SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of the

Securities Exchange Act of 1934

(Amendment No.    )

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

Check the appropriate box:

Alder BioPharmaceuticals, Inc.

(Name of Registrant as Specified In Its Charter)

(Name of Person(s) Filing Proxy Statement if Other Than the Registrant)

Payment of Filing Fee (Check the appropriate box)

ALDER BIOPHARMACEUTICALS, INC.

11804 North Creek Parkway South

Bothell, WA 98011

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS

To Be Held On May 23, 2019

Dear Alder Stockholder:

You are cordially invited to attend the Annual Meeting of Stockholders of Alder BioPharmaceuticals, Inc., a Delaware corporation (the “Company”). The meeting will be held on Thursday, May 23, 2019 at 10:00 a.m. local time at the offices of Cooley LLP, 1700 Seventh Avenue, Suite 1900, Seattle, Washington 98101-1355 for the following purposes:

These items of business are more fully described in the proxy statement accompanying this notice.

The record date for the Annual Meeting is April 18, 2019. Only stockholders of record at the close of business on that date may vote at the meeting or any adjournment thereof.

Bothell, WA

April 30, 2019

TABLE OF CONTENTS

ALDER BIOPHARMACEUTICALS, INC.

11804 North Creek Parkway South

Bothell, WA 98011

PROXY STATEMENT

FOR THE 2020 ANNUAL MEETING OF STOCKHOLDERS

May  23, 2019

QUESTIONS AND ANSWERS ABOUT THESE PROXY MATERIALS AND VOTING

Why am I receiving these materials?

We have sent you these proxy materials because the Board of Directors of Alder BioPharmaceuticals, Inc. (the “Company,” “Alder,” “we,” “us” or “our”) is soliciting your proxy to vote at the 2019 Annual Meeting of Stockholders (the “Annual Meeting”), including at any adjournments or postponements of the meeting. You are invited to attend the annual meeting to vote on the proposals described in this proxy statement. However, you do not need to attend the meeting to vote your shares. Instead, you may simply complete, sign and return the enclosed proxy card, or follow the instructions below to submit your proxy over the telephone or through the internet.

We intend to mail these proxy materials on or about May 2, 2019 to all stockholders of record entitled to vote at the annual meeting.

How do I attend the Annual Meeting?

The meeting will be held on Thursday, May 23, 2019 at 10:00 a.m. local time at the offices of Cooley LLP, 1700 Seventh Avenue, Suite 1900, Seattle, Washington 98101-1355. For directions, please call Cooley LLP at (206) 452-8700. Information on how to vote in person at the meeting is discussed below.

Who can vote at the Annual Meeting?

Only stockholders of record at the close of business on April 18, 2019 will be entitled to vote at the Annual Meeting. On this record date, there were 83,247,109 shares of common stock outstanding and entitled to vote.

Stockholder of Record: Shares Registered in Your Name

If on April 18, 2019, your shares were registered directly in your name with our transfer agent, American Stock Transfer & Trust Company, LLC, then you are a stockholder of record. As a stockholder of record, you may vote in person at the meeting or vote by proxy over the telephone, through the internet or by using a proxy card that you may request or that we may elect to deliver at a later time. Whether or not you plan to attend the meeting, we urge you fill out and return the enclosed proxy card or vote by proxy over the telephone or on the internet as instructed below to ensure your vote is counted.

Beneficial Owner: Shares Registered in the Name of a Broker or Bank

If on April 18, 2019, your shares were held, not in your name, but rather 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 are being forwarded to you by that organization. The organization holding your account is considered to be the stockholder of record for purposes of voting at the Annual Meeting. As a beneficial owner, you have the right to direct your broker or other agent regarding how to vote the shares in your account. You are also invited to attend the Annual Meeting. However, since you are not the stockholder of record, you may not vote your shares in person at the meeting unless you request and obtain a valid proxy from your broker or other agent.

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What am I voting on?

There are three matters scheduled for a vote:

What if another matter is properly brought before the meeting?

The Board of Directors knows of no other matters that will be presented for consideration at the Annual Meeting. If any other matters are properly brought before the meeting, it is the intention of the persons named in the accompanying proxy to vote on those matters in accordance with their best judgment.

How do I vote?

You may either vote “For” all the nominees to the Board of Directors or you may “Withhold” your vote for any nominee you specify. For your advisory vote on the compensation of our named executive officers and the ratification of the selection of PricewaterhouseCoopers LLP as the Company’s independent registered public accounting firm, you may vote “For” or “Against” or abstain from voting.

The procedures for voting are as follows:

Stockholder of Record: Shares Registered in Your Name

If you are a stockholder of record, you may vote in person at the Annual Meeting, vote by proxy using the enclosed proxy card, or vote by proxy over the telephone or through the internet. Whether or not you plan to attend the meeting, we urge you to vote by proxy to ensure your vote is counted. You may still attend the Annual Meeting and vote in person even if you have already voted by proxy.

Beneficial Owner: Shares Registered in the Name of Broker or Bank

If you are a beneficial owner of shares registered in the name of your broker, bank or other agent, you should have received a voting instruction form with these proxy materials from that organization rather than from us. Simply complete and mail the voting instructions form to ensure that your vote is counted. Alternatively, you may vote by telephone or over the internet as instructed by your broker or bank. To vote in person at the Annual

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Meeting, you must obtain a valid proxy from your broker, bank or other agent. Follow the instructions from your broker or bank included with these proxy materials, or contact your broker or bank to request a proxy form.

How many votes do I have?

On each matter to be voted upon, you have one vote for each share of common stock you own as of April 18, 2019.

What happens if I do not vote?

Stockholder of Record: Shares Registered in Your Name

If you are a stockholder of record and do not vote by completing your proxy card, by telephone, through the internet or in person at the Annual Meeting, your shares will not be voted.

Beneficial Owner: Shares Registered in the Name of Broker or Bank

If you are a beneficial owner and do not instruct your broker, bank, or other agent how to vote your shares, the question of whether your broker or nominee will still be able to vote your shares depends on whether the particular proposal is deemed to be a “routine” matter. Brokers and nominees can use their discretion to vote “uninstructed” shares with respect to matters that are considered to be “routine,” but not with respect to “non-routine” matters. Under the rules and interpretations of various national and regional securities exchanges, “non-routine” matters are matters that may substantially affect the rights or privileges of stockholders, such as mergers, stockholder proposals, elections of directors (even if not contested), executive compensation (including any advisory stockholder votes on executive compensation), and certain corporate governance proposals, even if management-supported. Ratification of the selection of auditors is considered a “routine” matter. Accordingly, your broker or nominee may not vote your shares on Proposal Nos. 1 and 2 without your instructions, but may vote your shares on Proposal No. 3, even in the absence of your instruction.

What if I return a proxy card or otherwise vote but do not make specific choices?

If you return a signed and dated proxy card or otherwise vote without marking voting selections, your shares will be voted, as applicable, “For” the election of each nominee for director, “For” the advisory approval of named executive officer compensation, and “For” the ratification of the selection by the Audit Committee of the Board of Directors of PricewaterhouseCoopers LLP as the independent registered public accounting firm of the Company for its fiscal year ending December 31, 2019. If any other matter is properly presented at the meeting, your proxyholder (one of the individuals named on your proxy card) will vote your shares using his best judgment.

Who is paying for this proxy solicitation?

We will pay for the entire cost of soliciting proxies. In addition to these proxy materials, our directors and employees may also solicit proxies in person, by telephone, or by other means of communication. Directors and employees will not be paid any additional compensation for soliciting proxies. We may also reimburse brokerage firms, banks and other agents for the cost of forwarding proxy materials to beneficial owners. We may retain a proxy solicitation firm to assist in the solicitation of proxies and related advice and informational support, and in that event, we will pay such firm customary fees.

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What does it mean if I receive more than one set of proxy materials?

If you receive more than one set of proxy materials, your shares may be registered in more than one name or in different accounts. Please follow the voting instructions on the proxy cards in the proxy materials to ensure that all of your shares are voted.

Can I change my vote after submitting my proxy?

Stockholder of Record: Shares Registered in Your Name

Yes. You can revoke your proxy at any time before the final vote at the meeting. If you are the record holder of your shares, you may revoke your proxy in any one of the following ways:

Your most current proxy card or telephone or internet proxy is the one that is counted.

Beneficial Owner: Shares Registered in the Name of Broker or Bank

If your shares are held by your broker or bank as a nominee or agent, you should follow the instructions provided by your broker or bank.

When are stockholder proposals and director nominations due for next year’s annual meeting?

To be considered for inclusion in next year’s proxy materials, your proposal must be submitted in writing by January 3, 2020, to our Corporate Secretary at 11804 North Creek Parkway South, Bothell, WA 98011, and must comply with all applicable requirements of Rule 14a-8 promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”); provided, however, that if our 2020 Annual Meeting of Stockholders is held before April 22, 2020 or after June 21, 2020, then the deadline is a reasonable amount of time prior to the date we begin to print and mail our proxy statement for the 2020 Annual Meeting of Stockholders. If you wish to submit a proposal (including a director nomination) at the 2020 Annual Meeting of Stockholders that is not to be included in next year’s proxy materials, the proposal must be received by our Corporate Secretary not later than the close of business on February 22, 2020 nor earlier than the close of business on January 23, 2020; provided, however, that if our 2020 Annual Meeting of Stockholders is held before April 22, 2020 or after June 21, 2020, then the proposal must be received no earlier than the close of business on the 120th day prior to such meeting and not later than the close of business on the later of the 90th day prior to such meeting or the 10th day following the day on which public announcement of the date of such meeting is first made. You are also advised to review our bylaws, which contain additional requirements about advance notice of stockholder proposals and director nominations.

How are votes counted?

Votes will be counted by the inspector of election appointed for the meeting, who will separately count, for the proposal to elect directors, votes “For,” “Withhold” and broker non-votes; with respect to the advisory approval of the executive compensation of our named executive officers, votes “For,” “Against,” and broker non-votes; and, with respect to the proposal to ratify the selection of PricewaterhouseCoopers LLP as the Company’s independent registered public accounting firm, votes “For,” “Against” and abstentions.

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What are “broker non-votes”?

As discussed above, when a beneficial owner of shares held in “street name” does not give instructions to the broker or nominee holding the shares as to how to vote on matters deemed to be “non-routine,” the broker or nominee cannot vote the shares. These unvoted shares are counted as “broker non-votes.”

How many votes are needed to approve each proposal?

The following table summarizes the minimum votes needed to approve each proposal and the effect of abstentions and broker non-votes.

What is the quorum requirement?

A quorum of stockholders is necessary to hold a valid meeting. A quorum will be present if stockholders holding at least a majority of the outstanding shares entitled to vote are present at the meeting in person or represented by proxy. On the record date, there were 83,247,109 shares outstanding and entitled to vote. Thus, the holders of 41,623,555 shares must be present in person or represented by proxy at the Annual Meeting to have a quorum.

Your shares will be counted towards the quorum only if you submit a valid proxy (or one is submitted on your behalf by your broker, bank or other nominee) or if you vote in person at the meeting. Abstentions and broker non-votes will be counted towards the quorum requirement. If there is no quorum, the holders of a majority of shares present at the meeting in person or represented by proxy may adjourn the Annual Meeting to another date.

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

Preliminary voting results will be announced at the Annual Meeting. In addition, final voting results will be published in a current report on Form 8-K that we expect to file within four business days after the Annual Meeting. If final voting results are not available to us in time to file a Form 8-K within four business days after the meeting, we intend to file a Form 8-K to publish preliminary results and, within four business days after the final results are known to us, file an amended Form 8-K to publish the final results.

What proxy materials are available on the internet?

The proxy statement and 2018 Annual Report are available at www.proxyvote.com.

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PROPOSAL NO. 1

ELECTION OF DIRECTORS

Our Board of Directors is divided into three classes. Each class consists, as nearly as possible, of one-third of the total number of directors, and each class has a three-year term. Vacancies on the Board of Directors may be filled only by persons elected by a majority of the remaining directors. A director elected by the Board of Directors to fill a vacancy in a class, including vacancies created by an increase in the number of directors, shall serve for the remainder of the full term of that class and until the director’s successor is duly elected and qualified.

