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Based on Our Discussion with Radford, Management Identified Our Peer Companies to Include the Following 19 Biotechnology and Pharmaceutical Companies for 2015

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Based on Our Discussion with Radford, Management Identified Our Peer Companies to Include the Following 19 Biotechnology and Pharmaceutical Companies for 2015 Based on our discussion with Radford, management identified our peer companies to include the following 19 biotechnology and pharmaceutical companies for 2015: Ariad Pharmaceuticals Inc. Infinity Pharmaceuticals, Inc. Progenics Pharmaceuticals, Inc. Array BiopPharma, Inc. Lexicon Pharmaceuticals, Inc Repligen Corporation Celldex Therapeutics, Inc. MacroGenics, Inc. Spectrum Pharmaceuticals, Inc. CTI BioPharma Corp. Merrimack Pharmaceuticals, Inc. Synta Pharmaceuticals Corp. DepoMed Inc. NewLink Genetics Corporation XOMA Corporation Halozyme Therpeutics, Inc. OncoMed Pharmaceuticals, Inc. Immunomedics Inc. Peregrine Pharmaceuticals, Inc These peer companies were selected from among publicly-held U.S. pharmaceutical and biotechnology companies with comparable operations in mid– to late–stages of product development or small commercial products in the U.S. based on the following criteria: number and stage of development programs; number of employees; market capitalization; and number of and revenue from commercial products. The market data included information as to base salaries, cash bonuses and stock option awards. Use of Compensation Consultants Our Compensation Committee is authorized to retain its own independent advisors to assist in carrying out its responsibilities. Our Compensation Committee engaged Radford to analyze historic compensation and establish recommendations for executive compensation for 2015 and methodologies for determining compensation on an on-going basis. Benchmarking in the Context of Our Other Executive Compensation Principles Our Compensation Committee and our Board of Directors use market data as one means of evaluating and establishing executive pay. In instances where an executive officer is believed to be especially suited to our company or important to our success, the Compensation Committee may establish or recommend compensation that deviates from industry averages or other specific benchmarks. Upward or downward variations in total cash compensation and long-term incentives may also occur as a result of the individual’s experience level, the nature and level of the individual’s specific job responsibilities, the balance of the individual’s different elements of compensation, market factors and other strategic considerations. Our Compensation Committee believes that, given the competitiveness of our industry and our company culture, our base compensation, annual cash bonuses and equity programs are flexible enough to reward the achievement of clearly defined corporate goals and are sufficient to retain our existing executive officers and to hire new executive officers with the appropriate qualifications and experience. Elements of Executive Compensation We have designed and implemented compensation policies that have historically allowed us to recruit both in the geographic areas where we operate and where our executives reside, as the case may be (i.e., Portland, Boston, and San Francisco). For 2014, the principal components of compensation for our named executive officers consisted of: • A base salary; • An annual year-end cash bonus; and • An annual (pre- or post-) year-end stock option award. 2015 PROXY STATEMENT AND NOTICE OF ANNUAL MEETING OF STOCKHOLDERS | GALENA BIOPHARMA 35.
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