Novelion Therapeutics Inc.
NOVELION THERAPEUTICS INC. (Form: DEF 14A, Received: 05/01/2017 16:04:52)

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

SCHEDULE 14A
(Rule 14a-101)

INFORMATION REQUIRED IN PROXY STATEMENT

SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934

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  Filed by a Party other than the Registrant o

Check the appropriate box:

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  Preliminary Proxy Statement

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  Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))

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  Definitive Proxy Statement

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  Definitive Additional Materials

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  Soliciting Material Pursuant to § 240.14a-12

NOVELION THERAPEUTICS INC.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

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  No fee required

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  Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number of the Form or Schedule and the date of its filing.

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LOGO

May 1, 2017

To the Shareholders of Novelion Therapeutics Inc.

I am pleased to invite you to attend the Annual General Meeting (the "Annual Meeting") of shareholders of Novelion Therapeutics Inc. ("Novelion") to be held on Wednesday, June 28, 2017 at 8:30 AM (Eastern Time)/5:30 AM (Pacific Time) at Boardroom 444 of the Sheraton Gateway Hotel in Toronto International Airport, Terminal 3, Toronto AMF, Toronto, Ontario.

The attached Notice of Annual Meeting and Proxy Statement provide details of the business to be conducted at the Annual Meeting. The Notice of Annual Meeting and Proxy Statement and the Instrument of Proxy (or voting information form) are first being mailed to shareholders on or about May 18, 2017. Your vote is very important to us. Whether or not you plan to attend our Annual Meeting, please communicate your vote in accordance with the instructions in the Proxy Statement and the enclosed Instrument of Proxy (or voting information form).

Thank you for your continued support of Novelion and I look forward to seeing you at the Annual Meeting on June 28, 2017.

Sincerely,


Novelion Therapeutics Inc.

GRAPHIC

Mary Szela
Chief Executive Officer


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Novelion Therapeutics Inc.
887 Great Northern Way, Suite 250
Vancouver, British Columbia, V5T 4T5

Notice of Annual General Meeting of Shareholders to be held on June 28, 2017

1.
To receive the Annual Report on Form 10-K, and the Audited Consolidated Financial Statements of Novelion for the year ended December 31, 2016, together with the Report of the Independent Registered Chartered Accountants on those Financial Statements.

2.
To elect nine directors (the "Directors") to serve for the ensuing year.

3.
To approve the appointment of Deloitte & Touche LLP as independent auditors of Novelion for the ensuing year and to authorize the Audit Committee of the Board of Directors to fix the remuneration to be paid to the auditors.

4.
To conduct an advisory (non-binding) vote to approve the compensation of our named executive officers.

5.
To conduct an advisory (non-binding) vote on the frequency of the advisory vote to approve the compensation of our named executive officers.

6.
To approve an ordinary resolution to adopt the amended and restated Novelion 2017 Equity Incentive Plan (as amended from time to time, the "2017 Plan").

7.
To approve an ordinary resolution to adopt the 2017 Employee Stock Purchase Plan ("ESPP").

8.
To transact such other business as may properly come before the Annual Meeting, or at any adjournments or postponements thereof.

You are entitled to receive notice of and attend the Annual Meeting, and may vote at the Annual Meeting, if you are a shareholder of Novelion at the close of business on May 10, 2017, which we refer to as the "record date." If you are a registered shareholder on the record date and you are unable to attend the Annual Meeting in person, you may vote by proxy on the matters to be considered at the Annual Meeting. Please read the notes accompanying the Instrument of Proxy enclosed with these materials and then follow the instructions for voting by proxy contained in this Proxy Statement. If on May 10, 2017, your shares in Novelion were held of record in your brokerage firm, securities dealer, trust company, bank or another similar organization, you may vote at the Annual Meeting if you complete a voting information form obtained from that organization issued in your name and carefully follow any instructions that are provided to you in connection with that voting information form, or if you follow the instructions contained in this Proxy Statement for submitting another form of written documentation to appoint yourself, or your nominee, as a proxyholder.

In order for it to be voted at the Annual Meeting, a proxy must be received (whether delivered by mail, telephone or Internet) by no later than 8:30 AM (Eastern Time)/5:30 AM (Pacific Time) on Tuesday, June 27, 2017 by our registrar and transfer agent, Computershare Investor Services Inc., Attn: Proxy Department, 100 University Avenue, 9th Floor, Toronto, Ontario, M5J 2Y1, telephone number: 1-866-732-VOTE (8683), website: www.investorvote.com . The Chairman of the Annual Meeting may determine, in his sole discretion, to accept or reject an Instrument of Proxy that is delivered in person to the Chairman at the Annual Meeting as to any matter in respect of which a vote has not already been cast.  


The enclosed Instrument of Proxy is solicited by our Board of Directors and management, but you may amend it if you wish by striking out the names listed in the Instrument of Proxy and inserting in the space provided the name of the person you wish to represent you at the Annual Meeting.


DATED at Vancouver, British Columbia, this 1st day of May, 2017.


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BY ORDER OF THE BOARD OF DIRECTORS

GRAPHIC

Mary Szela
Chief Executive Officer


Whether or not you plan to attend the Annual Meeting, please communicate your vote in accordance with the instructions in the Proxy Statement and the enclosed Instrument of Proxy (or voting information form) as soon as possible. If you are able to attend the Annual Meeting and wish to vote your shares in person, you may do so at any time before the proxy is exercised.



Important Notice Regarding the Availability of Proxy Materials

This Proxy Statement and our Annual Report for the fiscal year ended December 31, 2016 are available at http://materials.proxyvote.com/67001K .


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  Page  

QUESTIONS AND ANSWERS ABOUT THIS PROXY STATEMENT AND OUR ANNUAL MEETING

    2  

CORPORATE GOVERNANCE

   
8
 

COMPENSATION OF DIRECTORS

   
21
 

PROPOSAL NO. 1 ELECTION OF DIRECTORS

   
26
 

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

   
33
 

EXECUTIVE COMPENSATION

   
35
 

COMPENSATION COMMITTEE REPORT

   
56
 

SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS

   
66
 

INDEBTEDNESS OF DIRECTORS AND EXECUTIVE OFFICERS

   
67
 

REPORT OF THE AUDIT COMMITTEE

   
67
 

PROPOSAL NO. 2 APPROVAL OF APPOINTMENT OF INDEPENDENT AUDITORS

   
69
 

PROPOSAL NO. 3 ADVISORY VOTE TO APPROVE THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS

   
70
 

PROPOSAL NO. 4 ADVISORY VOTE ON THE FREQUENCY OF THE ADVISORY VOTE TO APPROVE THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS

   
71
 

PROPOSAL NO. 5 APPROVAL OF AMENDED AND RESTATED NOVELION 2017 EQUITY INCENTIVE PLAN

   
72
 

PROPOSAL NO. 6 APPROVAL OF NOVELION 2017 EMPLOYEE STOCK PURCHASE PLAN

   
80
 

INTEREST OF CERTAIN PERSONS IN MATERIAL TRANSACTIONS

   
83
 

AUDITED CONSOLIDATED FINANCIAL STATEMENTS AND ADDITIONAL INFORMATION

   
84
 

SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

   
84
 

OTHER BUSINESS

   
84
 


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NOVELION THERAPEUTICS INC.
887 Great Northern Way, Suite 250
Vancouver, British Columbia, V5T 4T5

PROXY STATEMENT FOR
ANNUAL GENERAL MEETING OF SHAREHOLDERS
TO BE HELD ON FRIDAY, JUNE 28, 2017

        We are providing you this Notice of Annual General Meeting and Proxy Statement, together with the enclosed Instrument of Proxy, because we are soliciting your proxy to vote at our Annual General Meeting of shareholders to be held on Wednesday, June 28, 2017 (the "Annual Meeting"). This Proxy Statement contains information about the matters being voted on at the Annual Meeting and important information about Novelion. Unless otherwise stated, information in this Proxy Statement is given as of April 18, 2017. As many of our shareholders are expected to be unable to attend the Annual Meeting in person, proxies are solicited, to give each shareholder an opportunity to vote on all matters that will properly come before the Annual Meeting. Novelion intends to mail this Proxy Statement and accompanying Instrument of Proxy or voting information form ("VIF"), as applicable, on or about May 18, 2017 to all shareholders of record as of the close of business on May 10, 2017, which we refer to as the "record date."

        We use a number of abbreviations in this Proxy Statement. We refer to Novelion Therapeutics Inc. as "Novelion" or "the Company," "we," "us" or "our" and to our board of directors as the "Board" or the "Board of Directors." The term "proxy solicitation materials" includes this Proxy Statement and the enclosed Instrument of Proxy or VIF, as applicable. References to "2016" and "2017" mean our 2016 fiscal year which began on January 1, 2016 and ended on December 31, 2016 and our 2017 fiscal year which began on January 1, 2017 and will end on December 31, 2017, respectively. Our Annual General Meeting of Shareholders to be held on Wednesday, June 28, 2017 is referred to as the "Annual Meeting" or the "Meeting." References in this Proxy Statement to the Annual Meeting include any adjournment or postponement of the Annual Meeting.

        At our 2016 annual general meeting of shareholders held on June 17, 2016, the six incumbent directors of Novelion were re-elected to serve on the Board for the ensuing year, or until their earlier resignation or removal as follows: Mr. Jason Aryeh, Dr. Geoffrey Cox, Dr. John Kozarich, Mr. Jeffrey Meckler, Dr. Stephen Sabba and Mr. John Thomas, Jr. (hereinafter referred to as the "Pre-Merger Board"). On June 14, 2016, we entered into an agreement and plan of merger (the "Merger Agreement") with Aegerion Pharmaceuticals, Inc. ("Aegerion") and Isotope Acquisition Corp., a wholly-owned subsidiary of Novelion ("Isotope"), pursuant to which Aegerion would merge with and into Isotope and become a wholly-owned subsidiary of Novelion (the "Merger"). Under the Merger Agreement, the parties agreed that on completion of the Merger, the Board would initially consist of ten individuals until the Annual Meeting, comprised of four individuals designated by Novelion, four individuals designated by Aegerion, one individual designated by Broadfin Capital, LLC ("Broadfin Capital") and one individual designated by Sarissa Capital Management LP ("Sarissa Capital"), the latter two individuals to be subject to the reasonable approval of the Novelion and Aegerion boards. Mr. Kevin Kotler was designated by Broadfin Capital and Dr. Jorge Plutzky was designated by Sarissa Capital. The right of each of Broadfin Capital and Sarissa Capital to designate a director to the Board expires as of the Annual Meeting. At a special meeting of shareholders of the Company held on November 7, 2016, Mr. Sandford Smith, Mr. Donald Stern, Ms. Mary Szela and Ms. Anne VanLent, each a former director of Aegerion, were elected to the Board of Novelion, subject to and conditional upon the completion of the Merger. On November 29, 2016, the Merger was completed and Mr. Smith, Mr. Stern, Ms. Szela and Ms. VanLent joined the Board, and Dr. Kozarich and Mr. Meckler resigned from the Board and were replaced by Mr. Kotler and Dr. Plutzky. As a result, on November 29, 2016, the Board was comprised of the following ten individuals: Mr. Aryeh, Dr. Cox, Mr. Kotler, Dr. Plutzky, Dr. Sabba, Mr. Smith, Mr. Stern, Ms. Szela, Mr. Thomas and Ms. VanLent (hereinafter referred to as the "Post-Merger Board"). Pursuant to the Merger Agreement, until the date which is three business days following the Annual Meeting, Sarissa Capital has the right to appoint an additional designee who is reasonably acceptable to the Board. References to the "Board" in this Proxy Statement are referring to the "Pre-Merger Board" or the "Post-Merger Board", as context may require. On March 30, 2017, Sandford Smith resigned from the Board and Dr. Mark Corrigan was appointed to the Board; as a result, references to the Board or "Post-Merger Board" on or after such date refer to the Board as constituted after this change.

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        Certain statements in this Proxy Statement may constitute "forward looking information" within the meaning of applicable Canadian and United States securities laws. Forward looking statements include statements regarding, among other things, our plans with respect to executive compensation in future periods. All such forward looking statements involve assumptions that, although believed to be reasonable based on information currently available to management, are subject to risks, uncertainties and other factors that could result in material changes to the plans expressed or described in the statements. You should not place undue reliance on any such forward-looking statements. Except as required by law, we undertake no obligation to update or revise the information contained in this proxy statement, whether as a result of new information, future events or circumstances or otherwise.

        On December 16, 2016, we completed a one-for-five (1:5) consolidation of all of our issued and outstanding common shares, without par value, for shareholders of record as of December 16, 2016 (the "Consolidation"). All share and per-share data included in this Proxy Statement give effect to the Consolidation unless otherwise noted.


QUESTIONS AND ANSWERS ABOUT THIS PROXY STATEMENT
AND OUR ANNUAL MEETING

Why did I receive this Proxy Statement?

        You are receiving these proxy materials from us because you owned common shares of Novelion at the close of business on the record date. When you vote using the Instrument of Proxy, you appoint Mr. Jason Aryeh or, failing him, Ms. Mary Szela, as your representative at the Annual Meeting. Mr. Aryeh and Ms. Szela will vote your shares at the Annual Meeting as you have instructed them on the Instrument of Proxy. This way, your shares will be voted whether or not you attend the Annual Meeting. Even if you plan to attend the Annual Meeting, it is a good idea to vote by proxy in advance of the Annual Meeting in case your plans change. You have the right to appoint another person to attend and act on your behalf at the Annual Meeting other than the persons named in the enclosed Instrument of Proxy. To exercise this right, you should strike out the names of the persons named in the Instrument of Proxy and insert the name of your nominee in the blank space provided. A person appointed as a proxy holder need not be a shareholder of Novelion.


Can I access the proxy materials on the Internet?

        Yes. This Proxy Statement and our Annual Report for the fiscal year ended December 31, 2016 are available at http://materials.proxyvote.com/67001K . The Proxy Statement and Form 10-K are also available on Novelion's profile on the SEDAR website ( www.sedar.com ) and EDGAR website ( www.sec.gov ).


What is the date, time and place of the Annual Meeting?

        The Annual Meeting will be held at Boardroom 444 at the Sheraton Gateway Hotel in Toronto International Airport, Terminal 3, Toronto AMF, Toronto, Ontario, on Wednesday, June 28, 2017 at 8:30 AM (Eastern Time)/5:30 AM (Pacific Time).


Who is entitled to vote at the Annual Meeting?

        Only shareholders of record at the close of business on the record date may vote at the Annual Meeting. On a show of hands every shareholder present in person has one vote, and on a poll every shareholder present in person or by proxy has one vote, for each Novelion common share registered in the shareholder's name. There are no other classes of voting securities other than the common shares. Cumulative voting is not permitted.


What am I voting on at the Annual Meeting?

        At the Annual Meeting, shareholders will be asked to vote on the following items of business:

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        Novelion does not know of any business or proposals to be considered at the Annual Meeting other than those set out in this Proxy Statement. If any other business is proposed and properly presented at the Annual Meeting, the proxies received from our shareholders give the proxy holders the authority to vote on the matter at their discretion. The proxy holders intend to vote the shares they represent as directed by our Board.


How does the Board recommend that I vote?

        Our Board believes that each of the resolutions being put to the shareholders at the Annual Meeting is in the best interests of Novelion and our shareholders and, accordingly, recommends that each shareholder vote such shareholder's shares:


What vote is required to approve each proposal?

        Broker Non-Votes and Abstentions.     A "broker non-vote" occurs when a bank, broker or other holder of record holding shares for a beneficial owner does not vote on a particular proposal because the nominee does not have authority to vote on that particular proposal without receiving voting instructions from the beneficial owner. Broker non-votes will be treated as present for purposes of determining whether a quorum is present. Common shares held by holders who abstain from voting (or vote "withhold") will also be included for quorum purposes. Broker non-votes and abstentions are not counted as votes cast and, therefore, will have no effect on the outcome of the matter. However, a broker will have the discretion to vote on Proposal No. 2 (appointment of independent auditors) without any instructions from the beneficial owner. Brokers may not vote on the other proposals contained in this Proxy Statement, which are considered "non-routine" proposals, unless they have received voting instructions from the beneficial owner, and to the extent that they have not received voting instructions, brokers report such number of shares as "non-votes". We encourage all shareholders that hold shares through a bank, broker or other holder of record to provide voting instructions to such parties well in advance of the Annual Meeting to ensure that their shares are voted at the Annual Meeting.

        Election of Directors.     For Proposal No. 1, under the Business Corporations Act (British Columbia) (the "BCBCA") and the Articles of Novelion, directors are entitled to be elected by a plurality of the common shares voted at the Annual Meeting. This means that the nine nominees with the most votes for election will be elected, subject to the requirements of the Company's majority voting policy (the "Majority Voting Policy"), which applies for elections of directors at uncontested shareholders' meetings. Pursuant to this policy, any nominee for director for which there are a greater number of votes "withheld" than votes "for" his or her election will be

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required to tender his or her resignation as a director of the Company. For more details with respect to the Majority Voting Policy, see " Novelion Proposal No. 1: Election of Directors — Majority Voting Policy ".

        You may choose to vote, or withhold your vote, separately for each nominee director.

        Appointment of Auditors.     For Proposal No. 2, the appointment of Deloitte & Touche LLP as auditors and authorization of the Audit Committee of the Board to fix the remuneration to be paid to the auditors, the affirmative vote, in person or by proxy, of a majority of the common shares voted at the Annual Meeting will be required for approval.

        Advisory Vote to Approve the Compensation of Named Executive Officers.     For Proposal No. 3, the advisory vote to approve the compensation of our named executive officers, as disclosed in this Proxy Statement pursuant to the compensation disclosure rules of the SEC, the affirmative vote, in person or by proxy, of a majority of the common shares voted at the Annual Meeting will be required for approval, on an advisory basis. Because your vote is advisory, it will not be binding on the Board, the Compensation Committee or Novelion. However, the Compensation Committee and the Board will review the voting results and take them into consideration when making future decisions about executive compensation.

        Advisory Vote on the Frequency of Future Advisory Votes to Approve the Compensation of Named Executive Officers.     For Proposal No. 4, the frequency of an advisory vote to approve the compensation of our named executive officers, the affirmative vote, in person or by proxy, of a majority of the common shares voted at the Annual Meeting will be required for approval, on an advisory basis. If none of the frequency alternatives (one year, which our Board recommends, two years or three years) receive a majority vote, we will consider the frequency that receives the highest number of votes by shareholders to be the frequency that has been selected by the shareholders. However, because your vote is advisory and not binding on the Board, the Compensation Committee or Novelion, the Board may decide that it is in our and our shareholders' best interests to hold an advisory vote on executive compensation more or less frequently than the alternative approved by our shareholders.

        Amended and Restated Novelion 2017 Equity Incentive Plan.     For Proposal No. 5, the approval of the 2017 Plan, the affirmative vote, in person or by proxy, of a majority of the common shares voted at the Annual Meeting will be required for approval.

        2017 Employee Stock Purchase Plan.     For Proposal No. 6, the approval of the ESPP, the affirmative vote, in person or by proxy, of a majority of the common shares voted at the Annual Meeting will be required for approval.


Who may attend the Annual Meeting?

        Novelion shareholders are invited to attend the Annual Meeting, including shareholders whose shares are held by their brokerage firm or another similar organization, or who otherwise do not hold their common shares in their own name (referred to herein as "Beneficial Shareholders"). Beneficial Shareholders fall into two categories — those who object to their identity being known to the issuers of securities which they own ("OBOs") and those who do not object to their identity being made known to the issuers of the securities which they own ("NOBOs"). Beneficial Shareholders should note that only proxies deposited by shareholders who appear on the records maintained by Novelion's registrar and transfer agent as registered holders of common shares will be recognized for the purposes of attending and voting at the Annual Meeting. If common shares are listed in an account statement provided to a Beneficial Shareholder by a broker, then those common shares will, in all likelihood, not be registered in the shareholder's name. Such common shares will more likely be registered under the name of the shareholder's broker or an agent of that broker. Without specific instructions, brokers and their agents and nominees are prohibited from voting shares for the broker's clients on non-routine matters. Therefore, each Beneficial Shareholder should ensure that voting instructions are communicated to the appropriate person well in advance of the Annual Meeting.

        Although a Beneficial Shareholder may not be recognized directly at the Annual Meeting for the purposes of voting common shares registered in the name of such shareholders' broker, a Beneficial Shareholder may attend the Annual Meeting as proxyholder for the registered shareholder and vote the common shares in that

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capacity. A Beneficial Shareholder who wishes to attend the Annual Meeting and to vote their common shares as proxyholder for the registered shareholder, should enter their own name in the blank space on the VIF and return the same to their broker (or the broker's agent) in accordance with the instructions provided by such broker. Alternatively, National Instrument 54-101 — Communication with Beneficial Owners of Securities of a Reporting Issuer ("NI 54-101") allows a Beneficial Shareholder to submit to the applicable intermediary any document in writing that requests that the Beneficial Shareholder, or a nominee of the Beneficial Shareholder, be appointed as proxyholder. If such a request is received, the applicable intermediary must arrange, without expense to the Beneficial Shareholder, to appoint such Beneficial Shareholder or its nominee as a proxyholder and to deposit that proxy within the time specified in this Proxy Statement, provided that the intermediary receives such written instructions from the Beneficial Shareholder at least one business day prior to the time by which proxies are to be submitted at the Annual Meeting, with the result that such a written request must be received by 5:30 AM (Pacific Time)/8:30 AM (Eastern Time) on the day which is at least two business days prior to the Annual Meeting.


What is the quorum for the Annual Meeting?

        The Consolidation resulted in a reduction in the issued and outstanding common shares from approximately 92,653,562 to approximately 18,530,323 as of December 16, 2016. As of April 18, 2017, the authorized share structure of Novelion was comprised of 100,000,000 common shares and 5,000,000 non-voting First Preference shares, of which, there were 18,580,688 common shares of Novelion issued and outstanding. All common shares in the capital of the Company carry the right to one vote. At least (i) two shareholders, (ii) two proxy holders representing two shareholders, or (iii) one shareholder and a proxy holder representing another shareholder entitled to vote at the Annual Meeting, present in person at the beginning of the Annual Meeting and collectively holding or representing by proxy in the aggregate not less than 33 1 / 3 % of the issued and outstanding Novelion common shares as of the record date, will constitute a quorum for the Annual Meeting. To the knowledge of the directors and executive officers of Novelion, as of April 18, 2017, the only person or company that beneficially owns, controls or directs, directly or indirectly, 10% or more of Novelion's common shares is Broadfin Capital which, as evidenced by public filings, owns 1,948,554 common shares, representing approximately 10.5% of the issued and outstanding common shares.


How do I vote?

        Carefully read and consider the information contained or incorporated by reference in this Proxy Statement. You should also determine whether you hold your shares directly in your name as a registered shareholder or through a broker or other nominee, because this will determine the procedure that you must follow in order to vote. If you are a registered shareholder of Novelion (that is, if your shares are registered in your name, as opposed to being held through a broker or other intermediary), you may vote in any of the following ways:

        All votes made by proxy must be received (whether delivered by mail, telephone or Internet) no later than Tuesday, June 27, 2017 at 8:30 AM (Eastern Time)/5:30 AM (Pacific Time).

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        If you are a Beneficial Shareholder, then you have received this material from your broker or the intermediary seeking your instructions as to how you wish your shares to be voted. In that case, follow the instructions given to you by your broker or the other intermediary. Existing Canadian regulatory policy requires brokers and other intermediaries to seek voting instructions from Beneficial Shareholders in advance of shareholder meetings. The various brokers and other intermediaries have their own mailing procedures and provide their own return instructions to clients, which should be carefully followed by Beneficial Shareholders in order to ensure that their common shares are voted at the Annual Meeting. The form of proxy supplied to a Beneficial Shareholder by its broker (or the agent of the broker) is substantially similar to the Instrument of Proxy provided directly to registered shareholders by Novelion. However, its purpose is limited to instructing the registered shareholder (i.e., the broker or agent of the broker) how to vote on behalf of the Beneficial Shareholder. A Beneficial Shareholder who receives a VIF from its broker or other intermediary cannot use that form to vote common shares directly at the Annual Meeting. The VIFs must be returned to your broker or other intermediary (or instructions respecting the voting of common shares must otherwise be communicated to your broker or other intermediary) well in advance of the Annual Meeting in order to have the common shares voted. If you have any questions respecting the voting of common shares held through a broker or other intermediary, please contact that broker or other intermediary for assistance.

        The Notice of Meeting, Proxy Statement, Instrument of Proxy and VIF, as applicable, and the 2016 Annual Report are being provided to both registered shareholders and Beneficial Shareholders. Subject to the provisions of NI 54-101, issuers may request and obtain a list of their NOBOs from intermediaries directly or via their transfer agent and may obtain and use the NOBO list for the distribution of proxy-related materials directly to such NOBOs.

        Novelion will distribute copies of the Notice of Meeting, Proxy Statement, VIF and 2016 Annual Report to intermediaries for distribution to NOBOs. Unless you have waived your right to receive the Notice of Meeting, Proxy Statement and VIF, intermediaries are required to deliver them to you as a NOBO of Novelion and to seek your instructions on how to vote your common shares.

        Novelion's OBOs can expect to be contacted by their brokers or their broker's agents. Novelion will assume the costs associated with the delivery of the Notice of Meeting, Proxy Statement, VIF and 2016 Annual Report as set out above, to OBOs by intermediaries.

        The Chairman of the Annual Meeting may determine, in his sole discretion, to accept or reject an Instrument of Proxy that is delivered in person to the Chairman at the Annual Meeting as to any matter in respect of which a vote has not already been cast. If you are a shareholder of record, you have the right to appoint another person to attend and act on your behalf at the Annual Meeting other than the persons named in the enclosed Instrument of Proxy. To exercise this right, you should strike out the names of the persons named in the Instrument of Proxy and insert the name of your nominee in the blank space provided. A person appointed as a proxy holder need not be a shareholder of Novelion. If you are a Beneficial Shareholder, you should follow the instructions set out above in the section entitled "Who may attend the Annual Meeting?" in connection with appointing another person to attend and act for it at the Annual Meeting.


How will proxies be exercised?

        The proxy holder will vote or withhold from voting according to instructions in the Instrument of Proxy on any ballot that may be called for and for which a choice has been specified. If you properly return your Instrument of Proxy, but do not include instructions on how to vote, your shares will be voted:

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         The Instrument of Proxy also confers upon the proxy holder discretionary authority to vote all shares represented by the proxy with respect to amendments or variations to matters identified in the Notice of Meeting and any other matter that properly comes before the Annual Meeting. We know of no such amendment, variation or other matter that is to be presented for action at the Annual Meeting. However, if any other matters which are not now known to us should properly come before the Annual Meeting, the proxies will be voted, or not voted, by the proxy holder in his or her discretion.


