31, 2021 and 2022 were pre-approved by our audit committee.
 
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Resolution to be Voted Upon
An ordinary resolution, being a majority of the votes duly cast at the Annual Meeting, is required to ratify the appointment of Ernst & Young LLP as our independent registered public accounting firm. Abstentions and broker non-votes, if any, will not affect the outcome of Proposal Two, other than counting towards the quorum of the meeting.
The full text of the resolution to be proposed is as follows:
“RESOLVED, as an ordinary resolution, that the appointment of Ernst & Young LLP as the independent registered public accounting firm of the Company for the year ending December 31, 2023 be confirmed, ratified and approved in all respects.”
OUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE “FOR” RATIFICATION OF THE APPOINTMENT OF ERNST & YOUNG LLP AS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
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PROPOSAL THREE:
ADVISORY VOTE ON EXECUTIVE COMPENSATION
We are required by Section 14A of the Exchange Act to give shareholders the right to vote to approve, on an advisory basis, the compensation of our named executive officers. This is commonly referred to as a “Say On Pay” proposal.
This vote is not intended to address any specific item of compensation, but rather the overall compensation of our named executive officers and the philosophy, policies and practices described in this proxy statement. As described further in the “Executive Compensation” section of this proxy statement, beginning on page 44, including the “Compensation Discussion and Analysis” and the related tables and narrative, the primary goals of our compensation programs are to fairly compensate employees, attract and retain highly qualified employees, motivate the performance of our employees towards key corporate goals, reward the achievement of such goals, and align our employees’ long-term interests with those of our shareholders. We believe our compensation programs link potential significant compensatory rewards to achievement of corporate operating goals designed to increase shareholder value and align our executives’ interest with those of shareholders through equity incentive compensation which vests over time and gives our executives direct proprietary interest in our operations and future success.
We made substantial progress during 2022 as a smaller, more focused company following our Restructuring, including, as described further in the “Compensation Discussion and Analysis” beginning on page 44, executing the board of directors’ vision for long-term and short-term value creation and the development of medicines that make a difference in the lives of patients by:
•
achieving all-time high net sales and profitability on an annual basis for YUPELRI;
​
•
selling our equity interests in TRC for approximately $1.1 billion while retaining future value through the right to receive contingent milestone payments and certain outer year-royalties;
​
•
retiring all of our outstanding debt, and completing $155.3 million of our total authorized up to $325 million capital return program by February 27, 2023;
​
•
securing funding for the majority of our new Phase 3 study for the use of ampreloxetine for patients suffering from Multiple System Atrophy and symptomatic neurogenic orthostatic hypotension; and
​
•
reducing our occupied leased office space by approximately 57% and resulting in an estimated cumulative cash savings of approximately $54.1 million over the life of our original lease terms.
​
In accordance with Section 14A of the Exchange Act, we are asking shareholders to vote on the following resolution:
“RESOLVED, as an ordinary resolution, that the compensation paid to the Company’s named executive officers as disclosed pursuant to Item 402 of Regulation S-K, including the Compensation Discussion and Analysis, compensation tables and narrative discussion is hereby approved.”
An ordinary resolution, being a majority of the votes duly cast at the Annual Meeting, is required for the non-binding advisory resolution regarding the compensation of our named executive officers. Abstentions and broker non-votes will not affect the outcome of Proposal Three, other than counting towards the quorum of the meeting.
This “Say On Pay” vote is advisory, and therefore not binding on our compensation committee or board of directors. Our board of directors and our compensation committee value the opinions of our shareholders, however, and will carefully review and consider the voting results when evaluating our executive compensation programs. We expect that our next shareholder vote on a “Say on Pay” Proposal will occur at our 2024 annual general meeting.
 
19
 
OUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE “FOR” APPROVAL OF THE COMPENSATION OF THE COMPANY’S NAMED EXECUTIVE OFFICERS AS DISCLOSED IN THE COMPENSATION DISCUSSION AND ANALYSIS, COMPENSATION TABLES AND NARRATIVE DISCUSSION.
 
20
 
PROPOSAL FOUR:
ADVISORY VOTE ON FREQUENCY OF SHAREHOLDER VOTES
ON EXECUTIVE COMPENSATION
Every six years, we are required by Section 14A of the Exchange Act to provide our shareholders the opportunity to vote on whether the Company should conduct an advisory vote on compensation of our named executive officers (commonly referred to as a “Say On Pay” proposal and which is the subject of Proposal Three this year) every one, two or three years. This Proposal Four provides our shareholders with the opportunity to cast an advisory vote indicating their preference on how often we should include a Say On Pay proposal in our proxy materials for future shareholder meetings. By voting on this proposal, shareholders may indicate their preference for us to conduct the Say On Pay vote every three years, every two years or every year or shareholders may abstain from voting.
After careful consideration, our board of directors recommends that future advisory votes on named executive officer compensation be conducted every year.
Shareholders who have concerns about executive compensation during the intervals between Say On Pay votes may provide input at any time to the board of directors, as described below under “Shareholder Communications with the Board of Directors.”
This vote is advisory, and therefore not binding on our board of directors or compensation committee. Notwithstanding the board of directors’ recommendation and the outcome of the shareholder vote on this Proposal Four, the board of directors may in the future decide to conduct advisory votes on a more or less frequent basis and may vary its practice based on factors such as discussions with shareholders and the adoption of material changes to compensation programs. Our decision as to how frequently it will conduct Say On Pay votes will be disclosed via Form 8-K as required by the SEC.
In accordance with Section 14A of the Exchange Act, we are asking shareholders to vote on the following resolution:
“RESOLVED, as an ordinary resolution, that the frequency of one year for advisory votes on the compensation of Company’s named executive officers is hereby approved.”
The frequency alternative that receives a plurality of the total votes cast on Proposal Four will be considered approved as the frequency alternative preferred by shareholders. Abstentions and broker non-votes will not affect the outcome of Proposal Four, other than counting towards the quorum of the meeting.
We expect that our next shareholder vote on the frequency of future non-binding advisory votes on named executive officer compensation will occur at our 2029 annual general meeting.
OUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE OF “1 YEAR” ON THE FREQUENCY OF FUTURE SHAREHOLDER ADVISORY VOTES ON EXECUTIVE COMPENSATION.
 
21
 
PROPOSAL FIVE:
APPROVAL OF OUR AMENDED AND RESTATED
2013 EQUITY INCENTIVE PLAN
The Background of the Amended and Restated 2013 Equity Incentive Plan
We are asking shareholders to approve an amendment and restatement of our 2013 Equity Incentive Plan (as amended and restated, the “Amended Plan”). On the recommendation of our compensation committee, our board of directors has approved the Amended Plan, subject to shareholder approval at the Annual Meeting.
The Theravance Biopharma, Inc. 2013 Equity Incentive Plan (the “Existing Plan”) was originally adopted by our board of directors on October 22, 2013 and has a ten year term which expires on October 22, 2023. In order to allow us to continue to grant equity awards to eligible employees and other service providers under this plan, we are proposing to amend and restate the Existing Plan. Our compensation committee carefully considered the Amended Plan and determined that it is necessary to continue to attract, retain and motivate our employees and other service providers. Equity-based compensation is a critical component of our ability to both attract and retain talent in our competitive biopharmaceutical sector. Improving retention and bolstering employee incentives to build shareholder value is particularly critical now, given the short- and long-term business priorities at stake. As we continue to position ourselves for value creation, the Amended Plan will allow us to offer our employees meaningful equity awards that will motivate them to expend maximum effort to improve our business results by providing them an opportunity to acquire or increase a direct proprietary interest in our operations and future success. If our shareholders do not approve this Amended Plan, we believe that it will be difficult for us to continue to use equity as a meaningful part of our compensation program in future years, which will put us at a significant disadvantage relative to our competitors and compromise our ability to enhance long-term shareholder value.
Our board of directors believes that our future success depends in large part on our ability to maintain a competitive compensation program to continue attracting, retaining and incentivizing key employees. Our board of directors also determined that the Amended Plan will provide our compensation committee with appropriate flexibility to structure a compensation program aimed at driving shareholder value without unreasonably diluting shareholders. Our executive compensation program is also aligned with the achievement of our strategic plan, including (1) continued focus on strong financial performance following the TRELEGY Royalty Transaction in July 2022 to achieve our expectation of generating non-GAAP profit1 in the second half of 2023 by building upon record sales of YUPELRI in the fourth quarter of 2022 and by continuing to allocate capital prudently, focusing on ampreloxetine and YUPELRI and a disciplined approach to costs; and (2) the continuation of our planned up to $325 million capital return to shareholders. In 2022 and 2023, we have been and remain focused on growing YUPELRI sales and executing on our clinical trials, which were reflected in performance conditions tied to performance-based restricted share units granted to our named executive officers primarily responsible for driving success of each program. We are also committed to directly providing value to shareholders through share price performance and accretive capital return, which is reflected in the use of options for a portion of our 2022 chief executive officer equity inventive compensation package and stock price performance conditions tied to half of our chief executive officer’s 2023 equity award grants. The $155 million of share repurchases we completed as of February 27, 2023 under our capital return program has partially offset dilution from prior equity grants under our Existing Plan. We plan to complete the remaining $170 million of repurchases under our capital return program by the end of 2023, which is expected to further offset dilution from future grants under our Amended Plan, if approved by shareholders.
In carefully reviewing the Amended Plan, our compensation committee revised key features of the Existing Plan to better align our equity compensation program with current best practices, including to, among other things:
•
Extend the term of the plan by an additional ten years;
​
​
1
Non-GAAP profit is expected to consist of GAAP income before taxes less share-based compensation expense and non-cash interest expense.
​
 
22
 
•
Eliminate the “evergreen” feature, which provided for automatic annual increases in the number of shares available for issuance under the plan;
​
•
Reduce the number of shares reserved for issuance by 3,808,287 shares, or a 46% reduction in shares available for future awards;
​
•
Eliminate our ability to reprice options and share appreciation rights (“SARs”) without first obtaining shareholder approval; and
​
•
Remove certain provisions no longer necessary since the repeal of the exemption from the annual deduction limitation imposed by Section 162(m) of the Internal Revenue Code for performance-based compensation, including annual limits on the amount of awards that could be granted to any participant in a fiscal year.
​
We analyzed various factors to determine the number of shares to request under the Amended Plan, including peer burn rate and dilution practices. We believe that the proposed reduction of the available share reserve under the Amended Plan highlights our commitment to manage our equity use responsibly.
If the Amended Plan is approved, potential total dilution from existing outstanding equity awards plus shares available for future awards amounts to 17.0% of fully-diluted shares outstanding (based on 63,225,611 shares outstanding as of March 6, 2023), which is a 19% reduction from the total potential dilution under the Existing Plan and below the median of our compensation peer group.
The 4.5 million shares that will be available for future awards under the Amended Plan is estimated to last for two years (i.e., until our 2025 annual shareholder meeting), based on our current plans and operating assumptions, which represents an equity compensation spending rate that is in line with our peers and reasonable for our industry. However, while this estimate is based on our current plans and operating assumptions, there can be no guarantee that future events, including changes in future business conditions and our share price, will not require us to grant equity awards at a different pace than currently expected. Based on the last reported sales price of our ordinary shares as reported on Nasdaq on March 6, 2023, which was $10.15 per share, the maximum aggregate market value of the shares available for issuance under the Amended Plan is $45,675,000.
The following table includes information about shares available for future awards and potential dilution under the Existing Plan and Amended Plan as of March 6, 2023:
​ ​ ​
Existing
Plan
​ ​
Amended
Plan
​ ​
Reduction
​
Total Shares Reserved for Issuance (from inception)
​ ​ ​ ​ 29,840,416 ​ ​ ​ ​ ​ 26,032,129 ​ ​ ​ ​ ​ 13% ​ ​
Shares Issued under the Existing Plan (inception through March 6, 2023
​ ​ ​ ​ 21,532,129 ​ ​ ​ ​ ​ 21,532,129 ​ ​ ​ ​ ​ — ​ ​
Outstanding Options(1)
​ ​ ​ ​ 2,491,792 ​ ​ ​ ​ ​ 2,491,792 ​ ​ ​ ​ ​ — ​ ​
Outstanding Restricted Shares/Restricted Share Units
​ ​ ​ ​ 5,602,143 ​ ​ ​ ​ ​ 5,602,143 ​ ​ ​ ​ ​ — ​ ​
Total Outstanding Awards (Shares)
​ ​ ​ ​ 8,093,935 ​ ​ ​ ​ ​ 8,093,935 ​ ​ ​ ​ ​ — ​ ​
Total Shares Available for Future Awards Under the 2013 Equity Incentive Plan After March 6, 2023
​ ​ ​ ​ 8,308,287 ​ ​ ​ ​ ​ 4,500,000 ​ ​ ​ ​ ​ 46% ​ ​
Total Shares Available for Future Awards Under the 2014 New Employee Equity Incentive Plan After March 6, 2023
​ ​ ​ ​ 345,861 ​ ​ ​ ​ ​ 345,861 ​ ​ ​ ​ ​ — ​ ​
Total Potential Dilution (Outstanding + Available)
​ ​ ​ ​ 16,748,083 ​ ​ ​ ​ ​ 12,939,796 ​ ​ ​ ​ ​ 23% ​ ​
Total Potential Dilution (% Fully-Diluted)
​ ​
20.9%
​ ​
17.0%
​ ​ ​ ​ 19% ​ ​
Ordinary Shares Outstanding
​ ​ ​ ​ 63,225,611 ​ ​ ​ ​ ​ 63,225,611 ​ ​ ​ ​ ​ — ​ ​
Fully-Diluted Ordinary Shares Outstanding
​ ​ ​ ​ 79,973,694 ​ ​ ​ ​ ​ 76,165,407 ​ ​ ​ ​ ​ 5% ​ ​
​
(1)
As of March 6, 2023 these outstanding options had a weighted average exercise price of $19.36, and the weighted average remaining contractual life of such options was 5.16 years.
​
 
23
 
For information about the number of our ordinary shares available for future issuance under all of our equity compensation plans, please see “Equity Compensation Plan Information” below.
Purpose of the Amended Plan
We use equity compensation to attract, retain and motivate employees, in particular our key employees, and non-employee directors, to create a direct alignment with shareholder interests through share ownership and to conserve our cash resources. For these reasons we believe approval of the Amended Plan is essential to our long-term success.
Reasons for the Amended Plan Proposal
Shareholder approval of the Amended Plan is necessary in order for us to (1) meet the shareholder approval requirements of Nasdaq and (2) grant incentive stock options (“ISOs”).
Consequences if the Amended Plan is Not Approved
If the Amended Plan is not approved by our shareholders, the Existing Plan will terminate as of October 22, 2023, the tenth anniversary of the date our board of directors originally adopted the plan, and we will not be able to grant equity awards under the Existing Plan after that date. We believe our ability to recruit, retain and incentivize top talent will be adversely affected if the Amended Plan is not approved. While we will be able to use our 2014 New Employee Equity Incentive Plan to grant equity awards to newly hired employees, the Amended Plan is the only plan that allows us to grant equity awards to our current employees and other service providers after the Existing Plan expires. If we are not able to grant equity awards under the Amended Plan, we may be forced to increase the cash component of our compensation programs, which we believe will adversely impact our business and will prevent us from maintaining our competitive annual equity grant practices to key employees in future years.
Material Terms of the Amended Plan
The material terms of the Amended Plan are summarized below. This summary, however, is not intended to be a complete description of the Amended Plan and is qualified in its entirety by reference to the complete text of the Amended Plan, which is attached to this proxy statement as Appendix A. To the extent there is a conflict between the terms of this summary and the Amended Plan, the terms of the Amended Plan will control.
Types of Awards.   The Amended Plan provides for the grant of options to purchase ordinary shares (including both incentive stock options described in Section 422 of the Internal Revenue Code of 1986, as amended (the “Code”) and options not described in Sections 422 or 423 of the Code), restricted share awards, share unit awards and SARs (collectively, “share awards”), as well as performance cash awards.
Eligibility.   Employees (including officers), non-employee directors and consultants who render services to us or our affiliates (whether now existing or subsequently established) are eligible to receive awards under the Amended Plan. As of March 6, 2023, approximately 119 persons (including 5 executive officers and 8 directors) were eligible to participate in the Amended Plan. While consultants are eligible to receive awards under the Amended Plan, we have not typically granted equity awards to consultants under the Existing Plan, nor do we have any current plans to do so under the Amended Plan.
Administration.   The compensation committee of our board of directors, which is comprised of two or more independent members of our board of directors, administers the Amended Plan. The committee has the complete discretion to make all decisions relating to the Amended Plan and outstanding awards, including modifications of outstanding awards. The equity awards committee of our board of directors also has the authority to make and modify option and other equity award grants to employees who are employed at or below the vice president level.
Share Reserve.   As of March 6, 2023, we have reserved 26,032,129 ordinary shares for issuance under the Amended Plan. This represents a reduction in the shares reserved for issuance under the Existing Plan of 3,808,287 ordinary shares. The number of ordinary shares that may be issued pursuant to incentive stock options granted under the Amended Plan shall not exceed 4,500,000. In general, to the extent that awards
 
