UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of Securities Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to ss.240.14a-11(c) or ss.240.14a-12
Agouron Pharmaceuticals, Inc.
10350 North Torrey Pines Road
La Jolla, California 92037
(Name of Registrant as Specified in its Charter)
________________________________________________
(Name of Person(s) Filing Proxy Statement if other than Registrant)
Payment of Filing Fee: (Check the Appropriate Box)
/X/ No fee required.
/ / Fee computed on the table below per Exchange Act Rules 14a-6(i)(4)
and 0-11.
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2. Aggregate number of securities to which transaction applies: _____
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statement number, or the Form or Schedule and the date of its filing.
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4. Date Filed: ______
AGOURON PHARMACEUTICALS, INC.
10350 North Torrey Pines Road
La Jolla, California 92037-1020
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON NOVEMBER 6, 1997
The Annual Meeting of Shareholders ("Meeting") of Agouron Pharmaceuticals,
Inc., a California corporation (the "Company") will be held at the Sheraton
Grande Torrey Pines, 10950 North Torrey Pines Road, La Jolla, California 92037,
on Thursday, November 6, 1997, at 10:00 a.m. for the following purposes:
1. To elect nine directors of the Company, all of whom shall serve until
the 1998 Annual Meeting of Shareholders (and until the election and
qualification of their successors);
2. To ratify the selection of independent accountants; and
3. To consider and act upon such other business as may properly be
presented to the Meeting or any adjournments or postponements thereof.
Only shareholders of record as of the close of business on September 23,
1997 will be entitled to notice of and to vote at the Meeting or any
adjournments or postponements thereof. A list of shareholders entitled to vote
at the Meeting will be available for inspection at the offices of the Company
for 10 days before the Meeting.
All shareholders are cordially invited to attend the Meeting in person.
Regardless of whether you plan to attend the Meeting, please sign and date the
enclosed Proxy and return it promptly in the accompanying envelope, postage for
which has been provided if mailed in the United States. The prompt return of
Proxies will ensure a quorum and save the Company the expense of further
solicitation. Any shareholder returning the enclosed Proxy may revoke it prior
to its exercise by voting in person at the Meeting or by filing with the
Secretary of the Company a written revocation or a duly executed Proxy bearing a
later date.
By Order of the Board of Directors
/s/ Gary E. Friedman
Gary E. Friedman
Secretary
La Jolla, California
September 26, 1997
AGOURON PHARMACEUTICALS, INC.
10350 North Torrey Pines Road
La Jolla, California 92037-1020
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON NOVEMBER 6, 1997
GENERAL INFORMATION
This Proxy Statement is furnished in connection with the solicitation of
Proxies by and on behalf of the Board of Directors ("Board") of Agouron
Pharmaceuticals, Inc., a California corporation (the "Company"), for use at the
Company's Annual Meeting of Shareholders for the fiscal year ended June 30, 1997
(the "Meeting") to be held at the Sheraton Grande Torrey Pines, 10950 North
Torrey Pines Road, La Jolla, California 92037, on Thursday, November 6, 1997 at
10:00 a.m., and at any adjournments or postponements thereof, for the purposes
set forth in the preceding notice. It is anticipated that this Proxy Statement
and the accompanying Proxy will be mailed to the Company's shareholders on or
about September 26, 1997.
Any shareholder returning the enclosed Proxy may revoke it prior to its
exercise by voting in person at the Meeting or by filing with the Secretary of
the Company a written revocation or a duly executed Proxy bearing a later date.
All shares represented by valid Proxies will be voted in accordance with
the directions specified thereon and otherwise in accordance with the judgment
of the proxyholders. Any duly executed Proxy on which no direction is specified
will be voted for the election of the nominees named herein to the Board and in
favor of Proposal 2 described in the Notice of Meeting and this Proxy Statement.
The expense of printing and mailing Proxy material will be borne by the
Company. In addition to the solicitation of Proxies by mail, solicitation may be
made by certain directors, officers or other employees of the Company by
telephone, telegraph, facsimile or in person. No additional compensation will be
paid to such persons for such solicitation. However, the Company will request
brokers, nominees, fiduciaries, custodians and others to forward Proxy materials
to the beneficial owners of the Company's shares and the Company will reimburse
such brokers or other persons for their reasonable out-of-pocket expenses
incurred in connection with forwarding such materials.
SHARES OUTSTANDING AND VOTING RIGHTS
Only shareholders of record as of the close of business on September 23,
1997 (the "Record Date") will be entitled to vote at the Meeting. As of
September 12, 1997, there were outstanding 30,235,906 shares of common stock.
Holders of common stock are entitled to one vote per share on all matters
brought before the Meeting and to cumulate votes for the election of the nine
directors. Therefore, in voting for directors, each outstanding share of common
stock is entitled to nine votes which may be cast for one candidate or
distributed in any manner among the nominees for director. However, the right to
cumulate votes in favor of one or more candidates may not be exercised until the
candidate or candidates have been nominated and the shareholder has given notice
at the Meeting of the intention to cumulate votes.