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

        You may receive more than one set of proxy materials because you own Novelion common shares that are registered under different names. For example, you may own some shares directly as a shareholder of record and other shares through a broker, or you may own shares through more than one broker. In these situations, you will receive multiple sets of proxy materials. It is necessary for you to vote all of the Instruments of Proxy according to the instructions contained in this Proxy Statement and to follow the instructions for any alternative voting procedures you receive in order to vote all of the shares you own. Each Instrument of Proxy you receive will come with its own prepaid return envelope. If you vote by mail, please make sure you return each Instrument of Proxy in the return envelope that accompanies that Instrument of Proxy.


Can I change my vote after I have voted?

        You may revoke your proxy at any time before it is exercised at the Annual Meeting.     A proxy may be revoked by voting in person at the Annual Meeting, by an instrument in writing stating that the proxy is revoked and signed and delivered as follows, or in any other manner provided by law. In order to revoke your proxy:


Who will tabulate the votes?

        Our transfer agent, Computershare, will tabulate votes cast by proxy by an automated system. Votes cast by proxy or in person at the Annual Meeting will be counted by the persons appointed by us to act as scrutineer for the Annual Meeting.


Who pays the cost of the proxy solicitation?

        This solicitation is made on behalf of the management of Novelion. We will pay the cost of soliciting these proxies, including the printing, handling and mailing of the proxy materials. Copies of these materials will be given to brokerage firms, securities dealers, trust companies, banks and other institutions that hold our shares

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that are beneficially owned by others. We will reimburse these brokerage firms, securities dealers, trust companies, banks and other institutions for their reasonable out-of-pocket expenses in forwarding proxy materials to beneficial owners of our shares. Proxies may be solicited by certain directors, officers and employees of Novelion personally or by telephone, mail, facsimile or e-mail. No additional compensation will be paid to directors, officers or other Novelion employees for soliciting proxies. We may engage a proxy solicitation firm to assist in soliciting proxies by personal interview, telephone, mail, facsimile or e-mail for a fee; if we do engage such a firm, we expect that the fee would be approximately $15,000, plus expenses.


How can shareholders submit proposals for Novelion's next Annual General Meeting?

        Under U.S. securities laws, the deadline for submitting shareholder proposals for inclusion in the Company's proxy statement and form of proxy for the Company's 2018 annual general meeting of shareholders is January 17, 2018. Proposals must be sent to our registered office at 1800 — 510 West Georgia Street, Vancouver, British Columbia, Canada V6B 0M3.

        Under the BCBCA, a proposal for a matter for consideration at the 2018 annual general meeting of shareholders must be received at our registered office at the address above on or before March 28, 2018. For a proposal under the BCBCA to be valid, it must be in writing, accompanied by the requisite declarations and signed by the submitter and qualified shareholders who at the time of signing are the registered or beneficial owners of shares that, in the aggregate, (i) constitute at least 1% of the issued shares of Novelion that have the right to vote at general meetings, or (ii) have a fair market value in excess of $2,000. For the submitter or a qualified shareholder to be eligible to sign the proposal, that shareholder must have been the registered or beneficial owner of Novelion shares that carry the right to vote at general meetings for an uninterrupted period of at least two years before the date the proposal is signed, among other requirements.


CORPORATE GOVERNANCE

Overview of Our Corporate Governance Principles

        We believe that effective and transparent corporate governance is critical to our long-term success and our ability to create value for our shareholders. We review our corporate governance policies periodically, monitor emerging developments in corporate governance and update our policies and procedures when our Board determines that it would benefit Novelion and our shareholders to do so.

        We maintain a corporate governance page on our website that includes key information about our corporate governance practices, including our Code of Conduct, the charters for the Audit Committee, the Compliance Committee, the Corporate Governance and Nominating Committee and the Compensation Committee of our Board and the Board's Diversity Policy, all of which can be found at Novelion's website at www.novelion.com by clicking on "Corporate Governance" under "Investors." The documents noted above will also be provided without charge to any shareholder who requests them. Any changes to these documents, and any waivers granted by us with respect to our Code of Conduct, will be posted on our website.

        We also monitor our corporate governance policies and practices to maintain compliance with the provisions of the Sarbanes-Oxley Act of 2002, rules of the SEC, National Instrument 58-101 —  Disclosure of Corporate Governance Guidelines , National Policy 58-201 —  Corporate Governance Guidelines , National Instrument 52-110 —  Audit Committees , and The NASDAQ Global Select Market ("NASDAQ") Listing Standards, (collectively, the "Governance Guidelines"). Our policies and practices meet or exceed the Governance Guidelines.


Disclosure Practices

        Novelion has in place disclosure controls and procedures to ensure Novelion meets its information disclosure obligations on a timely basis. These disclosure controls and procedures are evaluated on an ongoing basis, not less than quarterly, to ensure the controls and procedures allow Novelion to accomplish this objective. To implement and review our disclosure controls and procedures, management of Novelion established a Disclosure Practices Committee. The disclosure controls and procedures include procedures for ensuring prompt and effective communication of any material or reportable event to the appropriate executives, and also

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for designating those individuals within Novelion responsible for preparing, reviewing and approving the content of any disclosure.


Code of Conduct

        Novelion has adopted a Global Code of Conduct which is applicable to all directors, officers and employees of Novelion and its affiliates. As further described in the charter of the Audit Committee (the "Audit Committee"), the Audit Committee is responsible for reviewing, at least on an annual basis and with management and its principal financial and accounting officer, compliance with the Code of Conduct, the adequacy of and any requests for waivers under the Code of Conduct and to make recommendations to the Board with regard to any waiver sought with respect to any executive officer or director. As further described in the charter of the Compliance Committee, the Compliance Committee is responsible for reviewing and assessing the adequacy of the Code of Conduct periodically, but at least annually, and to recommend any proposed changes to the Board for approval.

        Novelion has not been required to, and has not, filed a material change report that pertains to any conduct of any of our directors or executive officers that constitutes a departure from the Code.

        The Code of Conduct is available on Novelion's website at www.novelion.com . Novelion will also post on its website any amendment to the Code of Conduct or waivers of compliance by directors or executive officers. In 2016, there were no such waivers granted.

        Novelion complies with the provisions of the BCBCA that deal with conflict of interest situations. Novelion, through directors' and officers' questionnaires and other systems, also gathers and monitors relevant information in relation to potential conflicts of interest that a director or officer may have. As part of these systems, Novelion adopted a Related Party Transactions Policy, under which the Audit Committee will review and pre-approve or otherwise ratify all Novelion "interested transactions," including, with certain exceptions, any transaction, arrangement or relationship in excess of $50,000 in value in any calendar year and of which a "related person" has or will have a direct or indirect interest. A "related person" includes Novelion's executive officers, directors and nominees for director, greater than 5% beneficial owners, and their respective associates, affiliates and immediate family members.


Gender Diversity

        As an extension of the Code of Conduct, the Board has adopted a policy to reflect its commitment to diversity and inclusion in all levels in the workplace and on the Board (the "Diversity Policy"). While the Diversity Policy does not specifically target the identification and nomination of women directors, it does require the Board and the Corporate Governance and Nominating Committee to consider diversity as an element in the overall selection criteria of new Board members and executive officer appointments.

        Specifically, the Board and the Corporate Governance and Nominating Committee are tasked with considering diversity (including gender, as well as age, geography, members of minority groups and persons with disabilities) as an element in the identification and selection criteria and when reviewing qualified candidates for recommendation for appointment or election to the Board and as executive officers.

        The Company does not support the adoption of quotas and, accordingly, no specific targets have been set for female Board members or female executive officers. The Board will proactively monitor the Company's performance in meeting the standards outlined in the Diversity Policy. The Post-Merger Board has not yet had the opportunity to consider the Company's progress on achieving the policy's standards.

        The Diversity Policy requires that each year the Company report on the proportion of female and minority personnel at the Company, in senior executive positions and on the Board in the Company's proxy statement. As of December 31, 2016, (a) two of the Company's seven executive officers were female and none of such personnel identified themselves as part of a minority group, (b) two of the Company's ten Board members were female and none of the Board members identified themselves as belonging to a minority group, and (c) of the non-executive employees of the Company and its subsidiaries, approximately 59% were female. Approximately 30% of the U.S. based non-executive employees of the Company and its subsidiaries identified themselves as belonging to a minority group.

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Mandate of the Board and the Chairman of the Board

        Our Board is responsible for the supervision of the management of the business and affairs of Novelion, the stewardship of Novelion and the enhancement of shareholder value. The Board has adopted a written Mandate, which is applicable to all directors, and which has formalized its position on corporate governance. The Board has also developed a written mandate regarding the position of Chairman of the Board, which is detailed in the Mandate of the Chairman of the Board and described below under the heading " Board Leadership Structure ". The Mandate of the Board and the Mandate of the Chairman of the Board are available on our website at www.novelion.com or copies will be provided without charge to any shareholder who requests them by writing to "Novelion Investor Relations," 887 Great Northern Way, Suite 250, Vancouver, British Columbia, Canada, V5T 4T5. The Corporate Governance and Nominating Committee of the Board is charged with reviewing and ensuring that good corporate governance practices and the Mandate of the Board are followed. The Corporate Governance and Nominating Committee is also responsible for reviewing and, if determined appropriate, updating the Mandate of the Board.

        On November 29, 2016, Mary Szela was appointed as the Chief Executive Officer (the "CEO") of the Company. Prior to this, from October 24, 2014 until November 29, 2016, Dr. Geoffrey Cox, a member of the Board, acted as Interim Chief Executive Officer ("Interim CEO") of the Company. Our Nominating and Corporate Governance Committee is responsible for developing succession plans for the CEO and reviewing such plans periodically. Under the Board's written Mandate, the Board is also responsible for succession planning for the CEO, and for discussing with the CEO succession plans for other senior management personnel. The CEO is responsible for recommending and then implementing the corporate strategy approved by the Board and for managing Novelion's business with the objective of meeting the corporate goals. The Board reviews, approves and documents in writing the annual corporate goals and objectives that the CEO is responsible for meeting each year, and the Board, together with the Compensation Committee, will assess the performance against those goals.

        During 2016, the Board kept informed of the business through open discussions with and reports from the CEO (or the Interim CEO), and key members of management. The Board also keeps itself informed by reviewing documents, such as detailed periodic management reports and quarterly financial statements, by attending presentations made during Board meetings and through periodic reports given to the full Board from each of Novelion's committees. Novelion's directors have access to all books, records and reports upon request, and members of its management are available at all times to answer any questions.


Role of the Board in Risk Oversight

        The Board is actively involved in overseeing risk management for Novelion. In accordance with the Mandate of our Board, the Board, as a whole, oversees the development and application of policies regarding corporate governance, and is responsible for adopting the corporate strategies and plans for Novelion's business, identifying the principal risks of Novelion's business and ensuring the implementation of the appropriate systems to manage these risks, overseeing compliance with applicable laws and regulations, overseeing the integrity of Novelion's internal controls, disclosure procedures and management information systems, and maintaining a continuing dialogue with senior management in order to ensure Novelion's ability to respond to changes, both internal and external, which may affect its business operations from time to time. This oversight is also conducted through committees of the Board. The Board receives full reports from each committee Chair regarding the committee's consideration and actions. The oversight responsibility of the Board and its committees is enabled by management reporting processes that are designed to provide visibility to the Board about the identification, assessment and management of critical risks. These areas of focus include financial reporting, compliance, compensation and operations, as summarized below.

        The Audit Committee reviews and discusses with management significant financial risks and the actions management has taken to monitor and mitigate potential exposures. The Audit Committee also assesses other areas of enterprise risk exposure, such as the disclosure controls and procedures, internal controls over financial reporting, whistleblower procedures and information technology systems.

        The Compliance Committee oversees that management has established, documented and maintained an adequate system of risk management as it relates to Novelion's policies and procedures with respect to risk

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assessment and risk management, and the Company's programs and controls for compliance with applicable legal and regulatory requirements.

        The Corporate Governance and Nominating Committee oversees risk management as it relates to, among other things, the development and assessment of our corporate governance framework and CEO, board and Chairman succession, including board and committee nominations, membership and standards, and potential conflicts of interest.

        The Compensation Committee oversees risk management as it relates to our compensation plans, policies and practices in connection with structuring our executive compensation programs and incentive compensation programs for other employees. This includes a review of our material compensation policies and practices under which the Compensation Committee concluded that these policies and practices are not reasonably likely to have a material adverse effect on Novelion.


Board Leadership Structure

        We operate under a corporate governance structure where the Chairman of the Board and the CEO are separate positions held by different individuals. Due to the demands of each position, we believe separating these roles enhances the ability of each to discharge his duties and fosters more accountability. We expect to maintain separate positions for the Chairman and the CEO because we believe that having the Board operate under the leadership and direction of a Board member who is independent from management provides the Board with the most appropriate mechanism to fulfill its oversight responsibilities.


Board Attendance at Annual Meeting

        It is a policy of the Board to encourage directors to attend regular Board meetings, Board committee meetings on which they serve and each annual general meeting of the shareholders. Other than Dr. Kozarich, one of our former directors, all directors nominated for re-election at the 2016 annual general meeting of shareholders held on June 17, 2016 attended the annual general meeting. No director nominees for appointment at the special meeting of shareholders held on November 7, 2016 attended the special meeting.


Decisions Requiring Prior Approval of the Board

        In addition to matters that must, by law or by the Articles of Novelion, be approved by the Board, management is required to seek approval from the Board for major transactions, for any single expense or commitment that exceeds certain specified dollar values, and for certain transactions with related persons. Additional information relating to transactions with related persons is set forth above under the heading " Code of Conduct. "


Orientation and Continuing Education Programs

        It is the intention of the Board that as and when a new Board nominee is appointed, the Board will ensure that a full program of orientation and education is provided for the nominee, including, but not limited to, information on our corporate history, copies of past minutes of meetings of the Board and the Mandate of the Board, and information regarding our business and operations. The Corporate Governance and Nominating Committee is responsible for reviewing the current orientation and education program and recommending and initiating improvements to this program as warranted. As part of the ongoing commitment of the Board to effective governance and director continuing education, our directors are encouraged to periodically attend accredited courses on current trends in corporate governance and other relevant areas.


Outside Advice

        Each of the Audit Committee, the Compensation Committee, the Compliance Committee and the Corporate Governance and Nominating Committee has the authority to engage external advisors as set forth in each of their respective charters.

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Director and Officer Liability Insurance

        We maintain directors' and officers' liability insurance coverage through a policy covering Novelion and its subsidiaries. This insurance provides coverage for indemnity payments made by Novelion to our directors and officers as required or permitted by law for losses, including legal costs, incurred by our directors and officers in their capacity as such. This policy also provides coverage directly to individual directors and officers if they are not indemnified by Novelion. The insurance coverage for our directors and officers has customary exclusions, including those acts determined to be uninsurable under law, deliberately fraudulent or dishonest, or that have resulted in personal profit or advantage.


Minimum Share Ownership Guidelines for Directors

        The Board believes it to be in the best interests of our shareholders to specify a minimum level of equity holdings in Novelion by each independent director to further align the interests of our Board and shareholders. As a result, following consultation with Radford, an Aon Hewitt company ("Radford"), the independent compensation advisor to our Compensation Committee, we adopted share ownership guidelines for our non-employee directors. Under these guidelines, non-employee directors are encouraged to acquire (if not already held) a number of common shares or share equivalents of Novelion equal to three times the annual retainer. The share ownership guidelines must be satisfied within five years from the date the director joins the Board and 50% of all shares issued to a director under vested equity awards must be held until such time as the guidelines are satisfied. The implementation of share ownership guidelines is consistent with corporate governance best practices.

        Vested in-the-money stock options, vested shares and vested deferred share units (referred to as "DSUs"), as well as shares held by a director's spouse, child or an affiliated fund, if such shares are deemed beneficially owned by the director, are counted towards fulfilling the guidelines. Unvested stock options and restricted stock units are not counted towards fulfilling the guidelines.

        The value of the shares owned for the purposes of fulfilling the share ownership guidelines is determined as the greater of the acquisition cost or the market value at the time of the determination. Compliance with the share ownership guidelines is evaluated on an annual basis by the Corporate Governance and Nominating Committee. Messrs. Aryeh, Cox, Sabba and Thomas joined the Board in June 2012 and have satisfied the guidelines. Mr. Kotler has satisfied the guidelines through the holdings of Broadfin Capital, of which Mr. Kotler is the founder and managing partner. Members of the Board who have not yet satisfied the guidelines were appointed to the Board as of or after the Merger and therefore are not yet required to be in compliance with the guidelines.

        Our share ownership guidelines for our named executive officers are described below in this Proxy Statement under the heading " Compensation Discussion and Analysis ".


Director Nomination Process

        To assist with director nominations, the Board has designated a standing committee, the Corporate Governance and Nominating Committee, as being responsible for reviewing and recommending nominees to the Board. In evaluating prospective nominees, the Corporate Governance and Nominating Committee looks for the following minimum qualifications: experience at a strategic or policy-making level in a business, government, non-profit or academic organization of high standing; accomplishments in his or her respective field with superior credentials and recognition; high standards of integrity, ethics, commitment and independence of thought and judgment; significant business or professional experience or a demonstrated exceptional understanding of the pharmaceutical industry or other disciplines relevant to the business of the Company; sufficient time and availability to devote to the affairs of the Company, particularly in light of the number of boards on which the nominee may serve; and, to the extent a nominee serves or has previously served on other boards, a demonstrated history of active contribution to board meetings. In evaluating prospective nominees, the Corporate Governance and Nominating Committee also takes into account shareholder support of prospective nominees in previous director elections of the Company, any direct experience in the pharmaceutical industry or markets in which the Company operates and any experience as a board member of other public companies. All nominees are selected with a view to the best interests of Novelion as a whole.

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        To foster and maintain a diversity of viewpoints, backgrounds and experience on the Board, the Corporate Governance and Nominating Committee evaluates the mix of skills and experience of the directors and assesses nominees and potential candidates in the context of the current composition of the Board and Novelion's objectives. In searching for a new director, the Corporate Governance and Nominating Committee identifies particular areas of specialization that it considers beneficial, in addition to the general qualifications, having regard to the skill sets of the other members of the Board. Further, in accordance with the Diversity Policy, while the Company does not support the adoption of quotas, management and the Board will consider diversity as an element of the overall selection criteria of candidates. All nominations proposed by the Corporate Governance and Nominating Committee are subject to the approval of the Board.

        The Corporate Governance and Nominating Committee may retain the assistance of a recruiting firm to assist it in identifying and recruiting candidates who possess the desired qualifications. The Corporate Governance and Nominating Committee may also involve other members of the Board or other Board committees, or members of the Company's executive management, to assist it with the recruitment of new directors. Upon the recommendation of the Company's CEO, the Board considered Mark H.N. Corrigan, M.D. to serve as a director of the Company, and ultimately appointed him to the Board on March 30, 2017, upon the recommendation of the Corporate Governance and Nominating Committee; as with the Company's other directors, his term will expire at the Annual Meeting. Potential nominees are interviewed in person before any nomination is recommended to the Board.

        The Board will also consider any director nominees proposed by shareholders. Shareholders may submit nominations to the Board by addressing a communication to the Chair of the Corporate Governance and Nominating Committee and providing sufficient information to the Corporate Governance and Nominating Committee to permit it to conduct an assessment of the qualifications of the proposed nominee, including biographical information about the candidate and his or her professional experience, confirmation of the candidate's willingness to serve as a director, and complete contact information for the candidate and the nominating shareholder. The method by which a shareholder may communicate with the Corporate Governance and Nominating Committee are set out in the Security Holder Communications Policy which can be found on Novelion's website at www.novelion.com . As a matter of policy, the Corporate Governance and Nominating Committee is committed to giving due and fair consideration to proposed nominations submitted by shareholders using the same criteria and processes as other nominations that come before it.

        The Board has also adopted an amended and restated advance notice policy (the "Advance Notice Policy") for the receipt of nominations to the board in advance of annual general or special meetings of shareholders, as applicable. For more details with respect to the Advance Notice Policy, see " Novelion Proposal No. 1: Election of Directors — Advance Notice Policy ".


Term and Age Limits

        The Board has not adopted policies imposing an arbitrary term or retirement age limit in connection with individuals nominated for election as directors. The Board strives to achieve a balance between the desirability to have a depth of institutional experience from its members on the one hand and the need for renewal and new perspectives on the other hand.


Independence of Directors

        To ensure that we maintain good and objective governance, the Board strives to maintain strong independence from management. In determining whether directors are independent, each year the Board considers and discusses the nature and materiality of all direct or indirect relationships between each director nominee and Novelion, including any family or business relationships. Under the applicable Canadian and United States securities laws, a relationship is considered material where that relationship could, in the view of the Board, reasonably interfere with the exercise of the director's independent judgment. A director who also serves as CEO, or, depending on duration of term, interim CEO, of a company would be considered a non-independent director of that company under applicable Canadian and United States securities laws.

        As a result, and in connection with a review of the nature and materiality of all direct or indirect relationships between each director and Novelion, the Board has determined that, with the exception of

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Ms. Szela and Dr. Cox, the CEO and former Interim CEO of the Company, respectively, the Board members, including the Chairman, are and have been "independent", under the independence standards of the NASDAQ Global Select Market Listing Standards, and SEC rules and regulations, since their respective appointments to the Board.

        In addition, each director who served as a member on each of the Audit Committee, the Compensation Committee and the Corporate Governance and Nominating Committee during 2016 was "independent" as independence for members of such committees is defined in National Instrument 52-110 —  Audit Committees and the NASDAQ Global Select Market Listing Standards and the rules of the SEC, as applicable, at the time they served on such committee.


Executive Session of Independent Directors

        The independent members of the Board meet without management and non-independent directors present during sessions following periodic Board meetings (unless the independent directors determine such a session is not required).


Assessments

        The Board has adopted an annual formal assessment process with respect to performance of the Board and its committees. The Board as a whole considers the contributions and performance of the Board and each of its committees by conducting a performance review questionnaire. The Board uses this assessment to determine whether additional expertise is required to ensure that the Board is able to discharge its responsibilities and individuals with specific skill sets are identified.


Audit Committee Financial Expert

        Each member of the Audit Committee is financially sophisticated, as defined by the NASDAQ Global Select Market Listing Standards, and is financially literate, as defined by Canadian securities regulations, and as required by such rules, able to read and understand fundamental financial statements, including Novelion's consolidated balance sheet, consolidated statement of income and consolidated statement of cash flows. The Board has determined that John C. Thomas, Jr. and Anne VanLent are each "audit committee financial experts" as defined in Item 407(d)(5) of Regulation S-K under the Exchange Act, and that all of our Audit Committee members are "independent," as independence for audit committee members is defined by the NASDAQ Global Select Market Listing Standards and applicable U.S. and Canadian securities rules.


Compensation Committee Interlocks and Insider Participation

        During 2016, none of the members of the Compensation Committee is or was previously an officer or employee of Novelion or has any relationships requiring disclosure under Item 404 of Regulation S-K promulgated by the SEC.

        None of Novelion's executive officers served during 2016 as members of the compensation committee or board of directors of any entity that had one or more executive officers serving as a member of the Novelion Compensation Committee or Novelion Board.

        John Thomas, Jr. is a director and the Chair of the Audit Committee and member of the Corporate Governance and Nominating Committee of Novelion. Mr. Thomas is also the Chief Financial Officer and Secretary of CorMatrix Cardiovascular, Inc. ("CorMatrix"). Jason Aryeh was a member of the Board of Directors and Compensation Committee of CorMatrix until March of 2017 and as such, he participated in compensation decisions about Mr. Thomas and CorMatrix's other executive officers. Mr. Aryeh is the Chairman of the Board of Novelion. Mr. Aryeh has not at any time received compensation from Novelion other than for his service in his role as a director of Novelion and for his provision of certain investor relations services, each as described in the " Compensation of Directors " section of this Proxy Statement.

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        The director nominees are also directors of the following publicly traded companies:

 
Name of Director
  Publicly Traded Companies
 

Jason Aryeh

  Ligand Pharmaceuticals Incorporated

  Aralez Pharmaceuticals Inc.
 

Dr. Mark Corrigan

  Cardiome Pharm Corporation

  Nabriva Therapeutics AG
 

Dr. Geoffrey Cox

  Aviragen Therapeutics Inc.
 

Kevin Kotler

  n/a
 

Dr. Jorge Plutzky

  VIVUS, Inc.
 

Dr. Stephen Sabba

  Ligand Pharmaceuticals Incorporated
 

Donald Stern

  n/a
 

Mary Szela

  Novo Nordisk A/S

  Coherus Biosciences, Inc.
 

John Thomas, Jr.

  Medovex Corporation

  NantKwest, Inc.
 


Communicating with the Board of Directors

        Our Board of Directors has approved a Security Holder Communications Policy that can be found on our website at www.novelion.com . Pursuant to this policy, shareholders who wish to address questions regarding our business directly with our Board of Directors as a whole, or with any individual director, should direct his or her questions in writing to the attention of the Secretary of Novelion at:

Novelion Therapeutics Inc.
887 Great Northern Way, Suite 250
Vancouver, British Columbia, V5T 4T5
Canada

        Communications will be distributed to our Board of Directors, or to any individual director or directors, as appropriate, depending on the facts and circumstances outlined in the communications.

        Shareholders and other interested persons may submit concerns regarding accounting matters by following the instructions for making a report published in the Corporate Governance subsection of the Investors section of our website.


Board of Directors and Board Committees

        The Board has a standing Audit Committee, Corporate Governance and Nominating Committee, Compensation Committee, and Compliance Committee. The Board disbanded the Scientific Review Committee of the Board on December 1, 2016. From time to time, the Board may establish special committees to assist the Board with respect to certain matters.

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        The Board held 17 meetings (in person or by teleconference) in 2016. During the period from January 1, 2016 to December 31, 2016, attendance by the directors at meetings of the Board was as follows:

 
Director
  Board Meetings
 

Jason Aryeh

  16 of 17
 

Dr. Stephen Sabba

  16 of 17
 

Dr. Geoffrey Cox

  16 of 17
 

John C. Thomas, Jr.

  15 of 17
 

Mary Szela

  1 of 1*
 

Donald Stern

  1 of 1*
 

Dr. Jorge Plutzky

  1 of 1*
 

Anne VanLent

  1 of 1*
 

Sandford Smith

  1 of 1*
 

Jeffrey Meckler

  10 of 16**
 

John Kozarich

  10 of 16**
 
*
Joined the Board in connection with the closing of the Merger on November 29, 2016.

**
Resigned from the Board in connection with the closing of the Merger on November 29, 2016.

        The following table and accompanying narrative provides information about the membership and meetings of the standing committees of the Board in 2016.

