UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of the

Securities Exchange Act of 1934

(Amendment No.        )

Filed by the Registrant ☒

Filed by a Party other than the Registrant ☐

Check the appropriate box:

INCYTE CORPORATION

(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):

Dear Fellow Stockholders,

This past year was one of significant progress as we seek to build Incyte into a diversified, fast-growing and global biopharmaceutical company.

Before highlighting our achievements in 2018, an important, although disappointing, event was the result of ECHO-301, our Phase 3 trial together with Merck evaluating epacadostat in combination with pembrolizumab, Merck’s PD-1 antagonist, for the first-line treatment of patients with advanced or metastatic melanoma. The expectations internally and within the medical community were high, and we were disappointed that the combination did not show a benefit in progression-free survival (PFS) over pembrolizumab monotherapy. We continue to learn as much as we can from the results, but this event reinforced our belief in the importance of having a robust portfolio of development projects. I’d like to now move on to our 2018 achievements.

Sales of Jakafi® (ruxolitinib) continue to grow in both approved indications, myelofibrosis (MF)¹ and polycythemia vera (PV)¹. The stories of the patients we treat inspire us to do better, and we are committed to maintaining our leadership position in the treatment of patients with myeloproliferative neoplasms (MPNs). To that end, we are pursuing strategies that may improve patient outcomes in three ways: improved formulations of ruxolitinib, investigating ruxolitinib-based combination therapies, and discovering new targets beyond JAK inhibition.

With the ongoing U.S. Food and Drug Administration (FDA) review of ruxolitinib in steroid-refractory acute graft versus host disease (GVHD) and NDA submissions expected in the near-term for pemigatinib in patients with cholangiocarcinoma and itacitinib in treatment-naïve GVHD, we are confident in our potential to drive top-line growth in the years to come.

Our discovery and development teams have created multiple opportunities for growth. In the coming year, we plan to focus on six key late-stage product candidates outlined below that, together, we believe may drive significant revenue growth in the near future.

We also have two late-stage product candidates, baricitinib and capmatinib, which are out-licensed globally to Eli Lilly and Novartis, respectively. In June, we, along with Eli Lilly, announced the FDA approval of Olumiant® (baricitinib) for the treatment of certain patients with rheumatoid arthritis (RA)⁵. Lilly is also developing baricitinib in multiple other autoimmune disorders and recently announced that the first two Phase 3 trials of baricitinib in atopic dermatitis achieved their primary endpoints. Lilly expects the last three of the five Phase 3 trials needed to seek approval in patients with moderate to severe atopic dermatitis to readout later in 2019. Data from capmatinib were presented in non-small cell lung cancer patients with MET exon 14 skipping mutations at the European Society for Medical Oncology 2018 Congress (ESMO), and Novartis has stated that it plans to submit an NDA in this indication this year.

It’s also important to note that should these goals come to fruition as we expect, five Incyte-invented molecules will have received FDA approval. We believe this remarkable achievement would be an excellent illustration of the quality of the work of our world class biologists and chemists.

On the financial front, total revenues reached $1.9B in 2018, an increase of over 20% versus 2017. Iclusig® (ponatinib)⁶ continues to grow, and royalties from Jakavi® (ruxolitinib)⁷ and Olumiant® (baricitinib) are contributing more to our top-line growth with each passing year. GAAP Net Income grew to $110M for 2018 as compared to a GAAP Net Loss of $313M in 2017.

We also had the opportunity to strengthen our executive management team with three new members in the last twelve months. First, we welcomed Maria Pasquale, J.D. as our General Counsel in April 2018. Ms. Pasquale has nearly 20 years of legal and compliance experience in the biopharmaceutical industry and most recently held the position of Global Chief Compliance Officer at Celgene Corporation. In December 2018, we were excited to welcome Dr. Dashyant Dhanak to the team as our Chief Scientific Officer. Dr. Dhanak joined us from Janssen Research & Development, where he most recently served as Global Head, Discovery Sciences. In February 2019, we welcomed Christiana Stamoulis as our new Chief Financial Officer. Ms. Stamoulis has over 20 years of experience in the biopharmaceutical industry, 15 of which was in investment banking and management consulting, and thereafter in executive positions at Vertex Pharmaceuticals and most recently serving as the President and CFO of Unum Therapeutics. We believe the collective experience of our new leadership team members will be a great asset for Incyte as we embark on our next stage of growth.

In October, we were proud to be recognized as the number two top employer in the biopharma industry by Science magazine. We believe that the collective experience and passion of our over 1,300 talented colleagues is foundational to our success, and as our organization continues to grow, we are committed to maintaining a culture that is driven by a passion for innovative science and where patients are at the forefront of everything we do.

Together, we strive to make a meaningful difference in the lives of those with cancer and other serious diseases, and in doing so, we aim to create long-term and sustainable value for you, our stockholders.

We thank you for your continued support and look forward to keeping you updated on our progress.

		Sincerely,
		Hervé Hoppenot Chairman of the Board of Directors

Company History of Success

Current Portfolio of Projects

Incyte Corporation

1801 Augustine Cut-Off

Wilmington, Delaware 19803

Notice of Annual Meeting of Stockholders

Friday, April 26, 2019

1:00 PM Eastern Daylight Time

1815 Augustine Cut-Off, Wilmington, Delaware 19803

To the Stockholders of Incyte Corporation:

The Annual Meeting of Stockholders of Incyte Corporation, a Delaware corporation (the “Company”), will be held at the Company’s offices located at 1815 Augustine Cut-Off, Wilmington, Delaware 19803, on Friday, April 26, 2019, at 1:00 PM Eastern Daylight Time, for the following purposes:

Purposes:

It is important that your shares be represented at this meeting. Even if you plan to attend the meeting, we hope that you will vote as soon as possible. Voting now will ensure your representation at the Annual Meeting regardless of whether you attend in person. You may vote over the internet, by telephone or by mailing the enclosed proxy card or voting instruction form. Please review the instructions on page 3 of the attached Proxy Statement and your proxy card or voting instruction form regarding each of these voting options.

March 21, 2019

Table of Contents

		Proxy Statement 2019    |    i

Proxy Statement Summary

Meeting Information

Time and Date:		1:00 PM EDT, April 26, 2019
Place:		1815 Augustine Cut-Off
		Wilmington, DE 19803
Record Date:		March 12, 2019
Admission:		Please follow the instructions
		contained in this Proxy
		Statement
Mail Date:		This Proxy Statement and the
		accompanying form of proxy
		are being mailed to
		stockholders on or about
		March 25, 2019

Voting Matters

		Proxy Statement 2019 | 1

Frequently Asked Questions

Will there be any other items of business on the agenda?

We do not expect any other items of business because the deadline for stockholder proposals and nominations has already passed. Nonetheless, in case there is an unforeseen need, the accompanying proxy gives discretionary authority to the persons named on the proxy with respect to any other matters that might be brought before the meeting. Those persons intend to vote that proxy in accordance with their best judgment.

Who is entitled to vote?

Stockholders of record at the close of business on March 12, 2019, the Record Date, may vote at the Annual Meeting. Each stockholder is entitled to one vote for each share of our common stock held by such stockholder as of the Record Date.

How many shares must be present to hold the Annual Meeting?

The presence, in person or by proxy, of the holders of a majority of our outstanding common stock on the Record Date constitutes a quorum, which is required to hold and conduct business at the Annual Meeting. As of the close of business on the Record Date, there were 214,264,527 shares of our common stock outstanding. If you are a record holder and you submit your proxy, regardless of whether you abstain from voting on one or more matters, your shares will be counted as present at the Annual Meeting for purposes of determining a quorum. If your shares are held in street name, your shares are counted as present for purposes of determining a quorum if your broker, bank or other nominee submits a proxy covering your shares. Your broker, bank or other nominee is entitled to submit a proxy covering your shares as to certain “routine” matters, even if you have not instructed your broker, bank or other nominee on how to vote on those matters. Please see “How are votes counted?” below. If a quorum is not present, we expect that the Annual Meeting will be adjourned until we obtain a quorum.

What is the difference between holding shares as a stockholder of record and as a beneficial owner?

Stockholder of Record.    If your shares are registered directly in your name with our transfer agent, Computershare, you are considered, with respect to those shares, the “stockholder of record.” This Proxy Statement, our Annual Report and the proxy card have been sent directly to you by Incyte.

Beneficial Owner.    If your shares are held in a stock brokerage account or by a broker, bank or other nominee, you are considered the “beneficial owner” of shares held in street name. This Proxy Statement and our Annual Report have been forwarded to you by your broker, bank or other nominee who is considered, with respect to those shares, the stockholder of record. As the beneficial owner, you have the right to direct your broker, bank or other nominee how to vote your shares by using the voting instruction form provided by your broker, bank or other nominee.