24
 
under the Amended Plan are forfeited, terminate or are settled in cash for any reason without the issuance of ordinary shares, those shares will again become available for issuance under the Amended Plan, as will restricted shares and ordinary shares issued upon the exercise of options that are repurchased by us. In addition, the number of ordinary shares that we may issue under the Amended Plan will not be reduced by the number of ordinary shares subject to any awards we grant in substitution or assumption of any outstanding awards that were previously issued by a corporation acquired by us, provided that ordinary shares subject to any award that is assumed or substituted by us will not again become available for grant to the extent the assumed or substituted award is later forfeited, expired or settled in cash. Further, to the extent permitted by the applicable Nasdaq rules, if we acquire or combine with a company that has shares available under one or more pre-existing plans, then those shares will generally be available for awards under the Amended Plan, provided that the awards are made in compliance with the terms of the applicable pre- existing plan and those awards are only made to those individuals who were not employed by or providing service to us immediately prior to the acquisition or combination.
No Repricings.   Other than in connection with certain corporate transactions, including stock splits, stock dividends, mergers, spin-offs and certain other similar transactions, unless shareholder approval is obtained, under the Amended Plan the plan administrator may not reduce the exercise price of any outstanding option or SAR after the date of grant, cancel any previously granted option or SAR in exchange for cash or another award if the exercise price of such option or SAR exceeds the fair market value of an ordinary share on the date of such cancellation or take any other action with respect to an option or SAR that would be treated as a repricing under the rules and regulations of Nasdaq.
Options and Share Appreciation Rights.   The per share exercise price of options granted under the Amended Plan may not be less than 100% of the fair market value of an ordinary share on the date the option is granted. The exercise price of options granted under the Amended Plan may be paid in cash or, with the administrator’s consent:
•
with ordinary shares that the optionee already owns;
​
•
by an immediate sale of the option shares through a broker approved by us;
​
•
by a margin loan;
​
•
by a net exercise procedure;
​
•
with a full-recourse promissory note, if permitted by applicable law; or
​
•
by any other form consistent with applicable laws, regulations and rules.
​
An optionee who exercises a SAR receives the increase in value of an ordinary share over the exercise price. The exercise price for SARs may not be less than 100% of the fair market value of an ordinary share on the date the SAR is granted. SARs may be granted in tandem with, or independent of, option grants under the Amended Plan. Amounts paid with respect SARs may be made in cash, in ordinary shares, or any combination thereof.
Options and SARs vest as determined by the administrator at the time of grant. Options and SARs expire at the time determined by the administrator, up to a maximum of ten years. They generally expire earlier if the participant’s service terminates prior to the expiration of the original term.
No non-employee director may receive options and SARs covering more than 228,571 ordinary shares (in the aggregate) in any fiscal year.
Restricted Shares and Share Units.   Restricted shares may be granted under the Amended Plan in consideration for (a) cash, (b) property, (c) past or future services rendered to us or our affiliates, (d) full- recourse promissory notes or (e) any other form of legal consideration approved by the administrator. Share units (also referred to as “RSUs”) may be granted under the Amended Plan for no consideration. In general, these awards will be subject to vesting. Vesting may be tied to length of service, attainment of performance goals, or a combination of both, as determined by the administrator. No non-employee director may receive restricted shares and share units covering more than 228,571 ordinary shares (in the aggregate) in any fiscal year. Settlement of vested RSUs may be made in cash, ordinary shares or any combination
 
25
 
thereof. Pursuant to the Amended Plan, dividends and dividend equivalents on restricted shares and RSUs will be subject to the same vesting conditions as the underlying award.
Performance Cash Awards.   Performance cash awards may be granted under the Amended Plan based on the attainment of performance goals over a specified performance period.
Performance Goals.   The Amended Plan permits the issuance of performance cash awards, or awards of restricted shares or share units with performance-based vesting and provides the administrator the flexibility to determine the appropriate performance goals under each such award in order to properly motivate our workforce. These goals may include financial goals (e.g., revenue), development goals (e.g., clinical or regulatory milestones), and/or individual goals. The administrator may adjust performance goals or results under a performance goal in the event of changes in our business or other events or circumstances that render the original goals or results unsuitable.
Transferability of Awards.   Awards under the Amended Plan generally may not be transferred other than by beneficiary designation, a will or the laws of descent and distribution, unless approved by the administrator.
Changes in Capital Structure.   In the event there is a stock split, a dividend payable in ordinary shares, or a combination or consolidation of the outstanding ordinary shares (by reclassification or otherwise) into a lesser number of ordinary shares, adjustments will automatically be made to (a) the number and kind of shares reserved for issuance under the Amended Plan, including the limit on incentive stock options and the annual limitations on awards that may be granted to any non-employee director in a fiscal year, and (b) the number and kind of shares and exercise prices, if applicable, of all outstanding share awards. In the event of an extraordinary dividend, a recapitalization, a spin-off or similar occurrence, the administrator shall, in its sole discretion, make one or more of the foregoing adjustments as it deems appropriate.
Corporate Transactions.   In the event that we are a party to a merger, consolidation, or a change in control transaction, all outstanding share awards will be governed by the terms of the definitive transaction agreement (or, in the event the transaction does not entail a definitive agreement to which we are a party, in a manner determined by the administrator). Such treatment may include any of the following actions with respect to each outstanding share award:
•
the continuation, assumption, or substitution of a share award by the surviving entity or its parent;
​
•
full acceleration of the vesting of a share award followed by its termination prior to the closing of the transaction after an opportunity to exercise, if applicable, the share award;
​
•
the cancellation of a share award in exchange for a payment equal to the excess, if any, of (a) the value that the holder of an ordinary share receives in the transaction over (b) if applicable, the exercise price otherwise payable in connection with the share award; provided that such payment may be subject to the participant’s continued service on a basis no less favorable than the schedule under which the share award would have originally vested; or
​
•
the assignment of any reacquisition or repurchase rights held by us in respect of an award of restricted shares to the surviving entity or its parent (with proportionate adjustments made to the price per share to be paid upon exercise of such rights).
​
Unless the administrator provides otherwise in an award agreement, in the event of a change in control, each outstanding share award under the Amended Plan will, immediately prior to the effective date of the change in control, become fully vested and exercisable for all of the ordinary shares at the time subject to such share award. However, an outstanding share award will not accelerate vesting if, and to the extent such share award is, in connection with the change in control, either assumed by the successor corporation (or parent) or replaced with a comparable award from the successor corporation (or its parent). The administrator also has the discretion to accelerate the vesting of outstanding share awards whether or not upon a change in control, which acceleration may or may not be conditioned upon the subsequent termination of the participant’s service within a specified period following the transaction.
 
26
 
For this purpose, a change in control transaction includes:
•
any merger or consolidation of us where persons who were not our shareholders prior to such merger or consolidation own 50% or more of the total voting power of the surviving entity or its parent;
​
•
the sale, transfer or other disposition of all or substantially all of our assets;
​
•
a change in the composition of our board of directors as a result of which fewer than 50% of the incumbent directors either were directors on the date twelve months prior to the change in control (the “Original Directors”) or were appointed or nominated for election to the board of directors by a majority of the Original Directors or directors whose appointment or nomination was approved by at least 50% of the Original Directors; or
​
•
any person acquiring beneficial ownership of at least 50% of our total voting power.
​
Amendments or Termination.   Our board of directors may amend or terminate the Amended Plan at any time and for any reason and no awards will be made under the Amended Plan after it is terminated. If not terminated earlier by our board of directors, the Amended Plan will automatically terminate on the 10th anniversary of the date our board of directors approved the Amended Plan. If our board of directors amends the plan, it does not need to ask for shareholder approval of the amendment unless applicable law so requires.
Certain Federal Income Tax Aspects of Awards Granted Under the Amended Plan
This is a general summary of the federal income tax aspects of awards that may be made under the Amended Plan based on existing U.S. federal income tax laws. It does not describe a number of special tax rules, including the alternative minimum tax and various elections that may be applicable under certain circumstances. It also does not reflect provisions of the income tax laws of any municipality, state or foreign country in which a holder may reside, nor does it reflect the tax consequences of a holder’s death. The tax consequences of awards granted under the Amended Plan depend upon the type of award.
Incentive Stock Options.   No taxable income is recognized by an optionee upon the grant or vesting of an ISO, and no taxable income is recognized at the time an ISO is exercised unless the optionee is subject to the alternative minimum tax. The excess of the fair market value of the purchased shares on the exercise date over the exercise price paid for the shares is includable in alternative minimum taxable income.
If the optionee holds the purchased shares for more than one year after the date the ISO was exercised and more than two years after the ISO was granted (the “required ISO holding periods”), then the optionee will generally recognize long-term capital gain or loss upon disposition of such shares. The gain or loss will equal the difference between the amount realized upon the disposition of the shares and the exercise price paid for such shares. If the optionee disposes of the purchased shares before satisfying either of the required ISO holding periods, then the optionee will recognize ordinary income equal to the fair market value of the shares on the date the ISO was exercised over the exercise price paid for the shares (or, if less, the amount realized on a sale of such shares). Any additional gain will be a capital gain and will be treated as short-term or long-term capital gain depending on how long the shares were held by the optionee.
Nonstatutory Options.   No taxable income is recognized by an optionee upon the grant or vesting of a nonstatutory option (“NSO”). The optionee will generally recognize ordinary income in the year in which the option is exercised equal to the excess of the fair market value of the purchased shares on the exercise date over the exercise price paid for the shares. If the optionee is an employee or former employee, the optionee will be required to satisfy the tax withholding requirements applicable to such income. Upon resale of the purchased shares, any subsequent appreciation or depreciation in the value of the shares will be treated as short-term or long-term capital gain or loss depending on how long the shares were held by the optionee.
Restricted Shares.   A participant who receives an award of restricted shares generally does not recognize taxable income at the time of the award. Instead, the participant recognizes ordinary income when the shares vest, subject to withholding if the participant is an employee or former employee. The amount of taxable income is equal to the fair market value of the shares on the vesting date(s) less the cash, if any, paid for the shares. Alternatively a participant may make a one-time election to recognize income
 
27
 
at the time the participant receives restricted shares in an amount equal to the fair market value of the restricted shares (less any cash paid for the shares) on the date of the award by making an election under Section 83(b) of the Code.
Restricted Share Unit Awards.   In general, no taxable income results upon the grant of a restricted share unit (“RSU”). The recipient will generally recognize ordinary income, subject to withholding if the recipient is an employee or former employee, equal to the fair market value of the shares that are delivered to the recipient upon settlement of the RSU. Upon resale of the shares acquired pursuant to an RSU, any subsequent appreciation or depreciation in the value of the shares will be treated as short-term or long-term capital gain or loss depending on how long the shares were held by the recipient.
Share Appreciation Rights.   In general, no taxable income results upon the grant of a SAR. A participant will generally recognize ordinary income in the year of exercise equal to the value of the shares or other consideration received. In the case of a current or former employee, this amount is subject to withholding.
Section 409A and Section 457A.   The foregoing description assumes that Section 409A of the Code does not apply to an award. In general, options and SARs are exempt from Section 409A if the exercise price per share is at least equal to the fair market value per share of the underlying stock at the time the option or SAR was granted. RSUs are subject to Section 409A unless they are settled within two and one half months after the end of the later of (i) the end of our fiscal year in which vesting occurs or (ii) the end of the calendar year in which vesting occurs. Restricted share awards are not generally subject to Section 409A. If an award is subject to Section 409A and the provisions for the exercise or settlement of that award do not comply with Section 409A, then the participant would be required to recognize ordinary income whenever a portion of the award vested (regardless of whether it had been exercised or settled). This amount would also be subject to a 20% U.S. federal tax in addition to the U.S. federal income tax at the participant’s usual marginal rate for ordinary income. Unless otherwise set forth in the applicable award agreement, it is intended that each award granted under the Amended Plan be exempt from Section 457A of the Code.
Tax Consequences to Us.   We will generally be entitled to an income tax deduction at the time and to the extent a participant recognizes ordinary income as a result of an award granted under the Amended Plan. However, Section 162(m) of the Code may limit the deductibility of certain awards granted under the Amended Plan.
New Plan Benefits
Because the Amended Plan is discretionary, benefits to be received by individual participants are not determinable. However, pursuant to our automatic director grant program (described in the section of this proxy statement titled “Corporate Governance — Director Compensation”), non-employee members of our board of directors receive equity awards in connection with their joining and re-election to our board of directors. The following table describes the awards that our current non-employee directors as a group will be granted on the date of our 2023 annual meeting, assuming each director up for election is re-elected to our board of directors, and highlights the fact that none of our named executive officers or other employees will receive any set benefits or awards conditioned upon shareholder approval of the Amended Plan:
Name
​ ​
Dollar Value of
Options(1)
​ ​
Dollar Value of
RSUs(1)
​
Named Executive Officers: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
Rick E Winningham
​ ​ ​ ​ — ​ ​ ​ ​ ​ — ​ ​
Rhonda F. Farnum
​ ​ ​ ​ — ​ ​ ​ ​ ​ — ​ ​
Richard A. Graham
​ ​ ​ ​ — ​ ​ ​ ​ ​ — ​ ​
Andrew A. Hindman
​ ​ ​ ​ — ​ ​ ​ ​ ​ — ​ ​
Ann B. Brady
​ ​ ​ ​ — ​ ​ ​ ​ ​ — ​ ​
All current executive officers as a group (5 persons)
​ ​ ​ ​ — ​ ​ ​ ​ ​ — ​ ​
All current non-employee directors as a group (8 persons)
​ ​ ​ $ 875,000 ​ ​ ​ ​ $ 700,000 ​ ​
All current employees, including current officers who are not executive officers, as a group
​ ​ ​ ​ — ​ ​ ​ ​ ​ — ​ ​
 
28
 
​
(1)
Number of shares will not be determinable until the grant date. See “Director Compensation” below for more information.
​
Existing Plan Benefits
The following table sets forth information about share options granted under the Existing Plan since inception through March 6, 2023:
Name
​ ​
Number of
Shares Underlying
Share Options
Granted
​ ​
Named Executive Officers ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
Rick E Winningham
​ ​ ​ ​ 915,000 ​ ​ ​
Rhonda Farnum
​ ​ ​ ​ 150,000 ​ ​ ​
Rick Graham
​ ​ ​ ​ 25,000 ​ ​ ​
Andrew A. Hindman
​ ​ ​ ​ 260,000 ​ ​ ​
Ann B. Brady
​ ​ ​ ​ 55,000 ​ ​ ​
Non-Employee Director Nominees ​ ​ ​ ​ ​ ​ ​ ​
Dean J. Mitchell
​ ​ ​ ​ 76,000 ​ ​ ​
Deepa R. Pakinathan
​ ​ ​ ​ 51,000 ​ ​ ​
All current executive officers as a group (5 persons)
​ ​ ​ ​ 1,119,500 ​ ​ ​
All current non-employee directors as a group (8 persons)
​ ​ ​ ​ 517,166 ​ ​ ​
All current employees, including current officers who are not executive officers, as a group
​ ​ ​ ​ 858,077 ​ ​ ​
No share options or other awards have been granted under the Existing Plan to any associate of any of our directors (including director nominees) or executive officers.
Vote Required for Approval
We are asking shareholders to vote on the following resolution:
“RESOLVED, as an ordinary resolution, that the amendment and restatement of the 2013 Equity Incentive Plan in the form of the Amended and Restated 2013 Equity Incentive Plan annexed to the proxy statement as Appendix A be confirmed, ratified and approved in all respects.”
An ordinary resolution, being a majority of the votes duly cast at the Annual Meeting, is required for approval of the Amended Plan. Abstentions and broker non-votes will not affect the outcome of Proposal Five, other than counting towards the quorum of the meeting. If this proposal is not approved, the Existing Plan will remain in effect until its expiration on October 22, 2023, after which time we will not be able to grant any further equity awards under the Existing Plan.
OUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS
A VOTE “FOR” THE APPROVAL OF THE AMENDED AND RESTATED
2013 EQUITY INCENTIVE PLAN.
 
