SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the 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
BENTLEY PHARMACEUTICALS, INC.
------------------------------------------------
(Name of Registrant as Specified in Its Charter)
------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11
1) Title of each class of securities to which transaction
applies:
________________________________________________________
2) Aggregate number of securities to which transaction
applies:
________________________________________________________
3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (Set forth
the amount on which the filing fee is calculated and
state how it was determined):
________________________________________________________
4) Proposed maximum aggregate value of transaction:
________________________________________________________
5) Total fee paid:
________________________________________________________
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for which
the offsetting fee was paid previously. Identify the previous
filing by registration statement number, or the Form or Schedule
and the date of its filing.
1) Amount Previously Paid:
________________________________________________________
2) Form, Schedule or Registration Statement No.:
________________________________________________________
3) Filing Party:
________________________________________________________
4) Date Filed:
________________________________________________________
BENTLEY PHARMDCEUTICALS, INC.
ONE URBAN CENTRE
SUITE 548
4830 WEST KENNEDY BLVD.
TAMPA, FLORIDA 33609
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
July 29, 1998
Tampa, Florida
July 2, 1998
To the Stockholders of
Bentley Pharmaceuticals, Inc.
NOTICE IS HEREBY GIVEN that the Annual Meeting (the "Meeting") of
Stockholders of BENTLEY PHARMACEUTICALS, INC., a Florida corporation (the
"Company"), will be held on July 29, 1998 at 9:00 a.m., local time, at
Castellana Inter-Continental Hotel, Paseo de la Castellana, 49, Madrid, Spain,
28046, for the purpose of considering and acting upon the following matters:
(1) The election of one Class I Director to serve until the 2000
Annual Meeting of Stockholders or until the election and
qualification of his successor, and the election of two Class
II Directors to serve until the 2001 Annual Meeting of
Stockholders or until the election and qualification of their
respective successors; and
(2) The transaction of such other business as may properly be
brought before the meeting or any adjournment or postponement
thereof.
The Board of Directors has fixed the close of business on July 2,
1998 as the record date for the determination of stockholders entitled to notice
of, and to vote at, the Meeting.
You are cordially invited to attend the Meeting. Whether or not it
is your intention to attend the Meeting, you are urged to complete, sign and
date the enclosed form of proxy, and return it promptly in the enclosed reply
envelope. No postage is required if mailed in the United States. Returning your
proxy does not deprive you of your right to attend the Meeting and to vote your
shares in person. This solicitation is being made on behalf of the Company's
Board of Directors.
By Order of the Board of Directors
/S/ MICHAEL D. PRICE
MICHAEL D. PRICE
Secretary
- --------------------------------------------------------------------------------
Recognizing that some stockholders may not be able to attend the Meeting in
Madrid, Spain, management of the Company will be scheduling an informational
meeting for stockholders to be held in the United States as soon as practicable
after the Meeting in Spain. You are invited to attend the informational meeting
and discuss the Company's operations with management of the Company at that
time. The time, date and location of the informational meeting will be announced
by the Company in the near future. Please note that at the informational meeting
stockholders will not be asked to vote upon the matters to be presented at the
Meeting in Spain.
- --------------------------------------------------------------------------------
BENTLEY PHARMACEUTICALS, INC.
One Urban Centre
Suite 548
4830 West Kennedy Blvd.
Tampa, Florida 33609
----------
PROXY STATEMENT
For Annual Meeting of Stockholders
July 29, 1998
----------
This Proxy Statement, to be mailed to stockholders on or about July
6, 1998, is furnished in connection with the solicitation by the Board of
Directors of Bentley Pharmaceuticals, Inc., a Florida corporation (the
"Company"), of proxies in the accompanying form ("Proxy" or "Proxies") for use
at the Annual Meeting of Stockholders of the Company to be held on July 29, 1998
at 9:00 a.m., local time, at Castellana Inter-Continental Hotel, Paseo de la
Castellana, 49, Madrid, Spain, 28046 and at any adjournments or postponements
thereof (the "Meeting").
All Proxies received will be voted in accordance with the
specifications made thereon or, in the absence of any specification, for the
director nominees named in this Proxy Statement. Any Proxy given pursuant to
this solicitation may be revoked by the person giving it any time prior to the
exercise of the powers conferred thereby by notice in writing to Michael D.
Price, Secretary of the Company, One Urban Centre, Suite 548, 4830 West Kennedy
Blvd., Tampa, Florida 33609, by execution and delivery of a subsequent Proxy or
by attendance and voting in person at the Meeting, except as to any matter or
matters upon which, prior to such revocation, a vote shall have been cast
pursuant to the authority conferred by such Proxy.
Only holders of record of the Company's issued and outstanding
Common Stock, $.02 par value (the "Common Stock"), as of the close of business
on July 2, 1998 (the "Record Date") will be entitled to notice of, and to vote
at, the Meeting. As of the Record Date, there were issued and outstanding
8,427,694 shares of the Company's Common Stock, each of which is entitled to one
vote upon each matter at the Meeting. The holders of a majority of the shares
entitled to vote at the Meeting will constitute a quorum for the transaction of
business. Proxies submitted which contain abstentions or broker non-votes will
be deemed present at the Meeting in determining the presence of a quorum. A
plurality of the votes cast at the Meeting at which a quorum is present will be
required for the election of Directors. Shares of Common Stock that are voted to
abstain and shares which are subject to broker non-votes with respect to any
matter will not be considered cast with respect to that matter.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth information as of June 1, 1998 as to
(i) each person (including any "group" as that term is used in Section 13(d)(3)
of the Securities Exchange Act of 1934, as amended) who is known to the Company
to be the beneficial owner of more than five percent of the Company's Common
Stock, its only class of voting securities, and (ii) the shares of the Company's
Common Stock beneficially owned by all Executive Officers and Directors of the
Company as a group.
