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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a)

of the Securities Exchange Act of 1934

(Amendment No.    )

Filed by the Registrant  x

Filed by a Party other than the Registrant  ¨

Check the appropriate box:  ¨

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April 30, 2012

Dear Fellow Investor,

I am pleased to invite you to attend our 2012 annual meeting of stockholders, which will be held on Thursday, June 21, 2012, beginning at 10:00 A.M., EDT, at our corporate offices in Cambridge, Massachusetts.

This year, you are being asked to:

Our Board of Directors urges you to read the accompanying proxy statement carefully and recommends the approval of each of the proposals.

At the meeting, we also will report on our development and business plans for the upcoming years. We will provide you with an opportunity to meet members of our management team and Board of Directors and will be available to respond to questions that you may have. Information on registering to attend the meeting or viewing a webcast of the meeting on the Internet is included in the proxy statement.

Under Securities and Exchange Commission rules that allow companies to furnish proxy materials to stockholders over the Internet, we have elected to deliver our proxy materials to the majority of our stockholders over the Internet. This delivery process allows us to provide stockholders with the information they need, while, at the same time, conserving natural resources and lowering the cost of delivery. We intend to begin mailing to our stockholders a Notice of Internet Availability of Proxy Materials on or about May 4, 2012 containing instructions on how to access our proxy statement for our 2012 annual meeting and our 2011 annual report to stockholders. The notice will also provide instructions on how to vote online or by telephone and will include instructions on how to receive a paper copy of the proxy materials by mail.

We hope that you will be able to join us at our annual meeting. Whether or not you expect to attend, it is important that you cast your vote either in person or by proxy. You may vote by attending the meeting in person, mailing a completed proxy card if you received written proxy materials, by the phone or the Internet.

I look forward to seeing you at this year’s annual meeting.

Sincerely yours,

Harvey J. Berger, M.D.

Chairman and Chief Executive Officer

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ARIAD PHARMACEUTICALS, INC.

26 Landsdowne Street

Cambridge, Massachusetts 02139-4234

NOTICE OF 2012 ANNUAL MEETING OF STOCKHOLDERS

JUNE 21, 2012

10:00 A.M. EDT

The 2012 annual meeting of stockholders (“Annual Meeting”) of ARIAD Pharmaceuticals, Inc. (“ARIAD” or the “Company”) will be held on Thursday, June 21, 2012 at 10:00 A.M. EDT, at our corporate offices located at 26 Landsdowne Street, Cambridge, Massachusetts 02139-4234. The purposes of the Annual Meeting, as more fully described in the accompanying proxy statement, are to:

Only those holders of our common stock of record as of the close of business on April 26, 2012 are entitled to receive notice of, to attend and to vote at the Annual Meeting. A total of 165,727,610 shares of our common stock were issued and outstanding as of that date. Each share of common stock entitles its holder to one vote. Cumulative voting of shares of common stock is not permitted.

At the Annual Meeting and for the ten-day period immediately prior to the Annual Meeting, the list of stockholders entitled to vote will be available for inspection at our offices for such purposes as are set forth in the General Corporation Law of the State of Delaware.

By Order of the Board of Directors,

Raymond T. Keane, Esq.

Senior Vice President,

General Counsel and Secretary

April 30, 2012

Your vote is important. You may vote your shares in person at the Annual Meeting. If you do not expect to attend the Annual Meeting or if you do plan to attend but wish to vote by proxy, you may vote by: (1) mailing a completed proxy card if you received written proxy materials, (2) calling the toll-free number indicated on the Notice of Internet Availability or the proxy card, or (3) using the Internet, as indicated on the Notice of Internet Availability or the proxy card.

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ARIAD PHARMACEUTICALS, INC.

26 Landsdowne Street

Cambridge, Massachusetts 02139-4234

PROXY STATEMENT

FOR 2012 ANNUAL MEETING OF STOCKHOLDERS

GENERAL INFORMATION ABOUT THE MEETING

Why am I receiving these materials?

We have made these materials available to you in connection with our solicitation of proxies for use at the Annual Meeting, to be held on Thursday, June 21, 2012, at 10:00 A.M., EDT, and at any adjournments or postponements thereof. We intend to begin sending a Notice of Internet Availability of Proxy Materials and making our proxy materials available to stockholders on or about May 4, 2012. You are invited to attend the Annual Meeting and are requested to vote on the proposals described in this proxy statement. The Annual Meeting will be held at our corporate offices, located at the address shown above.

What are included in these materials?

These materials include:

If you requested printed versions of these materials by mail, these materials also include the proxy card or vote instruction form for the Annual Meeting.

Who may vote at the Annual Meeting?

Each share of our common stock entitles the holder to one vote on each matter. Only stockholders of record as of the close of business on April 26, 2012 (“Record Date”) are entitled to receive notice of, to attend and to vote at the Annual Meeting. As of the Record Date, there were 165,727,610 shares of our common stock issued and outstanding held by stockholders of record.

What am I voting on at the Annual Meeting?

You are voting on:

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What are the Board’s voting recommendations?

The Board recommends that you vote your shares:

Why did I receive a one-page notice in the mail regarding the Internet availability of proxy materials instead of a full set of proxy materials?

Pursuant to rules adopted by the SEC, we have elected to provide access to our proxy materials over the Internet. Accordingly, we intend to commence sending a Notice of Internet Availability of Proxy Materials (“Notice”) to our stockholders on or about May 4, 2012. All stockholders of record will have the ability to access the proxy materials on the website referred to in the Notice or request to receive a printed set of the proxy materials. Instructions on how to access the proxy materials over the Internet or to request a printed copy may be found in the Notice. In addition, stockholders of record may request to receive proxy materials in printed form by mail or electronically by e-mail on an ongoing basis. We believe this process will reduce printing, postage, and environmental costs for distributing paper copies of our proxy materials and encourages stockholders to take advantage of the availability of the proxy materials on the Internet.

I share an address with another stockholder and we received only one paper copy of the proxy materials. How may I obtain an additional copy of the proxy materials?

We have adopted a procedure called “householding,” which the SEC has approved. Under this procedure, we are delivering a single copy of the Notice and, if applicable, the proxy materials to multiple stockholders who share the same address unless we have received contrary instructions from one or more of the stockholders. This procedure reduces our printing costs, mailing costs, and fees. Stockholders who participate in householding will continue to be able to access and receive separate Notices, and, if requested, proxy cards. Upon written or oral request, we will promptly deliver a separate copy of the Notice and, if applicable, the proxy materials to any stockholder at a shared address to which we delivered a single copy of any of these documents. The Notice will provide you with instructions regarding how to request a separate copy of the Notice and, if applicable, the proxy materials. Stockholders who hold shares in “street name” (as more fully described on the next page) may contact their brokerage firm, bank, broker-dealer, or other similar organization to request information about householding.

If your household received a single Notice or, if applicable, a single set of proxy materials this year, but you would prefer to receive your own copy, please contact our transfer agent, Computershare, by calling their toll free number, 877-282-1168.

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If you do not wish to participate in “householding” and would like to receive your own Notice or, if applicable, set of our proxy materials in future years, follow the instructions described below. Conversely, if you share an address with another ARIAD stockholder and together both of you would like to receive only a single Notice or, if applicable, set of proxy materials, follow these instructions:

How can I get electronic access to the proxy materials?

The Notice will provide you with instructions regarding how to:

Our proxy materials are available at www.proxyvote.com as well as in the Investors/News section of our website at http://investor.ariad.com under the heading “Proxy Materials.” We also offer our stockholders the opportunity to receive stockholder communications electronically.

Choosing to receive future proxy materials by e-mail will save us the cost of printing and mailing documents to you and will reduce the impact of our annual meetings on the environment. If you choose to receive future proxy materials by e-mail, you will receive an e-mail message next year with instructions containing a link to those materials and a link to the proxy voting website. Your election to receive proxy materials by e-mail will remain in effect until you terminate it. If you have any questions about electronic delivery, please e-mail us at investor@ariad.com or call our investor relations office at 617-494-0400, extension 2208.

What is the difference between a stockholder of record and a beneficial owner of shares held in street name?

Stockholder of Record. If your shares are registered directly in your name with our transfer agent, Computershare, you are considered the stockholder of record with respect to those shares, and we sent the Notice directly to you. If you request printed copies of the proxy materials by mail, you will receive a proxy card.

Beneficial Owner of Shares Held in Street Name. If your shares are held in an account at a brokerage firm, bank, broker-dealer, or other similar organization, then you are the beneficial owner of shares held in “street name,” and the Notice was forwarded to you by that organization. The organization holding your account is considered the stockholder of record for purposes of voting at the Annual Meeting. As a beneficial owner, you have the right to instruct that organization on how to vote the shares held in your account. If you request printed copies of the proxy materials by mail, you will receive a vote instruction form.

How do I vote?

You can either vote in person at the meeting or by proxy without attending the meeting. Most stockholders have three options for casting their votes by proxy: (1) using the Internet, (2) by telephone, or (3) by mail. If you received your proxy materials by mail, please follow the voting instructions on your

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Notice or proxy card. If you received your proxy materials electronically, please follow the voting instructions that were e-mailed to you. Proxies submitted by the Internet or telephone must be received by 11:59 P.M. EDT on June 20, 2012.

If you hold your ARIAD stock in “street name,” your ability to vote by telephone or over the Internet depends upon your broker’s voting process. Please follow the instructions on your voter instruction form carefully.

Even if you plan to attend the Annual Meeting, we encourage you to vote your shares by proxy. If you plan to vote in person at the meeting and you hold your ARIAD stock in street name, you must obtain a proxy from your broker and bring that proxy to the meeting.

How are proxies voted?

All shares represented by valid proxies received prior to the Annual Meeting will be voted and, where a stockholder specifies by means of the proxy a choice with respect to any matter to be acted upon, the shares will be voted in accordance with the stockholder’s instructions.

Can I change or revoke my vote?

You may revoke your proxy and change your vote at any time before the final vote at the Annual Meeting. Once you vote by proxy, you may vote again on a later date via the Internet or by telephone (only your latest Internet or telephone proxy submitted prior to the Annual Meeting will be counted), by signing and returning a new proxy card or vote instruction form with a later date, or by attending the Annual Meeting and voting in person. However, your attendance at the Annual Meeting will not automatically revoke your proxy unless you vote again at the Annual Meeting or specifically request that your proxy be revoked by delivering to our General Counsel at 26 Landsdowne Street, Cambridge, Massachusetts 02139-4234, a written notice of revocation prior to the Annual Meeting.

What happens if I do not give specific voting instructions?

Stockholder of Record. If you are a stockholder of record and you:

the proxy holders will vote your shares in the manner recommended by the Board on all matters presented in this proxy statement and as the proxy holders may determine in their discretion with respect to any other matters properly presented for a vote at the Annual Meeting. See the section “Miscellaneous” on the last page of this proxy statement.

Beneficial Owner of Shares Held in Street Name. If you are a beneficial owner of shares held in street name and do not provide the organization that holds your shares with specific voting instructions, under the rules of various national and regional securities exchanges, the organization that holds your shares may generally vote on routine matters but cannot vote on non-routine matters. If the organization that holds your shares does not receive instructions from you on how to vote your shares on a non-routine matter, the organization that holds your shares will inform the inspector of election that it does not have the authority to vote on this matter with respect to your shares. This is generally referred to as a “broker non-vote.”

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Which ballot measures are considered “routine” or “non-routine”?

The ratification of the appointment of Deloitte & Touche LLP as our independent registered public accounting firm for 2012 (Proposal No. 3) is a matter considered routine under applicable rules. A broker or other nominee may generally vote on routine matters such as Proposal No. 3 if voting instructions are not provided by the beneficial owner.

The election of directors (Proposal No. 1), the amendment to our 2006 Long-Term Incentive Plan (Proposal No. 2) and the approval, on an advisory basis, of the compensation of our named executive officers (Proposal No. 4) are matters considered non-routine under applicable rules. A broker or other nominee cannot vote without instructions on non-routine matters; therefore, there will be broker non-votes on Proposal No. 1, Proposal No. 2, and Proposal No. 4 if voting instructions are not provided by the beneficial owner.

What is the quorum requirement for the Annual Meeting?

