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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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NOTICE

and

PROXY STATEMENT

for

ANNUAL MEETING OF SHAREHOLDERS

MAY 16, 2019

10 Finderne Avenue, Building 10
Bridgewater, New Jersey 08807

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Insmed Incorporated
10 Finderne Avenue, Building 10
Bridgewater, New Jersey 08807
(908) 977-9900

April 4, 2019

To Our Shareholders:

              We cordially invite you to attend the 2019 Annual Meeting of Shareholders of Insmed Incorporated (Insmed) to be held at the Short Hills Hilton, 41 John F. Kennedy Parkway, Short Hills, NJ 07078 on May 16, 2019, at 9:00 a.m. local time (the Annual Meeting). A formal notice of the Annual Meeting accompanies this letter. At the Annual Meeting, the following items will be submitted to a shareholder vote:

1.

election of three Class I directors, Alfred F. Altomari, Steinar J. Engelsen, M.D., and William H. Lewis, to serve until the 2022 Annual Meeting of Shareholders;



2.

an advisory vote on the 2018 compensation of our named executive officers;



3.

ratification of the appointment of Ernst & Young LLP as our independent registered public accounting firm for the year ending December 31, 2019;



4.

approval of the Insmed Incorporated 2019 Incentive Plan; and



5.

transaction of such other business as may properly come before the Annual Meeting or any adjournment or postponement thereof.

              Your vote is important, and the company encourages you to vote. Please read the notice and proxy materials carefully, and vote promptly by telephone, electronically through the Internet, or by returning a completed proxy card by mail. You may also vote in person at the Annual Meeting. Whether or not you plan to attend the Annual Meeting in person and regardless of the number of shares of Insmed common stock you own, please vote by proxy prior to the Annual Meeting.

              You may inspect a list of shareholders of record as of the record date at Insmed's headquarters during regular business hours starting on April 8, 2019 through the date of the Annual Meeting, and the list of shareholders will be available at the Annual Meeting for inspection.

This Proxy Statement is first being mailed to shareholders on or about April 4, 2019.

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INSMED INCORPORATED
10 Finderne Avenue, Building 10
Bridgewater, New Jersey 08807
(908) 977-9900

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NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON MAY 16, 2019

              NOTICE IS HEREBY GIVEN that the 2019 Annual Meeting of Shareholders of Insmed Incorporated (Insmed) will be held at the Short Hills Hilton, 41 John F. Kennedy Parkway, Short Hills, NJ 07078, on May 16, 2019, at 9:00 a.m. local time (the Annual Meeting), and at any adjournment or postponement thereof, for the following purposes:

1.

To elect three Class I directors, Alfred F. Altomari, Steinar J. Engelsen, M.D., and William H. Lewis, to serve until the 2022 Annual Meeting of Shareholders;



2.

To conduct an advisory vote on the 2018 compensation of our named executive officers;



3.

To ratify the appointment of Ernst & Young LLP as our independent registered public accounting firm for the year ending December 31, 2019;



4.

To approve the Insmed Incorporated 2019 Incentive Plan; and



5.

To transact such other business as may properly come before the Annual Meeting or any adjournment or postponement thereof.

              Holders of record of shares of Insmed common stock at the close of business on March 22, 2019 will be entitled to vote at the Annual Meeting.

              You are requested to vote promptly by telephone, electronically through the Internet, or by returning a completed proxy card by mail regardless of whether you expect to attend the Annual Meeting. If you are present at the Annual Meeting, you may vote in person even if you already have sent in your proxy. If you are a beneficial owner, you may not vote your shares in person at the Annual Meeting unless you request and obtain a valid proxy from your broker or other agent.

April 4, 2019

IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE INSMED INCORPORATED ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON MAY 16, 2019: The Proxy Statement and Annual Report on Form 10-K for the year ended December 31, 2018 are available at www.proxyvote.com.

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PROXY STATEMENT
for
ANNUAL MEETING OF SHAREHOLDERS
of
INSMED INCORPORATED
To be held May 16, 2019

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In this Proxy Statement, we use the words "Insmed Incorporated" to refer to Insmed Incorporated, a Virginia corporation, and we use the words "Company," "Insmed," "we," "us" and "our" to refer to Insmed Incorporated and its consolidated subsidiaries. Insmed, CONVERT and ARIKAYCE are trademarks of Insmed Incorporated. This Proxy Statement also contains trademarks of third parties. Each trademark of another company appearing in this Proxy Statement is the property of its owner.

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PROXY STATEMENT
for
ANNUAL MEETING OF SHAREHOLDERS
of
INSMED INCORPORATED
To be held May 16, 2019

GENERAL INFORMATION ABOUT THE ANNUAL MEETING AND VOTING

Distribution of Proxy Solicitation and Other Required Annual Meeting Materials

              The Board of Directors (the Board) of Insmed Incorporated is soliciting your proxy for the Annual Meeting of Shareholders to be held at the Short Hills Hilton, 41 John F. Kennedy Parkway, Short Hills, NJ 07078, on May 16, 2019, at 9:00 a.m. local time (the Annual Meeting), and any adjournment or postponement thereof. We intend to make the Proxy Statement and related proxy materials available to our shareholders on or about April 4, 2019.

Information about the Annual Meeting and Voting at or Prior to the Annual Meeting

              Why Did I Receive a One-page Notice in the Mail Regarding the Internet Availability of Proxy Materials this Year Instead of a Full Set of Proxy Materials?

              Pursuant to rules adopted by the Securities and Exchange Commission (SEC), we have elected to mail to many of our shareholders a Notice of Internet Availability of the Proxy Materials (the Notice) instead of a paper copy of the proxy materials. All shareholders receiving the Notice will have the ability to access the proxy materials over the Internet and receive a paper copy of the proxy materials by mail on request. Instructions on how to access the proxy materials over the Internet or to request a paper copy may be found in the Notice. In addition, the Notice contains instructions on how you may request proxy materials in printed form by mail or electronically on an ongoing basis. This process has allowed us to expedite our shareholders' receipt of proxy materials, lower the costs of distribution and reduce the environmental impact of our Annual Meeting.

              Who May Vote Shares in Connection with the Annual Meeting?

              Shareholders of record at the close of business on March 22, 2019 (the Record Date), will be entitled to notice of and to vote at the Annual Meeting. As of the Record Date, we had 77,591,460 outstanding shares of our common stock, $0.01 par value per share (the Common Stock). Each share of our Common Stock entitles the holder to one vote with respect to all matters submitted to shareholders at the Annual Meeting. Beneficial owners of shares of our Common Stock may direct the record holder of the shares on how to vote the shares held on their behalf.

              What is a Shareholder of Record and How Can I Vote if I am a Shareholder of Record?

              If, on the Record Date, shares of our Common Stock were registered directly in your name with our transfer agent, then you are a shareholder of record. As a shareholder of record, you may vote by proxy or in person at the Annual Meeting.

              If you are a shareholder of record, you may vote or submit a proxy as follows:

1.

By Internet—You may authorize the voting of your shares by following the "Vote by Internet" instructions set forth on the notice or proxy card through 11:59 p.m. Eastern

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Time on Wednesday, May 15, 2019. You must specify how you want your shares voted or your vote will not be completed and you will receive an error message.

2.

By Telephone—Dial 1-800-690-6903 using any touch-tone phone to transmit your voting instructions through 11:59 p.m. Eastern Time on Wednesday, May 15, 2019. Have your proxy card in hand when you call and follow the voting instructions given to you over the phone.



3.

By Mail—Complete and sign the proxy card and mail it in accordance with the instructions on the proxy card. Completed proxy cards must be received by 9:00 a.m. Eastern Time on Thursday, May 16, 2019.



4.

In Person at the Meeting—If you attend the Annual Meeting, you may deliver a completed and signed proxy card in person or you may vote by completing a ballot, which we will provide to you at the Annual Meeting.

              In all cases, your shares will be voted according to your instructions.

              What is a Beneficial Owner of Shares and How Can I Vote if I am a Beneficial Owner?

              If, on the Record Date, your shares of our Common Stock were not held in your name with our transfer agent, but rather were held in an account at a brokerage firm, bank, dealer, or other similar organization, then you are the beneficial owner of shares held in "street name," and these proxy materials have been forwarded to you by that organization. The organization holding your account is considered to be the shareholder of record for purposes of voting at the Annual Meeting and is required to vote those shares in accordance with your instructions. If you do not give instructions to the organization holding your account, then the organization will have discretion to vote the shares with respect to "routine" matters but will not be permitted to vote the shares with respect to "non-routine" matters. See "What Matters at the Annual Meeting are 'Routine' and 'Non-Routine'?" below. As a beneficial owner, you are invited to attend the Annual Meeting. If you are a beneficial owner and not the shareholder of record, you may not vote your shares in person at the Annual Meeting unless you request and obtain a valid proxy from your broker or other agent.

              What is the Quorum Requirement?

              A quorum of shareholders is necessary to hold the Annual Meeting. Shares of our Common Stock representing a majority of the votes entitled to be cast on a matter at the Annual Meeting (or 38,795,731 shares as of the Record Date) will constitute a quorum for the transaction of business with respect to such matter, unless otherwise provided by law or in our Articles of Incorporation, as amended (Articles of Incorporation). Votes withheld, abstentions and broker non-votes count as present for establishing a quorum.

              What Matters at the Annual Meeting are "Routine" and "Non-Routine"?

              Proposal 1, the election of Class I directors, Proposal 2, the advisory vote on the compensation of our named executive officers, and Proposal 4, the approval of the Insmed Incorporated 2019 Incentive Plan (the "2019 Incentive Plan"), are non-routine matters. Proposal 3, the ratification of the appointment of an independent registered public accounting firm, is a routine matter. If you are a beneficial owner of shares and do not instruct your broker or other agent how to vote, your shares will not be voted on "non-routine" matters and your shares will be "broker non-votes" with respect to those proposals.

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              What are the Voting Requirements to Approve Each Proposal to be Submitted to Shareholders?

              The vote required to elect directors and approve each of the matters scheduled for a vote at the Annual Meeting is set forth below:

              Proposal 1, the election of Class I directors, requires a plurality of the votes cast. This means that the three nominees who receive the highest number of affirmative votes cast will be elected irrespective of how small the number of affirmative votes is in comparison to the total number of shares voted. Our Board, however, has adopted a director resignation policy, under which a director nominee in an uncontested election must submit his or her resignation for consideration by our Nominations and Governance Committee and our Board if the number of votes withheld with respect to such director's election exceeds the number of votes "for" such director's election. See "Corporate Governance—Corporate Governance Matters—Director Resignation Policy" for additional information.

              Proposal 2, the advisory vote on the 2018 compensation of our named executive officers, is not binding on, nor does it overrule, any decisions of the Company, the Board or the Compensation Committee. We value the input of our shareholders, and in the event that Proposal 2 is not approved, the Board and the Compensation Committee will consider our shareholders' concerns and evaluate what actions, if any, may be appropriate to address those concerns.

              Proposal 3, the ratification of the appointment of Ernst & Young as our independent registered public accounting firm for the year ending December 31, 2019, does not require shareholder ratification under Virginia law, our Articles of Incorporation, or our Amended and Restated Bylaws (Bylaws). However, the Board is submitting the appointment of Ernst & Young to the shareholders for ratification as a matter of good corporate governance. In the event that Proposal 3 is not approved, the Audit Committee will consider the vote in future independent auditor selection decisions.

              Proposal 4, the approval of the 2019 Incentive Plan, requires the affirmative vote of a majority of the votes cast, in person or by proxy, at the Annual Meeting.

              What Is the Effect of Votes Withheld, Abstentions and Broker Non-Votes On Each of the Proposals?

              Votes that are withheld or any abstentions from voting will not be counted in determining the number of votes cast with respect to any of the proposals. As explained above, because Proposals 1, 2 and 4 are considered "non-routine," if a beneficial owner does not instruct the broker or other agent how to vote the shares, broker non-votes will result. Broker non-votes will not be counted in determining the number of votes cast with respect to these proposals. Because Proposal 3 is considered "routine," the broker or other agent will have discretion to vote any shares with respect to which a beneficial owner does not provide instructions, and no broker non-votes will occur with respect to this proposal.

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              What if I Submit a Proxy But Do Not Specify How I Would Like to Vote?

              If we receive a signed and dated proxy card or receive your instructions by Internet or by telephone and your instructions do not specify how your shares are to be voted, your shares will be voted as follows:

•

FOR the election of each of the three Class I nominees for director;



•

FOR the approval of the 2018 compensation of our named executive officers;



•

FOR the ratification of the appointment of Ernst & Young as our independent registered public accounting firm for the year ending December 31, 2019; and



•

FOR the approval of the 2019 Incentive Plan.

              Unsigned proxy cards will not be voted.

              What If Other Matters Not on the Proxy Card Are Brought Before the Annual Meeting for Action by the Shareholders?

              As of the date of this Proxy Statement, the Board does not intend to present any matters other than those described herein at the Annual Meeting and is not aware of any matters to be presented by other parties. If other matters are properly brought before the Annual Meeting, or any adjournment or postponement thereof, for action by the shareholders, proxies will be voted in accordance with the recommendation of the Board or, in the absence of such a recommendation, in accordance with the judgment of the proxy holders.

              How Can I Revoke a Proxy Once I Have Voted?

              Anyone giving a proxy may revoke it at any time before it is voted by voting in person at the Annual Meeting or by delivering, including by phone or Internet, a later dated proxy or written notice of revocation to our Corporate Secretary. Attendance at the Annual Meeting will not itself revoke a proxy. A proxy, if executed, properly delivered and not revoked, will be voted at the Annual Meeting.

              What is the Expected Cost of Soliciting Proxies and Who Will Pay for this Cost?

              We will pay the cost of soliciting proxies. In addition to the use of mail and email, proxies may be solicited in person or by telephone by our employees, with no additional remuneration. We have engaged The Proxy Advisory Group, LLC to assist in the solicitation of proxies and provide related advice and informational support, for a service fee, plus customary disbursements, which are not expected to exceed $15,000 in total.

Principal Executive Offices of Insmed

              The address of our principal executive offices is 10 Finderne Avenue, Building 10, Bridgewater, New Jersey, 08807.

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PROPOSAL NO. 1

ELECTION OF CLASS I DIRECTORS

              Our organizational documents currently provide that our Board will consist of not less than six or more than ten directors. Our Board has adopted resolutions providing for up to nine directors. The directors are divided into three classes—Class I, Class II, and Class III. Each class of directors serves for three years on a staggered term basis and the term of our Class I directors will expire at the Annual Meeting. Accordingly, the Board has nominated Alfred F. Altomari, Steinar J. Engelsen, M.D., and William H. Lewis for election as Class I directors. Each of the nominees was recommended for election by the Nominations and Governance Committee, and such recommendation was approved by the Board. If re-elected, the term of office for these nominees will expire at our 2022 Annual Meeting of Shareholders. If one of these bona fide nominees set forth in this proxy statement is unable to serve or for good cause will not serve, proxy holders may vote for another nominee proposed by the Board or, as an alternative, the Board may reduce the number of directors to be elected at the annual meeting. The information below describes the primary experience, qualifications and skills of Mr. Altomari, Dr. Engelsen and Mr. Lewis.

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THE BOARD RECOMMENDS THAT YOU VOTE "FOR" EACH OF THE CLASS I DIRECTOR NOMINEES.

Vote Required for Election of Director Nominees

              Our Class I directors will be elected by a plurality of the votes properly cast, in person or by proxy, at the Annual Meeting. Votes withheld and broker non-votes will not have any effect on the outcome of this vote.

Our Remaining Board Members

              The information below describes the primary experience, qualifications and skills of each of our Class II directors, Donald Hayden, Jr., David W.J. McGirr, and Elizabeth M. Anderson, and Class III directors, David R. Brennan, Melvin Sharoky, M.D., and Leo Lee. The term of the Class II directors will expire at the 2020 Annual Meeting of Shareholders, and the term of the Class III directors will expire at the 2021 Annual Meeting of Shareholders.

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Incumbent Directors Whose Term Expires at the 2020 Annual Meeting of Shareholders (Class II Directors)

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Incumbent Directors Whose Term Expires at the 2021 Annual Meeting of Shareholders (Class III Directors)

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Executive Officers

              The following table sets forth our current executive officers, their ages, the positions currently held by each such person as of the date of this Proxy Statement and the period holding such positions.

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              William H. Lewis.    Mr. Lewis's biographical information is summarized above under "Election of Class I Directors."

              Paolo Tombesi.    Mr. Tombesi joined Insmed as Chief Financial Officer in June 2017. Mr. Tombesi brings over 20 years of experience in the biotechnology and pharmaceutical sector. Prior to joining the Company, Mr. Tombesi was Vice President and Chief Financial and Administrative Officer of Novartis Pharmaceuticals Corporation, a position he held from November 2014 through May 2017. Mr. Tombesi was Managing Director and Chief Financial Officer of Novartis Japan from April 2009 to October 2014 and held various finance roles at Novartis from September 2006 to March 2009. Mr. Tombesi held several finance director positions at Bristol-Myers Squibb from August 1996 to September 2006. From January 1988 to July 1996, Mr. Tombesi held various positions in consumer goods at Unilever NV and Johnson & Johnson. Mr. Tombesi holds a B.Ed. in Business and Managerial Economics from Sapienza Università di Roma and a B.A. in Accounting from Duca degli Abruzzi Roma. On March 27, 2019, Insmed announced that Mr. Tombesi will be leaving the Company effective June 2, 2019.

              Roger Adsett.    Mr. Adsett joined Insmed as Chief Commercial Officer in September 2016. Mr. Adsett has over 20 years of experience in the global biotechnology and pharmaceutical industry. From January 2015 to September 2016, Mr. Adsett was Senior Vice President, Head of Gastrointestinal and Internal Medicine Business Unit at Shire Plc (Shire), a global specialty biopharmaceutical company. From August 2008 to January 2015, Mr. Adsett was Senior Vice President, Gastrointestinal Business Unit Leader at Shire. From October 2005 to August 2008, Mr. Adsett was General Manager, Oral IBD Products of the Gastroenterology Business Unit of Shire. From November 1994 to October 2005, Mr. Adsett held various marketing and commercial roles at AstraZeneca plc (NYSE: AZN), a multinational pharmaceutical and biopharmaceutical company. Mr. Adsett was a senior analyst at Accenture PLC (NYSE: ACN), a global professional services company, from September 1991 to November 1994. Mr. Adsett holds a Masters of Business Administration from The Wharton School at the University of Pennsylvania and a Bachelor of Arts in English and Economics from Bucknell University.

              Christine Pellizzari.    Ms. Pellizzari joined Insmed as General Counsel and Corporate Secretary in July 2013 and was promoted to Chief Legal Officer in January 2018. Ms. Pellizzari has over 20 years of experience in the global biotechnology and pharmaceutical industry, including senior-level leadership roles. From August 2007 to December 2011, Ms. Pellizzari served as Executive Vice President, General Counsel and Secretary for Aegerion and served as a legal consultant for Aegerion from January 2012 to June 2012. From 1998 to 2007, Ms. Pellizzari served as Senior Vice President, General Counsel and Secretary of Dendrite International, Inc., a publicly traded company that provided the global pharmaceutical industry with sales effectiveness, promotional and compliance solutions until it was acquired by Cegedim S.A. (Euronext: CGM) in 2007. Prior to her tenure at Dendrite, Ms. Pellizzari practiced law at the firm of Wilentz, Goldman & Spitzer where she specialized in health care transactions and related regulatory matters. Before joining Wilentz, Ms. Pellizzari served as a law clerk to the Honorable Reginald Stanton, Assignment Judge for the Superior Court of New Jersey. Ms. Pellizzari received her Bachelor of Arts degree, cum laude, from the University of Massachusetts, Amherst and her Juris Doctor degree from the University of Colorado, Boulder.

              S. Nicole Schaeffer.    Ms. Schaeffer joined Insmed as Senior Vice President, Human Resources and Corporate Services in January 2013 and was promoted to Chief People Strategy Officer in January 2018. From October through December 2012, Ms. Schaeffer was a consultant to Insmed. Ms. Schaeffer has more than 25 years of experience in human resources, organizational development, corporate operations, and building life science organizations. From March 2005 to June 2012, Ms. Schaeffer served as Senior Vice President, Administration and Human Resources, for Amicus Therapeutics where

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she was responsible for the human resources, facilities, and information technology functions. Prior to Amicus, she served as Senior Director, Human Resources, for three portfolio companies of Flagship Ventures, a venture capital firm, and in that capacity she managed human resources for three life sciences companies. Ms. Schaeffer also held HR leadership positions with Oak Industries, from 1997 to 2000, and EMC Corporation, from 1994 to 1996. Ms. Schaeffer received her Bachelor of Arts degree from the University of Rochester and her Master of Business Administration degree from Boston University.

              John Soriano.    Mr. Soriano joined Insmed as Chief Compliance Officer in January 2018, bringing over 30 years of experience in legal and compliance leadership roles. From August 2010 to November 2017, Mr. Soriano served as Senior Vice President and Chief Compliance Officer at Celgene Corporation (Nasdaq: CELG) where he oversaw the Global Compliance Program. From November 2000 to February 2010, Mr. Soriano served as Vice President-Compliance and Deputy General Counsel at Ingersoll-Rand Company (NYSE: IR). Prior to that, Mr. Soriano worked as a litigation attorney at Becton Dickinson and Co. (NYSE: BDX) (December 1998—November 2000), Johnson & Johnson (NYSE: JNJ) (February 1998—December 1998), and Simpson Thacher & Bartlett (September 1987—February 1998). Mr. Soriano received his Bachelor of Arts degree from Princeton University's Woodrow Wilson School of Public and International Affairs and his Juris Doctor degree from Harvard Law School.