Amount and
Nature of
Beneficial Percent
Name and Address of Beneficial Owner Ownership (1) of Class
- ------------------------------------ ------------- --------
Estate of Richard C. Perry 3,755,000(2) 37.67%
2635 Century Parkway, N.E.
Suite 1000
Atlanta, GA 30345
Michael McGovern, J.D., C.P.A. 865,900(3) 9.96
65 Maryeanna Drive N.E.
Atlanta, GA 30342
The Dreyfus Corporation 590,958(4) 7.01
Mellon Bank Corporation
Premier Aggressive Growth Fund, Inc.
One Mellon Bank Center
Pittsburgh, PA 15258
Light Associates, Inc. 550,594(5) 6.27
1031 Rosewood Way
Alameda, CA 94501
All current Executive Officers and 1,596,302(6) 17.02
Directors as a group (6 persons)
- -----------------
(1) Except as otherwise indicated, all shares of Common Stock are beneficially
owned, and sole investment and voting power is held, by the persons named.
(2) Includes 1,000,000 shares of Common Stock which the estate of Mr. Perry
has the right to acquire pursuant to presently exercisable stock purchase
warrants (the "Warrants") and 540,000 shares which the estate of Mr. Perry
has the right to receive upon the conversion of 12% Convertible Senior
Subordinated Debentures (the "Debentures").
(3) As reported on the Form 4 dated January 8, 1998. Includes 263,500 shares
of Common Stock which Mr. McGovern has the right to acquire pursuant to
presently exercisable Warrants.
(4) As reported on the Amendment No. 1 to Schedule 13G, dated January 15,
1998.
(5) As reported on the Amendment No. 8 to Schedule 13D, dated December 26,
1997. Includes 350,000 shares which Light Associates, Inc. have the right
to acquire pursuant to presently exercisable Warrants.
(6) Includes 668,599 shares of Common Stock which certain of the current
Executive Officers and Directors have a right to acquire pursuant to
presently exercisable stock options, 276,000 shares of Common Stock which
certain of the current Executive Officers and Directors have a right to
acquire pursuant to presently exercisable Warrants and 5,600 shares of
Common Stock which certain of the current Executive Officers and Directors
have a right to acquire upon the conversion of the Debentures, which
Warrants and Debentures were purchased in the 1996 public offering.
-2-
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth information regarding beneficial
ownership of the Company's Common Stock as of June 1, 1998 as to (i) each
Director and nominee for Director of the Company, (ii) each Executive Officer of
the Company named in the Summary Compensation Table set forth below, and (iii)
all current Executive Officers and Directors as a group.
Amount and Nature of Percent
Name of Beneficial Owner Beneficial Ownership (1) of Class
- ------------------------ ------------------------ --------
James R. Murphy 276,487(2) 3.18%
Chairman of the Board, President,
Chief Executive Officer and Director
Robert M. Stote, M.D. 267,866(3) 3.09
Senior Vice President, Chief
Science Officer and Director
Michael D. Price 172,636(4) 2.01
Vice President, Chief
Financial Officer, Secretary,
Treasurer and Director
Randolph W. Arnegger 4,413(5) *
Director
Charles L. Bolling 9,000(6) *
Director
Michael McGovern, J.D., C.P.A. 865,900(7) 9.96
Director
Robert J. Gyurik 6,120(8) *
Nominee for Director
All current Executive Officers
and Directors as a group (6 persons) 1,596,302(9) 17.02
- ----------------------------
* Less than one percent
(1) Except as otherwise indicated, all shares are beneficially owned, and sole
investment and voting power is held, by the persons named.
(2) Includes 1,000 shares of Common Stock owned by Mr. Murphy's son as to
which Mr. Murphy disclaims beneficial ownership. Also, includes 253,000
shares of Common Stock which Mr. Murphy has the right to acquire pursuant
to presently exercisable stock options, 1,500 shares of Common Stock which
Mr. Murphy has the right to acquire pursuant to presently exercisable
Warrants and 1,200 shares of Common Stock which Mr. Murphy has a right to
acquire upon the conversion of the Debentures, which Warrants and
Debentures were purchased in the 1996 public offering.
(Footnote explanations continue on following page)
-3-
(3) Includes 239,166 shares of Common Stock which Dr. Stote has the right to
acquire pursuant to presently exercisable stock options and 10,000 shares
of Common Stock which Dr. Stote has the right to acquire pursuant to
presently exercisable Warrants and 4,000 shares of Common Stock which Dr.
Stote has a right to acquire upon the conversion of the Debentures, which
Warrants and Debentures were purchased in the 1996 public offering.
