Elements of Executive Compensation
Employees in our organization do not share either accountability or responsibility
equally for strategic and/or tactical decisions. It is well ingrained in our culture that
not everyone should share the same level of risk/reward for the consequences of these
decisions. As a result, we have structured the various components of our
compensation system to reflect accountability both for the successes and failures
(both long-term and short-term) of Isis and our employees. We pay our senior
management team for results and their use of judgment in executing the strategies
they have established. Therefore, the more senior a person becomes within Isis, the
more the person’s cash compensation will be ‘‘at risk.’’We compensate the more
junior employees for accomplishing their work well and, therefore, a lower portion of
their cash compensation is ‘‘at risk.’’
Our executive officers’ total direct compensation consists of four elements:
(1) base salary,
(2) MBO – Performance Based –At Risk Cash Compensation, no portion of which is guaranteed,
(3) stock-based compensation, and
(4) the same benefits, including 401(k) matching, that we provide to all employees.
TheMBO – Performance Based –At Risk Cash Compensation is the only element that does not apply to all
employees. Individual PerformanceMBOs are available only to employees at the director level and above.
We consider many factors in determining the amounts we grant to our executives for each of the above
three compensation elements. These factors include:
•
company-wide performance, including achievement of corporate objectives;
•
the Compensation Committee’s assessment of our CEO’s and executive officers’ individual
performance;
•
competitive compensation practices;
•
increased efficiencies and process improvements;
•
effective collaboration and teamwork;
•
individual expertise, skills and knowledge;
•
the need to retain and motivate;
•
the impact an individual’s judgment has on our success or failure; and
•
the advice of the Compensation Committee’s independent compensation consultant.
The Compensation Committee relies on these and other factors such as general economic conditions,
industry conditions, and the Compensation Committee’s collective business judgment in setting and/or approving
the appropriate increases. We do not have specific weightings assigned to these factors, as the importance of each
factor can vary among the executive officers and from year to year.
Peer Group
The Compensation Committee considers relevant market pay practices when setting executive compensation
to ensure our ability to recruit and retain high performing talent.
As part of setting the 2014 compensation, the Compensation Committee, in consultation with its
independent compensation consultant, evaluated and selected a peer group of 25 life science companies for
evaluating Isis’ compensation (the ‘‘Executive Peer Group’’). The Compensation Committee reviews the
compensation of our NEOs against the Executive Peer Group’s executive compensation to ensure that our
compensation is competitive and to inform and shape its decision-making when setting compensation. However,
the Compensation Committee does not strictly adhere to quantitative benchmarks.
The more senior
role a person
plays, the more
that person’s cash
compensation will
be ‘‘at risk.’’
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