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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.          )

 

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1040 Spring Street
Silver Spring, MD 20910

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS

        The annual meeting of shareholders of United Therapeutics Corporation will be held at our headquarters, 1040 Spring Street, Silver Spring, Maryland 20910, on Monday, June 28, 2010, at 9:00 a.m. local time for the following purposes:

1.

Election of the following three Class II directors nominated by our Board of Directors for terms expiring at the 2013 annual meeting of shareholders: Christopher Causey, Richard Giltner and R. Paul Gray;



2.

Approval of an amendment to our Amended and Restated Certificate of Incorporation to increase the authorized number of shares of our common stock;



3.

Ratification of the appointment of Ernst & Young LLP as our independent registered public accounting firm for 2010; and



4.

To consider and act upon such other business as may properly come before the annual meeting of shareholders and any adjournment or postponement thereof.

        Only shareholders of record at the close of business on April 29, 2010, are entitled to notice of, and to vote at, our 2010 annual meeting of shareholders.

        Important Notice Regarding the Availability of Proxy Materials for United Therapeutics Corporation's 2010 Annual Meeting of Shareholders to Be Held on Monday, June 28, 2010:

United Therapeutics Corporation's Proxy Statement, Annual Report, Form 10-K and
other proxy materials are available at: http://ir.unither.com/annualProxy.cfm.

        WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, YOU ARE REQUESTED TO FILL IN, SIGN, DATE AND RETURN THE ENCLOSED PROXY CARD IN THE ACCOMPANYING PRE-PAID ENVELOPE AS PROMPTLY AS POSSIBLE TO ENSURE THAT YOUR SHARES ARE REPRESENTED AT THE MEETING.

        ALL SHAREHOLDERS ARE EXTENDED A CORDIAL INVITATION TO ATTEND THIS MEETING.

By Order of the Board of Directors,



Paul A. Mahon
Corporate Secretary

April 29, 2010
Silver Spring, Maryland

NOTICE: This is the first year that brokers are not permitted to vote on the election of directors without instructions from the beneficial owner, as discussed in more detail in this proxy statement. Therefore, if your shares are held through a brokerage firm, bank or other nominee, they will not be voted on the election of directors unless you affirmatively vote your shares in one of the ways described in this proxy statement.

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UNITED THERAPEUTICS CORPORATION
1040 Spring Street
Silver Spring, MD 20910

PROXY STATEMENT FOR THE 2010 ANNUAL MEETING OF SHAREHOLDERS

INFORMATION ABOUT THE MEETING, VOTING AND PROXIES

General

        This proxy statement and enclosed proxy card are being furnished on or about May 8, 2010, to shareholders of United Therapeutics Corporation in connection with the solicitation by our Board of Directors of proxies to be voted at our 2010 annual meeting of shareholders (Annual Meeting) and any adjournment or postponement thereof. Our Annual Meeting will be held on Monday, June 28, 2010, beginning at 9:00 a.m. local time at our corporate headquarters, 1040 Spring Street, Silver Spring, Maryland 20910.

Record Date and Outstanding Shares

        At the close of business on April 29, 2010 (Record Date), there were [XX,XXX,XXX] shares of our common stock outstanding and entitled to vote at our Annual Meeting. Only shareholders of record at the close of business on the Record Date will be entitled to vote, either in person or by proxy, at our Annual Meeting, and each share will have one vote. On September 22, 2009, we effected a two-for-one split of our common stock.

Solicitation

        Proxies are being solicited by our Board of Directors. We will bear the cost of soliciting proxies. Our officers and employees may solicit proxies in person or by telephone, fax, email or regular mail, and they will receive no additional compensation for such work. Copies of solicitation materials may be furnished to brokers, custodians, nominees and other fiduciaries for forwarding to beneficial owners of shares of our common stock, and normal handling charges may be paid for such forwarding service.

Voting Rights and Quorum

        Shares can be voted at our Annual Meeting only by shareholders who are present in person or represented by proxy. Whether or not a shareholder plans to attend our Annual Meeting in person, he or she is encouraged to sign and return the enclosed proxy card. Any proxy given pursuant to this solicitation may be revoked by the person giving it at any time before it is exercised by delivering to the Corporate Secretary of United Therapeutics Corporation at 1040 Spring Street, Silver Spring, Maryland 20910, a written notice of revocation or a fully executed proxy bearing a later date, or by attending the Annual Meeting and voting in person. The representation in person or by proxy of at least a majority of the outstanding shares entitled to vote is necessary to achieve a quorum for the transaction of business at the Annual Meeting.

        Abstentions, "broker non-votes" (i.e., shares held by brokers or nominees that are represented at the meeting but with respect to which they have no discretionary power to vote on a particular matter and have received no instructions from the beneficial owners thereof or persons entitled to vote thereon) and proxies that are marked "withhold authority" with respect to the election of any one or more nominees for election as directors will be counted as present in determining whether the quorum requirement is satisfied.

        Your broker, bank, trust or other nominee has the discretion to vote on routine corporate matters (including the ratification of the appointment of the independent registered public accounting firm)

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presented in the proxy materials without your specific voting instructions. Your broker, bank, trust or other nominee does not have the discretion to vote on non-routine matters (including the election of directors and the amendment to the Amended and Restated Certificate of Incorporation). For non-routine matters, your shares will not be voted without your specific voting instructions.

Proxy

        If the enclosed proxy card is properly executed and returned prior to the Annual Meeting, the shares represented by the proxy card will be voted in accordance with the shareholder's directions. If the proxy card is signed and returned without any direction given, shares of our common stock represented by the proxy will be voted FOR the election of the three director nominees named on the proxy card, FOR the approval of the amendment to our Amended and Restated Certificate of Incorporation to increase the authorized number of shares of our common stock, and FOR ratification of the appointment of Ernst & Young LLP as our independent registered public accounting firm for 2010.

        Each of our director nominees has consented to be named herein and to continue to serve on our Board of Directors, if elected. It is not anticipated that any nominee will become unable or unwilling to accept his or her nomination or election. If such an event should occur, the persons named in the proxy intend to vote for the election of, in such nominee's stead, such other person as is recommended to our Board of Directors by our Board of Directors' Nominating and Governance Committee.

Voting Requirements

Proposal No. 1: Election of Directors

        Directors are elected by a plurality of the affirmative votes cast at our Annual Meeting. A "plurality" voting standard means that the three nominees who receive the largest number of votes cast will be elected as directors. Broker non-votes and shares as to which a shareholder withholds voting authority are not considered votes cast and therefore have no impact on the election of directors. Cumulative voting is not permitted in the election of directors. Proxies may not be voted for more than three nominees.

Proposal No. 2: Approval of Amendment to Amended and Restated Certificate of Incorporation to Increase Authorized Number of Shares of Common Stock

        The affirmative vote of the holders of a majority of the shares of common stock outstanding and entitled to vote at our Annual Meeting is required for approval of the amendment to our Amended and Restated Certificate of Incorporation to increase the authorized number of shares of our common stock. Abstentions and broker non-votes, if any, have the same effect as an "against" vote.

Proposal No. 3: Ratification of the Appointment of Ernst & Young LLP as United Therapeutics Corporation's Independent Registered Public Accounting Firm for 2010

        The affirmative vote of the holders of a majority of the shares of common stock present, in person or by proxy, and entitled to vote at our Annual Meeting is required for ratification of the appointment of Ernst & Young LLP as our independent registered public accounting firm for 2010. Abstentions and broker non-votes, if any, have the same effect as an "against" vote.

