IRONWOOD PHARMACEUTICALS INC

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For employees paid other than in U.S. dollars, we converted their compensation to U.S. dollars. We did not make any cost-of-living adjustments in identifying the “median employee.”

Once we identified the median employee, for purposes of the pay ratio, we calculated his or her compensation in the same manner as we do for Summary Compensation Table purposes.

Pay Versus Performance

Under Section 953(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act and Item 402(v) of Regulation S-K, we are presenting information that demonstrates the relationship between compensation actually paid, as computed under SEC rules, to our named executive officers and certain financial performance measures for the years ended December 31, 2024, 2023, 2022, 2021 and 2020. The compensation and HR committee did not consider the pay versus performance disclosure below in making its pay decisions for any of the fiscal years shown. For additional information about our performance-based pay philosophy and how we align executive compensation with Ironwood’s performance, please refer to the Compensation Discussion and Analysis section included elsewhere in this proxy statement.

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(1)

The dollar amounts reported in column (b) are the amounts of total compensation reported for Mr. Mallon, our former chief executive officer, and Mr. McCourt, our current chief executive officer, for each corresponding year in the “Total” column of the Summary Compensation Table. Refer to Summary Compensation Table elsewhere in this proxy statement for information on Mr. McCourt’s compensation. Mr. Mallon served as our chief executive officer during 2020 and 2021. Effective March 12, 2021, Mr. Mallon resigned from his position as chief executive officer and Mr. McCourt became interim chief executive officer and subsequently permanent chief executive officer effective June 2, 2021.

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(2)

The dollar amounts reported in column (c) represent the “compensation actually paid” to the principal executive officers, or PEOs, Messrs. Mallon and McCourt, as computed in accordance with Item 402(v) of Regulation S-K. The dollar amounts do not reflect the actual amount of compensation earned by or paid to Messrs. Mallon and McCourt, as applicable, during the applicable years, and are based on valuation assumptions required by the SEC, which are unlikely to reflect actual amounts realized at vesting or exercise of equity awards, as applicable. In accordance with the requirements of Item 402(v) of Regulation S-K, the following adjustments were made to Messrs. Mallon’s and McCourt’s total compensation for each applicable year to determine the compensation actually paid:

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54 Ironwood

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(a)

Represents the deduction from the “Reported Summary Compensation Table Total for PEO” column for the total grant date fair value of equity awards reported in the “Stock Awards” and “Option Awards” columns in the Summary Compensation Table for the applicable year.

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(b)

The equity award adjustments for each applicable year include the addition (or subtraction, as applicable) of the following: (i) the year-end fair value of any equity awards granted in the applicable year that are outstanding and unvested as of the end of the year; (ii) the amount of change as of the end of the applicable year (from the end of the prior year) in fair value of any awards granted in prior years that are outstanding and unvested as of the end of the applicable year; (iii) for awards that are granted and vest in the same applicable year, the fair value as of the vesting date; (iv) for awards granted in prior years that vest in the applicable year, the amount equal to the change as of the vesting date (from the end of the prior year) in fair value; (v) for awards granted in prior years that are determined to fail to meet the applicable vesting conditions during the applicable year, a deduction for the amount equal to the fair value at the end of the prior year; and (vi) the dollar value of any dividends or other earnings paid on stock or option awards in the applicable year prior to the vesting date that are not otherwise reflected in the fair value of such award or included in any other component of total compensation for the applicable year. Equity values are calculated in accordance with ASC 718. The valuation assumptions used to calculate fair values did not materially differ from those disclosed at the time of grant. The amounts deducted or added in calculating the equity award adjustments are as follows:

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(3)

The dollar amounts reported in column (d) represent the average of the amounts reported for the company’s non-PEO named executive officers, or NEOs, as a group in the “Total” column of the Summary Compensation Table in each applicable year. The names of each of the non-PEO NEOs included for purposes of calculating the average amounts in each applicable year are as follows: (i) for 2024, Andrew Davis, Sravan Emany, John Minardo and Michael Shetzline; (ii) for 2023, Andrew Davis, Sravan Emany, John Minardo and Michael Shetzline; (iii) for 2022, Sravan Emany, John Minardo, Jason Rickard and Michael Shetzline; (iv) for 2021, Sravan Emany, John Minardo, Jason Rickard, Michael Shetzline and Gina Consylman; and (v) for 2020, Gina Consylman, Thomas McCourt, Jason Rickard and Michael Shetzline.

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(4)

The dollar amounts reported in column (e) represent the average amount of “compensation actually paid” to the non-PEO NEOs as a group, as computed in accordance with Item 402(v) of Regulation S-K. The dollar amounts do not reflect the actual average amount of compensation earned by or paid to the non-PEO NEOs during the applicable year. In accordance with the requirements of Item 402(v) of Regulation S-K, the following adjustments were made to the average total compensation for the non-PEO NEOs as a group for each year to determine the compensation actually paid, using the same methodology described above in Note 2:

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(a)

Represents the deduction from the “Average Reported Summary Compensation Table Total for Non-PEO NEOs” column for the average total grant date fair value of equity awards reported in the “Stock Awards” and “Option Awards” columns in the Summary Compensation Table for the applicable year.