(4) Includes 101 shares of Common Stock owned by Mr. Price's son as to which
Mr. Price disclaims beneficial ownership. Also includes 165,833 shares of
Common Stock which Mr. Price has the right to acquire pursuant to
presently exercisable stock options and 1,000 shares of Common Stock which
Mr. Price has the right to acquire pursuant to presently exercisable
Warrants and 400 shares of Common Stock which Mr. Price has a right to
acquire upon the conversion of the Debentures, which Warrants and
Debentures were purchased in the 1996 public offering.
(5) Includes 3,600 shares of Common Stock which Mr. Arnegger has the right to
acquire pursuant to presently exercisable stock options.
(6) Includes 7,000 shares of Common Stock which Mr. Bolling has the right to
acquire pursuant to presently exercisable stock options.
(7) Includes 263,500 shares of Common Stock which Mr. McGovern has the right
to acquire pursuant to presently exercisable Warrants.
(8) Includes 2,000 shares of Common Stock which Mr. Gyurik has the right to
acquire pursuant to presently exercisable Warrants and 800 shares of
Common Stock which Mr. Gyurik has the right to acquire upon the conversion
of the Debentures, which Warrants and Debentures were purchased in the
1996 public offering.
(9) Includes 668,599 shares of Common Stock which certain of the current
Executive Officers and Directors have a right to acquire pursuant to
presently exercisable stock options, 276,000 shares of Common Stock which
certain of the current Executive Officers and Directors have a right to
acquire pursuant to presently exercisable Warrants and 5,600 shares of
Common Stock which certain of the current Executive Officers and Directors
have a right to acquire upon the conversion of the Debentures, which
Warrants and Debentures were purchased in the 1996 public offering.
-4-
PROPOSAL 1
ELECTION OF DIRECTORS
The Company's Articles of Incorporation and By-Laws provide for a
classified Board of Directors. The Board is divided into three classes
designated Class I, Class II and Class III. The nominees below are being
presented for election as a Class I Director to hold office until the 2000
Annual Meeting of Stockholders and Class II Directors to hold office until the
2001 Annual Meeting of Stockholders. The term of each Class III Director is to
expire at the 1999 Annual Meeting of Stockholders. Michael McGovern, a Class I
nominee, is intended to replace Ehud D. Laska who resigned as a member of the
Board of Directors on December 29, 1997. Unless instructed to the contrary, the
persons named in the enclosed Proxy intend to cast all votes pursuant to Proxies
received in favor of the persons listed under the heading "Nominees" below as
Directors. The nominees have indicated to the Company their availability for
election. In the event that the nominees should not continue to be available for
election, the holders of the Proxies may exercise their discretion to vote for a
substitute. Officers hold office until the meeting of the Board of Directors
following each Annual Meeting of Stockholders and until their successors have
been chosen and qualified.
The following information is furnished with respect to the nominees
and each other continuing member of the Company's Board of Directors.
CLASS
OF YEAR
POSITIONS WITH DIRECTOR FIRST
THE COMPANY (UPON BECAME
NAME AGE PRESENTLY HELD ELECTION) DIRECTOR
- ---- --- -------------- --------- --------
NOMINEES:
Charles L. Bolling 75 Director II 1991
Robert J. Gyurik 51 None II nominee
Michael McGovern, J.D., C.P.A. 54 Director I 1997
DIRECTORS WHOSE TERMS
OF OFFICE CONTINUE
AFTER THE MEETING:
James R. Murphy 48 Chairman of the Board, III 1993
President, Chief
Executive Officer and
Director
Robert M. Stote, M.D. 59 Senior Vice President, III 1993
Chief Science Officer
and Director
Michael D. Price 40 Vice President, Chief I 1995
Financial Officer,
Secretary, Treasurer
and Director
-5-
BACKGROUND OF NOMINEES
CHARLES L. BOLLING served from 1968 to 1973 as Vice President of
Product Management and Promotion (U.S.), from 1973 to 1977 as Vice President of
Commercial Development and from 1977 to 1986 as Director of Business Development
(International) at Smith Kline & French Laboratories. Mr. Bolling has been
retired since 1986.
ROBERT J. GYURIK is Manager of Development and Quality Control at
Macrochem Corporation, a position he has held since 1993. From 1971 to 1993 Mr.
Gyurik worked in various positions at SmithKline Beecham ranging from Associate
Senior Investigator in the Nutrition/Production Enhancer Research Group and
Pharmaceutical Development Group to Senior Medical Chemist in the Parasitology
Research Group. Prior thereto, Mr. Gyurik worked at Schering as a Medicinal
Chemist. Mr. Gyurik attended Rutgers University and received a B.A. in Biology
and Chemistry from Immaculata College. Mr. Gyurik is a member of the American
Chemical Society, International Society for Chronobiology and the New York
Academy of Sciences.
MICHAEL MCGOVERN, J.D., C.P.A. serves as President of McGovern
Enterprises, a provider of corporate and financial consulting services, which he
founded in 1975. Mr. McGovern is Chairman of the Board of Directors of Specialty
Surgicenters, Inc., a developer and operator of outpatient surgical clinics and
is the Chairman of the Board of Directors of North Fulton Bancshares, a company
that owns and operates banks. Mr. McGovern is also a member of the board of
directors of Suburban Lodges of America Inc., a public company that owns and
operates extended stay hotels, Career Publishing Network, L.L.C., a publishing
company that specializes in career and job fairs for college students, Training
Solutions Interactive Inc., a developer and producer of interactive training
programs and the Reynolds Development Company, a real-estate development
company. Mr. McGovern received a B.S. and M.S. in accounting and his Juris
Doctor from the University of Illinois. Mr. McGovern is a Certified Public
Accountant and a member of the State Bar of Georgia and the American Bar
Association.