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CORPORATE GOVERNANCE

Corporate Governance Matters

              Corporate Governance Materials and Practices.    Our written corporate governance materials, including our Bylaws, Corporate Governance Guidelines, Code of Business Conduct and Ethics, Audit Committee Charter, Compensation Committee Charter, Nominations and Governance Committee Charter, and Director Resignation Policy are posted on our website at www.insmed.com under the heading "Investor Relations—Corporate Governance." Our corporate governance practices include the following:

•

The Board currently has a lead independent director, and all of our non-employee directors and board committee members are independent.



•

The Board has adopted a director resignation policy in uncontested director elections.



•

The Board oversees succession planning for executive officers, including the CEO.



•

Directors have access to all levels of management and are provided with opportunities to meet with members of management on a regular basis.



•

Directors may retain their own independent advisors, at our expense.



•

The Board and each committee thereof conduct self-evaluations at least once per year to assess their performance and ways in which performance could be improved.



•

Our Board addresses the importance of incorporating new viewpoints on the Board through the director evaluation and nomination process. Our director composition reflects a mix of tenure on the Board (ranging from less than one year to 19 years), which we believe provides an effective balance of historical perspective and an understanding of the evolution of the Company with fresh perspectives and insights.



•

Share ownership guidelines are in place for our directors and executive officers.

              Code of Business Conduct and Ethics.    We have adopted a Code of Business Conduct and Ethics that applies to all of our directors, officers (including our CEO, chief financial officer, controller and any person performing similar functions) and employees. Our Code of Business Conduct and Ethics contains written standards designed to communicate our expectations of our directors, officers, and employees when making decisions and conducting themselves in corporate activities, including the ethical handling and use of confidential information; actual or apparent conflicts of interest; compliance with applicable governmental laws, rules and regulations; protection of our assets and proprietary information; the ethical handling of payments and gifts received in the normal course of business and of payments made to government personnel; prompt internal reporting of violations of our Code of Business Conduct and Ethics; and accountability for adherence to our Code of Business Conduct and Ethics. We have established a means for individuals to report a violation or suspected violation of the Code of Business Conduct and Ethics anonymously, including those violations relating to accounting, internal controls or auditing matters, and federal securities laws. We intend to satisfy the disclosure requirements regarding any amendment to, or waiver from, a provision of the Code of Business Conduct and Ethics by making disclosures concerning such matters available on our website at www.insmed.com under the heading "Investor Relations—Corporate Governance."

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              Corporate Governance Guidelines.    We have adopted Corporate Governance Guidelines to assist and guide the Board in the exercise of its responsibilities and establish a framework for our corporate governance practices. The Corporate Governance Guidelines contain written standards pertaining to director qualifications, director responsibilities, structure of our Board, director access to management and independent advisors, director compensation, and performance evaluation of our Board and committees, among other things. The Corporate Governance Guidelines help to ensure that the Board is independent from management, the Board adequately performs its oversight functions, and the interests of the Board and management align with the interests of our shareholders. Our Corporate Governance Guidelines are interpreted in accordance with all applicable laws and regulations, the Nasdaq listing standards, our Articles of Incorporation and our Bylaws.

              Meetings of the Board.    The Board held eight meetings during 2018. Each director attended at least 75% of the Board meetings that occurred in 2018 during his or her tenure on the Board. Each current director attended at least 75% of the committee meetings on which he or she served that occurred in 2018.

              Director Resignation Policy.    Any nominee for director in an uncontested election who has a greater number of votes "withheld" from his or her election than votes cast "for" his or her election must submit his or her resignation to the Board promptly following certification of the election results. Within 90 days after the date of the certification of the election results, the Nominations and Governance Committee will make a recommendation to the Board as to whether to accept or reject the submitted resignation. Within 45 days after receiving this recommendation, the Board must accept or reject the resignation or pursue another action unless doing so would cause us to fail to comply with federal or state law or Nasdaq listing standards. If more than a majority of the members of the Nominations and Governance Committee do not receive a greater number of votes cast "for" their election than votes "withheld," the independent directors whose classes were not nominated for election will appoint a special committee to consider the resignations and make a recommendation to the Board. Any director whose resignation is under consideration will not participate in any deliberation or vote regarding his or her resignation. If the Board accepts a director's resignation pursuant to this policy, the Board may decrease the size of the Board or fill the resulting vacancy in accordance with the Virginia Stock Corporation Act and our Articles of Incorporation and Bylaws.

              Independence of the Directors and Director Nominees.    The Board has determined that the following members of the Board are independent, as that term is defined under the general independence standards of the Nasdaq listing standards: Mr. Altomari, Mr. Brennan, Dr. Engelsen, Mr. Hayden, Mr. McGirr, Ms. Anderson, Dr. Sharoky and Mr. Lee. Mr. Lewis is not considered independent because he is currently employed by the Company. The Board also determined that Ms. Potter, who resigned as a director in November 2018, was an independent director. The Board makes an affirmative determination regarding the independence of each director annually, based on the recommendation of the Nominations and Governance Committee.

              Board's Role in Strategy.    The Board actively participates in Company strategy decisions and oversight throughout the year. The Board annually reviews the company's strategic plan, including key risks and decisions facing the Company.

Director Nominating Process

              Our Nominations and Governance Committee, which is described more fully below under "Corporate Governance—Committees of the Board—Nominations and Governance Committee," serves as an independent and objective party to identify, assess, recruit and recommend to the Board qualified candidates for directorship, consistent with criteria approved by the Board, and establishes and annually

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reviews such criteria based on factors it considers appropriate. The Board evaluates each nominee in the context of the Board as a whole, with the objective of recommending a group of directors that can best oversee the business and affairs of the Company and use its diversity of experience to represent shareholder interests through the exercise of sound judgment. The Board seeks director nominees with experience in the pharmaceutical and biotechnology industries, as well as business, management, accounting and financial experience, among other areas. Among the factors that the Board and the Nominations and Governance Committee consider are strength of character, sound business judgment, career specialization, relevant technical skills, independence, the ability to commit sufficient time to the Board, and the extent to which the candidate would fill a present need of the Board, along with geographic, gender, age, racial and ethnic diversity.

              Nominations and Governance Committee Process for Identifying and Evaluating Director Candidates.    The Nominations and Governance Committee evaluates all director candidates in accordance with the director qualification standards described above. The Nominations and Governance Committee evaluates a candidate's qualifications to serve as a member of the Board based on the skills and characteristics of such individual Board member, as well as the composition of the Board as a whole. In addition, the Nominations and Governance Committee will evaluate a candidate's independence, diversity, skills and experience in the context of the Board's needs.

              Director Candidate Recommendations and Nominations by Shareholders.    The Nominations and Governance Committee's charter provides that the committee will consider director candidate recommendations by shareholders. Shareholders should submit any such recommendations for the Nominations and Governance Committee through the method described below under "Corporate Governance—Communications with the Board." In accordance with our Bylaws, any person who is a shareholder of record on the record date for the shareholder meeting, on the date of the shareholder meeting, and on the date such person provides required notice to the Company may nominate persons for election to the Board if such shareholder complies with the notice procedures set forth in the Bylaws and summarized in this Proxy Statement under the heading "Proposals for 2020 Annual Meeting."

Communications with the Board

              The Board has approved a process for shareholders to send communications to the Board. Shareholders can send communications to the Board and, if applicable, to the Nominations and Governance Committee or to specified individual directors in writing c/o Ms. Christine Pellizzari, Corporate Secretary, Insmed Incorporated, 10 Finderne Avenue, Building 10, Bridgewater, New Jersey, 08807. All communications sent to Ms. Pellizzari will be forwarded, as appropriate, to the Board, the Nominations and Governance Committee or any specified individual directors.

Director Attendance at Annual Meeting

              Our policy is that directors are expected to make reasonable efforts to attend the annual meeting of shareholders absent unusual circumstances. All directors then on the Board, including Ms. Potter, attended the 2018 Annual Meeting of Shareholders.

Board Leadership Structure

              The Board believes that it is in the best interests of the Company to maintain the flexibility to make determinations about the separation of the positions of Board Chair and CEO. The Nominations and Governance Committee considers this structure as part of its annual review of the size, organization, structure, composition and operations of the Board and its committees. In November

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2018, Mr. Hayden stepped down as Chairman of the Board and was succeeded by Mr. Lewis. Mr. Lewis continued as President and CEO of the Company and Mr. Brennan was elected as Lead Independent Director. The Board believes that its current leadership structure, with Mr. Lewis serving as CEO and Chairman and Mr. Brennan serving as our Lead Independent Director, is appropriate for the Company at this time. Both Mr. Lewis and Mr. Brennan are actively engaged on significant matters affecting us, such as long-term strategy. The CEO has overall responsibility for all aspects of our operation, while the Lead Independent Director has a greater focus on governance of the Company, including oversight of the Board. We believe the combined role of CEO and Chairman balanced with the shared leadership with the Lead Independent Director is a strength for the Company. As our Lead Independent Director, Mr. Brennan calls and chairs regular and special meetings of the Board and all executive sessions of the independent directors, chairs and presides at annual or special meetings of shareholders, provides meaningful input into the agenda of Board meetings, oversees the retention of outside advisors, consultants and legal counsel who report directly to the Board, consults frequently with committee chairs and management and has the right to and often does attend Board committee meetings.

Committees of the Board

              Our Bylaws provide that the Board may create one or more committees of the Board. Currently, the Board has three standing committees: the Audit Committee, the Compensation Committee and the Nominations and Governance Committee.

Audit Committee

              Composition and Attendance.    Our Audit Committee consists of Mr. McGirr (Chairman), Dr. Engelsen, and Mr. Altomari, each of whom is an independent Board member. During 2018, the Audit Committee held six meetings. Each of Mr. McGirr, Dr. Engelsen and Mr. Altomari attended all meetings of the Audit Committee held in 2018.

              Responsibilities and Duties.    The Audit Committee assists our Board in fulfilling its oversight responsibilities relating to the accounting, reporting and financial practices of the Company as well as overseeing our compliance with applicable legal and regulatory requirements. The Committee reviews and oversees:

•

the auditing, accounting, and financial reporting processes, including the audits of our financial statements;



•

our systems of internal controls regarding finance and accounting that we have established;



•

the qualifications and independence of our independent registered public accounting firm;



•

the appointment, retention and performance of our independent registered public accounting firm and the performance of any internal audit functions; and



•

our compliance with legal and regulatory requirements.

              The Audit Committee reviews and reassesses the adequacy of its charter at least annually.

              Committee Independence.    Our Board has determined that all three of the current Audit Committee members, Mr. McGirr, Dr. Engelsen, and Mr. Altomari, satisfy the heightened

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independence requirements of the Nasdaq listing standards and Rule 10A-3 under the Securities Exchange Act of 1934, as amended (the Exchange Act).

              Financial Literacy and Expertise.    Our Board determined that each of the members of the Audit Committee is able to read and understand fundamental financial statements, including our consolidated balance sheet, statement of comprehensive income/loss, statement of cash flows, and statement of shareholders' equity. Our Board also has determined that Mr. McGirr is an "audit committee financial expert," as that term is defined in the rules promulgated by the SEC and has accounting or related financial management expertise as required under the Nasdaq listing standards.

Compensation Committee

              Composition and Attendance.    Our Compensation Committee consists of Mr. Altomari (Chairman), Mr. Brennan, Dr. Sharoky, and Mr. Lee, each of whom is an independent Board member. During 2018, the Compensation Committee held seven meetings. Each of Mr. Altomari and Mr. Brennan attended all Compensation Committee meetings held in 2018, and Dr. Sharoky attended six Compensation Committee meetings in 2018. Mr. Lee was not a member of the Compensation Committee during 2018 and therefore did not attend any of the Compensation Committee meetings held in 2018.

              Responsibilities and Duties.    The Compensation Committee develops and oversees the implementation of our compensation philosophy for our executive officers and is responsible for our executive and other compensation plans. The Committee's primary objectives are to develop and maintain an executive compensation program that:

•

creates a direct relationship between pay levels and corporate performance and returns to shareholders;



•

provides overall competitive pay levels to effectively attract and retain executive talent;



•

creates proper incentives to enhance shareholder value; and



•

rewards performance.

              The Compensation Committee reviews and reassesses the adequacy of its charter at least annually.

              Committee Independence and Related Requirements.    Our Board has determined that all four of the current Compensation Committee members, Mr. Altomari, Mr. Brennan, Dr. Sharoky, and Mr. Lee satisfy the heightened independence requirements of the Nasdaq listing standards. In addition, all of the members of our Compensation Committee are "non-employee directors" within the meaning of the rules under Section 16 of the Exchange Act and "outside directors" for purposes of Section 162(m) of the Internal Revenue Code of 1986, as amended (the Code and Section 162(m)). The Board has determined that Ms. Potter also satisfied these independence and related requirements during her tenure on the Compensation Committee.

Nominations and Governance Committee

              Composition and Attendance.    Our Nominations and Governance Committee consists of Dr. Engelsen (Chairman), Mr. Hayden, Dr. Sharoky, and Ms. Anderson, each of whom is an independent Board member. During 2018, the Nominations and Governance Committee held four

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meetings. Each of Dr. Engelsen, Mr. Hayden, and Dr. Sharoky attended all meetings of the Nominations and Governance Committee held in 2018. Ms. Anderson was not a member of the Nominations & Governance Committee during 2018 and therefore did not attend any of the Nominations and Governance Committee meetings held in 2018.

              Responsibilities and Duties.    The Nominations and Governance Committee identifies and nominates qualified candidates for directorship and serves in a leadership role in shaping our corporate governance and overseeing the evaluation of the Board and its committees. The Nominations and Governance Committee:

•

assists the Board by identifying individuals qualified to become Board members and recommending to the Board the director nominees for election at shareholder meetings and to fill vacancies on the Board;



•

makes recommendations to the Board regarding Board and committee organization, structure and composition;



•

evaluates the overall effectiveness of the Board and its committees; and



•

develops and assesses the Company's corporate governance policies and practices, including risks related to such policies and practices.

              The Nominations and Governance Committee reviews and reassesses the adequacy of its charter at least annually.

The Role of the Board in Risk Oversight

              The Board has primary responsibility for overseeing the Company's risk management. The Board administers its oversight responsibility for risk management directly and through its committees. Each committee chairman reports to the Board regarding the committee's considerations of management's processes for identifying, evaluating, and controlling significant risks. In addition, the officers responsible for oversight of particular risks within the Company provide updates and information to our Board. The Board considers specific risk topics, including risks associated with our strategic plan, our capital structure, our research and development activities, our manufacturing and supply chain, and our operations. Our Board believes that full and open communication between management and the Board is essential for effective risk management and oversight. The Board and each of its committees have full access to our senior management, as well as the ability to engage outside advisors and other experts. Management routinely informs the Board of developments that could affect our risk profile or other aspects of our business and development.

              The Audit Committee is responsible for overseeing the Company's program for identifying, evaluating and controlling significant risks. The Audit Committee periodically discusses with management and the independent auditor the Company's major risk exposures, including financial, legal, regulatory and cybersecurity risk exposures, and the steps taken to monitor, control and minimize such exposures. The Audit Committee also reviews and evaluates our processes and policies for identifying and assessing key risk areas and for formulating and implementing steps to address such risk areas. The Audit Committee oversees disclosure controls and procedures, including applicable internal control over financial reporting and meets with the Chief Financial Officer, the Chief Legal Officer, the Chief Compliance Officer, the Vice President of Quality Assurance, the Vice President, Corporate Controller, external audit personnel, and other senior managers as appropriate to review issues regarding compliance with the applicable legal and regulatory requirements.

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              The Compensation Committee assesses and monitors whether any of our compensation policies and programs has the potential to encourage excessive risk taking. Our Compensation Committee engages an independent consultant to advise it on topics related to Board and executive compensation. During the last year, the Compensation Committee, with the assistance of Frederic W. Cook & Co., Inc. (FW Cook), its independent compensation consultant, reviewed the executive compensation program and determined that the design of the compensation policies, including the components, weightings and focus of the elements of executive compensation, do not encourage management to assume excessive or inappropriate risks.

              The Nominations and Governance Committee oversees the risks associated with our corporate governance and operating practices, including those relating to the composition of the Board, the structure and function of Board committees and meeting logistics and policies. The Nominations and Governance Committee regularly reviews the Board's performance, oversees the self-evaluation of each of the Board's committees, oversees our corporate governance and formulates and recommends corporate governance standards to our Board.

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AUDIT COMMITTEE REPORT AND INDEPENDENT AUDITOR FEES

Report of the Audit Committee

              The Audit Committee approves the selection of the Company's independent registered public accounting firm and regularly meets with and holds discussions with management and the Company's independent registered public accounting firm.

              The Audit Committee oversees the Company's financial reporting process on behalf of the Board. Management has the primary responsibility for the financial statements and the reporting process including the systems of internal controls. In fulfilling its oversight responsibilities, the Audit Committee reviewed the audited financial statements in the Company's Annual Report on Form 10-K for the year ended December 31, 2018 (the Annual Report) with management, including a discussion of the accounting principles, the reasonableness of significant judgments, and the quality and clarity of disclosures in the financial statements.

              The Audit Committee reviewed with Ernst & Young, which is responsible for expressing an opinion on the conformity of those audited financial statements with generally accepted accounting principles, its judgments as to the overall quality of financial reporting, the Company's accounting principles, and such other matters as are required to be discussed with the Audit Committee by Public Company Accounting Oversight Board (PCAOB) standards.

              In addition, the Audit Committee has discussed with Ernst & Young its independence from management and the Company, including the matters described in the written disclosures and letter required by PCAOB standards from Ernst & Young to the Audit Committee regarding the independent accountant's communications with the Audit Committee concerning independence, and has considered the compatibility of non-audit services with the independence of the independent registered public accounting firm.

              In reliance on the reviews and discussions referred to above, the Audit Committee recommended to the Board (and the Board approved) that the audited financial statements be included in the Company's Annual Report for filing with the SEC.

THE AUDIT COMMITTEE

David W.J. McGirr, Chairman
Alfred F. Altomari
Steinar J. Engelsen, M.D., C.E.F.A.

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Audit Committee Pre-Approval Policy

              The Audit Committee has adopted an Audit Committee Pre-Approval Policy for the pre-approval of audit services and permitted non-audit services by the Company's independent registered public accounting firm in an effort to ensure that the provision of such services does not impair the independence of the independent registered public accounting firm from the Company and is consistent with the rules of the SEC. The policy requires pre-approval by the Audit Committee of the terms and fees of all audit, review and attestation engagements and related services. The policy also requires the Audit Committee to determine that the provision of any audit-related services or non-audit services would not impair the independence of our independent registered public accounting firm. The policy prohibits the Audit Committee from retaining our independent registered public accounting firm in connection with a transaction initially recommended by such firm, the purpose of which may be tax deferral or reduction. The policy delegates pre-approval authority to the Chair of the Audit Committee or, if the Chair is not available, to any of the Audit Committee's members, but any pre-approval decision must be reported to the Audit Committee at its next scheduled meeting. All of the services performed by Ernst & Young in the year ended December 31, 2018 were pre-approved in accordance with the pre-approval policy.

Independent Registered Public Accounting Firm Fee Disclosure

              The Audit Committee reviewed the aggregate fees billed by Ernst & Young for professional services rendered for the years ended December 31, 2018 and 2017, which were as follows:

              Audit fees in 2018 and 2017 include fees for services performed to comply with generally accepted auditing standards. These services include the integrated year-end audit of our consolidated financial statements, attestation services with respect to our internal control over financial reporting, quarterly reviews, accounting consultations on matters addressed during the audit or quarterly reviews, review of other documents filed with the SEC, and $115,000, with respect to 2018, and $100,000, with respect to 2017, paid to Ernst & Young for consent and comfort letter procedures for registration statements filed in 2018 and 2017, respectively.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Review and Approval of Related Party Transactions

              Pursuant to our written related party policy, our Audit Committee must review and consider whether to approve or ratify all related party transactions, as defined in Item 404 of Regulation S-K. In determining whether to approve or ratify a related party transaction, the Audit Committee will take into account, among other factors it deems appropriate, the purpose and potential benefits to us of the transaction, the related party's interest in the transaction, the approximate dollar value involved in the transaction, whether the transaction was undertaken in the ordinary course of business, whether the related party transaction is on terms no less favorable to us than terms generally available to us from an unaffiliated third-party under the same or similar circumstances, and whether, under all the

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circumstances, the transaction is not inconsistent with our best interests. Any transaction which is deemed to be a related party transaction requires the approval of a majority of the disinterested Audit Committee members.

Related Party Transactions

              Since January 1, 2018, there were no related party transactions, nor are there currently any proposed related party transactions, which in accordance with SEC rules, would require disclosure in this Proxy Statement.

