SEC Filing - Intercept Pharmaceuticals, Inc.

View:

Download DOC

Download PDF

Download XLS

Download XBRL

tm232155-1_nonfiling - none - 15.1250813s

TABLE OF CONTENTS

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14A

(Rule 14a-101)

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 §240.14a-12

Intercept Pharmaceuticals, 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

TABLE OF CONTENTS

May 1, 2023

To Our Stockholders:

We are pleased to invite you to attend the 2023 Annual Meeting of Stockholders of Intercept Pharmaceuticals, Inc., which will be held virtually on Wednesday, May 24, 2023, at 2:00 p.m. (Eastern Time). You will be able to attend the Annual Meeting, ask questions, and vote your shares by visiting www.virtualshareholdermeeting.com/ICPT2023. We have designed the format of the Annual Meeting to ensure that stockholders are afforded similar rights and opportunities to participate as they would at an in-person meeting. Please note that to participate you will need the 16-digit control number included in your proxy materials or on your proxy card.

Details regarding the Annual Meeting, the business to be conducted, and information about Intercept that you should consider when you vote your shares are described in the proxy statement.

The Board of Directors recommends that you vote “FOR” each of the proposals in the proxy statement.

Whether or not you plan to attend, it is important that your shares be represented and voted at the Annual Meeting. You are able to vote over the Internet as well as by mail. After you have finished reading the proxy statement, we urge you to vote in accordance with its instructions. We encourage you to vote by proxy, so that your shares will be represented and voted at the Annual Meeting, whether or not you plan to attend.

Thank you for your continued support of Intercept. We look forward to seeing you at the Annual Meeting.

Sincerely,

Jerome Durso
President and Chief Executive Officer

TABLE OF CONTENTS

INTERCEPT PHARMACEUTICALS, INC.
305 Madison Avenue, Morristown, NJ 07960

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 24, 2023

Dear Stockholder:

You are cordially invited to attend the 2023 Annual Meeting of Stockholders (the “Annual Meeting”) of Intercept Pharmaceuticals, Inc., a Delaware corporation (“Intercept” or the “Company”). The Annual Meeting will be held virtually on Wednesday, May 24, 2023, at 2:00 p.m. (Eastern Time). You will be able to attend the Annual Meeting, ask questions, and vote your shares by visiting www.virtualshareholdermeeting.com/ICPT2023. We have designed the format of the Annual Meeting to ensure that stockholders are afforded similar rights and opportunities to participate as they would at an in-person meeting. Please note that to participate you will need the 16-digit control number included in your proxy materials or on your proxy card.

The purposes of the Annual Meeting are:

To elect, by separate resolutions, the following eleven nominees to serve on our Board of Directors (the “Board”) until our 2024 Annual Meeting or until their respective successors are duly elected and qualified:

1A. Paolo Fundarò	1B. Jerome Durso	1C. Srinivas Akkaraju, M.D., Ph.D.
1D. Luca Benatti, Ph.D.	1E. Daniel Bradbury	1F. Keith Gottesdiener, M.D.
1G. Nancy Miller-Rich	1H. Mark Pruzanski, M.D.	1I. Dagmar Rosa-Bjorkeson
1J. Gino Santini	1K. Glenn Sblendorio

To approve our 2023 equity incentive plan.

To approve, on a non-binding, advisory basis, the compensation of the Company’s named executive officers.

To ratify the appointment of KPMG LLP as the independent registered public accounting firm of the Company for the year ending December 31, 2023.

To transact such other business as may properly come before the meeting or any adjournments thereof.

The foregoing items of business are more fully described in the proxy statement accompanying this Notice of Annual Meeting.

The close of business on March 31, 2023, is the record date for determining stockholders entitled to vote at the Annual Meeting. Only holders of our Common Stock, par value $0.001 per share (the “shares”), as of the record date, are entitled to notice of, and to vote at, the Annual Meeting or any adjournments thereof.

By Order of the Board of Directors,

/s/ Jose Truzman
Jose Truzman, Corporate Secretary

Morristown, NJ
May 1, 2023

Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting to be held on May 24, 2023.

The Company’s Proxy Statement for the Annual Meeting, and Annual Report on Form 10-K for the year ended December 31, 2022, are available at www.proxyvote.com.

TABLE OF CONTENTS

Whether or not you plan to attend the Annual Meeting, it is important that your shares be represented and voted at the Annual Meeting. Holders of record may submit a proxy online or by completing, signing, dating, and returning the proxy card enclosed if you received hard copy materials. Holders of record must vote in accordance with the instructions listed on the proxy card (either hard copy or online). Beneficial holders whose shares are held in the name of a bank, broker, or other nominee must vote in accordance with the voting instructions provided to them by their bank, broker, or other nominee.

The Company’s proxy statement is dated May 1, 2023, and is being made available on or about May 1, 2023.

TABLE OF CONTENTS

INTERCEPT PHARMACEUTICALS, INC.
PROXY STATEMENT

TABLE OF CONTENTS

	Page
ANNUAL MEETING MATTERS		1
General Information About the Annual Meeting and Voting		1
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS		6
PROPOSALS UNDER VOTE		9
PROPOSALS 1A THROUGH 1K: ELECTION OF DIRECTORS		9
Vote Required for Approval		14
PROPOSAL 2: APPROVAL OF OUR 2023 EQUITY INCENTIVE PLAN		15
Overview		15
Plan Size and Term		15
The Equity Plan Is Necessary and Appropriate		16
Plan Features		17
Summary of Material Terms of the Plan		17
Purpose		17
Plan Participants		17
Administrator; Awards Available Under the Plan		18
Amendments		19
Other Provisions		19
New Plan Benefits		19
Certain Federal Income Tax Consequences in Respect of the Plan		19
Other Disclosures		20
Vote Required for Approval		21
PROPOSAL 3: NON-BINDING, ADVISORY VOTE ON THE COMPENSATION OF THE COMPANY’S NAMED EXECUTIVE OFFICERS		22
Vote Required for Approval		23
PROPOSAL 4: RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM		24
Vote Required for Approval		24
BOARD OF DIRECTORS AND GOVERNANCE		25
Composition of the Board		25
Role and Meetings of the Board		25
Corporate Governance		25
Board Leadership Structure		25
Board Oversight of Risk		25
Independence		26
Executive Sessions		26
Board Attendance at Annual Meetings of Stockholders		26
Communication with the Board		26
Global Code of Business Conduct		27
Environmental, Social, and Corporate Governance (“ESG”) Practices		27
Additional Corporate Policies		30

TABLE OF CONTENTS

	Page
Committees of the Board		31
Audit Committee		31
Compensation Committee		32
Nominating and Governance Committee		33
Research and Development Committee		35
Director Compensation		35
Stock Ownership Guidelines for Directors		37
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT		38
EXECUTIVE OFFICERS		40
EXECUTIVE COMPENSATION		42
Compensation Discussion and Analysis		42
Compensation Committee Report		58
Summary Compensation Table		59
Grants of Plan-Based Awards Table		60
Outstanding Equity Awards at Fiscal Year-End		61
Table of Option Exercises and Stock Vested		62
Employment Arrangements with Our NEOs		62
Potential Payments and Benefits Upon Termination of Employment or Change in Control		65
Equity Compensation Plan Information		67
Pay Ratio Disclosure		67
Pay Versus Performance Disclosure		68
RELATED PERSON TRANSACTIONS		73
Limitation on Liability and Indemnification Matters		73
AUDIT COMMITTEE REPORT		74
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM		75
Fees Paid to KPMG LLP		75
Pre-Approval Policy and Procedures		75
STOCKHOLDERS’ PROPOSALS		76
EXPENSES AND SOLICITATION		77
HOUSEHOLDING		77
OTHER BUSINESS		77
APPENDIX: 2023 EQUITY INCENTIVE PLAN

TABLE OF CONTENTS

INTERCEPT PHARMACEUTICALS, INC.

Proxy Statement
for
2023 Annual Meeting of Stockholders
To Be Held on May 24, 2023

Annual Meeting Matters

These proxy materials are provided in connection with the solicitation of proxies by the Board of Directors (the “Board”) of Intercept Pharmaceuticals, Inc. (“Intercept” or the “Company”), for the Company’s 2023 Annual Meeting of Stockholders (the “Annual Meeting”), to be held virtually on Wednesday, May 24, 2023, at 2:00 p.m. (Eastern Time). You will be able to attend the Annual Meeting, ask questions, and vote your shares by visiting www.virtualshareholdermeeting.com/ICPT2023. We have designed the format of the Annual Meeting to ensure that stockholders are afforded similar rights and opportunities to participate as they would at an in-person meeting. Please note that to participate you will need the 16-digit control number included in your proxy materials or on your proxy card.

Unless otherwise noted, “we”, “us”, and “our” refer to Intercept Pharmaceuticals, Inc.

General Information About the Annual Meeting and Voting

General

This proxy statement contains information about the Annual Meeting and was prepared by our management for the Board. This proxy statement and the Company’s Annual Report on Form 10-K for the year ended December 31, 2022 (the “Annual Report”) are available at www.proxyvote.com. This proxy statement is being made available on or about May 1, 2023.

Purpose of the Annual Meeting

The specific proposals to be considered and acted upon at the Annual Meeting are summarized above in the Notice of Annual Meeting. Each proposal is described in more detail below.

Who can vote?

The close of business on March 31, 2023, is the record date for determining stockholders entitled to vote at the Annual Meeting. Only holders of the Company’s Common Stock, par value $0.001 per share (the “shares”), as of the record date, are entitled to notice of, and to vote at, the Annual Meeting or any adjournments thereof. Each such holder is entitled to one vote for each share that such holder held as of the record date.

On March 31, 2023, there were 41,687,084 of the Company’s shares outstanding.

How do I vote?

Holders of Record

If on the record date, your shares were registered directly in your name with our transfer agent, VStock Transfer, LLC, then you may vote your shares in one of the following ways:

•

by voting online as instructed in the materials that you received,

•

by completing, signing, dating, and returning the proxy card enclosed if you received hard copy materials, or

•

by attending the Annual Meeting online and voting during the meeting.

TABLE OF CONTENTS

Beneficial Holders

If on the record date, your shares were held through a bank, broker, or other nominee (“in street name”), then you must vote in accordance with the voting instructions provided to you by your nominee. Beneficial holders whose shares are held in street name and who plan to vote during the Annual Meeting must use the unique 16-digit control number included in their proxy materials.

What am I being asked to vote on?

There are four matters scheduled to be voted on at the Annual Meeting:

To elect, by separate resolutions, the following eleven nominees to serve on the Board until our 2024 Annual Meeting or until their respective successors are duly elected and qualified:

Proposal 1A: Paolo Fundarò

Proposal 1B: Jerome Durso

Proposal 1C: Srinivas Akkaraju, M.D., Ph.D.

Proposal 1D: Luca Benatti, Ph.D.

Proposal 1E: Daniel Bradbury

Proposal 1F: Keith Gottesdiener, M.D.

Proposal 1G: Nancy Miller-Rich

Proposal 1H: Mark Pruzanski, M.D.

Proposal 1I: Dagmar Rosa-Bjorkeson

Proposal 1J: Gino Santini

Proposal 1K: Glenn Sblendorio

Proposal 2: To approve our 2023 equity incentive plan.

Proposal 3: To approve, on a non-binding, advisory basis, the compensation of the Company’s named executive officers.

Proposal 4: To ratify the appointment of KPMG LLP as the Company’s independent registered public accounting firm for the year ending December 31, 2023.

Will any other matters be voted on at the Annual Meeting?

As of the date of this proxy statement, the Company’s management knows of no other matter that will be presented for consideration at the Annual Meeting other than those matters discussed in this proxy statement. If any other matters properly come before the Annual Meeting and call for a vote of stockholders, proxies properly submitted prior to the Annual Meeting will be voted in accordance with the judgment of the proxy holders.

How does the Board recommend that I vote on the proposals?

The Board recommends that you vote your shares as follows:

Proposals 1A through 1K: FOR the election of each of the eleven nominees.

Proposal 2: FOR the approval of our 2023 equity incentive plan.

Proposal 3: FOR the approval, on a non-binding, advisory basis, of the compensation of the Company’s named executive officers.

Proposal 4: FOR the ratification of the appointment of KPMG LLP as the Company’s independent registered public accounting firm for the year ending December 31, 2023.

TABLE OF CONTENTS

How can I vote on each proposal?

For Proposals 1A through 1K, you may vote FOR the nominee, or WITHHOLD your vote.

For Proposals 2, 3, and 4, you may vote FOR or AGAINST, or ABSTAIN.

How do I attend the Annual Meeting?

Attendance at the Annual Meeting is limited to our stockholders as of the record date. To attend the virtual Annual Meeting, log in at www.virtualshareholdermeeting.com/ICPT2023. You will need your unique 16-digit control number included in your proxy materials. The Annual Meeting will begin promptly at 2:00 p.m. (Eastern Time). Online check-in will begin 15 minutes prior. You should allow ample time for online check-in. In the event that you do not have a control number, please contact your broker, bank, or other nominee as soon as possible and no later than ten days before the Annual Meeting, so that you can be provided with a control number and gain access to the Annual Meeting. Beneficial holders whose shares are held in street name and who plan to vote during the Annual Meeting must use the unique 16-digit control number included in their proxy materials.

It is important that your shares be represented and voted at the Annual Meeting. Whether or not you plan to attend the Annual Meeting, we encourage you to submit a proxy over the Internet or by completing and returning a hard copy proxy card. You do not need to attend the Annual Meeting in order to vote.

How can I submit a question during the Annual Meeting?

You may submit written questions online during the meeting at www.virtualshareholdermeeting.com/ICPT2023. If you wish to submit a question during the meeting, log in to the virtual meeting website using your unique 16-digit control number included in your proxy materials, and type and submit a question using the question box.

During the meeting, we will read aloud and answer appropriate questions, submitted online in writing during the meeting, that are relevant to the meeting and pertinent to matters properly before the meeting. We reserve the right to omit questions that are outside of scope, and we may group questions by topic and only answer similar questions once.

What if I need technical assistance?

During the virtual Annual Meeting (and beginning 15 minutes prior), we will have a support team ready to assist you with any technical difficulties that you may have accessing or hearing the Annual Meeting. If you encounter any difficulties accessing or hearing the Annual Meeting during this time, you should call the technical support telephone number that will be posted on the virtual Annual Meeting log-in page.

Can I vote during the Annual Meeting?

Yes. To log in and cast your vote electronically during the Annual Meeting, you will need your unique 16-digit control number included in your proxy materials. In the event that you do not have a control number, please contact your broker, bank, or other nominee as soon as possible and no later than ten days before the Annual Meeting, so that you can be provided with a control number and cast your vote electronically during the Annual Meeting.

Will a replay of the Annual Meeting be available?

A replay of the Annual Meeting will be made publicly available 24 hours after the meeting at www.virtualshareholdermeeting.com/ICPT2023 and for two weeks thereafter.

Will a list of stockholders be made available?

Yes. A list of stockholders of record will be available electronically during the Annual Meeting at www.virtualshareholdermeeting.com/ICPT2023, and, during the ten days prior to the Annual Meeting, at our principal executive offices located at 305 Madison Avenue, Morristown, NJ 07960.

TABLE OF CONTENTS

What vote is required to approve each proposal?

Approval of Proposals 1A through 1K each requires a plurality of the votes cast in person or by proxy at the Annual Meeting.

Approval of Proposals 2, 3, and 4 requires the affirmative vote of a majority of the shares cast affirmatively or negatively in person or by proxy at the Annual Meeting.

Abstentions may be specified for Proposals 2, 3, and 4.

Broker non-votes and abstentions have no effect on voting results.

What is the quorum requirement?

A “quorum” must be present for the Annual Meeting to be held. A quorum is present if holders of a majority of shares entitled to vote are present or represented by proxy. Shares present or represented by proxy, including broker non-votes and shares that abstain or do not vote with respect to one or more proposals, will be counted for purposes of determining a quorum. If there is no quorum, the Annual Meeting may be adjourned by the chairman of the Annual Meeting.

Will my shares be voted if I do not provide a proxy?

If your shares are registered directly in your name with our transfer agent, they will not be counted if you do not vote as described above under “How do I vote?”

If your shares are held in street name, your shares may be voted even if you do not provide voting instructions to the nominee through which the shares are held. These entities have the authority, under applicable regulations, to vote shares for which their customers do not provide voting instructions, on certain “routine” matters. Proposal 4 is considered a “routine” matter for which these entities may vote unvoted shares.

Proposals 1A through 1K, 2, and 3 are not considered “routine” matters for which these entities may vote unvoted shares. Accordingly, if you hold your shares in street name and have not provided voting instructions, your nominee is not permitted to vote your shares with respect to these matters. Such failure to vote is called a “broker non-vote”. We strongly encourage you to submit your proxy and exercise your right to vote as a stockholder.

What if I return a proxy card or otherwise submit a proxy but do not make specific choices?

If you return a signed and dated proxy card or otherwise submit a proxy (online or in hard copy) without voting on a proposal, your shares will be voted on such proposal based on the Board recommendations set forth above. If any other matter comes before the Annual Meeting, the proxy holders will exercise your proxy as they deem appropriate.

May I revoke my proxy?

If you are a holder of record, you may revoke your proxy before it is voted at the Annual Meeting by:

•

Submitting another properly completed proxy card with a later date and returning it as instructed on the card with enough time for it to be received and processed before the Annual Meeting;

•

Submitting a new proxy online prior to the deadline listed in the proxy instructions;

•

Providing written notice received by the Secretary of the Company at least one hour prior to the commencement of the Annual Meeting; or

•

Attending the Annual Meeting and voting in accordance with the requirements described in this proxy statement.

If you are a beneficial holder whose shares are held in street name, you may submit new voting instructions by contacting your nominee through which you hold your shares. You may also vote at the Annual Meeting using your unique 16-digit control number included in your proxy materials.

TABLE OF CONTENTS

Who is making and paying for this proxy solicitation?

This proxy is solicited on behalf of the Board. The Company will pay the cost of distributing this proxy statement and related materials. Upon request, the Company will reimburse nominees for reasonable expenses they incur in forwarding proxy materials to beneficial owners. Certain of the Company’s directors, officers, and employees may participate in the solicitation of proxies, including electronically or by mail or telephone, without additional compensation. See “Expenses and Solicitation” below for more information.

What does it mean if I receive more than one set of proxy materials?

If you receive more than one set of proxy materials, your shares may be registered in more than one name or in different accounts. Please submit proxies for all of your shares.

I share an address with another stockholder and we received only one set of proxy materials. How do I obtain additional materials?

We have adopted a procedure called “householding”, under which only one set of proxy materials will be mailed to multiple stockholders sharing an address unless the Company receives contrary instructions from one or more of the stockholders. If your household has received only one set of proxy materials, and you wish to receive separate copies, please follow the instructions below under “Householding”.

How can I find out the results of the voting at the Annual Meeting?

Within four business days after the Annual Meeting, we will publish the voting results in a Current Report on Form 8-K.

TABLE OF CONTENTS

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This proxy statement contains forward-looking statements, including, but not limited to, statements regarding the progress, timing and results of our clinical trials, including our clinical trials for the treatment of nonalcoholic steatohepatitis (“NASH”), the safety and efficacy of our approved product, Ocaliva (obeticholic acid or “OCA”) for primary biliary cholangitis (“PBC”), and our product candidates, including OCA for liver fibrosis due to NASH, the timing and acceptance of our regulatory filings and the potential approval of OCA for liver fibrosis due to NASH, the review of our New Drug Application (“NDA”) for OCA for the treatment of liver fibrosis due to NASH by the U.S. Food and Drug Administration (the “FDA”), our intent to work with the FDA to address the issues raised in a complete response letter (“CRL”), the potential commercial success of OCA, as well as our strategy, future operations, future financial position, future revenue, projected costs, financial guidance, prospects, plans and objectives.