The Board of Directors presently has nine members. At the Annual Meeting, the authorized size of our Board of Directors will be reduced to eight members. There are two Class II directors whose term of office expires in 2019. Deepika R. Pakianathan, one of our Class II directors, has decided not to stand for re-election to our Board of Directors when her current term expires at the Annual Meeting. If elected at the Annual Meeting, both of the nominees would serve until the 2022 Annual Meeting of Stockholders and until his or her successor has been duly elected and qualified, or, if sooner, until the director’s death, resignation or removal. It is the Company’s policy to invite directors and nominees for director to attend the Annual Meeting. One of our directors attended the 2018 Annual Meeting of Stockholders.

The following table sets forth information with respect to the two nominees for election at the Annual Meeting and the directors whose terms of office will continue after the Annual Meeting, as of April 15, 2019:

Both of the nominees was recommended for election by the Nominating and Corporate Governance Committee of the Board of Directors. Both of the nominees are currently directors of the Company. Mr. Carter was previously elected by the stockholders as a Class II Director. Ms. Yarno was appointed to the Board of Directors by the then-current members of the Board of Directors to fill a vacant seat.

Directors are elected by a plurality of the votes of the holders of shares of common stock present in person or represented by proxy and entitled to vote on the election of directors. Accordingly, the two nominees receiving the highest number of affirmative votes will be elected. Shares represented by executed proxies will be voted, if authority to do so is not withheld, for the election of the two nominees. If any nominee becomes unavailable for election as a result of an unexpected occurrence, shares that would have been voted for that nominee will instead will be voted for the election of a substitute nominee proposed by Alder. Each person nominated for election has agreed to serve if elected. The Company’s management has no reason to believe that any nominee will be unable to serve.

Although according to our bylaws, all elections are determined by a plurality of the votes cast, it is our policy, as set forth in our Corporate Governance Guidelines, that any nominee for director in an uncontested election who

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does not receive a majority of the votes cast (i.e. receives a greater number of votes “withheld” from his or her election than votes “for” in such election) shall submit his or her offer of resignation for consideration by the Nominating and Corporate Governance Committee. The Nominating and Corporate Governance Committee shall consider all of the relevant facts and circumstances and recommend to the Board the action to be taken with respect to such offer of resignation. The Board will then act on the Nominating and Corporate Governance Committee’s recommendation. Promptly following the Board’s decision, we will disclose that decision and an explanation of such decision in a filing with the Securities and Exchange Commission (the “SEC”).

NOMINEES FOR ELECTION FOR A  THREE-YEAR TERM EXPIRING AT THE 2022 ANNUAL MEETING

Paul R. Carter. Mr. Carter has served as a member of our Board of Directors since September 2015. From April 2006 to August 2016, Mr. Carter served in various roles at Gilead Sciences, Inc., a research based biopharmaceutical company, most recently serving as Executive Vice President, Commercial Operations. Prior to joining Gilead, Mr. Carter spent 15 years in the pharmaceutical industry with GlaxoSmithKline and its legacy companies. During his time with GlaxoSmithKline, Mr. Carter gained increasing levels of senior experience as General Manager in Europe and later as a Regional Head of the International Business in Asia. Mr. Carter currently serves on the board of directors of Hutchison China Meditech Ltd, a biopharmaceutical company. Mr. Carter holds a degree in Business Studies from the Ealing School of Business and Management (now merged into University of West London) and is a Fellow of the United Kingdom’s Chartered Institute of Management Accountants.

The Nominating and Corporate Governance Committee believes that Mr. Carter is qualified to serve on our Board of Directors due to his experience in the pharmaceutical industry, including his key involvement with the commercial launches of several important medicines.

Wendy L. Yarno. Ms. Yarno has served as a member of our Board of Directors since March 2017. Ms. Yarno retired in September 2008 from Merck & Co., Inc. following a 26-year career there in commercial and human resource positions of increasing seniority, most recently Chief Marketing Officer before she retired. Prior to this role, she served as General Manager, Cardiovascular/Metabolic United States Business Unit, where she had P&L responsibility for Merck’s largest therapeutic area, and as Senior Vice President, Human Resources. From September 2010 through September 2011, Ms. Yarno was the Chief Marketing Officer of HemoShear LLC, a biotechnology research company and leading developer of human cell-based surrogate systems for discovery and assessment of new drug compounds. Ms. Yarno currently serves on the board of directors of MyoKardia, Inc., a biopharmaceutical company, Aratana Therapeutics, Inc., a pet therapeutics company, Global Blood Therapeutics, Inc. and Inovio Pharmaceuticals, Inc. Ms. Yarno previously served as member of the board of directors of St. Jude Medical, Inc., a medical device company, from April 2002 until January 2017 when St. Jude Medical was acquired by Abbott Laboratories, Medivation, Inc., a biopharmaceutical company, from April 2013 until September 2016 when Medivation was acquired by Pfizer Inc., and Durata Therapeutics, Inc., a pharmaceutical company, from August 2014 until November 2014 when Durata was acquired by Actavis plc. Ms. Yarno holds a B.S. in Business Administration from Portland State University and an M.B.A. from Temple University.

The Nominating and Corporate Governance Committee believes that Ms. Yarno is qualified to serve on our Board of Directors due to her extensive experience in the pharmaceutical industry, in particular her role at Merck in which she led a global organization charged with all aspects of supporting pre- and post-launch commercialization of pharmaceuticals in more than 20 therapeutics areas.

THE BOARD OF DIRECTORS RECOMMENDS

A VOTE IN FAVOR OF EACH NAMED NOMINEE.

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DIRECTORS CONTINUING IN OFFICE UNTIL THE 2020 ANNUAL MEETING

Jeremy C. Green. Mr. Green has served as a member of our Board of Directors since April 2018. Since 2007, Mr. Green has served as the Founder and Portfolio Manager of Redmile Group, LLC, a San Francisco-based investment firm that focuses on the healthcare sector. Prior to founding Redmile Group, LLC, Mr. Green served as Co-Founder and Director of Research at Steeple Capital L.P., and as an analyst at Andor Capital Management, L.L.C. Prior to that, Mr. Green served as a Managing Director at Citigroup Inc. and Head of the European Healthcare Research Team covering medical technology, biotech and healthcare services. Mr. Green holds a B.A. in Natural Science—Biological Sciences and an M.A. from the University of Oxford.

The Nominating and Corporate Governance Committee believes that Mr. Green is qualified to serve on our Board of Directors due to his experience as an investor in the healthcare sector, as well as his experience as a biotechnology research analyst.

Heather Preston, M.D. Dr. Preston has served as a member of our Board of Directors since December 2007. Since July 2018, Dr. Preston has served as managing partner at Pivotal BioVenture Partners and as a Senior Advisor of TPG Biotech, a biotechnology venture capital firm. Dr. Preston was previously a Partner and Managing Director at TPG Biotech, from 2005 to July 2018. Prior to joining TPG Biotech, Dr. Preston served for two years as a medical device and biotechnology venture capital investor at J.P. Morgan Partners, LLC, a private equity firm. Prior to that, she was an Entrepreneur-in-Residence at New Enterprise Associates, a venture capital firm, and was a leader of the pharmaceutical and medical products consulting practice at McKinsey & Co in New York. Dr. Preston currently serves on the board of directors of Entasis Therapeutics Holdings, Inc., Oxford BioMedica plc, Otonomy, Inc. and numerous private companies. Dr. Preston holds an M.D. from the University of Oxford and a B.S. in Biochemistry from the University of London.

The Nominating and Corporate Governance Committee believes that Dr. Preston is qualified to serve on our Board of Directors due to her substantial experience as an investor in biopharmaceutical and life sciences companies, as well as her experience at McKinsey & Co. advising large pharmaceutical companies.

Clay B. Siegall, Ph.D. Dr. Siegall has served as a member of our Board of Directors since November 2005. In 1998, Dr. Siegall co-founded Seattle Genetics, Inc., a biotechnology company, and currently serves as its President, Chief Executive Officer and Chairman of the Board of Directors. From 1991 to 1997, Dr. Siegall was with the Bristol-Myers Squibb Pharmaceutical Research Institute and the National Cancer Institute, National Institutes of Health from 1988 to 1991. In addition to Seattle Genetics and Alder, Dr. Siegall currently serves on the board of directors of Ultragenyx Pharmaceutical Inc. and he previously served on the board of directors of Mirna Therapeutics, Inc. from January 2013 to December 2016. Dr. Siegall holds a Ph.D. in Genetics from George Washington University and a B.S. in Zoology from the University of Maryland.

The Nominating and Corporate Governance Committee believes that Dr. Siegall is qualified to serve on our Board of Directors due to his experience in founding and building Seattle Genetics, his significant executive leadership experience and his role overseeing the successful development and commercialization of an approved product.

DIRECTORS CONTINUING IN OFFICE UNTIL THE 2021 ANNUAL MEETING

Robert W. Azelby, M.B.A. Mr. Azelby has served as our President and Chief Executive Officer since June 2018. From November 2015 to May 2018, Mr. Azelby served as Executive Vice President, Chief Commercial Officer of Juno Therapeutics, Inc. From June 2012 to October 2015, Mr. Azelby served as Vice President and General Manager, Oncology at Amgen Inc. From October 2010 to May 2012, he served as Amgen’s Vice President, Amgen Oncology Sales. Prior to that, he served in various positions at Amgen, including periods as Vice President, Commercial Effectiveness Unit and General Manager of Amgen Netherlands. Mr. Azelby currently serves on the board of directors of Clovis Oncology, Inc. and he previously served on the board of directors of Cascadian Therapeutics, Inc. from April 2017 to March 2018. Mr. Azelby holds a B.A. in Economics and Religious Studies from the University of Virginia and an M.B.A. from Harvard Business School.

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The Nominating and Corporate Governance Committee believes that Mr. Azelby is qualified to serve on our Board of Directors due to his experience in the biopharmaceutical industry, including his operational experience and strong track record in both large and small biopharmaceutical environments.

Paul B. Cleveland. Mr. Cleveland has served as a member of our Board of Directors since August 2015. Between March 2018 and June 2018, Mr. Cleveland served as our Interim President and Chief Executive Officer. Since October 2016, Mr. Cleveland has served as the Chairman of the board of directors of Adverum Biotechnologies, Inc., a biotechnology company. From October 2017 through June 2017, Mr. Cleveland served as Executive chairman of Adverum and from December 2015 to October 2016, he served as President and Chief Executive Officer of Adverum. From May 2015 to November 2015, Mr. Cleveland served as President and Chief Executive Officer at Celladon Corporation, a clinical-stage biotechnology company, and previously served as Celladon’s President and Chief Financial Officer since June 2014. From February 2013 to August 2013, Mr. Cleveland served as Executive Vice President, Corporate Strategy and Chief Financial Officer of Aragon Pharmaceuticals, Inc., a biotechnology company. From April 2011 to February 2013, Mr. Cleveland served as General Partner and Chief Operating Officer of Mohr Davidow Ventures, a venture capital firm. From January 2006 to February 2011, Mr. Cleveland served as Executive Vice President, Corporate Development and Chief Financial Officer of Affymax, Inc., a biopharmaceutical company. From April 2004 to December 2005, he served as a managing director at Integrated Finance, Ltd., an investment bank. From September 1996 to April 2003, Mr. Cleveland served as a managing director at investment bank J.P. Morgan Chase and Co. and a predecessor firm, Hambrecht & Quist. From January 1993 to September 1996, Mr. Cleveland was a partner at Cooley LLP, from December 1988 to December 1992, he was a corporate attorney at Sidley Austin LLP and from September 1981 to November 1988, he was a corporate attorney at Davis Polk & Wardwell LLP. Mr. Cleveland previously served on the board of directors of Sangamo BioSciences, Inc. from November 2008 to August 2016, and on the board of directors of Celladon from May 2015 to November 2015. Mr. Cleveland received an A.B. from Washington University in St. Louis and a J.D. from Northwestern University School of Law.

The Nominating and Corporate Governance Committee believes that Mr. Cleveland is qualified to serve on our Board of Directors due to his experience as the President and Chief Executive Officer, Chief Financial Officer, a member of the board of directors, and audit committee chair of several biotechnology companies, which provides additional insight to our Board of Directors on the operational, financial and best practices of such companies.