The persons authorized to vote shares represented by executed Proxies for
common stock in the enclosed form (if authority to vote for the election of
directors is not withheld) will have full discretion and authority to vote
cumulatively and to allocate votes among any or all of the nominees as they may
determine or, if authority to vote for a specified candidate or candidates had
been withheld, among those candidates for whom authority to vote has not been
withheld.
The required quorum for the Meeting shall consist of a majority of the
outstanding shares of common stock which are entitled to vote in person or by
proxy at the Meeting. Assuming that a quorum is present at the Meeting, the nine
persons receiving the highest number of votes will be elected to the Board. The
required vote for the approval of other business matters is set forth in the
discussion of such matters.
1
BOARD OF DIRECTORS
Under the bylaws of the Company, the number of directors is to be not less
than six nor more than eleven, with the actual number to be fixed from time to
time by resolution of the Board. The Board has fixed at nine the number of
directors to be elected at the 1997 Annual Meeting of Shareholders.
Nine directors are to be elected at the Meeting, each to serve until the
next Annual Meeting of Shareholders and until their respective successors are
elected or appointed. Unless authority to vote for all directors is withheld, it
is intended that the shares represented by the enclosed Proxy will be voted for
the election of the nominees named. In the event any of them shall become unable
or unwilling to accept nomination or election, the shares represented by the
enclosed Proxy will be voted for the election of such other person as the Board
may recommend in his or her place. The Board has no reason to believe that any
such nominee will be unable or unwilling to serve.
ELECTION OF DIRECTORS
(Item 1 on the Proxy Card)
The nine nominees for election as directors, all of whom are members of the
present Board, are Peter Johnson, Gary E. Friedman, John N. Abelson, Patricia M.
Cloherty, A.E. Cohen, Michael E. Herman, Irving S. Johnson, Antonie T. Knoppers
and Melvin I. Simon. Their terms will last until the 1998 Annual Meeting of
Shareholders. Certain information concerning the nominees for directors is set
forth below.
The Board recommends that you vote FOR the nominees for directors, as set
forth in Item 1 on the Proxy Card.
Nominees for Election as Directors
Name Age Position
Peter Johnson 52 President, Chief
Executive Officer and
Director
Gary E. Friedman 50 Corporate Vice
President, General
Counsel, Secretary
and Director
John N. Abelson, Ph.D.(1) 58 Director
Patricia M. Cloherty(2) 55 Director
A.E. Cohen(1) 61 Director
Michael E. Herman(1) 56 Director
Irving S. Johnson, Ph.D. 72 Director
Antonie T. Knoppers, M.D., Ph.D.(2) 82 Director
Melvin I. Simon, Ph.D.(2) 60 Director
- -----------------------
(1) Member of Directors Compensation Committee
(2) Member of Audit Committee
2
Peter Johnson, a founder of the Company, has served as a director and as
president and chief executive officer of the Company since its inception in
1984. Through 1989, Mr. Johnson held various positions with The Agouron
Institute, including executive director. Mr. Johnson received a M.A. from the
University of California, San Diego.
Gary E. Friedman, a founder of the Company, has served as a director since
its inception, as the secretary of the Company since May 1986 and as vice
president and general counsel since December 1991. In June 1997, Mr. Friedman
was promoted to corporate vice president. Previously, from 1982 until December
1991, Mr. Friedman was a principal of the law firm of Friedman, Jay & Cramer, a
Professional Corporation. Mr. Friedman is a California Certified Specialist in
Taxation. Mr. Friedman received a J.D. and a M.B.A. from the University of
California, Berkeley and a L.L.M. in taxation from the University of San Diego.
John N. Abelson, a founder of the Company, has served as a director since
its inception. Dr. Abelson, a molecular biologist, is a member of the National
Academy of Sciences. Since 1982, Dr. Abelson has been a member of the faculty of
the Division of Biology at the California Institute of Technology where, from
October 1989 until June 1995, he served as chairman. Previously, Dr. Abelson was
a member of the faculty in the Department of Chemistry at the University of
California, San Diego. Dr. Abelson received a Ph.D. in biophysics from The Johns
Hopkins University and was a postdoctoral fellow at the Laboratory of Molecular
Biology in Cambridge, England. Dr. Abelson also serves as a director of The
Agouron Institute.
Patricia M. Cloherty joined the Board in December 1988. Since 1970, Ms.
Cloherty has been associated with Patricof & Co. Ventures, Inc. (formerly Alan
Patricof Associates, Inc.), a New York venture capital firm ("Patricof"), and
has been a general partner of its funds since 1973. In 1993, she was elected
president of Patricof. Ms. Cloherty also served as deputy administrator for the
U.S. Small Business Administration in 1977 and 1978. Ms. Cloherty also serves on
the board of directors of several private companies.
A.E. Cohen joined the Board in March 1992. Mr. Cohen is an independent
management consultant. From 1957 until his retirement in January 1992, Mr. Cohen
held various positions at Merck & Co., Inc., including senior vice president and
president of the Merck Sharp & Dohme International Division. Currently, Mr.