These statements constitute 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”). The words “anticipate,” “believe,” “estimate,” “expect,” “intend,” “may,” “plan,” “predict,” “project,” “target,” “potential,” “will,” “would,” “could,” “should,” “possible,” “continue” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this proxy statement, and we undertake no obligation to update any forward-looking statement except as required by law. These forward-looking statements are based on estimates and assumptions by our management that, although believed to be reasonable, are inherently uncertain and subject to a number of risks.

The following represent some, but not necessarily all, of the factors that could cause actual results to differ materially from historical results or those anticipated or predicted by our forward-looking statements:

•

the success of our existing business and operations, including Ocaliva for PBC;

•

our ability to successfully commercialize Ocaliva for PBC and, if approved, OCA for NASH;

•

our ability to maintain our regulatory approval of Ocaliva for PBC;

•

our ability to timely and cost-effectively file for and obtain regulatory approval of our product candidates on an accelerated basis or at all, including OCA for liver fibrosis due to NASH;

•

our ability to address the issues raised in the CRL received in June 2020 with respect to OCA for NASH;

•

any advisory committee recommendation or dispute resolution determination that any of our product candidates should not be approved or approved only under certain conditions, including, for example, the advisory committee meeting scheduled on May 19, 2023 for OCA for liver fibrosis due to NASH;

•

any future determination that the regulatory applications and subsequent information we submit for our product candidates, including OCA for liver fibrosis due to NASH, do not contain adequate clinical or other data or meet applicable regulatory requirements for approval;

•

the progress, timing, and results of our REGENERATE clinical trial, including the safety and efficacy of OCA for liver fibrosis due to NASH, and the use of a consensus panel approach to histology reads;

•

our pre-submission meeting with the FDA in July 2022 in which we reviewed with the FDA the planned content and the timing of the submission of our NDA for OCA for liver fibrosis due to NASH;

•

our resubmission of an NDA to the FDA for OCA for liver fibrosis due to NASH, and the potential timing, review, acceptance, and approval of the NDA;

•

conditions that may be imposed by regulatory authorities on our marketing approvals for our products and product candidates, including OCA for liver fibrosis due to NASH, such as the need

TABLE OF CONTENTS

for clinical outcomes data (and not just results based on achievement of a surrogate endpoint), any risk mitigation programs such as a Risk Evaluation and Mitigation Strategies (“REMS”) program, and any related restrictions, limitations and/or warnings contained in the label of any of our products or product candidates;

•

any potential side effects associated with Ocaliva for PBC, OCA for liver fibrosis due to NASH or our other product candidates that could delay or prevent approval, require that an approved product be taken off the market, require the inclusion of safety warnings or precautions, or otherwise limit the sale of such product or product candidate, including in connection with our update to the Ocaliva prescribing information in May 2021 contraindicating Ocaliva for patients with PBC and decompensated cirrhosis, a prior decompensation event, or compensated cirrhosis with evidence of portal hypertension;

•

the initiation, timing, cost, conduct, progress and results of our research and development activities, preclinical studies and clinical trials, including any issues, delays or failures in identifying patients, enrolling patients, treating patients, retaining patients, meeting specific endpoints, or completing and timely reporting the results of our NASH or PBC clinical trials;

•

the outcomes of interactions with regulators, including the FDA, regarding our clinical trials;

•

our ability to establish and maintain relationships with, and the performance of, third-party manufacturers, contract research organizations and other vendors upon whom we are substantially dependent for, among other things, the manufacture and supply of our products, including Ocaliva for PBC and, if approved, OCA for liver fibrosis due to NASH, and our clinical trial activities;

•

our ability to identify, develop and successfully commercialize our products and product candidates, including our ability to successfully launch OCA for liver fibrosis due to NASH, if approved;

•

our ability to obtain and maintain intellectual property protection for our products and product candidates, including our ability to cost-effectively file, prosecute, defend and enforce any patent claims or other intellectual property rights;

•

the size and growth of the markets for our products and product candidates and our ability to serve those markets;

•

the degree of market acceptance of Ocaliva for PBC and, if approved, OCA for liver fibrosis due to NASH or our other product candidates among physicians, patients and healthcare payors;

•

the availability of adequate coverage and reimbursement from governmental and private healthcare payors for our products, including Ocaliva for PBC and, if approved, OCA for liver fibrosis due to NASH, and our ability to obtain adequate pricing for such products;

•

our ability to establish and maintain effective sales, marketing and distribution capabilities, either directly or through collaborations with third parties;

•

competition from existing drugs or new drugs that become available;

•

our ability to attract and retain key personnel to manage our business effectively;

•

our ability to prevent or defend against system failures or security or data breaches due to cyber-attacks, or cyber intrusions, including ransomware, phishing attacks and other malicious intrusions;

•

our ability to comply with data protection laws;

•

costs and outcomes relating to any disputes, governmental inquiries or investigations, regulatory proceedings, legal proceedings or litigation, including any securities, intellectual property, employment, product liability or other litigation;

•

our collaborators’ election to pursue research, development and commercialization activities;

TABLE OF CONTENTS

•

our ability to establish and maintain relationships with collaborators with development, regulatory and commercialization expertise;

•

our need for and ability to generate or obtain additional financing;

•

our estimates regarding future expenses, revenues and capital requirements and the accuracy thereof;

•

our use of cash, cash equivalents and short-term investments;

•

our ability to acquire, license and invest in businesses, technologies, product candidates and products;

•

our ability to manage the growth of our operations, infrastructure, personnel, systems and controls;

•

our ability to obtain and maintain adequate insurance coverage;

•

continuing threats from COVID-19, including additional waves of infections, and their impacts including quarantines and other government actions; delays relating to our regulatory applications; disruptions relating to our ongoing clinical trials or involving our contract research organizations, study sites or other clinical partners; disruptions relating to our supply chain or involving our third-party manufacturers, distributors or other distribution partners; and facility closures or other restrictions; and the impact of the foregoing on our results of operations and financial position;

•

the impact of general economic, industry, market, regulatory or political conditions;

•

how we use the funds received from the sale of our ex-U.S. business to Advanz Pharma and its affiliates (collectively, “Advanz”);

•

disagreements or legal, operational, or other business problems arising from our ongoing relationship with Advanz, including the licensing of the ex-U.S. rights to Ocaliva for PBC and, if approved, OCA for NASH, our operational separation from our former ex-U.S. commercial operations, and our agreement to supply Advanz with OCA;

•

unexpected tax, regulatory, litigation, or other liabilities;

•

whether we receive any future earn-outs or royalties under the transaction documents with Advanz; and

•

the other risks and uncertainties identified in our periodic filings filed with the U.S. Securities and Exchange Commission (the “SEC”), including our Annual Report.

TABLE OF CONTENTS

PROPOSALS UNDER VOTE

PROPOSALS 1A THROUGH 1K:

ELECTION OF DIRECTORS

The Board currently consists of eleven directors. Our directors are elected annually to serve one-year terms. Each of our directors is standing for election at the Annual Meeting.

The following table sets forth the names, ages (as of March 31, 2023), and current committee memberships of our directors.

Director	Age		Director Since
Paolo Fundarò(1)		49		2006
Jerome Durso		55		2021
Srinivas Akkaraju, M.D., Ph.D.(6)		55		2012
Luca Benatti, Ph.D.(5)(6)		62		2014
Daniel Bradbury(3)(5)		61		2016
Keith Gottesdiener, M.D.(6)		69		2016
Nancy Miller-Rich(4)(5)		64		2018
Mark Pruzanski, M.D.(6)		55		2002
Dagmar Rosa-Bjorkeson(4)		59		2021
Gino Santini(2)(3)(4)		66		2015
Glenn Sblendorio(3)		67		2014

(1)

Chairman of the Board.

(2)

Lead Independent Director.

(3)

Audit Committee member.

(4)

Compensation Committee member.

(5)

Nominating and Governance Committee member.

(6)

Research and Development Committee member.

The Board has nominated each of the individuals set forth in the table above for election as directors at the Annual Meeting. The election of each nominee requires a plurality of the votes cast in person or by proxy at the Annual Meeting. If elected, each individual will serve on the Board until our 2024 Annual Meeting or until his or her respective successor is duly elected and qualified. If any individual should become unable to accept election, the persons named as proxies may vote for a substitute nominee selected by the Board or by the named proxies, unless the Board chooses to reduce the number of directors on the Board. Each nominee has agreed to serve if elected, and the Company’s management has no reason to believe that any nominee will be unable to serve.

The names, principal occupations, and other information concerning the nominees are set forth below, including the specific experience, qualifications, attributes, and skills that led the Board to determine that the nominees should serve as directors. There are no family relationships between or among any of our directors or executive officers. For more information regarding the independence of our directors, please see “Board of Directors and Governance—Independence”.

Paolo Fundarò has served as our Chairman since October 2015 and as a member of our Board since 2006. Mr. Fundarò is Executive Chairman of XGen Partners, a life science advisory company he co-founded in 2021, and Managing Partner of its subsidiary XGen Venture, a life science venture capital firm. He was formerly the Chief Executive Officer of Genextra, a life science investment company, from 2019 to 2022, and its Chief Financial Officer from 2004 to 2019. From 2000 to 2004, Mr. Fundarò was Director of Finance and Strategic Planning for the Fastweb Group. Before that, he worked for investment

TABLE OF CONTENTS

banks Salomon Smith Barney (now Citigroup) and Donaldson, Lufkin & Jenrette (now Credit Suisse). As a venture capital investor, Mr. Fundarò has served as director or managing director of a number of portfolio companies. Mr. Fundarò received a degree in Business Management from Bocconi University in Milan, Italy.

Mr. Fundarò’s significant experience in venture capital, corporate finance, and strategic planning, as well as his expertise in leading, building, investing in, and growing companies in diverse industries, including the biopharmaceutical industry, contributed to the Board’s determination that he should be nominated to serve as a director.

Jerome Durso has been our President and Chief Executive Officer, and a director, since January 2021. Prior to becoming Chief Executive Officer, Mr. Durso served as Chief Operating Officer since joining Intercept in February 2017. Mr. Durso has over 25 years of experience in building and leading commercial and business operations at life sciences companies both in the United States and abroad. Prior to joining the Company, Mr. Durso served as a consultant to the biopharmaceutical industry from September 2015 to February 2017. Mr. Durso spent the majority of his career at Sanofi, a global pharmaceutical company, where he most recently served as SVP, Chief Commercial Officer of the Global Diabetes Division from June 2011 to April 2015. From 2010 to 2011, Mr. Durso was Senior Vice President, Chief Commercial Officer of Sanofi’s U.S. pharmaceuticals business. Prior to that, he served in a number of commercial leadership roles of increasing responsibility in business unit and brand management, marketing, and sales since he first joined Sanofi in 1993. Mr. Durso earned his bachelor’s degree in marketing from the University of Notre Dame.

Mr. Durso’s detailed business understanding of the pharmaceutical industry, and of the Company in particular, including from operating, managerial, marketing, and sales perspectives, contributed to the Board’s determination that he should be nominated to serve as a director.

Srinivas Akkaraju, M.D., Ph.D. has served as a member of our Board since October 2012. Since March 2017, Dr. Akkaraju has been the Managing General Partner of Samsara BioCapital, a venture capital firm that he founded. From April 2013 to March 2017, Dr. Akkaraju was a General Partner and then a Senior Advisor of Sofinnova Ventures, a venture capital firm focused on the life sciences industry. From January 2009 until April 2013, Dr. Akkaraju was a Managing Director of New Leaf Venture Partners, an investment firm focused on the healthcare technology sector. From 2006 to 2008, Dr. Akkaraju served as a Managing Director of Panorama Capital, a venture capital firm that he co-founded along with other members of the former venture capital investment team of J.P. Morgan Partners, a private equity division of JPMorgan Chase & Co. Prior to co-founding Panorama Capital, Dr. Akkaraju was with J.P. Morgan Partners, which he joined in 2001 and of which he became a partner in 2005. From 1998 to 2001, Dr. Akkaraju worked in business and corporate development at Genentech, Inc. (now a member of the Roche Group), a biotechnology company. Dr. Akkaraju has been a director of Chinook Therapeutics, Inc. since 2019, Mineralys Therapeutics, Inc. since 2021, Scholar Rock Holding Corporation since 2022, and Syros Pharmaceuticals, Inc. since 2017. Dr. Akkaraju also serves on the board of directors of a number of private companies. During the past five years, Dr. Akkaraju previously served as a director of Aravive, Inc. (formerly Versartis, Inc.), aTyr Pharma, Inc., Principia Biopharma Inc., Seattle Genetics, Inc. (now Seagen Inc.), and Jiya Acquisition Corp. (where he also served as Chairman). Dr. Akkaraju received his M.D. and a Ph.D. in Immunology from Stanford University. He received his undergraduate degrees in Biochemistry and Computer Science from Rice University.

Dr. Akkaraju’s extensive experience in venture capital, in-depth knowledge of life sciences companies, business development and financial expertise, as well as his scientific background and public company board experience, contributed to the Board’s determination that he should be nominated to serve as a director.

Luca Benatti, Ph.D. has served as a member of our Board since July 2014. Dr. Benatti has over 30 years of experience in the pharmaceutical and biotechnology industries. Since June 2012, Dr. Benatti has served as the Chief Executive Officer and a director of EryDel S.p.A., a private biotechnology company focused on rare diseases. From 1998 until May 2012, Dr. Benatti was Chief Executive Officer of Newron Pharmaceuticals S.p.A., a publicly traded biopharmaceutical company that Dr. Benatti co-founded. Under Dr. Benatti’s leadership, Newron developed a pipeline of innovative therapies including Xadago, approved

TABLE OF CONTENTS

worldwide for the treatment of Parkinson’s disease. From 1985 to 1998, Dr. Benatti held various research and development positions at Pharmacia & Upjohn and its predecessor companies. Dr. Benatti has authored several scientific publications and holds a number of patents. Dr. Benatti currently serves as a director of Newron Pharmaceuticals S.p.A. and Metis Precision Medicine. Dr. Benatti also serves as chairman of Italian Angels for Biotech, a member of the Advisory Board of the Sofinnova Telethon Fund, as chairman of the Scientific Advisory Board of Gain Therapeutics, and a member of the Strategic and Development Advisory Boards of Zambon S.p.A. Dr. Benatti graduated from and performed his post-doctoral training at the Milano Genetics Institute.

Dr. Benatti’s significant experience in the pharmaceutical and biotechnology industries; business development, financial, and strategic leadership expertise; and thorough understanding of pharmaceutical drug discovery and development, contributed to the Board’s determination that he should be nominated to serve as a director.

Daniel Bradbury has served as a member of our Board since July 2016. Mr. Bradbury has over 35 years of experience leading global, fast-growing life sciences companies. Mr. Bradbury has served as Executive Chairman of Equillium, Inc., a biopharmaceutical company that Mr. Bradbury co-founded, since January 2020 and served as Chairman of Equillium, Inc. from March 2018 through December 2019. Mr. Bradbury also previously served as Chief Executive Officer of Equillium, Inc., from June 2018 through December 2019 and as President of Equillium, Inc. from March 2017 until June 2018. In addition, Mr. Bradbury has been Managing Member of BioBrit, LLC, a life sciences consulting and investment firm, since 2012. From 1998 to 2012, Mr. Bradbury held several senior positions at Amylin Pharmaceuticals, Inc., a biopharmaceutical company focused on diabetes and metabolic disorders, including President and Chief Executive Officer from March 2007 until its acquisition by Bristol-Myers Squibb Company in August 2012. Mr. Bradbury also served as a director of Amylin from June 2006 to August 2012. Prior to joining Amylin in 1994, Mr. Bradbury worked at SmithKline Beecham Pharmaceuticals and its predecessor companies for ten years in various sales and marketing positions. Mr. Bradbury has been a director of Castle Biosciences, Inc. since September 2012 and serves on the board of directors of a number of private companies and philanthropic organizations. During the past five years, Mr. Bradbury previously served as a director of Panacea Acquisition Corp. (now Nuvation Bio Inc.), Geron Corporation, Corcept Therapeutics Incorporated, Illumina, Inc., BioMed Realty Trust, Inc., and Biocon Limited In addition, Mr. Bradbury serves on the Keck Graduate Institute’s Board of Trustees and the University of California San Diego’s Rady School of Management Dean’s Advisory Council. Mr. Bradbury received a Bachelor of Pharmacy from Nottingham University and a Diploma in Management Studies from Harrow and Ealing Colleges of Higher Education in the United Kingdom.

Mr. Bradbury has extensive experience in the biopharmaceutical industry, has demonstrated leadership and operational skills, and possesses significant research, development, and commercialization expertise, as well as public company board experience. These factors contributed to the Board’s determination that he should be nominated to serve as a director.

Keith Gottesdiener, M.D. has served as a member of our Board since July 2016. Since July 2020, Dr. Gottesdiener has served as the Chief Executive Officer of Prime Medicine, Inc., a publicly traded biopharmaceutical company. Prior to that, from October 2011 until March 2020, Dr. Gottesdiener served as the Chief Executive Officer and as a director of Rhythm Pharmaceuticals, Inc., a biopharmaceutical company. Dr. Gottesdiener joined Rhythm after 16 years at Merck Research Laboratories, where he held positions of increasing responsibility, including serving as a leader of Merck’s late clinical development organization from 2006 to 2011 and leading Merck’s early clinical development across all therapeutic areas from 2001 through early 2006. In such roles, Dr. Gottesdiener oversaw, led, or played a lead role in the development of many of Merck’s approved therapeutics and vaccines. Since July 2020, Dr. Gottesdiener has served as a director of Prime Medicine, Inc. He also serves as a director of Cardurion Pharmaceuticals, a private biotechnology company. During the past five years, Dr. Gottesdiener served as a director of Rhythm Pharmaceuticals, Inc. (from 2011 to 2020). Dr. Gottesdiener received his B.A. from Harvard College and his M.D. from the University of Pennsylvania. He completed his residency and fellowship at the Brigham and Women’s Hospital-Beth Israel Medical Center-Dana Farber Cancer Institute Children’s Hospital programs. After his fellowship, Dr. Gottesdiener did postdoctoral research in the laboratory of Dr. Jack Strominger at Dana Farber Cancer Institute working on the molecular immunology of the T-cell

TABLE OF CONTENTS

receptor. In 1986, he joined the faculty as an assistant professor at Columbia University, started an independent research laboratory with NIH RO-1 funding, focusing on gene transcription, and was Associate Clinical Professor of Medicine at the time he left to join Merck in 1995.

Dr. Gottesdiener’s extensive experience as a senior executive in the pharmaceutical industry, drug development and regulatory affairs expertise, and research work for both medical and academic institutions, as well as his public and private company experience, contributed to the Board’s determination that he should be nominated to serve as a director.

Nancy Miller-Rich has served as a member of our Board since April 2018. Ms. Miller-Rich has 35 years of experience in the healthcare industry, with significant expertise in business development and commercial strategy. She is Chief Executive Officer of Miller-Rich Associates, a pharmaceutical industry consultancy that she founded in 2017. Previously, Ms. Miller-Rich served in a number of leadership roles at Merck & Co., Inc. and, prior to the merger of the two companies, at Schering-Plough Corporation, including most recently as Senior Vice President, Global Human Health Business Development & Licensing, Strategy and Commercial Support from November 2013 to September 2017 and as Group Vice President, Consumer Care Global New Ventures and Strategic Commercial Development from January 2007 to November 2013. Prior to joining Schering-Plough in 1990, Ms. Miller-Rich served in a variety of commercial and marketing roles at Sandoz Pharmaceuticals and Sterling Drug, Inc. She is currently a director of Aldeyra Therapeutics, Inc., and 4D Molecular Therapeutics, Inc., as well as a board member of a number of private and not-for-profit entities. During the past five years, Ms. Miller-Rich previously served as a director of Kadmon Holdings, Inc., and UDG Healthcare plc. She received her B.S. in Business Administration, Marketing from Ithaca College in Ithaca, New York.

Ms. Miller-Rich’s significant executive experience in the healthcare industry, board experience, and business development and commercial strategy expertise, contributed to the Board’s determination that she should be nominated to serve as a director.