A. Bruce Montgomery, M.D. Dr. Montgomery has served as a member of our Board of Directors since October 2010. Since March 2017, Dr. Montgomery has served as the Chief Executive Officer of Avalyn Pharma Inc., a pharmaceutical company. In 2010, Dr. Montgomery founded Cardeas Pharma Corporation, a biotechnology company, where he served as Chief Executive Officer and a member of the board of directors from 2010 to December 2016. In 2001, he founded Corus Pharma, Inc., a biotechnology company, and served as its Chief Executive Officer from 2001 through its acquisition in 2006 by Gilead Sciences, Inc. He continued on at Gilead post-acquisition until 2010 and served as Senior Vice President and Head of Respiratory Therapeutics, where he successfully led the approval of Cayston (aztreonam) as a treatment for cystic fibrosis patients. From 1993 to 2000, Dr. Montgomery held positions within the research and development group of PathoGenesis Corporation, a biotechnology company. From 1989 to 1993, Dr. Montgomery worked at Genentech, Inc., a biotechnology company. Dr. Montgomery currently serves on the board of directors of Xencor Inc. Dr. Montgomery holds an M.D. and a B.S. in Chemistry from the University of Washington.

The Nominating and Corporate Governance Committee believes that Dr. Montgomery is qualified to serve on our Board of Directors due to his many years of research and development and executive management experience in the biotechnology industry, including overseeing the successful development of several approved products, including inhalable tobramycin and dornas alfa, or Pulmozyme.

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PROPOSAL NO. 2

ADVISORY VOTE ON EXECUTIVE COMPENSATION

Under the Dodd-Frank Wall Street Reform and Consumer Protection Act, or the Dodd-Frank Act, and Section 14A of the Exchange Act, the Company’s stockholders are entitled to vote to approve, on an advisory basis, the compensation of the Company’s named executive officers as disclosed in this proxy statement in accordance with the SEC rules.

At the 2016 Annual Meeting, we asked our stockholders to indicate if we should hold a “say-on-pay” vote every year, every two years or every three years. Consistent with the recommendation of our Board of Directors, our stockholders indicated by advisory vote their preference to hold a say-on-pay vote annually. After consideration of the voting results, and based upon its prior recommendation, our Board of Directors elected to hold a stockholder say-on-pay vote annually.

This vote is not intended to address any specific item of compensation, but rather the overall compensation of the Company’s named executive officers and the policies and practices described in this proxy statement. The compensation of the Company’s named executive officers subject to the vote is disclosed in the compensation tables and the related narrative disclosure contained in this proxy statement. The Company believes that its compensation policies and decisions are consistent with current market practices. Compensation of the Company’s named executive officers is designed to enable the Company to attract and retain talented and experienced executives to lead the Company successfully in a competitive environment.

Accordingly, the Board of Directors is asking the stockholders to indicate their support for the compensation of the Company’s named executive officers as described in this proxy statement by casting a non-binding advisory vote “FOR” the following resolution:

“RESOLVED, that the compensation paid to the Company’s named executive officers, as disclosed pursuant to Item  402 of Regulation S-K, including the compensation tables and narrative discussion is hereby APPROVED.”

Because the vote is advisory, it is not binding on the Board of Directors or the Company. Nevertheless, the views expressed by the stockholders, whether through this vote or otherwise, are important to management and the Board of Directors and, accordingly, the Board of Directors and the Compensation Committee intend to consider the results of this vote in making determinations in the future regarding executive compensation arrangements.

Unless our Board of Directors modifies its policy on the frequency of future advisory votes on the compensation of our named executive officers, the next advisory vote on the compensation of our named executive officers will be held at our 2020 Annual Meeting of Stockholders. In addition, our stockholders will be able to indicate by advisory vote at our 2022 Annual Meeting of Stockholders their preference as to the frequency of future advisory votes.

Advisory approval of this proposal requires the vote of the holders of a majority of the shares present in person or represented by proxy.

THE BOARD OF DIRECTORS RECOMMENDS

A VOTE IN FAVOR OF PROPOSAL NO. 2.

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PROPOSAL NO. 3

RATIFICATION OF SELECTION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Audit Committee of the Board of Directors has selected PricewaterhouseCoopers LLP as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2019, and has further directed that management submit the selection of its independent registered public accounting firm for ratification by the stockholders at the Annual Meeting. PricewaterhouseCoopers LLP has audited the Company’s financial statements since 2007. Representatives of PricewaterhouseCoopers LLP are expected to be present at the Annual Meeting. They will have an opportunity to make a statement if they so desire and will be available to respond to appropriate questions.

Neither the Company’s bylaws nor other governing documents or law require stockholder ratification of the selection of PricewaterhouseCoopers LLP as the Company’s independent registered public accounting firm. However, the Audit Committee of the Board of Directors is submitting the selection of PricewaterhouseCoopers LLP to the stockholders for ratification as a matter of good corporate practice. If the stockholders fail to ratify the selection, the Audit Committee of the Board of Directors will reconsider whether or not to retain that firm. Even if the selection is ratified, the Audit Committee of the Board of Directors in its discretion may direct the appointment of different independent auditors at any time during the year if they determine that such a change would be in the best interests of the Company and its stockholders.

The affirmative vote of the holders of a majority of the shares present in person or represented by proxy and entitled to vote on the matter at the Annual Meeting will be required to ratify the selection of PricewaterhouseCoopers LLP.

PRINCIPAL ACCOUNTANT FEES AND SERVICES

The following table represents aggregate fees billed to the Company for the years ended December 31, 2018 and 2017, by PricewaterhouseCoopers LLP, the Company’s principal accountant.

All fees described above were pre-approved by the Audit Committee.

PRE-APPROVAL POLICIES AND PROCEDURES

The Charter of the Audit Committee provides for the pre-approval of audit and non-audit services rendered by the Company’s independent registered public accounting firm, PricewaterhouseCoopers LLP. The Audit Committee generally pre-approves specified services in the defined categories of audit services, audit-related

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services and tax services up to specified amounts. Pre-approval may also be given as part of the Audit Committee’s approval of the scope of the engagement of the independent auditor or on an individual, explicit, case-by-case basis before the independent auditor is engaged to provide each service. The pre-approval of services may be delegated to one or more of the Audit Committee’s members, but the decision must be reported to the full Audit Committee at its next scheduled meeting.

The Audit Committee has determined that the rendering of services other than audit services by PricewaterhouseCoopers LLP is compatible with maintaining the principal accountant’s independence.

THE BOARD OF DIRECTORS RECOMMENDS

A VOTE IN FAVOR OF PROPOSAL NO. 3.

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INFORMATION REGARDING THE BOARD OF DIRECTORS AND CORPORATE GOVERNANCE

INDEPENDENCE OF THE BOARD OF DIRECTORS

As required under The Nasdaq Stock Market LLC (“Nasdaq”) listing standards, a majority of the members of a listed company’s board of directors must qualify as “independent,” as affirmatively determined by the board of directors. Our Board of Directors consults with the Company’s counsel to ensure that the Board of Director’s determinations are consistent with relevant securities and other laws and regulations regarding the definition of “independent,” including those set forth in pertinent listing standards of Nasdaq, as in effect from time to time.

Consistent with these considerations, after review of all relevant identified transactions or relationships between each director, or any of his or her family members, and the Company, its senior management and its independent auditors, the Board of Directors has affirmatively determined that the following seven directors are independent directors within the meaning of the applicable Nasdaq listing standards: Mr. Carter, Mr. Green, Dr. Montgomery, Dr. Pakianathan (who is not standing for reelection), Dr. Preston, Dr. Siegall and Ms. Yarno. In making this determination, the Board of Directors found that none of these directors had a material or other disqualifying relationship with Alder. The Board of Directors also considered Mr. Green’s role as the Founder and Portfolio Manager of Redmile Group, LLC, and our relationship with Redmile Group, LLC and affiliated entities as significant stockholders in making the determination that Mr. Green is independent. Mr. Azelby, our President and Chief Executive Officer, is not an independent director by virtue of his current employment with Alder, and Mr. Cleveland, our former Interim President and Chief Executive Officer, is not an independent director by virtue of his prior employment with Alder.

BOARD LEADERSHIP STRUCTURE

In accordance with our Corporate Governance Guidelines, a copy of which is posted on our website at https://investor.alderbio.com/corporate-governance, our Board of Directors does not have a policy as to whether the positions Chairman of the Board and Chief Executive Officer should be separate. Our Board of Directors believes that it should have the flexibility to make this determination as circumstances require and in a manner that it believes is best to provide appropriate leadership for the Company. The Board of Directors believes that its current leadership structure, with Mr. Cleveland serving as Chairman, is appropriate because it enables the Board of Directors, as a whole, to engage in oversight of management, promote communication and collaboration between management and the Board of Directors, and oversee governance matters, while allowing our Chief Executive Officer to focus on his primary responsibility, the operational leadership and strategic direction of the Company. In addition, the Company believes that it is advantageous to have a Chairman with a history with and knowledge of the Company (as is the case with Mr. Cleveland, the Company’s former Interim President and Chief Executive Officer) as compared to a relatively less informed independent Chairman.

ROLE OF THE BOARD OF DIRECTORS IN RISK OVERSIGHT

One of the Board of Director’s key functions is informed oversight of the Company’s risk management process. The Board of Directors does not have a standing risk management committee, but rather administers this oversight function directly through the Board of Directors as a whole, as well as through various Board of Directors standing committees that address risks inherent in their respective areas of oversight. In particular, our Board of Directors is responsible for monitoring and assessing strategic risk exposure, including a determination of the nature and level of risk appropriate for the Company. Our Audit Committee has the responsibility to consider and discuss our major financial risk exposures and the steps our management has taken to monitor and control these exposures, including guidelines and policies to govern the process by which risk assessment and management is undertaken. The Audit Committee also monitors compliance with legal and regulatory requirements, in addition to oversight of the performance of our internal audit function. Our Nominating and Corporate Governance Committee monitors the effectiveness of our corporate governance guidelines, including whether they are successful in preventing illegal or improper liability-creating conduct. Our Compensation Committee assesses and monitors whether any of our compensation policies and programs has the potential to encourage excessive risk-taking.

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MEETINGS OF THE BOARD OF DIRECTORS

The Board of Directors met 13 times during 2018. All directors attended at least 75% of the aggregate number of meetings of the Board of Directors and of the committees on which they served, held during the portion of 2018 for which they were directors or committee members, respectively. The Board of Directors also acts by written consent from time to time.

INFORMATION REGARDING COMMITTEES OF THE BOARD OF DIRECTORS

The Board of Directors has several committees, including an Audit Committee, a Compensation Committee and a Nominating and Corporate Governance Committee. The following table provides the current membership information for each such committee:

Below is a description of such committees of the Board of Directors, including membership of such committees during 2018. The Board of Directors has determined that each member of each committee meets the applicable Nasdaq rules and regulations regarding “independence” and each member is free of any relationship that would impair his or her individual exercise of independent judgment with regard to the Company.

AUDIT COMMITTEE

The Audit Committee of the Board of Directors was established by the Board of Directors in accordance with Section 3(a)(58)(A) of the Exchange Act, to oversee the Company’s corporate accounting and financial reporting processes and audits of its financial statements. The primary functions of this committee include:

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Initially in 2018, the Audit Committee was composed of three directors: Mr. Cleveland (chairman), Mr. Stephen M. Dow and Dr. Preston. Mr. Carter replaced Mr. Cleveland as a member and Mr. Dow replaced Mr. Cleveland as chairman of the Audit Committee following Mr. Cleveland’s appointment as Interim President and Chief Executive Officer. Dr. Montgomery then replaced Mr. Dow as a member and Mr. Carter replaced Mr. Dow as chairman of the Audit Committee following Mr. Dow’s resignation from the Board of Directors.

The Audit Committee met five times during 2018. The Board of Directors has adopted a written Audit Committee charter that is available to stockholders on the Company’s website at https://investor.alderbio.com/corporate-governance.

The Board of Directors reviews the Nasdaq listing standards definition of independence for Audit Committee members on an annual basis and has determined that all members of the Company’s Audit Committee are independent (as independence is currently defined in Rule 5605(c)(2)(A)(i) of the Nasdaq listing standards and Rule 10A-3 of the Exchange Act). Our Board of Directors also determined that each member of the Audit Committee can read and understand fundamental financial statements in accordance with applicable requirements.