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

              Section 16(a) of the Exchange Act requires that our directors, executive officers and holders of more than 10% of our Common Stock report to the SEC their ownership of our Common Stock and changes in that ownership. Directors, executive officers and beneficial owners of more than 10% of our Common Stock are required by applicable regulations to furnish us with copies of all Section 16(a) forms they file. As a matter of practice, members of our staff assist our executive officers and directors in preparing initial ownership reports and reporting ownership changes and typically file these reports on their behalf. Based solely upon a review of the reports filed pursuant to Section 16(a) of the Exchange Act, we believe that during the year ended December 31, 2018, our executive officers, directors and beneficial owners of more than 10% of our Common Stock complied with applicable Section 16(a) requirements.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS, DIRECTORS AND MANAGEMENT

              The following tables set forth information about the beneficial ownership of our Common Stock as of the Record Date (except as otherwise noted), by:

•

each person, or group of persons, who beneficially owns more than five percent (5%) of our Common Stock, based on reports filed with the SEC;



•

each of our directors and director nominees;



•

each of our named executive officers; and



•

all directors and executive officers as a group.

              Beneficial ownership and percentage ownership are determined in accordance with Section 13 of the Exchange Act and related rules and regulations of the SEC. In computing the number of shares beneficially owned by a person and the percentage ownership of that person, shares of Common Stock subject to options held by that person that are currently exercisable or exercisable within 60 days of the Record Date and restricted stock units that may vest within 60 days of the Record Date are deemed outstanding. Such shares, however, are not deemed outstanding for the purposes of computing the percentage ownership of any other person. Except as indicated in the footnotes to the following tables or pursuant to applicable community property laws, to our knowledge each shareholder named in the tables has sole voting and investment power with respect to the shares set forth opposite such

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shareholder's name. As of the Record Date, there were 77,591,460 shares of Common Stock outstanding.

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PROPOSAL NO. 2

ADVISORY VOTE ON THE 2018 COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS

Information Regarding the Advisory Vote on the 2018 Compensation of our Named Executive Officers

              Pursuant to Section 14A of the Exchange Act, we are holding a shareholder advisory vote on the compensation of our named executive officers, as described in the "Compensation Discussion and Analysis" section, the tabular disclosure regarding such compensation, and the accompanying narrative disclosure set forth in this Proxy Statement. At the 2017 Annual Meeting, shareholders voted to hold advisory votes on an annual basis, and the Board subsequently adopted a resolution providing for such an annual vote. At the Annual Meeting, shareholders will be asked to approve the following resolution:

              RESOLVED, that the shareholders of Insmed Incorporated approve, on an advisory basis, the compensation of the Company's named executive officers, disclosed pursuant to Item 402 of Regulation S-K in the Company's Proxy Statement.

              The Compensation Committee oversees and administers our executive compensation program, including the evaluation and approval of compensation plans, policies and programs offered to our named executive officers. Our executive compensation program is designed to meet the following objectives:

•

align management interests with the interests of our shareholders;



•

emphasize use of "at-risk" and performance-based compensation to motivate executives to advance our interests; and



•

provide executive compensation packages that are competitive in order to attract and retain executives whose skills are critical to the current and long-term success of the Company.

              Please read the "Compensation Discussion and Analysis" section starting on page 28 of this Proxy Statement for a detailed discussion about our executive compensation programs, including information about the 2018 compensation of our named executive officers.

Vote Required for Approval of this Proposal

              The advisory vote on the compensation of our named executive officers will be approved by the affirmative vote of the majority of votes properly cast, in person or by proxy, at the Annual Meeting. Abstentions or broker non-votes will not have an effect on the outcome of this proposal.

              While this vote is being conducted on an advisory basis, and is therefore not binding on us, the vote will be carefully considered by the Compensation Committee and our Board. Both our Compensation Committee and our Board value the opinions of our shareholders and, to the extent there is any meaningful vote against the 2018 compensation of our named executive officers, we will consider our shareholders' concerns and evaluate what actions, if any, may be appropriate to address those concerns. The outcome of the vote, however, will not be construed as overruling any prior decision by the Company, the Compensation Committee or the Board.

Recommendation

              THE BOARD RECOMMENDS THAT YOU VOTE "FOR" THE APPROVAL, ON AN ADVISORY BASIS, OF THE 2018 COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS.

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EXECUTIVE COMPENSATION
COMPENSATION DISCUSSION AND ANALYSIS

              This Compensation Discussion and Analysis (the CD&A) explains our compensation philosophy, policies and decisions for 2018 for the following executives, whom we refer to in this CD&A and in the following tables as our named executive officers:

1.

William H. Lewis, President and CEO, responsible for developing, in connection with the Board, our corporate mission and objectives and providing direction and leadership to ensure the execution of our corporate strategy and achievement of our objectives. Mr. Lewis was appointed as our Chairman in November 2018.



2.

Paolo Tombesi, Chief Financial Officer, responsible for managing all financial activities, including internal and external reporting, treasury, accounting, tax, investor relations and manufacturing.



3.

Roger Adsett, Chief Commercial Officer, responsible for managing all marketing, sales and commercial, technical operations and supply chain activities.



4.

Paul Streck, M.D., Former Chief Medical Officer, responsible for leading global research, clinical development, clinical operations, regulatory affairs, drug safety and pharmacovigilance, and medical affairs. On January 9, 2019, Dr. Streck resigned as our chief medical officer, effective January 18, 2019.



5.

Christine Pellizzari, Chief Legal Officer, responsible for oversight of all corporate and litigation-related legal matters, government affairs and for providing ongoing legal support with respect to regulatory strategy, financing opportunities, business development initiatives, and intellectual property matters.

Executive Summary of Our 2018 Business and Strategic Achievements

              We are a global biopharmaceutical company on a mission to transform the lives of patients with serious and rare diseases. Our first commercial product, ARIKAYCE (amikacin liposome inhalation suspension), received accelerated approval in the United States (US) on September 28, 2018 for the treatment of Mycobacterium avium complex (MAC) lung disease as part of a combination antibacterial drug regimen for adult patients with limited or no alternative treatment options. MAC lung disease is a rare and often chronic infection that can cause irreversible lung damage and can be fatal. Our clinical-stage pipeline includes INS1007 and INS1009. INS1007 is a novel oral, reversible inhibitor of dipeptidyl peptidase 1 (DPP1) with therapeutic potential in non-cystic fibrosis (non-CF) bronchiectasis and other inflammatory diseases. INS1009 is an inhaled formulation of a treprostinil prodrug that may offer a differentiated product profile for rare pulmonary disorders, including pulmonary arterial hypertension. Our earlier-stage pipeline includes preclinical compounds that we are evaluating in multiple rare diseases of unmet medical need, including gram positive pulmonary infections in CF, nontuberculous mycobacteria (NTM) lung disease and refractory localized infections involving biofilm. To complement our internal research and development, we actively evaluate in-licensing and acquisition opportunities for a broad range of rare diseases.

              In 2018, our named executive officers played critical roles in the achievement of our goal of transforming from a clinical-stage biopharmaceutical company to a commercial biopharmaceutical company. We announced interim data from the CONVERT study and the 312 extension study in January 2018. In September 2018, the US Food and Drug Administration (FDA) granted accelerated

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approval of ARIKAYCE for the treatment of MAC lung disease as part of a combination antibacterial drug regimen for adult patients who have limited or no alternative treatment options. We continued to enroll patients in the WILLOW study of INS1007 in patients with non-CF bronchiectasis, and expanded our leadership team with talented executives in key finance, medical, commercial, sales, and clinical roles. The Board, with respect to our President and CEO, and the Compensation Committee, with respect to the other named executive officers, took into account these and other achievements in the evaluation of our performance against our annual corporate objectives when determining payouts for the annual cash incentives.

Compensation Philosophy and Principles

              We operate in a competitive, rapidly changing and heavily-regulated industry. The long-term success of our business requires us to be resourceful, adaptable, and innovative. As we transition from a development stage company to a commercial biopharmaceutical company, the skills, talent, and dedication of our executive officers are critical components to the success of this transition and the future growth of the company. Therefore, our compensation program for our executive officers, including our named executive officers, is designed to attract, retain, and incentivize the best possible talent. The Company's compensation program for named executive officers is structured to implement the following guiding principles:

              Alignment with Shareholder Interests.    The compensation program is designed to align the compensation realized by our named executive officers with the value realized by our shareholders. For instance, a significant portion of our named executive officers' compensation is in the form of equity awards based on our belief that equity awards align management's interests with the creation of future shareholder value.

              Use of "At-Risk" Compensation to Incentivize Executives.    As shown in the charts below, the compensation program is designed such that a substantial portion of our named executive officers' compensation is based on "at risk," or variable, compensation, such as annual cash incentives and stock options. We believe this mix of compensation best aligns the interests of our named executive officers with those of our shareholders over time and contributes to the achievement of short-term goals and the advancement of our long-term strategy through long-term goals. Accordingly, in 2018, approximately 90% of our CEO's compensation was "at risk," and 80% of our other named executive officers' compensation was "at risk":

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              Pay for Performance.    The compensation program is designed to reward the named executive officers for attaining established business and individual goals. The attainment of these goals requires the named executive officer to dedicate his or her time, effort, skills and business experience to the success of the Company and the maximization of shareholder value. A significant portion of the named executive officers' compensation is based on Company and individual performance, and the compensation program is designed to reward both short-term and long-term performance. Short-term performance of our named executive officers is principally rewarded through annual cash incentives that reflect the achievement of corporate and individual goals. Long-term performance of our named executive officers is largely rewarded through stock option awards that are eligible to vest based on continued service and have a value tied to our share price appreciation.

              Pay competitively to attract and retain skilled executive officers.    The compensation program is designed to allow the Company to attract and retain individuals whose skills are critical to the current and long-term success of the Company. Because competition for top talent is intense in our industry, retention is a key objective of the compensation program. The compensation program is designed to appropriately compensate our executive officers for the success of the Company from a competitive standpoint, so that they remain with the Company and continue to contribute to the Company's

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long-term success. With this in mind, we introduced annual RSU awards in 2018 as an additional retention incentive.

              At our 2018 Annual Meeting of Shareholders, we held an advisory vote on the compensation of our named executive officers. Over 99% of the shares voted were voted in favor of our say-on-pay proposal. The Compensation Committee considered these voting results and believes they affirm the Company's compensation philosophy and the principles discussed above.

Corporate Governance Perspectives on our Executive Compensation Program

              We believe that our executive compensation program reflects our commitment to strong corporate governance practices as evidenced by the following aspects of our executive compensation program:

•

Our Compensation Committee has overall responsibility over executive compensation plans, policies and programs, although our independent Board members approve recommendations made by our Compensation Committee on our President and CEO's compensation;



•

Performance metrics that govern incentive compensation are defined by our Compensation Committee at the start of each fiscal year and are reviewed by our Compensation Committee at the end of the year;



•

The executive compensation program, in the aggregate, rewards performance in a variety of ways, aimed at a balanced assessment based on the Company's strategic objectives;



•

Individual and corporate multiplier ranges in our incentive compensation program are developed and implemented such that payouts are capped at a predetermined maximum amount, irrespective of performance that exceeds objectives;



•

Our Compensation Committee has the ability to exercise its discretion to reduce or eliminate incentive compensation payouts;



•

We have share ownership guidelines in place for our President and CEO, pursuant to which he must hold shares of Common Stock, vested in-the-money stock options and unvested restricted stock that aggregate to at least three times his base salary within 5 years of the adoption of the guidelines or date of hire, whichever is later. As of the Record Date, Mr. Lewis satisfied these guidelines;



•

We also have share ownership guidelines in place for certain of our other senior executives, including each of our current non-CEO named executive officers, pursuant to which each of them must hold shares of Common Stock, vested in-the-money stock options and unvested restricted stock that aggregate equal to his or her base salary within 5 years of the adoption of the guidelines or date of hire, whichever is later. As of the Record Date, Mr. Tombesi, Mr. Adsett and Ms. Pellizari satisfied these guidelines. Mr. Streck is no longer an officer and is no longer subject to our share ownership guidelines;



•

Our Compensation Committee regularly meets in executive session without members of management present;

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•

Our independent executive compensation consultant reports directly to the Compensation Committee and meets regularly with the Compensation Committee without management present;



•

The employment agreements for our named executive officers do not provide for tax "gross-ups" or severance payments on a change in control absent termination of the named executive officer's employment;



•

Our executive compensation program balances short-term pay opportunities through annual cash incentives with long-term incentive opportunities through equity awards and balances fixed compensation (base salary) with variable compensation (annual cash incentives and equity awards); and



•

Our insider trading policy prohibits our officers and directors from engaging in hedging transactions involving the Company's securities and prohibits insiders from pledging the Company's securities as collateral for loans of any type without the prior approval of the Compensation Committee. No such pledges were approved during 2018.

              In addition, the Compensation Committee annually reviews a compensation risk assessment conducted by management. The Compensation Committee does not believe that our compensation program is reasonably likely to have a material adverse effect on the Company based on our compensation philosophy and principles and the governance principles described above.

Executive Compensation Determination Process

              Role of the Compensation Committee and the Board in Making Compensation Decisions.    Our Compensation Committee has been delegated the authority to make determinations regarding all elements of compensation for our executive officers, except for Mr. Lewis, our President and CEO. Our Compensation Committee recommends to our independent Board members the individual elements of total compensation for Mr. Lewis for approval. The independent Board members review this recommendation and determine the compensation for Mr. Lewis. As discussed in further detail below, in assessing executive compensation, our Compensation Committee engages an outside independent executive compensation consultant to assess the competitiveness of our programs and periodically conducts a peer group review.

              Role of Management.    The Compensation Committee, in making executive compensation decisions, may solicit input from management as appropriate with respect to individual and Company performance and results. The Compensation Committee receives recommendations and evaluations with respect to the compensation and performance of our named executive officers from the President and CEO (aside from his own compensation and performance) and Company performance. The Compensation Committee considered management's assessment along with the input of its independent executive compensation consultant when making 2018 compensation decisions.

              Role of the Compensation Consultant.    The Compensation Committee is authorized to select and retain its own independent compensation consultant and has routinely sought the advice of an independent compensation consultant regarding our executive compensation practices. The Compensation Committee evaluates the independence of its compensation consultant on an annual basis and has concluded that FW Cook was independent during 2018. During 2018, FW Cook advised the Compensation Committee on evolving best pay practices, provided benchmarking data and recommendations on executive officer compensation, including the use of annual RSU awards as a

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component of equity compensation, and provided recommendations about certain changes to our 2018 peer group.

              Compensation Evaluation Processes and Criteria.    Given the high demand for the experienced and well-qualified executives we seek to employ, the Compensation Committee reviews data and information from a variety of sources such as outside surveys of compensation and benefits for executive officers in the biotechnology industry, as well as public information regarding executive compensation at peer biotechnology companies. The Compensation Committee also draws upon the personal knowledge of its members with respect to executive compensation at comparable companies.

              In determining the amount and composition of compensation elements (cash and non-cash elements and short- and long-term elements) for our non-CEO named executive officers, our Compensation Committee reviews the performance of each individual executive officer holistically. In setting compensation levels for our executive officers for 2018, our Compensation Committee considered many factors, including, but not limited to, the following factors:

•

our achievement of certain product development, financial, strategic planning and other goals;



•

each non-CEO named executive officer's individual performance against certain pre-established goals, as discussed in more detail below;



•

the scope and strategic impact of each executive officer's responsibilities;



•

our past business performance;



•

our long-term goals and strategies;



•

the experience of each executive officer;



•

past compensation levels of each executive officer and of the executives as a group;



•

relative levels of pay among executive officers;



•

the amount of each element of compensation in the context of the executive officer's total compensation and other benefits;



•

for each executive officer, other than the President and CEO, the evaluations and recommendations of our President and CEO; and



•

the competitiveness of our compensation relative to the selected peer group companies and other survey data, which are described in detail below.

              Consideration of these factors is subjective; no relative weights or rankings are assigned to them (except as otherwise discussed in this CD&A).

              For the President and CEO's compensation, the Compensation Committee reviews and evaluates the performance of the President and CEO and recommends to the Board the individual elements of his total compensation, considering, among other things, individual performance, experience, prior compensation levels, and our general performance objectives, as well as the compensation practices of peer companies and the markets where we compete for executive talent. The

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Board then must approve the President and CEO's compensation; the President and CEO may not be present during voting or deliberations on his compensation.

Selection of Peer Companies/Benchmarking

              In November 2017, the Compensation Committee, upon advice received from FW Cook, selected the companies that comprised our 2018 peer group through a screening process that considered publicly traded biopharmaceutical companies similar to us in number of employees, market capitalization and stage of product development. This review resulted in modifications from our 2017 peer group as described below.

              The number of employees at the companies in our 2018 peer group ranged from 36 to 456, with a median of 195 employees, and these companies had market capitalizations that ranged from approximately $734 million to $3.40 billion, with a median of $1.82 billion. We had 161 employees and a market capitalization of approximately $1.07 billion. Employee numbers were as of the most recently reported fiscal year-end prior to November 2017 and market capitalizations were as of June 30, 2017. The table below depicts our 2018 peer group:

              The 2018 peer group reflects the following changes from our 2017 peer group: (i) the removal of Achillion Pharmceuticals, Inc., Celldex Therapeutics, Inc., Cempra, Inc., Dynavax Technologies Corp., Novavax, Inc., and Raptor Pharmaceuticals Corp. and (ii) the addition of the companies above that are marked by an asterisk. The Compensation Committee concluded that these adjustments to the peer group were appropriate given changes in the number of employees, market capitalization, stage of development and merger-and-acquisition activity of the Company and historical and potential peer companies.

              FW Cook provided comparative data regarding cash compensation, long-term equity incentives, and short-term incentives to executive officers at companies in the 2018 peer group. Using this compensation data and relevant survey data, the Compensation Committee establishes benchmarks for the purpose of evaluating appropriate compensation ranges for base salary, annual cash incentive targets and long term equity incentives for each of our named executive officers.

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Components of Compensation

              In summary, the compensation paid to our executive officers in 2018 included the following components:

              The components of our compensation program and compensation decisions for 2018 for each named executive officer are described in more detail below:

Base Salary

              The Compensation Committee reviews and sets base salaries for executives, other than the President and CEO, on an annual basis during the first quarter of each year. The Board annually determines the base salary for our President and CEO based on the recommendation of our Compensation Committee.

              Our Board and Compensation Committee seek to establish and maintain base salaries for each position and level of responsibility that are competitive with those of executive officers in our peer group. Our Compensation Committee reviews variances between the salary levels for each of our executive officers and those of the companies included in our peer group and determines, in its discretion, individual salary adjustments after considering the factors described above, although no relative weights or rankings are assigned to these factors. In setting the base salary for our executive officers other than our President and CEO, the Compensation Committee also considers the recommendations of our President and CEO.

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              The base salaries for our named executive officers were adjusted as follows in 2018:

              The named executive officers were given merit increases based on their performance in 2017 and comparative salaries received by the executives in our peer group.

Annual Cash Incentives

              We maintain an annual cash incentive program for all of our employees to motivate and reward the attainment of annual corporate goals and individual goals. In establishing targets for the cash incentive awards for our executive officers, the Compensation Committee (and the Board in the case of our President and CEO) considers target annual cash incentive opportunities extended to executive officers in similar positions at companies included in our peer group.

              For 2018, there were no changes to target cash incentive award percentages that were were set at 60% of our President and CEO's base salary and 40% of base salary for each of Mr. Tombesi, Mr. Adsett, Ms. Pellizzari, and Dr. Streck in 2017.

              For 2018, the Compensation Committee determined that the cash incentive award for our named executive officers other than Mr. Lewis would be determined by reference to both corporate and individual goals, with 75% tied to corporate goals and 25% tied to individual goals. The Compensation Committee believed that including the achievement of individual goals as a component of our 2018 cash incentive award payouts was important to incent our non-CEO named executive officers. Given Mr. Lewis's substantial influence on the overall performance of the Company, the Compensation Committee believed it was appropriate and in the best interests of our shareholders to continue to have Mr. Lewis's cash incentive award be based solely upon the achievement of corporate objectives, and the Board concurred in this view.

              Payouts for corporate goals were based upon the product of each named executive officer's respective target award times an overall corporate multiplier (ranging between 0% and 200%), which was determined based on Company performance during 2018. For our non-CEO named executive officers, payouts for individual objectives were based upon the product of each named executive

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officer's respective target award times an individual multiplier (ranging between 25% and 150%), which was determined based on achievement of individual goals for 2018.

Corporate Goals

              At the beginning of each year, management recommends annual corporate objectives to the Compensation Committee for approval. These objectives serve as the basis for determining our performance against key strategic and operating parameters for the year.

              The Compensation Committee (and the Board, with respect to our President and CEO) approved the following corporate objectives and weightings for 2018:

              At that time, the Compensation Committee believed that these corporate objectives were challenging but attainable, and attainment was uncertain.

Individual Goals

              In consultation with our named executive officers, Mr. Lewis established individual goals for each of our named executive officers at the beginning of 2018 that (i) were specific to each named executive officer's area of responsibility and (ii) were intended to support our corporate objectives for 2018. These individual goals were then recommended to and approved by our Compensation Committee. At the time these goals were established, the Compensation Committee believed they were

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challenging but attainable, and attainment was uncertain. The individual goals for each named executive officer, other than Mr. Lewis, for 2018 included the following:

              With input from Mr. Lewis, the Compensation Committee made a qualitative determination following the end of the year as to the level of achievement by each of our named executive officers other than our President and CEO with regard to his or her respective individual performance objectives.