29
 
PROPOSAL SIX:
DECLASSIFICATION OF OUR BOARD OF DIRECTORS
Background
Our Amended and Restated Memorandum and Articles of Association currently provides for a classified board of directors consisting of three classes of directors, with each class of directors serving staggered three-year terms. As a result, only one class of directors stands for election at each of our annual general meetings of shareholders, such that shareholders vote on and elect approximately one-third of the Board each year. At the Annual Meeting, we are asking shareholders to approve and adopt a proposal to amend and restate our Amended and Restated Memorandum and Articles of Association to declassify our board over time. If the amendment to declassify our board over time (the “Declassification Amendment”) is approved, the declassification of our board will be phased-in so that beginning with the class of directors standing for election at our annual general meeting in 2024, directors will be elected for shorter terms until our board of directors is fully declassified at our annual general meeting in 2026.
The approval of the Declassification Amendment by the shareholders would not shorten the terms for any previously elected directors. This means that, even if the Declassification Amendment is approved by the shareholders, directors who were elected prior to our annual general meeting in 2024 would continue to hold office until the end of the terms for which they were elected and until their successors are duly elected and qualified. Accordingly, directors previously elected at our annual general meeting in 2022 would continue to have a term that expires at our annual general meeting in 2025, and directors elected at the Annual Meeting would continue to have a term that expires at our annual general meeting in 2026. If the Declassification Amendment is approved by the shareholders, all directors will be elected on an annual basis beginning at our annual general meeting in 2026.
In February 2023, our board of directors determined that the proposed amendment and restatement of the Amended and Restated Memorandum and Articles of Association to declassify the board over time is advisable and in the best interests of us and our shareholders, and unanimously approved the Declassification Amendment, subject to shareholder approval at the Annual Meeting.
Reasons for the Declassification Amendment
We are committed to reviewing and adopting corporate governance practices that are in the best interests of both us and our shareholders and have evaluated our classified board structure on numerous occasions to ensure that it is consistent with the best interests of us and our shareholders. Our board of directors recognizes that a classified structure may offer several advantages, such as promoting board stability and continuity, providing a greater opportunity to protect the interests of shareholders in the event of an unsolicited takeover offer and reinforcing a commitment to long-term perspectives and maximizing value for all of our shareholders. Our board of directors also recognizes that many institutional investors believe that the election of directors is the primary means for shareholders to express their views on each director’s performance, influence corporate governance policies and hold our board of directors and management accountable for implementing these policies. Our board of directors considered the arguments in favor of and against continuation of the classified board structure and determined that it would be in the best interests of us and our shareholders, subject to shareholder approval, to declassify our board of directors over a phase-in period commencing at our annual general meeting in 2024.
Effect of the Declassification Amendment
If the Declassification Amendment is approved and adopted by our shareholders at the Annual Meeting, we will begin the phased transition to a declassified board structure beginning at our annual general meeting in 2024. In accordance with the proposed Declassification Amendment, the transition will be phased in as follows:
•
If each of Mr. Mitchell and Dr. Pakianathan, the Class III directors, are elected pursuant to Proposal 1 at the 2023 Annual General Meeting, they will be elected to serve a three-year term expiring at our annual general meeting in 2026.
​
 
30
 
•
Each of Messrs. Broshy and Malkiel and Dr. Smaldone Alsup would continue to serve as Class I directors for a term expiring at our annual general meeting in 2024. At our annual general meeting in 2024, each of these individuals and/or any other individual(s) nominated by our board of directors to serve as a director in such class would stand for election to serve a two-year term.
​
•
Each of Messrs. Winningham and O’Connor and Ms. Gray would continue to serve as Class II directors for a term expiring at our annual general meeting in 2025. At our annual general meeting in 2025, each of these individuals and/or any other individual(s) nominated by our board of directors to serve as a director in such class would stand for election to serve a one-year term.
​
•
Commencing with the election of directors at our annual general meeting in 2026 and at each annual general meeting thereafter, our board of directors shall no longer be classified, and all directors would be elected to serve one-year terms.
​
Until the election of directors at our annual general meeting in 2026, our board of directors will continue to be classified and any director elected to fill a newly created directorship or vacancy would serve for the remainder of the full term of the class of directors for which the newly created directorship was created or the vacancy occurred.
The Declassification Amendment is set forth in Appendix B, with deletions indicated by strikeouts and additions indicated by underlining. The foregoing description of the Declassification Amendment is qualified in its entirety by reference to, and should be read in conjunction with, the full text of the Declassification Amendment attached as Appendix B.
Effective Date of the Declassification Amendment
If shareholders approve and adopt the Declassification Amendment, it will become effective when the requisite vote for this Proposal Six is obtained at the Annual Meeting. As a matter of Cayman Islands law, the Declassification Amendment is not conditional, or effective, upon any government filings in the Cayman Islands.
Impact if the Declassification Amendment is not Adopted
If the Declassification Amendment is not approved and adopted by our shareholders, our Amended and Restated Memorandum and Articles of Association will not be amended as set forth above and our board of directors will continue to be classified with directors serving staggered terms.
Full Text of the Resolution
“RESOLVED, as a special resolution, that the Amended and Restated Memorandum and Articles of Association of the Company currently in effect be amended and restated by their deletion in their entirety and the substitution in their place of the Amended and Restated Memorandum and Articles of Association in the form annexed to the proxy statement as Appendix B.”
Vote Required for Approval of Declassification Amendment
Approval of the Declassification Amendment requires a special resolution under Cayman Islands law, being the affirmative vote of at least two-thirds of the shares who, being present and entitled to vote at the meeting, vote at the meeting. Abstentions and broker non-votes, while considered present for the purposes of establishing a quorum, will not count as a vote cast at the meeting.
OUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE “FOR” THE AMENDMENT TO OUR AMENDED AND RESTATED MEMORANDUM AND ARTICLES OF ASSOCIATION TO DECLASSIFY OUR BOARD OF DIRECTORS OVER TIME.
 
31
 
CORPORATE GOVERNANCE
Code of Business Conduct
Our board of directors has adopted a code of business conduct that applies to all of our employees, officers and directors, including our Chief Executive Officer, Chief Financial Officer, and other executive and senior financial officers. The full text of our code of business conduct is posted on the Investor Relations portion of our website at www.theravance.com. We intend to disclose future amendments to, or waiver of, our code of business conduct, at the same location on our website identified above.
Director Independence
Our ordinary shares are listed on The Nasdaq Global Market under the symbol “TBPH.” The listing rules of this stock exchange generally require that a majority of the members of a listed company’s board of directors be independent. In addition, the rules of Nasdaq require that, subject to specified exceptions, each member of a listed company’s audit, compensation, and nominating/corporate governance committees be independent. Under Nasdaq’s rules, a director will only qualify as an “independent director” if that person is not an executive officer of the company and, in the opinion of that company’s board of directors, that person does not have a relationship that would interfere with the exercise of independent judgment in carrying out the responsibilities of a director.
Audit committee members must also satisfy the independence criteria set forth in Rule 10A-3 under the Securities Exchange Act. In order to be considered independent for purposes of Rule 10A-3, a member of an audit committee of a listed company may not, other than in his or her capacity as a member of the audit committee, the board of directors, or any other board committee: (1) accept, directly or indirectly, any consulting, advisory, or other compensatory fee from the listed company or any of its subsidiaries; or (2) be an affiliated person of the listed company or any of its subsidiaries.
Compensation committee members must also satisfy the independence criteria set forth under the Nasdaq rules. In order for a member of a listed company’s compensation committee to be considered independent for purposes of the Nasdaq rules, the listed company’s board of directors must consider all factors specifically relevant to determine whether a director has a relationship to the company which is material to that director’s ability to be independent from management in connection with the duties of a compensation committee member, including but not limited to: (1) the source of compensation of such director, including any consulting, advisory or other compensatory fee paid by the company to such director; and (2) whether such director is affiliated with the company, a subsidiary of the company or an affiliate of a subsidiary of the company.
Our board of directors has undertaken a review of the independence of each director. In making this determination, our board of directors considered the relationships that each non-employee director has with us and all other facts and circumstances that our board of directors deemed relevant in determining their independence. Based on this review, our board of directors has determined that all of our directors other than Mr. Winningham are “independent” as that term is defined under the Nasdaq for purposes of serving on our board of directors and those committees of our board of directors upon which each such director sits. Additionally, William D. Young, who is not standing for reelection at the Annual Meeting, and Susan M. Molineaux, Ph.D., who did not stand for reelection at our 2022 annual general meeting, were each independent directors during 2022 and 2023, as the case may be, under the standards applicable to our continuing directors and our director nominees. The independent members of our board of directors hold, and will continue to hold, separate regularly scheduled executive session meetings at which only independent directors are present.
Lead Independent Director
Mr. Winningham serves as our chairman of the board of directors and our principal executive officer. Mr. Young has served, and Mr. Mitchell is expected to serve from and after the Annual Meeting, as our lead independent director. Our lead independent director provides a source of leadership for the board of directors that is complementary to that of Mr. Winningham as chairman of the board of directors and helps to ensure the effective independent functioning of the board of directors in its oversight responsibilities.
 
32
 
The lead independent director coordinates the activities of the other independent directors, including coordinating with the chairman to determine an appropriate schedule of board of directors and committee meetings, working with the chairman to schedule any special update meetings he or she may determine would benefit the board of directors, working with the chairman to jointly set and agree upon the agenda for meetings of the board of directors, coordinating with the chairman on the quality, quantity and timeliness of information submitted by management to independent directors, developing agendas for and serving as chairman of the executive sessions of the board of directors’ independent directors, calling any special meetings of the independent directors, serving as the principal liaison between the independent directors and the chairman, coordinating with the General Counsel and Secretary responses to questions and/or concerns from shareholders, employees, or other interested parties, and, in his or her dual role as lead independent director and chairman of the compensation committee, delivering the results of the chief executive officer’s performance evaluation. Our board believes that the combined role of chairman and chief executive officer, while balanced with our use of a lead independent director, facilitates centralized board leadership in one person, so there is no ambiguity about accountability. In addition, given the relatively small size of our company, our board of directors believes that Mr. Winningham’s leadership as both chairman and chief executive officer is appropriate. Our Board of Directors Guidelines on Significant Corporate Governance Issues (“Corporate Governance Guidelines”) are posted on the Investor Relations portion of our website at www.theravance.com.
Board Committees
Our board of directors has established an audit committee, a compensation committee and a nominating/​corporate governance committee. Our board of directors and its committees set schedules for meetings throughout the year and can also hold special meetings and act by written resolutions from time to time, as appropriate. Our board of directors has delegated various responsibilities and authority to its committees as generally described below. The committees regularly report on their activities and actions to the full board of directors. Each member of each of our compensation, nominating/corporate governance and audit committees qualifies as an independent director in accordance with Nasdaq listing standards. Each committee of our board of directors has a written charter approved by our board of directors. Copies of each charter are posted on the Investor Relations portion of our website at www.theravance.com.
Audit Committee
The current members of our audit committee are Drs. Malkiel and Pakianathan and Messrs. Broshy and O’Connor, each of whom is a non-employee member of our board of directors and can read and understand fundamental financial statements. Dr. Malkiel has served as a member of the committee since October 2013, Mr. Broshy has served since April 2015, Mr. O’Connor has served since October 2015, and Dr. Pakianathan has served since July 2020. Drs. Malkiel and Pakianathan and Messrs. Broshy and O’Connor are each independent under the rules and regulations of the SEC and the listing standards of the Nasdaq applicable to audit committee members. Dr. Malkiel serves as chair of the audit committee. Our board of directors has determined that Dr. Malkiel qualifies as an audit committee financial expert within the meaning of SEC regulations and meets the financial sophistication requirements of Nasdaq. During the year ended December 31, 2022, our audit committee held seven meetings.
The audit committee of our board of directors oversees our accounting practices, system of internal controls, audit processes and financial reporting processes. Among other things, our audit committee is responsible for periodically reviewing financial reporting processes and disclosure controls and processes based on consultation with the Company’s management and independent auditors and counsel and reviewing with management and the independent auditors the adequacy and effectiveness of the Company’s internal controls over financial reporting and the effectiveness of the Company’s disclosure controls and procedures. It also discusses the scope and results of the audit with our independent registered public accounting firm, reviews with our management and our independent registered public accounting firm our interim and year-end operating results and, as appropriate, initiates inquiries into aspects of our financial affairs. Our audit committee is responsible for establishing procedures for the receipt, retention and treatment of complaints regarding accounting, internal accounting controls or auditing matters, and for the confidential, anonymous submission by our employees of concerns regarding questionable accounting or auditing matters. In addition, our audit committee has sole and direct responsibility for the appointment, retention, compensation
 
33
 
and oversight of the work of our independent registered public accounting firm, including approving services and fee arrangements. Significant related party transactions will be approved by our audit committee before we enter into them, as required by applicable rules and listing standards.
Compensation Committee
The current members of our compensation committee are Messrs. Young, Broshy and Mitchell, each of whom is independent under applicable requirements of Nasdaq. Mr. Young has served as a member of the committee since October 2013, Mr. Broshy has served as a member of the committee since October 2014, and Mr. Mitchell has served as a member of the committee since July 2020. Mr. Young serves, and Mr. Broshy is expected to serve from and after the Annual Meeting, as chair of the compensation committee. From and after the Annual Meeting, Ms. Gray is expected to join our compensation committee, and she is independent under applicable requirements of Nasdaq. The purpose of our compensation committee is to review and approve our overall compensation strategy and policies. Specifically, our compensation committee reviews and approves corporate performance goals and objectives relevant to the compensation of our executive officers and other senior management; reviews and approves the compensation and other terms of employment of our principal executive officer and other executive officers; approves the individual bonus programs in effect for our principal executive officer, other executive officers and any key employees for each fiscal year; recommends to our board of directors the compensation of our directors; recommends to our board of directors the adoption or amendment of equity and cash incentive plans; grants options and other equity awards; and administers our equity incentive plans and similar programs. During the year ended December 31, 2022, our compensation committee held three meetings and acted by written consent two times.
Mr. Winningham, our principal executive officer, does not participate in the determination of his own compensation or the compensation of our directors. However, he makes recommendations to our compensation committee regarding the amount and form of the compensation of the other executive officers and any key employees, and he often participates in the committee’s deliberations about their compensation. Our General Counsel and our Chief Human Resources Officer also assisted our compensation committee in its executive officer, director and employee compensation deliberations in 2022. No other executive officers participate in the determination of the amount or form of the compensation of our executive officers or directors.
During the year ended December 31, 2022, our compensation committee engaged the services of Frederic W. Cook & Co. (“FW Cook”), a compensation consulting firm, to advise the compensation committee regarding the amount and types of compensation that we provide to our executives and directors and how our compensation practices compare to the compensation practices of other companies. FW Cook reports directly to the compensation committee. FW Cook does not provide any services to us other than the services provided to the compensation committee. The compensation committee has assessed the independence of FW Cook pursuant to SEC rules and Nasdaq listing standards and concluded that no conflict of interest exists that would prevent FW Cook from independently representing the committee.
Nominating/Corporate Governance Committee
The current members of our nominating/corporate governance committee are Drs. Malkiel, Pakianathan and Smaldone Alsup and Mr. Young, each of whom is a non-employee member of our board of directors and is independent under applicable requirements of Nasdaq. Dr. Pakianathan has served as chair of the nominating/corporate governance committee since July 2022. Dr. Malkiel and Mr. Young have served as members of the committee since October 2013 and Dr. Smaldone Alsup has served as a member of the committee since October 2019. The nominating/corporate governance committee oversees the nomination of directors, including, among other things, identifying, evaluating and making recommendations of nominees to our board of directors, and evaluates the performance of our board of directors and individual directors. Our nominating/corporate governance committee is also responsible for reviewing developments in corporate governance practices, including issues and developments relating to environmental, social and similar matters, evaluating the adequacy of our governance practices and making recommendations to our board of directors concerning corporate governance matters. During the year ended December 31, 2022, our nominating/corporate governance committee held three meetings.
 
