UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of the

Securities Exchange Act of 1934

(Amendment No.     )

 

Filed by the Registrant  ☒                              Filed by a party other than the Registrant  ☐

Check the appropriate box:

 

bluebird bio, 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 the appropriate box):

 

 

 

 

 

 

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April 21, 2017

Dear Stockholder:

You are cordially invited to attend the 2017 Annual Meeting of Stockholders of bluebird bio, Inc. The meeting will be held on June 8, 2017 at 8:30 a.m. EDT at the offices of the Company, located at 60 Binney Street, Cambridge, Massachusetts.

Details regarding admission to the meeting and the business to be conducted are more fully described in the accompanying Notice of Annual Meeting and Proxy Statement.

At this Annual Meeting, the agenda includes the election of two (2) Class I directors for three-year terms, the approval of executive compensation by advisory vote, and the ratification of the appointment of Ernst & Young LLP as bluebird’s independent registered public accounting firm for the fiscal year ending December 31, 2017.

Under Securities and Exchange Commission rules, the Company is providing access to the proxy materials for the Annual Meeting to shareholders via the Internet. Accordingly, you can access the proxy materials and vote at www.proxyvote.com. Instructions for accessing the proxy materials and voting are described below and in the Notice of Annual Meeting that you received in the mail. Your vote is very important. Whether or not you plan to attend the meeting, please carefully review the enclosed proxy statement and then cast your vote, regardless of the number of shares you hold. If you are a stockholder of record, you may vote over the Internet, by telephone, or, if you request to receive a printed set of the proxy materials, by completing, signing, dating and mailing the accompanying proxy card in the return envelope. Submitting your vote via the Internet or by telephone or proxy card will not affect your right to vote in person if you decide to attend the Annual Meeting. If your shares are held in street name (held for your account by a broker or other nominee), you will receive instructions from your broker or other nominee explaining how to vote your shares, and you will have the option to cast your vote by telephone or over the Internet if your voting instruction form from your broker or nominee includes instructions and a toll-free telephone number or Internet website to do so. In any event, to be sure that your vote will be received in time, please cast your vote by your choice of available means at your earliest convenience.

We hope that you will join us on June 8, 2017. Your continuing interest in bluebird is very much appreciated.

 

 

 

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NOTICE OF 2017 ANNUAL MEETING OF STOCKHOLDERS

 

 

Cambridge, Massachusetts

April 21, 2017

Important Notice Regarding the Availability of Proxy Materials for the bluebird 2017 Annual Meeting of Stockholders to Be Held on June 8, 2017: The Notice of 2017 Annual Meeting of Stockholders, proxy statement and our Annual Report on Form 10-K for the fiscal year ended December 31, 2016, are available at www.bluebirdbio.com by following the link for “Investors & Media.” To obtain directions to our offices in order to attend the Annual Meeting in person, please visit the “Investors & Media – Calendar of Events” section of our website at www.bluebirdbio.com or contact Investor Relations at (339) 499-9300.

 

 

 

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BLUEBIRD BIO, INC.

60 BINNEY STREET

CAMBRIDGE, MASSACHUSETTS 02142

PROXY STATEMENT

FOR THE 2017 ANNUAL MEETING OF STOCKHOLDERS

TO BE HELD ON JUNE 8, 2017

AT 8:30 AM EDT

GENERAL INFORMATION

When are this proxy statement and the accompanying material scheduled to be sent to stockholders?

We have elected to provide access to our proxy materials to our stockholders via the Internet. Accordingly, on or about April 21, 2017, we will begin mailing a Notice of Internet Availability of Proxy Materials, or Notice of Internet Availability, and the proxy materials, including the Notice of 2017 Annual Meeting of Stockholders, this proxy statement and accompanying proxy card or, for shares held in street name (held for your account by a broker or other nominee), voting instruction form, and the Annual Report on Form 10-K for the year ended December 31, 2016 will be made available to stockholders on the Internet on the same date.

Why did I receive a Notice of Internet Availability of Proxy Materials instead of a full set of proxy materials?

Pursuant to rules adopted by the Securities and Exchange Commission, or SEC, we are providing access to our proxy materials over the Internet rather than printing and mailing the proxy materials. We believe electronic delivery will expedite the receipt of materials and will help lower our costs and reduce the environmental impact of our annual meeting materials. Therefore, a Notice of Internet Availability will be mailed to holders of record and beneficial owners of our common stock starting on or around April 21, 2017. The Notice of Internet Availability will provide instructions as to how stockholders may access and review the proxy materials, including the Notice of Annual Meeting, proxy statement, proxy card and Annual Report on Form 10-K, on the website referred to in the Notice of Internet Availability or, alternatively, how to request that a copy of the proxy materials, including a proxy card, be sent to them by mail. The Notice of Internet Availability will also provide voting instructions. In addition, stockholders of record may request to receive the proxy materials in printed form by mail or electronically by e-mail on an ongoing basis for future stockholder meetings. Please note that, while our proxy materials are available at the website referenced in the Notice of Internet Availability, and our Notice of Annual Meeting, proxy statement and Annual Report on Form 10-K are available on our website, no other information contained on either website is incorporated by reference in or considered to be a part of this document.

Who is soliciting my vote?

The Board of Directors of bluebird bio, Inc. (the “Company” or “bluebird”) is soliciting your vote for the 2017 Annual Meeting of Stockholders.

When is the record date for the Annual Meeting?

The Board of Directors has fixed the record date for the Annual Meeting as of the close of business on April 13, 2017.

How many votes can be cast by all stockholders?

A total of 40,939,551 shares of common stock of the Company were outstanding on April 13, 2017, and entitled to be voted at the meeting. Each share of common stock is entitled to one vote on each matter.

How do I vote?

If you are a stockholder of record and your shares are registered directly in your name, you may vote:

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If your shares of common stock are held in street name (held for your account by a broker or other nominee):

What are the Board of Director’s recommendations on how to vote my shares?

The Board of Directors recommends a vote:

Proposal 1: FOR election of the two Class I director nominees (page 5)

Proposal 2: FOR the advisory resolution approving the compensation of the Company’s named executive officers (page 16)

Proposal 3: FOR ratification of the selection of Ernst & Young LLP as the Company’s independent registered public accounting firm (page 47)

Who pays the cost for soliciting proxies?

bluebird will pay the cost for the solicitation of proxies by the Board of Directors. The solicitation of proxies will be made primarily by mail and through internet access to materials. Proxies may also be solicited personally, by telephone, fax or e-mail by employees of bluebird without any remuneration to such individuals other than their regular compensation. bluebird will also reimburse brokers, banks, custodians, other nominees and fiduciaries for forwarding these materials to their principals to obtain the authorization for the execution of proxies.

Will my shares be voted if I do not return my proxy?

If your shares are registered directly in your name, your shares will not be voted if you do not vote over the Internet, by telephone, by returning your proxy or by ballot at the Annual Meeting. If your shares are held in street name, your bank, broker or other nominee may under certain circumstances vote your shares if you do not timely return your proxy. Banks, brokers and other nominees can vote customers’ unvoted shares on routine matters, but cannot vote such shares on non-routine matters. If you do not timely return a proxy to your bank, broker or other nominee to vote your shares, your bank, broker or other nominee may, on routine matters, either vote your shares or leave your shares unvoted. Your bank, broker or other nominee cannot vote your shares on any non-routine matter. The election of directors (Proposal 1) and the advisory vote on executive compensation (Proposal 2) are non-routine matters. The ratification of the appointment of our independent registered public accounting firm (Proposal 3) is a routine matter. We encourage you to provide voting instructions to your bank, broker or other nominee by giving your proxy to them. This ensures that your shares will be voted at the Annual Meeting according to your instructions. You should receive directions from your bank, broker or other nominee about how to submit your proxy to them at the time you receive this proxy statement.

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Can I change my vote?

You may revoke your proxy at any time before it is voted by notifying the Secretary in writing, by returning a signed proxy with a later date, by transmitting a subsequent vote over the Internet or by telephone prior to the close of the Internet voting facility or the telephone voting facility, or by attending the meeting and voting in person. If your stock is held in street name, you must contact your broker or nominee for instructions as to how to change your vote.

How is a quorum reached?