Cohen is the chairman of the board of Neurobiological Technologies, Inc. and
Vasomedical, Inc., and is a member of the board of directors of Akzo Nobel N.V.,
Teva Pharmaceutical Industries Ltd., Vion Pharmaceuticals, Inc., Smith Barney
(Mutual Funds), and BlueStone Capital Partners, L.P., all of which are public
companies. Mr. Cohen also serves as a consultant to MeesPierson Inc., The
Population Council and Chugai Pharmaceutical Co. Ltd., Tokyo ("Chugai"), and
serves as chairman of the board of Chugai's U.S. subsidiary companies.
Michael E. Herman joined the Board in October 1992. Mr. Herman is a private
investor, as well as president and chief operating officer of the Kansas City
Royals Baseball Team. From October 1974 until his retirement in 1990, Mr. Herman
held various positions at Marion Laboratories, Inc. (now Hoechst Marion
Roussel), including executive vice president and chief financial officer.
Currently, Mr. Herman serves as chairman of the finance committee of the Ewing
Marion Kauffman Foundation, a private foundation located in Kansas City where,
from 1985 through 1990, he was the president and chief operating officer. Mr.
Herman is also a member of the board of directors of Cerner Corporation,
Seafield Capital and SLH Corporation, all of which are public companies, and
serves on the board of directors of several private companies.
Irving S. Johnson joined the Board in May 1989. Dr. Johnson is an
independent consultant in biomedical research working with numerous private
companies. From 1953 until his retirement in November 1988, Dr. Johnson held
various positions at Eli Lilly and Company, including vice president of research
from 1973 until 1988. Dr. Johnson also served on several committees of the
National Academy of Sciences, the Office of Technology Assessment and the
National Institutes of Health. Currently, he is a member of the board of
directors of Allelix Biopharmaceuticals Inc. and Ligand Pharmaceuticals
Incorporated, and is on the scientific advisory board of ELAN Corporation, all
of which are public companies. Dr. Johnson received a Ph.D. in developmental
biology from the University of Kansas.
Antonie T. Knoppers joined the Board in July 1991. Dr. Knoppers is an
independent management consultant. From 1952 until his retirement in 1975, Dr.
Knoppers held various positions at Merck & Co., Inc., including vice chairman of
the board and president and chief operating officer. Dr. Knoppers is a member of
the board of directors of Centocor, Inc., a public biotechnology company. In
addition, he is a former chairman of the U.S. Council of the International
Chamber of Commerce and a member of the advisory board of PaineWebber
Development Corporation, an affiliate of PaineWebber Incorporated. Dr. Knoppers
received a M.D. from the University of Amsterdam and a Ph.D.
from the University of Leiden, The Netherlands.
3
Melvin I. Simon, a founder of the Company, has served as a director since
its inception. Dr. Simon, a molecular geneticist, is a member of the National
Academy of Sciences. Currently, Dr. Simon is chairman of the Division of Biology
at the California Institute of Technology where he has been a member of the
faculty since 1982. Previously, Dr. Simon was a member of the faculty in the
Department of Biology at the University of California, San Diego. Dr. Simon
received a Ph.D. in biochemistry from Brandeis University. Dr. Simon also serves
as a director of The Agouron Institute.
Committees and Meetings of the Board
The Company has a Directors Compensation Committee and an Audit Committee.
The Company does not have a Nominating Committee. During the fiscal year ended
June 30, 1997, the Board held nine meetings.
During the fiscal year ended June 30, 1997, members of the Audit Committee
consisted of Ms. Cloherty, Chairperson, Dr. Knoppers and Dr. Simon. The Audit
Committee oversees the Company's accounting and financial reporting policies,
makes recommendations to the Board regarding the appointment of independent
accountants, reviews with the independent accountants the accounting principles
and practices followed by the Company and the adequacy thereof, approves the
Company's annual audit and financial results and any material change in
accounting principles, policies and procedures and makes recommendations to the
Board with regard to any of the preceding. The Audit Committee held two meetings
in the fiscal year ended June 30, 1997.
During the fiscal year ended June 30 1997, members of the Directors
Compensation Committee consisted of Mr. Herman, Chairman, Dr. Abelson, and Mr.
Cohen. The Directors Compensation Committee recommends to the Board the
Company's overall compensation and the individual compensation elements for the
Company's executive officers and directors. The Directors Compensation Committee
does not approve grants of stock options to executive officers and directors
under the Company's stock option plans. The Directors Compensation Committee
held two meetings in the fiscal year ended June 30, 1997. During fiscal 1997,
the full Board was responsible for approving grants of options to executive
officers and directors.
No incumbent director attended fewer than 75% of the aggregate of the Board
and Committee meetings in which such director was entitled to participate.
4
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information as of September 12, 1997
relating to the beneficial ownership of the Company's common stock by (i) each
person known by the Company to beneficially own more than 5% of the outstanding
shares of the Company's common stock, (ii) each director, (iii) each of the
executive officers named in the Summary Compensation Table below, and (iv) all
executive officers and directors as a group.
