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•	To vote in person, come to the Annual Meeting and we will give you a ballot when you arrive.

•	To vote using the proxy card, simply complete, sign and date the enclosed proxy card and return it promptly in the envelope provided. If you return your signed proxy card to us before the Annual Meeting, we will vote your shares as you direct.

•	To vote over the telephone, dial toll-free 1-800-690-6903 using a touch-tone telephone and follow the recorded instructions. You will be asked to provide the control number from the enclosed proxy card. Your vote must be received by 11:59 p.m., Eastern Time, on June 7, 2018, to be counted.

•	To vote on the Internet, go to www.proxyvote.com to complete an electronic proxy card. You will be asked to provide the control number from the enclosed proxy card. Your vote must be received by 11:59 p.m., Eastern Time, on June 7, 2018, to be counted.

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•	You may submit another completed proxy card with a later date.

•	You may submit new voting instructions via telephone or Internet.

•	You may send a timely written notice that you are revoking your proxy to our Secretary, care of PDL BioPharma, Inc., 932 Southwood Boulevard, Incline Village, Nevada 89451.

•	You may attend the Annual Meeting and vote in person by ballot. Simply attending the Annual Meeting will not, by itself, revoke your proxy.

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•	overseeing the accounting and financial reporting processes and audits of our financial statements;

•	appointing an independent registered public accounting firm to audit our financial statements;

•	overseeing and monitoring (a) the integrity of our financial statements, (b) our compliance with legal and regulatory requirements as they relate to financial statements or accounting matters, (c) our independent registered public accounting firm’s qualifications, independence and performance and (d) our internal accounting and financial controls;

•	preparing the report that SEC rules require to be included in our annual report or proxy statement;

•	reviewing all related person transactions for potential conflicts of interests or other improprieties;

•	discussing our policies with respect to certain risk assessments, including the risk of fraud, our major financial risk exposures and the steps management has taken to monitor and control such exposures;

•	reviewing our investment policy and evaluating our adherence to such policy with regard to investment of our assets;

•	providing the Board with the results of its monitoring and recommendations; and

•	providing the Board additional information and materials as it deems necessary to make the Board aware of significant financial matters that require the attention of the Board.

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•	reviewing and approving for our chief executive officer and other executive officers: (i) the annual base salary, (ii) the annual incentive bonus, including the specific goals and amount, (iii) equity compensation, (iv) employment agreements, severance arrangements and change in control agreements/provisions and (v) any other benefits, compensation, compensation policies or arrangements;

•	reviewing the effect of the Company’s compensation policies on risk management;

•	reviewing and approving or making recommendations to the Board regarding the compensation policy for such other senior management as directed by the Board;

•	reviewing and approving or making recommendations to the Board regarding general compensation goals and guidelines for employees and the criteria by which bonuses to employees are determined;

•

reviewing with management our Compensation Discussion and Analysis and recommending that it be included in our annual proxy statement. Our Compensation Discussion and Analysis discusses the compensation awarded to, earned by or paid to our named executive officers, including: (i) the objectives of the Company’s compensation programs, (ii) what each program is designed to reward, (iii) each element of compensation, (iv) why the Compensation Committee chooses to pay each element, (v) how the Compensation Committee determines the amount for each element and (vi) how each element and the Compensation Committee’s decisions related thereto fit into the Company’s overall compensation objectives and affect decisions regarding other elements; and

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•	acting as administrator of our compensation plans, including approving amendments to the plans (including approving changes in the number of shares reserved for issuance thereunder) and approving the grant or amendment of equity awards issued pursuant thereto.

•	comparative market data on the executive and director compensation practices and programs of competitive companies;

•	guidance on industry best practices and emerging trends and developments in executive and director compensation; and

•	advice on determining the total compensation of each of our executive officers and the material elements of total compensation, including: (i) annual base salaries, (ii) target cash bonus amounts and (iii) long-term incentives, including restricted stock awards.

•	consulting with management and outside counsel to discuss the initiation of any dispute by us prior to its commencement or the settlement of any dispute prior to its resolution;

•	consulting with management and outside counsel following the initiation of a dispute by a third party or an overture by a third party to settle a dispute;

•	consulting with management and outside counsel regarding the strategy for the management, prosecution and resolution of all disputes;

•	receiving updates on the status of all disputes; and

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•	assisting the Board in fulfilling its oversight responsibilities with respect to such disputes.

•	identifying individuals qualified to become Board members;

•	selecting, and recommending to the Board, director nominees for each election of directors;

•	developing, and recommending to the Board, criteria for selecting qualified director candidates;

•	considering committee member qualifications, appointment and removal;

•	considering and articulating the qualities, experiences, skills and attributes that qualify each director to be a member of the Board;

•	assessing the optimum size of the Board and its committees and the needs of the Board for various skills, background and business experience in determining whether it is advisable to consider additional candidates for nomination;

•	assessing the Nominating and Governance Committee’s effectiveness in diversifying the Board;

•	evaluating the effectiveness of the Board’s management structure and articulating why the Board’s current or proposed leadership structure is effective;

•	recommending corporate governance principles, codes of conduct and compliance mechanisms applicable to us; and

•	providing oversight in the evaluation of the Board and each committee of the Board.

•	the appropriate size of the Board and its committees;

•	the perceived needs of the Board for particular skills, diversity, background and business experience;

•	the skills, background, reputation and business experience of nominees compared to the skills, background, reputation and business experience already possessed by other Board members;

•	the nominees’ independence from management;

•	the applicable regulatory and listing requirements, including independence requirements and legal considerations, such as antitrust compliance;

•	the benefits of a constructive working relationship among directors; and

•	the desire to balance the considerable benefit of continuity with the periodic injection of a fresh perspective provided by new members.