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PROPOSAL NO. 1: ELECTION OF DIRECTORS

        Our Board of Directors (Board) consists of ten members and is divided into three classes of three or four members each. At each annual meeting of shareholders, members of one of the classes, on a rotating basis, are elected to a three-year term. This year at our Annual Meeting, Christopher Causey, Richard Giltner and R. Paul Gray are nominees for election as Class II directors for terms expiring at our 2013 annual meeting of shareholders.

        We believe that our directors should possess the highest personal and professional ethics, integrity and values, and be committed to representing the best interests of our shareholders. We also endeavor to have a board of directors that, as a whole, represents a range of experiences in business, government, education and technology and in other areas that are relevant to our business activities. In addition, our Board believes there are certain attributes every director should possess, which are set forth in the Director Nominations and Diversity section below.

        In evaluating incumbent directors for re-nomination to our Board, the members of our Nominating and Governance Committee consider a variety of factors. These include each director's independence, financial literacy, personal and professional accomplishments, tenure on our Board and experience in light of our business goals. The following table presents information concerning persons nominated for election as directors at our Annual Meeting and for those of our directors whose terms of office will continue after our Annual Meeting, including their membership on committees of our Board, principal occupations or affiliations during the last five years or more, director qualifications, and certain other directorships held. For additional information concerning the director nominees, including stock ownership and compensation, see the section entitled Non-Employee Director Compensation and the Beneficial Ownership of Common Stock table below.

Nominees for Election at our 2010 Annual Meeting of Shareholders

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OUR BOARD OF DIRECTORS RECOMMENDS THAT OUR SHAREHOLDERS VOTE "FOR" THE ELECTION OF THE NOMINEES AS CLASS II DIRECTORS.

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BOARD OF DIRECTORS, COMMITTEES, CORPORATE GOVERNANCE

Directors Continuing in Office with Terms Ending in 2011

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Directors Continuing in Office with Terms Ending in 2012

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The Role of our Board: Risk Oversight

        Our Board is responsible for overseeing the risks facing our company. Our Board works directly with Dr. Rothblatt, Dr. Jeffs, our Chief Financial Officer, our General Counsel and other members of our senior management in carrying out its risk oversight function. Our directors take a proactive, interested and detailed approach to their service on our Board, and set expectations to promote our success through the achievement of business objectives while maintaining high standards of responsibility and ethics. At its meetings our Board receives reports from our Chief Executive Officer, President and Chief Operating Officer, Chief Financial Officer and General Counsel, and may also receive reports from the Committee Chairmen, outside consultants and other executives, among others. These presentations often include identification and assessment of risks our company currently faces and/or that are anticipated to be faced by our company in the future. Our Board is able to ask questions, discuss and provide guidance to management on the risks presented. Our senior management is responsible for assessing risk on a daily basis. Our Board expects that our senior management continually identifies, assesses and manages the short-term and long-term risks faced by our company. If members of our senior management identify risks that are material to our company, our Board may convene a special meeting to discuss, assess and address such risks.

Board of Directors Leadership

        Our Chief Executive Officer, who founded our company, serves as Chairman of our Board. Our Board believes that the combined role of Chairman and Chief Executive Officer currently is an appropriate leadership structure for our company. In this regard, having a combined Chairman and Chief Executive Officer provides an efficient and effective leadership model for a growing entrepreneurial company like ours, as it fosters clear accountability, effective decision-making, and alignment on corporate strategy. In addition, because our Board works closely with our executive officers and members of senior management, there is a natural synergy in the combined Chairman and Chief Executive Officer role that facilitates our Board's guidance of management.

        Our Board has designated a Lead Independent Director. Among other responsibilities, our Lead Independent Director coordinates the activities of our other independent directors, approves Board meeting schedules, agendas and information sent to our Board, chairs all executive sessions of our independent directors, and serves as principal liaison between our independent directors and our Chairman and senior management.

Director Nominations and Diversity

        The Nominating and Governance Committee of our Board does not have a formal policy with respect to considering director candidates or director diversity. Once the Nominating and Governance Committee identifies a potential director nominee, with the help of our General Counsel, it screens the candidate, performs reference checks, prepares a biography and conducts interviews. If the outcome of that process is favorable, the Nominating and Governance Committee recommends the candidate to our Board for nomination.

        The Nominating and Governance Committee considers candidates recommended by shareholders and evaluates them using the same criteria as it uses to evaluate all other candidates. The Nominating and Governance Committee seeks to recommend director candidates who will enhance the quality of our Board's deliberations and decisions, who will take their duties seriously and who will promote the values and ethics to which we subscribe.

        A shareholder who wishes to suggest a prospective nominee for the Nominating and Governance Committee's consideration should submit the candidate's name and qualifications to our Corporate Secretary at the address set forth under Shareholder Communications with Directors below.

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Minimum Criteria for Director Candidates

        To be considered by the Nominating and Governance Committee, a director candidate must meet the following minimum criteria:

•

Personal and professional integrity;



•

A record of exceptional ability and judgment;



•

Ability and willingness to participate fully and work constructively in Board activities, including active participation in meetings of our Board and its committees;



•

Interest, capacity and willingness, in conjunction with the other members of our Board, to serve the interests of our shareholders;



•

Reasonable knowledge of the fields of our operations, as well as familiarity with the principles of corporate governance;



•

Expertise to serve on one or more committees of our Board; and



•

Absence of any personal or professional relationships that would adversely affect his or her ability to serve our best interests and those of our shareholders.

Additional Qualities and Skills for Director Candidates

        In addition, the Nominating and Governance Committee is interested in candidates who possess the following skills:

•

The ability to contribute to the variety of opinions, perspectives, personal and professional experiences and backgrounds, as well as other differentiating characteristics represented by the members of our Board;



•

A desire to contribute positively to the existing tone and collaborative culture among our Board members; and



•

Professional and personal experiences and expertise relevant to achievement of our strategic objectives.

Director Independence

        Our Board has determined that: (i) Christopher Causey, Richard Giltner and R. Paul Gray are "independent" in accordance with Rule 4200(a)(15) of the NASDAQ listing standards; (ii) Roger Jeffs and Martine Rothblatt are not "independent" in accordance with Rule 4200(a)(15) of the NASDAQ listing standards, due to Dr. Jeffs' employment as our President and Chief Operating Officer and Dr. Rothblatt's employment as our Chief Executive Officer; (iii) Ray Kurzweil is not "independent" in accordance with Rule 4200(a)(15) of the NASDAQ listing standards due to certain payments received in connection with the technical services agreements described in the section entitled Certain Relationships and Related Transactions below; (iv) Raymond Dwek, Christopher Patusky, Louis Sullivan and Tommy Thompson, who are not standing for election at our Annual Meeting, are "independent" under Rule 4200(a)(15) of the NASDAQ listing standards; and (v) R. Paul Gray, Christopher Patusky, Christopher Causey and Richard Giltner meet the heightened independence standards for audit committee members set forth in Rule 10A-3(b)(1) of the Securities Exchange Act of 1934, as amended.

        In determining that Professor Dwek is "independent," our Board considered the transactions between United Therapeutics and the University of Oxford described in the section entitled Certain Relationships and Related Transactions below.

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Committees of our Board of Directors

        Our Board has established four committees: an Audit Committee, a Compensation Committee, a Nominating and Governance Committee and a Scientific Committee. The current composition of each committee is as follows:

Audit Committee

        The Audit Committee's responsibilities include:

•

Representing and assisting our Board in its oversight responsibilities regarding our accounting and financial reporting processes, the audits of our financial statements, including the integrity of our financial statements, and the qualifications and independence of Ernst & Young, LLP, our independent registered public accounting firm;



•

Retaining and terminating our independent auditors;



•

Approving in advance all audit and non-audit services to be performed by our independent auditors; and



•

Approving related party transactions (as defined under the rules of the Securities and Exchange Commission (SEC)).