BACKGROUND OF CONTINUING DIRECTORS
JAMES R. MURPHY became President and Chief Operating Officer of the
Company on September 7, 1994, was named Chief Executive Officer effective
January 1, 1995 and became Chairman of the Board on June 9, 1995. Prior to
rejoining the Company, Mr. Murphy served as Vice President of Business
Development at MacroChem Corporation, a publicly owned pharmaceutical company,
from March 1993 through September 1994. From September 1992 until March 1993,
Mr. Murphy served as a Consultant to the pharmaceutical industry with his
primary efforts directed toward product licensing. Prior thereto, Mr. Murphy
served as Director - Worldwide Business Development and Strategic Planning of
the Company from December 1991 to September 1992. Mr. Murphy previously spent 14
years in basic pharmaceutical research and product development with SmithKline
Corporation and in business development with contract research laboratories. Mr.
Murphy received a B.A. in Biology from Millersville University.
ROBERT M. STOTE, M.D. became Senior Vice President and Chief Science
Officer of the Company in March 1992. Prior to joining the Company, Dr. Stote
was employed for 20 years by SmithKline Beecham Corporation serving as Senior
Vice President and Medical Director, Worldwide Medical Affairs from 1989 to
1992, and Vice President-Clinical Pharmacology-Worldwide from 1987 to 1989. From
1984 to 1987 Dr. Stote was Vice President-Phase I Clinical Research, North
America. Dr. Stote was Chief of Nephrology at Presbyterian Medical Center of
Philadelphia from 1972 to 1989 and was Clinical Professor of Medicine at the
University of Pennsylvania. Dr. Stote received a B.S.
-6-
in Pharmacy from the Albany College of Pharmacy, an M.D. from Albany Medical
College and is Board Certified in Internal Medicine and Nephrology. He was a
Fellow in Nephrology and Internal Medicine at the Mayo Clinic and is currently a
Fellow of the American College of Physicians.
MICHAEL D. PRICE became Chief Financial Officer, Vice
President/Treasurer and Secretary of the Company in October 1993, April 1993 and
November 1992, respectively. He has served the Company in other capacities since
March 1992. Prior to joining the Company, Mr. Price was employed as a financial
and management consultant with Carr Financial Group in Tampa, Florida from March
1990 to March 1992. Prior thereto, he was employed as Vice President of Finance
with Premiere Group, Inc., a real estate developer in Tampa, Florida from June
1988 to February 1990. Prior thereto, Mr. Price was employed by Price Waterhouse
in Tampa, Florida from January 1982 to June 1988 where his last position with
that firm was as an Audit Manager. Mr. Price received a B.S. in Business
Administration with a concentration in Accounting from Auburn University and an
M.B.A. from Florida State University. Mr. Price is a Certified Public Accountant
in the State of Florida.
COMMITTEES OF THE BOARD OF DIRECTORS; BOARD OF DIRECTORS MEETINGS
The Board of Directors has an Audit Committee and a Compensation
Committee. The Audit Committee recommends to the Board of Directors the
appointment of independent auditors to audit the Company's consolidated
financial statements, reviews the Company's internal control procedures and
advises the Company on tax and other matters connected with the growth of the
Company. The Audit Committee also reviews with management the annual audit and
other work performed by the independent auditors. The Company's Compensation
Committee administers the Company's 1991 Stock Option Plan and reviews and
recommends to the Board of Directors the nature and amount of compensation to be
paid to the Company's executive officers. The Audit Committee and the
Compensation Committee both currently consist of Charles L. Bolling and Michael
McGovern.
During the Company's last fiscal year ended December 31, 1997, the
Board of Directors held seven meetings, the Audit Committee held two meetings
and the Compensation Committee held three meetings. Each Director attended at
least 75% of the total number of meetings of the Board of Directors which were
held during the period he or she served as a Director in the fiscal year ended
December 31, 1997 and meetings of each Committee on which such Director served.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The members of the Compensation Committee during the fiscal year
ended December 31, 1997 were Randolph W. Arnegger, Charles L. Bolling, Ehud D.
Laska, Michael McGovern and Doris E. Wardell, all of whom are, or were at the
time, non-employee Directors. No member of the Compensation Committee has a
relationship that would constitute an interlocking relationship with Executive
Officers or Directors of another entity.