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•	the name and address, as they appear on the Company’s books, of such stockholder and the name and address of the beneficial owner, if any, on whose behalf a proposal of nomination to election of directors is made;

•	the class, series and number of shares of capital stock of the Company that are owned beneficially and of record by such stockholder and such beneficial owner;

•	a representation that such stockholder will notify the Company in writing of the class and number of such shares owned beneficially and of record by such stockholder and such beneficial owner as of the record date for the meeting (or action, as applicable) promptly following the later of the record date or the date notice of the record date is first publicly disclosed;

•	any option, warrant, convertible security, stock appreciation right, derivative, swap or similar right with an exercise or conversion privilege or a settlement payment or mechanism at a price related to any class or series of shares of the Company or with a value derived in whole or in part from the value or volatility of any class or

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•	any proxy, contract, arrangement, understanding or relationship pursuant to which such stockholder or beneficial owner has a right to vote any shares of any security of the Company;

•	any rights to dividends on the shares of the Company owned beneficially by such stockholder or beneficial owner that are separated or separable from the underlying shares of the Company;

•	any proportionate interest in shares of capital stock of the Company or Derivative Instruments or other direct or indirect opportunity to profit or share in any profit held, directly or indirectly, by a general or limited partnership in which such stockholder or beneficial owner is a general partner or, directly or indirectly, beneficially owns an interest in a general partner;

•	any performance related fees (other than an asset based fee) that such stockholder or beneficial owner is entitled to base on any increase or decrease in the price or value of shares of any class or series of the Company, or any Derivative Instruments or other direct or indirect opportunity to profit or share in any profit, if any;

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a description of any agreement, arrangement or understanding with respect to the proposal of nomination between or among such stockholder and such beneficial owner, any of their respective affiliates or associates, and any others acting in concert with any of the foregoing, and a representation that such stockholder will notify the Company in writing of any such agreements, arrangements or understandings in effect as of the record date for the meeting (or action, as applicable) promptly following the later of the record date or the date notice of the record date is first publicly disclosed;

•	a description of any material interest of such stockholder and such beneficial owner, if any, on whose behalf the proposal is made and of any material benefit that such stockholder and such beneficial owner, if any, on whose behalf the proposal is made expects or intends to derive from such business or action, as applicable;

•	a representation that such stockholder is a holder of record of stock of the Company entitled to vote at such meeting and intends to appear in person or by proxy at the meeting to propose such nomination or a representation that such stockholder is a holder of record of stock of the Company entitled to consent to corporate action in writing without a meeting, as applicable;

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a representation whether such stockholder or such beneficial owner, if any, intends or is part of a group which intends (i) to deliver a proxy statement and/or form of proxy (or consent, as applicable) to holders of at least the percentage of the Company’s outstanding capital stock required to elect the nominee and/or (ii) otherwise to solicit proxies (or consents, as applicable) from stockholders in support of such nomination; and

•	any other information that is required to be provided by such stockholder pursuant to Section 14 of the Exchange Act, and the rules and regulations promulgated thereunder (or any successor provision of the Exchange Act or the rules or regulations promulgated thereunder), in such stockholder’s capacity as a proponent of a stockholder nomination.

•	the name, age, business address and residence address of the person;

•	the principal occupation or employment of the person;

•	the class, series and number of shares of capital stock of the Company that are owned beneficially and of record by the person;

•	a statement as to the person’s citizenship;

•	the completed and signed representation and agreement described in the Bylaws;

•	a description of all direct and indirect compensation and other material monetary agreements, arrangements and understandings during the past three years, and any other material relationships, between or among such

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•	any other information relating to the person that is required to be disclosed in solicitations for proxies for election of directors pursuant to Section 14 of the Exchange Act; and

•	such person’s written consent to being named in the proxy statement as a nominee and to serving as a director if elected.

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•	the Compensation Committee uses third-party corporate governance reviews of the Company’s public filings to assess the reasonableness of pay levels, CEO pay-for-performance alignment and risk profile;

•	the Compensation Committee uses an independent compensation consultant who (i) assesses the competitiveness of each component of the Company’s compensation package in relation to its peers in the healthcare industry and (ii) provides the Compensation Committee with a risk assessment report no less than annually;

•	the Company uses explicit and discrete goals in its design of incentive plans and such plans are reasonable in relation to the Company’s size, financial position and business objectives; and

•	the Company uses reasonable maximum caps in its incentive plan design.

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•	Limitations on Dividend and Dividend Equivalent Payments on Unvested Awards. The Restated Plan provides that dividends and dividend equivalents may not be paid on awards subject to vesting conditions unless and until such conditions are met. In addition, dividend equivalents may not be paid on stock options or stock appreciation rights.

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Share Counting Provisions. Under the Restated Plan, the following shares will not be returned to the share reserve under the Restated Plan: (1) any shares subject to a stock option or stock appreciation right that are not delivered to a participant because the award is exercised through a reduction of shares subject to the award (i.e., “net exercised”); (2) any shares tendered by the holder or reacquired by us pursuant to our withholding obligations in connection with a stock option or stock appreciation right or as consideration in payment of the exercise or

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Tax Withholding. The Restated Plan permits the plan administrator to allow for the withholding or surrender of shares in satisfaction of tax withholding with respect to awards with a value up to the maximum individual statutory tax rate in the applicable jurisdiction at the time of such withholding (or such other rate as may be required to avoid the liability classification of the applicable award under generally accepted accounting principles in the United States of America).

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Extension of Time to Grant Incentive Stock Options and Increase in Incentive Stock Option Limitation. The Restated Plan provides that the maximum number of shares that may be issued pursuant to incentive stock options, or “ISOs,” will be 26,200,000, increased from 6,200,000 shares under the 2005 Plan. In addition, the Restated Plan provides that ISOs may be granted under the Restated Plan through August 27, 2027.

•	Removal of 162(m) Provisions. The Restated Plan removes certain provisions applicable to awards intended to qualify as performance-based compensation for purposes of Section 162(m) of the Internal Revenue Code, or the Code, given the repeal of the performance-based compensation exception pursuant to the Tax Cuts and Jobs Act of 2017, subject to certain limited transition relief.

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•	The share reserve under the Restated Plan (including the increases from both the August 28, 2017 and April 4, 2018 amendments) represents an aggregate increase of 20,000,000 shares from the aggregate number of shares reserved for issuance under the 2005 Plan.