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How do I vote?

You may vote using any of the following methods:

Can I change my vote or revoke my proxy?

You may change your vote or revoke your proxy at any time prior to the vote at the Annual Meeting. If you submitted your proxy by mail, you must file with the Secretary of our Company a written notice of revocation or deliver, prior to the vote at the Annual Meeting, a valid, later dated proxy. If you submitted your proxy by telephone or the internet, you may change your vote or revoke your proxy with a later telephone or internet proxy, as the case may be. Attendance at the Annual Meeting will not have the effect of revoking a proxy unless you give written notice of revocation to the Secretary before the proxy is exercised or you vote by written ballot at the Annual Meeting. For shares you hold beneficially in street name, you may change your vote or revoke your proxy by submitting new voting instructions to or informing your broker, bank or other nominee in accordance that entity’s procedures for changing or revoking your voting instructions.

How are votes counted?

In the election of directors, you may vote “FOR,” “AGAINST” or “ABSTAIN” for each nominee. For each of Proposals 2, 3, 4 and 5, you may vote “FOR,” “AGAINST” or “ABSTAIN.”

If you provide specific instructions, your shares will be voted as you instruct. If you sign your proxy card or voting instruction form with no further instructions, your shares will be voted in accordance with the recommendations of the Board (“FOR” all of the nominees to the Board of Directors, “FOR” the approval of the compensation of our named executive officers, “FOR” the approval of the amendments to our Amended and Restated 2010 Stock Incentive Plan, “FOR” the ratification of the independent registered public accounting firm, “AGAINST” the stockholder proposal, if properly presented, and in the discretion of the proxy holders on any other matters that may properly come before the meeting).

If you hold shares beneficially in street name and do not provide your broker, bank or other nominee with voting instructions, your shares may constitute “broker non-votes.” Generally, broker non-votes occur on a matter when a broker, bank or other nominee is not permitted to vote on that matter without instructions from the beneficial owner and instructions are not given. If you hold shares beneficially in

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street name and do not vote your shares, your broker, bank or other nominee can vote your shares at its discretion only on Proposal 4, the ratification of the independent registered public accounting firm. In tabulating the voting result for any particular proposal, shares that constitute broker non-votes are not considered entitled to vote on that proposal. Thus, broker non-votes will not affect the outcome of any matter being voted on at the Annual Meeting, other than Proposal 4, assuming that a quorum is obtained.

What vote is required to approve each item?

We have a majority voting standard for the election of directors in an uncontested election, which is generally defined as an election in which the number of nominees does not exceed the number of directors to be elected at the meeting. Cumulative voting is not permitted, which means that each stockholder may vote no more than the number of shares he or she owns for a single director candidate. Under our majority voting standard, in uncontested elections of directors, such as this election, each director must be elected by the affirmative vote of a majority of the votes cast by the shares present in person or represented by proxy. A “majority of the votes cast” means that the number of votes cast “FOR” a director nominee exceeds the number of votes cast “AGAINST” the nominee. If a director nominee is an incumbent director and does not receive a majority of the votes cast in an uncontested election, that director will continue to serve on the Board as a “holdover” director, but will be subject to our director resignation policy. Additional information concerning our director resignation policy is set forth under the heading “Corporate Governance—Majority Voting Policy.”

The table below describes the proposals to be considered at the Annual Meeting and the vote required for each proposal:

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If any other matter is properly brought before the Annual Meeting, such matter also will be determined by the affirmative vote of a majority of the shares of common stock present at the Annual Meeting in person or by proxy and entitled to vote at the Annual Meeting.

What is “householding” and how does it affect me?

We have adopted a process for mailing our Annual Report and this Proxy Statement called “householding,” which has been approved by the Securities and Exchange Commission. Householding means that stockholders who share the same last name and address will receive only one copy of our Annual Report and this Proxy Statement, unless we receive contrary instructions from any stockholder at that address. We will continue to mail a proxy card to each stockholder of record.

If you prefer to receive multiple copies of our Annual Report and this Proxy Statement at the same address, additional copies will be provided to you upon request. If you are a stockholder of record, you may contact us by writing to Investor Relations Department, Incyte Corporation, 1801 Augustine Cut-Off, Wilmington, Delaware 19803 or by calling (302) 498-6700 and asking for Investor Relations. Eligible stockholders of record receiving multiple copies of our Annual Report and this Proxy Statement can request householding by contacting us in the same manner. We have undertaken householding to reduce printing costs and postage fees, and we encourage you to participate.

If you are a beneficial owner, you may request additional copies of our Annual Report and this Proxy Statement or you may request householding by notifying your broker, bank or other nominee.

How are proxies solicited?

Our employees, officers and directors may solicit proxies. We will pay the cost of printing and mailing proxy materials, and will reimburse brokerage houses and other custodians, nominees and fiduciaries for their reasonable out-of-pocket expenses for forwarding proxy and solicitation material to the owners of our common stock. In addition, we have engaged D.F. King & Co., Inc. to assist us in soliciting proxies for a fee of $12,500, plus out-of-pocket expenses.

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Stockholder Engagement

Throughout the year, we maintain an ongoing stockholder outreach program to garner feedback as well as to answer any questions stockholders may have both during and outside of proxy season. Our goal is to ensure that our corporate governance practices, our compensation program and our stockholder communications align with best practices.

Each year, we proactively reach out to our stockholders to determine how our corporate governance, compensation practices and stockholder communications might improve. In 2018 and 2017, we contacted stockholders representing over 80% and 60% of our shares outstanding, respectively. Our CEO, our Lead Independent Director and the rest of our Board – along with the rest of our executive management – regularly discuss the learnings from these thorough and informative conversations. As a result of this ongoing stockholder engagement over the last four years, we have implemented several significant enhancements in our corporate governance and compensation policies and in our stockholder communication practices, including most recently in 2019. We believe these changes help us to further align the Company’s interests with the best interests of our stockholders.

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We continually seek to engage with stockholders throughout the year, and we invite you to reach out with any comments or questions at any time. Please see the Investor section of our website for the appropriate contact information.

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Proposal 1

Election of Directors

The Board proposes the election of eight directors of our Company to serve until the next annual meeting of stockholders, or thereafter until their successors are duly elected and qualified. If any nominee is unable or declines to serve as director at the time of the Annual Meeting, an event that we do not currently anticipate, proxies will be voted for any nominee designated by the Board to fill the vacancy.

Committee Membership

Name and Primary Occupation

Director Since

Age

Independent

Compensation

Audit

Nominating and Corporate Governance

Finance

Hervé Hoppenot—Chairman of the Board

2014

59

●

President and Chief Executive Officer

Incyte Corporation

Julian C. Baker—Lead Independent Director

2001

52

●

●

●

Managing Partner

Baker Brothers Investments

Jean-Jacques Bienaimé

2015

65

●

●

Chief Executive Officer

BioMarin Pharmaceutical Inc.

Paul A. Brooke

2001

73

●

●

Former Founder and Managing Partner venBio, LLC

Paul J. Clancy

2015

57

●

Executive Vice President and Chief Financial Officer

Alexion Pharmaceuticals, Inc.

Wendy L. Dixon, Ph.D.

2010

63

●

●

●

Former Chief Marketing Officer and

President, Global Marketing

Bristol-Myers Squibb Company

Jacqualyn A. Fouse, Ph.D.

2017

57

●

Chief Executive Officer

Agios Pharmaceuticals, Inc.

Paul A. Friedman, M.D.

2001

76

●

Chief Executive Officer

Madrigal Pharmaceuticals, Inc.

Committee Chair		Financial Expert		●    Member

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Director Nominees

Names of the nominees and certain biographical information about them are set forth below:

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Board Committees

The Board has appointed an Audit Committee, a Compensation Committee and a Nominating and Corporate Governance Committee. The Board has determined that each director who serves on these committees is “independent,” as that term is defined by applicable listing standards of The Nasdaq Stock Market and Securities and Exchange Commission rules. The Board has approved a charter for each of these committees, a current copy of each committee’s charter can be found on our website at http://www.incyte.com under the “Corporate Governance” heading in the “For Investors” portion of our website. The Board has also appointed a Finance Committee and a Non-Management Stock Option Committee.

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Corporate Governance

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Corporate Responsibility

At Incyte, in addition to our commitment to innovation and the rigorous pursuit of research and development excellence, we are also committed to enhancing the communities in which we operate, improving the treatment and experience of patients, supporting our colleagues and operating our business in a way that protects the environment. For more information, please see “Our Commitment” in the “Our Company” portion of our website at http://www.incyte.com; however, the information on our website is not part of this proxy statement.