Committee
  Current Members   Members Prior
to Merger
  Number of
Meetings
in 2016

Audit Committee

  John Thomas, Jr. (Chair)
Dr. Stephen Sabba
Anne VanLent
  Dr. Stephen Sabba (Chair)
John Thomas, Jr.
Jeffrey Meckler
  8

Compensation Committee

 

Dr. Stephen Sabba (Chair)
Kevin Kotler
Dr. Jorge Plutzky

 

Jeff Meckler (Chair)
John Thomas, Jr.
Dr. Stephen Sabba

 

6

Compliance Committee

 

Donald Stern (Chair)
Dr. Mark Corrigan
Anne VanLent

 

n/a

 

1

Corporate Governance and Nominating Committee

 

Kevin Kotler (Chair)
Jason Aryeh
John Thomas, Jr.

 

Jason Aryeh (Chair)
John Thomas, Jr.
Jeffrey Meckler

 

3

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        The Compliance Committee was formed in December 2016; all of the members of this committee served on the committee since its formation, except for Dr. Corrigan, who was appointed to the Board and replaced Mr. Smith on the Compliance Committee in March 2017. Except for Dr. Kozarich and Mr. Meckler, during 2016, each director of the Board attended at least 75% of the aggregate of (i) the total number of meetings of the Board, and (ii) the total number of meetings held by all committees of the Board on which such director served during 2016. Director attendance at Board and committee meetings is assessed based on the number of committee meetings a director attended during their relevant term of service on such committee.

        Set forth below is a chart indicating, by committee, each standing committee's current members and the key functions of the committees.

 
Committee
  Members
  Key Functions
 

Audit

  John Thomas, Jr.*
Dr. Stephen Sabba
Anne VanLent
 

Appoints, approves the compensation, and assesses the independence of our independent auditors;

Pre-approves audit and permissible non-audit services to be provided by our auditors and the terms of these services;

Reviews and recommends to the Board the approval of the audited financial statements; reviews and approves the interim financial statements and earnings releases prior to filing;

Coordinates the oversight and reviews the adequacy of our internal controls over financial reporting and our disclosure controls and procedures;

Oversees Novelion's accounting and financial reporting practices;

Reviews the management of corporate financial risks and related party transactions in accordance with Novelion's Related Party Transactions Policy;

Establishes, oversees and periodically assesses the procedures for the receipt and retention of complaints and concerns regarding accounting, internal accounting controls, or auditing;

Reviews, at least annually with management, compliance with Novelion's Code of Conduct;

Establishes procedures regarding the receipt, retention and consideration of any report of evidence of a material violation of applicable U.S. or Canadian securities laws or a material breach of fiduciary duty by Novelion's directors, officers, employees or agents, and initiates and oversees any investigations arising therefrom;

Reviews and assesses the adequacy of the Audit Committee Charter annually and recommends to the Board any amendments or modifications that the Audit Committee deems appropriate;

Reviews, discusses, and assesses the Audit Committee's performance as well as its role and responsibilities at least annually, seeking input from senior management, the Board, and others as the Audit Committee deems appropriate.

 

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Committee
  Members
  Key Functions
 

Corporate Governance and Nominating

  Kevin Kotler*
Jason Aryeh
John Thomas, Jr.
 

Develops and recommends to the Board criteria for identifying, selecting and evaluating nominees for appointment or election as members of the Board and committee members;

Identifies, considers and recommends to the Board qualified individuals for nomination for election or to fill Board vacancies;

Considers director nominees recommended by shareholders, and oversees the Company's policies and procedures with respect to these nominations;

Retains, oversees and terminates search firms used to identify director candidates, legal counsel or other advisers, including approval of their fees and terms of retention;

When required, expeditiously considers any resignation tendered by a director pursuant to the Company's Majority Voting Policy in accordance with the provisions of such policy and recommends to the Board whether to accept, delay accepting or reject such resignation;

Reviews annually the Corporate Governance and Nominating Committee's Charter and each of the Mandate of the Board and the Mandate of the Chairman of the Board, and recommends changes to the Board;

Develops, oversees and reviews Board governance principles and the effectiveness of corporate governance for recommendation to the Board;

Evaluates the size, composition and structure of the Board and Board committees for recommendation to the Board;

Develops and oversees the Board continuing education program and the orientation program;

Coordinates and oversees an annual process to assess the effectiveness of the Board and individual members of the Board;

Develops succession plans for the Chair of the Board and the CEO; and

Reviews compliance with Novelion share ownership guidelines by members of the Board and executive officers.

 

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Committee
  Members
  Key Functions
 

Compensation

  Dr. Stephen Sabba*
Kevin Kotler
Dr. Jorge Plutzky
 

Reviews and recommends to the Board the corporate goals relevant to the compensation of the CEO, and evaluates and makes recommendations to the Board concerning the performance of the CEO against those goals;

Considers any risks associated with proposed CEO compensation arrangements and potential ways to mitigate such risks;

Determines the compensation and employment agreement terms for all executive officers of the Company;

Reviews and makes recommendations to the Board concerning the director compensation program;

Provides oversight of management's decisions regarding the compensation of senior management;

Manages, administers, reviews and makes recommendations to the Board with respect to short and long-term incentive-based compensation plans and equity-based plans;

Manages and administers all equity-based plans, and reviews and makes recommendations with regard to policies and procedures for the grant of equity-based awards;

Reviews, discusses with management and recommends the Compensation Discussion and Analysis for inclusion in the Company's Proxy Statement or Form 10-K;

Develops and proposes share ownership guidelines for members of the Board and executive officers;

Reviews and assesses the adequacy of the Compensation Committee Charter annually and submits any proposed changes to the Board for approval;

Performs an annual performance evaluation of the Compensation Committee and reports to the Board on the results of such evaluation; and

Exercises sole authority to retain, terminate and approve any fees and other retention terms of any consulting firm, independent legal counsel or other outside adviser on compensation matters that is to be used by the Company or the Compensation Committee to assist in the evaluation of director, CEO or executive officer compensation.

 

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Committee
  Members
  Key Functions
 

Compliance Committee

  Donald Stern*
Dr. Mark Corrigan
Anne VanLent
 

Reviews the status of Novelion's compliance with relevant laws, regulations and internal procedures (other than those allocated to other committees);

Oversees that management has established, documented and maintained, and periodically reevaluates, its policies and procedures to assure that an adequate system of compliance and risk management is functioning within the Company;

Receives periodic (at least annual) presentations by management summarizing the Company's programs and controls for compliance with legal and regulatory requirements;

Receives regular reports from Novelion's General Counsel and Chief Compliance Officer on key legal and compliance matters, and provides guidance and oversight on such matters;

Oversees the implementation of the Company's compliance program with respect to companies acquired by the Company or in which the Company has controlling interest;

Reviews reporting chains that seek to provide a protected channel for reporting compliance related concerns to management and the Board;

Receives in its discretion reports from management on employee training and internal messaging regarding Novelion's commitment to behavior and practices that comply with our compliance policies and applicable laws and regulations, as well as our efforts to promote a culture focused on compliance;

At least annually, receives a report from management regarding the results of risk management reviews and assessments, as well as any significant compliance investigations and disciplinary actions;

Receives reports on internal investigations or government or regulatory actions that may cause significant financial or reputational damage to the Company or that otherwise indicate a significant compliance or regulatory issue;

Recommends to the Board or any relevant committee of the Board corrective actions or programs directed at resolving issues of non-compliance or encouraging a culture focused on compliance, including the terms and objectives of incentive compensation plans and any recommendations regarding the extent, if any, to which incentive-based compensation should be reduced or restructured in response to issues regarding risk management and compliance;

At least annually, reviews and assesses the adequacy of the Global Code of Conduct;

 

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Committee
  Members
  Key Functions
 

     

At least annually, reports to the Board on (i) the Company's compliance functions, (ii) relevant compliance issues involving the Company of which the Compliance Committee has been made aware, including a summary of the results of any compliance investigations conducted by the Company, (iii) any potential patterns of non-compliance identified within the Company, (iv) any significant disciplinary actions against any employee, and (v) any other issues that may reflect any problems in compliance or regulatory matters exposing the Company to substantial compliance risk;

Reviews and assesses the adequacy of the Compliance Committee Charter on a periodic basis and submits any proposed changes to the Board for approval; and

Performs an annual performance evaluation of the Compliance Committee and reports to the Board on the results of such evaluation.

 
*
Chair


Committee Chairs

        The Board has not developed written position descriptions for the Chair of each of the committees of the Board. The Chair of each committee has accepted leadership responsibilities of the committee including setting the agenda for and chairing the meetings, liaising with management as appropriate, as well as for ensuring fulfillment of the mandate set out in the charters of the committees.


COMPENSATION OF DIRECTORS

Director Compensation

Overview

        The compensation program for our non-employee directors is intended to fairly compensate each director for the time and effort required of a director based upon the size and complexity of our business, as well as, through an equity component of the program, to further align the interests of our non-employee directors with those of our shareholders. The amount and form of director compensation is reviewed periodically by the Compensation Committee, with any resulting recommendations made to the Board, to ensure that such compensation accurately reflects the responsibilities and risks of being an effective director.

        To assist in its evaluation of director compensation, the Compensation Committee has the authority to retain independent compensation consultants. During 2016, the Compensation Committee worked with Radford to review our director compensation program, which was then reviewed by the Board.

        The non-employee directors receive cash and equity-based compensation for their services on the Board as described below.

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Cash Compensation

        Effective November 1, 2015, following consultation with Radford and a review of the September 2015 Peer Group (defined below), the Pre-Merger Board, upon recommendation of the Compensation Committee, amended the cash component of our director compensation program to eliminate all per meeting attendance fees and amend the retainers associated with Chairmanship and Board and Committee membership positions. As a result, the cash compensation component of our program in 2016 included annual Board and Committee member or Chair position retainers, and fees paid for attending to Board or Committee business (other than for meeting attendance). Directors are also eligible for reimbursement of their expenses incurred in connection with attendance at Board meetings in accordance with our policies and up to CAD$1,500 reimbursement for preparation of annual Canadian tax returns. Director retainers and fees are paid to the Board quarterly in arrears.

        Following consultation with Radford and upon recommendation of the Compensation Committee, the Post-Merger Board set the annual retainer for the Chair and member positions of the Compliance Committee as set forth below, effective immediately upon formation of the Compliance Committee on December 1, 2016. On December 1, 2016, the Board authorized the termination of fees paid to Mr. Aryeh in his role as a director and Chairman of the Board for certain investor relations services.

        On December 19, 2016, based upon a review of our peer group market data provided by Radford (the "2017 Market Data"), the Compensation Committee of the Post-Merger Board determined that the total cash compensation component of the director compensation program was aligned with the 50 th  percentile of the 2017 Market Data. As a result, no changes to the cash component of the director compensation program were recommended by the Compensation Committee at that time.

        Fees paid to the non-employee directors in 2016 were as follows:

Nature of Board Duty
  Fee (US$)  

Annual Board Retainer Fee:

       

•    for all Directors

  $ 40,000  

•    additional retainer for Chairman of the Board

  $ 40,000  

Additional Annual Retainer Fee for Chair of the:

       

•    Audit Committee

  $ 20,000  

•    Compensation Committee

  $ 15,000  

•    Corporate Governance and Nominating Committee

  $ 10,000  

•    Compliance Committee

  $ 20,000  

•    Scientific Review Committee

  $ 10,000  

Additional Annual Retainer Fee for Member of the:

       

•    Audit Committee

  $ 10,000  

•    Compensation Committee

  $ 7,500  

•    Corporate Governance and Nominating Committee

  $ 5,000  

•    Compliance Committee

  $ 10,000  

•    Scientific Review Committee

  $ 5,000  

Fee to perform Board or committee business (other than attendance at a Board or committee meeting, but including certain investor relations services by Mr. Aryeh through December 1, 2016) at the specific request of the Board or relevant committee:

       

•    if no out-of-town travel is required

  $ 1,500  

•    if out-of-town travel is required

  $ 3,000  

Fee to Novelion Board member for attending operating subsidiary Board meeting as a member of the Board of Directors of the operating subsidiary (whether in person or by telephone)

  $ 1,500  

Equity-Based Compensation

        In addition to cash compensation, our non-employee directors also receive equity-based compensation to ensure that their interests are aligned with those of our shareholders.

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        Non-employee directors are eligible to receive grants of stock options and restricted stock units ("RSUs") under our equity incentive plan (prior to giving effect to the amendments described below in Proposal No. 5, the "Equity Incentive Plan"). RSUs granted to our non-employee directors typically vest in three successive and equal annual installments on the date of each of the first three annual general meetings held by Novelion after the grant date. Upon vesting, each RSU represents the right to receive one common share. The Compensation Committee's objective in recommending the grant of equity awards to non-employee directors is to provide a reasonable, market-based incentive for directors to deliver increased value to shareholders. Based in part on advice received from Radford in December 2016, the Compensation Committee recommended that the Board's equity grants to non-employee directors be comprised solely of stock options, as stock options are an effective way to align the interests of the non-employee directors with those of the shareholders because they provide value only if the value of our common shares increases.

        Equity grants to the non-employee directors typically occur annually, promptly following each annual general meeting of shareholders. On November 4, 2015, following consultation with Radford and upon the recommendation of the Compensation Committee, the Pre-Merger Board approved a grant of 10,000 stock options for Mr. Aryeh, as Chairman of the Board, and 5,000 stock options for each of the other non-employee directors (the "2015 Director Options"), subject to certain future events and conditions related to the Company's special election distribution of common shares (the "Aralez Shares") of Aralez Pharmaceuticals Inc. (the "Aralez Distribution"). The grant of 5,000 stock options to directors was positioned at the 50 th  percentile of the September 2015 Peer Group. Also on November 4, 2015, in order to address the loss in value of the deferred share units ("DSUs") granted to directors in 2012 and 2013 that would occur as a result of the Aralez Distribution, the Pre-Merger Board approved a grant of 2,560 DSUs for Mr. Aryeh, as Chairman of the Board, and 1,280 DSUs for each of the other directors, including Dr. Cox (the "2015 Director DSUs"), also subject to certain future events and conditions related to the Aralez Distribution.

        On June 17, 2016, upon the satisfaction of the conditions precedent to the grants of the 2015 Director Options and the 2015 Director DSUs, the 2015 Director Options and the 2015 Director DSUs were awarded to the directors without any further action of the Board. Pursuant to the terms of the Directors' Deferred Share Unit Plan (the "DDSU Plan"), the vesting of all DSUs held by the directors on the Pre-Merger Board accelerated upon the closing of the Merger. DSUs are converted to cash only when a director ceases to be a member of the Board. The DSUs held by Dr. Kozarich and Mr. Meckler were converted to cash upon the closing of the Merger.

        On June 17, 2016, the Pre-Merger Board, following consultation with Radford and upon the recommendation of the Compensation Committee, approved a grant of 10,000 stock options for Mr. Aryeh, as Chairman of the Board, and 5,000 stock options for each of the other non-employee directors (the "2016 Director Options"). Based on market data and the fact that the valuation of the Company had not significantly changed since the approval of the 2015 Director Options on November 4, 2015, the 2016 Director Options were determined to be aligned with the 50 th  percentile of the September 2015 Peer Group.

        Pursuant to the terms of the Merger Agreement, all stock options held by the legacy Aegerion board members were cancelled for no consideration on the effective date of the Merger, due to the fact that the exercise price of the stock options exceeded the fair market value of the Merger consideration. As a result of this, the legacy Aegerion board members appointed to the Post-Merger Board (other than Mr. Smith, who held certain RSUs), as well as Mr. Kotler, held no equity awards in the Company following the Merger. On December 22, 2016, following consideration of the 2017 Market Data, and upon recommendation of the Compensation Committee, the Board approved a grant of 9,600 stock options to each of the non-employee directors on the Post-Merger Board. The stock options were granted with an exercise price equal to the closing price of the Company's common shares on the grant date, and vest in 36 equal monthly installments commencing on the monthly anniversary of the grant date. The grant was positioned at the 50 th  percentile of the 2017 Market Data at an "initial" grant size, which equated to 1.5 times a typical annual grant. The timing of the grant to the Post-Merger Board was aligned with the timing of the equity awards to the Company's new management team and employees following the Merger. Upon his appointment to the Board on March 30, 2017, Dr. Corrigan received an initial grant of 9,600 stock options, with an exercise price equal to the closing price of the Company's common shares on the grant date, and vesting in 36 equal monthly installments commencing on the monthly anniversary of the grant date. On March 9, 2017, the Board approved the accelerated vesting of

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options held by individuals who would cease to be directors due to the Board's decision not to re-nominate such individuals for election at the Annual Meeting, with this acceleration to occur upon the earlier of the individual's resignation from the Board or the date of the Annual Meeting. As a result, the vesting of options held by Mr. Smith accelerated upon his resignation from the Board on March 30, 2017, and the vesting of options held by Ms. VanLent will accelerate as of the Annual Meeting, since she is not standing for re-election, unless she earlier resigns.

        We also maintain the DDSU Plan. Under the DDSU Plan, at the discretion of the Board, non-employee directors can receive a portion of their equity-based compensation in the form of DSUs. A DSU is convertible only into cash (i.e. no shares are issued), and can only be settled after the director ceases to be a member of the Board. The DSUs vest monthly over 36 months from the first month after the date of grant. The value of a DSU, when converted to cash, will be equivalent to the market value of a Novelion common share at the time the conversion takes place. We do not have a history of paying dividends on our common shares; however, if dividends are ever paid on our common shares, a non-employee director's DSU account will be credited with dividend equivalents (in the form of additional DSUs) at the same rate.

        The following table provides information regarding the compensation earned by our non-employee directors in 2016. For legacy Aegerion board members, amounts include cash fees paid and equity awards granted by Aegerion prior to the Merger, and cash fees paid and equity awards granted by Novelion following the Merger.


2016 Non-Employee Director Compensation

Name (1)
  Fees
Earned
($) USD
  Stock Option
Awards ($)
USD (3)(4)(5)(6)
  Stock
Awards
($)
USD (6)(7)
  Other
Comp.
($) USD
  Total
($) USD
 

Jason Aryeh

  $ 143,583   $ 87,272   $ 18,304   $   $ 249,159  

Dr. Geoffrey Cox

    3,492     70,772             74,264  

Kevin Kotler (8)

    4,792     34,272             39,064  

Dr. Jorge Plutzky

    49,791     34,272             84,063  

Dr. Stephen Sabba

    71,875     60,772     9,152         141,799  

Donald Stern

    87,500     34,272             121,772  

John Thomas

    62,709     60,772     9,152         132,633  

Anne VanLent

    88,833     34,272             123,105  

Sandford Smith (2)

    86,667     34,272         136,568     257,507  

Dr. John Kozarich

    45,634     22,819             68,453  

Jeffrey Meckler

    63,887     22,819             86,706  
                       

  $ 708,763   $ 496,586   $ 36,608   $ 136,568   $ 1,378,525  
                       

(1)
Dr. Kozarich and Mr. Meckler resigned from the Board on November 29, 2016, in connection with the completion of the Merger. Mr. Smith resigned from the Board on March 30, 2017. Dr. Mark Corrigan was appointed to the Board on March 30, 2017 and, therefore, is not included in the table above.

(2)
Mr. Smith received a bonus of $136,538 in April 2016, in connection with his service as Aegerion's interim CEO from July 2015 to January 2016.

(3)
Includes the grant date fair value of the annual option award granted to our current non-employee directors, with the exception of Dr. Corrigan, on December 22, 2016, for the purchase of 9,600 shares of our common stock at an exercise price of $8.65 per share. The options vest over three years on a monthly basis from the grant date. The grant date fair value has been determined using the Black-Scholes option-pricing model in accordance with ASC Topic 718, Compensation — Stock Compensation , or ASC Topic 718. In determining the Black-Scholes value, we used the assumptions described in Note 12 to the consolidated audited financial statements in our Annual Report on Form 10-K for the year ended December 31, 2016.

(4)
Includes the grant date fair value of the option awards granted to the below non-employee directors, including former non-employee directors, on June 17, 2016, for the purchase of shares of our common stock at an exercise price of $7.15 per share. The options vest

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    over three years on a monthly basis from the grant date. The grant date fair value has been determined using the Black-Scholes option-pricing model as noted in footnote (3) above.

Name
  Option Shares  

Jason Aryeh

    53,000  

Dr. Stephen Sabba

    10,000  

John Thomas

    10,000  

Dr. John Kozarich

    8,611  

Jeffrey Meckler

    8,611  
(5)
Includes the grant date fair value of the option award granted to Dr. Cox on December 6, 2016, for the purchase of 10,000 shares of our common stock at an exercise price of $9.00 per share. The options vested immediately on the grant date. The grant date fair value has been determined using the Black-Scholes option-pricing model as noted in footnote (3) above.

(6)
Excludes the 50,000 option award and 1,280 DSU award granted to Dr. Cox on June 17, 2016, respectively, as part of his service as Interim CEO. The grant date fair value of these awards is included in the 2016 Summary Compensation Table. For additional information regarding the compensation Dr. Cox received in connection with his service as Interim CEO, refer to the "Executive Compensation" section of this Proxy Statement.

(7)
Includes the grant date fair value of DSU awards granted to the non-employee directors listed below on June 17, 2016, at a market value of $7.15 per share. DSUs are settled in cash and can only be settled once a director ceases to be a member of the Board.

Name
  DSU Shares  

Jason Aryeh

    2,560  

Dr. Stephen Sabba

    1,280  

John Thomas

    1,280  
(8)
Fees earned by Mr. Kotler are paid to Broadfin Healthcare Master Fund, Ltd.


Director Awards Outstanding as at December 31, 2016

Name
  Total
Outstanding
Options
  Total
Outstanding
RSUs
  Total
Outstanding
DSUs (3)
 

Jason Aryeh

    29,600         11,360  

Dr. Geoffrey Cox (1)

    87,600          

Kevin Kotler

    9,600         5,680  

Dr. Jorge Plutzky

    9,600          

Dr. Stephen Sabba

    19,600         5,680  

Sandford Smith (2)

    9,600     1,823      

Donald Stern

    9,600          

John Thomas

    19,600         5,680  

Anne VanLent

    9,600          

Dr. John Kozarich

    8,611          

Jeffrey Meckler

    53,611          
               

    266,622     1,823     28,400  
               

*
Stock and option awards that were granted/priced in Canadian dollars and have been converted to U.S. dollars for disclosure purposes using an average of 2016 noon buying rates published by the Federal Reserve Bank of New York. The exchange rate used is: USD$1.00 = CAD$1.3243.

(1)
Includes 68,000 stock options and 5,680 DSUs outstanding as of December 31, 2016 that were granted to Dr. Cox in connection with his employment as Interim CEO and not in his capacity as a director, the grant date fair value of which is included in the Summary Compensation Table. For more information on compensation received by Dr. Cox for his service as Interim CEO, refer to the Executive Compensation section of this Proxy Statement.

(2)
Includes 1,823 RSUs outstanding as of December 31, 2016 that were granted to Mr. Smith on August 21, 2015 in connection with his employment as Aegerion's interim CEO a and not in his capacity as a director, the grant date fair value of which is $162,338.

(3)
DSUs are settled in cash and can only be settled once a director ceases to be a member of the Board.

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PROPOSAL NO. 1
ELECTION OF DIRECTORS

Information Regarding Director Nominees

        The term of office of each of the present directors expires at the Annual Meeting. The persons named below will be presented for election at the Annual Meeting as management's nominees and the persons named in the accompanying form of proxy intend to vote for the election of these nominees. Anne VanLent, a current director, is not standing for reelection at the Annual Meeting. Each director elected at the Annual Meeting will hold office until the next annual general meeting of Novelion or until his or her successor is elected or appointed, unless his or her office is earlier vacated in accordance with the articles of Novelion or with the provisions of the BCBCA.

        The names of the nominees and certain information about them are set forth below:

Name of Nominee and Residence
  Age   Position(s) With the Company   Independent   Director Since   Principal
Occupation

JASON M. ARYEH
California, USA

    48   Chairman and Director   Yes     2012   Managing partner, hedge fund

DR. MARK CORRIGAN
Massachusetts, USA

   
59
 

Director

 

Yes

   
2017
 

Director

DR. GEOFFREY COX
Massachusetts, USA

   
73
 

Director

 

No

   
2012
 

Director

KEVIN KOTLER
New York, USA

   
45
 

Director

 

Yes

   
2016
 

Managing partner, hedge fund

DR. JORGE PLUTZKY
Massachusetts, USA

   
58
 

Director

 

Yes

   
2016
 

Physician

DR. STEPHEN SABBA
New York, USA

   
57
 

Director

 

Yes

   
2012
 

Partner and Portfolio Manager

DONALD STERN
Massachusetts, USA

   
71
 

Director

 

Yes

   
2016
 

Attorney

MARY SZELA
Illinois, USA

   
53
 

Director and CEO

 

No

   
2016
 

CEO

JOHN THOMAS, JR .
Georgia, USA

   
63
 

Director

 

Yes

   
2012
 

CFO

        There is no family relationship between any of our directors, director nominees or executive officers. The number of common shares owned by each of the nominees for election as a director is set forth under " Security Ownership of Certain Beneficial Owners and Management " in this Proxy Statement.

Directors

         Jason Aryeh , age 48, is the Chairman of the Board and a Director of Novelion (since 2012) and serves on the Corporate Governance and Nominating Committee. Mr. Aryeh is the Founder and Managing General Partner of JALAA Equities, LP (since 1997), a private hedge fund focused on the life sciences sector. Mr. Aryeh also serves on the Board of Directors of Aralez Pharmaceuticals Inc. (since 2016), a public specialty pharmaceuticals company, Ligand Pharmaceuticals Incorporated ("Ligand") (since 2006), a public biotechnology company, and the Cystic Fibrosis Foundation's Therapeutics Board (since 2011). Mr. Aryeh previously served on the Board of Directors of Immunomedics, Inc. ("Immunomedics") (January 2017 to March 2017), a public biopharmaceutical

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company developing monoclonal antibody-based products. Mr. Aryeh has previously served as a director or as a consultant focused on maximizing shareholder value for multiple other biotechnology and regenerative medicine companies. Mr. Aryeh earned a B.A. in economics, with honors, from Colgate University, and is a member of the Omnicron Delta Epsilon Honor Society in economics.

        The Board has concluded that Mr. Aryeh is well-qualified to serve on the Board and as Chairman of the Board, and has the requisite qualifications, skills and perspectives stemming from his experience in the biotechnology and specialty pharmaceutical sector as a hedge fund manager and serving on the boards of publicly-traded companies. The Board believes that Mr. Aryeh's strategic insight and in-depth understanding of health care trends and capital markets add significant value to the Board.