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In determining the size of the share reserve under the Restated Plan, our Board considered the number of equity awards granted by our company under the 2005 Plan during the last three fiscal years and the introduction of the use of stock options in 2017, which are expected to be used going forward. In fiscal years 2015, 2016 and 2017, equity awards representing a total of approximately 522,000 shares, 1,264,000 shares and 6,131,400 shares, respectively, were granted under the 2005 Plan, for an annual equity burn rate of 0.3%, 0.8% and 4.0%, respectively. This represents a three-year average burn rate of 1.7%. If the employment inducement awards are included in these calculations, our annual equity burn rate for fiscal years 2015, 2016 and 2017 was 0.3%, 0.8% and 4.8%, respectively, representing a three-year average burn rate of 2.0%. Equity burn rate is calculated by dividing (1) the number of shares subject to equity awards granted during the fiscal year by (2) the number of shares outstanding at the end of the period.

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We expect the proposed aggregate share reserve under the Restated Plan to provide us with enough shares for awards for approximately three years, assuming we continue to grant awards consistent with our current practices, including the use of stock options, and historical usage, as reflected in our historical burn rate, and further dependent on the price of our shares and hiring activity during the next few years, forfeitures of outstanding awards, and noting that future circumstances may require us to change our current equity grant practices. We cannot predict our future equity grant practices, the future price of our shares or future hiring activity with any degree of certainty at this time, and the share reserve under the Restated Plan could last for a shorter or longer time.

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In fiscal years 2015, 2016 and 2017, the end of year overhang rate was approximately 3.2%, 3.0% and 3.5%, respectively (inclusive of any outstanding inducement awards but excluding the Contingent Options). If the Restated Plan is approved, we expect our overhang at the end of 2018 will be approximately 16.1% (inclusive of any outstanding inducement awards). Overhang is calculated by dividing (1) the sum of the number of shares subject to equity awards outstanding at the end of the fiscal year plus shares remaining available for issuance for future awards at the end of the fiscal year by (2) the number of shares outstanding at the end of the fiscal year.

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•	No Increase to Shares Available for Issuance without Stockholder Approval.  Without stockholder approval, the Restated Plan prohibits any alteration or amendment that operates to increase the total number of shares of common stock that may be issued under the Restated Plan (other than adjustments in connection with certain corporate reorganizations and other events).

•	No Automatic Change in Control Vesting for Awards. The Restated Plan does not have automatic accelerated vesting provisions for awards in connection with a change of control.

•	Limitations on Dividend Payments on Unvested Awards.  Dividends and dividend equivalents may not be paid on awards subject to vesting conditions unless and until such conditions are met. In addition, dividend equivalents may not be paid on stock options or stock appreciation rights.

•	Limitations on Full Value Awards. The Restated Plan provides that no more than 50% of the maximum aggregate number of shares authorized under the Restated Plan may be issued pursuant to “full value” awards.

•	Limitations on Grants. The Restated Plan contains annual per person award limits for performance awards under Section 162(m) of the Code of 2,450,000 shares of stock subject to stock options and stock appreciation rights, 2,000,000 shares subject to performance stock awards, and $5,000,000 subject to performance cash awards.

•	Limitations on Grants to Non-Employee Directors. The limit on the total aggregate value of cash compensation and equity-based awards for any non-employee director during any fiscal year is $800,000.

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No Repricing or Replacement of Options or Stock Appreciation Rights.  The Restated Plan prohibits, without stockholder approval: (1) the amendment of options or stock appreciation rights to reduce the exercise price, and (2) the replacement of an option or stock appreciation right with cash or any other award when the exercise or base price per share of the option or stock appreciation right exceeds the fair market value of the underlying shares.

•	No In-the-Money Option or Stock Appreciation Right Grants.  The Restated Plan prohibits the grant of options or stock appreciation rights with an exercise or base price less than 100% of the fair market value of our common stock on the date of grant.

•	Minimum Vesting Provisions. The Restated Plan includes a minimum vesting period such that awards granted under the Restated Plan will not vest earlier than the first anniversary of the applicable grant date (subject to limited exceptions).

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Reasonable Share Counting Provisions. In general, if a stock award under the Restated Plan expires or otherwise terminates without all of the shares covered by such stock award having been issued in full or is settled in cash, such expiration, termination or settlement will not reduce (or otherwise offset) the number of shares of common stock that may be available for issuance under the Restated Plan. If any shares of common stock issued pursuant to a stock award are forfeited back to, or repurchased by us because of the failure to meet a contingency or condition required to vest such shares, then the shares that are forfeited or repurchased will revert to and again become available for issuance under the Restated Plan. Further, any shares reacquired by us pursuant to our withholding obligations in connection with a full value award will become available for issuance under the Restated Plan; provided, however, that, notwithstanding the foregoing, in the event shares subject to a full value award are tendered or withheld to satisfy any tax withholding obligation at a tax withholding rate in excess of the employer’s minimum statutory withholding rates for federal, state, local and foreign taxes, the shares tendered or withheld to satisfy the tax withholding at a rate in excess of the employer’s minimum statutory withholding obligation shall not be added back to share reserve. Notwithstanding the foregoing, the following shares will not be returned to the share reserve under the Restated Plan: (1) any shares subject to a stock option or stock appreciation right that are not delivered to a participant because the award is exercised through a reduction of shares subject to the award (i.e., “net exercised”); (2) any shares tendered by the holder or reacquired by us pursuant to our withholding obligations in connection with a stock option or stock appreciation right or as consideration in payment of the exercise or purchase price of a stock option or stock appreciation right; (3) any shares subject to a stock appreciation right that are not issued in connection with the stock settlement of the stock appreciation right upon exercise; and (4) and any shares repurchased by us on the open market with the proceeds of the exercise price of an option or stock appreciation right or otherwise.

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•	the exercise price of the ISO must be at least 110% of the fair market value of the stock subject to the ISO on the date of grant; and

•	the term of the ISO must not exceed five years from the date of grant.

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•	arrange for the surviving or acquiring corporation (or its parent company) to assume or continue the award or to substitute a similar stock award for the award (including an award to acquire the same consideration paid to our stockholders pursuant to the transaction);

•	arrange for the assignment of any reacquisition or repurchase rights held by us with respect to the stock award to the surviving or acquiring corporation (or its parent company);

•	accelerate the vesting (and, if applicable, the exercisability) of the stock award and provide for its termination prior to the effective time of the transaction;

•	arrange for the lapse, in whole or in part, of any reacquisition or repurchase rights held by us with respect to the award;

•	cancel or arrange for the cancellation of the stock award, to the extent not vested or exercised prior to the effective time of the transaction, in exchange for such cash consideration or no consideration, as the Board may consider appropriate; and

•	make a payment, in such form as may be determined by the Board, equal to the excess, if any, of (i) the value of the property the participant would have received upon the exercise of the stock award immediately prior to the effective time of the transaction, over (ii) any exercise price payable in connection with such exercise.