The Board of Directors has also determined that Mr. Carter qualifies as an “audit committee financial expert,” as defined in applicable SEC rules. The Board of Directors made a qualitative assessment of Mr. Carter’s level of knowledge and experience based on a number of factors, including formal education and experience.

Compensation Committee

The Compensation Committee of the Board of Directors acts on behalf of the Board of Directors to review, adopt and oversee the Company’s compensation strategy, policies, plans and programs, including:

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In addition, the Compensation Committee reviews with management the Company’s Compensation Discussion and Analysis and considers whether to recommend that it be included in proxy statements and other filings.

During 2018, the Compensation Committee was composed of four directors: Mr. Carter, Dr. Pakianathan, Dr. Siegall (chairman) and Ms. Yarno. All members of the Company’s Compensation Committee are independent (as independence is currently defined in Rule 5605(d)(2) of the Nasdaq listing standards) and are “non-employee directors” as defined in Rule 16b-3 promulgated under the Exchange Act. During 2018, the Compensation Committee met seven times and acted by written consent. The Board of Directors has adopted a written Compensation Committee charter that is available to stockholders on the Company’s website at https://investor.alderbio.com/corporate-governance.

Compensation Committee Processes and Procedures

Typically, the Compensation Committee meets semiannually and with greater frequency if necessary, and acts by written consent from time to time, as appropriate. The agenda for each meeting is usually developed by the Chair of the Compensation Committee, in consultation with management. The Compensation Committee meets regularly in executive session. However, from time to time, various members of management and other employees as well as outside advisors or consultants may be invited by the Compensation Committee to make presentations, to provide financial or other background information or advice or to otherwise participate in Compensation Committee meetings. The Chief Executive Officer may not participate in, or be present during, any deliberations or determinations of the Compensation Committee regarding his compensation or individual performance objectives. The charter of the Compensation Committee grants the Compensation Committee full access to all books, records, facilities and personnel of the Company. In addition, under the charter, the Compensation Committee has the authority to obtain, at the expense of the Company, advice and assistance from compensation consultants and internal and external legal, accounting or other advisors and other external

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resources that the Compensation Committee considers necessary or appropriate in the performance of its duties. The Compensation Committee has direct responsibility for the oversight of the work of any consultants or advisers engaged for the purpose of advising the Committee. In particular, the Compensation Committee has the sole authority to retain, in its sole discretion, compensation consultants to assist in its evaluation of executive and director compensation, including the authority to approve the consultant’s reasonable fees and other retention terms. Under the charter, the Compensation Committee may select, or receive advice from, a compensation consultant, legal counsel or other adviser to the Compensation Committee, other than in-house legal counsel and certain other types of advisers, only after taking into consideration six factors, prescribed by the SEC and Nasdaq, that bear upon the adviser’s independence; however, there is no requirement that any adviser be independent.

Under its charter, the Compensation Committee may form, and delegate authority to, subcommittees as appropriate. In 2014, the Compensation Committee formed a Non-Officer Stock Award Committee, currently composed of the Company’s Chief Executive Officer in his capacity as a member of the Board of the Directors, to which it delegated authority to grant, without any further action required by the Compensation Committee, equity-based compensation awards to employees who are not officers of the Company. The purpose of this delegation of authority is to enhance the flexibility of equity award administration within the Company and to facilitate the timely grant of equity awards to non-management employees, particularly new employees, within specified limits approved by the Compensation Committee. In particular, the Non-Officer Stock Award Committee may not (1) grant awards covering more than an aggregate of 250,000 shares of common stock per fiscal quarter, (2) grant awards covering more shares than have been approved by the Company’s stockholders under the 2014 Equity Incentive Plan, (3) grant awards to the Company’s Section 16 reporting officers, (4) grant an award covering more than 30,000 shares of common stock to any individual employee in any fiscal quarter, and (5) grant awards unless they are granted in accordance with any approved guidelines established by the Board of Directors of Compensation Committee; provided, however, that the Compensation Committee may delegate additional authority to the Non-Officer Stock Award Committee from time-to-time in excess of the award limit per fiscal quarter in (1) above.

Nominating and Corporate Governance Committee

The Nominating and Corporate Governance Committee of the Board of Directors oversees our corporate governance function. The primary functions of this committee include:

Initially in 2018, the Nominating and Corporate Governance Committee was composed of four directors: Mr. Dow (chairman), Mr. Cleveland, Dr. Montgomery and Dr. Preston. Ms. Yarno replaced Mr. Dow as chairperson and Dr. Siegall replaced Dr. Preston and Mr. Cleveland as members of the Nominating and Corporate Governance Committee in 2018. Mr. Green was appointed as a member of the Nominating and Corporate Governance Committee in April 2018.

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All members of the Nominating and Corporate Governance Committee are independent (as independence is currently defined in Rule 5605(a)(2) of the Nasdaq listing standards). During 2018, the Nominating and Corporate Governance Committee met six times and acted by written consent. The Board of Directors has adopted a written Nominating and Corporate Governance Committee charter that is available to stockholders on the Company’s website at https://investor.alderbio.com/corporate-governance.

The Board of Directors believes that candidates for director should have certain minimum qualifications, including the ability to read and understand basic financial statements, being over 21 years of age and having the highest personal integrity and ethics. The Nominating and Corporate Governance Committee also considers such factors as possessing relevant expertise which qualifies him or her to offer advice and guidance to management, having sufficient time to devote to the affairs of the Company, demonstrated excellence in his or her field, having the ability to exercise sound business judgment and having the commitment to rigorously represent the long-term interests of the Company’s stockholders. However, the Board of Directors retains the right to modify these qualifications from time to time. Candidates for director nominees are reviewed in the context of the current composition of the Board of Directors, the operating requirements of the Company and the long-term interests of stockholders. In conducting this assessment, the Nominating and Corporate Governance Committee typically considers diversity, age, skills and such other factors as it deems appropriate, given the current needs of the Board of Directors and the Company, to maintain a balance of knowledge, experience and capability.

In the case of incumbent directors whose terms of office are set to expire, the Nominating and Corporate Governance Committee reviews these directors’ overall service to the Company during their terms, including the number of meetings attended, level of participation, quality of performance and any other relationships and transactions that might impair the directors’ independence. In the case of new director candidates, the Nominating and Corporate Governance Committee also determines whether the nominee is independent for Nasdaq purposes, which determination is based upon applicable Nasdaq listing standards, applicable SEC rules and regulations and the advice of counsel, if necessary. The Nominating and Corporate Governance Committee then uses its network of contacts to compile a list of potential candidates, but may also engage, if it deems appropriate, a professional search firm. The Nominating and Corporate Governance Committee conducts any appropriate and necessary inquiries into the backgrounds and qualifications of possible candidates after considering the function and needs of the Board of Directors. The Nominating and Corporate Governance Committee meets to discuss and consider the candidates’ qualifications and then selects a nominee for recommendation to the Board of Directors.

The Nominating and Corporate Governance Committee will consider director candidates recommended by stockholders. The Nominating and Corporate Governance Committee does not intend to alter the manner in which it evaluates candidates, including the minimum criteria set forth above, based on whether or not the candidate was recommended by a stockholder. Stockholders who wish to recommend individuals for consideration by the Nominating and Corporate Governance Committee to become nominees for election to the Board of Directors may do so by delivering a written recommendation to the Nominating and Corporate Governance Committee at the following address: 11804 North Creek Parkway South, Bothell, WA 98011. Submissions must include the full name of the proposed nominee, a description of the proposed nominee’s business experience for at least the previous five years, complete biographical information, a description of the proposed nominee’s qualifications as a director and a representation that the nominating stockholder is a beneficial or record holder of the Company’s stock. Any such submission must be accompanied by the written consent of the proposed nominee to be named as a nominee and to serve as a director if elected.

STOCKHOLDER COMMUNICATIONS WITH THE BOARD OF DIRECTORS

Historically, the Company has not provided a formal process related to stockholder communications with the Board of Directors. Nevertheless, every effort has been made to ensure that the views of stockholders are heard by the Board of Directors or individual directors, as applicable, and that appropriate responses are provided to stockholders in a timely manner. The Company believes its responsiveness to stockholder communications to the

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Board of Directors has been excellent. Nevertheless, the Nominating and Corporate Governance Committee will consider from time to time the adoption of a formal process for stockholder communications with the Board of Directors and, if adopted, publish it promptly and post it to the Company’s website.

CODE OF BUSINESS CONDUCT AND ETHICS

We have adopted a Code of Business Conduct and Ethics that applies to all of our employees, officers and directors, including those officers responsible for financial reporting. The Code of Business Conduct and Ethics is available on the Company’s website at https://investor.alderbio.com/corporate-governance. If the Company makes any substantive amendments to the Code of Business Conduct and Ethics or grants any waiver from a provision of the Code to any executive officer or director, the Company will promptly disclose the nature of the amendment or waiver on its website.

CORPORATE GOVERNANCE GUIDELINES

In March 2019, the Board of Directors adopted our amended and restated Corporate Governance Guidelines, which were originally adopted in March 2014, to assure that the Board of Directors will have the necessary authority and practices in place to review and evaluate the Company’s business operations as needed and to make decisions that are independent of the Company’s management. The guidelines are also intended to align the interests of directors and management with those of the Company’s stockholders. The Corporate Governance Guidelines set forth the practices the Board of Directors intends to follow with respect to board composition and selection, board meetings and involvement of senior management, Chief Executive Officer performance evaluation and succession planning, and board committees and compensation. The Corporate Governance Guidelines, as well as the charters for each committee of the Board of Directors, may be viewed at https://investor.alderbio.com/corporate-governance.

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REPORT OF THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS⁽¹⁾

The Audit Committee has reviewed and discussed the audited financial statements for the fiscal year ended December 31, 2018 with management of the Company. The Audit Committee has discussed with the independent registered public accounting firm the matters required to be discussed by Auditing Standard No. 16, Communications with Audit Committees, as adopted by the Public Company Accounting Oversight Board (“PCAOB”). The Audit Committee has also received the written disclosures and the letter from the independent registered public accounting firm required by applicable requirements of the PCAOB regarding the independent accountants’ communications with the Audit Committee concerning independence, and has discussed with the independent registered public accounting firm the accounting firm’s independence. Based on the foregoing, the Audit Committee has recommended to the Board of Directors that the audited financial statements be included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2018.

Mr. Paul R. Carter (Chair)

Dr. A. Bruce Montgomery

Dr. Heather Preston

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DIRECTOR COMPENSATION

We provide cash and equity compensation to our non-employee directors. Randall C. Schatzman, who served as our President and Chief Executive Officer from January 2018 to March 2018, Paul B. Cleveland, who served as our Interim President and Chief Executive Officer from March 2018 to June 2018, and Robert W. Azelby, who has served as our President and Chief Executive Officer since June 2018, were employees of Alder and were compensated for service as an employee for a portion of 2018 and did not receive any additional compensation for service on our Board of Directors during the time they served as employees.

Compensation Policy. Pursuant to our non-employee director compensation policy our non-employee directors received the following compensation for service on the Board of Directors and its committees in 2018:

Each non-employee director received an annual base cash retainer of $40,000 for such service, paid monthly. The non-executive chairperson of our Board of Directors received an additional annual base cash retainer of $20,000 for such service, paid monthly.

The policy also provided that we compensate the members of our Board of Directors for service on our committees as follows:

The policy further provided for the grant of equity awards as follows:

Each of these options will be granted with an exercise price equal to the fair market value of our common stock on the date of such grant.

Amendment to Non-Employee Director Compensation Policy. In June 2018, upon recommendation of the Compensation Committee, our Board of Directors amended our non-employee director compensation policy so that each option granted to our non-employee directors on the date of the date of the Annual Meeting and subsequent annual meetings of stockholders will vest in full upon a change in control, subject to the non-employee director’s continued service with us through the date of the change in control. Our Board of Directors approved this change to the terms of the annual option grants to our non-employee directors to conform to the vesting terms applicable to their initial option grants. In addition, in March 2019, upon recommendation of the Compensation Committee, our Board of Directors amended our non-employee director compensation policy to increase certain cash retainers and increase the initial and annual option awards, as described below.