Beneficial Ownership(1)
Number of Percentage of
Beneficial Owner Shares(9) Total
- ------------------------------ --------------- ---------
Ark Asset Management Co., Inc. 2,750,000 9.10%
One New York Plaza, 29th Floor
New York, New York 10004
Peter Johnson(2) 680,200 2.21%
Gary E. Friedman(2) Family Trust(8) 273,500 *
John N. Abelson(2)(3)(6) 117,776 *
Patricia M. Cloherty(2) 20,992 *
A. E. Cohen(2) 66,666 *
Michael E. Herman(2)(4) 79,666 *
Irving S. Johnson(2) 35,266 *
Antonie T. Knoppers(2) 50,866 *
Melvin I. Simon(2)(3) and Linda F. Simon Living Trust(5) 151,666 *
Neil J. Clendeninn 91,118 *
Barry D. Quart 105,270 *
R. Kent Snyder(7) 125,656 *
All executive officers and directors as a group (19 persons) 2,438,970 7.66%
- --------------------------
* less than 1%.
(1) Unless otherwise indicated, the persons named in the above table exercise
sole voting and investment powers with respect to all shares beneficially
owned by them, subject to applicable community property laws. The number of
shares beneficially owned includes the following number of shares issuable
upon exercise of stock options exercisable within 60 days of September 23,
1997: Mr. Johnson, 568,890 shares; Mr. Friedman, 202,118 shares; Dr.
Abelson, 21,666 shares; Ms. Cloherty, 6,666 shares; Mr. Cohen, 36,666
shares; Mr. Herman, 32,666 shares; Dr. Johnson, 9,166 shares; Dr. Knoppers,
36,666 shares; Dr. Simon, 21,666 shares; Dr. Clendeninn, 20,892 shares; Dr.
Quart 86,200 shares; Mr. Snyder,120,034 shares; and all executive officers
and directors as a group, 1,583,886 shares.
(2) Director.
(3) Does not include 1,106,000 shares held by The Agouron Institute, of which
Drs. Abelson and Simon are directors. As directors, they share voting and
investment powers as to the shares held by The Agouron Institute.
(4) Includes 20,000 shares held by the Herman Family Trading Company, a family
partnership of which Mr. Herman is the general partner, 10,000 shares held
by Vail Fishing Partners in which Mr. Herman has a 50% general partner
interest and 2,400 shares held by Mrs. Herman, of which Mr. Herman
disclaims any beneficial ownership.
(5) Shared voting and investment power.
(6) Includes 1,000 shares held by Dr. Abelson as custodian for his minor
children, of which Dr. Abelson disclaims any beneficial ownership.
(7) Includes 800 shares held by immediate family members, of which Mr. Snyder
disclaims any beneficial ownership.
(8) Includes 4,052 shares held by wife as custodian for minor children of which
Mr. Friedman disclaims any beneficial ownership.
(9) Adjusted to reflect two-for-one stock split in August 1997.
5
EXECUTIVE COMPENSATION
Compensation of Directors
Non-employee members of the Board receive cash compensation in the amount of
$250 per Board meeting for their services as Board members, and are eligible for
reimbursement of their expenses incurred to attend each such meeting in
accordance with Company policy. In addition to meeting fees, certain
non-employee directors received consulting fees during fiscal 1997. For
scientific consultation, Dr. Abelson received $29,040; Dr. Knoppers, $5,000; Dr.
Johnson, $18,000 and Dr. Simon, $24,200. For special consultation concerning
corporate development issues, Mr. Cohen received $18,000 and Mr. Herman received
$18,000.
Compensation of Executive Officers
The following table sets forth the aggregate compensation paid or accrued
by the Company to the Chief Executive Officer and to the four other most highly
compensated executive officers whose annual compensation exceeded $100,000 for
the fiscal year ended June 30, 1997 (collectively the "named executive
officers") for service during the fiscal years ended June 30, 1997, 1996 and
1995:
Summary Compensation Table
Long-Term
Compensation
Name Annual Compensation Awards(2)(3)
Principal Stock All Other
Position Year Salary(1) Bonus Options Compensation(4)
Peter Johnson 1997 $330,000 $165,000 100,000 $2,250
President and Chief 1996 285,000 100,000 180,000 1,647
Executive Officer 1995 253,500 70,000(5) 156,400 948
Neil J. Clendeninn 1997 206,600 75,000 26,000 23,452
Corporate Vice President, 1996 192,900 40,000 44,000 1,685
Clinical Affairs 1995 187,900 88,309(5)(6) 20,000 131,619
Gary E. Friedman 1997 195,000 70,000 26,000 2,250
Corporate Vice President, 1996 175,500 50,000 50,000 1,589
General Counsel 1995 171,100 30,000(5) 40,000 972
Barry D. Quart(5) 1997 180,000 115,500(7) 44,000 2,953
SeniorVice President, 1996 165,000 70,500(7) 72,000 16,587
Regulatory Affairs 1995 150,600 57,000(5) 60,000 9,005
R. Kent Snyder(5) 1997 200,000 102,000(7) 44,000 2,250
Senior Vice President, 1996 178,500 62,200(7) 64,000 1,777
Commercial Affairs 1995 158,000 55,000(5) 40,000 1,014
- -----------------------------------
<FN>
(1) Includes amounts deferred out of compensation under the Company's 401(k) Plan otherwise payable in cash during
each fiscal year.