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Reduction in CEO Base Salary for 2017: In recognition of the performance of the Company’s stock price in 2016, Mr. McLaughlin proposed, and the Compensation Committee agreed, to reduce his base salary from $800,065 (his base salary in 2016) to $700,057 for 2017, effective as of March 2, 2017. For 2017, none of the other named executive officers received a base salary increase, with the exception of Mr. Pietzke, who received an increase in connection with his promotion in January 2017 to Vice President, Finance and Chief Accounting Officer.

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No Bonuses Paid to Named Executive Officers Under 2017 Annual Bonus Plan: In December 2017, despite achieving certain of the corporate goals including the improvement of share performance relative to our peer companies, the Compensation Committee determined that no bonus payments would be made under the 2017 Annual Bonus Plan due to the threshold goal not being achieved. For more information on the non-payment of bonuses under the 2017 Annual Bonus Plan, please see the discussion under “2017 Performance Evaluations and Bonus Amounts” below. Mr. Pietzke received a discretionary bonus for his contributions to the Company during 2017, as described below.

•	Restructuring of Long-Term Incentive Award Program:

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2017/21 Long-Term Incentive Plan: In furtherance of our long-term performance incentive structure, in March 2017, the Compensation Committee established the 2017/21 Long-Term Incentive Plan, or the 2017/21 LTIP, for our executive officers. As with prior years, the 2017/21 LTIP is comprised of two components: (i) the right to receive a cash payment and (ii) the grant of a number of unvested restricted shares of our common stock based on a known underlying stock price. However, for the 2017/21 LTIP, the Compensation Committee determined that increasing the stock component provided for increased alignment with the interests of the Company’s stockholders, and changed the mix to 60% cash and 40% restricted stock (from 70% cash and 30% restricted stock in previous years). The purpose of the 2017/21 LTIP is to enhance stockholder return over the long term, through promotion of long-term corporate goals and retention of the Company’s management team over a performance period of five years. The 2017/21 LTIP is constructed so that 50% of such cash payments and restricted shares are eligible to vest in December 2018 at the end of a two calendar year performance period, and the remaining 50% of cash payments and restricted shares are eligible to vest in equal amounts over the following three-year period in December of 2019, 2020 and 2021.

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Payouts Under Previous Long-Term Incentive Awards: In December 2017, the Compensation Committee determined the 2017 payouts under our long-term incentive program awards originally granted to our named executive officers in 2014, 2015 and 2016, in accordance with the terms of those plans. As with the 2017/21 LTIP, those programs were comprised of both cash awards and restricted stock awards. Due to the nature of the restricted stock portion of the LTIP programs, our stock price directly affects the amount of compensation actually realized by our named executive officers under those programs. The table below sets forth the reported value of restricted stock granted to our chief executive officer under the 2014/18 LTIP, the 2015/19 LTIP and the 2016/20 LTIP based on the grant date values for the restricted stock under such plans ($8.22, $7.62 and $3.22 per share, respectively) for the portion subject to vesting during 2017 compared to the value realized based on the actual amount of restricted stock that vested and the stock price as of 2017 year-end ($2.74):

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Introduction of Stock Options: In recognition of the Company’s transition into a more traditional pharmaceutical company, in August 2017, the Compensation Committee, in consultation with Board Advisory, an independent compensation consultant, granted stock options to the Company’s executive officers for the first time since 2008. This decision was made as part of a restructuring of long-term incentives for the Company’s executive officers that would feature stock options and restricted stock as opposed to cash and restricted stock, which had been used in the Company’s long-term incentive plans for the past several years. The restructuring was in part a response to feedback that the Company had received from certain of its stockholders who expressed a belief that all equity awards better aligned the Company’s executive officer’s interests with that of its stockholders than cash payments. It is expected for the foreseeable future that our long-term incentive plans will consist of all equity with no cash component. Executives do not realize value from our stock options unless our stock price appreciates following the date of grant and our Compensation Committee therefore considers stock options to be “at-risk,” performance-based compensation. Moreover, the vesting of 50% of such stock options are subject to specified increases in our stock price, with 25% vesting on a 33% increase in our stock price and 25% vesting on a 50% increase in our stock price, in each case from the stock price at the grant date.

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•	Structure our compensation plans to effectively motivate our management to achieve the stated goals of the Company and to perform in a manner that maximizes stockholder value.

•	Offer executive compensation programs that are competitive in the marketplace to enable us to recruit high-quality candidates for senior leadership positions and to retain these executive officers through appropriate base compensation, equity and cash awards and incentives.

•	Strike a balance of short-term and long-term incentives tied to our named executive officers’ individual performance and their contribution to our annual and long-term company-wide goals and objectives.

•	Align the interests of our named executive officers and stockholders through the use of equity incentives, performance metrics and stock ownership requirements.

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(1)	Aegerion Pharmaceuticals, Inc. was acquired after the establishment of the comparator group and no longer exists as an independent company.

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(1)	Because he was appointed as an executive officer in September, Mr. Monnet was eligible to receive a prorated portion of his target bonus for 2017.

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•	Stock Option Awards: Based on feedback received from stockholders, commencing in 2017 stock options form a basis of our long-term incentive award program, which we expect to replace the cash component going forward. Stock options align the interests of management and stockholders by rewarding increases in stockholder value.

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Long-Term Incentive Plan Awards: Awards under our long-term incentive plans are performance-based and at risk of non-payment in the event of underperformance - no portion of these awards is subject solely to time-based vesting. Performance goals are selected by the Compensation Committee as objective goals most likely to increase stockholder return during the life of the plan. Under these long-term incentive plans, each named executive officer is eligible for awards consisting of (i) restricted stock and (ii) a cash payment, each of which is eligible to vest based on performance goals that are selected by the Compensation Committee as objective goals most likely to increase stockholder return during the life of the plan. Under the last four long-term incentive plans (including the 2017/21 LTIP), the performance goals are divided between an initial performance goal for the two-year period prior to the first vesting date and subsequent performance goals for the subsequent vesting periods under the plans. In 2018 and going forward, cash payments are not expected to be awarded under our long-term incentive plans.