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Processes and Procedures for Determining Director Compensation. The charter of the Compensation Committee vests in the Compensation Committee the responsibility for reviewing director compensation and recommending changes to the Board. It is the practice of the Compensation Committee to seek input from executive officers and outside compensation consultants as it deems appropriate. The Compensation Committee periodically reviews and assesses non-employee director pay levels from time to time with assistance from Compensia, an independent compensation consultant, which prepares a comprehensive assessment of our non-employee director compensation program. Our Compensation Committee reviewed our non-employee director compensation practices in March 2019 and determined to recommend that the Board of Directors approve adjustments to 2019 non-employee director compensation from the previously established levels specified under our compensation policy in order to align pay practices in line with that of our peer group. As a result, we adjusted the annual cash retainers for each committee member, committee chairperson and Chairman of the Board beginning in March 2019 to approximate the 50^th percentile of compensation received by members of the boards of directors of our peer companies. We also adjusted the annual option award and initial option award for newly appointed directors to alight with the 50^th percentile of our peer companies.

Director Compensation Table.    The following table sets forth information regarding compensation earned by or paid to our non-employee directors during 2018.

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SECURITY OWNERSHIP OF

CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth certain information with respect to the beneficial ownership of our capital stock as of April 15, 2019, for:

We have based our calculation of beneficial ownership on 83,247,109 shares of common stock outstanding on April 15, 2019. This table is based upon information supplied by officers, directors and principal stockholders and Schedules 13D and 13G filed with the SEC. Beneficial ownership is determined in accordance with the rules of the SEC and generally includes any shares over which a person exercises sole or shared voting or investment power. Shares of common stock issuable under options or warrants that are exercisable within 60 days after April 15, 2019 are deemed beneficially owned and such shares are used in computing the percentage ownership of the person holding the options or warrants, but are not deemed outstanding for the purpose of computing the percentage ownership of any other person. The information contained in the following table is not necessarily indicative of beneficial ownership for any other purpose, and the inclusion of any shares in the table does not constitute an admission of beneficial ownership of those shares.

Unless otherwise indicated below, to our knowledge, all persons named in the table have sole voting and dispositive power with respect to their shares of common stock, except to the extent authority is shared by spouses under community property laws. Unless otherwise indicated below, the address of each beneficial owner listed in the table below is c/o Alder BioPharmaceuticals, Inc. 11804 North Creek Parkway South, Bothell, WA 98011.

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SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Section 16(a) of the Exchange Act requires the Company’s directors and executive officers, and persons who own more than ten percent of a registered class of the Company’s equity securities, to file with the SEC initial reports of ownership and reports of changes in ownership of common stock and other equity securities of the Company. Officers, directors and greater than ten percent stockholders are required by SEC regulation to furnish the Company with copies of all Section 16(a) forms they file.

To the Company’s knowledge, based solely on a review of the copies of such reports furnished to the Company and written representations that no other reports were required, during the year ended December 31, 2018, all Section 16(a) filing requirements applicable to its officers, directors and greater than ten percent beneficial owners were complied with, except that one Form 4 related to our declared dividends on the convertible preferred stock, paid in the form of shares of preferred stock on June 29, 2018, was filed 15 days late by Redmile Group, LLC.

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EXECUTIVE OFFICERS

The following table sets forth certain information with respect to our executive officers as of April 15, 2019. Biographical information with regard to Mr. Azelby is presented under “Proposal No. 1—Election of Directors” in this proxy statement.

Carlos Campoy. Mr. Campoy has served as our Chief Financial Officer since December 2018. From September 2017 to December 2018, Mr. Campoy served as a partner of Think Forwards, a financial consulting firm. From March 2015 to November 2016, Mr. Campoy served as Vice President of Finance, International at Allergan plc, where he previously served as Vice President and Financial Controller, Europe, Africa and Middle East from July 2014 to March 2015. Prior to joining Allergan, Mr. Campoy had an 18-year tenure at Eli Lilly and Company, from August 1996 to July 2014, where he held a number of senior financial leadership positions of increasing responsibility, most recently serving as Chief Financial Officer, Eli Lilly Japan K.K. from January 2013 to July 2014. Mr. Campoy is a Certified Management Accountant (CMA). He holds an M.B.A. in Finance and Decision Information Systems from Indiana University and a B.S. in Management from Faculdade C.C. Administracao de Tupa, Tupa in São Paulo, Brazil.

Nadia Dac. Ms. Dac has served as our Chief Commercial Officer since April 2019. From December 2014 to March 2019, she served as Vice President, Global Specialty Commercial Development at AbbVie, Inc., a biopharmaceutical company. Prior to AbbVie, Ms. Dac served as Sr. Vice President of Marketing at Auxillium Pharmaceuticals, Inc. from May 2013 to September 2014, when the company was acquired by Endo International plc. From 2009 to 2013, Ms. Dac held several roles of increasing responsibility at Novartis AG, including Global Vice President, Neuroscience Professional Relations prior to her role as Vice President, MS Franchise. She holds a B.S. in Marketing from Rutgers University.

Erin M. Lavelle. Ms. Lavelle has served as our Chief Operating Officer since April 2018. From October 2017 to March 2018, Ms. Lavelle served as the General Manager of the Taiwan affiliate of Amgen Inc., a biopharmaceutical company. From June 2016 to September 2017, Ms. Lavelle served as Executive Director, Japan and Asia-Pacific Commercial Excellence and Digital Health at Amgen. From July 2003 to June 2016, Ms. Lavelle served in roles of increasing responsibility at Amgen, including as Executive Director in the areas of Global Marketing; Global Commercial Finance; and Strategy and Corporate Development. She began her career in 1998 as an investment banker in the healthcare group at Merrill Lynch & Co. Ms. Lavelle holds a B.A. in Economics from Yale University.

Paul Streck, M.D. Dr. Streck has served as our Chief Medical Officer since January 2019. From June 2017 to January 2018, Dr. Streck served as Chief Medical Officer of Insmed Incorporated. From November 2015 to June 2017, Dr. Streck served as Vice President, Global Medical Specialty Franchise, Immuno-inflammation at GlaxoSmithKline plc. From November 2007 to November 2015, Dr. Streck held various positions at Shire Pharmaceuticals plc. Dr. Streck served as Group Vice President, Clinical Development/TA Lead (Hematology, Gastrointestinal, Internal Medicine) at Shire Pharmaceuticals from November 2013 to November 2015. Prior to that, Dr. Streck served as Global Head of Medical Affairs, Internal Medicine (November 2012 to December 2013), Product General Manager, Emerging Business Unit (November 2011 to November 2012), and Senior Director, Global Clinical Development (November 2007 to December 2012) at Shire Pharmaceuticals. From February 2006 to October 2007, Dr. Streck was Director of Marketing at AMGEN USA Inc. Dr. Streck holds an

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M.B.A. from the Duke University Fuqua School of Business, an M.D. from Jefferson Medical College, a D.M.D. from the Temple University School of Dentistry and a B.A. in chemistry from Rutgers University.

Jeffrey T.L. Smith, M.D., FRCP. Dr. Smith has served as our Managing Director of Alder Biopharmaceuticals Limited since March 2017. Dr. Smith previously served as our Senior Vice President, Translational Medicine from 2012 to March 2017 and in other senior management positions from April 2004 to 2012. From 1999 to 2004, Dr. Smith served as Senior Director of Medical Research for Celltech R&D, where he was responsible for planning and managing the CDP870 anti-TNF clinical trials for rheumatoid arthritis as well as several other key autoimmune clinical development programs. From 1997 to 1999, Dr. Smith served as Medical Director at Simbec Research Ltd., a contract research organization. From 1995 to 1997, Dr. Smith served as Head of Clinical Pharmacology at Hoechst Marion Roussel Ltd., a pharmaceutical company. From 1994 to 1995, Dr. Smith served as a Senior Clinical Physician at the Proctor and Gamble Company, a publicly-traded consumer products company, and from 1989 to 1994, he served as a Senior Research Physician in the clinical pharmacology department at Glaxo Research and Development Ltd., now a division of GlaxoSmithKline plc. Dr. Smith holds an M.D. from the University of London and is a Fellow of the Royal College of Physicians in London.

Larry K. Benedict. Mr. Benedict has served as our Executive Vice President and Principal Accounting Officer since October 2016, and prior to that served as our Senior Vice President of Finance from January 2013 to October 2016 and as our Vice President of Finance from June 2008 to January 2013. From 2000 to 2008, Mr. Benedict served in various positions at Seattle Genetics, Inc., most recently as Director of Finance and Controller. Mr. Benedict holds a B.S. in Accounting from Central Washington University.

James B. Bucher, J.D. Mr. Bucher has served as our Executive Vice President and General Counsel since February 2019 and served as our Senior Vice President and General Counsel from January 2016 to February 2019. During 2015, Mr. Bucher served as a consultant providing legal services to several life sciences companies. From 2007 to 2014, Mr. Bucher served as Vice President, Corporate Legal Affairs and Secretary, and as the Corporate Compliance Officer, of Exelixis, Inc., a biopharmaceutical company. From 1991 to 2007, Mr. Bucher practiced as a corporate attorney at the international law firm Shearman & Sterling LLP, becoming a partner in 2001. Mr. Bucher holds a J.D. with distinction from Emory University School of Law and a B.A. in Biology from Colgate University.

Randal A. Hassler. Mr. Hassler has served as our Executive Senior Vice President of Pharmaceutical Operations since February 2018, and prior to that served as our Senior Vice President of Pharmaceutical Operations from August 2014 to February 2018. From 2008 to 2014, Mr. Hassler served in various leadership positions at Seattle Biomedical Research Institute, a non-profit infectious disease research institute, most recently as Chief Operating Officer. From 1995 to 2007, he served in various leadership positions at Amgen Inc., a biopharmaceutical company, including Process Development, Quality Control, and Quality Assurance. From 1983 to 1995, Mr. Hassler served in a variety of research and development positions at Synergen Inc., a biotechnology company, which was acquired by Amgen in 1994. Mr. Hassler holds a B.S. in Microbiology from Indiana University and an M.S. in Microbiology from Colorado State University.

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EXECUTIVE COMPENSATION

COMPENSATION DISCUSSION AND ANALYSIS

Our compensation discussion and analysis discusses the total compensation for all persons who served as our Chief Executive Officer or principal financial officer during 2018, and our three other most highly compensated executive officers during the year ended December 31, 2018, which officers are referred to as our “named executive officers.” Our named executive officers are:

Our compensation discussion and analysis describes our overall executive compensation philosophy, objectives and practices, as well as the Compensation Committee’s decisions and determinations regarding executive compensation for 2018.

Executive Summary

2018 was a seminal year for us, as we demonstrated strong execution with the completion of key milestones and evolved from being a company focused on research and development to one focused on seeking regulatory approval and preparing for commercialization. As part of this evolution, we transitioned our executive team, hiring and recruiting executives with significant operational and commercial experience in the biopharmaceutical industry to ensure eptinezumab’s successful progress toward a biologics license application (BLA) submission and to prepare the company for commercialization. This transition included the additions of Mr. Azelby to serve as our President and Chief Executive Officer, Ms. Lavelle to serve as our Chief Operating Officer and Mr. Campoy to serve as our Chief Financial Officer.

The Compensation Committee’s basic responsibility is to review the performance of our executive officers in achieving corporate and individual goals and objectives and to ensure that our management is compensated effectively in a manner consistent with our compensation philosophy and competitive practice. Toward that end, the Compensation Committee oversees and reviews all of our management compensation, equity and employee benefit plans and programs.

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The goal of our Compensation Committee is to ensure that our compensation programs are aligned with the interest of our stockholders and our corporate goals and the total compensation paid to each of our named executive officers is fair, reasonable and competitive.

Key elements of our 2018 executive compensation programs and what the element was intended to achieve include:

The Compensation Committee believes that our executive compensation program is appropriately designed and reasonable in light of the executive compensation programs of our peer group companies and responsible in that it both encourages our executive officers to work for meaningful stockholder returns and reflects a pay-for-performance philosophy, without encouraging our employees to assume excessive risks. We believe that risks arising from our compensation policies and practices for our employees are not reasonably likely to have a material adverse effect on our business. In addition, the Compensation Committee believes that the mix and design of the elements of executive compensation do not encourage our employees to assume excessive risks.