34
 
Considerations in Evaluating Director Nominees
Our nominating/corporate governance committee’s criteria and process for evaluating and identifying the candidates that it selects, or recommends to the full board of directors for selection, as director nominees are as follows:
•
Our nominating/corporate governance committee evaluates the current composition and organization of the board of directors and its committees, determines future requirements and makes recommendations to the board of directors for approval.
​
•
Our nominating/corporate governance committee evaluates the performance of the board of directors and of individual directors and oversees the board of directors’ performance evaluation process, including conducting surveys of director observations, suggestions and preferences.
​
•
While our nominating/corporate governance committee has not established specific minimum qualifications for director candidates, in its evaluation of director candidates, including the members of the Board eligible for re-election, our nominating/corporate governance committee considers: (1) the current size and composition of the board of directors and the needs of the board of directors and its committees; (2) such factors as personal integrity, knowledge, complementary skills, expertise, diversity of experience, ability to take independent analytical inquiries, understanding of our business environment and willingness to devote adequate time and effort to serve as members of the board of directors; (3) relationships between directors and our customers and suppliers; and (4) such other factors as the committee may consider appropriate.
​
•
With regard to candidates who are properly recommended by shareholders or by other means, our nominating/corporate governance committee will review the qualifications of any such candidate, which review may, in our nominating/corporate governance committee’s discretion, include interviewing references, direct interviews with the candidate, or other actions our nominating/​corporate governance committee deems necessary or proper for assessing a candidate.
​
•
Our nominating/corporate governance committee has the authority to retain and terminate any third-party search firm to identify director candidates and has the authority to approve the fees and retention terms of such search firm. The board of directors (which includes our Chief Executive Officer) has used and may in the future use the services of a third-party search firm to help identify, screen, conduct background investigations of, and interview potential director candidates.
​
•
After completing its review and evaluation of director candidates, our nominating/corporate governance committee selects, or recommends to the full board of directors for selection, the director nominees.
​
Shareholder Recommendations for Nominations to the Board of Directors
Our nominating/corporate governance committee reviews shareholder recommendations for candidates to our board of directors in accordance with our Corporate Governance Guidelines and our Shareholder Director Communications Policy & Procedures. The board of directors’ policy is to consider all bona fide director candidates recommended by shareholders. To recommend a candidate for election to the board of directors, a shareholder must notify the nominating/corporate governance committee by writing to the General Counsel or Secretary of Theravance Biopharma (Theravance Biopharma, Inc., c/o of its U.S. subsidiary, Theravance Biopharma US, Inc., at 901 Gateway Boulevard, South San Francisco, California 94080, Attention: General Counsel/Secretary) no later than the deadlines set forth in Theravance Biopharma’s proxy statement for the preceding annual general meeting. Such shareholder’s notice must include the following information to be considered: (i) to the extent reasonably available, information relating to such director candidate that would be required to be disclosed in a proxy statement pursuant to Regulation 14A under the Securities Exchange Act, in which such individual is a nominee for election to the board of directors, including the candidate’s name, age, detailed biographical data and qualifications for serving on our board of directors (including the candidate’s principal occupation or employment), information regarding any relationships between us and the candidate within the last three years and the number of our ordinary shares beneficially owned by the candidate; (ii) the director candidate’s written consent to (A) if selected, be named in Theravance Biopharma’s proxy statement and proxy and (B) if elected, to serve on the board of directors; (iii) a statement from the recommending shareholder in support of the candidate, including a
 
35
 
statement regarding the candidate’s satisfaction of the board of directors’ membership criteria set forth in our Corporate Governance Guidelines; and (iv) any other information that such shareholder believes is relevant in considering the director candidate. The shareholder is also advised to provide evidence of the recommending person’s ownership of our shares and the shareholder’s name and address.
Board Diversity, Skills, Experience and Tenure
Our nominating/corporate governance committee and our board of directors are focused on ensuring that a wide range of backgrounds, attributes, viewpoints and experiences are represented on our board of directors. While we value diversity, our nominating/corporate governance committee does not have a formal written policy with regard to the consideration of diversity in identifying director nominees. However, as discussed above, diversity of experience is one of the numerous criteria our nominating/corporate governance committee reviews before recommending a candidate. Our nominating/corporate governance committee believes diversity of experience can come from personal characteristics such as race and gender as well as diversity in background, viewpoints and skills. Our nominating/corporate governance committee and our board of directors is committed to actively seeking highly qualified women and individuals from underrepresented groups to include in the pool from which new candidates are selected.
While our nominating/corporate governance committee is committed to continued focus on and expansion of our board’s diversity, we also believe our current board represents a diversity of expertise, talents, skills, backgrounds, and personal characteristics. Our board of directors also seeks members that have extensive leadership experience, but may seek other members with different backgrounds, based upon the contributions they can make to our company. Currently, our directors all have significant leadership experience and collectively bring expertise and experience in a number of areas, including, without limitation, finance and investment, clinical development, biopharma, life sciences and healthcare industry, corporate strategy, corporate transactions public company governance, regulatory, and commercialization of pharmaceutical products. The chart below summarizes certain notable attributes and experiences of our continuing directors and of each Class III director nominee, highlighting the mix of attributes and experiences of our board of directors. These attributes and experiences align with the needs of, and positions our board of directors to oversee execution of, our long-term business strategy.
This general summary is not intended to be an exhaustive list of each director’s contributions to the board, and biographical information about each continuing director and each nominee is included above in “Proposal One: Election of Directors — Information Regarding the Nominees and Other Directors.”
Expertise/Experience
​ ​
Winningham
​ ​
Alsup
​ ​
Broshy
​ ​
Gray
​ ​
Malkiel
​ ​
Mitchell
​ ​
O’Connor
​ ​
Pakianathan
​
BioPharma/Life Sciences ​ ​
X
​ ​
X
​ ​
X
​ ​
X
​ ​
X
​ ​
X
​ ​
X
​ ​
X
​
Corporate/Business Development/M&A
​ ​
X
​ ​
X
​ ​
X
​ ​
X
​ ​
X
​ ​
X
​ ​
X
​ ​
X
​
Clinical Development ​ ​
X
​ ​
X
​ ​
X
​ ​ ​ ​ ​ ​ ​ ​
X
​ ​ ​ ​ ​
X
​
Commercial ​ ​
X
​ ​ ​ ​ ​
X
​ ​ ​ ​ ​ ​ ​ ​
X
​ ​ ​ ​ ​ ​ ​
Finance and Accounting ​ ​
X
​ ​ ​ ​ ​
X
​ ​
X
​ ​
X
​ ​ ​ ​ ​
X
​ ​
X
​
International Business ​ ​
X
​ ​
X
​ ​
X
​ ​ ​ ​ ​
X
​ ​
X
​ ​
X
​ ​ ​ ​
Legal, Policy, Corporate Governance
​ ​
X
​ ​
X
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
X
​
Marketing ​ ​
X
​ ​ ​ ​ ​
X
​ ​ ​ ​ ​ ​ ​ ​
X
​ ​ ​ ​ ​ ​ ​
Product Strategy ​ ​
X
​ ​
X
​ ​
X
​ ​ ​ ​ ​ ​ ​ ​
X
​ ​ ​ ​ ​
X
​
Regulatory ​ ​
X
​ ​
X
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
Risk Management ​ ​
X
​ ​
X
​ ​ ​ ​ ​
X
​ ​
X
​ ​ ​ ​ ​
X
​ ​ ​ ​
Strategic Planning ​ ​
X
​ ​
X
​ ​
X
​ ​
X
​ ​
X
​ ​
X
​ ​
X
​ ​
X
​
Technology & Cybersecurity ​ ​ ​ ​ ​
X
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
 
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Following the Annual Meeting, of the eight directors on our board, three will be women. One member of our board of directors is Asian, and one is a national of, and lives and works in, Ireland. Furthermore, our board members range in age from 58 to 90.
Board Diversity Matrix as of March 6, 2023
​
Total Number of Directors
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
9
​
​ ​ ​
Female
​ ​
Male
​ ​
Non
Binary
​ ​
Did Not
Disclose
Gender
​
Part I: Gender Identity ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
Directors
​ ​ ​ ​ 3 ​ ​ ​ ​ ​ 6 ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ — ​ ​
Part II: Demographic Background ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
African American or Black
​ ​ ​ ​ — ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ — ​ ​
Alaskan Native or Native American
​ ​ ​ ​ — ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ — ​ ​
Asian
​ ​ ​ ​ 1 ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ — ​ ​
Hispanic or Latinx
​ ​ ​ ​ — ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ — ​ ​
Native Hawaiian or Pacific Islander
​ ​ ​ ​ — ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ — ​ ​
White
​ ​ ​ ​ 2 ​ ​ ​ ​ ​ 6 ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ — ​ ​
Two or More Races or Ethnicities
​ ​ ​ ​ — ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ — ​ ​
LGBTQ+
​ ​
—
​
Did Not Disclose Demographic Background
​ ​
—
​
In addition to regularly assessing the performance of our board of directors, the skills and experiences of the directors represented and any additional skills or experiences that we would benefit by having represented, or more strongly represented, on our board of directors, our nominating/corporate governance committee seeks to regularly bring new perspectives and voices onto our board of directors. Our nominating/​corporate governance committee and our board actively seek to have a mix of both long-tenured directors with deep understanding of our company and our strategies for value creation and shorter-tenured directors with fresh perspectives. In addition, they work to balance the evolution of the board to both bring in new perspectives and enhance our boards collective skillset and ensure our board will continue to work together with respect, transparency and trust. Our nominating/corporate governance committee and our board believe achieving this balance is critical to fostering an environment of strong decision-making where our board can engage in healthy debate and dialogue and the unique skills and perspectives of each of our board members can be brought to bear for the company. Since 2018, three new members have joined our board of directors and five directors have stepped down from our board or declined to stand for re-election. Accordingly, following the Annual Meeting, three of eight board members will have joined our board of directors on or after January 1, 2018.
​ ​ ​
Winningham
​ ​
Alsup
​ ​
Broshy
​ ​
Gray
​ ​
Malkiel
​ ​
Mitchell
​ ​
O’Connor
​ ​
Pakianathan
​
Board Tenure (Years)
​ ​
10
​ ​
5
​ ​
9
​ ​
0
​ ​
10
​ ​
9
​ ​
8
​ ​
3
​
Year Joined
​ ​
2013
​ ​
2018
​ ​
2014
​ ​
2023
​ ​
2013
​ ​
2014
​ ​
2015
​ ​
2020
​
Compensation Committee Interlocks and Insider Participation
As noted above, the compensation committee of our board of directors is currently comprised of Messrs. Young, Broshy and Mitchell. None of the members of our compensation committee was at any time during the year ended December 31, 2022 (or at any other time) an officer or employee of Theravance Biopharma. None of our executive officers serve, or served during the year ended December 31, 2022, as a member of the board of directors or compensation committee of any other entity that has or has had one or more executive officers serving as a member of our board of directors or our compensation committee.
Meetings of the Board of Directors
The full board of directors met 16 times during the year ended December 31, 2022. During the year ended December 31, 2022, no director attended fewer than 75% of the aggregate of (i) the total number of
 
37
 
meetings of the board of directors (held during the period they were a director) and (ii) the total number of meetings held by all committees of the board on which they served (held during the period they were a member).
It is our policy that directors are invited and encouraged to attend our annual general meetings, and all of our directors attended the 2022 Annual Meeting. We have scheduled our Annual Meeting on the same day as a regularly scheduled board of directors meeting in order to facilitate attendance by the members of our board of directors.
Board Oversight of Risk
One of the key functions of our board of directors is informed oversight of our risk management process. In particular, our board of directors is responsible for monitoring and assessing strategic risk exposure. Our executive officers are responsible for the day-to-day management of the material risks we face. While our board of directors is ultimately responsible for risk oversight, our board committees assist the board in fulfilling its oversight responsibilities in certain areas of risk. The audit committee assists our board of directors in fulfilling its oversight responsibilities with respect to risk management in the areas of internal control over financial reporting and disclosure controls and related procedures, legal and regulatory compliance, and discusses with management and the independent auditor guidelines and policies with respect to risk assessment and risk management, including with respect to cybersecurity and information technology risks. Based on our regular monitoring of our information technology systems, we aren’t aware of any material cybersecurity breaches within the last three years. The nominating and corporate governance committee assists our board in fulfilling its oversight responsibilities with respect to the management of risk associated with board organization, membership and structure, and corporate governance. The compensation committee assesses risks created by the incentives inherent in our compensation policies. Finally, the full board of directors reviews strategic and operational risk in the context of reports from the management team, receives reports on all significant committee activities, and evaluates the risks inherent in significant transactions.
Environmental, Social and Governance Matters
We and our board of directors believe that long-term value for shareholders is supported by practices that follow a principled approach to environmental, social and governance (“ESG”) matters, including human capital management, workforce diversity, clinical trial safety and environmental stewardship. Our nominating/​corporate governance committee is responsible for overseeing ESG matters at the board level and reviews ESG practices with management. We have implemented, and continue to implement practices designed to have a positive impact on patients, employees and the environment. We are proud that once-daily YUPELRI is dosed in recyclable single-use vials administered with any standard jet nebulizer. Single-use vials allow for one vial per day of hospital stay and may reduce COPD-related medication waste in the hospital setting compared to multi-dose devices such as metered-dose inhalers, soft-mist inhalers and dry-powder inhalers. When multi-dose devices are used for hospitalized patients, the majority of the medication may be wasted, and both the unused doses and the device are likely to be discarded when the patient is discharged from the hospital. As further described in our Annual Report on Form 10-K for the year ended December 31, 2022 filed on March 1, 2023, we consider our employee relations first-rate and strive to provide a culture of purpose, engagement, and learning. We expect all employees to observe the highest levels of business ethics while delivering the highest levels of performance and, because we believe it benefits the entire company for employees to raise any concerns so we may consider them carefully and address them appropriately, we seek to promote an environment that fosters honest communications about matters of conduct related to our business activities. As an equal-opportunity employer, we strive to build and maintain a culture of diversity, equity, and inclusion through both our business and human resources practices and policies. Our Diversity, Equity & Inclusion Council and Women’s Leadership Network are company-sponsored, employee-led groups that aim to improve attraction, retention, development, inclusion, and engagement of a diverse and global workforce. For the benefit of our employees, patients, and community, we strive to celebrate, encourage, and support similarities and differences to drive innovation.
Director Compensation
The following is a description of the standard compensation arrangements under which our non-employee directors are compensated for their service as directors, including as members of the various committees of our board of directors.
 
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Cash Compensation
Effective as of our Annual Meeting and at the recommendation of our compensation committee, our board of directors revised the cash compensation portion of our non-employee director compensation program to align our non-employee director compensation with the median compensation paid by our peers. Following our Annual Meeting, the annual retainer paid to each of our non-employee directors for service under our non-employee director compensation program will be reduced from $55,000 to $50,000. The annual retainers for committee service, and to our committee chairpersons and our lead independent director will remain unchanged from those paid in 2022.
In 2022, each non-employee member of our board of directors received an annual retainer of $55,000 pursuant to our non-employee director compensation program. In addition, we paid the following fixed annual retainers to our non-employee directors for committee service and to our committee chairpersons and our lead independent director:
•
Lead Independent Director: $25,000
​
•
Audit committee chairperson: $20,000
​
•
Audit committee member (other than chairperson): $10,000
​
•
Compensation committee chairperson: $15,000
​
•
Compensation committee member (other than chairperson): $7,500
​
•
Nominating/corporate governance committee chairperson: $10,000
​
•
Nominating/corporate governance committee member (other than chairperson): $5,000
​
•
Science & Technology advisory committee chairperson: $10,000
​
•
Science & Technology advisory committee member (other than chairperson): $5,000
​
Pursuant to our non-employee director compensation program, we also paid our non-employee directors an additional fee of $1,500 for attending in-person board of directors meetings held outside the United States. All cash compensation to the non-employee members of our board of directors is paid quarterly in arrears.
The members of our board of directors are also eligible for reimbursement for their expenses incurred in attending board meetings in accordance with our non-employee director compensation program.
Equity Compensation
Each of our non-employee directors is also compensated with periodic automatic grants of equity awards under our non-employee director compensation program. These grants are non-discretionary, and only our non-employee directors are eligible to receive these automatic grants.
Automatic Equity Awards Prior to the Annual Meeting
Under our automatic grant program, each individual who first became a non-employee director was, on the date such individual joined our board of directors, automatically granted the following equity awards: (i) a grant of restricted share units (“RSUs”) covering ordinary shares with a grant date value of $100,000 and (ii) a nonstatutory share option grant covering 28,000 ordinary shares. The initial option grants would vest monthly over the director’s first two years of service, and the initial RSUs would vest in two equal annual installments over the director’s first two years of service. In addition, on the date of joining our board of directors, a new non-employee director also received the standard annual equity awards (if joining on the date of our annual general meeting) or pro-rated annual equity awards (if joining on any other date), as described below. The pro-ration was based upon the number of months of service the new board member provided during the 12-month period ending on the one-year anniversary of the most recent annual general meeting. The standard annual award would vest on the same dates as the automatic annual non-employee director grant described below.
At each annual general meeting (if applicable, upon each non-employee director’s re-election to our board of directors), each non-employee director was automatically granted the following equity awards:
 
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(i) a grant of RSUs covering ordinary shares with a grant date value of $100,000 and (ii) a nonstatutory share option grant covering 28,000 ordinary shares. These RSUs would vest in full on the earlier of the one-year anniversary of the date of grant or the next annual general meeting, subject to continued service through such date. The share options would vest monthly over the earlier of one year of service or the next annual general meeting.
Automatic Equity Awards Effective as of the Annual Meeting
Effective as of the Annual Meeting and at the recommendation of our compensation committee, our board of directors revised the automatic equity awards granted to our non-employee directors to align our non-employee director compensation with the median amount paid by our peers.
Commencing as of the Annual Meeting, under our automatic grant program, each individual who first becomes a non-employee director will, on the date such individual joins our board of directors, automatically be granted the following equity awards: (i) a grant of restricted share units covering ordinary shares with a grant date value of $100,000 and (ii) a nonstatutory share option grant with a Black-Scholes grant date fair value of $125,000. The initial option grants will vest monthly over the director’s first two years of service, and the initial RSUs will vest in two equal annual installments over the director’s first two years of service. In addition, on the date of joining our board of directors, a new non-employee director will also receive the standard annual equity awards (if joining on the date of our annual general meeting) or pro-rated annual equity awards (if joining on any other date), as described below. The pro-ration will be based upon the number of months of service the new board member will provide during the 12-month period ending on the one-year anniversary of the most recent annual general meeting. The standard annual award will vest on the same dates as the automatic annual non-employee director grant described below.
Commencing as of the Annual Meeting and continuing at each annual general meeting thereafter (if applicable, upon each non-employee director’s re-election to our board of directors), each non-employee director will automatically be granted the following equity awards: (i) a grant of RSUs covering ordinary shares with a grant date value of $100,000 and (ii) a nonstatutory share option grant with a Black-Scholes value of $125,000. These RSUs will vest in full on the earlier of the one-year anniversary of the date of grant or the next annual general meeting, subject to continued service through such date. The share options will vest monthly over the earlier of one year of service or the next annual general meeting.
All automatic equity awards vest in full if we are subject to a change in control or the board member dies or becomes disabled while in service. Each share option granted pursuant to the automatic grant program will have an exercise price equal to the fair market value of our ordinary shares on the date of grant, a term of up to ten years and will remain exercisable for three years following termination of a director’s service other than for cause. Each RSU granted pursuant to the automatic grant program will be settled by issuing our ordinary shares upon vesting and includes cash dividend equivalent rights in the event we pay any cash dividends to shareholders while the award is outstanding.
In addition to the automatic equity awards described above, directors are also eligible to receive other equity awards under our 2013 Equity Incentive Plan.
2022 Director Compensation Table
The following table sets forth the compensation awarded to, earned by, or paid to each person who served as a director during 2022, other than a director who also served as a named executive officer.
 