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Long-Term Incentive Plan Components. Under our long-term incentive plan in 2017, each named executive officer is eligible for awards consisting of (i) restricted stock and (ii) a cash payment. Prior to 2017, the Compensation Committee designed the long-term incentive plans to consist of a mix of 70% cash and 30% restricted stock. For the 2017/21 LTIP, the Compensation Committee determined that increasing the stock component provided for increased alignment with the interests of the Company’s stockholders, and changed the mix to 60% cash and 40% restricted stock. The increased equity component seeks to align management’s interest with the interests of our stockholders by ensuring that: (i) only transactions on terms attractive to equity holders are implemented and (ii) management is incentivized to continue our long-term growth objective for the purpose of providing valuable returns to our stockholders. The shares of restricted stock are granted at the beginning of the five-year performance period based on the participant’s target award. In 2018 and beyond, it is expected that long-term incentive plans will consist only of equity awards, with no cash payment component.

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2017/21 LTIP Awards. In furtherance of a long-term performance incentive structure, in March 2017, the Compensation Committee established the 2017/21 Long-Term Incentive Plan, or the 2017/21 LTIP, for our executive officers. In establishing the 2017/21 LTIP, the Compensation Committee relied on analysis performed by Board Advisory with respect to similar plans established by comparable revenue generating companies.

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•	2014/18 LTIP Payments in 2017.

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•	2015/19 LTIP Payments

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•	2016/20 LTIP Payments

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(1)

Amounts in this column represent the grant date fair value of restricted stock awards granted in 2017, 2016 and 2015, calculated in accordance with FASB ASC Topic 718. The amounts shown disregard estimated forfeitures. Assumptions used in the calculation of these amounts for awards granted in 2017, 2016 and 2015 are included in Note 16 to the Consolidated Financial Statements included in our Annual Report on Form 10-K filed with the SEC on March 16, 2018. All of the performance awards granted to the named executive officers during 2017 were deemed probable of achievement at the highest possible performance level for purposes of FASB ASC Topic 718, and so the full grant date fair value is reflected in the table above.

(2)

Amounts in this column represent the grant date fair value of stock options granted in 2017 to Mr. Monnet, calculated in accordance with FASB ASC Topic 718. The amounts shown disregard estimated forfeitures. Assumptions used in the calculation of these amounts are included in Note 16 to the Consolidated Financial Statements included in our Annual Report on Form 10-K filed with the SEC on March 16, 2018.

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(3)	Consists of: (a) the performance-based cash payment under the 2014/18 LTIP - $381,334, (b) the performance-based cash payment under the 2015/19 LTIP - $350,827, and (c) the performance-based cash payment under the 2016/20 LTIP - $758,073.

(4)	Consists of matching contributions we made under our 401(k) plan.

(5)	Consists of: (a) matching contributions we made to our 401(k) plan - $913, (b) the housing allowance paid to Mr. Monnet - $14,909 and (c) reimbursement of moving expenses - $9,479.

(6)	Consists of: (a) the performance-based cash payment under the 2014/18 LTIP - $97,724, (b) the performance-based cash payment under the 2015/19 LTIP - $116,878, and (c) the performance-based cash payment under the 2016/20 LTIP - $252,552.

(7)	Consists of: (a) the performance-based cash payment under the 2014/18 LTIP - $96,948, (b) the performance-based cash payment under the 2015/19 LTIP - $115,949, and (c) the performance-based cash payment under the 2016/20 LTIP - $250,546.

(8)	Consists of: (a) matching contributions we made to Mr. Garcia’s 401(k) plan - $10,000, and (b) the housing allowance paid to Mr. Garcia - $48,000.

(9)	In connection with his resignation in October 2017, Mr. Hart forfeited all of his outstanding restricted stock awards, including the awards made in connection with the 2017/21 LTIP.

(10)	Mr. Hart did not receive any non-equity incentive plan compensation for 2017 because he resigned from the Company on October 20, 2017.

(11)	Consists of: (a) matching contributions we made to our 401(k) plan - $10,000, (b) the housing allowance paid to Mr. Hart - $25,000, and (c) the severance paid to Mr. Hart in connection with his separation from the Company in October 2017 - $2,305,438.

(12)	Consists of a discretionary one-time bonus - $125,000.

(13)	Consists of: (a) the performance-based cash payment under the 2015/19 LTIP - $35,716, and (b) the performance-based cash payment under the 2016/20 LTIP - $77,176. Mr. Pietzke was not eligible to receive payment under the 2014/18 LTIP because he joined the Company after eligibility under the plan expired.

(14)	Consists of: (a) matching contributions we made to our 401(k) plan - $10,000 and (b) the housing allowance paid to Mr. Pietzke - $30,000.

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(1)

The amounts in the below columns relate to the Company’s 2017 Annual Bonus Plan (second row for each named executive officer, other than Mr. Monnet) and the cash component of the 2017/21 LTIP (third row for each named executive officer, other than Mr. Monnet). Due to the threshold goal not being achieved, there were no payments to management under the 2017 Annual Bonus Plan. For a description of the vesting of the cash component of the 2017/21 LTIP, see footnote (2) below. The cash component of the 2017/21 LTIP is subject to the acceleration provisions set forth in the severance agreements of our named executive officers and the long-term incentive plans described below.

(2)

Reflects the shares of restricted stock granted to our named executive officers other than Mr. Monnet in 2017 under the 2017/21 LTIP. The 2017/21 LTIP is comprised of two components: (a) the right to receive a cash payment and (b) the grant of a number of unvested restricted shares of our common stock based on a known underlying stock price, with a mix of 60% cash and 40% restricted stock (from 70% cash and 30% restricted stock in previous years). The 2017/21 LTIP is constructed so that 50% of such cash payments and restricted shares are eligible to vest in December 2018 at the end of a two calendar year performance period, and the remaining 50% of cash payments and restricted shares are eligible to vest in equal amounts over the following three-year period in December of 2019, 2020 and 2021. The restricted stock awards are subject to the acceleration provisions set forth in the severance agreements of our named executive officers and the long-term incentive plans described below. Dividend payments and other distributions made on the restricted stock during the vesting periods of the restricted stock will accrue through the vesting periods and will be paid, plus interest, to the named executive officer upon vesting of the restricted stock award.