The holders of one-third of the shares entitled to vote at the Annual Meeting must be present in person or represented by proxy at the Annual Meeting for the transaction of business. This is called a quorum. If a quorum is not present, the Annual Meeting will be adjourned until a quorum is obtained.

What is the voting requirement to approve each of the proposals?

For Proposal No. 1, the greatest number of votes (also known as a “plurality” of the votes) cast by the stockholders entitled to vote and who are present in person or represented by proxy at the Annual Meeting is required to elect the nominees for election as Class 3 directors.

For Proposal No. 2, the affirmative vote of a majority of the votes cast by the stockholders entitled to vote and who are present in person or represented by proxy at the Annual Meeting is required to amend our 2006 Long-Term Incentive Plan to increase the number of shares of common stock available for issuance under the plan by 14,000,000 shares.

For Proposal No. 3, the affirmative vote of a majority of the votes cast by the stockholders entitled to vote and who are present in person or represented by proxy at the Annual Meeting is required to ratify the selection of Deloitte & Touche LLP as our independent registered public accounting firm for 2012.

For Proposal No. 4, the affirmative vote of a majority of the votes cast by the stockholders entitled to vote and who are present in person or represented by proxy at the Annual Meeting is required to approve, on an advisory basis, the compensation of our named executive officers, as described in this proxy statement. Although the advisory vote is non-binding, the Compensation Committee and the Board of Directors will take into consideration the advisory vote results when making decisions regarding executive compensation.

How are broker non-votes and abstentions treated?

Broker non-votes and abstentions are counted for purposes of determining whether a quorum is present. Broker non-votes and abstentions are not considered to be votes cast, and have no effect on any of the proposals.

Is voting confidential?

We will keep all the proxies, ballots, and voting tabulations private. We only allow the inspector of election to examine these documents. Management will not know how you voted on a specific proposal unless it is necessary to meet legal requirements. We will, however, forward to management any written comments you make on the proxy card or elsewhere.

Who counts the votes?

A representative from Broadridge Financial Solutions, Inc. (“Broadridge”) will serve as the inspector of election and will count the votes represented by proxies cast by proxy card, ballot, telephone, and the Internet.

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Where can I find the voting results of the Annual Meeting?

The preliminary voting results will be announced at the Annual Meeting. The final voting results will be tallied by the inspector of election and published by us on a Form 8-K, which we are required to file with the SEC by June 27, 2012. Once filed, the Form 8-K will be publicly accessible on the Investors/News section of our website at http://investor.ariad.com under the heading “SEC Filings.”

Who is paying for the cost of this proxy solicitation?

We are paying the costs of the solicitation of proxies. We must also pay brokerage firms, and other persons representing beneficial owners of shares held in street name, certain fees associated with:

In addition to soliciting proxies by mail, certain of our directors, officers, and regular employees, without additional compensation, may solicit proxies personally or by telephone, facsimile, or e-mail on our behalf.

How can I attend the Annual Meeting?

Attendance at the Annual Meeting is limited to stockholders. Admission to the Annual Meeting will be on a first-come, first-served basis. Stockholders wishing to attend the meeting in person are requested to pre-register. To register for the meeting, please contact our investor relations office at 617-494-0400, extension 2208, or send an e-mail to investor@ariad.com. Registration will also be available the morning of the meeting beginning at 9:00 A.M. EDT. Each stockholder may be asked to present valid picture identification such as a driver’s license or passport and proof of stock ownership as of the Record Date. When you arrive, signs will direct you to the appropriate meeting room. The use of computers, cell phones, pagers, recording or photographic equipment is not permitted in the meeting room at the Annual Meeting. Directions to our offices can be found on our website at www.ariad.com.

Can I view the Annual Meeting on the Internet?

If you cannot attend the Annual Meeting in person, you may view a live webcast of the Annual Meeting. If you choose to view the webcast, visit the Investors/News section of our website, http://investor.ariad.com, shortly before the meeting time and follow the instructions for downloading the webcast. If you miss the Annual Meeting, you can view a replay of the webcast at http://investor.ariad.com until July 20, 2012.

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BOARD OF DIRECTORS

The Board currently consists of seven members classified into three classes. Listed below are our seven directors by class. At each annual meeting of stockholders, the term for one class of directors expires, and directors are elected for a full term of three years to succeed the directors of such class. This year, the Board, upon recommendation of the Nominating and Corporate Governance Committee, has nominated Harvey J. Berger, M.D. and Wayne Wilson for re-election as Class 3 Directors.

Certain biographical information is set forth below for the nominees for Class 3 directors up for election at this Annual Meeting, as well as for each of the continuing Class 1 and Class 2 directors whose terms expire at the annual meeting in either 2013 or 2014, respectively, or at such time as such director’s successor is duly elected and qualified. Additionally, information about the specific experience, qualifications, attributes or skills that led to our Board of Directors’ conclusion at the time of filing of this proxy statement that each person listed below should serve as a director is also set forth below.

Nominees for Class 3 Directors (Term to Expire in 2015)

Harvey J. Berger, M.D. is our principal founder and has served as our Chairman of the Board and Chief Executive Officer since April 1991. He served as our President from April 1991 to September 2003 and from December 2004 to present. He is chair of the Executive Committee. From 1986 to 1991, Dr. Berger held a series of executive management positions at Centocor, Inc., a biotechnology company, including Executive Vice President and President, Research and Development Division. He has also held senior academic and administrative appointments at Emory University, Yale University and the University of Pennsylvania and was an Established Investigator of the American Heart Association. Dr. Berger currently serves as a member of the Dean’s Council of Yale School of Medicine.

Dr. Berger brings to our Board a deep historical and practical knowledge of our business and our technologies, as well as many years of expertise in the medical, scientific, financial and biopharmaceutical arenas, making him uniquely qualified to lead the Board.

Dr. Berger has been actively engaged in our strategy and operations since our inception. Under his leadership, we have attracted and maintained talent, secured ongoing financing, and developed a pipeline of highly promising drug candidates. We benefit from his strategic direction of our research and development programs and his perspective regarding strategic and operational opportunities and challenges.

Dr. Berger received his A.B. degree in Biology from Colgate University and his M.D. degree from Yale University School of Medicine. He obtained further medical and research training at the Massachusetts General Hospital and Yale-New Haven Hospital.

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Wayne Wilson has over thirty years of business, financial, and accounting experience. He has been an independent business advisor since 2002. From 1995 to 2002, he served in various roles, including as President, Chief Operating Officer, and Chief Financial Officer, at PC Connection, Inc., a Fortune 1000, direct marketer of information technology products and services. From 1986 to 1995, Mr. Wilson was a partner in the assurance and advisory services practice of Deloitte & Touche LLP.

Mr. Wilson has been a member of our Board since October 2008. He is chair of the Audit Committee and a member of the Nominating and Corporate Governance Committee and the Executive Committee. Mr. Wilson is also a member of the boards of directors of Fairpoint Communications, Inc., a telecommunications company, Hologic, Inc., a medical diagnostics and device company focusing on women’s health, and Edgewater Technology, Inc., a technology management consulting firm. He previously served as a director of Cytyc Corporation, a medical diagnostics and device company. Mr. Wilson brings substantial general business and financial expertise to our Board, as well as our Audit Committee. His background and extensive experience in financial accounting and reporting make him well versed in accounting principles and financial reporting rules and regulations, and he is well equipped to evaluate financial results and generally oversee the financial reporting process of a publicly traded corporation.

Mr. Wilson received an A.B. degree in political science from Duke University and an M.B.A. from the University of North Carolina at Chapel Hill.

Continuing Class 1 Directors (Term to Expire in 2013)

Athanase Lavidas, Ph.D. has been the Chairman and Chief Executive Officer of the Lavipharm Group, a pharmaceutical, cosmetics and consumer health products company headquartered in Greece, since 1976. Dr. Lavidas is also Chairman of the Greece-U.S. Business Council and Vice Chairman of the Board of Hellenic Federation of Industries and Enterprises, Head of International Affairs.

Dr. Lavidas has been a member of our Board since September 2003 and our lead director since November 2008. He is chair of the Nominating and Corporate Governance Committee and a member of the Executive Committee and the Compensation Committee. Dr. Lavidas brings to the Board over thirty years of international pharmaceutical industry experience in strategic development and operational management, making him highly qualified to be the Board’s lead director. Dr. Lavidas has expertise in the research, development and commercialization of innovative drug products, as well as global pharmaceutical and biotechnology collaborations.

Dr. Lavidas received his B.S. and M.S. in chemistry from the University of Munich, his M.B.A. from the Institut Superieur de Marketing et de Management in Paris and his Ph.D. degree in pharmaceutical chemistry from the University of Athens.

Massimo Radaelli, Ph.D. is the President and Chief Executive Officer of Noventia Pharma, a specialty pharmaceutical company with headquarters in Lausanne, Switzerland focused on rare diseases and orphan drugs (CNS and Respiratory). Dr. Radaelli brings over twenty-five years of industry experience to our Board, including senior leadership positions with major European pharmaceutical companies. Prior to joining Noventia in May 2009, Dr. Radaelli was President and Chief Executive Officer of Dompé International SA, the international pharmaceutical company of the Dompé Group. He joined Dompé in 1996 as director of corporate business development. Previously, Dr. Radaelli held various sales and marketing positions at the Dupont-Merck Pharmaceutical Company, the Menarini Group, and Hoffman-La Roche Ltd. Dr. Radaelli is also the Executive Chairman of Bioakos Pharma Laboratories, a specialty pharmaceuticals company concentrated in the fields of gynecology, dermatology, ENT and pediatrics. He also serves as a director of Arriani International, SA, the international subsidiary of Arriani

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Pharmaceuticals, a leading pharmaceutical company in Southeastern Europe, and a director of Lavipharm svl, the Italian subsidiary of Lavipharm Group, a pharmaceutical, cosmetics and consumer health products company headquartered in Greece.

Dr. Radaelli has been a member of our Board since October 2008. He is chair of the Compensation Committee and a member of the Audit Committee. Since June 2011, Dr. Radaelli has also served on the Nominating and Corporate Governance Committee. Dr. Radaelli brings to the Board sophistication in financial and accounting matters, as well as significant strategic and operational industry experience, including expertise in pharmaceutical business development, strategic planning, alliance management, and new product development and commercialization.

Dr. Radaelli is a member of the Italian Society of Pharmacology. Dr. Radaelli has been awarded the highest ranking honor of the Italian Republic by the President and Prime Minister of Italy for merit acquired in the fields of Science and Biopharma and, in particular, for his commitment to patients with rare diseases and unmet medical needs.

Dr. Radaelli received a University Degree in pharmaceutical sciences and a Ph.D. in clinical pharmacology from the University of Milan and an Executive Master of Business from Bocconi University of Milan.

Continuing Class 2 Directors (Term to Expire in 2014)

Jay R. LaMarche is a retired financial executive who brings to our Board over thirty years of financial and senior operating experience. He has served us for over twenty years as a director and in executive leadership positions including Chief Financial Officer and Treasurer from January 1992 to November 2000. Mr. LaMarche was our Executive Vice President from March 1997 to November 2000 and Senior Vice President, Finance from January 1992 to February 1997. Prior to joining ARIAD, he was Chief Financial Officer and a director of ChemDesign Corporation, a fine chemicals manufacturer. Previously, Mr. LaMarche was an audit partner with Deloitte Haskins & Sells, a public accounting firm. Mr. LaMarche also served as an officer in the United States Navy.

Mr. LaMarche has been a member of our Board since January 1992. He is a member of the Audit Committee and the Nominating and Corporate Governance Committee. Mr. LaMarche provides the Board with an extensive knowledge of our operations, as well as expertise in financial and accounting issues, particularly as they relate to the pharmaceutical and biotechnology industry. Mr. LaMarche’s management experience and financial background serve him well in providing guidance concerning our operations and business strategy.

Mr. LaMarche received his B.B.A. degree in Public Accountancy from the University of Notre Dame.