REMUNERATION OF NON-EMPLOYEE DIRECTORS
The Company presently pays non-employee Director fees of $3,000 for
each face to face meeting of the Board of Directors, $500 for each telephonic
meeting, $500 for each committee meeting of the Board of Directors and
reimburses expenses incurred in attending meetings. Prior to August 1997, the
Company's policy consisted of payment of fees equal to $12,000 per year to
non-employee Directors and an award of 200 shares of Common Stock per year to
non-employee Directors who serve on committees of the Board of Directors. Total
non-employee Director fee
-7-
payments during the year ended December 31, 1997 were $45,500 and expenses
incurred by non-employee Directors in attending meetings which were reimbursed
by the Company totaled $3,256. During the year ended December 31, 1997, 600
shares of Common Stock were granted to non-employee Directors. Until June 1997,
options to purchase 10,000 shares of Common Stock were automatically granted to
each non-employee Director upon his or her election to the Board. As of August
1997, pursuant to a Compensation Policy for non-employee Directors, each
non-employee Director shall be automatically granted options to purchase 15,000
shares of Common Stock upon his or her election to the Board. Thereafter, each
continuing non-employee Director shall be entitled to receive, annually, options
to purchase the number of shares of Common Stock equal to 1/10 of 1% of the
number of outstanding shares of Common Stock. During the year ended December 31,
1997, options to purchase 54,000 shares of Common Stock were granted to
non-employee Directors of the Company. Such options were granted at prices
ranging from $2.69 to $2.88 per share, representing the fair market value of the
Common Stock on the dates of grant. These options expire on various dates
through November 13, 2007.
-8-
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth the total compensation paid to or
accrued by the Company for the account of the current Chief Executive Officer
and the executive officers at December 31, 1997 whose total cash compensation
for the year ended December 31, 1997 exceeded $100,000.
SUMMARY COMPENSATION TABLE
Long-Term Compensation
--------------------------------
Annual Compensation Awards Payouts
------------------------------- -------------------------------- --------
Securities
Other Restricted Underlying LTIP All
Annual Stock Options/ Payouts Other
Name and Principal Position Year Salary($) Bonus($) Comp.($) Awards($) SARs(#) ($) Comp.(1)
- --------------------------- ---- --------- -------- -------- --------- ------- ------- --------
James R. Murphy (2) Y/E 12/31/97 $245,000 $50,000 -- -- - -- $4,750
Chairman of the Board, Y/E 12/31/96 $235,833 $20,000 -- -- 600,000 -- $4,750
President, Chief Executive Y/E 12/31/95 $187,500 -- -- -- 50,000 -- $4,620
Officer and Director
Robert M. Stote(3) Y/E 12/31/97 $225,000 -- -- -- - -- $4,750
Senior Vice President, Y/E 12/31/96 $220,417 -- -- -- 500,000 -- $4,750
Chief Science Officer and Y/E 12/31/95 $203,750 -- -- -- 37,500 -- $4,620
Director
Michael D. Price(4) Y/E 12/31/97 $136,378 -- -- -- - -- $4,750
Vice President, Chief Y/E 12/31/96 $122,500 $10,000 -- -- 400,000 -- $4,750
Financial Officer Y/E 12/31/95 $114,808 -- -- -- 22,500 -- $4,620
Treasurer, Secretary and
Director
- ---------------
(1) The value of perquisites provided to the named executive officers did not
exceed the lesser amount of either $50,000 or 10% of total compensation in
any case.
(2) Mr. Murphy, Chairman, President and Chief Executive Officer, has been
employed by the Company since September 1994. Mr. Murphy's annual base
salary is currently $245,000. During the year ended December 31, 1996, Mr.
Murphy was awarded ten-year stock options to purchase 600,000 shares of
common stock, of which one-third of such options vested when the closing
price of the Company's Common Stock on the American Stock Exchange equaled
or exceeded the exercise price of $2.89 for twenty consecutive trading
days; one-third will vest and become exercisable when the closing price
equals or exceeds the exercise price of $3.68 for twenty consecutive
trading days; and one-third will vest and become exercisable when the
closing price equals or exceeds the exercise price of $4.73 for twenty
consecutive trading days. During the year ended December 31, 1995, Mr.
Murphy was awarded stock options to purchase 50,000 shares of Common Stock
at $3.75 per share, 50% of which vested on June 12, 1996 and the balance
of which vested on June 12, 1997. During the years ended December 31,
1997, 1996 and 1995, the Company provided to Mr. Murphy matching funds
totaling $4,750, $4,750 and $4,620, respectively, pursuant to the terms of
a Company sponsored 401(k) retirement plan (see "401(k) Retirement Plan").
(3) Dr. Stote, Senior Vice President and Chief Science Officer, has been
employed by the Company since March 1992. Dr. Stote's annual base salary
is currently $225,000. During the year ended December 31, 1996, Dr. Stote
was awarded ten-year stock options to purchase 500,000 shares of Common
Stock, of which one-third of such options vested when the closing price of
the Company's Common Stock on the American Stock Exchange equaled or
exceeded the exercise price of $2.89 for twenty consecutive trading days;
one-third will vest and become exercisable when the closing price equals
or exceeds the exercise price of $3.68 for twenty consecutive trading
days; and one-third will vest and become exercisable when the closing
price equals or exceeds the exercise price
(Footnote explanations continue on following page)
-9-
of $4.73 for twenty consecutive trading days. During the year ended
December 31, 1995, Dr. Stote was awarded stock options to purchase 37,500
shares of Common Stock at $3.75 per share, 50% of which vested on June 12,
1996 and the balance of which vested on June 12, 1997. During the years
ended December 31, 1997, 1996 and 1995, the Company provided to Dr. Stote
matching funds totaling $4,750, $4,750 and $4,620, respectively, pursuant
to the terms of a Company sponsored 401(k) retirement plan (see "401(k)
Retirement Plan").