(3)	Represents restricted stock granted to Mr. Monnet in connection with his commencement of employment. For a description of the vesting provisions of this grant, please see footnote (5) of the table set forth under “Outstanding Equity Awards at December 31, 2017” below.

(4)

Amounts in this column represent the grant date fair value of restricted stock awards granted in 2017, 2016 and 2015, and in the case of Mr. Monnet, stock options granted in 2017, calculated in accordance with FASB ASC Topic 718. The amounts shown disregard estimated forfeitures. Assumptions used in the calculation of these amounts for awards granted in 2017, 2016 and 2015 are included in Note 16 to the Consolidated Financial Statements included in our Annual Report on Form 10-K filed with the SEC on March 16, 2018. All of the performance awards granted to the named executive officers during 2017 were deemed probable of achievement at the highest possible performance level for purposes of FASB ASC Topic 718, and so the full grant date fair value is reflected in the table above.

(5)	Mr. Monnet was not a participant in the 2017 Annual Bonus Plan and the 2017/21 LTIP because he did not join the Company until September of 2017.

(6)	Represents stock options granted to Mr. Monnet in connection with his commencement of employment. For a description of the vesting provisions of this grant, please see footnote (4) of the table set forth under “Outstanding Equity Awards at December 31, 2017” below.

(7)	All of Mr. Hart’s plan based awards were forfeited upon his resignation from the Company in October 2017.

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(1)

The named executive officers (other than Mr. Monnet) were granted stock options on August 29, 2017, subject to the approval of Proposal No. 4 of this proxy statement by the stockholders of the Company. As a result, pursuant to SEC rules and FASB ASC Topic 718, since the stock option grants are subject to stockholder approval, the grant date of such awards for purposes of FASB ASC Topic 718 and SEC disclosure rules will occur on the date such option grants are approved by the stockholders, if at all. As a result, in accordance with SEC rules and FASB ASC Topic 718, the grant date fair value of such contingent option awards is not included in the table above for 2017. If stockholder approval of Proposal No. 4 is obtained at the Annual Meeting, the grant date fair value of such awards will be included in our compensation tables for 2018. For more information on the contingent stock option grants in August 2017 to our named executive officers, please see the discussion under “Fiscal 2017 Executive Compensation” above and Proposal No. 4.

(2)	Market value is the “closing” price of the shares on December 29, 2017 ($2.74).

(3)

Reflects restricted stock granted to our named executive officers in 2014, 2015, 2016 and 2017 under the 2014/18 LTIP, the 2015/19 LTIP, the 2016/20 LTIP and the 2017/21 LTIP, respectively. Each LTIP is comprised of two components: (a) the right to receive a cash payment and (b) the grant of a number of unvested restricted shares of our common stock. The shares of restricted stock are granted at the beginning of the five-year performance period based on the participant’s target award. Each LTIP is constructed so that 50% of such cash payments and restricted shares are eligible to vest at the end of a two calendar year performance period ending on December 31 of the calendar year following the initial year of the LTIP program (e.g., for the 2017/21 LTIP, the initial two-year performance period will end on December 31, 2018), and the remaining 50% of cash payments and restricted shares are eligible to vest in equal amounts over the following three-year period (e.g., for the 2017/21 LTIP, in December of 2019, 2020 and 2021). The performance goals for the performance periods are established by the Compensation Committee at the time of grant of the applicable LTIP award. In addition to remaining employed by the Company through the applicable vesting dates, the Company must meet minimum performance goals described above over the applicable performance periods for the restricted stock and cash awards to vest and/or be paid.

(4)

The options were granted to Mr. Monnet on September 11, 2017 and have a term of ten years from the date of grant. The stock options will vest as follows: 50% of the shares subject to the option shall vest on September 10, 2018, and 50% of the shares subject to the option shall vest on a monthly basis pro rata over the thirty-six (36) months following September 10, 2018, subject to Mr. Monnet’s continued service with us through the applicable vesting dates. The options are subject to the acceleration provisions set forth in the severance agreement with Mr. Monnet described below. In addition, the stock options will vest upon a change in control.

(5)

The options were granted to Mr. Monnet on September 11, 2017 and have a term of ten years from the date of grant. The stock options will vest as follows: 50% of the shares subject to the option shall vest on a 33% increase in the price of our common stock; and the remaining 50% of the shares subject to the option shall vest on a 50% increase in the price of our common stock, subject to Mr. Monnet’s continued service with us through the applicable vesting dates. The options are subject to the acceleration provisions set forth in the severance agreement with Mr. Monnet described below. In addition, the stock options will vest upon a change in control.

(6)

Represents restricted stock granted to Mr. Monnet. The award will vest in three equal installments on each of December 12, 2018, 2019 and 2020. The restricted stock award is subject to the acceleration provisions set forth in the severance agreement with Mr. Monnet described below. Dividend payments and other distributions made on the restricted stock during the vesting periods of the restricted stock will accrue through the vesting periods and will be paid, plus interest,

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•	Voluntary Termination/For Cause Termination: includes voluntary termination of employment by the named executive officer (other than in connection with a resignation for good reason) and termination of the named executive officer’s employment by us for cause.

•	Involuntary Termination without Cause: includes termination of the named executive officer’s employment by us for reasons not constituting cause, such as due to a company-wide or departmental reorganization, or resignation by the named executive officer for good reason.

•	a material diminution in the authority, duties or responsibilities of the named executive officer, causing the position to be of materially lesser rank or responsibility within PDL;

•	a requirement that the named executive officer report to a corporate officer or other employee less senior than the named executive officer’s previous report;

•	a material reduction in annual base salary of the named executive officer, unless reductions comparable in amount and duration are concurrently made for all other PDL officers; or

•	any action or inaction by PDL that constitutes, with respect to the named executive officer, a material breach of the applicable offer letter.

