UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
(Amendment No. )
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Infinity Pharmaceuticals, Inc. | ||||
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Supplemental Materials in Support of Equity Plan Proposal May 2012 |
Reasons to Vote “FOR” the Equity Plan Proposal 1. We have a strong track record of aligning executive pay with performance. 2. We have a broad-based, options-only equity program that optimally aligns compensation with shareholder return. Moreover, our Citizen-Owners have demonstrated their belief in the long-term success of our company by holding their vested, in-the-money options. 3. Our burn rate from options is well below ISS thresholds, as well as the more stringent commitment we made to our shareholders. 4. We have been extremely successful in funding our clinical development programs through vehicles other than dilutive equity financings. This success has the result of overstating the impact of options when performing shareholder value transfer (SVT) and voting power dilution analyses. In addition, recent appreciation in INFI stock is not reflected in ISS analyses. 5. We do not anticipate requesting additional shares under our equity incentive plan until at least our 2014 annual meeting. 2 |
INFI Aligns Pay with Performance and Shareholder Value Creation • “Say on Pay” proposal received 96% support at our 2011 annual meeting • We score a “LOW” level of concern under each of ISS’s pay for performance tests: – Relative Degree of Alignment score of 32.4 – TSR performance ranking has outpaced our CEO pay ranking over the combined one and three year periods – Multiple of Median – our CEO pay for the last year was approximately 0.8x of our peer group median – Pay/TSR Alignment score of 4.6% -- TSR performance has trended higher than our CEO compensation • We have a “broad based,” “options-only” equity program – Over 76% of option grants are to non-NEOs – a higher percentage of grants to non- officers than our compensation peer group – Options-only approach better aligns compensation to shareholder return than does use of less dilutive, “full value” awards Sources: Internal analysis using ISS Compass Model, 24 February 2012; Glass Lewis Proxy Paper, 22 April 2012 3 |
Our Citizen-Owners Share Our Shareholders’ Long-Term Focus Number Weighted-Average Exercise Price Outstanding stock options 7,992,966 $8.36 Vested stock options 5,037,061 $9.08 Vested and in-the-money stock options 3,624,292 $7.15 Expected term of outstanding stock options (using internal Black-Scholes valuation model) 6.1 years* 4 Our Citizen-Owners are focused on creating long-term value for shareholders. This is manifest in their practice of holding their vested, in-the-money stock options. This practice has the result of magnifying our “overhang” from stock options. Calculated as of 3/31/12. * Our stock options generally vest over 4 years. |
Our Burn Rate from Options Is Well Managed ISS Burn Rate Cap – GIC Code 3520 (Pharmaceuticals, Biotechnology & Life Sciences) 7.49% INFI 3-year burn rate commitment made upon approval of 2010 equity incentive plan 7.31% INFI 1-year burn rate – FY 2011 4.85% INFI 3-year average burn rate – FY 2009-11 4.72% 5 |
Our Track Record of Non-Dilutive Financing Overstates the Impact of Stock Options Date Shares of INFI Stock Outstanding December 31, 2011 26,721,739 December 31, 2009 26,238,954 Aggregate Shares Issued in FY 2010-11 482,785 6 Fiscal Year Non-Dilutive R&D Funding from Alliance Partner Average Closing Price Per Share Share Dilution Avoided 2011 $85,000,000 $7.06 ~ 12 million 2010 $65,000,000 $6.11 ~ 10.6 million Total $150,000,000 ~ 22.6 million Management’s strategy to avoid dilution while enabling robust R&D investment has provided significant benefits to shareholders. Focusing solely on dilution from stock options could create a perverse disincentive with respect to seeking non-dilutive sources of R&D financing in the future. |
Recent INFI Stock Appreciation Not Reflected in ISS Calculations Using 12/1/11 Data 7 INFI stock has appreciated > 45% since the 12/1/11 data download used by ISS, and has substantially outpaced growth in the NASDAQ Biotech Index during this period. We believe that this stock price appreciation, if considered, would have a favorable impact on the results of ISS’s SVT analysis. |
Forward-Looking Statements The foregoing contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements involve risks and uncertainties that could cause actual results to be materially different from those expressed or implied by such forward-looking statements. These risks and uncertainties are described in detail under the caption “Risk Factors” included in our annual report on Form 10-K for the year ended December 31, 2011, which we filed with the Securities and Exchange Commission on March 13, 2012. We expressly disclaim any obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise. 8 |