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Name
​ ​
Fees Earned
or Paid in
Cash ($)(1)
​ ​
Share
Awards
($)(2)(3)
​ ​
Option
Awards
($)(2)(4)
​ ​
Total ($)
​
(a)
​ ​
(b)
​ ​
(c)
​ ​
(d)
​ ​
(h)
​
Eran Broshy
​ ​ ​ ​ 77,000 ​ ​ ​ ​ ​ 99,998 ​ ​ ​ ​ ​ 146,118 ​ ​ ​ ​ ​ 323,116 ​ ​
Burton G. Malkiel, Ph.D.
​ ​ ​ ​ 89,500 ​ ​ ​ ​ ​ 99,998 ​ ​ ​ ​ ​ 146,118 ​ ​ ​ ​ ​ 335,616 ​ ​
Dean J. Mitchell
​ ​ ​ ​ 72,000 ​ ​ ​ ​ ​ 99,998 ​ ​ ​ ​ ​ 146,118 ​ ​ ​ ​ ​ 318,116 ​ ​
Susan Molineaux, Ph.D.(5)
​ ​ ​ ​ 22,929 ​ ​ ​ ​ ​ 99,998 ​ ​ ​ ​ ​ 146,118 ​ ​ ​ ​ ​ 269,044 ​ ​
Donal O’Connor
​ ​ ​ ​ 69,500 ​ ​ ​ ​ ​ 99,998 ​ ​ ​ ​ ​ 146,118 ​ ​ ​ ​ ​ 315,616 ​ ​
Deepika R. Pakianathan, Ph.D.
​ ​ ​ ​ 78,821 ​ ​ ​ ​ ​ 99,998 ​ ​ ​ ​ ​ 146,118 ​ ​ ​ ​ ​ 324,936 ​ ​
Laurie Smaldone Alsup, M.D.
​ ​ ​ ​ 74,500 ​ ​ ​ ​ ​ 99,998 ​ ​ ​ ​ ​ 146,118 ​ ​ ​ ​ ​ 320,616 ​ ​
William D. Young
​ ​ ​ ​ 104,500 ​ ​ ​ ​ ​ 99,998 ​ ​ ​ ​ ​ 146,118 ​ ​ ​ ​ ​ 350,616 ​ ​
​
(1)
Includes the annual retainers paid to each director for service in 2022, as well as fees for attendance at in-person board of director meetings outside of the United States in 2022.
​
(2)
The amounts in these columns represent the aggregate grant date fair value of share awards and option awards granted to the director during 2022, computed in accordance with FASB ASC Topic 718. See Notes 1 and 12 of the notes to our consolidated financial statements in our Annual Report on Form 10-K filed on March 1, 2023 for a discussion of all assumptions made by us in determining the grant date fair value of our equity awards.
​
(3)
As of December 31, 2022, (i) Dr. Molineaux held no outstanding, unvested RSUs and (ii) each of the remaining directors listed above held outstanding, unvested RSUs under which 9,852 ordinary shares were issuable.
​
(4)
As of December 31, 2022, the directors listed above held outstanding options to purchase the following number of our ordinary shares: Mr. Broshy (76,000); Dr. Malkiel (76,000); Mr. Mitchell (76,000); Dr. Molineaux (36,000); Mr. O’Connor (64,000); Dr. Pakianathan (51,000); Dr. Smaldone Alsup (65,500); and Mr. Young (76,000). As of December 31, 2022, certain of the above-listed directors also held outstanding options to purchase the following number of shares of Innoviva, Inc.’s (“Innoviva”) common stock: Dr. Malkiel (7,585) and Mr. Young (7,585). The Innoviva options held by our non-employee directors are fully vested, but, in connection with our spin-off from Innoviva in 2014, they were amended to remain outstanding based on service on our board of directors.
​
(5)
Dr. Molineaux resigned from our board of directors effective April 26, 2022.
​
Non-Employee Director Share Ownership Guidelines
Effective January 1, 2018, our board of directors adopted share ownership guidelines for our non-employee directors. Pursuant to these guidelines, beginning on the later of January 1, 2023 or after five years of service, non-employee directors are expected to hold shares (including vested and unvested RSUs) with a value equal to at least five times their annual base cash retainer. All non-employee members of our board of directors are in compliance with our non-employee director share ownership guidelines, with the exception of one non-employee member of our board of directors who does not yet have sufficient tenure to require compliance with such guidelines.
Hedging Policy Disclosure
Pursuant to our insider trading policy, all our directors, officers, employees and agents (such as consultants and independent contractors) as well as the members of their immediate family, persons with whom they share a household, persons that are their economic dependents and any other individuals or entities whose transactions in securities they influence, direct or control are prohibited from engaging in transactions in publicly-traded options on our securities, such as puts, calls and other derivative securities, on an exchange or in any other organized market. Although our Insider Trading Policy requires that all such individuals receive permission from one of our senior legal officers before entering into any hedging or monetization transactions, we have not and do not intend to in the future approve any such transactions.
 
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The full text of our insider trading policy is posted on the Investor Relations portion of our website at www.theravance.com.
Shareholder Communications with the Board of Directors
Shareholders interested in communicating with the board of directors or a particular director should send correspondence to Theravance Biopharma, Inc., c/o of its U.S. subsidiary, Theravance Biopharma US, Inc., at 901 Gateway Boulevard, South San Francisco, California 94080, Attn: Secretary. Each communication should set forth (i) the name and address of the shareholder as it appears on our books and, if the shares are held by a nominee, the name and address of the beneficial owner of the shares, and (ii) the number of ordinary shares that are owned of record by the record holder and beneficially by the beneficial owner. Pursuant to our Shareholder — Director Communications Policy & Procedures, the Secretary has been instructed, in his discretion, to screen out communications from shareholders that are not related to the duties and responsibilities of the board of directors. If deemed an appropriate communication, the Secretary will forward it, depending on the subject matter, to the chairperson of a committee of the board of directors or a particular director, as appropriate.
 
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EXECUTIVE OFFICERS
The following table provides information concerning our executive officers as of March 6, 2023:
Name
​ ​
Age
​ ​
Position(s)
​
Rick E Winningham
​ ​
63
​ ​ Chief Executive Officer and Chairman of the Board ​
Rhonda F. Farnum
​ ​
58
​ ​ Chief Business Officer and Senior Vice President, Commercial & Medical Affairs ​
Richard A. Graham
​ ​
49
​ ​ Senior Vice President, Research and Development ​
Brett A. Grimaud ​ ​
49
​ ​ Senior Vice President, General Counsel and Secretary ​
Aziz Sawaf ​ ​
41
​ ​ Senior Vice President, Chief Financial Officer ​
Rick E Winningham.   See biographical information set forth above under “Proposal One: Election of Directors — Information Regarding the Nominees and Other Directors.”
Rhonda F. Farnum was appointed Chief Business Officer and Senior Vice President, Commercial and Medical Affairs in December 2021. Ms. Farnum joined Theravance Biopharma in July 2018 as Vice President, Sales and Marketing. She is responsible for commercial execution of Theravance Biopharma’s branded products, including sales, marketing, and managed markets. Prior to joining Theravance Biopharma, Ms. Farnum led marketing efforts for multiple products in the Amgen, Inc. oncology business unit from June 2015 to July 2018. Prior to Amgen, she served as the head of the Hematology Business Unit at Onyx Pharmaceuticals, from December 2014 to June 2015. Prior to Onyx Pharmaceuticals, she served in increasing marketing and sales leadership roles within the commercial divisions of Pharmacyclics and Genentech. Ms. Farnum earned a Bachelor of Science degree from the University of Georgia in Physics and Pre-Med, graduating Magna Cum Laude, and in addition has completed programs and boarded registration in Nuclear Medicine Technology and Nursing.
Richard A. Graham, Ph.D., was appointed Senior Vice President, Research and Development in August 2020, where he is responsible for leading the progression of late-stage clinical assets through regulatory filing and approval. Since joining Theravance Biopharma, Dr. Graham has served as Vice President of Clinical Pharmacology, and more recently, as Vice President of Clinical Development. Prior to joining Theravance Biopharma, Dr. Graham spent five years at GlaxoSmithKline working in the area of Drug Metabolism and Pharmacokinetics, seven years at Genentech/Roche as a clinical pharmacologist and Global Development Team Leader, and one year at Onyx Pharmaceuticals where he headed Translational Medicine. In his nearly 20-year career, he worked across all stages of drug development and all major therapeutic areas. Dr. Graham is a member of the board of directors of TruLab Inc., a private software company, Medval AI, a private software company and Med Aditus, a non-profit organization. Dr. Graham received his Bachelor’s and Master’s degree in Biochemistry from Iowa State University and his Doctorate of Philosophy degree in Pharmaceutical Sciences from The University of North Carolina at Chapel Hill.
Brett A. Grimaud has served as our Senior Vice President, General Counsel and Secretary since June 2022. Previously, Mr. Grimaud was our Vice President and General Counsel from October 2021 to June 2022. Since joining Theravance Biopharma in June 2014, Mr. Grimaud has served in various roles of increasing responsibility across the legal organization. Prior our spin-off from Innoviva, Mr. Grimaud was the Senior Director and Senior Corporate Counsel at Innoviva from January 2012 to June 2014. From January 2003 to December 2011, Mr. Grimaud was a corporate and securities attorney at the law firm, Gunderson Dettmer Stough Villeneuve Franklin & Hachigian, LLP. Mr. Grimaud holds a J.D. from the University of Chicago and a B.A. from the University of California, Los Angeles.
Aziz Sawaf, CFA, has served as our Senior President, Chief Financial Officer since January 2023. Previously, Mr. Sawaf was our Vice President of Finance and a member of the Senior Leadership Team from October 2021 to December 2022, having joined us in June 2014 and serving in various roles of increasing responsibility across the finance organization. Prior to Theravance Biopharma, Mr. Sawaf spent four years at Gilead Sciences, working in several Finance roles supporting the Commercial and R&D organizations. Prior to Gilead Sciences, Mr. Sawaf worked at Amgen, in Consulting and in internet start-up Finance. Mr. Sawaf holds a B.A. in Business Administration, Finance, from the University of Arizona, an M.B.A. from the University of Southern California Marshall School of Business, and a Master of Biotechnology Enterprise and Entrepreneurship (M.B.E.E.) from Johns Hopkins University. Mr. Sawaf has been a CFA charterholder since 2013.
 
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EXECUTIVE COMPENSATION
Compensation Discussion and Analysis
This section discusses our executive compensation policies and decisions and the most important factors relevant to an analysis of these policies and decisions. It provides qualitative information regarding the manner and context in which compensation is awarded to and earned by our named executive officers and offers perspective on the data presented in the tables and narrative that follow.
For 2022, our named executive officers were:
•
Rick E Winningham, our current Chairman & Chief Executive Officer;
​
•
Rhonda F. Farnum, our current Chief Business Officer & Senior Vice President, Commercial & Medical Affairs;
​
•
Richard A. Graham, our current Senior Vice President, Research and Development;
​
•
Andrew A. Hindman, our former Senior Vice President and Chief Financial Officer; and
​
•
Ann B. Brady, our former President of Theravance Biopharma Ireland Ltd.
​
Dr. Brady’s employment terminated in February 2022 in connection with our Restructuring, as further described below. In connection with our internal changes, Mr. Hindman transitioned from us on December 31, 2022.
Executive Summary
We are a biopharmaceutical company that operates in an extremely competitive, rapidly changing and heavily regulated industry. Maximizing the value of our assets and delivering medicines to patients in need requires our executive officers to be expert in not only the science behind drug development, formulation and manufacturing, but also patient needs, prescriber concerns and priorities, institutional dynamics, the insurance reimbursement landscape, as well as the priorities, plans, strengths and weaknesses of our competitors and potential partners. We believe that the skill, talent, judgment and dedication of the executive officers and other employees are critical factors affecting our long-term shareholder value. Our goal is to maintain a compensation program that will fairly compensate employees while attracting and retaining highly qualified employees, motivating their performance and rewarding the achievement of key corporate goals. We also aim to align employees’ long-term interests with those of our shareholders.
We executed on a strategic restructuring and a significant cost reduction program (referred to throughout this proxy statement as the “Restructuring”) in 2021. As part of the Restructuring, our headcount was reduced by approximately 75% during the period between November 2021 and March 2022 and the composition of portions of the senior executive team changed. We entered 2022 a smaller, more focused, company concentrating on executing the board of directors’ vision for long-term and short-term value creation and the development of medicines that make a difference in the lives of patients. Strategic planning, portfolio management and dramatic action by our board and senior management enabled us to increase our TSR by 65% between the time we announced the Restructuring and December 31, 2022 relative to a 21% decrease in the NASDAQ Biotechnology Index over the same period and achieved the following in 2022:
2022 Corporate Highlights
​
•
YUPELRI Sales Growth.   In 2022, our internally discovered product YUPELRI continued it sales growth trajectory and reached all-time high net sales and profitability on an annual basis. Through the combined commercialization efforts with our partner Viatris Inc. (“Viatris”), aggregate YUPELRI net sales increased by 25% in 2022 compared to 2021. While Viatris records the total YUPELRI net sales, we are entitled to a 35% share of the profits and losses pursuant to a co-promotion agreement with Viatris. In addition, notwithstanding an over 60% reduction following the Restructuring, our commercial organization grew the hospital business unit volume, for which we are responsible, 53% in 2022 over 2021. Our commercial organization has an important impact on YUPELRI sales. Approximately 90% of patients who receive YUPELRI in the hospital setting are discharged with a
​
 