Majority Voting Policy

Our Bylaws include a majority voting standard for the election of directors. In order to receive a majority of the votes cast, the number of shares voted “FOR” must exceed the number of votes “AGAINST”; abstentions and broker non-votes do not count as votes cast. Our Bylaws provide that, in an uncontested election, director nominees must receive a majority of the votes cast to be elected to

		Proxy Statement 2019 | 17

the Board. Our Corporate Governance Guidelines state that if a nominee for director in an uncontested election does not receive a majority of the votes cast, the director should submit a resignation for consideration by the Board. The Nominating and Corporate Governance Committee will evaluate and make a recommendation to the Board with respect to the proffered resignation. The Board must take action on the recommendation within 90 days following certification of the stockholder vote. The director whose resignation is under consideration cannot participate in any decision regarding his or her resignation. The Nominating and Corporate Governance Committee and the Board may consider any factors they deem relevant in deciding whether to accept a director’s resignation.

Board Leadership Structure and Role in Risk Oversight

Our current leadership structure and governing documents permit the roles of Chairman and CEO to be filled by the same or different individuals. Where the Chairman and CEO roles are filled by the same individual, our Corporate Governance Guidelines require the independent directors on our Board to appoint a Lead Independent Director. The Board has currently determined that it is in the best interests of our stockholders to have Hervé Hoppenot, our President and CEO, serve as Chairman, coupled with an active Lead Independent Director. As such, Mr. Hoppenot holds the position of Chairman, President and CEO, and Julian C. Baker serves as our Lead Independent Director. Mr. Baker is a managing member of the general partner of our largest stockholder—namely, Baker Bros. Advisors LP and affiliated entities—who collectively holds 16.1% of our common stock as of March 12, 2019. The Board retains the authority to modify this structure as it deems appropriate.

Focus on Independence.    The Board maintains a strong commitment to ensuring Board independence so that it is able to maintain effective oversight of management. The Board’s commitment to independence includes:

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Benefits of Combined Leadership Structure.    The Board believes that the Company and our stockholders have been best served by having Mr. Hoppenot in the role of Chairman and CEO for the following reasons:

Flexibility of the Leadership Structure.    The Board is committed to high standards of corporate governance. The Board values its flexibility to select, from time to time, a leadership structure that is most able to serve the Company’s and stockholders’ best interests based on the qualifications of individuals available and circumstances existing at the time. As such, the Board periodically evaluates whether combining or separating the roles of Chairman and CEO is in the best interests of the Company and our stockholders. The Board believes that a policy limiting its flexibility to choose, consistent with its fiduciary duties, a leadership structure that will enable the Company to most effectively execute its strategy and business plans to maximize stockholder value would be detrimental to the Company and our stockholders.

Board’s Role in Risk Oversight.    Our Board is responsible for overseeing the overall risk management process at the Company directly and through its committees. The responsibility for managing risk rests with executive management while the committees of the Board and the Board as a whole participate in the oversight process. The Board’s risk oversight process builds upon management’s

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risk assessment and mitigation processes, which include reviews of long term strategic and operational planning, executive development and evaluation, regulatory and legal compliance, and financial reporting and internal controls. The Board considers strategic and operational risks and opportunities and regularly receives reports from executive management regarding specific aspects of risk management. The Audit Committee receives periodic reports from executive management with respect to, and reviews such risks associated with, our financial and accounting systems, accounting policies, investment strategies, regulatory compliance and our information systems and technology, including cybersecurity risks and readiness. The Audit Committee also meets regularly with our Chief Compliance Officer, our internal controls team and our independent registered public accounting firm in executive session without the presence of other members of management. The Compensation Committee evaluates our compensation policies and practices to help ensure that these policies and practices do not incentivize employees to take unnecessary or excessive risks that are reasonably likely to have a material adverse effect on our Company and provide appropriate incentives for meeting both short-term and long-term objectives and increasing stockholder value over time. The Nominating and Corporate Governance Committee reviews our risks associated with governance matters and non-compensation related human resources matters.

Director Independence

In 2018, our Board determined that each individual who served as a member of the Board in 2018, except for Mr. Hoppenot, was an “independent director” within the meaning of Rule 5605 of The Nasdaq Stock Market.

Mr. Hoppenot is not considered independent as he is currently employed as our CEO. For Mr. Bienaimé, Mr. Baker, Mr. Brooke, Mr. Clancy, Dr. Dixon, Dr. Fouse and Dr. Friedman, the Board considered their relationship and transactions with our Company as directors and security holders of our Company.

All of the nominees are current members of the Board.

Director Nominations

The Board nominates directors for election at each annual meeting of stockholders and elects new directors to fill vacancies when they arise. The Board has as an objective, set forth in our Corporate Governance Guidelines, that its membership be composed of experienced and dedicated individuals with diversity of backgrounds, perspectives and skills. The Nominating and Corporate Governance Committee has the responsibility to identify, evaluate, recruit and recommend qualified candidates to the Board for nomination or election.

The Nominating and Corporate Governance Committee will select candidates for director based on their character, judgment, diversity of experience, business acumen, and ability to act on behalf of all stockholders. The Nominating and Corporate Governance Committee believes that nominees for director should have experience, such as experience in management, accounting, finance, drug discovery and development, or marketing, or industry and technology knowledge, that may be useful to the Company and the Board; high personal and professional ethics and the willingness and ability to devote sufficient time to effectively carry out his or her duties as a director. Although the Company has no formal diversity policy for board members, the Board and the Nominating and Corporate Governance Committee consider diversity of backgrounds and experiences and other forms of diversity when selecting nominees.

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The Nominating and Corporate Governance Committee believes it appropriate for at least one, and, preferably, multiple, members of the Board to meet the criteria for an “audit committee financial expert” as defined by Securities and Exchange Commission rules, and our Corporate Governance Guidelines require that a majority of the members of the Board meet the definition of “independent director” under the rules of The Nasdaq Stock Market. The Nominating and Corporate Governance Committee believes it appropriate for certain key members of our management — currently, our CEO — to participate as members of the Board.

Prior to each annual meeting of stockholders, the Nominating and Corporate Governance Committee identifies nominees first by evaluating the current directors whose term will expire at the annual meeting and who are willing to continue in service. These candidates are evaluated based on the criteria described above, including as demonstrated by the candidate’s prior service as a director, and the needs of the Board with respect to the particular talents and experience of its directors. In the event that a director does not wish to continue in service, the Nominating and Corporate Governance Committee determines not to re-nominate the director, or if a vacancy is created on the Board as a result of a resignation, an increase in the size of the Board or other event, then the Committee will consider various candidates for Board membership, including those suggested by the Committee members, by other Board members, by any search firm engaged by the Committee and by stockholders. The Committee may only recommend, and the Board may only nominate, candidates for director who agree to tender, promptly following their election or re-election as a director, irrevocable resignations that would be effective if the director fails to receive a sufficient number of votes for re-election at the next annual meeting of stockholders at which he or she faces re-election and if the Board accepts the resignation. The Committee recommended all of the nominees for election included in this Proxy Statement. All of the nominees are current members of the Board.

A stockholder who wishes to suggest a prospective nominee for the Board should notify the Secretary of the Company or any member of the Nominating and Corporate Governance Committee in writing with any supporting material the stockholder considers appropriate. In addition, our Bylaws contain provisions that address the process by which a stockholder may nominate an individual to stand for election to the Board at our annual meeting of stockholders. In order to nominate a candidate for director, a stockholder must give timely notice in writing to the Secretary of the Company and otherwise comply with the provisions of our Bylaws. To be timely, our Bylaws provide that our Secretary must have received the stockholder’s notice not less than 90 days nor more than 120 days prior to the first anniversary of the preceding year’s annual meeting of stockholders. However, in the event that no annual meeting was held in the preceding year or the annual meeting is called for a date that is more than 30 days before or more than 60 days after the first anniversary date of the preceding year’s annual meeting of stockholders, notice by the stockholder to be timely must be so received by the Secretary of the Company not later than the close of business on the later of (1) the 90th day prior to the date of the meeting and (2) the 10th day following the first public announcement or disclosure of the meeting date. Information required by the Bylaws to be in the notice include the name and contact information for the candidate and the person making the nomination and other information about the nominee that must be disclosed in proxy solicitations under Section 14 of the Securities Exchange Act of 1934 and the related rules and regulations under that Section.

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Stockholder nominations must be made in accordance with the procedures outlined in, and include the information required by, our Bylaws and must be addressed to:

Secretary

Incyte Corporation

1801 Augustine Cut-Off

Wilmington, DE 19803

You can obtain a copy of the full text of the Bylaw provision by writing to the Company’s Secretary at the above address.