(2) The Company has made no restricted stock awards, has not granted any stock
appreciation rights and has no other long-term incentive plans.
(3) Adjusted to reflect two-for-one stock split in August 1997.
(4) (a) During 1997, the Company made matching contributions to the Company's 401(k) Plan in the following amounts:
Mr. Johnson, $2,250; Dr. Clendeninn, $2,550; Mr. Friedman $2,250; Dr. Quart, $2,953 and Mr. Snyder, $2,250.
(b) During 1996, the Company made matching contributions to the Company's 401(k) Plan in the following amounts:
Mr. Johnson, $1,647; Dr. Clendeninn, $1,647; Mr. Friedman $1,589; Dr. Quart, $1,959; and Mr. Snyder, $1,777.
(c) During 1995, the Company made matching contributions to the Company's 401(k) Plan in the following amounts:
Mr. Johnson, $948; Dr. Clendeninn, $900; Mr. Friedman $972; Dr. Quart, $557; and Mr. Snyder, $1,014.
(d) During 1997, the Company reimbursed Dr. Clendeninn for relocation costs in the amount of $20,901.
(e) During 1996, the Company reimbursed Dr. Quart for relocation costs in the amount of $14,628.
(f) During 1995, the Company reimbursed certain officers for relocation costs as follows: Dr. Clendeninn,
$130,719 and Dr. Quart, $8,448.
(5) Cash bonus shown in year earned; actually paid in fiscal 1996. For Dr. Quart and Mr. Snyder, a portion of the
bonus amount was subsequently used to partially repay their outstanding relocation loans.
(6) A portion of the bonus was used to partially repay an outstanding relocation loan and $43,982 of the bonus was
directly applied to the reduction of such loan.
(7) For Dr. Quart and Mr. Snyder, a portion of the bonus amount was subsequently used to partially repay their
outstanding relocation loans. These loans were paid in full on June 30, 1997.
</FN>
6
The following table sets forth certain information with respect to
individual grants of stock options made during the fiscal year ended June 30,
1997, to each of the named executive officers:
Option Grants in Fiscal 1997
Potential Realizable Value at
Assumed Annual Rates of
Stock Price Appreciation
Individual Grants for Option Term(2)
_________________________________________________________________________________ _____________________________
% of Total
Options
Granted to
Employees
Options in Fiscal Exercise Expiration
Name Granted(1) (3) Year Price(3) Date 5% 10%
- ------------ --------------------------------------------------- ----------- ---------
Peter Johnson 92,686# 2.9% $41.00 6/29/07 $2,389,900 $6,056,400
7,314* 0.2 41.00 6/29/07 188,600 477,900
Neil J. Clendeninn 18,686# 0.6 41.00 6/29/07 481,800 1,221,000
7,314* 0.2 41.00 6/29/07 188,600 477,900
Gary E. Friedman 18,686# 0.6 41.00 6/29/07 481,800 1,221,000
7,314* 0.2 41.00 6/29/07 188,600 477,900
Barry D. Quart 36,686# 1.2 41.00 6/29/07 945,900 2,397,200
7,314* 0.2 41.00 6/29/07 188,600 477,900
R. Kent Snyder 36,686# 1.2 41.00 6/29/07 945,900 2,397,200
7,314* 0.2 41.00 6/29/07 188,600 477,900
(1) During fiscal 1997, the Agouron Stock Option Plan ("Plan") for executive
officers and directors was administered by the Board. The Board, based upon
the recommendation of the Directors Compensation Committee, determines the
number of shares to be granted and the term of such grants to each
executive officer and director. The options granted in fiscal 1997 were
either incentive stock options(*) or non-statutory stock options(#), have
exercise prices equal to the fair market values on the date of grant, vest
over a period of three years and have a term of ten years. Upon certain
corporate events as defined in the Plan which result in a change of
control, the exercise date of all outstanding options for all employees,
including executive officers, may be accelerated. The Plan also permits the
Company to assist an employee in using a so-called "cashless" exercise
procedure to pay the option exercise price.
(2) Potential realizable value is based on an assumption that the stock price
of the common stock appreciates at the annual rate shown (compounded
annually) from the date of grant until the end of the ten year option term.
These numbers are calculated based on the requirements promulgated by the
Securities and Exchange Commission and do not reflect the Company's
estimate of future stock price growth. Any such growth would benefit all
shareholders.
(3) Adjusted to reflect two-for-one stock split in August 1997.
7
The following table sets forth certain information with respect to each
exercise of stock options during the fiscal year ended June 30, 1997, by each of
the named executive officers and the number and value of unexercised options
held by such named executive officers as of June 30, 1997:
Option Exercises in Fiscal 1997
And Value of Options at June 30, 1997
Number of Unexercised Value of Unexercised
Options at In-the-Money Options at
June 30, 1997(2) June 30, 1997(1)
Shares -------------------------- ------------------------
Acquired on Value
Name Exercise(2) Realized Exercisable Unexercisable Exercisable Unexercisable
- ----------------- ---------- -------- ----------- ------------- ----------- -------------
Peter Johnson 71,110 $2,397,851 543,890 343,800 $ 17,593,900 $ 6,326,600
Neil J. Clendeninn 127,226 4,416,000 14,892 74,482 346,300 1,207,800
Gary E. Friedman 0 0 192,118 94,482 6,318,400 1,796,100
Barry D. Quart 40,000 1,253,375 98,200 135,400 2,944,200 2,320,500
R. Kent Snyder 20,000 683,450 115,034 127,066 3,606,400 2,164,800
- ----------------------------------
<FN>
(1) Value calculated as market value of Company stock on June 30, 1997, minus exercise price multiplied by the
number of shares.
