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endo | 100 Endo Boulevard | Chadds Ford, Pennsylvania 19317 20
The Company’s Executive Compensation Program
Overall Program Objectives
The Company’s primary objective with respect to executive compensation is to design compensation programs that align
executives’ compensation with the Company’s overall business strategies for the creation of stockholder value and attract,
motivate and retain highly qualified executives. The Compensation Committee believes that the most effective executive
compensation program is one that is designed to reward the achievement of specific annual, long-term and strategic goals
of the Company, and which aligns executives’ interests with those of the shareholders by rewarding performance in meet-
ing or exceeding established goals, with the ultimate objective of improving shareholder value.
Accordingly, the Company provides incentives to advance the interests of shareholders and deliver levels of compensation
that are commensurate with performance. Overall, the Company designs its compensation program to:
• create a strong performance alignment with shareholders’ interests;
• support the corporate business strategy and business plan by clearly communicating what is expected of execu-
tives with respect to goals and results and by rewarding achievement; and
• recruit and retain superior executive talent.
The Company seeks to achieve these objectives through three key compensation elements:
• a base salary;
• a performance-based annual cash incentive (i.e., annual IC program); and
• an annual (and, under certain circumstances, periodic) grants of long-term, equity-based compensation (i.e., a
long-term incentive), comprised of stock options, restricted stock units subject to time-based vesting require-
ments, and performance share units that have performance-based vesting requirements.
In order to enhance the Compensation Committee’s ability to carry out its responsibilities effectively, as well as maintain
strong links between executive pay and performance, the Compensation Committee reviews compensation information for
each NEO which includes the following information:
• the annual compensation and benefit values that are being offered to each executive;
• the value of all outstanding equity awards; and
• the value of all other compensation.
The Compensation Committee also meets with our Chairman, President and Chief Executive Officer and other senior man-
agement in connection with compensation matters and regularly meets in executive sessions with and without Hay Group
Compensation Committee consultants.
Competitive Considerations
In making compensation decisions with respect to each element of compensation, the Compensation Committee considers
the competitive market for executives and compensation levels provided by comparable companies. The Compensation
Committee regularly reviews the compensation practices at companies with which it competes for talent, including busi-
nesses engaged in activities similar to those of the Company, including branded pharmaceuticals, generics, devices and
services. While we do not believe that it is appropriate to establish compensation levels based primarily on benchmarking,
we believe that information regarding pay practices at other companies is nevertheless useful in two respects. First, we
recognize that our compensation practices must be competitive in the marketplace. Second, independent marketplace
information is one of the many factors that we consider in assessing the reasonableness of compensation.
The Compensation Committee generally targets total executive compensation at the median of compensation packages
for executives in similar positions and with similar responsibilities and experience at similar companies of comparable size
with the opportunity for top quartile compensation based upon individual and company performance. We recognize, how-
ever, that positions with similar titles at the Data Point Companies are not always comparable in terms of responsibility to
such positions at the Company. The Compensation Committee’s choice of this target percentile reflects the Company’s
consideration for our shareholders’ interests in paying what is competitive, but not significantly more than that which is
competitive, to achieve our corporate goals, while conserving cash and equity as much as practicable.
We believe that, given the industries in which we operate and our compensation philosophy and objectives, compensa-
tion targeted at the median of similar companies with the opportunity for top quartile total compensation based upon
performance is generally sufficient to retain our current executive officers and to hire new executive officers when and
as required. In setting compensation for the NEOs, the Compensation Committee considers comparative market data re-
quested from Hay Group, its compensation consultant. In gathering relevant competitive market compensation data, the
Compensation Committee approved the use of a sample of mid-sized companies with similar operations as Endo.