Board Meetings

The Board held five meetings during 2018. All directors attended all meetings held by the Board and of the committees on which such director served during his or her tenure in 2018.

The independent directors meet in executive sessions at regularly scheduled meetings of the Board without the participation of our CEO or other members of management. There were four regularly scheduled meetings of the Board in 2018.

In 2018, we did not, and for 2019, we do not, have a policy that requires the attendance of directors at the Annual Meeting.

Corporate Governance Guidelines

The Board is committed to sound and effective corporate governance practices. Accordingly, the Board has adopted Corporate Governance Guidelines, which are intended to describe the governance principles and procedures by which the Board functions. The guidelines are subject to periodic review and update by the Nominating and Corporate Governance Committee and the Board, and were most recently amended in November 2017. These Guidelines can be found on our website at http://www.incyte.com under the “Corporate Governance” heading in the “For Investors” portion of our website.

The Corporate Governance Guidelines provide, among other things, that:

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Communications with the Board

If you wish to communicate with the Board, you may send your communication in writing to:

Secretary

Incyte Corporation

1801 Augustine Cut-Off

Wilmington, DE 19803

You must include your name and address in the written communication and indicate whether you are a stockholder of the Company.

The Secretary will review any communications received from a stockholder and all material communications from stockholders will be forwarded to the appropriate director or directors or Committee of the Board based on the subject matter.

Certain Relationships and Related Transactions

Our policy is that all employees, officers and directors must avoid any activity that is or has the appearance of conflicting with the interests of the Company. This policy is included in our Code of Business Conduct, Ethics and Board Code of Conduct and Ethics. We conduct a review of all related party transactions for potential conflict of interest situations on an ongoing basis and all such transactions must be approved by the Audit Committee or another independent body of the Board.

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Compensation of Directors

Our director compensation program is designed to enable continued attraction and retention of highly qualified non-employee directors by ensuring that our director compensation is in line with compensation offered by our peer companies that compete with us for director talent. The program is designed to address the time, effort, expertise, and accountability required of active board membership. Directors who are employees of the Company do not receive any fees for their service on the Board or any committee. Mr. Hoppenot is the Company’s only employee director. The Compensation Committee, with the assistance of its independent compensation consultant, periodically reviews the compensation for our non-employee directors in relation to the peer group used for compensation purposes (as described below under “Compensation Discussion and Analysis”).

In the course of our stockholder engagement during 2018, it became clear that it was time to re-evaluate our director compensation practices. Existing director compensation practices included an equity grant of a fixed number of options. A consensus was forming among several of our stockholders that the equity component of director compensation should, instead, aim to deliver a fixed value. The goal of fixed-value equity compensation is to ensure that overall compensation amounts are generally consistent over time, thus avoiding the up-and-down values that occur when equity compensation grants are fixed to a particular number of stock options. Accordingly, based on the Compensation Committee’s most recent review in September 2018, the Compensation Committee recommended, and, in March 2019, the Board of Directors approved the changes in non-employee director compensation described below, noting the continued heavy weighting of compensation toward equity and stock options. These changes will take effect upon the approval of amendments to our Amended and Restated 2010 Stock Incentive Plan (the “2010 Stock Incentive Plan”), as described below under “Proposal 3.”

Cash Compensation

Effective as of the date of stockholder approval of Proposal 3, the amendments to the 2010 Stock Incentive Plan, each non-employee director, other than the Lead Independent Director, will receive a $60,000 annual retainer, payable quarterly, and prorated for such portion of the year that the director serves on the Board. The Lead Independent Director will receive a $90,000 annual retainer. The chair of the Audit Committee will receive an additional $25,000 annual retainer, and each other member of the Audit Committee will receive an additional $12,000 annual retainer. The chair of the Compensation Committee will receive an additional $25,000 annual retainer, and each other member of the Compensation Committee will receive an additional $10,000 annual retainer. The chair of the Nominating and Corporate Governance Committee will receive an additional $16,000 annual retainer, and each other member of the Nominating and Corporate Governance Committee will receive an additional $8,000 annual retainer. The chair of the Finance Committee receives an additional $15,000 annual retainer, and each other member of the Finance Committee receives an additional $8,000 annual retainer. All retainers will be prorated for such portion of the year that the director serves on the Board.

Non-employee directors have the option to elect to receive their retainers and committee fees in the form of restricted stock that vests immediately when the associated quarterly retainer amount is paid. All directors are reimbursed for their travel and out-of-pocket expenses in accordance with our travel policy for each in-person Board or committee meeting that they attend.

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Equity Compensation

In addition to cash compensation for services as a member of the Board, non-employee directors also receive equity awards. If our stockholders approve Proposal 3, the 2010 Stock Incentive Plan will be amended to provide that following the conclusion of the Annual Meeting and each future annual meeting of our stockholders, each non-employee director who continues to serve as a member of the Board will receive awards with a grant date value of $500,000, of which 75% would be in the form of stock options and 25% would be in the form of restricted stock unit (RSU) awards, determined in the same manner as with awards to our executive officers, as described below under “Compensation Discussion and Analysis.” The exercise price of the options will be equal to the fair market value on the date of grant, and the options will have a term of ten years. Each of these options and RSUs will vest in full on the first anniversary of the date of the grant or, if earlier, the date of the next annual meeting of stockholders or upon a change in control. The initial stock option grants described in the next paragraph will be eliminated.

Prior to the date of stockholder approval of Proposal 3, each new non-employee director appointed to the Board will receive an initial stock option to purchase 25,000 shares of our common stock at an exercise price equal to the fair market value of our common stock on the date of grant. The initial stock option vests and becomes exercisable as to 25% of those shares on the first anniversary of the date of the grant, and the remaining shares vest and become exercisable monthly over the following three years. In addition, on the date of each annual meeting of stockholders, each non-employee director who continues to serve as a member of the Board will receive an option to purchase 15,000 shares of our common stock at an exercise price equal to the fair market value of our common stock on the date of grant. Each of these annually granted options will vest in full on the first anniversary of the date of the grant or, if earlier, the date of the next annual meeting of stockholders or upon a change in control.

Under the 2010 Stock Incentive Plan, when a new non-employee director is appointed to the Board at a time other than at an annual meeting, the director receives a pro rata portion of the automatic annual grants. On May 1, 2018, the date of our 2018 Annual Meeting of Stockholders, each then continuing non-employee director received his or her annual grant of an option to purchase 15,000 shares of our common stock at an exercise price equal to the fair market value of our common stock on the date of grant.

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The table below shows the compensation paid to each non-employee director for his or her service in 2018:

2018 Director Compensation Table

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Executive Compensation

Compensation Discussion and Analysis

What We Do
		We pay for performance				We have adopted a compensation clawback policy
		25% of executives’ target equity award value is in the form of performance shares				Our Compensation Committee uses an independent compensation consultant, Compensia
		We consider peer groups in establishing executive compensation				We have robust anti-hedging and anti-speculation policies in place
		We have implemented robust stock ownership guidelines for our CEO, executive officers and our directors				We conduct an annual say-on-pay vote
		We have double-trigger equity vesting in the event of a change-in-control				Our Compensation Committee is comprised of all independent directors
		Equity awards have a minimum vesting period of 12 months.				We engage proactively with our stockholders throughout the year

What We Don’t Do
		We do not reprice stock options without stockholder approval				We do not provide golden parachute excise tax gross-ups
		We do not provide single-trigger equity vesting in the event of a change-in-control				We do not provide executive perquisites beyond financial and tax planning

Compensation Program Strategy and Objectives

The Compensation Committee of our Board believes that the compensation of our executive officers should:

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Our executive officers’ compensation currently includes three primary components: base salary, cash bonus, and equity-based incentive awards. Equity-based incentive awards can be made up of restricted stock units, performance shares or stock options. Salary is a fixed amount and does not vary with our performance. All other components of our executives’ compensation are closely tied to our Company’s performance – either through the amounts (if any) of each component actually received or the value of each component over time, or both – and each contributes toward our goal of delivering long-term stockholder value. Each of the equity-based components – including the performance shares that only become earned upon achievement of pre-determined goals – are also subject to time-based vesting, which the Compensation Committee believes incentivizes executive retention. The performance-based components and time-based components of our equity compensation program are designed to encourage both an appropriate level of risk-taking and a focus on sound long-term decision-making, thus aligning executive interests with the long-term best interests of our Company and our stockholders. The chart below sets out each of these components.