(2) Adjusted to reflect two-for-one stock split in August 1997.
</FN>
8
Compensation Committee Report on Executive Compensation(1)
Overview and Philosophy
The Directors Compensation Committee (the "Committee") is composed entirely
of outside directors and is responsible for developing and making
recommendations to the Board with respect to the Company's executive
compensation policies and practices, including the establishment of the annual
total compensation for the chief executive officer (the "CEO") and all executive
officers. The Committee has available to it an outside compensation consultant
and access to independent compensation data. The Board is responsible for
approving and implementing the compensation recommendations of the Committee.
The recommendations made by the Committee to the Board during 1997 were approved
without any significant modification.
The objectives of the Company's executive compensation program are to
attract, retain and motivate highly qualified executive personnel. These
objectives are satisfied through the use of three principal compensation
elements: base salary, cash bonus payments and stock options.
Base Salary
Base salary levels for the Company's executive officers are based on the
concept of pay for performance and are competitively set relative to the
compensation of other executives in the biotechnology industry. Extensive salary
survey data is available on the industry (notably, the annual "Biotechnology
Compensation and Benefits Survey" conducted by Radford Associates and Alexander
& Alexander Consulting Group) and is utilized by the Committee in establishing
annual base salaries. In determining base salaries, the Committee also considers
corporate performance and progress in the immediately preceding fiscal year,
individual experience and performance, specific issues which are relevant to the
Company and general economic conditions. The base salary of the CEO and all
other executive officers is reviewed annually. During fiscal year 1997, the base
salaries paid to the executive officers other than the CEO approximated the 75th
percentile of the above-noted industry survey data.
Bonus Payments
Annual cash bonus payments are discretionary unless otherwise required
pursuant to an employment agreement. Bonus payments, if any, to executive
officers, including the CEO, or payments above the required annual minimum, are
based on two principal factors: corporate performance as compared to the
Company's annual goals and objectives and individual performance relative to
corporate performance and individual goals and objectives.
Bonus payments in 1997 were generally in recognition of the satisfaction of
several significant corporate objectives during the year, including the timely
submission of a New Drug Application (NDA) to the United States Food and Drug
Administration for the Company's first product, VIRACEPT(R) (nelfinavir
mesylate), the subsequent approval of the NDA and successful commercial launch
of VIRACEPT in March 1997, the acquisition of Alanex Corporation, the
establishment of a major corporate collaboration, a successful public offering
of common stock, and the continued preclinical and clinical development of the
Company's cancer and anti-viral agents.
Bonus payment recommendations for executive officers other than the CEO are
initiated by the CEO and submitted to the Committee for review and subsequent
submission to the Board. Bonus payment recommendations for the CEO are initiated
by the Committee and submitted to the Board.
Total base salary and any bonus payments are compared to "total
compensation" of peers as reported by the previously noted industry survey. Such
total compensation for the executive officers of the Company is at or above the
averages of such data, which reflects the Committee's belief that the relative
levels of corporate performance during the period were also above average.
- ---------------------------------
(1) The material in this report is not soliciting material, is not deemed filed
with the SEC, and is not incorporated by reference in any filing of the
Company under the Securities Act of 1933 (the "Securities Act"), as
amended, or the Securities Exchange Act of 1934 (the "Exchange Act"), as
amended, whether made before or after the date of this Proxy Statement and
irrespective of any general incorporation language in such filing.
9
Stock Options
To conserve its cash resources, the Company places special emphasis on
equity-based incentives to attract, retain and motivate executive officers as
well as other employees. Under the Company's stock option plans, grants are
generally priced at the fair market value on the date of grant, vest over a
period of three or four years and have a term of ten years. Grants are made to
all employees on their date of hire based on salary level and position. All
employees, including executive officers, are eligible for subsequent,
discretionary grants which are generally based on either individual or corporate
performance. It is the Committee's intent that the interests of the Company's
shareholders and the executive officers be closely aligned through the use of
stock options. Option grants recommended by the Committee are submitted to the
Board for approval. Based on recent peer-company proxy data compiled by the
Company, the level of option grants to each executive officer in 1997 remains
competitive, and the resultant total option position as a percent of total
shares outstanding represents approximately the 70th to 90th percentile of such
positions.
Chief Executive Officer Compensation
During 1997, Mr. Johnson's base salary of $330,000 was based on individual
and corporate performance, and was between the 70th and 75th percentile of the
updated industry data for base salaries of CEOs.