The highlights of our Company performance for 2018 include:

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Our executive compensation policies for 2018 included the following:

Compensation Philosophy and Objectives

We are a clinical-stage biopharmaceutical company that discovers, develops and seeks to commercialize therapeutic antibodies with the potential to meaningfully transform the treatment paradigm in migraine. Our compensation philosophy is to provide overall compensation that is competitive among comparable companies in our industry in order to attract and retain the highest quality executive officers and other senior management.

The Compensation Committee believes that, when targeted levels of performance are achieved, the resulting overall compensation should be comparable with the pay practices of a peer group of companies selected by the Compensation Committee and other market data. The Compensation Committee generally seeks to establish a mix between cash compensation and long-term equity incentives similar to the mix utilized by the companies in our peer group. Our Compensation Committee believes that it is important to align compensation levels and the mix of compensation to that offered by our peers in order to attain our primary compensation objectives – retaining, incentivizing and attracting the high-quality executives whose efforts are key to our long-term success.

Compensation Setting Process

At the time the Compensation Committee makes executive compensation decisions, the Compensation Committee may consider individual performance and our company’s performance against pre-established

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company corporate and strategic goals. In this regard, decisions with respect to the principal, ongoing elements of compensation for our executive officers may be based, in combination with the competitive peer group analysis described above, upon the Compensation Committee’s assessment of (i) each individual’s performance as assessed by our Chief Executive Officer (other than with respect to his own performance) in consultation with the Compensation Committee and (ii) our performance measured against corporate and strategic goals as defined by the Compensation Committee. Determinations of individual performance at the executive officer level (other than our Chief Executive Officer) are based on achievement of individual goals, as well as the individual’s performance with respect to (and contributions toward) the achievement of our pre-established corporate and strategic goals. The Compensation Committee believes that successful execution against goals is the best way to enhance long-term stockholder value.

The Compensation Committee generally relies upon its judgment and not upon rigid guidelines or formulas in determining the amount and mix of compensation elements for each executive officer, particularly with respect to base salary determinations and overall levels of long-term equity compensation. However, as set forth below, bonus awards under our annual bonus program are formulaic in that the target bonus opportunity is established, as is the extent to which bonuses are awarded based on individual performance against individual goals and the achievement of pre-established corporate goals. Factors considered by the Compensation Committee in making its determinations regarding annual bonus awards include individual performance, contributions to corporate and strategic goals, and the nature and scope of the individual’s responsibilities and effectiveness in leading management’s initiatives to achieve the corporate goals.

Peer Group

The Compensation Committee also periodically consults with executive compensation consultants and, in making 2018 compensation decisions engaged Compensia, Inc. to assist the Compensation Committee with this analysis. In setting 2018 compensation levels the Compensation Committee, considered the compensation levels of similarly positioned executives at the peer group companies discussed below in determining the amount and mix of compensation elements for the executive officers. Our peer group companies are selected based on a review of biotechnology and pharmaceutical companies that are similar to Alder with respect to industry, development stage, market capitalization, headcount as well as revenue and funding from partnerships. Based on information available as of January 2018 when the peer group was selected, the median market capitalization of our peer group companies was $839 million, compared to Alder’s market capitalization as of December 31, 2017 of $902 million, and the median headcount was 201 employees, compared to Alder’s 176 employees as of such date.

The Compensation Committee reviews the peer group periodically to reflect changes in development stage, market capitalization and other factors, including acquisitions, and revises the companies included in the peer group accordingly, based upon the advice of Compensia. Considering the change in our market capitalization and advancement of our pipeline, our Compensation Committee reviewed and revised our peer group in February 2018 to consist of:

Compensation Consultants and Management Participation in Compensation Decisions

Under its charter, the Compensation Committee has the authority, in its sole discretion, to retain (or obtain the advice of) any compensation consultant, legal counsel or other adviser to assist it in the performance of its duties.

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The Compensation Committee has consulted with its compensation consultants periodically with respect to specific questions or as new compensation programs are considered and to update its competitive market analysis on an annual basis.

In October 2015, Compensia was first retained by Alder at the request of our Compensation Committee, in consultation with management, to prepare compensation analyses for our executives. In particular, Compensia was directed to provide a market analysis of base salary, annual bonus and long-term incentive compensation of our executive officers against our revised peer group. This market analysis was updated and reviewed again with the Compensation Committee in February 2018, and was used to guide decisions made in February 2018 regarding base salary adjustments, annual target bonus incentive opportunities and long-term equity compensation. Our Chief Executive Officer makes recommendations to the Compensation Committee with respect to base salary levels, annual bonus targets, individual performance assessments and the levels of long-term equity compensation to be awarded to our other executive officers in consultation with our compensation consultants but the Compensation Committee approves of any adjustments as the committee sees appropriate. With respect to our annual bonus program, our Chief Executive Officer assesses the other executives’ contributions to the corporate goals, and makes a recommendation to the Compensation Committee with respect to such individual’s achieved performance percentage and the Compensation Committee then makes a final determination of the individual performance percentage. Neither our Chief Executive Officer or any executive officer take part in the Compensation Committee’s actual decisions regarding executive officer compensation.

On an annual basis, our Compensation Committee analyzes whether the work of such consultant as a compensation consultant has raised any conflict of interest, taking into consideration the following factors: (i) the provision of other services to our company by Compensia; (ii) the amount of fees from our company paid to Compensia as a percentage of the firm’s total revenue; (iii) Compensia’s policies and procedures that are designed to prevent conflicts of interest; (iv) any business or personal relationship of such consultant or the individual compensation advisors employed by the firm with an executive officer of our company; (v) any business or personal relationship of the individual compensation advisors with any member of the Compensation Committee; and (vi) any stock of our company owned by the individual compensation advisors employed by the firm. The Compensation Committee determined, based on its analysis of the above factors, that the work of Compensia and the individual compensation advisors employed by Compensia as compensation consultants to our company has not created any conflict of interest. The Compensation Committee will continue to assess the independence of any of its compensation advisers by reference to the foregoing factors, consistent with applicable Nasdaq listing standards.

Results of Most Recent Stockholder Advisory Vote on Executive Compensation

Approximately 99% of the votes cast in 2018 in the stockholder advisory vote on the 2017 compensation of our named executive officers approved our executive compensation as described in our 2018 definitive proxy statement. The Compensation Committee considered the result of the stockholder advisory vote as an endorsement of its compensation policies, practices and philosophy for our named executive officers. Accordingly, the Compensation Committee determined not to make any significant changes as a result of the vote. In addition, in part based on the support shown by the vote, the Compensation Committee has maintained a consistent approach in making compensation decisions.

The Compensation Committee considers the results of the say-on-pay vote on our executive compensation program as part of its annual executive compensation review. Our Board of Directors values the opinions of our stockholders, and the Compensation Committee will continue to consider the outcome of future say-on-pay votes, as well as any feedback received throughout the year, when making compensation decisions for the named executive officers. The next say-on-pay vote on the compensation of the named executive officers will take place at the Annual Meeting.

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2018 Compensation Decisions

Base Salaries. Base salaries for our named executive officers are established based on the underlying scope of their respective responsibilities, taking into account competitive market compensation by reviewing the base salaries paid by our peer group for similar positions. The base salary for each executive officer is generally determined on an annual basis after referencing the 50^th percentiles for similarly positioned executives based on the data from our peer group, but may be established between the 25^th and 75^th percentiles after considering the other factors described below. We also review industry survey data provided by our compensation consultant. Annual salary adjustments are based primarily on a review of the competitive market salaries and general levels of market increases in salaries of similarly positioned executives in our peer group, and adjusted based on individual performance, achievement of our corporate goals, changes in job duties and responsibilities and budget considerations, as applicable. Annual salary adjustments are typically reviewed in January or February of each year.

In February 2018, the Compensation Committee approved a merit increase of 3.0% to Dr. Schatzman’s 2017 base salary in recognition of his role in leading the achievement of substantially all of our 2017 corporate performance goals, a merit increase of 3.0% for Mr. Benedict in recognition of his key contributions to our successful public offering in January 2018 and his key role in leading our SEC and financial reporting, a merit increase of 16.4% to Ms. Sandoval’s 2017 base salary in recognition of her key contributions to planning for commercialization of eptinezumab and a merit increase of 4.5% to Mr. Bucher’s 2017 base salary in recognition of Mr. Bucher’s key contributions to our successful follow-on public offering in January 2018 and his greater leadership positions and responsibilities related to key corporate activities. All the February 2018 base salary increases were approved after the Compensation Committee also considered an analysis of competitive peer group salary levels and other survey data.

In determining the base salary levels for each of Mr. Azelby, Mr. Campoy and Ms. Lavelle in connection with their initial hiring, the Compensation Committee considered their respective relevant experience and achievements and the level of compensation of our peer group companies after referencing the 50^th to 60^th percentile of the competitive peer group salary levels and other survey data and individual negotiations with each executive. Mr. Cleveland’s base salary for his service as Interim President and Chief Executive Officer was set at the same level as Dr. Schatzman, our former President and Chief Executive Officer.

The 2018 base salaries of our named executive officers and any increases from their 2017 base salary levels, if applicable, are set forth in the table below.

Annual Incentive Compensation. Our executive officers are eligible to participate in our bonus program, based upon individual performance (for executives other than our Chief Executive Officer) and the achievement of corporate goals and other factors deemed relevant by our Compensation Committee. The Compensation Committee determines the relative achievement of the specific corporate goals following the end of the year. The Compensation Committee also has the discretion to take into account significant corporate events or other

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significant accomplishments that were not contemplated at the beginning of the performance period in determining the relevant corporate and individual achieved performance percentages for the relevant year. The weighted company performance percentage and individual performance percentage are then multiplied by a base pay target percentage for each executive officer to determine the actual amount of the bonus award. The target incentive bonus percentage for each executive officer is determined by the Compensation Committee at the beginning of the year and is based on a review of potential bonuses for similarly positioned executives at companies included in our peer group. These target percentages are reviewed on an annual basis and adjusted based on the results of competitive market data provided by the Compensation Committee’s compensation consultant and generally set after referencing 50^th percentile for annual cash bonus targets for similar positions.

For 2018, the Compensation Committee determined the following target bonus percentages for the eligible named executive officers:

Mr. Cleveland, as our Interim President and Chief Executive Officer, was not eligible to participate in our annual bonus program in 2018. However, under the terms of Mr. Cleveland’s employment agreement he was provided with a sign-on bonus of $100,000 and a retention bonus of up to $158,950 as described further below under “Mr. Cleveland’s Employment Offer Letter.” Mr. Campoy commenced his employment with us in December 2018 so he was not eligible to participate in our 2018 bonus program and will be eligible to participate in our bonus program starting with the 2019 calendar year with a target bonus set at 40% of his base salary.

In making its assessment regarding the extent to which the pre-established corporate performance measures for that year have been achieved, the Compensation Committee considers both the extent to which the corporate performance measures were achieved as well as the relative importance of the corporate performance measures that were achieved as compared to any corporate performance measures that were not achieved. The Compensation Committee then assesses our performance on an overall basis. Because the corporate performance measures include stretch goals and vary in terms of relative importance to Alder, the Compensation Committee has not historically given specific weightings to the various corporate performance measures when initially established. Accordingly, the corporate performance percentage determined by the Compensation Committee in any given year may be either greater or less than the percentage of the total corporate objectives for that year that were actually fully achieved. Our company’s achieved performance percentage and/or the individual achieved performance percentage may exceed 100% in the event we and/or the executive officer exceed expected performance against goals.

2018 Corporate Performance Goals

The corporate performance measures used for 2018 were primarily based on the advancement of development and clinical activities related to eptinezumab, which the Compensation Committee believes strongly relate to the creation of total stockholder value, as eptinezumab is our lead product candidate.

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Specifically, the corporate performance goals in 2018 were:

In reviewing the year, our Compensation Committee concluded that 2018 was a year of strong company performance and that we performed well against our corporate goals. While the Compensation Committee did not establish specific weightings to the various corporate performance measures, the Compensation Committee prioritized the achievement of goals related to the development of eptinezumab. In particular, the Compensation Committee noted:

As a result, our Compensation Committee determined that we met or exceeded substantially all of our corporate goals for 2018. Consequently, the Compensation Committee determined our corporate performance percentage to be 105% for 2018.

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Individual Performance

With respect to our named executive officers (other than our Chief Executive Officer) who were eligible to earn 2018 performance bonuses the Compensation Committee considered the following individual performance factors and approved the following individual performance percentages:

For the executive officers, other than our Chief Executive Officer, the 2018 bonus awards were awarded based 50% on company performance and 50% on the individual’s performance. The Compensation Committee determined that greater weighting of the corporate goals should apply to our Chief Executive Officer than our other executive officers because his position and responsibilities give him more opportunity to significantly impact our overall corporate performance. Accordingly Mr. Azelby’s 2018 bonus award was determined by the Compensation Committee based solely on overall achievement of our 2018 corporate goals and awarded at 105.6% of his target bonus award level, reduced pro-rata to reflect his period of employment during 2018.

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The actual bonuses awarded to our named executive officers for 2018 performance are set forth in the table below.

Long-Term Incentive Compensation. Long-term incentive compensation in the form of equity awards is designed to provide executive officers with meaningful compensation awards in order to align executives’ incentives with stockholder value creation. Generally, significant stock awards are made at the time an executive officer commences employment. Thereafter, stock awards may be made at varying times and in varying amounts in the discretion of the Compensation Committee, but are generally made once a year unless such executive officer is promoted, in which case an award will normally be made at that time, or for recognition of outstanding performance. Upon hiring an executive officer, stock awards generally will be made at the next regularly scheduled Board or Compensation Committee meeting. Annual stock awards to all executives are made at regularly scheduled meetings of the Compensation Committee and are generally made in January or February. Alder does not have any program, plan or practice to time stock awards to its executives or other employees in coordination with the release of material, non-public information.

We grant equity awards to our executive officers by delivering stock options and allowing our executive officers to participate in our ESPP. The exercise price of our stock options is always equal to the fair market value (our closing price on the Nasdaq Global Market) of our common stock on the date of grant. Our stock option grants generally vest 1/4^th upon the one year anniversary of the grant date and 1/36^th of the remaining shares each month thereafter until such grant is fully vested on the four year anniversary of the grant date, subject to vesting acceleration as described under the heading “Compensation Discussion and Analysis—Post-Termination Protection” below. The vesting schedule and the number of shares granted are established to ensure a meaningful retention incentive. Accordingly, the stock option will provide a return to the employee only if he or she remains in our service and only if the market price of our common stock appreciates over the option term.

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2018 Equity Awards

In connection with the annual review of each executive officer’s individual performance and consistent with our compensation philosophy, in February 2018, our Compensation Committee approved annual equity incentive awards for our named executive officers serving at that time based on a comparative analysis of comparable positions at our peer group companies. The annual incentive awards granted to our named executive officers in February 2018 under our 2014 Plan are set forth in the table below:

In November 2018, in connection with Mr. Bucher’s assuming a greater leadership role and responsibilities related to key corporate activities, our Compensation Committee approved an additional equity incentive award to Mr. Bucher under our 2014 Plan as set forth in the table below:

Performance-Based Incentive Awards

In January 2018, we began granting performance based compensation under the 2014 Plan to eligible employees in the form of PRSUs. The vesting of the PRSUs (“PRSU Award”) is contingent upon the achievement of pre-determined regulatory milestones. The Compensation Committee approved the performance based compensation for purpose of incentivizing such individuals (the “Participants”) to (i) obtain acceptance by the FDA of the first BLA submitted to the FDA by Alder or an affiliate seeking approval for the commercial sale and marketing of eptinezumab in the United States for review (the “FDA Filing Milestone”) and (ii) obtain approval by the FDA for the commercial sale and marketing of eptinezumab in the United States by Alder or an affiliate (the “FDA Approval Milestone”). The Compensation Committee selected these performance goals because it considered achievement of these goals to be critical to implementation of our business plan. We ceased granting PRSU Awards to eligible employees in August 2018, given the proximity to the anticipated achievement of the regulatory milestones.

Each of the named executive officers was granted a PRSU Award for the target number of PRSUs (the “Target Amount”) and maximum number of PRSUs (the “Maximum Amount”) as set forth below:

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Mr. Azelby did not receive a PRSU Award, but was granted a performance-based option grant in connection with commencing his employment, as described above. Mr. Campoy did not receive a PRSU Award or other performance-based equity award because he commenced employment in December 2018 and we ceased granting PRSU Awards to eligible employees after August 2018, as described above.

Vesting of the PRSU Awards is based upon the achievement of the FDA Filing Milestone and the FDA Approval Milestone, and is subject to the terms of the 2014 Plan. The combined total number of PRSUs subject to each PRSU Award that may vest may not exceed the Maximum Amount of such PRSU Award, which equals 125% of the Target Amount of such PRSU Award. In the event that the FDA Filing Milestone is achieved, 1/3 of the Target Amount of each PRSU Award multiplied by the applicable Achievement Factor (as defined below) shall vest, subject to the Participant’s continuous service through the vesting date. In the event that the FDA Approval Milestone is achieved, 2/3 of the Target Amount of each PRSU Award multiplied by the applicable Achievement Factor shall vest, subject to the Participant’s continuous service through the vesting date. The “Achievement Factor” will mean a percentage (within a range of 80% to 125%) determined by the Committee, in its sole discretion, at the time it certifies achievement of the FDA Filing Milestone or FDA Approval Milestone, as applicable, based on such achievement in relation to Alder’s corporate plan at such time. If the FDA Filing Milestone and/or the FDA Approval Milestone is not achieved by December 31, 2025, then the unvested PRSUs subject to each PRSU Award will not vest and such PRSU Awards will terminate. If a PRSU Award is not assumed, continued or substituted in connection with a Change in Control (as defined in the 2014 Plan), then the Maximum Amount of such PRSU Award minus any PRSUs subject to such PRSU Award that have vested prior to such Change in Control, shall vest on the effective date of such Change in Control, to the extent such PRSU Award is outstanding on such date. If a Participant’s employment with Alder is terminated as a result of (i) a termination by Alder without Cause (as defined in the 2014 Plan) and other than as a result of such Participant’s death or Disability (as defined in the 2014 Plan) or (ii) such Participant’s resignation for Good Reason (as defined in the PRSU Award Package), in each case on or within 12 months following the effective date of a Change in Control (as defined in the 2014 Plan), then the Maximum Amount of such Participant’s PRSU Award minus any PRSUs subject to such PRSU Award that have vested prior to such termination, shall vest on the date of such termination, to the extent such PRSU Award is outstanding on such date.

Employment Inducement Equity Awards

In June 2018, we established the 2018 Inducement Award Plan (“Inducement Plan”). The Inducement Plan was recommend for approval by our Compensation Committee, and subsequently approved and adopted by our Board of Directors without stockholder approval pursuant to Nasdaq Marketplace Rule 5635(c)(4). The Inducement Plan allows for the grant of options, restricted stock, restricted stock unit awards, and performance unit awards to new employees by granting an award to such new employee as an inducement to begin employment.

The incentive awards granted to our named executive officers that commenced employment during 2018 under our 2014 Plan or Inducement Plan are set forth in the table below:

In determining the size of the inducement awards to grant, our Compensation Committee considered a number of factors including: the pay practices of our peer group and the need to provide new hire executives with a significant equity stake in connection with their commencement of employment in order to align their interests with those of our stockholders.

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For example, Mr. Azelby’s service-based option grants were set at a level to establish his ownership level equal to approximately the 60^th percentile of the peer group based on percentile of the company. Mr. Azelby’s service-based vesting option of 1,000,000 shares will vest with respect to 25% of the shares one year after Mr. Azelby’s employment start date and the remaining 75% of the shares will vest in equal monthly installments over the 36 month period following the one year anniversary of Mr. Azelby’s employment start date, subject to his continued service to us through each relevant vesting date. In addition, Mr. Azelby was granted performance-vesting options for 150,000 shares. Mr. Azelby’s performance-vesting option vest based upon acceptance by the FDA of the first BLA submitted to the FDA by us or an affiliate seeking approval for the commercial sale and marketing of eptinezumab in the United States, and was awarded to Mr. Azelby to incentivize his achievement of such performance goal because he did not receive a PRSU award.

Post-Termination Protection

Our Executive Severance Plan provides for the payment of severance benefits to certain eligible employees of our company in the event such persons become subject to involuntary or constructive employment terminations. Benefits under the Severance Plan are provided to our Chief Executive Officer, executive officers and key employees designated by the Board of Directors and who sign a participation notice. Payments under the Severance Plan will be reduced by any severance benefit payable to a participant under any other severance plan, program or agreement.

The Compensation Committee believes these severance benefits are important from a retention perspective to provide some level of protection to our executive officers from being terminated without cause or constructively terminated prior to or after a change in control, and that the amounts are reasonable when compared with similar arrangements adopted by companies in our peer group. In addition, the Compensation Committee believes that these severance benefits align executive and stockholder interests by enabling the executive officers to consider corporate objectives and possible transactions that are in the best interests of the stockholders and other constituents of Alder without undue concern over whether such objectives or transactions may jeopardize the officers’ own employment. With these arrangements, the Compensation Committee sought uniformity of results among the officers based on their positions at Alder. In addition, the Compensation Committee believes that the payment-triggering event outside of the death or disability context, namely, being terminated without cause or constructively terminated, and then only when there is no misconduct by the officer, is a fair hurdle for the ensuing rewards.

More information regarding these arrangements is provided under the heading “Potential Payments upon Termination or Change in Control.”

2018 Executive Employment and Transition Agreements

Mr. Azelby’s Employment Offer Letter

On June 4, 2018, we entered into an employment offer letter with Mr. Azelby to serve as our President and Chief Executive Officer, starting on June 13, 2018.

Pursuant to the terms of the employment offer letter, Mr. Azelby receives an initial annual base salary of $600,000 and is eligible to receive an annual performance and retention bonus of up to 60% of his annual base salary. Pursuant to his offer letter Mr. Azelby was granted an option to purchase 1,000,000 shares of common stock which vests over a four year period subject to his continued service with us through each relevant vesting date and an option to purchase 150,000 shares of common stock which vest based upon acceptance by the FDA of the first BLA submitted to the FDA by us or an affiliate seeking approval for the commercial sale and marketing of eptinezumab in the United States. Upon the commencement of Mr. Azelby’s employment with us, he also become a member of our Board of Directors.

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The Compensation Committee approved the benefits provided to Mr. Azelby under his employment offer letter after individual negotiations with Mr. Azelby after considering the market practices of our peer group and determined that such benefits were reasonable and necessary to induce his commencement of employment with us.

Ms. Lavelle’s Employment Offer Letter

On March 18, 2018, we entered into an employment offer letter with Ms. Lavelle. Under her offer letter Ms. Lavelle receives an annual base salary of $400,000 and is eligible to receive a bonus of up to 40% of her annual base salary. The offer letter also provides that we will reimburse Ms. Lavelle for certain relocation expenses incurred through December 31, 2018. If Ms. Lavelle voluntarily terminates her employment within 12 months of her start date, she will be required to reimburse us for 100% of the relocation expenses reimbursed to her or paid on her behalf (including any tax gross-up). If Ms. Lavelle voluntarily terminates her employment after 12 months and before 24 months of her start date with Alder, she will be required to reimburse us for 50% of the relocation expenses reimbursed to her or paid on her behalf. Additionally, the offer letter provided that Ms. Lavelle would be granted an option to purchase 300,000 shares of common stock, vesting over a four year period subject to continuous service.

The Compensation Committee approved the benefits provided to Ms. Lavelle under her employment offer letter after individual negotiations with Ms. Lavelle after considering the market practices of our peer group and determined that such benefits were reasonable and necessary to induce her commencement of employment with us.

Mr. Cleveland’s Employment Offer Letter

Mr. Cleveland was appointed to serve as the Company’s Interim President and Chief Executive Officer on March 15, 2018 in connection with Dr. Schatzman’s separation, while we conducted a search for a permanent President and Chief Executive Officer.

In connection with his appointment as Interim President and Chief Executive Officer, we entered into an employment offer letter with Mr. Cleveland providing that he would continue to serve as a director but would no longer serve as Chair of the Audit Committee of the Board. Pursuant to the offer letter, Mr. Cleveland received an annual base salary of $578,000 and a $100,000 sign-on bonus. The offer letter also provided that Mr. Cleveland would receive a retention bonus of up to $158,950 if he remained continuously employed with us through the earlier of the six-month anniversary of his start date of employment and the date that a new Chief Executive Officer began employment with us. Additionally, pursuant to the offer letter Mr. Cleveland was granted an option to purchase 100,000 shares of common stock, which would vest in full if Mr. Cleveland remained continuously employed with us through the earlier of the six-month anniversary of his start date of employment and the date that a new Chief Executive Officer began employment with us.