The presence, in person or by proxy, of holders of at least a majority of the total number of outstanding shares entitled to vote is necessary to constitute a quorum for the transaction of business at the Annual Meeting. Shares held of record by stockholders or brokers, bankers or other nominees who do not return a signed and dated proxy or attend the Annual Meeting in person will not be considered present or represented at the Annual Meeting and will not be counted in determining the presence of a quorum. Abstentions and broker non-votes, if any, will be counted for purposes of determining whether a quorum is present for the transaction of business at the meeting.

What vote is required to approve each item and how are votes counted?

Votes cast by proxy or in person at the Annual Meeting will be counted by the persons appointed by bluebird to act as tabulators for the meeting. The tabulators will count all votes FOR and AGAINST, abstentions and broker non-votes, as applicable, for each matter to be voted on at the Annual Meeting. Abstentions and broker non-votes are not counted as votes cast and, therefore, do not have the effect of votes in opposition to such proposals. A broker non-vote occurs when a nominee holding shares for a beneficial owner does not vote on a particular proposal because the nominee does not have discretionary voting power with respect to that item and has not received instructions from the beneficial owner.

For the election of the two Class I director nominees, each director nominee presented must be elected by a majority of the votes cast in person or by proxy at the Annual Meeting. Director nominees are elected by a majority vote for non-contested director elections. Because the number of director nominees properly nominated for the Annual Meeting does not exceed the number of positions on the Board of Directors to be filled by election at the Annual Meeting, this election of directors is non-contested. To elect a director nominee to the Board of Directors, the votes cast FOR the director nominee must exceed the votes cast AGAINST. Only FOR and AGAINST votes will affect the outcome. Abstentions will have no effect on the voting of Proposal 1. Proposal 1 is a non-routine matter. Therefore, if your shares are held by your bank, broker or other nominee in street name and you do not vote your shares, your bank, broker or other nominee cannot vote your shares on Proposal 1. Shares held in street name by banks, brokers or nominees who indicate on their proxies that they do not have authority to vote the shares on Proposal 1 will not be counted as votes FOR or AGAINST any director nominee and will be treated as broker non-votes. As a result, broker non-votes will have no effect on the voting of Proposal 1.

For the advisory vote on executive compensation, the votes cast FOR must exceed the votes cast AGAINST to approve, on an advisory basis, the compensation of our named executive officers. Only FOR and AGAINST votes will affect the outcome. Abstentions will have no effect on the voting of Proposal 2. Proposal 2 is a non-routine matter. Therefore, if your shares are held by your bank, broker or other nominee in street name and you do not vote your shares, your bank, broker or other nominee cannot vote your shares on Proposal 2. Shares held in street name by banks, brokers or nominees who indicate on their proxies that they do not have authority to vote the shares on Proposal 2 will not be counted as votes FOR or AGAINST the proposal and will be treated as broker non-votes. As a result, broker non-votes will have no effect on the voting of Proposal 2.

For the ratification of the selection of Ernst & Young LLP as our independent registered public accounting firm for our 2017 fiscal year, the votes cast FOR must exceed the votes cast AGAINST.  Only FOR and AGAINST votes will affect the outcome. Abstentions will have no effect on the voting of Proposal 3. Proposal 3 is a routine matter. Therefore, if your shares are held by your bank, broker or other nominee in street name and you do not vote your shares, your bank, broker or other nominee may vote your shares on Proposal 3.

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If there are insufficient votes to approve Proposal(s) 1, 2, or 3, your proxy may be voted by the persons named in the proxy to adjourn the Annual Meeting in order to solicit additional proxies in favor of the approval of such proposal. If the Annual Meeting is adjourned or postponed for any purpose, at any subsequent reconvening of the meeting, your proxy will be voted in the same manner as it would have been voted at the original convening of the Annual Meeting unless you withdraw or revoke your proxy. Your proxy may be voted in this manner even though it may have been voted on the same or any other matter at a previous session of the Annual Meeting.

Could other matters be decided at the Annual Meeting?

bluebird does not know of any other matters that may be presented for action at the Annual Meeting. Should any other business come before the meeting, the persons named on the enclosed proxy will have discretionary authority to vote the shares represented by such proxies in accordance with their best judgment. If you hold shares through a broker, bank or other nominee as described above, they will not be able to vote your shares on any other business that comes before the Annual Meeting unless they receive instructions from you with respect to such matter.

What happens if the meeting is postponed or adjourned?

Your proxy may be voted at the postponed or adjourned meeting. You will still be able to change your proxy until it is voted.

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

Preliminary voting results will be announced at the Annual Meeting. Final voting results will be published in a Current Report on Form 8-K, or Form 8-K, that we expect to file with the SEC within four business days after the Annual Meeting. If final voting results are not available to us in time to file a Form 8-K within four business days after the Annual Meeting, we intend to file a Form 8-K to publish preliminary results and, within four business days after the final results are known to us, file an additional Form 8-K to publish the final results.

What does it mean if I receive more than one proxy card or voting instruction form?

It means that you have multiple accounts at the transfer agent or with brokers. Please complete and return all proxy cards or voting instruction forms to ensure that all of your shares are voted.

Who should I call if I have any additional questions?

If you hold your shares directly, please call Jason F. Cole, Secretary of the Company, at (339) 499-9300. If your shares are held in street name, please contact the telephone number provided on your voting instruction form or contact your broker or nominee holder directly.

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PROPOSAL 1: ELECTION OF DIRECTORS

In accordance with Delaware law and our certificate of incorporation and By-laws, the Board of Directors is divided into three classes of approximately equal size. The members of each class are elected to serve a three-year term with the term of office of each class ending in successive years. Nick Leschly and Mark Vachon are the directors whose terms expire at this Annual Meeting and each of Nick Leschly and Mark Vachon has been nominated for and has agreed to stand for re-election to the Board of Directors to serve as a Class I director of the Company until the 2020 Annual Meeting and until his successor is duly elected.

Our By-laws provide for a majority voting standard for the election of directors in uncontested elections, which provides that to be elected, a director nominee must receive a greater number of votes FOR his or her election than votes AGAINST such election. The number of votes cast with respect to that director’s election excludes abstentions and broker non-votes with respect to that director’s election. In contested elections where the number of director nominees exceeds the number of directors to be elected, the voting standard will be a plurality of the shares present in person or by proxy and entitled to vote. If a director nominee who already serves as a director is not elected and no successor is elected, the resignation policy in our Corporate Governance Guidelines provides that such director will offer to tender his or her resignation to the Board of Directors. Our Nominating and Corporate Governance Committee will make a recommendation to the Board of Directors on whether to accept or reject the resignation, or whether to take some other action. The Board of Directors will act on the Nominating and Corporate Governance Committee’s recommendation and publicly disclose its decision within 90 days from the date of the certification of the election results.

It is intended that, unless you give contrary instructions, shares represented by proxies solicited by the Board of Directors will be voted for the election of the two director nominees listed below. We have no reason to believe that any director nominee will be unavailable for election at the Annual Meeting. In the event that one or more director nominees is unexpectedly not available to serve, proxies may be voted for another person nominated as a substitute by the Board of Directors, or the Board of Directors may reduce the number of directors to be elected at the Annual Meeting. Information relating to each director nominee and for each continuing director, including his or her period of service as a director of bluebird, principal occupation and other biographical material is shown below. Pursuant to the By-laws, the Board of Directors has fixed the number of directors at eight (8) as of the date of this year’s Annual Meeting of Stockholders, with one position on the Board of Directors vacant. Vacancies on the Board of Directors are filled exclusively by the affirmative vote of a majority of the remaining directors, even if less than a quorum is present, and not by the stockholders. Your proxy cannot be voted for a greater number of persons than the number of director nominees named in this proxy statement

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE

FOR

EACH OF THESE DIRECTOR NOMINEES FOR CLASS I DIRECTOR:

NICK LESCHLY

MARK VACHON

(PROPOSAL 1 ON YOUR PROXY CARD)

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DIRECTOR BIOGRAPHIES

The following table sets forth information concerning our directors as of April 21, 2017. The biographical description of each director includes the specific experience, qualifications, attributes and skills that the Board of Directors would expect to consider if it were making a conclusion currently as to whether such person should serve as a director.