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•	intentional theft, dishonesty, willful misconduct, breach of fiduciary duty for personal profit or falsification of any PDL documents or records;

•	material failure to abide by PDL’s code of conduct or other written policies (including, without limitation, policies relating to confidentiality and reasonable workplace conduct);

•	material and intentional unauthorized use, misappropriation, destruction or diversion of any tangible or intangible asset or corporate opportunity of PDL (including, without limitation, improper use or disclosure of PDL confidential or proprietary information);

•	willful act that has a material detrimental effect on PDL’s reputation or business;

•	repeated failure or inability to perform any reasonable assigned duties after written notice from the chief executive officer of, and a reasonable opportunity to cure, such failure or inability;

•	material breach of any employment, service, non-disclosure, non-competition, non-solicitation or other similar agreement between the named executive officer and PDL, which breach is not cured pursuant to the terms of such agreement or within twenty (20) days of receiving written notice of such breach; or

•	conviction (including any plea of guilty or nolo contendere) of any criminal act involving fraud, dishonesty, misappropriation or moral turpitude, or which impairs the named executive officer’s ability to perform his or her duties with PDL.

•	a percentage of the executive officer’s annual base salary;

•	a percentage of the executive officer’s target annual bonus for the year in which the separation occurs;

•	payment of the executive officer’s COBRA premiums, if any, for a certain number of months;

•	acceleration of vesting of a pro-rated amount of the restricted stock awards granted pursuant to any outstanding long-term incentive plan;

•	payment of any accrued but unpaid dividends or other distributions, plus interest, paid on the restricted stock awards which are accelerated pursuant to the above clause; and

•	payment of a pro-rated amount of the named executive officer’s target cash payment that the executive officer is eligible to earn under any long-term incentive plan.

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•

any “person” (as such term is used in Sections 13(d) and 14(d) of the Exchange Act), other than a trustee or other fiduciary holding securities of the Company under an employee benefit plan of the Company, becomes the “beneficial owner” (as defined in Rule 13d-3 promulgated under the Exchange Act), directly or indirectly, of securities of the Company representing 50% or more of (i) the outstanding shares of common stock of the Company or (ii) the combined voting power of the Company’s then-outstanding securities entitled to vote generally in the election of directors; or

•

the Company (i) is party to a merger, consolidation or exchange of securities which results in the holders of voting securities of the Company outstanding immediately prior thereto failing to continue to hold at least 50% of the combined voting power of the voting securities of the Company, the surviving entity or a parent of the surviving entity outstanding immediately after such merger, consolidation or exchange, or (ii) sells or disposes of all or substantially all of the Company’s assets (or any transaction or combination of transactions having similar effect is consummated), or (iii) the individuals constituting the Board immediately prior to such merger, consolidation, exchange, sale or disposition shall cease to constitute at least 50% of the Board, unless the election of each director who was not a director prior to such merger, consolidation, exchange, sale or disposition was approved by a vote of at least two-thirds of the directors then in office who were directors prior to such merger, consolidation, exchange, sale or disposition.

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(1)	Represents ratable portion of target cash payment and accelerated vesting of equity, respectively, as follows - Mr. McLaughlin ($306,298 and $43,757); Mr. Stone ($78,495 and $11,213); and Mr. Garcia ($77,871 and $11,125).

(2)	Represents total target cash payment and accelerated vesting of equity, respectively, as follows - Mr. McLaughlin ($382,850 and $54,693); Mr. Stone ($98,113 and $14,016); and Mr. Garcia ($97,333 and $13,905).

(3)	Represents ratable portion of target cash payment and accelerated vesting of equity, respectively, as follows - Mr. McLaughlin ($516,878 and $79,654); Mr. Stone ($172,198 and $29,840); Mr. Garcia ($170,830 and $29,602) and Mr. Pietzke ($52,633 and $10,227).

(4)	Represents total target cash payment and accelerated vesting of equity, respectively, as follows - Mr. McLaughlin (zero and $765,722); Mr. Stone (zero and $255,101); Mr. Garcia (zero and $253,074) and Mr. Pietzke (zero and $77,973).

(5)	Represents ratable portion of target cash payment and accelerated vesting of equity, respectively, as follows - Mr. McLaughlin ($599,834 and $218,750); Mr. Stone ($199,835 and $72,877); Mr. Garcia ($198,247 and $72,298) and Mr. Pietzke ($61,080 and $22,276).

(6)	Represents total target cash payment and accelerated vesting of equity, respectively, as follows - Mr. McLaughlin ($1,148,595 and $418,875); Mr. Stone ($382,655 and $139,548); Mr. Garcia ($379,615 and $138,440) and Mr. Pietzke ($116,960 and $42,655).

(7)	Represents ratable portion of target cash payment and accelerated vesting of equity, respectively, as follows - Mr. McLaughlin ($685,005 and $613,370); Mr. Stone ($249,639 and $223,532); Mr. Garcia ($247,655 and $221,756); and Mr. Pietzke ($114,167 and $102,228).

(8)	Represents ratable portion of target cash payment and accelerated vesting of equity, respectively, as follows - Mr. McLaughlin ($1,800,000 and $1,611,764); Mr. Stone ($655,980 and $587,379); Mr. Garcia ($650,768 and $582,713); and Mr. Pietzke ($300,000 and $268,627).

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(9)	Represents value of the accelerated vesting of Mr. Monnet’s restricted stock award under the scenarios listed above. All of Mr. Monnet’s shares of restricted stock will vest upon a change in control.

(10)	Represents value of the accelerated vesting of Mr. Monnet’s stock options under the scenarios listed above. All of Mr. Monnet’s stock options will vest upon a change in control.

▪	the median of the annual total compensation of all employees of our company (other than our CEO) was $124,236; and

▪	the annual total compensation of our CEO, as reported in the Summary Compensation Table included elsewhere in this Proxy Statement, was $3,417,236.

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•	Each member of the Audit Committee received a retainer of $17,500 per year, except for the chairperson of the Audit Committee who received a retainer of $30,000 per year, for his or her service on the Audit Committee.

•	Each member of the Compensation Committee received a retainer of $15,000 per year, except for the chairperson of the Compensation Committee who received a retainer of $22,500 per year, for his or her service on the Compensation Committee.

•	Each member of the Litigation Committee received a retainer of $10,000 per year, except for the chairperson of the Litigation Committee who received a retainer of $20,000 per year, for his or her service on the Litigation Committee.

•	Each member of the Nominating and Governance Committee received a retainer of $2,500 per year, except for the chairperson of the Nominating and Governance Committee who received a retainer of $5,000 per year, for his or her service on the Nominating and Governance Committee.