        For additional information regarding the processes and procedures used by the Audit Committee, see the section entitled Report of the Audit Committee below.

        The Audit Committee's duties are fully outlined in its charter.

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Compensation Committee

        The Compensation Committee oversees our compensation plans and policies, reviews and approves compensation for our executive officers and administers our equity incentive and share tracking awards plans, including reviewing and approving grants of stock options and share tracking awards to our executive officers and employees. The Compensation Committee's responsibilities include:

•

Creating a system for awarding long-term and short-term performance-oriented incentive compensation to attract and retain senior management, and ensuring that our compensation plans are appropriate, competitive and properly reflect our goals and objectives; and



•

Assisting our Board in discharging its responsibilities regarding compensation of our executive officers.

        For additional information regarding the processes and procedures used by the Compensation Committee, see the section entitled Executive Pay Decisions and Process in the Compensation Discussion & Analysis below.

        The Compensation Committee's duties are fully outlined in its charter.

Independent Compensation Consultant

        The Compensation Committee has the authority to engage advisors to assist it in carrying out its responsibilities. In accordance with this authority, the Compensation Committee directly engages Compensia, Inc. (Compensia) as its compensation consultant to advise it on our executive and non-employee director compensation practices and policies. Compensia has served in this capacity since 2004, and is expected to continue in this role until determined otherwise by either the Compensation Committee or Compensia. The Compensation Committee, in its discretion, may replace Compensia or hire additional consultants at any time. We have determined that Compensia is independent because it does not provide any other services to us and receives compensation only for services it provides to or on behalf of the Compensation Committee.

        The Compensation Committee has engaged Compensia to review and advise it on all principal aspects of executive and non-employee director compensation. This includes base salaries, cash incentive bonus awards, and long-term incentive bonus awards for our executive officers, and cash compensation and long-term incentive awards for non-employee directors. Tasks Compensia performed for the Compensation Committee in 2009 include:

•

Reviewing and advising on the structure of our compensation arrangements (i.e., base salary levels, cash incentive bonus award target levels and the size of long-term incentive bonus award targets) for our Chief Executive Officer and our other executive officers;



•

Providing recommendations regarding the composition of our peer groups;



•

Gathering and analyzing publicly available proxy data for our peer groups and survey data relating to executive compensation;



•

Conducting pay and performance analyses relative to our peer groups;



•

Updating the Compensation Committee on industry trends and best practices with respect to executive long-term incentive compensation program design, including types of long-term incentive compensation awards, size of long-term incentive compensation grants, and aggregate long-term incentive compensation grant usage;



•

Evaluating the United Therapeutics Corporation Share Tracking Awards Plan against industry norms and our design/cost targets;

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Assisting with the drafting of the Compensation Discussion and Analysis for our proxy statement; and



•

Working on special or ad-hoc projects for the Compensation Committee as they arose.

        In the course of fulfilling these responsibilities, Compensia regularly communicates with the Compensation Committee Chairman outside of and prior to most Compensation Committee meetings. The Compensation Committee may invite Compensia to attend its meetings. In 2009, Compensia attended three of the Compensation Committee's twelve meetings.

        Per the Compensation Committee's instructions, Compensia completed these services and advised the Compensation Committee where indicated above. While the Compensation Committee considers Compensia's recommendations, the Compensation Committee's decisions, including the specific amounts paid to our executive officers and directors, are its own and may reflect factors and considerations other than the information and recommendations provided by Compensia.

Nominating and Governance Committee

        In addition to the responsibilities described in the section entitled Director Nominations and Diversity above, the Nominating and Governance Committee's responsibilities include:

•

Proposing nominees for election to our Board;



•

Proposing nominees to fill vacancies and newly created directorships;



•

Reviewing candidates for election to our Board recommended to us by our shareholders;



•

Recommending committee membership and chairmen;



•

Reviewing management succession plans;



•

Developing, evaluating, recommending to our Board and monitoring all matters with respect to corporate governance; and



•

Monitoring our compliance with legal and regulatory obligations.

        The Nominating and Governance Committee's duties are fully outlined in its charter.

Scientific Committee

        On April 1, 2010, our Board established a Scientific Committee. The Scientific Committee's responsibilities include:

•

Providing strategic advice and making recommendations to our Board and management regarding our current and planned research and development programs;



•

Advising our Board and management on the scientific merit of technology or products involved in licensing and acquisition opportunities; and



•

Reviewing new developments, technologies, and trends in biopharmaceutical research and development.

        Scientific Committee members with appropriate scientific expertise also serve as members of our Scientific Advisory Board and act as the Board's liaisons to our Scientific Advisory Board. Our Scientific Advisory Board is composed of scientists and physicians who meet twice a year to discuss and evaluate potential opportunities for our company and guide our scientists as they work to develop improved versions of our existing products. From time to time, our Chairman and Chief Executive Officer will ask Scientific Committee members to review technological developments that are strategically important or promising to our company.

        The Scientific Committee's duties are fully outlined in its charter.

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Committee Charters

        The charter for each Board committee is available electronically in the "Corporate Governance" section of the "Investor Relations" page of our website located at http://ir.unither.com/governance.cfm, or by writing to us at: United Therapeutics Corporation, Attention: Corporate Secretary, 1040 Spring Street, Silver Spring, Maryland 20910, or by sending an e-mail to corporatesecretary@unither.com.

Meetings of our Board of Directors

        Our full Board held seven meetings during 2009. In addition, during 2009, the Audit Committee held nine meetings, the Compensation Committee held twelve meetings, and the Nominating and Governance Committee held three meetings. Each of our directors attended more than 75% of the total number of meetings of our Board and the committees on which he or she served during 2009. In accordance with applicable NASDAQ rules, the independent members of our Board met without management present four times during 2009. We do not have a formal policy regarding director attendance at our annual meeting of shareholders and although our Board encourages all members to attend such meetings, their attendance is not mandatory. All but one member of our Board attended our 2009 annual meeting of shareholders.

Shareholder Communication with Directors

        Shareholders are encouraged to address any director communications to our Corporate Secretary by overnight or certified mail, signature acceptance or return receipt required, at: United Therapeutics Corporation, Attention: Corporate Secretary, 1040 Spring Street, Silver Spring, Maryland 20910. Our Corporate Secretary has the authority to disregard or take other reasonable action with respect to any inappropriate shareholder communications. After confirming the stock ownership of the author of the communication, our Corporate Secretary will review the appropriateness of a shareholder communication based on the relevance of the communication to Board decisions. If deemed an appropriate communication, our Corporate Secretary will submit the shareholder communication to our Lead Independent Director. Shareholders will receive a written acknowledgement from our Corporate Secretary upon receipt of such written communication.

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DIRECTOR COMPENSATION

        Our non-employee directors are eligible to receive stock options under the 1997 United Therapeutics Amended and Restated Equity Incentive Plan (EIP) and awards under the 2008 United Therapeutics Corporation Share Tracking Awards Plan (STAP). Non-employee directors' initial and annual stock option and STAP awards are granted with an exercise price equal to the closing price of our common stock as reported on the NASDAQ Global Select Market (NASDAQ) on the date of grant, or on the preceding trading day if the award is granted on a date when the NASDAQ is not open. Initial grants of stock options or STAP awards, consisting of the initial membership award and a pro-rated amount of the annual award for the remainder of the then-current term, are made on the date of a director's appointment or election to our Board, or on the preceding trading day if the award is granted on a date when the NASDAQ is not open. Annual awards of stock options or STAP awards are made on the date of the first meeting of our Board following our annual meeting of shareholders in the year of grant. Awards of stock options and STAP awards to our non-employee directors become fully vested on the one-year anniversary of the grant date only if the director attends at least 75% of the regularly scheduled meetings of our Board and his or her committee meetings from the date of grant until the date of our next annual meeting of shareholders.