Robert M. Whelan, Jr. has over thirty-five years of investment banking experience working predominantly with high technology and healthcare companies. He has been the President of Whelan & Company, LLC, providing business and financial consulting and strategic services to a broad range of companies, since 2001. From 2001 to 2005, Mr. Whelan served as Managing Director of Valuation Perspectives, Inc., a consulting firm. Prior to that, he held a number of senior-level positions at various investment banking and brokerage firms. Mr. Whelan was Vice Chairman of Prudential Volpe Technology Group, the technology investment banking and research division of Prudential Securities. Prior to Prudential Volpe, he was Chief Operating Officer, Managing Director, board member and Head of Investment Banking of Volpe Brown Whelan & Company, a private technology and healthcare investment banking, brokerage and asset management firm. Volpe Brown Whelan & Company was acquired by Prudential Securities in 1999.

From 2008 to 2009, Mr. Whelan was a Fellow at the Harvard University Advanced Leadership Initiative, an innovative year-long program aimed at providing a rigorous educational curriculum for exceptional leaders who have reached the height of their professions and are seeking to contribute their skills to solve global social problems.

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Mr. Whelan currently serves as a director of Aspen Technology, Inc., a publicly traded provider of software and services for the process industries based in Burlington, Massachusetts, and Leerink Swann, L.L.C., a privately held investment banking firm focused on the life sciences. He is a former member of the board of directors of Coastal Enterprise Ventures, a socially responsible venture fund in Portland, Maine, and of Growth Capital Partners, L.P., an advisory and asset management firm based in Houston, Texas.

Mr. Whelan has been a member of our Board since April 2010. Since May 2010, he has served on the Audit Committee and Compensation Committee. His extensive investment-banking experience provides him with a wealth of knowledge in dealing with financial, accounting and regulatory matters and offers the Board insights into the views of shareholders, investors, analysts and others in the financial community. His service on boards of other companies positions him well to serve as a member of our Board.

Mr. Whelan received a B.A. in history from Dartmouth College and a M.B.A. from Stanford University Graduate School of Business.

Norbert G. Riedel, Ph.D., is Corporate Vice President and Chief Scientific Officer of Baxter International Inc., a diversified healthcare company, having served in that capacity since March 2001. Before assuming this role, from 1998 to 2001, Dr. Riedel served as President and General Manager of the recombinant therapeutic proteins business unit and Vice President of Research and Development at Baxter’s BioScience business. Prior to joining Baxter, from 1996 to 1998, he was head of worldwide biotechnology and worldwide core research functions at Hoechst-Marion Roussel, now Sanofi-Aventis, a global pharmaceutical company. Previously, he held a series of scientific management positions at Hoechst-Marion Roussel and Hoechst AG.

Dr. Riedel has been a member of the Supervisory Board of MediGene, AG, a biotechnology company, since 2003. He is a member of the Board of Directors of the Illinois Biotechnology Industry Organization and also serves on the Advisory Board of Northwestern University’s Kellogg School of Management Center for Biotechnology, and the McCormick School of Engineering. Most recently, he was appointed by Illinois Governor Pat Quinn to the newly formed Illinois Innovation Council.

From 1999 to 2010, Dr. Riedel was a member of the board of directors of Oscient Pharmaceuticals Corporation, a biopharmaceutical company, and its predecessor company, Genome Therapeutics Corporation, a genomics company.

Dr. Riedel was a postdoctoral fellow at Harvard University from 1984 to 1987 and an Assistant Professor and Associate Professor of medicine and biochemistry at Boston University School of Medicine from 1987 to 1991. He was a Visiting Professor at Massachusetts Institute of Technology in 1992, is an Adjunct Professor at Boston University School of Medicine and an Adjunct Professor of Medicine at Northwestern University’s Feinberg School of Medicine. In 2009, Dr. Riedel was elected as a member of the Austrian Academy of Sciences.

Dr. Riedel has been a member of our Board since April 2011. Since June 2011, he has served on the Compensation Committee. As a senior executive in the healthcare field, Dr. Riedel brings to the Board valuable scientific and commercial experience, as well as a keen understanding of the biotechnology industry, drug discovery and development, and pharmaceutical management.

Dr. Riedel received his Diploma in biochemistry from the University of Frankfurt in 1981 and his Ph.D. in biochemistry from the University of Frankfurt in 1983.

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The Board’s Leadership Structure

Harvey J. Berger, M.D., who has served as our Chairman of the Board (“Chairman”) and Chief Executive Officer since April 1991, leads our Board. We believe that the structure of our Board facilitates efficient communication between our directors and management team. We believe this leadership structure is appropriate because of the efficiencies achieved in having the role of Chairman and Chief Executive Officer combined, and because Dr. Berger’s detailed knowledge of our day-to-day operations and business greatly enhances the decision-making processes of the Board as a whole.

Our Corporate Governance Guidelines require the election of an independent lead director to serve during any period when there is no independent Chairman. Our directors have selected Athanase Lavidas, Ph.D. to serve as our lead director, and he has served in that capacity since November 2008. A more detailed description of the roles and responsibilities of the Chairman and the lead director is set forth in our Corporate Governance Guidelines, which are publicly available on the Investors/News section of our website at http://investor.ariad.com under the heading “Corporate Governance.”

The Role of the Board in Risk Oversight

As set forth in our Corporate Governance Guidelines, one of the Board’s functions is oversight of risk management at ARIAD. Risks vary in many ways, including our ability to anticipate and understand the risk, the types of adverse effects that could occur if an undesired event happens, and our ability to control the risk and potential adverse consequences. Nevertheless, risk is inherent in business, and the Board seeks to understand and advise on risk in conjunction with the activities of the Board and its committees.

Management is responsible for identifying risk and risk controls related to significant business activities. The Board ensures that management’s approach to risk management is designed to support the achievement of organizational objectives, including strategic goals, to improve long-term organizational performance and enhance stockholder value. The involvement of the Board in reviewing our strategic objectives and plans is a key part of our Board’s assessment of management’s approach and tolerance to risk. A fundamental part of risk management is not only understanding the risks a company faces and what steps management is taking to manage those risks, but also understanding what level of risk is appropriate. In reviewing and affirming our business strategy, the Board assesses the various risks being mitigated by management and determines what constitutes an appropriate level of risk. As part of its ongoing activities, the Board meets regularly with management to discuss our most significant risk exposures and ensure that the risks undertaken by management are consistent with the Company’s business strategy. In other cases, a Board committee may be responsible for oversight of specific risk topics. For example, the Audit Committee oversees issues related to internal control over financial reporting, and the Compensation Committee oversees risks related to compensation programs, as discussed in greater detail elsewhere in this proxy statement.

Compensation Practices and Policies Relating to Risk Management

Consistent with SEC disclosure requirements, we have assessed the Company’s compensation programs and have concluded that our compensation policies and practices do not create risks that are reasonably likely to have a material adverse effect on the Company. Our management assessed the Company’s compensation and benefits programs to determine if the programs’ provisions and operations create undesired or unintentional risk of a material nature. We do not have any programs where the ability of a participant may directly affect variability of payout. Rather, we support the use of base salary, performance-based compensation, and retirement plans that are generally uniform in design and operation throughout the Company and with all levels of employees. The compensation policies and practices are substantially the same.

In 2012 we implemented a minimum stock ownership guideline for our Chief Executive Officer equal to six times his base salary, to be phased in over five years, as well as minimum stock ownership guidelines for

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the non-management members of our Board of Directors equal to three times the annual cash retainer, to be phased in over five years. We believe the adoption of such guidelines further aligns the interests of our Chief Executive Officer and our Board of Directors with those of our shareholders.

Based on the foregoing, we believe that our compensation policies and practices do not create inappropriate or unintended significant risk to the Company as a whole. We also believe that our incentive compensation arrangements provide incentives that do not encourage risk-taking beyond the organization’s ability to effectively identify and manage significant risks, are compatible with our effective internal controls and our risk management practices, and are supported by the oversight and administration of the Compensation Committee with regard to executive compensation programs.

Director Independence and Committee Qualifications

The Board has determined that each of our directors, except Dr. Berger, is an “independent director” as such term is defined by The NASDAQ Stock Market LLC (“NASDAQ”). The Board has also determined that each member of the Compensation Committee, the Audit Committee, and the Nominating and Corporate Governance Committee meets the independence requirements applicable to each such committee member prescribed by NASDAQ and the SEC. The Board has further determined that Messrs. LaMarche, Whelan, and Wilson are “audit committee financial experts” as defined in the rules of the SEC.

The Nominating and Corporate Governance Committee annually reviews the independence of all directors and reports its findings to the full Board. The Nominating and Corporate Governance Committee has reviewed each director’s status by applying the standards for director independence and the criteria to determine “audit committee financial expert” status and by evaluating self-evaluation questionnaires and other information supplied by the director or independently obtained. On the basis of this review, the Nominating and Corporate Governance Committee delivered a report to our Board upon which our Board made its determinations of each director’s status.

In determining that Mr. Whelan qualifies as an independent director under applicable NASDAQ rules, the Board considered Mr. Whelan’s position as a director of Leerink Swann, L.L.C., which served as a co-manager of our public offering in December 2011, and concluded that Mr. Whelan did not receive any compensation from ARIAD, directly or indirectly, in connection with that offering and that his role as a director at Leerink Swann does not interfere with his exercise of independent judgment in carrying out his responsibilities as a director.

Board Committees

The following table lists which directors are members of the respective standing committees.

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Dr. Radaelli has served on the Nominating and Corporate Governance Committee and Dr. Riedel has served on the Compensation Committee since June 2011. In addition, A. Collier Smyth, M.D. served as a member of the Compensation Committee during 2011 until his resignation from the Board on April 28, 2011.

Audit Committee

The Audit Committee’s primary duties and responsibilities are to:

In addition, the Audit Committee is responsible for reviewing, in consultation with our management and independent registered public accounting firm, the scope and results of reviews of our quarterly financial statements, audits of our annual financial statements, and audits of our system of internal control over financial reporting. The Audit Committee performs other additional duties and responsibilities, including reviewing, evaluating, and approving related-person or similar transactions or relationships and recommending approval of such transactions to the disinterested and independent members of the Board, if necessary.

The Audit Committee maintains a written charter that outlines its responsibilities, which it reviews and reassesses annually and recommends any changes to the Board for approval. A copy of the Audit Committee’s charter is publicly available on the Investors/News section of our website at http://investor.ariad.com under the heading “Corporate Governance.”

The Audit Committee met eight times in 2011.

Please also see the Audit Committee Report, located elsewhere in this proxy statement.

Compensation Committee

The Compensation Committee’s primary duties and responsibilities are to:

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As Chief Executive Officer, Dr. Berger recommends compensation decisions involving our other officers and discusses these recommendations and related matters, including reviewing these officers’ performance, with the Compensation Committee. Dr. Berger actively participates during Compensation Committee meetings to discuss compensation actions involving his direct reports. The Compensation Committee determines Dr. Berger’s compensation in executive session, without Dr. Berger present, and makes recommendations to the Board which then votes on these matters. How the Compensation Committee reviews and sets executive compensation is described in more detail in the CD&A section located elsewhere in this proxy statement. The Chair of the Compensation Committee determines the agenda for its meetings in conjunction with Dr. Berger. At each meeting, the Compensation Committee has the opportunity to meet in executive session and does so when the Compensation Committee deems it necessary or appropriate.

Our Compensation Committee, or our Board of Directors at the recommendation of the Compensation Committee, makes all equity awards under stockholder-approved plans. When granted, stock options have an exercise price equal to the closing price of our common stock as quoted on The NASDAQ Global Select Market on the date of grant. Our Compensation Committee, or our Board of Directors at the recommendation of the Compensation Committee, also approves the other terms of the grants, including the vesting conditions, restrictions and term of the awards.

Grants of stock options or other equity awards to new employees, including executive officers, are generally approved at the first scheduled meeting of our Compensation Committee after such employees begin employment. Annual grants are generally approved in the first quarter of the fiscal year for performance in the prior year.