During 1997, Mr. Johnson was awarded a bonus of $165,000 in recognition of
the satisfaction of several significant corporate objectives, including the
continued preclinical and clinical development of product candidates, one of
which, VIRACEPT(R), was approved by the FDA in March 1997, the completion of a
secondary offering of the Company's common stock and the successful merger with
Alanex Corporation. The Committee believes that Mr. Johnson has made a
significant contribution during 1997 in enhancing shareholder value and
establishing a sound base for the continued enhancement of shareholder value
through his managerial and entrepreneurial efforts.
The stock options awarded to Mr. Johnson during fiscal 1997 are competitive
and consistent with the purpose of the stock option plans. The resultant total
option position as a percent of total shares outstanding represents
approximately the 75th percentile for peer CEO positions.
Executive Compensation Deduction Limitations
In 1993, Section 162(m) of the Internal Revenue Code ("Section 162(m)") was
enacted which disallows the deductibility by the Company of any compensation
over $1 million per year paid to each of the chief executive officer and the
four other most highly compensated executive officers, unless certain
performance-based compensation criteria are satisfied. While it is the
Committee's firm belief and intent that compensation from base salary and cash
bonus payments will not approach the annual Section 162(m) limitation in the
foreseeable future, additional "compensation" from the exercise of option grants
pursuant to the Company's stock option plans could result in the annual
limitation being exceeded. Accordingly, the Company's 1990 and 1996 Stock Option
Plans contain certain provisions which exempt compensation resulting from such
option exercises from the $1 million limitation. The Committee will continue to
monitor all forms of compensation to its executive officers to ensure that the
Company may maximize the tax benefits of such compensation.
Directors Compensation Committee
Michael E. Herman, Chairman
John N. Abelson, Ph.D.
A. E. Cohen
Directors Compensation Committee Interlocks and Insider Participation
The Directors Compensation Committee is composed exclusively of three
outside directors: Mr. Herman, Mr. Cohen and Dr. Abelson. The Company is not
aware of any Committee interlocks.
10
Performance Measurement Comparison(1)
The chart set forth below shows the value of an investment of $100 on June 30,
1992 in the Company's common stock, The Nasdaq Stock Market Index (U.S.
Companies) ("Nasdaq Market (US)") and the Nasdaq Pharmaceutical Index ("Nasdaq
Pharmaceuticals"). The total returns assume the reinvestment of dividends,
although cash dividends have not been declared on the Company's common stock.
The Company's common stock is traded on The Nasdaq Stock Market and is a
component of both the Nasdaq Market (US) and the Nasdaq Pharmaceutical Index.
The comparisons in the chart are required by the Securities and Exchange
Commission and are not intended to forecast or be an indicator of possible
future performance of the Company's common stock.
[GRAPHIC OMITTED]
6/30/92 6/30/93 6/30/94 6/30/95 6/30/96 6/30/97
------- ------- ------- ------- ------- -------
Agouron Common Stock $100.00 $85.11 $95.74 $201.11 $331.91 $688.34
Nasdaq Market (US) 100.00 125.76 126.97 169.48 217.59 264.61
Nasdaq Pharmaceuticals 100.00 86.93 72.71 96.52 142.13 144.59
- -------------
(1) This section is not "soliciting material," is not deemed filed with the
Securities and Exchange Commission and is not to be incorporated by
reference in any filing of the Company under the Securities Act or the
Exchange Act.
11
CERTAIN TRANSACTIONS
As part of its employment agreement with Mr. Snyder, the Company provided
him with a six-year, non-interest bearing $85,000 employee relocation loan. The
loan was secured by real property. This loan was paid in full on June 30, 1997.
As part of its employment agreement with Dr. Quart, the Company provided
him with a four-year, non-interest bearing $60,000 employee relocation loan. The
loan was secured by real property. This loan was paid in full on June 30, 1997.
All transactions with affiliates have been and will continue to be on terms
no less favorable to the Company than could be obtained from unaffiliated
parties. Furthermore, all transactions with affiliates and any loans to Company
officers, affiliates or shareholders must be approved by a majority of the
disinterested directors.
As permitted by California law, the articles of incorporation and bylaws of
the Company currently provide for the limitation of director liability for
monetary damages for breach of duty to the Company and for indemnification of
agents (including officers and directors) to the full extent permitted under the
California General Corporations Law. The Company has entered into
Indemnification Agreements with all of its directors and officers. Additionally,
the Company has in effect a directors and officers liability insurance policy
which insures directors and officers of the Company against loss arising from
claims made against them due to wrongful acts while acting in their individual
and collective capacities as directors and officers.
SUBMISSION OF SHAREHOLDER PROPOSALS
Shareholders are advised that any shareholder proposal intended for
consideration at the 1998 Annual Meeting of Shareholders must be received by the
Company on or before May 15, 1998 to be included in the Proxy materials for the
1998 Annual Meeting. It is recommended that shareholders submitting proposals
direct them to the Secretary of the Company and utilize Certified Mail-Return
Receipt Requested.