        The following table describes our current compensation practices for non-employee directors. Employee directors do not receive any compensation for service on our Board in addition to their regular compensation as employees.

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        Directors may also be compensated for special assignments from our Board. In 2009, Louis Sullivan and Raymond Dwek received special compensation for serving as members of our Scientific Advisory Board in their capacity as Board members. The compensation received is reported in the Director Compensation table below.

        The following table lists the compensation earned in 2009 by each non-employee director:

Director Compensation

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(1)

Includes annual cash retainer and fees for serving on our Board, the committees of our Board and as Lead Independent Director.

(2)

Represents the aggregate grant date fair value of stock option and STAP awards granted to non-employee directors in 2009, computed in accordance with the rules of the SEC. For a discussion of the valuation assumptions for stock options and STAP awards, see Notes 8 and 11, respectively, to our Consolidated Financial Statements included in our Annual Report on Form 10-K for the year ended December 31, 2009.

(3)

During 2009, Mr. Causey was granted 30,000 stock options with an exercise price of $41.14 and a grant date fair value of $19.56 per share (number of options and per-share prices adjusted for the September 2009 two-for-one split of our common stock). As of December 31, 2009, Mr. Causey had 104,000 stock options outstanding.

(4)

During 2009, Prof. Dwek was granted 30,000 stock options with an exercise price of $41.14 and a grant date fair value of $19.56 per share (number of options and per-share prices adjusted for the September 2009 two-for-one split of our common stock). As of December 31, 2009, Prof. Dwek had 159,334 stock options outstanding.

(5)

During 2009, Mr. Gray was granted 30,000 stock options with an exercise price of $41.14 and a grant date fair value of $19.56 per share (number of options and per-share prices adjusted for the September 2009 two-for-one split of our common stock). As of December 31, 2009, Mr. Gray had 122,000 stock options outstanding.

(6)

During 2009, Mr. Giltner was granted: (a) upon joining our Board on April, 29 2009, 47,500 stock options (number of options and per-share prices adjusted for the September 2009 two-for-one split of our common stock) with an exercise price of $31.04 and a grant date fair value of $14.34 per share (which includes his initial membership award as well as a pro-rated amount of his annual award for the remainder of the then-current term); and (b) as his annual stock option award, 30,000 stock options with an exercise price of $41.14 and a grant date fair value of $19.56 per share (number of options and per-share prices adjusted for the September 2009 two-for-one split of our common stock). As of December 31, 2009, Mr. Giltner had 77,500 stock options outstanding.

(7)

During 2009, Mr. Kurzweil was granted 30,000 awards under our STAP with an exercise price of $41.14 and a grant date fair value of $19.56 per share (number of STAP awards and per-share prices adjusted for the September 2009 two-for-one split of our common stock). As of December 31, 2009, Mr. Kurzweil had 60,000 stock options outstanding and 30,000 STAP awards outstanding.

(8)

During 2009, Prof. Patusky was granted 30,000 awards under our STAP with an exercise price of $41.14 and a grant date fair value of $19.56 per share (number of STAP awards and per-share prices adjusted for the September 2009 two-for-one split of our common stock). As of December 31, 2009, Prof. Patusky had 137,500 stock options outstanding and 30,000 STAP awards outstanding.

(9)

During 2009, Dr. Sullivan was granted 30,000 awards under our STAP with an exercise price of $41.14 and a grant date fair value of $19.56 per share (number of STAP awards and per-share prices adjusted for the September 2009 two-for-one split of our common stock). As of December 31, 2009, Dr. Sullivan had 151,282 stock options outstanding and 30,000 STAP awards outstanding.

(10)

Includes cash fees paid for service on the Scientific Advisory Board as Board liaisons.

(11)

Governor Thompson was appointed to our Board effective January 1, 2010.

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Certain Relationships and Related Party Transactions

Review and Approval of Related Party Transactions

        It is the general practice of our Audit Committee to review all material facts regarding potential related party transactions (as defined under the rules of the SEC), as prepared and presented to the Audit Committee by our Chief Financial Officer and/or our General Counsel. After reviewing all relevant information, the Audit Committee generally approves of or prohibits entering into a related party transaction, taking into account whether the related party transaction is made on arm's length terms no more favorable to the related party than terms generally available to an unaffiliated third party under the same or similar circumstances as well as the nature and extent of the related party's interest in the transaction.

Kurzweil Technologies, Inc. Technical Services Agreements

        In September 2002, we entered into a technical services agreement for certain telemedicine technology development services for our subsidiary, Medicomp, Inc. with Kurzweil Technologies, Inc. (KTI), a company controlled by Ray Kurzweil. Pursuant to this agreement, we paid KTI a monthly consulting fee. In addition, we agreed to pay KTI a five percent royalty on certain sales of products reasonably attributed to and dependent upon the technology developed by KTI under the technical services agreement and which are covered by claims of an issued and unexpired United States patent. We terminated the services performed under this agreement in December 2006, but the royalty obligation survived termination. In late 2009 and early 2010, KTI was awarded patents based on some of its work performed under the technical services agreement. We did not incur any expenses during the year ended December 31, 2009 under this agreement. We are currently evaluating our royalty obligation to KTI under the agreement with regard to certain of our products.

        In May 2007, we entered into a new technical services agreement with KTI. Pursuant to this agreement, we agreed to pay KTI consulting fees of up to $12,000 monthly. We also agreed to reimburse KTI on a monthly basis for all necessary, reasonable and direct out of pocket expenses incurred in connection with its services. Under the agreement, we agreed to pay KTI up to a 5 percent royalty on sales of certain products reasonably attributed to and dependent upon certain technology developed by KTI. We incurred approximately $172,000 in expenses during the year ended December 31, 2009, under this agreement. As of December 31, 2009, no amounts were owed to KTI.

        Our Audit Committee has approved these transactions.

University of Oxford Research Agreements

        In 2000, we entered into a research agreement with the University of Oxford and an agreement for consulting services with Isis Innovation Limited (formerly Oxford University Consulting) with respect to the development of our iminosugar platform. On October 1, 2006, the research agreement was extended through September 30, 2011, obligating us to make 60 equal monthly payments totaling approximately $3.7 million. Under exclusive licenses issued in accordance with the research agreement, we are required to pay the University of Oxford a royalty equal to 1.5% percent of net sales of products arising under these agreements, less certain offsets. We incurred approximately $588,000 in expenses during 2009 under our agreement with the University of Oxford. In 2009, we awarded an additional grant to the University of Oxford of approximately $309,000 to build and support a Category 3 laboratory, a highly-secure laboratory required for working with certain viruses, at the University of Oxford and to expand antiviral research.

        In March 2006, we entered into an agreement with the University of Oxford to fund an annual lecture in virology at the University of Oxford through 2022. Under this agreement, we are obligated to

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make 16 annual payments of £16,000, totaling £256,000. We incurred approximately $25,500 in expenses during 2009 under this agreement.