In coordination with our Compensation Committee, we jointly retain an independent compensation consultant, Radford, an Aon Hewitt company (“Radford”), to provide information, advice and recommendations with respect to officer and director compensation. Radford has served as our compensation consultant since September 2008. For our 2011 and 2012 compensation decisions, Radford, with input from management, provided advice on our peer group and an analysis of the competitiveness of our executive and director compensation programs (including our use of equity, pay-for-performance metrics, stock ownership analysis, and the retentive effect of our pay practices), and also assisted management with the preparation of tally sheets quantifying the total compensation paid to our executive officers. Radford provided advice, information and recommendations directly to, and at the request of, the Compensation Committee, and the Committee’s decisions regarding the components and amounts of executive and director compensation were informed by the analysis and input of Radford. In addition, during 2011 and 2012 Radford provided advisory services, not in excess of $120,000, related to compensation programs for our non-executive officers, including job classification, payment of cash compensation compared to our peer group, review of salary levels by position, and development of new equity compensation guidelines.

The Compensation Committee maintains a written charter that outlines its responsibilities, which it reviews and reassesses annually and recommends any changes to the Board for approval. A copy of the Compensation Committee’s charter is publicly available on the Investors/News section of our website at http://investor.ariad.com under the heading “Corporate Governance.”

The Compensation Committee met seven times in 2011.

Please also see the Compensation Committee Report, located elsewhere in this proxy statement.

Executive Committee

The Executive Committee reviews and, where appropriate, approves corporate action with respect to the conduct of our business between Board meetings. The Executive Committee’s actions are reported to the Board as soon as possible.

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The Executive Committee did not meet in 2011.

Nominating and Corporate Governance Committee

The Nominating and Corporate Governance Committee’s primary duty and responsibilities are to:

The Nominating and Corporate Governance Committee may consider candidates recommended by stockholders, as well as by directors or officers or other appropriate sources. For all potential candidates, the Nominating and Corporate Governance Committee may consider any factors it deems relevant, including, among other factors, a candidate’s personal integrity and judgment, business and professional skills and experience, independence, knowledge of our industry and applicable laws, regulations and guidelines governing U.S. public companies, possible conflicts of interest, diversity, the extent to which the candidate would fill a priority need on the Board, the willingness of the candidate to commit sufficient time and attention to his or her duties or responsibilities as a director of a public company, and concern for the long-term interests of our stockholders. The factors generally considered by the Nominating and Corporate Governance Committee are set out in our Corporate Governance Guidelines, which are publicly available on the Investors/News section of our website at http://investor.ariad.com under the heading “Corporate Governance.” In general, persons recommended by stockholders will be considered on the same basis as candidates from other sources.

We do not have a formal policy on diversity. However, in selecting a director nominee, the Nominating and Corporate Governance Committee considers issues of diversity among Board members and seeks to find a nominee whose talents, skills, expertise and background would complement those of the existing directors.

If a stockholder wishes to recommend a candidate for director for election at our 2013 annual meeting of stockholders, such a recommendation should be submitted in writing to the Nominating and Corporate Governance Committee, c/o Raymond T. Keane, Esq., Secretary, ARIAD Pharmaceuticals, Inc., 26 Landsdowne Street, Cambridge, Massachusetts 02139-4234. Any such written recommendation should include a minimum of the following:

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Any such recommendation should be submitted in the timeframe for stockholder proposals which are to be included in proxy materials for the annual meeting to be held in 2013 under the caption “Future Stockholder Proposals” set forth elsewhere in this proxy statement.

The Nominating and Corporate Governance Committee maintains a written charter that outlines its responsibilities, which it reviews and reassesses annually and recommends any changes to the Board for approval. A copy of the Nominating and Corporate Governance Committee’s charter is publicly available on the Investors/News section of our website at http://investor.ariad.com under the heading “Corporate Governance.”

The Nominating and Corporate Governance Committee met two times in 2011.

Compensation Committee Interlocks and Insider Participation

During the fiscal year ended December 31, 2011, Drs. Lavidas, Radaelli, Riedel and Smyth and Mr. Whelan served as members of our Compensation Committee. Dr. Smyth resigned from the Board in April, 2011. In 2011, none of our executive officers served on the board of directors or compensation committee of any entity that had one or more executive officers serving as a member of our Board or Compensation Committee. There are no family relationships between or among the members of our Board or executive officers.

Director Compensation

Effective June 2010, the Board of Directors adopted the following policy for compensation of the non-management members of our Board for their services, which remained in effect through 2011:

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Regarding stock option awards, the exercise price of each such award is the closing price of our common stock as quoted on The NASDAQ Global Select Market on the date of grant. These awards have terms of ten years, subject to earlier termination. Regarding restricted stock unit awards, directors were able to select future payment dates for the shares issued upon the settlement of restricted stock units, subject to compliance with Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”). Awards of common stock, stock options and restricted stock units under this policy are subject to the terms and conditions of our 2006 Long-Term Incentive Plan, as amended (the “2006 Long-Term Incentive Plan”).

No other compensation, in the form of cash or otherwise, was paid to non-management directors other than reimbursement of their reasonable expenses incurred in attending Board and committee meetings. Management directors do not receive any compensation for their service as directors.

Set forth below is information concerning the compensation paid to or earned by our non-management directors during 2011.

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Effective January 2, 2012, the Board of Directors adopted the following new policy for compensation of the non-management members of our Board:

We have the right to repurchase the shares for a nominal amount if the individual ceases to be a member of the Board of Directors or provide us other services following their service as a director. The right will lapse as to 25% of the shares on March 31, June 30, September 30 and December 31 of the year of the award.

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CORPORATE GOVERNANCE

Corporate Governance Guidelines

Our Corporate Governance Guidelines, which were developed and are overseen by the Nominating and Corporate Governance Committee, establish basic principles of corporate governance by which the Board operates. These guidelines address selection, composition and independence of the Board, director compensation, evaluation of the performance of the Board and its committees, the structure and operations of the committees of the Board, the establishment and implementation of corporate governance guidelines, principles and practices, leadership development, and succession planning.

Under our Corporate Governance Guidelines, as long as the Chief Executive Officer is also Chairman of the Board, the Board shall appoint one of the independent directors to serve in the role of lead director. His or her role is to support the ability of the independent directors to perform their responsibilities as independent directors. As such, he or she is responsible for oversight of those processes of the Board which independent directors are required to perform. In addition, he or she presides at meetings of the non-management directors. The lead director also meets and consults regularly with the Chairman and Chief Executive Officer. Dr. Lavidas has served as our lead director since November 2008.

The Nominating and Corporate Governance Committee is responsible for the establishment, implementation, and oversight of our Corporate Code of Conduct and Ethics, Conflict of Interest Policy for Board of Directors, and specific corporate governance guidelines, policies, and practices. The charter of our Nominating and Corporate Governance Committee, as well as the above mentioned policies and guidelines are publicly available on the Investors/News section of our website at http://investor.ariad.com under the heading “Corporate Governance.”

Corporate Code of Conduct and Ethics

Our Corporate Code of Conduct and Ethics applies to all of our employees and directors. Any changes in or waivers from our Corporate Code of Conduct and Ethics will be included in a Current Report on Form 8-K within four business days following the date of the change or waiver, unless website posting of the amendments or waivers is then permitted by NASDAQ rules.

Certain Relationships and Related Transactions

All related-person transactions are reviewed and approved in advance by our Audit Committee or other independent body of our Board. In general, a related-person transaction is defined as any transaction (other than setting compensation) in which we or any subsidiary or affiliate is a participant and in which any of the following persons has or will have a direct or indirect material interest: our executive officers, our Board members and nominees, beneficial holders of more than 5% of our securities, immediate family members of any of the foregoing persons, and any other persons who the Board determines may be considered to be related persons as defined by the rules and regulations of the SEC.

Our Audit Committee or its chair or other independent body of our Board, as the case may be, will approve only those related-person transactions that are determined to be in, or not inconsistent with, the best interests of our company and our stockholders, taking into account all available facts and circumstances as it determines in good faith to be necessary. These facts and circumstances will typically include, but not be limited to, the benefits of the transaction to us and our stockholders, the impact on a director’s independence in the event the related person is a director or nominee, an immediate family member of a director or nominee, or an entity in which a director or nominee is a partner, shareholder, or executive officer, the availability of other sources for comparable products or services, the terms of the transaction, and the terms of comparable transactions that would be available to unrelated third parties or to employees generally. No member of our Audit Committee or our Board will participate in any review, consideration, or approval of any related-person transaction with respect to which the member or any of his or her immediate family members or other business affiliates is the related person.

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In reviewing and approving such transactions, our Audit Committee or other independent body of our Board will obtain, or will direct management to obtain on its behalf, all information that it believes to be relevant and important to its review of the transaction prior to approval. Following receipt and review of the necessary information, a discussion will be held of the relevant factors deemed to be necessary prior to approval. If a discussion is not deemed to be necessary, approval may be given by unanimous written consent of our Audit Committee or other independent body of our Board. This approval authority may also be delegated to the chair of our Audit Committee in some circumstances. No related-person transaction shall be entered into prior to completing these procedures.

Our policies as described above are included in the Audit Committee Charter as approved by our Audit Committee and our Board. As required under SEC rules, transactions that involve an amount in excess of $120,000, in which we are a participant and a related person is determined to have a direct or indirect material interest, are disclosed in our proxy statement.

Communications with the Board

Generally, stockholders who have questions or concerns should contact our Investor Relations department at 617-494-0400, extension 2208. However, any stockholders who wish to submit written communications to the Board or any individual director should send their communications to our Secretary at ARIAD Pharmaceuticals, Inc., 26 Landsdowne Street, Cambridge, MA 02139-4234 or raymond.keane@ariad.com. Communications will be distributed to the Board, or to any individual director or directors as appropriate, depending on the facts and circumstances outlined in the communications. Items that are unrelated to the duties and responsibilities of the Board may be excluded, such as:

In addition, any material that is unduly hostile, threatening, or illegal in nature may be excluded, provided that any communication that is filtered out will be made available to any director upon request.

Director Attendance at Board and Committee Meetings

The Board held eight meetings in 2011, and each director attended at least 75% of the meetings. The various committees of the Board met a total of 17 times in 2011, and each director attended at least 75% of the meetings held by all of the committees on which he served, other than Dr. Lavidas, who attended 66 2/3% of the meetings for the committees on which he served. For purposes of this determination, actions taken by written consent of the Board or committees were not included.

Director Attendance at the Annual Meeting

Under our Corporate Governance Guidelines, we expect all incumbent directors, as well as all nominees for election as director, to attend our annual meetings of stockholders. All of our incumbent directors attended the annual meeting of stockholders in 2011.

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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL

OWNERS AND MANAGEMENT

The following table sets forth, as of April 16, 2012, certain information with respect to (i) each person (including any “group” as defined in Section 13(d)(3) of the Exchange Act) known to us to own beneficially more than 5% of our common stock, (ii) each of our directors and director nominees, (iii) each executive officer named in the Summary Compensation Table under “Executive Compensation” (referred to as our named executive officers), and (iv) all of our current directors and executive officers as a group. In accordance with the rules promulgated by the SEC, such ownership includes shares currently owned, as well as shares that the named person has the right to acquire within 60 days of April 16, 2012, including, but not limited to, shares that the named person has the right to acquire through the exercise of any option and restricted stock units that will be vested as of that date. Except as otherwise indicated, the stockholders listed in the table have sole voting and investment powers with respect to the common stock shown as beneficially owned. Percentage ownership is based on 165,666,235 shares of common stock outstanding as of April 16, 2012.

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EXECUTIVE COMPENSATION

Executive Officers

The following table sets forth certain information regarding our executive officers, including their ages as of the upcoming Annual Meeting.

For biographical information on Dr. Berger, see the section in this proxy statement entitled, “Board of Directors.”

Timothy P. Clackson, Ph.D. has served as our President of Research and Development and Chief Scientific Officer since June 2010. Previously, he served as our Senior Vice President and Chief Scientific Officer from September 2003 to June 2010, as our Senior Vice President, Science and Technology from June 2002 to September 2003, as our Vice President, Gene Therapy and Genomics from June 2000 to June 2002, and in a series of additional research and research management positions since joining us in December 1994. Dr. Clackson led the multi-disciplinary research group that discovered our product candidates, ponatinib, AP26113, and ridaforolimus. From 1991 to 1994, Dr. Clackson was a postdoctoral research fellow in protein engineering at Genentech, Inc., a biotechnology company. Dr. Clackson received his B.A. degree in Biochemistry from the University of Oxford, and his Ph.D. degree in Biology from the University of Cambridge for research conducted at the MRC Laboratory of Molecular Biology that included the development of antibody phage display technology.