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prescription to continue their treatment in the out-patient setting, and data show that the total community or outpatient sales volume derived from hospital initiation has increased to approximately 38%.
•
Sale of Theravance Respiratory Company, LLC.   In July 2022, we completed the sale of all of our equity interests in Theravance Respiratory Company, LLC (“TRC”) representing our 85% economic interest in the sales-based royalty rights on worldwide net sales of GSK’s TRELEGY ELLIPTA (“TRELEGY”) to Royalty Pharma Investments 2019 ICAV (“Royalty Pharma”) for approximately $1.1 billion in upfront cash while retaining future value through the right to receive contingent milestone payments and certain outer year-royalties (the “TRELEGY Royalty Transaction”).
​
•
Debt Paydown and Capital Return Program.   In July and August 2022, we completed the process to retire all of our then-outstanding debt. We repaid our 9.5% non-recourse TRELEGY notes due in 2035 for approximately $420.0 million on July 20, 2022. We also completed a tender offer to retire $230.0 million in principal amount of our 3.25% convertible senior notes due 2023, at par, on August 25, 2022. Following the retirement of all of our outstanding debt, we initiated a $250.0 million capital return program to shareholders, which our board of directors increased to $325 million in early 2023. As of February 27, 2023, we have repurchased $155.3 million of shares, including $27.1 million in 2023, and we have approximately $170.0 million remaining in the capital return program, which is expected to be completed by the end of 2023.
​
•
Ampreloxetine Funding.   In conjunction with the TRELEGY Royalty Transaction, in July 2022 we received a $25.0 million upfront cash investment from Royalty Pharma, and we are entitled to receive another $15.0 million cash investment upon the first regulatory approval of ampreloxetine. The upfront $25.0 million cash received is expected to fund the majority of our new Phase 3 study for the use of ampreloxetine for patients suffering from Multiple System Atrophy (“MSA”) and symptomatic neurogenic orthostatic hypotension (“nOH”).
​
•
Reduction of Office Space.   As a result of our reduction in workforce that was announced in September 2021, in the second quarter of 2022, we reduced our occupied leased office space by approximately 83,000 square feet representing approximately 57% of our total occupied leased office at the beginning of 2022. The reduction of occupied leased office space was achieved through a sublease of a significant portion of our offices in South San Francisco, California, and a move to a smaller office in Dublin, Ireland. We estimate that the cumulative cash savings from the reduction in occupied leased office space to be approximately $54.1 million over the life of the original South San Francisco and Dublin lease terms ending in May 2030 and April 2027, respectively.
​
2022 Executive Compensation Highlights
•
Most of the 2022 compensation decisions for our named executive officers were made in late 2021 in connection with the Restructuring; however, our Chief Executive Officer, Mr. Winningham, was not provided any compensation in connection with the Restructuring and his 2022 compensation reflects a typical year of compensation-related decisions. As a result, many 2022 compensation-related decisions were reported as compensation in 2021, although this does not affect the 2022 compensation reported for Mr. Winningham. At the time of the Restructuring, our compensation committee granted short-term cash bonuses and equity awards consisting of restricted share units (“RSUs”) and performance-contingent RSUs to our continuing named executive officers other than Mr. Winningham. No bonuses were paid pursuant to our annual bonus program for 2021. The compensation committee’s goal was retaining and rewarding the remaining named executive officers using both short-term incentives designed to offer tangible, near-term value, and long-term incentives aimed at fostering long-term alignment with shareholder interests. These awards are further described in “Restructuring Cash Bonuses” and “Equity Incentive Compensation” below. These named executive officers were not granted equity awards in 2022.
​
•
Our Chief Executive Officer did not receive an annual cash bonus or any short-term cash bonus in 2021, nor did he receive any equity awards in connection with the Restructuring in late 2021. Mr. Winningham’s 2022 annual replenishment equity award was granted in accordance with our usual schedule in the first quarter of 2022, was set at the median of the 2022 Peer Group chief executive officers and was delivered in the form of options and RSUs. As discussed in greater detail
​
 
45
 
below, the compensation committee has continued to build additional performance elements into Mr. Winningham’s equity award compensation in 2023, providing 50% of his 2023 annual replenishment equity awards in the form of performance-contingent RSUs that vest upon the achievement of three stock price appreciation targets of increasing difficulty, all of which reflect strong growth that is well in excess of industry returns within the next 4 years.
•
None of our named executive officers received a base salary increase in 2022, other than Dr. Graham who received a salary increase in connection with an increase in responsibilities.
​
•
Mr. Winningham, Dr. Graham and Ms. Farnum each received an annual cash bonus under our performance-based bonus program based on our achievement of 2022 corporate goals. The corporate goals as well as the compensation committee’s determination of the achievement level are described below in “Principal Elements of Compensation — Annual Cash Incentive Compensation.”
​
Compensation Philosophy and Objectives
To attract, retain and incentivize our named executive officers, our compensation philosophy is to provide a competitive pay package with significant upside potential. In addition, we emphasize long-term equity compensation to align our compensation with the long-term nature of the drug development and commercialization cycle. We have increasingly incorporated performance-based equity awards tied to individual officer goals designed to maximize shareholder value into our executive officer compensation program. Performance incentives are an important element of our compensation that provide rewards to motivate and retain a targeted group of employees who are critical to the successful accomplishment of short-term and long-term goals that have a significant impact on our long term business objectives. They are designed to motivate and reward the achievement of challenging goals and/or overachievement of our targeted objectives and are differentiated based on role, level of contribution and impact. In addition, we generally work to ensure that officers have meaningful share-holdings, including unvested shares and shares that vest over multiple years, so that they are well-aligned with shareholders in the goal of long-term and short-term stock price performance.
We believe that successful execution against the goals we set is the best way to enhance enduring shareholder value. Accordingly, our annual cash incentives are tied to achievement of corporate operating, drug development and commercialization goals that are set annually. The importance of the goals to our business, the difficulty of achieving our goals in the time frames specified, as well as the high level of drug development and leadership experience of the officer team, motivates our compensation philosophy. The business of developing novel compounds as potential medicines is risky, and the field is highly competitive. Once a compound is approved for sale, then successful commercialization is challenging, with not only physicians and patients but also third-party payors influencing success. We set corporate goals that require our leadership team and employees to overcome these challenges to advance the company’s mission and create value in a relatively short time-frame to earn incentives. We typically set more goals than we reasonably believe we can accomplish in a given time frame to drive the leadership team’s performance and set a tone of high achievement.
In connection with the Restructuring, in the third quarter of 2021, the board of directors and management completed a comprehensive scenario planning exercise, which was begun in 2020 to anticipate and plan for all possible outcomes to the clinical trials we had underway at the time, with the assistance of outside financial and other advisors to determine the best path forward to maximize shareholder value. 2021 and 2022 compensation decisions were made to support short-term and long-term achievement of this strategy, 2022 corporate goals were set accordingly and, in 2022, the refocused and restructured company executed substantially on this plan. In 2022, the compensation committee followed through on the compensation decisions it made in 2021, which were designed to retain employees and incentivize their performance to successfully execute on the board’s strategies to maximize shareholder value. No replenishment awards were issued to our executive officers who received awards in late 2021. Cash bonus payments for 2022 were tied directly to the achievement of corporate goals designed to rebuild the focused, streamlined company.
Corporate Governance Policies
Our executive officers are subject to share ownership guidelines. The share ownership guidelines require each of our executive officers to own shares equal in value to a multiple of six times the base salary
 
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for the CEO and two times the base salary for our other executive officers. Ownership requirements may be met by shares and RSUs, whether or not vested, and exclude shares still subject to a performance requirement. Executive officers are required to comply with these guidelines by January 1, 2023, or, if later, by the five-year anniversary of their becoming an executive officer. Thereafter, compliance will be measured annually. If, at the compliance measurement date, the executive officer does not meet the guideline, then until such officer complies, he or she will be expected to hold 50% of our after-tax shares acquired thereafter, whether by option exercise, vesting or settlement of equity awards. Mr. Winningham, who is our only executive officer with a tenure as an executive officer of 5 years or more, held shares valued at considerably more than a multiple of six times his base salary on January 1, 2023.
Compensation Committee
The compensation committee of our board of directors is comprised of three non-employee members of the board of directors. The compensation committee’s basic responsibility is to review the performance of our management relative to achievement of corporate objectives and to ensure that the named executive officers and other members of senior management are compensated in a manner consistent with competitive practice and reasonably designed to incentivize top performance and commitment to us. In fulfilling this responsibility, the compensation committee reviews the performance of each named executive officer at least once each year, and generally twice per year. The CEO, as the manager of the executive team, assesses the executives’ contributions and importance to the achievement of the corporate goals and makes a recommendation to the compensation committee with respect to any merit increase in salary, cash bonus and equity awards for each member of the executive team, other than himself. The compensation committee meets with the CEO to evaluate, discuss and modify or approve these recommendations. The compensation committee also conducts a similar evaluation of the CEO’s contributions when the CEO is not present, and determines any increase in salary, cash bonus and equity awards for him.
The compensation committee periodically reviews the overall compensation for each named executive officer to assist with analyzing existing compensation and any proposed changes in compensation for each named executive officer, including information regarding the accumulated value of unvested equity ownership, how much is unvested, and the amount of potential value earnable under various share price scenarios. The compensation committee considers changes in an officer’s total direct compensation from year to year and the compensation historically paid to each named executive officer. In addition to the information and analyses supplied to the compensation committee as described above and in the peer group segment below, members of management support the compensation committee in its work from time to time.
Advisory Vote on Executive Compensation
Our most recent advisory vote on named executive officer compensation took place at our 2020 annual meeting of shareholders. Of the votes cast by our shareholders at the meeting, over 99% voted “For” a non-binding advisory resolution approving the compensation of our named executive officers, as disclosed in the proxy statement for that meeting. Our compensation committee reviewed the results of the 2020 advisory vote and viewed the high level of shareholder support as an affirmation of our compensation policies. As a result, our compensation committee concluded that no revisions were necessary to our overall named executive officer compensation program or philosophy as a result of the advisory vote. This year, shareholders are again being asked to cast a non-binding advisory vote to approve the compensation of our named executive officers.
At our 2017 annual meeting of shareholders, our shareholders approved holding a vote on executive compensation every three years. At this year’s annual meeting, our shareholders are again being asked to cast a non-binding advisory vote on the frequency of conducting future advisory votes on executive compensation.
Compensation Consultant
The compensation committee has the authority under its charter to engage the services of outside advisors, experts and others to assist the compensation committee. In accordance with this authority and as described in the “Corporate Governance — Board Committees — Compensation Committee” section beginning on page 34, the compensation committee confers from time to time with its independent executive
 
47
 
compensation consultant, Frederic W. Cook & Co. (“FW Cook”). FW Cook is retained by and reports directly to the compensation committee, and its role is to assist and advise the compensation committee on matters related to compensation for executive officers, other key employees and non-employee directors. FW Cook does not work on projects for management except as an agent of the compensation committee and with the advance knowledge and approval of the chairman of the compensation committee. The compensation committee has the sole authority to retain and dismiss its outside compensation consultants.
Peer Group
The peer group used to evaluate compensation decisions made at the start of 2022 (the “2022 Peer Group”) was established following the Restructuring in December 2021, with advice from FW Cook. The peer selection process focused on aligning our peer group with our size after the Restructuring, focusing on companies that are similar to us in terms of stage and revenue and are competitors for talent. This resulted in a targeted range for market capitalization of $200 million to $3.0 billion in light of our approximately $1 billion enterprise value at the time. The resulting peer group consists of the following 21 companies:
​
Peer Group — Established Post-Restructuring
​
​ Agenus ​ ​ Intra-Cellular Therapies ​
​ Akebia Therapeutics ​ ​ Ironwood Pharmaceuticals ​
​ BioCryst Pharmaceuticals ​ ​ Myovant Sciences ​
​ Corcept Therapeutics ​ ​ Pacira BioSciences ​
​ Dynavax Technologies ​ ​ Radius Health ​
​ Eagle Pharmaceuticals ​ ​ Revance Therapeutics ​
​ Enanta Pharmaceuticals ​ ​ Rigel Pharmaceuticals ​
​ Heron Therapeutics ​ ​ Travere Therapeutics ​
​ ImmunoGen ​ ​ UroGen Pharma ​
​ Insmed ​ ​ Zogenix ​
​ Intercept Pharmaceuticals ​ ​ ​ ​
In September 2022, with advice from FW Cook, the peer group was further revised to account for the end of the Restructuring. The resulting group (the “2023 Peer Group”) was used in connection with 2023 compensation decisions. The peer selection process for the 2023 Peer Group again focused on companies that were similar to us in terms of stage and revenue and are competitors for talent. This resulted in a targeted range for market capitalization of approximately $200 million to $2 billion in light of our approximately $700 million enterprise value at the time. The 2023 Peer Group consists of the following 18 companies:
​
Peer Group — Established September 2022
​
​ Agenus ​ ​ Ironwood Pharmaceuticals ​
​ Albireo Pharmaceuticals ​ ​ MannKind ​
​ Axsome Therapeutics ​ ​ Mirum Pharmaceuticals ​
​ BioCryst Pharmaceuticals ​ ​ Myovant Sciences ​
​ Dynavax ​ ​ Revance Therapeutics ​
​ Eagle Pharmaceuticals ​ ​ Rhythm Pharmaceuticals ​
​ Enanta Pharmaceuticals ​ ​ Rigel Pharmaceuticals ​
​ ImmunoGen ​ ​ Travere Therapeutics ​
​ Intercept Pharmaceuticals ​ ​ UroGen Pharmaceuticals ​
We operate in an intensely competitive labor market in which talented employees typically have many alternatives and it is relatively easy to change jobs. This dynamic has been further exacerbated by the increased availability of remote roles in recent years, which means that we more directly compete for talent not only locally, but also globally. To ensure we remain competitive in the market to hire and retain employees, our CEO and compensation committee frequently review data about the compensation of similar officers at the
 
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peer group companies when making compensation-related decisions. The peer data are used as a reference point to ensure our compensation practices remain aligned with the market, but compensation decisions are ultimately informed by factors specific to our company and the individual named executive officers, and we do not target pay at a particular benchmark.
Principal Elements of Compensation
Base Salaries
Base salaries are set to reflect compensation commensurate with the individual’s current position, work experience and contribution. Our goal in this regard is to attract and retain high caliber talent for the position and to provide a base wage that is stable and subject to relatively little risk. Salary for the CEO and the other named executive officers is determined based on the underlying scope of their respective responsibilities and their personal experience working at innovative biotechnology and drug development companies, and takes into account competitive market compensation data as a reference point. We review base salaries for the named executive officers annually, generally in the first quarter of each year. The CEO proposes salary adjustments to the compensation committee (other than for himself) based on any changes in competitive market salaries, individual performance and/or changes in job duties and responsibilities. The compensation committee then determines any salary adjustment applicable to each of the named executive officers.
None of our named executive officers received increases in their base salaries in 2022, other than Dr. Graham. In February 2022, our compensation committee approved an increase of Dr. Graham’s base salary from $464,438 to $500,000 to recognize his increased responsibilities following the Restructuring. This 7.35% salary increase was determined with input from FW Cook and with reference to peer data to ensure Dr. Graham’s compensation relative to his responsibilities is in line with peers.
Annual Cash Incentive Compensation
Our named executive officers are typically eligible for annual cash incentives under our company-wide bonus program, which is designed to reward the achievement of key corporate goals established by our board of directors at the beginning of the year and which we believe should increase shareholder value over time, as well as individual performance. For 2022, Dr. Brady was our only named executive officer who was not eligible for an annual cash bonus under our company-wide bonus program, pursuant to the terms of the settlement agreement she entered into with us in connection with the Restructuring and as a result of her termination of employment in February 2022. Mr. Hindman was eligible to participate in the company-wide bonus program during 2022; however, he was not employed at the time of payment of our 2022 bonuses and as a result, he did not receive an annual cash incentive bonus payment for 2022 performance.
Each participant in our company-wide bonus program, including our named executive officers, has a target bonus stated as a percentage of annual base salary for the year. For 2022, target bonus percentages were 50% of annual base salary for senior vice presidents and 60% of annual base salary for our CEO, which reflects no changes from the prior year. The corporate goals applicable to the annual bonus program are established by our board of directors at the beginning of the year as part of our annual business plan and communicated to employees. For 2022, the goals were grouped into three distinct categories, which were weighted based on the compensation committee’s assessment of their relative importance to the creation of long-term shareholder value. Each category is eligible for a score of up to 200% of the assigned weighting, at the discretion of our compensation committee. The individual goals within each category are not weighted in order to provide the compensation committee with the flexibility to determine the importance of individual goals based on a variety of factors, which include actual results, changing business conditions throughout the year and operating opportunities and challenges that were not reasonably foreseeable at the time the goals were established.
After determining the size of the company-wide bonus pool, a named executive officer’s individual bonus may be increased or decreased based on a subjective assessment of individual performance, up to a maximum bonus of 200% of target. While individual bonuses may be adjusted based on performance, the overall size of the bonus pool may not exceed the amount funded based on the corporate performance score. The compensation committee did not make any individual achievement adjustments for our named executive officers with respect to their 2022 annual cash bonus awards.
 