        Professor Raymond Dwek is a co-discoverer of our iminosugar platform, a co-principal investigator under our research agreement with the University of Oxford, Director of the Glycobiology Institute, and Professor of Glycobiology at the University of Oxford. Our Board and Nominating and Governance Committee each periodically review our agreements with the University of Oxford in light of Professor Dwek's membership on our Board, and have determined that Professor Dwek remains "independent" under Rule 4200(a)(15) of the NASDAQ listing standards. Our Audit Committee has approved these transactions and has determined that these transactions do not constitute related party transactions with respect to Professor Dwek.

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BENEFICIAL OWNERSHIP OF COMMON STOCK

        The following table sets forth certain information as of April 16, 2010 (unless otherwise noted), with respect to the beneficial ownership of our common stock by: (i) each person who we know beneficially owns more than 5% of the outstanding shares of our common stock; (ii) each director and director nominee; (iii) each of our Named Executive Officers (which, for 2009, included our Chief Executive Officer, our Chief Financial Officer, our President and Chief Operating Officer, and our Executive Vice President, Strategic Planning and General Counsel); and (iv) all of our directors and executive officers as a group. Unless otherwise noted, the address of each person listed below is our corporate address.

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*

Less than one percent.

(1)

Beneficial ownership is determined in accordance with the rules of the SEC and generally includes ownership of those shares over which the person has sole or shared voting or investment power. Beneficial ownership also includes ownership of shares of our common stock subject to rights, options and warrants currently exercisable or convertible, or exercisable or convertible within 60 days after April 16, 2010 (currently exercisable). Except where indicated otherwise, and subject to community property laws where applicable, to our knowledge, the persons listed in the table above have sole voting and investment power with respect to their shares of our common stock.

(2)

Ownership percentage is based on [XX,XXX,XXX] shares of our common stock outstanding on April 16, 2010, plus, as to the holder thereof and no other person, the number of shares (if any)

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that the person has the right to acquire as of April 16, 2010, or within 60 days after April 16, 2010, through the exercise of stock options or other similar rights.

(3)

Beneficial ownership information obtained from a Schedule 13G filed by FMR LLC and Edward C. Johnson 3d on February 16, 2010. According to the Schedule 13G, FMR LLC has sole voting power over [120,520] shares, Mr. Johnson has sole voting power over none of the shares and each of them has sole investment power over [8,046,784] of the shares.

(4)

Beneficial ownership information obtained from a Schedule 13D filed by Eli Lilly and Company on December 29, 2008, reporting beneficial ownership as of December 18, 2008. The number of shares reported in the table has been adjusted to reflect the two-for-one split of our common stock on September 22, 2009.

(5)

Beneficial ownership information obtained from a Schedule 13G filed by Sectoral Asset Management Inc., Jerome G. Pfund and Michael L. Sjostrom on February 12, 2010. According to the Schedule 13G, each of them has sole voting power over [2,552,864] shares and sole investment power over [3,485,734] shares. Messrs. Pfund and Sjostrom disclaim beneficial ownership over these shares.

(6)

Beneficial ownership information obtained from a Schedule 13G filed by BlackRock, Inc. on January 29, 2010.

(7)

Includes currently exercisable options to purchase [X,XXX,XXX] shares. Also includes [XXX,XXX] shares held indirectly in trusts.

(8)

Includes currently exercisable options to purchase [XXX,XXX] shares. Also includes [XX,XXX] shares held in a margin account and [X,XXX] shares held by a family limited liability company of which Dr. Jeffs and his spouse are managing members.

(9)

Includes currently exercisable options to purchase [XXX,XXX] shares. Also includes [XX,XXX] shares held in a margin account.

(10)

Includes currently exercisable options to purchase [XXX,XXX] shares.

(11)

Includes currently exercisable options to purchase [XXX,XXX] shares.

(12)

Includes currently exercisable options to purchase [XXX,XXX] shares. Also includes [X,XXX] shares held in a margin account and [X,XXX] shares held in a family trust with Prof. Patusky as trustee.

(13)

Includes currently exercisable options to purchase [XXX,XXX] shares.

(14)

Includes currently exercisable options to purchase [XX,XXX] shares.

(15)

Includes currently exercisable options to purchase [XX,XXX] shares. Also includes [XXX] shares held in a margin account and [X,XXX] shares held in a Uniform Gift to Minors Act account for the benefit of Mr. Causey's children with his spouse as trustee.

(16)

Includes currently exercisable options to purchase [XX,XXX] shares.

(17)

Includes currently exercisable options to purchase [X,XXX] shares.

(18)

Mr. Thompson joined our Board on January 1, 2010.

(19)

Includes currently exercisable options to purchase [X,XXX,XXX] shares.

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PROPOSAL NO. 2: APPROVAL OF AMENDMENT TO AMENDED AND RESTATED CERTIFICATE OF INCORPORATION TO INCREASE AUTHORIZED NUMBER OF SHARES OF COMMON STOCK

        We are asking our shareholders to approve an amendment to our Amended and Restated Certificate of Incorporation (Certificate) to increase the authorized number of shares of our common stock from 100,000,000 to 245,000,000. The proposed amendment was adopted, subject to shareholder approval, by the unanimous vote of our Board on April 1, 2010.

        Last amended in 1999, the Certificate currently authorizes up to 100,000,000 shares of common stock for issuance, of which 57,904,869 shares are issued (including 2,461,590 shares held in treasury) and 42,095,131 shares are available for issuance as of March 19, 2010. Of the 42,095,131 shares available for issuance, 7,695,693 are subject to outstanding stock options under our EIP, 11,516,188 have been reserved for future issuance under our EIP, 8,041,650 have been reserved for issuance under our convertible senior notes and 6,646,664 have been reserved for issuance under outstanding warrants to purchase our common stock. The proposed amendment to our Certificate would increase the number of shares of common stock authorized for issuance by 145,000,000 shares, to a total of 245,000,000 shares. The number of shares of preferred stock authorized for issuance under our Certificate would remain unchanged, at 10,000,000 shares.

        Our Board believes it is imperative that we maintain the flexibility to issue additional shares of common stock in connection with stock splits, stock dividends, acquisitions and other strategic transactions, financings, employee incentive compensation plans and other proper corporate purposes, should our Board deem any of those actions to be in the best interests of our company and our shareholders. Currently, however, only 8,194,936 shares of our common stock remain unissued and unreserved, and only 2,461,590 treasury shares are available for our use. If our shareholders do not approve the proposed amendment to our Certificate, we may not be able to complete strategic transactions, access the capital markets, retain employees and pursue other business opportunities integral to our growth and success. Our Board believes that the proposed increase in authorized common stock will make sufficient shares available to maintain the flexibility necessary to pursue our strategic objectives. After all, pursuit of our strategic objectives has resulted in both nine consecutive years of more than 30% annual revenue growth and a greater than 30% compounded annual growth rate in the price of our common stock over the past eight years. Our Board believes that we should have the flexibility to issue additional shares of common stock in order to stay on this growth trajectory.

        Over the past several years, flexibility has allowed us to pursue a number of strategic transactions and other business opportunities. For example, in order to increase the liquidity and marketability of our common stock, we recently issued 26,833,484 shares to provide a two-for-one stock dividend to our shareholders. In 2008, we issued 6,301,674 shares of our common stock out of treasury to Eli Lilly and Company in connection with a series of agreements pursuant to which we acquired certain exclusive commercialization rights to Adcirca® (tadalafil) tablets, an oral therapy for the treatment of pulmonary arterial hypertension. We commenced commercial sales of Adcirca during the third quarter of 2009. We also issued 400,000 shares of our common stock in 2007 to Toray Industries, Inc., in connection with an agreement relating to the commercialization of beraprost-MR, a chemically stable oral prostacyclin analogue that has received regulatory approval in Japan for the treatment of pulmonary arterial hypertension and has been designated an orphan medicinal product by the European Medicines Agency. Additionally, in 2006, we issued $250.0 million of 0.50% convertible senior notes due October 2011 (Convertible Senior Notes) in order to repurchase shares of our common stock in privately negotiated transactions, to obtain additional working capital, and to concurrently enter into call option and warrant agreements with Deutsche Bank AG London to reduce the potential dilutive impact of the Convertible Senior Notes. The Convertible Senior Notes and the warrant required us to reserve shares of our common stock for issuance in the amounts noted above. Unless our shareholders approve the

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proposed amendment to our Certificate, we may not have sufficient unissued and unreserved authorized shares to engage in similar transactions in the future.