Mark Pruzanski, M.D. founded Intercept and has served as a member of our Board since its inception in 2002. Dr. Pruzanski served as the company’s President and Chief Executive Officer until 2021 and remained as a consultant and strategic advisor to Intercept in 2021. In 2022, Dr. Pruzanski assumed the role of Chairman and Chief Executive Officer of Versanis Bio. Since September 2018, Dr. Pruzanski has served as a director of biotechnology company Equillium, Inc. He also serves as a director of private biotechnology company eGenesis, and serves on the boards of the Emerging Companies Section of the Biotechnology Innovation Organization (BIO), a biotechnology-focused trade association, and the Foundation for Defense of Democracies, a non-profit policy institute focusing on foreign policy and national security. Previously, Dr. Pruzanski was a venture partner at Apple Tree Partners, an early stage life sciences venture capital firm that he co-founded, and an entrepreneur-in-residence at Oak Investment Partners, a venture capital firm. Dr. Pruzanski is a co-author of a number of scientific publications and is named as an inventor on several of our patents. Dr. Pruzanski received his M.D. from McMaster University in Hamilton, Canada, a M.A. degree in International Affairs from the Johns Hopkins University School of Advanced International Studies in Bologna, Italy and Washington, D.C., and a bachelor’s degree from McGill University in Montreal, Canada.

Dr. Pruzanski’s comprehensive knowledge of the Company and both its business and scientific aspects, thorough understanding of pharmaceutical drug discovery and development, and general experience with managing, operating, advising, and investing in life sciences companies, as well as his venture capital and public company board experience, contributed to the Board’s determination that he should be nominated to serve as a director.

Dagmar Rosa-Bjorkeson has served as a member of our Board since April 2021. She has more than 25 years of global experience in the pharmaceutical industry, including executive leadership positions in corporate and product strategy, market development, and operational execution. Since 2020, she has been the Chief Operating Officer of Mesoblast Limited, a publicly traded cellular medicine company. From 2017 to 2019, she worked at Mallinckrodt Pharmaceuticals, where she was Executive Vice President and Chief Strategy and Development Officer, responsible for corporate and therapeutic area strategy, business development, and new product commercialization, and also served as Senior Vice President of new product commercialization. From 2014 to 2016, she was Executive Vice President and President, Biosimilars, at

TABLE OF CONTENTS

Baxalta (now a wholly owned subsidiary of Takeda Pharmaceutical Company), where she developed a biosimilars strategy, managed post spin-off efforts from Baxter International, and oversaw a fully integrated unit including program management, research, clinical development, manufacturing, commercialization and business development. From 1997 to 2014, she held various roles of increasing responsibility at Novartis, including Vice President and Head of its multiple sclerosis business unit; Vice President, Business Development and Licensing in the United States; Vice President, Respiratory in the United States; and Country Head and President for Novartis Sweden. Throughout her 17 years at Novartis, Ms. Rosa-Bjorkeson’s experience spanned sales, marketing, general management, and country operations. She has led multiple successful product launches, including Gilenya® for multiple sclerosis at Novartis. Since December 2019, she has served on the board of directors of Xencor, Inc. She also serves on the board of private company Red Nucleus, and on the non-profit boards of the New Jersey City University Foundation and Deirdre’s House. Ms. Rosa-Bjorkeson earned an M.B.A., an M.S. in chemistry, and a B.S. in chemistry from the University of Texas, Austin.

Ms. Rosa-Bjorkeson has deep experience in the pharmaceutical industry, including in the areas of management, operations, strategy, product commercialization, and public company board experience, contributing to the Board’s determination that she should be nominated to serve as a director.

Gino Santini has served as our Lead Independent Director since February 2018 and as a member of our Board since November 2015. Mr. Santini has been an advisor of European and U.S. venture capital, pharmaceutical, and biotechnology companies since 2011. From 1983 until his retirement in 2010, Mr. Santini held a variety of commercial, operational and leadership roles of increasing responsibility at Eli Lilly and Company, including Senior Vice President, Corporate Strategy and Business Development, Senior Vice President of Corporate Strategy and Policy, President of U.S. Operations, and President of the Women’s Health Franchise. Mr. Santini has been a director of Horizon Therapeutics plc since March 2012, and Collegium Pharmaceutical, Inc. since July 2012. Mr. Santini also serves on the board of directors of a number of private companies. During the past five years, Mr. Santini previously served as a director of AMAG Pharmaceuticals, Inc., Vitae Pharmaceuticals, Inc., and Allena Pharmaceuticals, Inc. Mr. Santini holds an undergraduate degree in mechanical engineering from the University of Bologna and an M.B.A. from the Simon School of Business, University of Rochester.

Mr. Santini has extensive experience in the pharmaceutical industry, has demonstrated leadership and operational skills, and possesses significant domestic and international commercial, corporate strategy, business development, and transactional experience, as well as public company board experience. These factors contributed to the Board’s determination that he should be nominated to serve as a director.

Glenn Sblendorio has served as a member of our Board since February 2014. Since 2017, Mr. Sblendorio has been Chief Executive Officer of IVERIC bio, Inc., and since joining it in 2016 had served as its President, Executive Vice President, Chief Operating Officer, Chief Financial Officer, and Treasurer. Prior to joining IVERIC bio, Inc., Mr. Sblendorio served as the President and Chief Financial Officer of The Medicines Company, a publicly traded biopharmaceutical company, from March 2006 until December 2015. He also served as a director of The Medicines Company from 2012 through 2015. Mr. Sblendorio served as Executive Vice President and Chief Financial Officer of Eyetech Pharmaceuticals, Inc. from February 2002 until it was acquired by OSI Pharmaceuticals, Inc. in November 2005. From July 2000 to February 2002, Mr. Sblendorio served as Senior Vice President of Business Development at The Medicines Company. Prior to joining The Medicines Company in 2000, Mr. Sblendorio served as a managing director at MPM Capital Advisors, LLC and held a variety of senior financial positions at Hoffman-La Roche, Inc. Mr. Sblendorio has been a director of Amicus Therapeutics, Inc., since 2006, and IVERIC bio, Inc., from 2013 to 2016 and again since 2017. Mr. Sblendorio received a B.B.A. from Pace University and an M.B.A. from Fairleigh Dickinson University. He is also a graduate of the Harvard Advanced Management Program.

Mr. Sblendorio’s extensive experience in the pharmaceutical and biotechnology industries, leadership skills, operational and strategic expertise, and financial knowledge (which enables him to serve as a financial expert on our Audit Committee), as well as his public company board experience, and strong record of dedication to service on our Board, contributed to the Board’s determination that he should be nominated to serve as a director.

TABLE OF CONTENTS

Vote Required for Approval

The election, by separate resolutions, of each nominee to the Board requires a plurality of the votes cast in person or by proxy at the Annual Meeting.

THE BOARD RECOMMENDS A VOTE “FOR”
THE ELECTION OF EACH NOMINEE SET FORTH ABOVE.

TABLE OF CONTENTS

PROPOSAL 2:

APPROVAL OF OUR 2023 EQUITY INCENTIVE PLAN

Overview

The Board requests that stockholders approve our 2023 Equity Incentive Plan (the “2023 Plan”). The 2023 Plan was approved by our Compensation Committee on April 13, 2023, and by the Board on April 20, 2023. The 2023 Plan will become effective upon stockholder approval. The 2023 Plan will replace our Amended and Restated Equity Incentive Plan (the “2022 Plan”), which would otherwise terminate on May 25, 2032, pursuant to its terms, ten years after its adoption in 2022.

At our 2022 Annual Meeting of Stockholders, we submitted for stockholder approval the 2022 Plan as a replacement for our expiring 2012 Equity Incentive Plan (the “2012 Plan”). At that time, we did not request that additional shares be reserved for issuance under the 2022 Plan; rather, we effectively rolled over the remaining portion of the plan pool from the 2012 Plan into the 2022 Plan. Because of this decision, we indicated in our proxy statement at the time that we expected to return to stockholders at the 2023 Annual Meeting for approval of an additional number of shares for the equity plan pool, which is the purpose of this proposal.

Our approach in 2022 was guided by the Company’s need for an equity plan to compensate and incentivize our employees and other plan participants pending greater clarity with respect to some of our key R&D development programs, particularly the resubmission to the U.S. Food and Drug Administration (the “FDA”) of our New Drug Application (“NDA”) for obeticholic acid (“OCA”) for the treatment of pre-cirrhotic liver fibrosis due to nonalcoholic steatohepatitis (“NASH”).

At present, our NDA has been resubmitted, and the FDA has accepted it for review, with a Prescription Drug User Fee Act (“PDUFA”) target action date of June 22, 2023, which will determine whether our NDA is approved.

With this major potential catalyst occurring in June 2023, we have reviewed our expected need for equity grants for the period between the 2023 Annual Meeting (May 24, 2023) and the 2024 Annual Meeting (expected to be in late May 2024). Accordingly, we have decided to request stockholder approval of (1) a rollover of our existing 2,535,323 share plan pool (which represents shares available for new awards as of March 31, 2023) (counting performance stock units, or “PSUs”, at maximum 150% vesting) (2.8 million shares counting PSUs at 100% vesting; see tables below for more details), plus (2) an additional allocation of 1.5 million shares. The additional allocation is less than one full year’s worth of shares required to support our projected equity incentive program, but with the rollover of the existing plan pool, we believe that the overall amount will allow us to support any strategic scenario that is likely to occur following the PDUFA target action date, including a potential commercial launch of OCA in NASH, until we are able to request a further allocation next year (in 2024), when we expect to have greater clarity regarding Intercept’s future, business model, strategic direction, valuation, and employee headcount.

We believe that this limited additional request is the most prudent choice that we can make at this time, and request stockholder support FOR Proposal #2 so that we can proceed with strategic planning.

Plan Size and Term

As stated above, the size of the proposed 2023 Plan pool is 4,035,323 shares, based on a rollover of our existing unallocated plan pool as of the record date of March 31, 2023, plus an additional allocation of 1.5 million shares. The initial plan pool will be decreased based on awards granted between the record date and the effective date of the 2023 Plan, and increased based on forfeitures over the same time period of awards granted under the 2012 Plan or the 2022 Plan. During the effectiveness of the 2023 Plan, forfeitures of awards granted under the 2012 Plan, 2022 Plan, and 2023 Plan will be recycled into the plan pool. Shares withheld for tax withholdings, and shares withheld to pay for stock option exercises, will not be recycled.

As of March 31, 2023, outstanding awards granted under the 2012 Plan and 2022 Plan totaled 4.6 million (counting PSUs at 100% vesting) or 4.9 million (counting PSUs at maximum 150% vesting). Further details are provided below regarding the number of outstanding awards.

TABLE OF CONTENTS

Like the 2022 Plan, the 2023 Plan will have a ten-year term. It will terminate ten years after its approval at the Annual Meeting, on May 24, 2033, although awards granted prior to termination may continue in effect in accordance with their terms.

The Equity Plan Is Necessary and Appropriate

We believe, as explained above, that the equity plan proposal is reasonable and prudently sized, and we wish to emphasize the practical business need for it. Having a stockholder-approved, market-competitive equity incentive plan is essential to attract, motivate, and retain employees in the dynamic and competitive biopharmaceutical industry—and thereby is important to Intercept’s success. To operate such a plan requires availability of an adequate number of shares to support the plan’s operations, for granting of shares both to reward and incentivize existing staff, and to hire the talented staff necessary to support Intercept’s future growth and success. In the absence of a new equity plan, Intercept may need to rely on alternative means of employee compensation, such as use of cash, that could otherwise be used for other purposes, and that could be less effective at recruiting employees or aligning long-term employee interests with Intercept’s financial success.

In addition, we wish to address any potential concerns that approval of this proposal could lead to excessive stockholder dilution. In particular, we wish to address (1) overhang and (2) burn rate.

Overhang

On the basis of the circumstances described below, we believe that our equity overhang is manageable and that approval of the 2023 Plan will not lead to excessive dilution.

Overhang is the number of outstanding awards of common stock, plus the number of shares available for grant, divided by the number of shares outstanding. As of March 31, 2023, based on 4.9 million awards outstanding (counting PSUs at maximum 150% vesting) (4.6 million awards counting PSUs at 100% vesting; see tables below for more details), plus 2.5 million shares available for grant, and 41.7 million common shares outstanding, our overhang was 17.7%. The 1.5 million additional shares requested in this proposal would increase the overhang to 21.3%.

However, much of our outstanding award overhang relates to deeply underwater stock options. For the 2.6 million stock options outstanding as of March 31, 2023, the average exercise price is $38.72. For the 1.3 million that are currently exercisable, the average exercise price is $57.86. Both of these are significantly higher than our closing stock price on April 26, 2023, of $18.34. For the 1.3 million stock options that have not yet vested, the average exercise price is $19.82. Those stock options vest over a period of years, spreading their potential dilutive effect over time, and are conditional on ongoing service to Intercept.

In addition, the approximately 1.5 million restricted stock units (“RSUs”) and approximately 0.8 million PSUs (calculated at maximum vesting) outstanding as of March 31, 2023, likewise vest over a period of years, spreading their potential dilutive effect over time, and are conditional on ongoing service to Intercept.

Finally, underwater stock options become exercisable, and PSUs vest, based on the performance of Intercept’s stock price. Therefore, their potential dilutive effect would be counterbalanced by favorable stock price performance.

Burn Rate

We believe that our equity burn rate in recent years demonstrates prudent management of equity capital, not associated with excessive dilution.

Our historical burn rate is equal to the number of shares underlying awards granted during a period, divided by our weighted average outstanding share count. Our 2020, 2021, and 2022 burn rates were 4.40%, 7.25%, and 4.21%, respectively, for an average of 5.29%. While we are seeking the additional allocation of shares to give us operational flexibility in dealing with potential strategic scenarios coming out of our PDUFA date, we will continue to steward the plan pool responsibly and based on the needs of the business and prudent human capital management, consistent with our past practice and stockholder interests.

TABLE OF CONTENTS

Conclusion

In conclusion, we believe that potential concerns about excessive dilution are unwarranted, as (1) the potential dilutive effect of currently outstanding awards is modest when adjusted for underwater stock options and the multi-year vesting schedules of existing awards, and (2) our equity burn rate is reasonable.

We believe that Proposal #2 is reasonable and important for Intercept’s success, and we request that you vote FOR it.

Plan Features

We believe that certain key features of the proposed 2023 Plan, consistent with the features of the 2022 Plan, also reflect good compensation practice and justify support for the proposal.

1. The 2023 Plan does not contain an “evergreen” share replenishment clause that automatically increases the size of the plan pool every year. That, combined with a modestly sized plan pool, means that our stockholders will have an ongoing say in approving future equity plans, based on factors including the number of shares sought for future awards, and the level of potential dilution corresponding to outstanding and future awards.

2. The 2023 Plan prohibits the repricing of stock options, prohibiting Intercept from resetting the exercise price of outstanding, underwater awards.

3. The 2023 Plan prohibits “liberal” share recycling of shares underlying awards back into the plan pool. Particularly, shares withheld for tax withholdings, and shares withheld to pay for stock option exercise (i.e., net share settlement), will not be recycled.

4. The 2023 Plan does not require that upon a change in control awards will vest based upon an automatic single trigger. Rather, our award agreements contain double triggers, that is, vesting based upon both a change in control and a qualifying termination of employment.

5. The 2023 Plan does not provide for gross-ups of awards in connection with taxes related to equity awards or changes in control.

6. The 2023 Plan does not provide for “reload options”, where additional stock options are granted to employees upon the exercise of the employee’s outstanding stock options.

Summary of Material Terms of the Plan

The sections below describe the material features of the 2023 Plan. Other than plan size and termination date, the provisions of the 2023 Plan are materially the same as the provisions of the 2022 Plan. The 2023 Plan is being filed as an appendix to this proxy statement, and the descriptions in this proposal are qualified by reference to the text of the 2023 Plan, which contains additional details and controls in the event of any inconsistency.

Purpose

The 2023 Plan is intended to encourage ownership of Intercept stock by employees, directors, and certain consultants of Intercept and its affiliates in order to attract and retain such people, to induce them to work for the benefit of Intercept or an affiliate, and to provide additional incentive for them to promote the success of Intercept or an affiliate.

Plan Participants

The 2023 Plan allows as participants our employees, directors, and consultants (including, in each case, those working for our affiliates). As of December 31, 2022, we had 341 employees (including those working for affiliates). We currently have eleven directors on our Board. Although consultants are defined broadly under the 2023 Plan and its predecessors, we don’t often grant awards to consultants. As of March 31, 2023, the number of consultants with outstanding awards under our equity plans was fewer than ten people

TABLE OF CONTENTS

(excluding former employees who became consultants and kept their existing awards), and we currently expect that number to hold steady when also including the 2023 Plan. Recipients of awards under the 2023 Plan will be selected from among eligible participants by the administrator of the 2023 Plan (discussed below).

Administrator; Awards Available Under the Plan

The administrator of the 2023 Plan (the “Plan Administrator”), responsible for granting awards, will continue to be our Compensation Committee, acting on behalf of the Board (which may also act as Plan Administrator). The Compensation Committee may further delegate plan administration, for example to our Chief Executive Officer, except that only the Board or the Compensation Committee may grant awards to directors or officers who are subject to the provisions of Section 16 of the Exchange Act. The 2023 Plan, like the 2022 Plan, will provide for grants of:

•

Stock options, including incentive stock options (“ISOs”), and options that do not qualify as ISOs (“Non-Qualified Options” or “NSOs”),

•

Stock grants, including unrestricted shares, restricted shares (“RSAs”), and performance restricted shares (“PSAs”), and

•

Stock-based awards, including RSUs and PSUs.

As discussed below, both ISOs and Non-Qualified Options are stock options (contractual rights to purchase shares at a set exercise price, which may not be less than fair market value on the date of issuance of the option), distinguished from each other by their tax treatment. Payment of the exercise price for the shares as to which an option is being exercised shall be made (a) in United States dollars in cash or by check, or (b) at the discretion of the Plan Administrator, through delivery of shares held for at least six months having a fair market value equal as of the date of the exercise to the aggregate cash exercise price for the number of shares as to which the option is being exercised, or (c) at the discretion of the Plan Administrator, by having the Company retain from the shares otherwise issuable upon exercise of the option, a number of shares having a fair market value equal as of the date of exercise to the aggregate exercise price for the number of shares as to which the option is being exercised, or (d) at the discretion of the Plan Administrator, in accordance with a cashless exercise program established with a securities brokerage firm, or (e) at the discretion of the Plan Administrator, by any combination of the foregoing or by payment of such other lawful consideration as the Plan Administrator may determine.

Stock grants are grants of actual Common Stock, potentially subject to vesting or other conditions. Stock-based awards are grants of equity awards or equity-based awards that are generally contractual rights to receive shares of Common Stock in the future, typically subject to satisfaction of vesting conditions. Performance-based awards include performance-based vesting conditions typically combined with time-based vesting conditions.

All of these awards are further governed by the terms of grant notices and award agreements, with terms and conditions determined by the Plan Administrator, consistent with the 2023 Plan. Specific grant notices and award agreements will set forth the conditions of the applicable awards, such as exercise price, expiration date, and vesting conditions.

The securities underlying awards are shares of our Common Stock, par value $0.001 per share. We periodically register the shares of Common Stock issuable pursuant to equity awards with the SEC on Form S-8. We expect to register securities under the 2023 Plan shortly after the 2023 Plan comes into effect. As of March 31, 2023, the closing price of our Common Stock on the Nasdaq Global Select Market was $13.43.

Under the 2012 Plan, we granted both ISOs and Non-Qualified Options, and both stock-based awards (RSUs and PSUs) and stock grants (RSAs and PSAs). Under the 2022 Plan and 2023 Plan, we retain the ability to grant any of these awards. However, in recent years, we have generally granted Non-Qualified Options rather than ISOs, and stock-based awards rather than stock grants. For the immediate future, we expect this recent practice to continue. No more than 8.9 million shares may be issued under the 2023 Plan pursuant to the exercise of ISOs (representing the 4.0 million plan pool plus the 4.9 million outstanding awards).