 

 

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EXECUTIVE OFFICERS

The following table sets forth information regarding our executive officers, as of April 21, 2017:

 

Jeffrey T. Walsh – Mr. Walsh has served as our Chief Financial and Strategy Officer and Principal Financial Officer since March 2016. Prior to this role, he served as our Chief Operating Officer since May 2011 and also previously served as our Principal Financial Officer from June 2013 to November 2014. Mr. Walsh has over 25 years of experience in executive leadership positions with responsibility for finance, business development, commercial and business operations, strategic planning and legal functions with established and emerging public and private life sciences companies. From November 2008 to February 2011, Mr. Walsh served as chief business officer of Taligen Therapeutics, Inc. where he played a key role in the growth of the company and the ultimate sale of Taligen Therapeutics, Inc. to Alexion Pharmaceuticals, Inc. in January 2011. Mr. Walsh started his career at SmithKline Beecham Corporation in finance and worldwide business development roles. He subsequently held senior business development, finance and operations roles at PathoGenesis Corp. (acquired by Chiron Corporation), Allscripts Healthcare Solutions Inc., EXACT Sciences Corporation and Inotek Pharmaceuticals Corp. Mr. Walsh received his B.A. in sociology and economics from Yale University and his M.B.A. from the Kellogg Graduate School of Management at Northwestern University.

David Davidson, M.D. – Dr. Davidson has served as our Chief Medical Officer since February 2012. Prior to joining us, Dr. Davidson served as a senior medical director at Genzyme Corporation, where he led clinical research for programs in Phases I through IV across a wide range of therapeutic areas for more than a decade. Most recently, Dr. Davidson was the medical leader for Genzyme’s gene therapy and Pompe disease enzyme replacement therapy programs. In addition to Dr. Davidson’s translational medicine experience, he has also worked on a number of commercial products, including Fabrazyme and Myozyme/Lumizyme, and was integral in crafting the new drug application that resulted in the approval of Welchol. Prior to Genzyme, Dr. Davidson was a medical director at GelTex Pharmaceuticals Inc. Previously, he completed clinical and research fellowships in infectious diseases at the Harvard Longwood Combined Infectious Diseases Program. Dr. Davidson received his B.A. from Columbia University and his M.D. from New York University School of Medicine. In addition, he completed an internal medicine internship, residency training and an endocrinology research fellowship at the University of Chicago Hospitals.

Philip Gregory, D. Phil. – Dr. Gregory has served as our Chief Scientific Officer since June 2015. Prior to joining us, Dr. Gregory was formerly with Sangamo BioSciences, where he held multiple leadership positions over a nearly fifteen-year tenure, most recently serving as Chief Scientific Officer and Senior Vice President, Research. In this role, he was responsible for the scientific direction and strategic research planning for the company. Dr. Gregory played an integral role in Sangamo’s partnerships and drove early discovery and development for several product candidates in multiple therapeutic areas. Prior to joining Sangamo, he was a postdoctoral fellow at Ludwig-Maximilians-Universität in Munich, Germany. Dr. Gregory holds a D. Phil in biochemistry from Oxford University, Keble College and a B.Sc. in microbiology from Sheffield University.

Susanna G. High – Ms. High has served as our Chief Operating Officer since November 2016. Prior to joining us, Ms. High served in roles with increasing responsibility for strategy, business planning, portfolio and program management, alliance management, information technology and broader organizational growth initiatives at Alnylam Pharmaceuticals, Inc. At Alnylam, she served as Senior Vice President Strategy & Business Integration from June 2015 to September 2016, after serving as Vice President Business Planning & Program Management from June 2008 through June 2015, and as Senior Director from February 2007 through June 2008. Prior to her time at Alnylam, Ms. High worked at Millennium Pharmaceuticals, Inc. (now a subsidiary of Takeda) from 2001 to 2007, serving first as Director, Business Operations and then as Director, Corporate Strategy. From 1996 to 2001, Ms. High was a management consultant at Accenture in the Strategic Services Practice, where her clients included biopharmaceutical companies. Ms. High received her B.A. in Economics and Business Management, Financial Planning and Analysis from Università ‘Luigi Bocconi’ and her M.B.A. from the Massachusetts Institute of Technology – Sloan School of Management.

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Jason F. Cole, Esq. – Mr. Cole has served as our Chief Legal Officer and Secretary since March 2016. Prior to this role, he served as our Senior Vice President, General Counsel and Secretary since March 2014.  Prior to joining us, Mr. Cole served as Executive Vice President, Corporate Development and General Counsel at Zalicus Inc. from September 2011 through March 2014, and as Senior Vice President, General Counsel of Zalicus and its predecessor company CombinatoRx, Incorporated from January 2006 to September 2011.  From 1999 to 2006, Mr. Cole was a corporate and securities attorney at Ropes & Gray LLP. Mr. Cole received an A.B. in government from Dartmouth College and a J.D. from Columbia University School of Law.

Eric Sullivan – Mr. Sullivan has served as our Vice President, Finance and Treasurer since March 2016. Prior to this role, he served as our Senior Director, Finance since November 2013. Prior to joining us, Mr. Sullivan served as Corporate Controller of Merrimack Pharmaceuticals, Inc. from January 2011 to November 2013 and as Assistant Controller of Merrimack Pharmaceuticals from September 2008 to December 2010. Prior to Merrimack Pharmaceuticals, Mr. Sullivan held positions at NSTAR and PricewaterhouseCoopers LLP. Mr. Sullivan received his B.S. in Accountancy from Bentley University (formerly known as Bentley College) and is a Certified Public Accountant in Massachusetts.

 

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THE BOARD OF DIRECTORS AND ITS COMMITTEES

Board Composition

We currently have seven directors and the terms of office of the directors are divided into three classes:

Class I consists of Mr. Leschly and Mr. Vachon, Class II consists of Mr. Lynch and Dr. Maraganore, and Class III consists of Dr. Dixon, Dr. Mandell and Dr. Schenkein. At each Annual Meeting of Stockholders, the successors to directors whose terms will then expire shall serve from the time of election and qualification until the third Annual Meeting following election and until their successors are duly elected and qualified. A resolution of the Board of Directors may change the authorized number of directors. Any additional directorships resulting from an increase in the number of directors will be distributed among the three classes so that, as nearly as possible, each class will consist of one-third of the directors. This classification of the Board of Directors may have the effect of delaying or preventing changes in control or management of our company.

Board Independence

Our Board of Directors has determined, upon the recommendation of our Nominating and Corporate Governance Committee, that each of our directors, except for Nick Leschly, who serves as our President and Chief Executive Officer, has no relationship that would interfere with the exercise of independent judgment in carrying out the responsibilities of a director and is independent within the meaning of the director independence standards of the Nasdaq Stock Market, or NASDAQ, rules and the SEC. At least annually, our Board of Directors will evaluate all relationships between us and each director in light of relevant facts and circumstances for the purposes of determining whether a material relationship exists that might signal a potential conflict of interest or otherwise interfere with such director’s ability to satisfy his or her responsibilities as an independent director. Based on this evaluation, our Board of Directors will make an annual determination of whether each director is independent within the meaning of NASDAQ, and the SEC independence standards.

Board Meetings and Attendance

Our Board of Directors held six (6) meetings during the fiscal year ended December 31, 2016. Each of the directors attended at least 75% of the meetings of the Board of Directors and the committees of the Board of Directors on which he or she served during the fiscal year ended December 31, 2016 (in each case, which were held during the period for which he or she was a director and/or a member of the applicable committee).  bluebird encourages its directors to attend the Annual Meeting of Stockholders.

Board Committees

Our Board of Directors has established three standing committees: the Audit Committee, the Compensation Committee and the Nominating and Corporate Governance Committee, each of which is comprised solely of independent directors, and is described more fully below. Each of the Audit Committee, Compensation Committee and Nominating and Corporate Governance Committee operates pursuant to a written charter and each committee reviews and assesses the adequacy of its charter and submits its charter to the Board of Directors for approval. The charters for the Audit Committee, Compensation Committee and Nominating and Corporate Governance Committee are all available on our website (www.bluebirdbio.com) under “Investors & Media” at “Corporate Governance.”