        In addition, upon reviewing the capitalization of our peer companies, we determined that our percentage of authorized shares available for issuance is significantly lower than the percentages held by our peer companies. Accordingly, our Board is asking our shareholders to vote in favor of this proposed amendment to our Certificate to increase the number of shares of common stock authorized for issuance from 100,000,000 shares to 245,000,000 shares.

        If this proposal is approved and the amendment becomes effective, Article V, paragraph (a) of the Certificate, which sets forth our currently authorized capital stock, will be amended to read in its entirety as follows:

        While we are not at this time party to any plan, proposal or arrangement, written or otherwise, to issue any of the newly authorized shares of common stock for any purpose, including acquisitions or financings, we intend to continue to pursue opportunities and transactions to further our strategic objectives. Accordingly, in the future, we may enter into or develop a plan, proposal or arrangement, written or otherwise, to issue all or a portion of the newly authorized shares of common stock. No additional action or authorization by our shareholders would be necessary prior to the issuance of such additional shares, unless required by applicable law or the rules of any stock exchange or national securities association trading system on which our common stock is then listed or quoted.

Effects of the Increase in Authorized Common Stock

        While the proposed increase in the number of authorized shares of our common stock is not intended by management or our Board to prevent or discourage any actual or threatened takeover of our company, under certain circumstances, it could have an anti-takeover effect. Additional shares could be issued (within the limits imposed by applicable law) in one or more transactions that could resist, frustrate or make more difficult a third-party transaction that was favored by a majority of the independent shareholders and that might provide an above-market premium. The holders of our common stock are not entitled to preemptive rights; consequently, additional shares could be issued to dilute the stock ownership or voting rights of persons seeking to obtain control of our company. Similarly, the issuance of additional shares to persons allied with our management could have the effect of making it more difficult to remove our management by diluting the stock ownership or voting rights of persons seeking to effect such removal. Any such additional shares could be issued in private placements and without shareholder approval or further action by our shareholders, subject to applicable law or the rules of any stock exchange or national securities association trading system on which our common stock is then listed or quoted. Accordingly, if the proposal is adopted, the increase in the number of authorized shares of common stock may render more difficult or discourage a merger, tender offer or proxy contest, the assumption of control by a holder of a large block of our common stock, or the replacement or removal of management or our Board. Any such anti-takeover effect may be beneficial to management and our Board and could have an adverse impact on shareholders.

        We are not currently aware of any specific third-party effort to accumulate shares of common stock or to obtain control of our company by means of a merger, tender offer or solicitation in opposition to management or our Board. Moreover, we currently have no plans to issue newly authorized shares of common stock or adopt other anti-takeover proposals intended to discourage third parties from

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attempting to take over our company. Although our Board is motivated by business and financial considerations in proposing the increase in the number of authorized shares of common stock, and not the threat of any attempt by a third party to gain control of our company, shareholders nevertheless should be aware that increasing the number of authorized shares of common stock could facilitate management's ability to deter or prevent changes in control in the future, and any issuance of newly authorized shares of common stock, regardless of the intent, could have an anti-takeover effect.

Certain Existing Anti-Takeover Mechanisms

        Certain provisions of Delaware law and our Certificate, By-laws, shareholder rights agreement, employment and license agreements and Convertible Senior Notes may prevent, delay or discourage a merger, tender offer or proxy contest, the assumption of control by a holder of a large block of our common stock, or the replacement or removal of management or our Board.

        Our Certificate authorizes undesignated preferred stock, which makes it possible for our Board, without shareholder approval or further action by our shareholders, to issue preferred stock with voting or other rights or preferences that could impede the success of an attempt to obtain control of our company. In addition, the Certificate provides for a classified Board with three-year staggered terms, which could delay the ability of shareholders to change membership of a majority of our Board or could deter the accumulation of large blocks of our common stock by limiting the voting power of such blocks. The Certificate also eliminates shareholders' ability to take action by written consent without a meeting, which makes it more difficult for shareholders to take action opposed by our Board.

        Under our By-laws, special meetings of shareholders may be called only by a majority vote of our Board, or by the Chairman, a Vice Chairman or the President. Our By-laws also contain advance notice provisions that restrict shareholders' rights to present shareholder proposals at our shareholders' meetings. In addition, the By-laws permit shareholders to remove directors only for cause and only with the affirmative vote of the holders of at least 80% of the voting power of the then outstanding shares of stock of our company. Moreover, vacancies in our Board may be filled only by the vote of a majority of directors then in office, which could limit the ability of a potential acquiror to appoint representatives to our Board prior to our annual meeting of shareholders. Our shareholders do not have cumulative voting rights, and directors are elected by a plurality of the votes cast.

        We are subject to Section 203 of the Delaware General Corporation Law, which generally prohibits a publicly held Delaware corporation from engaging in a "business combination" with an "interested shareholder" for a period of three years after the date of the transaction in which the person became an interested shareholder, unless the business combination is approved in a prescribed manner. This provision may have an anti-takeover effect with respect to transactions not approved in advance by our Board, including discouraging takeover attempts that might result in a premium over the market price for the shares of common stock held by shareholders.

        We have also adopted a shareholder rights agreement, commonly referred to as a "poison pill." The rights agreement is designed to protect and maximize the value of our outstanding equity interests in the event of an unsolicited attempt to acquire our company in a manner or on terms not approved by our Board that prevent our shareholders from realizing the full value of their shares of common stock. The triggering and exercise of the rights subject to the rights agreement would cause substantial dilution to a person or group attempting to acquire our company on terms or in a manner not approved by our Board, except pursuant to an offer conditioned upon redemption of the rights. As a result, the rights agreement may have the effect of rendering more difficult or discouraging a takeover that our Board considers undesirable.

        Non-competition and other restrictive covenants in most of our employment agreements will terminate upon a change in control that is not approved by our Board. Further, we enter into certain license agreements that generally prohibit our counterparties to these agreements or their affiliates

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from taking necessary steps to acquire or merge with us, directly or indirectly, throughout the term of these agreements, plus a specified period thereafter. We are also party to certain license agreements that restrict our ability to assign or transfer the rights licensed to us to third parties, including parties with whom we wish to merge, or those attempting to acquire us. These agreements often require that we obtain the prior consent of the counterparties to these agreements if we are contemplating a change-in-control. If our counterparties to these agreements withhold their consent, related agreements could be terminated and we would lose related license rights. These restrictive change-in-control provisions could impede or prevent mergers that could benefit our shareholders.

        We may be required to repurchase our Convertible Senior Notes in the event of a fundamental change, which includes a takeover of our company. This may delay or prevent a takeover of our company that would otherwise be beneficial to our shareholders.

Required Vote and Effective Date of Proposed Amendment

        The affirmative vote of the holders of a majority of the shares of our common stock outstanding and entitled to vote at our Annual Meeting is required for approval of the proposed amendment.