TABLE OF CONTENTS

Amendments

The 2023 Plan may be amended by the Plan Administrator. Any amendment approved by the Plan Administrator that the Plan Administrator determines requires stockholder approval shall be subject to obtaining such stockholder approval. Any modification or amendment of the Plan may not, without the consent of a participant, adversely affect his or her rights under a previously granted award.

Other Provisions

The 2023 Plan contains customary terms and conditions, including regarding exercise of stock options, assignability and transferability of stock rights, the effect on awards of various types of termination of employment, adjustments for stock splits, and adjustments for certain corporate transactions such as mergers or acquisitions.

New Plan Benefits

The benefits or amounts under the 2023 Plan that will be received by, or allocated to, our Chief Executive Officer, our named executive officers, our executive officers as a group, our directors, and all employees who are not executive officers, are in the discretion of the Plan Administrator and are not determinable at this time.

Certain Federal Income Tax Consequences in Respect of the Plan

The following is a summary of certain United States federal income tax consequences with respect to awards under the 2023 Plan. Participants should consult with their own tax advisors and should not rely upon this summary.

Non-Qualified Options. A participant in the 2023 Plan generally will not be taxed upon the grant of an NSO. Rather, at the time of exercise of such NSO, the participant will recognize ordinary income for federal income tax purposes in an amount equal to the excess of the fair market value of the shares purchased over the exercise price. Intercept, as the recipient of the services rendered by the participant, will generally be entitled to a tax deduction at the same time and in the same amount that the participant recognizes ordinary income. If shares acquired upon exercise of an NSO are later sold or exchanged, then the difference between the sales price and the fair market value of such shares on the date that ordinary income was recognized on the exercise of the NSO will generally be taxable as long-term or short-term capital gain or loss depending upon the length of time the shares have been held.

Incentive Stock Options. A participant in the 2023 Plan will not be in receipt of taxable income upon the grant or timely exercise of an ISO. Exercise of an ISO will generally be timely if made during its term and if the participant remains an employee of us or a parent, subsidiary, or related entity of ours at all times during the period beginning on the date of grant and ending on the date three months before the date of exercise. The tax consequences of an untimely exercise of an ISO will generally be determined in accordance with the rules applicable to NSOs. If shares acquired pursuant to the timely exercise of an ISO are later disposed of, the participant will, except as noted below, recognize long-term capital gain or loss equal to the difference between the amount realized upon such sale and the exercise price. The Company, under these circumstances, will not be entitled to any federal income tax deduction in connection with either the exercise of the ISO or the sale of such shares by the participant. If, however, shares acquired pursuant to the exercise of an ISO are disposed of by the participant prior to the expiration of two years from the date of the ISO’s grant or within one year from the date such shares are transferred to him or her upon exercise, referred to as a disqualifying disposition, any gain realized by the participant generally will be taxable at the time of such disqualifying disposition as follows: (i) at ordinary income rates to the extent of the difference between the exercise price and the lesser of the fair market value of the shares on the date the ISO is exercised or the amount realized on such disqualifying disposition, and (ii) as short-term or long-term capital gain to the extent of any excess of the amount realized on such disqualifying disposition over the fair market value of the shares on the date which governs the determination of his or her ordinary income. In such case, the Company may claim a federal income tax deduction at the time of such disqualifying disposition for the amount taxable to the participant as ordinary income. The amount by which the fair market value of the stock on the exercise date of an ISO exceeds the exercise price will be an item of adjustment for purposes of the “alternative minimum tax” imposed under the Internal Revenue Code.

TABLE OF CONTENTS

RSAs and PSAs. A participant in the 2023 Plan generally will not be taxed upon the grant of an RSA or PSA, but rather will recognize ordinary income in an amount equal to the fair market value of the Common Stock at the time the shares are no longer subject to a substantial risk of forfeiture (generally, when they vest). The Company, as the recipient of the services rendered by the participant, will be entitled to a deduction at the same time as, and in the same amount that, the participant recognizes ordinary income. A participant may however elect (not later than 30 days after acquiring such shares) to recognize ordinary income at the time the RSA or PSA is granted in an amount equal to the fair market value of the shares at that time, notwithstanding the fact that such shares are subject to restrictions and a substantial risk of forfeiture. If such an election is made, no additional taxable income will be recognized by such participant at the time the restrictions lapse. The Company, as the recipient of the services rendered by the participant, will be entitled to a tax deduction at the same time as and to the extent that income is recognized by such participant. If shares in respect of which such election was made are later forfeited, no tax deduction is allowable to the participant for the forfeited shares, and we will be deemed to recognize ordinary income equal to the amount of the deduction allowed to us at the time of the election in respect of such forfeited shares.

Other Awards. With respect to RSUs and PSUs, unrestricted shares, and other awards, the Company will generally be entitled to a deduction for U.S. income tax purposes in the amount and at the time that the participant is deemed to be in receipt of ordinary income.

Other Disclosures

Please refer below to “Executive Compensation—Equity Compensation Plan Information” for disclosures furnished pursuant to Item 201(d) of Regulation S-K.

The following table provides certain additional information as of March 31, 2023, regarding our equity plans.

	Number of shares subject to awards (thousands)		Weighted average exercise price ($)		Weighted average remaining contractual term (years)
Outstanding stock options		2,554		38.72		7.4
Expected to vest		1,285		19.82		8.9
Exercisable		1,269		57.86		5.9
Outstanding RSUs (excluding PSUs)		1,536
Outstanding PSUs (at 100% vesting)		512
Outstanding PSUs (at 150% vesting)		768
Outstanding RSUs (including PSUs at 100%)		2,048
Outstanding RSUs (including PSUs at 150%)		2,304
Shares available for grant (PSUs at 100%)		2,791
Shares available for grant (PSUs at 150%)		2,535

The following table shows across time periods the number of equity awards granted and the number of performance-based awards earned.

Fiscal period	Options granted		RSUs granted		PSUs granted (at 100%)		PSUs granted (at 150%)		RSUs + PSUs granted (at 100%)		RSUs + PSUs granted (at 150%)		PSUs earned
Q1 2023*		517		849		225		337		1,074		1,186		0
2022		543		711		169		253		880		964		0
2021		1,305**		830		177		265		1,007		1,095		0
2020		727		660		65		97		725		757		0

Note: All numbers in thousands.

Reflects annual award grants, which occur in Q1.

Excludes 338,848 options issued in our 2021 underwater stock option exchange, as a result of the tender of 612,080 old options, for a net decrease in options outstanding of approximately 273,000.

TABLE OF CONTENTS

Vote Required for Approval

The approval of the new Plan requires the affirmative vote of a majority of the shares cast affirmatively or negatively in person or by proxy at the Annual Meeting.

THE BOARD RECOMMENDS A VOTE “FOR”
THE APPROVAL OF OUR 2023 EQUITY INCENTIVE PLAN.

TABLE OF CONTENTS

PROPOSAL 3:

NON-BINDING, ADVISORY VOTE ON THE COMPENSATION OF
THE COMPANY’S NAMED EXECUTIVE OFFICERS

We have adopted a performance-based compensation philosophy that is intended to attract, retain, reward, and incentivize our executive officers to achieve our near-term corporate goals, as well as our long-term strategic objectives. In particular, our philosophy is designed to achieve the following objectives:

•

reward the achievement of measurable corporate objectives and align executive officers’ incentives with increasing stockholder value;

•

attract, retain, and motivate highly talented individuals with the skills and demonstrated abilities necessary to deliver superior execution of our short- and long-term strategic plans and drive our continued success;

•

provide executive compensation that is competitive with that paid by our peers in the competitive and dynamic biopharmaceutical industry;

•

appropriately balance cash compensation designed to encourage the achievement of critical annual goals with equity incentives designed to inspire the achievement of long-term objectives and align the interests of our executive officers more closely with those of our stockholders; and

•

align the compensation principles for our executive officers with those for all employees to help create a company-wide performance culture.

We urge our stockholders to read the “Compensation Discussion and Analysis” section of this proxy statement, which describes our executive compensation philosophy and how we implemented it through our 2022 compensation program for our principal executive officer, principal financial officer, and other “named executive officers” identified therein.

Pursuant to Section 14A of the Exchange Act, our stockholders are provided an opportunity to vote to approve, on a non-binding, advisory basis, the compensation of our named executive officers as disclosed in this proxy statement. This non-binding, advisory vote is commonly referred to as a “say-on-pay” vote.

At our 2021 Annual Meeting, we asked our stockholders to indicate if we should hold a “say-on-pay” vote every one, two, or three years. Our stockholders indicated a strong preference for voting annually, and, taking this into consideration, our Board determined to hold such a vote annually.

Accordingly, we are submitting the following resolution for stockholder approval at the Annual Meeting:

“RESOLVED, that the stockholders of Intercept Pharmaceuticals, Inc. approve, on a non-binding, advisory basis, the compensation of the Company’s named executive officers as disclosed in the proxy statement for the 2023 Annual Meeting of Stockholders, including the Compensation Discussion and Analysis and the compensation tables and other narrative compensation disclosures.”

This vote is not intended to address any specific item of compensation, but rather the overall compensation of the Company’s named executive officers and the philosophy, programs, and practices described in this proxy statement. As this is a non-binding, advisory vote, the result will not be binding on the Company, our Board, or our Compensation Committee, although our Compensation Committee will consider the outcome of the vote when evaluating the Company’s compensation philosophy, programs, and practices.

TABLE OF CONTENTS

Vote Required for Approval

The approval, on a non-binding, advisory basis, of the compensation of the Company’s named executive officers requires the affirmative vote of a majority of the shares cast affirmatively or negatively in person or by proxy at the Annual Meeting.

THE BOARD RECOMMENDS A VOTE “FOR”
THE APPROVAL, ON A NON-BINDING, ADVISORY BASIS,
OF THE COMPENSATION OF THE COMPANY’S NAMED EXECUTIVE OFFICERS.

TABLE OF CONTENTS

PROPOSAL 4:

RATIFICATION OF APPOINTMENT OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Audit Committee is responsible for the appointment, retention, compensation, evaluation, and oversight of the Company’s independent registered public accounting firm. The Audit Committee has appointed KPMG LLP as the Company’s independent registered public accounting firm for the year ending December 31, 2023.

KPMG LLP has audited the Company’s financial statements since 2008. Representatives of KPMG LLP will be present virtually at the Annual Meeting, with the opportunity to make a statement should they choose to do so, and are expected to be available to respond to questions submitted electronically, as appropriate.

While stockholder ratification is not required by the Company’s Restated Bylaws or otherwise, the Board is submitting the appointment of KPMG LLP to the stockholders for ratification as a matter of good corporate governance practices. If the Company’s stockholders fail to ratify the appointment, the Audit Committee may, but is not required to, reconsider whether to retain KPMG LLP. Even if the appointment is ratified, the Audit Committee, in its discretion, may direct the appointment of a different independent registered public accounting firm at any time during the year if it determines that such a change would be in the best interest of the Company and its stockholders.

Vote Required for Approval

Ratification of the appointment of KPMG LLP as the independent registered public accounting firm of the Company for the year ending December 31, 2023, requires the affirmative vote of a majority of the shares cast affirmatively or negatively in person or by proxy at the Annual Meeting.

THE BOARD RECOMMENDS A VOTE “FOR”
THE RATIFICATION OF THE APPOINTMENT OF KPMG LLP
AS THE COMPANY’S INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM.

TABLE OF CONTENTS

BOARD OF DIRECTORS AND GOVERNANCE

Composition of the Board

The Board currently consists of eleven directors. Our directors are elected annually to serve one-year terms. Each of our directors is standing for election at the Annual Meeting.

We strive to maintain Board composition in a way that includes a significant voice for a wide cross-section of the population, since the patients who use our approved product, our employees, and our other stakeholders benefit when our Board has a broader and more representative composition.

Role and Meetings of the Board

The Board meets regularly to review significant developments affecting the Company and to act on matters requiring the approval of the Board. The Board held 8 meetings during the year ended December 31, 2022. During that year, each of our incumbent directors attended at least 75%, in the aggregate, of (i) the meetings of the Board held during the period that such director served, and (ii) the meetings held by the committees of the Board on which such director served during the period that such director served.

Corporate Governance

We maintain a corporate governance page on our website that includes key information about our Global Code of Business Conduct, Corporate Governance Guidelines, and charters for each of our Board’s Audit Committee, Compensation Committee, Nominating and Governance Committee, and Research and Development Committee. The corporate governance page can be found on our website at www.interceptpharma.com in the Investors & Media section under “Corporate Governance”.

Board Leadership Structure

Mr. Fundarò has served as our Chairman since October 2015. Mr. Durso has served as our President and Chief Executive Officer, and as a director, since January 2021. In February 2018, we appointed Mr. Santini to serve as the Board’s Lead Independent Director.

We believe that separating the roles of Chairman and Chief Executive Officer recognizes the time, effort, and energy that our Chief Executive Officer is required to devote to his position, and allows him to focus on our day-to-day business, while allowing our Chairman to lead the Board in its fundamental role of providing advice to, and independent oversight of, management. Such separation is also helpful in dealing with leadership transitions, such as occurred when Mr. Durso became President and Chief Executive Officer, during which transition Mr. Fundarò continued as Chairman.

The Board also recognizes the commitment required to serve as our Chairman, particularly as the Board’s oversight responsibilities continue to grow. As a result, we believe that the appointment of Mr. Santini as our Lead Independent Director contributes to the overall effectiveness of the Board. We also believe that Mr. Santini’s appointment enhances the governance structure of the Board by reinforcing the independence of the Board in its oversight of the business and affairs of the Company. However, no single leadership model is right for all companies and at all times, and the Board may review its leadership structure in the future.

The Board has delegated certain responsibilities to committees of the Board. The Board has created four standing committees: an Audit Committee, a Compensation Committee, a Nominating and Governance Committee, and a Research and Development Committee. In addition, special ad hoc Board committees may be created from time to time to oversee special projects, financings, and other matters.

The chairperson of each standing committee reports to the full Board on the activities and findings of his or her respective committee. The Board believes that this delegation of responsibilities facilitates efficient decision-making and communication among the directors and management.

Board Oversight of Risk

The Board has responsibility for the oversight of risk management, while the Company’s management has the day-to-day responsibility for the identification and control of risk at the Company. The Board,

TABLE OF CONTENTS

either as a whole or through its committees, regularly discusses with management the Company’s major risk exposures, their potential impact on the Company, and the appropriate steps that should be taken in order to monitor and control such exposures. The committees assist the Board in fulfilling its risk oversight responsibilities within their respective areas of responsibility. For example, pursuant to its written charter, the Audit Committee oversees the Company’s processes and procedures with respect to financial and enterprise risk, including overseeing the Company’s enterprise risk management program. The Compensation Committee assists the Board in fulfilling its oversight responsibilities with respect to the management of risks arising from the Company’s compensation policies and practices. The Nominating and Governance Committee focuses on the management of risks associated with the composition, organization, and governance of the Board and its committees, as well as the corporate governance structure of the Company. The Research and Development Committee reviews risks associated with the Company’s research and development programs. Each committee of the Board meets and reports its findings to the Board on a regular basis.

Independence

The Board currently consists of eleven directors. The Board uses the standards of independence established by the SEC and Nasdaq in determining whether its members are independent. The Board has affirmatively determined that each of the Company’s current directors, other than Mr. Durso and Dr. Pruzanski, is independent under the director independence criteria established by Nasdaq.

Mr. Durso is not an independent director by virtue of his employment with the Company.

Dr. Pruzanski also is not an independent director, by virtue of his previous employment and consulting agreements with the Company.

The Board has determined that each member of the Audit Committee, Compensation Committee, and Nominating and Governance Committee meets any specific “independent director”, “outside director”, or similar criteria established by Nasdaq, the SEC, or the IRS required for service on such committees.

Executive Sessions

The Board generally holds executive sessions of the directors following each regularly scheduled meeting of the Board. Executive sessions generally do not include any employee directors, or other members of management of the Company.

Board Attendance at Annual Meetings of Stockholders

In accordance with our Corporate Governance Guidelines, members of the Board are strongly encouraged to attend the Company’s Annual Meetings of Stockholders. Ten of the eleven directors comprising the Board at the time were in attendance at the Company’s 2022 Annual Meeting of Stockholders held on May 25, 2022.

Communication with the Board

The Board has adopted a process by which stockholders may communicate with the Board. Stockholders who wish to communicate with the Board may do so by sending written communications to the following address:

Intercept Pharmaceuticals, Inc.
c/o Corporate Secretary
305 Madison Avenue
Morristown, NJ 07960

Any such communication must state the number of shares owned by the stockholder making the communication. In any such communication, an interested person may also designate a particular director, or a committee of the Board, such as the Audit Committee, to which such communication should be directed. Our legal department will forward all correspondence to the Board or to the particularly

TABLE OF CONTENTS

designated audience, except for spam, junk mail, mass mailings, job inquiries, surveys, business solicitations or advertisements, or patently offensive or otherwise inappropriate or frivolous material. Our legal department may forward certain correspondence, such as product-related inquiries, elsewhere within the Company for review and possible response.

Global Code of Business Conduct

We have adopted a Global Code of Business Conduct as our “code of ethics”, as defined by regulations promulgated under the Securities Act and the Exchange Act, which applies to our directors, officers, and employees, including our principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions. Our Global Code of Business Conduct is available on our website at www.interceptpharma.com in the Investors & Media section under “Corporate Governance”. We intend to satisfy the disclosure requirement under Item 5.05 of Form 8-K regarding any future amendment to, or waiver from, a provision of our Global Code of Business Conduct that applies to our principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions, by posting such information on our website at www.interceptpharma.com in the Investors & Media section under “Corporate Governance”.

Environmental, Social, and Corporate Governance (“ESG”) Practices

It is a priority of our Board and of our Company to seek to further improve the Company through sound and sustainable business practices that benefit Company stockholders, Company stakeholders generally, and society at large. Key initiatives are described below.

Corporate Governance Guidelines

As part of the Board’s commitment to building long-term stockholder value with an emphasis on corporate governance, the Board has adopted a set of Corporate Governance Guidelines to assist it in exercising its responsibilities. The guidelines cover, among other topics, Board composition, structure, and functioning; Board membership criteria; the submission of Board nominee recommendations by stockholders; Board self-evaluations; Board access to management and advisors; leadership development; and succession planning. The guidelines are available on our website at www.interceptpharma.com in the Investors & Media section under “Corporate Governance”.

Board Skills and Diversity

Our Corporate Governance Guidelines specify that the Nominating and Governance Committee shall consider the diversity of the Board and its committees when identifying and considering board nominees, and Board committee assignments, and shall strive to achieve an appropriate balance of diverse backgrounds, perspectives, experiences, ages, genders, and ethnicities on the Board and its committees.

Skills Matrix

We have compiled the following matrix to illustrate what we believe are core relevant skills and experiences of our directors for management and oversight of Intercept, demonstrating the substantial experience of our Board, the range of talents that its members bring to it, and their balanced and complementary skills.

TABLE OF CONTENTS

Life
Science

Leadership &
Management

U.S.
Public
Company
Boards

Research &
Development

Sales &
Commercial

Business
Development

Operations

Finance &
Banking

Paolo Fundarò

✓

Jerome Durso

✓

Srinivas Akkaraju, M.D., Ph.D.

✓

Luca Benatti, Ph.D.

✓

Daniel Bradbury

✓

Keith Gottesdiener, M.D.

✓

Nancy Miller-Rich

✓

Mark Pruzanski, M.D.

✓

Dagmar Rosa-Bjorkeson

✓

Gino Santini

✓

Glenn Sblendorio

✓

Board Diversity

We continue to strive to incrementally diversify our Board so that we can further benefit from a variety of backgrounds and perspectives. Particularly, our Corporate Governance Guidelines require that, in connection with the use of a third-party search firm to identify potential director candidates, the Nominating and Governance Committee will instruct the firm to include on its initial list of candidates qualified individuals who reflect diverse backgrounds, including diversity of gender and race or ethnicity.