         Dr. Mark Corrigan, M.D. , age 59, has served as a Director of Novelion since March 2017 and serves as a member of the Compliance Committee. Currently, Dr. Corrigan also serves on the board of directors of Cardiome Pharma Corp., a public cardiovascular therapeutics company (since 2015) and the supervisory board of Nabriva Therapeutics AG, a public biopharmaceutical company (since 2016). From 2015 to March 2017, Dr. Corrigan served as a director of CoLucid Pharmaceuticals, Inc. (a public biopharmaceutical company), prior to its acquisition by Eli Lilly and Company. From 2014 to 2016, Dr. Corrigan served as chairman of the board of directors of EPIRUS Biopharmaceuticals, Inc. ("EPIRUS"), which filed for bankruptcy in July 2016. Prior to that, Dr. Corrigan served as President and Chief Executive Officer of Zalicus Inc. ("Zalicus"), from January 2010 until the completion of Zalicus' merger with EPIRUS in July 2014. From 2013 to 2015, Dr. Corrigan served on the board of directors of Avanir Pharmaceuticals, Inc. (acquired by Otsuka Pharmaceuticals Co., Ltd.), a publicly traded company, chairing the Scientific Committee, and serving on the Nominating and Corporate Governance Committee. From 2008 to 2015, Dr. Corrigan served on the board of directors of Cubist Pharmaceuticals, Inc. (acquired by Merck & Co., Inc.), a publicly traded biopharmaceutical company, serving on the Audit Committee and the Nominating and Governance Committee and chairing the Scientific Affairs Committee. From 2003 to 2009, Dr. Corrigan was Executive Vice President, Research & Development of Sepracor, Inc. (now Sunovion Pharmaceuticals Inc.) ("Sunovion"). Prior to joining Sunovion, Dr. Corrigan spent 10 years with Pharmacia & Upjohn, Inc., most recently as Group Vice President of Global Clinical Research and Experimental Medicine. Dr. Corrigan spent five years in academic research at the University of North Carolina Medical School, focusing on psychoneuroendocrinology, before joining the pharmaceutical industry. Dr. Corrigan holds a B.A. and an M.D. from the University of Virginia and received specialty training in psychiatry at Maine Medical Center and Cornell University.

        The Board has concluded that Dr. Corrigan is well-qualified to serve on the Board and has the requisite qualifications, skills and perspectives derived from his extensive experience in the biopharmaceutical industry, including as a director and executive officer of publicly-traded biotechnology companies, as well as his scientific background.

         Dr. Geoffrey Cox, Ph.D. , age 73, is a Director of Novelion (since 2012). Previously, Dr. Cox served as our Interim CEO (from October 2014 to November 2016). Dr. Cox has extensive pharmaceutical and biotechnology experience holding a broad range of senior management and board positions with private and public companies. Dr. Cox is the Principal of Beacon Street Advisors LLC (since 2013) which provides corporate, operational and organizational strategic advice and interim management support to life sciences companies. Previously, he was a partner with Red Sky Partners LLC, a life sciences consulting firm (from 2011 to 2013). Dr. Cox served as a Director (2000 to 2012) and the Non-Executive Chairman (2007 to 2012) of Nabi Biopharmaceuticals prior to its merger with Biota in 2012 and continues to serve as a Director of Biota (now Aviragen Therapeutics Inc.), a public anti-infective drug development company. He also served as a Director of Gallus Biopharmaceuticals LLC (2011 to 2014), a biologics contract manufacturing and development company, and as a Director of Immunomedics (January 2017 to March 2017), and currently serves as a Director of Lakewood-Amedex LLC (since 2013), a private company developing novel antibiotics and RNA silencing technology. Dr. Cox was Chairman, President and CEO of GTC Biotherapeutics Inc. (now rEVO Biologics) (2001 to 2010), a company focused on the development of recombinant therapeutic proteins, including proteins for the treatment of rare diseases, using transgenic animal production technology. Prior to 2001, Dr. Cox was Executive VP, Operations, of Genzyme Corporation and later Chairman, President and CEO of Aronex Pharmaceuticals Inc. Dr. Cox is a past Chairman and current member of the Board of the Massachusetts Biotechnology Council. He previously served on the Board of the Biotechnology Industries Association and as a

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member of its Health Governing and Emerging Companies Sections. Dr. Cox received a B.Sc. (Hons) in biochemistry from the University of Birmingham, UK, and a Ph.D. in biochemistry from the University of East Anglia, UK.

        The Board has concluded that Dr. Cox is well-qualified to serve on the Board and has the requisite qualifications, skills and perspectives derived from his extensive leadership experience in the biopharmaceutical industry, including as a director and executive officer of publicly-traded biotechnology companies. The Board believes that Dr. Cox's strategic consulting, operations and business development expertise as well as his scientific background bring significant value to the Board.

         Kevin Kotler , age 45, has served as a Director of Novelion since November 2016 and serves as Chair of the Corporate Governance and Nominating Committee and as a member of the Compensation Committee. Mr. Kotler has over 23 years of experience as an investor and analyst following the healthcare industry. He is the founder and Managing Partner of Broadfin Capital, which is the investment advisor for Broadfin Healthcare Master Fund, Ltd., a healthcare focused investment fund which he launched in 2005. Mr. Kotler was designated to the Board by Broadfin Capital. Since 2014, Mr. Kotler has served as a Director of InnerSpace Neuro Solutions, Inc., a privately-held medical device company. Mr. Kotler earned a B.S. in economics from the Wharton School at the University of Pennsylvania in 1993.

        The Board has concluded that Mr. Kotler is well-qualified to serve on the Board and has the requisite qualifications, skills and perspectives stemming from his experience in the pharmaceutical and medical device sectors as a hedge fund manager. The Board believes that Mr. Kotler's strategic insight and in-depth understanding of health care trends and capital markets add significant value to the board of directors of Novelion.

         Dr. Jorge Plutzky, M.D. , age 58, has served as a Director of Novelion since November 2016 and serves as a member of the Compensation Committee. Dr. Plutzky was designated to the Board by Sarissa Capital Management LP. Prior to this, Dr. Plutzky served as a member of Aegerion's Board of Directors since April 2015. Dr. Plutzky is the Director of Preventive Cardiology, which includes the Lipid Clinic, in the Cardiovascular Medicine Division at Brigham and Women's Hospital. Since 1995, he has been on the faculty at Harvard Medical School and has directed a basic science laboratory focused on transcriptional mechanisms involved in lipid metabolism, adipogenesis and diabetes, and the relationship of these conditions to inflammation and atherosclerosis. Throughout his career, Dr. Plutzky has also been involved in translational clinical studies investigating links between metabolic disorders and cardiovascular disease. Dr. Plutzky has been a member of the Scientific Advisory Committee of the Sarnoff Cardiovascular Research Foundation since 2009. Dr. Plutzky has been elected to the American Society for Clinical Investigation and is a Fellow of the American College of Cardiology. Dr. Plutzky has been involved with the U.S. Food and Drug Administration, serving both as a member of the Endocrinologic and Metabolic Drugs Advisory Committee and in advising and presenting for new drug application sponsors. He has been involved extensively with both the American Heart Association and the American Diabetes Association. Dr. Plutzky has been a member of the Board of Directors of VIVUS, Inc. (a public healthcare company) since May 2013. Dr. Plutzky holds a B.A. with Highest Honors from the University of Virginia, where he was an Echols Scholar and a member of Phi Beta Kappa, and an M.D. from the University of North Carolina, Chapel Hill. He completed research fellowships at the National Institutes of Health and the Massachusetts Institute of Technology.

        The Board has concluded that Dr. Plutzky is well-qualified to serve on the Board and has the requisite qualifications, skills and perspective based on his extensive experience and expertise in the lipid area.

         Dr. Stephen Sabba, M.D. , age 57, is a Director of Novelion (since 2012) and serves as the Chair of the Compensation Committee and a member of the Audit Committee. Currently, Dr. Sabba is also a Partner and Health Care Portfolio Manager at Knott Partners, LP (since 2006), an investment fund, and a Director of Ligand (since 2008), a public biotechnology company. Previously, he was a Partner and Director of Research with Kilkenny Capital Management (2001 to 2006), a Chicago-based hedge fund. Dr. Sabba received his medical degree from the New York University School of Medicine, and completed a residency in internal medicine and a fellowship in gastroenterology at the Veterans Administration Medical Center in New York City. He earned a Bachelor of Science degree with honors at Cornell University.

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        The Board has concluded that Dr. Sabba is well-qualified to serve on the Board and has the requisite qualifications, skills and perspectives based on his capital markets and financial expertise gained from his experience working in the hedge fund and investment fund industries. The Board believes that Dr. Sabba's deep understanding of the biotechnology industry, medicine and health care trends adds significant value to the Board.

         Donald Stern , age 71, has served as a Director of Novelion since November 2016 and serves as Chair of the Compliance Committee. Prior to this, Mr. Stern was a member of Aegerion's Board of Directors since September 2015. Mr. Stern is Managing Director of Corporate Monitoring & Consulting Services at Affiliated Monitors Inc., a consulting firm providing independent integrity monitoring services and compliance services across a wide range of regulated industries and professions. He is also Of Counsel to Yurko, Salvesen, & Remz, PC, a boutique litigation law firm in Boston. Mr. Stern was United States Attorney for the District of Massachusetts from 1993 to 2001. He was also the chair of the U.S. Attorney General's Advisory Committee from 1996 to 1998. Mr. Stern served as the chief legal counsel to Governor Michael S. Dukakis from 1987 to 1990. He also spent seven years as an assistant attorney general in the Massachusetts Attorney General's office, where he held several positions, including Chief of the Government Bureau. Previously, Mr. Stern was a partner at three major law firms, Cooley LLP, Bingham McCutchen LLP, and Hale and Dorr LLP (now Wilmer Cutler Pickering Hale and Dorr LLP), where his law practice focused on internal investigations, white collar defense and business litigation. He has extensive experience representing companies and individuals in complex civil, criminal and regulatory matters, with clients across a spectrum of industries, including health care, pharmaceutical, and financial services. Mr. Stern was an Advisor to President Barack Obama's Justice Department Transition Team. He currently co-chairs the American Bar Association/DOJ White Collar Liaison Committee, and is a former President of the National Association of Former U.S. Attorneys. He was a liaison to the American Bar Association Task Force on Corporate Monitors. Mr. Stern has been on the faculty of Boston College Law School and Harvard Law School. He received his LL.M. from the University of Pennsylvania, his J.D. from Georgetown University Law Center, and his B.A. from Hobart College. He also received an honorary LL.D. from the New England School of Law. Mr. Stern is a member of the Board of Directors of Blue Cross and Blue Shield of Massachusetts.

        The Board has concluded that Mr. Stern is well-qualified to serve on the Board and has the requisite qualifications, skills and perspectives based on his extensive experience as an adviser in corporate and government regulatory compliance.

         Mary Szela , age 53, was appointed Chief Executive Officer and a Director of Novelion on November 29, 2016. Prior to this, Ms. Szela was chief executive officer and a Director of Aegerion since January 2016. Prior to Aegerion, Ms. Szela was Chairperson of the Board and chief executive officer of Melinta Therapeutics, Inc. ("Melinta") from January 2013 to August 2015. Before joining Melinta, she held various management positions at Abbott Laboratories ("Abbott"), most recently as senior vice president for global strategic marketing and services. From 2008 to 2010, Ms. Szela served as president of the $8 billion U.S. pharmaceuticals division, during which time she directed the development and launch of more than eight new pharmaceutical products. Between 2002 and 2008, Ms. Szela managed several of Abbott's billion-dollar U.S. pharmaceutical businesses, and was VP of U.S. commercial operations. Prior to 2001, Ms. Szela held a series of leadership positions in the Abbott Hospital Products Division. She currently serves as a member of the boards of Novo Nordisk A/S, a public pharmaceutical company (since 2015) Coherus Biosciences, Inc., a public pharmaceutical company (since 2014) and Suneva Medical, Inc., a privately-held aesthetics company. Ms. Szela earned an M.B.A. and a B.S. in nursing from the University of Illinois.

        The Board has concluded that Ms. Szela is well-qualified to serve on the Board and has the requisite qualifications, skills and perspectives based on her extensive leadership experience as well as valuable expertise building global brands and advancing pipeline products in the biotechnology and pharmaceutical industries.

         John Thomas, Jr. , age 63, is a Director of Novelion (since 2012) and is a member of Novelion's Audit and Corporate Governance and Nominating Committees. Mr. Thomas has more than 38 years of experience in a variety of financial and accounting positions, with the last 28 years spent in the medical, pharmaceutical and device fields. Currently, Mr. Thomas also serves as Chief Financial Officer and Secretary (since 2001) and served as a Director (2001 to 2016) of CorMatrix, a privately-held medical device company, and as Chief Financial

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Officer, Secretary and Director of Motion Reality, Inc. (since 1991), a motion capture and simulation company. Since September 2013, Mr. Thomas has served on the Board of Medovex Corporation a publicly-traded medical device company. Since 2014, Mr. Thomas has served on the Board of Directors of NantKwest, Inc., a publicly-traded biotechnology company. Mr. Thomas has also served as the Chief Financial Officer of The Zika Foundation, a non-profit organization addressing the Zika virus. In the past ten years, Mr. Thomas served as acting Chief Financial Officer for DemeRx, Inc. (2010 to 2011); as Chief Financial Officer for MRI Interventions, Inc. (1998 to 2010), MiMedx Group, Inc. (2007 to 2008) and DARA BioSciences (2003 to 2009); and as a director of MRI Interventions, Inc. (2004 to 2011) and DARA BioSciences (2012). Previously, Mr. Thomas also served as a Trustee and subsequently the Chairman of the Finance Committee of The Walker School, a private Pre-K through 12 grade school (1999 to 2012). Mr. Thomas is a Certified Public Accountant and graduated from the University of Virginia, McIntire School of Commerce with a Bachelor of Science in Commerce degree in 1975.

        The Board has concluded that Mr. Thomas is well-qualified to serve on the Board and has the requisite qualifications, skills and perspectives based on his financial and development stage company expertise and service on the Boards of pharmaceutical and medical device companies. The Board believes that Mr. Thomas' background and experience serving as Chief Financial Officer of a number of life sciences companies provides him with valuable perspective on financial management, performance and strategy for a biotechnology company such as Novelion.


Vote Required and Board of Directors' Recommendation

        Under the BCBCA and the Articles of Novelion, directors are elected by a plurality of the common shares voted at the Annual Meeting. This means that the nine nominees with the most votes for election would be elected, subject to the requirements of our Majority Voting Policy, as described below.

         The Board unanimously recommends that our shareholders vote "FOR" the election of all nine nominees for director.


Majority Voting Policy

        The Board has adopted a Majority Voting Policy which requires that any nominee for director for which there are a greater number of votes "withheld" than votes "for" his or her election will be required to tender his or her resignation as a director of the Company. This policy applies only to uncontested elections, which are elections in which the number of nominees for election as director is equal to the number of positions available on the Board. If a nominee for director is required under the Majority Voting Policy to tender his or her resignation, the Board will refer the resignation to the Corporate Governance and Nominating Committee (except in certain circumstances, in which case the entire Board will review the resignation without reference to the Corporate Governance and Nominating Committee) which will consider the director's resignation and will recommend to the Board whether or not to accept it. The Corporate Governance and Nominating Committee will generally be expected to recommend accepting the resignation, except in situations where extraordinary circumstances would warrant the applicable director to continue to serve on the Board. The Board will act on the Corporate Governance and Nominating Committee's recommendation within 90 days following the certification by the scrutineer of the voting results of the applicable annual meeting and will promptly disclose by press release its decision whether to accept the director's resignation, including the reasons for rejecting the resignation, if applicable. A director who tenders his or her resignation pursuant to the Majority Voting Policy will not participate in any meeting of the Board or the Corporate Governance and Nominating Committee at which the resignation is considered.


Advance Notice Policy

        The Board has adopted an Advance Notice Policy which was ratified and approved by shareholders of the Company at the annual general meeting held on December 15, 2014. The intention of the Advance Notice Policy is to facilitate an orderly and efficient annual general or, where the need arises, special meeting, to ensure that all shareholders receive adequate notice of director nominations and sufficient information with respect to all

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nominees, and allow shareholders to register an informed vote having been afforded reasonable time for appropriate deliberation.

        Pursuant to the Advance Notice Policy, any additional director nominations for an annual general meeting must be received by the Company not less than 30 nor more than 65 days prior to the date of the meeting. If no nominations are received by May 29, 2017, being the date which is 30 days prior to the Meeting date, management's nominees for election as directors set forth below shall be the only nominees eligible to stand for election at the Meeting.


EXECUTIVE OFFICERS

        The following table sets forth the name, ages and positions of our current executive officers as of April 18, 2017:

Name
  Age   Position(s) With the Company

MARY SZELA*

    53   Chief Executive Officer

JOHN ORLOFF

   
59
 

Executive Vice President, Research & Development

GREGORY PERRY

   
56
 

Chief Financial and Administrative Officer

REMI MENES

   
51
 

Global Chief Commercial Officer

ROGER LOUIS

   
61
 

Global Chief Compliance Officer

BENJAMIN HARSHBARGER

   
48
 

General Counsel

LINDA BUONO

   
51
 

Senior Vice President, Human Resources


*
Ms. Szela is a member of our Board of Directors. Please see " Novelion Proposal No. 1: Election of Directors — Majority Voting Policy " for a brief biography of Ms. Szela.

         John Orloff has served as our Executive Vice President, Head of Research and Development since November 2016. Prior to this, Dr. Orloff was Executive Vice President, Research and Development at Aegerion in November 2016. Prior to joining the Company, Dr. Orloff served as Executive Vice President, Global Head of Research and Development and Chief Scientific Officer of Baxalta, Inc. ("Baxalta") from July 2015 to June 2016. Dr. Orloff served as Global Head of R&D for Baxter BioSciences ("Baxter") from July 2014 to June 2015, prior to Baxter's spinout of Baxalta. Prior to Baxter, he served as senior vice president, global head of clinical development at Merck Serono Pharmaceuticals from January 2014 to May 2014. Between 2003 and 2013, Dr. Orloff held a series of positions at Novartis Pharma AG, including senior vice president and chief medical officer. Dr. Orloff completed his internal medicine residency at University of Pittsburgh Medical Center and his endocrinology and metabolism fellowship at Yale University School of Medicine, where he also spent seven years on the faculty. He holds an M.D. from University of Vermont College of Medicine and a B.A. from Dartmouth College.

Gregory Perry has served as our Chief Financial and Administrative Officer since November 2016. Prior to this, Mr. Perry was Chief Financial Officer of Aegerion from July 2015 to November 2016. Mr. Perry most recently served as Chief Financial Officer of Eleven Biotherapeutics, Inc. ("Eleven Biotherapeutics"). Prior to joining Eleven Biotherapeutics, Mr. Perry served as the Interim Chief Financial Officer of InVivo Therapeutics ("InVivo"). Prior to joining InVivo, he served as the Executive Vice President and Chief Financial Officer of ImmunoGen, Inc. ("Immunogen"). Before that, he was the Chief Financial Officer of Elixir Pharmaceuticals. Mr. Perry previously was Senior Vice President and Chief Financial Officer of Transkaryotic Therapies. He has also held various financial leadership roles within PerkinElmer Inc., Domantis Ltd., Honeywell and General Electric. Since May 2016, Mr. Perry has served on the Board of Directors of Merus N.V. (a public clinical-stage immune-oncology company), including as Chair of its Audit Committee. From December 2011 to February 2016, Mr. Perry served on the Board of Directors of Ocata Therapeutics (a public biotechnology company), including as Chair of its Audit Committee and a member of its Compensation Committee, until it was acquired by Astellas Pharma Inc. Mr. Perry received a B.A. in Economics and Political Science from Amherst College.

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         Remi Menes has served as our Senior Vice President, Chief Commercial Officer since November 2016. Prior to this, Mr. Menes was Chief Commercial Officer of Aegerion. from September 2016 to November 2016. Prior to joining Aegerion, Mr. Menes served as the General Manager of AbbVie Finland from October 2013 to August 2016. He served as Board Member of Pharma Industry Finland from May 2014 to August 2016. Before joining AbbVie Finland in 2013, from November 2010 to September 2013, Mr. Menes served as Area Commercial Director, Virology & Neonatal Care, Western Europe & Canada at AbbVie Europe. From 2008 to 2010, he was the Commercial Director, Specialty Products Division and a Member of the Affiliate Leadership Team at Abbott Canada. Between 1990 and 2008, Mr. Menes held a series of roles of increasing responsibility at Merck Frosst Canada Ltd., including Director, Sales & Marketing. He holds an Executive M.B.A. and a B.Sc. in Organic Chemistry with a minor in Business Studies from Concordia University.

         Roger Louis has served as our Senior Vice President, Global Chief Compliance Officer since November 2016. Prior to this, Mr. Louis was Senior Vice President, Global Chief Compliance Officer at Aegerion from November 2015 to November 2016. Mr. Louis has extensive experience in compliance and risk management having served most recently as Senior Vice President, Compliance & Risk Management, Chief Compliance Officer at Cubist Pharmaceuticals prior to its acquisition by Merck. Mr. Louis joined Cubist from Biogen Idec Corporation where he was Senior Vice President, Chief Compliance Officer. From 1997 to 2012, he held positions of increasing responsibility at Genzyme Corporation, including Senior Vice President, Chief Compliance Officer. Mr. Louis began his legal career as an Associate at Hale & Dorr in Boston where he practiced corporate and securities law. Mr. Louis received his J.D. from University of Chicago School of Law and his Bachelor of Arts from Tufts University.

         Benjamin Harshbarger has served as our General Counsel since November 2016. Prior to this, Mr. Harshbarger was Acting General Counsel at Aegerion from September 2015 to August 2016 and General Counsel from August 2016 to November 2016. Prior to that, he served as Aegerion's VP, EMEA Legal Counsel from January 2014 to September 2015 and as Aegerion's VP, Deputy General Counsel from April 2012 to January 2014. Before joining Aegerion, Mr. Harshbarger served as Senior Director, Corporate Counsel at Cubist Pharmaceuticals, Inc. from March 2008 to March 2012, and Senior Director, Deputy General Counsel at ViaCell, Inc. from March 2006 to March 2008. Mr. Harshbarger served in several legal positions of increasing responsibility at Biogen Idec from November 2001 to March 2006 and served as an associate at the law firm of Mintz Levin from 1996 to 2001. Mr. Harshbarger has a JD from Boston College Law School and a BA from the University of Richmond.

         Linda Buono has served as our Senior Vice President, Human Resources since November 2016. Prior to this, Ms. Buono was Senior Vice President, Human Resources at Aegerion from August 2016 to November 2016. From March 2016 to August 2016, she served as Aegerion's Vice President, Human Resources. Prior to that, Ms. Buono, held a series of positions with ImmunoGen, most recently as Executive Director, Human Resources since July 2013 and Senior Director, Human Resources from July 2008 through June 2013.

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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

        The following table sets forth information with respect to the beneficial ownership of our common shares as of April 18, 2017 (unless otherwise noted) with respect to:

    each person, or group of affiliated persons, known to us to be the beneficial owner of more than 5% of our common shares outstanding as of such date ("5% Shareholders"), based on currently available Schedules 13G and 13D filed with the SEC, as may be updated by a Statement of Change of Beneficial Ownership of Securities on Form 4 subsequently filed with the SEC;

    each of our named executive officers and directors; and

    all of our current executive officers and directors as a group.

        Beneficial ownership is determined in accordance with the rules of the SEC and the applicable Canadian securities regulators. These rules generally attribute beneficial ownership of securities to persons who possess sole or shared voting power or investment power with respect to those securities and include common shares issuable upon the exercise of stock options or other securities that are immediately exercisable or exercisable within sixty days after April 18, 2017, although these shares are not deemed outstanding for the purpose of computing percentage ownership of any other person. Inclusion of shares of common stock in the following table does not constitute an admission that the named shareholder is a direct or indirect beneficial owner for any other purposes. Except as otherwise indicated, all of the shares reflected in the table are our common shares, and all persons listed below have sole voting and investment power with respect to the common shares beneficially owned by them, subject to applicable community property laws. The information is not necessarily indicative of beneficial ownership for any other purpose. Percentage of ownership is based on 18,580,688 common shares outstanding as of April 18, 2017.

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        Except as otherwise indicated in the table below, addresses of named beneficial owners are c/o Novelion Therapeutics Inc., Vancouver, British Columbia, Canada V5T 4T5.

 
  Amount and Nature of Beneficial
Ownership
  Total Beneficial
Ownership
Name of Beneficial Owner (3)
  Shares
Beneficially
Owned
  Shares for Which
Beneficial Ownership
May Be Acquired Within
60 Days (1)
  Number of
Shares (2)
  Percent of Class

Directors and Named Executive Officers

                     

Jason Aryeh

    392,372     8,000     400,372   2.2

Dr. Mark Corrigan

        533     533   *

Dr. Geoffrey Cox

    157,700     79,333     237,033   *

Kevin Kotler

    1,948,554     1,333 (4)   1,949,887   10.5%

Dr. Jorge Plutzky

        1,333     1,333   *

Dr. Stephen Sabba

    7,400     4,666     12,066   *

Donald Stern

        1,333     1,333   *

John Thomas, Jr. 

    7,400     4,666     12,066   *

Anne VanLent

    820     1,333     2,153   *

Mary Szela

        6,632     6,632   *

Gregory Perry

        2,393     2,393   *

Remi Menes

              *

Roger Louis

        547     547   *

Ben Harshbarger

    470     2,131     2,480   *

W. Glen Ibbott

    6,277     31,000     37,277   *

All current executive officers and directors as a group (16 persons) (5)

    2,514,716     114,507     2,629,223   14.1%

5% Shareholders

                     

Broadfin Capital, LLC (6)

    1,948,554         1,948,554   10.5%

Stonepine Capital Management, LLC (7)

    1,644,591         1,644,591   8.9%

NB Public Equity K/S (8)

    1,289,525         1,289,525   6.9%

Scopia Capital Management LP (9)

    1,169,912         1,169,912   6.3%

Sarissa Capital Management LP (10)

    1,111,544         1,111,544   6.0%

*
Represents less than 1%.

(1)
Indicates common shares that may be acquired upon exercise of outstanding stock options that are presently exercisable or will be exercisable by the persons named in the table above and by all directors and executive officers as a group within 60 days of April 18, 2017, as well as common shares that may be acquired on vesting of restricted stock units within 60 days of such date.

(2)
Excludes DSUs, which are issued to directors and are payable only in cash. As of April 18, 2017, each of Messrs. Cox, Sabba and Thomas hold 5,680 vested DSUs and Mr. Aryeh holds 11,360 vested DSUs.

(3)
The information in the table regarding the beneficial ownership of 5% Shareholders is derived from the System for Electronic Disclosures by Insiders (SEDI) and the Electronic Data Gathering, Analysis, and Retrieval system (EDGAR).

(4)
Mr. Kotler has assigned the economic benefit of these stock options to Broadfin Healthcare Master Fund, Ltd.

(5)
Includes, in addition to the holdings of our directors and those named executive officers who are current officers of the Company, 274 shares of common stock subject to restricted stock units exercisable within 60 days of April 18, 2017 held by Linda Buono, our Senior Vice President, Human Resources.