        If our shareholders approve the proposed amendment, it will become effective upon filing of a certificate of amendment to the Certificate with the Delaware Secretary of State, which we anticipate doing as soon as practicable following shareholder approval. However, if our shareholders approve the proposed amendment to our Certificate, our Board retains discretion under Delaware law not to implement the proposed amendment. If our Board were to exercise such discretion, the number of authorized shares would remain at current levels.

OUR BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE "FOR"
THE AMENDMENT TO OUR AMENDED AND RESTATED CERTIFICATE OF
INCORPORATION TO INCREASE THE AUTHORIZED NUMBER OF SHARES OF COMMON STOCK

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PROPOSAL NO. 3: RATIFICATION OF THE APPOINTMENT
OF ERNST & YOUNG LLP AS UNITED THERAPEUTICS CORPORATION'S
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR 2010

        The Audit Committee of our Board has appointed Ernst & Young LLP as our independent registered public accounting firm for the year ended 2010. Services provided to us and our subsidiaries by Ernst & Young LLP in 2009 are described under the section entitled Principal Accountant Fees and Services below.

        We ask that our shareholders vote to ratify the appointment of Ernst & Young LLP as our independent registered public accounting firm. Although ratification is not required by our By-laws or otherwise, our Board has chosen to submit the ratification of Ernst & Young LLP's appointment to our shareholders as a matter of good corporate practice.

        Representatives of Ernst & Young LLP are expected to be present at our Annual Meeting to respond to appropriate shareholder questions and to make such statements as they may desire.

        The affirmative vote of the holders of a majority of the shares of our common stock present, in person or by proxy, and entitled to vote at our 2010 annual meeting of shareholders is required for ratification.

OUR BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE "FOR"
RATIFICATION OF THE APPOINTMENT OF ERNST & YOUNG LLP AS OUR
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR 2010

        In the event our shareholders do not ratify the appointment of Ernst & Young LLP, such appointment will be reconsidered by the Audit Committee and our Board. Even if the appointment of Ernst & Young LLP is ratified, the Audit Committee, in its discretion, may select a different registered public accounting firm at any time during the year if it determines that such a change would be in our best interests and those of our shareholders.

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COMPENSATION DISCUSSION AND ANALYSIS

        This Compensation Discussion and Analysis describes the Compensation Committee's compensation objectives and policies for our Named Executive Officers, including executive pay decisions and processes and all elements of our executive compensation program.

        Our Named Executive Officers in 2009 consisted of the following four individuals:

Executive Summary

        2009 was an eventful year for us. We received FDA approval for two new products, Adcirca® (tadalafil) tablets and Tyvaso® (treprostinil) Inhalation Solution. We also continued to grow our revenues, achieving our ninth consecutive year of more than 30% annual revenue growth. In addition, since 2001, the compounded annual growth rate in the price of our common stock has been greater than 30%. Even in light of the unprecedented international economic climate, the price of our common stock rose 61% in 2009. For the first half of 2009, our Named Executive Officers realized 30% of one-half of their annual cash incentive bonus target opportunities, and, other than our Chief Executive Officer, between 80 - 95% of one-half of their long-term incentive bonus target opportunities (our Chief Executive Officer does not receive mid-year long-term incentive bonus compensation). For the second half of 2009, our Named Executive Officers realized 83% of one-half of their annual cash incentive bonus target opportunities, and, other than our Chief Executive Officer, 100% of one-half of their annual long-term incentive bonus target opportunities. In accordance with the terms of her employment agreement, which took into account the rise in our market capitalization from December 2008 to December 2009, our Chief Executive Officer was awarded options to purchase 625,396 shares of our common stock. For 2009, actual total direct compensation (defined as annual base salary plus annual cash incentive bonus plus the fair value of long-term incentive bonus awards) (Actual Total Direct Compensation) for our Named Executive Officers was, on average, above the 75th percentile of the Similarly Situated Peer Group (as defined below) and at the 75th percentile of the High Performing Peer Group (as defined below).

        Our Board believes that we have an exceptional leadership team (including each of our Named Executive Officers) and that their leadership is one of the principal reasons why we have consistently generated industry-leading performance over the past nine years in terms of revenue growth and average stock price increase. The Compensation Committee believes it is critical to our future success that we retain and reward our Named Executive Officers in a manner that supports a strong pay-for-performance philosophy. In other words, the compensation realized by our Named Executive Officers should reflect our financial and operational performance and the value realized by our shareholders. The Compensation Committee believes that these objectives are accomplished through the following executive compensation principles and processes:

•

Compensation for our Named Executive Officers is benchmarked every two years against two peer groups (described more fully in the section entitled Benchmarks below) in order to provide competitive compensation to our executives and to forestall their loss to competitors.



•

Bonus opportunity targets are established at or above the 75th percentile of the Similarly Situated Peer Group (as defined below) and at or above the 50th percentile of the High Performing Peer Group (as defined below) for each element of target total direct compensation (defined as base salary plus annual cash incentive bonus target opportunity plus the grant date fair value of the annual long-term incentive bonus target opportunity)(Target Total Direct

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Compensation). The Compensation Committee's program is flexible enough to allow it to provide compensation above or below these targets so that the compensation realized by our Named Executive Officers is aligned with our performance.

•

A substantial portion of Target Total Direct Compensation is delivered in the form of variable, performance-based compensation consisting of cash, stock options and STAP awards. Target Total Direct Compensation is structured with the intent to create an appropriate balance between our long-term and short-term performance and a positive relationship between our financial and operational performance and shareholder return. For 2009, our Named Executive Officers' variable performance-based compensation comprised an average of approximately 90% of Target Total Direct Compensation, approximately the same percentage as in 2008. In particular, in 2009, an average of approximately 70% of Actual Total Direct Compensation for our Named Executive Officers other than Dr. Rothblatt was delivered in the form of STAP awards, which supports the Compensation Committee's objective to provide significant incentives to our Named Executive Officers to increase shareholder value and to align their interests with those of our shareholders. In addition, our Named Executive Officers did not receive an increase in their salaries for 2009. Rather, the Compensation Committee chose to increase only the at-risk portions of their total compensation.



•

In order to promote the retention of our Named Executive Officers and other key executives, certain elements of our executive compensation program require continued employment in order to receive a payout. In particular, in order to be entitled to any benefit under our Supplemental Executive Retirement Plan (SERP), an executive must remain employed with us until at least age 60 (other than in the cases of death or disability or a change in control). Additionally, beginning in 2010, grants of STAP awards to our Named Executive Officers, other than our Chief Executive Officer, are structured to vest in equal amounts over a four-year period (STAP awards granted prior to 2010 were subject to a three-year vesting period).

        Our compensation program for our Named Executive Officers is developed by the Compensation Committee with input from our Chief Executive Officer (other than with respect to her compensation) and Compensia. See the section entitled Independent Compensation Consultant above for more information regarding Compensia. No other members of our management team are involved in compensation decisions for our Named Executive Officers. The ultimate decision-making authority regarding compensation for our Named Executive Officers rests with the Compensation Committee. While the Compensation Committee considers the recommendations of our Chief Executive Officer and Compensia, the Compensation Committee's decisions are its own and may reflect factors and considerations other than the information and recommendations provided by our Chief Executive Officer and Compensia.

Compensation Guiding Principles

        Our executive compensation program is designed to achieve four primary objectives: (i) to attract and retain highly-competent executive officers capable of leading our company to the fulfillment of its business objectives and continued growth to augment shareholder value; (ii) to offer competitive compensation opportunities that reward individual contributions and corporate performance; (iii) to align the interests and compensation of our Named Executive Officers with the value created for shareholders through a strong pay-for-performance culture; and (iv) to incentivize our Named Executive Officers to consider the long-term as well as the short-term best interests of our company.

        The Compensation Committee believes that a significant portion of Target Total Direct Compensation for our Named Executive Officers should be dependent on our achievement of pre-determined operational goals and increasing shareholder value. For this reason, the Compensation Committee is focused on increasing at-risk compensation as a percentage of total compensation.

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Review of 2009 Executive Compensation Decisions

Summary of 2009 Compensation

        The main components of our Named Executive Officers' Target Total Direct Compensation are base salary, cash incentive bonus compensation, and long-term incentive bonus compensation. The following table shows our Named Executive Officers' base salaries and target variable compensation for 2009 and the amount of any increase of such compensation over that for 2008. The basis for the Compensation Committee's decisions with respect to each component of 2009 compensation is discussed in greater detail below.

Summary 2009 Target Compensation

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(1)

The long-term incentive bonus target is used by the Compensation Committee to determine the number of STAP awards granted to our Named Executive Officers other than Dr. Rothblatt for the first and second halves of the year.

(2)

Long-term incentive bonus awards for Dr. Rothblatt, if any, are determined at the end of each calendar year in accordance with a formula set forth in her employment agreement, which takes into account the rise, if any, in our market capitalization each year based on the average closing price of our common stock for the month of December. For a description of Dr. Rothblatt's long-term incentive bonus award opportunity, see the narrative under the section entitled Individual Equity Incentive Compensation Plan following the Grants of Plan-Based Awards for 2009 table below.

2009 Base Salary

        Base salary is the primary fixed element of the compensation packages for our Named Executive Officers. The Compensation Committee reviews and establishes base salary amounts for our Named Executive Officers each year taking into consideration the following three factors: (i) a subjective evaluation of individual performance, including contribution to the advancement of corporate objectives, impact on financial results, and strategic accomplishments; (ii) our overall performance, financial condition and prospects; and (iii) the annual compensation received by executives holding comparable positions at our peers as described in the section entitled Benchmarking of Compensation, Target Pay Position, Tally Sheets and Other Factors Affecting Compensation Decisions below.

        In March 2009, the Compensation Committee approved the base salaries for our Named Executive Officers listed in the Summary 2009 Target Compensation table above. The Compensation Committee reviewed the competitive data and determined that the 2008 base salaries were at or near the desired benchmarks and therefore decided not to increase base salaries for our Named Executive Officers for 2009.

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2010 Base Salary

        In January 2010, the Compensation Committee set the 2010 base salaries for our Named Executive Officers. All of our employees other than our Named Executive Officers received an average base salary increase of 3% in 2010. The Compensation Committee set the 2010 base salaries for our Named Executive Officers as follows:

        In making a determination with regard to 2010 base salaries for our Named Executive Officers, the Compensation Committee strove to provide competitive compensation while significantly increasing emphasis on performance-based compensation. The Compensation Committee also intended to bring Dr. Rothblatt's and Mr. Ferrari's base salaries more in line with those of executives at companies in the High Performing Peer Group (discussed below under Benchmarks). For these reasons, Dr. Rothblatt's and Mr. Ferrari's base salaries were increased by 11% and 10%, respectively, to bring them closer to the 50th percentile of the High Performing Peer Group. Mr. Mahon's and Dr. Jeffs' base salaries were increased at the same level as the average increase given to all employees for 2010 because their base salaries were already above the 50th percentile of the High Performing Peer Group.

Company-Wide Milestone Incentive Bonus Program

        Our Company-wide Milestone Incentive Bonus Program establishes a combination of qualitative and/or quantitative metrics, as appropriate, which we call Company-wide Milestones. Our Company-wide Milestones can change from year to year as we seek to align performance metrics with changing fundamental business objectives. In the past, we have had between three and ten different Company-wide Milestones at any given time. The Compensation Committee, in its discretion, may amend our Company-wide Milestones from time to time, to reflect core performance measures for the success of our business and to set goals that translate most directly into short-, medium- and long-term value growth.

        The Compensation Committee reviews our achievement of the Milestones on a semi-annual basis and reviews the Milestones' metrics to harmonize them with our growth strategy. Our Company-wide Milestone Incentive Bonus Program is assessed on a semi-annual basis because the Compensation Committee believes that reviewing our performance twice a year, instead of once a year, produces better performance from our Named Executive Officers. In addition, the environment in which we operate is so dynamic that adjusting performance metrics less frequently than every six months risks setting goals that would either prove frustratingly unrealistic or too easy to achieve.

        The Milestone performance targets are difficult to meet, and require significant leadership and execution on the part of our Named Executive Officers. Because of this, the Compensation Committee believes it is appropriate to align cash incentive bonus award decisions with Milestone achievement. The Compensation Committee believes that using Milestone achievement as a basis for this determination effectively supports its objectives related to promoting a strong pay-for-performance culture and rewarding our Named Executive Officers for strong corporate performance.

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2009 Company-Wide Milestone Incentive Bonus Program

        Our Company-wide Milestones for 2009 were:

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(1)

We measure communication under this Milestone through surveys of physicians who are visited by our sales representatives. The surveys are targeted to measure physician awareness of key messages about our products that we would like to convey to the marketplace. The level of physician awareness of these key messages translates into achievement under this Milestone.

        The specific components for achievement of each Milestone are set forth in the corresponding Partial Credit Performance Goals. The Compensation Committee may award partial credit for any Milestone based on achievement of certain components but not others.

Partial Credit Performance Goals

2010 Company-Wide Milestone Incentive Bonus Program

        The Compensation Committee, in its discretion, amends the Company-wide Milestones from time to time, to reflect core performance measures for the success of the Company's business. On

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December 15, 2009, the Compensation Committee approved modifications to the Milestones under our Company-wide Milestone Incentive Bonus Program.

        The Compensation Committee amended and consolidated the Milestones in the Program, decreasing the number of Milestones from five to four, and made the following changes to the criteria: (i) Milestone 1 remains unchanged; (ii) Milestone 2 now uses an increase in the number of prescriptions for our products as a metric for our financial growth between each measuring period; (iii) Milestone 3 consolidated the former research and development and manufacturing milestones under one umbrella; and (iv) Milestone 4 places increased emphasis on ethical conduct, particularly by our sales and marketing personnel, rather than absence of material legal problems. Each Milestone is weighted equally at 25%.

        The revised 2010 Milestones, which will be the metrics for cash incentive bonus awards for our Named Executive Officers to be paid on September 15, 2010 (for the first-half 2010 evaluation period) and March 15, 2011 (for the second-half 2010 evaluation period), are:

Partial credit may be earned under Milestones 2 and 3 as follows:

Partial Credit Performance Goals

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(1)

Reflects the adjustment made to outstanding STAP awards granted to our Named Executive Officers prior to September 2009 for the two-for-one split of our common stock on September 22, 2009.

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(1)

Reflects the adjustment made to outstanding STAP awards granted to our Named Executive Officers prior to September 2009 for the two-for-one split of our common stock on September 22, 2009.

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(1)

The 2009 long-term incentive bonus target opportunities for our Named Executive Officers were not adjusted for the two-for-one split of our common stock on September 22, 2009. Only STAP awards outstanding on the date of the stock split were adjusted.

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(1)

For this analysis, the Compensation Committee assumed that the "target" is an award of 250,000 stock options for Dr. Rothblatt and awards of 60% of the long-term incentive bonus target opportunities listed in the Summary 2009 Target Compensation table above for each of our Named Executive Officers other than Dr. Rothblatt.