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Consistent with prior years, our board and compensation committee adopted 2022 key corporate goals in the first quarter of 2022. The goals approved by our compensation committee in early 2022, grouped by category, as well as their relative weightings were as follows:
Category
​ ​
2022 Corporate Goals
​ ​
Weighting
​ ​
Achievement
(out of possible
200%)
​
COMMERCIAL ​ ​
•
YUPELRI® (Revefenacin) Inhalation Solution: Achieve net sales in the range of $220 million to $250 million
​
 ​ ​
50%
​ ​
95%
​
RESEARCH AND DEVELOPMENT ​ ​
•
Complete enrollment in PIFR-2 study of YUPELRI®
​
•
AMPRELOXETINE (TD-9855):
​
•
Report results from randomized withdrawal Phase 3 Study 0170 (REDWOOD) and close out studies
​
•
Conduct regulatory meeting(s), if appropriate
​
•
IZENCITINIB (TD-1473):
​
•
Report results from Phase 2 Crohn’s Disease 12-week induction study and close out studies
​
•
NEZULCITINIB (TD-0903):
​
•
Initiate REMAP-CAP study
​
•
Initiate Phase 2 study in VI-ALI, if appropriate
​
•
Nominate chronic indication
​
•
NINJA:
​
•
Nominate one development candidate
​
•
Nominate a second advanced candidate
​
 ​ ​
25%
​ ​
90%
​
CORPORATE ​ ​
•
Execute 1 to 2 significant corporate or business development transactions, as needed
​
•
Become sustainably cash flow positive beginning in 2H 2022
​
•
Retain and reenergize go-forward organization through comprehensive initiatives that create a meaningful and enjoyable employee experience
​
 ​ ​
25%
​ ​
180%
​
​ ​ ​ Total: ​ ​
100%
​ ​
115%
​
At the end of the year, our compensation committee reviewed performance against the corporate goals and determined the overall score for each category, which determined the size of the bonus pool for all employees. The compensation committee considers information presented by our management on our company-wide performance against goals and the individual contributions of the named executive officers toward achievement of the goals. The corporate score is the sum of the scores in each category and for 2022 resulted in funding of the bonus pool at 115% of target out of a total possible 200%.
In determining the size of our 2022 bonus pool, the compensation committee made the following subjective determinations:
​
•
COMMERCIAL.   Net sales of YUPELRI were approximately $202 million for the year ended December 31, 2022. To push and motivate the team, and considering the sales targets set in 2021 prior to the Restructuring, we set our aggressive internal sales goal of net sales in the range of $220 million to $250 million. The compensation committee awarded only 95% achievement for our commercial goal since we did not meet this target. However, the compensation committee noted that we materially contributed to significant growth for the YUPELRI brand, noting that hospital business unit
​
 
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volume, for which we are responsible, grew approximately 53% year-over-year, notwithstanding that we had over 60% fewer representatives in field than in 2021 due to the Restructuring, and the team achieved a launch to date milestone of one million YUPELRI doses sold in the hospital in December 2022. In addition, YUPELRI achieved three consecutive quarters of all-time high net sales in the second, third and fourth quarters of 2022. In fact, as described in greater detail in our Annual Report on Form 10-K filed on March 1, 2023, our implied 35% share of net sales for YUPELRI during the fourth quarter of 2022 was $19.5 million, up 27% from the fourth quarter of 2021, and our implied 35% share of YUPELRI net sales for 2022 was $70.7 million, which represents 25% year-over-year net sales growth from 2021.
•
RESEARCH AND DEVELOPMENT.   The compensation committee determined the goals in this category were achieved at 90% due to the analytical work done to understand the results of our prior ampreloxetine studies, to prepare for an additional study and achieve alignment with the FDA on the ampreloxetine plan and the orderly wind-down of our discontinued programs. However, the compensation committee did not award full achievement since the PIFR-2 study enrollment was not completed in 2022.
​
•
The compensation committee noted the potential of the ampreloxetine program to deliver a distinctive, unique treatment for MSA patients with nOH, building upon the data delivered from the study design and pre-specified endpoints of our prior ampreloxetine clinical study, the important work we had done in June 2022 to align with the FDA on the design of an additional, registrational study for ampreloxetine, and the attention our prior ampreloxetine clinical study data received from MSA medical experts at the American Autonomic Society (AAS) 33rd International Symposium on the Autonomic Nervous System in 2022. The committee also considered the rapid, timely work we did to assess and prepare ampreloxetine to move forward in, we believe, creating value for shareholders and patients, and the importance of that work in securing funding for the program from Royalty Pharma in July 2022.
​
•
The committee considered the progress achieved towards fully enrolling the PFIR-2 study notwithstanding the protocol driven sample size re-estimation, which increased the trial size in 2022 and noted that this goal remains to be achieved.
​
•
The committee also noted the careful analysis of the team that informed strategic decisions we made to deprioritize pursuit of clinical studies of nezulcitinib in acute indications and consider chronic indications and also to progress and evaluate our NINJA inhaled JAKi research program. The committee also noted that, notwithstanding reduced capital allocation to the inhaled JAKi program, the research organization nominated an advanced drug candidate in early 2023 with novel features as compared to any other JAKi that we are aware of.
​
•
CORPORATE.   The compensation committee determined this goal was exceeded and determined achievement at 180%. We executed numerous, highly impactful corporate transactions in 2022.
​
•
We completed the sale of our equity interests in TRC, representing our 85% economic interest in the sales-based royalty rights on worldwide net sales of GSK’s TRELEGY ELLIPTA, for approximately $1.1 billion in upfront cash, while retaining future value through the right to receive contingent milestone payments and certain outer year-royalties. The sale of our equity interests in TRC was the product of an intensive, competitive process and negotiation of a complex transaction involving four distinct parties, and resulted in the realization of what we believe to be significant value for us.
​
•
We received a $25 million upfront cash investment that we expect to fund the majority of our new Phase 3 study of ampreloxetine in MSA patients suffering from symptomatic nOH, and we are entitled to receive another $15 million cash investment upon the first regulatory approval of ampreloxetine, in exchange for low single digit royalties on any eventual sales of ampreloxetine.
​
•
We retired all of our outstanding debt, consisting of both the early repayment of our 9.5% non-recourse TRELEGY notes due 2035 and a tender offer to retire our 3.25% convertible senior notes due 2023, at par.
​
•
We initiated an up to $250 million capital return program to shareholders, which included the repurchase of our shares held by GSK, the completion of a modified Dutch auction tender offer
​
 
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and the commencement of an open-market share repurchase program in late 2022, for a total of approximately $128 million returned to shareholders in 2022. We increased our capital return program to a total of up to $325 million and expect to complete it by the end of 2023.
•
The compensation committee noted that we were well-positioned to achieve the goal to become sustainably cash flow positive beginning in the second half of 2022 had we not sold our interest in TRC, which resulted in a large, one-time cash receipt while eliminating much more modest, recurring payments from TRC.
​
•
The compensation committee also noted that we successfully achieved our goal of retaining and reenergizing our employee population after a major reduction in force and in the face of a competitive labor market. Our culture remains strong and continues to show resilience during a time of significant change, both internally and externally. Our voluntary turnover rate in 2022 was 11% (compared to the industry average of 16%), and our annual employee survey received 100% participation, an overall score of 4.1/5, and positive written feedback.
​
The actual bonuses awarded to our named executive officers who remained employed at the time of payment are shown in the table below and reflected in the Non-Equity Incentive Compensation column of the “Summary Compensation Table” on page 57:
Name
​ ​
Title
​ ​
Cash Bonus
($)
​ ​
Percentage of
Target
(%)
​
Rick E Winningham
​ ​ Chief Executive Officer ​ ​ ​ ​ 722,727 ​ ​ ​ ​ ​ 115 ​ ​
Rhonda F. Farnum
​ ​ Chief Business Officer and Senior Vice President, Commercial and Medical Affairs ​ ​ ​ ​ 264,500 ​ ​ ​ ​ ​ 115 ​ ​
Richard A. Graham
​ ​ Senior Vice President, Research and Development ​ ​ ​ ​ 287,500 ​ ​ ​ ​ ​ 115 ​ ​
Equity Incentive Compensation
We believe that successful development and commercialization of medicines requires excellent functional expertise. However, functional expertise alone will not result in approved medicines, successful customer interactions or a successful company. Our long-term equity incentives seek to support our strategy of attracting employees with excellence and expertise in a wide variety of functional areas (e.g. clinical science, clinical trial execution, partnering and collaboration, strategic marketing, marketing science and financial planning). Equally as important, our equity incentives seek to support an environment of extraordinary teamwork as well as long-term retention of our employees in an intensely competitive environment.
The types of equity compensation comprising the mix of officer compensation consist of: (i) options with time-based vesting, which require the market value of our ordinary shares to increase before they are valuable; (ii) performance-contingent restricted share awards (“RSAs”) or RSUs, the right to which is dependent upon successful completion of corporate performance goals; and (iii) RSUs with time-based vesting. We do not use a targeted cash/equity split to set officer compensation.
Generally, to align employee interests with those of our shareholders, an option grant is made to an employee at the first regularly scheduled meeting of the compensation committee after the employee commences employment. Annual replenishment equity awards generally are considered during the first quarter of each year, and additional equity awards may be made in connection with an officer earning a promotion, taking on additional duties, or for retention purposes in certain circumstances such as those associated with the Restructuring in 2021. Options have been used primarily as a hiring incentive, with annual replenishment awards historically provided primarily in the form of RSUs to minimize dilution to shareholders. Replenishment equity awards are granted annually and generally vest over a four-year period. We believe that the resulting overlapping vesting schedule from awards made in prior years, together with the number of shares subject to each award, helps ensure a meaningful incentive to remain in our employ and to enhance shareholder value over time. In determining the size of equity awards granted to our named executive officers, our compensation committee considers such matters as it deems appropriate in its discretion, including individual and company performance and, in the case of named executive officers other than our CEO, recommendations from our CEO. The compensation committee also references guidelines that provide
 
52
 
the compensation committee with information about the size of equity awards, both as a percentage of the company and based on grant value, at our peer companies.
2022 Annual Replenishment Equity Awards
The only named executive officer to receive an annual replenishment equity award in 2022 was Mr. Winningham. Our other named executive officers received RSUs (consisting both of time-based RSUs and performance-contingent RSUs) in the fourth quarter of 2021 to address retention concerns associated with the Restructuring in 2021, rather than waiting for our typical grant schedule where replenishment equity awards are considered in the first quarter of each year. Because Mr. Winningham was not provided any retention or Restructuring-related equity grants in 2021, he was awarded a 2022 replenishment equity award in the first quarter of 2022 consisting of the following options and RSUs:
​
2022 RSUs
​ ​
2022 Options
​ ​
Grant Date Fair Value
of RSUs ($)
​ ​
Grant Date Fair
Value of Options ($)
​
​
170,000
​ ​
515,000
​ ​
1,740,800
​ ​
2,756,847
​
25% of the replenishment RSUs granted to Mr. Winningham vested on February 20, 2023, and the remaining replenishment RSUs vest in equal quarterly installments on the Company vesting dates for the three years thereafter, provided that Mr. Winningham remains in continuous service through each such date. 25% of the replenishment stock options granted to Mr. Winningham vested on February 25, 2023, and the remaining replenishment options vest in equal monthly installments for the three years thereafter, provided that Mr. Winningham remains in continuous service through each such date.
Instead of being delivered entirely in RSUs with time-based vesting, Mr. Winningham’s replenishment equity awards included stock options in order to better align our CEO equity award grant practices and amounts with that of our peers and also provide a performance incentive element to the annual replenishment equity award grant. Option grants require the market value of our ordinary shares to increase before they are valuable and therefore contain an inherent performance component risk as any decrease in share price renders them valueless.
CEO 2023 Annual Replenishment Equity Awards
Building on our decision in 2022 to structure a portion of our CEO’s equity compensation in the form of stock options, which require appreciation in our stock price in order to become more valuable, the compensation committee has continued to structure our CEO compensation to become more performance-based. In 2023, Mr. Winningham’s annual replenishment equity awards consist of equal parts performance-contingent RSUs and time-based RSUs. No additional equity awards are expected to be granted to Mr. Winningham for 2023.
In March 2023, Mr. Winningham was granted the following equity awards:
​ ​ ​ ​
PSUs
​ ​
RSUs
​ ​ ​ ​
​ ​ ​ ​
165,000
​ ​
165,000
​ ​ ​ ​
25% of the RSUs granted to Mr. Winningham vest on February 20, 2024, and the remaining replenishment RSUs vest in equal quarterly installments on the Company vesting dates for the three years thereafter, provided that Mr. Winningham remains in continuous service through each such date. The PSUs granted to Mr. Winningham are intended to reward only share-price growth viewed as challenging and important to long-term shareholder value. Mr. Winningham’s PSUs are subject to the achievement of three stock price appreciation milestones within four years of the date of grant, with one-third of the PSUs eligible to vest based on achievement of each of the three milestones. Following achievement of the applicable stock price appreciation target, a four-year time based-vesting period will apply retroactively starting from the grant date of the PSU (25% on February 20, 2024 and 6.25% of the RSUs on each Company vesting date thereafter), provided that Mr. Winningham remains in continuous service through each such date. The following stock price appreciation milestones are applicable to Mr. Winningham’s PSUs:
 
53
 
Stock Price Appreciation Milestone*
​ ​
% of Total Number of
PSUs Eligible to Vest
​
Achieve 20 trading day average closing share price of $13.05 or higher
​ ​ ​ ​ 33.33% ​ ​
Achieve 20 trading day average closing share price of $16.06 or higher
​ ​ ​ ​ 33.33% ​ ​
Achieve 20 trading day average closing share price of $19.08 or higher
​ ​ ​ ​ 33.33% ​ ​
​
*
The milestones are subject to adjustment in the event of a stock split or similar event.
​
2021 Performance-Contingent RSUs Granted in Connection with Restructuring
In connection with the Restructuring and as further described in detail in the “Equity Incentive Compensation” section of our 2022 proxy statement, each of Mr. Hindman, Ms. Farnum and Dr. Graham were granted performance-contingent RSUs (the “Restructuring PSUs”) in December 2021. The Restructuring PSUs were granted with performance metrics and vesting schedules unique to each of their respective positions with us. The PSUs were intended to reward outcomes viewed as very challenging and important to a long-term shareholder value. Mr. Hindman and Ms. Farnum were each granted 100,000 Restructuring PSUs and Dr. Graham was granted 85,000 Restructuring PSUs. Consistent with the challenging nature of the performance goals, none of the performance metrics applicable to the Restructuring PSUs were achieved. As a result, Ms. Farnum and Dr. Graham forfeited all of their Restructuring PSUs. Mr. Hindman forfeited his Restructuring PSUs upon his termination of employment on December 31, 2022.
2019 Performance-Contingent RSUs Granted to Mr. Hindman
In connection with Mr. Hindman’s commencement of employment in 2019, he was granted performance-contingent RSUs for 60,000 ordinary shares. Two-thirds of the performance-contingent RSUs vested prior to 2022 for the successful completion of a business development transaction and achievement of the performance milestone related to additional sell-side analyst coverage. The remaining one-third of the performance-contingent RSUs were eligible to vest on the one-year anniversary following certification of achievement of the performance milestone related to a more diversified shareholder base by our compensation committee. Achievement of the final performance milestone was attained by Mr. Hindman before the end of the performance period on June 30, 2022; however, Mr. Hindman’s employment with us terminated on December 31, 2022, prior to the completion of the required service period following achievement of the performance milestone. While Mr. Hindman was not otherwise eligible to vest in such PSUs due to his termination of employment, the vesting of such PSUs was accelerated pursuant to the terms of his separation agreement with us.
Restructuring Cash Bonuses
While no bonuses were paid under the annual bonus program in 2021, cash incentive opportunities were granted in 2021 to employees to motivate and retain continuing employees during a particularly challenging period in connection with the Restructuring. Each of Ms. Farnum, Mr. Hindman and Dr. Graham were eligible to earn cash bonuses equal to 125% of their annual bonus target, although in the case of Mr. Hindman and Dr. Graham their bonuses were also subject to performance conditions.
Ms. Farnum’s Restructuring bonus was paid in two installments, with an amount equal to 75% of her annual bonus target paid if she remained continuously employed with us through March 15, 2022, and an amount equal to 50% of her annual bonus target paid if she remained continuously employed with us through June 15, 2022.
The Restructuring bonuses paid to Mr. Hindman and Dr. Graham were also payable in two installments, with the first installment equal to 75% of the officer’s annual bonus target paid on April 15, 2022 and the second installment equal to 50% of the annual bonus target paid on September 15, 2022, subject to the officer’s continued employment and achievement of the performance goals specific to the officer’s duties. In the case of Mr. Hindman, these goals were to (1) eliminate facilities utilization of specific portion of the Company’s South San Francisco premises by April 15, 2022 and (2) leasing specific portion of the Company’s South San Francisco premises by September 15, 2022. In the case of Dr. Graham these goals were to (1) wind down all ongoing studies for izencitinib and ampreloxetine in the first quarter of 2022 and (2) deliver
 