FINANCIAL STATEMENTS AVAILABLE
Financial statements for the Company are included in the Company's Annual
Report to Shareholders for the fiscal year ended June 30, 1997. Additional
copies of these statements and the Annual Report to the Securities and Exchange
Commission on Form 10-K (excluding exhibits, unless such exhibits have been
specifically incorporated by reference therein) may be obtained without charge
upon written request to: Investor Relations, Agouron Pharmaceuticals, Inc.,
10350 North Torrey Pines Road, La Jolla, California 92037-1020 or by calling
(619) 622-3000. Web Site address:
http://www.agouron.com.
RATIFICATION OF SELECTION OF INDEPENDENT ACCOUNTANTS
(Item 2 on the Proxy Card)
The Board has selected the firm of Price Waterhouse LLP as independent
accountants for the Company for the fiscal year ending June 30, 1998, it being
intended that such selection would be proposed for ratification by the
affirmative vote of a majority of the shares of the Company's common stock
represented and voting at the Meeting on this matter (which shares constitute at
least a majority of the required quorum for the Meeting). For purposes of
calculating the vote necessary for ratification of the selection of independent
accountants, abstentions and non-votes are not counted. One or more members of
Price Waterhouse LLP are expected to be present at the Meeting and will be
available to respond to questions and make a statement if they desire to do so.
The Board recommends that you vote FOR the ratification of the selection of
Price Waterhouse LLP, which is set forth as Item 2 on the Proxy Card.
12
OTHER MATTERS
The Company's Annual Report for the fiscal year ended June 30, 1997
accompanies this Proxy Statement.
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
executive officers and directors, and persons who own more than 10% of a
registered class of the Company's equity securities, to file reports of
ownership and changes in ownership with the Securities and Exchange Commission
and The Nasdaq Stock Market. Executive officers, directors and greater than 10%
shareholders are required by Securities and Exchange Commission regulation to
furnish the Company with copies of all Section 16(a) forms they file. Based
solely on review of the copies of such forms furnished to the Company, or
written representations that no Forms 5 were required, the Company believes
that, during the applicable reporting period ending June 30, 1997, all Section
16(a) filing requirements applicable to its executive officers, directors and
greater than 10% beneficial owners were satisfied.
The Company's Board does not know of any other matters to be presented at
the Meeting. However, if any other business is properly presented at the Meeting
for action, the persons named in the enclosed form of Proxy will vote such Proxy
according to their best judgment on such matters.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Gary E. Friedman
Gary E. Friedman, Secretary
September 26, 1997
13
AGOURON PHARMACEUTICALS, INC.
10350 North Torrey Pines Road
La Jolla, California 92037-1020
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Peter Johnson and Gary E. Friedman, and
each of them, with full power of substitution, as proxies to represent and to
vote, as designated below, all the shares of common stock of Agouron
Pharmaceuticals, Inc., held of record by the undersigned on September 23, 1997,
at the Annual Meeting of Shareholders to be held on November 6, 1997 and at any
adjournments or postponements thereof.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED SHAREHOLDER. IF NO OTHER DIRECTION IS MADE, THIS PROXY
WILL BE VOTED FOR THE ELECTION OF THE DIRECTOR NOMINEES LISTED ON THE OTHER SIDE
AND FOR PROPOSAL 2. IF CUMULATIVE VOTING PROCEDURES ARE INVOKED AT THE MEETING
AND THIS PROXY CARD INDICATES "FOR" OR GIVES NO DIRECTION ON PROPOSAL 1, THE
DESIGNATED PROXIES ARE AUTHORIZED TO DISTRIBUTE THE VOTES REPRESENTED BY THIS
PROXY IN THEIR DISCRETION SO AS TO ELECT THE MAXIMUM NUMBER OF MANAGEMENT
NOMINEES WHICH MAY BE ELECTED BY CUMULATIVE VOTING.
(continued on reverse side)
FOLD AND DETACH HERE
[GRAPHIC OMITTED]
Please check the appropriate box on the voting card
to R.S.V.P. your attendance at the Meeting on Nov. 6, 1997 at 10:00 a.m.
or phone Agouron Investor Relations at 1-800-501-2474.
Please mark
our vote as / X /
indicated in
this example
The Board recommends a vote FOR Proposals 1 and 2.
1. Proposal 1- FOR ALL WITHHOLD
ELECTION OF DIRECTORS NOMINEES FOR ALL
Peter Johnson Gary E. Friedman / / / /
John N. Abelson Patricia M. Cloherty
A. E. Cohen Michael E. Herman
Irving S. Johnson Antonie T. Knoppers
Melvin I. Simon
WITHHELD FOR: (To withhold authority to vote for any
individual nominee, write that nominee's name in the space
provided below.)
- ----------------------------------------------------------------
2. Proposal 2: FOR AGAINST ABSTAIN
RATIFICATION OF THE SELECTION / / / / / /
OF INDEPENDENT ACCOUNTANTS
3. IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO
VOTE UPON SUCH OTHER BUSINESS AS MAY PROPERLY
COME BEFORE THE MEETING.
Check here if you
plan to attend the / /
Annual Meeting.
Signature(s) _____________________________________ Date _________________, 1997
NOTE: Please sign as name appears hereon. Joint owners should each sign. When
signing as attorney, executor, administrator, trustee or guardian, please give
full title as such.
FOLD AND DETACH HERE