Determining Payouts of Annual Cash Incentives

              The Compensation Committee received benchmarking data and recommendations from FW Cook in evaluating the 2018 cash incentive awards for our named executive officers. When determining payouts for the annual cash incentives, the Board, with respect to our President and CEO, and the Compensation Committee, with respect to the other named executive officers, took into account our

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performance against our annual corporate objectives. Specifically, we had the following achievements in 2018 relative to our corporate objectives:

              For bonuses related to our 2018 performance, the Compensation Committee determined that we achieved a cash bonus payout percentage of 170% on our overall performance against our corporate objectives. The following table provides a breakdown of how the Board, with respect to our President

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and CEO, and the Compensation Committee, with respect to our remaining named executive officers, determined that we performed against each of these corporate objectives during 2018:

              Based upon our achievement of the corporate goals summarized above, as well as the achievement of individual goals set by the Compensation Committee, our named executive officers earned the following cash incentive awards for 2018:

Long-term Equity Incentives

              One of the guiding principles of our compensation program is pay for performance, and we believe that a significant portion of our executives' compensation should be performance-based to create appropriate incentives and rewards for achieving strategic goals that are critical drivers of shareholder value. We also believe that stock ownership by management aligns our executives' interests with those of our shareholders, and equity incentive compensation rewards our executives for their contributions to the long-term success of the Company. The Compensation Committee believes that equity-based compensation is a vital part of our compensation program as it creates an ownership culture that rewards our executives for maximizing shareholder value over time and aligns the interests of our named executive officers and other key employees with those of our shareholders.

              The Compensation Committee believes that the combination of stock option and RSU awards to our named executive officers and other employees encourages retention. We have historically granted stock options as we believe stock options align the interests of employees and our shareholders. Upon the advice of FW Cook, the Board, with respect to our President and CEO, and the Compensation Committee, with respect to our remaining named executive officers, determined that time-based RSUs would create an additional retention incentive and awarded a portion of long-term equity incentives in 2018 to our named executive officers in the form of RSUs.

              In determining the equity compensation awards to grant to our named executive officers in 2018, the Board, with respect to our President and CEO, and the Compensation Committee, with respect to our remaining named executive officers, considered each named executive officer's role, as described above, along with the advice of FW Cook, including information regarding comparative

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equity compensation awards received by the executives in our peer group. Individual performance prior to the grant date was also considered. Based on these considerations, our named executive officers received the following equity incentive awards in 2018, with 75% of the award value in the form of stock options and 25% of the award value in the form of RSUs:

(1)

Options granted on January 4, 2018 had an exercise price of $30.46, the per-share closing price of our Common Stock on that date. Shares of our Common Stock underlying these options will vest over a four-year period, with 25% of the shares vesting on the first anniversary of the date of grant and 12.5% of the shares vesting every six months thereafter until the fourth anniversary of the date of grant.



(2)

The restricted stock units vest and become available as follows: 25% on each anniversary of the date of grant through the fourth anniversary date of the grant.

              The Board, with respect to our President and CEO, and the Compensation Committee, with respect to our remaining named executive officers, may also grant equity awards from time to time in recognition of a named executive officer's expanded duties and responsibilities or continuing contributions to the Company's performance. Accordingly, on August 8, 2018, Dr. Streck received an award of restricted stock units in recognition of his contributions with respect to the FDA Advisory Committee meeting. All unvested portions of the awards made to Dr. Streck were forfeited upon his resignation in January 2019.

Other Benefits

              We maintain several other benefit programs that are offered to all employees including executives on an equivalent basis, which include coverage for health insurance, dental insurance, life and disability insurance, and a 401(k) plan. With respect to our 401(k) plan, the Company will deposit a matching contribution of 100% of deferrals up to 4% of an employee's eligible compensation (subject to any maximum applicable limits under the IRS regulations). We also maintain an Employee Stock Purchase Plan whereby eligible employees, including executives, are given the opportunity to purchase common stock at a discounted price through payroll deductions. We do not have any defined benefit plans or non-qualified deferred compensation plans.

Severance and Change in Control Benefits

              As discussed in further detail below, we have entered into employment agreements with each of our named executive officers that, in addition to other items, provide for certain severance and change in control payments. We believe that the existence of these potential benefits will discourage turnover and mitigate the influence of a potential change in control on an executive officer's decision-making due to concerns regarding job security. The employment agreements with our named executive officers do not provide for single-trigger vesting on a change in control or tax gross-up payments.

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COMPENSATION COMMITTEE REPORT

              The Compensation Committee has reviewed and discussed the CD&A required by Item 402(b) of Regulation S-K with management and based on the review and discussions with management of the CD&A, the Compensation Committee recommended to the Board that the CD&A be included in this Proxy Statement and incorporated by reference in the Company's Annual Report.

THE COMPENSATION COMMITTEE

Alfred F. Altomari, Chairman
David R. Brennan
Leo Lee
Melvin Sharoky, M.D.

Summary Compensation Table

              The following table sets forth information regarding compensation earned by the named executive officers in 2018, 2017, and 2016.

              To improve readability, the following columns have been removed from the table as there is no reportable information with respect to these items: "Change in Pension Value" and "Nonqualified Deferred Compensation Earnings."

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2018 Grants of Plan-Based Awards

              The following table sets forth certain information regarding the annual cash incentive awards and equity grants made to our named executive officers during the year ended December 31, 2018. No other plan-based awards were granted to any of our named executive officers during 2018.

Narrative Disclosure to Summary Compensation Table and 2018 Grants of Plan-Based Awards Table

              The employment agreements for our named executive officers generally provide for no fixed termination or other expiration dates. See "Potential Payments Upon Termination" for information regarding the terms of these agreements that would be relevant in the event of the executive's termination or upon a change in control.

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Outstanding Equity Awards at 2018 Year End

              The following table sets forth certain information regarding the equity awards held by each of our named executive officers as of December 31, 2018.

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Option Exercises and Stock Vested During 2018

              During the fiscal year ended December 31, 2018, none of the named executive officers acquired shares upon exercise of stock options or vesting of stock awards.

Potential Payments Upon Termination

              Our named executive officers are entitled to payments and other benefits under their employment agreements in connection with their termination under certain circumstances. We believe that the existence of these potential benefits will discourage turnover and mitigate the influence of a potential change in control on an executive officer's decision-making due to concerns regarding job security. On January 9, 2019, Dr. Streck resigned as our chief medical officer effective January 18, 2019. Pursuant to the terms of his employment agreement, Dr. Streck received only payments of accrued obligations upon his departure. The remainder of this section discusses potential payments to which our remaining named executive officers could be entitled under their employment agreements upon termination, including a change in control.

              If Mr. Lewis's employment is terminated by us without cause or by Mr. Lewis for good reason within one year after a change in control of the Company, Mr. Lewis will receive payment of accrued obligations, a lump sum severance payment equal to two times the sum of his then applicable annual base salary and target bonus, a pro-rata portion of his annual target bonus based on actual performance for the year of termination, full vesting of all time-based equity awards, and continuation for up to eighteen months of health benefits provided he elects continued coverage under COBRA. Should Mr. Lewis's employment be terminated by us without cause or by Mr. Lewis for good reason prior to the date of a change in control or more than one year after a change in control, he would be entitled to receive all of the foregoing benefits provided that his severance payment would instead be limited to one times his then applicable annual base salary (payable over a twelve month period) and target bonus for the year of termination and his accelerated vesting would be limited to full vesting of all time-based equity awards granted at least one year prior to his termination date. Should Mr. Lewis's employment be terminated due to his death or disability, Mr. Lewis or his estate would receive payment of accrued obligations, a pro-rata portion of his annual target bonus based on actual performance for the year of termination, and any insurance benefits to which he and his beneficiaries were entitled as a result of his death or disability.

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              If Mr. Tombesi's employment is terminated by us without cause or by Mr. Tombesi for good reason within one year after a change in control of the Company, Mr. Tombesi will receive payment of accrued obligations, a lump sum severance payment equal to his then applicable annual base salary, a pro-rata portion of his annual target bonus based on actual performance for the year of termination, full vesting of all time-based equity awards, and a continuation of up to one year of health benefits provided he elects continued coverage under COBRA. Should Mr. Tombesi's employment be terminated by us without cause or by Mr. Tombesi for good reason prior to the date of a change in control or more than one year after a change in control, Mr. Tombesi would be entitled to receive all of the foregoing benefits provided that his severance payment would instead be payable over a twelve month period and his equity award vesting would be limited to accelerated vesting of all time-based equity awards that would otherwise have vested within 6 months following his termination date. Should Mr. Tombesi's employment be terminated due to his death or disability, Mr. Tombesi or his estate would receive payment of accrued obligations, a pro-rata portion of his annual target bonus based on actual performance for the year of termination, and any insurance benefits to which he and his beneficiaries were entitled as a result of his death or disability.

              If Mr. Adsett's employment is terminated by us without cause or by Mr. Adsett for good reason within one year after a change in control of the Company, Mr. Adsett will receive payment of accrued obligations, a lump sum severance payment equal to his then applicable annual base salary, a pro-rata portion of his annual target bonus based on actual performance for the year of termination, full vesting of all time-based equity awards, and a continuation of up to one year of health benefits provided he elects continued coverage under COBRA. Should Mr. Adsett's employment be terminated by us without cause or by Mr. Adsett for good reason prior to the date of a change in control or more than one year after a change in control, Mr. Adsett would be entitled to receive all of the foregoing benefits provided that his severance payment would instead be payable over a twelve month period and his equity award vesting would be limited to accelerated vesting of all time-based equity awards that would otherwise have vested within 6 months following his termination date. Should Mr. Adsett's employment be terminated due to his death or disability, Mr. Adsett or his estate would receive payment of accrued obligations, a pro-rata portion of his annual target bonus based on actual performance for the year of termination, and any insurance benefits to which he and his beneficiaries were entitled as a result of his death or disability.

              If Ms. Pellizzari's employment is terminated by us without cause or by Ms. Pellizzari for good reason within one year after a change in control of the Company, Ms. Pellizzari will receive payment of accrued obligations, a lump sum severance payment equal to her then applicable annual base salary, a pro-rata portion of her annual target bonus based on actual performance for the year of termination, full vesting of all time-based equity awards, and a continuation of up to one year of health benefits provided she elects continued coverage under COBRA. Should Ms. Pellizzari's employment be terminated by us without cause or by Ms. Pellizzari for good reason prior to the date of a change in control or more than one year after a change in control, Ms. Pellizzari would be entitled to receive all of the foregoing benefits provided that her severance payment would instead be payable over a twelve month period and her equity award vesting would be limited to accelerated vesting of all time-based equity awards that would otherwise have vested within 12 months following her termination date. Should Ms. Pellizzari's employment be terminated due to her death or disability, Ms. Pellizzari or her estate would receive payment of accrued obligations, a pro-rata portion of her annual target bonus based on actual performance for the year of termination, and any insurance benefits to which she and her beneficiaries were entitled as a result of her death or disability.

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              For purposes of the employment agreements, the term "cause" generally includes:

(a)

a conviction of the executive, or a plea of nolo contendere, to a felony involving moral turpitude;



(b)

willful misconduct or gross negligence by the executive resulting, in either case, in material economic harm to the Company or any related entities;



(c)

a willful failure by the executive to carry out the reasonable and lawful directions of the Board and failure by the executive to remedy such willful failure within 30 days after receipt of written notice of same, by the Board;



(d)

fraud, embezzlement, theft or dishonesty of a material nature by the executive against the Company or any related entity, or a willful material violation by the executive of a policy or procedure of the Company or any related entity, resulting, in any case, in material economic harm to the Company or any related entity; or



(e)

a willful material breach by the executive of his or her employment agreement and failure by the executive to remedy the material breach within 30 days after receipt of written notice thereof from the Board.

              For purposes of the employment agreements, the term "good reason" generally includes:

(a)

a material diminution in the executive's base compensation;



(b)

a material diminution in the executive's authority, duties, or responsibilities;



(c)

a material diminution in the authority, duties, or responsibilities of the supervisor to whom the executive is required to report;



(d)

the Company's or related entity's requiring the executive to be based at any office or location outside of 50 miles from the location of employment or service as of the effective date of his or her employment agreement, except for travel reasonably required in the performance of the executive's responsibilities; or



(e)

any other action or inaction that constitutes a material breach by the Company of the executive's employment agreement.

              For purposes of the employment agreements, the term "change in control" generally includes:

(a)

the acquisition by another person of beneficial ownership of 40% or more of our Common Stock;



(b)

a proxy contest that results in the replacement of a majority of the members of our Board;



(c)

a merger after which our shareholders own less than 60% of the surviving corporation's stock; or



(d)

approval by our shareholders of a complete liquidation or dissolution of our Company.

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              To protect our business and goodwill, for a period of twelve months after the termination of an executive's employment with us, each executive has agreed that he or she will not:

1.

engage in any activity in material competition with the business in which we engaged while the executive was employed by us;



2.

directly or indirectly recruit or solicit any person who is then our employee or was our employee at any time within six months prior to such solicitation; or



3.

solicit, divert or take away, or attempt to divert or to take away, the business or patronage of any of our clients or customers, or prospective clients or customers.

              The severance benefits that executives may be entitled to receive under these agreements and other benefits that the executives are entitled to receive under other plans may constitute parachute payments that are subject to the "golden parachute" rules of Section 280G of the Code and the excise tax of Code Section 4999. If these payments are determined to be parachute payments, as calculated by our independent registered public accounting firm, the parachute payments will be reduced if, and only to the extent that, a reduction will allow the executives to receive a greater net after tax amount than the executives would receive absent a reduction. All severance benefits are also subject to the execution and non-revocation of a general release of claims against the Company.

              The table below summarizes the hypothetical payments that could have been incurred by us with respect to each of the named executive officers below, assuming that a qualified termination under the applicable agreement had occurred on December 31, 2018 as a result of termination without cause or for good reason during the one-year period immediately following a change in control.

              The following table summarizes the hypothetical payments that could have been incurred by us with respect to each of the named executive officers below assuming that a qualified termination under

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the applicable agreement had occurred on December 31, 2018 as a result of termination without cause or for good reason prior to the date of a change in control or following the one-year period after a change in control.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

              The Compensation Committee is comprised entirely of independent directors, and none of our executive officers served on the Compensation Committee or on the board of any company that employed any member of our Compensation Committee or our Board during the year ended December 31, 2018.

DODD-FRANK MANDATED CEO PAY RATIO

              As required by Section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act, and Item 402(u) of Regulation S-K, we are providing the following information about the relationship of the median annual total compensation of our employees and the annual total compensation of Mr. Lewis, our President and CEO. Registrants may identify the median employee once every three years unless there has been a change in their employee population or employee compensation arrangements that the registrant reasonably believes would result in a significant change in pay ratio disclosure. The pay ratio included in this section is calculated in a manner consistent with Item 402(u) of Regulation S-K.

•

In 2018, we determined the median of the annual total compensation of all employees of our company (other than Mr. Lewis) for 2018 was $220,257.



•

For 2018, the annual total compensation of Mr. Lewis, as reported in the Summary Compensation Table, is $5,943,159.

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              Based on this information, the ratio of the median of the annual total compensation of all employees (other than Mr. Lewis) to the annual total compensation of Mr. Lewis was 1 to 26.98.

              To identify the median of the annual total compensation of all of our employees (other than Mr. Lewis), as well as to determine the annual total compensation of our median employee, we took the following steps:

1.

We determined that, as of December 31, 2018, our employee population, excluding Mr. Lewis, consisted of approximately 372 individuals working either at Insmed Incorporated or one of our global consolidated subsidiaries. This population consisted of our full-time, part-time and temporary employees and, as permitted by SEC rules, excluded independent contractors or similar non-employee workers during 2018. We did not exclude any non-US employees from these calculations.



2.

To identify the "median employee" from our employee population, we compared the sum of each employee's wages, aggregate fair value of equity awards and target cash bonus for 2018. In doing so, we annualized the compensation of all permanent employees who were hired in 2018 but did not work for us the entire fiscal year. The fair value of option awards granted during 2018 was calculated using the Black-Scholes valuation model pursuant to the assumptions described in Note 9 of the consolidated financial statements included in our Annual Report. We did not make any cost-of-living adjustments in identifying the median employee. Our determination of the median employee resulted in 11 median employees with the same compensation based on the methodology described above.



3.

After identifying these 11 median employees, we calculated annual total compensation for each such employee using the same methodology we use for our named executive officers, as set forth in the Summary Compensation Table, and selected the employee with the median annual total compensation to compute the ratio. This process resulted in a median employee with annual total compensation of $220,257 for 2018.

              The SEC's rules for identifying the median employee and calculating the pay ratio based on that employee's annual total compensation allow companies to adopt a variety of methodologies, to apply certain exclusions, and to make reasonable estimates and assumptions that reflect their employee populations and compensation practices. As a result, the pay ratio reported by other companies may not be comparable to our pay ratio, reported above, as other companies have different employee populations and compensation practices and may utilize different methodologies, exclusions, estimates and assumptions in calculating their own pay ratios.

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DIRECTOR COMPENSATION

              Our Board determines the compensation of our non-employee directors based in part on recommendations made by the Compensation Committee. The Compensation Committee evaluates the form and amount of compensation for non-employee directors at least annually and recommends changes to our Board when appropriate. Our Board is currently compensated through a combination of cash retainers and equity awards, in the form of RSUs. Our approach to Board compensation is intended to align our non-employee director compensation practices with the interests of our shareholders. For example, we have share ownership guidelines in place for our non-employee directors, with a target share ownership of three times the amount of each director's annual retainer that should be achieved within five years after the adoption of the guidelines or first appointment to the Board, whichever is later. As of the Record Date, all of our non-employee directors who had been on the Board for at least five years held shares exceeding the share ownership guidelines. Mr. Lewis is a director and an executive officer of the Company. He receives no additional compensation for serving on the Board. Our share ownership guidelines for Mr. Lewis are described under "Compensation Discussion and Analysis—Corporate Governance Perspectives on our Executive Compensation Program" above. No other director is an employee of the Company.

Fees Earned or Paid in Cash

              Our non-employee directors are paid quarterly retainer fees for their service on the Board. Our non-employee directors are not compensated for attending individual meetings of the Board on a per-meeting basis. During 2018, each non-employee director was paid a retainer totaling $40,000 annually, except for Mr. Hayden who, as the former Chairman of the Board, was paid a retainer totaling $80,000. Mr. Brennan, the Lead Independent Director, was paid a retainer totaling $25,000, prorated to reflect his service as Lead Independent Director effective as of November 6, 2018. The Chairman of the Nominations and Governance Committee was paid an additional annual fee of $10,000. The Chairman of the Compensation Committee was paid an additional annual fee of $15,000. The Chairman of the Audit Committee was paid an additional annual fee of $20,000. Annual retainer fees for non-chair committee members were paid as follows: members of the Nominations and Governance Committee, $5,000; members of the Compensation Committee, $7,000; and members of the Audit Committee, $10,000. Retainers are paid on a quarterly basis.

Grant of Restricted Stock Units

              During 2018, each non-employee director received an annual equity-based grant with a grant date value of approximately $165,000 in the form of RSUs. Ms. Anderson's compensation was prorated to reflect her appointment as of November 6, 2018. The RSUs vest on the first anniversary of the date of the award, provided that the director attends at least 75% of the meetings of the Board during the year in which the award is made.

Other

              We reimburse all of our directors for expenses incurred in connection with their attendance at Board or committee meetings. We also provide director and officer insurance for all directors.

              The following table sets forth a summary of the compensation we paid to our non-employee directors in 2018.

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              To improve readability, only the columns "Fees Earned or Paid in Cash," "Stock Awards," and "Total" have been included in the table, all other columns have been removed as there is no reportable information with respect to those compensation items.

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PROPOSAL NO. 3

RATIFICATION OF THE APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Information Relative to Ratification of the Appointment of Independent Registered Public Accounting Firm

              The Audit Committee has appointed Ernst & Young as our independent registered public accounting firm for the year ending December 31, 2019. Shareholder ratification of the appointment of our independent registered public accounting firm is not required under Virginia law, our Articles of Incorporation or our Bylaws. However, the Board is submitting the appointment of Ernst & Young to our shareholders for ratification as a matter of good corporate governance. A representative of Ernst & Young is expected to be present at the Annual Meeting and will have an opportunity to make a statement and respond to appropriate questions.

              The principal function of Ernst & Young is to audit our consolidated financial statements and attest on the effectiveness of our internal control over financial reporting and, in connection with these audits, to review certain related filings submitted to the SEC and to conduct limited reviews of the consolidated financial statements included in each of our quarterly reports. The aggregate fees billed for each of the last two years for professional services rendered by Ernst & Young, as well as information relating to the Audit Committee's pre-approval policies and procedures, are detailed under "Audit Committee Report and Independent Auditor Fees."

Vote Required for Approval of Proposal

              Ratification of the appointment of Ernst & Young as the Company's independent registered public accounting firm for the year ending December 31, 2019 requires the affirmative vote of a majority of the votes properly cast, in person or by proxy, at the Annual Meeting. Abstentions are not considered votes cast and, therefore, will have no effect on the voting outcome. If your shares are held in street name, your broker or agent has discretionary authority to vote shares held through it in the absence of your instruction regarding how your shares should be voted.