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•	each person who is known by us, based on the records of our transfer agent and relevant documents filed with the SEC, to own beneficially more than 5% of the outstanding shares of our common stock;

•	each member of or nominee to the Board;

•	each of our named executive officers; and

•	all members of the Board and our executive officers as a group.

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(1)

Beneficial ownership is determined in accordance with SEC rules. Shares that the person or group has the right to acquire within 60 days after April 18, 2018, are deemed to be outstanding in calculating the share ownership of the person or group. Beneficial ownership calculations for 5% stockholders are based on the most recently publicly-filed Schedule 13Ds or 13Gs, which 5% stockholders are required to file with the SEC and which generally set forth their ownership interests, as amended for known changes.

(2)	Percentage is based on 151,640,656 shares of common stock outstanding as of April 18, 2018. Shares to which the person or group has the right to acquire within 60 days after April 18, 2018, are deemed to be outstanding in calculating the share ownership of the person or group but are not deemed to be outstanding as to any other person or group.

(3)

All information included in this footnote and table regarding the beneficial ownership of BlackRock, Inc., a Delaware corporation, is based on our review of the Schedule 13G/A filed with the SEC on January 23, 2018. Blackrock, Inc. discloses the identity of the subsidiaries that acquired the securities being reported by Blackrock, Inc. as BlackRock (Netherlands) B.V.; BlackRock Advisors, LLC; BlackRock Japan Co., Ltd.; BlackRock (Luxembourg) S.A.; BlackRock Asset Management Canada Limited; BlackRock Asset Management Ireland Limited; BlackRock Asset Management Schweiz AG; BlackRock Financial Management, Inc.; BlackRock Fund Advisors; BlackRock Institutional Trust Company, N.A.; BlackRock International Limited; BlackRock Investment Management (Australia) Limited; BlackRock Investment Management (UK) Ltd; and BlackRock Investment Management, LLC.

(4)

All information included in this footnote and table regarding the beneficial ownership of The Vanguard Group, Inc. (VG), a Pennsylvania corporation, is based on our review of the Schedule 13G/A filed with the SEC on February 9, 2018. VG discloses the identity of the subsidiaries that acquired the securities being reported by VG as Vanguard Fiduciary Trust Company, a wholly-owned subsidiary of VG, being the beneficial owner of 158,020 shares, and Vanguard Investments Australia, Ltd., a wholly-owned subsidiary of VG, being the beneficial owner of 25,501 shares.

(5)	All information included in this footnote and table regarding the beneficial ownership of Dimensional Fund Advisors LP, a Delaware limited partnership, is based on our review of the Schedule 13G filed with the SEC on February 9, 2018.

(6)	All information included in this footnote and table regarding the beneficial ownership of Renaissance Technologies LLC (RTC), a Delaware limited liability company, and Renaissance Technologies Holdings Corporation (RTHC), a Delaware corporation, is based on our review of the Schedule 13G/A filed with the SEC on February 14, 2018. RTHC maintains a majority ownership of RTC.

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(7)

All information included in this footnote and table regarding the beneficial ownership of State Street Corporation a Massachusetts corporation, is based on our review of the Schedule 13G filed with the SEC on February 14, 2018. State Street Corporation discloses the identity of the subsidiaries that acquired the securities being reported as State Street Bank and Trust Company; SSGA Funds Management, Inc.; State Street Global Advisor Trust Company; State Street Global Advisors (Japan) Co., LTD.; State Street Global Advisors Limited; State Street Global Advisors GmbH; and State Street Global Advisors, Australia.

(8)	Includes 60,729 restricted shares that will vest on June 9, 2018, provided the director continues to serve on the Board on that date.

(9)

Includes up to 402,900 restricted shares that will vest in December 2018, 186,860 restricted shares that will vest in December 2019, 165,327 restricted shares that will vest in December 2020 and 98,039 restricted shares that will vest in December 2021, under the Company’s 2014/18 LTIP, 2015/19 LTIP, 2016/20 LTIP and 2017/21 LTIP; provided Mr. McLaughlin is employed by the Company at such dates and certain minimum performance conditions are met.

(10)

Includes up to 137,345 restricted shares that will vest in December 2018, 60,772 restricted shares that will vest in December 2019, 52,706 restricted shares that will vest in December 2020, and 35,728 restricted shares that will vest in December 2021, under the Company’s 2014/18 LTIP, 2015/19 LTIP, 2016/20 LTIP and 2017/21 LTIP; provided Mr. Stone is employed by the Company at such dates and certain minimum performance conditions are met.

(11)

Includes up to 136,254 restricted shares that will vest in December 2018, 60,289 restricted shares that will vest in December 2019, 52,287 restricted shares that will vest in December 2020, and 35,444 restricted shares that will vest in December 2021, under the Company’s 2014/18 LTIP, 2015/19 LTIP, 2016/20 LTIP and 2017/21 LTIP; provided Mr. Garcia is employed by the Company at such dates and certain minimum performance conditions are met.

(12)	Includes 80,066 restricted shares that will vest in December 2018, 80,066 restricted shares that will vest in December 2019 and 80,067 restricted shares that will vest in December 2020; provided Mr. Monnet is employed by the Company at such dates.

(13)

Consists of all shares beneficially owned by all directors and executive officers as a group as of April 18, 2018.  Includes (i) 364,374 shares that will vest on June 9, 2018, provided all the directors continue to serve on our Board on that date, (ii) up to 660,166 restricted shares that will vest in December 2018, provided the named executive officer(s) other than Mr. Monnet continue to be employed by the Company on that date and certain performance conditions are met, 291,591 restricted shares that will vest in December 2019, provided the named executive officer(s) other than Mr. Monnet continue to be employed by the Company on that date and certain performance conditions are met, 253,990 restricted shares that will vest in December 2020, provided the named executive officer(s) other than Mr. Monnet continue to be employed by the Company on that date and certain performance conditions are met and 169,213 restricted shares that will vest in December 2021, provided the named executive officer(s) other than Mr. Monnet continue to be employed by the Company on that date and certain performance conditions are met, and (iii) 80,066 restricted shares that will vest in December 2018, 80,066 restricted shares that will vest in December 2019 and 80,067 restricted shares that will vest in December 2020, in each case, provided Mr. Monnet continues to be employed by the Company on such dates.

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