The composition of the Board reflects diversity of gender, race, and ethnicity. Specifically, the Board has two women, Ms. Nancy Miller-Rich and Ms. Dagmar Rosa-Bjorkeson, and two ethnically diverse directors, Dr. Srinivas Akkaraju (Asian) and Ms. Rosa-Bjorkeson (Hispanic and Caucasian). The Board also has a diverse range of international perspectives, with five directors having been raised or educated outside of the United States or having lived or worked overseas for extended periods of time.

We believe that the three directors mentioned above are “diverse” under Nasdaq rules, and that we satisfy the diversity requirements under the Nasdaq rules for companies trading on the Nasdaq Global Select Market (at least one woman and at least one minority). Our board diversity matrices for the past two years are below.

Board Diversity Matrix (As of March 31, 2023)

Total Number of Directors

Female

Male

Non-Binary

Did Not Disclose
Gender

Part I: Gender Identity

Directors

–

Part II: Demographic Background

African American or Black

–

Alaskan Native or Native American

–

Asian

–

Hispanic or Latinx

–

Native Hawaiian or Pacific Islander

–

White

–

Two or More Races or Ethnicities

–

LGBTQ+

–

Did Not Disclose Demographic Background

–

TABLE OF CONTENTS

Board Diversity Matrix (As of April 1, 2022)

Total Number of Directors

Female

Male

Non-Binary

Did Not Disclose
Gender

Part I: Gender Identity

Directors

–

Part II: Demographic Background

African American or Black

–

Alaskan Native or Native American

–

Asian

–

Hispanic or Latinx

–

Native Hawaiian or Pacific Islander

–

White

–

Two or More Races or Ethnicities

–

LGBTQ+

–

Did Not Disclose Demographic Background

Executive Officer Diversity

In addition to our Board, we believe that diversity is important among our officers and executive officers, providing valuable variations in backgrounds, experiences, and perspectives. Currently, two of our seven executive officers are female (Dr. Berrey and Ms. Richardson).

ESG Policies

We have published on our website (see www.interceptpharma.com in the Investors & Media section under “Corporate Governance”) a Human Rights Policy, a Labor Policy, and an Environmental Policy. The Human Rights Policy relates to our commitment to supporting fundamental human rights, and includes standards of conduct including relating to diversity and inclusion, equal opportunity, and non-discrimination. The Labor Policy relates to labor standards of conduct including working conditions, harassment, and workplace safety. The Environmental Policy relates to environmentalism and sustainability, and includes topics including energy efficiency, water management, and waste management.

Diversity, Equity, and Inclusion (“DEI”) Initiatives

With respect to our employee population, we believe that diversity is extremely important, and we are encouraging our hiring managers and other employees to keep a broad perspective in making hiring decisions, thinking about how candidates can contribute to the organization, and not hiring people similar to themselves based on unconscious bias. We increased our emphasis on DEI, starting in 2020. Our directors are interested in our progress with DEI, and the Board and senior management will continue to monitor diversity issues as they affect both Board and workforce composition. To further the goal of recruiting and supporting a diverse and inclusive workforce, we have initiated the following projects:

Inclusive recruitment and DEI training. In order to be inclusive in the recruiting process, and to help obtain diverse and inclusive slates of job candidates, we have recalibrated language in job descriptions, implemented the designation of pronouns in our applicant tracking systems, and updated our review system, and we also discuss our DEI programming and efforts as part of the interview process.

Employee resource groups. Intercept now has multiple employee resource groups (“ERGs”) for interested employees, including WIN—Women’s Initiative NOW, InterPride Alliance (focused on LGBTQ+ individuals), and Blended: United Voices for Change (focused on Black, Indigenous, and people of color, or “BIPOC” individuals). ERGs support us and our employees in developing a diverse and inclusive workplace, and help us to gain insight regarding potential enhancements to our workplace. Intercept’s ERGs have the mission of providing a safe space for those whom each ERG represents. ERGs work to

TABLE OF CONTENTS

provide advocacy, empathy, allyship, and education through discussions or other programming. Our ERGs then become a space for communicating and sharing insights, with the goal of shaping, improving, and enhancing our workplace and corporate culture and how we innovate and think about our work that benefits our patients.

Building relationships with corporate affiliations and networks. In addition to our ERGs, we also work with outside affiliate groups and community leaders to educate and support our workforce regarding diversity issues. For example, our relationship with Out & Equal complements our ERGs and helps us to gain specific knowledge about workplace advocacy for LGBTQ+ professionals. Out & Equal also partners with us on best practices for our overall DEI program.

Human Capital and Corporate Culture

We consider the intellectual capital of our employees to be an essential driver of our business and key to our future prospects. Accordingly, we monitor our compensation programs closely and provide what we consider to be a competitive mix of compensation and insurance benefits for all our employees, as well as participation in our equity programs.

Furthermore, we seek to benefit, improve, and educate our workforce and our community in a variety of ways.

One such way is community volunteering. In order to give back to the communities in which our employees live and work, we encourage our employees to dedicate time and effort to help community organizations, including both medically focused charitable and educational efforts, and charitable community efforts of general applicability. The Company dedicates resources to community-building initiatives as well, and partners with organizations in the liver community to support patients impacted by progressive non-viral liver diseases.

Environmental Initiatives

We believe that the following Company initiatives represent good corporate environmental practices:

Waste, Reuse, Recycling, and Water. We seek to reduce our waste by moving signature procedures to an e-signature platform, by using reusable dishes in our kitchens, and by installed centralized waste management bins to separate recyclables from other trash. Our landlord for our headquarters office manages water use through low-flow fixtures. We are moving our data center management from physical servers to the cloud, which we expect will reduce carbon emissions and improve efficiency.

Manufacturing and Procurement. We contract with contract development and manufacturing organizations (“CDMOs”) as part of our manufacturing process and some of our CDMOs commit to certain levels of compliance in regard to their environmental practices. We believe that through our supply chain management and agreements, we can help promote environmental standards and stewardship. Likewise, our procurement policy encourages sourcing of sustainable goods and services, and selection of diverse suppliers. We continue to develop additional ESG criteria for the screening, onboarding, and monitoring of suppliers.

Additional Corporate Policies

Anti-Hedging and Anti-Pledging Policy

The Company restricts its directors, officers, and employees from (i) engaging in any transactions involving options, straddles, collars, or other similar risk reduction or hedging devices, (ii) using the Company’s securities to secure a margin or other loan, (iii) effecting “short sales” of the Company’s securities, and (iv) trading in the Company’s securities on a short-term basis.

Policies and Procedures Dealing with the Review and Approval of Related Person Transactions

Pursuant to its written charter, the Audit Committee is responsible for reviewing and approving, prior to the Company’s entry into such transactions, all transactions in which the Company is or will be a participant that would be required to be disclosed by the Company pursuant to Item 404 of Regulation S-K

TABLE OF CONTENTS

as a result of any executive officer, director, director nominee, beneficial owner of more than 5% of the Company’s securities, or immediate family member of any of the foregoing persons, or any other person whom the Board determines may be considered to be a related person under Item 404 of Regulation S-K, having or being expected to have a direct or indirect material interest therein. For the above purposes, “immediate family member” means any child, stepchild, parent, step-parent, spouse, sibling, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, or sister-in-law, and any person (other than a tenant or employee) sharing the household with the executive officer, director, director nominee, or greater than 5% beneficial owner.

In reviewing and approving such transactions, the Audit Committee shall obtain, or shall direct management to obtain on its behalf, all information that the Audit Committee believes to be relevant and important to a review of the transaction prior to its approval. Following receipt of the necessary information, a discussion shall be held of the relevant factors if deemed to be necessary by the Audit Committee prior to approval. If a discussion is not deemed to be necessary, approval may be given by written consent of the Audit Committee.

The Audit Committee shall approve only those related person transactions that are determined to be in, or not inconsistent with, the best interests of the Company and its stockholders, taking into account all available facts and circumstances as the Audit Committee determines in good faith to be necessary in accordance with principles of Delaware law generally applicable to directors of a Delaware corporation. These facts and circumstances will typically include, but not be limited to, the commercial reasonableness of the terms, the benefit and perceived benefit, or lack thereof, to the Company, opportunity costs of alternate transactions, the materiality and character of the related person’s direct or indirect interest, and the actual or apparent conflict of interest of the related person. No member of the Audit Committee shall participate in any review, consideration, or approval of any related person transaction with respect to which such member or any of his or her immediate family members has an interest.

No related person transaction shall be entered into or continued prior to the completion of the foregoing procedures. In the event management becomes aware of a related person transaction that has not been previously approved, it shall be submitted to the Audit Committee promptly, and the Audit Committee shall review such related person transaction in accordance with the foregoing procedures, taking into account all of the relevant facts and circumstances available to the Audit Committee. Based on the conclusions reached, the Audit Committee shall evaluate all options, including, without limitation, approval, ratification, amendment, or termination of the related person transaction.

Committees of the Board

The composition of our Board and our standing committees is as follows (with “C” indicating chairperson and “M” indicating member):

Name

Board

Audit

Compensation

Nominating and
Governance

Research and
Development

Paolo Fundarò

–

Jerome Durso

–

Srinivas Akkaraju, M.D., Ph.D.

–

Luca Benatti, Ph.D.

–

Daniel Bradbury

–

Keith Gottesdiener, M.D.

–

Nancy Miller-Rich

–

Mark Pruzanski, M.D.

–

Dagmar Rosa-Bjorkeson

–

Gino Santini

–

Glenn Sblendorio

–

Audit Committee

The Board has established an Audit Committee currently consisting of Mr. Bradbury, Mr. Santini, and Mr. Sblendorio (chairperson). Mr. Sblendorio, whom the Board has determined is an “audit committee

TABLE OF CONTENTS

financial expert” (as that term is defined in Item 407(d)(5) of Regulation S-K), and who also satisfies the equivalent Nasdaq listing rules for financial sophistication, serves as the chairperson of the Audit Committee. Each member of the Audit Committee is independent under Rule 10A-3 of the Exchange Act and the applicable rules of Nasdaq, and also satisfies the financial literacy requirement of Nasdaq.

The Audit Committee’s primary purpose is to act on behalf of the Board in fulfilling the Board’s oversight responsibilities with respect to the Company’s accounting and financial reporting practices, systems of internal control over financial reporting and audit process, as well as the quality and integrity of the Company’s financial reports, the qualifications, independence and performance of the Company’s independent registered public accounting firm, the performance of the Company’s internal audit function and the Company’s processes for monitoring compliance with legal and regulatory requirements and the Company’s Global Code of Business Conduct. The Audit Committee’s report is set forth under “Audit Committee Report”.

The Audit Committee operates under a written charter adopted by the Board, a current copy of which is available on our website at www.interceptpharma.com in the Investors & Media section under “Corporate Governance”. In 2022, the Audit Committee met 4 times.

Compensation Committee

The Board has established a Compensation Committee currently consisting of Ms. Miller-Rich, Ms. Rosa-Bjorkeson, and Mr. Santini (chairperson), all of whom are independent under applicable Nasdaq rules, “non-employee directors” within the meaning of Rule 16b-3 under the Exchange Act, and “outside directors” within the meaning of Section 162(m) of the Internal Revenue Code (the “Code”) (which is only relevant to the extent deemed necessary to qualify for transition relief under Section 162(m)). Mr. Santini serves as the chairperson of the Compensation Committee.

The Compensation Committee’s primary purpose is to act on behalf of the Board in fulfilling the Board’s responsibilities to oversee the Company’s compensation programs, policies and practices, to review and determine the compensation to be paid to the Company’s executive officers, to review, discuss with management, and approve the Company’s “Compensation Discussion and Analysis” disclosures, and to review and approve the committee’s report included in the Company’s annual proxy statement in accordance with applicable rules and regulations of the SEC in effect from time to time. The Compensation Committee’s report is set forth under “Executive Compensation—Compensation Committee Report”. For a discussion of the role of management and the use of compensation consultants in determining executive compensation, see “Executive Compensation—Compensation Discussion and Analysis”.

The Compensation Committee operates under a written charter adopted by the Board, a current copy of which is available on our website at www.interceptpharma.com in the Investors & Media section under “Corporate Governance”. Under its charter, the Compensation Committee may form and delegate its authority to subcommittees of the committee when it deems it appropriate and in the best interests of the Company. In 2022, the Compensation Committee met 4 times.

Compensation Committee Interlocks and Insider Participation

In 2022, individuals who served as members of the Compensation Committee were Ms. Miller-Rich, Ms. Rosa-Bjorkeson, and Mr. Santini. Except as described immediately below, none of these individuals is or has formerly been an officer or employee of the Company, nor were there any transactions since the beginning of 2022, nor are there any currently proposed transactions, in which any of these individuals had or will have an interest, other than the limitations on liability and indemnification discussed below, under “Related Person Transactions—Limitation on Liability and Indemnification Matters”.

In 2022, none of our executive officers:

(i)

served on the compensation committee of another entity that had one or more of its executive officers serving on the Board or the Compensation Committee of the Company, or

(ii)

served on the board of directors of another entity that had one or more of its executive officers serving on the Compensation Committee of the Company.

TABLE OF CONTENTS

Nominating and Governance Committee

The Board has established a Nominating and Governance Committee currently consisting of Dr. Benatti (chairperson), Mr. Bradbury, and Ms. Miller-Rich, all of whom are independent under applicable Nasdaq rules. Dr. Benatti serves as the chairperson of the Nominating and Governance Committee.

The Nominating and Governance Committee’s primary purpose is to:

(i)

evaluate and make recommendations to the Board with respect to the current size, composition, organization, and governance of the Board and its committees;

(ii)

identify, review, and evaluate candidates qualified to serve as directors and on committees of the Board and make recommendations concerning the leadership structure of the Board;

(iii)

recommend to the Board nominees for election to the Board at the Company’s Annual Meetings of Stockholders and appointment to the Board to fill interim vacancies, if any;

(iv)

administer the annual performance evaluation process for the Board and its committees;

(v)

oversee the executive officer succession planning process; and

(vi)

oversee and make recommendations to the Board with respect to corporate governance matters.

When the Board determines to seek a new member, whether to fill a vacancy or otherwise, the Nominating and Governance Committee may utilize third-party search firms and will consider recommendations from directors, management, and others, including the Company’s stockholders, as well as take into account the diversity provisions in our Corporate Governance Guidelines. (See “Board Skills and Diversity” above.) Our Corporate Governance Guidelines include a policy regarding the qualifications of directors, which sets forth threshold requirements for individuals nominated to serve as directors of the Company. In general, the Nominating and Governance Committee looks for new members possessing relevant expertise to offer advice and guidance to management, having demonstrated excellence in his or her field, having the ability to exercise sound business judgment, having the commitment to promote and enhance the long-term value of the Company for its stockholders, and possessing the highest personal and professional standards of integrity and ethical values.

The Nominating and Governance Committee operates under a written charter adopted by the Board. A current copy of such charter, as well as our Corporate Governance Guidelines, which include our policies regarding the qualifications of directors, the consideration of candidates recommended by stockholders for nomination for election to the Board, and the procedures for stockholders to follow in submitting such recommendations, are available on our website at www.interceptpharma.com in the Investors & Media section under “Corporate Governance”. In 2022, the Nominating and Governance Committee met 2 times.

Overboarding

The Nominating and Governance Committee believes that all members of the Board must have sufficient time and devote sufficient attention to board duties and to otherwise fulfill the responsibilities required of directors. In identifying and considering nominees for director and directors for service on Board committees, the Nominating and Governance Committee considers whether such nominees and directors have sufficient time and attention to devote to board duties, including whether, among other things, such nominees and directors may be “overboarded”, which refers to the situation where a director serves on an excessive number of boards.

Our Corporate Governance Guidelines provide that in advance of accepting an invitation to serve on the board of another company, directors should advise the CEO and Secretary of the Company, who shall then notify the Chairperson of the Board and the Chairperson of the Nominating and Governance Committee.

Our Corporate Governance Guidelines further provide that, unless approved by the Board:

(i)

no director may serve on more than a total of five boards of directors of U.S. public companies (including service on our Board), and

TABLE OF CONTENTS

(ii)

a director who serves as a CEO of a U.S. public company shall not serve on the boards of directors of more than three U.S. public companies (including service on our Board).

Accordingly, prior to recommending a candidate as a nominee for director or a director for service on a Board committee, the Nominating and Governance Committee reviews the number of public company boards that the candidate or director serves on, and whether the individual is a CEO of a public company, and considers whether such outside commitments may limit his or her ability to devote sufficient time and attention to the affairs of the Company.

All nominees are in compliance with our Corporate Governance Guidelines, and their extensive experience in the pharmaceutical industry and in managerial and financial leadership roles has led to their nomination to the Board.

Dr. Akkaraju is currently a director of Chinook Therapeutics, Inc., Mineralys Therapeutics, Inc. (which became publicly traded in February 2023), Scholar Rock Holding Corporation, and Syros Pharmaceuticals, Inc. Dr. Akkaraju adds significant skill, experience, and institutional knowledge to Intercept. He has served as a director of Intercept since 2012, and currently sits on our Research and Development Committee. He both is an experienced venture capital investor with an equity-oriented perspective and extensive knowledge of the life sciences industry, and has strong technical and scientific understanding as an M.D. and Ph.D.

Mr. Bradbury is currently a director of Castle Biosciences, Inc., and is the Executive Chairman of Equillium, Inc. (“Equillium”), a biopharmaceutical company that he co-founded. He was previously Chairman and CEO of Equillium. In recommending Mr. Bradbury to serve on the Board, the Nominating and Governance Committee considered, among other things, that in January 2020 Mr. Bradbury transitioned from Chairman and CEO of Equillium to the more limited role of Executive Chairman, which was not a named executive officer (“NEO”) position at Equillium for 2022 and which does not present a time commitment obstacle to his work on our Board. The committee also considered Mr. Bradbury to be an asset to our Board, on account of his significant public company experience in the pharmaceuticals industry.

Mr. Sblendorio is currently the CEO, and a director, of IVERIC bio, Inc., and a director of Amicus Therapeutics, Inc. In recommending Mr. Sblendorio to serve on the Board, the Nominating and Governance Committee considered his more than 30 years of industry experience, including as a CEO, President, director, COO, CFO, and SVP of Business Development at multiple pharmaceutical companies.

At our 2022 Annual Meeting, Mr. Sblendorio received 76% votes in favor of election, and 24% votes withheld. We understand that although Mr. Sblendorio complies with our overboarding policy, certain stockholders and proxy advisory firms have a strict “withhold” policy when a director is on more than four boards, or more than two boards and is a public company CEO (compared with our policy of five or three respectively). Accordingly, some stockholders voted “withhold” on Mr. Sblendorio last year as a policy matter.

The Nominating and Governance Committee and the Board have considered Mr. Sblendorio’s situation, and while they understand that some stockholders may not be able to support Mr. Sblendorio as a policy matter, they strongly recommend his re-election to the Board. In the time since he joined our Board in 2014, Mr. Sblendorio has become familiar with the Company and its business, and has been committed to his work for the Company. In particular, his Company knowledge, work ethic, and corporate finance expertise have been valuable for the Company in his work as chairperson and financial expert for our Audit Committee, to which he brings public company biopharmaceutical CEO, CFO, and COO experience.

In addition, Mr. Sblendorio’s other public company positions give him useful perspective to share with the Company. IVERIC bio, Inc., is a biopharmaceutical company focused on discovering and developing transformative therapies for retinal diseases with significant unmet medical needs. Amicus is a biotechnology company focused on discovering, developing, and delivering high-quality medicines for people living with rare metabolic diseases. Both of these business models have many parallels to our business of developing novel treatments for liver disease. In conclusion, Mr. Sblendorio has exactly the perspective that we should have on our Board as we navigate the development and commercialization of novel pharmaceutical products.

TABLE OF CONTENTS

Candidate Review

Candidates for the Board are reviewed in the context of the foregoing standards and considerations, as well as the expected contributions of each candidate to the collective functioning of the Board, based upon the totality of his or her credentials, experience, and expertise, the composition of the Board at the time, and other relevant circumstances, including the operating requirements of the Company and the long-term interests of stockholders. With respect to the nomination of continuing directors for re-election, the individual’s past performance as a director is also considered. The Nominating and Governance Committee periodically reviews the composition of the Board, including whether the directors, both individually and collectively, can and do provide the experience, qualifications, attributes, and skills appropriate for the Company.

Our Corporate Governance Guidelines include policies with respect to the consideration of candidates recommended by stockholders for nomination for election to the Board and the procedures for stockholders to follow in submitting such recommendations. The Nominating and Governance Committee will consider bona fide candidates recommended by stockholders in accordance with such policies. Any such recommendation must be submitted in writing to the Nominating and Governance Committee, care of Intercept Pharmaceuticals, Inc., 305 Madison Avenue, Morristown, NJ 07960, Attention: Corporate Secretary, within the time frames set forth in such policies and contain the information and undertakings required by such policies. Nominees for director who are recommended by stockholders to the Nominating and Governance Committee will be evaluated in the same manner as any other nominee for director. Nominations by stockholders may also be made in the manner set forth under “Stockholders’ Proposals”.

Research and Development Committee

The Board has established a Research and Development Committee currently consisting of Dr. Akkaraju, Dr. Benatti, Dr. Gottesdiener (chairperson), and Dr. Pruzanski. Dr. Gottesdiener serves as the chairperson of the Research and Development Committee.

The Research and Development Committee’s primary purpose is to assist the Board in its oversight of the Company’s strategic direction and investment in research and development, technology, and manufacturing, and to identify and discuss significant emerging trends and issues in science and technology, and consider their potential impact on the Company.

The Research and Development Committee operates under a written charter adopted by the Board, a copy of which is available on our website at www.interceptpharma.com in the Investors & Media section under “Corporate Governance”. In 2022, the Research and Development Committee met 16 times.

Director Compensation

On an annual basis, the Compensation Committee conducts an evaluation of the design of the Company’s independent director compensation program in light of best practices and competitive market data for the Company’s compensation peer group. In 2022, as in prior years, the Compensation Committee again retained the services of the Rewards Solution practice at Aon plc, specifically members of Radford, an independent compensation consultant, to provide it with additional comparative data on director compensation practices in the Company’s industry and to advise it on the Company’s independent director compensation program generally. In April 2022, based on the input and analysis provided by Radford, the Compensation Committee left unchanged the independent director compensation levels previously adopted by the Board in May 2020, which had been adopted with reference to the 50th percentile of the competitive market based on our compensation peer group. As a result, (i) all annual cash retainers were maintained at their pre-existing levels, (ii) the aggregate equity value of the Annual Grant (as defined below) was maintained at $264,500, and (iii) the aggregate equity value of any New Director Grant (as defined below) was maintained at $396,750. Only directors who are “independent” in accordance with applicable Nasdaq rules receive compensation for their service as directors. Each of the Company’s current directors, other than Mr. Durso and Dr. Pruzanski, qualifies as independent.

TABLE OF CONTENTS

For 2022, the annual cash retainers for the independent directors were as follows (payable quarterly in equal installments):

Membership	Chairperson			Other Members
Board of Directors.		$	80,000		$	50,000
Audit Committee		$	20,000		$	10,000
Compensation Committee		$	15,000		$	7,500
Nominating and Governance Committee		$	10,000		$	5,000
Research and Development Committee		$	10,000		$	5,000

Pursuant to the independent director compensation levels adopted by the Board, (i) each independent director who had served on the Board for six months or longer as of the date of the Company’s 2022 Annual Meeting of Stockholders (i.e., in 2022, all independent directors) was eligible to receive an annual equity grant (each, an “Annual Grant”), comprised of stock options with an equity value of $132,250 and RSUs with an equity value of $132,250, and (ii) each new independent director first appointed or elected to the Board in 2022 (i.e., none in 2022) was eligible to receive an equity grant (each, a “New Director Grant”), comprised of stock options with an equity value of $198,375 and RSUs with an equity value of $198,375.

The number of (i) stock options granted in connection with each Annual Grant and New Director Grant is determined by dividing the equity value to be represented thereby by the value per-option derived from a Black-Scholes model with reference to the average of the per-share closing prices of the Company’s common stock on the Nasdaq Global Select Market during the 30 trading days preceding the grant date, and (ii) RSUs granted in connection with each Annual Grant and New Director Grant is determined by dividing the equity value to be represented thereby by the average of the per-share closing prices of the Company’s common stock on the Nasdaq Global Select Market during the 30 trading days preceding the grant date. Because the number of stock options and RSUs granted in connection with each Annual Grant and New Director Grant is determined using a 30-day average closing stock price, the grant date fair values of such stock options and RSUs, as computed in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718 (“ASC 718”), differ from the amounts set forth above.

Subject to the independent director’s continued service on the Board, the stock options and RSUs granted in connection with (i) each Annual Grant vest in full on the earlier of (A) the one-year anniversary of the date of grant and (B) the day immediately preceding the date of the next Annual Meeting of Stockholders, and (ii) each New Director Grant vest in a series of three equal annual installments, with 1/3 of the shares subject to the award vesting on each anniversary of the date that the independent director was first elected or appointed to the Board (or, if earlier in any given year, the day immediately preceding the date of the Annual Meeting of Stockholders in such year). In addition, all unvested Annual Grants and New Director Grants shall immediately vest in connection with a change in control of the Company. The exercise price for stock options granted in connection with each Annual Grant and New Director Grant is the per-share closing price of the Company’s common stock on the Nasdaq Global Select Market on the date of grant.

The Company also reimburses reasonable out-of-pocket expenses incurred in connection with attendance at Board meetings.

TABLE OF CONTENTS

The following table sets forth total director compensation in 2022.

Director Compensation for 2022

Name	Fees Earned or Paid in Cash ($)(2)		Stock Awards ($)(3)		Option Awards ($)(3)		Total ($)
Paolo Fundarò		80,000		130,136		132,249		342,385
Jerome Durso(1)		—		—		—		—
Srinivas Akkaraju		55,000		130,136		132,249		317,385
Luca Benatti		65,000		130,136		132,249		327,385
Daniel Bradbury		65,000		130,136		132,249		327,385
Keith Gottesdiener		60,000		130,136		132,249		322,385
Nancy Miller-Rich		62,500		130,136		132,249		324,885
Mark Pruzanski(1)		—		—		—		—
Dagmar Rosa-Bjorkeson		57,500		130,136		132,249		319,885
Gino Santini		75,000		130,136		132,249		337,385
Glenn Sblendorio		70,000		130,136		132,249		332,385

(1)

Director compensation is for independent directors only. Mr. Durso and Dr. Pruzanski do not qualify as independent.

(2)

Annual cash retainer for Board and committee service.

(3)

Amounts shown represent the aggregate grant date fair value, computed in accordance with ASC 718, in respect of stock options and RSUs. These amounts do not reflect compensation actually received by the independent directors. Assumptions used in the calculation of these amounts are included in “Stock Compensation”, Note 11 to the Notes to Consolidated Financial Statements for the year ended December 31, 2022, included in our Annual Report.

Each independent director received an Annual Grant in 2022 comprised of 12,790 stock options and 7,737 RSUs.

As of December 31, 2022, the aggregate number of shares subject to stock options (both vested and unvested), and unvested RSUs, held by each independent director who served on the Board during 2022 was as follows:

Name	Shares Subject to Stock Options		RSUs
Paolo Fundarò		40,406		7,737
Srinivas Akkaraju		39,405		7,737
Luca Benatti		38,702		7,737
Daniel Bradbury		37,999		7,737
Keith Gottesdiener		37,999		7,737
Nancy Miller-Rich		37,703		7,737
Dagmar Rosa-Bjorkeson		30,509		14,765
Gino Santini		39,901		7,737
Glenn Sblendorio		38,702		7,737

Stock Ownership Guidelines for Directors

The Company has adopted minimum stock ownership guidelines for the Board. See “Compensation Discussion and Analysis—Stock Ownership Guidelines” for more information.

TABLE OF CONTENTS

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table and accompanying footnotes show information as of the record date (March 31, 2023), regarding the beneficial ownership of the Company’s shares by:

•

each person known by the Company to own beneficially more than 5% of its shares;

•

each director and named executive officer; and

•

all directors and executive officers as a group.

For purposes of the table below, we deem shares subject to options that are exercisable on or within sixty days, and RSUs vesting within sixty days, of the record date, to be outstanding and beneficially owned by the person holding them, for purposes of computing percentage ownership of that person, but we do not treat them as outstanding for purposes of computing percentage ownership of any other person.

Except as noted, the persons in this table have sole voting and investment power with respect to all of the shares beneficially owned by them. As of the record date, 41,687,084 shares were outstanding. Unless otherwise noted, the address of each director or executive officer is c/o Intercept Pharmaceuticals, Inc., 305 Madison Avenue, Morristown, NJ 07960.

	Shares Beneficially Owned
Name and Address	Number of Shares		Percentage of Common Stock
5% Stockholders:
Genextra S.p.A.(1)		4,000,000		9.6%
The Vanguard Group(2)		3,637,935		8.7%
State Street Corporation(3)		3,175,925		7.6%
BlackRock, Inc.(4)		3,084,833		7.4%
Directors and Executive Officers:(5)
Paolo Fundarò		76,200		*
Jerome Durso		184,515		*
Srinivas Akkaraju(6)		717,980		1.7%
Luca Benatti		64,189		*
Daniel Bradbury(7)		69,359		*
Keith Gottesdiener		62,718		*
Nancy Miller-Rich		60,007		*
Mark Pruzanski		867,172		2.1%
Dagmar Rosa-Bjorkeson		39,369		*
Gino Santini		63,546		*
Glenn Sblendorio		62,149		*
Andrew Saik		55,682		*
Michelle Berrey		72,880		*
Linda Richardson		55,087		*
Jared Freedberg		64,362		*
All current directors and executive officers as a group (17 persons)		2,599,252		6.2%

Less than 1%.

(1)

Based on a Schedule 13G of Genextra S.p.A. filed on September 2, 2022. It reported shared voting and dispositive power over 4,000,000 shares. Its address is Via Privata Giovannino De Grassi, 11, 20123 Milan, Italy.

TABLE OF CONTENTS

(2)

Based solely on a Schedule 13G of The Vanguard Group filed on February 9, 2023. It reported shared voting power over 43,707 shares, sole dispositive power over 3,560,752 shares, and shared dispositive power over 77,183 shares. Its address is 100 Vanguard Blvd., Malvern, PA 19355.

(3)

Based solely on a Schedule 13G of State Street Corporation filed on February 2, 2023. It reported shared voting power over 3,047,163 shares and shared dispositive power over 3,175,925 shares. Its address is State Street Financial Center, 1 Lincoln Street, Boston, MA 02111.

(4)

Based solely on a Schedule 13G of BlackRock, Inc. filed on January 31, 2023. It reported sole voting power over 2,951,387 shares and sole dispositive power over 3,084,833 shares. Its address is 55 East 52nd Street, New York, NY 10055.

(5)

Figures include the following numbers of stock options vested or vesting within sixty days of the record date, and RSUs vesting within sixty days of the record date, for the following directors and executive officers:

	Mr. Fundarò (48,143 shares),			Mr. Durso (132,700 shares),
	Dr. Akkaraju (47,142 shares),			Dr. Benatti (46,439 shares),
	Mr. Bradbury (45,736 shares),			Dr. Gottesdiener (45,736 shares),
	Ms. Miller-Rich (45,440 shares),			Dr. Pruzanski (248,278 shares),
	Ms. Rosa-Bjorkeson (35,854 shares),			Mr. Santini (47,638 shares),
	Mr. Sblendorio (46,439 shares),			Mr. Saik (40,624 shares),
	Dr. Berrey (50,428 shares),			Ms. Richardson (38,381 shares),
	Mr. Freedberg (47,670 shares), and
	all directors and executive officers as a group (1,024,865 shares).

(6)

Includes 640,688 shares held by Samsara BioCapital, L.P. Dr. Akkaraju is a managing member of Samsara BioCapital GP, LLC, the general partner of Samsara BioCapital, L.P. Dr. Akkaraju disclaims beneficial ownership of such shares except to the extent of his pecuniary interest therein.

(7)

Includes 7,812 shares held by BioBrit, LLC. Mr. Bradbury and his spouse are the trustees and beneficiaries of a trust that is the sole member of BioBrit, LLC.

TABLE OF CONTENTS

EXECUTIVE OFFICERS

In addition to Jerome Durso, our President and Chief Executive Officer, whose biography is included above under “Election of Directors”, our executive officers as of March 31, 2023, and their ages and positions, are listed below.

Name	Age	Position
Andrew Saik	53	Chief Financial Officer
M. Michelle Berrey, M.D., M.P.H.	56	President of Research & Development; Chief Medical Officer
Linda Richardson	59	Chief Commercial Officer
Jared Freedberg	54	General Counsel
David Ford	55	Chief Human Resources Officer
Rocco Venezia	47	Chief Accounting Officer

Andrew Saik has served as our Chief Financial Officer since June 2021. Mr. Saik has more than 20 years of biopharmaceutical finance experience and has served in management positions in several companies. From 2020 to 2021, Mr. Saik was CFO of Vyne Therapeutics Inc., where he was instrumental in building out the company’s finance department in the United States, renegotiated debt obligations to provide the company with enhanced financial flexibility, and helped raise over $135 million to fund operations. From 2017 to 2020, he was CFO of PDS Biotechnology Corporation (formerly Edge Therapeutics, Inc.). From 2015 to 2017, he was CFO of Vertice Pharma, LLC. From 2014 to 2015, he was CFO of Auxilium Pharmaceuticals, Inc. From 2013 to 2014, he was SVP, Finance and Treasurer at Endo Health Solutions Inc., where he helped complete the acquisition of Paladin Labs and restructured $3 billion of debt into a new corporate structure. From 2001 to 2012, he served in senior financial management roles at Valeant Pharmaceuticals International. Mr. Saik holds an M.B.A. from the University of Southern California and a Bachelor of Arts from the University of California, Los Angeles.

M. Michelle Berrey, M.D., M.P.H. has served as our President of Research & Development and Chief Medical Officer since June 2021. Dr. Berrey was most recently President and Chief Executive Officer at Chimerix from 2012 to 2019 where the focus was on viral infections in immunocompromised hosts. From 2007 to 2012, she served as Chief Medical Officer at Pharmasset, where she played a critical role in the development of Sovaldi® (sofosbuvir) for treatment of hepatitis C. Dr. Berrey began her career in drug development at Glaxo Wellcome and then GlaxoSmithKline. She served in multiple roles at GW/GSK, eventually serving as Vice President, Viral Diseases, Clinical Pharmacology & Discovery Medicine. During her time at GW/GSK, she was responsible for the early development of compounds for the treatment of HIV, hepatitis viruses, and hepatic fibrosis. Since March 2021, Dr. Berrey has been on the board of directors of Ocean Biomedical, Inc., which in February 2023 became publicly traded pursuant to a special purpose acquisition company merger. Dr. Berrey received her M.D. from the Medical College of Georgia — Augusta University, and a Master of Public Health from Emory University. She completed her internal medicine residency at UNC Chapel Hill and a fellowship in Infectious Diseases at UW in Seattle, where her research focused on transmission of HIV, early establishment of the viral reservoir, and the potential for early antiviral therapy during acute infection.

Linda Richardson has served as our Chief Commercial Officer since February 2021. Ms. Richardson has more than 30 years of commercial strategy, sales, and marketing experience. From 2018 to 2021, she served as our SVP and Head of our Cholestasis Program. From 2013 to 2018, she worked at Chimerix, Inc., where she ultimately held the role of Chief Strategy and Commercial Officer, overseeing marketing, market access and reimbursement, market research and analytics, forecasting, supply chain and distribution strategies, commercial operations, product communications, and sales. From 2008 to 2013, Ms. Richardson held commercial leadership roles of increasing responsibility at Sanofi, where she was a Vice President and led the company’s global GLP-1 diabetes franchise. Prior to joining Sanofi, Ms. Richardson held roles of increasing responsibility at both Reliant Pharmaceuticals and GlaxoSmithKline, including Vice President of Marketing. Ms. Richardson has been recognized by PM360 as an “ELITE 100” award winner in the pharmaceutical industry, by the Healthcare Businesswomen’s Association as a “Rising Star,” and by PharmaVOICE as one of its “Top 100 Most Inspiring People in Life Sciences.” Ms. Richardson holds a bachelor’s degree in English from the University of Pennsylvania.

TABLE OF CONTENTS

Jared Freedberg has served as our General Counsel since February 2021. Mr. Freedberg brings to the Company cross-disciplinary experience as both a senior lawyer and a senior business development executive in the pharmaceutical industry. From 2018 to 2020, he was General Counsel and Corporate Secretary of Immunomedics, Inc. From 2016 to 2018, he was General Counsel, Specialty Generics Operating Division, and VP, Legal, Business Development and Licensing, at Mallinckrodt Pharmaceuticals. From 2001 to 2016, he held positions of increasing responsibility at Covance Inc., including Vice President and Associate General Counsel, and, from 2014 to 2016, VP for Business Development and Strategy, in which capacity he was a member of Covance’s Global Executive Leadership Team. Earlier in his career, Mr. Freedberg was in private practice. He holds a J.D. from Duke University School of Law, and a bachelor’s degree from the University of Pennsylvania.

David Ford has served as our Chief Human Resources Officer since May 2017. He brings over 25 years of experience in a variety of human resources roles across the United States, Europe, Latin America and New Zealand. Prior to joining the Company, Mr. Ford spent nearly 15 years at Sanofi, where he most recently served as Vice President Human Resources for the Sanofi Genzyme global business unit from January 2016 to May 2017. Prior to that role, from November 2011 through December 2015, Mr. Ford served as Vice President Human Resources for the Sanofi North American businesses. Mr. Ford joined the pharmaceutical industry in 2002 as the HR Director — United Kingdom and Republic of Ireland for Sanofi-Synthelabo. Mr. Ford holds a master’s degree in business administration from INSEAD, Fontainebleau (France).

Rocco Venezia has served as our Chief Accounting Officer and Treasurer since March 2021, and brings more than 20 years of relevant finance and accounting experience to his work. Previously, he served as our Corporate Controller since 2016, where he led the expansion of the Company’s finance and accounting department during its transition from development-stage to a fully integrated commercial organization. Before he joined the Company, Mr. Venezia was the Assistant Corporate Controller at Ikaria, Inc., now part of Mallinckrodt Pharmaceuticals, from 2013 to 2016, where he led the accounting and finance team through operational and system transformations. From 2000 to 2013, Mr. Venezia held roles of increasing responsibility at KPMG LLP and Arthur Andersen, where he led multinational audits, transactions and due diligence engagements across several industries. Mr. Venezia also spent three years at KPMG LLP’s Department of Professional Practice where he supported engagement teams on complex technical accounting, compliance matters and audit methodology. Mr. Venezia holds a bachelor’s degree in accounting from Kean University and is a certified public accountant in New Jersey and New York.

TABLE OF CONTENTS

EXECUTIVE COMPENSATION

Compensation Discussion and Analysis

This Compensation Discussion and Analysis describes our executive compensation practices and how we implemented them in the past year for the following five people (our “named executive officers” or “NEOs”):

(i)

our principal executive officer during 2022 (Mr. Durso),

(ii)

our principal financial officer during 2022 (Mr. Saik),

(iii)

our three other most highly compensated executive officers in 2022 (Dr. Berrey, Ms. Richardson, and Mr. Freedberg).