Fixed Compensation Performance-Based Compensation Short Term Cash Compensation Program Long Term Equity Compensation Program Partially At-Risk Wholly At-Risk Salary Incentive Compensation Program Restricted Stock Units1 Performance Shares Stock Options2 Form and Key Features Provides base compensation that is predictable and competitive with our peer group Reflects the scope and complexity of executives' roles and responsibilities Reviewed and approved annually by the Compensation Committee Annual cash bonus opportunity Percentage of base salary awarded is determined by level of achievement of commercial, R&D and strategic goals Goals approved at the start of each year by the Compensation Committee Achievement percentage determined at the end of each year by the Compensation Committee 25% of target equity value Value is tied to the stock price Vests over four years 25% of target equity value Goals approved at the start of each year by the Compensation Committee Performance goals align with stockholder interests Only earned if we meet pre-determined performance goals If achieved, value is directly tied to the stock priceVests over four years50% of target equity value Value is directly tied to the stock price Vests over four years Purpose Rewards current contributions to the CompanyAttracts and retains high-level talentProvides opportunity for near-term cash bonus based on the achievement of short-term strategic corporate objectives, which are intended to drive long-term growthSets the stage for potential continued growthProvides opportunity for compensation when stock price is volatileProvides long-term retention of key talentEncourages long-term decision making Aligns management objectives with stockholder interest Provides incentive to achieve key objectives intended to maximize stockholder valueProvides long-term retention of key talentEncourages long-term decision making Aligns management objectives with stockholder interestProvides incentives for strategic risk-taking to maximize value, which correlates to our longer-term R&D plans, and aligns with longer-term stockholder valueProvides long-term retention of key talentEncourages long-term decision makingAligns management objectives with stockholder interest Equity Ownership Guidelines for Executives Help Ensure Continued Alignment with Stockholder Interests Year After Year

As the design of our executive compensation program shows, the Compensation Committee believes that executive compensation should be designed to pay for performance. Our Company has been very successful in recent years, and executive compensation has reflected that performance. While 2018 was also successful in many respects, we did miss a very important development goal

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when our ECHO-301 trial failed, resulting in a lower cash bonus of 81% of target as well as decreased value of equity holdings. In addition, in the case of performance shares which were tied to pre-determined, internal, stretch revenue targets, the shares earned amounted to only 83% of target shares. The charts below illustrate how our CEO’s compensation is closely tied to our Company’s performance goals over the last three years and how the percentage of our CEO’s compensation that is tied to performance compares with those of our peer group of companies. The chart below illustrates this evolution with respect to our CEO’s compensation, demonstrating that our CEO’s total compensation tracks our achievement of Board-approved corporate goals:

CEO Total Compensation is Linked to Performance

Total CEO Compensation

Incentive Compensation Program Achievement		Performance Share Achievement

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CEO At-Risk Compensation is In-Line with 2019 Peer Group

Implementing Our Objectives – Role of Compensation Committee and Our Chief Executive Officer

The Compensation Committee approves, administers and interprets our executive compensation and benefits policies, including our 2010 Stock Incentive Plan. The Compensation Committee evaluates the performance of our CEO and determines his compensation in light of the goals and objectives of our compensation program. Our CEO and the Compensation Committee together assess the performance of our other executive officers and determine their compensation, based on initial recommendations from our CEO.

Role of the Independent Compensation Consultant

Under its charter, the Compensation Committee has the sole authority to retain any independent compensation consultant or other advisor as the Committee may deem appropriate. Pursuant to this authority, the Compensation Committee has engaged Compensia, a national compensation consulting firm, for support on matters related to the compensation of our executive officers. Compensia does not provide any other services to our Company.

Compensia was retained by the Compensation Committee to prepare compensation analyses for our executive officers and the non-employee members of our Board of Directors. Specifically, Compensia was directed to provide a competitive market analysis of the base salary, annual cash incentive awards, and long-term incentive equity compensation of our executive officers compared against our compensation peer groups and to review other market practices and trends. This market analysis was reviewed with the Compensation Committee in connection with its January 2018 compensation decisions, and was used to guide decisions regarding base salary adjustments and target annual cash and equity incentive award opportunities. Updated data prepared by Compensia were used to inform the July 2018 equity award decisions made by the Compensation Committee.

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Market Reference Data

While the Compensation Committee reviews market benchmarks, it does not necessarily target a specific percentile within our peer group but rather utilizes market reference data to evaluate the competitiveness of our executive officers’ compensation and to determine whether the total compensation paid to each of our named executive officers was reasonable in the aggregate.

In connection with its analysis for purposes of 2018 compensation decisions, the Compensation Committee reviewed information prepared by Compensia comparing the compensation for our executive officers with data from SEC filings and the Radford Life Sciences Survey for a peer group comprised of 16 publicly-traded biopharmaceutical companies. Where peer data was unavailable, Compensia used survey data from the Mercer SIRS Survey. We collectively refer to this data as the competitive compensation data.

The peer group for 2018 compensation decisions, referred to as the 2018 peer group, was chosen based on the following characteristics: major labor and capital market competitors, broadly similar size in revenue, market capitalization and headcount, and similar product and business models.

In September 2018, the peer group was changed because one company, Bioverativ, had been acquired and another company, Tesaro, no longer met our revenue and market capitalization criteria. Two new companies that did meet our criteria, Jazz Pharmaceuticals and Neurocrine Biosciences, were added to our peer group to replace the dropped companies. This updated peer group was used for 2019 compensation decisions and is referred to as the 2019 peer group.

The following table sets forth our peer group criteria and a comprehensive list of the peer group companies used for 2018 and 2019 compensation decisions:

How We Establish Our Peer Group

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Using recent data as of December 31, 2018, the following tables illustrate Incyte’s twelve trailing months of revenue performance relative to the 2019 peer group and also illustrate our relative headcount and revenue-to-employee ratio compared to the 2019 peer group. We believe this data helps underscore the efficiency of our operations.

2018 Revenue vs. Peers

Revenue to Employee Ratio vs. Peers

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Recent Evaluation of Our Equity Grant Practices

In July 2016, the Compensation Committee, after consulting with Compensia with respect to peer group practices, revised our equity grant guidelines. In 2016 and 2017, 75% of the value of an executive officer’s annual equity-based incentive awards were in the form of stock options while the remaining 25% were in the form of restricted stock units (RSUs).

In response to stockholder feedback, in 2018, the Compensation Committee changed the RSU portion to performance share awards, which combine the time-based vesting aspects of RSUs with a performance-based vesting requirement, resulting in 75% of the value being in the form of stock options and 25% in performance share awards.

In 2019, the Compensation Committee noted Compensia’s observation that our mix for executives of 75% stock options and 25% performance shares put our executives’ equity-based compensation more at-risk than our peer group and the broader market norm and that, on average, our peers deliver approximately 25% of executive equity compensation value in the form of time-based vesting RSUs, with approximately 50% being delivered in the form of stock options and approximately 25% being delivered in the form of performance-based shares or options. The Committee also noted that, due to our stock price decline and limited use of RSUs, realizable compensation for our executives for 2016 through 2018 fell well below target compensation values. Accordingly, to enhance executive retention and bring our executive equity compensation practices in line with our peers, the Committee determined that, for 2019, our executives will receive 50% of their grant date target value in the form of stock options, 25% in the form of performance shares, and 25% in the form of RSUs.

While the equity awards are actually granted in July of each year, the Compensation Committee determines the overall equity grant target value for our executive officers in the early portion of the year, in conjunction with the determination of base salary adjustments and the establishment of the annual incentive compensation plan described in greater detail below. Based on those target values, the share numbers of our annual stock option grants are determined in the middle of each calendar year, with one-half of the grants made at that time and one-half made at the beginning of the following calendar year, with a view toward countering some of the effects of the volatile trading price of our common stock. Our annual stock option grants have a ten-year term with four-year service-based vesting with one-quarter vesting after one year and the remainder vesting in 36 equal monthly installments. Our annual executive performance share and RSU awards are made in the middle of each calendar year. The performance share awards vest, assuming performance goals are achieved at specified levels, in equal annual installments over four years and are described further below. The RSU awards vest in equal installments on each of the first four anniversaries of the grant date.

The Compensation Committee also has the discretion to make outstanding merit stock option awards, which have a ten-year term and vest in a single installment after four years. Those awards, if granted, can be made to executives other than our CEO as well as other key employees throughout our Company and are typically made in connection with salary adjustments at the beginning of each year as the awards are intended to relate to prior year performance and to incentivize and retain the recipients. Our CEO championed the creation of the outstanding merit grant program to recognize important contributions – both within a function and the Company as a whole - by leaders throughout our organization. Previously, our CEO received these grants too, but, starting in 2019, in response to stockholder feedback, the Compensation Committee eliminated awards of outstanding merit grants to our CEO.