(4) Mr. Price, Vice President, Chief Financial Officer, Secretary, and
Treasurer has been employed by the Company since March 1992. Mr. Price's
annual base salary is currently $150,000. During the year ended December
31, 1996, Mr. Price was awarded ten-year stock options to purchase 400,000
shares of Common Stock, of which one-third of such options vested when the
closing price of the Company's Common Stock on the American Stock Exchange
equaled or exceeded the exercise price of $2.89 for twenty consecutive
trading days; one-third will vest and become exercisable when the closing
price equals or exceeds the exercise price of $3.68 for twenty consecutive
trading days; and one-third will vest and become exercisable when the
closing price equals or exceeds the exercise price of $4.73 for twenty
consecutive trading days. During the year ended December 31, 1995, Mr.
Price was awarded stock options to purchase 22,500 shares of Common Stock
at $3.75 per share, 50% of which vested on June 12, 1996 and the balance
of which vested on June 12, 1997. During the years ended December 31,
1997, 1996 and 1995, the Company provided to Mr. Price matching funds
totaling $4,750, $4,750 and $4,620, respectively, pursuant to the terms of
a Company sponsored 401(k) retirement plan (see "401(k) Retirement Plan").
OPTION/SAR GRANTS IN LAST FISCAL YEAR
No options were granted to the individuals listed in the Summary
Compensation table during the year ended December 31, 1997. No stock
appreciation rights have been granted to date.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUES
The following table sets forth certain information concerning the
number of shares of Common Stock acquired upon the exercise of stock options
during the year ended December 31, 1997 by, and the number and value at December
31, 1997 of shares of Common Stock subject to unexercised options held by, the
individuals listed in the Summary Compensation Table.
Number of
Securities Value of
Underlying Unexercised
Unexercised In-The-Money
Options/SARs At Options/SARs At
Shares Fiscal Year End (#) Fiscal Year End($)
Acquired Value Exercisable/ Exercisable/
Name On Exercise(#) Realized($) Unexercisable Unexercisable(1)
- ---------------------- --------------- ----------- -------------------- -----------------
James R. Murphy -- -- 253,000 / 400,000 -0- / -0-
Robert M. Stote, M.D. -- -- 239,166 / 333,333 -0- / -0-
Michael D. Price -- -- 165,833 / 266,667 -0- / -0-
- ----------------
(1) Represents the closing price of the Company's Common Stock on the American
Stock Exchange on December 31, 1997 minus the respective exercise prices.
LONG-TERM INCENTIVE PLAN AWARDS IN LAST FISCAL YEAR
No long-term incentive plan awards were granted to the individuals
listed in the Summary Compensation table during the year ended December 31,
1997.
EMPLOYMENT AGREEMENTS
Mr. James R. Murphy, Chairman of the Board, President and Chief
Executive Officer, entered into an employment agreement with the Company dated
as of June 12, 1995 which term has been extended through June 12, 1999. Under
the terms of this agreement, as amended, Mr. Murphy's
-10-
annual base salary is $245,000. The agreement with Mr. Murphy also provides for
bonuses at the recommendation and discretion of the Compensation Committee of
the Company's Board of Directors and a severance payment equal to two years
salary and immediate vesting of all outstanding stock options upon termination
following a change in control of the Company. Pursuant to the agreement, if
terminated without cause, Mr. Murphy will be entitled to a severance payment
equal to one year salary and immediate vesting of all outstanding stock options.
Dr. Robert M. Stote, Senior Vice President and Chief Science
Officer, entered into an employment agreement with the Company dated as of June
12, 1995 providing for an initial term which expired on June 12, 1998. This
agreement has been extended for three months through September 12, 1998. Under
the terms of this agreement, as amended, Dr. Stote's annual base salary is
$225,000. The agreement with Dr. Stote also provides for bonuses at the
recommendation and discretion of the Compensation Committee of the Company's
Board of Directors and a severance payment equal to two years salary and
immediate vesting of all outstanding stock options upon termination following a
change in control of the Company. Pursuant to the agreement, if terminated
without cause, Dr. Stote will be entitled to a severance payment equal to one
year salary and immediate vesting of all outstanding stock options. The terms of
Dr. Stote's future involvement are currently under negotiation.
Mr. Michael D. Price, Vice President, Chief Financial Officer,
Secretary and Treasurer, entered into an employment agreement with the Company
dated as of June 12, 1995 which term has been extended through June 12, 1999.
Under the terms of this agreement, as amended, Mr. Price's annual base salary is
$150,000. The agreement with Mr. Price also provides for bonuses at the
recommendation and discretion of the Compensation Committee of the Company's
Board of Directors and a severance payment equal to two years salary and
immediate vesting of all outstanding stock options upon termination following a
change in control of the Company. Pursuant to the agreement, if terminated
without cause, Mr. Price will be entitled to a severance payment equal to one
year salary and immediate vesting of all outstanding stock options.
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934, as amended,
requires the Company's executive officers and directors, and any persons who own
more than 10% of any class of the Company's equity securities, to file certain
reports relating to their ownership of such securities and changes in such
ownership with the Securities and Exchange Commission, the American Stock
Exchange and the Pacific Stock Exchange and to furnish the Company with copies
of such reports. To the Company's knowledge, during the year ended December 31,
1997, all Section 16(a) filing requirements have been satisfied.
1991 STOCK OPTION PLAN
The Company's 1991 Stock Option Plan (the "1991 Plan") was
unanimously adopted by the Board of Directors on September 30, 1991, approved by
the Stockholders at the December 1991 Annual Meeting of Stockholders and amended
to increase the number of shares available under the plan to an aggregate of
500,000 by the Stockholders at the February 1993, June 1994 and June 1997 Annual
Meeting of Stockholders. The purpose of the 1991 Plan is to promote the
interests of the Company in attracting and retaining employees (including
Officers) and experienced and knowledgeable non-employee Directors for the
Company and its subsidiaries, by enabling them to acquire or increase a
proprietary interest in the Company, to benefit from appreciation in the value
of the Company's Common Stock and, thus, participate in the long-term growth of
the Company.
-11-
During the fiscal year ended December 31, 1997, options to purchase
10,000 shares of Common Stock were granted to an employee of the Company who is
not an executive officer. Such options were granted at a price of $2.88 per
share, representing the fair market value of the Common Stock on the date of
grant. These options expire on August 12, 2007.
401(k) RETIREMENT PLAN
The Company sponsors a 401(k) retirement plan (the "401(k) Plan")
under which eligible employees may contribute, on a pre-tax basis, between 1% to
15% of their respective total annual income from the Company, subject to maximum
aggregate annual contribution imposed by the Internal Revenue Code of 1986, as
amended. All full-time employees who have worked for the Company for at least
six months are eligible to participate in the 401(k) Plan. All employee
contributions are allocated to the employee's individual account and are
invested in various investment options as directed by the employee. Cash
contributions are fully vested and nonforfeitable. The Company made matching
contributions to the 401(k) Plan for the 1997 fiscal year in the amount of
$27,208 and is continuing to match 50% of each eligible employee's contribution
in fiscal 1998.
COMPENSATION COMMITTEE REPORT
The Compensation Committee of the Board of Directors, which is
comprised of two non-employee Directors of the Company, determines, to the
extent not fixed pursuant to the terms of applicable employment agreements, the
compensation of the Chief Executive Officer, other employee members of the Board
of Directors, and all other employees whose annual compensation exceeds $50,000.
The compensation levels of such officers, Directors and employees are subject to
the approval of the Board of Directors.
The Compensation Committee, being responsible for overseeing and
approving executive compensation and grants of stock options, is in a position
to appropriately balance the current cash compensation considerations with the
longer-range incentive-oriented growth outlook associated with stock options.
The main objectives of the Company's compensation structure include
rewarding individuals for their respective contributions to the Company's
performance, providing executive officers with a stake in the long-term success
of the Company and providing compensation programs and policies that will
attract and retain qualified executive personnel. The Board of Directors and the
Compensation Committee place a great deal of importance on job security and
recognize that by offering executives protection against job loss, it can be
more successful in recruiting experienced executives from large, established
pharmaceutical companies to relocate with the Company in Florida. Historically,
the members of the Board of Directors and the Compensation Committee have chosen
to achieve these objectives through salary increases, bonuses and periodic stock
option grants. The Committee considered each of these factors in approving the
compensation for Mr. Murphy, who serves as Chief Executive Officer.
The Compensation Committee considers, among other things, the
performance of the Company, improvement in financial position, strategic
alliances, acquisition of products, product registration, raising of capital,
compensation levels in competing companies, individual contributions to the
Company and the length of service with the Company. The Compensation Committee
also considered independent surveys of executive compensation of similarly
situated companies.
Compensation through the periodic grant of stock options under the
Company's stock option plans is intended to coordinate executives' and
stockholders' long-term interests by creating a direct
-12-
link between a portion of executive compensation and increases in the price of
Common Stock and the long-term success of the Company. This method of
compensation also permits the Company to preserve its cash resources.
Although the extraordinary individual contributions of each
executive officer must be recognized when appropriate, it can be expected that
any future substantial increases in executive compensation will be based upon
the satisfaction of pre-established individual objectives, corporate milestones
and financial performance of the Company.
COMPENSATION COMMITTEE
Charles L. Bolling
Michael McGovern
COMMON STOCK PERFORMANCE
The graph presented below compares the cumulative total stockholder
return on the Company's Common Stock for the five years ended December 31, 1997
with the cumulative total stockholder return for such period reflected in both
the Standard and Poor's (S&P) 500 Stock Index and a peer group index of four
competing pharmaceutical companies (Andrx Corp., Biovail Corp. International,
Noven Pharmaceuticals, Inc. and Theratech Inc. Utah). The graph (and the
information relating to it) was obtained by the Company from S&P. The
comparative returns shown in the graph assume (i) the investment of $100 in the
Company's Common Stock, the common stock of the companies included in the S&P
500 Stock Index and the common stock of the four peer group companies at the
market close on December 31, 1992 and (ii) the reinvestment of all dividends.
[GRAPH OMITTED]
-13-
TOTAL STOCKHOLDER RETURNS - DIVIDENDS REINVESTED
ANNUAL RETURN PERCENTAGE
Years Ended December 31,
-------------------------------------------
COMPANY/INDEX 1993 1994 1995 1996 1997
- ------------- ------ ------ ------ ------ ------
Bentley Pharmaceuticals -60.00 -80.00 -55.00 16.67 -9.52
S&P 500 Index 10.08 1.32 37.58 22.96 33.36
Peer Group 4.74 -23.16 157.26 6.82 23.84
INDEXED RETURNS
Years Ended December 31,
----------------------------------------------------
COMPANY/INDEX 1992 1993 1994 1995 1996 1997
- ------------- ------ ------ ------ ------ ------ ------
Bentley Pharmaceuticals 100 40.00 8.00 3.60 4.20 3.80
S&P 500 Index 100 110.08 111.53 153.45 188.68 251.63
Peer Group 100 104.74 80.48 207.04 221.16 273.89
PEER GROUP COMPANIES:
- ---------------------
Andrx Corp - included from 1997
Biovail Corp International - included from 1995 forward
Noven Pharmaceuticals Inc. - included in all years
Theratech Inc. Utah - included from 1993 forward
-14-
MISCELLANEOUS
VOTING REQUIREMENTS
Directors are elected by a plurality of the votes cast at the
Meeting at which a quorum is present (Proposal 1). Abstentions and broker
non-votes with respect to any matter are not considered cast with respect to
that matter.
INDEPENDENT AUDITORS
The Audit Committee of the Board of Directors of the Company
selected Deloitte & Touche LLP to serve as the Company's independent auditors
for the year ended December 31, 1997 and for the year ending December 31, 1998.
Representatives of Deloitte & Touche LLP will not be present at the Meeting.
STOCKHOLDER PROPOSALS
From time to time stockholders may present proposals for
consideration at a meeting which may be proper subjects for inclusion in the
proxy statement and form of proxy related to that meeting. Stockholder proposals
intended to be included in the Company's proxy statement and form of proxy
relating to the Company's 1999 Annual Meeting of Stockholders must be received
by the Company at its principal offices, One Urban Centre, Suite 548, 4830 West
Kennedy Blvd., Tampa, Florida 33609 by February 10, 1999. Any such proposals, as
well as any questions relating thereto, should be directed to the Secretary of
the Company at such address.
ADDITIONAL INFORMATION
The cost of solicitation of Proxies, including the cost of
reimbursing banks, brokers and other nominees for forwarding Proxy solicitation
material to the beneficial owners of shares held of record by them and seeking
instructions from such beneficial owners, will be borne by the Company. The
Company has engaged Morrow & Co., Inc. to solicit Proxies and has agreed to pay
Morrow & Co., Inc. a fee of $4,000 plus their accountable expenses in connection
with the solicitation. Proxies may also be solicited without extra compensation
by certain officers and regular employees of the Company. Proxies may be
solicited by mail and, if determined to be necessary, by telephone, telegraph or
personal interview.
OTHER MATTERS
Management does not intend to bring before the Meeting any matters
other than those specifically described above and knows of no matters other than
the foregoing to come before the Meeting. If any other matters or motions
properly come before the Meeting, it is the intention of the persons named in
the accompanying Proxy to vote such Proxy in accordance with their judgment on
such matters or motions, including any matters dealing with the conduct of the
Meeting.
By Order of the Board of Directors
/S/ MICHAEL D. PRICE
MICHAEL D. PRICE
Secretary
Tampa, Florida
July 2, 1998
-15-
BENTLEY PHARMACEUTICALS, INC.
ANNUAL MEETING OF STOCKHOLDERS - July 29, 1998
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints, as proxies for the undersigned,
James R. Murphy, Dr. Robert M. Stote and Michael D. Price and each of them, with
full power of substitution, to vote all shares of Common Stock of the
undersigned in Bentley Pharmaceuticals, Inc. (the "Company") at the Annual
Meeting of Stockholders of the Company to be held at Castellana
Inter-Continental Hotel, Paseo de la Castellana, 49, Madrid, Spain, 28046 on
July 29, 1998, at 9:00 a.m., local time (the receipt of Notice of which meeting
and the Proxy Statement accompanying the same being hereby acknowledged by the
undersigned), or at any adjournments thereof, upon the matters described in the
Notice of Annual Meeting and Proxy Statement and upon such other business as may
properly come before such meeting or any adjournments thereof, hereby revoking
any proxies heretofore given.
Each properly executed proxy will be voted in accordance with the
specifications made on the reverse side hereof. If no specifications are made,
the shares represented by this proxy will be voted "FOR" the listed nominees.
(CONTINUED AND TO BE SIGNED ON REVERSE SIDE)
Election of Directors:
FOR ALL NOMINEES |_| WITHHOLD AUTHORITY |_|
to vote for all nominees
Nominees: Charles L. Bolling, Robert J. Gyurik and Michael McGovern
(INSTRUCTION: To withhold authority for any individual nominee, strike a line
through the nominee's name on the list above.)
NOTE: Please date and sign your name or
names exactly as set forth hereon. If
signing as attorney, executor,
administrator, trustee or guardian, please
indicate the capacity in which you are
acting. Proxies by corporations should be
signed by a duly authorized officer and
should bear the corporate seal.
Dated: _______________________________, 1998
____________________________________________
____________________________________________
Signature of Stockholder(s)
____________________________________________
Print Name(s)
Please Sign and Return the Proxy Promptly in the Enclosed Envelope.