(6)
The information in the table and this note is derived from a Schedule 13D/A filed with the SEC on December 1, 2016 by Broadfin Capital, Broadfin Healthcare Master Fund, Ltd. and Kevin Kotler, reporting beneficial ownership as of November 29, 2016. The information as reported has been adjusted to reflect our one-for-five share consolidation of our common shares that took effect on December 16, 2016. Of the 1,948,554 common shares beneficially owned, Broadfin Capital, Broadfin Healthcare Master Fund, Ltd. and Mr. Kotler each report shared voting and shared dispositive power as to 1,948,554 shares. The address for Broadfin Capital is 300 Park Avenue, 25th Floor, New York, New York 10022.

(7)
The information in the table and this note is derived from a Schedule 13G/A filed with the SEC on February 14, 2017 by Stonepine Capital Management, LLC, Stonepine Capital, L.P., Jon M. Plexico and Timothy P. Lynch (collectively, Stonepine), reporting beneficial ownership as of December 31, 2016. Of the 1,644,591 common shares beneficially owned, Stonepine Capital Management, LLC,

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    Stonepine Capital, L.P., Jon M. Plexico and Timothy P. Lynch each report sole voting and sole dispositive power as to 1,644,591 shares. The address for Stonepine is 919 NW Bond Street, Suite 204, Bend, Oregon 97703.

(8)
The information in the table and this note is derived from a Schedule 13D/A filed with the SEC on December 22, 2016 by NB Public Equity K/S, NB Public Equity Komplementar ApS, Cora Madsen and Florian Schönharting (collectively, NB), reporting beneficial ownership as of November 29, 2016. Of the 1,289,525 common shares beneficially owned, NB Public Equity K/S, NB Public Equity Komplementar ApS, Cora Madsen and Florian Schönharting each report shared voting and shared dispositive power as to 1,289,525 shares. The address for NB is Ostergade 24A, 1, DK-1100, Copenhagen K, Denmark.

(9)
The information in the table and this note is derived from a Schedule 13G filed with the SEC on February 14, 2017 by Scopia Capital Management LP, Scopia Management, Inc., Matthew Sirovich and Jeremy Mindich (collectively, Scopia), reporting beneficial ownership as of December 31, 2016. Of the 1,169,912 common shares beneficially owned, Scopia Capital Management LP, Scopia Management, Inc., Mr. Sirovich and Mr. Mindich each report shared voting and shared dispositive power as to 1,169,912 shares. The address for Scopia is 152 West 57th Street, 33rd Floor, New York, New York 10019.

(10)
The information in the table and this note is derived from a Schedule 13D filed with the SEC on December 5, 2016 by Sarissa Capital Management LP, Sarissa Capital Offshore Master Fund LP, Sarissa Capital Domestic Fund LP and Alexander J. Denner, Ph.D., reporting beneficial ownership as of November 29, 2016. The information as reported has been adjusted to reflect our one-for-five share consolidation of our common shares that took effect on December 16, 2016. Of the 1,111,544 common shares beneficially owned, Sarissa Capital Management LP and Dr. Denner each report shared voting and shared dispositive power as to 1,111,544 shares. Sarissa Capital Offshore Master Fund LP reports sole voting and sole dispositive power as to 496,501 shares. Sarissa Capital Domestic Fund LP reports sole voting and sole dispositive power as to 615,043 shares. The address for Sarissa Capital Management LP, Sarissa Capital Domestic Fund LP and Dr. Denner is c/o Sarissa Capital Management LP, 660 Steamboat Road, 3rd Floor, Greenwich, Connecticut 06830. The address for Sarissa Capital Offshore Master Fund LP is c/o Ogier Fiduciary Services (Cayman) Limited, 89 Nexus Way, Camana Bay, Grand Cayman KY1-9007, Cayman Islands.


EXECUTIVE COMPENSATION

Compensation Discussion and Analysis

Overview

        This Compensation Discussion and Analysis ("CD&A") provides an overview of our compensation philosophy, our compensation programs, and our decision-making processes as they relate to our named executive officers.

        2016 was a transformative year for us. On November 29, 2016, we acquired Aegerion Pharmaceuticals, Inc. ("Aegerion") in a merger transaction (the "Merger") in which Aegerion became a wholly-owned subsidiary of QLT Inc. ("QLT"). Following the Merger, QLT changed its name to Novelion Therapeutics Inc.

        2016 was a transformative year for us. On November 29, 2016, we acquired Aegerion Pharmacueticals, Inc. ("Aegerion") in a merger transaction (the "Merger"), with Aegerion becoming a wholly-owned subsidiary of QLT Inc. ("QLT"). Upon completion of the Merger, QLT changed its name to Novelion Therapeutics Inc.

        Prior to the Merger, decisions about our executive compensation program were made by QLT's Compensation Committee and decisions about Aegerion's executive compensation program were made by Aegerion's Compensation Committee (the "Aegerion Compensation Committee"). This CD&A generally describes the actions taken and decisions made by each of the QLT Compensation Committee and the Aegerion Compensation Committee prior to the Merger and the Compensation Committee following the Merger (the "QLT Compensation Committee" and the "Compensation Committee" are referred to throughout this CD&A, collectively, as the "Compensation Committee"). Following the Merger, the Compensation Committee utilized a blend of our and Aegerion's compensation policies and procedures, and also adopted new practices and policies taking into account our new profile after the Merger.

        As of the effective date of the Merger, we have an entirely new management team, comprised of members of the former Aegerion management team, including our CEO. Our management team has significant depth and breadth of experience in the biopharmaceutical industry and a track record of developing and commercializing rare disease and other pharmaceutical products. Because of the turnover in our management team as result of the Merger, our list of named executive officers for 2016 includes two of our former executive officers, in accordance with applicable SEC rules.

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        Our "named executive officers" for 2016 are:

    Mary Szela, our CEO;

    Gregory Perry, our Chief Financial and Administration Officer;

    Remi Menes, our Global Chief Commercial Officer;

    Roger Louis, our Global Chief Compliance Officer;

    Ben Harshbarger, our General Counsel and Corporate Secretary;

    Geoffrey Cox, our former Interim CEO; and

    Glen Ibbott, our former Senior Vice President, Finance and Chief Financial Officer.

        Dr. Cox and Mr. Ibbott (collectively, the "Former NEOs") were executive officers of QLT until the effective date of the Merger. Ms. Szela and Messrs. Perry, Menes, Louis and Harshbarger (collectively, the "New NEOs"), as well as Linda Buono, Senior Vice President, Human Resources, and John Orloff, Executive Vice President, Head of Research and Development, were executive officers of Aegerion prior the effective date of the Merger and became our executive officers as of the Merger. Dr. Cox's employment with us terminated on the effective date of the Merger. Mr. Ibbott's employment with us terminated on March 31, 2017.


2016 Performance Highlights

        The Merger:     The Merger was unanimously approved by our Board and Aegerion's board of directors on the basis that it would create a strong, well-funded rare disease-focused global biopharmaceutical company with a diversified portfolio consisting of Aegerion's two commercially branded products, Juxtapid® (lomitapide) capsules and Myalept® (metreleptin), and our zuretinol pipeline product, each as further described below. In addition, a broad-based investor syndicate comprised of both new investors and existing shareholders of both QLT and Aegerion invested approximately $22 million into the Company, which provided us with additional capital. The table below exemplifies each company's strategic imperatives for the Merger:

GRAPHIC

        The Merger re-oriented and expanded our strategic and operational focus, and also transformed our business. We now have a diversified commercial portfolio through Aegerion and we are developing our late-stage pipeline asset, for which we have received orphan drug designation. We have commercial capabilities in North America, Europe, Japan and Latin America, and seek to maximize the potential of our current

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marketed compounds while creating a strong foundation for other future rare disease therapies by investing in science and clinical development. Through Aegerion, we now have two commercial products:

    metreleptin, a recombinant analog of human leptin, is currently marketed in the U.S. under the brand name MYALEPT. MYALEPT is approved in the U.S. as an adjunct to diet as replacement therapy to treat the complications of leptin deficiency in patients with congenital or acquired generalized lipodystrophy ("GL"). In December 2016, Aegerion submitted a marketing authorization application ("MAA") to the European Medicines Agency ("EMA") to seek approval for metreleptin, under the brand name MYALEPTA, as replacement therapy to treat complications of leptin deficiency in patients with GL and in a subset of patients with partial lipodystrophy. We also plan to expand MYALEPT's indication in the U.S. to the PL subset, and to seek regulatory approvals of GL and the PL subset in other key markets. We also plan to use our knowledge of the diverse effects of leptin on various physiologic functions to explore new opportunities for metreleptin as a platform drug to potentially treat patients suffering from a range of low leptin-mediated rare and metabolic diseases. We are evaluating and prioritizing these potential opportunities and plan to provide an update in 2017.

    lomitapide, which is marketed in the U.S. under the brand name JUXTAPID. JUXTAPID is approved in the U.S. as an adjunct to a low-fat diet and other lipid-lowering treatments, including low-density lipoprotein (LDL) apheresis where available, to reduce low-density lipoprotein cholesterol (LDL-C), total cholesterol (TC), apolipoprotein B (apo B) and non-high-density lipoprotein cholesterol (non-HDL-C) in adult patients with homozygous familial hypercholesterolemia ("HoFH"). Lomitapide is also approved for the treatment of adult patients with HoFH in the European Union ("EU"), Japan, Canada, and a small number of other countries.

        We also have our orphan drug-designated product candidate, zuretinol acetate (zuretinol), an oral synthetic retinoid, in late stage development for the treatment of Inherited Retinal Disease caused by underlying mutations in retinal pigment epithelium protein 65 (RPE65) and lecithin: retinol acyltransferase (LRAT) genes ("IRD"), comprising Leber Congenital Amaurosis (LCA) and Retinitis Pigmentosa (RP). Our clinical and regulatory pathway for the zuretinol program is currently under review, and we expect to provide an update in mid-2017.

        Other Aspects of Our 2016 Performance:     In addition to the completion of the Merger, during 2016, we continued to advance the development of zuretinol and successfully completed the Aralez Distribution. Please see our 2016 corporate goals table and related narrative in the section entitled " Other 2016 Compensation Decisions — Annual Cash Incentive Compensation " for additional 2016 business and performance highlights and our level of achievement against our 2016 corporate goals. This information is intended to assist our shareholders in understanding certain of the compensation decisions made in, or attributable to, 2016 with respect to our Former NEOs.

        Aegerion's 2016 Performance:     Prior to the Merger, 2016 was a year of both accomplishments and challenges for Aegerion. Aegerion generated $153.2 million of net product sales in 2016, including $51.6 million from net product sales of MYALEPT and $101.6 million from net product sales of JUXTAPID, representing a significant decrease from Aegerion's total revenues in 2015 and net sales that were below Aegerion's original 2016 corporate goal of $192 million of total revenues. During 2016, Aegerion continued to experience a number of significant challenges and strong headwinds to its business, including competition from PCSK9 inhibitor products and other factors which greatly impacted U.S. JUXTAPID revenues. As a result, Aegerion took transformative steps to reduce its costs in 2016 and future years, including implementing two reductions in force and other significant cost management measures, such as closing down certain non-core ex-U.S. markets and outlicensing lomitapide in the EU and certain other markets. In addition, as part of its effort to resolve significant legacy issues, Aegerion reached preliminary agreements in principle with the U.S. Department of Justice ("DOJ") and SEC to preliminarily resolve ongoing investigations into the sales and marketing of JUXTAPID in the U.S., and to settle all claims in the class action shareholder lawsuit pending in the United States District Court for the District of Massachusetts. Please see the Aegerion 2016 corporate goals table included in the section entitled " Other 2016 Compensation Decisions — Annual Cash Incentive Compensation " for additional 2016 business and performance highlights and Aegerion's level of achievement against its 2016

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corporate goals. This information is intended to assist our shareholders in understanding certain of the compensation decisions made in, or attributable to, 2016 with respect to our New NEOs.


Overview of Our Executive Compensation Objectives and Pay-for-Performance Philosophy

        Our executive compensation programs are designed to:

    attract, retain, and motivate executives with significant industry knowledge and the experience and leadership capability necessary for our corporate success;

    align incentives for our executive officers with our short-term and long-term corporate strategies and business objectives and goals; and

    drive the achievement of key strategic performance measures aligned to the long-term interests of our shareholders.

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        To achieve these objectives, we seek to provide a competitive total compensation package, consisting primarily of the compensation components listed in the table below.

Component
  Description   Primary objectives

Base Salary

  Fixed cash payments paid over the fiscal year   Provide a stable level of compensation that recognizes career experience, individual performance and the role and the scope of the executive's responsibilities

Short-Term Cash Incentives

 

Performance-based annual cash incentives

 

Promote and reward achievement of our annual financial and strategic objectives and, for certain named executive officers, individual performance goals

Long-Term Equity Incentives

 

Historically, time-based stock options and restricted stock units; beginning in December 2016, performance-based stock units and time-based stock options.

Equity grants described in this CD&A and the accompanying tables that were made prior to the Consolidation in mid- December 2016 have been adjusted to reflect the Consolidation.

 

Align executive and shareholder interests through awards that realize value only if our stock price increases over time, in the case of stock options subject to time-based vesting, or upon the achievement of specified corporate goals, in the case of stock units subject to performance-based vesting and retain executives, in the case of time-based restricted stock units, in each case, to ensure focus on long-term strategic priorities that will grow value and to encourage retention

Benefits

 

Medical, dental, vision, life insurance and short- and long-term disability insurance

 

Provide competitive health and welfare benefits

 

401(k) plan for U.S.-based named executive officers

 

Provide tax-efficient retirement savings

 

Registered retirement savings plan ("RRSP") matching program for Canadian-based named executive officers

   

Perquisites and Personal Benefits

 

Relocation and commuting expense reimbursements, and, in certain cases, tax, legal and/or financial planning services

 

Provide competitive ancillary benefits

Severance Benefits

 

Cash and non-cash payments and benefits payable upon a qualifying termination of employment, including upon or following a change of control

 

Provide a level of protection in the event of an involuntary termination of employment, including in connection with a change of control

        A significant component of our named executive officers' compensation is geared towards performance-based compensation. The key elements of our performance-based compensation have historically been our

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equity program, which included stock options and restricted stock units, and our annual cash incentive program. In December 2016, we added performance-based stock units as another key element of our performance-based compensation package. These awards are described in more detail in the section entitled " Key Compensation Decisions Made At and After the Merger ". We believe that our executive compensation program, with its heavy weight on equity-based incentives, including performance-based stock units, rewards the achievement of key short- and long-term performance goals and strongly aligns the interests of our executive officers with those of our shareholders. We have not adopted any formal guidelines for allocating total compensation between long-term and short-term incentive compensation and between cash and non-cash compensation, or among different forms of non-cash compensation.


Compensation Framework: Policies and Process

Roles of Compensation Committee and CEO in Compensation Decisions

        The Compensation Committee oversees our total compensation philosophy, compensation programs, equity incentive programs and benefit plans, and reviews and approves all compensation decisions relating to our CEO and our other named executive officers. During 2016 and until the Merger, our Board, taking into account the recommendations of the Compensation Committee, approved the compensation decisions related to the QLT executive officers and the Aegerion Compensation Committee approved the compensation decisions related to the Aegerion executive officers, with the Board of Directors of Aegerion (the "Aegerion Board") reviewing and approving decisions of the Aegerion Compensation Committee as it related to our CEO, Ms. Szela. Following the Merger, our Board reviews and approves the compensation decisions with respect to our CEO, based upon the recommendation of the Compensation Committee, and the Compensation Committee makes the compensation decisions for our other named executive officers. Our CEO provides recommendations to the Compensation Committee with respect to the key elements of the compensation of our named executive officers (other than herself), including with respect to salary adjustments, annual cash incentive bonus targets and awards and equity incentive awards. In making compensation decisions relating to our named executive officers, the Compensation Committee takes into account the CEO's recommendations and has the discretion to increase or decrease the recommended amounts of compensation.

        The Compensation Committee also reviews our named executive officers' base salary increases, if any, based on an assessment of the executive's individual performance and contribution to our corporate performance and achievements, as well as benchmarking data. Annual cash incentive payments to our named executive officers, if any, are determined based on corporate performance against pre-established goals and are subject to the Compensation Committee's discretion to increase or decrease the amount of such payments, as it deems appropriate in light of business considerations at the time of such determination. The size of equity awards made to our named executive officers is determined based on, among other factors, each individual's contribution to our overall corporate achievement, his or her individual performance, and benchmarking data. All compensation decisions are assessed within the framework of our financial position, stock performance and general economic conditions.

Compensation Data and Use of Compensation Consultant

        The Compensation Committee obtains information from a number of sources, including North American surveys and market reports on executive compensation in the biotechnology industry, as well as internally generated reports of executive compensation practices of a sub-group of biotechnology companies of similar size and market capitalization. To assist with its evaluation of executive compensation, the Compensation Committee has the authority to retain independent compensation consultants. During 2016, both before and after the Merger, the Compensation Committee engaged Radford as its outside compensation consultant to provide independent director and executive compensation assessments and recommendations to the Compensation Committee. Radford was selected and retained by the Compensation Committee to provide advice regarding our executive compensation programs, including:

    reviewing and making recommendations concerning our executive compensation programs and practices;

    providing market data and data relating to the compensation practices of companies in our peer group and industry; and

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    advising the Compensation Committee as to best practices.

        Although the Compensation Committee considers Radford's recommendations in its review of executive compensation programs, the Compensation Committee ultimately makes its own decisions about compensation matters.

        In addition, if requested by the Compensation Committee, a representative from Radford will attend meetings of our Compensation Committee.

        The Compensation Committee has assessed the independence of Radford and has concluded that no conflict of interest exists that would prevent Radford from independently representing the Compensation Committee. Radford did not provide any services to the Company other than with respect to the services provided to the Compensation Committee as described above and in the section "Compensation of Directors".

        Prior to the Merger, the Aegerion Compensation Committee also engaged Radford as its outside compensation consultant. Radford provided the Aegerion Compensation Committee with executive compensation-related advice and services. The Aegerion Compensation Committee also assessed the independence of Radford and found that no conflict of interest existed that would prevent Radford from independently representing it.

Peer Groups/Market Data

        In light of the significant changes to our financial profile and the nature of our business following the Merger, we updated our peer group after the Merger.

        Prior to the Merger, the Compensation Committee engaged Radford to develop and refine our peer group and assist our Compensation Committee in evaluating our 2016 executive compensation program for our Former NEOs. The following 22 public companies located in North America comprised our September 2015 peer group (the "September 2015 Peer Group") and were considered comparable to us at that time based on size (less than 100 employees), market capitalization (generally between $75 and $500 million), and stage of product pipelines (pre-commercial phase II/III):

Canadian Peer Company   U.S. Peer Companies

Aurinia Pharmaceuticals Inc.
Nymox Pharmaceutical Corporation
Transition Therapeutics Inc.

  Aerie Pharmaceuticals, Inc.
Avalanche Biotechnologies Inc.
ChemoCentryx, Inc.
Conatus Pharmaceuticals Inc.
Cytokinetics Inc.
Eleven Biotherapeutics, Inc.
Endocyte, Inc.
Fibrocell Science, Inc.
Five Prime Therapeutics, Inc.
Geron Corporation
Idera Pharmaceuticals, Inc.
Mirati Therapeutics, Inc.
Ocata Therapeutics Inc.
OHR Pharmaceutical, Inc.
Regulus Therapeutics Inc.
Sangamo BioSciences, Inc.
Sunesis Pharmaceuticals, Inc.
Threshold Pharmaceuticals, Inc.
Tobira Pharmaceuticals, Inc.

        Prior to the Merger, Radford also assisted the Aegerion Compensation Committee in an analysis of competitive market data for 2016 compensation decisions as it related to its executive officers. Data sources included publicly available information, such as company proxy statements, of companies in the Aegerion peer

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group, as described below. Aegerion also gathered data from the Radford Global Life Sciences Survey of public biopharmaceutical companies that had between 100 and 1,000 employees and a market value of between $300 million and $2 billion. Aegerion's 2016 peer group was selected from a group of public biopharmaceutical companies that ranged in size from between one-third and three times the revenues of Aegerion at the time and one-third to five times the market capitalization of Aegerion at the time, and had between 100 and 1,000 employees. This peer group was approved by Aegerion's Compensation Committee in November 2015. Aegerion's 2016 peer group is listed below.

Acorda Therapeutics

  Idera Pharmaceuticals

AMAG Pharmaceuticals

  Insmed Incorporated

Arena Pharmaceuticals

  INSYS Therapeutics

Ariad Pharmaceuticals

  Ironwood Pharmaceuticals

Array BioPharma

  Nektar Therapeutics

Catalyst Pharmaceuticals

  Pacira Pharmaceuticals

Concert Pharmaceuticals

  Raptor Pharmaceuticals

Halozyme Therapeutics

  Repligen Corporation

Horizon Pharmaceuticals

  Sage Pharmaceuticals

  The Medicines Company

        Following the Merger, in December 2016, the Compensation Committee engaged Radford to advise on modifications to our peer group to be more reflective of our Company after the Merger and assist the Compensation Committee in evaluating the compensation packages of our New NEOs and other executive officers. The parameters for the selection of companies for this peer group were as follows: public biopharmaceutical companies, with annual revenues between $50 million and $500 million, and less than $2 billion market capitalization. The companies in this group are listed below:

Acorda Therapeutics

  Raptor Pharmaceuticals

AMAG Pharmaceuticals

  Repligen Corporation

Ariad Pharmaceuticals

  Retrophin, Inc.

Depomed, Inc.

  Sciclone Pharmaceuticals

Ironwood Pharmaceuticals

  Sucampo Pharmaceuticals

Momenta Pharamaceuticals

  Supernus Pharmaceuticals

Nanostring Technologies

  The Medicines Company

Pacific Biosciences

  Theravance Biopharma US

PDL Biopharma

  Vericel Corporation

Pernix Therapeutics

  Vivus, Inc.

Compensation Governance and Practices

        Our compensation practices emphasize good governance and market practice. To this end:

    Pay based on Performance. As described in this CD&A, we or Aegerion, as applicable, provided a significant portion of each named executive officer's target compensation in 2016 in the form of performance-based compensation comprised of stock options, performance-based stock units and performance-based annual cash incentives. These awards included awards of stock options and performance-based stock units made in December 2016 to our New NEOs, as described below and also in the Summary Compensation Table .

      All of the outstanding stock options held by Aegerion's executive officers as of the Merger, including all options granted in 2016, were out-of-the-money as of the effective date of the Merger and were cancelled for no consideration. Because of this, our New NEOs only hold stock options that were granted in December 2016.

    Share Ownership Guidelines:   Following the Merger, in December 2016, we updated our share ownership guidelines to increase the ownership requirements for each of our New NEOs. The primary objective of

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      these guidelines is to align the interests of our directors, CEO and other executive officers with those of our shareholders. As updated, the guidelines require the following:

      Our directors to own a number of common shares or share equivalents at least equal in value to three times the standard annual cash retainer for directors;

      Our CEO to own a number of common shares or share equivalents at least equal in value to three times her annual base salary; and

      Our executive officers (other than our CEO) to own a number of common shares or share equivalents at least equal in value to one times their annual base salary.

      In addition to directly held shares, vested in-the-money options and vested shares and units will count towards the ownership requirements. Directors and executive officers have until five years after originally becoming subject to such guidelines to meet the requirements; however until the requirement is achieved, they are required to hold 50% (net of taxes) of any shares that vest or that are acquired upon the exercise of stock options. Compliance with the share ownership guidelines is evaluated on an annual basis by the Corporate Governance and Nominating Committee. Given the turnover in our management team as of the Merger, our New NEOs are not yet required to meet the guidelines.

    Anti-Hedging/Pledging:   We do not allow any of our executive officers, including our named executive officers, or our directors, to enter into any hedging-type transactions in our stock or to pledge our stock.

    Independent Compensation Consultant:   As described above, the Compensation Committee engages Radford as an independent advisor on topics related to Board and executive compensation.


Risk Considerations in Our Compensation Program

        We periodically review and consider whether our compensation programs and policies create risks that are reasonably likely to have a material adverse effect on the Company. In that regard, we believe that we have designed our compensation programs in a balanced manner while also creating appropriate incentives to drive strong performance. As applied to our named executive officers, each component of variable performance-based compensation, both short- and long-term, is subject to a pre-established target. We also have a Global Code of Conduct in place to prevent conduct by our named executive officers and other employees that is inconsistent with applicable laws and regulations. Disciplinary measures for violations of the Global Code of Conduct may include a reduction in salary, reduction or elimination of bonus, termination of employment or restitution. In addition, the agreements that govern equity awards granted to our named executive officers and other employees provide that the awards will be immediately forfeited in the event of termination of the individual's employment for cause.

        We also believe that our current business process and planning cycle fosters the following behaviors and controls that mitigate the potential for excessive risk caused by the action of our executives:

    annual establishment of corporate and individual objectives for our performance-based cash bonus programs for our executive officers that are consistent with our annual operating and strategic plans, that are designed to achieve the proper risk/reward balance, and that should not require excessive risk taking to achieve;

    the mix between fixed and variable, annual and long-term and cash and equity compensation is designed to encourage strategies and actions that balance our short-term and long-term best interests; and

    equity awards generally vest over a lengthy period of time, which we believe encourages executives to take a long-term view of our business.

        The Compensation Committee has concluded that, given these measures, among other factors, our current compensation programs present no risk that is reasonably likely to have a material adverse effect on the Company.

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Overview of 2016 Compensation Arrangements Prior to the Merger

        The following is a summary of the employment agreements and amendments to such agreements entered into with our named executive officers prior to the Merger. For a discussion of the annual cash incentive and equity awards granted to our named executive officers during 2016 outside of this context, please see "Other 2016 Compensation Decisions — Annual Cash Incentive Compensation " and " Other 2016 Compensation Decisions — Long-Term Incentive Awards ."

        Ms. Szela:     In January 2016, Aegerion entered into an employment agreement with Ms. Szela upon her appointment as Aegerion's CEO. This agreement was assigned to us in connection with the Merger. Under Ms. Szela's Aegerion employment agreement, as in effect during 2016 and currently:

    She receives a base salary of $689,550 per year and is eligible to receive an annual cash incentive payment based on achievement of certain performance goals with a target of 60% of her base salary.

    Upon commencement of employment with Aegerion, she was granted an option to purchase 120,000 shares of Aegerion common stock. For a discussion of the treatment of Ms. Szela's Aegerion stock options in connection with the Merger, see " Treatment of Aegerion Stock Options and Aegerion RSUs in Connection with the Merger " below.

    She receives a housing allowance of up to $7,200 per month, reimbursement for her reasonable commuting expenses, including air travel, offset of any tax liability associated with such housing allowance and commuting expense reimbursements, and reimbursement for her tax and financial planning expenses of up to $15,000 on an annual basis.

    She is also entitled to certain benefits upon certain terminations of her employment without cause or for good reason, both absent a change of control and in connection with a change of control, as described in " Employment Agreements with Named Executive Officers " and in " Potential Payments Upon Termination or Change of Control ." A summary of these benefits, which were in effect as of December 31, 2016, are set forth below under " Potential Payments Upon Termination or Change of Control ."

        In determining the compensation for Ms. Szela in connection with her appointment as Aegerion's CEO, the Aegerion Compensation Committee reviewed CEO market data from its 2016 peer group as well as new hire packages of recently hired CEOs of similarly situated companies outside its peer group. The Aegerion Compensation Committee generally targeted the 50 th  to 75 th  percentile of this peer and similar company data for each element of compensation (base salary, target annual incentive cash compensation and equity awards) after considering Ms. Szela's experience and based on the significant challenges facing Aegerion. Ms. Szela's severance, while in line with market norms, was not specifically benchmarked by the Aegerion Compensation Committee, and was instead based on negotiations between Aegerion and Ms. Szela.

    Other New NEOs :

        Mr. Perry:     In January 2016, Mr. Perry was promoted from the position of Chief Financial Officer of Aegerion to Chief Financial and Administration Officer of Aegerion. In connection with his promotion, the Aegerion Compensation Committee approved an amendment to his employment agreement which increased his base salary to $450,000 per year (from $390,000 per year) and provided for an annual target bonus of 50% of his base salary (from 45% of base salary), each effective in February 2016. In addition, in connection with his promotion, Mr. Perry received a one-time cash incentive bonus opportunity, comprised of payments to Mr. Perry of up to a total of $450,000, subject to the achievement within specified timeframes of the following operational and strategic corporate goals: reconfiguration of Aegerion's expense structure and headcount; timely filing of Aegerion's Annual Report on Form 10-K; preliminary settlement of Aegerion's government investigations; and completion of a business development deal resulting in Aegerion's gaining access to a new product or portfolio of products. Mr. Perry was paid the full amount of this cash incentive bonus opportunity upon achievement of these goals in 2016. In addition, in connection with his promotion, in February 2016, Mr. Perry received a grant of options to purchase 40,000 shares of Aegerion common stock, of which 25% of such shares vested and became exercisable on February 12, 2016, and the remaining 75% of such shares were subject to vest in equal annual installments on December 31 of 2016, 2017 and 2018. In making these compensation changes, the Aegerion Compensation Committee determined the compensation levels for Mr. Perry based on negotiations

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between Aegerion and Mr. Perry and in consideration of his experience, his performance to date, the expanded scope and additional responsibilities of his new role as Chief Financial and Administration Officer, and the significant challenges facing Aegerion. For a discussion of the treatment of Mr. Perry's Aegerion stock options in connection with the Merger, see " Treatment of Aegerion Stock Options and Aegerion RSUs in Connection with the Merger, " below. Mr. Perry's Aegerion employment agreement was amended in November 2016 to provide for, among other things, tax equalization and the reimbursement of tax consultation expenses in connection with the Canadian tax implications of his work for the Company.

        Mr. Menes:     In September 2016, Aegerion entered into an employment agreement with Mr. Menes in connection with his appointment as its Global Chief Commercial Officer. Pursuant to his employment agreement, Mr. Menes receives a base salary of $400,000 and a sign-on bonus of $200,000, the net amount of which will be subject to repayment by Mr. Menes if he resigns or his employment is terminated by the Company for cause prior to September 2017. Mr. Menes is also eligible to receive an annual target bonus of 45% of his base salary. Mr. Menes also receives a relocation allowance of up to $60,000, which is subject to certain conditions and repayment in certain circumstances. Mr. Menes was not granted Aegerion equity awards prior to the Merger due to restrictions in the Merger Agreement on the granting of equity awards prior to the closing of the Merger. The Aegerion Compensation Committee generally targeted the 50 th  to 75 th  percentile of its 2016 peer group data for base salary and target bonus for the Global Chief Commercial Officer role being filled by Mr. Menes due to the importance of the position and the breadth of the role, and the experience of Mr. Menes. The compensation package provided to Mr. Menes was also based upon negotiations with Mr. Menes. Mr. Menes's Aegerion employment agreement was amended in November 2016 to provide for, among other things, tax equalization and the reimbursement of tax consultation expenses in connection with the Canadian tax implications of his work for the Company.

        Mr. Louis:     During 2016, Mr. Louis received a base salary of $350,000 and had an annual target bonus of 40% of his base salary, which were the same as 2015 for Mr. Louis given that he joined Aegerion as Global Chief Compliance Officer very late in 2015 (November). Mr. Louis's Aegerion employment agreement was amended in November 2016 to provide for, among other things, tax equalization and the reimbursement of tax consultation expenses in connection with the Canadian tax implications of his work for the Company.

        Mr. Harshbarger:     In August 2016, Mr. Harshbarger was promoted to General Counsel of Aegerion. In connection with his promotion, the Aegerion Compensation Committee approved an amendment to his then existing employment agreement which increased his base salary to $350,000 per year (from $290,000 per year) and provided for an annual target bonus of 40% of his base salary (from 35% of base salary). In making these compensation changes, the Aegerion Compensation Committee generally targeted the 50 th  percentile of its 2016 peer group data and also reviewed data from the Radford Global Life Sciences Survey related to the base salary and target bonus levels of other similarly situated executive officers at the level of Mr. Harshbarger. Mr. Harshbarger's Aegerion employment agreement was amended in November 2016 to provide for, among other things, tax equalization and the reimbursement of tax consultation expenses in connection with the Canadian tax implications of his work for the Company.

        Retention Bonus Payments — Mr. Perry and Mr. Harshbarger:     Aegerion implemented a retention bonus program in August 2015 in order to retain its then executive officers to remain with Aegerion during a time of significant management turnover and other business challenges. As a result, Mr. Perry and Mr. Harshbarger were granted retention bonuses under this program of $200,000 and $100,000, respectively, which were payable if they remained employees of Aegerion or a successor company as of December 31, 2016, or earlier if they were terminated by the Company without cause or for good reason. Because Mr. Perry and Mr. Harshbarger remained employed through December 31, 2016, each was paid the full amount of his retention bonus.

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    Former NEOs :

        Dr. Cox:     Dr. Cox served as our Interim CEO until the Merger. In April 2016 and October 2016, we amended Dr. Cox's employment agreement to extend the interim term of his agreement, with the October 2016 amendment being designed to ensure that the term of his agreement would extend through the date of the Merger. In June 2016, we amended Dr. Cox's employment agreement to clarify that, in the event of a termination of Dr. Cox's employment other than for cause, (1) the stock options held by Dr. Cox would accelerate upon his termination of employment, and (2) Dr. Cox would be entitled to receive an amount equal to the lesser of (x) two months' base salary and (y) base salary for the period from the last day of Dr. Cox's termination through the end of the then current term of employment.

        Mr. Ibbott:     In June 2016, we amended the employment agreement of Mr. Ibbott, our former Senior Vice President, Finance and Chief Financial Officer, to provide for the grant of 12,000 restricted stock units, as described below under " Elements of Compensation — Long-Term Incentive Awards ," and a cash retention bonus of CAD$60,000 (USD$45,306), payable on June 17, 2017 (or earlier, on a qualifying termination of employment). We provided the retention bonus to Mr. Ibbott and certain of our other former executive officers in order to maintain a strong, focused executive team through the Merger. Mr. Ibbott was paid his retention bonus upon his termination of employment on March 31, 2017.


Other 2016 Compensation Decisions

Base Salary

        Annual base salary is designed to provide a competitive fixed rate of pay recognizing different levels of responsibility and performance. Actual salaries reflect the Compensation Committee's consideration of numerous factors, including the named executive officer's experience, length of service, importance of position, scope of responsibilities, leadership skills and performance as well as the importance of the executive's position within the Company. In determining whether to increase the base salary for a particular named executive officer, the Compensation Committee considers a variety of factors, including the achievement of the named executive officer's individual goals, as well as overall performance, comparative survey data, and the other elements of compensation received by the named executive officer.

        New NEOs:     For 2016, the Aegerion Compensation Committee established base salaries for our New NEOs with the objective of providing base salaries generally at the 50th percentile relative to Aegerion's peer group and similarly-situated companies based on the Radford Global Life Sciences Survey. Aegerion reviewed base salaries annually and considered them for adjustment to reflect individual roles, experience, capability, scope of responsibility, and performance during the year, the impact of the executive's performance on Aegerion's overall performance, and the Radford benchmarking data regarding Aegerion's peer group and similar companies as shown on the Radford Global Life Sciences Survey. For Ms. Szela, the Compensation Committee also took into account the factors set forth the description of Ms. Szela's compensation arrangements in " Named Executive Officers — Overview of 2016 Compensation Arrangements Prior to the Merger. " Because three of the five New NEOs either joined Aegerion late in 2015 or during 2016, and two New NEOs, Mr. Perry and Mr. Harshbarger, received base salary increases in 2016 in connection which their respective promotions, no New NEOs received base salary increases during the 2016 annual base salary review cycle. The annual salaries of our New NEOs as of December 31, 2015 and 2016 are as follows:

New NEOs
  2016
($)
  2015
($)
 

Mary Szela

    689,550      

Gregory Perry

    450,000 (1)   390,000  

Remi Menes

    400,000      

Roger Louis

    350,000     350,000  

Ben Harshbarger

    350,000 (2)   290,000  

(1)
Mr. Perry received a base salary increase to $450,000 in February 2016 in connection with his promotion to Chief Financial and Administration Officer. For more information regarding Mr. Perry's compensation, refer to "Overview of 2016 Compensation Arrangements Prior to the Merger" above.

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(2)
Mr. Harshbarger received a base salary increase to $350,000 in August 2016 in connection with his promotion to General Counsel. For more information regarding Mr. Harshbarger's compensation, refer to "Overview of 2016 Compensation Arrangements Prior to the Merger" above.

        Former NEOs:     Dr. Cox did not receive a salary increase in 2016 due to the interim nature of his appointment as CEO. In addition, the Board, after consultation with our Compensation Committee, determined that Mr. Ibbott would not receive a base salary merit increase or market-based adjustment for 2016 because he received a base salary increase in connection with his promotion to Senior Vice President, Finance and Chief Financial Officer in November 2015.

Annual Cash Incentive Compensation

        The Compensation Committee has the authority to award annual performance-based cash bonuses to our named executive officers.

        New NEOs:     The 2016 cash incentive payments to our New NEOs, including Ms. Szela, were based upon the Aegerion annual incentive compensation program and the level of achievement against the corporate and individual goals established under this program, as determined by our Board, based upon the recommendation of the Compensation Committee. The target amount of annual cash incentive of our New NEOs for 2016 and the portion of each New NEO's annual cash incentive that was based on corporate and individual performance was set by the Aegerion Compensation Committee as follows:

Name
  Target Bonus
(as a % of
base salary)
  Weighting between
Corporate and
Individual Goals

Mary Szela

    60 % 100% Corporate

Greg Perry

    50 % 80% Corporate / 20% Individual

Remi Menes

    45 % 80% Corporate / 20% Individual

Roger Louis

    40 % 80% Corporate / 20% Individual

Ben Harshbarger

    40 % 80% Corporate / 20% Individual

        Under Aegerion's annual incentive compensation program, the Aegerion Compensation Committee (and, following the Merger, the Compensation Committee) had the discretion to award cash bonuses that were greater than or less than a target bonus amount, depending on the level of achievement of corporate or individual performance goals. The maximum payout level under the corporate goals is 150% of target.

        Aegerion's 2016 corporate goals and the weight attributable to each goal were approved by the Aegerion Board in the first quarter of 2016. In early 2017, as part of the annual performance review process, Ms. Szela made a recommendation to the Compensation Committee regarding the level of achievement against each such goal. The Compensation Committee reviewed Ms. Szela's recommendation, and subsequently recommended to

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the Board for review and approval the level of achievement against each corporate goal. A summary of the corporate goals, relative weightings, and level of achievement is set forth in the table below:

Corporate Goals
  Weight   Actual
Performance
  %
Earned
 

Financial Goals

    30 %            

Achieve revenues of $192 million and operating cash usage not exceed $20 million

    10 %   0 %   0 %

Reconfigure the company to ensure an investable P&L

    10 %   100 %   10 %

Renegotiate term loan with Silicon Valley Bank to regain access to such funds or do a replacement financing

    10 %   0 %   0 %

Pipeline Goals

    20 %            

Identify and present two business development opportunities

    2 %   100 %   2 %

File MAA for metreleptin in EMA

    8 %   100 %   8 %

Implement global asset teams for lomitapide and metreleptin

    2 %   100 %   2 %

Obtain regulatory and pricing approval of Juxtapid in Japan

    8 %   100 %   8 %

Organizational Goals

    20 %            

Re-brand and re-launch the company

    10 %   100 %   10 %

Identify and retain 90% of top performing employees

    2 %   100 %   2 %

Launch one "big new idea" per function

    4 %   100 %   4 %

Identify 10% of cost reduction opportunities

    4 %   100 %   4 %

Compliance Goals

    30 %            

Resolve government investigations in a manner that sustains the company

    10 %   100 %   10 %

Embed compliance through the business and have a compliance plan in place for each function

    15 %   100 %   15 %

Continue to develop drug safety, quality, risk management and pharmacovigilance organizations

    5 %   100 %   5 %

Total

    100 %       80.00 %

        Individual performance goals for our New NEOs, other than Ms. Szela (whose 2016 bonus was based solely on achievement of corporate performance goals) and Mr. Menes (who did not have specific individual goals for 2016 due to the fact that his employment with Aegerion began in September 2016, just two months before the Merger), were tailored to each executive's role at Aegerion and were established by the Aegerion Compensation

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Committee, in consultation with Ms. Szela. The individual performance goals in 2016 for each of our New NEOs, other than Ms. Szela and Mr. Menes, are described below:

New NEO
  Summary of Individual Goals

Greg Perry

 

Manage audit and timely file 10-K

 

Reach preliminary agreement in principle with DOJ/SEC

 

Plan and implement reduction in force in Q1 2016

 

Close business development deal to bring in a product or portfolio of products

Roger Louis

 

Reach preliminary agreement in principle with DOJ/SEC

 

Ensure readiness for corporate integrity agreement and other compliance documents coming out of DOJ/SEC preliminary agreement in principle

 

Continue to build and evolve the global compliance program

 

Continue to implement Board compliance committee and build compliance architecture under the committee; work with committee chair on same

Ben Harshbarger

 

Reach preliminary agreement in principle with DOJ/SEC and manage final settlement

 

Support compliance program and efforts of compliance team

 

Provide legal advice on global product matters, pricing matters and strategy

 

Provide legal advice on SEC filings and corporate communications

 

Manage patent work and patent defense

 

Provide legal advice on loan agreements and financings

 

Implement measures to reduce and control legal expenses

 

Re-work legal and contracts processes

        The Compensation Committee, upon the recommendation of Ms. Szela, determined that each New NEO attained an individual performance rating of 100% in 2016. The Compensation Committee made these performance determinations based upon each New NEO's achievement of his individual goals.

        Based upon achievement of the 2016 corporate goals and each New NEO's individual goals (other than Ms. Szela and Mr. Menes), our New NEOs received the following cash incentive payments for 2016:

    Ms. Szela: $326,450

    Mr. Perry: $189,000

    Mr. Menes: $45,567

    Mr. Louis: $117,040

    Mr. Harshbarger: $133,952

        Mr. Menes's bonus was prorated based on the length of time he was employed during 2016. Mr. Harshbarger's bonus reflects an upward adjustment of $17,472, or approximately 15% of his overall bonus, in order to reward Mr. Harshbarger's strong performance on the achievement of critical corporate objectives.

        Former NEOs:     Due to the interim nature of his appointment, Dr. Cox was not eligible for an annual incentive cash award. Mr. Ibbott was eligible to receive an annual cash incentive award, with a target amount equal to 40% of his base salary. Consistent with the annual incentive program maintained during 2016 by QLT, 75% of his bonus was based on the achievement of corporate goals and 25% on the achievement of individual goals.

        The Board, following the recommendation of the Compensation Committee, determined that, for 2016 bonuses, former QLT executive officers, including Mr. Ibbott, would be eligible to attain between 0% and 100%

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of corporate and individual goals in 2016 depending on the executive's performance, with the potential to attain up to 125% under exceptional circumstances.

        Our 2016 corporate goals and the weight attributable to each goal were approved by the Board in the first quarter of 2016. As part of the annual performance review process, our former management team, including Mr. Ibbott and Dr. Cox, who continued to serve as one of our directors after the Merger, made a recommendation to the Compensation Committee regarding the level of achievement of each such goal. The Compensation Committee reviewed this recommendation, and subsequently recommended to the Board for review and approval the level of achievement of each corporate goal. A summary of the corporate goals, relative weighing, and level of achievement is set forth in the table below:

Corporate Goals
  Weight   Weighted
Rating
  %
Earned
 

Zuretinol Program Goals, which include:

    70 %       53.38 %

Completing the IRD Natural History Study in the second quarter of 2016

    10 %   10 %  
 

Complete internal review of pivotal study protocol and submit to EMA/FDA

    10 %   10 %  
 

Prepare submission and meet with EMA to plan for conditional approval submission

    5 %   5 %  
 

Retain regulatory consultant to support FDA interactions; engage in defined set of FDA interactions on plans for conditional approval in EMA and proposed development pathway in U.S. and obtain breakthrough therapy status

    20 %   12 %  
 

Initiating a pivotal clinical trial in the third quarter of 2016

    30 %   27 %  
 

Prepare dossier for EMA conditional approval

    15 %   11 %  
 

Submitting an application to the EMA for conditional approval

    10 %   1 %  
 

Total

    100 %   76 %   See above  

Operational Goals, which include:

    15 %         12.98 %

Strengthening operational functions to support the clinical development organization

    40 %   40 %  
 

Effectively managing cash flow such that cash balance at 12/31/16 meets or exceeds budget

    30 %   30 %  
 

If an application for conditional approval of zuretinol is made to the EMA, initiating planning for commercialization and reimbursement

    15 %   4 %  
 

Effectively manage Valeant litigation

    15 %   13 %  
 

Total

    100 %   87 %   See above  

Strategic Goals, which include:

    15 %         22.50 %

Work with the Board to complete a review of strategic alternatives

    50 %   75 %  
 

Following Board decision to execute a strategic transaction(s), obtain any shareholder approvals and complete transaction

    35 %   53 %  
 

Analyze and recommend financial objectives supporting strategic transaction(s) and execute on objectives

    15 %   23 %  
 

Total

    100 %   150 %   See above  

Total

    100 %       88.85 %

        The individual goals for Mr. Ibbott related to his areas of responsibility and were designed to facilitate the achievement of our corporate goals. The extent to which his individual goals were achieved or exceeded was typically determined largely from the annual performance recommendations prepared by the QLT Interim CEO, and recommended by the Compensation Committee to the Board for approval. For 2016, due to management turnover as a result of the Merger, in lieu of specifically reviewing the level of achievement against individual goals, Mr. Ibbott's level of performance was assessed at 100%. Based upon achievement of the 2016 corporate goals and individual goals, Mr. Ibbott received CAD$109,965 (USD $83,036) as a cash incentive payment for 2016.

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Long-term Incentive Awards

        We have a broad-based equity compensation program designed to reward and motivate our employees, including our named executive officers. Equity awards help align the interests of our named executive officers and other employees with the long-term interests of our shareholders, and provide an opportunity for employees to acquire an ownership interest in the Company. The granting of equity awards is also consistent with our compensation philosophy of attracting, retaining and motivating our named executive officers to deliver sustainable long-term value.

        We currently maintain one equity compensation plan, the Equity Incentive Plan, under which we grant stock options, restricted stock units and performance-based stock units, as applicable, to our directors, officers, employees and key consultants and of our affiliates. If approved by shareholders at the Annual Meeting, the 2017 Plan will include the terms set forth in " Proposal No. 5 — Approval of our Amended and Restated 2017 Equity Incentive Plan ." The Equity Incentive Plan is administered by the Compensation Committee. The Board, upon the recommendation of the Compensation Committee, approves equity awards for our CEO, and our Compensation Committee, taking into account the recommendations of our CEO, approves equity awards for our other executive officers. In December 2016, the Compensation Committee approved market-based equity guidelines for December 2016-2017 awards for new hires and promotions below the level of executive officer and also delegated the authority to our CEO and Senior Vice President, Human Resources to make such awards within these guidelines.

    Annual, New Hire, Promotion and Other Awards

        Each of our named executive officers received a grant of stock options in connection with his or her commencement of employment and may be eligible for a grant of stock options upon promotion, as applicable. The size and terms of these stock option awards are determined in accordance with guidelines approved by the Compensation Committee from time to time and negotiations with the executive officer, and approved by the Compensation Committee, for named executive officers other than our CEO, and the Board, for our CEO.

        Our named executive officers are also eligible to receive annual grants of equity awards. For a description of the equity awards granted to our named executive officers in in 2016, please see below under " Equity Awards to Former NEOs " and " Equity Awards to New NEOs ."

        Equity awards are generally made once a year in connection with our year-end performance cycle. In 2016 and prior years, equity awards were generally approved at a regularly scheduled Board meeting proximate to the annual general meeting of shareholders. Going forward, we intend to grant annual equity awards in the first quarter of each year in conjunction with our annual performance and compensation review cycle covering the prior year.

        We may also make equity awards to certain of our named executive officers and other employees when specific circumstances warrant such grants, including for purposes of retention or the achievement of critical corporate objectives.

        Equity Awards to Former NEOs:     In June 2016, we made the following equity awards to our Former NEOs:

    Dr. Cox:    Stock options to purchase 30,000 common shares, which were scheduled to vest and become exercisable in equal monthly installments over six months; stock options to purchase 20,000 common shares, which were approved by the Board in October 2015, subject to the completion of certain future events and conditions related to the Aralez Distribution, which options were awarded in June 2016 after such conditions were met and vested in equal monthly installments over six months from the grant date; and, in connection with Dr. Cox's service as a director, a DSU award with respect to 1,280 common shares under our DDSU Plan, which are payable in cash and generally vest in equal monthly installments over 36 months. Dr. Cox's DSUs became 100% vested in connection with the Merger.

    Mr. Ibbott:    12,000 restricted stock units, which vest as to 2/3 of the units on the first anniversary of the date of grant and 1/3 of the units on the second anniversary of the date of grant; stock options to purchase 24,000 common shares, which were scheduled to vest and become exercisable in equal monthly installments over 36 months; and stock options to purchase 20,000 common shares, which were approved by the Board in November 2015 as part of the 2015 equity award process, subject to certain future events and conditions related to the Aralez Distribution, which options were awarded in June 2016 after such conditions were met and vested in equal monthly installments over 36 months from the grant date.

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        The size of the equity awards approved in June 2016 for Dr. Cox and Mr. Ibbott were positioned below the 25 th  percentile of the September 2015 Peer Group market data. In making these awards to Dr. Cox and Mr. Ibbott, the Compensation Committee considered numerous factors, including the following: their prior grants of stock options and other equity awards; their levels of total cash compensation; their performance; the potential of the equity awards to retain these executives, particularly in light of the pending Merger, which was announced prior to the grant of the June 2016 awards; their level of responsibility and expected future contributions, including in Dr. Cox's case, the interim nature of his position as Interim CEO; and, in Mr. Ibbott's case, the fair value of long-term incentives awarded to executives in similar positions in companies within the September 2015 Peer Group and a desire for parity among him and our other former executive officers who reported to Dr. Cox.

        Equity Awards to our New NEOs:     In May 2016, during Aegerion's annual compensation review process, the Aegerion Compensation Committee made the following grants of Aegerion stock options and Aegerion restricted stock units ("Aegerion RSUs") to our New NEOs:

New NEOs
  Stock Options   Aegerion RSUs (1)  

Mary Szela

    38,800     19,896  

Gregory Perry

    13,800     7,179  

Roger Louis

    3,400     1,640  

Ben Harshbarger

        2,543  

(1)
For a description of the treatment of Aegerion equity awards in connection with the Merger, please see below under " Treatment of Aegerion Stock Options and Aegerion RSUs in Connection with the Merger ." Aegerion RSUs in this table are reported as Adjusted RSUs, as defined below.

        The shares of Aegerion common stock underlying these stock options were scheduled to vest over four years, with 25% of such shares to vest and become exercisable on May 9, 2017, and the remaining 75% of such shares to vest in equal monthly installments through May 9, 2020; these options were cancelled in connection with the Merger. Aegerion RSUs vest in three equal annual installments on May 9 of 2017, 2018 and 2019, except for 1,460 of the Aegerion RSUs awarded to Mr. Harshbarger, which vest in three annual installments, with 25% of the units vesting on May 9, 2017, 50% of the units vesting on May 9, 2018, and 25% of the units vesting on May 9, 2019, in each case, subject to continued employment. Mr. Menes did not receive any equity awards in 2016 given that his employment started with Aegerion in September 2016 and Aegerion was subject to strict limitations on the equity awards it could make prior to the closing of the Merger.

        In making grant decisions relating to the New NEOs, the Aegerion Compensation Committee utilized competitive market data provided by Radford considering both annual value delivered as well as annual grant as a percentage of company to target stock option and restricted stock unit awards at the 50th to 75th percentile relative to our peer group and similar companies as shown on the Radford Global Life Sciences Survey for the executive's position and also considered the executive's level and scope of responsibility and potential contribution to the advancement of our corporate objectives. Typically, Aegerion made larger awards to named executive officers with the roles and responsibilities that were more likely to build long-term shareholder value through their potential to contribute to Aegerion's growth and to help it achieve key milestones.

        In addition, as described above, the Compensation Committee granted our New NEOs both stock options and performance-based stock units in December 2016. For a description of these awards, please see " Key Compensation Decisions Made At and After the Merger — New NEOs — December 2016 Equity Award Grants. "


Treatment of Aegerion Stock Options and Aegerion RSUs in Connection with the Merger

        Because the exercise price of all Aegerion stock options held by Ms. Szela and Messrs. Perry, Louis and Harshbarger, exceeded the fair market value of the merger consideration received in connection with the Merger, they were cancelled at the effective time of the Merger for no consideration.

        In connection with the Merger, all Aegerion RSUs held by Ms. Szela and Messrs. Perry, Louis, and Harshbarger were exchanged for a restricted stock unit with respect to a number of our common shares equal to the product obtained by multiplying (i) the total number of Aegerion RSUs as of immediately prior to the

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effective time of the Merger by (ii) the equity exchange ratio (as defined in the Merger Agreement), with any fractional shares rounded down to the nearest whole share (the "Adjusted RSU"). Each Adjusted RSU is otherwise subject to the same terms and conditions applicable to the corresponding Aegerion RSU under the Aegerion equity plan and the agreements evidencing grants thereunder, including vesting terms, but excluding any terms that are rendered inoperative solely by reason of the transactions contemplated by the Merger Agreement.


Key Compensation Decisions Made At and After the Merger

New NEOs — December 2016 Equity Award Grants

        In December 2016, we added awards of performance-based stock units to our long-term incentive program to further align the interests of our New NEOs and our shareholders by focusing on both short- and long-term performance goals, the achievement of which is intended to drive our long-term success. Performance-based stock units were granted to our New NEOs in December 2016 and will be earned based on the achievement of regulatory and development milestones with respect to MYALEPT and specified revenues from JUXTAPID in Japan. To the extent earned, one-third of the units become vested upon achievement of the applicable performance target, and the remaining two-thirds will vest in substantially equal annual installments on the second and third anniversaries of the grant date, subject to continued employment.

        In December 2016, we also made stock option grants to our New NEOs, which vest in three equal installments on the first, second and third anniversaries of the date of grant, subject to continued employment.

        The value of the performance-based stock units and stock options granted to our New NEOs in December 2016 was based on the 2017 Market Data. Our Compensation Committee considers information compiled by our compensation consultant, including data regarding comparative stock ownership of, and equity awards received by, executives at companies in our peer group and our industry in determining the size of the annual equity awards granted to our New NEOs. The Compensation Committee and the Board believe that the size of these equity awards are in the best interests of shareholders and best enable us to achieve our compensation objectives and further our pay-for-performance philosophy with respect to our New NEOs, each of whom are critical to our near- and long-term success, for the following reasons:

    All of the Aegerion stock options held by our New NEOs were cancelled as of the Merger since they were out-of-the-money, leaving our executive officers with little, if any, equity in the company;

    Given the minimal equity held by our New NEOs as of the Merger, the size of the awards were aligned with new hire awards, rather than annual equity awards, which are normally much larger than annual equity awards;

    Our New NEOs did not receive equity awards as part of the 2016 annual performance process (which took place in the first quarter of 2017) given the fact that these awards were granted late in 2016, and the size of the awards against the market; and

    In order to more fully align the executive officers interests with shareholders, executive officers will not receive merit salary increases in 2017.

        A summary of the performance-based restricted stock units and stock options granted to our New NEOs in December 2016 is set forth below:

New NEOs
  Performance-Based Stock Units   Stock Options  

Mary Szela

    171,660     323,520  

Gregory Perry

    81,760     166,020  

Remi Menes

    47,980     97,400  

Roger Louis

    20,560     41,740  

Ben Harshbarger

    47,980     97,400  

        In connection with the December 2016 equity awards to our New NEOs, the Board, upon the recommendation of the Compensation Committee, determined it was appropriate to pay any excise taxes that may be assessed on the executive by reason of the Merger being treated as a corporate inversion, and to provide

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for a gross-up on the amount necessary to put the executive in the same net after-tax position had such excise tax not been incurred. The Board determined that it was appropriate to provide this benefit in order to protect our New NEOs from an individual tax liability that could arise in connection with the Merger, a transaction that we believe was beneficial for the Company and our shareholders; in addition, if such individual tax liability were incurred by our New NEOs and our New NEOs were not protected from it, the Board determined it would undercut our goals of retaining and motivating our executives through a pivotal transitional and growth period following the Merger. The Board did not approve any gross-ups under Section 280G of the Code in connection with these awards.

New NEOs — 2017 Annual Cash Incentive Compensation Plan

        For 2017, the annual cash incentive plan of our New NEOs, including Ms. Szela, has the following key elements:

    A range of corporate goals, including financial, operational, research and development, business development, organizational, compliance and legal goals.

    The corporate goals were approved by our Board, upon the recommendation of the Compensation Committee, in the first quarter of 2017.

    The level of achievement against these corporate goals will be determined by our Board, upon the recommendation of the Compensation Committee, in the first quarter of 2018.

    All executive officers, including our CEO and our other New NEOs, are eligible to participate in the annual cash incentive plan;

    The target cash incentive opportunity for our New NEOs in 2017, as a percentage of base salary, will be as follows: Ms. Szela — 60%; Mr. Perry — 50%; Mr. Menes — 45%; Mr. Louis — 40%; and Mr. Harshbarger — 40%.

    The actual amount that our New NEOs and other executive officers will receive under the plan will be tied 100% to the achievement of our corporate goals.

    The Compensation Committee has the discretion to award cash bonuses that are greater than or less than a New NEO's target bonus amount, depending on the level of achievement of corporate goals; for the CEO, this would need to be approved by our Board. In determining our corporate performance score each year, the Compensation Committee may also elect to consider our overall performance in addition to our level of achievement against approved corporate goals.

Former NEOs

        Dr. Cox's employment was terminated, effective as of the Merger, and Mr. Ibbott's employment terminated on March 31, 2017. A summary of the payments and benefits that each received in connection with his termination of employment is described below under " Potential Payments Upon Termination or Change of Control. "


Other Compensation

        Broad-based benefit programs.     We currently maintain broad-based employee benefits that are provided to all full-time employees, including our named executive officers, including health insurance, life and disability insurance, and dental and vision insurance.

        Our U.S.-based employees are eligible to participate in our tax-qualified 401(k) Plan. Our 401(k) plan permits employees to make contributions up to the statutory limit. We have the discretion to match up to 50% of the first 6% of gross wages that an employee contributes, resulting in a maximum match by us that totals up to 3% of an employee's gross wages (as further limited by statutorily defined annual compensation limits). We and Aegerion matched employee contributions in 2016.

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        Our Canada-based employees are eligible to participate in our RRSP. Under this program, we match the amount contributed by the participant, up to 50% of the annual maximum amount allowable by the Canada Revenue Agency, less any applicable tax withholdings.

        Perquisites; Other Benefits.     We provide certain additional benefits to our New NEOs. Below are other personal benefits that we provide, or have provided in 2016, to our New NEOs.

        Pursuant to Ms. Szela's amended and restated employment agreement, during the term of her employment, we provide her with a housing allowance of up to $7,200 per month, reimbursement of reasonable commuting expenses, including air travel, an amount to offset any tax liability associated with such housing allowance and commuting expense reimbursements, reimbursement of tax and financial planning expenses up to $15,000 on an annual basis, and a tax equalization payment and up to $5,000 per year for reasonable expenses for tax consultations regarding the Canadian tax aspects of her employment.

        Pursuant to Mr. Perry's employment agreement, as amended, we reimburse him for certain commuting and relocation expenses for a period of up to 24 months from the date of his original hire by Aegerion, including a tax gross-up on such amounts, a tax equalization payment and up to $5,000 per year for reasonable expenses for tax consultations regarding the Canadian tax aspects of his employment.

        Pursuant to Mr. Menes' employment agreement, as amended, we reimburse him for certain commuting and relocation expenses, including a tax gross-up on such amounts, not to exceed $60,000, a tax equalization payment and up to $5,000 per year for reasonable expenses for tax consultations regarding the Canadian tax aspects of him employment.

        Pursuant to Mr. Louis' employment agreement, as amended, we provide him with a tax equalization payment and up to $5,000 per year for reasonable expenses for tax consultations regarding the Canadian tax aspects of his employment.

        Pursuant to Mr. Harshbarger's employment agreement, as amended, we provide him with a tax equalization payment and up to $5,000 per year for reasonable expenses for tax consultations regarding the Canadian tax aspects of his employment. In addition, during Mr. Harshbarger's ex-patriate assignment for Aegerion, which ended on July 31, 2016, Aegerion provided Mr. Harshbarger with tax services and tax equalization and a variety of benefits common to such assignments, such as a cost of living salary adjustment, reimbursement for housing, up to a monthly cap, and tuition reimbursement for his children.

        Detailed information regarding the perquisites and other benefits that were provided to our named executive officers in 2016 is set forth the Summary Compensation Table .

        Severance and change of control payments/benefits.     As discussed in this CD&A and below in " Employment Agreements with Named Executive Officers " and in " Potential Payments Upon Termination or Change of Control ," we have agreements with our New NEOs providing certain severance benefits to them upon termination of their employment or in connection with a change in control of the Company, including, in the case of a termination without cause or for good reason within 18 months following a change in control. Our goal in providing severance and change in control benefits is to offer sufficient protection such that a named executive officer will devote his or her full time and attention to the requirements of the business rather than to the potential implications of a change in control for his or her position. We prefer to have certainty regarding the potential severance amounts payable to our named executive officers under specified circumstances, rather than negotiating severance at the time that a named executive officer's employment terminates. We have also determined that accelerated vesting provisions in connection with a qualifying termination following a change in control are appropriate because such provisions will encourage our executives holding unvested equity awards, including our named executive officers, to stay focused on their responsibilities in such circumstances, rather than be distracted by the potential implications for them of a change in control.

        As described above and in " Employment Agreements with Named Executive Officers " and in " Potential Payments Upon Termination or Change of Control ," we had employment agreements with our Former NEOs that provided them with severance in the event of a termination of employment by the Company without cause; these provisions were triggered for Dr. Cox and Mr. Ibbott in connection with their respective terminations of employment at or following the Merger.

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Say-on-Pay Consideration

        At our 2016 annual general meeting ("2016 Annual Meeting"), approximately 98% of our shareholders who voted at the 2016 Annual Meeting approved, in a non-binding advisory vote, the compensation of our named executive officers as disclosed in our proxy statement for the 2016 Annual Meeting. The Compensation Committee believes that the results of this advisory vote affirmed shareholders' support of our approach to executive compensation, and did not implement any changes as a direct result of the vote. As described above, following the Merger, the Compensation Committee did approve the adoption of a performance-based stock unit program in 2016 to further align compensation with performance. The Compensation Committee continues to review, assess and adjust our named executive officers' compensation on a regular basis to best position the Company to achieve its compensation objectives. We expect that the Compensation Committee will continue to consider the outcome of advisory votes on executive compensation when making future compensation decisions with respect to our named executive officers. Aegerion did not have an advisory vote on executive compensation in 2016; its last advisory vote on executive compensation was in 2014, when approximately 95% of Aegerion's shareholders who voted at the Aegerion 2014 annual meeting approved Aegerion's executive compensation.


Section 162(m) of the Internal Revenue Code and Accounting Considerations

        We consider the tax and accounting rules associated with various forms of compensation when designing our compensation programs. However, to maintain flexibility to compensate our named executive officers in a manner designed to promote our long-term corporate goals and objectives, the Compensation Committee has not adopted a policy that all compensation must be deductible or have the most favorable accounting treatment to the Company.

        The Compensation Committee and the Board may consider the effects of Section 162(m) of the Code, which limits to $1 million the amount a company may deduct for compensation paid to its CEO and any of its other three named executive officers (excluding the chief financial officer). This limitation does not, however, apply to compensation meeting the definition of "qualifying performance-based compensation." At this Annual Meeting we are asking our shareholders to approve our 2017 Plan, which would permit grants of RSUs intended to qualify as performance-based compensation under Section 162(m). However, the Compensation Committee believes that its primary responsibility is to provide a compensation program that attracts, retains and rewards the executive talent necessary for our success. Consequently, the Compensation Committee may pay or provide, and has paid or provided, compensation that could exceed $1 million that is not exempt from the deduction limitations under Section 162(m).

        The Compensation Committee considers the accounting implications of significant compensation decisions, especially in connection with decisions that relate to our equity incentive award plans and programs.


Compensation Committee Report

        The Compensation Committee has reviewed and discussed with management the foregoing CD&A required by Item 402(b) of Regulation S-K. Based on this review and discussion, the Compensation Committee has recommended to our Board of Directors that the CD&A be included in this Proxy Statement and our Annual Report on Form 10-K for 2016.

By the Compensation Committee of the Board of Directors of Novelion Therapeutics Inc.

Dr. Stephen Sabba, Chair
Kevin Kotler
Dr. Jorge Plutzky

        This report shall not constitute "soliciting material," shall not be deemed "filed" with the SEC and is not to be incorporated by reference into any of our other filings under the Securities Act of 1933, as amended, or the Securities Act, or the Exchange Act, except to the extent that we specifically incorporate this report by reference therein.


Compensation of Named Executive Officers

        Where our named executive officers were paid in Canadian dollars, their compensation has been converted into U.S. dollars for reporting purposes in the tables below at the exchange rate of USD$1.00 = CAD$1.3243.

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2016 Summary Compensation Table

        The following table summarizes total compensation earned by our named executive officers for 2016, 2015 and 2014. Salary amounts in the table below for Mr. Ibbott, and a portion of Dr. Cox's salary, were paid in Canadian dollars and have been converted into U.S. dollars for reporting purposes. Amounts for our named executive officers who are legacy Aegerion employees include amounts paid by or earned from, and equity awards granted by, Aegerion through the Merger and amounts paid by or earned from, and equity awards granted by, Novelion following the Merger.

Name
  Year   Salary
($)
  Bonus
($) (1)
  Option
Awards
($) (2)
  Stock
Awards
($) (3)
  Non-Equity
Incentive
Plan
Compensation
($) (1)
  All Other
Compensation
($) (9)
  Total
Compensation
 

Mary Szela (4)

    2016   $ 679,973   $   $ 4,482,542   $ 1,723,618   $ 326,450   $ 197,973   $ 7,410,556  

Gregory Perry (5)

    2016   $ 443,167   $ 735,000   $ 1,366,631   $ 793,374   $ 189,000   $ 61,675   $ 3,588,847  

Remi Menes

    2016   $ 121,111   $ 200,000   $ 347,718   $ 415,027   $ 45,567   $ 64,149   $ 1,193,572  

Roger Louis

    2016   $ 350,000   $ 50,000   $ 173,905   $ 197,534   $ 117,040   $ 45   $ 888,524  

Ben Harshbarger (6)

    2016   $ 306,445   $ 154,797   $ 347,718   $ 445,545   $ 133,952   $ 222,003   $ 1,610,460  

Dr. Geoffrey Cox (7)

    2016   $ 350,523   $   $ 132,500   $ 9,152   $   $ 104,322   $ 593,497  

    2015   $ 480,000   $   $   $   $   $ 704   $ 480,704  

    2014   $ 94,398   $   $ 287,965   $   $   $ 92,899   $ 475,262  

W. Glen Ibbott (8)

    2016   $ 226,535   $   $ 116,600   $ 85,800   $ 83,036   $ 12,111   $ 524,082  

    2015   $ 217,964   $ 78,180   $ 165,742   $   $ 72,539   $ 9,745   $ 544,170  

(1)
Bonus and non-equity incentive compensation amounts are reported based on performance in the applicable year, whether or not paid in the year the compensation was earned based on such performance.

(2)
This column represents the grant date fair value of stock option awards, including the Aegerion stock options cancelled in the Merger, using the Black-Scholes option-pricing model in accordance with ASC Topic 718. Aegerion stock options granted to Ms. Szela and Messrs. Perry and Louis in 2016 were cancelled at the effective time of the Merger for no consideration because the exercise price of such Aegerion stock options exceeded the fair market value of the consideration received in connection with the Merger. A table directly under the "Grants of Plan-Based Awards" table provides information related to the cancelled Aegerion option grants made to Ms. Szela and Messrs. Perry and Louis in 2016.

(3)
This column represents the grant date fair value of RSUs, including Adjusted RSUs, in accordance with ASC Topic 718. All Aegerion RSUs held by Ms. Szela and Messrs. Perry, Harshbarger and Louis were exchanged for Adjusted RSUs (as defined in this Proxy Statement) in connection with the Merger. This column also includes the grant date value of performance-based stock units granted to Ms. Szela and Messrs. Perry, Menes, Louis and Harshbarger, such value calculated based on the probable outcome of performance conditions in accordance with ASC Topic 718. In addition, this column includes the grant date fair value of deferred stock units granted to Dr. Cox.

(4)
Ms. Szela was appointed CEO of Aegerion on January 7, 2016, and appointed CEO of the Company on November 30, 2016.

(5)
Mr. Perry served as Chief Financial Officer of Aegerion from July 2015 to February 2016, when he was promoted to Chief Financial and Administrative Officer of Aegerion. He served in that capacity until November 30, 2016, when he was appointed Chief Financial and Administrative Officer of the Company.

(6)
Mr. Harshbarger was appointed as General Counsel of Aegerion in August 2016. He served in that capacity until November 30, 2016, when he was appointed General Counsel of the Company. Compensation information in the above table is provided solely for the year 2016 because Mr. Harshbarger was not an executive officer of Aegerion in 2014 or 2015.

(7)
Dr. Cox served as Interim CEO of the Company from October 23, 2014 until November 30, 2016. Amounts in the Summary Compensation Table with respect to Dr. Cox relate to compensation for his service as Interim CEO. For amounts paid or provided to him in connection with his service as a member of the Board, see the Director Compensation Table above.

(8)
Mr. Ibbott was appointed Interim Chief Financial Officer on January 26, 2015 and Senior Vice President, Finance and Chief Financial Officer on November 5, 2015. He served in that capacity until November 30, 2016.

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(9)
Other Compensation consists of the following:

Name
  Year   Relocation   Income Tax
Preparation
  Severance
Payments
  Unused
Vacation
Time
  Life And
AD&D
Insurance
  Directors
Fees
  Tax
Payments by
Company for
benefits
provided to
NEOs
  Retirement
Plan
Contributions
  Cost of
Living
  Other   Total  

Mary Szela, CEO

    2016   $ 99,791 (a) $ 14,989   $   $   $   $   $ 83,193   $   $   $   $ 197,973  

Gregory Perry, Chief Financial and Administrative Officer

    2016   $ 35,888 (b) $   $   $   $   $   $ 25,787   $   $   $   $ 61,675  

Remi Menes, Chief Commercial Officer

    2016   $ 37,173 (c) $   $   $   $   $   $ 26,976   $   $   $   $ 64,149  

Roger Louis, Global Chief Compliance Officer

    2016   $   $   $   $   $   $   $   $   $   $ 45   $ 45  

Ben Harshbarger, General Counsel

    2016   $ 99,831 (d) $   $   $   $   $   $ 82,294   $   $ 39,740   $ 138   $ 222,003  

Dr. Geoffrey Cox, Former Interim CEO

    2016   $   $   $ 80,000 (e) $ 20,923   $ 3,399   $   $   $   $   $   $ 104,322  

    2015   $   $ 704   $   $   $   $   $   $   $   $   $ 704  

    2014   $   $   $   $   $   $ 92,899   $   $   $   $   $ 92,899  

W. Glen Ibbott, Former Senior Vice President, Finance and Chief Financial Officer

    2016   $   $   $   $   $ 2,532   $   $   $ 9,579   $   $   $ 12,111  

    2015   $   $   $   $   $   $   $   $ 9,745   $   $   $ 9,745  

(a)
Represents amounts paid to or on behalf of Ms. Szela in connection with temporary housing ($84,004) and commuting expenses ($15,787) in her role as CEO of Aegerion and then of the Company.

(b)
Represents amounts paid to or on behalf of Mr. Perry in connection with temporary housing ($35,888) in his role of Chief Financial and Administrative Officer of Aegerion and then of the Company.

(c)
Represents amounts paid to or on behalf of Mr. Menes in connection with temporary housing ($27,508) and commuting expenses ($9,665) in his role of Chief Commercial Officer of Aegerion and then of the Company.

(d)
Represents amounts paid to or on behalf of Mr. Harshbarger in connection with his ex-patriate assignment for Aegerion, which ended on July 31, 2016, including transportation ($20,145), relocation and moving expenses ($25,454), reimbursement for housing ($52,152) and tuition reimbursement for his children ($2,080).

(e)
Represents cash severance payment to Dr. Cox in 2016.

        At the closing of the Merger, on November 29, 2016, because the exercise price of all Aegerion stock options held by Ms. Szela and Messrs. Perry, Louis, and Harshbarger exceeded the fair market value of the merger consideration received in connection with the Merger, all such Aegerion stock options, including all Aegerion stock options granted to Ms. Szela and Messrs. Perry and Louis in 2016, were cancelled at the effective time of the Merger for no consideration. The following table summarizes total compensation earned by Ms. Szela and Messrs. Perry and Louis in 2016, determined in accordance with SEC rules but excluding the option awards that were granted in 2016 and cancelled on the closing of the Merger.

Name
  Year   Salary
($)
  Bonus
($) (1)
  Option
Awards
($) (2)
  Stock
Awards
($) (3)
  Non-Equity
Incentive Plan
Compensation
($)
  All Other
Compensation
($) (10)
  Total
Compensation
($)
 

Mary Szela

  2016   $ 679,973   $   $ 1,154,966   $ 1,723,618   $ 326,450   $ 197,973   $ 4,082,980  

Gregory Perry

  2016   $ 443,167   $ 735,000   $ 592,691   $ 793,374   $ 189,000   $ 62,342   $ 2,815,574  

Roger Louis

  2016   $ 350,000   $ 50,000   $ 149,012   $ 177,844   $ 117,040   $ 45   $ 863,631  

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Grants of Plan-Based Awards for the Fiscal Year Ended December 31, 2016

        The following table provides information related to grants of awards to named executive officers in 2016. As noted above, all share and per-share data included below give effect to the Consolidation.

Name
  Grant
Date
  Threshold
($) (1)
  Estimated
Future
Payouts
Under
Non-Equity
Incentive Plan
Awards Target
($) (2)
  Maximum
($) (3)
  Estimated
Future
Payouts
Under Equity
Incentive Plan
Awards (#)
  All Option
Awards:
Number of
Securities
Underlying
Options (#) (11)
  All Stock
Awards:
Number of
Shares of
Stock or
Units (#)
  Exercise or
Base Price
of Option
and
Awards
($/Sh)
  Grant Date
Fair Value
of Option
and Stock
Awards
($) (4)
 

Mary Szela

      $ 330,984   $ 413,730   $ 620,595                                

  12/22/16                             323,520 (5)       $ 8.65   $ 1,154,966  

  12/22/16                       171,660           171,660 (6) $   $  

  5/9/16                             38,800 (7)       $ 12.30   $ 284,076  

  5/9/16                                   19,896 (8) $   $ 238,759  

  1/7/16                             120,000 (7)       $ 43.25   $ 3,043,500  

Gregory Perry

     
$

180,000
 
$

225,000
 
$

337,500
                               

  12/22/16                             166,020 (5)       $ 8.65   $ 592,691  

  12/22/16                       81,760           81,760 (6) $   $  

  5/9/16                             13,800 (7)       $ 12.30   $ 101,040  

  5/9/16                                   7,179 (8) $   $ 86,148  

  2/12/16                             40,000 (7)       $ 28.55   $ 672,900  

Remi Menes

     
$

144,000
 
$

180,000
 
$

270,000
                               

  12/22/16                             97,400 (5)       $ 8.65   $ 347,718  

  12/22/16                       47,980           47,980 (6) $   $  

Roger Louis

     
$

112,000
 
$

140,000
 
$

210,000
                               

  12/22/16                             41,740 (5)       $ 8.65   $ 149,012  

  12/22/16                       20,560           20,560 (6) $   $  

  5/9/16                             3,400 (7)       $ 12.30   $ 24,893  

  5/9/16                                   1,640 (8) $   $ 19,690  

Ben Harshbarger

     
$

112,000
 
$

140,000
 
$

210,000
                               

  12/22/16                             97,400 (5)       $ 8.65   $ 347,718  

  12/22/16                       47,980           47,980 (6) $   $  

  5/9/16                                   1,046 (8) $   $ 12,552  

  5/9/16                                   1,497 (8) $   $ 17,964  

Dr. Geoffrey Cox

     

$

 

$

 

$

                               

  12/22/16                             9,600 (5)       $ 8.65   $ 34,272  

  6/17/16                             50,000 (9)       $ 7.15   $ 132,500  

  12/6/16                             10,000 (5)       $ 9.00   $ 36,500  

  6/17/16                                   1,280 (10) $   $ 9,152  

W. Glen Ibbott

     

$

 
$

90,614
 
$

113,268
                               

  6/17/16                             44,000 (9)       $ 7.15   $ 116,600  

  6/17/16                                   12,000 (11) $   $ 85,800  

(1)
Represents the 2016 threshold annual cash bonus, which is 80% of target annual cash bonus for our named executive officers (other than Mr. Ibbott, for which the threshold annual cash bonus is 0% of his target annual cash bonus). As described in the CD&A section of this Proxy Statement, Dr. Cox was not eligible for an annual cash bonus for 2016.

(2)
Represents the 2016 target annual cash bonus. The target is based on a percentage of 2016 base salary, as described above in the CD&A section of this Proxy Statement.

(3)
Represents the 2016 maximum annual cash bonus, which was 150% of target annual cash bonus for our legacy Aegerion named executive officers and 125% of target annual cash bonus for Mr. Ibbott.

(4)
For stock options, represents the grant date fair value using the Black-Scholes option-pricing model in accordance with ASC Topic 718, disregarding the effects of estimated forfeitures. For RSUs, represents the grant date fair value determined in accordance with ASC Topic 718, disregarding the effects of estimated forfeitures. For performance-based stock units, represents the probable outcome of performance conditions in accordance with ASC Topic 718, excluding the effect of estimated forfeitures. In determining grant date values, we used the assumptions described in Note 12 to the consolidated audited financial statements in our Annual Report on Form 10-K for the year ended December 31, 2016.

(5)
Represents a stock option award under the Equity Incentive Plan.

(6)
Represents a performance-based stock unit award under the Equity Incentive Plan.

(7)
Represents a stock option award under the Aegerion 2010 Stock Option and Incentive Plan (the "Aegerion 2010 Plan").

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(8)
Represents an RSU award under the Aegerion 2010 Plan.

(9)
Represents stock option awards under the Equity Incentive Plan, which were approved by the Pre-Merger Board on November 4, 2015 as part of the 2015 equity award process, subject to certain future events and conditions related to the Aralez Distribution, which options were awarded in June 2016 after such conditions were met and vested in equal monthly installments over 36 months from the grant date.

(10)
Represents a DSU award under the DDSU Plan, which was approved by the Pre-Merger Board on November 4, 2015 as part of the 2015 equity award process, subject to certain future events and conditions related to the Aralez Distribution, which DSUs were awarded in June 2016 after such conditions were met, and vested in equal monthly installments over six months from the grant.

(11)
Represents RSU award under the Equity Incentive Plan.

(12)
At the closing of the Merger, on November 29, 2016, because the exercise price of all Aegerion stock options held by Ms. Szela and Messrs. Perry, Harshbarger, and Louis exceeded the fair market value of the merger consideration received in connection with the Merger, all such Aegerion stock options, including all Aegerion stock options granted to Ms. Szela and Messrs. Perry and Louis in 2016, were cancelled at the effective time of the Merger for no consideration. The following table provides information related to the cancelled Aegerion option grants made to Ms. Szela and Messrs. Perry and Louis in 2016.

Name
  Grant Date   All Option
Awards:
Number of
Securities
Underlying
Options (#)
  Exercise or
Base Price
of Option
and
Awards
($/Sh)
  Grant Date
Fair Value
of Option
and Stock
Awards
($)
 

Mary Szela

    5/9/16     38,800   $ 12.30   $ 284,076  

Mary Szela

    1/7/16     120,000   $ 43.25   $ 3,043,500  

Gregory Perry

    5/9/16     13,800   $ 12.30   $ 101,040  

Gregory Perry

    2/12/16     40,000   $ 28.55   $ 672,900  

Roger Louis

    5/9/16     3,400   $ 12.30   $ 24,893  


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

        We have entered into the agreements summarized below with our named executive officers.