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In addition, as described below, in June 2018, the Compensation Committee made retention plan awards to certain key R&D and salesforce employees, including the grant of performance share awards to certain executive officers (not including our CEO).

The exercise price of each stock option awarded under our 2010 Stock Incentive Plan is the closing price of our common stock on the date of grant, which for our annual stock option grants are the dates of the regularly scheduled Compensation Committee meetings or actions without meetings, which are taken following decisions at meetings, in the middle of the year at which equity awards for senior executives are formally determined and at the beginning of the year at which salary adjustments and cash bonuses under our incentive compensation plan are determined. These meetings are scheduled in advance, and we do not coordinate the timing of equity award grants with the release of financial results or other material announcements by our Company. Under our 2010 Stock Incentive Plan, we may not reprice or replace options at lower exercise prices without stockholder approval.

Compensation Practices and Policies

Equity Ownership Guidelines.    Effective January 1, 2016, our Board adopted robust equity ownership guidelines for members of senior management, including our executive officers, and members of the Board. Under these guidelines, the covered individuals are expected to meet the following equity ownership requirements:

Covered individuals as of January 1, 2016 must satisfy these guidelines by December 31, 2020, and individuals who subsequently become subject to the guidelines will have five years to reach their ownership requirements. Shares held directly, shares held indirectly, such as by a trust or a 401(k) plan, unvested restricted shares and RSUs, and shares underlying vested stock options are included in determining an individual’s equity ownership. Unvested stock options and unearned performance shares are not counted toward meeting these guidelines.

Compensation Recovery Policy. In late 2017, in response to our 2017 stockholder engagement campaign (described more fully under “Stockholder Engagement” on page 6), our Compensation Committee adopted a compensation recovery (“clawback”) policy which provides that, in the event that, on account of fraud or other intentional misconduct, we are required to prepare an accounting restatement, we may recover from any executive officer any incentive compensation erroneously paid or awarded in excess of what would have been paid under the accounting restatement. This policy applies prospectively to certain incentive compensation paid or awarded after January 1, 2018, its effective date, and covers the three-year period preceding the date on which we are required to prepare the accounting restatement. The incentive compensation to which it applies is cash bonuses or other cash awards to the extent those bonuses or awards are earned based on the attainment of a financial reporting measure presented in our financial statements or derived from our accounting

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records. In addition, we are subject to the provisions of Section 304 of the Sarbanes-Oxley Act of 2002, which provides that 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 CEO and Chief Financial Officer may be legally required to reimburse us for any bonus or other incentive-based or equity-based compensation they receive. To the extent our policy is inconsistent with any final regulations adopted by the SEC to implement the requirements of the Dodd-Frank Wall Street Reform and Consumer Protection Act, we intend to revise our policy to comply with those regulations.

Limitations on Hedging and Pledging.    Under our insider trading policy, our employees, including our executive officers, and Board members are prohibited from trading in our securities on a short-term basis, purchasing our securities on margin, making short sales in our securities, buying or selling put or call options on our stock, pledging our securities as collateral for a loan, and engaging in other hedging or monetization transactions such as prepaid variable forwards, equity swaps, collars and exchange funds, that permit a holder to continue to own our securities but, without the full risks and rewards of ownership.

Effects of Stockholder Advisory Vote on Executive Compensation, Stockholder Engagement

Approximately 72% of the votes cast in the stockholder advisory “say on pay” vote on executive compensation in 2018 approved our executive compensation described in last year’s proxy statement. Throughout the 2018 proxy season, we engaged directly or indirectly through our proxy solicitor, D. F. King & Co., with investors across the vast majority of our stockholder base, representing over 80% of our outstanding shares at that time, including our top ten stockholders. The Compensation Committee considered the result of the stockholder advisory vote as generally strong support for its overall compensation policies, practices and philosophy for our executive officers while also clearly understanding the perspective from several of our stockholders that some change was needed. Accordingly, as a result of this valuable stockholder feedback, the Compensation Committee eliminated the practice of granting special option grants (now called outstanding merit option grants) to our CEO on an ad hoc basis.

While say-on-pay votes are a key indicator of stockholder feedback, we are committed to keeping an open dialogue with our stockholders, including our institutional investors, throughout the year, not just during proxy season. We regularly and frequently engage with our stockholders to discuss business topics, seek feedback on our performance and address other matters of importance to our stockholders, such as executive compensation and corporate governance. Even though our 2017 say-on-pay vote resulted in nearly unanimous approval of our compensation practices, our 2017 stockholder engagement campaign (described more fully under “Stockholder Engagement” on page 6) made clear that a persistent stockholder concern was that our executive compensation program did not include any performance-based shares tied to financial metrics. As a result, and as described elsewhere in this proxy statement, the Compensation Committee included performance shares tied to pre-specified performance goals (which were revenue-based for 2018) starting with the equity grant cycle in July 2018. These performance share awards comprised 25% of each executive officer’s target equity award value for 2018 and 2019.

The Compensation Committee intends to continue to regularly review, assess and, when appropriate, adjust our compensation practices based on feedback from our stockholders or other determinations informed by best practices and trends.

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Tax Deductibility of Compensation

Section 162(m) of the Internal Revenue Code places a limit of $1,000,000 on the amount of compensation that we may deduct in any one year with respect to our CEO and each of the next three most highly compensated executive officers (excluding the chief financial officer for taxable years prior to 2018). Section 162(m) historically permitted deductions in excess of $1,000,000 for “performance-based compensation,” which included stock options meeting certain requirements, but the exception for “performance-based compensation” has been repealed effective for taxable years beginning after December 31, 2017.

Stock options that we granted in 2017 and prior years should still qualify for full deductibility under a transition rule for amounts payable pursuant to written binding contracts in effect on November 2, 2017. To maintain flexibility in compensating our executive officers, the Compensation Committee has not adopted a policy requiring all executive compensation to be deductible.

Key Elements of Executive Compensation

Our executive officers’ compensation currently includes three primary components: base salary, cash bonus, and long-term equity-based incentive awards. Of these components, only base salary is not tied directly and meaningfully to our Company’s performance because base salary is intended to attract and retain key talent by providing a stable source of income. In addition, we provide our executive officers a variety of benefits that are available generally to all salaried employees. Each of these components is described in more detail below.

Base Salary

Base salaries are designed to attract and retain qualified personnel by providing a consistent cash flow throughout the year as compensation for acceptable levels of performance of day-to-day responsibilities. Base salaries for our executive officers are established based on the scope of their responsibilities, their performance, and their prior relevant background, training and experience, taking into account competitive market compensation paid by the companies represented in the compensation data we review for similar positions and the overall market demand for those executive officers at the time of hire. The Compensation Committee reviews salaries on an annual basis. At such time, the Compensation Committee may change each executive officer’s salary based on the individual’s contributions and responsibilities over the prior twelve months and any change in competitive market pay levels.

In January 2018, the Compensation Committee set the 2018 base salaries for our executive officers. The Committee considered our Company’s performance in 2017, including our commercial operations, clinical trial progress of our other drug candidates, job performance, internal pay alignment and equity, marketplace competitiveness and the 2018 peer group data in determining the base salaries for 2018.

In January 2019, the Compensation Committee set the 2019 base salaries for our executive officers. The Committee considered our Company’s performance in 2018, including our commercial operations, clinical trial progress of our other drug candidates, job performance, internal pay alignment and equity, marketplace competitiveness and the 2019 peer group data in determining the base

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salaries for 2019. The following table sets forth the salary history of our named executive officers listed in the Summary Compensation Table and for Christiana Stamoulis, our new Chief Financial Officer.

For each of 2018 and 2019, 3.0% was the average base salary increase for all of our non-executive employees.

Annual Incentive Compensation Plan

Each year, we have established an incentive compensation plan that provides for cash incentive awards for all of our eligible employees. The plans have been designed to pay for performance by aligning incentive awards for each participant with an evaluation of our achievement of corporate objectives. These corporate objectives are approved by the independent members of our Board based on the recommendations of the Compensation Committee, as well as, in the case of individuals other than our CEO, the achievement of individual business objectives for a particular year. Eligibility to participate in the plans and actual award amounts are not guaranteed and are determined, in the case of our executive officers, at the discretion of the Compensation Committee. After the completion of each year, the Compensation Committee reviews with our CEO the level of achievement of the corporate objectives under the plan and determines the size of the overall bonus pool to be used for awards. The Compensation Committee, with input from our CEO with respect to our other executive officers, may use discretion in determining for each executive officer his or her bonus amount.