Edward M. Fitzgerald has served as our Executive Vice President, Chief Financial Officer and Treasurer since June 2010. Previously, he served as our Senior Vice President, Chief Financial Officer and Treasurer from May 2002 to June 2010. From 1998 to April 2002, he served as Senior Vice President, Chief Financial Officer and Secretary at AltaRex Corp., a biotechnology company. From 1992 to 1997, Mr. Fitzgerald held various management positions at BankBoston Corp., a financial services and commercial banking company. From 1989 to 1992, he was a partner at Arthur Andersen & Co. in the audit and business advisory practice. Previously, from 1978 to 1988, he also was at Arthur Andersen & Co. Mr. Fitzgerald received his B.S. degree in accounting and M.B.A. degree in finance from Babson College.

David L. Berstein, Esq. has served as our Senior Vice President and Chief Intellectual Property Officer since May 2008. Mr. Berstein also served as our Senior Vice President and Chief Patent Counsel from June 2003 until June 2007 and our Vice President and Chief Patent Counsel from September 1993 to June 2000. From

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July 2007 until his return to our company in May 2008, Mr. Berstein was Senior Vice President and Chief Patent Counsel for Tempo Pharmaceuticals, Inc., a biotechnology company. During this time period, he was a consultant to us on intellectual property matters. From 1990 through 1993, Mr. Berstein was Patent Counsel at BASF Bioresearch Corporation, a biotechnology company, where he was responsible for intellectual property matters, including patents and licensing. From 1985 to 1990, Mr. Berstein was a patent attorney at Genetics Institute, Inc., a biotechnology company, where he was involved in various aspects of the patent process from patent procurement through litigation. Mr. Berstein joined Genetics Institute from the law firm of Cooper & Dunham. Mr. Berstein received his B.S. degree from the University of Michigan and his J.D. degree from Fordham University School of Law.

Daniel M. Bollag, Ph.D. has served as our Senior Vice President, Regulatory Affairs and Quality since January 2009. He previously served as Vice President, Regulatory Affairs for Genzyme Corporation, a biotechnology company, from 2006 to 2008. From 2002 to 2006, Dr. Bollag held multiple positions at Sanofi-Aventis Pharmaceuticals, including Associate Vice President, Global Regulatory Domain Head. Dr. Bollag also served as Director, Project Planning and Management at Bristol-Myers Squibb from 2000 to 2002. Earlier in his career, he held positions at Merck. Dr. Bollag received his B.S. degree in Science and B.A. degree in French at Pennsylvania State University and his Ph.D. degree in Biochemistry from Cornell University. He also completed a postdoctoral fellowship at Princeton University.

Maria E. Cantor has served as our Senior Vice President, Corporate Affairs since January 2012. Previously she served as our Vice President, Corporate Communications and Investor Relations since July 2008. Prior to joining our company, Ms. Cantor held several positions of increasing responsibility at Genzyme Corporation from 2001 to 2008, most recently serving as Senior Director, Corporate Communications. From 2000 to 2001, she held the position of Director, Public Relations and Marketing at St. Elizabeth’s Medical Center of Boston. From 1994 to 2000, Ms. Cantor held director positions in marketing and public relations at Optima Healthcare, Inc. and Catholic Medical Center. Prior to 1994, she was Assistant Press Secretary to former U.S. Congressman, Martin T. Meehan and served as News Anchor/Reporter at a Massachusetts broadcast station. She received her M.S. degree in communications management from Syracuse University and her B.S. degree from Emerson College.

Pierre F. Dodion, M.D. has served as our Senior Vice President, Corporate Development and Operations since February 2012 and Senior Vice President, Corporate Development from July 2010 to January 2012. Previously, he served as our Senior Vice President and Chief Medical Officer from April 2008 to June 2010 and as Senior Vice President, Oncology from June 2007 to April 2008. From 2006 to 2007, Dr. Dodion served as Executive Director, Oncology at Pfizer Inc. From 2002 to 2006, he held senior positions at Novartis in the Oncology Business Unit, most recently as Executive Director, Global Strategy and Global Marketing. From 1997 to 2002, Dr. Dodion served as Medical Director and later as Senior Medical Director at Aventis. Prior to Aventis, he held medical and scientific positions at UBC S.A. and Roche Pharmaceuticals. Previously, he held positions at Institut Jules Bordet at the Free University of Brussels and the National Cancer Institute. Dr. Dodion received his M.D. degree from the Free University of Brussels in Belgium and his M.B.A. degree from St. Joseph University in Philadelphia, Pennsylvania.

Martin J. Duvall has served as our Senior Vice President, Commercial Operations since September 2011. Prior to joining our company, Mr. Duvall served as Senior Vice President and General Manager of Merck and Company’s global oncology franchise. From 2009 to 2010, Mr. Duvall led global marketing and commercial operations at Abraxis Bioscience, Inc. From 2004 to 2009, Mr. Duvall held roles leading commercial operations, commercial development and oncology strategy for MGI Pharma, Inc. and its acquirer, Eisai. Earlier in his career, from 1986 to 2004, he held numerous oncology marketing and sales roles at Sanofi-Aventis and its predecessor companies, including a leadership role in the global development, commercialization and strategic direction of the company’s cytotoxic chemotherapy drugs. He received his B.S. degree in Chemistry from Muhlenberg College, his M.A. degree in Chemistry from the Johns Hopkins University and his M.B.A degree from the University of Kansas.

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Frank G. Haluska, M.D., Ph.D., has served as our Senior Vice President, Clinical Research and Development and Chief Medical Officer since January 2012, having held the position of Vice President and Chief Medical Officer since June 2010. Previously, he served as our Vice President, Clinical Affairs from May 2009 to June 2010, Vice President, Clinical Research from July 2008 to May 2009, and Senior Medical Director from October 2007 to July 2008. Prior to joining our company, Dr. Haluska served as a senior faculty member in the departments of medicine and genetics at Tufts University School of Medicine from 2005 to 2007, where he also was Clinical Director and Deputy Director of the Tufts-New England Medical Center Cancer Center. From 1994 to 2005, he held positions in academia, medical research and clinical oncology at centers of excellence, including assistant professor of medicine at Harvard Medical School, and leader of the melanoma research programs at Dana-Farber Cancer Institute and Massachusetts General Hospital Cancer Center. Dr. Haluska is Colonel in the Medical Corps of the United States Air Force and the Massachusetts Air National Guard. He completed a post-doctoral fellowship at the Massachusetts Institute of Technology, fellowship training in medical oncology at Dana Farber Cancer Institute, and his training in internal medicine at Massachusetts General Hospital. He received his M.D. degree and Ph.D. degree from the University of Pennsylvania School of Medicine and A.B. degree from Harvard University.

Raymond T. Keane, Esq. has served as our Senior Vice President, General Counsel, Secretary and Chief Compliance Officer since January 2009. Previously, he was our Vice President, General Counsel and Chief Compliance Officer. Prior to joining our company in May 2008, Mr. Keane spent twenty years with Bristol-Myers Squibb Company (BMS), most recently as Senior Counsel, Worldwide Medicines and previously as lead counsel to various therapeutic divisions, including BMS Oncology/Immunology. While at BMS, he had primary legal responsibility for the commercialization and launch of seven BMS products. Before joining BMS in 1988, Mr. Keane was an associate with the law firms of Wilson, Elser, Moskowitz, Edelman & Dicker from 1987 to 1988 and Martin, Clearwater and Bell from 1984 to 1987. He received his J.D. degree from Fordham University School of Law and his B.A. degree in Economics from Fordham University.

Compensation Committee Report

The following report of the Compensation Committee should not be deemed “soliciting material” or to otherwise be considered “filed” with the SEC, nor shall this information be incorporated by reference into any future filing under the Securities Act of 1933 or the Exchange Act except to the extent that ARIAD specifically incorporates it by reference into that filing.

The Compensation Committee of the Board has reviewed and discussed with members of management the Compensation Discussion and Analysis (“CD&A”) section included in this proxy statement, as required by Item 402(b) of Regulation S-K.

Based on this review and discussion, the Compensation Committee recommended to the Board that the CD&A be included in this proxy statement.

Members of the Compensation Committee

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Compensation Discussion and Analysis

Executive Summary

This CD&A explains our executive compensation program as it relates to the following “named executive officers” whose compensation information is presented in the tables following this discussion in accordance with SEC rules:

The compensation of our executive officers for 2011 is based on the performance of the Company and our individual executives during the year. It is also consistent with our compensation objectives — to focus our officers on the achievement of key business objectives and to align their interests with those of our stockholders. After successfully executing our key product development plans and strengthening our balance sheet in 2010, we again achieved all of our key corporate objectives in 2011, as discussed in detail in the section entitled “Factors Considered in the Determination of Executive Compensation for 2011” found elsewhere in this CD&A. We believe that these accomplishments are reflected in the increase of approximately 140% in the market price of our common stock from December 31, 2010 to December 31, 2011.

Our compensation actions for our named executive officers related to 2011 performance reflect these achievements over this time period. In addition, based on our continued assessment of our compensation policies and practices, we took the following actions consistent with our overall compensation objectives:

These and other actions are discussed in greater detail in the sections that follow. Our Compensation Committee will continue to evaluate our overall compensation structure and awards to ensure that they are reflective of the performance of our executive officers and our Company and are consistent with our compensation objectives.

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We believe that our compensation program has been and will continue to be successful in attracting and retaining the right executive team during this critical phase of our evolution. Our compensation program for our named executive officers was supported by 98% of the “Say-on-Pay” advisory votes cast by shareholders at our 2011 annual meeting of shareholders. Based on the success of our compensation program and after consideration of last year’s “Say-on-Pay” advisory vote, we are continuing the same structure for our executive compensation program except for the changes to our target compensation and peer group noted above.

The Objectives of Our Compensation Program

The primary objectives of our compensation and benefits programs for our executive officers are to:

More generally, we believe that our total compensation program should meet the following additional objectives:

We have refined our compensation objectives and practices as we evolve towards becoming a fully integrated commercial oncology company. Since our founding, we have strived to adjust compensation practices to reflect our stage of development and evolving practices within our industry, and we intend to continue to do so. We maintain compensation programs that are competitive at all levels and particularly reward exceptional employees for their achievement of corporate and individual goals. This approach focuses our entire Company on making our product candidates available to the patients who need them.

We have advanced ponatinib swiftly toward filing for regulatory approval and commercialization. In addition, we made the decision to commercialize ponatinib on our own and build a global oncology business. In recognition of this, we reviewed our compensation policy with the assistance of our compensation consultant, Radford, and updated our compensation philosophy to target the 65^th percentile of the market for overall compensation. We believe that this philosophy will help ensure that we attract, retain and motivate executives who can lead the successful commercialization of our product candidates in a highly competitive market for executive talent.

Elements of Total Direct Compensation

We provide three basic forms of direct compensation to our executive officers: base salary, bonuses (which we refer to as annual performance awards), and long-term equity incentive awards.

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BASE SALARY

Base salary is intended to provide all of our employees with a fair and competitive base level of compensation that reflects their job function, organizational level, experience and tenure, and sustained performance over time. Executive-officer base salary levels are set using these criteria.

On an annual basis, our executives are eligible for a salary increase. The amount of this increase, if any, is based primarily on market compensation data, the performance of each executive in achieving key corporate objectives established at the beginning of each year, and internal pay equity, as well as demonstrated levels of core job competency and effective leadership. Increases are considered within the context of our overall budgetary parameters before more specific individual and market competitive factors and overall economic factors are considered. We do not apply specific formulas for individual actions. Adjustments to base salary levels typically are made in the first quarter of each year (prorated, as appropriate, for the length of time an individual is an executive officer during the year) but become effective as of January 1 of that year.