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(b)

The amounts deducted or added in calculating the total average equity award adjustments are as follows:

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(5)

Cumulative TSR is calculated by dividing (i) the sum of (A) the cumulative amount of dividends for the measurement period, assuming dividend reinvestment, and (B) the difference between Ironwood’s share price at the end and the beginning of the measurement period, by (ii) Ironwood’s share price at the beginning of the measurement period.

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(6)

Represents the weighted peer group TSR, weighted according to the respective companies’ stock market capitalization at the beginning of each period for which a return is indicated. The peer group used for this purpose is the Nasdaq Biotechnology Index, our peer group used for purposes of Item 201(e) of Regulation S-K.

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(7)

The dollar amounts reported represent the amount of net income (loss) reflected in our audited financial statements for the applicable year. Net income for the year ended December 31, 2021, included a $338 million non-cash, non-recurring income tax benefit related to the release of the valuation allowance against the majority of the company’s deferred tax assets in the second quarter of 2021. Net loss for the year ended December 31, 2023, included a non-recurring charge of approximately $1.1 billion related to acquired in-process research and development from the acquisition of VectivBio in the second quarter of 2023.

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(8)

As required by Item 402(v) of Regulation S-K, we have determined that Adjusted EBITDA from organic business is the Company Selected Measure, as it is the most important financial performance measure (that is not otherwise required to be disclosed in the table) used to link compensation actually paid to our NEOs to company performance for the most recently completed year. Adjusted EBITDA from organic business, which is a non-GAAP measure, is calculated by subtracting mark-to-market adjustments on derivatives related to the company’s 2022 convertible senior notes, restructuring expenses, net interest expense, income taxes, depreciation and amortization, revenue and expenses related to corporate development activities, and costs associated with a potential CNP-104 option exercise from GAAP net income. This metric and definition is consistent with Adjusted EBITDA used in the performance goals scorecard, as described in the Compensation Discussion and Analysis included elsewhere in this proxy statement. We may change the Company Selected Measure from year to year, depending upon a number of factors relating to our business.

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Comparative Analysis of the Pay versus Performance Table

As described in more detail in the Compensation Discussion and Analysis section included elsewhere in this proxy statement, our compensation program is designed to provide compensation and incentives that align employee actions and motivations with the interests of our stockholders; attract, retain, motivate, and reward outstanding talent across the company through well-communicated programs that are aligned with our vision and mission, and support a positive company culture. We consider several performance measures to ensure executives are incentivized to accomplish these objectives, many of which are not presented in the pay versus performance table. In accordance with Item 402(v) of Regulation S-K, we are providing the following descriptions of the relationships between information presented in the Pay versus Performance Table above.

Comparison of Ironwood Cumulative TSR to Peer Group Cumulative TSR

The graph below shows our cumulative TSR over the five-year period ending December 31, 2024, as compared to the Nasdaq Biotechnology Index, which reflects the company’s industry sector and is also the peer group used in our Annual Report on Form 10-K.

Comparison of “Compensation Actually Paid” to Cumulative TSR

The “compensation actually paid” in the graph below reflects Mr. Mallon’s CAP in 2020, Mr. McCourt’s CAP in 2022, 2023 and 2024, and, for purposes of a graphical representation, a weighted average CAP for both for 2021, or Average PEO CAP. The graph below demonstrates the “compensation actually paid” amounts shown for our PEOs, Messrs. Mallon and McCourt, as applicable, is generally aligned with the company’s cumulative TSR over the four years presented in the Pay versus Performance Table above. The alignment of compensation actually paid with the company’s cumulative TSR over the period presented is because a significant portion of the compensation actually paid to the NEOs is comprised of equity awards. As described in more detail in the Compensation Discussion and Analysis section included elsewhere in this proxy statement, in 2024, approximately 78% of the value of total compensation awarded to our CEO and 73% of the value of total compensation awarded to the other current NEOs consists of equity awards, including RSU and PSU awards.

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Comparison of “Compensation Actually Paid” to Net Income (Loss)

The graph below reflects the relationship between the Average PEO CAP and average other NEOs CAP and the company’s net income (loss) for the years ended December 31, 2020, 2021, 2022, 2023 and 2024. Net income for the year ended December 31, 2021, included a $338 million non-cash, non-recurring income tax benefit related to the release of the valuation allowance against the majority of the company’s deferred tax assets in the second quarter of 2021. Net loss for the year ended December 31, 2023, included a non-recurring charge of approximately $1.1 billion related to acquired in-process research and development from the acquisition of VectivBio in the second quarter of 2023. The company does not use net income (loss) as a performance metric in its compensation program to determine named executive officers’ compensation.

Comparison of “Compensation Actually Paid” to Company-Selected Measure (Adjusted EBITDA from Organic Business)

The graph below reflects the relationship between the Average PEO CAP and average Other NEOs CAP and the company’s Adjusted EBITDA from organic business, which is the Company Selected Measure, for the years ended December 31, 2020, 2021, 2022, 2023 and 2024:

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