54
 
top-line results for our izencitinib Crohn’s disease Phase 2 study and our 170 ampreloxetine study. The goals were achieved and the Restructuring bonuses were paid to Mr. Hindman and Dr. Graham in April 2022 and September 2022.
Retention Payments to Ann Brady
Dr. Brady remained with us through February 2022 to assist with the substantial reduction in our Irish operations in connection with the Restructuring, consistent with Irish employment law and practices. We executed a Settlement Agreement with Dr. Brady in connection with her planned termination of employment under which she was paid $504,936 for her services in connection with successfully winding down our Irish operations (converted from Euros to USD using FX Exchange Rate as of February 28, 2022). The agreement to make such as payment was entered into in 2021 as part of the Restructuring and in recognition that Dr. Brady’s services to assist with the Irish reduction in force would ultimately end in the loss of her employment without cause as part of the Restructuring.
Post-Termination Protection
We believe that the possibility of a change in control creates uncertainty for our officers regarding their continued employment because such transactions frequently result in senior management changes. We provide change in control protections to our officers to alleviate concerns regarding the possible occurrence of such a transaction, allowing them to focus their attention on our business in a highly competitive labor market. In addition, these protections encourage executives to remain with us during the threat or negotiation of a change in control transaction, which preserves our value and the potential benefit to be received by our shareholders in the transaction.
The change in control severance benefits are structured under a plan instead of individual employment agreements. With this change in control severance plan, we sought uniformity of results among the officers based on their positions. In addition, we believe that the events triggering payment, both the consummation of a change in control and an involuntary termination, and then only when there is no misconduct by the officer, are fair hurdles for the ensuing income protection. A description of our change in control severance plan is in the “Potential Payments Upon Termination or Change-in-Control” section on page 62. For officers who were eligible to participate in the Amended and Restated Change in Control Severance Plan of Innoviva, Inc. (“Innoviva”) prior to our spin-off from Innoviva in 2014 (i.e., such named executive officer was an officer of Innoviva as of December 16, 2009), we provide gross-ups for excise taxes potentially due upon a change in control. This provides former Innoviva employees a level of benefits that is at least equal to those they were eligible for prior to our spin-off. Mr. Winningham is the only named executive officer who was eligible to participate in the Innoviva severance plan prior to our spin-off and eligible for a gross-up.
We do not have agreements with any of our current named executive officers that provide for severance in the event of an involuntary termination that does not occur in connection with a change in control, other than with our CEO. Pursuant to the offer letter we entered into with Mr. Winningham to become our CEO, if Mr. Winningham’s service is terminated without cause, he will receive a lump-sum severance payment of 24 months of his current salary, plus two times his current target bonus.
In connection with their terminations, we entered into separation agreements with each of Mr. Hindman and Dr. Brady. Pursuant to these agreements the officers received certain severance benefits described in “Potential Payments Upon Termination or Change-in-Control” below, in exchange for a release of claims.
Perquisites
We do not provide a non-qualified deferred compensation program or a supplemental executive retirement plan to our named executive officers. We generally do not provide perquisites or other personal benefits to named executive officers that we do not provide to all of our employees.
Tax Deductibility of Pay
Section 162(m) of the Internal Revenue Code of 1986, as amended, places a limit of $1,000,000 on the amount of compensation that we may deduct in any one year with respect to our CEO and certain other
 
55
 
executive officers. Prior to changes in tax law taking effect in 2018, there was an exception to the $1,000,000 limitation for performance-based compensation, including options, meeting certain requirements. Historically some of our named executive officer compensation arrangements were intended to qualify for this exception. The exemption from the Section 162(m) deduction limit for performance-based compensation has been repealed, effective for taxable years beginning after December 31, 2017. As a result of the repeal of the performance-based compensation exemption, Section 162(m) is no longer a significant factor in compensation decisions and compensation paid to our CEO and certain other executive officers in excess of $1,000,000 will not be deductible unless it qualifies for transition relief applicable to certain arrangements in place as of November 2, 2017.
Compensation Committee Report2
The compensation committee has reviewed and discussed the foregoing Compensation Discussion and Analysis with management and, based on such review and discussions, the compensation committee has recommended to the board of directors that the Compensation Discussion and Analysis be included in this proxy statement.
Submitted by the following members of the compensation committee:
Eran Broshy
Dean J. Mitchell
William D. Young, Chairman
​
2
The material in this report is not “soliciting material,” is not deemed “filed” with the SEC and is not to be incorporated by reference in any filing of Theravance Biopharma under the Securities Act or the Exchange Act, whether made before or after the date hereof and irrespective of any general incorporation language in any such filing
​
 
56
 
2022 Summary Compensation Table
The following table sets forth all of the compensation awarded to, earned by, or paid to our “principal executive officer,” our “principal financial officer,” our next two most highly compensated executive officers and one former executive officer (our “named executive officers”) for our fiscal years ended December 31, 2022, 2021 and 2020, as applicable.
Name and Principal Position
​ ​
Year
​ ​
Salary
($)(1)
​ ​
Bonus
($)(2)
​ ​
Share
Awards
($)(3)
​ ​
Option
Awards
($)(3)
​ ​
Non-Equity
Incentive Plan
Compensation
($)(4)
​ ​
All Other
Compensation
($)
​ ​
Total ($)
​ ​
Rick E Winningham
Chief Executive Officer
​ ​ ​ ​ 2022 ​ ​ ​ ​ ​ 1,047,431 ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ 1,740,800 ​ ​ ​ ​ ​ 2,756,847 ​ ​ ​ ​ ​ 722,730 ​ ​ ​ ​ ​ 5,099(5) ​ ​ ​ ​ ​ 6,272,907 ​ ​ ​
​ ​ ​ 2021 ​ ​ ​ ​ ​ 1,044,889 ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ 3,400,000 ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ 7,053 ​ ​ ​ ​ ​ 4,451,942 ​ ​ ​
​ ​ ​ 2020 ​ ​ ​ ​ ​ 1,014,455 ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ 4,977,600 ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ 579,646 ​ ​ ​ ​ ​ 6,045 ​ ​ ​ ​ ​ 6,577,746 ​ ​ ​
Rhonda F. Farnum(6)
Chief Business Officer
and Senior Vice
President, Commercial
and Medical Affairs
​ ​ ​ ​ 2022 ​ ​ ​ ​ ​ 460,000 ​ ​ ​ ​ ​ 213,207 ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ 264,500 ​ ​ ​ ​ ​ 5,099(5) ​ ​ ​ ​ ​ 942,806 ​ ​ ​
​ ​ ​ 2021 ​ ​ ​ ​ ​ 430,518 ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ 2,586,950 ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ 5,000 ​ ​ ​ ​ ​ 3,022,468 ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
Richard A. Graham(6)
Senior Vice President,
Research and
Development
​ ​ ​ ​ 2022 ​ ​ ​ ​ ​ 482,875 ​ ​ ​ ​ ​ 291,094 ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ 287,500 ​ ​ ​ ​ ​ 5,130(7) ​ ​ ​ ​ ​ 1,066,599 ​ ​ ​
​ ​ ​ 2021 ​ ​ ​ ​ ​ 464,438 ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ 3,265,600 ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ 5,000 ​ ​ ​ ​ ​ 3,735,038 ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
Andrew A. Hindman(8)
Former Senior Vice
President and
Chief Financial
Officer
​ ​ ​ ​ 2022 ​ ​ ​ ​ ​ 572,006 ​ ​ ​ ​ ​ 357,504 ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ 60,098(9) ​ ​ ​ ​ ​ 989,608 ​ ​ ​
​ ​ ​ 2021 ​ ​ ​ ​ ​ 570,394 ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ 3,931,550 ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ 5,000 ​ ​ ​ ​ ​ 4,506,944 ​ ​ ​
​ ​ ​ 2020 ​ ​ ​ ​ ​ 551,608 ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ 1,275,144 ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ 265,278 ​ ​ ​ ​ ​ 5,920 ​ ​ ​ ​ ​ 2,097,950 ​ ​ ​
Ann B. Brady(10)
Former President of
Theravance Biopharma
Ireland Ltd.
​ ​ ​ ​ 2022(11) ​ ​ ​ ​ ​ 68,865 ​ ​ ​ ​ ​ 504,936 ​ ​ ​ ​ ​ 169,639(12) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ 312,766(13) ​ ​ ​ ​ ​ 1,056,206 ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​
(1)
Includes amounts deferred pursuant to our 401(k) plan.
​
(2)
The amounts in this column reflect cash bonuses paid in connection with the Restructuring, as discussed in greater detail in the “Restructuring Cash Bonuses” section of the “Compensation Discussion and Analysis” beginning on page 44.
​
(3)
The amounts in these columns reflect the aggregate grant date fair value of share awards and option awards granted by us, computed in accordance with FASB ASC Topic 718. See Notes 1 and 12 of the notes to our consolidated financial statements in our Annual Report on Form 10 K filed on March 1, 2023 for a discussion of all assumptions made by us in determining the grant date fair value of such awards. In accordance with SEC rules, the grant date fair value of any award subject to a performance condition is based on the probable outcome of the performance conditions.
​
(4)
The amounts in this column reflect cash bonus awards earned by the named executive officers under our annual cash bonus plan, and which were paid in the first quarter of the following year.
​
(5)
Consists of matching contributions for the 401(k) plan of $5,000 and (ii) $99, which was the value of a gift at a company event, plus tax gross-up amounts associated therewith, which were provided to all employees who received such gifts.
​
(6)
The executive officer was employed by us but was not one of our named executive officers in 2020. Accordingly, compensation information is only provided for 2021 and 2022.
​
 
57
 
(7)
Consists of (i) matching contributions for the 401(k) plan of $5,000 and (ii) $130, which was the value of a gift at a company event and a peer-to-peer award, plus tax gross-up amounts associated therewith, which were provided to all employees who received such gifts and awards.
​
(8)
Mr. Hindman terminated employment with us on December 31, 2022 in connection with internal changes at the Company.
​
(9)
Consists of (i) matching contributions for the 401(k) plan of $5,000; (ii) $99, which was the value of a gift at a company event, plus tax gross-up amounts associated therewith, which were provided to all employees who received such gifts and (iii) $54,999 for accrued vacation time that was paid out at the time of his termination of employment.
​
(10)
Dr. Brady was employed by us but was not one of our named executive officers in 2020 or 2021. Accordingly, compensation information is only provided for 2022. Further, Dr. Brady terminated employment with us on February 28, 2022 in connection with the Restructuring.
​
(11)
Amounts paid to Dr. Brady have been converted from Euros to US Dollars using the current exchange rate on the applicable pay date.
​
(12)
Includes $169,639 in incremental fair value associated with the acceleration of certain RSUs held by Dr. Brady pursuant to the settlement agreement entered into with her in connection with the Restructuring and her termination of employment.
​
(13)
Consists of (i) a car allowance of $2,252; (ii) a health allowance of $1,836; (iii) $14,040 for accrued vacation time that was paid out at the time of Dr. Brady’s termination of employment and (iv) $294,638 in severance benefits paid in connection with Dr. Brady’s termination of employment. Such severance benefits are described in greater detail in “Change in Control Severance Benefits” beginning on page 62.
​
2022 Grants of Plan-Based Awards
The following table sets forth each non-equity incentive plan award and equity incentive plan award granted to our named executive officers during fiscal year 2022. As a result of Dr. Brady’s termination of employment with us on February 28, 2022 and pursuant to the terms of her settlement agreement with us entered into in November 2021, Dr. Brady was not eligible for any plan-based awards during fiscal year 2022. Unless indicated below, all equity awards were made under our 2013 Equity Incentive Plan.
​ ​ ​ ​ ​ ​
Estimated Possible
Payouts Under
Non-Equity
Incentive Plan
Awards(1)
​ ​
All Other
Stock
Awards:
Number of
Shares or
Units (#)(2)
​ ​
All Other
Option
Awards:
Number
of Securities
Underlying
Options
(#)(2)
​ ​
Exercise
or Base
Price of
Option Awards
($/Sh)
​ ​
Grant Date
Fair Value
of Stock
Awards ($)
​
Name
​ ​
Grant
Date
​ ​
Target ($)
​ ​
Maximum
($)
​
Rick E Winningham
​ ​
N/A
​ ​ ​ ​ 628,459 ​ ​ ​ ​ ​ 1,256,918 ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ — ​ ​
​
2/25/2022
​ ​ ​ ​ — ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ 515,000(3) ​ ​ ​ ​ ​ 10.24 ​ ​ ​ ​ ​ 2,756,847 ​ ​
​
2/25/2022
​ ​ ​ ​ — ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ 170,000(4) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ 1,740,800 ​ ​
Rhonda F. Farnum
​ ​
N/A
​ ​ ​ ​ 230,000 ​ ​ ​ ​ ​ 460,000 ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ — ​ ​
Richard A. Graham
​ ​
N/A
​ ​ ​ ​ 250,000 ​ ​ ​ ​ ​ 500,000 ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ — ​ ​
Andrew A. Hindman
​ ​
N/A
​ ​ ​ ​ 286,003 ​ ​ ​ ​ ​ 572,006 ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ — ​ ​
​
(1)
In accordance with SEC rules, this table reflects the grant that each named executive officer received in early 2022 of a non-equity incentive plan award pursuant to our 2022 annual cash bonus plan, which is discussed in greater detail in the “Annual Cash Incentive Compensation” section of the “Compensation Discussion and Analysis” beginning on page 44. The amounts shown in the “target” column reflect the target payout under the plan. The target amount is equal to 50% of each named executive officer’s base salary, with the exception of Mr. Winningham, whose target bonus amount was 60% of his base salary. The amounts shown in the “maximum” column reflect the maximum payout under the plan equal to 200% of each officer’s target bonus.
​
 
58
 
(2)
The options and RSUs will become fully vested if we are acquired and the holder is subject to an involuntary termination. Such vesting acceleration is described in greater detail in “Potential Payments Upon Termination or Change in Control” beginning on page 62.
​
(3)
Reflects an annual replenishment option granted under our 2013 Equity Incentive Plan. 25% of the shares subject to the option vested on February 25, 2023, and the remaining 75% of the shares subject to the option vest in equal monthly installments over the next three years, provided the holder remains in continuous service through each vesting date.
​
(4)
Reflects an annual replenishment RSU granted under our 2013 Equity Incentive Plan. 25% of the RSUs vested on February 20, 2023, and the remaining 75% of the RSUs vest in equal quarterly installments over the next three years, provided the holder remains in continuous service through each vesting date.
​
Outstanding Equity Awards at 2022 Year-End
The following table sets forth information regarding each unexercised option to purchase our ordinary shares and each restricted share unit held by each of our named executive officers as of December 31, 2022. As a result of Dr. Brady’s termination of employment with us on February 28, 2022, she did not hold any equity awards as of December 31, 2022.
Unless otherwise indicated below, all of our equity awards were granted under our 2013 Equity Incentive Plan and will fully vest in the event of a change in control unless the awards are assumed by the successor corporation or replaced with comparable awards. For additional information regarding other vesting acceleration provisions applicable to the outstanding equity awards held by our named executive officers, please see the section titled “Potential Payments Upon Termination or Change-in-Control” beginning on page 62.
​ ​ ​
Option Awards
​ ​
Stock Awards
​
Name
​ ​
Number of
Securities
Underlying
Unexercised
Options
Exercisable
(#)
​ ​
Number of
Securities
Underlying
Unexercised
Options
Unexercisable
(#)
​ ​
Option
Exercise
Price
($)
​ ​
Option
Expiration
Date
​ ​
Number of
Shares or
Units of
Stock That
Have Not
Vested
(#)
​ ​
Market
Value of
Shares or
Units That
Have Not
Vested($)(1)
​
(a)
​ ​
(b)
​ ​
(c)
​ ​
(e)
​ ​
(f)
​ ​
(g)
​ ​
(h)
​
Rick E Winningham
​ ​ ​ ​ 80,000(2) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ 23.51 ​ ​ ​ ​ ​ 6/02/2024 ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ — ​ ​
​ ​ ​ 320,000(3) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ 28.35 ​ ​ ​ ​ ​ 8/21/2024 ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ — ​ ​
​ ​ ​ — ​ ​ ​ ​ ​ 515,000(4) ​ ​ ​ ​ ​ 10.24 ​ ​ ​ ​ ​ 2/24/2032 ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ — ​ ​
​ ​ ​ — ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ 10,625(5) ​ ​ ​ ​ ​ 119,213 ​ ​
​ ​ ​ — ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ 53,125(6) ​ ​ ​ ​ ​ 596,063 ​ ​
​ ​ ​ — ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ 95,625(7) ​ ​ ​ ​ ​ 1,072,913 ​ ​
​ ​ ​ — ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ 170,000(8) ​ ​ ​ ​ ​ 1,907,400 ​ ​
Rhonda F. Farnum
​ ​ ​ ​ 150,000(9) ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ 25.64 ​ ​ ​ ​ ​ 7/31/2028 ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ — ​ ​