ANNUAL PERFORMANCE AWARDS

Annual performance awards are intended to reward our executive officers for achievement of corporate, individual, and key leadership and management objectives on an annual basis. Annual performance awards to our Chief Executive Officer have previously been made in the form of shares of common stock. Performance awards to our other executive officers have been payable in cash but deferred under our 2005 Executive Compensation Plan, as amended (the “2005 Executive Compensation Plan”). Awards in past years have vested in equal installments beginning on the first anniversary of the date of the award and are payable in cash in installments on or after vesting, provided the executive continues to be employed with us, subject to later payment at the executive’s election. These arrangements allowed us to conserve cash to fund our priority research and development programs and commercialization efforts and also supported the retention of our executive officers. The value of amounts deferred under the 2005 Executive Compensation Plan is increased or decreased over the vesting and payment periods based upon the actual total return of specified mutual funds.

This year, in order to ensure that we offer a competitive compensation package designed to attract, retain and motivate our executive officers, we revised the form and terms of our annual performance awards. Our annual performance award to our Chief Executive Officer in 2012 for fiscal 2011 performance was paid as to 50% of the award in the form of shares of common stock and as to the remainder in the form of cash. Only the cash portion of the annual incentive is reflected in the Summary Compensation Table in accordance with SEC disclosure rules. Our annual performance awards to our other executive officers for fiscal 2011 performance were paid as to 50% of the award currently in cash, with the remainder deferred under our 2005 Executive Compensation Plan for one year. The entire value of annual incentive is reflected in the Summary Compensation Table in accordance with SEC disclosure rules, as it is all payable in the form of cash. It is typical practice within our peer group and the broader life sciences marketplace to pay annual performance awards all in cash at the date of the determination of the award amount. Therefore, we believe that the changes we have made to our annual performance awards provide a more competitive compensation package to our executive officers.

LONG-TERM EQUITY INCENTIVE AWARDS

Long-term equity incentive awards are also intended to reward our executive officers for achievement of corporate, individual, and key leadership and management objectives. In addition, such awards are intended to align the interests of all of our executive officers with those of our stockholders, promote progress toward achieving our long-term strategy and assist in long-term retention of our executive officers. As such, long-term equity incentive awards for our executive officers are made in the form of stock options, restricted stock units and/or performance shares, with vesting schedules over multiple years or, in the case of performance shares, tied to achievement of one or more key corporate objectives or metrics. Long-term equity incentive awards are made under our 2006 Long-Term Incentive Plan.

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We include performance shares as a component of our long-term equity incentive awards to our executive officers to provide a direct link between a portion of their incentive compensation and the achievement of one or more key corporate objectives that will help drive long-term value for stockholders. We include stock options as a component of our long-term equity incentive awards to our executive officers to align their interests with those of our stockholders in that our executive officers will only realize value from these stock options if our stock price increases over time. Restricted stock units are used to provide our executive officers with an opportunity to increase their holdings of our common stock, as well as to provide some certainty as to the ability to receive compensation during periods of market volatility, thereby helping us to attract, retain and motivate the best available talent to lead our Company.

The long-term equity incentive awards to our executive officers made in March 2012 for 2011 performance and in March 2011 for 2010 performance were in the form of stock options, restricted stock units and performance shares, divided approximately equally in terms of value among the three. The stock options and restricted stock units vest ratably over three years. The performance shares will vest only if we achieve the specific performance objective stated in the awards. For the awards made in March 2011, the performance objective is regulatory approval by the U.S. Food and Drug Administration (FDA), prior to the end of 2016, to market ponatinib, with the vesting schedule dependent on when prior to the end of 2016 such approval is obtained. For the awards made in March 2012, the performance objective is regulatory approval by the EMA, prior to the end of 2016, to market ponatinib in the European Union, with the number of shares and vesting schedule dependent on when prior to the end of 2016 such approval is obtained. As no amount was recorded on our financial statements for these awards as per ASC Topic 718, the Summary Compensation Table does not reflect the value of these equity awards. If approvals from the FDA or the EMA are not obtained prior to the end of 2016, these awards will terminate and have no value.

Elements of Indirect Compensation

BENEFITS AND PERQUISITES

We provide our executive officers with generally the same benefits as those provided to all other salaried employees, such as health, dental and vision insurance, life insurance, short- and long-term disability, 401(k) plan with company match, and the ability to participate in our employee stock purchase plan. In addition, we also provide executive officers with supplemental long-term disability insurance and long-term care insurance.

We offer tax return preparation services to our executive officers to assist them in complying with their tax reporting obligations. Our executive officers also receive an auto allowance in accordance with their employment agreements. These are the only perquisites we provided to our executive officers during 2011. Perquisites represent less than 2% of each named executive officer’s total compensation in the Summary Compensation Table located elsewhere in this proxy statement.

We believe that our benefits and perquisites represent competitive market practices for executives at companies within our peer group. They are offered as a means to attract and retain our executive officers.

Process for Determining Executive Compensation

As discussed in the section titled “Compensation Committee” located elsewhere in this proxy statement, the Compensation Committee is responsible for, among other duties, reviewing the performance of our Chief Executive Officer and reviewing and recommending his compensation for approval by the full Board. The Compensation Committee is also responsible for reviewing the assessment of performance of our other executive officers conducted by our Chief Executive Officer and reviewing and approving their compensation as recommended by our Chief Executive Officer. While our Compensation Committee has ultimate authority and responsibility for approving all executive officer compensation, our Chief Executive Officer plays an active role in such decisions except with respect to his own compensation.

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At the beginning of each year, the executive leadership team of the Company establishes annual corporate objectives, which are reviewed and discussed with the Compensation Committee and the Board and form the basis for our annual operating plan. The status of our corporate objectives, as well as our performance relative to our operating plan, are reviewed and discussed with the Board regularly during the year. Based on the annual corporate objectives and the associated operating plan, each of the executive officers prepares individual and departmental objectives, which are reviewed and approved by the Chief Executive Officer early in the year.

At the end of each year, each of the executive officers provides a detailed self-assessment of his or her performance relative to the established corporate and individual objectives, and key leadership and management measures. In addition, each executive officer is evaluated by several of his or her peers, subordinates, and in some instances, external colleagues, selected by the Chief Executive Officer. The Chief Executive Officer reviews and evaluates all of these assessments and completes an overall evaluation of performance for each officer for the year, taking into account his judgment regarding the Company’s overall progress, each officer’s contribution to achievement of corporate objectives, as well as his or her achievement of individual objectives and leadership and management measures. Specific numerical weightings or ratings are not applied to individual corporate or personal objectives; rather, the performance of the executive officer is evaluated as a whole in the context of his or her peers at the same level of management within the Company.

Based on this evaluation, each executive officer’s performance is rated on a scale from “unsatisfactory” to “outstanding.” The mid-point of this range — “meets requirements “— reflects that an executive officer has generally met the requirements of his or her position. To obtain 100% of an executive’s target base salary increase, bonus award or long-term incentive award, the executive must be rated at least “exceeds requirements.” Each component of compensation is adjusted upwards or downwards from 0% to 160% of target based on the individual’s performance rating. The level of performance is then used by the Chief Executive Officer to guide his recommendations regarding each of the components of executive compensation for the other executive officers. The Chief Executive Officer reviews and discusses such recommendations with the Compensation Committee. As part of this process, the Compensation Committee, with input from the Chief Executive Officer, reviews the overall performance of the Company relative to the key corporate objectives established at the beginning of the year. This assessment, along with the assessments made by the Chief Executive Officer regarding the individual officers, forms the basis for the Compensation Committee’s assessment of each executive officer. Upon completion of its process, the Compensation Committee approves base salary increases and other awards for each of these officers.

The Compensation Committee also undertakes a comprehensive review of the Chief Executive Officer’s performance based on its evaluation of our Company’s overall performance, the Chief Executive Officer’s individual contributions to achievement of key objectives, his strategic leadership of the Company and his demonstration of our vision and corporate values. He is rated using the same metrics as the other executive officers. The Compensation Committee uses this information to determine the annual adjustment to his base salary, if any, as well as the amount of his annual performance award and long-term equity incentive award, if any. The Chief Executive Officer’s annual performance award and long-term equity incentive award are based on the Compensation Committee’s assessment and rating of his performance and a target award established each year, with input from Radford, our compensation consultant. The Compensation Committee makes these determinations in executive session and then makes recommendations to the Board for approval at a subsequent meeting.

Based on analysis of the market research data relating to our peer group prepared by Radford, the Compensation Committee determines the following parameters:

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In 2012 and 2011, the target base salary adjustment for officers was approximately 3%. The target annual performance award for each officer is based on a percentage of base salary. The target long-term equity incentive awards for each officer is based on recommendations by Radford, taking into consideration the value of equity-based awards and total compensation of executives of companies in our peer group (as described below under “Data Used to Make Compensation Determinations”). The target awards for our executive officers for 2012 and 2011 were as follows:

The level of performance of each executive officer, as determined above, directly influences his or her increase in base salary, annual performance award and long-term equity incentive award relative to target awards, and such amounts may be greater than or less than the target levels based on the assessment and rating of each officer’s performance. In order to achieve or exceed the target level of the annual performance or long-term equity incentive award, the executive officer’s performance must be rated at least “exceeds requirements.” In order to receive any award, the officer’s performance must be rated at least “meets requirements.” Executive officers who are rated “meets requirements” generally receive annual performance awards and long-term equity incentive awards of 50% to 85% of the target award for the level of the officer. Executive officers who are rated “outstanding” may receive annual performance awards and long-term equity incentive awards of up to 160% of the target award for 2011 performance, which percentages may change from year to year. The final amount of the award reflects the individual performance during the assessment period. The use of “performance multipliers” ensures that executives who demonstrate outstanding performance receive awards that are more than twice as large as those given to executives who only meet the requirements of the position. The number of performance shares ultimately issued to an executive officer may be greater than or less than the target awards listed in the table above based on the timing of the EMA approval of ponatinib.

DATA USED TO MAKE COMPENSATION DETERMINATIONS

In making decisions regarding the compensation of our executive officers, the Compensation Committee generally considers compensation and survey data for similarly situated executives at a comparison group of companies it considers our peer group. These comparison data are primarily used to gauge the reasonableness and competitiveness of executive compensation decisions.

We draw upon a pool of talent that is highly sought after by large and established pharmaceutical and biotechnology companies as well as by other development-stage life science companies, both within and outside our geographic area. We believe that the compensation practices of our industry in general and of our select peer group in particular provide useful information to help us establish

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compensation practices that allow us to attract, retain, and motivate a highly talented executive team. We believe we must offer a compensation package to all of our officers and our other employees that is competitive with our peer group, as well as larger pharmaceutical and biotechnology companies from whom we frequently recruit. In addition, the comparator companies should be aligned with our current stage of development and have similar short and long-term growth objectives. In 2011, we set the target level of total compensation, as well as the key elements of compensation, at the 60^th percentile of our peer group, but then adjusted each of the elements based on an individual’s performance and contribution to our strategic objectives. At times, we need to adjust these levels to attract or retain specific individuals. In 2012, we set the target level at the 65^th percentile of the market in recognition of the very competitive market for executive talent in which we operate and the critical importance of attracting and retaining such talent as we grow and prepare for potential commercial launch of one or more product candidates.

Each year, we review the levels of cash, equity, and total compensation for all comparable officers in our peer group relative to the elements of compensation paid to our officers. In considering how these data relate to our existing compensation structure, we take into account our size, stage of development, performance, and geographic location as compared to these peer companies, as well as what we know about the comparable scope of responsibilities of our officers versus those of comparable executives at such peer group companies. With the assistance of our compensation consultant, Radford, we used two primary market frames of reference (which we refer to as the “market”) against which to compare our total executive compensation practices and levels and inform our decisions regarding compensation of our officers as follows:

We do not apply a specific weighting to either data source when making compensation comparisons. Instead, we work with Radford to develop competitive market guidelines using these data sources and in some cases, additional local and/or national market frames of reference.

Our peer group is reviewed each year to ensure continued relevance as we grow and develop and is approved by the Compensation Committee prior to its adoption. The select peer group as of February 2012 analyzed by Radford and used to inform our decisions affecting executive compensation based on 2011 performance consisted of the following companies:

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This peer group consisted of public companies in the biopharmaceutical industry with product candidates generally in late-stage development or a product recently approved for marketing, annual revenues generally less than $600 million (mean of $259 million), and market capitalization of at least $750 million (mean of $2.9 billion). We believe that, as of February 2012, this list was representative of the companies with whom we generally compete for talent.

FACTORS CONSIDERED IN THE DETERMINATION OF EXECUTIVE COMPENSATION FOR 2011

In making decisions regarding the compensation of our executive officers, the Compensation Committee considers the assessment and rating of the performance of each executive officer relative to our key corporate objectives and each officer’s individual goals and leadership and management measures. Our key corporate objectives applicable to our executive officers for 2011 and the key corporate accomplishments considered in the determination of executive compensation by the Compensation Committee for each objective were as follows:

Advance ponatinib towards marketing authorization and commercialization

Prepare the Company for commercialization

Advance AP26113 into first-in-man studies

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Strengthen the balance sheet and build sustained shareholder value

Decisions regarding our Chief Executive Officer’s compensation, including annual performance awards, are based predominantly on our company’s level of achievement of these key corporate objectives, as well as the following measures:

Dr. Clackson, as President of Research and Development and Chief Scientific Officer, and Mr. Fitzgerald, as Executive Vice President and Chief Financial Officer, have broad responsibilities for the management of our business and the achievement of our key corporate objectives as described above. Decisions regarding their compensation are, therefore, based largely on the achievement of these key corporate objectives, the other measures associated with the Chief Executive Officer listed above, and their ability to effectively lead the Company in the execution of its annual operating plan.

Decisions regarding compensation for each of our other executive officers are based on each individual’s contributions to the achievement of the key corporate objectives listed above as well as the level of achievement of individual objectives developed at the beginning of the year in support of these key corporate objectives.

Mr. Duvall, our Senior Vice President, Commercial Operations, joined the Company in September 2011. As the senior leader of our commercial group, Mr. Duvall assumed responsibility for the key objectives we had established to prepare for potential commercial launch of ponatinib, including:

Dr. Haluska was promoted from Vice President, Chief Medical Officer to Senior Vice President, Chief Medical Officer in January 2012. His key individual objectives in 2011 consisted of:

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In addition to an evaluation of the level of achievement of these objectives, each executive officer is evaluated as to key leadership and management measures, including each individual’s:

There are no thresholds or maximum levels of achievement applicable to these individual objectives or the corporate objectives. In addition, no specific weight is given to any of these factors in determining annual performance or long-term equity incentive awards for any of our executive officers.

Compensation Actions

The following sections discuss the actions taken by our Compensation Committee and Board in 2011 and 2012 related to compensation for 2011 of our executive officers. In determining base salaries for 2011 and 2012 and annual performance and long-term equity incentive awards granted in 2011 and 2012, the Compensation Committee considered the factors and criteria described under the headings “Elements of Total Direct Compensation” and “Process for Determining Executive Compensation” above, as well as the factors discussed in the sections that follow, relating to each executive officer.

COMPENSATION OF OUR CHIEF EXECUTIVE OFFICER

In March 2011, the Compensation Committee approved a merit increase of approximately 5% to Dr. Berger’s 2010 base salary (to $665,200 in 2011), effective as of January 1, 2011. In March 2012, the Compensation Committee approved a merit increase of approximately 5% to Dr. Berger’s 2011 base salary (to $697,000 in 2012), effective as of January 1, 2012.

In determining each component of compensation, the Compensation Committee rated Dr. Berger’s performance in 2010 and 2011 as outstanding. In making this determination, the Compensation Committee considered Dr. Berger’s leadership and management of the Company and the management team and his contributions to the achievement of our key corporate objectives for each year.

Based on its evaluation of Dr. Berger’s 2010 performance, in March 2011, the Compensation Committee recommended, and the Board approved, an annual performance award to Dr. Berger of 70,750 shares of common stock and a long-term equity incentive award of 125,000 performance shares, 125,000 restricted stock units and 220,000 stock options. The 70,750 shares of common stock had a value of approximately $553,000 on the date of determination by the Compensation Committee, which corresponds to approximately 88% of Dr. Berger’s base salary for 2010 or 175% of his target award. The shares of common stock were subject to a right of repurchase by ARIAD until February 15, 2012. The long-term equity incentive award of 125,000 performance shares, 125,000 restricted stock units and 220,000 stock options equated to approximately 175% of the target award for Dr. Berger for 2010 performance, and had a grant date fair value of approximately $3.2 million. The levels of these awards were within the range of awards related to his level of performance, as set forth in “Process for Determining Executive Compensation” above and reflected Dr. Berger’s leadership in the achievement of our key corporate objectives for 2010.

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Based on its evaluation of Dr. Berger’s 2011 performance, in March 2012, the Compensation Committee recommended, and the Board approved, an annual performance award to Dr. Berger, consisting of a cash bonus of $372,000 and 25,000 shares of common stock, and a long-term equity incentive award of 92,000 performance shares, 102,000 restricted stock units and 213,000 stock options. The 25,000 shares of common stock had a value of approximately $376,000 on the date of determination by the Compensation Committee. The total of the cash bonus plus the value of the 25,000 shares of common stock is $748,000 which corresponds to approximately 112% of Dr. Berger’s base salary for 2011 or 160% of his target award. The long-term equity incentive award of 92,000 performance shares, 102,000 restricted stock units and 213,000 stock options equated to approximately 100%, 160% and 160%, respectively, of the target awards for Dr. Berger for 2011 performance, and had a grant date fair value of approximately $5.3 million. The number of performance shares ultimately issued to Dr. Berger may be greater than or less than this award based on the timing of EMA approval of ponatinib. The levels of these awards were within the range of awards related to his level of performance, as set forth in “Process for Determining Executive Compensation” above and reflected Dr. Berger’s leadership in the achievement of our key corporate objectives for 2011, as described under the heading “Factors Considered in the Determination of Executive Compensation for 2011” above.

COMPENSATION OF THE OTHER NAMED EXECUTIVE OFFICERS

Dr. Clackson. In March 2011, the Compensation Committee approved a merit increase of approximately 7% to Dr. Clackson’s 2010 base salary (to $418,000 in 2011), effective as of January 1, 2011. In March 2012, the Compensation Committee approved an increase of approximately 12% to Dr. Clackson’s 2011 base salary (to $468,000 in 2012), effective as of January 1, 2012. This increase reflects a merit increase of approximately 5% related to his performance for 2011, plus a market adjustment of approximately 7% to align his base salary with that of our current peer group.

The Compensation Committee determined that Dr. Clackson’s performance in 2010 exceeded requirements and in 2011 was outstanding, based upon his contributions to our key corporate objectives, the level of achievement of his individual objectives and his leadership and management qualities. In particular, Dr. Clackson has responsibility for leading multiple functions within our company, including discovery research, preclinical development, clinical development, manufacturing and program and alliance management. He has led the discovery of our product candidates which are in various stages of development. He also has led the significant development efforts related to ponatinib and AP26113, including the progress of ponatinib through the pivotal PACE clinical trial and preparations for commercial launch as well as the completion of pre-clinical studies and the initiation of clinical development of AP26113.

Based on the assessment of his 2010 performance, in March 2011, the Compensation Committee approved an annual performance award of $165,000 and a long-term equity incentive award of 39,000 performance shares, 39,000 restricted stock units and 68,000 stock options for Dr. Clackson’s performance in 2010. Dr. Clackson’s annual performance award was 42% of his base salary in 2010, which was 140% of his target award. The long-term equity incentive award of 39,000 performance shares, 39,000 restricted stock units and 68,000 stock options equated to approximately 140% of the target award for Dr. Clackson for 2010 performance and had a grant date fair value of approximately $1.0 million. The levels of these awards were within the range of awards related to his level of performance, as set forth in the earlier section “Process for Determining Executive Compensation” and reflected the increased scope of his responsibilities as President of Research and Development and Chief Scientific Officer.

Based on the assessment of his 2011 performance, in March 2012, the Compensation Committee approved an annual performance award of $300,000 and a long-term equity incentive award of 35,000 performance shares, 40,000 restricted stock units and 82,000 stock options for Dr. Clackson’s performance in 2011. Dr. Clackson’s annual performance award was approximately 72% of his base salary in 2011, which was 160% of his target award. The long-term equity incentive award of 35,000 performance shares, 40,000 restricted

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stock units and 82,000 stock options equated to approximately 100%, 160% and 160%, respectively, of the target awards for Dr. Clackson for 2011 performance and had a grant date fair value of approximately $2.0 million. The number of performance shares ultimately issued to Dr. Clackson may be greater than or less than this award based on the timing of EMA approval of ponatinib. The levels of these awards were within the range of awards related to his level of performance, as set forth in the earlier section “Process for Determining Executive Compensation” and reflected the scope of his responsibilities as President of Research and Development and Chief Scientific Officer.

Mr. Fitzgerald. In March 2011, the Compensation Committee approved a merit increase of approximately 5% to Mr. Fitzgerald’s 2010 base salary (to $398,000 in 2011), effective as of January 1, 2011. In March 2012, the Compensation Committee approved an increase of approximately 10% to Mr. Fitzgerald’s 2011 base salary (to $438,000 in 2012), effective as of January 1, 2012. This increase reflects a merit increase of approximately 3% related to his performance for 2011, plus a market adjustment of approximately 7% to align his base salary with that of our current peer group.

The Compensation Committee determined that Mr. Fitzgerald’s performance in 2010 and 2011 exceeded requirements, based upon his contributions to our key corporate objectives, the level of achievement of his individual objectives and his leadership and management qualities. In particular, Mr. Fitzgerald led key aspects of our planning for growth and international expansion of our business anticipated upon commercial launch of ponatinib, led the planning and implementation of key systems necessary to support the needs of our business, managed significant initiatives that provided additional funding for our programs, including two equity offerings (a $58 million public offering in 2010 and a $243 million equity offering in 2011), and effectively managed our spending in support of our key corporate objectives.

Based on the assessment of his 2010 performance, in March 2011, the Compensation Committee approved an annual performance award of $160,000 and a long-term equity incentive award of 39,000 performance shares, 39,000 restricted stock units and 68,000 stock options to Mr. Fitzgerald. Mr. Fitzgerald’s annual performance award was approximately 42% of his base salary in 2010, which was approximately 140% of his target award. The long-term equity incentive award of 39,000 performance shares, 39,000 restricted stock units and 68,000 stock options equated to approximately 140% of the target award for Mr. Fitzgerald for 2010 performance and had a grant date fair value of approximately $1.0 million. The levels of these awards were within the range of awards related to his level of performance, as set forth in the earlier section “Process for Determining Executive Compensation” and reflected the increased scope of his responsibilities as an Executive Vice President in the management of our business.

Based on the assessment of his 2011 performance, in March 2012, the Compensation Committee approved an annual performance award of $179,000 and a long-term equity incentive award of 35,000 performance shares, 25,000 restricted stock units and 51,000 stock options to Mr. Fitzgerald. Mr. Fitzgerald’s annual performance award was approximately 45% of his base salary in 2011, which was approximately 100% of his target award. The long-term equity incentive award of 35,000 performance shares, 25,000 restricted stock units and 51,000 stock options equated to approximately 100% of each target award for Mr. Fitzgerald for 2011 performance and had a grant date fair value of approximately $1.5 million. The number of performance shares ultimately issued to Mr. Fitzgerald may be greater than or less than this award based on the timing of EMA approval of ponatinib. The levels of these awards were within the range of awards related to his level of performance, as set forth in the earlier section “Process for Determining Executive Compensation” and reflected the scope of his responsibilities as an Executive Vice President in the management of our business.

Mr. Duvall. Mr. Duvall joined the Company in September 2011 and was provided an annual base salary of $388,000. In addition, pursuant to the offer of employment to attract Mr. Duvall, we awarded him options to purchase 100,000 shares of the Company’s common stock at an exercise price of $10.28 per share, which vest ratably over four years, and 25,000 restricted stock units which vest as to 100% of the award on the second anniversary of the date of grant. The stock options had a grant date fair value of $738,620 and the restricted stock units had a grant date fair value of $257,000.

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The Compensation Committee determined that Mr. Duvall’s performance in 2011 exceeded requirements, based upon his contributions to our key corporate objectives, the level of achievement of his individual objectives and his leadership and management qualities. In particular, Mr. Duvall led the detailed planning for the anticipated commercial launch of ponatinib in the United States and Europe and hired the key leadership in the commercial team that will manage the expected launch of ponatinib in the United States. In addition, Mr. Duvall has contributed to the long-range planning of our product candidates through the integration into that planning process of key commercial considerations that impact the potential future value of our product candidates.

Based on the assessment of his 2011 performance, in March 2012, the Compensation Committee approved an annual performance award of $51,000 and a long-term equity incentive award of 7,000 performance shares, 5,000 restricted stock units and 10,000 stock options to Mr. Duvall. These awards were all prorated for Mr. Duvall for the period of time during 2011 that he was employed by the Company. Mr. Duvall’s annual performance award on an annualized basis was approximately 40% of his base salary in 2011, which was approximately 100% of his target award. The long-term equity incentive award of 7,000 performance shares, 5,000 restricted stock units and 10,000 stock options equated on an annualized basis to approximately 100% of the target award for Mr. Duvall for 2011 performance and had a grant date fair value of approximately $290,000. The number of performance shares ultimately issued to Mr. Duvall may be greater than or less than this award based on the timing of EMA approval of ponatinib. The levels of these awards were within the range of awards related to his level of performance, as set forth in the earlier section “Process for Determining Executive Compensation” and reflected the scope of his responsibilities as Senior Vice President, Commercial Operations.

Dr. Haluska. In March 2011, the Compensation Committee approved a merit increase of approximately 8% to Dr. Haluska’s 2010 base salary (to $375,000 in 2011), effective as of January 1, 2011. In March 2012, the Compensation Committee approved an increase of approximately 7% to Dr. Haluska’s 2011 base salary (to $400,000 in 2012), effective as of January 1, 2012. This increase reflects a merit increase of approximately 5% related to his performance for 2011, plus a market adjustment of approximately 2% to align his base salary with that of the our current peer group.

The Compensation Committee determined that Dr. Haluska’s performance in 2010 and 2011 exceeded requirements, based upon his contributions to our key corporate objectives, the level of achievement of his individual objectives and his leadership and management qualities. In particular, Dr. Haluska led the management of all aspects of our clinical trials, including the pivotal PACE clinical trial of ponatinib which will be the basis for the planned submission of a new drug application with the FDA and a marketing authorization application with the EMA in 2012.

Based on the assessment of his 2010 performance, in March 2011, the Compensation Committee approved an annual performance award of $145,000 and a long-term equity incentive award of 25,500 performance shares, 25,500 restricted stock units and 44,500 stock options to Dr. Haluska. Dr. Haluska’s annual performance award was approximately 42% of his base salary in 2010, which was approximately 140% of his target award. The long-term equity incentive award of 25,500 performance shares, 25,500 restricted stock units and 44,500 stock options equated to approximately 140% of the target awards for Dr. Haluska for 2010 performance and had a grant date fair value of approximately $650,000. The levels of these awards were within the range of awards related to his level of performance, as set forth in the earlier section “Process for Determining Executive Compensation” and reflected the scope of his responsibilities as Senior Vice President, Clinical Research and Development and Chief Medical Officer

Based on the assessment of his 2011 performance, in March 2012, the Compensation Committee approved an annual performance award of $195,000 and a long-term equity incentive award of 20,000 performance shares, 18,000 restricted stock units and 38,000 stock options to Dr. Haluska. Dr. Haluska’s annual

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performance award was approximately 52% of his base salary in 2011, which was approximately 130% of his target award. The long-term equity incentive award of 20,000 performance shares, 18,000 restricted stock units and 38,000 stock options equated to approximately 100%, 130% and 130%, respectively, of the target awards for Dr. Haluska for 2011 performance and had a grant date fair value of approximately $995,000. The number of performance shares ultimately issued to Dr. Haluska may be greater than or less than this award based on the timing of EMA approval of ponatinib. The levels of these awards were within the range of awards related to his level of performance, as set forth in the earlier section “Process for Determining Executive Compensation” and reflected the scope of his responsibilities as Senior Vice President, Clinical Research and Development and Chief Medical Officer.

TAX DEDUCTIBILITY OF COMPENSATION

Section 162(m) of the Code limits the deduction a public company is permitted for compensation paid to the chief executive officer and to the three most highly compensated executive officers (other than the chief executive officer or chief financial officer). Generally, amounts paid in excess of $1,000,000 to a covered executive cannot be deducted, unless the compensation is paid pursuant to a plan, which is performance related, non-discretionary and has been approved by shareholders. In its deliberations the Compensation Committee considers ways to maximize deductibility of executive compensation, but nonetheless retains the discretion to compensate executive officers at levels the Compensation Committee considers commensurate with their responsibilities and achievements. Our 2006 Long-Term Incentive Plan permits the issuance of performance-based stock awards that would be compliant with Section 162(m). In 2012, we have included performance-based stock awards that are intended to comply with Section 162(m) in our annual equity-based compensation awards to our officers. We have not adopted a policy that all executive compensation be fully deductible.

MIX OF DIRECT COMPENSATION COMPONENTS

As our executive officers have increasing responsibility for and impact on our results, we place greater emphasis on variable, performance-based compensation and longer term compensation vehicles in the form of equity awards and deferred performance awards.

We do not have specific policies nor do we use formulas to determine a mix of total compensation. We intend for total compensation to vary based on our progress towards achievement of corporate, departmental and team objectives, as well as individual performance goals. For fiscal 2011, performance awards and long-term equity incentive awards represent over 70% of the total direct compensation (excluding benefits) on average for our named executive officers.

TOTAL DIRECT COMPENSATION SUMMARY

We believe the total direct compensation paid to our executive officers supports our compensation philosophy and objectives, is positioned at appropriate levels relative to our stage of development and our peer companies, and provides our named executive officers with a competitive total compensation opportunity.

EMPLOYMENT AGREEMENTS

We have entered into employment agreements with our named executive officers. These employment agreements provide for base salary, performance and long-term equity incentive awards, health, disability, life and other insurance coverage, and other benefits over specified terms of employment. Each of these agreements provides for certain payments and other benefits if the executive’s employment terminates under certain circumstances other than for “cause,” including in connection with a “change in control.” See the subsection “Narrative to Summary Compensation Table and Grants of Plan-Based Awards Table” for a description of the agreement terms impacting current compensation and “Potential Payments upon Termination or Change in Control” for a description of applicable severance and change in control benefits.

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Our Compensation Committee periodically reviews the principal terms of our employment agreements with our named executive officers in light of our needs and evolving market conditions.

Our Compensation Committee believes that change-in-control and severance arrangements are important parts of the overall compensation program for our named executive officers. Change-in-control provisions help to secure the continued employment and dedication of our executive officers, to reduce any concern that they might have regarding their own continued employment prior to or following a change in control, and to promote a continuity of management during a corporate transaction. Severance arrangements are used primarily to attract, retain and motivate individuals with the requisite experience and ability to drive our success. Severance arrangements also serve, in part, as consideration to secure commitments from our executive officers not to compete with us after termination of their employment.

Compensation Committee Policy Regarding Change in Control Severance Payments

Effective April 2010, our Compensation Committee adopted a policy that restricts our Company from entering into any future agreement that provides an executive officer with a severance payment following a change in control of our Company, except in the case of a double trigger termination event. In addition, the policy also restricts our Company from entering into any future agreement that provides an executive officer with the right to receive excise tax gross-ups following a change in control, except in unusual circumstances where the Compensation Committee believes that accommodations have to be made to recruit a new executive officer to our Company. In those circumstances, the excise tax gross-up will be limited to a double trigger termination event and such provision will terminate no later than three years from the date of the agreement. The employment agreements for the hiring of the new executives in 2011 comply with this policy.

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Summary Compensation Table

The following table sets forth the compensation paid to or accrued on behalf of our Chief Executive Officer, our Chief Financial Officer and our three other most highly compensated executive officers, whom we refer to collectively as our named executive officers, during the fiscal years ended December 31, 2009, 2010 and 2011.

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Grants of Plan-Based Awards in 2011

The following table shows information regarding grants of equity awards that were made during the year ended December 31, 2011 to each of our named executive officers. All awards were made under our 2006 Long-Term Incentive Plan. There were no grants of non-equity incentive plan awards to our named executive officers during 2011.

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

Employment agreements with our named executive officers provide for base salary as may be adjusted annually, annual bonus opportunities, participation in our benefit plans, the opportunity to receive equity awards, and post-termination benefits and obligations.

Dr. Berger’s employment agreement, as currently in effect, has a term that expires on December 31, 2013, subject thereafter to automatic renewal for successive three-year terms absent notice to the contrary by either party, and following a change in control (as defined in the agreement), until the later of the expiration of the then current term or the second anniversary of the date on which the change in control occurs. The employment agreements with our other named executive officers provide for initial terms expiring on the dates indicated below, subject thereafter to automatic renewal for successive one-year terms absent notice to the contrary by either party.

Each employment agreement specifies a minimum level of base salary for the executive, but gives our Compensation Committee authority to increase the executive’s base salary from time to time.

Dr. Berger’s employment agreement, as currently in effect, provides that we shall pay him a discretionary target cash bonus of fifty percent of his then current salary, with the actual amount determined by our Board. As set forth in the Compensation Discussion and Analysis under the headings “Process for Determining Executive Compensation,” “Compensation Actions” and “Compensation of our Chief Executive Officer,” this target was increased to 75% in 2012 for performance in 2011 and we paid Dr. Berger in excess of these targets based on his performance. For 2009 and 2010, the Board awarded shares of our common stock to Dr. Berger instead of cash bonuses or deferred compensation awards. For 2011, the Board awarded half of the value of his in the form of shares of common stock and the remainder in the form of cash.

The employment agreements for the other named executive officers provide for discretionary bonuses of up to thirty percent of their then current salaries, payable in the form of stock options, stock awards, restricted stock units, deferred compensation or cash, as determined by our Board. As set forth in the Compensation Discussion and Analysis under the headings “Process for Determining Executive Compensation,” “Compensation Actions” and “Compensation of the Other Named Executive Officers,” the Compensation Committee revised the target levels of such awards in 2012 for performance in 2011 to 45% for executive vice presidents and 35% for other executive officers and we paid each of our other named executive officers at or in excess of their target amount based on their performance. Payment of all bonuses awarded to such officers for 2009, 2010, and 2011 have been in cash with full or partial deferral under the terms of our 2005 Executive Compensation Plan, except that half of the bonus for 2011 performance was paid immediately.

In 2011, we awarded performance shares to Dr. Berger, Dr. Clackson, Mr. Fitzgerald and Dr. Haluska. The performance shares will vest only if we obtain regulatory approval from the FDA to market ponatinib prior to the end of 2016. If such approval is obtained on or before December 31, 2014, the performance shares will vest 50% on the date of approval and 50% one year thereafter. If such approval is obtained after December 31, 2014 but before December 31, 2016, the performance shares will vest 100% on the date of approval. If such approval is not obtained prior to December 31, 2016, the performance shares will terminate and have no value.

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The employment agreements also provide that each executive is entitled to, among other things, participation in any incentive, stock award or bonus plan, pension, group insurance, and fringe benefits on the same basis as executives at a comparable level; group health, disability and life insurance; paid vacation; an auto allowance of $750 per month (increased to $1,000 per month in 2012); standard tax preparation and planning services; reimbursement of business expenses; indemnification and directors’ and officers’ insurance coverage; and for executives who had received credit under our sabbatical policy prior to its termination in 2008, a lump sum payment upon termination of employment in good standing equal to three months of their base salary for each sabbatical that was fully earned under the policy. In addition, Dr. Berger’s employment agreement provides him with medical malpractice insurance with coverage reasonably satisfactory to Dr. Berger and legal costs to enforce the employment agreement on an as-incurred basis subject to repayment if we prevail.

The employment agreements with our named executive officers also provide for severance payments upon termination of employment by us without cause, termination by the executive for material breach of the agreement by us, non-renewal (for Dr. Berger only) or termination in connection with a change in control. Dr. Berger’s agreement also provides for a tax gross-up in the event that any amounts payable by us or our successor are subject to excise taxes under Sections 280G and 4999 of the Code. See “Potential Payments upon Termination or Change in Control” for a description of these provisions in the employment agreements.

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Outstanding Equity Awards at December 31, 2011

The following table lists the outstanding equity awards at December 31, 2011 for each of the named executive officers: