SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
(Amendment No. )
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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 under Rule 14a-12
SEQUENOM, INC.
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement if Other Than the Registrant)
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pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
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SEQUENOM, INC.
3595 John Hopkins Court
San Diego, California 92121
(858) 202-9000
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 31, 2002
To The Stockholders Of Sequenom, Inc.:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of SEQUENOM,
INC., a Delaware corporation, or the Company (the "Company"), will be held on
Friday, May 31, 2002 at 10:00 a.m. local time at the offices of the Company
located at 3595 John Hopkins Court, San Diego, California 92121 for the
following purposes:
1. To elect two directors to hold office until the 2005 Annual Meeting of
Stockholders.
2. To approve an amendment to the Company's Bylaws to provide that the
authorized number of directors will be set within a range of five to
nine.
3. To ratify the selection of Ernst & Young LLP as independent auditors of
the Company for its fiscal year ending December 31, 2002.
4. To transact such other business as may properly come before the meeting
or any adjournment or postponement thereof.
The foregoing items of business are more fully described in the Proxy
Statement accompanying this Notice.
The Board of Directors has fixed the close of business on April 16, 2002, as
the record date for the determination of stockholders entitled to notice of and
to vote at this Annual Meeting and at any adjournment or postponement thereof.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Stephen Zaniboni
Stephen L. Zaniboni
Chief Financial Officer and Secretary
San Diego, California
April 24, 2002
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ALL STOCKHOLDERS ARE CORDIALLY INVITED TO ATTEND THE MEETING IN PERSON.
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE COMPLETE, DATE, SIGN
AND RETURN THE ENCLOSED PROXY AS PROMPTLY AS POSSIBLE IN ORDER TO ENSURE YOUR
REPRESENTATION AT THE MEETING. A RETURN ENVELOPE (WHICH IS POSTAGE PREPAID IF
MAILED IN THE UNITED STATES) IS ENCLOSED FOR THAT PURPOSE. EVEN IF YOU HAVE
GIVEN YOUR PROXY, YOU MAY STILL VOTE IN PERSON IF YOU ATTEND THE MEETING.
PLEASE NOTE, HOWEVER, THAT IF YOUR SHARES ARE HELD OF RECORD BY A BROKER,
BANK OR OTHER NOMINEE AND YOU WISH TO VOTE AT THE MEETING, YOU MUST OBTAIN
FROM THE RECORD HOLDER A PROXY ISSUED IN YOUR NAME.
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SEQUENOM, INC.
3595 John Hopkins Court
San Diego, California 92121
(858) 202-9000
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PROXY STATEMENT
FOR ANNUAL MEETING OF STOCKHOLDERS
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May 31, 2002
INFORMATION CONCERNING SOLICITATION AND VOTING
General
The enclosed proxy is solicited on behalf of the Board of Directors of
Sequenom, Inc., a Delaware corporation (the "Company"), for use at the Annual
Meeting of Stockholders to be held on May 31, 2002 at 10:00 a.m. local time
(the "Annual Meeting"), or at any adjournment or postponement thereof, for the
purposes set forth herein and in the accompanying Notice of Annual Meeting. The
Annual Meeting will be held at 3595 John Hopkins Court, San Diego, California
92121. The Company intends to mail this proxy statement and accompanying proxy
card on or about April 24, 2002, to all stockholders entitled to vote at the
Annual Meeting.
Solicitation
The Company will bear the entire cost of solicitation of proxies, including
preparation, assembly, printing and mailing of this proxy statement, the proxy
card and any additional information furnished to stockholders. The Company has
retained Georgeson Shareholder at an estimated cost of $15,000 plus
reimbursement of expenses to assist in the solicitation of proxies for the
Annual Meeting. Copies of solicitation materials will be furnished to banks,
brokerage houses, fiduciaries and custodians holding in their names shares of
Common Stock beneficially owned by others to forward to such beneficial owners.
The Company may reimburse persons representing beneficial owners of Common
Stock for their costs of forwarding solicitation materials to such beneficial
owners. Original solicitation of proxies by mail may be supplemented by
telephone, telegram or personal solicitation by directors, officers or other
regular employees of the Company. No additional compensation will be paid to
directors, officers or other regular employees for such services.
Voting Rights and Outstanding Shares
Only holders of record of Common Stock at the close of business on April 16,
2002 will be entitled to notice of and to vote at the Annual Meeting. At the
close of business on April 16, 2002 the Company had outstanding and entitled to
vote 37,505,134 shares of Common Stock.
Each holder of record of Common Stock on such date will be entitled to one
vote for each share held on all matters to be voted upon at the Annual Meeting.
All votes will be tabulated by the inspector of election appointed for the
meeting, who will separately tabulate affirmative and negative votes,
abstentions and broker non-votes. Abstentions will be counted towards the
tabulation of votes cast on proposals presented to the stockholders and will
have the same effect as negative votes. Broker non-votes are counted towards a
quorum, but are not counted for any purpose in determining whether a matter has
been approved.
1
Voting by Telephone or Via the Internet
Stockholders may grant a proxy to vote their shares by means of the
telephone or the Internet. Proxies submitted by telephone or on the Internet
must contain or be submitted with information from which the inspector of
election can determine that such proxy was authorized by the stockholder.
Please refer to your proxy card to determine if you are eligible to vote either
by telephone or via the Internet.
Revocability of Proxies
Any person giving a proxy pursuant to this solicitation has the power to
revoke it at any time before it is voted. It may be revoked by filing with the
Secretary of the Company at the Company's principal executive office, 3595 John
Hopkins Court, San Diego, California 92121, a written notice of revocation or a
duly executed proxy bearing a later date, or it may be revoked by attending the
meeting and voting in person. Attendance at the meeting will not, by itself,
revoke a proxy.
Stockholder Proposals
The deadline for submitting a stockholder proposal for inclusion in the
Company's proxy statement and form of proxy for the Company's 2003 annual
meeting of stockholders pursuant to Rule 14a-8 of the Securities and Exchange
Commission ("SEC") is December 25, 2002. Stockholders wishing to submit
proposals or director nominations that are not to be included in such proxy
statement and proxy must also do so by December 25, 2002. Stockholders are
advised to review the Company's Bylaws, which contain additional requirements
with respect to advance notice of stockholder proposals and director
nominations.
2
PROPOSAL 1
ELECTION OF DIRECTORS
The Company's Restated Certificate of Incorporation and Bylaws provide that
the Board of Directors shall be divided into three classes, each class
consisting, as nearly as possible, of one-third of the total number of
directors, with each class having a three-year term. Vacancies on the Board may
be filled only by persons elected by a 2/3 majority of the directors then in
office. A director elected by the Board to fill a vacancy (including a vacancy
created by an increase in the number of directors) shall serve for the
remainder of the full term of the class of directors in which the vacancy
occurred and until such director's successor is elected and qualified.
The Board of Directors is presently composed of seven members. At the Annual
Meeting, the term of office of the two current Class II Directors shall expire.
The nominees for election to this class are the current Class II Directors of
the Company. If elected at the Annual Meeting, each nominee would serve until
the 2005 annual meeting and until his successor is elected and has qualified,
or until such director's earlier death, resignation or removal.
Directors are elected by a majority of the votes present in person or
represented by proxy and entitled to vote at the meeting. Shares represented by
executed proxies will be voted, if authority to do so is not withheld, for the
election of the two nominees named below. In the event that any nominee should
be unavailable for election as a result of an unexpected occurrence, such
shares will be voted for the election of such substitute nominee as management
may propose. The persons nominated for election have agreed to serve if
elected, and management has no reason to believe that the nominees will be
unable to serve.
Set forth below is biographical information for each person nominated and
each person whose term of office as a director will continue after the Annual
Meeting.
Nominees for Election for a Three-year Term Expiring at the 2005 Annual Meeting
Class II Directors
Ernst-Gunter Afting, Ph.D., M.D.
Ernst-Gunter Afting, Ph.D., M.D., 59, has served as a director of the
Company since 1996. Since 1995, Dr. Afting has served as President of the
National Research Center for Environment and Health, GSF, a governmental
science research center in Munich. From 1993 to 1995, he served as President
and Chief Executive Officer of Roussel UCLAF, Paris. He also headed the
pharmaceutical division of Hoechst Group and was Chairman of the Divisional
Pharmaceutical Board of Hoechst. He was a member of the advisory committee on
Science and Technology to Chancellor Kohl from 1996 to 1997 and since 1996 has
been a member of the German National Advisory Committee on Health Research to
the State Secretaries of Science, Technology and Health. Dr. Afting has been a
member of the medical faculty at the University of Goettingen since 1985. He
earned a Ph.D. in Chemistry and an M.D. from the University of
Freiburg/Breisgau.
John E. Lucas
John E. Lucas, 70, has served as a director of the Company since 1998. Since
1999, Mr. Lucas has served as Chairman and Chief Executive Officer of EpiCept
Corporation which develops topical pain control products. He has also served as
an industry advisor to TVM Techno Venture Management since 1996. From 1996 to
2000, Mr. Lucas served as a management consultant to six biomedical companies.
From 1994 to 1996, he was founder, President and Chief Executive Officer of
American Scientific Resources, Inc. From 1991 to 1994, he held the positions of
President, Chief Executive Officer and Chairman at Oxigene, Inc. and held
similar positions from 1963 to 1991 at Luconex, Mast ImmunoSystems, Xoma,
Millipore Ventures, Chemetrics and Oxford Laboratories. Mr. Lucas serves as a
director of VitaResc AG and EpiCept Corporation. Mr. Lucas earned an MBA from
Harvard University.
The Board of Directors Recommends A Vote In Favor Of Each Named Nominee.
3
Directors Continuing in Office Until the 2003 Annual Meeting
Class III Directors
Charles R. Cantor, Ph.D.
Charles R. Cantor, Ph.D., 59, joined the Company as Chief Scientific Officer
and Chairman of the scientific advisory board in August 1998. In May 2000, Dr.
Cantor was appointed to the Company's Board of Directors. From 1992 until
joining the Company, Dr. Cantor served as the chair of and as a professor in
the department of biomedical engineering and biophysics, and Director of the
Center for Advanced Biotechnology at Boston University. Prior to that time, Dr.
Cantor held positions at Columbia University and the University of California,
Berkeley. He was also Director of the Human Genome Center of the Department of
Energy at Lawrence Berkeley Laboratory. Dr. Cantor published the first textbook
on genomics, The Science and Technology of the Human Genome Project, and
remains active in the Human Genome Project through his membership in a number
of the project's advisory committees and review boards. He is a scientific
advisor to 16 biotech and life science companies and two venture capital firms.
He is also a member of the National Academy of Sciences. Dr. Cantor earned his
Ph.D. from the University of California, Berkeley.
Helmut Schuhsler, Ph.D.
Helmut Schuhsler, Ph.D., 43, has served as the Chairman of the Board of
Directors since 1996. Since 1998, Dr. Schuhsler has served as a managing
partner at TVM Techno Venture Management, a German and U.S. venture capital
firm. He has been with TVM since 1990 and has been responsible for over 25
healthcare investments of the firm. He is currently a member of the board of
directors of several biotechnology and instrumentation companies, including
Medigene AG and GPC Biotech. Dr. Schuhsler earned a Ph.D. in the Social and
Economic Sciences from the University of Economics in Vienna.
Michael Fitzgerald
Michael Fitzgerald, LL.B., LL.M., 43, has served as a director of the
Company since September 2001. Mr. Fitzgerald was co-founder and Chairman of
Gemini Genomics plc prior to its merger with the Company. Since 1987, Mr.
Fitzgerald has acted as a consultant to and director of a number of companies,
including Roxro Pharmaceutical, Inc. and Medcenter Holdings Inc. Mr. Fitzgerald
is also the principal of Cloverleaf Holdings Limited, which provides advice on
international banking and corporate legal services to clients in Australia, the
United States and the United Kingdom. From 1981 to 1986, he served as an
associate director and in-house banking and special projects counsel for the
Hongkong Bank of Australia Limited in Sydney, Australia. He is admitted as a
barrister in England and Wales, a barrister and solicitor in Victoria and a
solicitor in New South Wales.
Directors Continuing in Office Until the 2004 Annual Meeting
Class I Directors
Kris Venkat, Ph.D.
Kris Venkat, Ph.D., 55, joined the Company as a member of its Board of
Directors in February 2001. Dr. Venkat currently serves as Chairman and Chief
Executive Officer of Sundari Enterprises, Inc. From 1992 to 2000, he served as
Chairman and Chief Executive Officer of Phyton Inc. He also served as Chairman
and Managing Director of Phyton GmbH in Germany from 1993 to 2000. Prior to
joining Phyton Inc., Dr. Venkat served as President and Chief Executive Officer
of Genmap, Inc. and held various positions at H.J. Heinz Company and Merck &
Co. Dr. Venkat has participated as a founder, board member, and advisor in a
number of high technology start-up companies. He currently serves as Chairman
of Transvivo, Inc., Morphochem Inc., Automated Cell, Inc., Provid
Pharmaceuticals Inc., Juelich Enzyme Products GmbH and Accentua Pharma AG, and
serves as a director of Celsion Corp. Dr. Venkat was an advisor to the
government of India on biotechnology
4
development from 1988 to 1997 and since 1979 has been a visiting Professor of
Biochemical Engineering at Rutgers University and has held various faculty
positions at other major universities. Dr. Venkat earned his Ph.D. in chemical
and biochemical engineering from Rutgers University.
Antonius Schuh, Ph.D.
Antonius Schuh, Ph.D., 38, was appointed President, Chief Executive Officer
and a director of the Company in May 2000. Dr. Schuh joined the Company's
German subsidiary as Managing Director in December 1996 and was promoted to the
Company's Executive Vice President, Business Development and Marketing, in 1998
when he moved to the Company's headquarters in San Diego, California. From 1993
until joining the Company, Dr. Schuh was with Helm AG, an international
pharma/chemical trading and distribution corporation. While at Helm AG, he
established and headed the Pharma Business Development Group and the associated
technical and regulatory affairs department. Prior to that, from 1992 to 1993,
he was with Fisons Pharmaceuticals. Dr. Schuh earned his Ph.D. in
pharmaceutical chemistry from the University of Bonn, in Germany.
Board Committees and Meetings
During the fiscal year ended December 31, 2001 the Board of Directors held
six meetings. The Board has an Audit Committee, a Compensation Committee and a
Nominating Committee.
The Audit Committee meets with the Company's independent auditors to review
the results of the annual audit and discuss the financial statements; reviews
the Company's quarterly financial results; recommends to the Board the
independent auditors to be retained; oversees the independence of the
independent auditors; evaluates the independent auditors' performance; and
receives and considers the independent auditors' comments as to internal
controls, adequacy of staff and management performance and procedures in
connection with the audit and financial reporting. The Audit Committee is
composed of three non-employee directors: Dr. Afting, Mr. Lucas, and Dr.
Schuhsler. It met three times during 2001. The members of the Company's Audit
Committee are independent (as independence is defined in Rule 4200(a)(15) of
the NASD listing standards). The Board of Directors has adopted a written
charter for the Audit Committee.
The Compensation Committee makes recommendations concerning salaries and
incentive compensation, awards stock options to employees and consultants under
the Company's stock option plans and otherwise determines compensation levels
and performs such other functions regarding compensation as the Board may
delegate. The Compensation Committee is composed of three non-employee
directors: Dr. Schuhsler, Mr. Lucas and Dr. Venkat. It met two times during
2001. The Board of Directors has adopted a written charter for the Compensation
Committee.
The Nominating Committee interviews, evaluates, nominates and recommends
individuals for membership on the Company's Board of Directors and committees
thereof and nominates specific individuals to be elected as officers of the
Company by the Board of Directors. No procedure has been established for the
consideration of nominees recommended by stockholders. The Nominating Committee
is composed of three non-employee directors: Dr. Afting, Mr. Lucas, and Dr.
Schuhsler. The Nominating Committee was established in February 2001 and did
not meet during the last fiscal year.
During the fiscal year ended December 31, 2001, each Board member attended
75% or more of the aggregate of the meetings of the Board and of the committees
on which he served, held during the period for which he was a director or
committee member, respectively.
5
REPORT OF THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS(1)
The Audit Committee of the Company (the "Committee") is composed of three
independent directors and operates under a written charter adopted by the Board
of Directors. The members of the Committee are Dr. Ernst-Gunter Afting, John E.
Lucas, and Dr. Helmut Schuhsler. The Committee recommends to the Board of
Directors, subject to stockholder ratification, the selection of the Company's
independent accountants.
Management is responsible for the Company's internal controls and the
financial reporting process. The independent accountants are responsible for
performing an independent audit of the Company's financial statements in
accordance with generally accepted auditing standards and to issue a report
thereon. The Committee's responsibility is to monitor and oversee these
processes. The independent accountants understand that they are accountable to
our Board of Directors, not our management.
In this context, the Committee has met and held discussions with management
and the independent accountants. Management represented to the Committee that
the Company's financial statements were prepared in accordance with generally
accepted accounting principles, and the Committee has reviewed and discussed
the financial statements with management and the independent accountants,
including whether there were any off-balance sheet financing transactions or
any transactions with related parties. The Committee discussed with the
independent accountants matters required to be discussed by Statement on
Auditing Standards No. 61 (Communication with Audit Committees).
The Company's independent accountants also provided to the Committee the
written disclosures required by Independence Standards Board Standard No. 1
(Independence Discussions with Audit Committees), and the Committee discussed
with the independent accountants that firm's independence.
Based on the Committee's discussion with management and the independent
accountants and the Committee's review of the representation of management and
the report of the independent accountants to the Committee, the Committee
recommended that the Board of Directors include the audited financial
statements in the Company's Annual Report on Form 10-K for the year ended
December 31, 2001 filed with the Securities and Exchange Commission on April 1,
2002.
Audit Committee
Dr. Ernst-Gunter Afting
John E. Lucas
Dr. Helmut Schuhsler
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(1) The material in this report is not "soliciting material," is not deemed
filed with the SEC and is not to be incorporated by reference in any filing
of the Company under the Securities Act of 1933, as amended (the "1933
Act"), or the Securities Exchange Act of 1934 (the "1934 Act") whether made
before or after the date of this Proxy Statement and irrespective of any
general incorporation language therein.
6
PROPOSAL 2
APPROVAL OF AMENDMENT OF BYLAWS
The Company's Bylaws, as currently in effect, provide that the number of
directors may be set from time to time by at least 66 2/3% of the directors
then in office or the holders of 66 2/3% of the shares of Common Stock then
outstanding within a range of four and seven. The Board has set the number of
directors currently at seven. The Board of Directors has unanimously adopted,
subject to stockholder approval, an amendment to the Bylaws to provide that the
range for the number of directors be set at five to nine.
The proposed amendment to the Bylaws, if approved by the stockholders, would
still require that the actual number of directors be fixed, within the
authorized range, by resolution of 66 2/3% of the directors then in office or
by 66 2/3% of the stockholders at the annual meeting of stockholders. Vacancies
would still be filled only by a 2/3 majority of the directors then in office,
and each director so chosen would hold office until a successor is duly
elected. The proposed amendment, if approved, would not affect the existing
requirement that the Company obtain the approval of the holders of at least
66 2/3% of the outstanding shares of the Company's Common Stock to change the
range for the number of directors set in the Bylaws.
If approved, the proposed amendment would provide the Board of Directors the
ability to increase the size of the Board by up to two members. In 2001, in
connection with its acquisition of Gemini Genomics plc, the Company agreed to
elect to the Board an additional nominee designated by Michael Fitzgerald, a
director of the Company, if Mr. Fitzgerald submitted such a nominee for
election. If the proposed amendment is not approved by the stockholders, the
Company could elect an additional nominee of Mr. Fitzgerald's only by asking
one of its current directors to resign to create a vacancy. The Board of
Directors believes that it is in the best interests of the Company and its
stockholders to provide the Board with the flexibility to add additional
directors, including persons with relevant industry experience, to help guide
and manage the Company.
The affirmative vote of the holders of 66 2/3% of the shares outstanding at
the record date will be required to approve the proposed amendment to the
Bylaws. As a result, abstentions and broker non-votes will have the same effect
as negative votes.
The Board of Directors Recommends A Vote In Favor Of Proposal 2.
7
PROPOSAL 3
RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS
The Board of Directors has selected Ernst & Young LLP as the Company's
independent auditors for the fiscal year ending December 31, 2002 and has
further directed that management submit the selection of independent auditors
for ratification by the stockholders at the Annual Meeting. Ernst & Young LLP
has audited the Company's financial statements since 1997. Representatives of
Ernst & Young LLP are expected to be present at the Annual Meeting, will have
an opportunity to make a statement if they so desire and will be available to
respond to appropriate questions.
Stockholder ratification of the selection of Ernst & Young LLP as the
Company's independent auditors is not required by the Company's Bylaws or
otherwise. However, the Board is submitting the selection of Ernst & Young LLP
to the stockholders for ratification as a matter of good corporate practice. If
the stockholders fail to ratify the selection, the Audit Committee and the
Board will reconsider whether or not to retain that firm. Even if the selection
is ratified, the Audit Committee and the Board in their discretion may direct
the appointment of different independent auditors at any time during the year
if they determine that such a change would be in the best interests of the
Company and its stockholders.
The affirmative vote of the holders of a majority of the shares present in
person or represented by proxy at the Annual Meeting will be required to ratify
the selection of Ernst & Young LLP. Abstentions will be counted toward the
tabulation of votes cast on this proposal and will have the same effect as
negative votes. Broker non-votes are counted towards a quorum, but are not
counted for any purpose in determining whether this matter has been approved.
Audit Fees. During the fiscal year ended December 31, 2001, the aggregate
fees billed by Ernst & Young LLP for the audit of the Company's financial
statements and for the reviews of the Company's interim financial statements
was $214,265.
Financial Information Systems Design and Implementation Fees. During the
fiscal year ended December 31, 2001, the aggregate fees billed by Ernst & Young
LLP for information technology consulting services was $1,840.
All Other Fees. During the fiscal year ended December 31, 2001, the
aggregate fees billed by Ernst & Young LLP for professional services other than
audit and information technology consulting fees was $886,366.
The Audit Committee has determined that the rendering of the information
technology consulting fees and all other non-audit services by Ernst & Young
LLP was compatible with maintaining the auditor's independence.
The Board of Directors Recommends A Vote In Favor Of Proposal 3.
8
SECURITY OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the ownership
of the Company's Common Stock as of March 31, 2002 by: (i) each director; (ii)
each of the executive officers named in the Summary Compensation Table; (iii)
all executive officers and directors of the Company as a group; and (iv) all
those known by the Company to be beneficial owners of more than five percent of
its Common Stock.
Beneficial ownership has been determined in accordance with Rule 13d-3 under
the 1934 Act. Under this rule, certain shares may be deemed to be beneficially
owned by more than one person (if, for example, persons share the power to vote
or the power to dispose of the shares). In addition, shares are deemed to be
beneficially owned by a person if the person has the right to acquire shares
(for example, upon exercise of an option or warrant) within 60 days of the date
as of which the information is provided. In computing the percentage ownership
of any person, the amount of shares is deemed to include the amount of shares
beneficially owned by such person (and only such person) by reason of such
acquisition rights. As a result, the percentage of outstanding shares of any
person as shown in the following table does not necessarily reflect the
person's actual voting power at any particular date.
Beneficial
Ownership(1)
-----------------
Number of Percent
Beneficial Owner Shares of Total
- ---------------- --------- --------
Directors and Executive Officers**
Helmut Schuhsler, Ph.D.(2)........................................... 686,135 1.83%
Michael Fitzgerald(3)................................................ 488,740 1.30%
Charles R. Cantor, Ph.D.(4).......................................... 362,216 *
Antonius Schuh, Ph.D.(5)............................................. 326,000 *
Stephen L. Zaniboni(6)............................................... 263,929 *
Andreas Braun, Ph.D., M.D.(7)........................................ 175,781 *
Delbert F. Foit, Jr.(8).............................................. 80,438 *
Ernst-Gunter Afting, Ph.D., M.D.(9).................................. 95,000 *
John E. Lucas(10).................................................... 60,685 *
Kris Venkat, Ph.D.(11)............................................... 22,885 *
All directors and executive officers as a group (13 persons)......... 2,586,517 6.90%
Five Percent Stockholders
Wellington Management Company, LLP(12)............................... 2,412,800 6.44%
GeneLink Holdings, Ltd.(13).......................................... 3,120,972 8.32%
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* Less than one percent.
** These beneficial owners can be reached at Sequenom, Inc., 3595 John
Hopkins Court, San Diego, California 92121.
(1) This table is based upon information supplied by officers, directors and
principal stockholders and Schedules 13D and 13G, if any, filed with the
SEC. To our knowledge, except as indicated in the footnotes to this table
and pursuant to applicable community property laws, the persons named in
the table have sole voting and investment power with respect to all shares
of Common Stock shown as beneficially owned by them. Applicable
percentages are based on 37,491,165 shares outstanding on March 29, 2002,
adjusted as required by rules promulgated by the SEC.
(2) Reflects 72,032 shares of Common Stock held of record by Dr. Schuhsler and
614,103 shares held by entities affiliated with TVM Techno Venture
Management GmbH ("TVM Techno GmbH"). Dr. Schuhsler is the managing partner
of TVM Techno GmbH and disclaims ownership of the shares beneficially held
by the fund and its affiliates, except to the extent of his pecuniary
interest therein.
9
(3) Excludes 107,400 shares of Common Stock underlying options that were
surrendered to the Company in November 2001, pursuant to a voluntary stock
option exchange program initiated by the Company, in exchange for
replacement options to purchase the same number of shares that will be
granted by the Company on May 31, 2002 if Mr. Fitzgerald is still serving
as a director of the Company.
(4) Includes 22,083 shares of Common Stock that are subject to our right to
repurchase. Excludes 115,000 shares of Common Stock underlying options
that were surrendered to the Company in November 2001, pursuant to a
voluntary stock option exchange program initiated by the Company, in
exchange for replacement options to purchase the same number of shares
that will be granted by the Company on May 31, 2002 if Dr. Cantor is still
employed by or serving as a director of the Company.
(5) Includes 96,500 shares held of record by Dr. Schuh, 20,000 of which are
subject to our right of repurchase, and 229,500 shares held of record by
trusts related to Dr. Schuh and beneficially owned by Dr. Schuh. Excludes
336,000 shares of Common Stock underlying options that were surrendered to
the Company in November 2001, pursuant to a voluntary stock option
exchange program initiated by the Company, in exchange for replacement
options to purchase the same number of shares that will be granted by the
Company on May 31, 2002 if Dr. Schuh is still employed by or serving as
director of the Company.
(6) Includes 75,255 shares held of record by Mr. Zaniboni, 26,094 of which are
subject to our right to repurchase, and 188,674 shares held of record by
trusts related to Mr. Zaniboni and beneficially owned by Mr. Zaniboni.
Excludes 136,000 shares of Common Stock underlying options that were
surrendered to the Company in November 2001, pursuant to a voluntary stock
option exchange program initiated by the Company, in exchange for
replacement options to purchase the same number of shares that will be
granted by the Company on May 31, 2002 if Mr. Zaniboni is still employed
by the Company.
(7) Includes 38,542 shares of Common Stock that are subject to our right to
repurchase. Excludes 136,000 shares of Common Stock underlying options
that were surrendered to the Company in November 2001, pursuant to a
voluntary stock option exchange program initiated by the Company, in
exchange for replacement options to purchase the same number of shares
that will be granted by the Company on May 31, 2002 if Dr. Braun is still
employed by the Company.
(8) Includes 40,785 shares held of record by Mr. Foit and 2,570 shares held of
record by Mr. Foit's wife and beneficially owned by Mr. Foit. Also
includes 37,083 shares of Common Stock underlying options which are
currently exercisable but subject to our right to repurchase. Excludes
67,000 shares of Common Stock underlying options that were surrendered to
the Company in November 2001, pursuant to a voluntary stock option
exchange program initiated by the Company, in exchange for replacement
options to purchase the same number of shares that will be granted by the
Company on May 31, 2002 if Mr. Foit is still employed by the Company.
(9) Excludes 15,000 shares of Common Stock underlying options that were
surrendered to the Company in November 2001, pursuant to a voluntary stock
option exchange program initiated by the Company, in exchange for
replacement options to purchase the same number of shares that will be
granted by the Company on May 31, 2002 if Dr. Afting is still serving as a
director of the Company.
(10) Excludes 15,000 shares of Common Stock underlying options that were
surrendered to the Company in November 2001, pursuant to a voluntary stock
option exchange program initiated by the Company, in exchange for
replacement options to purchase the same number of shares that will be
granted by the Company on May 31, 2002 if Mr. Lucas is still serving as a
director of the Company.
(11) Includes 20,000 shares of Common Stock underlying options which are
currently exercisable but subject to our right to repurchase. Excludes
15,000 shares of Common Stock underlying options that were surrendered to
the Company in November 2001, pursuant to a voluntary stock option
exchange program initiated by the Company, in exchange for replacement
options to purchase the same number of shares that will be granted by the
Company on May 31, 2002 if Dr. Venkat is still serving as a director of
the Company.
(12) Reflects 2,412,800 shares beneficially owned by Wellington Management
Company, LLP ("WMC") and held of record by investment advisory clients of
WMC. Of the 2,412,800 shares beneficially owned, WMC has shared voting and
investment power over 1,280,800 and 2,412,800 shares, respectively. The
address for WMC is 75 State Street, Boston, MA 02109.
(13) The address for Genelink Holdings, Ltd. is 19 Boulevard de Suisse, MC
98000 Monaco.
10
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the 1934 Act requires the Company's directors and executive
officers, and persons who own more than ten percent of a registered class of
the Company's equity securities, to file with the SEC initial reports of
ownership and reports of changes in ownership of Common Stock and other equity
securities of the Company. Officers, directors and greater than ten percent
stockholders are required by SEC regulation to furnish the Company with copies
of all Section 16(a) forms they file.
To the Company's knowledge, based solely on a review of the copies of such
reports furnished to the Company and written representations that no other
reports were required, during the fiscal year ended December 31, 2001 all
Section 16(a) filing requirements applicable to its officers, directors and
greater than ten percent beneficial owners were complied with; except that one
report covering one transaction, was filed late by funds affiliated with TVM
Techno Management GmbH.
EXECUTIVE COMPENSATION
Compensation of Directors
Directors currently receive no cash compensation from the Company for their
services as members of the Board or for attendance at committee meetings. All
directors are eligible for reimbursement for their expenses incurred in
connection with attendance at Board meetings in accordance with Company policy.
Each non-employee director of the Company receives stock option grants under
the Company's 1999 Stock Incentive Plan (the "1999 Plan"). Options granted
under the 1999 Plan to non-employee directors are intended by the Company not
to qualify as incentive stock options under the Internal Revenue Code (the
"Code").
Option grants to non-employee directors under the 1999 Plan are
non-discretionary. On the date of the annual meeting of stockholders each year,
each member of the Company's Board of Directors who is not an employee of the
Company and has served as a non-employee director for at least six months is
automatically granted under the 1999 Plan, without any further action by the
Company, the Board of Directors or the stockholders of the Company, an option
to purchase 15,000 shares of Common Stock of the Company. These options become
fully exercisable upon the optionee's completion of one year of continuous
service as a non-employee director, measured from the grant date. After January
31, 2000, each director who is elected for the first time to be a non-employee
director of the Company is automatically granted under the 1999 Plan, without
any further action by the Company, the Board of Directors or the stockholders
of the Company, an option to purchase 15,000 shares upon the date of initial
election to the Board of Directors, whether by the Board or stockholders of the
Company, provided the individual has not previously been employed as an
employee by the Company or any parent or subsidiary corporation. These options
may not be exercised until the date upon which such optionee has provided one
year of continuous service as a non-employee director following the date of
grant of such option, whereupon such option shall become exercisable as to
one-third of the option shares. The remaining option shares become exercisable
in two equal annual installments upon the completion of each additional year of
service as a non-employee board member.
The exercise price of options granted to non-employee directors under the
1999 Plan is 100% of the fair market value of the Common Stock subject to the
option on the date of the option grant. The term of the options granted to
non-employee directors under the 1999 Plan is ten years. The 1999 Plan will
terminate on November 6, 2009, unless earlier terminated by the Board. In the
event of a merger of the Company with or into another corporation or a
consolidation, acquisition of assets or other change-in-control transaction
involving the Company in which the Company is not the acquiror, the vesting of
each option will accelerate and the option will terminate if not exercised
prior to the consummation of the transaction.
11
Compensation of Executive Officers
Summary of Compensation
The following table shows for the fiscal years ended December 31, 1999, 2000
and 2001, compensation awarded or paid to, or earned by, the Company's Chief
Executive Officer and its other four most highly compensated executive officers
at December 31, 2001 (the "Named Executive Officers").
In accordance with the rules of the SEC, the compensation described in this
table does not include medical, group life insurance or other benefits which
are available generally to all of the Company's salaried employees and certain
perquisites and other personal benefits received which do not exceed the lesser
of $50,000 or 10% of any officer's salary and bonus disclosed in this table.
SUMMARY COMPENSATION TABLE
Long Term
Compensation
Annual Compensation Awards/
---------------------------------- Securities
Other Annual Underlying All Other
Name and Principal Position Year Salary ($) Bonus ($) Compensation ($) Options (#) Compensation ($)
- --------------------------- ---- ---------- --------- ---------------- ------------ ----------------
Antonius Schuh............ 1999 187,223 10,000 -- 50,000 23,126(1)
President and Chief 2000 265,883 110,000 -- 186,000 551,926(2)
Executive Officer 2001 310,000 155,000 -- 150,000 219,240(6)
Stephen L. Zaniboni....... 1999 185,208 10,000 -- 50,000 17,084(1)
Chief Financial Officer 2000 234,508 35,000 -- 86,000 469,964(2)
2001 260,000 130,000 -- 50,000 190,903(6)
Charles R. Cantor......... 1999 180,000 21,000 30,000(3) 100,000 207,200(1)
Chief Scientific Officer 2000 246,250 46,000 -- 65,000 699,252(2)
2001 281,000 135,000 -- 50,000 205,250(6)
Andreas Braun............. 1999 145,917 10,000 -- 130,000 --
Chief Medical Officer 2000 197,191 60,000 -- 86,000 556,016(2)
2001 230,000 55,000 -- 50,000 228,783(6)
Delbert F. Foit, Jr....... 1999(5) 126,000 7,432 -- 100,000 --
Chief Operating Officer 2000 210,721 10,000 -- 47,000 28,500(4)
2001 240,300 55,000 -- 20,000 --
- --------
(1) Represents income from the exercise of non-qualified stock options in 1999.
(2) Represents income from the Company's forgiveness, in February 2000, of an
aggregate of $3.8 million in loans granted to certain executive officers in
1999 and 2000 related to their exercise of stock options.
(3) Other annual compensation for Dr. Cantor during 1999 represents payment for
his services as chief of the Company's scientific advisory board.
(4) Other compensation for Mr. Foit includes, for 2000, $25,000 paid in
connection with his relocation to the Company's corporate headquarters in
San Diego and $3,500 paid in connection with various housing and living
expenses.
(5) Mr. Foit joined the Company as Chief Operating Officer in April 1999.
(6) Includes income from the Company's forgiveness, in May 2001, of an
aggregate of $828,823 in loans granted to certain executive officers in
2000 and 2001. These loans were used by the executive officers to pay
individual tax liability associated with the Company's forgiveness, in
February 2000, of an aggregate of $3.8 million in loans granted to such
executive officers in 1999 and 2000 related to their exercise of stock
options.
12
STOCK OPTION GRANTS AND EXERCISES
The Company has granted options to its executive officers under its 1994
Stock Plan, 1998 Stock Option/Stock Issuance Plan, and the 1999 Plan
(collectively, the "Plans"). As of December 31, 2001, options to purchase a
total of 1,089,384 shares were outstanding under the Plans and options to
purchase 2,976,537 shares remained available for grant under the 1999 Plan.
The following tables show for the fiscal year ended December 31, 2001,
certain information regarding options granted to, exercised by, and held at
year-end by, the Named Executive Officers:
OPTION GRANTS IN LAST FISCAL YEAR
Potential Realizable
Value at Assumed Annual
Rates of Stock Price
Appreciation for Option
Individual Grants Term(1)
------------------------------------------- -----------------------
Percent of
Number of Total
Securities Options
Underlying Granted to Exercise
Options Employees Or Base
Granted in Fiscal Price Expiration
Name (#) Year (%)(3) ($/Sh) Date 5% ($) 10% ($)
- ---- ---------- ----------- -------- ---------- --------- ---------
Antonius Schuh.......... 150,000(2) 13.74 15.60 6/1/11 1,471,613 3,729,357
Stephen L. Zaniboni..... 50,000(2) 4.58 15.60 6/1/11 490,538 1,243,119
Charles R. Cantor....... 50,000(2) 4.58 15.60 6/1/11 490,538 1,243,119
Andreas Braun........... 50,000(2) 4.58 15.60 6/1/11 490,538 1,243,119
Delbert F. Foit, Jr..... 20,000(2) 1.83 15.60 6/1/11 196,215 497,248
- --------
(1) The potential realizable value is based on the term of the option at the
time of grant (ten years). Assumed stock price appreciation of 5% and 10%
is used pursuant to rules promulgated by the SEC. The potential realizable
value is calculated by assuming that the stock price on the date of grant
appreciates at the indicated rate, for the entire term of the option and
that the option is exercised and sold on the last day of its term at the
appreciated price. No gain to the optionee is possible unless the stock
price increases over the option term.
(2) The options granted become exercisable on a monthly basis following the
date of grant at the rate of 1/48th of the shares subject to the option
per month for four years or, earlier based upon a factor derived from the
Company's total market capitalization relative to comparable/competing
companies. The options expire ten years from the date of grant, or earlier
upon termination of employment. Upon a change of control of the Company in
which the Company is not the acquiror, all unvested stock options become
fully exercisable.
(3) Based on 1,091,700 options granted to employees and directors of, and
consultants to, the Company during the fiscal year ended December 31, 2001.
13
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR,
AND FISCAL YEAR-END OPTION VALUES
Shares Number of Securities Value of Unexercised in-the-
Acquired Underlying Unexercised Money Options at FY-End
on Value Options at 12/31/2001 (#) ($)(1)
Exercise Realized ------------------------- ----------------------------
(#) ($) Exercisable Unexercisable Exercisable Unexercisable
Name -------- -------- ----------- ------------- ----------- -------------
Antonius Schuh.......... -- -- -- -- -- --
Stephen L. Zaniboni..... -- -- -- -- -- --
Charles R. Cantor....... -- -- -- -- -- --
Andreas Braun........... -- -- -- -- -- --
Delbert F. Foit, Jr..... -- -- 60,000 -- 460,200 --
- --------
(1) Based on the fair market value of the Company's Common Stock at December
31, 2001, $10.67 per share less the exercise price payable for such options.
EMPLOYMENT AGREEMENTS
Dr. Schuh's employment agreement with the Company provides for an annual
salary of $300,000, subject to periodic increases by the Board of Directors at
its discretion, and a one-time signing bonus of $100,000. Dr. Schuh is also
entitled to receive an annual non-discretionary bonus of $10,000 and an annual
performance-based bonus subject to the Board's approval. In connection with his
employment, Dr. Schuh has been granted options to purchase an aggregate of
666,000 shares of Company Common Stock under the Plans. Dr. Schuh has exercised
a portion of these options. If Dr. Schuh's employment is terminated without
cause, Dr. Schuh will be entitled to receive all employee benefits and his
annual salary in periodic payments, until he secures full-time employment with
another company or until one year has elapsed after termination, whichever is
earlier.
Mr. Zaniboni's employment agreement with the Company provides for an annual
salary of $250,000, subject to periodic increases by the Board of Directors at
its discretion. Mr. Zaniboni is also entitled to receive an annual
non-discretionary bonus of $10,000 and an annual performance-based bonus
subject to the Board's discretion. In connection with his employment, Mr.
Zaniboni has been granted options to purchase an aggregate of 396,000 shares of
Company Common Stock under the Plans. Mr. Zaniboni has exercised a portion of
these options. If Mr. Zaniboni's employment is terminated without cause, Mr.
Zaniboni will be entitled to receive all employee benefits and his annual
salary in periodic payments, until he secures full-time employment with another
company or until six months have elapsed after termination, whichever is
earlier.
Dr. Cantor's employment agreement with the Company provides for an annual
salary of $180,000, subject to periodic increases by the Board of Directors at
its discretion. The Company has agreed to reimburse Dr. Cantor for the costs
associated with up to 12 visits per year to Boston University. Dr. Cantor is
required to make such trips in connection with his leave of absence from the
university. In connection with his employment, Dr. Cantor has been granted
options to purchase an aggregate of 466,000 shares of Company Common Stock
under the Plans. Dr. Cantor has exercised a portion of these options. If Dr.
Cantor's employment is terminated without cause, Dr. Cantor will be entitled to
receive all employee benefits and his annual salary in periodic payments, until
he secures full-time employment with another company or until six months have
elapsed after termination, whichever is earlier.
Dr. Braun's employment agreement with the Company provides for an annual
salary of $220,000, subject to periodic increases by the Board of Directors at
its discretion. Dr. Braun is also entitled to receive an annual
non-discretionary bonus of $10,000 and an annual performance-based bonus
subject to the Board's approval. In connection with his employment, Dr. Braun
has been granted options to purchase an aggregate of 386,000 shares of Company
Common Stock under the Plans. Dr. Braun has exercised a portion of these
options. If Dr. Braun's employment is terminated without cause, Dr. Braun will
be entitled to receive all employee benefits and his annual salary in periodic
payments, until he secures full-time employment with another company or until
six months have elapsed after termination, whichever is earlier.
14
Mr. Foit's employment agreement with the Company provides for an annual
salary of $220,000, subject to periodic increases by the Board of Directors at
its discretion. Mr. Foit is also entitled to receive an annual
non-discretionary bonus of $10,000 and an annual performance-based bonus
subject to the Board's approval. In connection with his employment, Mr. Foit
has been granted options to purchase an aggregate of 167,000 shares of Company
Common Stock under the Plans. Mr. Foit has exercised a portion of these
options. If Mr. Foit's employment is terminated without cause, Mr. Foit will be
entitled to receive all employee benefits and his annual salary in periodic
payments, until he secures full-time employment with another company or until
six months have elapsed after termination, whichever is earlier.
REPORT OF THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS
ON EXECUTIVE COMPENSATION
Compensation Committee Report(1)
The Compensation Committee of the Board of Directors (the "Committee") is
currently composed of Dr. Helmut Schuhsler, Dr. Kris Venkat and John E. Lucas,
none of whom are currently officers or employees of the Company. The Committee
is responsible for establishing the Company's compensation programs for all
employees, including executives. The Committee annually evaluates the
performance, and determines the compensation, of the Chief Executive Officer
("CEO") and the other executive officers of the Company based upon a mix of the
achievement of corporate goals, individual performance and comparisons with
other biotechnology companies. The CEO and the other executive officers were
not present during the discussion of their compensation.
Compensation Philosophy
The primary goal of the compensation program is to align compensation with
business objectives and performance. The Company's aim is to attract, retain
and reward executive officers and other key employees who contribute to the
long-term success of the Company and to motivate those individuals to enhance
long-term stockholder value. To establish this relationship between executive
compensation and creation of stockholder value, the Board of Directors has
adopted a total compensation package comprised of base salary, bonus and stock
option awards, with a bias toward stock options to emphasize the link between
executive incentives and the creation of shareholder value as measured by the
equity markets. Key elements of this philosophy are:
. The Company pays competitively with biotechnology companies with which
the Company competes for talent.
. The Company maintains annual incentive opportunities sufficient to
provide motivation to achieve specific operating goals and to generate
rewards that bring total compensation to competitive levels.
. The Company provides significant equity-based incentives for executives
and other key employees to ensure that they are motivated over the
long-term to respond to the Company's business challenges and
opportunities as owners and not just as employees.
Base Salary
The Committee annually reviews each executive officer's base salary. Among
the factors taken into consideration are (1) individual and corporate
performance, (2) levels of responsibility, (3) prior experience, (4) breadth of
knowledge of the industry, and (5) competitive pay practices. Consistent with
this policy, the
- --------
(1) The material in this report is not "soliciting material," is not deemed
filed with the SEC and is not to be incorporated by reference in any filing
of the Company under the 1933 Act, or the 1934 Act whether made before or
after the date of this Proxy Statement and irrespective of any general
incorporation language therein.
15
Committee considered the 2001 base salary for all executive officers. Under the
terms of their employment agreements, certain of the Company's executive
officers are entitled to annual non-discretionary bonuses. During 2001, the
Committee incorporated these bonuses into such executive officers' base
salaries.
Bonus
The Company believes that executive performance may be maximized via a
system of annual incentive awards. The actual incentive awards earned depend on
the extent to which the Company and individual performance objectives are
achieved. During each fiscal year, the Compensation Committee reviews and
approves the annual performance objectives for the Company and the individual
officers. The Company's objectives typically consist of specific operating,
strategic and financial goals that are considered to be critical to the
Company's overall goal: building stockholder value. For fiscal year 2001, the
Compensation Committee determined that the primary goals in building
stockholder value were:
. Achieving the Company's 2001 revenue goal;
. Entering into significant collaboration agreements with leading
pharmaceutical/life science companies;
. Completion of the screening of all human genes in a healthy population to
determine the subset of genes with a strong association to morbidity; and
. Establishment of a SNP portal including all assays developed by the
Company that are available for sale to MassARRAY(TM) system customers.
For 2001, the Committee set a range of 23% to 50% of salary for executive
officer discretionary bonuses. Within that range, the Committee set the bonus
for each executive officer based on the Company's achievement of its goals and
the Committee's subjective evaluation of the individual's performance. In the
past several years, based upon the Company's degree of achievement of then
specified corporate goals, the Company has consistently paid bonuses to
executive officers.
Long Term Incentives
The Company's long-term incentive program consists of equity incentives
granted under the Plans. The Plans utilize vesting periods, generally four
years, to encourage key employees to continue in the employ of the Company.
Through option grants, executives receive significant equity incentives to
build long-term stockholder value. The exercise price of options granted under
the Plans generally is 100% of fair market value of the underlying stock on the
date of grant. Employees receive value from these grants only if the Company's
Common Stock appreciates over the long-term. The size of option grants is
determined based on competitive practices at leading companies in the
biotechnology industry and the Company's philosophy of significantly linking
executive compensation with stockholder interests.
In fiscal year 2001, the Company issued certain of its executive officers
stock options with accelerated vesting provisions. The options vest in equal
monthly installments over a period of four years or, earlier based on the
Company's total market capitalization relative to comparable and competing
companies.
In November 2001, the Company initiated a voluntary stock option exchange
program for its employees, officers and board members. As a result of a decline
in the price of the Company's Common Stock during fiscal year 2001, the
exercise prices associated with the majority of the Company's outstanding stock
options were higher than the market price of the Company's Common Stock. The
Board of Directors determined that these options were not attractive or
effective as an incentive to retain and motivate employees and were unlikely to
be exercised. By offering employees, officers and board members the opportunity
to exchange certain of their stock
16
options, the Company intends to provide its employees with the benefit of
holding stock options that over time may have a greater potential to increase
in value, and thereby create better incentives for its employees to remain with
the Company and to contribute to the attainment of its business and financial
objectives and the creation of value for its stockholders.
Pursuant to the terms of the program, employees, officers and board members
of the Company were offered the opportunity to exchange all outstanding options
to purchase shares of the Company's Common Stock with an exercise price equal
or greater than $10.00 per share for replacement options to purchase shares of
the Company's Common Stock. The replacement options will be granted on May 31,
2002 and will have an exercise price equal to the fair market value of the
Company's Common Stock on that date. Each replacement option will be subject to
the same vesting schedule and have the same vesting commencement date as the
option that it replaces. The Named Executive Officers exchanged an aggregate of
790,000 options pursuant to the program.
Other Compensation
In 2000 and 2001, the Company loaned an aggregate of $800,686 to certain of
its executive officers, including the Company's CEO, under the terms of
promissory notes and stock pledge agreements. These loans were used by the
executive officers to pay individual tax liability associated with the
Company's forgiveness, in February 2000, of an aggregate of $3.8 million in
loans granted to such executive officers in 1999 and 2000 related to their
exercise of stock options. In May 2001, the Committee approved the forgiveness
of the remaining principal amount of such loans, plus any accrued interest.
Chief Executive Officer Compensation
The Committee uses the same procedures described above for the other
executive officers in setting the annual salary, bonus and stock option awards
for the Company's CEO. Dr. Antonius Schuh's salary is currently set at
$310,000. Dr. Schuh's base salary reflects the Board's subjective assessment of
(1) his performance, (2) his skills in relation to other CEOs in the Company's
industry, (3) the Board's confidence in his ability to lead the Company's
continued development, and (4) the Board's assessment of the Company's
performance.
In awarding stock options, the Committee considers the CEO's performance,
overall contribution to the Company, retention, the number of unvested options
and the total number of options to be granted. Dr. Antonius Schuh was granted
150,000 stock options in 2001. The options vest in equal monthly installments
over a period of four years or, earlier based on the Company's total market
capitalization relative to comparable and competing companies.
In 2001, the Committee set a target bonus for Dr. Schuh of up to $155,000.
As discussed above, the CEO's actual bonus is dependent on the Company's
achieving certain performance goals set by the Committee and the Committee's
subjective evaluation of his performance. Compared to other comparable
biotechnology companies surveyed by the Company, the CEO's base salary, stock
options, and discretionary cash bonus are in the mid-range.
Certain Tax Considerations
Section 162(m) of the Code limits the Company to a deduction for federal
income tax purposes of not more than $1 million of compensation paid to certain
executive officers in a taxable year. Compensation above $1 million may be
deducted if it is "performance-based compensation" within the meaning of the
Code.
The Board of Directors has not established a formal policy for determining
which forms of incentive compensation awarded to executive officers shall be
designed to qualify as "performance based compensation."
Compensation Committee
John E. Lucas
Dr. Helmut Schuhsler
Dr. Kris Venkat
17
Performance Measurement Comparison(1)
The following graph compares the cumulative total stockholder return on the
Company's Common Stock between February 1, 2000 (the date the Company's Common
Stock commenced public trading) and December 31, 2001 with the cumulative total
return of (i) the Nasdaq Stock Market (U.S.) ("Nasdaq") and (ii) the Nasdaq
Biotechnology Index (the "Nasdaq Biotech"), over the same period. This graph
assumes the investment of $100.00 on February 1, 2000 in the Company's Common
Stock, the Nasdaq and the Nasdaq Biotech, and assumes the reinvestment of
dividends, if any.
[CHART]
SEQUENOM, INC. NASDAQ STOCK MARKET (U.S.) NASDAQ BIOTECHNOLOGY
2/1/2000 100.00 100.00 100.00
3/2000 151.44 113.32 105.09
6/2000 174.52 98.53 116.65
9/2000 162.02 90.67 126.08
12/2000 53.85 60.71 103.96
3/2001 32.69 45.32 73.49
6/2001 53.85 53.41 97.15
9/2001 26.92 37.06 71.20
12/2001 41.04 48.17 87.12
- --------
(1) This Section is not "soliciting material," is not deemed "filed" with the
SEC and is not to be incorporated by reference in any filing of the Company
under the 1933 Act or the 1934 Act whether made before or after the date
hereof and irrespective of any general incorporation language in any such
filing.
(2) The Nasdaq Biotechnology Index is calculated using an equal-dollar weighing
methodology.
18
CERTAIN TRANSACTIONS
The Company has entered into employment agreements with certain of its
officers. See "Employment Agreements."
In September 2001, the Company completed its acquisition of Gemini Genomics
plc, a company registered under the Companies Act of 1985 of Great Britain, as
amended. As a result of the merger, the Company issued 12,950,836 shares of its
Common Stock and assumed options and warrants to purchase approximately 1.5
million shares of its Common Stock. In addition, the Company paid cash to
Gemini shareholders in lieu of any fractional shares. Andreas Braun, an
executive officer of the Company, received 80 shares of the Company's Common
Stock in the merger. Michael Fitzgerald, a director of the Company, received
(i) options to purchase 107,400 shares of the Company's Common Stock in
exchange for his unexercised Gemini options and (ii) 3,979,728 shares of the
Company's Common Stock in the merger (including shares received by companies
that were affiliated with Michael Fitzgerald at the time of the September 2001
Gemini acquisition). On September 20, 2001, the Company entered into a
Registration Rights Agreement with Mr. Fitzgerald and companies that were
affiliated with Mr. Fitzgerald at the time of the Gemini acquisition pursuant
to which it granted certain registration rights with respect to all such
securities. There were no other material relationships between the Company or
any of its affiliates, directors or officers and the persons to whom the
Company issued shares of Common Stock in the merger.
In 2000 and 2001, the Company loaned an aggregate of $800,686 to certain of
its executive officers under the terms of promissory notes and stock pledge
agreements. The notes bore interest at the applicable federal rate in existence
when the notes were made. These loans were used by the executive officers to
pay their individual tax liability associated with the Company's forgiveness,
in February 2000, of an aggregate of $3.8 million in loans granted to such
executive officers in 1999 and 2000 related to their exercise of stock options.
In May 2001, the Compensation Committee of the Board of Directors approved the
forgiveness of the remaining principal amount of such loans, plus any accrued
interest, as follows: $214,542 to Dr. Schuh, $185,573 to Mr. Zaniboni, $205,000
to Dr. Cantor and $223,708 to Dr. Braun.
In November 2001, the Company initiated a voluntary stock option exchange
program for its employees, officers and board members. Pursuant to the terms of
the program, employees, officers and board members of the Company were offered
the opportunity to exchange all outstanding options to purchase shares of the
Company's Common Stock with an exercise price equal or greater than $10.00 per
share for replacement options to purchase shares of the Company's Common Stock.
The replacement options will be granted on May 31, 2002 and will have an
exercise price equal to the fair market value of the Company's Common Stock on
that date. Each replacement option will be subject to the same vesting schedule
and have the same vesting commencement date as the option that it replaces. The
Named Executive Officers exchanged an aggregate of 790,000 options pursuant to
the program, and the Company's non-employee directors exchanged an aggregate of
152,400 options pursuant to the program.
The Company has entered into indemnity agreements with certain officers and
directors which provide, among other things, that the Company will indemnify
such officer or director, under the circumstances and to the extent provided
for therein, for expenses, damages, judgments, fines and settlements he may be
required to pay in actions or proceedings which he is or may be made a party by
reason of his position as a director, officer or other agent of the Company,
and otherwise to the full extent permitted under Delaware law and the Company's
Bylaws.
19
DELIVERY OF THIS PROXY STATEMENT
The SEC has adopted rules that permit companies and intermediaries (e.g.,
brokers) to satisfy the delivery requirements for proxy statements with respect
to two or more security holders sharing the same address by delivering a single
proxy statement addressed to those security holders. This process, which is
commonly referred to as "householding," potentially means extra convenience for
securityholders and cost savings for companies.
This year, brokers with account holders who are Sequenom stockholders may be
"householding" our proxy materials. A single proxy statement will be delivered
to multiple stockholders sharing an address unless contrary instructions have
been received from the affected stockholders. Once you have received notice
from your broker or us that they will be "householding" communications to your
address, "householding" will continue until you are notified otherwise or until
you revoke your consent. If, at any time, you no longer wish to participate in
"householding" and would prefer to receive a separate proxy statement, please
notify your broker, direct your written request to Sequenom, Inc., Attention:
Investor Relations, 3595 John Hopkins Court, San Diego, California 92121 or
contact the Company at (858) 202-9000.
Stockholders who currently receive multiple copies of the proxy statement at
their address and would like to request "householding" of their communications
should contact their broker.
OTHER MATTERS
The Board of Directors knows of no other matters that will be presented for
consideration at the Annual Meeting. If any other matters are properly brought
before the meeting, it is the intention of the persons named in the
accompanying proxy to vote on such matters in accordance with their best
judgment.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Stephen Zaniboni
Stephen L. Zaniboni
Chief Financial Officer and Secretary
April 24, 2002
20
YOUR VOTE IS IMPORTANT!
YOU CAN VOTE IN ONE OF THREE WAYS:
Option 1: Vote over the Internet
1. Read the accompanying Proxy Statement.
2. Have your 12-digit control number and company number located on your voting
ballot available.
3. Point your browser to http://proxy.georgeson.com.
4. Follow the instructions. You will be given two choices:
. You can simply cast your vote; or
. You can cast your vote and register to receive all future stockholder
communications electronically, instead of in print. This means that the
annual report, proxy, and any other correspondence will be delivered to
you electronically via e-mail.
or
Option 2: Vote by telephone
1. Read the accompanying Proxy Statement.
2. Have your 12-digit control number located on your voting ballot available.
3. Using a touch-tone phone, call, toll-free: 1-800-790-4577
4. Follow the recorded instructions.
or
Option 3: Vote by Paper Ballot
1. Read the accompanying Proxy Statement.
2. Mark your vote on the enclosed paper ballot and return it in the envelope
provided.
Voting by Internet or telephone is fast, convenient and your vote is immediately
confirmed and tabulated. Using the Internet or the telephone, you can vote
anytime, 24 hours a day. More importantly, by choosing either option, you help
Sequenom reduce postage and proxy tabulation costs. Please do not return the
enclosed paper ballot if you are voting using the Internet or telephone.
-------------- --------------
COMPANY NUMBER CONTROL NUMBER
-------------- --------------
TO VOTE BY MAIL, PLEASE DETACH PROXY CARD HERE
- --------------------------------------------------------------------------------
[X} Please mark
votes as in this
example.
MANAGEMENT RECOMMENDS A VOTE FOR THE NOMINEES FOR DIRECTOR LISTED BELOW.
PROPOSAL 1: To elect two directors to hold office until the 2005 Annual Meeting
of Stockholders.
Nominees: Ernst-Gunter Afting, Ph.D. and John E. Lucas
For all nominees listed above (except as marked to the contrary below).
[ ]
WITHHOLD AUTHORITY to vote for all nominees listed above
[ ]
To withhold authority to vote for any nominee(s) write such nominee(s)' name(s)
below:
- --------------------------------------------------------------------------------
MANAGEMENT RECOMMENDS A VOTE FOR PROPOSAL 2.
PROPOSAL 2: To approve an amendment to the Company's Bylaws to provide that the
authorized number of directors will be set within a range of five to
nine.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
MANAGEMENT RECOMMENDS A VOTE FOR PROPOSAL 3.
PROPOSAL 3: To ratify selection of Ernst & Young LLP as independent auditors of
the Company for its fiscal year ending December 31, 2002.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
Dated _______________________________________________
_____________________________________________________
_____________________________________________________
Signature(s)
Please sign exactly as your name appears hereon. If the stock is registered in
the names of two or more persons, each should sign. Executors, administrators,
trustees, guardians and attorneys-in-fact should add their titles. If signer is
a corporation, please give full corporate name and have a duly authorized
officer sign, stating title. If signer is a partnership, please sign in the
partnership's name by an authorized person.
Please vote, date and promptly return this proxy in the enclosed return envelope
which is postage prepaid if mailed in the United States.
TO VOTE BY MAIL, PLEASE DETACH PROXY CARD HERE
- --------------------------------------------------------------------------------
SEQUENOM, INC.
PROXY SOLICITED BY THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 31, 2002
The undersigned hereby appoints Antonius Schuh, Ph.D. and Stephen L.
P Zaniboni, and each of them, as attorneys and proxies of the undersigned,
with full power of substitution, to vote all of the shares of stock of
Sequenom, Inc. (the "Company") which the undersigned may be entitled to
R vote at the Annual Meeting of Stockholders of the Company to be held at
the offices of the Company located at 3595 John Hopkins Court, San Diego,
California 92121 on Friday, May 31, 2002 at 10:00 a.m. local time, and at
O any and all postponements, continuations and adjournments thereof, with all
powers that the undersigned would possess if personally present, upon and
in respect of the following matters and in accordance with the following
X instructions, with discretionary authority as to any and all other matters
that may properly come before the meeting.
Y UNLESS A CONTRARY DIRECTION IS INDICATED, THIS PROXY WILL BE VOTED
FOR ALL NOMINEES LISTED IN PROPOSAL 1, FOR PROPOSAL 2 AND FOR PROPOSAL 3,
AS MORE SPECIFICALLY DESCRIBED IN THE PROXY STATEMENT. IF SPECIFIC
INSTRUCTIONS ARE INDICATED, THIS PROXY WILL BE VOTED IN ACCORDANCE
THEREWITH.
SEE REVERSE SEE REVERSE
SIDE (CONTINUED AND TO BE SIGNED ON REVERSE SIDE) SIDE