The Compensation Committee believes that the benefits provided to Mr. Cleveland under his employment offer letter were appropriate and necessary in order to ensure a smooth transition while we conducted a search for a permanent President and Chief Executive Officer.

Mr. Campoy’s Employment Offer Letter

In December 2018, we entered into an employment offer letter with Mr. Campoy. Under his offer letter Mr. Campoy receives an annual base salary of $410,000 and is eligible to receive a bonus of up to 40% of his annual base salary. The offer letter also provides that we will reimburse Mr. Campoy for certain relocation expenses incurred through December 31, 2019. If Mr. Campoy voluntarily terminates his employment within 12 months of his start date, he will be required to reimburse us for 100% of the relocation expenses reimbursed to him or paid on his behalf (including any tax gross-up). If Mr. Campoy voluntarily terminates his employment

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after 12 months and before 24 months of his start date with Alder, he will be required to reimburse us for 50% of the relocation expenses reimbursed to him or paid on his behalf. Additionally, the offer letter provided that Mr. Campoy would be granted an option to purchase 270,000 shares of common stock, vesting over a four year period subject to continued service.

The Compensation Committee approved the benefits provided to Mr. Campoy under his employment offer letter after individual negotiations with Mr. Campoy after considering the market practices of our peer group and determined that such benefits were reasonable and necessary to induce his commencement of employment with us.

Dr. Schatzman’s Separation

In March 2018, we entered into a separation and consulting agreement with Dr. Schatzman pursuant to which Dr. Schatzman stepped down as President, Chief Executive Officer and as a director of the Company effective on March 15, 2018. Dr. Schatzman was eligible to receive benefits under our Executive Severance Benefit Plan in connection with his termination. Pursuant to our Severance Plan, the Company agreed: (i) to pay cash severance to Dr. Schatzman equal to 18 months of his current base salary and monthly annual target bonus (defined as 1/12 of his annual target bonus), less all applicable withholdings and deductions, paid in equal installments on our regular payroll schedule over the 18-month period following his separation date; and (ii) to pay the COBRA premiums necessary to continue Dr. Schatzman’s health insurance coverage (including dependent and other family member coverage, if any) for up to the 18-month period following his separation date. Dr. Schatzman did not receive any equity vesting acceleration as a severance benefit.

In addition, under the separation and consulting agreement, Dr. Schatzman agreed to consult for us for a period of 18 months after his employment separation date. All outstanding equity awards previously granted to Dr. Schatzman under the Company’s equity incentive plans would continue to vest during the period that he provides us with consulting services. In addition, Dr. Schatzman will receive $750 per hour as consulting fees during his consulting period.

Ms. Sandoval’s Transition Agreement

In November 2018, we entered into a transition agreement with Ms. Sandoval pursuant to which her employment with us ceased on March 31, 2019. Under the transition agreement, Ms. Sandoval remained eligible for reimbursement of certain relocation expenses incurred through December 31, 2018 and cash severance equal to: (i) eight months of her current base salary, payable within 60 days following her separation date; and (ii) her annual target bonus for 2018, payable at the same time as we pay annual bonuses generally but no later than 60 days following her separation date, all in exchange for Ms. Sandoval’s full general release of claims.

In addition, under the transition agreement, Ms. Sandoval will consult for us for a period of three months after her employment separation date. All outstanding equity awards previously granted to Ms. Sandoval under the Company’s equity incentive plans would continue to vest during the period that she provides us with consulting services. In addition, Ms. Sandoval will receive $2,000 per month as consulting fees during her consulting period.

The Compensation Committee believes that the benefits provided to Ms. Sandoval under her transition agreement were appropriate and necessary in order to ensure a smooth transition of her responsibilities to our next Chief Commercial Officer.

Tax and Accounting Considerations

Under Section 162(m) of the Internal Revenue Code (“Section 162(m)”), compensation paid to any publicly held corporation’s “covered employees” that exceeds $1 million per taxable year for any covered employee is generally non-deductible.

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However, Section 162(m) provides a reliance period exception, pursuant to which the deduction limit under Section 162(m) does not apply to any compensation paid (or in certain cases, granted) during a certain reliance period pursuant to a plan or agreement that existed prior to the corporation’s initial public offering, subject to certain requirements. Under Section 162(m), this reliance period ends upon the earliest of the following: (i) the expiration of the plan or agreement; (ii) the material modification of the plan or agreement; (iii) the issuance of all employer stock and other compensation that has been allocated under the plan; or (iv) the first meeting of stockholders at which directors are to be elected that occurs after the close of the third calendar year following the calendar year in which the initial public offering occurs. However, the reliance period exception under Section 162(m) may be repealed or modified in the future as a result of certain changes that were made to Section 162(m) pursuant to the Tax Cuts and Jobs Act.

In addition, prior to the enactment of the Tax Cuts and Jobs Act, Section 162(m) provided a performance-based compensation exception, pursuant to which the deduction limit under Section 162(m) did not apply to any compensation that qualified as “performance-based compensation” under Section 162(m). Pursuant to the Tax Cuts and Jobs Act, the performance-based compensation exception under Section 162(m) was repealed with respect to taxable years beginning after December 31, 2017, except that certain transition relief is provided for compensation paid pursuant to a written binding contract which was in effect on November 2, 2017 and which is not modified in any material respect on or after such date.

Compensation paid to each of the Company’s “covered employees” in excess of $1 million per taxable year generally will not be deductible unless it qualifies for (i) the reliance period exception under Section 162(m) or (ii) the performance-based compensation exception under Section 162(m) pursuant to the transition relief described above. Because of certain ambiguities and uncertainties as to the application and interpretation of Section 162(m), as well as other factors beyond the control of the Compensation Committee, no assurance can be given that any compensation paid by the Company will qualify for the reliance period exception under Section 162(m) or will be eligible for such transition relief and be deductible by the Company in the future. Although the Compensation Committee will continue to consider tax implications as one factor in determining executive compensation, the Compensation Committee also looks at other factors in making its decisions and retains the flexibility to provide compensation for the Company’s named executive officers in a manner consistent with the goals of the Company’s executive compensation program and the best interests of the Company and its stockholders, which may include providing for compensation that is not deductible by the Company due to the deduction limit under Section 162(m). The Compensation Committee also retains the flexibility to modify compensation that was initially intended to be exempt from the deduction limit under Section 162(m) if it determines that such modifications are consistent with the Company’s business needs.

We follow the applicable accounting rules for our stock-based compensation awards. In accordance with generally accepted accounting principles, stock-based compensation cost is measured at the grant date, or with respect to performance-based awards, the service inception date, based on the estimated fair value of the awards using a variety of assumptions. This calculation is performed for accounting purposes and, as applicable, reported in the compensation tables, even though recipients may never realize any value from their awards. We expect to record this expense on an ongoing basis over the requisite employee service period. Accounting rules also require us to record cash compensation as an expense at the time the obligation is incurred.

Prohibitions on Hedging and Pledging

Pursuant to our insider trading policy, we prohibit our executive officers and the members of our Board of Directors from hedging or pledging our securities as collateral.

Compensation Recovery Policy

We do not have a policy to attempt to recover cash bonus payments paid to our executive officers if the performance objectives that led to the determination of such payments were to be restated, or found not to have

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been met to the extent the Compensation Committee originally believed. However, as a public company subject to the provisions of Section 304 of the Sarbanes-Oxley Act of 2002, if we are required as a result of misconduct to restate our financial results due to our material noncompliance with any financial reporting requirements under the federal securities laws, our Chief Executive Officer and principal financial officer may be legally required to reimburse us for any bonus or other incentive-based or equity-based compensation they receive. In addition, we will comply with the requirements of the Dodd-Frank Act and will adopt a compensation recovery policy once the SEC adopts final regulations on the subject.

Summary

The Compensation Committee believes that our compensation philosophy and programs are designed to foster a performance-oriented culture that aligns employees’ interests with those of our stockholders. The Compensation Committee believes that the compensation of our executives is both appropriate and responsive to the goal of improving stockholder value.

REPORT OF THE COMPENSATION COMMITTEE⁽¹⁾

The Compensation Committee of the Board of Directors has reviewed and discussed the Compensation Discussion and Analysis required by Item 402(b) of Regulation S-K with management and, based on such review and discussions, the Compensation Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this proxy statement.

COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS

Dr. Clay Siegall (Chair)

Mr. Paul R. Carter

Dr. Deepika R. Pakianathan

Ms. Wendy Yarno

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

During 2018, the Compensation Committee consisted of Clay Siegall (chairman), Paul R. Carter, Deepika R. Pakianathan and Wendy Yarno, none of whom is a current or former officer or employee of Alder.

No member of the Compensation Committee during 2018 or executive officer of Alder has or had a relationship that would constitute an interlocking relationship with executive officers or directors of another entity.

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SUMMARY COMPENSATION TABLE

The following table sets forth all of the compensation awarded to, earned by or paid to our named executive officers during the years ended December 31, 2018, 2017 and 2016.

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GRANTS OF PLAN-BASED AWARDS FOR 2018

The following table provides information relating to grants of plan-based incentive awards to each of our named executive officers in 2018.

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OUTSTANDING EQUITY AWARDS AT DECEMBER 31, 2018

The following table provides information regarding outstanding equity awards held by each of our named executive officers as of December 31, 2018.

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OPTION EXERCISES IN 2018

The following table presents, for each of our named executive officers, the number of shares of our common stock acquired upon the exercise of stock options and the aggregate value realized upon the exercise of stock options.

Employment Agreements

Offer Letters

We have entered into offer of employment letters with each of the named executive officers in connection with his or her employment with us. These agreements provided for “at will” employment and set forth the terms and conditions of employment of each named executive officer, including base salary, standard employee benefit plan participation, and the acceleration of the vesting of restricted stock and stock options held by such named executive officers upon the occurrence of certain conditions. These employment agreements were each subject to execution of our standard confidential information and invention assignment agreement.

The employment offer letters entered into with our named executive officers in 2018 are summarized above under “Compensation Discussion and Analysis—2018 Executive Employment and Transition Agreements.”

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Severance Plan

We adopted the Severance Plan, which became effective in May 2014 and was last amended in December 2016. The terms of the Severance Plan are summarized below under “Potential Payments Upon Termination or Change of Control.”

CEO PAY RATIO

Under SEC regulations, we are required to calculate and disclose the total annual compensation paid to our median employee, as well as the ratio of the total compensation paid to the median employee as compared to the total compensation paid to our Chief Executive Officer (“CEO Pay Ratio”). Set forth below is a description of the methodology, including material assumptions, adjustments and estimates, we used to identify the median employee for purposes of calculating the CEO Pay Ratio:

Using this approach, we selected the median of our employee population. Once the median employee was identified, we then calculated annual total compensation for this employee in accordance with the requirements of the Summary Compensation Table.

Because we had more than one person serving as Chief Executive Officer during the year, our CEO Pay Ratio is based on the annualized total compensation of Mr. Azelby, the Chief Executive Officer serving as of December 31, 2018, the date we selected to identify our median employee.

For 2018, the median of the annual total compensation of our employees (other than our Chief Executive Officer) was $167,385 and the annual total compensation of our Chief Executive Officer was $10,572,438, which includes the grant date fair value of the option awards Mr. Azelby was granted in connection with the commencement of his employment. The ratio of the annual total compensation of our Chief Executive Officer to the median of the annual total compensation of all employees other than the Chief Executive Officer was 63.2.

The pay ratio above represents the Company’s reasonable estimate calculated in a manner consistent with the rule and applicable guidance. The rule and guidance provide significant flexibility in how companies identify the median employee, and each company may use a different methodology and make different assumptions particular to that company. As a result, as the SEC explained when it adopted the rule, in considering the pay-ratio disclosure, stockholders should keep in mind that the rule was not designed to facilitate comparisons of pay ratios among different companies, even companies within the same industry, but rather to allow stockholders to better understand and assess each particular company’s compensation practices and pay-ratio disclosures.

Neither the Compensation Committee nor our management used our CEO Pay Ratio measure in making compensation decisions.

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POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL