UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
DC 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 o
Check the
appropriate box:
o Preliminary
Proxy Statement
o Confidential, for Use of the
Commission Only (as permitted by Rule 14a-6(e)(2))
x Definitive
Proxy Statement
o Definitive
Additional Materials
o Soliciting
Material Pursuant to Rule 14a-12
PROGENICS
PHARMACEUTICALS, INC.
(Name of
Registrant as Specified in its Charter)
(Name of
Person(s) Filing Proxy Statement, if other than the Registrant)
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Payment
of Filing Fee (Check the appropriate box):
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x
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No
fee required.
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o
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Fee
computed on table below per Exchange Act Rules 14a-6(i)(2) and
0-11.
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(1)
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Title
of each class of securities to which transaction
applies:
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(2)
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Aggregate
number of securities to which transaction applies:
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(3)
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Per
unit price or other underlying value of transaction computed pursuant to
Exchange Act
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Rule
0-11 (set forth the amount on which the filing fee is calculated and state
how it was determined):
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(4)
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Proposed
maximum aggregate value of transaction:
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(5)
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Total
fee paid:
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o
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Fee
paid previously with preliminary materials.
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o
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Check
box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its
filing.
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(1)
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Amount
Previously Paid:
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(2)
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Form,
Schedule or Registration Statement No.:
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(3)
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Filing
Party:
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Date
Filed:
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April 27,
2009
Dear
Stockholder:
You are
cordially invited to attend the Annual Meeting of Stockholders of Progenics
Pharmaceuticals, Inc. to be held on June 8, 2009 at 10:00 a.m. local time at the
Landmark at Eastview, Rockland Room, 777 Old Saw Mill River Road, Tarrytown, New
York.
At this
meeting, you will be asked to consider and vote upon the election of Progenics’
directors, approval of amendments to the Company’s 1998 Employee Stock Purchase
Plan, 1998 Non-Qualified Employee Stock Purchase Plan and 2005 Stock Incentive
Plan, and ratification of the selection of PricewaterhouseCoopers LLP to serve
as our independent registered public accounting firm for 2009.
The Board
of Directors encourages stockholder participation in Progenics’ affairs and
cordially invites you to attend the meeting in person. It is
important that your shares be represented. Whether or not you decide
to attend the meeting, we urge you to vote. Even if you return a
proxy card or vote via the Internet or by telephone, you may still attend the
meeting and vote in person.
Thank you
for your cooperation.
Very
truly yours,
Kurt
W. Briner
Chairman
of the Board of Directors
NOTICE
OF ANNUAL MEETING OF STOCKHOLDERS
To
be held June 8, 2009
NOTICE IS
HEREBY GIVEN THAT THE ANNUAL MEETING OF STOCKHOLDERS OF PROGENICS
PHARMACEUTICALS, INC. WILL BE HELD AT THE LANDMARK AT EASTVIEW, ROCKLAND ROOM,
777 OLD SAW MILL RIVER ROAD, TARRYTOWN, NEW YORK, ON MONDAY, JUNE 8, 2009 AT
10:00 A.M. LOCAL TIME, FOR THE PURPOSE OF CONSIDERING AND VOTING UPON THE
FOLLOWING MATTERS, EACH AS MORE FULLY DESCRIBED IN THE ATTACHED PROXY
STATEMENT:
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1.
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The
election of eight directors to serve until the next Annual Meeting of
Stockholders and until their successors are elected and
qualified.
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2.
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The
approval of amendments to our 1998 Employee Stock Purchase Plan and 1998
Non-Qualified Employee Stock Purchase Plan to increase the number of
shares of common stock reserved for issuance thereunder to 3,400,000 and
1,100,000, respectively, and to make certain other changes to the terms of
the Plans.
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3.
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The
approval of an amendment to our 2005 Stock Incentive Plan to increase the
number of shares of common stock reserved for issuance thereunder to
5,450,000, and to make certain other changes to the terms of the
Plan.
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4.
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The
ratification of the selection of PricewaterhouseCoopers LLP to serve as
our independent registered public accounting firm for
2009.
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5.
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The
transaction of such other business as may properly come before the Meeting
and any adjournment thereof.
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Only
stockholders of record at the close of business on April 13, 2009 will be
entitled to receive notice of, and vote at, the Meeting. A list of
stockholders entitled to vote at the Meeting is open to examination by any
stockholder at our principal offices, 777 Old Saw Mill River Road, Tarrytown,
New York 10591.
Whether
or not you plan to attend the Meeting, please promptly vote your shares over the
Internet or via the toll-free telephone number, as described in the enclosed
materials. If you received a copy of the proxy card by mail, please
sign, date and return the proxy card in the envelope provided. If you
are present at the Meeting and desire to vote in person, your vote by proxy will
not be used.
The proxy
is revocable by you at any time prior to its exercise, regardless of the manner
used to transmit your voting instructions. The prompt communication
of your voting instructions by any of these methods will help us in preparing
for the Meeting, and your cooperation is greatly appreciated.
By order
of the Board of Directors,
Robert A. McKinney
Chief
Financial Officer
Senior
Vice President,
Finance
& Operations and Treasurer
Tarrytown,
New York
April 27,
2009
Proxy Statement Table of Contents
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A-1
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B-1
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C-1
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PROGENICS
PHARMACEUTICALS, INC.
777
Old Saw Mill River Road
Tarrytown,
New York 10591
April 27,
2009
PROXY
STATEMENT
GENERAL INFORMATION ABOUT THE MEETING AND VOTING
This
Proxy Statement is furnished to holders of Progenics Pharmaceuticals, Inc. (the
“Company,” “we,” “us” or “our”) common stock, par value $.0013 per share, in
connection with the solicitation of proxies, in the accompanying form, by our
Board of Directors (the “Board”) for use at the Annual Meeting of Stockholders
(the “Meeting”) to be held at the Landmark at Eastview, Rockland Room, 777 Old
Saw Mill River Road, Tarrytown, New York on Monday, June 8, 2009, at 10:00 a.m.
local time, and at any and all adjournments thereof. Stockholders may
revoke the authority granted by their proxies at any time prior to their use by
filing with our Corporate Secretary a written revocation, submitting a new,
proper proxy by telephone or using the Internet after the date of the proxy, or
attending the Meeting and voting in person. Solicitation of proxies
will be made chiefly through the mails, but additional solicitation may be made
in person or by telephone or other electronic communication by our officers or
employees. We may also enlist the aid of brokerage houses or our
transfer agent in soliciting proxies. We will bear all solicitation
expenses, including costs of preparing, assembling and mailing the proxy
materials.
As
permitted by rules of the U.S. Securities and Exchange Commission, we have
elected to make our proxy materials available to stockholders on the Internet,
rather than mailing printed copies. On or about April 27, 2009, we
will mail to stockholders a Notice of Internet Availability of Proxy Materials
that contains instructions on how to access our proxy materials online or
request a printed or e-mail copy. If you would like to receive a
printed or email copy of our proxy materials, please follow the instructions
included in the Notice. We are first making available the Notice, the
Proxy Statement, the proxy card and a copy of our 2008 Annual Report on Form
10-K on or about April 27, 2009 at www.proxyvote.com. To view these
documents, enter the 12-digit control number, which appears on the
Notice. Our proxy material and other SEC filings are also available
on the Internet at our website, www.progenics.com,
and on the SEC’s EDGAR system, at www.sec.gov. Stockholders may also
obtain without charge a copy of our Form 10-K by directing a written request to
Investor Relations, Progenics Pharmaceuticals, Inc., 777 Old Saw Mill River
Road, Tarrytown, New York 10591.
Shares of
common stock represented by unrevoked proxies will be voted in accordance with
the choice or instructions specified thereon. It is the intention of
the persons named in the proxy, unless otherwise specifically instructed in the
proxy, to vote all proxies received by them FOR election of the eight
director nominees named herein, FOR approval of the amendments
to our 1998 Employee Stock Purchase Plan and 1998 Non-Qualified Employee Stock
Purchase Plan, FOR
approval of the amendment to our 2005 Stock Incentive Plan and FOR ratification of the
selection of PricewaterhouseCoopers LLP to serve as our independent registered
public accounting firm for 2009.
VOTING
Only
stockholders of record at the close of business on April 13, 2009 will be
entitled to vote at the Annual Meeting or any adjournment thereof. At
April 13, 2009, we had outstanding 30,893,653 shares of common stock, our
only class of voting securities outstanding. Each stockholder will be
entitled to one vote for each share of common stock registered in the
stockholder’s name on the record date. A majority of all shares of
common stock outstanding constitutes a quorum and is required to be present in
person or by proxy to conduct business at the Meeting.
PROPOSAL 1:
ELECTION
OF DIRECTORS
At the
Meeting, eight directors, constituting the entire Board of Directors, are to be
elected to serve until the next Annual Meeting of Stockholders and until their
respective successors are elected and qualified. The proxies given
pursuant to this solicitation will be voted in favor of the eight nominees
listed below unless authority is withheld. Should a nominee become
unavailable to serve for any reason, the proxies will be voted for an
alternative nominee to be determined by the persons named in the
proxy. The Board has no reason to believe that any nominee will be
unavailable. Proxies cannot be voted for a greater number of persons
than the number of nominees named. The election of directors requires
a plurality vote of those shares voted at the Meeting with respect to the
election of directors.
Information
Concerning Director Nominees
The
persons nominated as our directors (all of whom are currently our directors),
their respective ages, the year in which each first became a director and their
principal occupations or employment during the past five years are as
follows:
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Name
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Age
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Year
First
Elected Director
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Position
with Company
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Kurt
W.
Briner
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64
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1998
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Chairman
and Director
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Charles
A. Baker, J.D.
(1)(2)(3)
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76
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1994
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Director
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Peter
J. Crowley, M.B.A.
(1)
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50
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2009
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Director
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Mark
F. Dalton, J.D.
(2)(3)
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58
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1990
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Director
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Stephen
P. Goff, Ph.D.
(2)
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57
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1993
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Director
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Paul
J. Maddon, M.D.,
Ph.D.
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49
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1986
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Chief
Executive Officer, Chief
Science
Officer and Director
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David
A. Scheinberg, M.D., Ph.D.
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53
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1996
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Director
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Nicole
S. Williams, M.B.A.
(1)
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64
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2007
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Director
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____________
(1) Member
of the Audit Committee.
(2) Member
of the Nominating and Corporate Governance Committee.
(3) Member
of the Compensation Committee.
Kurt W.
Briner is the former President and Chief Executive Officer of Sanofi
Pharma S.A, a position he held from 1988 until his retirement in
2000. He has 35 years of experience in the pharmaceutical industry,
and is a director of Novo Nordisk Danmark and Galenica S.A., European-based
pharmaceutical companies. He attended Humanistisches Gymnasium in
Basel and Ecole de Commerce in Basel and Lausanne.
Charles A. Baker,
J.D. is a business advisor to biotechnology companies. He is
the former Chairman, President and Chief Executive Officer of The Liposome
Company, Inc., a biotechnology company located in Princeton, New Jersey, a
position he held from 1989 until the sale of the company in 2000. Mr.
Baker has 46 years of pharmaceutical industry experience and has held senior
management positions at Pfizer, Abbott Laboratories and Squibb
Corporation. He is a director of Regeneron Pharmaceuticals, Inc., a
biotechnology company. Mr. Baker received a B.A. from Swarthmore
College and a J.D. from Columbia University.
Peter J.
Crowley, M.B.A. was
elected to our Board in January 2009. Mr. Crowley retired in 2008 as
Manager Director of the Healthcare Investment Banking group at Oppenheimer &
Company (formerly CIBC World Markets), which he headed since 1995, with
responsibility for public and private financing and advisory services for
biotechnology, pharmaceutical, medical device and healthcare services
companies. Mr. Crowley serves on the board of directors of the New
York Eye and Ear Infirmary, the Cancer Research Institute, the Foundation
Fighting Blindness, the Glaucoma Foundation and Rye Country Day
School. He is also a board member at Jurlique plc, a skin care
company, and Napastyle, a specialty food and furnishings company. Mr.
Crowley holds an M.B.A. in finance from Columbia University Graduate School of
Business and a B.S. in economics from Harvard University.
Mark F. Dalton,
J.D. has been the President and a director of Tudor Investment
Corporation, an investment advisory company, and its affiliates since 1988, and
President and Vice Chairman since 2005. From 1979 to 1988, he served
in various senior management positions, including Chief Financial Officer, at
Kidder, Peabody & Co. Incorporated. He is a director of several
private companies. Mr. Dalton received a B.A. from Denison University
and a J.D. from Vanderbilt University Law School.
Stephen P. Goff,
Ph.D. the Higgins Professor in the Departments of Biochemistry and
Microbiology at Columbia University, has been a scientific advisor to us since
1988. He received an A.B. in biophysics from Amherst College and a
Ph.D. in biochemistry from Stanford University. Dr. Goff performed
post-doctoral research at the Massachusetts Institute of Technology in the
laboratory of Dr. David Baltimore.
Paul J. Maddon,
M.D., Ph.D. is our founder and has served in various capacities since our
inception, including Chairman of the Board of Directors, Chief Executive
Officer, President and Chief Science Officer. From 1981 to 1988, Dr.
Maddon performed research at the Howard Hughes Medical Institute at Columbia
University in the laboratory of Dr. Richard Axel. Dr. Maddon serves
on several scientific review committees of the National Institutes of Health and
on the Executive Committee of the Rockefeller University Council. He
received a B.A. in biochemistry and mathematics, an M.D. and a Ph.D. in
biochemistry and molecular biophysics from Columbia University. Dr.
Maddon also serves as a trustee of Columbia.
David A.
Scheinberg, M.D., Ph.D. has been a scientific advisor to us since
1994. Dr. Scheinberg has been associated with the Sloan-Kettering
Institute for Cancer Research since 1986, where he is the Vincent Astor Chair
and Member, Leukemia Service; Chairman, Molecular Pharmacology and Chemistry
Program; Chairman, Experimental Therapeutics Center; and Head, Laboratory of
Hematopoietic Cancer Immunochemistry. He also holds the positions of
Professor of Medicine and of Pharmacology, Weill-Cornell Medical
College. He received a B.A. from Cornell University and a M.D. and a
Ph.D. in pharmacology and experimental therapeutics from The Johns Hopkins
University School of Medicine.
Nicole S.
Williams, M.B.A. was elected to our Board in 2007 after retiring in 2006
as Chief Financial Officer of Abraxis Bioscience Inc., a biopharmaceutical
company, and President of its Abraxis Pharmaceutical Products division,
positions she assumed upon the 2006 merger of American Pharmaceutical Partners,
Inc. and American Bioscience Inc. From 2002 to 2006, Ms. Williams was
the Executive Vice President and Chief Financial Officer of American
Pharmaceutical Partners, as well as President from 2005. Ms. Williams
is President of the Nicklin Capital Group, Inc., a firm she founded in 1999 to
invest in and provide consulting to early-stage technology companies in the
Midwest. She is a director of Orchid Cellmark, Inc., a leading DNA
identity testing service company and Intercept Pharmaceuticals, Inc., a
privately-held biotechnology company. Ms. Williams received her
Demi-License en Science Politique from the University of Geneva, Switzerland,
her License en Science Politique from the Graduate Institute of International
Affairs, University of Geneva, Switzerland and her M.B.A. from the Graduate
School of Business, University of Chicago.
Other
Information
In 2005, the SEC issued an order
against Mr. Crowley arising out of allegations that his former employer violated
Section 15B(c)(1) of the U.S. Securities Exchange Act of 1934 and Rule G-37(b)
of the Municipal Securities Rulemaking Board, which prohibit a broker, dealer or
municipal securities dealer from engaging in municipal securities business with
an issuer within two years after any contribution to an official of such
issuer. The alleged violations occurred as a result of a 2002
political donation made by Mr. Crowley to the re-election campaign of an
official of an issuer with which the employer subsequently engaged in municipal
securities business. Mr. Crowley was ordered to cease and desist from
causing any violations and any future violations of the above provisions and pay
a $25,000 civil money penalty. Mr. Crowley consented to the entry of
the order without admitting or denying its findings, except as to the SEC’s
jurisdiction over him and the subject matter of the
proceedings.
VOTING
Those
nominees receiving a plurality of the votes cast will be elected
directors. Abstentions and broker non-votes will not affect the
outcome of the election.
Our
Board deems the election of the eight nominees listed above as directors to be
in our and our stockholders’ best interests and recommends a vote “FOR” their
election.
PROPOSAL 2:
AMENDMENT
OF OUR 1998 EMPLOYEE STOCK PURCHASE PLAN AND
1998
NON-QUALIFIED EMPLOYEE STOCK PURCHASE PLAN
Proposed
Amendments
The Board
has amended, subject to stockholder approval, our Employee Stock Purchase Plan
(the “ESPP”) and Non-Qualified Employee Stock Purchase Plan (the “Non-Qualified
ESPP,” and together in this Proposal with the ESPP, the “Plans”) to increase the
aggregate number of shares of common stock available for sale to employees
thereunder from 2,400,000 to 3,400,000 shares for the ESPP and from 600,000 to
1,100,000 shares for the Non-Qualified ESPP. The Board has also
amended the ESPP, subject to stockholder approval, in a manner consistent with
the Non-Qualified ESPP, to provide that the date of exercise of each option
under the ESPP will be specified by the Compensation Committee (the “Committee”)
of our Board.
Reason for the
Amendments
Our
Board believes that it is in our best interest to encourage our employees to
acquire an equity interest in the Company by making shares of common stock
available for purchase by all employees on favorable terms. The Plans
were initially adopted in 1998 and as of December 31, 2008, employees had
purchased a total of 1,664,259 shares under the ESPP and 305,405 shares under
the Non-Qualified ESPP, leaving 735,741 and 294,595 shares available for future
issuance under the respective Plans.
Given the
current level of employee participation in the Plans, the rate at which shares
are being purchased and the expected near-term exhaustion of shares available
for issuance under them, our Board has determined that, in order to continue to
have an adequate number of shares available for awards to recruit, hire and
retain employees, additional shares should be made available under the
Plans. If the amendments are not approved, we will need to reconsider
how to encourage employees to acquire an equity interest in the
Company.
Summary
of the Plans
This
summary of the material terms of the Plans is qualified by reference to the full
text of the Plans, as they are proposed to be amended, attached as Appendix A
and B, respectively. The Plans will become effective upon the
approval by the Company’s stockholders.
Purpose. The
purpose of the Plans is to aid us in attracting, compensating and retaining
well-qualified employees by providing them with an equity interest in the
Company.
Eligible
Employees. All employees, including our executive officers,
are eligible to participate in the Plans, provided that any employee holding a
beneficial interest in more than five percent of the Company’s common stock is
not eligible. For this reason, Dr. Maddon was ineligible to
participate in the Plans in 2008, and he has elected not to participate in the
Plans in 2009. At March 31, 2009, 240 employees were eligible to
participate in the Plans.
How the Plans
Work. The Plans provide for quarterly grants of rights to
purchase common stock in an amount equal to 25% of each employee’s total
compensation during the respective calendar quarter. The percentage
may be changed from time to time by the Committee. Each purchase
right expires six months after the date of grant and is only exercisable during
the three-month period prior to the date of expiration, on such date or dates
specified by the Committee prior to the date of grant, provided that the
participant remains employed on such date(s) of exercise (except upon
death).
The ESPP
provides that the fair market value of the shares subject to a grant on the
first day of the quarter may not exceed $6,250. In the event an
employee’s total compensation is such that the applicable percentage results in
shares subject to a grant having a fair market value greater than $6,250, the
excess is granted from the Non-Qualified ESPP.
Upon a
“change of control” of the Company, all outstanding purchase rights under the
Plans immediately become fully exercisable and all rights of participants become
nonforfeitable.
Available
Shares. There are currently available for future grants
735,741 shares under the ESPP and 294,595 under the Non-Qualified
ESPP. The proposed amendments would increase availability for future
grants to 1,735,741 under the ESPP and 794,595 under the Non-Qualified
ESPP. Shares issued under the Plans may be either authorized but
unissued shares or treasury shares, and any shares subject to options that have
been terminated or expired by their terms are available for further
grants.
Exercise Price and
Payment. The price at which employees may exercise purchase
rights is the lesser of (i) the closing price of the common stock on the date
prior to the date of grant (the first day of each fiscal quarter) or (ii) 85% of
the fair market value of the common stock on the date of
exercise. Payment for shares upon exercise may be made in cash or, at
the discretion of the Committee, in shares of Company common stock already owned
by the participant or acquired upon exercise of the right. We do not
withhold any amount from an employee’s cash compensation in order to exercise an
option under the Plans. Participants may, at the discretion of the
Committee, elect to effect a simultaneous exercise and sale of the shares
acquired upon such exercise through a program arranged by the Company, or to pay
withholding tax on the exercise of the purchase rights through the surrender of
shares of common stock already owned by the participants or received upon
exercise of the right, or through the payment of cash.
Transfer
Restrictions. Stock purchase rights may not be transferred
other than by will or by the laws of descent and distribution and may be
exercised during the employee’s lifetime only by the employee.
Amendment. Our
Board may at any time alter, amend, suspend or terminate the Plans, provided
that any such alteration, amendment, suspension or termination will not (i)
adversely affect the rights of an employee under any previously
granted award, or (ii) be made without the approval of our stockholders
to the extent approval is required by applicable laws, rules or
regulations.
Administration. The
Compensation Committee administers the Plans, and has the authority and
discretion, not inconsistent with the Plans, to amend the terms of future grants
and terminate further grants.
U.S.
Federal Income Tax Consequences
The ESPP
is intended to comply with the requirements of Section 423 of the U.S. Internal
Revenue Code of 1986, so that neither the grant of purchase rights nor their
exercise will have any federal income tax consequences to either us or the
employee. Employees will recognize income on sale of shares acquired
upon exercise, subject to tax at ordinary income tax rates or at capital gains
rates, depending on the holding period for the shares. We generally
will not be entitled to a tax deduction for the income recognized by employees
under the ESPP, except for certain amounts upon a “disqualifying disposition” of
shares by employees within a two-year period following the date of
grant.
Under the
Non-Qualified ESPP, the grant of purchase rights will have no federal income tax
consequences to either us or the employee. Their exercise will,
however, result in taxable income to the employee in an amount equal to the
difference between the purchase price and the fair market value on the date of
exercise and will generally result in a corresponding deduction from taxable
income for us.
Information
Concerning Operation of the Plans in 2008
Under the
Plans, employees are entitled to apply up to 25% of their gross pay to the
purchase of common stock, with a limit of $25,000 per year under the ESPP and
any remainder under the Non-Qualified ESPP. The table below sets
forth information regarding award grants made under the Plans in
2008:
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Name
and Position
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Gain from exercise under
Plans1
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Number
of shares issued upon ESPP exercise
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Number
of shares issued upon Non-Qualified ESPP exercise
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Paul
J.
Maddon
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— | — | — | |||||||||
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Chief
Executive Officer2
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Robert
A.
McKinney
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$ | 35,151 | 809 | 1,076 | ||||||||
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Chief
Financial Officer3
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Mark
R. Baker3
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$ | 45,400 | 809 | 1,510 | ||||||||
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Thomas
A. Boyd3
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$ | 54,132 | 809 | 1,894 | ||||||||
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Robert
J. Israel3
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$ | 41,709 | 809 | 1,381 | ||||||||
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All
current executive officers as a group3
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$ | 206,838 | 4,045 | 6,734 | ||||||||
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All
current directors who are not executive officers as a group4
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— | — | — | |||||||||
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All
employees, including all current officers who are not executive officers
as a group5
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$ | 2,513,130 | 533,779 | 119,911 | ||||||||
__________
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(1)
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The
exercise price range for the ESPP was $4.27 to $15.32 and for the
Non-Qualified ESPP was $6.07 to
$15.32.
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(2)
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As
the holder of a beneficial interest in more than five percent of common
stock in 2008, Dr. Maddon was not eligible to participate in either
Plan.
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(3)
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Gain
from exercise is the difference between (i) the fair market value on the
date of exercise of the shares issued upon exercise of the purchase rights
and (ii) the exercise price thereof. Share numbers are net of
shares surrendered in payment of exercise prices for, and applicable
withholding taxes in respect of, rights
exercised.
|
|
(4)
|
Non-employee
directors are not eligible to participate in the
Plans.
|
|
(5)
|
Gain
from exercise is the difference between (i) the fair market value on the
date of exercise of the shares issued upon exercise of the purchase rights
and (ii) the exercise price thereof. Share numbers are net of
shares surrendered in payment of exercise prices for, and, in the case of
employees who so elect, applicable withholding taxes in respect of, rights
exercised. Executive officers are not included in this
group.
|
VOTING
Under
Nasdaq Stock Market rules, amendment of the Plans must be approved by
affirmative vote of holders of a majority of the shares of common stock present
or represented and entitled to vote at the Meeting. Abstentions from
voting on this proposal will have the effect of a “no” vote. Broker
non-votes are not considered shares present, are not entitled to vote and
therefore will not affect the outcome of the vote.
Our
Board deems the adoption of amendments of the 1998 Employee Stock Purchase Plan
and 1998 Non-Qualified Employee Stock Purchase Plan to be in our and our
stockholders’ best interest and recommends a vote FOR Proposal 2.
PROPOSAL 3:
AMENDMENT
OF OUR 2005 STOCK INCENTIVE PLAN
Proposed
Amendments
The Board
has amended, subject to stockholder approval, our 2005 Stock Incentive Plan (the
“Stock Incentive Plan” or, in this Proposal, the “Plan”) to (i) increase the
maximum number of shares of common stock available for issuance thereunder from
3,950,000 shares to 5,450,000 shares, (ii) change the method for determining the
number of shares available for issuance under the Plan from time to time,
including with respect to the different types of awards available under the Plan
as described below under “Available Shares,” and (iii) amend the definition of
“Change in Control” under the Plan as described below under “Effect of Change in
Control.”
Reason for the
Amendments
Our Board
believes it is in our best interest to encourage stock ownership by employees
and others who provide valuable services to the Company. Accordingly,
the Board adopted the Stock Incentive Plan to provide for the award of
equity-based and other incentive compensation to our employees, officers,
directors, consultants, advisors and other individual service
providers. This Plan provides for the award of stock options, stock
appreciation rights, restricted stock, stock units, stock awards and performance
awards. It allows us to make awards that qualify as
“performance-based compensation” under section 162(m) of the Internal Revenue
Code.
As of
December 31, 2008, a total of 1,115,087 shares remained available for issuance
under the Stock Incentive Plan. Our Board has determined that
additional shares of common stock should be made available for awards under the
Plan to eligible persons who are responsible for the success of our
business.
The Board
believes that the Stock Incentive Plan is important to attract and retain
employees in a competitive labor market, which is essential to our long-term
growth and success. In order to continue to ensure that a sufficient
reserve of common stock is available for awards under the Stock Incentive Plan,
so that we can recruit, hire and retain employees, our Board believes that
additional shares of our common stock should be made available under the
Plan.
The
proposed changes in counting restricted stock and similar awards against the
Plan’s maximum share limitation and in the definition of “Change in Control”
bring the Plan into conformity with current compensation practices.
If
stockholders do not approve this amendment, we will reevaluate how we provide
incentives to existing and future employees and other service providers, but
will continue to utilize the Stock Incentive Plan pursuant to its existing
terms.
Summary
of the Stock Incentive Plan
Purpose. The
purpose of the Stock Incentive Plan is to further align the interests of our
employees and other eligible service providers with those of our stockholders by
providing incentive compensation opportunities tied to the performance of our
common stock and by promoting increased ownership of our common stock by those
individuals. The Plan is also intended to advance our interests and
those of our stockholders by helping to attract, retain and motivate personnel
upon whose judgment, initiative and effort the successful conduct of our
business is largely dependent. This summary of the material terms of
the Plan is qualified by reference to the proposed full text of the Plan, as it
is proposed to be amended, attached as Appendix C. The Plan will
become effective upon approval of the Company’s stockholders.
Eligible
Employees. Awards under the Stock Incentive Plan may be
granted to any of our current or prospective employees, officers, directors,
consultants, advisors or other individual service providers. As of
March 31, 2009, we had 240 employees and approximately ten other eligible
awardees.
Available
Shares. The Plan currently provides that up to 3,950,000
shares may be issued pursuant to awards granted thereunder, of which 1,115,087
shares remained available at December 31, 2008. Increasing the
maximum number of shares available for issuance under the Plan to 5,450,000
shares will result in 2,615,087 shares being available for future
grants. Any shares subject to stock options or stock appreciation
rights under the Plan will be counted against the maximum share limitations as
one share for every share of common stock subject thereto. With respect to stock
appreciation rights that are settled in shares, the common stock subject to such
award will be counted against the maximum share limitations as one share for
every share of common stock subject thereto, regardless of the number of shares
actually issued to settle the award upon exercise. Any shares subject
to restricted stock awards, stock unit awards, stock awards or share-based
performance awards, if any, under the Plan will be counted against the maximum
share limitations under the Plan as 1.2 shares for every share of common stock
subject thereto or issued thereunder. In its deliberations in
considering whether to use one or another form of stock incentive in any
particular grant, or a combination of types of incentives, the Committee may use
ratios in converting among stock options, stock appreciation rights, stock
awards, performance awards and stock units awards that differ from the ratios to
be used in determining the number of shares to be counted against the maximum
share limitations under the Plan, but in no event will the ratio used to
determine the number of shares counted against the maximum share limitation of
the Plan be less than 1.2-to-one for restricted stock awards, stock unit awards,
stock awards or share-based performance awards, or one-to-one for other
awards.
Shares
issued and sold under the Stock Incentive Plan may be either authorized but
unissued shares or shares held in our treasury. To the extent that
any award payable in shares is forfeited, cancelled, returned for failure to
satisfy vesting requirements or upon the occurrence of other forfeiture events,
or otherwise terminates without payment being made thereunder, the shares
covered thereby will no longer be charged against the maximum share limitations
and may again be made subject to award. Any awards that are settled
in cash and not in shares will not be counted against the share limitations
under the Plan. Any shares of common stock used by the participant to
pay the exercise price for stock options or satisfy payroll tax withholding
requirements will not be added back to the share reserve.
Adjustments. In the event of
any recapitalization, reclassification, stock dividend, extraordinary dividend,
stock split, reverse stock split, or other distribution with respect to our
common stock, or any merger, reorganization, consolidation, combination,
spin-off or other similar corporate change, or any other change affecting our
common stock, appropriate and equitable adjustments shall be made to the number
and kind of shares available for grant, as well as to other maximum limitations
under the Stock Incentive Plan, and the number and kind of shares of common
stock or other rights and prices under outstanding awards to prevent dilution or
enlargement of a participant’s rights under an award.
Effect of Change in
Control. The Compensation Committee may, in an award
agreement, provide for the effect of a “Change in Control” on an
award. These provisions may include the acceleration of vesting of an
award, the elimination or modification of performance or other conditions, the
extension of the time for exercise or realizing gain from an award, the
acceleration of payment, cash settlement of an award or other adjustments that
the Committee considers appropriate. The Board has approved, subject
to stockholder approval, an amendment to the Plan providing that a Change in
Control with respect to a merger, consolidation, sale of assets, liquidation or
other transaction involving the Company occurs only upon final consummation of
the transaction. Under the Plan as currently in effect, a Change in
Control occurs upon stockholder approval of such a transaction.
Term, Amendment and
Termination. The term of the Stock Incentive Plan is ten years
from the date of its adoption by the Board, or until April 4,
2015. The Board may, however, terminate, amend or modify the Plan at
any time, subject to stockholder approval under certain circumstances, provided
no termination, amendment or modification will adversely affect the rights of a
participant under any previously granted award.
Administration. The Stock Incentive
Plan is administered by the Compensation Committee. The Committee
shall, to the extent deemed necessary or advisable by the Board, be constituted
so each committee member will satisfy the requirements for (i) an “independent
director” as defined by the Nasdaq Marketplace rules, (ii) a “non-employee
director” for purposes of Rule 16b-3 under the Exchange Act and (iii) an
“outside director” under section 162(m) of the Internal Revenue
Code. Subject to the limitations set forth in the Plan, the Committee
has the authority to determine the (a) persons to whom awards are to be granted,
(b) types of awards to be granted, (c) time at which awards will be granted, (d)
number of shares of common stock, units or other rights subject to each award,
(e) exercise, base or purchase price of an award, (f) time or times at which the
award will become vested, exercisable or payable, (g) performance criteria,
performance goals and other conditions of an award, and (h) duration of the
award. Subject to the terms of the Plan, the Compensation Committee
has the authority to amend the terms of an award in any manner permitted by the
Plan for the grant of an award, provided that no such action adversely effects
the rights of a participant with respect to an outstanding award without the
participant’s consent. The Committee has the right to delegate from time to time
to one or more of our officers its authority to grant and determine the terms
and conditions of awards, subject to certain limitations. No such
delegation is currently in place. Any awards under the Plan made to
non-employee members of the Board must be approved by the Board.
Types
of Awards
Stock Options. Stock options granted
under the Stock Incentive Plan may be issued as either incentive stock options,
within the meaning of section 422 of the Internal Revenue Code, or as
non-qualified stock options. The exercise price of an option will be not less
than 100% of the fair market value of a share of our common stock on the date of
grant, or such higher amount as determined by the Compensation
Committee. The Committee will determine the vesting and/or
exercisability requirements and the term of exercise of each option, including
the effect of termination of employment or service of a
participant. Such vesting requirements shall be based on the
continued employment or service of the participant for a specified time period
or on the attainment of specified business performance goals established by the
Committee. The Committee may accelerate the vesting of options at any
time. The maximum term of an option will be ten years from the date of
grant. In the case of incentive stock options, for purposes of
Internal Revenue Code section 422, the maximum value of shares of common stock
(determined at the time of grant) that may be subject to incentive stock options
that become exercisable by a single employee in any one year is limited to
$100,000. Subject to adjustments as described above, a maximum of
750,000 shares may be subject to under options granted under the Plan to any
single participant in any calendar year.
To
exercise an option, the participant must pay the exercise price, subject to
specified conditions, (i) in cash, (ii) in shares of common stock, (iii) through
an open-market broker-assisted transaction, (iv) by combination of these
methods, or (v) by such other method approved by the Compensation Committee, and
must pay any required tax withholding amounts. All options are
nontransferable except upon the participant’s death by his or her will or the
laws of descent and distribution or, in the case of non-qualified options, to a
participant’s “family member,” or as otherwise permitted by the Committee, in
each case as may be approved by the Committee in its discretion at the time of
the proposed transfer. Without prior approval of stockholders, the
Plan prohibits the cancellation, substitution or amendment of an option for the
purpose of reducing the exercise price of a previously granted option, except
for equitable adjustments for any recapitalization, reclassification or other
change in our corporate structure, as described above.
Stock Appreciation Rights
(SARs). A stock appreciation right may be granted either in
tandem with an option or without a related option, and entitles the participant,
upon settlement or exercise, to receive a payment based on the excess of the
fair market value of a share of common stock on the date of settlement or
exercise over the base price of the right, multiplied by the number of shares as
to which the right is being settled or exercised. SARs may be granted on a basis
that allows for the exercise of the right by the participant or that provides
for the automatic payment of the right upon a specified date or
event. The base price of an SAR may not be less than the fair market
value of a share of common stock on the date of grant. The
Compensation Committee will determine the vesting requirements and the term of
exercise of each SAR, including the effect of termination of employment or
service of a participant, which may be based on the continued employment or
service of the participant for a specified time period or on the attainment of
specified business performance goals established by the Committee. The Committee
may accelerate the vesting of SARs at any time. The maximum term of
an SAR will be ten years from the date of grant. Subject to
adjustments as described above, a maximum of 750,000 shares of common stock may
be subject to SARs granted under the Plan to any single participant during any
calendar year. SARs may be payable in cash, shares of common stock or
a combination of both. Without prior approval of stockholders, the
Plan prohibits the cancellation, substitution or amendment of an SAR for the
purpose of reducing the exercise price of a previously granted SAR, except for
equitable adjustments for any recapitalization, reclassification or other change
in our corporate structure, as described above.
Restricted Stock Awards
(RSAs). A restricted
stock award represents shares of our common stock that are issued subject to
restrictions on transfer and vesting requirements as determined by the
Compensation Committee. Vesting requirements may be based on the
continued employment or service of the participant for a specified time period
or on the attainment of specified business performance goals established by the
Committee. The Committee may accelerate the vesting of an RSA at any
time. Subject to the transfer restrictions and vesting requirements
of the award, the participant will have the rights of a stockholder of our
Company, including all voting and dividend rights, during the restriction
period, unless the Compensation Committee determines otherwise at the time of
the grant. Subject to adjustments as described above, a maximum of
250,000 shares of common stock may be subject to RSAs granted under the Plan to
any single participant during any calendar year.
Stock Units. An
award of stock units provides the participant the right to receive a payment
based on the value of a share of common stock. Stock units may be
subject to vesting requirements, restrictions and conditions to payment as
determined by the Compensation Committee. Vesting requirements may be
based on the continued employment or service of the participant for a specified
time period or on the attainment of specified business performance goals
established by the Committee. The Committee may accelerate the
vesting of a stock unit award at any time. A stock unit award may
also be granted on a fully vested basis, with a deferred payment
date. A stock unit award shall become payable to a participant at the
time or times determined by the Compensation Committee and set forth in the
award agreement, which may be upon or following the vesting of the
award. Stock unit awards are payable in cash, shares or a combination
of both. Stock units may also be granted together with related
dividend equivalent rights. Subject to adjustments as described
above, a maximum of 250,000 shares of common stock may be subject to stock units
granted under the Plan to any single participant during any calendar
year.
Stock Awards. A
stock award represents shares of common stock that are issued free of
restrictions on transfer and free of forfeiture conditions and to which the
participant is entitled to all incidents of ownership. A stock award
may be granted for past services, in lieu of bonus or other cash compensation,
directors’ fees or for any other valid purpose as determined by the Compensation
Committee. The Committee may, in connection with any stock award,
require the payment of a specified purchase price. Upon the issuance
of shares under a stock award, the participant shall have all rights of a
stockholder with respect thereto, including the right to vote and receive all
dividends and other distributions paid or made with respect
thereto. Subject to adjustments as described above, a maximum of
250,000 shares of common stock may be subject to stock awards granted under the
Plan to any single participant during any calendar year.
Performance
Awards. The Compensation Committee may grant performance
awards under the Stock Incentive Plan which represent the right to receive a
payment in cash if performance goals established by the Committee for a
performance period are satisfied. The Committee may grant performance
awards that are intended to qualify as performance-based compensation under
section 162(m) of the Internal Revenue Code, as well as performance awards that
are not intended to so qualify. At the time a performance award is
granted, the Committee will determine, in its sole discretion, the applicable
performance period and performance goals to be achieved during the performance
period, as well as such other conditions as the Committee deems
appropriate. The Committee may also determine a target payment amount
or a range of payment amounts for each award. No more than $1 million
of compensation may be payable to any single participant during any one calendar
year in performance awards. In the case of performance awards, as
well as other awards under the Stock Incentive Plan that are intended to qualify
as performance-based compensation under section 162(m) of the Code, the
Committee will designate performance criteria from among the criteria set forth
below.
Section 162(m)
Awards. Awards of options and SARs granted under the Stock
Incentive Plan are intended by their terms to qualify for the performance-based
compensation exception under section 162(m) of the Internal Revenue
Code. In addition, the Compensation Committee may grant awards of
restricted stock, stock units, stock awards or performance awards that are
intended to qualify for the performance-based compensation exception under
section 162(m) of the Code. Under that section, the terms of the
award must state, in terms of an objective formula or standard, the method of
computing the amount of compensation payable under the award, and must preclude
discretion to increase the amount of compensation payable under the terms of the
award (but may give the Committee discretion to decrease the amount of
compensation payable). For each such award, the performance criteria
upon which the payment or vesting may be based shall be limited to one or more
of the following performance measures, which may be applied with respect to the
Company, any subsidiary or any business unit:
(i) total
stockholder return; (ii) stock price increase; (iii) return on equity; (iv)
return on capital; (v) return on investment; (vi) earnings per share, diluted or
basic; (vii) EBIT (earnings before interest and taxes); (viii) EBITDA (earnings
before interest, taxes, depreciation and amortization); (ix) cash flow
(including operating cash flow, free cash flow, discounted cash flow, and cash
flow in excess of costs of capital); (x) net or gross revenue; (xi) operating
expenses; (xii) gross or operating margin; (xiii) execution of a corporate
collaboration agreement relating to one of our product candidates; (xiv)
approval or acceptance by the U.S. Food and Drug Administration or a comparable
foreign regulatory authority of a final New Drug Application, a Biologic License
Application or similar document; (xv) approval for marketing of one of our
product candidates by the FDA or a comparable foreign regulatory authority;
(xvi) obtaining a specified level of financing for the Company, as determined by
the Compensation Committee, including through government grants (or similar
awards) and the issuance of securities; and (xvii) commencement of a particular
stage of clinical trials for one of our product candidates. The
foregoing performance criteria shall have any reasonable definitions that the
Committee may specify, which may include or exclude any items specified by the
Committee, including, but not limited to, any or all of the following items:
discontinued operations, extraordinary, unusual or non-recurring items, effects
of accounting changes, effects of currency or interest rate fluctuations,
effects of financing activities (e.g., effect on earnings per
share of issuing convertible debt securities), changes in tax rates, expenses
for restructuring or productivity initiatives, litigation losses, non-operating
items, effects of acquisitions or divestitures and changes of law or regulation
affecting our business. The foregoing performance measures may be
determined on an absolute basis or relative to internal goals or relative to
levels attained in prior years, or related to other companies or indices, or as
ratios expressing relationships between two or more performance
measures.
Stock
Incentive Plan Benefits in 2008
During
2008, stock options and restricted stock were granted under the Stock Incentive
Plan to our Named Executive Officers as set forth in the “Grants of Plan-Based
Awards for 2008” table in “Executive Compensation.” Under the Stock
Incentive Plan, in 2008 a total of 220,000 non-qualified stock options and
53,334 restricted shares were granted to our executive officers (including our
NEOs); a total of 267,542 options and 210,033 restricted shares were
granted to our other officers and employees; a total of 100,000 options were
granted to our non-employee directors; and 11,500 options were granted to a
non-director scientific advisor. All of the options were granted at a
weighted average exercise price of $16.01 per share. The terms and
number of stock options or other awards to be granted in the future under the
Plan are to be determined in the discretion of the Compensation
Committee. Since no such determinations have yet been made, the
benefits or amounts that will be received by or allocated to our executive
officers, directors or other eligible employees cannot be determined at this
time.
On April
24, 2009, the closing price on the Nasdaq National Market of our common stock
was $5.74 per share.
U.S.
Federal Income Tax Consequences
Following
is a summary of the United States federal income tax consequences of awards
under the Stock Incentive Plan to participants who are subject to United States
tax. Tax consequences of the Plan to us and participants in other
jurisdictions are not addressed.
Stock Options. An
optionee will not generally recognize taxable income upon the grant of a
non-qualified stock option to purchase shares of common stock. Upon
exercise of the option, the optionee will generally recognize ordinary income
for federal income tax purposes equal to the excess of the fair market value of
the shares subject thereto over the exercise price. The tax basis of
the shares in the hands of the optionee will equal the exercise price paid for
the shares plus the amount of ordinary compensation income the optionee
recognizes upon exercise of the option, and the holding period for the shares
for capital gains purposes will commence on the day the option is
exercised. An optionee who sells any of the shares will recognize
short-term or long-term capital gain or loss measured by the difference between
the tax basis of the shares and the amount realized on the sale. We
will be entitled to a federal income tax deduction equal to the amount of
ordinary compensation income recognized by the optionee. The
deduction will be allowed at the same time the optionee recognizes the
income.
An
optionee will not generally recognize income upon the grant of an incentive
stock option to purchase shares of common stock and will not generally recognize
income upon exercise of the option, provided that the optionee is our employee
at all times from the date of grant until three months prior to
exercise. If an optionee who has exercised an incentive stock option
sells the shares acquired upon exercise more than two years after the grant date
and more than one year after exercise, he or she will recognize capital gain or
loss equal to the difference between the sales price and the exercise
price. An optionee who sells the shares before the expiration of the
foregoing holding periods will generally recognize ordinary income upon the
sale, and we will be entitled to a corresponding federal income tax deduction at
the same time the participant recognizes ordinary income.
Other Awards. The
current United States federal income tax consequences of other awards authorized
under the Stock Incentive Plan are generally in accordance with the following:
(i) stock appreciation rights are generally subject to ordinary income tax at
the time of exercise or settlement; (ii) restricted stock is generally subject
to ordinary income tax at the time the restrictions lapse, unless the recipient
elects to accelerate recognition as of the date of grant; (iii) stock units and
performance awards are generally subject to ordinary income tax at the time of
payment, and (iv) unrestricted stock awards are generally subject to ordinary
income tax at the time of grant. In each of the foregoing cases, we
will generally be entitled to a corresponding federal income tax deduction at
the same time the participant recognizes ordinary income.
Section
162(m). Section 162(m) of the Internal Revenue Code generally
disallows the corporate tax deduction for certain compensation paid in excess of
$1,000,000 annually to each of the chief executive officer and the four other
most highly paid executive officers of publicly held
companies. Awards that qualify as “performance-based compensation”
are exempt from section 162(m), thus allowing us the full federal tax deduction
otherwise permitted for such compensation.
VOTING
Under
Nasdaq Stock Market rules, amendment of the Stock Incentive Plan must be
approved by affirmative vote of holders of a majority of the shares of common
stock present or represented and entitled to vote at the
Meeting. Abstentions from voting on this proposal will have the
effect of a “no” vote. Broker non-votes are not considered shares
present, are not entitled to vote and therefore will not affect the outcome of
the vote.
Our
Board deems the adoption of the amendment of the 2005 Stock Incentive Plan to be
in our and our stockholders’ best interest and recommends a vote FOR Proposal
3.
* * *
Equity Compensation Plan
Information
The
following table sets forth, as of December 31, 2008, certain information related
to our equity compensation plans.
|
(a)
Number
of shares
to
be issued upon exercise of outstanding options, warrants and
rights
|
(b)
Weighted
average exercise price of outstanding options, warrants and
rights
|
(c)
Number
of shares remaining available for future issuance (excluding securities
reflected in first column)
|
||||||||||
|
Equity
compensation plans approved by stockholders
|
4,366,031 | (1) | $ | 19.11 | 2,145,423 | (2) | ||||||
|
Equity
compensation plans not approved by stockholders (3)
|
85,143 | $ | 1.51 | — | ||||||||
|
Total
|
4,451,174 | $ | 18.78 | 2,145,423 | ||||||||
__________
|
(1)
|
Does
not include purchase rights issued under the ESPP or the Non-Qualified
ESPP.
|
|
(2)
|
Includes
735,741 and 294,595 shares available for issuance under the ESPP and
Non-Qualified ESPP, respectively.
|
|
(3)
|
Consists
only of our 1989 Non-Qualified Stock Option
Plan.
|
PROPOSAL 4:
RATIFICATION
OF SELECTION OF INDEPENDENT ACCOUNTING FIRM
The Audit
Committee of the Board (the “Audit Committee”) has selected
PricewaterhouseCoopers LLP (“PWC”) to serve as our independent registered public
accounting firm for 2009. PWC has served as our independent
registered public accounting firm since 1994.
A
representative of PWC is expected to be present at the meeting with the
opportunity to make a statement if he or she desires to do so and is expected to
be available to respond to appropriate questions.
Although
it is not required to do so, the Audit Committee is submitting the selection of
our independent registered public accounting firm for ratification at the
meeting. If this selection is not ratified, the Audit Committee will
reconsider its choice.
Fees
Billed for Services Rendered by Our Independent Accounting Firm
The
following table discloses the fees that PWC billed or is expected to bill for
professional services rendered to us for each of the last two fiscal
years:
|
Type of Fee
|
2008
|
2007
|
||||||
|
Audit
Fees
(1)
|
$ | 559,992 | $ | 601,161 | ||||
|
Tax
Fees
(2)
|
39,900 | 59,500 | ||||||
|
All
Other Fees
(3)
|
1,611 | 1,611 | ||||||
__________
|
(1)
|
Consists
of fees billed or expected to be billed by PWC in connection with (i) the
audit of our annual financial statements, including attestation services
required under section 404 of the Sarbanes-Oxley Act of 2002, and reviews
of our quarterly interim financial statements, totaling $547,700 in 2008
and $535,026 in 2007, (ii) filing of registration statements with the SEC,
totaling $5,000 in 2008 and $57,500 in 2007, and (iii) statutory non-U.S.
audit fees of $7,292 for 2008 and $8,635 for
2007.
|
|
(2)
|
Consists
of fees billed or expected to be billed by PWC for (i) tax return
preparation totaling $35,000 in 2008 and $32,500 in 2007, and (ii) tax
advice of $4,900 for 2008 and tax consultation regarding Internal Revenue
Code section 382 analysis of $27,000 in
2007.
|
|
(3)
|
Consists
of fees paid to PWC for a proprietary internet-based subscription
service.
|
Pre-Approval
of Audit and Non-Audit Services by the Audit Committee
As part
of its duties, the Audit Committee is required to pre-approve audit and
non-audit services performed by the independent registered public accounting
firm in order to assure that the provision of such services does not impair the
accounting firm’s independence. Around April of every year, the
Committee reviews a schedule, prepared by the accounting firm, of certain types
of services, and projected fees, to be provided for that year. The
Committee reviews the schedule and provides general pre-approval of those types
of services. The fee amounts are updated to the extent necessary at
each of the other regularly scheduled meetings of the Audit
Committee. If a type of service to be provided by the accounting firm
has not received general pre-approval during this annual process, it requires
specific pre-approval by the Audit Committee. The Committee may
delegate either general or specific pre-approval authority to its chair or any
other member(s). The member(s) to whom such authority is delegated
must report, for informational purposes only, any pre-approval decisions to the
Committee at its next meeting. The Committee approved all services
described in “Fees Billed for Services Rendered by Our Independent Accounting
Firm” during fiscal years 2008 and 2007.
VOTING
A
majority of the votes cast (excluding abstentions and broker non-votes) at the
meeting in person or by proxy is necessary for ratification of the selection of
PWC as our independent registered public accounting firm.
Our
Board deems the ratification of the selection of PricewaterhouseCoopers LLP as
our independent registered public accounting firm to be in our and our
stockholders’ best interests and recommends a vote FOR Proposal 4.
EXECUTIVE AND OTHER OFFICERS OF THE COMPANY
The
names, positions, ages and backgrounds of our executive and other officers are
set forth below. There are no family relationships between any of our
directors and executive officers. None of the corporations or other
organizations referred to below with which an executive officer has previously
been employed or otherwise associated with, is a parent, subsidiary or affiliate
of the Company.
|
Name
|
Age
|
Position
|
|
|
Paul
J. Maddon, M.D.,
Ph.D.
|
49
|
Chief
Executive Officer, Chief Science Officer and Director
|
|
|
Mark
R. Baker,
J.D.
|
54
|
Executive
Vice President-Corporate, General
Counsel
and Secretary
|
|
|
Robert
A. McKinney,
CPA
|
52
|
Chief
Financial Officer, Senior Vice President,
Finance
& Operations and Treasurer
|
|
|
Thomas
A. Boyd,
Ph.D.
|
57
|
Senior
Vice President, Product Development
|
|
|
Robert
J. Israel,
M.D.
|
52
|
Senior
Vice President, Medical Affairs
|
|
|
William
C. Olson,
Ph.D.
|
46
|
Senior
Vice President, Research & Development
|
|
|
Benedict
Osorio, M.S., M.B.A.
|
52
|
Senior
Vice President, Quality
|
|
|
Nitya
G. Ray,
Ph.D.
|
56
|
Senior
Vice President, Manufacturing
|
|
|
Ann
Marie Assumma,
M.S.
|
55
|
Vice
President, Regulatory
|
|
|
Walter
M. Capone,
M.B.A.
|
44
|
Vice
President, Commercial Development and
Operations
|
|
|
Richard
W. Krawiec,
Ph.D.
|
61
|
Vice
President, Corporate Affairs
|
|
|
Tage
Ramakrishna,
M.D.
|
34
|
Vice
President, Clinical Research
|
|
Paul J. Maddon,
M.D., Ph.D. is our founder and has served in various capacities since our
inception, including Chairman of the Board of Directors, Chief Executive
Officer, President and Chief Science Officer. From 1981 to 1988, Dr.
Maddon performed research at the Howard Hughes Medical Institute at Columbia
University in the laboratory of Dr. Richard Axel. Dr. Maddon serves
on several scientific review committees of the National Institutes of Health and
on the Executive Committee of the Rockefeller University Council. He
received a B.A. in biochemistry and mathematics, an M.D. and a Ph.D. in
biochemistry and molecular biophysics from Columbia University. Dr.
Maddon also serves as a trustee of Columbia.
Mark R. Baker,
J.D., our
Executive Vice President-Corporate, joined the Company in 2005 as Senior Vice
President & General Counsel and Secretary. From 2003 to 2005, Mr.
Baker was Chief Business Officer, Secretary and a director of New York Trans
Harbor LLC, a privately-held ferry operation in New York City. From
1997 to 2001, he was Executive Vice President, Chief Legal Officer and Secretary
of ContiGroup Companies, Inc. (formerly Continental Grain Company) a
privately-held international agri-business and financial
concern. Prior thereto, he was a partner and Co-Chairman of the
Capital Markets Group of the New York law firm, Dewey Ballantine. Mr.
Baker was awarded an A.B. degree from Columbia College and a J.D. from the
Columbia University School of Law.
Robert A.
McKinney, CPA has been our Chief Financial Officer since
2005. Mr. McKinney joined us in 1992 and currently serves as Senior
Vice President Finance & Operations and Treasurer. Early in his
career, he was an audit supervisor at Coopers & Lybrand LLP. Mr.
McKinney studied finance at the University of Michigan, received a B.B.A. in
accounting from Western Connecticut State University, and is a Certified Public
Accountant.
Thomas A. Boyd,
Ph.D. joined us in 2000 and currently serves as Senior Vice President,
Product Development. From 1996 through 2000, Dr. Boyd was Associate
Director, R & D Project Management at Boehringer Ingelheim Pharmaceuticals,
Inc. and before that held various positions with Wyeth-Ayerst Research and
Alteon, Inc. He received his Ph.D. from Brown University in
physiology and biophysics and an A.B. degree from Cornell University’s College
of Arts and Sciences.
Robert J. Israel,
M.D. joined us in 1994 and currently serves as Senior Vice President,
Medical Affairs. Before joining Progenics, he held oncology positions
at Sandoz Pharmaceuticals Corporation and Schering-Plough
Corporation. Dr. Israel is a licensed physician and is board
certified in internal medicine and medical oncology. He received a
B.A. in physics from Rutgers University and an M.D. from the University of
Pennsylvania, and completed an oncology fellowship at Sloan-Kettering Institute
for Cancer Research. Dr. Israel has been a consultant to the Solid
Tumor Service at Sloan-Kettering.
William C. Olson,
Ph.D. joined us in 1994 and currently serves as Senior Vice President,
Research and Development. From 1989 to 1994, Dr. Olson was a
scientist at Johnson & Johnson and MicroGeneSys, Inc., a biotechnology
company. Dr. Olson has served on scientific review committees of the
National Institutes of Health and has co-authored more than 40 articles for
peer-reviewed scientific journals. Dr. Olson received a Ph.D. from
the Massachusetts Institute of Technology and a B.S. from the University of
North Dakota, both in chemical engineering.
Benedict Osorio,
M.S., M.B.A. joined us in 2005 and is currently our Senior Vice
President, Quality. He has almost three decades of experience in
pharmaceutical quality control and quality
assurance, including service as Director and Senior Director at Forest
Laboratories from 2001 to 2005. From 1984 to 2001, Mr. Osorio held
positions of increasing responsibility with The PF Laboratories (a subsidiary of
Purdue Pharma), ultimately as Executive Director, Quality
Assurance. From 1979 to 1984, he was an analytical chemist with
Berlex Laboratories. He earned both an M.B.A. and an M.S. in
chemistry from Seton Hall University and a B.S. in forensic science
from John Jay College of Criminal Justice. Mr. Osorio is a Certified
Quality Engineer and Quality Auditor recognized by the American Society for
Quality.
Nitya G. Ray,
Ph.D. joined us in 2001 and currently serves as Senior Vice President,
Manufacturing. Prior to joining Progenics, Dr. Ray served as Director
of Bioprocess Development at Ortec International from 1997 to
2001. From 1993 to 1997, Dr. Ray held positions of increasing
responsibility at Hoffmann-La Roche in the areas of GMP Manufacturing and
Process Development, ultimately as Research Leader,
Biopharmaceuticals. From 1985 to 1993 he developed process technology
for biopharmaceutical manufacturing at Verax Corporation. Dr. Ray
received an M.S. and Ph.D. in chemical and biochemical engineering from Rutgers
University and a B.S. in chemical engineering from Jadavpur University,
India.
Ann Marie
Assumma, M.S. joined us in 2004 and currently serves as Vice President,
Regulatory Affairs. She has over 30 years of experience in the
pharmaceutical industry and regulatory affairs at companies including Dov
Pharmaceuticals, Emisphere Technologies, Bayer and American
Cyanamid. Ms. Assumma earned her M.S. in pharmacology from New York
Medical College and a B.S. in biology from Fordham University.
Walter M. Capone,
M.B.A. joined us in 2007 as Vice President, Commercial Development and
Operations. Mr. Capone was employed by Trimeris, Inc. from 2002 to
2007 as Senior Vice President of Commercial Operations managing the FUZEON® and
fusion inhibitor commercial collaboration with Hoffmann LaRoche. He
has 19 years of U.S. and international commercial experience in the
pharmaceutical and biotechnology industries, having held vice president and
director-level positions in marketing, sales management and commercial
development in the U.S. and Europe for companies including Wyeth, Bristol-Myers
Squibb and Triangle Pharmaceuticals, Inc. Mr. Capone earned his
M.B.A. in finance and international business from Columbia University School of
Business, and an undergraduate degree in international relations from Brown
University.
Richard W.
Krawiec, Ph.D. joined us in 2001 as Vice President, Investor Relations
and Corporate Communications (now Corporate Affairs). Prior to
joining us, Dr. Krawiec served in similar capacities at Cytogen Corporation, La
Jolla Pharmaceuticals, Inc., Amylin Pharmaceuticals, Inc. and IDEC
Pharmaceuticals, Inc. Dr. Krawiec was founder and Editor-In-Chief of
Biotechnology Week
magazine and founder and Managing Editor of Biotechnology
Newswatch. He received a B.S. in biology from Boston
University and a Ph.D. in biological sciences from the University of Rhode
Island.
Tage Ramakrishna,
M.D. joined us in
2008 and currently serves as Vice President, Clinical Research. Prior
to joining us, Dr. Ramakrishna worked for Altana Pharma, where he served from
2003 to 2007, most recently as Corporate Vice President of International Drug
Safety and Medical Affairs. Prior thereto, Dr. Ramakrishna worked as
Medical Director for Insmed Inc. He received an M.D. from Karol
Marcinkowski University in Poznan, Poland and a B.A. in biology from Rutgers
University.
Scientific
Advisors
An
important component of our scientific strategy is our collaborative relationship
with leading researchers in supportive care, cancer and
virology. These scientific advisors attend periodic meetings and
provide us with specific expertise in both research and clinical
development. All of our scientific advisors are employed elsewhere
and may have commitments to or consulting or advisory agreements with other
entities that limit their availability to us. These entities may also
compete with us. Certain of our scientific advisors have, from time
to time, devoted significant time and energy to our affairs, but none is
regularly expected to devote more than a small portion of time to
us. We have consulting agreements with two scientific advisors, Drs.
Goff and Scheinberg, who are also members of our Board.
EXECUTIVE COMPENSATION
Compensation Discussion and Analysis
Overview
We are a
biotechnology company engaged in drug development and
commercialization. We have only recently obtained regulatory approval
for our first commercial product and begun earning royalties on world-wide
sales. We compete with biopharmaceutical companies of all sizes to
attract employees with the skills and expertise necessary to develop and
commercialize drugs and achieve our objectives. Since the funds we
can use for compensation are, of necessity, limited, we have worked to develop a
compensation program that allows us to attract and retain talented individuals
with the essential experience and skills we need at the executive level while
being sensitive to our limited resources. We have done this through a
program which combines base salary with bonus compensation and long-term
incentives in the form of stock options and restricted stock. We
strive to conserve cash resources by not setting base salaries or total cash
compensation at a higher percentile of market compensation data and, instead,
providing meaningful long-term equity opportunity.
This
Compensation Discussion & Analysis (“CD&A”) outlines, among other
things, our compensation philosophy, objectives and processes as they relate to
Dr. Maddon, our Chief Executive Officer (“CEO”), Mr. McKinney, our Chief
Financial Officer (“CFO”), and our three other most highly compensated
executives in 2008 (together with our CEO and CFO, “Named Executive Officers,”
or “NEOs”).
Objectives
We seek
to achieve the following broad goals in our executive compensation programs and
in making decisions regarding individual compensation:
|
·
|
Attract
and retain those executives critical to our overall
success;
|
|
·
|
Reward
executives for contributions to achievement of strategic goals which
enhance stockholder value;
|
|
·
|
Foster
and maintain a company culture of ownership, creativity and innovation;
and
|
|
·
|
Motivate
our NEOs to achieve critical financial, product and development milestones
(long- and short-term) set by the Board and
management.
|
General
Compensation Process
The
Compensation Committee of our Board is responsible for determining compensation
(both the elements and levels) for our NEOs. In doing so, the
Committee reviews our corporate performance against financial and corporate
achievement measures, assesses individual performance and evaluates
recommendations of the CEO regarding compensation for our other
NEOs.
In
assessing the performance of the Company and the individual performance of each
of the NEOs, the Compensation Committee has considered the progress of the
Company in the research, development and commercialization of its product
candidates and the contributions made by each of the NEOs. Recent
examples of this progress include the approval for marketing in 2008 of
RELISTOR®
(methylnaltrexone bromide), our first commercial product, in the U.S. and
throughout the world, the commencement of sales of RELISTOR, the entering into
of a licensing agreement with Ono Pharmaceutical Co. Ltd. for the development
and commercialization of RELISTOR in Japan, and progress in the clinical
development of our HIV product candidate PRO 140 and our prostate specific
membrane antigen antibody-drug conjugate (PSMA ADC) for treatment of prostate
cancer. The Committee has also considered in its deliberations
regarding compensation of the NEOs the continuing world-wide economic downturn
and the Company’s share price.
In order
to evaluate our NEOs’ performance and our corporate performance, Dr. Maddon is
invited to present his oral performance appraisals of direct reports, and shares
his views of corporate and divisional performance with the
Committee. He then makes recommendations with regard to the annual
base salary adjustments for each executive for approval by the
Committee. At this meeting, our CEO also makes recommendation for
bonuses to be paid to the executives for the prior year’s
performance. In March 2008, the Committee made decisions regarding
2008 salaries for our NEOs and the bonuses to be paid in 2008 for 2007
performance. In March 2009, the Committee met and decided on salaries
for 2009 and bonuses to be paid in 2009 for 2008 performance.
Dr.
Maddon’s performance is also reviewed at the beginning of the year by the
Committee in conjunction with setting his target compensation for the upcoming
year. Salary, bonus and long-term equity compensation for fiscal year
2008 were paid to our CEO in accordance with an employment agreement he entered
into with us effective July 1, 2007. The terms of the
employment agreement are set forth in more detail below under “Employment
Agreements” and “Potential Payments Upon Termination or
Change-in-Control.”
Similar
to the process for other NEOs, Dr. Maddon is invited at the beginning of each
year to meet with the Committee in order to present and discuss his performance
and target compensation. His bonus for the prior year and base salary
for the upcoming year is then considered and voted on by the Committee with him
absent from the discussion and vote.
In
determining our CEO’s and NEOs’ compensation, the Committee also confers with
its compensation consultant, Pearl Meyer & Partners, about the competitive
market for comparable executives and the proposed elements and amounts of
compensation for each executive. Pearl Meyer provides a report to the
Committee and Dr. Maddon outlining competitive market compensation data for
consideration when determining the different levels and mix of
compensation. The primary data sources utilized for NEO comparisons
is the compensation information publicly disclosed by a Peer Group of companies
within the biotechnology industry, selected by the Committee with Pearl Meyer’s
assistance, that are similar to us in size, stature and state of
development. Peer Group companies are reviewed annually by the
Committee with Pearl Meyer’s assistance to ensure that they remain relevant and
meaningful comparators. The Peer Group used to set compensation for
our CEO and other NEOs for 2008 consisted of:
|
Acorda
Therapeutics, Inc.
|
Myriad
Genetics, Inc.
|
|
Alexion
Pharmaceuticals, Inc.
|
Neurocrine
Biosciences, Inc.
|
|
Exelixis,
Inc.
|
Nuvelo,
Inc.
|
|
Human
Genome Sciences, Inc.
|
Regeneron
Pharmaceuticals, Inc.
|
|
Idenix
Pharmaceuticals, Inc.
|
Telik,
Inc.
|
|
Intermune,
Inc.
|
Theravance,
Inc.
|
|
Medarex,
Inc.
|
Zymogenetics
Inc.
|
The Peer
Group data are supplemented with published executive compensation surveys
providing position-based compensation data from biotechnology companies similar
in size and scope to us.
After
review and discussion with Dr. Maddon of the market data and his
recommendations, the Committee either approves the recommendations or asks him
and/or Pearl Meyer for additional analysis or an alternative
recommendation. Once the Committee is satisfied with the information
provided, it makes decisions by vote of the majority of the
Committee. Dr. Maddon does not have a vote on the compensation
decisions, but is present for discussion of our other NEOs’
compensation. He does not have a vote, nor is he present for
decisions regarding his own compensation.
Decisions
with regard to the actual amount or value of total compensation or specific
elements of compensation granted to each of our NEOs are based on a number of
factors in addition to the market data. These factors include
objective compensation data provided by Pearl Meyer representing pay levels in
the marketplace, pay levels of our other executives at a similar level, the
individual’s corporate roles and responsibilities, particular experience and
expertise, performance and specific duties, the scope of his or her position and
department(s) or group(s), our corporate financial performance and the progress
of our research and development programs during the year. In
determining a compensation package for each of our NEOs, the Committee looks at
all forms of compensation and benefits received by the executive in the
aggregate, not merely the individual elements separately, seeking to achieve a
balanced program that is well-suited to each of our NEOs individually and as a
group.
The
Committee uses a similar process at mid-year to determine the long-term
incentive elements of our NEO compensation program paid in stock options and
restricted stock. The Committee considers Dr. Maddon’s recommendation
for long-term incentive awards to the other NEOs, and makes its own
determination of the appropriate long-term incentive awards for all NEOs,
including Dr. Maddon.
The
amount and mix of compensation is determined within the context of both
objective data from our competitive assessment of compensation and the
subjective factors outlined above. We believe that each NEO’s
compensation package is generally within the competitive range of practices when
compared to objective comparative data even where subjective factors have
influenced our compensation decision.
The
Committee retains Pearl Meyer for its services directly, although in carrying
out assignments, Pearl Meyer interacts directly with our management when
necessary and appropriate. In addition, in its discretion, Pearl
Meyer may seek input and feedback from our executives, typically our CFO,
regarding its work product prior to presentation to the Committee, in order to
confirm alignment with our business strategy and to obtain data or information
necessary for its work. Pearl Meyer provides the Committee with an
annual Compensation Report that it updates as the Committee considers
appropriate. During 2008, the Committee used this Compensation Report
in setting salary, bonus and equity compensation for the Company’s NEOs and
other employees for the year.
Elements
of Compensation
We
utilize a compensation strategy in line with that of other companies within the
biotechnology industry which includes base salary, annual bonus, long-term
incentives and retirement and severance benefits. These elements of
pay are designed to reward (i) the level of effort and competence demonstrated
relevant to the executive’s duties and responsibilities (base salary), (ii)
decision-making that supports our annual financial and product goals (annual
bonus), and (iii) a focus on building shareholder value over the long term by
making decisions that will not sacrifice our long-term prospects for a
particular short-term achievement or goal (long-term incentives).
Base
Salary. Levels of base salary take into account an
individual’s role and responsibilities, experience, expertise, individual
performance and tenure. The amount is typically at or slightly below
the median industry compensation level for the position as shown by appropriate
market data provided by Pearl Meyer. The market position of each
NEO’s base salary reflects our compensation philosophy and the executive’s
tenure, experience and expertise.
Annual
Bonus. We do not have a formal annual bonus plan for our NEOs,
although business goals, such as product and/or collaboration development,
clinical trial progress and budgetary controls, are set by management at
the beginning of each year and communicated to each NEO. Within the
context and framework of these established goals, annual bonuses are paid to
NEOs on a discretionary basis after our CEO (excluding discussion of his bonus
compensation) and the Committee have assessed our corporate financial position
at year end and corporate and individual performance for the year against those
goals and the competitive market data outlined above. Individual
performance, as well as the performance of the team managed by the NEO, is also
taken into consideration in determining an NEO’s annual bonus.
The
Committee has historically paid the annual bonus on a discretionary basis
because we have been in the drug development stage, without significant revenues
or profits. The Committee has not felt it appropriate to commit to
have specific bonus award targets and performance levels set at the beginning of
the year because at that time our financial condition at year-end is unclear and
may not be sufficient to allow payment of those pre-determined
targets.
Bonus
compensation amounts paid to our NEOs for 2008 shown in the Summary Compensation
Table reflect the significant progress that we, in collaboration with Wyeth,
made in gaining approval and commencing commercial sales of
RELISTOR. They were also influenced by the Company’s entering into
the licensing agreement with Ono. Progress was also made on
several other research and development programs relating to other drug
candidates, including selecting for further development a formulation of our HIV
product candidate, PRO 140; selecting a small-molecule drug candidate,
designated PRO 206, for treatment of hepatitis C infection; and initiating phase
1 studies of our prostate-specific membrane antigen antibody-drug conjugate
(PSMA ADC) for treatment of prostate cancer.
In
determining bonuses for fiscal year 2008, the Compensation Committee also
considered the continuing economic downturn and the Company’s share
price. The Committee determined that reduced bonuses compared to
those paid for 2007 were generally appropriate given the current uncertainty of
the global economy and world financial markets. The Committee took
the foregoing circumstances and overall Company performance into account in
determining Dr. Maddon’s 2008 bonus, which, at his election, was paid in 66,294
shares of restricted stock, 29,464 of which vested on the date of the award and
36,830 of which will vest six months thereafter.
Long-term incentives. Long-term
incentives include both non-qualified stock options and restricted stock
awards. During 2008, these awards were made to NEOs from our 2005
Stock Incentive Plan, the terms of which are described in our 2008 Annual Report
on Form 10-K and in Proposal 3 above. The exercise price of stock
options granted was equal to the closing price of our common stock on the date
of grant, as determined by the Committee. Both stock options and
restricted stock granted to our NEOs generally vest over three to
four years from the date of grant, except for options granted to all newly
hired employees which vest over a five-year period, provided in all cases the
employee continues to be employed by us. The long-term incentive
awards granted to our NEOs during 2008 and in prior years that were outstanding
at December 31, 2008 are presented in the Grants of Plan-Based Awards for 2008
and Outstanding Equity Awards at Fiscal Year-End tables, below.
We also
provide long-term incentives through the use of performance-based
awards. In particular, recent grants made to Drs. Maddon and Boyd, as
described below, are performance-based.
Although
our long-term incentive grants have typically been time-vested instruments, Dr.
Maddon was granted 515,500 performance-based non-qualified stock options between
2002 and 2007. The performance-based stock options were used by the
Committee to align more closely the compensation of our CEO to the business
goals established by the Committee and our Board. Vesting of a
percentage of each performance-based award occurs as each defined performance
condition for that award is achieved. The performance conditions for
Dr. Maddon’s awards include regulatory marketing approval or signing of
corporate partnerships for some of our product candidates; raising capital
through the issuance of new securities; initiation of certain clinical trials
for some of our product candidates; and approval of government grants and
contracts to fund our research and development programs. The
percentages of the award that vest, if every performance condition is achieved,
total more than 100% of the award, recognizing that we are pursuing multiple
goals and that not every performance condition must be achieved in order for Dr.
Maddon’s performance to be considered sufficient to justify the full vesting of
the award. Even if the percentage of the award that vests for the
performance conditions actually achieved exceeds 100%, however, Dr. Maddon is
entitled to only 100% of the award. In the event that the defined
portions of the award that vest for each performance condition total less than
100%, the award nonetheless vests completely, or “cliff vests,” if Dr. Maddon is
still employed by the Company nine years and 11 months from the date of the
award. At the end of 2008, 437,125 performance-based options awarded
to Dr. Maddon have vested due to the achievement of performance milestones and a
portion of the 78,375 remaining such options may vest before the
cliff-vesting date upon the achievement of milestones in the
future.
In 2008,
we granted Dr. Maddon an additional 75,000 stock options and 25,000 shares of
restricted stock, vesting of which is based on achievement of Company
performance and milestones. As in prior years, the Compensation
Committee met with Dr. Maddon on several occasions in July 2008 to agree on the
performance metrics that trigger vesting, which include regulatory marketing
approval for new forms of current products or new products, signing of corporate
partnerships for new or existing products or product candidates, corporate
profitability and stock price. As in prior years, not all of the
goals need to be achieved in order for 100% of the awards to vest, because the
Committee believed that the goals are sufficiently challenging to justify the
level of vesting resulting from achievement of each goal. Unlike
prior awards, however, the 2008 awards will not cliff-vest if performance
milestones are not met. As of the end of 2008, none of these awards
had vested.
Dr. Boyd
received performance-based awards in recognition of his efforts in obtaining FDA
approval for RELISTOR, as described in the notes to the Summary Compensation
Table.
Other
Compensation Considerations. While in prior years our
long-term incentives consisted principally of stock options, commencing in 2004
we issued restricted stock awards to our NEOs and other employees in order to
help reduce our overall equity dilution by decreasing the number of stock
options issued. Stock options require the use of more shares to
provide equal compensation value and therefore increase the “overhang” on our
stock, i.e., the
potential number of shares to be issued upon exercise of stock incentives or
convertible securities. The 2008 equity grants generally consisted of
70% stock options and 30% restricted stock in terms of the total number of
options granted or restricted shares awarded.
The mix
of pay for our NEOs is more heavily weighted toward equity than
cash. The Committee believes that it is important to have equity
constitute a substantial portion of executive compensation because it aligns the
interests of the NEOs with those of our shareholders, promotes the long-term
focus required for success in the biotechnology industry despite the volatility,
uncertainty and potential set-backs involved in the discovery and development of
pharmaceutical products, and helps us retain key individuals. Our
strategy also allows us to retain more cash for use in our research and
development programs. Our approach is to keep equity compensation in
line with the competitive market, yet reflective of the individual’s performance
and long-term value to the Company.
When
determining amounts of long-term incentive grants to our NEOs, the Committee
compares (i) the value of the grant with the value of comparable grants in our
Peer Group; (ii) the number of options granted by position in our Peer Group;
(iii) the number of options granted by position as a percentage of total common
shares outstanding, compared with the applicable percentages of comparable
grants in our Peer Group; and (iv) the executive’s overall equity incentive
opportunity. We believe these comparisons provide an important
context for comparing the competitive level of our equity based compensation
practices to those of other companies in our Peer Group and ensure that we are
not at a competitive disadvantage in terms of hiring or retaining key executive
talent.
Our
current practice is to make annual awards of stock options and/or restricted
stock determined by the Committee to our employees, including our NEOs, on the
first business day of July. In addition, stock options and/or
restricted stock are awarded to newly-hired employees as described
above. We may from time to time issue equity-based compensation at
other times during the year. We do not have a practice or policy of
granting stock options or restricted stock in anticipation of, or subsequent to,
the disclosure of material non-public information, including quarterly earnings
releases.
Retirement,
Welfare Benefits. We make available to our NEOs retirement and
welfare benefits, consisting of partial matching contributions to their 401(k)
retirement plans and access to medical, dental and other welfare plans, all of
which are equally available to our other full-time employees. NEOs
also receive reimbursement of premiums for enhanced life and disability
insurance, totaling less than $10,000 per NEO. No other perquisites
are given to our NEOs. This philosophy is consistent with our view
that an emerging company generally best utilizes its resources in research,
development and commercialization efforts. The total of retirement
and welfare benefits for each NEO is presented in the Summary Compensation
Table, below.
Equity
Ownership by Executives
We do not
currently have a formal stock ownership requirement for executives, but we
encourage stock ownership by executives on a voluntary basis and through
participation in the Stock Incentive Plan as well as the ESPP and Non-Qualified
ESPP. Each of our NEOs has both vested and unvested stock options and
unvested restricted stock as shown in our Outstanding Equity Awards at Fiscal
Year-End table.
Employment
Agreements
We have
an employment agreement with Dr. Maddon, effective July 1, 2007. The
agreement extended prior employment agreements and automatically renews each
year unless one of the parties gives 90 days’ prior written
notice. It provides for Dr. Maddon to receive an annual salary of
$600,000 for the initial term, increasing at a rate of at least three percent
per year (which increase he declined for 2009), and a discretionary bonus in an
amount to be determined by the Board. The agreement also provides for
the terms of continued employment and the responsibilities of each party upon
termination of employment, as more fully outlined below under “Potential
Payments upon Termination or Change-in-Control.”
We
believe Dr. Maddon’s employment agreement is an important tool because it allows
us to motivate and retain him by providing a measure of earnings security
through (i) income protection in the form of severance and continued benefits if
he is terminated without cause or resigns for good reason, (ii) protection for
his family if he becomes disabled or dies, and (iii) additional protections in
connection with a change in control of the Company.
We
believe providing severance protection to our CEO is an appropriate bridge to
subsequent employment if he is terminated without cause, particularly because
the opportunities are typically more limited and the job search lead time longer
for positions appropriate to his level of skill and experience. In
addition, his employment agreement benefits us by enabling him to remain focused
on our business in uncertain times without the distraction of potential job
loss. It also allows him to take positions and engage in strategic
initiatives that he and the Board believe are in our best interest without fear
of personal economic consequences if the initiative fails.
We also
have an employment agreement with Dr. Israel entered into effective September 1,
1994. The agreement contains a severance provision for termination
without cause consisting of nine months salary and benefits. If at
any time during such severance period Dr. Israel secures new employment,
however, the severance will cease. The agreement also contains
restrictive covenants against disclosure of our confidential business
information, non-solicitation of our employees and customers and non-competition
with our business, and establishes our right to inventions and intellectual
property as more fully outlined below under “Potential Payments upon Termination
or Change-in-Control.”
Tax
and Accounting Considerations
The
compensation paid to our NEOs is generally subject to taxation at ordinary
rates. Although we endeavor to structure our compensation packages so
that they are not subject to tax penalties (such as additional taxes arising
under Section 409A of the Internal Revenue Code), our efforts in this
regard do not materially affect the terms of our compensation
arrangements.
Section
162(m) of the Internal Revenue Code limits our deduction of compensation paid to
each of our NEOs to $1,000,000 unless the compensation is “performance-based” as
defined in the Code. Our 2005 Stock Incentive Plan allows the
Committee to grant awards that will be exempt from the deduction limits of
section 162(m) if applicable criteria are satisfied. While the
Committee considers the tax and accounting effect of the compensation programs,
there may be times when the Committee accepts a less advantageous tax and
accounting outcome in order to achieve other goals, such as motivating and
retaining executives.
We design
our stock incentive plans from which long-term incentive awards are granted to
be in compliance with generally-accepted accounting principles in order to avoid
additional non-cash compensation charges.
Summary Compensation Table
The table
and footnotes below describe the total compensation paid to our CEO, CFO, and
three other most-highly compensated NEOs. As reflected in the table
and discussed above in the CD&A, we pay these executive officers a mix of
cash and equity compensation.
|
Name
and Principal Position
|
Year
|
Salary
($)
|
Bonus
($)
|
Stock
Awards1
($)
|
Option
Awards1
($)
|
All
Other Compen-
sation2
($)
|
Total
($)
|
|
Paul
J. Maddon
|
2008
|
618,000
|
330,0003
|
779,610
|
1,374,410
|
17,228
|
3,119,248
|
|
Chief
Executive Officer
|
2007
|
600,000
|
-
|
738,848
|
1,779,997
|
16,806
|
3,135,6517
|
|
2006
|
565,000
|
350,0003
|
384,306
|
2,850,421
|
16,306
|
4,166,0337
|
|
|
Robert
A. McKinney
|
2008
|
290,000
|
88,0004
|
184,702
|
415,874
|
28,752
|
1,007,328
|
|
Chief
Financial Officer
|
2007
|
270,000
|
110,0004
|
143,762
|
352,506
|
25,923
|
902,191
|
|
2006
|
250,000
|
100,0004
|
80,607
|
334,053
|
25,423
|
790,083
|
|
|
Mark
R. Baker
|
2008
|
385,000
|
160,0004
|
122,067
|
825,197
|
20,500
|
1,512,764
|
|
Executive
Vice President-
|
2007
|
325,000
|
200,0004
|
88,185
|
650,729
|
20,500
|
1,284,414
|
|
Corporate
|
2006
|
300,000
|
200,0004
|
24,949
|
519,975
|
20,000
|
1,064,924
|
|
Thomas
A. Boyd
|
2008
|
290,000
|
155,0004,5
|
59,3166
|
445,765
|
25,979
|
976,060
|
|
Senior
Vice President
|
2007
|
270,000
|
220,0004,5
|
170,2526
|
391,650
|
26,161
|
1,078,063
|
|
2006
|
250,000
|
125,0004
|
166,166
|
492,274
|
25,516
|
1,058,956
|
|
|
Robert
J. Israel
|
2008
|
355,000
|
80,0004
|
143,468
|
238,693
|
29,167
|
846,328
|
|
Senior
Vice President
|
|||||||
_____________________
|
(1)
|
Amount
of compensation for each NEO reflects the expense recognized by the
Company for financial statement reporting purposes for the year presented,
in accordance with FAS 123R, in respect of awards made in the year
presented and prior years. The assumptions used in calculating
the expense amounts are set forth in our Annual Reports on Form 10-K for
the relevant years. “Option Awards” column includes
compensation derived from our ESPP and Non-Qualified ESPP
Plans.
|
|
(2)
|
Includes
the amount of the Company’s matching contribution under our 401(k) Plan
and reimbursement of premiums for enhanced life and disability insurance
made to or on behalf of our NEOs.
|
|
(3)
|
Dr.
Maddon elected to receive the 2008 bonus award in the form of 66,294
shares of restricted stock rather than $330,000 cash, of which 29,464
shares vested on March 17, 2009, the date of grant, with the balance of
36,830 vesting six months later. The total value of the award
was $371,246, based on 66,294 shares at a per-share value of $5.60, the
fair market value of our common stock on the date of grant. The $41,246
incremental cost will be reported in the Summary Compensation Table of our
2010 Proxy Statement as compensation expense for 2009, when the restricted
shares are scheduled to vest. Dr. Maddon elected to receive the
2006 bonus award in the form of 15,957 shares of restricted stock rather
than $350,000 cash. The total value of the award was $481,263, based on
15,957 shares at a per-share value of $30.16, the fair market value of our
common stock on February 20, 2007, the date of grant. All shares
awarded for the 2006 bonus have vested and compensation expense has been
recorded in accordance with FAS 123R. Dr. Maddon did not
receive a bonus in 2007.
|
|
(4)
|
Includes
a performance-based discretionary cash bonus approved by the
Committee.
|
|
(5)
|
2008
amount includes a discretionary cash bonus of $88,000 and a
milestone-based cash bonus of $67,000 paid upon approval by the FDA of the
Company’s NDA for RELISTOR in 2008 (see our CD&A above under the
heading “Elements of Compensation-Long-term
incentives”). 2007 amount includes a discretionary cash
bonus of $110,000 and an additional bonus of the same amount paid upon
filing of the RELISTOR NDA.
|
|
(6)
|
Includes
a reduction of $127,800 in each of 2007 and 2008 in respect of two 2006
grants of 5,000 restricted shares each which were subject to subsequent
milestone-based vesting which did not occur and were
forfeited.
|
|
(7)
|
Amounts
differ from those previously reported. In our 2008 Proxy
Statement, Dr. Maddon’s compensation was reported to be $381,911 higher
for 2007 and $438,006 higher for 2006 than in the presentation
above. For all years, however, the actual compensation received
by Dr. Maddon as reported in the 2008 Proxy Statement and in this document
remains the same. In the presentation
above:
|
|
|
(i)
|
vesting
of portions of Dr. Maddon’s bonus compensation is reported beginning in
the year preceding the award (in respect of which the bonus was awarded),
rather than beginning in the year the bonus was
awarded;
|
|
(ii)
|
recognition
of the fair market value of incremental costs of his bonus awards is
reported in the “Stock Awards” column rather than under
“Bonus;”
|
|
(iii)
|
the
amount of his 2006 bonus (awarded in 2007) is reported as compensation for
2006 rather than 2007, and the initial vested portion of his 2005 bonus
(awarded in 2006) is not included in 2006 bonus compensation (the 2008
Proxy Statement reported the 2005 bonus portion in both the “Bonus” and
“Stock Awards” columns, without a compensating reduction of the “Total”
column); and
|
|
(iv)
|
compensation
derived from our Non-Qualified ESPP is reported in the “Option Awards”
column.
|
Grants of Plan-Based Awards For 2008
The
following table sets forth information regarding grants of compensatory awards
we made to our NEOs during 2008:
|
Name
|
Grant
Date
|
Estimated
Future Payouts Under Equity Incentive Plan Awards (#)1
|
All
Other Stock Awards: Number of Shares of Stock or Units
(#)
|
All
Other Option Awards: Number of Securities Underlying Options
(#)
|
Exercise
or Base Price of Option Awards ($/Share)
|
Grant
Date Fair Value of Stock and Option Awards ($)
|
|
Paul
J. Maddon
|
7/1/2008
|
25,0002
|
197,250
|
|||
|
7/1/2008
|
75,0002
|
16.05
|
513,000
|
|||
|
Robert
A. McKinney
|
7/1/2008
|
8,3333
|
133,745
|
|||
|
7/1/2008
|
25,0004
|
16.05
|
277,223
|
|||
|
|
||||||
|
Mark
R. Baker
|
7/1/2008
|
60,0004
|
16.05
|
665,334
|
||
|
Thomas
A. Boyd
|
7/1/2008
|
6,6673
|
107,005
|
|||
|
7/1/2008
|
20,0004
|
16.05
|
221,778
|
|||
|
Robert
J. Israel
|
7/1/2008
|
6,6673
|
107,005
|
|||
|
7/1/2008
|
20,0004
|
16.05
|
221,778
|
__________________
|
(1)
|
Awards
reported in this column are limited to performance-based equity awards;
other equity awards are reported in following
columns.
|
|
(2)
|
Restricted
stock awards and stock options vest in defined percentages upon
achievement of specified performance or market-based milestones; not
subject to cliff vesting.
|
|
(3)
|
Restricted
stock awards vest 33.3% per year, with vesting dates of June 20, 2009,
2010 and 2011.
|
|
(4)
|
Stock
options vest 33.3% per year with vesting dates of July 1, 2009, 2010 and
2011.
|
Outstanding Equity Awards at Fiscal Year-End
The
following table sets forth information regarding unexercised stock option and
unvested stock awards held by our NEOs as of December 31, 2008:
|
Option
Awards
|
Stock
Awards
|
||||||||
|
Name
|
Number
of
Securities
Underlying Unexercised Options
(#)
Exercisable
|
Number
of Securities Underlying Unexercised Options
(#)
Unexercisable
|
Equity
Incentive Plan Awards: Number of Securities Underlying Unexercised
Unearned Options
(#)
|
Option
Exercise Price
($)
|
Option
Expiration Date
|
Number
of Shares or Units of Stock That Have Not Vested
(#)1
|
Market
Value of Shares or Units of Stock That Have Not Vested
($)
|
Equity
Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights
That Have Not Vested
(#)
|
Equity
Incentive Plan Payout Value of Unearned Shares, Units or Other Rights That
Have Not Vested
($)2
|
|
Paul
J.
Maddon
|
0
101,250
79,750
75,000
|
75,000(3)
11,250(4)
65,250(5)
|
16.05
22.01
24.26
21.39
|
7/1/2018
7/2/2017
7/3/2016
7/1/2015
|
|||||
|
35,625
37,500
112,500
112,500
75,000
|
1,875(6)
|
16.85
16.85
15.06
15.06
12.29
|
7/1/2014
7/1/2014
7/1/2013
7/1/2013
7/1/2012
|
||||||
|
33,000
|
12.29
|
7/1/2012
|
|||||||
|
58,543
|
603,578
|
25,000
|
257,750
|
||||||
|
Robert
A.
McKinney
|
0
2,500
12,500
9,375
18,750
25,000
25,000
|
25,000(7)
7,500(8)
12,500(9)
3,125(10)
6,250(11)
|
16.05
22.01
24.26
21.39
22.68
15.06
12.29
|
7/1/2018
7/2/2017
7/3/2016
7/1/2015
3/1/2015
7/1/2013
7/1/2012
|
|||||
|
25,000
|
17.19
|
12/27/2011
|
|||||||
|
25,000
|
13.63
|
6/28/2010
|
|||||||
|
25,000
|
13.75
|
4/16/2009
|
|||||||
|
23,457
|
241,842
|
–
|
–
|
||||||
|
Mark
R. Baker
|
0
2,500
12,500
30,000
30,000
|
60,000(7)
7,500(8)
12,500(9)
30,000(12)
20,000(13)
|
16.05
22.01
24.26
27.71
20.02
|
7/1/2018
7/2/2017
7/3/2016
2/21/2016
6/20/2015
|
|||||
|
13,999
|
144,330
|
–
|
–
|
||||||
|
Thomas
A. Boyd
|
0
1,750
8,750
12,500
18,750
|
20,000(7)
5,250(8)
8,750(9)
12,500(12)
6,250(10)
|
16.05
22.01
24.26
27.71
21.39
|
7/1/2018
7/2/2017
7/3/2016
2/21/2016
7/1/2015
|
|||||
|
25,000
20,000
50,000
|
0
0
0
|
15.06
12.29
18.47
|
7/1/2013
7/1/2012
1/1/2012
|
||||||
|
18,791
|
193,735
|
–
|
–
|
||||||
|
Robert
J. Israel
|
0
1,750
8,750
|
20,000(7)
5,250(8)
8,750(9)
|
16.05
22.01
24.26
|
7/1/2018
7/2/2017
7/3/2016
|
|||||
|
7,500
35,000
25,000
25,000
25,000
24,000
|
2,500(10)
0
0
0
0
0
|
21.39
15.06
12.29
17.19
13.62
13.75
|
7/1/2015
7/1/2013
7/1/2012
12/27/2011
6/28/2010
4/16/2009
|
||||||
|
17,791
|
183,425
|
||||||||
|
_____________________
|
|
(1)
|
Vest
in equal annual installments commencing one year from date of grant with
final vesting no later than June 20,
2011.
|
|
(2)
|
Based
on the closing price of our common stock on December 31, 2008 of
$10.31.
|
|
(3)
|
Performance
stock options vest in percentages upon achievement of milestones or share
price performance (see our CD&A above under the heading “Elements of
Compensation-Long-term
incentives” for a discussion of the performance
criteria).
|
|
(4)
|
Performance
options vested 90% through 2008 due to the achievement of specified
milestones; remaining 10% cliff vest on June 2,
2017.
|
|
(5)
|
Performance
options vested 55% through 2008 due to the achievement of specified
milestones; remaining 45% cliff vest on June 3,
2016.
|
|
(6)
|
Performance
options vested 95% through 2008 due to the achievement of specified
milestones; remaining 5% cliff vest on June 1, 2014 or earlier achievement
of milestones.
|
|
(7)
|
Stock
options vest equally at 33% in each of the three years beginning July 1,
2009.
|
|
(8)
|
Stock
options vested 25% through December 31, 2008; remaining vest on July 2,
2009, 2010 and 2011.
|
|
(9)
|
Stock
options vested 50% through December 31, 2008; remaining vest on July 3,
2009 and 2010.
|
|
(10)
|
Stock
options vested 75% through December 31, 2008; remaining vest on July 1,
2009.
|
|
(11)
|
Stock
options vested 75% through December 31, 2008; remaining vested on March 1,
2009.
|
|
(12)
|
Stock
options vested 50% through December 31, 2008; remaining vest on February
21, 2009 and 2010.
|
|
(13)
|
Stock
options vested 60% through December 31, 2008; remaining vest on June 20,
2009 and 2010.
|
Option Exercises and Stock Vested
in 2008
The
following table sets forth information regarding the exercise and vesting of
stock and stock option awards held by our NEOs during 2008:
|
Option
Awards
|
Stock
Awards
|
|||
|
Name
|
Number
of Shares Acquired on Exercise
(#)
|
Value
Realized on Exercise
($)
|
Number
of Shares Acquired on Vesting
(#)
|
Value
Realized on Vesting
($)
|
|
Paul
J.
Maddon
|
-
|
-
|
37,9481
|
657,639
|
|
Robert
A.
McKinney
|
-
|
-
|
8,334
|
144,428
|
|
Mark
R.
Baker
|
-
|
-
|
5,334
|
92,438
|
|
Thomas
A.
Boyd
|
-
|
-
|
7,709
|
133,597
|
|
Robert
J.
Israel
|
9,000
|
32,704
|
6,709
|
116,267
|
_______________
(1) Awards
were subject to vesting upon achievement of milestones.
Potential Payments Upon Termination or
Change-in-Control
Dr. Maddon. Under
the terms of the employment agreement we negotiated with Dr. Maddon, we will be
required to provide compensation to him in the event of termination of his
employment or a Change-in-Control (defined below) of the Company. We
believe that these arrangements with Dr. Maddon are competitive with the
arrangements involving CEOs of comparable companies and are fair to
us. The following table describes those potential
payments:
|
Cash
Severance
|
Equity
|
Benefits
Continuation8
($)
|
Gross
up of I.R.C. Golden Parachute Excise Tax Resulting from
Change-in-Control
($)
|
Total
($)
|
|||||
|
Base
Salary
|
Bonus5
|
||||||||
|
Circumstances
of Termination1
|
Multiple
|
($)
|
Multiple
|
($)
|
Value
of Vested Equity6
($)
|
Value
of Accelerated Unvested Equity7
($)
|
|||
|
Termination
by us for cause or voluntary termination
|
N/A
|
N/A
|
N/A
|
N/A
|
0
|
N/A
|
N/A
|
N/A
|
0
|
|
Death
or disability of named executive officer2
|
1.0
|
618,000
|
N/A
|
685,375
|
0
|
N/A
|
25,182
|
N/A
|
1,328,557
|
|
Termination
by us without cause or by the named executive officer with good
reason3
|
2.0
|
1,236,000
|
2.0
|
1,020,752
|
0
|
861,328
|
25,182
|
N/A
|
3,143,262
|
|
Termination
by us without cause or by the named executive officer with good reason
following a change in control4
|
3.0
|
1,854,000
|
3.0
|
1,356,128
|
0
|
861,328
|
37,773
|
N/A
|
4,109,229
|
___________________________
|
(1)
|
Assumes
that the triggering event occurred on December 31, 2008, when the closing
price per share of our common stock was
$10.31.
|
|
(2)
|
In
this circumstance, Dr. Maddon or his estate receives a pro-rated amount of
bonus from the beginning of the year of termination to the date of
termination. In addition, he receives one times his base salary
for the year of termination and average bonus (calculated using the
average of the annual bonuses paid to him in the three years preceding the
year of termination). For purposes of this calculation, bonus
used to calculate pro-rated bonus is assumed to be
$350,000.
|
|
(3)
|
In
this circumstance, Dr. Maddon receives cash severance equal to twice the
sum of his base salary for the year of termination and the average of the
annual bonuses paid to him in the three years preceding the year of
termination, together with a prorated bonus from the beginning of the year
of termination to the date of termination. For purposes of this
calculation, base salary is $618,000, the fair market values of his
bonuses for the three years preceding 2008 are $525,000, $481,250 and $0
and the fair market value of his bonus for 2008 is
$371,246. Bonus used to calculate pro-rated bonus is assumed to
be $350,000.
|
|
(4)
|
In
this circumstance, Dr. Maddon receives cash severance equal to three times
the sum of his base salary for the year of termination and the average of
the annual bonuses paid to him in the three years preceding the year of
termination, together with a prorated bonus from the beginning of the year
of termination to the date of termination. Assumptions
specified in note (3) are used for purposes of this
calculation.
|
|
(5)
|
Includes
bonus multiple calculated using the multiple shown plus a pro-rated bonus
of $350,000 where any amount is shown, representing an estimated pro-rata
bonus for the year of termination as contemplated by employment
agreement.
|
|
(6)
|
All
of Dr. Maddon’s outstanding stock options were underwater as of December
31, 2008.
|
|
(7)
|
Assumes
(i) acceleration of vesting at December 31, 2008 of all 153,375
unexercisable and unearned stock options, as set forth in the Outstanding
Equity Awards at Fiscal Year-End table above, all
of which were underwater at December 31, 2008 and (ii) acceleration of
vesting of all 83,543 outstanding shares of restricted stock at December
31, 2008 and the sale of the stock on that date, yielding, before taxes,
$861,328, using the closing price of our common stock on December 31, 2008
of $10.31.
|
|
(8)
|
Health
and welfare benefits continue for 24 or 36 months, depending on the
circumstances of termination; includes the employer cost of health,
dental, disability and group life
insurance.
|
Narrative for Potential Payments Upon Termination or
Change-in-Control Table for Dr. Maddon
Our
employment agreement with Dr. Maddon sets for the terms of his employment as CEO
and obligates both parties to perform certain responsibilities upon termination
of employment under certain circumstances, as follows:
Termination prior
to a Change-in-Control. Prior to a Change-in-Control (defined
below), Dr. Maddon or his estate will be entitled upon termination
to:
|
·
|
If
terminated by us for Cause or if he resigns without Good Reason (each as
defined), a pro-rated salary through his termination date (his unvested
equity compensation will be
forfeited).
|
|
·
|
If
his employment is terminated due to death or disability, (i) his salary
and a pro-rated bonus until his termination date, (ii) continued welfare
benefits for a period of two years, (iii) a lump sum payment equal to the
sum of his base salary and Average Bonus (defined as the average of the
bonuses paid to him in the three years preceding the year of termination),
(iv) vesting of all time-based equity and (v) vesting of all
milestone-based equity if the milestones are achieved under the original
vesting provisions.
|
|
·
|
If
terminated without Cause by us or if Dr. Maddon resigns for Good Reason,
(i) a pro-rated salary through his termination date, (ii) a lump sum equal
to twice his base salary and Average Bonus, (iii) continued welfare
benefits for two years and (iv) immediate vesting of all time-based and
performance-based equity.
|
Termination
within two years after or three months prior to a Change-in-Control. Within two years after
or three months prior to a Change-in-Control, Dr. Maddon or his estate will be
entitled upon termination to:
|
·
|
If
terminated by us for Cause or if he resigns without Good Reason, a
pro-rated salary through his termination date (his unvested equity
compensation will be forfeited).
|
|
·
|
If
his employment is terminated due to death or disability, (i) his salary
and a pro-rated bonus until his termination date, (ii) continued welfare
benefits for a period of two years, (iii) a lump sum payment equal to the
sum of his base salary and Average Bonus, (iv) vesting of all time-based
equity and (v) vesting of all milestone-based equity if the milestones are
achieved under the original vesting
provisions.
|
|
·
|
If
terminated without Cause or if Dr. Maddon resigns for Good Reason during
the designated period before or after a Change-in-Control, (i) three times
his base salary and Average Bonus, (ii) continued welfare benefits for
three years, (iii) a pro-rata bonus for the year of termination, (iv)
immediate vesting of all time-based and performance-based equity and (v)
payment from the Company of a gross-up for any excise tax incurred under
sections 280G or 4999 of the Internal Revenue Code (unless reducing his
cash severance by ten percent will result in no tax being
incurred).
|
Assumptions
and definitions related to the calculations in the above table
include:
Non-Compete,
Non-Disclosure of Confidential Information and Non-Solicitation
Agreements. Dr.
Maddon’s employment agreement includes covenants not to compete with us, not to
disclose our confidential information and not to solicit our employees or
customers, either during the term of the agreement or for defined periods
thereafter. None of the covenants affects payments or benefits
due.
Involuntary
Without Cause Termination and Termination for Good Reason. Dr.
Maddon will be entitled to certain benefits as described in the table above if
his employment is terminated by us for reasons other than Cause or by Dr. Maddon
for Good Reason.
A
termination is for Cause if it is because of his (i) continual failure to
perform substantially his corporate duties or follow the reasonable instructions
of the Board; (ii) conviction of a felony or a guilty or nolo contendere plea with
respect thereto; (iii) habitual drunkenness or habitual use of illegal
narcotics; (iv) excessive absenteeism not related to sick leave or
vacations (but only after 60 days’ prior written notice is received by Dr.
Maddon from the Board) followed by a repetition of such excessive absenteeism;
(v) continuous conflict of interest after Dr. Maddon receives notice in writing
from the Board; (vi) material breach of any of our written policies that are
material to the business or our reputation and applicable to our senior
executives or any of the material provisions of his employment agreement; or
(vii) engagement in illegal conduct that is directly and materially injurious to
us.
A
termination is for Good Reason if it is because of (i) a material
diminution during the term of the employment agreement in Dr. Maddon’s position,
title, responsibilities, authority or reporting relationship from what is set
forth in the employment agreement; (ii) a material breach by us of our
obligations under the employment agreement; or (iii) a material adverse change
to our insurance arrangement or indemnification agreement with Dr.
Maddon. An event will not constitute Good Reason if (a) Dr. Maddon
does not notify us in writing that an event that would constitute good reason
has occurred within 90 days after he has knowledge of such an event, or (b) we
remedy such event within 30 days after we receive written notification of the
event. If Dr. Maddon does not resign within 24 months after he has
knowledge that an event constituting Good Reason has occurred and has not been
remedied, any resignation based on such an event will be deemed not to be for
Good Reason.
Payments upon a
Termination in Connection with a Change-in-Control. Dr.
Maddon will be entitled to certain benefits as described in the table above if
his employment is terminated by us for reasons other than Cause during the
three-month period before or the two-year period after a Change-in-Control or by
Dr. Maddon for Good Reason during the two-year period after a
Change-in-Control. A Change-in-Control means any of (i) a change in
the composition of the Board such that during any period of two consecutive
years, individuals who at the beginning of such period constitute the Board, and
any new director, as defined, cease for any reason to constitute at least a
majority of the members thereof; (ii) the approval by our stockholders of a
merger, consolidation, reorganization or similar corporate transaction, whether
or not we are the surviving corporation in such transaction in which outstanding
shares of our common stock are converted, as defined; (iii) acquisition of our
common stock by any entity, as defined, whose ownership represents 30% or more
of the voting power of all of our capital stock outstanding; or (iv) the
approval by our stockholders of the sale or other disposition of all or
substantially all of our assets or a complete liquidation or dissolution of the
Company.
Tax
Gross-up. Upon a Change-in-Control, Dr. Maddon may be subject
to certain excise taxes pursuant to Sections 280G and 4999 of the Internal
Revenue Code. We have agreed to reimburse Dr. Maddon for all such
excise taxes that are imposed on him and any income and excise taxes that are
payable by him as a result of any reimbursements for Sections 280G and 4999
excise taxes. As a result, the net amount retained by Dr. Maddon
after deduction of any excise taxes and all other taxes on the gross-up payments
will be equal to the net amount that he would have retained from the initial
payments under his employment agreement. If, however, reducing the
excess parachute payments to a level that would not trigger the excise tax would
result in a net after-tax benefit to him of at least 90% of the unreduced
benefit, then his excess parachute payments shall be reduced to such
level.
The
calculation of the 280G gross-up amount in the above table reflects the fact
that, as of December 31, 2008, the value of his severance related payments and
benefits would not trigger the 280G excise tax. Any calculation of
the gross-up in the future or if an actual change-of-control were to occur will
vary from the calculations performed for this proxy and would be based upon a
280G excise tax rate of 20%, the then applicable maximum federal income tax
rate, a Medicare tax rate and state income tax rate. For purposes of
the 280G calculation it is assumed that no amounts will be discounted as
attributable to reasonable compensation and no value will be attributed to Dr.
Maddon for executing a non-competition agreement. The payment of a
280G tax gross-up will be payable to Dr. Maddon for any excise tax incurred
regardless of whether his employment is terminated. The amount of the
280G tax gross-up will change based upon whether Dr. Maddon’s employment with us
is terminated, because the amount of compensation subject to Section 280G will
change. For termination on December 31, 2008, as a result of a
Change-in-Control, Dr. Maddon would not have triggered the excise
tax.
Dr. Israel. In
accordance with the terms of our employment agreement with Dr. Israel we will be
required to provide compensation to him in the event of termination of his
employment. The following table describes those potential
payments:
|
Cash
Severance
|
Equity
|
Benefits
Continuation1
($)
|
Gross
up of I.R.C. Golden Parachute Excise Tax Resulting from
Change-in-Control
($)
|
Total
($)
|
|||||
|
Base Salary1
|
Bonus
|
||||||||
|
Circumstances
of Termination
|
Multiple
|
($)
|
Multiple
|
($)
|
Value
of Vested Equity
($)
|
Value
of Accelerated Unvested Equity
($)
|
|||
|
Termination
by us for cause
|
N/A
|
N/A
|
N/A
|
N/A
|
0
|
0
|
0
|
N/A
|
0
|
|
Termination
by us without cause2
|
N/A
|
266,225
|
N/A
|
0
|
N/A
|
N/A
|
13,988
|
N/A
|
280,213
|
___________________________
|
(1)
|
Assumes
salary and benefits as of December 31,
2008.
|
|
(2)
|
In
this circumstance, Dr. Israel receives nine months salary at his current
salary and benefits. If at any time during such severance
period Dr. Israel secures new employment, however, the severance and
benefits will cease.
|
Narrative for Potential Payments Upon Termination or
Change-in-Control Table for Dr. Israel
Our
employment agreement with Dr. Israel sets terms of his employment with us and
obligates both parties to perform certain responsibilities upon termination of
employment under certain circumstances, as follows:
Termination for
Cause. If terminated by us for cause, Dr. Israel will not be
entitled to any severance benefits and all vested and unvested stock options
will be immediately forfeited. Termination for cause is defined as
continual failure to perform substantially one’s duties, conviction of a felony,
habitual drunkenness, excessive absenteeism, dishonesty, unauthorized disclosure
of confidential information, continuous conflict of interest or any other reason
constituting cause under New York or federal law.
Termination
without Cause. If terminated by us without cause, Dr. Israel
will be entitled nine months’ salary continuation at his current salary and
benefits. If at any time during such severance period Dr. Israel
secures new employment, however, the severance and benefits will
cease. In addition, Dr. Israel will immediately vest in the greater
of (i) 37,500 stock options or (ii) the number of the options that have vested
on the termination date.
Non-Compete,
Non-Disclosure of Confidential Information and Non-Solicitation
Agreements. Dr.
Israel’s employment agreement includes covenants not to compete with us, not to
disclose our confidential information and not to solicit our employees, either
during the term of the agreement or for defined periods
thereafter. None of the covenants affects payments or benefits
due.
Other Named Executive
Officers. There are no agreements in place with any other
NEO. Therefore, the only amounts to which they would be legally
entitled would be their vested equity compensation and amounts payable from
their qualified retirement plan. For this reason we have not provided
tables for the other NEOs.
Director Compensation in 2008
The
following table sets forth information regarding the aggregate compensation we
paid to the members of our Board during 2008:
|
Name1
|
Fees
Earned or Paid in Cash
($)
|
Option
Awards2
($)
|
All
Other Compensation3
($)
|
Total
($)
|
||||||||||||
|
Kurt
W.
Briner
|
40,000 | 277,223 | - | 317,223 | ||||||||||||
|
Paul
F.
Jacobson
|
40,000 | 277,223 | - | 317,223 | ||||||||||||
|
Charles
A.
Baker
|
17,500 | 110,889 | - | 128,389 | ||||||||||||
|
Mark
F.
Dalton
|
17,500 | 110,889 | - | 128,389 | ||||||||||||
|
Stephen
P.
Goff
|
15,000 | 110,889 | 30,000 | 155,889 | ||||||||||||
|
David
A.
Scheinberg
|
15,000 | 110,889 | 30,000 | 155,889 | ||||||||||||
|
Nicole
S.
Williams
|
25,000 | 219,335 | - | 244,335 | ||||||||||||
_________________________
|
(1)
|
Dr.
Maddon serves as a director but does not receive any additional
compensation for services provided in that
capacity.
|
|
(2)
|
At
December 31, 2008, the aggregate number of stock options outstanding for
each of our non-employee directors was as follows: Mr. Baker
92,500; Mr. Briner 167,500; Mr. Dalton 87,500; Dr. Goff 127,500; Mr.
Jacobson 157,500; Dr. Scheinberg 121,607; Ms. Williams
45,000. In general, the options granted to the non-employee
directors vested immediately on the date of grant and the amounts shown
represent the grant date fair value which is equal to the compensation
recognized for each director during the fiscal year under FAS
123R. The grant date fair value of the 2008 option awards
was determined using option pricing models with assumptions disclosed
in our Annual Reports on Form 10-K for the relevant
years.
|
|
(3)
|
Drs.
Goff and Scheinberg each received payment of $30,000 for services as
scientific advisors for the year
2008.
|
Narrative for Director Compensation Table
Mr.
Briner receives $40,000 annually as compensation for his services as Chairman of
the Board. (Former Co-Chairman Paul Jacobson also received $40,000 in
2008 for his services as Co-Chairman.) Mr. Briner and our other
non-employee directors are entitled, for their Board and committee service,
to:
|
·
|
$2,000
for attendance at each Board (including same-day committee) meeting
($1,000 for attendance by telephone), and $500 for participation in each
telephonic Board meeting;
|
|
·
|
$1,000
for attendance at each committee meeting not in conjunction with a Board
meeting ($500 for telephonic
participation);
|
|
·
|
$500
for each committee meeting held on the day after a Board
meeting;
|
|
·
|
an
annual retainer fee of $15,000 for Board service, except for Mr. Briner
who is entitled to an annual retainer fee of $40,000 as described
above;
|
|
·
|
an
option to purchase 10,000 fully-vested shares of common
stock (except for Mr. Briner who is granted 25,000 shares)
granted annually on the first business day of July with an exercise price
equal to the fair market value as of the date of grant;
and
|
|
·
|
an
annual retainer fee of $10,000 for service as Audit Committee Chair
(currently Ms. Williams); $2,500 for service as Compensation
Committee Chair (currently Mr. Dalton) and $2,500 for service as
Nominating and Corporate Governance Committee Chair (currently Mr. Charles
Baker).
|
For their
service on the Board in 2008, Messrs. Briner and Jacobson each received on July
1, 2008 a grant of stock options to purchase 25,000 shares of our common stock
with an exercise price of $16.05 per share; our other non-employee directors
each received a grant of 10,000 fully-vested stock options with the same
exercise price.
All stock
option awards granted to directors for their service on the Board during 2008
were made under our 2005 Stock Incentive Plan, as described in our
CD&A. These non-qualified options expire ten years from the grant
date and have an exercise price equal to the closing price of our common stock
on the date of grant. Option compensation to non-employee directors
equals the grant-date fair values of option awards that vested in the respective
year. Since all directors’ option awards generally vest on the date
of grant, the amounts reported are equal to the grant-date fair value of each
award. The fair values were determined using the Black-Scholes option
pricing model with assumptions as noted in our 2008 Annual Report on Form 10-K
and the closing stock prices on the dates of grant. The fair value
per share, so calculated, of stock options granted on July 1, 2008 was
$11.089.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
The
following table sets forth certain information as of March 31, 2009, except as
noted, regarding the beneficial ownership of the common stock by (i) each person
or group known to us to be the beneficial owner of more than five percent of our
common stock outstanding, (ii) each of our directors and executive officers and
(iii) all of our directors and executive officers as a group.
|
Shares
Beneficially Owned2
|
||
|
Name
and Address of Beneficial Owner1
|
Number
|
Percent
|
|
Federated
Investors, Inc.3
Federated
Investors Tower
Pittsburgh,
PA 15222
|
4,500,391
|
14.6%
|
|
Wellington
Management Company, LLP4
75
State Street
Boston,
MA 02109
|
4,017,754
|
13%
|
|
Sectoral
Asset Management Inc.5
2120-1000
Sherbrooke Street
West
Montreal, PQ H3A 3G4 Canada
|
3,923,325
|
12.7%
|
|
Paul Tudor Jones II6
1275
King Street
Greenwich,
CT 06831
|
2,888,513
|
9.4%
|
|
Entities
affiliated with Tudor Investment Corporation7
1275
King Street
Greenwich,
CT 06831
|
2,342,388
|
7.6%
|
|
Morgan
Stanley8
1585
Broadway
New
York , NY 10036
|
1,981,798
|
6.4%
|
|
Barclays
Global Investors, NA.9
45
Fremont Street
San
Francisco, CA 94105
|
1,626,901
|
5.3%
|
|
Charles
A. Baker10
|
113,981
|
*
|
|
Kurt
W. Briner11
|
220,500
|
*
|
|
Peter
J. Crowley12
|
-
|
*
|
|
Mark
F. Dalton13
|
2,524,888
|
8.2%
|
|
Stephen
P. Goff14
|
161,000
|
*
|
|
Paul
J. Maddon15
|
1,491,814
|
4.7%
|
|
David
A. Scheinberg16
|
167,789
|
*
|
|
Nicole
S. Williams17
|
30,000
|
*
|
|
Robert
A. McKinney18
|
213,605
|
*
|
|
Mark
R. Baker19
|
117,486
|
*
|
|
Thomas
A. Boyd20
|
181,340
|
*
|
|
Robert J. Israel21
|
193,360
|
*
|
|
William
C. Olson22
|
237,702
|
*
|
|
All
directors and executive officers as a group23
|
5,936,565
|
17.9%
|
_________________________
* Less
than one percent.
|
(1)
|
If
not otherwise specified, the address of each beneficial owner is c/o
Progenics Pharmaceuticals, Inc., 777 Old Saw Mill River Road, Tarrytown,
New York 10591.
|
|
(2)
|
With respect to our directors and
executive officers, and except as indicated and pursuant to applicable
community property laws, each stockholder possesses sole voting and
investment power with respect to the shares of common stock
listed. The number of shares of common stock beneficially owned
includes the shares issuable pursuant to stock options to the extent
indicated in the notes to this table. Shares issuable upon
exercise of these options are deemed outstanding for computing the
percentage of beneficial ownership of the person holding the options but
are not deemed outstanding for computing the percentage of beneficial
ownership of any other person. None of the shares held
by our directors and
executive officers are pledged as
collateral.
|
|
(3)
|
Based
on a Schedule 13G, filed February 10, 2009, (i) all shares are owned by
Federated Investors, Inc. (“Parent”), the parent holding company of
Federated Equity Management Company of Pennsylvania and Federated Global
Investment Management Corp., (ii) all of Parent’s outstanding voting stock
is held in the Voting Shares Irrevocable Trust for which John F. Donahue,
Rhodora J. Donahue and J. Christopher Donahue act as trustees, and (iii)
they have the collective voting control over the
Parent.
|
|
(4)
|
Based
on a Schedule 13G, filed on February 17, 2009, Wellington Management
Company, LLP has shared voting power over 3,445,873 shares and shared
dispositive power over 3,990,954
shares.
|
|
(5)
|
Based
on a Schedule 13G filed on February 10, 2009, (i) Sectoral Asset
Management Inc. in its capacity as an investment adviser has the sole
right to vote 3,356,425 shares and to dispose of the 3,923,325 shares
reported, (ii) Jerome G. Pfund and Michael L. Sjostrom are shareholders of
Sectoral Asset Management Inc. and (iii) Pictet Funds-BIOTECH, a Luxemburg
investment company beneficially owns 9.4% of the shares
reported. Based on a Schedule 13G filed on January 12, 2009,
Pictet Funds Biotech is the beneficial owner of 2,870,811 shares
(9.43%).
|
|
(6)
|
Includes
2,888,513 shares beneficially owned by entities affiliated with Tudor
Investment Corporation (TIC). Mr. Jones is the Chairman
and principal equity owner of TIC, and the indirect principal equity owner
of Tudor Arbitrage Partners L.P. (TAP), Tudor Proprietary Trading, L.L.C.
(TPT) and Tudor Global Trading LLC (TGT). Mr. Jones may be
deemed to be the beneficial owner of shares beneficially owned, or deemed
beneficially owned, by entities affiliated with
TIC. Mr. Jones disclaims beneficial ownership of such
shares. See
Note (7).
|
|
(7)
|
The
number of shares owned by entities affiliated with TIC consists of
1,820,068 shares held of record by The Tudor BVI Portfolio L.P., a limited
partnership organized under the law of the Cayman Islands (Tudor BVI),
287,813 shares held of record by TIC, 193,126 shares held of record by
TAP, 25,981 shares held of record by TPT, and 15,400 shares held of record
by TGT. In addition, because TIC provides investment advisory
services to Tudor BVI, it may be deemed to beneficially own the shares
held by such entity. TIC disclaims beneficial ownership of such
shares. TGT is the general partner of TAP. Tudor
Group Holdings LLC (TGH) is the sole member of TGT and indirectly holds
all of the membership interests of TPT. TGH is also the sole
limited partner of TAP. TGH expressly disclaims beneficial
ownership of the shares beneficially owned by each of such
entities. TGT disclaims beneficial ownership of shares held by
TAP. The number set forth does not include shares owned of
record by Mr. Jones and Mr. Dalton. See Notes (6) and
(13).
|
|
(8)
|
Based
on a Schedule 13G filed on February 16, 2009, 1,981,798 shares are held by
Morgan Stanley and Frontpoint Partners, LLC, which share voting and
dispositive powers.
|
|
(9)
|
Based
on a Schedule 13G, filed on February 6, 2009, Barclays Global Investors,
NA. has sole voting power over 554,224 shares, and Barclays Global Fund
Advisors owns 972,006 shares over which it has sole voting and dispositive
powers.
|
|
(10)
|
Includes
21,481 shares owned by the Baker Family Limited Partnership and 92,500
shares issuable upon exercise of options held by Mr. Baker and exercisable
within 60 days of March 31, 2009.
|
|
(11)
|
Includes
53,000 shares outstanding and 167,500 shares issuable upon exercise of
options exercisable within 60 days of March 31,
2009.
|
|
(12)
|
Upon
his appointment to the Board of Directors, Mr. Crowley was granted 25,000
stock options, none of which are exercisable within 60 days of March 31,
2009.
|
|
(13)
|
Includes
78,500 shares held of record directly by Mr. Dalton, 87,500 shares
issuable upon exercise of options held by Mr. Dalton exercisable
within 60 days of March 31, 2009 and 16,500 shares held of record by DF
Partners, a family partnership of which Mr. Dalton is the sole
general partner. The number set forth also includes 2,342,388
shares beneficially owned by entities affiliated with TIC. Mr.
Dalton is Vice Chairman and President and an equity owner of TIC and
TGH. Mr. Dalton is also the Vice Chairman and President and an
indirect equity owner of TGT and TPT. Mr. Dalton disclaims
beneficial ownership of shares beneficially owned, or deemed beneficially
owned, by entities affiliated with TIC and DF Partners, except to the
extent of his pecuniary interest therein. See Note
(7).
|
|
(14)
|
Includes
33,500 shares outstanding and 127,500 shares issuable upon exercise of
options exercisable within 60 days of March 31,
2009.
|
|
(15)
|
Includes
(i) 665,069 shares outstanding; (ii) 662,125 shares issuable upon exercise
of options exercisable within 60 days of March 31, 2009, (iii) 120,373
shares of restricted stock and (iv) 44,247 shares held by Dr. Maddon’s
spouse, the beneficial ownership of which Dr. Maddon
disclaims.
|
|
(16)
|
Includes
41,681 shares outstanding and 121,607 shares issuable upon exercise of
options exercisable within 60 days of March 31, 2009 and 4,501 shares of
restricted stock.
|
|
(17)
|
Includes
30,000 shares issuable upon exercise of options exercisable within 60 days
of March 31, 2009.
|
|
(18)
|
Includes
15,773 shares outstanding, 174,375 shares issuable upon exercise of
options exercisable within 60 days of March 31, 2009 and 23,457 shares of
restricted stock.
|
|
(19)
|
Includes
13,487 shares outstanding, 90,000 shares issuable upon exercise of options
exercisable within 60 days of March 31, 2009 and 13,999 shares of
restricted stock.
|
|
(20)
|
Includes
19,549 shares outstanding, 143,000 shares issuable upon exercise of
options exercisable within 60 days of March 31, 2009 and 18,791 shares of
restricted stock.
|
|
(21)
|
Includes
23,569 shares outstanding, 152,000 shares issuable upon exercise of
options exercisable within 60 days of March 31, 2009 and 17,791 shares of
restricted stock.
|
|
(22)
|
Includes
19,786 shares outstanding, 199,875 shares issuable upon exercise of
options exercisable within 60 days of March 31, 2009 and 18,041 shares of
restricted stock.
|
|
(23)
|
Includes
3,514,130 shares outstanding, 216,953 shares of restricted stock and
2,205,482 shares issuable upon the exercise of stock options exercisable
within 60 days of March 31, 2008 held by directors, NEOs and all other
executive officers of the Company.
|
CORPORATE GOVERNANCE
Board
and Committee Meetings
During
2008, the Board had three standing committees: the Compensation Committee, the
Audit Committee and the Nominating and Corporate Governance
Committee. The Board held six meetings, the Compensation Committee
held twelve meetings, the Audit Committee held six meetings and the Nominating
and Corporate Governance Committee held two meetings. It is the
policy of the Board to hold an executive session of independent directors at
each Board meeting. During 2008, each director attended 75% or more
of the meetings of the Board and Board committees on which he or she
served. Copies of the Charters for our Board committees are available
on our website at http://www.progenics.com/documents.cfm.
The Audit Committee reviews
our annual financial statements prior to their submission to the SEC, consults
with our independent auditors and examines and considers such other matters in
relation to the audit of our financial statements and in relation to our
financial affairs, including the selection and retention of our independent
auditors. Ms. Williams, Chair of the Committee, is an “audit
committee financial expert” as such term is defined in Item 404(d)(5) of
Regulation S-K promulgated by the SEC.
The Compensation Committee
makes recommendations concerning salaries and incentive compensation for our
employees and consultants, establishes and approves salaries and incentive
compensation for our executive officers and other senior employees, administers
our stock option plans and otherwise seeks to ensure that our compensation
philosophy is consistent with our best interests and is properly
implemented. Mr. Dalton is Chair of this Committee.
The Nominating and Corporate
Governance Committee is responsible for developing and implementing
policies and procedures intended to constitute and appropriately organize the
Board to meet its fiduciary obligations to us and our stockholders on an ongoing
basis. Among its specific duties, this Committee makes
recommendations to the Board about our corporate governance processes, assists
in identifying and recruiting candidates for the Board, administers the
Nominations Policy, considers nominations to the Board received from
stockholders, makes recommendations to the Board regarding the membership and
chairs of the Board’s committees, oversees the annual evaluation of the
effectiveness of the organization of the Board and of each of its committees,
periodically reviews the type and amount of Board compensation for non-employee
directors and makes recommendations to the full Board regarding such
compensation. The Nominating and Corporate Governance Committee also
annually reports findings of fact to the Board that permit the Board to make
affirmative determinations regarding each Board and committee member with
respect to independence and expertise criteria established by the Nasdaq
Marketplace and SEC rules and applicable law. Mr. Charles Baker is
Chair of this Committee.
Affirmative
Determinations Regarding Director Independence and Other Matters
The Board
has determined each of Messrs. Charles Baker, Briner, Crowley and Dalton, Dr.
Goff and Ms. Williams to be an “independent director” as such term is defined by
Nasdaq Marketplace Rule 4200(a)(15). (Mr. Jacobson, who resigned as a
director in November 2008, was also an “independent director.”)
The Board
has also determined that each member of the Audit Committee, the Compensation
Committee and the Nominating and Corporate Governance Committee meets the
independence requirements applicable to those committees prescribed by the
Nasdaq Marketplace rules, the SEC and the Internal Revenue Service.
With the
assistance of our legal counsel, the Nominating and Corporate Governance
Committee reviewed the applicable legal standards for Board member and Board
committee independence and the criteria applied to determine “audit committee
financial expert” status, as well as the answers to annual questionnaires
completed by each of our directors. On the basis of this review, the
Committee delivered a report to the full Board and the Board made its
independence and “audit committee financial expert” determinations based upon
the Committee’s report and each member’s review of the information made
available to the Committee.
Stockholder
Communications with the Board; Board Attendance at the Annual Meeting of
Stockholders
Stockholders
may communicate with the Board by writing to the Board c/o the Corporate
Secretary at our corporate headquarters.
It is our
policy that the members of the Board attend annual meetings of our
stockholders. All of the members of our Board attended the 2008
Annual Meeting of Stockholders.
Code
of Business Ethics and Conduct
We have a
Code of Business Ethics and Conduct which is applicable to all of our directors,
employees and consultants. The Code meets the criteria for a “code of
ethics” under the SEC rules and “code of conduct” under the Nasdaq Marketplace
rules. The Code is available on our website at http://www.progenics.com/documents.cfm.
Our
Director Nominations Process
The
Charter for the Nominating and Corporate Governance Committee includes our
Director Nominations Policy. The purpose of the Nominations Policy is
to describe the criteria for Board member candidates and the process by which
candidates for possible inclusion in our recommended slate of director nominees
are selected. The Nominations Policy is administered by the
Nominating and Corporate Governance Committee. You may find this
Committee’s Charter on our website at http://www.progenics.com/documents.cfm.
Minimum Criteria for Board
Members. Each Board candidate must possess at least the
following specific minimum qualifications:
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·
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Each
candidate shall be prepared to represent the best interests of all of our
stockholders and not just one particular
constituency.
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|
·
|
Each
candidate shall be an individual who has demonstrated integrity and ethics
in his or her personal and professional life and has established a record
of professional accomplishment in his or her chosen
field.
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·
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No
candidate, or family member (as defined in the Nasdaq Marketplace rules)
or affiliate or associate (each as defined in Rule 405 under the
Securities Act of 1933, as amended) of a candidate, shall have any
material personal, financial or professional interest in any of our
present or potential competitors.
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·
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Each
candidate shall be prepared to participate fully in Board activities,
including, if eligible, active membership on at least one Board committee
and attendance at, and active participation in, meetings of the Board and
any committee of which he or she is a member, and not have other personal
or professional commitments that would, in the Nominating and Corporate
Governance Committee’s sole judgment, interfere with or limit his or her
ability to do so.
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Desirable Qualities and
Skills. In addition, the Nominating and Corporate Governance
Committee also considers it desirable that candidates possess the following
qualities or skills:
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·
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Each
candidate should contribute to the Board’s overall diversity — diversity
being broadly construed to mean a variety of opinions, perspectives,
personal and professional experiences and backgrounds, as well as other
differentiating characteristics.
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|
·
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Each
candidate should contribute positively to the collaborative culture among
Board members.
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|
·
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Each
candidate should possess professional and personal experiences and
expertise relevant to our goal of being a leading biopharmaceutical
company. At this stage of our development, relevant experiences
might include, among other things, large biotechnology or pharmaceutical
company CEO or senior management experience, senior-level management
experience in medical research or clinical development activities in the
fields of oncology, virology, immunology or molecular biology within a
public company or large university setting, and relevant senior-level
expertise in one or more of the following areas: finance, accounting,
sales and marketing, organizational development and public
relations.
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Internal Process for Identifying
Candidates. The Nominating and Corporate Governance Committee
has two primary methods for identifying candidates (other than those proposed by
our stockholders, as discussed below). First, on a periodic basis,
the Committee may solicit suggestions for possible candidates from a number of
sources, which may include members of the Board, our senior-level executives,
individuals personally known to the members of the Board, and independent
research by either members of the Board or our senior level
executives.
Second,
the Committee may use its authority under its Charter to retain, at our expense,
one or more search firms to identify candidates (and to approve such firms’ fees
and other retention terms). If the Committee retains a search firm,
it may be asked to identify possible candidates who meet the minimum and desired
qualifications expressed in the Nominations Policy, to interview and screen such
candidates (including conducting appropriate background and reference checks),
to act as a liaison among the Board, the Committee and each candidate during the
screening and evaluation process and thereafter to be available for consultation
as needed by the Committee.
The
Committee will also consider properly submitted stockholder nominations for
candidates for membership on the Board as described below under “Nomination of
Directors by Stockholders.”
Nomination of Directors by
Stockholders. Any of our stockholders may recommend one or
more persons for election as a director at an annual meeting of stockholders if
the stockholder complies with the procedures and requirements set forth
below.
In order
for the director nomination to be timely, a stockholder’s notice to our
Corporate Secretary must be delivered to our principal executive offices not
less than 120 days prior to the anniversary of the date of the proxy statement
released to stockholders in connection with the previous year’s annual
meeting. In the event that we set an annual meeting date that is not
within 30 days before or after the date of the immediately preceding annual
stockholders meeting, notice by the stockholder must be received no later than
the close of business on the 10th day following the day on which notice of the
date of the annual meeting was mailed or public disclosure of the date of the
annual meeting was made, whichever occurs first.
Any
candidate proposed by a stockholder must be independent of the stockholder
providing the nomination in all respects as determined by the Nominating and
Corporate Governance Committee or by applicable law. Any candidate
submitted by a stockholder must also meet the definition of an “independent
director” under the Nasdaq Marketplace rules and must meet the “Minimum Criteria
for Board Members” set forth above.
Evaluation of
Candidates. The Nominating and Corporate Governance Committee
will consider all candidates identified through the processes described above,
and will evaluate each of them, including incumbents, based on the same
criteria.
If, based
on the Committee’s initial evaluation, a candidate continues to be of interest
to the Committee, the Committee Chair will interview the candidate and
communicate the Chair’s evaluation to the other Committee members, the Chairman
of the Board and the CEO. Later reviews will be conducted by other
members of the Committee and senior management. Ultimately,
background and reference checks will be conducted and the Committee will meet to
finalize its list of recommended candidates for the Board’s
consideration.
In
November 2008, Paul F. Jacobson resigned from our Board. The
Nominating and Corporate Governance Committee recommended Mr. Crowley’s
candidacy as a replacement to Mr. Jacobson, and in January 2009, Mr. Crowley was
appointed to our Board.
Timing of the Identification and
Evaluation Process. Our fiscal year is the calendar
year. The Nominating and Corporate Governance Committee expects
generally to meet one or more times prior to March 31 of each year to consider,
among other things, candidates to be recommended to the Board for inclusion in
our recommended slate of director nominees for the next annual meeting and our
Proxy Statement. The Board usually meets each March and at that
meeting will vote on, among other things, the slate of director nominees to be
submitted to and recommended for election by stockholders at the annual meeting,
which is typically held in May or June.
All
candidates (whether identified internally or by a nomination received from a
stockholder) who, after evaluation, are then recommended by the Nominating and
Corporate Governance Committee and approved by the Board, will be included in
our recommended slate of director nominees in our Proxy Statement.
Future Revisions to the Nominations
Policy. The Nominations Policy is intended to provide a
flexible set of guidelines for the effective functioning of our director
nominations process. The Nominating and Corporate Governance
Committee intends to review the Nominations Policy at least annually and
anticipates that modifications may be necessary or desirable from time to time
as our needs and circumstances evolve, and as applicable legal or listing
standards change. The Committee may amend the Nominations Policy at
any time, in which case the most current version will be available on our web
site at http://www.progenics.com/documents.cfm.
COMPENSATION COMMITTEE REPORT
The
Compensation Committee has submitted the following report for inclusion in this
Proxy Statement:
Our
Committee has reviewed and discussed the Compensation Discussion and Analysis
contained in this Proxy Statement with management. Based on our
Committee’s review of and the discussions with management with respect to the
Compensation Discussion and Analysis, our Committee recommended to the Board
that the Compensation Discussion and Analysis be included in this Proxy
Statement and incorporated by reference in the Company’s 2008 Annual Report on
Form 10-K.
The
foregoing report is provided by the following directors, who constitute the
Committee:
By the
Compensation Committee of the Board of Directors,
Mark F.
Dalton, Chair
Charles
A. Baker
Compensation
Committee Interlocks and Insider Participation
The
Compensation Committee is comprised entirely of independent
directors. Neither Mr. Dalton nor Mr. Baker had any affiliation or
relationship with the Company which requires disclosure under this
heading.
AUDIT COMMITTEE REPORT
The Audit
Committee of the Board consists of three non-employee directors: Ms. Williams,
Chair, and Messrs. Charles Baker and Crowley. The Board and the Audit
Committee believe that the Audit Committee’s current member composition
satisfies the Nasdaq Marketplace rule that governs audit committee composition,
including the requirements that Audit Committee members satisfy the criteria for
Audit Committee membership set forth in the Sarbanes-Oxley Act of 2002 and the
rules promulgated by the SEC thereunder. The Audit Committee operates
under a written Charter adopted by the Committee and approved by the Board as a
whole.
As set
forth in its Charter, the Audit Committee’s role is one of
oversight. Progenics management is responsible for preparing our
financial statements and the independent registered public accounting firm is
responsible for auditing those financial statements and expressing an opinion as
to their conformity with accounting principles generally accepted in the United
States.
The Audit
Committee’s primary function is to assist the Board in monitoring and overseeing
the integrity of our financial statements, systems of internal control and the
audit process. Additionally, the Committee selects, subject to
stockholder ratification, the independent registered public accounting firm for
the Company. In this context, the Committee has met and has reviewed
and discussed with management and our accounting firm, PricewaterhouseCoopers
LLP, the Company’s audited financial statements as of and for the year ended
December 31, 2008. The Committee has also discussed with members of
PWC each of the matters required to be discussed by Statement on Auditing
Standards No. 61, Communication with Audit Committees, as amended.
The Audit
Committee has received and reviewed the written disclosures and the letter from
PWC required by PCAOB Rule No. 3526, Communication with the Audit Committee
Concerning Independence, as amended, and the Committee has discussed PWC’s
independence with it. When considering PWC’s independence, the Audit
Committee considered whether their provision of services to the Company beyond
those rendered in connection with their audit and review of the Company’s
financial statements was compatible with maintaining their independence and
discussed with them any relationships that may impact their objectivity and
independence. The Committee also reviewed, among other things, the
amount of fees paid to PWC for audit and non-audit services in
2008. Information about PWC’s fees for 2008 is listed above in this
Proxy Statement under “Fees Billed for Services Rendered by Our Independent
Accounting Firm.” Based on these discussions and considerations, the
Committee is satisfied as to PWC’s independence.
The
members of the Audit Committee are not professional accountants or auditors and,
in performing their oversight role, rely without independent verification on the
information and representations provided to them by management and
PWC. Accordingly, the Committee’s oversight does not provide an
independent basis to certify that the audit of the Company’s financial
statements has been carried out in accordance with generally accepted auditing
standards, that the financial statements are presented in accordance with
accounting principles generally accepted in the United States or that PWC is in
fact “independent.”
Based on
the reviews and discussions referred to above, the Audit Committee recommended
to the Board that the audited financial statements referred to above be included
in the Company’s 2008 Annual Report on Form 10-K. The Committee has
also determined, subject to stockholder ratification, to retain
PricewaterhouseCoopers LLP as the independent registered public accounting firm
for the Company for the year 2009.
By the
Audit Committee of the Board of Directors,
Nicole S.
Williams, Chair
Charles
A. Baker
Peter J.
Crowley
CERTAIN RELATIONSHIPS AND RELATED
TRANSACTIONS
We have
entered into indemnification agreements with each of our directors and executive
officers. These agreements require us to indemnify such individuals
to the fullest extent permitted by Delaware law for certain liabilities to which
they may become subject as a result of their affiliation with us.
Our Code
of Business Ethics and Conduct, which our Corporate Governance Guidelines make
applicable to all directors and employees, including our CEO and CFO, requires
all Progenics personnel to act in the best interests of the Company consistent
with their duty of loyalty to it, including by avoiding situations and
relationships that involve actual or potential conflicts of
interest. Situations that could be perceived as conflicts of interest
include related party transactions. The Code requires Progenics
personnel who believe they are involved in or become aware of a potential
conflict of interest to discuss the matter with the individual’s manager and our
General Counsel. Our Audit Committee is required and empowered to
meet with our management and independent auditors to review all related party
transactions that would be required to be disclosed in our annual proxy
statement for potential conflicts of interest situations and, on an ongoing
basis, approve such transactions. The Audit Committee’s policy is to
approve only those transactions that are in the best interests of our
stockholders. In addition, our Nominating and Corporate Governance
Committee is required and empowered to conduct any and all investigations into
alleged violations of our Corporate Governance Guidelines or Code of Business
Ethics and Conduct, and present the results of such investigations to our
Board.
As
required by SEC rules, we disclose in our Proxy Statement under this heading any
relevant transactions. No such transactions occurred in
2008.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING
COMPLIANCE
Based
solely on a review of the reports under Section 16(a) of the Exchange Act and
representations furnished to us with respect to the last fiscal year, we believe
that each of the persons required to file such reports is in compliance with all
applicable filing requirements, except that the Form 4 filings for each of
Messrs. Charles Baker, Briner, Dalton and Jacobson, Drs. Goff and Scheinberg and
Ms. Williams in respect of the annual grant of options to Company directors were
untimely. We continue to monitor the effectiveness of our policies
and procedures designed to ensure compliance with Section 16 reporting
requirements.
SALES OF STOCK BY INSIDERS
We have
established stock sale guidelines governing the way in which shares of our
common stock may be sold by persons who may be considered insiders (directors,
executive officers and certain key employees who we may designate from time to
time). From time to time, such insiders will engage in sales of our
common stock in accordance with these guidelines. These sales may be
accomplished pursuant to SEC Rule 144 or pursuant to pre-arranged stock trading
plans adopted in accordance with Rule 10b5-1 of the Exchange Act.
Rule
10b5-1 allows persons who may be considered insiders to establish written
pre-arranged stock trading plans when they do not have material, non-public
information. The plans establish predetermined trading parameters
(amount, price and date of the transactions) that do not permit the person
adopting the plan to exercise any subsequent influence over how, when or whether
to effect trades. Implementation of these plans seeks to avoid
concerns about executing stock transactions when insiders may subsequently be in
possession of material, non-public information. Pre-arranged stock
trading plans adopted in accordance with Rule 10b5-1 also permit our insiders to
gradually diversify their investment portfolios and may minimize the market
impact of stock trades by spreading them over an extended period of
time.
STOCKHOLDER PROPOSALS
The proxy
rules adopted by the SEC provide that certain stockholder proposals must be
included in the Proxy Statement for our Annual Meeting. For a
proposal to be considered for inclusion in next year’s Proxy Statement, it must
be submitted in writing to our Corporate Secretary no later than December 29,
2009. If we receive notice after that date of a stockholder’s intent
to present a proposal at our 2010 Annual Meeting, we will have the right to
exercise discretionary voting authority with respect to such proposal, if
presented at the meeting, without including information regarding such proposal
in our proxy materials.
HOUSEHOLDING
In order
to reduce printing costs and postage fees and protect the environment, we mail
only one copy of the Notice and/or the Annual Report and Proxy Statement to any
one address, unless we receive contrary instructions from any stockholder at
that address. This is known as “householding.”
We will
deliver upon written or oral request a separate copy of the Notice and/or the
Annual Report and Proxy Statement to any stockholder at a shared address to
which a single copy of these materials was delivered. If you are a
stockholder of record, you may contact us by writing c/o the Corporate Secretary
at our corporate headquarters located at 777 Old Saw Mill River Road, Tarrytown,
New York 10591 or by calling us at 914-789-2800. If you are a
beneficial but not record owner, you can request additional copies, or you can
request householding, by notifying your broker, bank or nominee.
The Board
knows of no other business to be acted upon at the meeting. If any
other business properly comes before the meeting, however, it is the intention
of the persons named in the enclosed proxy to vote on such matters as
recommended by the Board.
We will
appreciate the prompt return of your proxy, which will be helpful in obtaining
the necessary vote. Therefore, whether or not you expect to attend
the meeting, please follow the instructions on the Notice and submit your
proxy.
By order of the Board
of Directors,
ROBERT A. MCKINNEY
Chief Financial Officer,
Senior
Vice President,
Finance
& Operations and Treasurer
Tarrytown,
New York
April 27,
2009
Appendix
A
PROGENICS PHARMACEUTICALS, INC.
EMPLOYEE
STOCK PURCHASE PLAN
3,400,000
Shares
(Effective
as
of )
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1.
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PURPOSE
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The
purpose of the Employee Stock Purchase Plan (the “Plan”) of Progenies
Pharmaceuticals, Inc. (the “Company”) is to attract, compensate and retain well
qualified employees by providing them with an equity interest in the Company’s
success.
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2.
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STOCK
SUBJECT TO THE
PLAN
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The
Company may issue and sell a total of 3,400,000 shares of its common
stock, par value $.0013 per share (the “Common Stock”), pursuant to the
Plan. Such shares may be either authorized but unissued shares or
treasury shares and may include shares that have previously been subject to
unexercised options, whether such options have terminated or expired by their
terms, by cancellation or otherwise.
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3.
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ADMINISTRATION
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The Plan
shall be administered by a committee (the “Committee”) consisting of the entire
Board of Directors of the Company or of two or more non-employee directors
thereof. The Committee shall have the power and authority as may be
necessary to carry out the provisions of the Plan, including the interpretation
and construction of the Plan and the option grants made under the Plan, the
adoption of such rules and regulations as it may deem advisable and the
termination of further option grants under the Plan.
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4.
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ELIGIBILITY
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Options
under the Plan shall be granted only to employees of the Company, all employees
of the Company are eligible to receive option grants and all employees granted
options under the Plan shall have the same rights and
privileges. Notwithstanding the foregoing, (i) no employee shall
be granted an option if such employee, immediately after the option is granted,
owns stock possessing 5% or more of the total combined voting power or
value of all classes of stock of the Company, within the meaning of
Section 423(b)(3) of the Internal Revenue Code of 1986, as amended
(the “Code”) and (ii) no employee shall be granted an option which permits
his rights to purchase stock under the Plan to accrue at a rate which exceeds
$6,250 of the fair market value of such stock (determined at the time such
option is granted) for each fiscal quarter in which such option is outstanding
at any time. Furthermore, the Committee may in its sole discretion
impose such restrictions on eligibility as may be permitted by
Section 423(b) (4) of the Code.
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5.
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OPTION
GRANTS
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Until
such time as the Committee in its sole discretion terminates further option
grants under the Plan, all eligible employees of the Company shall, on
July 1, October 1, January 1 and April 1 of each year (the
“Date of Grant”) starting July 1, 1998, be granted an option to purchase
the Common Stock, each such option to be subject and pursuant to the following
terms and conditions:
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(a)
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Option
Term. The term of each option shall be from the Date of
Grant to the date six months after the Date of Grant (the “Date of
Expiration”).
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(b)
|
Option
Price. The purchase price per share for each option (the
“Option Price”) shall be the lesser of (i) the fair market value of
the Common Stock on the Date of Grant or (ii) 85% of the fair market value
of the Common Stock on the Date of Exercise (as such term is defined
below). As used herein, the fair market value of the Common
Stock on the Date of Grant shall be the closing price of the Common Stock
on the Nasdaq National Market on the date prior to the Date of Grant and
the fair market value of the Common Stock on the Date of Exercise shall be
the closing price of the Common Stock on the Nasdaq National Market on the
Date of Exercise provided, however, that, if the employee exercising the
option resells the shares on the Date of Exercise, the average selling
price for such shares, before the payment of brokerage commissions and
expenses, shall be the fair market value on the Date of
Exercise. In the event the Common Stock ceases at any time to
be traded on the Nasdaq National Market, the fair market value of the
Common Stock shall be determined in such manner as may be set by the
Committee.
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(c)
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Number of Option Shares.
Unless and until the Committee in its sole discretion determines
otherwise, the number of shares subject to each option shall be the whole
number equal to (i) up to 25% of each employee’s total
compensation during the fiscal quarter starting with the Date of Grant, as
such percentage shall be determined by the Committee prior to the Date of
Grant, divided by (ii) the lesser of the fair market value of the
Common Stock on the Date of Grant or 85% of the closing price of the
Common Stock on the Nasdaq National Market on the date prior to the Date
of Exercise (or such other manner for determining the fair market value of
the Common Stock on such date if not then traded on the Nasdaq National
Market). In no event, however, shall the number of shares
subject to any option exceed $6,250 divided by the fair market value of
the Common Stock on the Date of
Grant.
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(d)
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Exercise. The
date of exercise of each option (the “Date of Exercise”) shall be the
date or dates specified by the Committee in writing prior to the Date of
Grant of an option that occurs during the three-month period starting with
the date three months after the Date of Grant of the option and ending on
the Date of Expiration of the option. Exercise shall not be
made with respect to less than the total number of shares subject to each
option and shall be effected by delivering to the Company written notice
of exercise at least one day prior to the Date of
Exercise.
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(e)
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Payment. Payment
for the shares purchased upon exercise of each option (including the
amount, if any, necessary to satisfy federal, state or local income tax
withholding requirements) shall be in cash within five business days
following the Date of Exercise and, in the event payment is not received,
the Company may withhold the shares and cancel the
option. Notwithstanding the foregoing, the Committee may in its
sole discretion permit employees (i) to pay for shares acquired upon
exercise of options by delivering shares of the Common Stock owned by such
employee or (ii) to forgo payment for the shares and receive instead
the net number of shares that would be received if such employee borrowed
shares of the Common Stock for payment of the purchase price and returned
the borrowed shares from the shares acquired upon exercise of the
option.
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(f)
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Termination of
Employment. In the event an employee’s employment with
the Company terminates for any reason other than the employee’s death, any
option held by such employee shall forthwith terminate without any further
rights on the part of the employee. In the event of an
employee’s death, the employee’s estate, legal representative or
beneficiary may exercise any option held by such employee at any time
prior to the Date of Expiration with respect to such
option. Nothing herein shall be deemed to confer any right of
continued employment with the Company or to limit the right of the Company
to terminate employment with any
employee.
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6.
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RIGHTS
AS A STOCKHOLDER
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Until
such time as each option has been exercised and the shares acquired thereby have
been issued and delivered to the employee pursuant to such exercise, the
employee shall have no rights as a stockholder with respect to the shares of the
Common Stock subject to the option.
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7.
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NONTRANSFERABILITY
OF THE OPTION
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Any
option granted under the Plan may not be assigned or transferred except by will
or by the laws of descent and distribution and is exercisable during the life of
the employee only by the employee.
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8.
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COMPLIANCE
WITH SECURITIES LAWS
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If the
shares to be issued upon exercise of any option granted under the Plan have not
been registered under the Securities Act of 1933, as amended, and any
applicable state securities laws, the Company’s obligation to issue such shares
shall be conditioned upon receipt of a representation in writing that the
employee is acquiring such shares for his or her own account and not with a view
to the distribution thereof and the certificate representing such shares shall
bear a legend in such form as the Company’s counsel deems necessary or
desirable. In no event shall the Company be obligated to issue any
shares pursuant to the exercise of an option if, in the opinion of the Company’s
counsel, such issuance would result in a violation of any federal or state
securities laws.
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9.
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CHANGE
OF CONTROL
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In the
event of a Change of Control (as such term is defined below), all outstanding
options under the Plan shall immediately become fully exercisable and all of the
rights and benefits relating thereto shall become fixed and not subject to
change or revocation by the Company. As used herein, a Change of
Control shall be deemed to have occurred if (i) any person within the
meaning of Section 13(d) and 14(d) of the Exchange Act, other than the
Company or any officer or director of the Company, becomes the beneficial owner,
within the meaning of Rule 13d-3 under the Exchange Act, of 20% or
more of the combined voting securities of the Company or (ii) a change
of 20% or more in the composition of the Board of Directors of the Company
occurs without the approval of the majority of said Board of Directors as it
exists at the time immediately preceding such change in
composition.
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10.
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STOCK
ADJUSTMENTS
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(a)
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In
the event of a stock dividend, stock split, recapitalization, merger in
which the Company is the surviving corporation or other capital adjustment
affecting the outstanding shares of the Common Stock, an appropriate
adjustment shall be made, as determined by the Board of Directors of the
Company, to the number of shares subject to the Plan and the exercise
price per share with respect to any option granted under the
Plan.
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|
(b)
|
In
the event of the complete liquidation of the Company or of a
reorganization, consolidation or merger in which the Company is not the
surviving corporation, any option granted under the Plan shall continue in
full force and effect unless either (i) the Board of Directors of the
Company modifies such option so that it is fully exercisable with respect
to the number of shares measured by the then current compensation prior to
the effective date of such transaction or (ii) the surviving
corporation issues or assumes a stock option contemplated by
Section 424(a) of the Code.
|
|
11.
|
EFFECTIVENESS
OF THE PLAN
|
The Plan
has been adopted on April 22, 1998 by resolution of the Board of Directors
of the Company and shall become effective upon the approval by the affirmative
votes of the holders of a majority of the Common Stock present, or represented,
and entitled to vote at a meeting duly held in accordance with the applicable
laws of the State of Delaware. The Plan as amended and restated
herein became effective following its adoption by the Board and its approval by
the Company’s stockholders on the date of the 2008 Annual Meeting of
Stockholders.
|
12.
|
AMENDMENT
OF THE PLAN
|
The Board
may at any time alter, amend, suspend or terminate the Plan in whole or in part,
provided, however, that (i) no alteration, amendment, suspension or
termination shall adversely affect the rights of an employee with respect to any
outstanding options granted under the Plan and (ii) any amendment which
must be approved by the stockholders of the Company in order to ensure that all
transactions under the Plan continue to be exempt under Rule 16b-3 under
the Exchange Act or any successor provision or to comply with any rule or
regulation of a governmental authority, applicable securities exchange or Nasdaq
National Market shall not be effective unless and until such stockholder
approval has been obtained in compliance with such rule or
regulation.
Appendix
B
PROGENICS PHARMACEUTICALS, INC.
NON-QUALIFIED
EMPLOYEE STOCK PURCHASE PLAN
1,100,000
Shares
(Effective
as
of )
|
1.
|
PURPOSE
|
The
purpose of the Non-Qualified Employee Stock Purchase Plan (the “Plan”) of
Progenies Pharmaceuticals, Inc. (the “Company”) is to provide employees of the
Company with the same equity interest in the Company’s success they would have
under the Company’s qualified Employee Stock Purchase Plan (the “Qualified
Plan”) but for the limitations imposed by Section 423 of the Internal
Revenue Code (the “Code”), which limitations are set forth in Section 4 of
the Qualified Plan.
|
2.
|
STOCK
SUBJECT TO THE PLAN
|
The
Company may issue and sell a total of 1,100,000 shares of its common
stock, par value $.0013 per share (the “Common Stock”), pursuant to the
Plan. Such shares may be either authorized but unissued shares or
treasury shares and may include shares that have previously been subject to
unexercised options, whether such options have terminated or expired by their
terms, by cancellation or otherwise.
|
3.
|
ADMINISTRATION
|
The Plan
shall be administered by a committee (the “Committee”) consisting of the entire
Board of Directors of the Company or of two or more non-employee directors
thereof. The Committee shall have the power and authority as may be
necessary to carry out the provisions of the Plan, including the interpretation
and construction of the Plan and the option grants made under the Plan, the
adoption of such rules and regulations as it may deem advisable and the
termination of further option grants under the Plan.
|
4.
|
ELIGIBILITY
|
Options
under the Plan shall be granted only to employees of the Company, all employees
of the Company are eligible to receive option grants and all employees granted
options under the Plan shall have the same rights and
privileges. Notwithstanding the foregoing, no employee shall be
granted an option if such employee (i) is eligible to be granted options
under the Qualified Plan and (ii) is granted options under the Qualified
Plan which permit his rights to purchase stock thereunder to accrue at a rate
which is less than $6,250 of the fair market value of such stock (determined at
the time such option is granted) for each fiscal quarter in which such option is
outstanding at any time. Furthermore, the Committee may in its sole
discretion impose such restrictions on eligibility as may be permitted by
Section 423(b)(4) of the Code. Notwithstanding the foregoing,
for any date of grant effective on or after July 1, 2007, no employee shall
be granted an option if, immediately after the option is granted, such employee
owns stock possessing 5% or more of the total combined voting power or
value of all classes of stock of the Company, within the meaning of
Section 423(b)(3) of the Code.
|
5.
|
OPTION
GRANTS
|
Until
such time as the Committee in its sole discretion terminates further option
grants under the Plan, all eligible employees of the Company shall, on
July 1, October 1, January 1 and April 1 of each year (the
“Date of Grant”) starting July 1, 1998, be granted an option to purchase
the Common Stock, each such option to be subject and pursuant to the following
terms and conditions:
|
(a)
|
Option
Term. The term of each option shall be from the Date of
Grant to the date six months after the Date of Grant (the “Date of
Expiration”).
|
|
(b)
|
Option
Price. The purchase price per share for each (the
“Option Price”) shall be the lesser of (i) the fair market value of
the Common Stock on the Date of Grant or (ii) 85% of the fair market value
of the Common Stock on the Date of Exercise (as such term is defined
below). As used herein, the fair market value of the Common
Stock on the Date of Grant shall be the closing price of the Common Stock
on the Nasdaq National Market on the date prior to the Date of Grant and
the fair market value of the Common Stock on the Date of Exercise shall be
the closing price of the Common Stock on the Nasdaq National Market on the
Date of Exercise provided, however, that, if the employee exercising the
option resells the shares on the Date of Exercise, the average selling
price for such shares, before the payment of brokerage commissions and
expenses, shall be the fair market value on the Date of
Exercise. In the event the Common Stock ceases at any time to
be traded on the Nasdaq National Market, the fair market value of the
Common Stock shall be determined in such manner as may be set by the
Committee.
|
|
(c)
|
Number of Option
Shares. Unless and until the Committee in its sole
discretion determines otherwise, the number of shares subject to each
option shall be the whole number equal to (i) up to 25% of each
employee’s total compensation during the fiscal quarter starting with the
Date of Grant, as percentage shall be determined by the Committee prior to
the Date of Grant, divided by (ii) the lesser of the fair market
value of the Common Stock on the Date of Grant or 85% of the closing
price of the Common Stock on the Nasdaq National Market on the date prior
to the Date of Exercise (or such other manner for determining the fair
market value of the Common Stock on such date if not then traded on the
Nasdaq National Market) minus (iii) the number of shares subject to
an option granted under the Qualified Plan with the same Date of
Grant.
|
|
(d)
|
Exercise. The
date of exercise of each option (the “Date of Exercise”) shall be the
date or dates specified by the Committee in writing prior to the Date of
Grant of an option that occurs during the three-month period starting with
the date three months after the Date of Grant of the option and ending on
the Date of Expiration of the option. Exercise shall not be
made with respect to less than the total number of shares subject to each
option and shall effected by delivering to the Company written notice of
exercise at least one day prior to the Date of
Exercise.
|
|
(e)
|
Payment. Payment
for the shares purchased upon exercise of each option (including the
amount, if any, necessary to satisfy federal, state or local income tax
withholding requirements) shall be in cash within five business days
following the Date of Exercise and, in the event payment is not received,
the Company may withhold the shares and cancel the
option. Notwithstanding the foregoing, the Committee may in its
sole discretion permit employees (i) to pay for shares acquired upon
exercise of options by delivering shares of the Common Stock owned by such
employee or (ii) to forgo payment for the shares and receive instead
the net number of shares that would be received if such employee borrowed
shares of the Common Stock for payment of the purchase price and returned
the borrowed shares from the shares acquired upon exercise of the
option.
|
|
(f)
|
Termination of Employment.
In the event an employee’s employment with the Company terminates
for any reason other than the employee’s death, any option held by such
employee shall forthwith terminate without any further rights on the part
of the employee. In the event of an employee’s death, the
employee’s estate, legal representative or beneficiary may exercise any
option held by such employee at any time prior to the Date of Expiration
with respect to such option. Nothing herein shall be deemed to
confer any right of continued employment with the Company or to limit the
right of the Company to terminate employment with any
employee.
|
|
6.
|
RIGHTS
AS A STOCKHOLDER
|
Until
such time as each option has been exercised and the shares acquired thereby have
been issued and delivered to the employee pursuant to such exercise, the
employee shall have no rights as a stockholder with respect to the shares of the
Common Stock subject to the option.
|
7.
|
NONTRANSFERABILITY
OF THE OPTION
|
Any
option granted under the Plan may not be assigned or transferred except by will
or by the laws of descent and distribution and is exercisable during the life of
the employee only by the employee.
|
8.
|
COMPLIANCE
WITH SECURITIES LAWS
|
If the
shares to be issued upon exercise of any option granted under the Plan have not
been registered under the Securities Act of 1933, as amended, and any
applicable state securities laws, the Company’s obligation to issue such shares
shall be conditioned upon receipt of a representation in writing that the
employee is acquiring such shares for his or her own account and not with a view
to the distribution thereof and the certificate representing such shares shall
bear a legend in such form as the Company’s counsel deems necessary or
desirable. In no event shall the Company be obligated to issue any
shares pursuant to the exercise of an option if, in the opinion of the Company’s
counsel, such issuance would result in a violation of any federal or state
securities laws.
|
9.
|
CHANGE
OF CONTROL
|
In the
event of a Change of Control (as such term is defined below), all outstanding
options under the Plan shall immediately become fully exercisable and all of the
rights and benefits relating thereto shall become fixed and not subject to
change or revocation by the Company. As used herein, a Change of
Control shall be deemed to have occurred if (i) any person within the
meaning of Section 13(d) and 14(d) of the Exchange Act, other than the
Company or any officer or director of the Company, becomes the beneficial owner,
within the meaning of Rule 13d–3 under the Exchange Act, of 20% or
more of the combined voting securities of the Company or (ii) a change
of 20% or more in the composition of the Board of Directors of the Company
occurs without the approval of the majority of said Board of Directors as it
exists at the time immediately preceding such change in
composition. To the extent necessary for compliance with
Section 409A of the Code, any option subject to the requirements of
Section 409A that would otherwise become exercisable upon a Change in
Control shall only become exercisable upon such event to the extent that the
requirements for a “change in control” for purposes of Section 409A have
been satisfied.
|
10.
|
STOCK
ADJUSTMENTS
|
|
(a)
|
In
the event of a stock dividend, stock split, recapitalization, merger in
which the Company is the surviving corporation or other capital adjustment
affecting the outstanding shares of the Common Stock, an appropriate
adjustment shall be made, as determined by the Board of Directors of the
Company, to the number of shares subject to the Plan and the exercise
price per share with respect to any option granted under the
Plan.
|
|
(b)
|
In
the event of the complete liquidation of the Company or of a
reorganization, consolidation or merger in which the Company is not the
surviving corporation, any option granted under the Plan shall continue in
full force and effect unless either (i) the Board of Directors of the
Company modifies such option so that it is fully exercisable with respect
to the number of shares measured by the then current compensation prior to
the effective date of such transaction or (ii) the surviving
corporation issues or assumes a stock option contemplated by
Section 424(a) of the Code.
|
|
11.
|
EFFECTIVENESS
OF THE PLAN
|
The Plan
has been adopted on April 22, 1998 by resolution of the Board of Directors
of the Company and shall become effective upon the approval by the affirmative
votes of the holders of a majority of the Common Stock present, or represented,
and entitled to vote at a meeting duly held in accordance with the applicable
laws of the State of Delaware. The Plan as amended and restated
herein became effective following its adoption by the Board and its approval by
the Company’s stockholders on the date of the 2008 Annual Meeting of
Stockholders.
|
12.
|
AMENDMENT
OF THE PLAN
|
The Board
may at any time alter, amend, suspend or terminate the Plan in whole or in part,
provided, however, that (i) no alteration, amendment, suspension or
termination shall adversely affect the rights of an employee with respect to any
outstanding options granted under the Plan and (ii) any amendment which
must be approved by the stockholders of the Company in order to ensure that all
transactions under the Plan continue to be exempt under Rule 16b—3 under
the Exchange Act or any successor provision or to comply with any rule or
regulation of a governmental authority, applicable securities exchange or Nasdaq
National Market shall not be effective unless and until such stockholder
approval has been obtained in compliance with such rule or
regulation.
|
13.
|
409A
COMPLIANCE
|
To the
extent applicable, it is intended that the Plan and all options granted
hereunder comply with the requirements of Section 409A of the Code, and the
Plan shall be interpreted and applied by the Committee in a manner consistent
with this intent in order to avoid the imposition of any additional tax under
Section 409A of the Code. In the event that any provision of the
Plan is determined by the Committee to not comply with the applicable
requirements of Section 409A of the Code, the Committee shall have the
authority to take such actions and to make such interpretations or changes to
the Plan as the Committee deems necessary to comply with such requirements,
provided that the Committee shall act in a manner that is intended to preserve
the economic value of the option to the employee. Notwithstanding the
foregoing or anything elsewhere in the Plan to the contrary, if an employee is
treated as a “specified employee” as defined in Section 409A of the Code
with respect to any payment under the Plan upon a termination of service of the
employee, then solely to the extent necessary to avoid the imposition of any
additional tax under Section 409A of the Code, such payment shall be
deferred until the date that is six months following the employee’s termination
of service (or such other period as required to comply with
Section 409A).
Appendix
C
PROGENICS
PHARMACEUTICALS,
INC.
2005
STOCK INCENTIVE PLAN
(Effective
as
of )
|
1.
|
PURPOSE
|
The
purpose of the Progenics Pharmaceuticals, Inc. 2005 Stock Incentive Plan is to
further align the interests of employees, officers, non-employee directors and
other individual service providers with those of the stockholders by providing
incentive compensation opportunities tied to the performance of the Common Stock
and by promoting increased ownership of the Common Stock by such
individuals. The Plan is also intended to advance the interests of
the Company and its stockholders by attracting, retaining and motivating key
personnel upon whose judgment, initiative and effort the successful conduct of
the Company’s business is largely dependent.
|
2.
|
DEFINITIONS
|
Wherever
the following capitalized terms are used in the Plan, they shall have the
meanings specified below:
|
(a)
|
Award means an award of
a Stock Option, Stock Appreciation Right, Restricted Stock Award, Stock
Unit Award, Stock Award or Performance Award granted under the
Plan.
|
|
(b)
|
Award Agreement means a
written or electronic agreement entered into between the Company and a
Participant setting forth the terms and conditions of an
Award.
|
|
(c)
|
Board means the Board of
Directors of the Company.
|
|
(d)
|
Change in Control shall
have the meaning set forth in Section 13.2 hereof.
|
|
(e)
|
Code means the Internal
Revenue Code of 1986, as amended.
|
|
(f)
|
Committee means the
Compensation Committee of the Board or a successor thereof, or any other
committee of the Board appointed by the Board to administer the Plan from
time to time.
|
|
(g)
|
Common Stock means the
Company’s Common Stock, par value $.0013 per share.
|
|
(h)
|
Company means Progenics
Pharmaceuticals, Inc., a Delaware corporation.
|
|
(i)
|
Date of Grant means the
date on which an Award under the Plan is granted by the Committee, or such
later date as the Committee may specify to be the effective date of an
Award.
|
|
(j)
|
Disability means a
Participant being considered “disabled” within the meaning of Section
409A(a)(2)(C) of the Code, unless otherwise provided in an Award
Agreement.
|
|
(k)
|
Eligible Person means
any person who is an employee, officer, director, consultant, advisor or
other individual service provider of the Company or any Subsidiary, as
determined by the Committee, or any person who is determined by the
Committee to be a prospective employee, officer, director, consultant,
advisor or other individual service provider of the Company or any
Subsidiary.
|
|
(l)
|
Exchange Act means the
Securities Exchange Act of 1934, as
amended.
|
|
(m)
|
Fair Market Value with
respect to the value of a share of Common Stock as of a particular day,
shall mean the last reported sale price (as reported on the NASDAQ) of the
Common Stock on such day (unless such day is not a trading day, in which
case, on the last trading day immediately preceding such day on which the
Common Stock is traded on the NASDAQ). If the Common Stock is
not listed on the NASDAQ, the Committee shall determine in good faith the
Fair Market Value in whatever manner it considers appropriate, taking into
account to the extent necessary the requirements of Section 409A of the
Code.
|
|
(n)
|
Incentive Stock Option
means a Stock Option granted under Section 6 hereof that is intended to
meet the requirements of section 422 of the Code and the regulations
promulgated thereunder.
|
|
(o)
|
NASDAQ means The Nasdaq
Stock Market’s National Market.
|
|
(p)
|
Nonqualified Stock
Option means a Stock Option granted under Section 6 hereof that is
not an Incentive Stock Option.
|
|
(q)
|
Participant means any
Eligible Person who holds an outstanding Award under the
Plan.
|
|
(r)
|
Performance Awards means
an Award under Section 11 hereof entitling a Participant to a payment in
cash at the end of a performance period, if the performance and other
conditions established by the Committee are satisfied.
|
|
(s)
|
Plan means this
Progenics Pharmaceuticals, Inc. 2005 Stock Incentive Plan as amended
herein, and as may be amended from time to time, effective as provided in
Section 15.1 hereof.
|
|
(t)
|
Restricted Stock Award
means a grant of shares of Common Stock to an Eligible Person under
Section 8 hereof that are issued subject to such vesting and transfer
restrictions and such other conditions as are set forth in the Plan and
the applicable Award Agreement.
|
|
(u)
|
Section 162(m) Award
means any Award that is intended to qualify for the “performance-based”
compensation exception under section 162(m) of the Code and the
regulations promulgated thereunder.
|
|
(v)
|
Service means a
Participant’s employment or other service relationship with the Company or
any Subsidiary.
|
|
(w)
|
Stock Appreciation Right
means a contractual right granted to an Eligible Person under
Section 7 hereof entitling such Eligible Person to receive a payment,
representing the difference between the base price per share of the right
and the Fair Market Value of a share of Common Stock at such time, and
subject to such conditions, as are set forth in the Plan and the
applicable Award Agreement.
|
|
(x)
|
Stock Award means a
grant of shares of Common Stock to an Eligible Person under Section 10
hereof entitling a Participant to shares of Common Stock that are issued
free of transfer restrictions and forfeiture
conditions.
|
|
(y)
|
Stock Option means a
contractual right granted to an Eligible Person under Section 6 hereof to
purchase shares of Common Stock at such time and price, and subject to
such conditions, as are set forth in the Plan and the applicable Award
Agreement.
|
|
(z)
|
Stock Unit Award means a
contractual right granted to an Eligible Person under Section 9 hereof
representing notional unit interests equal in value to a share of Common
Stock to be paid and distributed at such times, and subject to such
conditions, as are set forth in the Plan and the applicable Award
Agreement.
|
|
(aa)
|
Subsidiary means an
entity (whether or not a corporation) that is wholly or majority owned or
controlled, directly or indirectly, by the Company, or any other affiliate
of the Company that is so designated, from time to time, by the Committee;
provided, however, that with respect to Incentive Stock Options, the term
“Subsidiary” shall include only an entity that qualifies under section
424(f) of the Code as a “subsidiary corporation” with respect to the
Company.
|
|
3.
|
ADMINISTRATION
|
Section
3.1 Committee
Members. The Plan shall be administered by a Committee
comprised of no fewer than two members of the Board. It is intended
that each Committee member shall satisfy the requirements for (i) an
“independent director” under rules adopted by the NASDAQ, (ii) a “nonemployee
director” for purposes of such Rule 16b-3 under the Exchange Act and (iii) an
“outside director” under section 162(m) of the Code. No member of the
Committee shall be liable for any action or determination made in good faith by
the Committee with respect to the Plan or any Award hereunder.
Section
3.2 Committee
Authority. The Committee shall have such powers and authority
as may be necessary or appropriate for the Committee to carry out its functions
as described in the Plan. Subject to the express limitations of the
Plan, the Committee shall have authority in its discretion to determine the
Eligible Persons to whom, and the time or times at which, Awards may be granted,
the number of shares, units or other rights subject to each Award, the exercise,
base or purchase price of an Award (if any), the time or times at which an Award
will become vested, exercisable or payable, the performance criteria,
performance goals and other conditions of an Award, the duration of the Award,
and all other terms of the Award. Subject to the terms of the Plan,
the Committee shall have the authority to amend the terms of an Award in any
manner that is not inconsistent with the Plan, provided that no such action
shall adversely affect the rights of a Participant with respect to an
outstanding Award without the Participant’s consent. The Committee
shall also have discretionary authority to interpret the Plan, to make all
factual determinations under the Plan, and to make all other determinations
necessary or advisable for Plan administration, including, without limitation,
to correct any defect, to supply any omission or to reconcile any inconsistency
in the Plan or any Award Agreement hereunder. The Committee may
prescribe, amend, and rescind rules and regulations relating to the
Plan. The Committee’s determinations under the Plan need not be
uniform and may be made by the Committee selectively among Participants and
Eligible Persons, whether or not such persons are similarly
situated. The Committee shall, in its discretion, consider such
factors as it deems relevant in making its interpretations, determinations and
actions under the Plan including, without limitation, the recommendations or
advice of any officer or employee of the Company or such attorneys, consultants,
accountants or other advisors as it may select. All interpretations,
determinations, and actions by the Committee shall be final, conclusive, and
binding upon all parties.
Section
3.3 Delegation of
Authority. The Committee shall have the right, from time to
time, to delegate to one or more officers of the Company the authority of the
Committee to grant Awards under the Plan, subject to the requirements of section
157(c) of the Delaware General Corporation Law (or any successor provision) and
such other limitations as the Committee shall determine. In no event
shall any such delegation of authority be permitted with respect to Awards to
any members of the Board or to any Eligible Person who is subject to Rule 16b-3
under the Exchange Act or who is a covered employee under section 162(m) of the
Code. The Committee shall also be permitted to delegate, to any
appropriate officer or employee of the Company, responsibility for performing
ministerial functions under the Plan. In the event that the
Committee’s authority is delegated to officers or employees in accordance with
the foregoing, all provisions of the Plan relating to the Committee shall be
interpreted in a manner consistent with the foregoing by treating any such
reference as a reference to such officer or employee for such
purpose. Any action undertaken in accordance with the Committee’s
delegation of authority hereunder shall have the same force and effect as if
such action was undertaken directly by the Committee and shall be deemed for all
purposes of the Plan to have been taken by the Committee.
Section
3.4 Grants to Non-Employee
Directors. Any Awards or formula for granting Awards under the
Plan made to non-employee directors shall be approved by the
Board. With respect to awards granted to such directors, all rights,
powers and authorities vested in the Committee under the Plan shall instead be
exercised by the Board, and all provisions of the Plan relating to the Committee
shall be interpreted in a manner consistent with the foregoing by treating any
such reference as a reference to the Board for such purpose.
|
4.
|
SHARES
SUBJECT TO THE PLAN
|
Section
4.1 Share
Limitation. Subject to adjustment pursuant to Section 4.2
hereof, the maximum aggregate number of shares of Common Stock which may be
issued under all Awards granted to Participants under the Plan shall be
5,450,000 shares. Shares of Common Stock issued under the Plan may be
either authorized but unissued shares or shares held in the Company’s
treasury. Shares of Common Stock subject to Awards of Stock Options
or Stock Appreciation Rights that are settled in Common Stock shall be counted
against the maximum share limitations of this Section 4.1 as one share of Common
Stock for every share of Common Stock subject thereto, regardless of the number
of shares of Common Stock actually issued to settle the Stock Option or Stock
Appreciation Right upon exercise. Shares of Common Stock subject to
Awards of Restricted Stock Awards, Stock Unit Awards, Stock Awards, or
share-based Performance Awards, if any, shall be counted against the maximum
share limitations of this Section 4.1 as 1.2 shares of Common Stock for every
share of Common Stock subject thereto. To the extent that any Award
under the Plan payable in shares of Common Stock is forfeited, cancelled,
returned to the Company for failure to satisfy vesting requirements or upon the
occurrence of other forfeiture events, or otherwise terminates, in whole or in
part, without payment being made thereunder, the shares of Common Stock
remaining subject thereto at the time of such forfeiture, cancellation, return
or other termination will no longer be counted against the foregoing maximum
share limitations and may again be made subject to Awards under the Plan
pursuant to such limitations. Awards under the Plan that are settled
in cash and not in shares of Common Stock shall not be counted against the
foregoing maximum share limitations. Shares that are withheld from an
Award by the Participant in payment of the exercise or purchase price or
separately surrendered by the Participant, or taxes relating to such an Award
shall be deemed to constitute delivered shares and will not be available for
future Awards under the Plan.
Section
4.2 Adjustments. If
there shall occur any change with respect to the outstanding shares of Common
Stock by reason of any recapitalization, reclassification, stock dividend,
extraordinary dividend, stock split, reverse stock split, or other distribution
with respect to the shares of Common Stock, or any merger, reorganization,
consolidation, combination, spin-off or other similar corporate change, or any
other change affecting the Common Stock, the Committee shall, in the manner and
to the extent that it deems appropriate and equitable to the Participants and
consistent with the terms of the Plan, cause an adjustment to be made in (i) the
maximum numbers and kind of shares provided in Section 4.1 hereof, (ii) the
maximum numbers and kind of shares or units set forth in Sections 6.1, 7.1, 8.1,
9.1 and 10.1 hereof, (iii) the numbers and kind of shares of Common Stock,
units, or other rights subject to then outstanding Awards, (iv) the price for
each share or unit or other right subject to then outstanding Awards, (v) the
performance measures or goals relating to an Award and (vi) any other terms of
an Award that are affected by the event to prevent dilution or enlargement of a
Participant’s rights under an Award. Notwithstanding the foregoing, in the case
of Incentive Stock Options, any such adjustments shall, to the extent
practicable, be made in a manner consistent with the requirements of section
424(a) of the Code.
|
5.
|
PARTICIPATION
AND AWARDS
|
Section
5.1 Designation of
Participants. All Eligible Persons are eligible to be
designated by the Committee to receive Awards and become Participants under the
Plan. The Committee has the authority, in its discretion, to
determine and designate from time to time those Eligible Persons who are to be
granted Awards, the types of Awards to be granted and the number of shares of
Common Stock or units subject to Awards granted under the Plan. In
selecting Eligible Persons to be Participants and in determining the type and
amount of Awards to be granted under the Plan, the Committee shall consider any
and all factors that it deems relevant or appropriate.
Section
5.2 Determination of
Awards. The Committee shall determine the terms and conditions
of all Awards granted to Participants in accordance with its authority under
Section 3.2 hereof. An Award may consist of one type of right or
benefit hereunder or of two or more such rights or benefits granted in tandem or
in the alternative. In the case of any fractional share or unit
resulting from the grant, vesting, payment or crediting of dividends or dividend
equivalents under an Award, the Committee shall have the discretionary authority
to (i) disregard such fractional share or unit, (ii) round such fractional share
or unit to the nearest lower or higher whole share or unit, or (iii) convert
such fractional share or unit into a right to receive a cash
payment. To the extent deemed necessary by the Committee, an Award
shall be evidenced by an Award Agreement as described in Section 14.1
hereof.
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6.
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STOCK
OPTIONS
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Section
6.1 Grant of Stock
Option. A Stock Option may be granted to any Eligible Person
selected by the Committee. Subject to the provisions of Section 6.7
hereof and section 422 of the Code, each Stock Option shall be designated, in
the discretion of the Committee, as an Incentive Stock Option or as a
Nonqualified Stock Option. The maximum number of shares of Common Stock that may
be subject to Stock Options granted to any Participant during any calendar year
shall be limited to 750,000 shares (subject to adjustment as provided in Section
4.2 hereof).
Section
6.2 Exercise Price. The
exercise price per share of a Stock Option shall not be less than 100 percent of
the Fair Market Value of the shares of Common Stock on the Date of Grant,
provided that the Committee may in its discretion specify for any Stock Option
an exercise price per share that is higher than the Fair Market Value on the
Date of Grant.
Section
6.3 Vesting of Stock
Options. The Committee shall in its discretion prescribe the
time or times at which, or the conditions upon which, a Stock Option or portion
thereof shall become vested and/or exercisable. The requirements for
vesting and exercisability of a Stock Option may be based on the continued
Service of the Participant with the Company or a Subsidiary for a specified time
period (or periods) or on the attainment of a specified performance goal (or
goals) established by the Committee in its discretion. The Committee
may, in its discretion, accelerate the vesting or exercisability of any Stock
Option at any time.
Section
6.4 Term of Stock
Options. The Committee shall in its discretion prescribe in an
Award Agreement the period during which a vested Stock Option may be exercised,
provided that the maximum term of a Stock Option shall be ten years from the
Date of Grant. A Stock Option may be earlier terminated as specified
by the Committee and set forth in an Award Agreement upon or following the
termination of a Participant’s Service with the Company or any Subsidiary,
including by reason of voluntary resignation, death, Disability, termination for
cause or any other reason. Except as otherwise provided in this
Section 6 or in an Award Agreement, no Stock Option may be exercised at any time
during the term thereof unless the Participant is then in the Service of the
Company or one of its Subsidiaries.
Section
6.5 Stock Option Exercise; Tax
Withholding. Subject to such terms and conditions as shall be
specified in an Award Agreement, a Stock Option may be exercised in whole or in
part at any time during the term thereof by notice in the form required by the
Company, together with payment of the aggregate exercise price therefor and
applicable withholding tax. Payment of the exercise price shall be
made in the manner set forth in an Award Agreement, unless otherwise provided by
the Committee: (i) in cash or by cash equivalent acceptable to the Committee;
(ii) by payment in shares of Common Stock that have been held by the Participant
for at least six months (or such period as the Committee may deem appropriate
for accounting purposes or otherwise), valued at the Fair Market Value of such
shares on the date of exercise; (iii) through an open-market broker-assisted
sales transaction pursuant to which the Company is promptly delivered the amount
of proceeds necessary to satisfy the exercise price; (iv) by a combination of
the foregoing methods; or (v) by such other method as may be approved by the
Committee and set forth in an Award Agreement. In addition to and at
the time of payment of the exercise price, the Participant shall pay to the
Company the full amount of any and all applicable income tax, employment tax and
other amounts required to be withheld in connection with such exercise, payable
under such of the methods described above for the payment of the exercise price
as may be approved by the Committee and set forth in an Award
Agreement.
Section
6.6 Limited Transferability of
Nonqualified Stock Options. All Stock Options shall be
nontransferable except (i) upon the Participant’s death, in accordance with
Section 14.3 hereof or (ii) in the case of Nonqualified Stock Options only, for
the transfer of all or part of the Stock Option to a Participant’s “family
member” (as defined for purposes of the Form S-8 registration statement under
the Securities Act of 1933), or as otherwise permitted by the Committee, in each
case as may be approved by the Committee in its discretion at the time of
proposed transfer. The transfer of a Nonqualified Stock Option may be
subject to such terms and conditions as the Committee may in its discretion
impose from time to time. Subsequent transfers of a Nonqualified
Stock Option shall be prohibited other than in accordance with Section 14.3
hereof.
Section
6.7 Additional
Rules for Incentive Stock Options.
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(i)
|
Eligibility. An
Incentive Stock Option may only be granted to an Eligible Person who is
considered an employee under Treasury Regulation §1.421-7(h) of the
Company or any Subsidiary.
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(ii)
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Annual
Limits. No Incentive Stock Option shall be granted to an
Eligible Person as a result of which the aggregate Fair Market Value
(determined as of the Date of Grant) of the stock with respect to which
Incentive Stock Options are exercisable for the first time in any calendar
year under the Plan and any other stock option plans of the Company or any
Subsidiary would exceed $100,000, determined in accordance with section
422(d) of the Code. This limitation shall be applied by taking
Incentive Stock Options into account in the order in which
granted.
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(iii)
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Ten Percent
Stockholders. If a Stock Option granted under the Plan
is intended to be an Incentive Stock Option, and if the Participant, at
the time of grant, owns stock possessing ten percent or more of the total
combined voting power of all classes of Common Stock of the Company or any
Subsidiary, then (A) the Stock Option exercise price per share shall in no
event be less than 110 percent of the Fair Market Value of the Common
Stock on the date of such grant and (B) such Stock Option shall not be
exercisable after the expiration of five years following the date such
Stock Option is granted.
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(iv)
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Termination of
Employment. An Award of an Incentive Stock Option may
provide that such Stock Option may be exercised not later than 3 months
following termination of employment of the Participant with the Company
and all Subsidiaries, or not later than one year following death or a
permanent and total disability within the meaning of section 22(e)(3) of
the Code, as and to the extent determined by the Committee to comply with
the requirements of section 422 of the Code.
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(v)
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Other Terms and Conditions;
Nontransferability. Any Incentive Stock Option granted
hereunder shall contain such additional terms and conditions, not
inconsistent with the terms of the Plan, as are deemed necessary or
desirable by the Committee, which terms, together with the terms of the
Plan, shall be intended and interpreted to cause such Incentive Stock
Option to qualify as an “incentive stock option” under section 422 of the
Code. An Award Agreement for an Incentive Stock Option may
provide that such Stock Option shall be treated as a Nonqualified Stock
Option to the extent that certain requirements applicable to “incentive
stock options” under the Code shall not be satisfied. An
Incentive Stock Option shall by its terms be nontransferable other than by
will or by the laws of descent and distribution, and shall be exercisable
during the lifetime of a Participant only by such
Participant.
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(vi)
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Disqualifying
Dispositions. If shares of Common Stock acquired by
exercise of an Incentive Stock Option are disposed of within two years
following the Date of Grant or one year following the transfer of such
shares to the Participant upon exercise, the Participant shall, promptly
following such disposition, notify the Company in writing of the date and
terms of such disposition and provide such other information regarding the
disposition as the Company may reasonably
require.
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Section
6.8 Repricing of Stock Options
Prohibited. Subject to the anti-dilution adjustment provisions
contained in Section 4.2 hereof, without the prior approval of the Company’s
stockholders, evidenced by a majority of votes cast, neither the Committee nor
the Board shall cause the cancellation, substitution or amendment of a Stock
Option that would have the effect of reducing the exercise price of such a Stock
Option previously granted under the Plan, or otherwise approve any modification
to such a Stock Option that would be treated as a “repricing.”
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7.
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STOCK
APPRECIATION RIGHTS
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Section
7.1 Grant of Stock Appreciation
Rights. A Stock Appreciation Right may be granted to any
Eligible Person selected by the Committee. Stock Appreciation Rights
may be granted on a basis that allows for the exercise of the right by the
Participant or that provides for the automatic payment of the right upon a
specified date or event. The maximum number of shares of Common Stock
that may be subject to Stock Appreciation Rights granted to any Participant
during any calendar year shall be limited to 750,000 shares (subject to
adjustment as provided in Section 4.2 hereof).
Section
7.2 Freestanding Stock Appreciation
Rights. A Stock Appreciation Right may be granted without any
related Stock Option. The Committee shall in its discretion prescribe
the time or times at which, or the conditions upon which, a Stock Appreciation
Right or portion thereof shall become vested and/or exercisable. The
requirements for vesting and exercisability of a Stock Appreciation Right may be
based on the continued Service of a Participant with the Company or a Subsidiary
for a specified time period (or periods) or on the attainment of a specified
performance goal (or goals) established by the Committee in its
discretion. A Stock Appreciation Right will be exercisable or payable
at such time or times as determined by the Committee, provided that the maximum
term of a Stock Appreciation Right shall be ten years from the Date of
Grant. The Committee may, in its discretion, accelerate the vesting
or exercisability of any Stock Appreciation Right at any time. The
base price of a Stock Appreciation Right granted without any related Stock
Option shall be determined by the Committee in its sole discretion; provided,
however, that the base price per share of any such freestanding Stock
Appreciation Right shall not be less than 100 percent of the Fair Market Value
of the shares of Common Stock on the Date of Grant.
Section
7.3 Tandem Stock Option/Stock
Appreciation Rights. A Stock Appreciation Right may be granted
in tandem with a Stock Option, either at the time of grant or at any time
thereafter during the term of the Stock Option. A tandem Stock
Option/Stock Appreciation Right will entitle the holder to elect, as to all or
any portion of the number of shares subject to the Award, to exercise either the
Stock Option or the Stock Appreciation Right, resulting in the reduction of the
corresponding number of shares subject to the right so exercised as well as the
tandem right not so exercised. A Stock Appreciation Right granted in
tandem with a Stock Option hereunder shall have a base price per share equal to
the per share exercise price of the Stock Option, will be vested and exercisable
at the same time or times that a related Stock Option is vested and exercisable,
and will expire no later than the time at which the related Stock Option
expires.
Section
7.4 Payment of Stock Appreciation
Rights. A Stock Appreciation Right will entitle the holder,
upon exercise or other payment of the Stock Appreciation Right, as applicable,
to receive an amount determined by multiplying: (i) the excess of the Fair
Market Value of a share of Common Stock on the date of exercise or payment of
the Stock Appreciation Right over the base price of such Stock Appreciation
Right, by (ii) the number of shares as to which such Stock Appreciation Right is
exercised or paid. Payment of the amount determined under the
foregoing may be made, as approved by the Committee and set forth in the Award
Agreement, in shares of Common Stock valued at their Fair Market Value on the
date of exercise or payment, in cash, or in a combination of shares of Common
Stock and cash, subject to applicable tax withholding requirements.
Section
7.5 Repricing of Stock Appreciation
Rights Prohibited. Subject to the anti-dilution adjustment
provisions contained in Section 4.2 hereof, without the prior approval of the
Company’s stockholders, evidenced by a majority of votes cast, neither the
Committee nor the Board shall cause the cancellation, substitution or amendment
of a Stock Appreciation Right that would have the effect of reducing the base
price of such a Stock Appreciation Right previously granted under the Plan, or
otherwise approve any modification to such a Stock Appreciation Right that would
be treated as a “repricing.”
8. RESTRICTED
STOCK AWARDS
Section
8.1 Grant of Restricted Stock
Awards. A Restricted Stock Award may be granted to any
Eligible Person selected by the Committee. The Committee may require
the payment by the Participant of a specified purchase price in connection with
any Restricted Stock Award. The Committee may grant Restricted Stock
Awards that are Section 162(m) Awards, as well as Restricted Stock Awards that
are not Section 162(m) Awards. The maximum number of shares of Common
Stock that may be subject to Restricted Stock Awards granted to a Participant
during any one calendar year shall be limited to 250,000 shares (subject to
adjustment as provided in Section 4.2 hereof).
Section
8.2 Vesting
Requirements. The restrictions imposed on shares of Common
Stock granted under a Restricted Stock Award shall lapse in accordance with the
vesting requirements specified by the Committee in the Award
Agreement. The requirements for vesting of a Restricted Stock Award
may be based on the continued Service of the Participant with the Company or its
Subsidiaries for a specified time period (or periods) or on the attainment of a
specified performance goal (or goals) established by the Committee in its
discretion. The Committee may, in its discretion, accelerate the
vesting of a Restricted Stock Award at any time. In the case of any
Restricted Stock Award that is a Section 162(m) Award, any such
performance-based vesting requirements shall be based upon the performance
criteria identified in Section 12.2 hereof, and the terms of the Award shall
otherwise comply with the requirements described in Section 12.3
hereof. If the vesting requirements of a Restricted Stock Award shall
not be satisfied, the Award shall be forfeited and the shares of Common Stock
subject to the Award shall be returned to the Company. In the event
that the Participant paid any purchase price with respect to such forfeited
shares, unless otherwise provided by the Committee in an Award Agreement, the
Company will refund to the Participant the lesser of (i) such purchase price and
(ii) the Fair Market Value of such shares on the date of
forfeiture.
Section
8.3 Restrictions. Shares
granted under any Restricted Stock Award may not be transferred, assigned or
subject to any encumbrance, pledge, or charge until all applicable restrictions
are removed or have expired, unless otherwise allowed by the
Committee. Failure to satisfy any applicable restrictions shall
result in the shares subject to the Restricted Stock Award being forfeited and
returned to the Company. In the event that the Participant paid any
purchase price with respect to such forfeited shares, unless otherwise provided
by the Committee in an Award Agreement, the Company will refund to the
Participant the lesser of (i) such purchase price and (ii) the Fair Market Value
of such shares on the date of forfeiture. The Committee may require
in an Award Agreement that certificates representing the shares granted under a
Restricted Stock Award bear a legend making appropriate reference to the
restrictions imposed, and that certificates representing the shares granted or
sold under a Restricted Stock Award will remain in the physical custody of an
escrow holder until all restrictions are removed or have expired.
Section
8.4 Rights as
Stockholder. Subject to the foregoing provisions of this
Section 8 and the applicable Award Agreement, the Participant shall have all
rights of a stockholder with respect to the shares granted to the Participant
under a Restricted Stock Award, including the right to vote the shares and
receive all dividends and other distributions paid or made with respect thereto,
unless the Committee determines otherwise at the time the Restricted Stock Award
is granted. The Committee may provide in an Award Agreement for the
payment of dividends and distributions to the Participant at such times as paid
to stockholders generally or at the times of vesting or other payment of the
Restricted Stock Award.
Section
8.5 Section 83(b)
Election. If a Participant makes an election pursuant to
section 83(b) of the Code with respect to a Restricted Stock Award, the
Participant shall file, within 30 days following the Date of Grant, a copy of
such election with the Company and with the Internal Revenue Service, in
accordance with the regulations under section 83 of the Code. The
Committee may provide in an Award Agreement that the Restricted Stock Award is
conditioned upon the Participant’s making or refraining from making an election
with respect to the Award under section 83(b) of the Code.
9. STOCK
UNIT AWARDS
Section
9.1 Grant of Stock Unit
Awards. A Stock Unit Award may be granted to any Eligible
Person selected by the Committee. The value of each stock unit under
a Stock Unit Award is equal to the Fair Market Value of the Common Stock on the
applicable date or time period of determination, as specified by the Committee.
The Committee may grant Stock Unit Awards that are Section 162(m) Awards, as
well as Stock Unit Awards that are not Section 162(m) Awards. The
maximum number of units that may be subject to Stock Unit Awards granted to a
Participant during any one calendar year shall be limited to 250,000 units
(subject to adjustment as provided in Section 4.2 hereof). A Stock
Unit Award shall be subject to such restrictions and conditions as the Committee
shall determine. A Stock Unit Award may be granted together with a
dividend equivalent right with respect to the shares of Common Stock subject to
the Award, which may be accumulated and may be deemed reinvested in additional
stock units, as determined by the Committee in its discretion.
Section
9.2 Vesting of Stock Unit
Awards. On the Date of Grant, the Committee shall, in its
discretion, determine any vesting requirements with respect to a Stock Unit
Award, which shall be set forth in the Award Agreement. The
requirements for vesting of a Stock Unit Award may be based on the continued
Service of the Participant with the Company or its Subsidiaries for a specified
time period (or periods) or on the attainment of a specified performance goal
(or goals) established by the Committee in its discretion. The
Committee may, in its discretion, accelerate the vesting of a Stock Unit Award
at any time. In the case of any Stock Unit Award that is a Section
162(m) Award, any such performance-based vesting requirements shall be based
upon the performance criteria identified in Section 12.2 hereof, and the terms
of the Award shall otherwise comply with the requirements described in Section
12.3 hereof. A Stock Unit Award may also be granted on a fully vested
basis, with a deferred payment date as may be determined by the Committee or
elected by the Participant in accordance with the rules established by the
Committee.
Section
9.3 Payment of Stock Unit
Awards. A Stock Unit Award shall become payable to a
Participant at the time or times determined by the Committee and set forth in
the Award Agreement, which may be upon or following the vesting of the
Award. Payment of a Stock Unit Award may be made, at the discretion
of the Committee, in cash or in shares of Common Stock, or in a combination
thereof, subject to applicable tax withholding requirements. Any cash
payment of a Stock Unit Award shall be made based upon the Fair Market Value of
the Common Stock, determined on such date or over such time period as determined
by the Committee. In the case of a Participant who is a “specified
employee” as defined in Section 409A of the Code at the time of any payment of a
Stock Unit Award upon the Participant’s termination of Service, the payments
under the Stock Unit Award shall be deferred until the date that is six months
following the Participant’s termination of Service to the extent necessary to
comply with Section 409A of the Code, with the terms of such deferral and
payment to be made in the manner determined by the Committee and set forth in
the Award Agreement.
Section
9.4 No Rights as
Stockholder. The Participant shall not have any rights as a
stockholder with respect to the shares subject to a Stock Unit Award until such
time as shares of Common Stock are delivered to the Participant pursuant to the
terms of the Award Agreement.
10.
STOCK AWARDS
Section
10.1 Grant of Stock
Awards. A Stock Award may be granted to any Eligible Person
selected by the Committee. A Stock Award may be granted for past
services, in lieu of bonus or other cash compensation, as directors’
compensation or for any other valid purpose as determined by the
Committee. A Stock Award granted to an Eligible Person represents
shares of Common Stock that are issued free of restrictions on transfer and free
of forfeiture conditions and to which such Eligible Person is entitled all
incidents of ownership, except as otherwise provided in the Plan and the Award
Agreement. The Committee may, in connection with any Stock Award,
require the payment of a specified purchase price. The Committee may
grant Stock Awards that are Section 162(m) Awards, as well as Stock Awards that
are not Section 162(m) Awards. The maximum number of shares of Common
Stock that may be subject to Stock Awards granted to a Participant during any
one calendar year shall be limited to 250,000 shares (subject to adjustment as
provided in Section 4.2 hereof).
Section
10.2 Rights as
Stockholder. Subject to the foregoing provisions of this
Section 10 and the applicable Award Agreement, upon the issuance of the shares
of Common Stock under a Stock Award, the Participant shall have all rights of a
stockholder with respect to the shares of Common Stock, including the right to
vote the shares and receive all dividends and other distributions paid or made
with respect thereto.
11. PERFORMANCE
AWARDS
Section
11.1 Grant of Performance
Awards. The Committee may grant Performance Awards under the
Plan, which shall represent the right to receive a payment in cash if
performance goals established by the Committee for a performance period are
satisfied. The Committee may grant Performance Awards that are
Section 162(m) Awards, as well as Performance Awards that are not Section 162(m)
Awards. At the time a Performance Award is granted, the Committee
shall determine, in its sole discretion, the applicable performance period and
performance goals to be achieved during the performance period, as well as such
other conditions as the Committee deems appropriate. The Committee
may also determine a target payment amount or a range of payment amounts for
each Award. The performance goals applicable to a Performance Award
grant may be subject to adjustments as the Committee shall deem appropriate to
reflect significant unforeseen events, such as changes in law, accounting
practices or unusual or nonrecurring items or occurrences. The
Committee’s authority to make such adjustments shall be subject to such
limitations as the Committee deems appropriate in the case of a Performance
Award that is a Section 162(m) Award. In the case of any Performance
Award that is a Section 162(m) Award, performance goals shall be based upon the
performance criteria identified in Section 12.2 hereof, and the terms of the
Award shall otherwise comply with the requirements described in Section 12.3
hereof. The maximum amount of cash compensation that may be paid to a
Participant during any one calendar year under Performance Awards shall be $1
million.
Section
11.2 Payment of Performance
Awards. At the end of the performance period, the Committee
shall determine the extent to which performance goals have been attained, or a
degree of achievement between minimum and maximum levels, in order to establish
the level of payment to be made, if any. Payments of Performance
Awards shall generally be made as soon as practicable following the end of the
performance period, subject to any tax withholding requirements. In
the case of a Participant who is a “specified employee” as defined in Section
409A of the Code at the time of any payment of a Performance Award upon the
Participant’s termination of Service, the payments under the Performance Award
shall be deferred until the date that is six months following the Participant’s
termination of Service to the extent necessary to comply with Section 409A of
the Code, with the terms of such deferral and payment to be made in the manner
determined by the Committee and set forth in the Award Agreement.
12.
SECTION 162(M) AWARDS
Section
12.1 Awards. Awards of
Stock Options and Stock Appreciation Rights granted under the Plan are intended
by their terms to qualify as Section 162(m) Awards. Restricted Stock
Awards, Stock Unit Awards, Stock Awards and Performance Awards granted under the
Plan may qualify as Section 162(m) Awards if the Awards are granted or become
payable or vested based upon pre-established performance goals in accordance
with this Section 12.
Section
12.2 Performance
Criteria. In the case of a Restricted Stock Award, Stock Unit
Award, Stock Award or Performance Award that is intended to be a Section 162(m)
Award, the performance criteria upon which the grant, payment or vesting may be
based shall be limited to one or more of the following performance measures,
which may be applied with respect to the Company, any Subsidiary or any business
unit: (i) total stockholder return; (ii) stock price increase; (iii) return on
equity; (iv) return on capital; (v) return on investment; (vi) earnings per
share, diluted or basic; (vii) EBIT (earnings before interest and taxes); (viii)
EBITDA (earnings before interest, taxes, depreciation and amortization); (ix)
cash flow (including operating cash flow, free cash flow, discounted cash flow,
and cash flow in excess of costs of capital); (x) net or gross revenue; (xi)
operating expenses; (xii) gross or operating margin; (xiii) execution of a
corporate collaboration agreement relating to a product candidate of the
Company; (xiv) acceptance by the U.S. Food and Drug Administration (“FDA”) or a
comparable foreign regulatory authority of a final New Drug Application, a
Biologic License Application or similar document; (xv) approval for marketing of
a product candidate of the Company by the FDA or a comparable foreign regulatory
authority; (xvi) obtaining a specified level of financing for the Company, as
determined by the Committee, including through government grants (or similar
awards) and the issuance of securities; and (xvii) commencement of a particular
stage of clinical trials for a product candidate of the Company. The
foregoing performance criteria shall have any reasonable definitions that the
Committee may specify, which may include or exclude any items specified by the
Committee, including but not limited to any or all of the following items:
discontinued operations, extraordinary, unusual or non-recurring items, effects
of accounting changes, effects of currency or interest rate fluctuations,
effects of financing activities (e.g., effect on earnings per share of issuing
convertible debt securities), changes in tax rates, expenses for restructuring
or productivity initiatives, litigation losses, non-operating items, effects of
acquisitions or divestitures and changes of law or regulation affecting the
Company’s business. The foregoing performance measures may be
determined on an absolute basis or relative to internal goals or relative to
levels attained in prior years, or related to other companies or indices, or as
ratios expressing relationships between two or more performance
measures. In the case of Awards that are not Section 162(m) Awards,
the Committee may designate performance criteria from among the foregoing or
such other performance criteria as it shall determine in its sole
discretion.
Section
12.3 Section 162(m)
Requirements. In the case of a Restricted Stock Award, Stock
Unit Award, Stock Award or Performance Award that is intended to be a Section
162(m) Award, the Committee shall make such determinations with respect to an
Award as required by section 162(m) of the Code within 90 days after the
beginning of the performance period (or such other time period as is required
under section 162(m) of the Code). As and to the extent required by
section 162(m) of the Code, the terms of an Award that is a Section 162(m) Award
must state, in terms of an objective formula or standard, the method of
computing the amount of compensation payable under the Award, and must preclude
discretion to increase the amount of compensation payable under the terms of the
Award (but may allow the Committee discretion to decrease the amount of
compensation payable).
13.
CHANGE IN CONTROL
Section
13.1 Effect of Change in
Control. The Committee may, at the time of the grant of an
Award and as set forth in an Award Agreement, provide for the effect of a
“Change in Control” on an Award. Such provisions may include any one
or more of the following: (i) the acceleration or extension of time periods for
purposes of exercising, vesting in, or realizing gain from any Award, (ii) the
elimination or modification of performance or other conditions related to the
payment or other rights under an Award, (iii) provision for the cash settlement
of an Award for an equivalent cash value, as determined by the Committee, or
(iv) such other modification or adjustment to an Award as the Committee deems
appropriate to maintain and protect the rights and interests of Participants
upon or following a Change in Control. To the extent necessary for
compliance with Section 409A of the Code, an Award Agreement shall provide that
an Award subject to the requirements of Section 409A that would otherwise become
payable upon a Change in Control shall only become payable to the extent that
the requirements for a “change in control” for purposes of Section 409A have
been satisfied.
Section
13.2 Definition of Change in
Control. For purposes of the Plan, unless otherwise defined in
an Award Agreement, a “Change in Control” shall be deemed to have occurred
upon:
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(i)
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a
change in the composition of the Board such that during any period of two
consecutive years, individuals who at the beginning of such period
constitute the Board, and any new director (other than a director
designated by a person who has entered into an agreement with the Company
to effect a transaction described in clause (ii) or (iii) of this Section
13.2) whose election by the Board or nomination for election by the
Company’s stockholders was approved by a vote of at least two-thirds of
the directors then still in office who either were directors at the
beginning of the period or whose election or nomination for election was
previously so approved, cease for any reason to constitute at least a
majority of the members thereof;
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(ii)
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the
consummation of a merger, consolidation, reorganization or
similar corporate transaction, whether or not the Company is the surviving
corporation in such transaction, in which outstanding shares of Common
Stock are converted into (A) shares of stock of another company, other
than a conversion into shares of voting common stock of the successor
corporation (or a holding company thereof) representing more than 50% of
the voting power of all capital stock thereof outstanding immediately
after the merger or consolidation, or (B) other securities (of either the
Company or another company) or cash or other property;
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(iii)
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any
“Person” (as such term is used in Sections 13(d)(3) and 14(d)(2) of the
Exchange Act), except that such term shall not include (A) the Company,
(B) a trustee or other fiduciary holding securities under an employee
benefit plan of the Company, (C) an underwriter temporarily holding
securities pursuant to an offering of such securities, or (D) a
corporation owned, directly or indirectly, by the stockholders of the
Company in substantially the same proportions as their ownership of stock
of the Company, who is or becomes the “Beneficial Owner” (as defined in
Rule 13d-3 under the Exchange Act), directly or indirectly, of securities
of the Company (not including in the securities Beneficially Owned by such
Person any securities acquired directly from the Company) representing 30%
or more of the voting power of all capital stock thereof outstanding,
excluding any Person who is an officer or director of the Company or who
becomes such a Beneficial Owner in connection with a transaction described
in clause (ii) of this Section 13.2; or
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(iv)
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the
consummation of (A) the sale or other disposition of all or substantially
all of the assets of the Company, or (B) a complete liquidation or
dissolution of the Company.
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14.
GENERAL PROVISIONS
Section
14.1 Award Agreement. To
the extent deemed necessary by the Committee, an Award under the Plan shall be
evidenced by an Award Agreement in a written or electronic form approved by the
Committee setting forth the number of shares of Common Stock or units subject to
the Award, the exercise price, base price, or purchase price of the Award, the
time or times at which an Award will become vested, exercisable or payable and
the term of the Award. The Award Agreement may also set forth the
effect on an Award of termination of Service under certain
circumstances. The Award Agreement shall be subject to and
incorporate, by reference or otherwise, all of the applicable terms and
conditions of the Plan, and may also set forth other terms and conditions
applicable to the Award as determined by the Committee consistent with the
limitations of the Plan. Award Agreements evidencing Incentive Stock
Options shall contain such terms and conditions as may be necessary to meet the
applicable provisions of section 422 of the Code. The grant of an
Award under the Plan shall not confer any rights upon the Participant holding
such Award other than such terms, and subject to such conditions, as are
specified in the Plan as being applicable to such type of Award (or to all
Awards) or as are expressly set forth in the Award Agreement. The
Committee need not require the execution of an Award Agreement by a Participant,
in which case, acceptance of the Award by the Participant shall constitute
agreement by the Participant to the terms, conditions, restrictions and
limitations set forth in the Plan and the Award Agreement as well as the
administrative guidelines of the Company in effect from time to
time.
Section
14.2 Forfeiture
Events/Representations. The Committee may specify in an Award
Agreement at the time of the Award that the Participant’s rights, payments and
benefits with respect to an Award shall be subject to reduction, cancellation,
forfeiture or recoupment upon the occurrence of certain specified events, in
addition to any otherwise applicable vesting or performance conditions of an
Award. Such events shall include, but shall not be limited to,
termination of Service for cause, violation of material Company policies, breach
of noncompetition, confidentiality or other restrictive covenants that may apply
to the Participant, or other conduct by the Participant that is detrimental to
the business or reputation of the Company. The Committee may also
specify in an Award Agreement that the Participant’s rights, payments and
benefits with respect to an Award shall be conditioned upon the Participant
making a representation regarding compliance with noncompetition,
confidentiality or other restrictive covenants that may apply to the Participant
and providing that the Participant’s rights, payments and benefits with respect
to an Award shall be subject to reduction, cancellation, forfeiture or
recoupment on account of a breach of such representation.
Section
14.3 No Assignment or Transfer;
Beneficiaries. Except as provided in Section 6.6 hereof,
Awards under the Plan shall not be assignable or transferable by the
Participant, except by will or by the laws of descent and distribution, and
shall not be subject in any manner to assignment, alienation, pledge,
encumbrance or charge. Notwithstanding the foregoing, the Committee
may provide in an Award Agreement that the Participant shall have the right to
designate a beneficiary or beneficiaries who shall be entitled to any rights,
payments or other benefits specified under an Award following the Participant’s
death. During the lifetime of a Participant, an Award shall be
exercised only by such Participant or such Participant’s guardian or legal
representative. In the event of a Participant’s death, an Award may,
to the extent permitted by the Award Agreement, be exercised by the
Participant’s beneficiary as designated by the Participant in the manner
prescribed by the Committee or, in the absence of an authorized beneficiary
designation, by the legatee of such Award under the Participant’s will or by the
Participant’s estate in accordance with the Participant’s will or the laws of
descent and distribution, in each case in the same manner and to the same extent
that such Award was exercisable by the Participant on the date of the
Participant’s death.
Section
14.4 Deferrals of
Payment. The Committee may in its discretion permit a
Participant to defer the receipt of payment of cash or delivery of shares of
Common Stock that would otherwise be due to the Participant by virtue of the
exercise of a right or the satisfaction of vesting or other conditions with
respect to an Award. If any such deferral is to be permitted by the
Committee, the Committee shall establish rules and procedures relating to such
deferral in a manner intended to comply with the requirements of Section 409A of
the Code, including, without limitation, the time when an election to defer may
be made, the time period of the deferral and the events that would result in
payment of the deferred amount, the interest or other earnings attributable to
the deferral and the method of funding, if any, attributable to the deferred
amount.
Section
14.5 Rights as
Stockholder. A Participant shall have no rights as a holder of
shares of Common Stock with respect to any unissued securities covered by an
Award until the date the Participant becomes the holder of record of such
securities. Except as provided in Section 4.2 hereof, no adjustment
or other provision shall be made for dividends or other stockholder rights,
except to the extent that the Award Agreement provides for dividend payments or
dividend equivalent rights.
Section
14.6 Employment or
Service. Nothing in the Plan, in the grant of any Award or in
any Award Agreement shall confer upon any Eligible Person or Participant any
right to continue in the Service of the Company or any of its Subsidiaries, or
interfere in any way with the right of the Company or any of its Subsidiaries to
terminate the employment or other service relationship of an Eligible Person or
Participant for any reason at any time.
Section
14.7 Securities Laws. No
shares of Common Stock will be issued or transferred pursuant to an Award unless
and until all then applicable requirements imposed by Federal and state
securities and other laws, rules and regulations and by any regulatory agencies
having jurisdiction, and by any exchanges upon which the shares of Common Stock
may be listed, have been fully met. As a condition precedent to the
issuance of shares pursuant to the grant or exercise of an Award, the Company
may require the Participant to take any reasonable action to meet such
requirements. The Committee may impose such conditions on any shares
of Common Stock issuable under the Plan as it may deem advisable, including,
without limitation, restrictions under the Securities Act of 1933, as amended,
under the requirements of any exchange upon which such shares of the same class
are then listed, and under any blue sky or other securities laws applicable to
such shares. The Committee may also require the Participant to
represent and warrant at the time of issuance or transfer that the shares of
Common Stock are being acquired only for investment purposes and without any
current intention to sell or distribute such shares.
Section
14.8 Tax
Withholding. The Participant shall be responsible for payment
of any taxes or similar charges required by law to be withheld from an Award or
an amount paid in satisfaction of an Award, which shall be paid by the
Participant on or prior to the payment or other event that results in taxable
income in respect of an Award. The Award Agreement may specify the
manner in which the withholding obligation shall be satisfied with respect to
the particular type of Award.
Section
14.9 Unfunded Plan. The
adoption of the Plan and any reservation of shares of Common Stock or cash
amounts by the Company to discharge its obligations hereunder shall not be
deemed to create a trust or other funded arrangement. Except upon the
issuance of Common Stock pursuant to an Award, any rights of a Participant under
the Plan shall be those of a general unsecured creditor of the Company, and
neither a Participant nor the Participant’s permitted transferees or estate
shall have any other interest in any assets of the Company by virtue of the
Plan. Notwithstanding the foregoing, the Company shall have the right
to implement or set aside funds in a grantor trust, subject to the claims of the
Company’s creditors or otherwise, to discharge its obligations under the
Plan.
Section
14.10 Other Compensation and Benefit
Plans. The adoption of the Plan shall not affect any other
stock incentive or other compensation plans in effect for the Company or any
Subsidiary, nor shall the Plan preclude the Company from establishing any other
forms of stock incentive or other compensation or benefit program for employees
of the Company or any Subsidiary. The amount of any compensation
deemed to be received by a Participant pursuant to an Award shall not constitute
includable compensation for purposes of determining the amount of benefits to
which a Participant is entitled under any other compensation or benefit plan or
program of the Company or any Subsidiary, including, without limitation, under
any bonus, pension, profit-sharing, life insurance, salary continuation or
severance benefits plan, except to the extent specifically provided by the terms
of any such plan.
Section
14.11 Plan Binding on
Transferees. The Plan shall be binding upon the Company, its
transferees and assigns, and the Participant, the Participant’s executor,
administrator and permitted transferees and beneficiaries.
Section
14.12 Severability. If
any provision of the Plan or any Award Agreement shall be determined to be
illegal or unenforceable by any court of law in any jurisdiction, the remaining
provisions hereof and thereof shall be severable and enforceable in accordance
with their terms, and all provisions shall remain enforceable in any other
jurisdiction.
Section
14.13 Foreign
Jurisdictions. The Committee may adopt, amend and terminate
such arrangements and grant such Awards, not inconsistent with the intent of the
Plan, as it may deem necessary or desirable to comply with any tax, securities,
regulatory or other laws of other jurisdictions with respect to Awards that may
be subject to such laws. The terms and conditions of such Awards may
vary from the terms and conditions that would otherwise be required by the Plan
solely to the extent the Committee deems necessary for such purpose. Moreover,
the Board may approve such supplements to or amendments, restatements or
alternative versions of the Plan, not inconsistent with the intent of the Plan,
as it may consider necessary or appropriate for such purposes, without thereby
affecting the terms of the Plan as in effect for any other purpose.
Section
14.14 Substitute Awards in Corporate
Transactions. Nothing contained in the Plan shall be construed
to limit the right of the Committee to grant Awards under the Plan in connection
with the acquisition, whether by purchase, merger, consolidation or other
corporate transaction, of the business or assets of any corporation or other
entity. Without limiting the foregoing, the Committee may grant
Awards under the Plan to an employee or director of another corporation who
becomes an Eligible Person by reason of any such corporate transaction in
substitution for awards previously granted by such corporation or entity to such
person. The terms and conditions of the substitute Awards may vary
from the terms and conditions that would otherwise be required by the Plan
solely to the extent the Committee deems necessary for such
purpose. Any shares of Common Stock subject to these substitute
Awards shall not be counted against any of the maximum share limitations set
forth in the Plan.
Section
14.15 Governing Law. The
Plan and all rights hereunder shall be subject to and interpreted in accordance
with the laws of the State of Delaware, without reference to the principles of
conflicts of laws, and to applicable Federal securities laws.
Section
14.16 Section 409A
Compliance. To the extent applicable, it is intended that the
Plan and all Awards hereunder comply with the requirements of Section 409A of
the Code, and the Plan and all Award Agreements shall be interpreted and applied
by the Committee in a manner consistent with this intent in order to avoid the
imposition of any additional tax under Section 409A of the Code. In
the event that any provision of the Plan or an Award Agreement is determined by
the Committee to not comply with the applicable requirements of Section 409A of
the Code, the Committee shall have the authority to take such actions and to
make such interpretations or changes to the Plan or an Award Agreement as the
Committee deems necessary to comply with such requirements, provided that the
Committee shall act in a manner that is intended to preserve the economic value
of the Award to the Participant. Notwithstanding the foregoing or
anything elsewhere in the Plan or an Award Agreement to the contrary, if a
Participant is a “specified employee” as defined in Section 409A of the Code at
the time of termination of Service with respect to an Award, then solely to the
extent necessary to avoid the imposition of any additional tax under Section
409A of the Code, the commencement of any payments or benefits under the Award
shall be deferred until the date that is six months following the Participant’s
termination of Service (or such other period as required to comply with Section
409A).
15. EFFECTIVE
DATE; AMENDMENT AND TERMINATION
Section
15.1 Effective Date. The
Plan became effective following its adoption by the Board and its approval by
the Company’s stockholders on the date of the 2005 Annual Meeting of
Stockholders. The term of the Plan shall be ten (10) years from the
date of such adoption by the Board, subject to Section 15.3
hereof. The Plan as amended and restated herein became effective
following its adoption by the Board and its approval by the Company’s
stockholders on the date of the 2007 Annual Meeting of
Stockholders.
Section
15.2 Amendment. The
Board may at any time and from time to time and in any respect, amend or modify
the Plan. The Board may seek the approval of any amendment or
modification by the Company’s stockholders to the extent it deems necessary or
advisable in its discretion for purposes of compliance with section 162(m) or
section 422 of the Code, the listing requirements of the NASDAQ or other
exchange or securities market or for any other purpose. No amendment
or modification of the Plan shall adversely affect any Award theretofore granted
without the consent of the Participant or the permitted transferee of the
Award. Notwithstanding the foregoing and notwithstanding anything to
the contrary in the Plan, the Board may amend the Plan and any outstanding Award
Agreement solely to comply with any new regulations or other guidance from the
Internal Revenue Service under section 409A of the Code without the consent of
the Participant or the permitted transferee of the Award.
Section
15.3 Termination. The
Plan shall terminate on April 4, 2015, which is the date immediately preceding
the tenth anniversary of the date of the Plan’s adoption by the
Board. The Board may, in its discretion and at any earlier date,
terminate the Plan. Notwithstanding the foregoing, no termination of
the Plan shall adversely affect any Award theretofore granted without the
consent of the Participant or the permitted transferee of the
Award.
777 OLD SAW MILL RIVER
ROAD
TARRYTOWN, NY
10591
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VOTE
BY INTERNET - www.proxyvote.com
Use
the Internet to transmit your voting instructions and for
electronic
delivery of information up until 11:59 PM Eastern Time
on
the day before the meeting date. Have your proxy card in
hand
when
you access the web site and follow the instructions to obtain
your
records and to create an electronic voting instruction form.
VOTE
BY PHONE-1-800-690-6903
Use
any touch-tone telephone to transmit your voting instructions
up
until
11:59 PM Eastern Time on the day before the
meeting. Have
your
proxy card in hand when you call and then follow the
instructions.
VOTE
BY MAIL
Mark,
sign and date your proxy card and return it in the
postage-paid
envelope
we’ve provided or return to Vote Processing, c/o
Broadridge,
51 Mercedes Way, Edgewood, NY 11717.
VOTE IN
PERSON
Attend
the Annual Shareholders Meeting at 10:00 A.M. Eastern
Time
on Monday, June 08, 2009.
Landmark
at Eastview
Rockland
Room
777
Old Saw Mill River Road
Tarrytown,
NY 10591
ELECTRONIC DELIVERY OF FUTURE
SHAREHOLDER
COMMUNICATIONS
If
you would like to reduce the costs incurred by Progenics in
mailing
proxy materials, you can consent to receiving all future
proxy
statements, proxy cards and annual reports electronically via
e-mail
or the Internet. To sign up for electronic delivery, please
follow
the instructions above to vote using the Internet and, when
prompted,
indicate that you agree to receive or access shareholder
communications
electronically in future
years.
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TO
VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS
FOLLOWS: PROGN1 KEEP
THIS PORTION FOR YOUR RECORDS
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DETACH
AND RETURN THIS PORTION ONLY
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THIS
PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
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Vote
On Directors
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1. ELECTION
OF DIRECTORS:
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NOMINEES:
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For
All
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Withhold
All
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For
All
Except
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To
withhold authority to vote for any individual nominee(s), mark “For All
Except” and write the nominee's number on the line
below
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01) Kurt
W. Briner
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¨
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¨
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¨
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02) Charles
A. Baker
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_____________________________________________________ | ||||||||||||||
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03) Peter
J. Crowley
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04) Mark
F. Dalton
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05) Stephen
P. Goff
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06) Paul
J. Maddon
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07) David
A. Scheinberg
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08) Nicole
S. Williams
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Vote
On Proposals
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For
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Against
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Abstain
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2.
The approval of amendments to the Company’s1998 Employee Stock Purchase
Plan and the 1998 Non-Qualified Employee Stock Purchase Plan to increase
the number of shares of common stock reserved for issuance thereunder to
3,400,000 and 1,100,000, respectively, and to make certain other changes
to the terms of the Plans.
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¨
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¨
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3.
The approval of an amendment to the 2005 Stock Incentive Plan to increase
the number of shares of common stock reserved for issuance thereunder to
5,450,000 and to make certain other changes to the terms of the
Plan.
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¨
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¨
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¨
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4. The
ratification of the selection of PricewaterhouseCoopers LLP to serve as
the Company’s independent registered public accounting firm for
2009.
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¨
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¨
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¨
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5.
The authority to vote in their discretion on such other business as may
properly come before the meeting.
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¨
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¨
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¨
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NOTE:
Please sign exactly as your name(s) appear(s) on this proxy. When
shares are held jointly, each holder should sign. When signing as
attorney, executor, administrator or other fiduciary, please give full
title as such. If the signer is a corporation or partnership, please sign
in full corporate or partnership name, by duly authorized
officer.
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For
comments, please check this box and write them on the back where
indicated
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¨
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Please
indicate if you plan to attend this meeting
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¨
Yes
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¨
No
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Signature
[PLEASE SIGN WITHIN BOX]
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Date
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Signature
(Joint Owners)
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Date
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Important
Notice Regarding the Availability of Proxy Materials for the Annual
Meeting
The
Notice of Meeting, Proxy Statement and Annual Report /Form 10-K Wrap are
available at www.proxyvote.com
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PROGENICS
PHARMACEUTICALS, INC.
777
OLD SAW MILL RIVER ROAD
TARRYTOWN,
NEW YORK 10591
ANNUAL
MEETING OF STOCKHOLDERS-JUNE 08, 2009
THIS
PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
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The
undersigned hereby appoints Paul J. Maddon, Robert A. McKinney and Mark R.
Baker and each of them, as proxies each with the power to appoint his
substitute and hereby authorizes them to represent and to vote, as
designated on the reverse side of this ballot, all of the shares of common
stock of Progenics Pharmaceuticals, Inc. held of record by the undersigned
on April 13, 2009, at the Annual Meeting of Stockholders to be held on
June 08, 2009 and any adjournments or postponements thereof.
THIS
PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED STOCKHOLDER(S). IF NO DIRECTION IS MADE,
THIS PROXY WILL BE VOTED FOR EACH OF
THE PROPOSALS LISTED ON THE REVERSE SIDE.
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(Continued
and to be signed on the reverse side)
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