              In the event that this proposal is not approved, the Audit Committee plans to consider the vote and the reasons therefore in future decisions on the selection of our independent registered public accounting firm. Even if the appointment is ratified, the Audit Committee may engage different independent auditors at any time during the year if it determines that such a change would be in our best interests and those of our shareholders.

Recommendation

              THE BOARD RECOMMENDS THAT YOU VOTE "FOR" THE RATIFICATION OF THE APPOINTMENT OF ERNST & YOUNG AS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR THE YEAR ENDING DECEMBER 31, 2019.

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PROPOSAL NO. 4

APPROVAL OF THE 2019 INCENTIVE PLAN

Introduction

              The 2019 Incentive Plan was adopted by our Board on April 3, 2019, subject to the approval of our shareholders. The purpose of the 2019 Incentive Plan is to advance the interests of the Company by aligning the individual interests of employees, officers, non-employee directors and other service providers, in each case who are selected to be participants, with the interests of Company shareholders and by providing such individuals with an incentive to continue working toward and contributing to the success and progress of the Company.

              The 2019 Incentive Plan, if approved, will provide for the issuance of 3,500,000 shares, plus any shares that were subject to outstanding awards under the 2017 Incentive Plan, the 2015 Incentive Plan and the 2013 Incentive Plan, as of the effective date of the 2019 Incentive Plan, that are cancelled, terminate unearned, expire, are forfeited, lapse for any reason or are settled in cash without the delivery of shares. If the 2019 Incentive Plan is approved, no additional awards will be granted under the 2017 Incentive Plan, which is the only shareholder-approved incentive plan under which equity-based incentive awards are currently granted.

Timing of Proposal

              There are a number of reasons why we are seeking approval of the 2019 Incentive Plan at this time. The last time we had our shareholders approve a long-term equity incentive plan was in 2017, and the Company currently administers its equity-based compensation programs under the 2017 Incentive Plan. Due to the significant increase in our employee population over the past two years in connection with our transition to a commercial biopharmaceutical company and fluctuations in the price of our Common Stock since that time, we have nearly depleted the share pool under the 2017 Incentive Plan. If the 2019 Incentive Plan is not approved, we will have remaining only approximately 770,475 shares available for future grant under the 2017 Incentive Plan (plus any shares that might be returned to the 2017 Incentive Plan as a result of future cancellations, expirations and forfeitures), based on awards outstanding as of the Record Date, and thereafter will not be able to grant additional equity incentives under the 2017 Incentive Plan. We continue to focus on having a successful commercial launch of ARIKAYCE in the US for appropriate patients, intend to seek regulatory approvals for ARIKAYCE outside the US, such as in Europe and Japan, and expect to complete enrollment in the WILLOW clinical study of INS1007 in mid-2019. We expect these activities to result in continued increases in our employee headcount and to ensure that we have sufficient equity plan capacity to compensate and incentivize our employees, the Board adopted the 2019 Incentive Plan and strongly recommends that our shareholders approve the 2019 Incentive Plan.

Why You Should Vote for the 2019 Incentive Plan

              Equity-based compensation is a vital part of our compensation program for our employees, including our named executive officers, and our non-employee directors. We believe equity-based compensation creates an ownership culture that rewards our executives for maximizing shareholder value over time and aligns the interests of our employees and directors with those of our shareholders. We have traditionally granted stock options to new hires in connection with their commencement of employment and stock options, as well as other forms of equity-based compensation, to key employees as part of their ongoing compensation packages. In 2018, we began granting RSUs to our employees. We believe that providing these equity awards incentivizes employees, including management, to create

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long-term shareholder value and aids in retention efforts, as awards generally vest over a number of years. In addition, we grant RSUs to non-employee directors annually as part of their compensation for service on the Board.

              The Board currently intends that the 3,500,000 shares requested under the 2019 Incentive Plan will be sufficient to fund the Company's annual stock option and RSU grants to current employees as well as stock option grants to new hires for at least the next year, which it believes appropriate taking into account the Company's planned growth. In determining the appropriate number of shares to request, the Board considered a dilution and overhang analysis. Upon a review of the remaining shares available for grant under our 2017 Incentive Plan, the anticipated need for future equity award issuances, the Board approved the 2019 Incentive Plan and the share pool authorized for issuance thereunder, to ensure that we have sufficient equity plan capacity to continue to provide our eligible employees and directors with appropriate equity-based incentives.

              The Board believes that the 2019 Incentive Plan is necessary and important to ensure that we have a sufficient share reserve to grant equity incentives at levels deemed appropriate by the Compensation Committee and the Board. We believe that providing competitive equity awards is critical in attracting and retaining talent as we progress towards commercialization. Without the 2019 Incentive Plan, we may not be able to attract and provide long-term incentives to new executives and other professional talent that we may need to achieve our research and development goals and, assuming regulatory approval, to maximize the revenue potential of our products through effective introduction and commercialization.

Key Considerations for Requesting Additional Shares

              In determining the number of shares to be authorized under the 2019 Incentive Plan, the Board considered the following principal factors:

•

Number of Shares Available for Grant under Existing Plan:  As of the Record Date, 770,475 shares remained available for issuance under the 2017 Incentive Plan.



•

Burn Rate:  Burn rate measures our usage of shares for our stock plans as a percentage of our outstanding shares. For 2018, 2017, and 2016, our burn rate was 1.95%, 2.88%, and 3.38%, respectively. The rates were calculated by dividing the number of shares subject to awards granted during the year net of forfeitures and cancellations by the weighted average number of shares outstanding during the year. We have been advised by PAG that our average annual burn rate of 2.74% over this three-year period is considered reasonable by most institutional shareholders.



•

Overhang.  As of December 31, 2018, 9,609,556 shares were subject to outstanding awards resulting in an overhang of 11.06%. This is in line with the overhang of our peer group and therefore the Board believes that a 3,500,000 share authorization under the 2019 Incentive Plan is appropriate at this time to allow us to grant awards with the intent of maintaining a similar overhang for the next one or two years.

Key Features Designed to Protect Shareholders' Interests

              The Board of Directors believes the use of equity-based incentive awards aligns participants' interests with those of our shareholders. The 2019 Incentive Plan's design reflects our continued

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commitment to strong corporate governance and our desire to preserve shareholder value as demonstrated by the following Plan features:

•

Shareholder Approval Required for Additional Shares.  The 2019 Incentive Plan does not contain an "evergreen" provision that automatically increases the number of shares authorized for issuance under the plan.



•

One-Year Minimum Vesting.  Awards granted under the 2019 Incentive Plan are subject to a vesting period of at least one year, except for substitute awards issued in connection with acquisitions and awards that vest in connection with certain acceleration events. The administrator also has the authority to use up to 5% of the plan's share pool for awards that are not subject to the minimum vesting requirement.



•

No Payment of Dividends Prior to Vesting.  Participants who are eligible to receive dividends or dividend equivalents with respect to their awards under the 2019 Incentive Plan may not be paid such dividends or dividend equivalents before their award vests.



•

No Liberal Share Recycling.  Shares that are tendered, delivered or withheld to satisfy any option exercise price or tax withholding obligation are not again available for issuance under the plan. Additionally, shares covered by a stock-settled stock appreciation right (SAR) that were not issued upon full settlement are also not returned to the plan's share pool.



•

Limits on Full Value Awards.  The 2019 Incentive Plan limits the number of shares of Common Stock available for full value share awards payable in the form of Common Stock by providing that each share issued pursuant to one of these types of awards reduces the number of shares available for grant by 1.25 shares.



•

No Discounted Awards; Maximum Term Specified.  Stock options and SARs must have an exercise price no less than the closing price per share on the date the award is granted (except with respect to certain substitute awards) and a term that is generally no longer than ten years.



•

No Repricing; Reloading Prohibited.  Shareholder approval is required for any repricing, replacement, or buyout of underwater awards. In addition, no new awards are granted automatically upon the exercise or settlement of any outstanding award.



•

No Liberal Change in Control Provisions.  The definition of change in control in our 2019 Incentive Plan requires the consummation of an actual transaction so that no vesting acceleration benefits may occur merely on the approval of a transaction by our Board of Directors or shareholders.



•

No Transfers for Value.  Participants are not permitted to transfer awards for value under the 2019 Incentive Plan.



•

Recoupment Policy.  The administrator may subject any participant or any award (including the shares issuable thereunder) to the Company's recoupment, clawback or other forfeiture policies, as maintained by the Company from time to time.

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              The administrator has full discretion to determine the number of shares subject to awards to be granted to participants under the 2019 Incentive Plan, subject to the terms of the plan. No awards have been granted contingent upon shareholder approval of the 2019 Incentive Plan.

2019 Incentive Plan Summary

              The following is a description of the material features of the 2019 Incentive Plan. The following discussion is qualified in all respects by reference to the full text of the plan attached as Appendix A. The term "employees" in the following discussion is used to refer to officers and directors and other employees of the Company and its affiliates, where applicable.

Purpose and Eligibility

              The purpose of the 2019 Incentive Plan is to advance the interests of the Company by aligning the individual interests of employees, officers, non-employee directors and other service providers, in each case who are selected to be participants, with the interests of Company shareholders and by providing such individuals with an incentive to continue working toward and contributing to the success and progress of the Company. Employees of the Company and its affiliates, members of the Board, and other non-employee advisors or service providers will be eligible to be considered for the grant of awards under the 2019 Incentive Plan. As of the Record Date, approximately 8 nonemployee directors, 6 executive officers and 395 other employees of the Company were so eligible.

Shares Subject to the 2019 Incentive Plan and to Awards

              The maximum number of shares of Common Stock that may be issued pursuant to awards granted under the 2019 Incentive Plan is 3,500,000, plus any shares of Common Stock subject to outstanding awards under the 2017 Incentive Plan, the 2015 Incentive Plan or the 2013 Incentive Plan, as of the effective date of the 2019 Incentive Plan, that, after such date, are canceled, terminate unearned, expire, are forfeited or lapse for any reason or are settled in cash without the delivery of shares. Shares of Common Stock issued under the 2019 Incentive Plan may either be authorized and unissued shares or previously issued shares acquired by the Company, including shares purchased in the open market. The number of shares of Common Stock available for issuance under the 2019 Incentive Plan will be reduced by (i) one share for each share of Common Stock subject to a stock option or SAR with an exercise or strike price of at least 100% of the fair market value of the underlying Common Stock on the date of grant, and (ii) 1.25 shares for each share of Common Stock subject to a full value award (e.g., restricted stock or RSUs).

              The number of shares of Common Stock available for issuance under the 2019 Incentive Plan will be increased to the extent that an award under the 2019 Incentive Plan (or any award under the 2017 Incentive Plan, the 2015 Incentive Plan or the 2013 Incentive Plan that is outstanding as of the effective date of the 2019 Incentive Plan) is canceled, terminates unearned, expires, is forfeited, or lapses for any reason, or such an award is settled in cash without the delivery of shares to a participant, such that any shares of Common Stock subject to any such award will again be available for the grant of an award pursuant to the 2019 Incentive Plan. Shares will not again be available for issuance under the plan if they are tendered in payment of an option exercise price or delivered or withheld to satisfy any tax withholding obligation. Additionally, shares covered by a stock-settled SAR that are not issued upon full settlement will also not again be available for issuance under the plan. The payment of dividend equivalents in cash in conjunction with any outstanding awards under the 2019 Incentive Plan will not be counted against the shares available for issuance under the 2019 Incentive Plan. Any shares of Common Stock with respect to awards issued under the 2019 Incentive Plan (or an award issued under the 2017 Incentive Plan, the 2015 Incentive Plan or the 2013 Incentive Plan) that again become

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available for future grants will be added back to the share pool (i) as one share for each share of Common Stock subject to a stock option or SAR, and (ii) as 1.25 shares for each share of Common Stock subject to a full value award, provided, that awards issued under the 2017 Incentive Plan, the 2015 Incentive Plan or the 2013 Incentive Plan will be considered full-value awards if they would have been full-value awards if issued under the 2019 Incentive Plan and added back to the share pool as one share in all other cases.

              The aggregate number of shares of Common Stock that may be issued pursuant to the exercise of incentive stock options (ISOs) granted under the 2019 Incentive Plan will not exceed 3,500,000.

              Awards granted or shares issued by the Company in assumption of, or in substitution or exchange for, awards previously granted, or the right or obligation to make future awards, by a company acquired by the Company or with which the Company combines will not reduce the shares authorized for issuance under the 2019 Incentive Plan. In addition, in the event that a company acquired by the Company, or with which the Company combines, has shares available under a shareholder-approved, pre-existing equity compensation plan, not adopted in contemplation of such acquisition or combination, the shares available for grant pursuant to such pre-existing plan (as adjusted in connection with such acquisition or combination) may be used for awards under the 2019 Incentive Plan and will not reduce the shares authorized for issuance under the 2019 Incentive Plan, provided that the awards using such available shares will not be made after the last day awards could have been made under the terms of the pre-existing plan absent the acquisition or combination and will not be granted to individuals who were employed by the Company or its subsidiaries at the time the acquisition or combination was consummated.

Administration

              The 2019 Incentive Plan will be administered by the Compensation Committee, or, in the absence of the Compensation Committee, the Board itself. Any power of the administrator may also be exercised by the Board. To the extent that any permitted action taken by the Board conflicts with action taken by the administrator, the Board action will control. The Compensation Committee may by resolution authorize one or more officers of the Company to perform any or all things that the administrator is authorized and empowered to do or perform under the 2019 Incentive Plan; provided, however, that such authorization must specify the total number of awards (if any) such officer or officers may award pursuant to such delegated authority, and provided further that in no event may an officer of the Company be delegated the authority to grant awards to, or amend awards held by, the individuals who are subject to Section 16 of the Exchange Act or report directly to such officer. Additionally, no such officer may grant any awards to himself or herself. The administrator may also delegate any or all aspects of the day-to-day administration of the 2019 Incentive Plan to one or more officers or employees of the Company or any subsidiary, and/or to one or more agents.

              Subject to the provisions of the 2019 Incentive Plan, the administrator has the authority to select the participants to receive awards and to grant such awards and to determine the terms and conditions of awards and the number of shares to be issued pursuant thereto, including conditioning the receipt or vesting of awards upon achievement of performance conditions. All decisions, determinations and interpretations by the administrator are final and binding on all participants and all other persons holding or claiming rights under the plan or any award granted thereunder.

Awards

              The 2019 Incentive Plan authorizes the grant of awards of stock options, SARs, restricted stock and RSUs. Any award may be subject to performance conditions as determined by the administrator.

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The terms of awards will be determined by the administrator and set forth in an award agreement. The terms of any awards may vary among participants. Subject to the provisions of the 2019 Incentive Plan, the administrator will specify before, at or after the time of grant the provisions governing the effects upon an award of a separation from service or other termination of service. Unless otherwise provided in an award agreement or another agreement, including an employment agreement, unvested awards will be forfeited immediately if a participant terminates his or her employment with the Company for any reason. Participants will not have any rights as a shareholder with respect to shares covered by an award until the date the participant becomes the holder of record of such shares. Awards granted under the plan are subject to a minimum vesting period of one year, except in the case of substitute awards issued in connection with acquisitions or awards that vest in connection with certain acceleration events. Additionally, the administrator has the authority to grant awards covering up to 5% of the plan's share pool that are not subject to this minimum vesting requirement. With respect to awards that entitle a participant to dividends or dividend equivalents, in no event may such dividends or dividend equivalents, if any, be paid to the participant prior to the vesting of the portion of the award to which such dividends or dividend equivalents relate.

              Stock Options.    Stock options granted under the 2019 Incentive Plan may be either non-qualified stock options or ISOs under Section 422 of the Code. The exercise price of any stock option granted, other than substitute awards, may not be less than 100% of the fair market value of a share of our Common Stock on the date of grant (provided that the exercise price of an ISO granted to a participant who owns stock possessing more than 10 percent of the combined voting power of all classes of the Company's stock (a 10% Shareholder) will be at least 110% of the fair market value on such date). The option exercise price is payable in cash or such other method as determined by the administrator, including an irrevocable commitment by a broker to pay over such amount from a sale of the shares issuable under an option, the delivery of previously owned shares of Common Stock or withholding of shares of Common Stock deliverable upon exercise. Vesting may be based on continued employment, passage of time, attainment of age and/or service requirements, and/or satisfaction of performance conditions. The term of a stock option will in no event be greater than ten years (or, for an ISO granted to a 10% Shareholder, five years), provided that the term of a non-qualified stock option will be automatically extended if, at the time of its scheduled expiration, the participant holding such option is prohibited by law or by the Company's insider trading policy from exercising such option. Any such extension will expire on the 30^th day following the date such prohibition no longer applies.

              Other than in connection with a change in the Company's capitalization, at any time when the exercise price of an option is above the fair market value of a share of Common Stock, the Company may not, without shareholder approval: (i) reduce the exercise price of such option, (ii) exchange such option for cash, another award or a new option or SAR with a lower exercise price or (iii) otherwise reprice such option. Options may not be granted under the 2019 Incentive Plan in consideration for, and will not be conditioned upon the delivery of shares to the Company in payment of the exercise price and/or tax withholding obligation under, any other option. Holders of a stock option will have no voting rights or rights to receive dividends or dividend equivalents with respect to their stock option until they become the holder of record of the underlying shares.

              As of April 3, 2019, the fair market value of a share of our Common Stock, determined by the last reported sale price per share on that date as quoted on the Nasdaq Capital Market, was $30.14.

              Restricted Stock and Restricted Stock Units.    The grant, issuance, retention, vesting and/or settlement of any restricted stock or RSU award will occur at such time and be subject to such terms and conditions as determined by the administrator or under conditions established by the administrator, which may include conditions based on continued employment, passage of time, attainment of age and/or service requirements, and/or satisfaction of performance conditions.

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              Participants who receive restricted stock will be entitled to receive all dividends and other distributions paid with respect to those shares unless determined otherwise by the administrator. The administrator will determine whether such dividends or distributions will be automatically reinvested in additional restricted stock and/or subject to the same restrictions as the underlying restricted stock, or whether such dividends or distributions will be paid in cash. Unless otherwise set forth in the award agreement, prior to the time shares are issued to a participant under an RSU, the Company will pay or accrue dividend equivalents on each date that dividends are paid, and such dividend equivalents will be paid at the time specified in the award agreement. As described above, no dividends or dividend equivalents may be paid with respect to an award of restricted stock or RSUs prior to the vesting of the portion of the award to which such dividends or dividend equivalents relate. Unless otherwise determined by the administrator, participants holding shares of restricted stock may exercise full voting rights with respect to those shares during the period of restriction. Participants holding RSUs will not have voting rights with respect to the underlying shares until they become the holder of record of the underlying shares.

              Stock Appreciation Rights.    A SAR entitles the participant, upon settlement, to receive a payment based on the excess of the aggregate market price of a specified number of shares of Common Stock at the time of the exercise over the exercise price of the right. SARs may be granted on a stand-alone basis or in tandem with a related stock option. The exercise price may not be less than the fair market value of a share of our Common Stock on the date of grant. A SAR granted in tandem with a stock option will have an exercise price equal to the exercise price of the stock option to which it relates. The administrator will determine the vesting requirements and the payment and other terms of a SAR, including the effect of termination of service of a participant. Vesting may be based on continued employment, passage of time, attainment of age and/or service requirements, and/or satisfaction of performance conditions. Other than in connection with a change in the Company's capitalization, at any time when the exercise price of a SAR is above the fair market value of a share of Common Stock, the Company may not, without shareholder approval: (i) reduce the exercise price of such SAR, (ii) exchange such SAR for cash, another award or a new option or SAR with a lower exercise price or (iii) otherwise reprice such SAR. Holders of a SAR will have no voting rights or rights to receive dividends or dividend equivalents with respect to their SAR until they become the holder of record of the underlying shares.

Adjustment and Change in Control

              The number and kind of shares of Common Stock available for issuance (including under any awards then outstanding), and the number and kind of shares of Common Stock subject to the limits set forth in the 2019 Incentive Plan, will be equitably adjusted by the administrator to reflect any reorganization, reclassification, combination of shares, stock split, reverse stock split, spin-off, dividend or distribution of securities, property or cash (other than regular, quarterly cash dividends), or any other event or transaction that affects the number or kind of shares of Common Stock outstanding. Such adjustment may be designed to comply with Section 424 of the Code or may be designed to treat the shares available under the 2019 Incentive Plan and subject to awards as if they were all outstanding on the record date for such event or transaction or to increase the number of such shares to reflect a deemed reinvestment in shares of the amount distributed to the Company's security holders. The terms of any outstanding award will also be equitably adjusted by the administrator as to price, number or kind of shares subject to such award, vesting, and other terms to reflect the foregoing events, which adjustments need not be uniform as between different awards or different types of awards. No fractional shares of Common Stock will be issued pursuant to such an adjustment. In the event there is any other change in the number or kind of outstanding shares of Common Stock, or any stock or other securities into which such Common Stock will have been changed, or for which it will have been exchanged, by reason of a change in control, other merger, consolidation or otherwise, then the

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administrator will determine the appropriate and equitable adjustment to be effected, which adjustments need not be uniform between different awards or different types of awards. In addition, in the event of such change, the administrator may accelerate the time or times at which any award may be exercised, consistent with and as otherwise permitted under Section 409A of the Code, and may provide for cancellation of such accelerated awards that are not exercised within a time prescribed by the administrator in its sole discretion.

              Unless otherwise expressly provided for in an award agreement or another agreement, including an employment agreement, in the event of a change in control, unless provision is made in connection with the change in control for (i) assumption of awards previously granted or (ii) substitution for such awards, (A) the administrator will make an adjustment to any or all awards as the administrator deems appropriate to reflect such change in control or (B) (1) in the case of an option or SAR, the participant will have the ability to exercise such option or SAR, including any portion of the option or SAR not previously exercisable, and the unexercised portion of such option or SAR will be cancelled upon on the consummation of the change in control; (2) in the case of an award subject to performance conditions, the participant will have the right to receive a payment based on performance through a date determined by the administrator prior to the change in control (unless such performance cannot be determined, in which case the participant will have the right to receive a payment equal to the target amount payable); and (3) in the case of outstanding restricted stock and/or RSUs not subject to performance conditions, all conditions to the grant, issuance, retention, vesting or transferability of, or any other restrictions applicable to, such award will immediately lapse.

              Unless otherwise expressly provided for in an award agreement or another agreement, including an employment agreement, or under the terms of a transaction constituting a change in control, the following will occur upon a participant's involuntary termination of employment or other service within 24 months following a change in control, provided that such termination does not result from disability, cause or gross misconduct: (i) in the case of an option or SAR, the participant will have the ability to exercise such option or SAR, including any portion of the option or SAR not previously exercisable, and the option or SAR will remain exercisable for a period of three years following such termination (or until expiration, if earlier), (ii) in the case of an award subject to performance conditions, the participant will have the right to receive a payment based on performance through a date determined by the administrator prior to the change in control (unless such performance cannot be determined, in which case the participant will have the right to receive a payment equal to the target amount payable), and (iii) in the case of outstanding restricted stock and/or RSUs not subject to performance conditions, all conditions to the grant, issuance, retention, vesting or transferability of, or any other restrictions applicable to, such award will immediately lapse.

Transferability

              No award may be sold, transferred for value, pledged, assigned, or otherwise alienated or hypothecated other than by will or the laws of descent and distribution, and each option or SAR is exercisable only by the participant during his or her lifetime. Notwithstanding the foregoing, outstanding options may be exercised following the participant's death by the participant's beneficiaries or as permitted by the administrator.

Duration of the 2019 Incentive Plan

              Awards may not be granted under the 2019 Incentive Plan after the tenth anniversary of the adoption by the Board of the 2019 Incentive Plan. Notwithstanding the foregoing, the 2019 Incentive Plan may be terminated at such earlier time as the Board may determine. Termination of the 2019

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Incentive Plan will not affect the rights and obligations of the participants and the Company arising under awards granted prior to such termination.

Amendment and Termination

              Subject to limitations imposed by law, the Board may amend or terminate the 2019 Incentive Plan at any time and the administrator may amend or alter any agreement or other document evidencing an award made under the 2019 Incentive Plan. However, no such amendment may deprive the recipient of an award previously granted under the 2019 Incentive Plan of any rights thereunder without his or her consent, unless the administrator determines that the amendment (i) is required or advisable to satisfy any law or regulation or avoid adverse financial accounting consequences, or (ii) is not reasonably likely to significantly diminish the benefits provided under the award, or that any diminishment has been adequately compensated. Notwithstanding the foregoing, no such amendment shall, without the approval of the shareholders of the Company:

(a)

increase the maximum number of shares of Common Stock for which awards may be granted under the 2019 Incentive Plan;



(b)

reduce the price at which options may be granted below the price provided for in the 2019 Incentive Plan;



(c)

reprice outstanding options or SARs;



(d)

extend the term of the 2019 Incentive Plan;



(e)

change the class of persons eligible to be participants; or



(f)

otherwise amend the 2019 Incentive Plan in any manner requiring shareholder approval by law or the rules of any stock exchange or market or quotation system on which the Common Stock is traded, listed or quoted.

Recoupment Policy

              The administrator has the authority to cause a participant or an award under the plan to be subject to the Company's recovery, recoupment, clawback and/or other forfeiture policies, as maintained by the Company from time to time.

New Plan Benefits

              Awards under the 2019 Incentive Plan are discretionary and the administrator has not yet determined to whom awards will be made and the terms and conditions of such awards. As a result, no information is provided concerning the benefits to be delivered under the 2019 Incentive Plan to any individual or group of individuals. Information about awards granted to our named executive officers and directors during 2018 under our 2017 Incentive Plan can be found under the heading "Compensation Discussion and Analysis—2018 Grants of Plan-Based Awards" and "Director Compensation—Grant of Restricted Stock Units," respectively. During 2018, awards covering 543,233 shares were granted under our 2017 Incentive Plan to our named executive officers, awards covering 53,646 shares were granted under our 2017 Incentive Plan to our non-employee directors and awards covering 1,116,587 shares were granted under our 2017 Incentive Plan to our other employees.

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Federal Income Tax Treatment

              The following discussion summarizes the material U.S. federal income tax consequences to the Company and the participants in connection with the 2019 Incentive Plan under existing applicable provisions of the Code and the accompanying regulations. The discussion is general in nature and does not address issues relating to the income tax circumstances of any individual participant. The discussion is based on federal income tax laws in effect on the date of this Proxy Statement and is, therefore, subject to possible future changes in the law. The discussion does not address the consequences of state, local or foreign tax laws.

              Nonqualified Options—An employee will not recognize any income upon receipt of a nonqualified stock option, and the Company will not be entitled to a deduction for federal income tax purposes at the time of grant. Ordinary income will be realized by the holder at the time the nonqualified stock option is exercised and the shares are transferred to the employee. The amount of such taxable income, in the case of a nonqualified stock option, will be the excess, if any, of the fair market value of the shares on the date of exercise over the exercise price. The Company will generally be entitled to a tax deduction in an amount equal to the ordinary income that an employee recognizes upon exercise.

              Incentive Stock Options—An employee who receives an ISO will not recognize any income for federal income tax purposes upon receipt of the ISO, and the Company will not realize a deduction for federal income tax purposes. The holder generally will not be taxed upon exercise, but the excess, if any, of the fair market value of the stock on the date of exercise over the option exercise price may subject the holder to the alternative minimum tax. If the holder does not dispose of the ISO shares within two years from the date the option was granted or within one year after the shares were transferred to him on exercise of the option, then that portion of the gain on the sale of the shares that is equal to the difference between the sales price and the option exercise price will be treated as a long-term capital gain. The Company will not be entitled to a deduction either at the time the employee exercises the ISO or subsequently sells the ISO shares. However, if the employee sells the ISO shares within two years after the date the ISO is granted or within one year after the date the ISO is exercised, then the sale is considered a disqualifying sale, and the spread on exercise will be taxed as ordinary income. The balance of the gain will be treated as long- or short-term capital gain depending on the length of time the employee held the stock. If the shares decline in value after the date of exercise, the compensation income will be limited to the difference between the sale price and the amount paid for the shares. The tax will be imposed in the year the disqualifying sale is made. The Company will be entitled to a deduction equal to the ordinary income recognized by the employee.

              With respect to both nonqualified stock options and ISOs, special rules apply if an employee uses shares already held by the employee to pay the exercise price or if the shares received upon exercise of the option are subject to a substantial risk of forfeiture by the employee.

              Restricted Stock—Employees receiving restricted stock will not recognize any income upon receipt of the restricted stock. Ordinary income will be realized by the holder at the time that the restrictions on transfer are removed or expire. The amount of ordinary income will be equal to the fair market value of the shares on the date that the restrictions on transfer are removed or expire. The Company will be entitled to a deduction at the same time and in the same amount as the ordinary income the employee is deemed to have realized. However, no later than 30 days after an employee receives the restricted stock, the employee may elect to recognize taxable ordinary income in an amount equal to the fair market value of the shares at the time of receipt. Provided that the election is made in a timely manner, when the restrictions on the shares lapse, the employee will not recognize

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any additional income. If the employee forfeits the shares to the Company, the employee may not claim a deduction with respect to the income recognized as a result of the election.

              Generally, when an employee disposes of shares acquired under the 2019 Incentive Plan, the difference between the sales price and his or her basis in such shares will be treated as long- or short-term capital gain or loss depending upon the holding period for the shares.

              Restricted Stock Units—Employees who are granted RSUs do not recognize income at the time of the grant. When the award vests or is paid, participants recognize ordinary income in an amount equal to the fair market value of the units at such time, and the Company will receive a corresponding tax deduction.

              Stock Appreciation Rights—Upon exercise of a SAR, an employee will recognize taxable income in the amount of the cash received. An employee who receives unrestricted shares upon exercise of a SAR will recognize ordinary income in the year of exercise equal to the fair market value of the shares received. In either such case, the Company will be entitled to an income tax deduction in the amount of such income recognized by the employee.

              Potential Limitation on Deductions—Section 162(m) of the Code places a limit of $1,000,000 on the amount the Company may deduct in any one year for compensation paid to each of the Company's "covered employees." The definition of "covered employee" includes anyone who was the Company's CEO or CFO at any time during the year, as well as the Company's three other most highly-compensated executive officers during the year. Any individual who is or became a covered employee after December 31, 2016 will always be treated as a covered employee, even after termination of employment. Accordingly, awards granted to the Company's covered employees under the 2019 Incentive Plan may not be fully deductible.

              Federal Income Tax Consequences to the Company—To the extent that a recipient recognizes ordinary income in the circumstances described above, the Company will be entitled to a corresponding deduction provided that, among other things, the income meets the test of reasonableness, is an ordinary and necessary business expense, is not an "excess parachute payment" within the meaning of Section 280G of the Code and is not disallowed by the $1,000,000 limitation on certain executive compensation under Section 162(m).

              Tax Withholding—To the extent required by applicable federal, state, local or foreign law or practice, a participant will be required to satisfy, in a manner satisfactory to the Company, any withholding tax obligations that arise by reason of the award.

              Section 409A—Section 409A of the Code applies to any awards under the 2019 Incentive Plan that are deemed to be deferred compensation. If the requirements of Section 409A of the Code are not met, the recipient may be required to include deferred compensation in taxable income, and additional taxes and interest may be assessed on such amounts. If any awards are subject to Section 409A of the Code, we intend to have the awards comply with Section 409A of the Code.

Equity Compensation Plan Information

              In 2018, we made stock-based awards from our 2017 Incentive Plan, and have outstanding grants under our 2015 Incentive Plan, 2013 Incentive Plan and 2000 Stock Incentive Plan (together with the 2017 Incentive Plan, 2015 Incentive Plan and the 2013 Incentive Plan, the Plans).

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              The 2017 Incentive Plan was adopted by the Board and approved by our shareholders on May 18, 2017. Under the terms of the 2017 Incentive Plan, we are authorized to grant a variety of incentive awards based on our Common Stock, including stock options (both ISOs and non-qualified stock options), performance options/shares and other stock awards, such as RSUs, as well as the payment of incentive bonuses to all employees and non-employee directors.

              The following table presents information as of December 31, 2018, with respect to the Plans.

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Vote Required for Approval of this Proposal

              Approval of the 2019 Incentive Plan requires the affirmative vote of a majority of the votes cast, in person or by proxy, at the Annual Meeting. Abstentions and broker non-votes will not have an effect on the outcome of this proposal.

Recommendation

              THE BOARD RECOMMENDS THAT YOU VOTE "FOR" THE APPROVAL OF THE 2019 INCENTIVE PLAN.

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PROPOSALS FOR 2020 ANNUAL MEETING

              Shareholder proposals intended for inclusion in our proxy statement for the 2020 Annual Meeting of Shareholders must be received at our offices no later than the close of business on December 6, 2019. All such proposals must comply with Rule 14a-8 under the Exchange Act and must be submitted to the Corporate Secretary, Insmed Incorporated, 10 Finderne Avenue, Building 10, Bridgewater, New Jersey, 08807.

              Under our Bylaws, any shareholder (as defined in our Bylaws) who wishes to present other business or nominate a director candidate at the 2020 Annual Meeting of Shareholders must give timely written notice of any such business or nomination to our Corporate Secretary in advance of the meeting. Such written notice must comply with the requirements in our Bylaws and must be given, either by personal delivery or by United States registered or certified mail, postage prepaid, to our Corporate Secretary at the address given above no later than 120 days nor more than 150 days before the anniversary of the immediately preceding year's annual meeting. Accordingly, for the 2020 Annual Meeting of Shareholders, our Corporate Secretary must receive such written notice no earlier than December 18, 2019 and no later than January 17, 2020. If the date of the 2020 Annual Meeting of Shareholders is more than 30 days before or more than 60 days after May 16, 2020 (the anniversary of this year's Annual Meeting), then the written notice must be received no later than the 120th day prior to such Annual Meeting or, if later, the 10th day following the day on which public disclosure of the date of such Annual Meeting was first made. If a shareholder fails to meet these requirements or fails to satisfy the requirements of Rule 14a-4 under the Exchange Act, the named proxies may exercise discretionary voting authority under proxies that we solicit to vote on any such business or nomination in accordance with their best judgment. Our Bylaws are available on our website at www.insmed.com under the heading "Investor Relations—Corporate Governance" or by submitting a written request to the Corporate Secretary, Insmed Incorporated, 10 Finderne Avenue, Building 10, Bridgewater, New Jersey, 08807.

ANNUAL REPORT ON FORM 10-K

              We will provide without charge to each person to whom this Proxy Statement has been made available on the written request of such person, a printed copy of our Annual Report, including the financial statements and financial statement schedules. Requests should be directed to Ms. Christine Pellizzari, Corporate Secretary, Insmed Incorporated, 10 Finderne Avenue, Building 10, Bridgewater, New Jersey, 08807, (908) 977-9900. In connection with any such request, we will provide a list of exhibits to the Annual Report, and will provide copies of any such exhibit upon the payment of a reasonable fee.

SEPARATE COPIES FOR BENEFICIAL HOLDERS

              Institutions that hold shares in street name for two or more beneficial owners with the same address are permitted to deliver a single set of proxy materials to that address. Only one set of proxy materials will be delivered to such address unless they receive contrary directions from one or more of such beneficial owners. Any such beneficial owner can request a separate copy of these proxy materials by contacting our Corporate Secretary as described above, and we will promptly provide a separate copy. If you are the beneficial owner, but not the record holder, of the Company's shares and wish to receive only one copy of our proxy materials in the future, you will need to contact your broker, bank or other agent to request that only a single copy of each document be mailed to all shareholders at the shared address in the future.

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Appendix A

INSMED INCORPORATED
2019 INCENTIVE PLAN

              1.           Purpose

              The purpose of the Plan is to advance the interests of the Company by aligning the individual interests of employees, officers, non-employee directors and other service providers, in each case who are selected to be participants, with the interests of Company shareholders and by providing such individuals with an incentive to continue working toward and contributing to the success and progress of the Company. The Plan provides for the grant of Options, Stock Appreciation Rights, Restricted Stock and Restricted Stock Units, any of which may be performance-based, as determined by the Administrator. The Plan replaces the Insmed Incorporated 2017 Incentive Plan (the "2017 Plan") with respect to future awards granted by the Company, and no future awards will made under the 2017 Plan after the Effective Date (as defined herein) of the Plan except as otherwise provided herein.

              2.           Definitions

              As used in the Plan, the following terms shall have the meanings set forth below:

        ​ ​              ​ ​      a.        ​ ​   "Administrator" means the Administrator of the Plan in accordance with Section 6 of the Plan.

        ​ ​              ​ ​      b.        ​ ​   "Affiliate" means any entity in which the Company has a substantial direct or indirect equity interest, as determined by the Committee from time to time.

        ​ ​              ​ ​      c.        ​ ​    "Act" means the Securities Exchange Act of 1934, as amended from time to time, or any successor thereto.

        ​ ​              ​ ​      d.        ​ ​   "Approval Date" has the meaning set forth in Section 4 of the Plan.

        ​ ​              ​ ​      e.        ​ ​   "Award" means an Option, Stock Appreciation Right, Restricted Stock, or Restricted Stock Unit granted to a Participant pursuant to the provisions of the Plan.

        ​ ​              ​ ​      f.        ​ ​    "Award Agreement" means any written or electronic agreement or other instrument evidencing any Award, which may (but need not) require execution or acknowledgment by a Participant.

        ​ ​              ​ ​      g.        ​ ​   "Board" means the board of directors of the Company.

        ​ ​              ​ ​      h.        ​ ​   "Change in Control" means the occurrence of any one of the following:

        ​ ​              ​ ​      1.        ​ ​   any Person becomes the beneficial owner (as such term is defined in Rule 13d-3 under the Act) of at least 50% of either (A) the value of the then outstanding shares of Common Stock (the "Outstanding Company Common Stock") or (B) the combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of directors (the "Outstanding Company Voting Securities") (the foregoing beneficial ownership hereinafter being referred to as a "Controlling Interest"); provided, however, that for purposes of this definition, the following acquisitions shall not constitute or result in a Change in Control: (v) any acquisition directly from the Company;

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(w) any acquisition by the Company; (x) any acquisition by any Person that as of the Effective Date has beneficial ownership of a Controlling Interest; (y) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or an Affiliate; or (z) any acquisition by any corporation pursuant to a transaction which complies with clauses (A), (B) and (C) of subsection (3) below; or

        ​ ​              ​ ​      2.        ​ ​   during any period of two consecutive years (not including any period prior to the Effective Date) individuals who constitute the Board on the Effective Date (the "Incumbent Board") cease for any reason to constitute at least a majority of the Board; provided, however, that any individual becoming a director subsequent to the Effective Date whose election, or nomination for election by the Company's shareholders, was approved by a vote of at least a majority of the directors then comprising the Incumbent Board shall be considered as though such individual were a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office occurs after the Effective Date as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board; or

        ​ ​              ​ ​      3.        ​ ​   consummation of a reorganization, merger, statutory share exchange or consolidation or similar corporate transaction involving the Company or any of its subsidiaries, a sale or other disposition of all or substantially all of the assets of the Company, or the acquisition of assets or stock of another entity by the Company or any of its subsidiaries (each a "Business Combination"), in each case, unless, following such Business Combination, (A) all or substantially all of the Persons who were the beneficial owners, respectively, of the Outstanding Company Common Stock and Outstanding Company Voting Securities immediately prior to such Business Combination beneficially own, directly or indirectly, more than 50% of the then outstanding shares of common stock and the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the corporation resulting from such Business Combination (including, without limitation, a corporation which as a result of such transaction owns the Company or all or substantially all of the Company's assets either directly or through one or more subsidiaries) (such resulting or acquiring corporation is referred to herein as the "Acquiring Corporation") in substantially the same proportions as their ownership, immediately prior to such Business Combination of the Outstanding Company Common Stock and Outstanding Company Voting Securities, as the case may be, (B) no Person (excluding the Acquiring Corporation or any employee benefit plan (or related trust) of the Company or such Acquiring Corporation) beneficially owns, directly or indirectly, more than 50% of the then outstanding shares of common stock of the corporation resulting from such Business Combination or the combined voting power of the then outstanding voting securities of such corporation except to the extent that such ownership existed prior to the Business Combination, and (C) at least a majority of the members of the Board of the corporation resulting from such Business Combination were members of the Incumbent Board at the time of the execution of the initial agreement, or of the action of the Board, providing for such Business Combination; or

        ​ ​              ​ ​      4.        ​ ​   the complete liquidation or dissolution of the Company.

Notwithstanding the foregoing, to the extent an Award provides for deferred compensation under Section 409A of the Code and payment is made upon a Change in Control, no event or transaction will constitute a Change in Control hereunder unless it also constitutes a "change in control event" under Section 409A of the Code.

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        ​ ​              ​ ​      i.        ​ ​    "Code" means the Internal Revenue Code of 1986, as amended from time to time, or any successor thereto, and the rulings and regulations issued thereunder.

        ​ ​              ​ ​      j.        ​ ​    "Committee" means the Compensation Committee of the Board (or any successor committee).

        ​ ​              ​ ​      k.        ​ ​   "Common Stock" means the common stock of the Company, par value $0.01 per share, or such other class or kind of shares or other securities as may be applicable under Section 14 of the Plan.

        ​ ​              ​ ​      l.        ​ ​    "Company" means Insmed Incorporated, a Virginia corporation, and except as utilized in the definition of Change in Control, any successor corporation.

        ​ ​              ​ ​      m.        ​ ​  "Dividend Equivalents" mean an amount payable in cash or Common Stock, as determined by the Administrator, with respect to a Restricted Stock Unit Award equal to what would have been received if the shares underlying the Award had been owned by the Participant.

        ​ ​              ​ ​      n.        ​ ​   "Effective Date" has the meaning set forth in Section 4 of the Plan.

        ​ ​              ​ ​      o.        ​ ​   "Fair Market Value" means as of any date, the value of the Common Stock determined as follows: (i) if the Common Stock is listed on any established stock exchange, system or market, the closing price for the Common Stock on such date (or if Common Stock was not traded on such exchange, system, or market on such date, then on the next preceding date on which shares of Common Stock were traded) as quoted on such exchange, system or market as reported in the Wall Street Journal or such other source as the Administrator deems reliable; and (ii) in the absence of an established market for the Common Stock, as determined in good faith by the Administrator by the reasonable application of a reasonable valuation method, taking into account factors consistent with Treas. Reg. § 409A-1(b)(5)(iv)(B) as the Administrator deems appropriate.

        ​ ​              ​ ​      p.        ​ ​   "Freestanding SARs" has the meaning set forth in Section 9(a) of the Plan.

        ​ ​              ​ ​      q.        ​ ​   "Full-Value Award" means an Award that results in the Company transferring the full value of a share of Common Stock under the Award, whether or not an actual share of stock is issued. Full-Value Awards shall include Restricted Stock and Restricted Stock Units to the extent payable in Common Stock (including, but not limited to, Awards that are performance-based) for which the Company transfers the full value of a share of Common Stock under the Award, but shall not include Dividend Equivalents.

        ​ ​              ​ ​      r.        ​ ​    "Incentive Stock Option" means a stock option that is designated as potentially eligible to qualify as an "incentive stock option" within the meaning of Section 422 of the Code.

        ​ ​              ​ ​      s.        ​ ​    "Nonqualified Stock Option" means a stock option that is not intended to qualify as an "incentive stock option" within the meaning of Section 422 of the Code.

        ​ ​              ​ ​      t.        ​ ​    "Option" means a stock option awarded under Section 8 of the Plan, which may be an Incentive Stock Option or a Nonqualified Stock Option.

        ​ ​              ​ ​      u.        ​ ​   "Participant" means any individual described in Section 3 of the Plan to whom Awards have been granted or who has received a Substitute Award and any authorized transferee of such individual.

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        ​ ​              ​ ​      v.        ​ ​    "Person" shall have the meaning given in Section 3(a)(9) of the Act, as modified and used in Sections 13(d) and 14(d) thereof, except that such term shall not include (i) the Company or any of its Affiliates, (ii) a trustee or other fiduciary holding securities under an employee benefit plan of the Company or any of its Subsidiaries, (iii) an underwriter temporarily holding securities pursuant to an offering of such securities or (iv) a corporation owned, directly or indirectly, by the shareholders of the Company in substantially the same proportions as their ownership of stock of the Company.

        ​ ​              ​ ​      w.        ​ ​   "Plan" means the Insmed Incorporated 2019 Incentive Plan as set forth herein and as amended from time to time.

        ​ ​              ​ ​      x.        ​ ​    "Prior Plan" means the Insmed Incorporated 2013 Incentive Plan, Insmed Incorporated 2015 Incentive Plan or the 2017 Plan.

        ​ ​              ​ ​      y.        ​ ​    "Restricted Stock" means an Award or issuance of Common Stock the grant, issuance, retention, vesting and/or transferability of which is subject during specified periods of time to such conditions (including continued employment or performance conditions) and terms as the Administrator deems appropriate.

        ​ ​              ​ ​      z.        ​ ​    "Restricted Stock Unit" means an Award denominated in units of Common Stock under which the issuance of shares of Common Stock (or cash payment in lieu thereof) is subject to such conditions (including continued employment or performance conditions) and terms as the Administrator deems appropriate.

        ​ ​              ​ ​      aa.        ​ ​ "Separation from Service" means the termination of Participant's employment with the Company and all Subsidiaries that constitutes a "separation from service" within the meaning of Section 409A of the Code.

        ​ ​              ​ ​      bb.        ​ ​ "Share Pool" has the meaning set forth in Section 5(a) of the Plan.

        ​ ​              ​ ​      cc.        ​ ​  "Stock Appreciation Right" means a right granted pursuant to Section 9 of the Plan that entitles the Participant to receive, in cash or Common Stock or a combination thereof, value equal to the excess of (i) the aggregate market price of a specified number of shares of Common Stock at the time of exercise over (ii) the exercise price of the right, as established by the Administrator on the date of grant.

        ​ ​              ​ ​      dd.        ​ ​ "Subsidiary" means any entity in which the Company, directly or indirectly, possesses 50% or more of the total combined voting power of all classes of its equity interests or, for Incentive Stock Options, a "subsidiary corporation" (as defined in Section 424(f) of the Code).

        ​ ​              ​ ​      ee.        ​ ​ "Substitute Awards" means Awards granted or Common Stock issued by the Company in assumption of, or in substitution or exchange for, awards previously granted, or the right or obligation to make future awards, by a company acquired by the Company or any Subsidiary or with which the Company or any Subsidiary combines.

        ​ ​              ​ ​      ff.        ​ ​   "Tandem SARs" has the meaning set forth in Section 9(a) of the Plan.

        ​ ​              ​ ​      gg.        ​ ​ "2017 Plan" has the meaning set forth in Section 1 of the Plan.

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              3.           Eligibility

              Any employee of the Company or an Affiliate (including an officer or director who is such an employee), member of the Board (whether or not such Board member is employed by the Company or an Affiliate), or other non-employee advisor or service provider of the Company or an Affiliate shall be eligible to receive an Award under the Plan. Notwithstanding the foregoing, a person who would otherwise be eligible to receive an Award under the Plan shall not be eligible in any jurisdiction where such person's participation in the Plan would be unlawful.

              4.           Effective Date and Termination of Plan

              The Plan was adopted by the Board on April 3, 2019 (the "Approval Date"), and it will become effective when it is approved by the Company's shareholders (the "Effective Date"). All Awards granted under the Plan are subject to, and may not be exercised before, the approval of the Plan by the shareholders prior to the first (1st) anniversary of the Approval Date; provided that if such approval by the shareholders of the Company is not forthcoming prior to such date, all Awards previously granted under the Plan shall be void and the 2017 Plan shall remain in effect. The Plan shall remain available for the grant of Awards until the tenth (10th) anniversary of the Approval Date. Notwithstanding the foregoing, the Plan may be terminated at such earlier time as the Board may determine. Termination of the Plan will not affect the rights and obligations of the Participants and the Company arising under Awards theretofore granted.

              5.           Shares Subject to the Plan and to Awards

        ​ ​              ​ ​      a.        ​ ​   Aggregate Limits. The aggregate number of shares of Common Stock issuable under the Plan (the "Share Pool") shall be equal to the sum of 3,500,000 shares of Common Stock plus any shares of Common Stock subject to outstanding awards under the Prior Plans as of the Effective Date that, after the Effective Date, are canceled, terminate unearned, expire, are forfeited, lapse for any reason, or are settled in cash without the delivery of shares. On the grant date of an Award, the Share Pool shall be reduced either by 1 share of Common Stock for each share subject to an Award other than a Full-Value Award or by 1.25 shares of Common Stock for each share subject to a Full-Value Award. The aggregate number of shares of Common Stock available for grant under the Plan and the number of shares of Common Stock subject to Awards outstanding shall be subject to adjustment as provided in Section 14 of the Plan. The shares of Common Stock issued pursuant to Awards granted under the Plan may be shares that are authorized and unissued or shares that were reacquired by the Company, including shares purchased in the open market.

        ​ ​              ​ ​      b.        ​ ​   Issuance of Shares. The Share Pool shall be increased when and to the extent that an Award (or an award under any Prior Plan that is outstanding as of the Effective Date) is canceled, terminates unearned, expires, is forfeited, or lapses for any reason, or an Award (or an award under any Prior Plan that is outstanding as of the Effective Date) is settled in cash without the delivery of shares to the Participant, such that any shares of Common Stock subject to such Award (or such award under any Prior Plan that is outstanding as of the Effective Date) shall again be available for the grant of an Award pursuant to the Plan. Notwithstanding anything to the contrary contained herein, shares subject to an Award (or an award under any Prior Plan that is outstanding as of the Effective Date) shall not again be made available for issuance or delivery under the Plan if such shares are (a) shares tendered in payment of an Option, (b) shares delivered or withheld by the Company to satisfy any tax withholding obligation, or (c) shares covered by a stock-settled Stock Appreciation Right that were not issued upon full settlement. The payment of Dividend Equivalents in cash in conjunction with any outstanding Awards shall not be counted against the shares available for issuance under the Plan. Any shares of Common Stock with respect to Awards issued under the Plan (or awards issued

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under a Prior Plan) that again become available for future grants pursuant to this Section 5 shall be added back to the Share Pool as 1 share for each share subject to an Award other than a Full-Value Award or as 1.25 shares for each share subject to a Full-Value Award, and, for purposes of this sentence, awards issued under a Prior Plan shall be (i) considered Full-Value Awards if they would have been Full-Value Awards if issued under this Plan and (ii) added back to the Share Pool as 1 share in all other cases.

        ​ ​              ​ ​      c.        ​ ​    Tax Code Limit. The aggregate number of shares of Common Stock that may be issued pursuant to the exercise of Incentive Stock Options granted under the Plan shall not exceed 3,500,000 (subject to adjustment pursuant to Section 14 of the Plan).

        ​ ​              ​ ​      d.        ​ ​   Substitute Awards. Substitute Awards shall not reduce the shares of Common Stock authorized for issuance under the Plan or authorized for grant to a Participant in any calendar year. Additionally, in the event that a company acquired by the Company or any Subsidiary, or with which the Company or any Subsidiary combines, has shares available under a pre-existing plan approved by such acquired company's shareholders and not adopted in contemplation of such acquisition or combination, the shares available for grant pursuant to the terms of such pre-existing plan (as adjusted, to the extent appropriate, using the exchange ratio or other adjustment or valuation ratio or formula used in such acquisition or combination to determine the consideration payable to the holders of common stock of the entities party to such acquisition or combination) may be used for Awards under the Plan and shall not reduce the shares of Common Stock authorized for issuance under the Plan; provided that Awards using such available shares shall not be made after the last day awards or grants could have been made under the terms of the pre-existing plan, absent the acquisition or combination, and shall not be granted to individuals who were employed by the Company or its Subsidiaries at the time the acquisition or combination was consummated.

              6.           Administration of the Plan

        ​ ​              ​ ​      a.        ​ ​   Administrator of the Plan. The Plan shall be administered by the Administrator, which shall be the Committee, or, in the absence of the Committee, the Board itself. Any power of the Administrator may also be exercised by the Board. To the extent that any permitted action taken by the Board conflicts with action taken by the Administrator, the Board action shall control.

        ​ ​              ​ ​      b.        ​ ​   Powers of Administrator. Subject to the express provisions of the Plan, the Administrator shall be authorized and empowered to do all things that it determines to be necessary or appropriate in connection with the administration of the Plan, including, without limitation:

        ​ ​              ​ ​      1.        ​ ​   to prescribe, amend and rescind rules and regulations relating to the Plan and to define terms not otherwise defined herein;

        ​ ​              ​ ​      2.        ​ ​   to determine which persons are eligible to receive Awards under the Plan, to which of such persons, if any, Awards shall be granted hereunder, and the timing of any such Awards;

        ​ ​              ​ ​      3.        ​ ​   to prescribe and amend the terms of the Award Agreements, to grant Awards and determine the terms and conditions thereof;

        ​ ​              ​ ​      4.        ​ ​   to establish and verify the extent of satisfaction of any performance goals or other conditions applicable to the grant, issuance, retention, vesting, exercisability or settlement of any Award;

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        ​ ​              ​ ​      5.        ​ ​   to prescribe and amend the terms of or form of any document or notice required to be delivered to the Company by Participants under the Plan;

        ​ ​              ​ ​      6.        ​ ​   to determine the extent to which adjustments are required pursuant to Section 14 of the Plan;

        ​ ​              ​ ​      7.        ​ ​   to interpret and construe the Plan, any rules and regulations under the Plan and the terms and conditions of any Award granted hereunder, and to make exceptions to any such provisions if the Administrator, in good faith, determines that it is appropriate to do so;

        ​ ​              ​ ​      8.        ​ ​   to approve corrections in the documentation or administration of any Award; and

        ​ ​              ​ ​      9.        ​ ​   to make all other determinations deemed necessary or advisable for the administration of the Plan.

The Administrator may, in its sole and absolute discretion, without amendment to the Plan but subject to the limitations otherwise set forth in Section 18 of the Plan, waive or amend the operation of Plan provisions respecting exercise after termination of employment or service to the Company or an Affiliate. The Administrator may, in its sole and absolute discretion and, except as otherwise provided in Section 18 of the Plan, waive, settle or adjust any of the terms of any Award so as to avoid unanticipated consequences or address unanticipated events (including any temporary closure of an applicable stock exchange, disruption of communications or natural catastrophe).

        ​ ​              ​ ​      c.        ​ ​    Determinations by the Administrator. All decisions, determinations and interpretations by the Administrator regarding the Plan, any rules and regulations under the Plan and the terms and conditions of or operation of any Award granted hereunder, shall be final and binding on all Participants, beneficiaries, heirs, assigns or other persons holding or claiming rights under the Plan or any Award. The Administrator shall consider such factors as it deems relevant, in its sole and absolute discretion, to making such decisions, determinations and interpretations including, without limitation, the recommendations or advice of any officer or other employee of the Company and such attorneys, consultants and accountants as it may select. Members of the Board and members of the Committee acting under the Plan shall be fully protected in relying in good faith upon the advice of counsel and shall incur no liability except for gross negligence or willful misconduct in the performance of their duties.

        ​ ​              ​ ​      d.        ​ ​   Delegation of Authority. To the maximum extent permitted by applicable law, the Committee may by resolution delegate to a committee of one or more members of the Board or one or more officers of the Company the authority to perform any or all things that the Administrator is authorized and empowered to do or perform under the Plan, and for all purposes under the Plan, such officer or officers shall be treated as the Administrator; provided, however, that the resolution so authorizing such officer or officers shall specify the total number of Awards (if any) such officer or officers may award pursuant to such delegated authority; and provided further that in no event shall an officer of the Company be delegated the authority to grant Awards to, or amend Awards held by, individuals who are subject to Section 16 of the Act or who report directly to such officer. No such officer shall designate himself or herself as a recipient of any Awards granted under authority delegated to such officer. In addition, the Administrator may delegate any or all aspects of the day-to-day administration of the Plan to one or more officers or employees of the Company or any Subsidiary, and/or to one or more agents.

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        ​ ​              ​ ​      e.        ​ ​   Subsidiary Awards. In the case of a grant of an Award to any Participant employed by a Subsidiary, such grant may, if the Administrator so directs, be implemented by the Company issuing any subject shares of Common Stock to the Subsidiary, for such lawful consideration as the Administrator may determine, upon the condition or understanding that the Subsidiary will transfer the shares of Common Stock to the Participant in accordance with the terms of the Award specified by the Administrator pursuant to the provisions of the Plan. Notwithstanding any other provision hereof, such Award may be issued by and in the name of the Subsidiary and shall be deemed granted on such date as the Administrator shall determine.

              7.           Plan Awards

        ​ ​              ​ ​      a.        ​ ​   Terms Set Forth in Award Agreement. The terms and conditions of each Award shall be set forth in an Award Agreement in a form approved by the Administrator for such Award, which Award Agreement may contain such terms and conditions as specified from time to time by the Administrator, provided such terms and conditions do not conflict with the Plan. The Award Agreement for any Award, as applicable, shall include the time or times at or within which and the consideration, if any, for which any shares of Common Stock may be acquired from the Company. The terms of Awards may vary among Participants, and the Plan does not impose upon the Administrator any requirement to make Awards subject to uniform terms. Accordingly, the terms of individual Award Agreements may vary.

        ​ ​              ​ ​      b.        ​ ​   Separation from Service. Subject to the express provisions of the Plan, the Administrator shall specify before, at, or after the time of grant of an Award the provisions governing the effect(s) upon an Award of a Participant's Separation from Service or other termination of service.

        ​ ​              ​ ​      c.        ​ ​    Rights of a Shareholder. A Participant shall have no rights as a shareholder with respect to shares of Common Stock covered by an Award until the date the Participant becomes the holder of record of such shares of Common Stock. No adjustment shall be made for dividends or other rights for which the record date is prior to such date, except as provided in Section 10(b) or Section 14 of the Plan or as otherwise provided by the Administrator.

        ​ ​              ​ ​      d.        ​ ​   Minimum Vesting. Notwithstanding anything in the Plan to the contrary, all Awards granted under the Plan shall be subject to a vesting period of not less than one year from the date of grant; provided, that up to 5% of the Share Pool may be issued pursuant to Awards that are not subject to the minimum vesting requirement set forth in this Section 7(d); provided, further, that the minimum vesting requirement set forth in this Section 7(d) shall not apply with respect to Substitute Awards or with respect to Awards that vest in connection with a Change in Control or upon a Participant's death, disability, or involuntary termination of employment.

        ​ ​              ​ ​      e.        ​ ​   No Payment of Dividends Prior to Vesting. Notwithstanding anything in the Plan to the contrary, to the extent a Participant is eligible to receive dividends or Dividend Equivalents with respect to an Award granted under the Plan, such dividends or Dividend Equivalents shall in no case be paid to the Participant before the vesting of the portion of the Award to which such dividends or Dividend Equivalents relate.

              8.           Options

        ​ ​              ​ ​      a.        ​ ​   Grant, Term and Price. The grant, issuance, retention, vesting and/or settlement of any Option shall occur at such time and be subject to such terms and conditions as determined by the Administrator or under criteria established by the Administrator, which may include conditions based on continued employment, passage of time, attainment of age and/or service requirements,

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and/or satisfaction of performance conditions. The term of an Option shall in no event be greater than ten years; provided, however, the term of an Option (other than an Incentive Stock Option) shall be automatically extended if, at the time of its scheduled expiration, the Participant holding such Option is prohibited by law or the Company's insider trading policy from exercising the Option, which extension shall expire on the thirtieth (30th) day following the date such prohibition no longer applies. The Administrator will establish the price at which Common Stock may be purchased upon exercise of an Option, which, in no event will be less than the Fair Market Value of such shares on the date of grant; provided, however, that the exercise price per share of Common Stock with respect to an Option that is granted as a Substitute Award may be less than the Fair Market Value of the shares of Common Stock on the date such Option is granted if such exercise price is based on a formula set forth in the terms of the options held by such optionees or in the terms of the agreement providing for such merger or other acquisition that satisfies the requirements of Section 409A and/or Section 424 of the Code, as applicable. The exercise price of any Option may be paid in cash or such other method as determined by the Administrator, including an irrevocable commitment by a broker to pay over such amount from a sale of the Shares issuable under an Option, the delivery of previously owned shares of Common Stock or withholding of shares of Common Stock deliverable upon exercise.

        ​ ​              ​ ​      b.        ​ ​   No Repricing without Shareholder Approval. Other than in connection with a change in the Company's capitalization (as described in Section 14 of the Plan), at any time when the exercise price of an Option is above the Fair Market Value of a share of Common Stock, the Company shall not, without shareholder approval, (i) reduce the exercise price of such Option, (ii) exchange such Option for cash, another Award or a new Option or Stock Appreciation Right with a lower exercise or base price or (iii) otherwise reprice such Option.

        ​ ​              ​ ​      c.        ​ ​    No Reload Grants. Options shall not be granted under the Plan in consideration for and shall not be conditioned upon the delivery of shares of Common Stock to the Company in payment of the exercise price and/or tax withholding obligation under any other employee stock option.

        ​ ​              ​ ​      d.        ​ ​   Incentive Stock Options. Notwithstanding anything to the contrary in this Section 8, in the case of the grant of an Option intended to qualify as an Incentive Stock Option, if the Participant owns stock possessing more than 10% of the combined voting power of all classes of stock of the Company, the exercise price of such Option must be at least 110% of the Fair Market Value of the shares of Common Stock on the date of grant and the Option must expire within a period of not more than five (5) years from the date of grant. Notwithstanding anything in this Section 8 to the contrary, options designated as Incentive Stock Options shall not be eligible for treatment under the Code as Incentive Stock Options (and will be deemed to be Nonqualified Stock Options) to the extent that either (a) the aggregate Fair Market Value of shares of Common Stock (determined as of the time of grant) with respect to which such Options become exercisable for the first time by the Participant during any calendar year (under all plans of the Company and any Subsidiary) exceeds $100,000, taking Options into account in the order in which they were granted, or (b) such Options otherwise remain exercisable but are not exercised within three (3) months (or such other period of time provided in Section 422 of the Code) of separation of service (as determined in accordance with Section 3401(c) of the Code).

        ​ ​              ​ ​      e.        ​ ​   No Shareholder Rights. Participants shall have no voting rights and will have no rights to receive dividends or Dividend Equivalents in respect of an Option or any shares of Common Stock subject to an Option until the Participant has become the holder of record of such shares.

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               9.            Stock Appreciation Rights

        ​ ​              ​ ​      a.        ​ ​    General Terms. The grant, issuance, retention, vesting and/or settlement of any Stock Appreciation Right shall occur at such time and be subject to such terms and conditions as determined by the Administrator or under criteria established by the Administrator, which may include conditions based on continued employment, passage of time, attainment of age and/or service requirements, and/or satisfaction of performance conditions. Stock Appreciation Rights may be granted to Participants from time to time either in tandem with or as a component of Options granted under the Plan ("tandem SARs") or not in conjunction with other Awards ("freestanding SARs"). Upon exercise of a tandem SAR as to some or all of the shares covered by the grant, the related Option shall be canceled automatically to the extent of the number of shares covered by such exercise. Conversely, if the related Option is exercised as to some or all of the shares covered by the grant, the related tandem SAR, if any, shall be canceled automatically to the extent of the number of shares covered by the Option exercise. Any Stock Appreciation Right granted in tandem with an Option may be granted at the same time such Option is granted or at any time thereafter before exercise or expiration of such Option, provided that the Fair Market Value of Common Stock on the date of the tandem SAR's grant is not greater than the exercise price of the related Option. All freestanding SARs shall be granted subject to the same terms and conditions applicable to Options as set forth in Section 8 of the Plan and all tandem SARs shall have the same exercise price as the Option to which they relate. Subject to the provisions of Section 8 of the Plan and the immediately preceding sentence, the Administrator may impose such other conditions or restrictions on any Stock Appreciation Right as it shall deem appropriate. Stock Appreciation Rights may be settled in Common Stock, cash or a combination thereof, as determined by the Administrator and set forth in the applicable Award Agreement.

        ​ ​              ​ ​      b.        ​ ​   No Repricing without Shareholder Approval. Other than in connection with a change in the Company's capitalization (as described in Section 14 of the Plan), at any time when the exercise price of a Stock Appreciation Right is above the Fair Market Value of a share of Common Stock, the Company shall not, without shareholder approval (i) reduce the exercise or base price of such Stock Appreciation Right, (ii) exchange such Stock Appreciation Right for cash, another Award or a new Option or Stock Appreciation Right with a lower exercise or base price or (iii) otherwise reprice such Stock Appreciation Right.

        ​ ​              ​ ​      c.        ​ ​    No Shareholder Rights. Participants shall have no voting rights and will have no rights to receive dividends or Dividend Equivalents in respect of an Award of Stock Appreciation Rights or any shares of Common Stock subject to an Award of Stock Appreciation Rights until the Participant has become the holder of record of such shares.

               10.          Restricted Stock and Restricted Stock Units

        ​ ​              ​ ​      a.        ​ ​    Vesting and Performance Conditions. The grant, issuance, retention, vesting and/or settlement of any Restricted Stock or Restricted Stock Unit Award shall occur at such time and be subject to such terms and conditions as determined by the Administrator or under criteria established by the Administrator, which may include conditions based on continued employment, passage of time, attainment of age and/or service requirements, and/or satisfaction of performance conditions.

        ​ ​              ​ ​      b.        ​ ​   Dividends and Distributions. Participants in whose name Restricted Stock is granted shall be entitled to receive all dividends and other distributions paid with respect to those shares of Common Stock, unless determined otherwise by the Administrator. The Administrator will determine whether any such dividends or distributions will be automatically reinvested in additional Restricted Stock and/or subject to the same restrictions on transferability as the Restricted Stock with

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respect to which they were distributed or whether such dividends or distributions will be paid in cash. Unless otherwise provided in the Award Agreement, during the period prior to shares being issued in the name of a Participant under any Restricted Stock Unit, the Company shall pay or accrue Dividend Equivalents on each date dividends on Common Stock are paid, subject to such conditions as the Administrator may deem appropriate. The time and form of any such payment of Dividend Equivalents shall be specified in the Award Agreement. Notwithstanding anything herein to the contrary, in no event will dividends or Dividend Equivalents be paid with respect to any Award of Restricted Stock or Restricted Stock Units prior to the time specified in Section 7(e).

        ​ ​              ​ ​      c.        ​ ​    Voting Rights. Unless otherwise determined by the Administrator, Participants holding shares of Restricted Stock granted hereunder may exercise full voting rights with respect to those shares during the period of restriction. Participants shall have no voting rights with respect to shares of Common Stock underlying Restricted Stock Units unless and until such shares are reflected as issued and outstanding shares on the Company's stock ledger.

               11.          Performance Awards

        ​ ​              ​ ​      a.        ​ ​    General Terms. The Administrator may establish performance conditions and level of achievement versus such conditions that shall determine the number of Options, Stock Appreciation Rights or shares of Common Stock to be granted, retained, vested, issued or issuable under or in settlement of, or the cash amount payable pursuant to, an Award.

        ​ ​              ​ ​      b.        ​ ​   Timing and Form of Payment. The Administrator shall determine the timing of payment of any award subject to performance conditions. Payment of the amount due under such an award may be made in cash or in Common Stock, as determined by the Administrator.

        ​ ​              ​ ​      c.        ​ ​    Discretionary Adjustments. Notwithstanding satisfaction of any performance goals, the amount paid under an award subject to either financial performance and/or personal performance evaluations may be adjusted by the Administrator on the basis of such further considerations as the Administrator shall determine.

               12.          Deferral of Payment and Section 409A

        ​ ​              ​ ​      The Administrator may, in an Award Agreement or otherwise, provide for the deferred delivery of shares of Common Stock upon settlement, vesting or other events with respect to Restricted Stock or Restricted Stock Units. Notwithstanding anything herein to the contrary, the Administrator may, in its sole and absolute discretion, deny any deferral of the delivery of shares of Common Stock or any other payment with respect to any Award if the Administrator determines, in its sole and absolute discretion, that the deferral would result in the imposition of the additional tax under Section 409A(a)(1)(B) of the Code. The Plan and each Award Agreement shall be interpreted such that each Award complies with, or is exempt from, Section 409A of the Code. However, the Company shall have no liability to a Participant, or any other party, if an Award that is intended to be exempt from, or compliant with, Section 409A of the Code is not so exempt or compliant or for any action taken by the Administrator or the Board.

        ​ ​      13.        ​ ​ Conditions and Restrictions Upon Securities Subject to Awards

        ​ ​              ​ ​      The Administrator may provide that the Common Stock issued upon exercise of an Option or Stock Appreciation Right or otherwise subject to or issued under an Award shall be subject to such further agreements, restrictions, conditions or limitations as the Administrator in its discretion may specify prior to the exercise of such Option or Stock Appreciation Right or the grant, vesting or

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settlement of such Award, including without limitation, conditions on vesting or transferability, forfeiture or repurchase provisions and method of payment for the Common Stock issued upon exercise, vesting or settlement of such Award (including the actual or constructive surrender of Common Stock already owned by the Participant) or payment of taxes arising in connection with an Award. Without limiting the foregoing, such restrictions may address the timing and manner of any resales by the Participant or other subsequent transfers by the Participant of any shares of Common Stock issued under an Award, including without limitation (i) restrictions under an insider trading policy or pursuant to applicable law, (ii) restrictions designed to delay and/or coordinate the timing and manner of sales by the Participant and holders of other Company equity compensation arrangements, (iii) restrictions as to the use of a specified brokerage firm for such resales or other transfers and (iv) provisions requiring Common Stock be sold on the open market or to the Company in order to satisfy tax withholding or other obligations.

        ​ ​      14.        ​ ​ Adjustment of and Changes in the Stock; Change in Control

        ​ ​              ​ ​      a.        ​ ​    Adjustments Upon Certain Unusual or Nonrecurring Events. The number and kind of shares of Common Stock available for issuance under the Plan (including under any Awards then outstanding), and the number and kind of shares of Common Stock subject to the limits set forth in Section 5 of the Plan, shall be equitably adjusted by the Administrator to reflect any reorganization, reclassification, combination of shares, stock split, reverse stock split, spin-off, dividend or distribution of securities, property or cash (other than regular, quarterly cash dividends), or any other event or transaction that affects the number or kind of shares of Common Stock outstanding. Such adjustment may be designed to comply with Section 424 of the Code or may be designed to treat the shares of Common Stock available under the Plan and subject to Awards as if they were all outstanding on the record date for such event or transaction or to increase the number of such shares of Common Stock to reflect a deemed reinvestment in shares of Common Stock of the amount distributed to the Company's security holders. The terms of any outstanding Award shall also be equitably adjusted by the Administrator as to price, number or kind of shares of Common Stock subject to such Award, vesting, and other terms to reflect the foregoing events, which adjustments need not be uniform as between different Awards or different types of Awards. No fractional shares of Common Stock shall be issued pursuant to such an adjustment.

        ​ ​              ​ ​      b.        ​ ​   Adjustments Upon Other Events. In the event there shall be any other change in the number or kind of outstanding shares of Common Stock, or any stock or other securities into which such Common Stock shall have been changed, or for which it shall have been exchanged, by reason of a Change in Control, other merger, consolidation or otherwise, then the Administrator shall determine the appropriate and equitable adjustment to be effected, which adjustments need not be uniform between different Awards or different types of Awards. In addition, in the event of such change described in this paragraph, the Administrator may accelerate the time or times at which any Award may be exercised, consistent with and as otherwise permitted under Section 409A of the Code, and may provide for cancellation of such accelerated Awards that are not exercised within a time prescribed by the Administrator in its sole and absolute discretion.

        ​ ​              ​ ​      c.        ​ ​    Change in Control. Unless otherwise provided in the applicable Award Agreement, in the event of a Change in Control after the Effective Date, unless provision is made in connection with the Change in Control for (i) assumption of Awards previously granted or (ii) substitution for such Awards of new awards covering stock of a successor corporation or its "parent corporation" (as defined in Section 424(e) of the Code) or "subsidiary corporation" (as defined in Section 424(f) of the Code) with appropriate adjustments as to the number and kinds of shares and the exercise prices, if applicable, (A) the Administrator shall make an adjustment to any or all Awards as the Administrator deems appropriate to reflect such Change in Control or (B) (1) in the case of an

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Option or Stock Appreciation Right, the Participant shall have the ability to exercise such Option or Stock Appreciation Right, including any portion of the Option or Stock Appreciation Right not previously exercisable, and the unexercised portion of such Option or Stock Appreciation Right shall be cancelled upon consummation of the Change in Control; (2) in the case of an Award subject to performance conditions, the Participant shall have the right to receive a payment based on performance through a date determined by the Administrator prior to the Change in Control (unless such performance cannot be determined, in which case the Participant shall have the right to receive a payment equal to the target amount payable); and (3) in the case of outstanding Restricted Stock and/or Restricted Stock Units not subject to performance conditions, all conditions to the grant, issuance, retention, vesting or transferability of or any other restrictions applicable to, such Award shall immediately lapse.

        ​ ​              ​ ​      d.        ​ ​   Termination Following a Change in Control. Unless otherwise expressly provided for in the Award Agreement or another contract, including an employment agreement, or under the terms of a transaction constituting a Change in Control, the following shall occur upon a Participant's involuntary termination of employment within twenty-four (24) months following a Change in Control, provided that such termination does not result from the Participant's termination for disability, cause or gross misconduct: (i) in the case of an Option or Stock Appreciation Right, each Option or Stock Appreciation Right shall immediately become exercisable and shall remain exercisable for three (3) years following such termination (or until the expiration of such Option or Stock Appreciation Right, if earlier); (ii) in the case of an Award subject to performance conditions, the Participant shall have the right to receive a payment based on performance through a date determined by the Administrator prior to the Change in Control (unless such performance cannot be determined, in which case the Participant shall have the right to receive a payment equal to the target amount payable); and (iii) in the case of outstanding Restricted Stock and/or Restricted Stock Units not subject to performance conditions, all conditions to the grant, issuance, retention, vesting or transferability of, or any other restrictions applicable to, such Award shall immediately lapse.

        ​ ​              ​ ​      e.        ​ ​   The Company shall notify Participants holding Awards subject to any adjustments pursuant to this Section 14 of such adjustment, but (whether or not notice is given) such adjustment shall be effective and binding for all purposes of the Plan.

               15.          Transferability

        ​ ​              ​ ​      No Award may be sold, transferred for value, pledged, assigned, or otherwise alienated or hypothecated by a Participant other than by will or the laws of descent and distribution, and each Option or Stock Appreciation Right shall be exercisable only by the Participant during his or her lifetime. Notwithstanding the foregoing, outstanding Options may be exercised following the Participant's death by the Participant's beneficiaries or as permitted by the Administrator.

        ​ ​      16.        ​ ​ Compliance with Laws and Regulations

        ​ ​              ​ ​      The Plan, the grant, issuance, vesting, exercise and settlement of Awards hereunder, and the obligation of the Company to sell, issue or deliver shares of Common Stock under such Awards, shall be subject to all applicable foreign, federal, state and local laws, rules and regulations, stock exchange rules and regulations, and to such approvals by any governmental or regulatory agency as may be required. The Company shall not be required to register in a Participant's name or deliver Common Stock prior to the completion of any registration or qualification of such shares under any foreign, federal, state or local law or any ruling or regulation of any government body which the Administrator shall determine to be necessary or advisable. To the extent the Company is unable to or the Committee deems it infeasible to obtain authority from any regulatory body having jurisdiction,

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which authority is deemed by the Company's counsel to be necessary to the lawful issuance and sale of any shares of Common Stock hereunder, the Company and its Subsidiaries shall be relieved of any liability with respect to the failure to issue or sell such shares of Common Stock as to which such requisite authority shall not have been obtained. No Option shall be exercisable and no Common Stock shall be issued and/or transferable under any other Award unless a registration statement with respect to the Common Stock underlying such Option is effective and current or the Company has determined that such registration is unnecessary.

        ​ ​              ​ ​      In the event an Award is granted to or held by a Participant who is employed or providing services outside the United States, the Administrator may, in its sole and absolute discretion, modify the provisions of the Plan or of such Award as they pertain to such individual to comply with applicable foreign law or practice, to recognize differences in local law, currency or tax policy, or to foster and promote achievement of the purposes of the Plan locally. The Administrator may also amend the terms of Awards and impose conditions on the grant, issuance, exercise, vesting, settlement or retention of Awards in order to comply with such foreign law or practice, to achieve such purposes, and/or to minimize the Company's obligations with respect to tax equalization for Participants employed outside their home country.

        ​ ​      17.        ​ ​ Withholding

        ​ ​              ​ ​      To the extent required by applicable federal, state, local or foreign law, the Administrator may and/or a Participant shall make arrangements satisfactory to the Company for the satisfaction of any withholding tax obligations that arise with respect to any Award, or the issuance or sale of any shares of Common Stock. The Company shall not be required to recognize any Participant rights under an Award, to issue shares of Common Stock or to recognize the disposition of such shares of Common Stock until such obligations are satisfied. To the extent permitted or required by the Administrator, these obligations may or shall be satisfied by the Company withholding cash from any compensation otherwise payable to or for the benefit of a Participant, the Company withholding a portion of the shares of Common Stock that otherwise would be issued to a Participant under such Award or any other award held by the Participant or by the Participant tendering to the Company cash or, if allowed by the Administrator, shares of Common Stock.

        ​ ​      18.        ​ ​ Amendment of the Plan or Awards

        ​ ​              ​ ​      The Board may amend, alter or discontinue the Plan and the Administrator may amend, or alter any agreement or other document evidencing an Award made under the Plan but, except as provided pursuant to the provisions of Section 14 of the Plan, no such amendment shall, without the approval of the shareholders of the Company:

        ​ ​              ​ ​      a.        ​ ​    increase the maximum number of shares of Common Stock for which Awards may be granted under the Plan;

        ​ ​              ​ ​      b.        ​ ​   reduce the price at which Options may be granted below the price provided for in Section 8(a) of the Plan;

        ​ ​              ​ ​      c.        ​ ​    reprice outstanding Options or Stock Appreciation Rights as described in 8(b) and 9(b);

        ​ ​              ​ ​      d.        ​ ​   extend the term of the Plan;

        ​ ​              ​ ​      e.        ​ ​   change the class of persons eligible to be Participants; or

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        ​ ​              ​ ​      f.        ​ ​    otherwise amend the Plan in any manner requiring shareholder approval by law or the rules of any stock exchange or market or quotation system on which the Common Stock is traded, listed or quoted.

No amendment or alteration to the Plan or an Award or Award Agreement shall be made which would impair the rights of the holder of an Award, without such holder's consent, provided that no such consent shall be required if the Administrator determines in its sole and absolute discretion and prior to the date of any Change in Control that such amendment or alteration either (i) is required or advisable in order for the Company, the Plan or the Award to satisfy any law or regulation or to meet the requirements of or avoid adverse financial accounting consequences under any accounting standard, or (ii) is not reasonably likely to significantly diminish the benefits provided under such Award, or that any such diminishment has been adequately compensated.

              19.         No Liability of Company

        ​ ​              ​ ​      The Company, any Subsidiary or Affiliate which is in existence or hereafter comes into existence, the Board and the Administrator shall not be liable to a Participant or any other person as to: (a) the non-issuance or sale of shares of Common Stock as to which the Company has been unable to obtain from any regulatory body having jurisdiction the authority deemed by the Company's counsel to be necessary for the lawful issuance and sale of any shares of Common Stock hereunder; and (b) any tax consequence expected, but not realized, by any Participant or other person due to the receipt, exercise or settlement of any Award granted hereunder.

        ​ ​      20.        ​ ​ Non-Exclusivity of Plan

        ​ ​              ​ ​      Neither the adoption of the Plan by the Board nor the submission of the Plan to the shareholders of the Company for approval shall be construed as creating any limitations on the power of the Board or the Committee to adopt such other incentive arrangements as either may deem desirable, including without limitation, the granting of inducement or retention shares or stock options otherwise than under the Plan, and such arrangements may be either generally applicable or applicable only in specific cases.

        ​ ​      21.        ​ ​ Governing Law

        ​ ​              ​ ​      The Plan and any agreements or other documents hereunder shall be interpreted and construed in accordance with the laws of the Commonwealth of Virginia (without regard to any rule or principle of conflicts of laws that otherwise would result in the application of the substantive laws of another jurisdiction) and applicable federal law. Any reference in the Plan or in the agreement or other document evidencing any Awards to a provision of law or to a rule or regulation shall be deemed to include any successor law, rule or regulation of similar effect or applicability.

        ​ ​      22.        ​ ​ No Right to Employment, Reelection or Continued Service

        ​ ​              ​ ​      Nothing in the Plan or an Award Agreement shall interfere with or limit in any way the right of the Company, its Subsidiaries and/or its Affiliates to terminate any Participant's employment, service on the Board or service for the Company at any time or for any reason not prohibited by law, nor shall the Plan or an Award itself confer upon any Participant any right to continue his or her employment or service for any specified period of time. Neither an Award nor any benefits arising under the Plan shall constitute an employment contract with the Company, any Subsidiary and/or its Affiliates. Subject to Sections 4 and 18 of the Plan, the Plan and the benefits

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hereunder may be terminated at any time in the sole and absolute discretion of the Board without giving rise to any liability on the part of the Company, its Subsidiaries and/or its Affiliates.

        ​ ​      23.        ​ ​ Forfeiture upon Termination of Employment

        ​ ​              ​ ​      Except as otherwise provided by the Administrator in the Award Agreement, unvested Awards shall be forfeited immediately if the Participant terminates his or her employment with the Company, a Subsidiary or an Affiliate for any reason.

        ​ ​      24.        ​ ​ Specified Employee Delay

        ​ ​              ​ ​      To the extent any payment under the Plan is considered deferred compensation subject to the restrictions contained in Section 409A of the Code, such payment may not be made to a specified employee (as determined in accordance with a uniform policy adopted by the Company with respect to all arrangements subject to Section 409A of the Code) upon Separation from Service before the date that is six months after the specified employee's Separation form Service (or, if earlier, the specified employee's death). Any payment that would otherwise be made during this period of delay shall be accumulated and paid on the sixth month plus one day following the specified employee's Separation from Service (or, if earlier, as soon as administratively practicable after the specified employee's death).

        ​ ​      25.        ​ ​ No Liability of Committee Members

        ​ ​              ​ ​      No member of the Committee shall be personally liable by reason of any contract or other instrument executed by such member or on his or her behalf in his or her capacity as a member of the Committee nor for any mistake of judgment made in good faith, and the Company shall indemnify and hold harmless each member of the Committee and each other employee, officer or director of the Company to whom any duty or power relating to the administration or interpretation of the Plan may be allocated or delegated, against any cost or expense (including counsel fees) or liability (including any sum paid in settlement of a claim) arising out of any act or omission to act in connection with the Plan unless arising out of such person's own fraud or willful bad faith; provided, however, that approval of the Board shall be required for the payment of any amount in settlement of a claim against any such person. The foregoing right of indemnification shall not be exclusive of any other rights of indemnification to which such persons may be entitled under the Company's Articles of Incorporation or Bylaws, as a matter of law, or otherwise, or any power that the Company may have to indemnify them or hold them harmless.

        ​ ​      26.        ​ ​ Severability

        ​ ​              ​ ​      If any provision of the Plan or any Award is or becomes or is deemed to be invalid, illegal, or unenforceable in any jurisdiction or as to any Person or Award, or would disqualify the Plan or any Award under any law deemed applicable by the Administrator, such provision shall be construed or deemed amended to conform to the applicable laws, or if it cannot be construed or deemed amended without, in the determination of the Administrator, materially altering the intent of the Plan or the Award, such provision shall be stricken as to such jurisdiction, Person or Award and the remainder of the Plan and any such Award shall remain in full force and effect.

        ​ ​      27.        ​ ​ Unfunded Plan

        ​ ​              ​ ​      The Plan is intended to be an unfunded plan. Participants are and shall at all times be general creditors of the Company with respect to their Awards. If the Administrator or the Company

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chooses to set aside funds in a trust or otherwise for the payment of Awards under the Plan, such funds shall at all times be subject to the claims of the creditors of the Company in the event of its bankruptcy or insolvency.

        ​ ​      28.        ​ ​ Successors

        ​ ​              ​ ​      All obligations of the Company under the Plan with respect to Awards granted hereunder shall be binding on any successor to the Company, whether the existence of such successor is the result of a direct or indirect purchase, merger, consolidation, or otherwise, of all or substantially all of the business and/or assets of the Company.

        ​ ​      29.        ​ ​ Recoupment Policy

        ​ ​              ​ ​      Subject to the terms and conditions of the Plan, the Administrator may provide that any Participant and/or any Award, including any shares of Common Stock subject to an Award, is subject to any recovery, recoupment, clawback and/or other forfeiture policy maintained by the Company from time to time.

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