Incentive awards for our executive officers were approved by the Compensation Committee and paid in 2019 pursuant to our 2018 incentive compensation plan. Each of our executive officers who was with us for all of 2018, other than our CEO, had a funding target under the plan of 50% of his or her annual base salary for 2018, with the potential for actual awards under the plan to either exceed or be less than the funding target depending upon corporate performance, as well as the executive officer’s achievement of certain individual goals that are predetermined by our CEO. Our CEO had a funding target under the plan of 100% of his annual base salary for 2018, with the potential for actual awards under the plan to either exceed or be less than such funding target depending upon corporate performance. Target incentive award amounts for each participant were based on the participant’s potential impact on our operating and financial results and on market competitive pay practices. Individual performance goals were also established for eligible employees other than our CEO, and evaluations were based upon whether the employee met, exceeded or did not meet each established goal. The Committee believes that it is appropriate to align a higher percentage of our executive officers’ total cash compensation with the achievement of our Board-approved corporate objectives because those objectives are determined with a view toward progressing our Company’s business and

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maximizing stockholder value. Linking a significant percentage of executive officer cash incentive awards to achievement of Committee-approved corporate objectives puts a substantial portion of our CEO’s and executive officers’ cash compensation at risk, and is another way the Committee has designed executive compensation to pay for performance.

While executive officers other than our CEO have individual performance objectives that are evaluated by our CEO, the outcome of those objectives did not affect awards under our 2018 incentive compensation plan to those officers, and the award amounts were based solely on achievement of the corporate performance objectives.

Annual Incentive Compensation Plan

2018 Corporate Performance Objectives

Corporate performance objectives for 2018 were based on achievement of drug discovery objectives, drug development objectives, commercial objectives, finance objectives, and technical operations objectives.

Threshold, target and outperform achievement levels are defined for each corporate objective and, depending on the achievement of those performance levels, a payout ranging from 0% to 150% may be made for each objective. The ECHO-301 component of our drug development objectives was only achievable at the outperform level and related to achieving data sufficient for a regulatory submission. Bonus objectives included an extra 5% for drug discovery, an extra 25% for drug development, and an extra 5% for business development. Collectively, the bonus opportunities enabled the payout of up to an additional 35 percentage points for extraordinary achievements beyond core objectives.

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At the time the corporate performance objectives for 2018 were set, the Committee and management believed that achievement of the target levels of performance for the non-ECHO-301 objectives would be difficult and challenging, but achievable with significant effort and skill, favorable preclinical study and clinical trial results and continued strong commercial performance. As noted above, achievement of the ECHO-301 component of our drug development objectives were dependent on clinical trial results.

In January 2019, the Compensation Committee evaluated the achievement of the 2018 corporate performance objectives and determined that incentive awards under our 2018 incentive compensation plan should be based upon achievement of 81% of the target level of corporate performance objectives. While the Committee noted that the business development bonus opportunity relating to the establishment of a strategic relationship that provides near-term sales revenues was not met, the Committee determined that our establishment of our strategic collaboration in China with Innovent warranted the award of two percentage points. The various objective categories, target payouts and actual payouts, are listed in the table below.

Objectives					Target %				Payout %
Drug Discovery					15				22.5
		Achieved IND filings for INCAGN2385, INCAGN2390, and INCB86550
		Achieved pre-clinical objectives relating to certain programs
Bonus Achieved					—				5
		Achieved four objectives, including filing an IND for INCB86550
Drug Development					60				30
JAK Programs					5				5
		Submitted sNDA for ruxolitinib in steroid-refractory acute GVHD
		Completed enrollment targets for pre-specified trials, including GRAVITAS-301
Immune Therapies – Large Molecule					5				7.5
		Achieved five of six objectives, including initiating three monotherapy clinical trials with registrational intent for INCMGA0012
Immune Therapies – Small Molecule					5				5
		Achieved three of five objectives, including opening enrollment for the first clinical trial of INCB86550
Epacadostat					35				—
		Did not achieve sufficient pivotal data from ECHO-301 to trigger a decision to submit to regulatory authorities
		Did not complete enrollment in other pivotal epacadostat trials
Targeted Therapies					5				—
		Only achieved four of eleven objectives, including opening enrollment for the Phase III study of pemigatinib in first-line cholangiocarcinoma
Bonus Achieved					—				5
		Reported preliminary data for pemigatinib in second-line FGFR2 translocated cholangiocarcinoma which, if confirmed in the full cohort, would support an NDA submission
Inflammation/Autoimmunity					5				7.5
		Achieved four out of five objectives, including the initiation of the Phase III trial of ruxolitinib cream in atopic dermatitis as well as trials with INCB54707 and parsaclisib in pre-specified indications
Commercial					25				21
		Achieved pre-specified level of revenue for Jakafi and Iclusig
Business Development Bonus Achieved					—				2
		Achieved out-licensing collaboration that provides potential for royalties by 2021

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The table below sets forth the incentive awards under our 2018 incentive compensation plan for our named executive officers:

Our incentive compensation program is designed to incentivize employees, including our executive officers, in every area of our Company, which we believe helps lead to significant achievement across all areas. Our Compensation Committee believes that measuring and rewarding achievements from all functions — including functions such as discovery, development, technical operations and business development, whose efforts take a much longer time to make an impact on our top-line revenue or on our stock price — helps ensure that we are properly incentivizing the collective efforts that lead not only to successful current commercial performance but also critically set the stage for potential continued growth and potential long-term sustained success in the years ahead. Our Compensation Committee also believes that linking incentive compensation to corporate goals aligns employees’ incentives with strategic imperatives, thus paying for performance.

The chart below illustrates the achievement levels under our incentive compensation program over the last three years, and illustrates how the annual incentive compensation plan serves to execute on the Compensation Committee’s goal of paying for performance:

Incentive Compensation Plan Achievement — 2016-2018

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Annual Incentive Compensation Plan

2019 Corporate Performance Objectives

In January 2019, our Board, based on the recommendations of the Compensation Committee, approved corporate objectives for our 2019 incentive compensation plan. Under this plan, the funding targets for our executive officers remain the same as for 2018. Corporate performance objectives for 2019 are based on achievement of drug discovery objectives, drug development objectives and commercial objectives.

Threshold, target and outperform achievement levels are defined for each corporate objective and, depending on the achievement of those performance levels, a payout ranging from 0% to 150% may be made for each objective. Bonus objectives include an extra 5% for Drug Discovery, an extra 20% for Drug Development, and an extra 10% for Business Development. Collectively, the bonus opportunities enable the payout of up to an additional 35 percentage points for extraordinary achievements beyond core objectives.

The Committee and management believe that achievement of the target levels of performance will be difficult and challenging, but achievable with significant effort and skill, favorable preclinical study and clinical trial results and continued strong commercial performance.

Equity-Based Incentive Awards

The Compensation Committee administers equity-based incentive awards, such as stock option grants, RSUs and performance shares that are made to our executive officers under our 2010 Stock Incentive Plan. The Compensation Committee believes that by providing those persons who have substantial responsibility for our management and growth with an opportunity to increase their ownership of our stock, the best interests of our stockholders and executive officers will be closely aligned. Therefore, executive officers are eligible to receive equity-based incentive awards when the Compensation Committee performs its annual review, although these awards may be granted at other times in recognition of exceptional achievements. As is the case when the amounts of base salary and initial equity awards are determined, the Compensation Committee conducts a review of all components

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of an executive officer’s compensation when determining annual equity awards to ensure that the executive’s total compensation conforms to our overall philosophy and objectives.

Under our 2010 Stock Incentive Plan, we may grant restricted shares, performance shares, RSUs or stock appreciation rights.

In 2018, our executive officers received stock options and performance shares and, for 2019, our executive officers will receive stock options, performance shares, and RSUs. The value of all of these awards are inherently performance-based.

In addition to the performance-based aspects of stock options, performance shares and RSUs, the four-year vesting periods of all of these awards also serves a critical retention function. Time-based vesting helps ensure the long-term retention of highly valuable executive officers, in whom we have invested considerable time and money, and the intellectual capital they create as well as continuity of their respective teams. The performance-based components and time-based components of our equity compensation program are designed to encourage both an appropriate level of risk-taking and a focus on sound long-term decision making, thus aligning executive interests with the long-term best interests of our Company and our stockholders.

For our 2018 annual equity grants, stock options comprised 75% of an executive officer’s target equity compensation and performance shares comprised 25%. As described above under “—Equity Grant Practices,” for 2019 the Compensation Committee has determined that our executive officers’ annual equity award mix should be 50% stock options, 25% performance shares and 25% RSUs to bring our practices in line with our peer group and the broader market norm and to provide greater retentive value from our equity awards.

Performance shares granted in July 2018 had revenue triggers that were determined by the Compensation Committee in February 2018. Depending on revenue actually achieved, the payout on these performance shares could have varied from 0% to 150% of target. These performance shares comprise 25% of an executive officer’s target equity compensation awarded in connection with our annual equity grants. The Compensation Committee believes that these performance shares align our executive officers’ interest even more closely with the financial performance of our Company and the eventual value delivered to stockholders. For 2018, the revenue target for the performance shares that would have yielded a 100% payout was an aspirational, internal, stretch target. The Compensation Committee believes such stretch revenue targets help incentivize executives to achieve maximum performance and are a key element of the pay-for-performance strategy. While we achieved record revenue in 2018, we nevertheless did not achieve the internal, stretch target. Accordingly, in February 2019, the Compensation Committee determined that the performance shares earned were only 83% of the target payout.

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Performance Share Achievement 2018

Target Value of 2018 Equity Grants

For the 2018 annual equity grants, our CEO received awards with a grant date target value of $7,000,000 and each of our executive vice presidents received awards with a grant date target value of $1,800,000, in each case, unchanged from the values awarded in July 2017.

While, for our CEO, the Compensation Committee did not target a particular peer group percentile in setting the 2018 equity award values, in July 2018 when the Compensation Committee was actually granting these awards, it noted that then current peer group data indicated that the value of peer group long-term incentive awards had increased. Accordingly, the Compensation Committee noted that our CEO’s 2018 equity awards would result in target total direct compensation (target total cash compensation plus long-term incentive value of equity awards) approximating only the 30th percentile of our peer group. The Compensation Committee further noted that, for calendar year 2018, when including the outstanding merit stock option grant made to our CEO in January 2018 that was intended to relate to 2017 performance, our CEO’s target total direct compensation would approximate the peer group 40th percentile.

Similarly, for executive officers other than our CEO, the Compensation Committee noted in July 2018 that, because the value of peer group long-term incentive awards had increased since January 2018 when our equity target values were established, target award values likely no longer approximated the peer group 60th percentile.

Nevertheless, despite these target equity award values being lower relative to our then current peer group than initially designed to be, the Compensation Committee decided - in keeping with its pay-for-performance philosophy - that no changes would be made at that time.

For a discussion of updates to the equity grant target values undertaken by the Compensation Committee in 2019, see “—Target Value of 2019 Equity Grants” on page 45.

Outstanding Merit Grants

In January 2018, certain of our named executive officers received outstanding merit option grants intended to incentivize and retain those individuals. Our CEO received a grant with a grant date target

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value of $1,200,000 and certain other named executive officers - Drs. Huber, Stein and Yao - received grants with a grant date target value of $1,000,000. These outstanding merit option grants are subject to four-year cliff vesting. As noted above under “—Compensation Practices and Policies—Effects of Stockholder Advisory Vote on Executive Compensation,” the Compensation Committee has now eliminated the practice of awarding outstanding merit option grants (formerly named special option grants) to our CEO and no such grant was made in 2019.

2018 Retention Plans

With the failure of our ECHO-301 program in April 2018 and the significant stock price decline which accompanied it, the Compensation Committee believed it was vital to act to preserve the two key engines of growth within Incyte – namely, the salesforce which generates the revenue to fund our day-to-day operations and the R&D effort which aims to produce the compounds that will potentially lead to future growth. Accordingly, in June 2018, the Compensation Committee adopted retention plans utilizing performance share awards for certain groups of employees of our Company, namely key R&D employees and our salesforce. The R&D retention plan participants included three of our named executive officers, Drs. Huber, Stein and Yao, who each received performance share awards potentially representing 50,000 shares of common stock, which would be earned based on a specific number of investigational new drug (IND) filings made by our Company during a specified time frame and, if earned, would vest on the third anniversary of the initial grant date.

Full Value Share Issuance Limits

While the Compensation Committee, in its discretion, may elect to make grants of restricted shares, performance shares, RSUs or stock appreciation rights if it deems it advisable, the 2010 Stock Incentive Plan contains a limit on the total amount of shares that may be issued other than upon the exercise of stock options or stock appreciation rights or pursuant to sales of restricted shares at purchase prices at least equal to the fair market value of the shares sold. That limit is currently 3,500,000 shares and is proposed to be eliminated in connection with the amendments to the 2010 Stock Incentive Plan described under Proposal 3.

Termination Based Compensation Under Employment Agreements and Offer Letters

Our executive officers are parties to employment agreements and offer letters, as described below under “Employment Contracts, Termination of Employment and Change-in-Control Arrangements.”

These employment agreements and offer letters provide for severance payments and acceleration of vesting of equity-based awards upon termination of employment under the circumstances described below under “Employment Contracts, Termination of Employment and Change-in-Control Arrangements.” In general, the employment agreements provide for severance benefits if an officer’s employment is terminated within 24 months following a change in control. These agreements are designed both to attract executives, as we compete for talented employees in a marketplace where such protections are routinely offered, and to retain executives and provide continuity of management in the event of an actual or threatened change in control.

Other Compensation

All of our full-time employees, including our executive officers, may participate in our health programs, such as medical, dental and vision care coverage, and our 401(k) and life and disability insurance programs. These benefits are designed to provide our executive officers and eligible employees a competitive total compensation package that enables us to attract and retain qualified

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personnel. Under our employment agreement with our CEO, we paid the premiums with respect to a six-year insurance policy that becomes payable to the CEO or his estate upon his disability or death, although at his suggestion we recently amended his employment agreement to eliminate our obligation to pay the last year’s premium on that insurance policy, as described below under “Employment Contracts, Termination of Employment and Change-in-Control Arrangements.”

Target Value of 2019 Equity Grants

In February 2019, the Compensation Committee established grant date target values for the 2019 annual equity grants for our CEO and other executive officers. In determining to establish a grant date target value of $12,900,000 for our CEO, the Committee noted that the 2019 peer group data presented to the Committee in November 2018 indicated that our CEO’s target total direct compensation (target total cash compensation plus long-term incentive value) for 2018 approximated the peer 25th percentile despite his target total cash compensation (base salary plus target bonus) approximating the peer 50th percentile. The Committee noted our Company’s overall performance in 2018 despite the ECHO-301 disappointment and the CEO’s strong leadership following that development as our Company continued to increase product revenues and continued to advance product candidates through our clinical pipeline, with a number of late-stage candidates that can accelerate near-term growth. Our CEO’s 2019 equity grant date target value approximates the 2019 peer group 68th percentile for long-term incentive value and places him at approximately the peer 67th percentile for target total direct compensation. The Committee established grant date target values of $2,200,000 for each of our other executive officers who is eligible to receive annual equity grants in 2019, intended generally to approximate the peer 60th percentile for long-term incentive value. Ms. Stamoulis joined us in February 2019, received initial equity awards with an aggregate grant date target value of $3,300,000 on joining us, and will not receive a 2019 annual equity award but instead will be entitled to receive, on the first anniversary of the commencement of her employment and in July 2020, equity awards with an aggregate grant date target value of $1,300,000 and $2,200,000, respectively.

CEO Pay Ratio

As required by Section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act and Item 402(u) of Regulation S-K we are providing the following information about the relationship of the annual total compensation of our employees and the annual total compensation of Mr. Hoppenot, our CEO. The pay ratio included in this information is a reasonable estimate calculated in a manner consistent with Item 402(u) of Regulation S-K.

For 2018, our last completed fiscal year:

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To identify the median of the annual total compensation of all our employees, as well as to determine the annual total compensation of the “median employee,” the methodology and the material assumptions, adjustments, and estimates that we used were as follows:

Compensation Committee Report

This report shall not deemed to be “soliciting material” or “filed” with the Securities and Exchange Commission or be deemed incorporated by reference into any filing under the Securities Act of 1933 or under the Securities Exchange Act of 1934, except to the extent the Company specifically incorporates it by reference into a document filed under such Acts.

The Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis set forth in this Proxy Statement with our management. Based on such review and discussions, the Compensation Committee recommended to the Board that the Compensation Discussion and Analysis be included in this Proxy Statement and incorporated by reference into the Company’s Annual Report on Form 10-K for the year ended December 31, 2018.

Compensation Committee

Paul A. Brooke (Chair)

Julian C. Baker

Jean-Jacques Bienaimé

Named Executive Officers

The Summary Compensation Table, Grants of Plan-Based Awards Table and the tables that follow provide compensation information for our named executive officers, including Hervé Hoppenot, our President and CEO, David W. Gryska, our Executive Vice President and Chief Financial Officer until December 31, 2018, and Reid M. Huber, Steven H. Stein, Wenqing Yao and Maria E. Pasquale.

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Our named executive officers’ total compensation for 2018 as determined under the rules of the Securities and Exchange Commission, or SEC, is set forth in the following table under the caption “Total.”

SUMMARY COMPENSATION TABLE