Audit Committee

Our Audit Committee is currently composed of Dr. Dixon, Mr. Lynch, and Mr. Vachon, with Mr. Vachon serving as chairman of the committee.  Our Board of Directors has determined that each member of the Audit Committee meets the independence requirements of Rule 10A-3 under the Exchange Act and the applicable listing standards of NASDAQ. Our Board of Directors has determined that Mr. Lynch and Mr. Vachon are “audit committee financial experts” within the meaning of the SEC regulations and applicable listing standards of NASDAQ.  During the fiscal year ended December 31, 2016, the Audit Committee met four times. The report of the Audit Committee is included in this Proxy Statement under “Report of the Audit Committee.” The Audit Committee’s responsibilities include:

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Compensation Committee

Our Compensation Committee is currently composed of Dr. Dixon, Dr. Maraganore and Mr. Lynch, with Mr. Lynch serving as chairman of the committee.  Our Board of Directors has determined each member of the Compensation Committee is “independent” as defined under the applicable listing standards of NASDAQ. In addition, each member qualifies as an “outside director” within the meaning of Section 162(m) of the Internal Revenue Code of 1986, as amended, and as a non-employee director, as defined in Rule 16b-3 of the Exchange Act. During the fiscal year ended December 31, 2016, the Compensation Committee met six times. The Compensation Committee’s responsibilities include:

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Historically, our Compensation Committee has made most of the significant adjustments to annual compensation, determined bonus and equity awards and established new performance objectives at one or more meetings held during the first and last quarters of the year. However, our Compensation Committee also considers matters related to individual compensation, such as compensation for new executive hires, as well as high-level strategic issues, such as the efficacy of our compensation strategy, potential modifications to that strategy and new trends, plans or approaches to compensation, at various meetings throughout the year. Generally, the Compensation Committee’s process comprises two related elements: the determination of compensation levels and the establishment of performance objectives for the current year. For executives other than our Chief Executive Officer, our Compensation Committee solicits and considers evaluations and recommendations submitted to the Compensation Committee by our Chief Executive Officer. In the case of our Chief Executive Officer, the evaluation of his performance is conducted by the Compensation Committee, which determines any adjustments to his compensation as well as awards to be granted. For all executives and directors as part of its deliberations, the Compensation Committee may review and consider, as appropriate, materials such as financial reports and projections, operational data, tax and accounting information, tally sheets that set forth the total compensation that may become payable to executives in various hypothetical scenarios, executive and director stock ownership information, company stock performance data, analyses of historical executive compensation levels and current Company-wide compensation levels and recommendations of our Chief People Officer, including analyses of executive and director compensation paid at a peer group of other companies approved by our Compensation Committee.

Nominating and Corporate Governance Committee

Our Nominating and Corporate Governance Committee is composed of Dr. Mandell and Dr. Schenkein, with Dr. Schenkein serving as chairman of the committee. Our Board of Directors has determined that each member of the Nominating and Corporate Governance Committee is “independent” as defined under the applicable listing standards of NASDAQ. During fiscal year ended December 31, 2016, the Nominating and Corporate Governance Committee met three times. The Nominating and Corporate Governance Committee’s responsibilities include:

Identifying and Evaluating Director Nominees

Our Board of Directors is responsible for selecting its own members. The Board of Directors delegates the selection and nomination process to the Nominating and Corporate Governance Committee, with the expectation that other members of the Board of Directors, and of management, will be requested to take part in the process as appropriate.

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Generally, our Nominating and Corporate Governance Committee identifies candidates for director nominees in consultation with management, through the use of search firms or other advisors, through the recommendations submitted by stockholders or through such other methods as the Nominating and Corporate Governance Committee deems to be helpful to identify candidates. Once candidates have been identified, our Nominating and Corporate Governance Committee confirms that the candidates meet all of the minimum qualifications for director nominees established by the Nominating and Corporate Governance Committee. The Nominating and Corporate Governance Committee may gather information about the candidates through interviews, detailed questionnaires, background checks or any other means that the Nominating and Corporate Governance Committee deems to be appropriate in the evaluation process. The Nominating and Corporate Governance Committee then meets as a group to discuss and evaluate the qualities and skills of each candidate, both on an individual basis and taking into account the overall composition and needs of our Board of Directors. Based on the results of the evaluation process, the Nominating and Corporate Governance Committee recommends candidates for the Board of Directors’ approval as director nominees for election to the Board of Directors.

Minimum Qualifications

Our Nominating and Corporate Governance Committee will consider, among other things, the following qualifications, skills and attributes when recommending candidates for the Board’s selection as director nominees for the Board and as candidates for appointment to the Board’s committees. A director nominee shall have the highest personal and professional integrity, shall have demonstrated exceptional ability and judgment, and shall be most effective, in conjunction with the other director nominees to the Board, in collectively serving the long-term interests of the stockholders.

In evaluating proposed director candidates, our Nominating and Corporate Governance Committee may consider, in addition to the minimum qualifications and other criteria for board membership approved by the Board from time to time, all facts and circumstances that it deems appropriate or advisable, including, among other things, diversity and is not limited to race, gender or national origin, the skills of the proposed director candidate, his or her depth and breadth of professional experience or other background characteristics, his or her independence and the needs of the Board. We have no formal policy regarding board diversity. Our Nominating and Corporate Governance Committee’s priority in selecting board members is identification of persons who will further the interests of our company through his or her established record of professional accomplishment, the ability to contribute positively to the collaborative culture among board members, and professional and personal experiences and expertise relevant to our growth strategy. The Nominating and Corporate Governance Committee will consider candidates recommended by stockholders. The policy adopted by the Nominating and Corporate Governance Committee provides that candidates recommended by stockholders are given appropriate consideration in the same manner as other candidates.

Non-Management Director Meetings

In addition to the meetings of the committees of the Board of Directors described above, in connection with the Board of Directors meetings, the non-management directors met four times in executive session during the fiscal year ended December 31, 2016. The Chairman of the Board of Directors presides at these executive sessions. The Audit Committee and the Board of Directors have established a procedure whereby interested parties may make their concerns known to non-management directors, which is described on our website.

Leadership structure and risk oversight

Our Board of Directors is currently chaired by Mr. Lynch. As a general policy, our Board of Directors believes that separation of the positions of chairman and chief executive officer reinforces the independence of the Board of Directors from management, creates an environment that encourages objective oversight of management’s performance and enhances the effectiveness of the Board of Directors as a whole. As such, Mr. Leschly serves as our president and chief executive officer while Mr. Lynch serves as our chairman of the Board of Directors but is not an officer.

Our Board of Directors oversees the management of risks inherent in the operation of our business and the implementation of our business strategies. Our Board of Directors performs this oversight role by using several different levels of review. In connection with its reviews of the operations and corporate functions of our company, our Board of Directors addresses the primary risks associated with those operations and corporate functions. In addition, our Board of Directors reviews the risks associated with our company’s business strategies periodically throughout the year as part of its consideration of undertaking any such business strategies.

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Each of the committees of our Board of Directors also oversees the management of our company’s risk that falls within the committee’s areas of responsibility. In performing this function, each committee has full access to management, as well as the ability to engage advisors. Our Chief Financial and Strategy Officer, our Chief Legal Officer and our Principal Accounting Officer all periodically provide reports to the Audit Committee and are responsible for identifying, evaluating and implementing risk management controls and methodologies to address any identified risks. In connection with its risk management role, our Audit Committee meets privately with representatives from our independent registered public accounting firm. The Audit Committee oversees the operation of our risk management program, including the identification of the primary risks associated with our business and periodic updates to such risks, and reports to our Board of Directors regarding these activities.

Compensation Committee interlocks and insider participation

Dr. Dixon, Dr. Maraganore, and Mr. Lynch served as members of our Compensation Committee during the year ended December 31, 2016. None of the members of our Compensation Committee has at any time been one of our officers or employees. None of our executive officers currently serves, or in the past fiscal year has served, as a member of the board of directors or compensation committee of any entity that has one or more executive officers serving on our Board of Directors or Compensation Committee. For a description of transactions between us and members of our Compensation Committee and affiliates of such members, please see “Certain relationships and related party transactions.”

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PROPOSAL NO. 2—ADVISORY VOTE ON EXECUTIVE COMPENSATION

Our Board of Directors is committed to excellence in governance. As part of that commitment, and as required by Section 14A(a)(1) of the Exchange Act, our Board of Directors is providing the stockholders with an opportunity approve, on a non-binding, advisory basis, the compensation of the Company’s named executive officers.

As described below under “Executive Compensation—Compensation Discussion and Analysis,” we have developed a compensation policy that is designed to attract and retain key executives responsible for our success and motivate management to enhance long-term stockholder value. We believe our compensation policy strikes an appropriate balance between the implementation of responsible, measured compensation practices and the effective provision of incentives for our named executive officers to exert their best efforts for our success.

For the reasons discussed above, the Board of Directors unanimously recommends that stockholders vote in favor of the following resolution:

“RESOLVED, that the Company’s stockholders hereby approve, on an advisory basis, the compensation of the named executive officers, as disclosed in the Company’s proxy statement for the 2017 Annual Meeting of Stockholders pursuant to the compensation disclosure rules of the Securities and Exchange Commission, including the Compensation Discussion and Analysis, Summary Compensation Table and the other compensation related tables and disclosure.”

The resolution will be approved, on an advisory basis, if the votes cast FOR exceed the votes cast AGAINST the proposal. Abstentions and broker non-votes will have no effect on the voting of this proposal. As this vote is advisory, it will not be binding upon the Board of Directors or the Compensation Committee and neither our Board of Directors nor the Compensation Committee will be required to take any action as a result of the outcome of this vote. However, our Board of Directors and the Compensation Committee value the opinions of our stockholders, and the Compensation Committee will carefully consider the outcome of this vote when considering future executive compensation policies. We will hold an advisory vote to approve the compensation of our named executive officers annually until the next vote on the advisory frequency of such advisory votes, which will occur no later than our 2021 Annual Meeting of Stockholders.

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE

FOR

THE ADVISORY RESOLUTIONS APPROVING THE COMPANY’S EXECUTIVE COMPENSATION

(PROPOSAL 2 ON YOUR PROXY CARD)

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EXECUTIVE OFFICER AND DIRECTOR COMPENSATION

Compensation Discussion and Analysis

Our Compensation Committee is responsible for overseeing the total compensation of our senior management team, which is comprised of our executive officers and certain other senior managers. In this capacity, our Compensation Committee designs, implements, reviews and approves all compensation for our Chief Executive Officer and our other named executive officers. This section discusses the principles underlying our policies and decisions with respect to the compensation of certain of our named executive officers, and all material factors relevant to an analysis of these policies and decisions. Our named executive officers as of the end of our last completed fiscal year on December 31, 2016, were:

James M. DeTore served as our Chief Financial Officer and Principal Financial Officer until March 1, 2016, at which time Mr. Walsh became our Chief Financial and Strategy Officer and Principal Financial Officer.  Mr. DeTore’s employment with the Company ended on March 18, 2016.

Stockholder engagement

At our 2016 Annual Meeting of Stockholders, we conducted our annual non-binding advisory vote on the compensation of our named executive officers, commonly referred to as a “say-on-pay” vote, in accordance with the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010. Over 90% of the votes cast by stockholders on this proposal were cast in support of the compensation paid to our named executive officers. While this vote is considered to be a non-binding advisory vote, our Compensation Committee and Board of Directors value the opinions of our stockholders and seriously consider the voting results when making future executive compensation decisions. Given the strong level of support evidenced by last year’s say-on-pay vote, our Compensation Committee determined that our stockholders were supportive of our current executive compensation philosophy and program. As a result, our Compensation Committee decided to maintain our general approach to executive compensation and made no significant changes to our executive compensation program. Nevertheless, our Compensation Committee and Board of Directors will continue to monitor the executive compensation program to ensure it aligns the interests of our executive officers with the interests of our stockholders and adequately addresses any stockholder concerns that may be expressed in future votes.

Consistent with the recommendation of our Board of Directors and the preference of our stockholders as reflected in the non-binding advisory vote on the frequency of future “say-on-pay” votes conducted at our 2015 Annual Meeting of Stockholders, we intend to provide for annual advisory votes on the compensation of our named executive officers.

Executive Summary and Company Background

We are a clinical-stage biotechnology company committed to developing potentially transformative gene therapies for severe genetic diseases and cancer.  With our lentiviral-based gene therapy and gene editing capabilities, we have built an integrated product platform with broad potential application in these areas.

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The goal of our Compensation Committee is to ensure that our compensation programs are aligned with the interests of our stockholders and our business goals and that the total compensation paid to each of our named executive officers is fair, reasonable and competitive.  Key elements of our compensation programs include the following:

 

In addition to our direct compensation elements, the following features of our compensation program are designed to align our executive team with stockholder interests and with market best practices:

 

As described below, during 2016, we made significant progress on our clinical development and business goals, including the following that impacted executive compensation:

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As described in more detail below, under the heading “2016 Annual Incentive Program,” based on our performance during 2016, our Board of Directors determined that we achieved 112.5% of our company goals for 2016, which allows us to focus our efforts and further advance our programs and business goals in 2017 and beyond.

Determining and Setting Executive Compensation

We develop our compensation programs after reviewing publicly available compensation data and subscription survey data for our peer group, provided by Radford Consulting, or Radford, a compensation consulting firm engaged by our Compensation Committee.  Our Compensation Committee has assessed the independence of Radford consistent with NASDAQ listing standards and has concluded that the engagement of Radford does not raise any conflict of interest.

Defining and Comparing Compensation to Market Benchmarks

In evaluating the total compensation of our named executive officers, our Compensation Committee, using information provided by Radford, establishes a peer group of publicly traded companies in the biopharmaceutical and biotechnology industries that is selected based on a balance of the following criteria:

Based on these criteria, our peer group for 2016, referred to as our 2016 peer group, as approved by our Compensation Committee, was comprised of the following 18 companies:

 

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We believe that the compensation practices of our 2016 peer group provided us with appropriate compensation benchmarks for evaluating the compensation of our named executive officers during 2016. Notwithstanding the similarities of the 2016 peer group to bluebird, due to the nature of our business, we compete for executive talent with many public companies that are larger and more established than we are or that possess greater resources than we do, and with smaller private companies that may be able to offer greater equity compensation potential, as well as with prestigious academic and non-profit institutions. Accordingly, in 2016, our Compensation Committee generally targeted compensation for our executive officers as follows:

In addition, our Compensation Committee may consider other criteria, including market factors, the experience level of the executive and the executive’s performance against established company goals, in determining variations to this general target range.

For purposes of compensation for 2017, our Compensation Committee, with the advice of Radford, examined our 2016 peer group in light of our continued growth throughout 2016, which is anticipated to continue in 2017, the stage of development of our clinical programs, and changes in our market capitalization. With reference to these and other key business metrics, companies whose market capitalization and/or whose number of employees that were at the low end, below, or significantly above our targeted range were removed and new companies were added to the peer group for 2017. Our peer group for 2017, as approved by our Compensation Committee, is comprised of the following 18 companies:

 

Other Key Performance Factors in Determining Executive Compensation

As the biopharmaceutical industry is characterized by a very long product development cycle, including a lengthy research and development period and a rigorous approval phase involving clinical studies and governmental regulatory approval, many of the traditional benchmarking metrics, such as product sales, revenues and profits are inappropriate for a development-stage biopharmaceutical company such as bluebird. Instead, the specific performance factors our Compensation Committee considers when determining the compensation of our named executive officers include:

These performance factors are considered by our Compensation Committee in connection with our annual performance reviews described below and are a critical component in the determination of annual cash and equity incentive awards for our executives.

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Annual Performance Reviews

Our Compensation Committee conducts an annual performance review of our named executive officers and approves the compensation of each member of our senior management team.  By the end of the first quarter of each year, annual company goals and individual performance objectives applicable to cash incentive compensation are determined and set forth in writing. After the end of each year, our Compensation Committee determines executive compensation levels after carefully reviewing overall company performance and performing an evaluation of each named executive officer’s annual performance against established company goals, as well as each individual executive officer’s contributions to achievement of the company goals and, in the case of executive officers other than our Chief Executive Officer, the achievement of individual performance objectives. In addition, our Compensation Committee may apply its discretion, as it deems appropriate, in determining executive compensation.

Annual company goals are proposed by our senior management team and approved by our Board of Directors.  For 2016, our Chief Executive Officer’s bonus was entirely on performance relative to company goals and the bonus of our other named executive officers were based 90% on company goals and 10% on individual objectives.   Individual objectives for 2016 for our senior management team other than our Chief Executive Officer focused on individual contributions that were intended to drive achievement of the Company goals and were proposed by each member of senior management, with review and input from our Chief Executive Officer. Any merit increases in base salary and any annual equity awards or cash awards made under our 2016 annual incentive program were based on the achievement of these Company and individual performance goals and objectives.  In 2016, our Compensation Committee established the target cash bonus opportunity for each member of our senior management team under the 2016 annual incentive program, representing a percentage of each individual’s base salary.

During the last quarter of each year, our senior management team evaluates our Company performance and each executive officer’s individual performance, as compared to the Company goals and, as applicable, the individual objectives for that year.  Based on this evaluation, our Chief Executive Officer recommends to our Compensation Committee any increases in base salary and any annual equity awards and/or cash awards under our annual incentive program.  Our Compensation Committee, with input from the Board of Directors, evaluates our Chief Executive Officer’s individual performance and determines whether to change his base salary, grant him an annual equity award and/or grant him a cash award under our annual incentive program.  Our Compensation Committee typically grants annual equity awards, and determines changes in base salary and the amount of any cash incentive payments, at its first regularly scheduled meeting of the new year.  Our Compensation Committee may also review the compensation of our executive officers throughout the course of the year. With respect to year-end reviews, any changes in base salary are effective at the beginning of the following year. The cash incentive payments awarded under our 2016 annual incentive program were paid in February 2017.

Compensation Objectives and Philosophy

Our compensation programs are designed to attract, motivate and retain qualified and talented executives, motivating them to achieve our business goals and rewarding them for superior short- and long-term performance. In particular, our compensation programs are intended to reward the achievement of specified pre-determined quantitative and qualitative individual and company performance goals and objectives and to align the interests of our senior management team with those of our stockholders in order to attain our ultimate objective of increasing stockholder value.

We may award annual merit-based increases in base salary based upon an assessment of each executive’s performance and the scope of his or her responsibilities. Our 2016 annual incentive program was designed to reward annual achievements as measured against pre-determined quantitative and qualitative Company performance goals, and, with respect to members of our senior management team other than our Chief Executive Officer, individual objectives. We awarded cash incentive payments to our named executive officers and the other members of our senior management team under our 2016 annual incentive program, which is described in more detail below.

We typically make equity grants to our executive officers upon commencement of their employment, annually following a review of their individual performance, and in connection with a promotion. With the exception of our 2016 annual cash incentive program, we do not have any pre-established targets for allocations or apportionment by type of compensation. The mix of compensation components is designed to reward annual results as well as drive long-term company performance and create stockholder value.

Base Salary

We provide base salaries to our named executive officers to compensate them with a fair and competitive base level of compensation for services rendered during the year.  Our Compensation Committee typically determines the base salary for each executive based on the executive’s responsibilities, experience and, if applicable, the base salary level of the executive prior to joining bluebird.  In addition, our Compensation Committee reviews and considers the level of base salary paid by companies in our peer

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group for similar positions. Generally, our Compensation Committee believes our executives’ base salaries should be targeted at approximately the 35^th percentile of the salaries in our peer group.

Any merit-based increases in base salary for all of our executive officers, other than our Chief Executive Officer, are determined by our Compensation Committee based upon a written summary of the executive officer’s performance and a recommendation from our Chief Executive Officer. Any merit-based increase in base salary for our Chief Executive Officer is based upon an assessment of his performance by our Compensation Committee, input from the Board of Directors and a review by our Compensation Committee of the base salary of chief executive officers in our peer group.

With respect to Mr. Leschly, our Chief Executive Officer, at the beginning of 2016, our Compensation Committee reviewed Mr. Leschly’s overall compensation and determined, based on his accomplishments during the year and comparison of his base salary to the base salary of chief executive officers in our peer group, to increase his annual base salary to $500,000 from $460,000.

At the beginning of 2016, our Compensation Committee approved merit increases in base salary for each of our other named executive officers serving at that time, based upon the company’s performance against the 2015 company goals, as well as each executive officer’s achievement of individual goals, and the other factors described above. The table below sets forth the adjustments to base salary, in dollars and as a percentage, for each of our named executive officers serving at the beginning of 2016:

 

 

 

In November 2016, Ms. High joined the Company as our Chief Operating Officer, and based on her experience and an assessment of base salaries of chief operating officers at our peer and similar companies, her annual base salary for 2016 was set at $365,000.

2016 Annual Incentive Program

Our Compensation Committee aims to provide an appropriate mix of cash payments and equity incentive awards to meet short- and long-term goals and objectives.  In February 2016, our Compensation Committee approved the annual incentive program for 2016, including the opportunity for eligible participants to achieve incentive awards above established bonus targets based on the Company’s performance against 2016 Company goals. Based on the determination that the Company achieved 112.5% of our 2016 Company goals, the actual incentive awards for our named executive officers eligible to participate our 2016 annual incentive program exceeded their respective bonus targets.

The table below shows the target award under the incentive program as a percentage of each named executive officer’s annual base salary in 2016, the target cash award opportunity in dollars for 2016 and the actual cash bonus payments to our named executive officers for 2016 performance, which were paid in February 2017, as well as the actual bonus payment as a percentage of the target award opportunity. The details regarding the determination of these cash bonus awards are discussed below.

 

 

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As Mr. DeTore’s employment with the Company ended in March 2016, he was not eligible to participate in the 2016 annual incentive program. As Ms. High joined the Company in November 2016, she was not eligible to participate in the 2016 annual incentive program.

Under the 2016 annual incentive program, bonus awards were determined by first establishing a bonus pool. The bonus pool was calculated by aggregating the target awards for all eligible plan participants and then multiplying that sum by a modifier established by our Compensation Committee based on our performance as measured against the 2016 Company goals. The bonus pool was then allocated among all of the plan participants in accordance with the terms of the 2016 annual incentive program.  For 2016, our Chief Executive Officer’s bonus was entirely based on performance relative to Company goals and the bonuses of our other named executive officers were based 90% on Company goals and 10% on individual objectives. In addition, our Compensation Committee had the discretion under the 2016 annual incentive program to adjust upward or downward any bonus award and/or the bonus pool as it deemed appropriate. In making its determination regarding awards under the 2016 annual incentive program, our Compensation Committee considered our success against our 2016 Company goals. The 2016 Company goals approved by our Board of Directors, the relative weightings assigned to each goal at the beginning of the year, and senior management’s recommendation regarding our actual achievement during the performance period as a percentage of target and the weighted performance against these Company goals for 2016, were as follows:

 

 

Specifically, during 2016, we made significant progress on our clinical development and business goals, including the following that impacted executive compensation:

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Based on our overall performance during 2016, our Board of Directors determined that we achieved 112.5% of our Company goals for 2016.

The individual objectives in 2016 assigned to our named executive officers other than our Chief Executive Officer were as follows:

Jeffrey T. Walsh. Mr. Walsh was assigned objectives related to (1) providing leadership for the Company, (2) increasing operational capacity and efficiency, and (3) identifying and executing strategic transactions intended to enhance stockholder value, including business development. The Compensation Committee determined that Mr. Walsh achieved 100% of his individual objectives in 2016.

David Davidson, M.D. Dr. Davidson was assigned objectives related to (1) executing the strategy for each of our clinical development programs, (2) achieving clinical milestones relating to development and potential FDA and EMA approval, (3) supporting various regulatory objectives, and (4) executing a medical affairs plan. The Compensation Committee determined that Dr. Davidson achieved 100% of his individual objectives in 2016.

Philip Gregory, D. Phil. Dr. Gregory was assigned objectives related to (1) executing a strategic plan for pipeline development, and (2) directing preclinical development and advancing identified product candidates. The Compensation Committee determined that Dr. Gregory achieved 100% of his individual objectives in 2016.

Chief Executive Officer Compensation

Mr. Leschly’s total 2016 compensation reported in the Summary Compensation Table below decreased significantly from his total 2015 compensation because of the price of our stock when annual equity grants were made in the first half of 2015, which contributed to higher reported grant date fair values for stock options granted in 2015. The Compensation Committee set Mr. Leschly’s base salary near the 35^th percentile of our applicable peer group, and approved increases in 2016 and 2017. The Compensation Committee set Mr. Leschly’s equity compensation near the 75^th percentile of our applicable peer group, because the Compensation Committee believed that a meaningful grant of equity awards was necessary and appropriate to reward Mr. Leschly for performance in 2016, to enhance retention and to further incent and align Mr. Leschly’s interests with stockholders. Over 50% of Mr. Leschly’s 2016 total compensation as reported in the Summary Compensation Table below relates to stock options which vest over a four-year period, and only realize value if our stock price increases after the date of grant. Over 25% of his total 2016 compensation as reported in the Summary Compensation Table relates to restricted stock units that also vest over a four-year period, which promotes retention while using a fewer number of authorized shares to deliver equivalent value.

Equity Awards

Our equity awards program is designed to:

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The market for qualified and talented executives in the biopharmaceutical industry is highly competitive and we compete for talent with many companies that have greater resources than we do. Accordingly, we believe equity compensation is a crucial component of any competitive executive compensation package we offer.

Historically, our equity awards have generally taken the form of stock options, and beginning in 2015, restricted stock units. We typically make equity award grants to each of our executive officers upon commencement of employment, annually in conjunction with our review of individual performance, in connection with a promotion, or as a special incentive.

All equity awards to our executive officers are approved by our Compensation Committee and, other than equity awards to new hires, are typically granted at our Compensation Committee’s regularly scheduled meeting at the beginning of the year. The size of equity awards vary among our executive officers based on their positions and annual performance assessments. In addition, our Compensation Committee reviews all components of the executive’s compensation to ensure that his or her total compensation is aligned with our overall philosophy and objectives. All stock options granted to our executives have exercise prices equal to the fair market value of our common stock on the date of grant, so that the recipient will not realize any value from his or her options unless our share price increases above the exercise price on the date of grant. Accordingly, this portion of our executive officers’ compensation is at risk and is directly aligned with stockholder value creation.

In addition, equity grants to our executive officers typically vest over four years, which we believe provides an incentive to our executives to add value to the Company over the long-term and to remain with bluebird. Typically, the stock options we grant to our executives have a ten-year term and vest as to 25% of the shares on the first anniversary of their hire date or the first business day of the year of grant and then in equal monthly installments thereafter until the fourth anniversary of such date. Vesting of option grants to employees ceases upon termination of employment and exercise rights typically cease three months following termination of employment, except in the case of death or disability. Prior to the exercise of an option, the stock option holder does not have any rights as a stockholder with respect to the shares subject to such option, including voting rights or the right to receive dividends or dividend equivalents. Historically, our equity awards have taken the form of stock options, and we began granting restricted stock units in addition to stock options in 2015. Restricted stock units we granted to our executives in 2016 vest in equal annual installments each anniversary of the first business day of the year of grant, until the fourth anniversary of such date. As part of the ongoing review of our compensation strategy and practices, the Compensation Committee determines the appropriate mix of the type of equity awards, based in part on recommendations from Radford. For 2016, the target mix for equity grants to our executive officers is split approximately two-thirds in stock options and one-third in restricted stock units based on value. The Compensation Committee believes that this deliberate mix of equity ensures that wealth creation remains tied to stock performance (via stock options), and promotes retention (through restricted stock units that vest over time to deliver equivalent value while using fewer authorized shares). The Compensation Committee may adjust the mix of award types or approve different award types as part of the overall compensation strategy. Awards made in connection with a new, extended or expanded employment relationship may involve a different mix of equity awards, depending on the Compensation Committee’s assessment of the total compensation package being offered.  

In connection with the annual review of each executive officer’s individual performance and consistent with our compensation philosophy, in February 2016, our Compensation Committee approved annual equity incentive awards for our named executive officers serving at that time. The annual equity incentive awards granted to our named executive officers serving at that time are set forth in the table below:

 

 

As Mr. DeTore’s employment with the Company ended in March 2016, he did not receive an annual equity incentive award in 2016. As Ms. High’s employment with the Company began in November 2016, she did not receive an annual equity incentive award in 2016. However, in connection with her hire and pursuant to the terms of her employment agreement with the Company, Ms. High was granted an option to purchase 60,000 shares of the Company’s common stock and 15,000 restricted stock units in December 2016.

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The equity awards granted to our named executive officers during 2016, and the grant date fair value of those awards determined in accordance with Financial Accounting Standards Board, or FASB, Accounting Standards Codification, or ASC, Topic 718, are shown in the 2016 Grants of Plan-Based Awards table below.

Insider Trading Policy

Our insider trading policy expressly prohibits short sales and derivative transactions of our stock by our named executive officers, directors and specified other employees, including short sales of our securities, including short sales “against the box”; purchases or sales of puts, calls or other derivative securities of the company or any derivative securities that provide the economic equivalent of ownership of any of our securities or an opportunity, direct or indirect, to profit from any change in the value of our securities; or other hedging or monetization transactions accomplished through the use of prepaid variable forwards, equity swaps, collars and exchange funds. In addition, our insider trading policy expressly prohibits our named executive officers, directors and specified other employees from purchasing our securities on margin, borrowing against company securities held in a margin account, or pledging our securities as collateral for a loan.

Clawback Policy

In 2017, our Compensation Committee and Board of Directors adopted a clawback policy that covers incentive compensation paid to our executive officers, including our Chief Executive Officer and our Principal Accounting Officer. The policy provides that if we are required to prepare an accounting restatement due to our material non-compliance with any financial reporting requirement and/or intentional misconduct by a covered executive, our Compensation Committee may require the covered executive to repay to us any excess compensation received by the covered executive during the covered period. For purposes of this policy, excess compensation means annual cash bonus and long term equity incentive compensation that is in excess of the amount such covered executive would have received, if the annual cash bonus and/or long term equity incentive compensation had been determined based on the financial results reported in the restated financial statement.

Share Ownership Guidelines

Also in 2017, our Compensation Committee and Board of Directors adopted share ownership guidelines applicable to our non-employee directors and our senior executive officers, including our Chief Executive Officer to further align the interests of the leadership of our Company with those of our stockholders. The equity ownership guidelines are as follows: our Chief Executive Officer must hold equity worth at least three times his base salary; each of our other senior executive officers must hold equity worth at least one times his or her base salary; and each of our non-employee directors must hold equity worth at least three times the annual cash retainer. Covered individuals and newly appointed or elected persons have five years to achieve the guideline. The following forms of equity will count toward the ownership guideline: shares owned outright, vested but unexercised “in-the-money” stock options, and fifty percent of unvested restricted stock units.

Benefits and Other Compensation

Other compensation to our executives consists primarily of the broad-based benefits we provide to all full-time employees in the United States, including medical, dental and vision insurance, group life and disability insurance, an employee stock purchase plan and a 401(k) plan. Pursuant to our employee stock purchase plan, employees, including our named executive officers, have an opportunity to purchase our common stock at a discount on a tax-qualified basis through payroll deductions. The employee stock purchase plan is designed to qualify as an “employee stock purchase plan” under Section 423 of the Internal Revenue Code. The purpose of the employee stock purchase plan is to encourage our employees, including our named executive officers, to become our stockholders and better align their interests with those of our other stockholders. Pursuant to our 401(k) plan, employees, including our named executive officers, may elect to defer a portion of their current compensation up to the statutorily prescribed annual limit (which was $18,000 in 2016), with additional salary deferrals not to exceed $24,000 available to those employees 50 years of age or older, and to have the amount of this deferral contributed to our 401(k) plan. We may, but are not required to, make discretionary matching contributions and other employer contributions on behalf of eligible employees under our 401(k) plan. For fiscal year 2016, we matched a portion of eligible employee contributions up to $5,250 pursuant to our 401(k) plan’s matching formula.  

Currently, we do not view perquisites or other personal benefits as a significant component of our executive compensation program. Accordingly, we do not provide perquisites to our named executive officers, except in situations where we believe it is appropriate to assist an individual in the performance of his or her duties, to make him or her more efficient and effective, and for recruitment and retention purposes. None of our other named executive officers received perquisites or other personal benefits with an aggregate value of $10,000 or more 2016. In the future, we may provide perquisites or other personal benefits in limited circumstances, such as where we believe it is appropriate to assist an individual named executive officer in the performance of his or

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her duties, to make him or her more efficient and effective, and for recruitment, motivation or retention purposes. All future practices with respect to perquisites or other personal benefits will be approved and subject to periodic review by our Compensation Committee.

Base Salary Compensation for Our Named Executive Officers in 2017

With respect to Mr. Leschly, our Chief Executive Officer, at the beginning of 2017, our Compensation Committee reviewed Mr. Leschly’s overall compensation and determined, based on his accomplishments during the year and comparison to the base salaries of chief executive officers in our 2017 peer group, to increase his annual base salary to $560,000 from $500,000.

At the beginning of 2017, our Compensation Committee approved merit increases in base salary for each of our remaining named executive officers serving at that time, based upon the Company’s performance against the 2016 company goals, each executive officer’s achievement of individual objectives and the comparison to the base salary of similar executive officers in our 2017 peer group. The table below sets forth the adjustments to base salary, in dollars and as a percentage, for each of our named executive officers serving at the beginning of 2017:

 

 

Mr. Walsh’s increased base salary for 2017 reflects the increased responsibility he assumed in March 2016, when he became our Chief Financial and Strategy Officer and Principal Financial Officer, after serving as our Chief Operating Officer. As Ms. High’s employment at the Company began in November 2016, the Compensation Committee did not adjust her base salary in 2017.

 

Cash Incentive Compensation for Our Named Executive Officers in 2017

In January 2017, our Compensation Committee approved the annual incentive program for 2017. For 2017, our Chief Executive Officer’s bonus will be determined entirely on the Company’s performance relative to company goals, and the bonuses of our other named executive officers will be based 80% on Company goals and 20% on individual objectives. The other terms of the 2017 annual incentive program are substantially the same as the 2016 annual incentive program. The 2017 annual incentive program includes an opportunity for eligible participants to achieve their target award percentage based on the achievement of our 2017 Company goals. This potential upside achievement allows us to better align our cash incentive awards with market practice while reflecting our commitment to closely managing our cash reserves.

The table below shows the target award under the incentive program as a percentage of each named executive officer’s annual base salary in 2017, as well as the target cash award opportunity in dollars for 2017.

 

 

In determining the 2017 actual cash incentive compensation for our named executive officers under the 2017 annual incentive program, our Compensation Committee will review the performance of the Company during 2017.  Our Compensation Committee retains the discretion under the 2017 annual incentive program to adjust upward or downward any bonus award or the bonus pool as it deems appropriate.  We expect to pay any cash incentive awards made under our 2017 annual incentive program in the first quarter of 2018.

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Separation agreement with Mr. DeTore

On March 1, 2016, Mr. DeTore ceased serving as our Chief Financial Officer and Principal Financial Officer, and on March 18, 2016, his employment with bluebird terminated. In connection with his departure, we entered into a Separation Agreement with Mr. DeTore, which superseded the severance provisions of his employment agreement. Pursuant to the Separation Agreement, Mr. DeTore received his base salary for a period of twelve months following his separation from us. In addition, he was entitled to payment of the monthly employer contribution for his group healthcare benefits until the earlier of twelve months following his separation from bluebird, or the date Mr. DeTore became eligible for insurance through another employer or otherwise becomes ineligible for COBRA.  Following his separation from us, Mr. DeTore was engaged as a consultant to the Company, and his outstanding equity awards continued to vest until September 18, 2016. Our Board of Directors determined that our entry into the separation agreement and consulting agreement with Mr. DeTore would, among other things, facilitate the transition of Mr. Walsh into the role of Chief Financial and Strategy Officer and Principal Financial Officer, and was in the best interests of our Company and our stockholders.

IRS Code Section 162(m)

Section 162(m) of the Internal Revenue Code of 1986, as amended, generally disallows a tax deduction to public companies for compensation in excess of $1.0 million per person paid to a company’s chief executive officer and its next three most highly compensated executive officers (other than the chief/principal financial officer). Qualified performance-based compensation is not subject to the deduction limitation if specified requirements are met. We periodically review the potential effects of Section 162(m) and we consider whether to structure the performance-based portion of our executive compensation to comply with exemptions in Section 162(m), so that the compensation remains tax deductible to us. However, our Compensation Committee may, in its judgment, authorize compensation payments that do not comply with the exemptions in Section 162(m) when it believes that such payments are appropriate to attract, motivate and retain executive talent and are in our best interest and those of our stockholders.

Stock Option Granting Practices

Delegation to Our Chief Executive Officer

Currently, all of our employees, including our named executive officers, are eligible to participate in our 2013 Stock Option and Incentive Plan, or the 2013 Plan. All new full-time employees are granted stock options and restricted stock units when they start employment and all continuing employees are eligible for stock option and restricted stock unit awards on an annual basis based on performance and upon promotions to positions of greater responsibility. Our Compensation Committee has delegated to Mr. Leschly, our Chief Executive Officer, the authority to make equity awards under our 2013 Plan to new hires (other than to vice presidents and executive officers), and in connection with promotions and with our annual incentive program (other than to vice presidents and executive officers). The number of shares underlying stock options and the number of restricted stock units he may grant to any one individual must be within the range specifically set by our Compensation Committee for these awards, and the aggregate number of shares underlying stock options and the number of restricted stock units he may grant within a period must be within specified limits set by our Compensation Committee for these awards. The exercise price of stock options must be equal to the closing price of our common stock on the NASDAQ Global Market on the date of grant.  With respect to stock option awards and restricted stock units to new hires other than vice presidents and executive officers, Mr. Leschly approves the award in connection with such hire and provides that the award is to be granted to the new hire on the first business day of the calendar month following the date of his or her first date of regular employment. With respect to stock option and restricted stock unit awards made in connection with promotions other than of vice presidents and executive officers, Mr. Leschly approves the award in connection with such promotion and provides that the award is to be granted on the first business day of the calendar month following the date of such promotion. Mr. Leschly is required to maintain a list of stock options and restricted stock units granted pursuant to such delegated authority and periodically report to our Compensation Committee regarding such awards.

Compensation Risk Assessment

We believe that our executive compensation program does not encourage excessive or unnecessary risk taking. As described more fully above, we structure our pay to consist of both fixed and variable compensation, particularly in connection with our pay-for-performance compensation philosophy. We believe this structure motivates our executives to produce superior short- and long-term results that are in the best interests of our Company and stockholders in order to attain our ultimate objective of increasing stockholder value, and we have established, and our Compensation Committee endorses, several controls to address and mitigate compensation related risk.  These include the introduction of stock ownership guidelines for our senior executive officers and our directors, and a clawback policy that permits recovery of incentive compensation from our executive officers in the event that cash and equity incentive award amounts are based on financial results that are subsequently restated. As a result, we do not believe that our compensation programs are reasonably likely to have a material adverse effect on us.

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Report of the Compensation Committee on Executive Compensation

Our Compensation Committee has reviewed and discussed the “Compensation Discussion and Analysis” required by Item 402(b) of Regulation S-K with management.  Based upon such review and discussions, our Compensation Committee recommended to our Board of Directors that such section be included in this proxy statement and incorporated by reference in our Annual Report on Form 10-K for the year ended December 31, 2016, which was filed with the SEC on February 22, 2017.

By the Compensation Committee of the Board of Directors of bluebird bio, Inc.

Daniel Lynch, Chair

Wendy Dixon, Ph.D.

John Maraganore, Ph.D.

 

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Executive Compensation

Summary Compensation Table

The following table sets forth the compensation earned during the fiscal years ended December 31, 2016, December 31, 2015 and December 31, 2014 for our named executive officers.

 

 

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Grants of Plan-Based Awards

The following table shows information regarding grants of plan-based awards during the fiscal year ended December 31, 2016 to the Company’s named executive officers. Mr. DeTore’s employment terminated on March 18, 2016 and he did not receive any grants of plan-based awards in the year ended December 31, 2016.