        Mary Szela.     Pursuant to Ms. Szela's Aegerion employment agreement, in 2016, Ms. Szela received a base salary of $689,550 per year and was eligible to receive an annual cash incentive bonus based on the achievement of certain performance goals with a target of 60% of her base salary. In addition, Ms. Szela received (a) a housing allowance of up to $7,200 per month; (b) reimbursement for reasonable commuting expenses between the Chicago, Illinois area and the Cambridge, Massachusetts area, including air travel; (c) an amount to offset any tax liability associated with such housing allowance and commuting expense reimbursements; and (d) reimbursement for tax and financial planning fees up to $15,000 on an annual basis, subject to the Company's receipt of appropriate documentation and substantiation of the same. Ms. Szela is eligible to participate in our employee benefit plans, as may be in effect for employees of the Company from time to time.

        Gregory Perry.     In January 2016, Mr. Perry was promoted to Chief Financial and Administration Officer of Aegerion. Pursuant to his employment agreement, as amended in connection with his promotion (as described above under " Overview of 2016 Compensation Arrangements Prior to the Merger — Other New NEOs " in the CD&A), Mr. Perry is entitled to receive an annual base salary of $450,000 and is eligible to receive an annual cash bonus based on the achievement of certain Company performance goals with a target of 50% of his base salary. Mr. Perry is also entitled to reimbursement for certain commuting and relocation expenses, as described under " Executive Compensation Components — Other Compensation " in the CD&A. In 2016, Mr. Perry received a one-time cash incentive bonus, comprised of payments to Mr. Perry of up to a total of $450,000, subject to the achievement within specified timeframes of certain operational and strategic corporate goals, as described in the CD&A. In July 2015, when Mr. Perry joined Aegerion, he received a sign-on bonus and grant of options, each as described in the CD&A. Mr. Perry is eligible to participate in our employee benefit plans, as may be in effect for employees of the Company from time to time. In November 2016, we entered into an amendment to Mr. Perry's employment agreement with Aegerion, which was assigned to us in connection with the closing of the Merger, to provide for, among other things, tax equalization and the reimbursement of tax consultation expenses in connection with the Canadian tax implications of his work for the Company.

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        Remi Menes.     Mr. Menes serves as the Company's Chief Commercial Officer. Pursuant to his employment agreement, Mr. Menes is entitled to receive an annual base salary of $400,000 and is eligible to receive an annual cash bonus based on the achievement of certain Company performance goals with a target of 45% of his base salary. In September 2016, when Mr. Menes joined Aegerion, he received a sign-on bonus, as described above under " Overview of 2016 Compensation Arrangements Prior to the Merger — Other New NEOs " in the CD&A. Mr. Menes is eligible to participate in our employee benefit plans, as may be in effect for employees of the Company from time to time. In November 2016, we entered into an amendment to Mr. Menes' employment agreement with Aegerion, which was assigned to us in connection with the closing of the Merger, to provide for, among other things, tax equalization and the reimbursement of tax consultation expenses in connection with the Canadian tax implications of his work for the Company.

        Roger Louis.     Mr. Louis serves as the Company's Chief Compliance Officer. Pursuant to his employment agreement, as amended, Mr. Louis is entitled to receive an annual base salary of $350,000 and is eligible to receive an annual cash bonus based on the achievement of certain Company performance goals with a target of 40% of his base salary. Mr. Louis is eligible to participate in our employee benefit plans, as may be in effect for employees of the Company from time to time. In November 2016, we entered into an amendment to Mr. Louis' employment agreement with Aegerion, which was assigned to us in connection with the closing of the Merger, to provide for, among other things, tax equalization and the reimbursement of tax consultation expenses in connection with the Canadian tax implications of his work for the Company.

        Benjamin Harshbarger.     In August 2016, Mr. Harshbarger was promoted to General Counsel of Aegerion. Pursuant to his employment agreement, as amended in connection with his promotion (as described above under " Overview of 2016 Compensation Arrangements Prior to the Merger — Other New NEOs " in the CD&A), Mr. Harshbarger is entitled to receive an annual base salary of $350,000 and is eligible to receive an annual cash bonus based on the achievement of certain Company performance goals with a target of 40% of his base salary. Mr. Harshbarger is eligible to participate in our employee benefit plans, as may be in effect for employees of the Company from time to time. In November 2016, we entered into an amendment to Mr. Harshbarger's employment agreement with Aegerion, which was assigned to us in connection with the closing of the Merger, to provide for, among other things, tax equalization and the reimbursement of tax consultation expenses in connection with the Canadian tax implications of his work for the Company.

        Dr. Geoffrey Cox.     Dr. Cox served as the Company's Interim Chief Executive Officer until the closing of the Merger. Pursuant to his employment agreement, Dr. Cox received a specified base salary and was eligible to receive health-related benefits, paid vacation, and expense reimbursement in accordance with Company policies.

        W. Glen Ibbott.     Mr. Ibbott served as the Company's Senior Vice President, Finance and Chief Financial Officer until the closing of the Merger. Pursuant to his employment agreement, Mr. Ibbott was entitled to base salary, cash incentive compensation under the Company's cash incentive compensation plan, participation in the Company's equity incentive plan, health-related benefits and registered retirement savings plan employer matching contributions. On January 31, 2016, Mr. Ibbott received a CAD$100,000 (USD $78,180) retention bonus in accordance with the terms of his employment agreement.

        For a description of the payments and benefits our named executive officers may be (or were, in the case of Dr. Cox and Mr. Ibbott) entitled to in connection with a termination of employment, see "—  Potential Payments Upon Termination or Change of Control ."

Treatment of Aegerion Stock Options and Aegerion RSUs in Connection with the Merger

        As discussed in the CD&A and directly under the Grants of Plan-Based Awards Table , because the exercise price of all Aegerion stock options held by Ms. Szela and Messrs. Perry, Harshbarger, and Louis exceeded the fair market value of the merger consideration received in connection with the Merger, they were cancelled at the effective time of the Merger for no consideration. In addition, in connection with the Merger, all Aegerion RSUs held by Ms. Szela and Messrs. Perry, Harshbarger and Louis were exchanged for Adjusted RSUs. Each Adjusted RSU is otherwise generally subject to the same terms and conditions applicable to the corresponding Aegerion RSU under the Aegerion equity plan and the agreements evidencing grants thereunder, including vesting terms.

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        Ms. Szela and Messrs. Perry, Menes, Louis and Harshbarger were each granted new equity awards of stock options and performance-based stock units in December 2016. As described in the CD&A, the size of the December 2016 equity grants to these executives (other than Ms. Szela) were more closely aligned with new hire awards, rather than annual equity awards, because most of the equity awards held by these executives (other than Mr. Menes) prior to the Merger were forfeited in connection with the Merger. For a summary of the December 2016 equity grants, see " Key Compensation Decisions Made At and After the Merger — New NEOs — December 2016 Equity Award Grants " in the CD&A.


Outstanding Equity Awards at 2016 Fiscal Year-End

        The following table provides information regarding equity awards held by our named executive officers as of December 31, 2016. As noted above, all share-related data included below give effect to the Consolidation.

Equity Awards  
 
  Stock Options   Stock Awards   Performance Awards  
Name
  Number of
Securities
Underlying
Unexercised
Options (#)
Exercisable
  Number of
Securities
Underlying
Unexercised
Options (#)
Unexercisable
  Option
Exercise
Price
($)
  Option
Expiration
Date
  Number of
Shares or
Units That
Have Not
Vested (#)
  Market
Value of
Shares or
Units That
Have Not
Vested
($) (1)
  Number
of Shares
or Units
That
Have Not
Vested
(#)
  Market
Value of
Shares or
Units That
Have Not
Vested
($) (1)
 

Mary Szela

        323,520 (2) $ 8.65     12/22/2026                          

                            19,896 (3) $ 167,524              

                                        171,660 (4) $ 1,445,377  

Gregory Perry

        166,020 (2) $ 8.65     12/22/2026                          

                            7,179 (3) $ 60,447              

                                        81,760 (4) $ 688,419  

Remi Menes

          97,400 (1) $ 8.65     12/22/2026                          

                                        47,980 (4) $ 403,992  

Roger Louis

          41,740 (1) $ 8.65     12/22/2026                          

                            1,640 (3)   13,809              

                                        20,560 (4) $ 173,115  

Ben Harshbarger

        97,400 (2) $ 8.65     12/22/2026                          

                            717 (12)   6,037              

                            355 (13)   2,989              

                            512 (12)   4,311              

                            673 (14)   5,667              

                            1,046 (3)   8,807              

                            1,497 (15)   12,605              

                                        47,980 (4) $ 403,992  

Dr. Geoffrey Cox (8)

        9,600 (2) $ 8.65     12/22/2026                          

    18,000 (5)     $ 19.85     10/29/2024                          

    50,000 (6)     $ 7.15     6/17/2026                          

    10,000 (7)     $ 9.00     12/6/2026                          

                            5,680 (8)   47,826              

W. Glenn Ibbott

    20,000 (9)     $ 20.50     1/6/2025                          

    7,333 (10)   36,677 (10) $ 7.15     6/17/2026                          

                            12,000 (11) $ 101,040              

*
Aegerion RSUs were converted into Adjusted RSUs in connection with the Merger, as described above under "Treatment of Aegerion Stock Options and Aegerion RSUs in Connection with the Merger."

(1)
Based on the closing price of a share of our common stock on December 30, 2016 ($8.42).

(2)
Represents an option to purchase shares of common stock granted on December 22, 2016, which vests ratably on an annual basis over three years from the grant date, subject to continued employment.

(3)
Represents RSUs granted on May 9, 2016, which vest ratably on an annual basis over three years from the grant date, subject to continued employment.

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(4)
Represents performance-based stock units granted on December 22, 2016, which become earned based upon achievement of certain performance criteria and, to the extent earned, become eligible to vest as to 22.22% of the stock units on December 31, 2017, 11.12% on July 31, 2018, 33.33% on December 22, 2018, and 33.33% on December 22, 2019, subject to continued employment.

(5)
Represents an option to purchase shares of common stock granted on October 29, 2014, which were fully vested on grant.

(6)
Represents an option to purchase shares of common stock granted on June 17, 2016, which vested monthly over six months, and are fully vested.

(7)
Represents an option to purchase shares of common stock granted on December 6, 2016, which were fully vested on grant.

(8)
Represents DSUs granted on May 9, 2016, which have fully vested.

(9)
Represents an option to purchase shares of common stock granted on January 6, 2015, which has fully vested.

(10)
Represents an option to purchase shares of common stock granted on June 17, 2016, which vests ratably on a monthly basis over three years from grant date, subject to continued employment.

(11)
Represents RSUs granted on June 17, 2016, 33% of which vest on the first anniversary of the grant date, and 67% of which vest on the second anniversary grant date, subject to continued employment.

(12)
Represents RSUs granted on May 15, 2014, which vest on the third anniversary of the grant date, subject to continued employment.

(13)
Represents RSUs granted on April 4, 2015, 50% of which vest on the first anniversary of the grant date, and 50% of which vest on the second anniversary grant date, subject to continued employment.

(14)
Represents RSUs granted on September 17, 2015, 50% of which vest on the first anniversary of the grant date, and 50% of which vest on the second anniversary grant date, subject to continued employment.

(15)
Represents RSUs granted on May 9, 2016, 25% of which vest on the first anniversary of the grant date, 50% of which vest on the second anniversary grant date, and 25% of which vest on the third anniversary grant date, subject to continued employment.


2016 Option Exercises and Stock Vested

        The following table provides information with respect to vested stock awards and option exercises during 2016 by named executive officers. None of our named executive officers exercised stock options during 2016.

 
  Option Awards   Stock Awards  
Name
  Number of Shares
Acquired on
Exercise
  Value Realized
on Exercise
  Number of Shares
Acquired on
Vesting
  Value Realized
on Vesting (1)
 

Mary Szela

      $       $  

Gregory Perry

                 

Remi Menes

                 

Roger Louis

                 

Ben Harshbarger

            501     5,990  

Dr. Geoffrey Cox

                 

W. Glen Ibbott

               
 

(1)
Based on the $17.75 closing price of a share of our common stock on April 1, 2016, the date on which 173 of these RSUs vested, and the $8.90 closing price of a share of our common stock on September 17, 2016, the date on which 328 of these RSUs vested.

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Nonqualified Deferred Compensation

Name
  Registrant
contributions in
last fiscal year ($) (1)
  Aggregate
earnings in last
fiscal year
  Aggregate
withdrawals /
distributions
  Aggregate
balance at last
fiscal year end
 

Mary Szela

                 

Gregory Perry

                 

Remi Menes

                 

Roger Louis

                 

Ben Harshbarger

                 

Dr. Geoffrey Cox

    9,152             47,826  

W. Glen Ibbott

               
 

(1)
Reflects a grant of 1,280 DSUs to Dr. Cox on June 17, 2016 under our DDSU Plan. The fair value of this grant was calculated by multiplying the number of DSUs by the closing price of a share of our common stock on the date of grant ($7.15). The vesting of DSUs held by Dr. Cox accelerated in connection with the Merger. DSUs are settled in cash and can only be settled once a director ceases to be a member of the Board. For a description of the material terms of the plan, please see the discussion in the section entitled " Compensation of Directors — Equity-Based Compensation " in this Proxy Statement.


Potential Payments Upon Termination or Change of Control

        Each of our named executive officers is entitled to receive certain benefits upon a qualifying termination of employment and/or upon certain change of control transactions accompanied by a qualifying termination of employment within a certain time following such transaction, as described below:

        Mary Szela.     Pursuant to Ms. Szela's employment agreement, as in effect on December 31, 2016, Ms. Szela is entitled to the following severance payments in the event that her employment is terminated without "cause" or she resigns for "good reason" (each, as defined in her employment agreement): (i) accrued but unpaid base salary, any unpaid or unreimbursed business expenses and any accrued but unused vacation through the date of termination ("Accrued Obligations"); and (ii) 12 months' base salary continuation. If Ms. Szela's employment is terminated without "cause" or Ms. Szela resigns for "good reason" within 18 months following the occurrence of certain corporate transactions, which would include the Merger, Ms. Szela would be entitled to the following severance payments: (i) Accrued Obligations (ii) 18 months' base salary continuation; (iii) 100% acceleration of the vesting of Ms. Szela's then-outstanding unvested equity awards; and (iv) payment of a pro rata portion of Ms. Szela's target annual bonus for the year in which her termination of employment occurs.

        Gregory Perry, Remi Menes, Roger Louis, and Ben Harshbarger.     Pursuant to the employment agreements with each of Messrs. Perry, Menes, Louis, and Harshbarger, each executive is entitled to the following severance payments in the event the executive's employment is terminated without "cause" or the executive resigns for "good reason" (each, as defined in his respective employment agreement): (i) Accrued Obligations; (ii) 12 months' base salary; (iii) continuation of health and dental benefits until the earlier of 12 months after the date of termination and the date the executive becomes re-employed and eligible for other health and/or dental insurance; (iv) to the extent not yet paid at the time of the executive's termination of employment, payment of any outstanding retention bonus at the end of the severance term; and (v) if such termination of employment occurs within 18 months following the occurrence of certain corporate transactions, which would include the Merger, 100% acceleration of the vesting of the executive's then-outstanding unvested equity incentive awards.

        Dr. Geoffrey Cox.     Dr. Cox's employment with us terminated in connection with the Merger, but he continues to be a director of the Company and receives director fees for Board service. In accordance with Dr. Cox's employment agreement, Dr. Cox received two months of base salary in connection with his termination of employment. In addition, the vesting of all stock options held by Dr. Cox accelerated upon his termination of employment, and pursuant to the terms of the DDSU Plan, the vesting of all DSUs held Dr. Cox accelerated upon the closing of the Merger. DSUs are converted to cash only when a director ceases to be a member of the Board. Dr. Cox is bound by non-competition and non-solicitation terms, which prohibit him from participating in a competitive business or soliciting Novelion's customers or employees for a period of nine months following the termination of his employment with Novelion.

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        W. Glen Ibbott.     Mr. Ibbott served as the Company's Senior Vice President, Finance and Chief Financial Officer until the Merger and terminated employment with us in March 2017. In accordance with Mr. Ibbott's employment agreement, Mr. Ibbott received the following in connection with his termination of employment: a lump sum payment equivalent to his base salary for the 8.25-month severance period; a lump sum payment representing the Company's outstanding RRSP contributions for 2017, pro-rated for the balance of the severance period; an amount equal to 10% of his base salary for the balance of the severance period in lieu of employee benefit plan coverage; payment of a pro rata portion of Mr. Ibbott's target annual bonus for 2017; payment in full of the retention bonus Mr. Ibbott was awarded in June 2016; and acceleration of the restricted stock units that he received in June 2016. Mr. Ibbott is bound by the terms of a non-competition and non-solicitation agreement, which prohibits him from participating in a competitive business or soliciting Novelion's customers or employees for a period of one year following the termination of his employment.

        The amount of compensation payable to our named executive officers in the event of a termination of employment or a change of control is set forth in the table below. The amounts in the table below were calculated assuming the termination of the named executive officer's employment occurred as of December 30, 2016, the last business day of our fiscal year. The amounts for Dr. Cox and Mr. Ibbott represent the actual severance amounts and benefits paid to them in connection with their employment terminations.

Name
  Benefit   Termination
Without
Cause
  Resignation
for Good
Reason
  Termination
without Cause in
Connection with
Sale Event or
Change in
Control
  Resignation for
Good Reason in
Connection with
Sale Event or
Change in
Control
 

Mary Szela

  Cash Severance   $ 689,550 (1) $ 689,550 (1) $ 1,034,250 (2) $ 1,034,250 (2)

  Option Acceleration   $   $   $


(3)
$


(3)

  Award Acceleration   $   $   $ 1,612,902 (4) $ 1,612,902 (4)

  Health Benefits   $   $   $   $  

  Pro Rata Bonus   $   $   $ 545,595 (6) $ 545,595 (6)

Gregory Perry

  Cash Severance   $ 450,000 (1) $ 450,000 (1) $ 450,000 (1) $ 450,000 (1)

  Option Acceleration   $   $   $


(3)
$


(3)

  Award Acceleration   $   $   $ 748,866 (4) $ 748,866 (4)

  Health Benefits   $ 18,633 (5) $ 18,633 (5) $ 18,633 (5) $ 18,633 (5)

  Retention Bonus   $ 200,000   $ 200,000   $ 200,000   $ 200,000  

Remi Menes

  Cash Severance   $ 400,000 (1) $ 400,000 (1) $ 400,000 (1) $ 400,000 (1)

  Option Acceleration   $   $   $


(3)
$


(3)

  Award Acceleration   $   $   $ 403,992 (4) $ 403,992 (4)

  Health Benefits   $ 18,633 (5) $ 18,633 (5) $ 18,633 (5) $ 18,633 (5)

Roger Louis

  Cash Severance   $ 350,000 (1) $ 350,000 (1) $ 350,000 (1) $ 350,000 (1)

  Option Acceleration   $   $   $


(3)
$


(3)

  Award Acceleration   $   $   $ 186,924 (4) $ 186,924 (4)

  Health Benefits   $ 11,914 (5) $ 11,914 (5) $ 11,914 (5) $ 11,914 (5)

Ben Harshbarger

  Cash Severance   $ 350,000 (1) $ 350,000 (1) $ 350,000 (1) $ 350,000 (1)

  Option Acceleration   $   $   $


(3)
$


(3)

  Award Acceleration   $   $   $ 444,408 (4) $ 444,408 (4)

  Health Benefits   $ 18,440 (5) $ 18,440 (5) $ 18,440 (5) $ 18,440 (5)

  Retention Bonus   $ 100,000   $ 100,000   $ 100,000   $ 100,000  

Dr. Geoffrey Cox

  Cash Severance   $ 80,000 (7) $   $   $  

W. Glen Ibbott

  Cash Severance   $ 178,396 (8) $   $   $  

  Option Acceleration   $   $   $   $  

  RSU Acceleration   $ 128,880 (9) $   $   $  

  Health Benefits   $ 15,574 (10) $   $   $  

  Retention Bonus   $ 45,306 (11) $   $   $  

  RRSP Contribution   $ 7,755 (12) $   $   $

 

(1)
Represents twelve (12) month' base salary, determined based on base salary as in effect on December 30, 2016.

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(2)
Represents eighteen (18) month' base salary, determined based on base salary as in effect on December 30, 2016.

(3)
Because the exercise price of stock options held by our named executive officers was greater than the fair market value of a common share on December 30, 2016 ($8.42), no amounts have been included in this table with respect to stock options.

(4)
Represents the value of 100% of the unvested portion of the named executive officer's RSUs and performance-based stock units as of December 30, 2016. The value is calculated by multiplying the number of RSUs and performance-based stock units that would have vested upon such employment termination by $8.42, the closing price of our common stock on December 30, 2016.

(5)
Represents twelve (12) months' benefits continuation, based on premium costs as of December 30, 2016.

(6)
Represents the pro rata portion of Ms. Szela's target annual bonus for 2016, assuming termination as of December 30, 2016.

(7)
Represents Dr. Cox's actual severance in accordance with his employment agreement.

(8)
Represents Mr. Ibbott's actual severance, paid in accordance with his employment agreement: a lump sum payment equal to (a) 8.25 months base salary, determined based on base salary as in effect on the date on which Mr. Ibbott terminated employment with us in March 2017, and (b) the pro rata portion of Mr. Ibbott's target annual bonus for 2017.

(9)
Represents the value of 100% of the unvested portion of Mr. Ibbott's RSUs, which immediately vested upon the termination of his employment on March 31, 2017. The value is calculated by multiplying the number of RSUs that vested upon such date by $10.74, the closing price of our common stock on March 31, 2017.

(10)
Represents an amount equal to 10% of Mr. Ibbbott's base salary for the balance of his 8.25 month severance period, which he received in lieu of employee benefit plan coverage in connection with his termination of employment.

(11)
Represents the retention bonus granted to Mr. Ibbott in June 2016, which was paid on March 31, 2017 in connection with his termination of employment.

(12)
Represents a lump sum payment Mr. Ibbott received in connection with his termination, equal to the Company's outstanding RRSP contributions for 2017, pro-rated for the balance of the severance period.


SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS

        Novelion currently maintains one equity compensation plan, the Equity Incentive Plan, which was previously approved by the shareholders and directors of Novelion. Pursuant to the Equity Incentive Plan, directors, officers, employees and consultants of Novelion and its affiliates may be granted RSUs, performance share units and stock options to acquire common shares. We will seek shareholder approval of the amended and restated Equity Incentive Plan, which we refer to as the "2017 Plan," at the Annual Meeting, as described later in this Proxy Statement.

        In connection with the Merger, Novelion assumed the Aegerion 2010 Plan from Aegerion. On the closing of the Merger, on November 29, 2016, all of the outstanding out-of-the-money Aegerion stock options were cancelled, all of the outstanding and unexercised in-the-money Aegerion stock options were exchanged for adjusted options of Novelion and all the outstanding Aegerion RSUs were exchanged for Adjusted RSUs of Novelion, in each case appropriately adjusted to reflect the exchange ratio under the Merger Agreement. The Aegerion 2010 Plan governs the terms of the 10,561 adjusted options and 133,351 Adjusted RSUs issued and outstanding under that Plan as of December 31, 2016. The Company does not plan to issue any additional awards under the Aegerion 2010 Plan.

        The following table sets out information regarding our common shares that may be issued upon the exercise of options, RSUs, performance-based stock units, DSUs and other rights granted to employees, consultants or directors under our equity compensation plans, as of December 31, 2016. This table does not include the

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proposed 1,800,000 shares of our common stock under the 2017 Plan, which is the subject of Proposal 5 of this Proxy Statement.

   
Plan Category
  Number of securities to
be issued upon exercise
of outstanding options,
warrants and rights

(a)

  Weighted-average
exercise price of
outstanding options,
warrants and rights

(b)

  Number of securities
remaining available for
future issuance under
equity compensation plans
(excluding securities
reflected in column (a))

(c)

 
   

Equity compensation plans approved by security holders (Plan)

    2,743,474 (1) $ 8.94 (2)   468,432 (3)
   

Equity compensation plans not approved by security holders

             
   

Total

    2,743,474 (1) $ 8.94 (2)   468,432 (3)
   
(1)
Reflects securities from the Aegerion 2010 Plan (143,912 shares) and the Equity Incentive Plan (2,599,562 shares)

(2)
Reflects the weighted average exercise price of stock options outstanding. Where options were granted/priced in Canadian dollars, the calculated weighted average exercise price has been converted to U.S. dollars for disclosure purposes using the December 31, 2016 period end rate published by the Federal Reserve Bank of New York: USD$1.00 = CAD$1.3243.

(3)
Reflects available securities for future issuance from the Equity Incentive Plan (prior to giving effect to any additional shares requested in Proposal No.5 below).


INDEBTEDNESS OF DIRECTORS AND EXECUTIVE OFFICERS

        No current or former directors, executive officers or employees of Novelion or any subsidiaries thereof, or proposed nominees for election as a director of Novelion, are currently indebted to Novelion or its subsidiaries.


REPORT OF THE AUDIT COMMITTEE

         Notwithstanding anything to the contrary set forth in any of our previous or future filings under the Securities Act of 1933 or the Securities Exchange Act of 1934 that might incorporate this Proxy Statement or future filings with the Securities and Exchange Commission, in whole or part, the following report shall not be deemed to be incorporated by reference into any such filing.

        The Audit Committee has reviewed and discussed the audited consolidated financial statements for the year ended December 31, 2016 with the management of Novelion and Deloitte LLP, our independent auditors for the 2016 fiscal year. Each member of the Audit Committee is "independent" as defined by the rules of NASDAQ.

        The Audit Committee has discussed with Deloitte LLP the matters required to be discussed by Statement on Auditing Standards No. 61, as amended. In addition, the Audit Committee has received the written disclosures and the letter from Deloitte LLP required by applicable requirements of the Public Company Accounting Oversight Board regarding their independence, and has discussed with Deloitte LLP their independence relative to us, including whether the provision of their services is compatible with maintaining Deloitte LLP's independence.

        Based on the review and discussions referred to above, the Audit Committee recommended to Novelion's Board that the audited consolidated financial statements for the year ended December 31, 2016 be included in Novelion's Annual Report on Form 10-K for 2016 filed with the SEC.

    John Thomas, Jr., Chair
Dr. Stephen Sabba
Anne VanLent

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Audit Fees

        The following table sets forth the aggregate fees billed by Deloitte LLP, the member firms of Deloitte Touche Tohmatsu, and their respective affiliates (collectively, " Deloitte ") for the following services during 2016 and 2015.

Description of Service
  2016 (3)
(US$)
  2015 (3)
(US$)