Name			Title
Jerome Durso			President and Chief Executive Officer
Andrew Saik			Chief Financial Officer
M. Michelle Berrey, M.D., M.P.H.			President of Research & Development; Chief Medical Officer
Linda Richardson			Chief Commercial Officer
Jared Freedberg			General Counsel

Executive Summary

In 2022, Intercept’s Executive Leadership Team (“ELT”) delivered on a number of major strategic priorities, which helped better position Intercept for the future, including the following:

•

The resubmission of our New Drug Application (“NDA”) to the U.S. Food and Drug Administration (“FDA”) for obeticholic acid (“OCA”) for the treatment of pre-cirrhotic liver fibrosis due to nonalcoholic steatohepatitis (“NASH”).

•

Continued performance in our Ocaliva business for primary biliary cholangitis (“PBC”), which sustained double-digit growth six years after launch.

•

The sale of our ex-U.S. commercial business to Advanz Pharma and its affiliates (“Advanz”).

•

Significant improvement of Intercept’s balance sheet, meaningfully increasing cash on hand (cash, cash equivalents, restricted cash, and investment debt securities available for sale) and reducing debt.

•

Advancement of our pipeline programs of an OCA/bezafibrate fixed-dose combination (“FDC”) for PBC, and INT-787 for the treatment of severe alcohol-associated hepatitis (“sAH”).

•

The stabilization of Intercept as an organization, with a significant reduction in voluntary turnover through the year and the attraction of a number of highly talented new team members into key roles.

Due to the low turnover rate of Intercept’s ELT members in 2022, the need to use equity for new hire grants was reduced significantly relative to 2021, and the overall equity burn rate declined significantly from 7.25% in 2021 to 4.21% in 2022.

TABLE OF CONTENTS

		2022 Company Performance and Alignment of Interests

		✓ Steady Growth in Ocaliva Net Sales. Our Ocaliva net sales in the United States have risen from $18.2 million in 2016 to $285.7 million in 2022. Our Ocaliva net sales rose 10% in 2022 as compared to the prior year, and have grown at a 19.8% rate since 2017. ✓ Management Alignment Behind Value Creation. In 2022, we again granted, as part of our annual equity award program for our executive officers, performance stock unit (“PSU”) awards that vest, if at all, based on total shareholder return (“TSR”), as measured by our common stock relative to the companies comprising the S&P Biotechnology Select Industry Index (our “TSR Peer Group”) over a three-year period, subject to a vesting cap equal to 100% of target in the event that our relative TSR exceeds target but our absolute TSR is negative. Despite the growth of our underlying PBC business, our stock performance over the three-year period that ended in 2022 has meant that maturing PSUs previously awarded to our NEOs did not vest. Going forward, our NEOs continue to remain aligned to create shareholder value, both based on the performance of the underlying business and share price performance.

TABLE OF CONTENTS

Key Business Achievements

✓

Sustainable and Growing PBC Business, Achieving Significant Ocaliva Net Sales. In 2022, Ocaliva U.S. net sales increased to $285.7 million, up 10% from 2021.

✓

Leveraged Commercial Strengths. We leveraged our commercial strengths, and focused from a sales perspective on specialty product distribution, payor coverage, community education, deep relationships in the liver community, and (due to the COVID-19 pandemic) expanded use of virtual communications channels.

✓

Reduced Operating Expenses and Improved Financial Results. In 2022, total operating expenses from continuing operations declined by 2.0%, which combined with the increase in Ocaliva net sales led to a 32.1% decline in operating loss, from negative $100.4 million to negative $68.2 million. As of December 31, 2022, we had $490.9 million of cash, cash equivalents, restricted cash, and investment debt securities available for sale.

✓

Strengthened Financial Position and Improved Overall Capital Structure. We sold our ex-U.S. commercial operations, and sublicensed the right to commercialize Ocaliva for PBC and OCA for NASH outside of the United States, for total upfront consideration of $405 million, subject to customary working capital and other adjustments. We also retired $389 million of convertible senior secured notes due 2026, decreasing the principal balance of debt outstanding by 54%, and reducing future cash interest expense by 58%.

✓

Progressing OCA for Pre-Cirrhotic Liver Fibrosis Due to NASH. In December 2022, we resubmitted our NDA to the FDA. The FDA subsequently accepted the NDA and assigned a Prescription Drug User Fee Act (“PDUFA”) target action date of June 22, 2023. Our NDA is supported by a robust body of evidence from our OCA NASH clinical development program, including two positive interim analyses from our Phase 3 REGENERATE study.

✓

Advancing Internal Pipeline in Liver Diseases with High Unmet Need. We are evaluating the efficacy, safety, and tolerability of OCA in combination with bezafibrate in patients with PBC in a Phase 2 study outside of the United States that has completed enrollment. In the United States, we have an ongoing Phase 1 study to better characterize the exposure response of the FDC, which has completed enrollment, and we have an open Investigational New Drug (“IND”) application with the FDA. We are also conducting a second Phase 2 study evaluating an FDC of OCA and bezafibrate for the treatment of patients with PBC who have not achieved an adequate biochemical response to ursodeoxycholic acid (“UDCA”). We have also initiated our Phase 2a FRESH study of INT-787 for sAH.

TABLE OF CONTENTS

CEO Compensation Highlights

Mr. Jerome Durso became our Chief Executive Officer on January 1, 2021. Previously, he was our Chief Operating Officer. Mr. Durso has been with Intercept since 2017, and has over 25 years of life sciences experience, including in operational, managerial, marketing, and sales positions.

Mr. Durso leads a highly experienced executive leadership team, and his compensation in both 2022 and 2023 was set based on competitive market forces, specifically based on the 50th percentile of our compensation peer group. His compensation is also designed to be aligned with creation of stockholder value. In 2022, his cash salary represented 16% of his total compensation, non-equity incentive pay represented 14%, options represented 12%, RSUs represented 12%, and PSUs represented 46%. Overall, 69% of his compensation was in equity awards, which aligned his compensation with stockholder value creation. Notably, the largest component of his equity compensation was in the form of PSUs, which as described above vest based on stock performance both in absolute terms and relative to our TSR Peer Group. Also, for both 2022 and 2023, Mr. Durso’s cash incentive bonus was set at 70% of his base salary, the highest of any of our employees, and evaluated solely based on achievement of corporate goals.

Compensation and Governance Best Practices

What We Do

✓

Independent Chairman and Majority Independent Board. Paolo Fundarò serves as our Board’s Chairman, and all of the members of our Board other than our current CEO (Mr. Durso), and our founder and retired CEO (Dr. Pruzanski) are independent directors.

✓

Independent Compensation Committee. Our Compensation Committee, which is composed entirely of independent directors, provides independent oversight of our compensation programs.

✓

Independent Compensation Consultant. Our Compensation Committee uses an independent executive compensation consulting firm that reports directly to the Compensation Committee.

✓

Annual Compensation Review and Analysis. Our Compensation Committee conducts an annual assessment of executive compensation to ensure that we provide competitive compensation packages to attract, retain, reward, and incentivize our executive management team to achieve success for us and our stockholders.

✓

Multiple Performance Elements. In accordance with our performance-based compensation philosophy, our executive compensation program incorporates multiple performance elements, including target-based cash incentive bonuses payable upon the achievement of corporate goals and individual performance, and long-term equity incentive compensation, a substantial portion of which consists of stock options and PSUs.

✓

Significant Portion of Compensation Is at Risk. Under our executive compensation program, a significant portion of compensation is “at risk” based on our performance, including annual cash incentive bonuses, and long-term incentive compensation in the form of equity awards, to align the interests of our executive officers and stockholders.

✓

Market Benchmarking and Use of Reference Peer Group. Our Compensation Committee, with the assistance of its independent compensation consultant, annually analyzes similar life science companies to identify a relevant group of peer companies for purposes of ensuring the reasonableness and competitiveness of our executive compensation program.

✓

Stock Ownership Requirements. We have adopted minimum stock ownership guidelines for our Board, Chief Executive Officer, and other executive officers, including our named executive officers, which require, within specified periods of time, our non-employee directors to hold Company equity with a value equal to at least 3x their annual cash retainer, and our Chief Executive Officer and other executive officers to hold Company equity with a value equal to at least 3x and 1x, respectively, their annual base salary.

TABLE OF CONTENTS

✓

Clawback Policy. We have adopted a clawback policy that permits the Company to recover from any current or former executive officer, including any named executive officer, whose fraud or intentional misconduct contributes to the circumstances requiring the Company to prepare an accounting restatement due to material non-compliance of the Company with any financial reporting requirement under U.S. federal securities laws, up to 100% of any incentive-based compensation, including equity compensation, received by such officer from the Company during the one-year period preceding the date on which the Company is required to prepare such accounting restatement.

✓

Corporate Governance Guidelines. We follow corporate governance guidelines reflecting our Board’s commitment to building long-term stockholder value and the importance of diversity, equity, and inclusion (“DEI”). The Nominating and Governance Committee periodically reviews the adequacy and effectiveness of our corporate governance guidelines and recommends any proposed changes to the Board for approval.

What We Don’t Do

✘

No excise tax gross-ups. We have not provided, or committed to provide, excise tax gross-ups to any of our named executive officers.

✘

No change in control “windfalls”. The change in control protections for our named executive officers are limited to “double-trigger” arrangements, which require both a change in control and a qualifying termination of employment, or in the case of PSUs, vesting, if at all, based on our TSR performance relative to that of our TSR Peer Group through the month preceding the month in which the change in control occurs.

✘

Limited perquisites. Our named executive officers generally receive the same benefits as are available to all of our salaried employees, with limited recurring exceptions primarily consisting of fully-paid health insurance premiums.

✘

No automatic or guaranteed annual salary increases. We do not provide for any formulaic or guaranteed base salary increases for our named executive officers.

✘

No guaranteed bonuses or annual equity grants. We do not provide guaranteed bonuses or annual equity grants to our named executive officers.

✘

No hedging or pledging of Company stock. Our named executive officers and other employees are restricted from engaging in speculative trading activities, including hedging or pledging Company securities as collateral.

✘

No evergreen provision. Our equity compensation plan requires a shareholder vote for new equity requests and does not contain an evergreen provision.

TABLE OF CONTENTS

Executive Compensation Philosophy

We have a performance-based compensation philosophy that is intended to attract, retain, reward, and incentivize our executive officers to achieve both our short-term and long-term corporate and strategic goals.

In particular, our philosophy is designed to achieve the following objectives:

•

Reward achievement of measurable corporate objectives.

•

Align executive officers’ incentives with increasing stockholder value.

•

Attract, retain, and motivate highly talented individuals with the skills and demonstrated abilities necessary to drive our continued success and deliver superior execution of our goals.

•

Provide executive compensation that is competitive with our peers in the dynamic biopharmaceutical industry.

•

Appropriately balance cash compensation, designed to encourage achievement of critical annual goals, with equity incentives, designed to inspire achievement of long-term objectives and align our executives with our stockholders.

•

Align our compensation principles for executives with those for employees generally, helping to create a company-wide culture of high standards and performance.

Stockholder Outreach and Feedback

Overview

We are committed to establishing and maintaining an open and transparent dialogue with our stockholders with respect to executive compensation and important governance matters. Each year, we engage with our stockholders to request feedback regarding our executive compensation program and other governance matters of importance to our stockholders. Stockholder feedback is then reported to our Compensation Committee, Nominating and Governance Committee, and full Board for consideration.

Stockholder Advisory Vote on Executive Compensation

Each year, our stockholders are provided the opportunity to cast an advisory vote on the compensation of our named executive officers (a “say-on-pay” vote), and our Compensation Committee considers the outcome of the prior year’s say-on-pay vote when making decisions relating to the compensation of our named executive officers and our executive compensation program.

In 2022, our say-on-pay proposal garnered 98% support and 2% opposition.

Outreach and Feedback Process

Since our 2022 Annual Meeting of Stockholders, we have contacted approximately 61% of our stockholders by share count, including each of our largest stockholders, to discuss executive compensation, the say-on-pay vote, and other topics. If stockholders were interested in meetings, we arranged meetings, with certain of our executive officers and other participants.

We believe that our outreach in 2022 and following our 2022 Annual Meeting of Stockholders was well received, and we collected constructive feedback from many of our stockholders. Generally, the stockholders we met with have a long-term outlook and understand that our compensation programs need to evolve over time to reflect corporate conditions. Below is a summary of specific key areas of stockholder focus, and our responses regarding them.

TABLE OF CONTENTS

	Key areas of stockholder focus			Our responses
	During the course of our investor outreach, we explained the challenges of delivering competitive executive compensation, particularly with regards to long-term incentives, in a period where our stock price has been depressed for a sustained period of time. These challenges impact both the attraction of new executive talent, and also the retention and incentivization of existing executives. We shared that, in response to these challenges, the Company has had to deploy new and innovative compensation tools in 2022 and 2023 to respond to these circumstances—and that these tools have proven to be, largely, effective. Investors clearly understood the challenges facing the Company and the competitive pressures driving the needs for innovation in compensation, and requested an explanation of compensation measures implemented, including their usage and effectiveness.			In relation to this request, this Compensation Discussion and Analysis (“CD&A”) contains detailed explanations of (where applicable) the new hire awards issued to attract new executives, and the Company’s cash-based, long-term incentive plans aimed at ensuring the competitiveness of overall long-term incentives for executives.
	Investors whom we spoke with were highly complimentary of our executive compensation disclosures, particularly the CD&A portions of our recent proxy statements with respect to comprehensiveness, transparency, and clear explanations of our corporate goals for purposes of payout under our annual cash incentive bonus program. Investors encouraged us to continue these disclosure practices, and improve them further where possible.			In this proxy statement, as in prior years, we continue to seek to provide useful disclosures to investors, including the calculations used to establish payout levels for our 2022 cash bonuses.

Conclusions

Engagement with our stockholders is important, and we have heard from stockholders that they appreciate our engagement efforts. Feedback regarding executive compensation was generally favorable, and most stockholders that we met did not see the need to discuss executive compensation issues in detail.

Our Compensation Committee will continue to consider stockholder feedback, future say-on-pay votes, and relevant market developments to determine whether future changes to our executive compensation program are warranted. We expect to continue our outreach efforts regarding executive compensation and other important governance matters to ensure that we collect stockholder feedback for consideration by our Board and its committees.

TABLE OF CONTENTS

Our Executive Compensation Process

The Role of the Compensation Committee

Our Compensation Committee is responsible for the evaluation and oversight of our executive compensation program, policies, and practices. Accordingly, the committee reviews and approves all compensation provided to our named executive officers, including adjustments to base salaries, annual target-based cash incentive bonuses, equity incentive awards, severance arrangements, and benefit programs. The committee consists of three members of our Board, each of whom has extensive experience in our industry and is an independent director under applicable Nasdaq and SEC rules. The committee uses its judgment and experience to develop and approve our executive compensation program, including our CEO’s compensation package. In doing so, the committee periodically meets with an independent compensation consultant in executive session without our CEO or any other member of management present. The committee also periodically evaluates the need for revisions to our executive compensation program to ensure our program is competitive with the companies with which we compete for executive talent.

Management’s Involvement in the Executive Compensation Process

A small number of Company officers, including our CEO, participate in general sessions, but not executive sessions, of our Compensation Committee. At the request of the committee, our CEO provides input and recommendations to the committee on salary adjustments, annual target-based cash incentive bonus amounts, and appropriate equity incentive compensation levels for executive officers other than himself. In formulating these recommendations, our CEO may consider data obtained from third-party sources, including data provided by compensation consultants other than the independent compensation consultant retained by the committee.

Use of an Independent Compensation Consultant by the Compensation Committee

In designing our executive compensation program, our Compensation Committee considers as a reference point publicly available compensation data for other companies in the biopharmaceutical industry to help guide its executive compensation decisions at the time of hiring and for subsequent adjustments in compensation. In 2022, as in prior years, the committee retained Aon plc’s Rewards Solution practice, known as Radford, as an independent compensation consultant, to provide the committee with additional comparative data on executive compensation practices in our industry and to advise the committee on our executive compensation program generally. For 2022, Radford provided advice and data to the committee on executive and director compensation matters, including the selection of our compensation peer group, comparative market pay levels, equity dilution, annual share utilization practices, incentive plan design, and trends emerging in the market. Although the committee considers the advice and recommendations of the compensation consultant, the committee ultimately makes its own decisions. For 2022, the committee determined that Radford’s work did not raise any conflicts of interest. In making this assessment, the committee considered the independence factors enumerated in the applicable Nasdaq rules.

Peer Group

Our Compensation Committee references a peer group of publicly traded companies in the biopharmaceutical industry for purposes of gathering data to compare with our existing executive compensation levels and practices and as context for future compensation decisions. The committee, with the assistance of its independent compensation consultant, periodically reviews and, if appropriate, updates the compensation peer group, as appropriate, to include companies that the committee believes are competitors for executive talent and are similar to us based on a number of criteria, including sector, market capitalization, revenue, stage of development, and head count. The committee may consider peer group and other industry compensation data and the recommendations of its independent compensation consultant when making decisions related to executive compensation. The committee also considers data with respect to peer companies identified by proxy advisory firms in the prior year’s proxy cycle.

In 2021, the committee, with input from its independent compensation consultant, reviewed our current compensation peer group and determined appropriate modifications for 2022, including based on size (e.g., market capitalization between $200 million and $2.0 billion, revenues between $150 million and

TABLE OF CONTENTS

$1.0 billion, and head count between 200 and 1,500 full-time employees) and stage of development, and removing companies as appropriate, for example due to their merging or being acquired.

The companies included in our compensation peer group for 2022 were as follows:

Akebia Therapeutics, Inc.	FibroGen, Inc.	Pacira Pharmaceuticals, Inc.
Amarin Corporation	Heron Therapeutics Inc.	PTC Therapeutics Inc.
bluebird bio, Inc.	Ironwood Pharmaceuticals, Inc.	Puma Biotechnology, Inc.
Coheres BioSciences, Inc.	Ligand Pharmaceuticals Incorporated	Radius Health, Inc.
Collegium Pharmaceutical, Inc.	MidMedx Group, Inc.	Supernus Pharmaceuticals, Inc.
Esperion Therapeutics, Inc.	Omeros Corporation	Vanda Pharmaceuticals Inc.

Likewise, in 2022, the committee modified our peer group for 2023, based on updated corporate and peer group information and size criteria (e.g., market capitalization between $200 million and $2.0 billion, revenues between $150 million and $1.0 billion, and head count between 100 and 1,000 full-time employees).

Our peer group for 2023 is as follows:

Aerie Pharmaceuticals, Inc.	Esperion Therapeutics, Inc.	Prothena Corporation plc
Akebia Therapeutics, Inc.	FibroGen, Inc.	Puma Biotechnology, Inc.
Amarin Corporation	Heron Therapeutics Inc.	Radius Health, Inc.
ANI Pharmaceuticals, Inc.	Ironwood Pharmaceuticals, Inc.	Supernus Pharmaceuticals, Inc.
bluebird bio, Inc.	Karyopharm Therapeutics	UniQure N.V.
Coheres Biosciences, Inc.	Ligand Pharmaceuticals Incorporated	Vanda Pharmaceuticals Inc.
Collegium Pharmaceutical, Inc.

Market Benchmarking

In early 2022, based on the input and analysis provided by Radford and the recommendation of our CEO (except for his own compensation), the committee determined that 2022 target total cash and equity compensation for our CEO and other NEOs should be determined with reference to the 50th percentile of compensation for executives holding similar positions at the companies in our compensation peer group, with the understanding that due to our volatile stock price and corresponding changes in our size and peer group that certain metrics would be temporarily distorted and appear higher or lower than our current peer group. In determining each named executive officer’s equity incentive award, the committee examined peer group compensation data provided by Radford and other related compensation data.

Annual Compensation Review Process

On an annual basis, the committee meets to review the performance of our CEO and our other NEOs. At these meetings, the committee typically invites our CEO to participate in the discussions (except for his own compensation) in order to seek our CEO’s input and recommendations with respect to each NEO (other than himself) as to:

•

The achievement of stated corporate performance objectives;

•

The level of contributions made to the general management and guidance of the Company; and

•

The amount of any salary increases, cash incentive bonus payouts, and new equity awards.

The committee takes into consideration these recommendations and other relevant performance and competitive market factors when it determines executive compensation. The committee also meets to monitor, review, and decide compensation matters periodically throughout the year.

Compensation Risk Assessment

We periodically evaluate our compensation programs to understand which elements, if any, may pose risk to the Company and from time to time adopt additional compensation policies and practices designed to discourage excessive or unnecessary risk-taking on the part of program participants. The Company, with

TABLE OF CONTENTS

the assistance of its independent compensation consultant, has reviewed Company compensation policies and practices, both for executive and non-executive employees, and determined that those policies and practices do not create risks that are reasonably likely to have a material adverse effect on the Company. In conducting this review, we considered various features of our compensation policies and practices that discourage excessive or unnecessary risk-taking, including, but not limited to, the following:

•

Oversight of our compensation policies and practices by our Compensation Committee, including with respect to performance goal setting and the evaluation of achievement thereunder.

•

An effective balance between fixed and variable compensation, and short-term and long-term incentive opportunities.

•

Diversity in long-term incentive vehicles.

•

The adoption of performance measures that support the achievement of key goals and the Company’s business strategy.

•

The inclusion of risk-mitigating features (such as the clawback policy) in the Company’s compensation programs.

•

Reasonable severance and change in control arrangements.

Components of Our Executive Compensation Program

The primary elements of our executive compensation program are:

•

Base salary;

•

Annual target-based cash incentive bonuses;

•

Equity incentive awards;

•

Broad-based health and welfare benefits; and

•

Balanced severance arrangements.

Our Compensation Committee believes that a significant amount of executive compensation should be in the form of “at risk” incentives and that the pay mix should be strongly weighted toward equity incentive awards in order to provide alignment with long-term stockholder value. However, we do not have a formal or informal policy for a pre-set allocation between long-term and short-term compensation, between cash and non-cash compensation, or among different forms of non-cash compensation. Instead, the committee, after reviewing information provided by its independent compensation consultant and other relevant data, determines what it believes to be the appropriate level and mix of the various compensation components. We generally strive to provide our executive officers with a balance of short-term and long-term incentives to encourage consistently strong performance. Ultimately, the objective in allocating between long-term and currently paid compensation is to ensure adequate base compensation to attract and retain personnel, while providing incentives to maximize long-term value for the Company and its stockholders. Therefore, we provide base salaries that meet competitive salary norms, while also recognizing and rewarding Company and individual performance. We provide an opportunity to earn annual target-based cash incentive bonuses to incentivize and reward superior short-term performance. To further focus our executive officers on longer-term performance and the creation of stockholder value, we rely upon equity-based awards that vest over a meaningful period of time, the values of which are dependent on stock price performance.

Base Salary

We use base salaries to recognize the experience, skills, knowledge, and responsibilities of our employees, including executive officers. Base salaries for newly-hired executive officers typically are established through an arm’s-length negotiation at the time of hiring, taking into account factors such as the position for which the individual is being considered, the individual’s qualifications, prior experience, prior base salary (if available and if legally permissible), and competitive market demand. None of our NEOs is currently party to an employment agreement that provides for automatic or scheduled increases in base salary. On an annual basis, our Compensation Committee reviews and evaluates, with input from our

TABLE OF CONTENTS

CEO (except for his own base salary), the need for adjustment of the base salaries of our executive officers, based on changes and expected changes in the scope of their responsibilities. The committee also considers promotions, the contributions made by and performance of the executive officer during the prior year, the individual’s performance over a period of years, overall economic and labor market conditions, the relative ease or difficulty of obtaining a well-qualified replacement, our overall growth and development as a company, general salary trends in our industry and among our compensation peer group, and where the individual’s salary falls in the salary range presented by that data. Compensation trends and cost of living increases in relevant geographic areas may also factor into such evaluation. The committee may also draw upon Board members who have experience making salary increase decisions at other companies.

For 2023, 2022, and 2021, our NEO base salaries were as follows:

Name	2023 ($)		2022 ($)		2021 ($)		Change 2022 to 2023 (%)		Change 2021 to 2022 (%)
Jerome Durso		752,850		717,000		690,750		5.00%		3.80%
Andrew Saik		512,720		493,000		475,000		4.00%		3.79%
Michelle Berrey		647,400		622,500		600,000		4.00%		3.75%
Linda Richardson		517,920		498,000		480,000		4.00%		3.75%
Jared Freedberg		498,160		479,000		461,600		4.00%		3.77%

Generally, the table above reflects annual base salaries determined by the Compensation Committee, effective for each year beginning on February 1. Actual salaries earned during the year, including during January at the previously applicable salary, are provided in the “Summary Compensation Table” below.

Annual Target-Based Cash Incentive Bonuses

As part of our performance-based compensation philosophy, our annual target-based cash incentive bonus program is designed to reward our NEOs for the achievement of specified, measurable annual corporate goals and (with respect to our NEOs other than our CEO) individual goals and contributions. At the beginning of each year, the target bonus for each NEO is set by the Compensation Committee as a percentage of such officer’s base salary. The target bonus percentages set by the committee are typically based on an evaluation of compensation peer group data, as well as consideration of the level of qualification and experience of each NEO as well as internal pay comparisons. Based on this evaluation, the committee determined in 2022 and 2023 to maintain the target percentages at the same levels as for prior years.

Actual bonus amounts are determined after year-end based on the committee’s evaluation of performance against the corporate goals and (except for our CEO) individual performance. NEO individual performance (except for our CEO) is assessed by the committee after considering the performance of each officer based on specific goals, individual contributions, and the recommendations of our CEO. Generally, the committee determines that a cash incentive bonus opportunity for the CEO for the prior year will be based entirely on the achievement of corporate goals.

The committee believes that a cash incentive bonus program based on the evaluation of multiple corporate goals and (except for our CEO) individual performance is best suited for a biopharmaceutical company at our stage of development, due to the uncertainties inherent in the development, regulatory approval, and commercialization of new drug treatments. The committee also considers the practices of our compensation peer group and overall industry practices as part of its review of our bonus program.

Our annual corporate goals have historically included the achievement of specific clinical, regulatory, operational and/or financial milestones, with a focus on the advancement of our product candidates in clinical development, the pursuit of various internal initiatives, and ensuring adequate funding for our growth. As we continue to research and develop our product candidates, as well as pursue commercial goals with respect to our approved product Ocaliva, we have included pre-commercial and commercial-related milestones in our annual corporate goals, with a focus on pre-commercial deliverables, commercial deliverables, and commercial financial targets. The corporate goals are proposed by senior management early each year, and are approved by the committee and the Board with such modifications as the

TABLE OF CONTENTS

committee and the Board deem appropriate. In connection with such approval, the committee and the Board conduct a rigorous review designed to ensure that such goals reflect the corporate performance measures that we believe are most important to the success of the Company and will drive stockholder value. In addition, the corporate goals are generally set at challenging “stretch” levels so as to require our NEOs to expend substantial effort and commitment leveraging their individual and collective skills and competencies to attain such goals.

In order to better align bonus payouts with performance, the committee may consider for bonus calculations significant corporate achievements that were not contemplated at the time that the corporate goals were set. The committee also has the authority to shift corporate goals to subsequent years and to eliminate goals for the current year if it determines that underachievement of a goal was primarily caused by circumstances beyond an NEO’s control, or that business priorities have shifted. The Compensation Committee and the Board each have the authority, each in their sole discretion, to review and approve management’s evaluation of how the Company performed against our corporate goals, and management’s recommended bonus payout levels. This authority includes the ability to rate the accomplishment of particular goals below, at, or above 100% of target, based on the Company’s performance. The committee’s assessment of the individual performance of our NEOs (except for our CEO) may result in such officers receiving bonuses that are higher or lower than the amounts that they would otherwise receive if such bonuses were based on achievement of corporate goals alone.

For 2022, our corporate goals, their relative weightings, our performance, and our weighted performance are below. Weights sum to 100% within each category, and across categories. Weighted performance is calculated by multiplying each performance score by the weight of each goal and each category, and adding the results across categories.

Goal	Weight		Performance Score		Weighted Performance
Achieve PBC net sales of $395 million*		50%		102.0%		17.85%
Achieve PBC commercial contribution of $165 million*		25%		106.5%		9.32%
Submit comprehensive benefit-risk data package to the European Medicines Agency (“EMA”)*		25%		100.0%		8.75%
PBC (total)		35%		102.6%		35.92%
Report topline results from the re-analysis of efficacy data from the updated REGENERAGE interim analysis		25%		97.5%		9.75%
Report topline results of the REVERSE study		25%		100.0%		10.00%
Prepare a go/no-go recommendation on the NASH resubmission		50%		100.0%		20.00%
If the recommendation is to resubmit, resubmitting by year-end 2022 results in a 50% additional multiplier to the NASH goals		N/A		N/A		19.88%
NASH (total)		40%		149.1%		59.63%
Achieve interim read-out for Studies #123, 213, and 214 to support a go/no-go decision for the OCA/bezafibrate FDC		50%		80.0%		4.00%
Achieve first patient in (“FPI”) for bezafibrate Study #977-113		20%		100.0%		2.00%
Achieve first patient dose in proof of concept Study #787-201		30%		80.0%		2.40%
Advance portfolio expansion (total)		10%		84.0%		8.40%
Operational readiness and strategic planning goals, including a 50% additional multiplier if the company completes a substantial business development transaction**		100%		150.0%		22.50%
Operational readiness (total)		15%		150.0%		22.50%
Grand total		100%		126.43%		126.43%

Following the sale of the ex-U.S. commercial business, net sales and commercial contribution goals were revised to $337 million and $131.4 million respectively, and data package submission responsibility was transferred to Advanz.

Satisfied by the sale of the ex-U.S. commercial business.

TABLE OF CONTENTS

In early 2023, the committee considered our performance in light of the above goals, and approved an overall score of 126.43%.

The bonus for our NEOs (other than our CEO) is based both on our corporate goals and on individual performance. For 2022, key individual responsibilities, goals, and achievements for our NEOs (other than our CEO) were as follows:

•

Mr. Saik: In 2022, Mr. Saik was responsible for overseeing the Company’s finances, as well as investor relations, business development, facilities, and information technology. During the year, Mr. Saik’s notable accomplishments included leading the successful sale of our ex-U.S. commercial business and improving our balance sheet by reducing debt and increasing cash on hand.

•

Dr. Berry: In 2022, Dr. Berrey led our ongoing medical and research activities on a broad range of topics across both our approved indication of Ocaliva for PBC and potential future indications. Notably, in 2022, Dr. Berrey oversaw the delivery of the second, positive, interim analysis of the REGENERATE Phase 3 study, as well as the resubmission of our NDA for OCA for the treatment of pre-cirrhotic liver fibrosis due to NASH.

•

Ms. Richardson: In 2022, Ms. Richardson led all commercial activities of the Company, and exceeded our targets in both net sales and commercial contribution. She led our International commercial team through the transition process of the sale to Advanz, while continuing to deliver exceptional results, as well as driving our U.S. commercial team to continue to deliver sustained growth in sales of Ocaliva for PBC six years after launch.

•

Mr. Freedberg: In 2022, Mr. Freedberg was responsible for the oversight of all aspects of our legal, corporate governance, intellectual property, and compliance functions. During the year, Mr. Freedberg was a key contributor in the sale of our ex-U.S. commercial business and also led his team in the intensive work associated with generic drug company Abbreviated New Drug Application (“ANDA”) litigation regarding Ocaliva, ultimately resulting in multiple settlements and cancellation of a trial scheduled for early 2023.

The committee determined to pay out bonuses for 2022 performance (payable in 2023) to the executive team based on their respective bonus targets (as a percentage of base salary), adjusted for the Company’s overall corporate performance multiplier, and, except for the CEO, individual performance multipliers. Particularly, the committee awarded higher scores to Mr. Saik and Dr. Berrey for leading the Advanz sale and debt reduction, and the NASH resubmission, respectively.

The numerical results of the committee’s evaluation of our NEOs based on bonus targets and goals are as follows. Targets and payouts are set as a percentage of base salary.

	2022										2023 Target
Name	Target		Corporate Performance		Individual Performance		Payout		Payout ($)		2023 Target
Jerome Durso		70%		126.43%		N/A		88.501%		634,552.17		70%
Andrew Saik		50%		126.43%		120%		75.858%		373,979.94		50%
Michelle Berrey		50%		126.43%		120%		75.858%		472,216.05		50%
Linda Richardson		50%		126.43%		103%		65.111%		324,255.02		50%
Jared Freedberg		50%		126.43%		103%		65.111%		311,883.85		50%

Equity Incentive Awards

Our equity incentive program is the vehicle used for providing long-term incentives to our executive officers, including our NEOs. We believe that equity awards provide our NEOs with a strong link to our long-term performance, create an ownership culture, and help to align the long-term interests of our officers and our stockholders. In addition, while there will always be some degree of management turnover over time, we believe that equity awards with a time- or performance-based vesting feature promote retention, because these features incentivize our NEOs to remain in our employment through the vesting period.

TABLE OF CONTENTS

We typically grant an initial equity award to new NEOs at the commencement of their employment, and grant annual equity awards as part of our ongoing executive compensation program. In addition, we may grant other special equity awards if determined to be in the best interest of the Company, including at the time of significant promotions.

NEO annual equity awards are typically granted in conjunction with the Compensation Committee’s annual review, in the first quarter of each year, of individual and corporate performance, allowing the committee to review various performance metrics before making award determinations. In sizing NEO annual equity awards, with recommendations from its independent compensation consultant, the committee also considers factors including:

•

Award and stock ownership practices in our compensation peer group and in our industry.

•

The current vesting status of the NEO’s existing equity awards, and the efficacy for retention purposes of granting additional awards.

•

Stockholder dilution, and the size of proposed awards relative to our existing share count.

In 2022 and 2023, we granted stock options, RSUs, and PSUs to our NEOs.

The equity grants to our NEOs in early 2022 and 2023 were as follows:

	2022						2023
Name	Options		RSUs		PSUs		Options		RSUs		PSUs
Jerome Durso		60,900		35,700		107,000		82,700		50,400		151,300
Andrew Saik		17,600		10,300		10,300		24,000		14,700		14,700
Michelle Berrey		17,600		10,300		10,300		24,000		14,700		14,700
Linda Richardson		17,600		10,300		10,300		20,000		12,200		12,200
Jared Freedberg		17,600		10,300		10,300		20,000		12,200		12,200

In 2022 and 2023, we granted each of our NEOs all three award types as part of their annual grants as continuing executive officers.

In both 2022 and 2023, on a value basis, our CEO’s grant was weighted towards PSUs. For other NEOs, awards are roughly equally weighted at approximately 33% each of overall grant value.

We believe that this mix of award types incentivizes consistently strong performance. Stock options and PSUs are particularly dependent on stock price performance, thus incentivizing a focus on value creation, while RSUs address the historically high volatility of our common stock by maintaining some value through any volatility. A balanced approach to the mix of awards also helps to manage potential equity dilution, and the size of our remaining equity pool under our equity incentive plan.

Our NEO stock options vest over four years, with 25% vesting after one year from the “vesting commencement date”, and 1/48th of the award (i.e., 1/36th of the remaining award) vesting monthly for the following three years. The exercise prices for the 2022 and 2023 annual awards were $14.44 and $18.40 respectively, based on our closing price on the grant date.

Our NEO annual award RSUs vest over four years, with 25% vesting each year from the “vesting commencement date”. New hire RSUs vest over four years, with 25% vesting after the first year, and the remainder vesting quarterly.

Our NEO PSUs vest, if at all, based on our TSR relative to our TSR Peer Group over a three-year period. PSUs vest in an amount between 0% and 150% of the nominal amount of the award. If TSR is below the 25% percentile of our TSR Peer Group, vesting is 0%. At the 25% percentile, vesting is 50%. At the 50% percentile, vesting is 100%. If TSR is above the 75% percentile, vesting is 150%. Vesting between the 25% and 75% percentile is based on linear interpolation. Also, if our TSR exceeds the 50% percentile, but absolute TSR is negative, vesting is capped at 100%.

Our PSUs granted in 2020 had a three-year measurement period from January 1, 2020, through December 31, 2022. They vested on December 31, 2022, with a 0% payout, due to our stock performance. Our PSUs granted in 2021, 2022, and 2023 have three-year measurement periods through December 31, 2023, 2024, and 2025, respectively.

TABLE OF CONTENTS

Vesting of each type of award is subject to continued employment through the applicable vesting date, except with certain qualifying terminations of employment.

Benefits and Other Compensation

We believe that establishing competitive benefits packages for our employees is an important factor in attracting and retaining highly qualified personnel. We maintain broad-based benefits that are provided to all employees, including medical, dental, vision, group life insurance, and long- and short-term disability insurance. For our U.S.-based employees, we also provide a 401(k) plan. Under our 401(k) plan, we are permitted to make discretionary contributions and matching contributions, subject to established limits and a vesting schedule. Since 2015, we have matched an employee’s contributions to the 401(k) plan up to the first five percent of the employee’s salary, subject to such limits. We provide pension, insurance, and other benefits to employees located outside the United States in line with those provided to similar employees in their respective countries. Our NEOs generally receive the same benefits as are available to all of our salaried employees, with limited recurring exceptions primarily consisting of fully-paid health insurance premiums. In addition, certain employees in our commercial organization receive the use of a leased vehicle and payment of certain ancillary expenses. The Compensation Committee in its discretion may revise, amend, or add to an NEO’s benefits and perquisites if it deems it advisable.

Severance and Change in Control Benefits

Pursuant to employment agreements or arrangements that we have entered into with our NEOs, such officers are entitled to specified benefits in the event of the termination of their employment under specified circumstances, including termination in connection with a change in control of the Company. We believe that providing such benefits is consistent with industry practices and helps us to compete for executive talent, as well as to retain and motivate our NEOs and minimize management distraction created by uncertain job security, particularly in the event of a potential transaction that would be beneficial to our stockholders.

We have structured our change in control benefits so as to prevent unintended “windfalls” in the event of a change in control. Accordingly, change in control protections for our NEOs are limited to “double-trigger” arrangements, which require both a change in control and a qualifying termination of the employment of the NEO in connection with the change in control, or in the case of PSUs, vesting, if at all, based on our TSR performance relative to that of our TSR Peer Group through the month preceding the month in which the change in control occurs. We believe that structuring our change in control benefits in this manner is protective of stockholder value, and maintains flexibility to pursue change in control transactions determined by our Board to be in the best interests of our stockholders.

Special Long-Term Cash Incentive Plans

In January 2022 and January 2023, due to the gap between the equity value that could currently be delivered to our executive officers (based on constraints to our use of equity awards due to our current low stock price) and market levels of executive compensation, the Compensation Committee adopted the 2022 Cash Incentive Plan and 2023 Cash Incentive Plan, respectively. Both plans are cash-based incentive plans intended to align employee incentives and stockholder interests, drive stockholder value, allow employees to share in the success of the Company, aid in recruitment and retention, and provide competitive total compensation opportunities. Both plans permit grants of both service-based and performance-based awards. The Board or the Compensation Committee can set the amounts, vesting provisions, and other terms and conditions of awards.

In connection with the two plans, the Compensation Committee approved awards to executive officers, including:

•

For the 2022 plan, $1 million to Mr. Durso and $500,000 each to Mr. Saik, Dr. Berrey, Ms. Richardson, and Mr. Freedberg.

•

For the 2023 plan, $1 million to Mr. Durso, $600,000 each to Mr. Saik and Dr. Berrey, and $400,000 each to Ms. Richardson and Mr. Freedberg.

TABLE OF CONTENTS

Each award to these NEOs vests after two years, based on a performance period from January 1, 2022, through December 31, 2023, or from January 1, 2023, through December 31, 2024, respectively. The awards contain performance conditions intended to align with shareholder value creation, with payout levels at 75%, 100%, and 125%, based on performance relative to a target base-case level.

Material Tax and Accounting Considerations

Section 162(m) of the Code generally restricts deductibility for federal income tax purposes of annual individual compensation in excess of $1 million paid to certain executive officers.

We account for stock-based compensation, including annual and new hire equity awards, in accordance with the requirements of ASC 718.