SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
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 Rule 14a-11(c) or Rule 14a-12
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NPS PHARMACEUTICALS, INC.
(Name of Registrant as Specified In Its Charter)
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(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:
Not Applicable
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(2) Aggregate number of securities to which transaction applies:
Not Applicable
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(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):
Not Applicable
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(4) Proposed maximum aggregate value of transaction:
Not Applicable
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[_] 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:
Not Applicable
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Not Applicable
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(4) Date Filed:
Not Applicable
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NPS PHARMACEUTICALS, INC.
420 Chipeta Way
Salt Lake City, Utah 84108-1256
___________
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
May 24, 2001 at 3:00 p.m. (EDT)
at the
Park Hyatt Hotel
4 Avenue Road
Toronto, Ontario, Canada M5R 2E8
___________
TO THE STOCKHOLDERS OF NPS PHARMACEUTICALS, INC.:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of NPS
Pharmaceuticals, Inc., a Delaware corporation, will be held on Thursday, May 24,
2001, at 3:00 p.m., Eastern Daylight Time, at the Park Hyatt Hotel, 4 Avenue
Road, Toronto, Ontario, Canada M5R 2E8 for the following purposes:
1. To elect eleven members to the Board of Directors.
2. To ratify the selection of KPMG LLP as independent auditors of the
Company for its fiscal year ending December 31, 2001.
3. To transact such other business as may properly come before the
meeting or any adjournment 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 9, 2001, as
the record date for the determination of stockholders entitled to notice of and
to vote at this Annual Meeting of Stockholders and at any adjournment thereof.
By Order of the Board of Directors
/s/ James U. Jensen
James U. Jensen
Secretary
Salt Lake City, Utah
April 24, 2001
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ALL STOCKHOLDERS ARE CORDIALLY INVITED TO ATTEND THE MEETING IN PERSON. WHETHER
OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE COMPLETE, DATE, SIGN, AND RETURN
THE ENCLOSED PROXY CARD 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. 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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NPS PHARMACEUTICALS, INC.
420 Chipeta Way
Salt Lake City, Utah 84108-1256
___________
PROXY STATEMENT
for the
Annual Meeting of Stockholders
(May 24, 2001)
___________
INFORMATION CONCERNING SOLICITATION AND VOTING
General
The enclosed proxy is solicited on behalf of the Board of Directors (the
"Board of Directors" or the "Board") of NPS Pharmaceuticals, Inc., a Delaware
corporation ("NPS" or the "Company"), for use at the Annual Meeting of
Stockholders to be held on May 24, 2001, at 3:00 p.m., Eastern Daylight Time and
at any adjournment thereof (the "Annual Meeting"), for the purposes set forth
herein and in the accompanying Notice of Annual Meeting. The Annual Meeting will
be held at the Park Hyatt Hotel, 4 Avenue Road, Toronto, Ontario, Canada, M5R
2E8.
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. Copies of
solicitation materials will be furnished to banks, brokerage houses,
fiduciaries, and custodians holding in their names shares of NPS 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.
The Company intends to mail this Proxy Statement and accompanying proxy
card on or about April 24, 2001, to all stockholders entitled to vote at the
Annual Meeting.
Voting Rights and Outstanding Shares
April 9, 2001 is the record date for determining those holders of NPS
common stock and exchangeable shares of NPS Allelix Inc., a subsidiary of the
Company ("Exchangeable Shares") entitled to notice of and to vote at the Annual
Meeting. On the record date, the Company had outstanding and entitled to vote
29,801,939 shares of common stock which includes 911,898 Exchangeable Shares.
Each holder of the Company's common stock is entitled to one vote for each share
held as of the record date on all matters to be voted upon at the Annual
Meeting. CIBC Mellon Trust Company (the "Trustee"), the holder of the Company's
Special Voting Share is entitled to one vote for each Exchangeable Share
outstanding as of the record date, other than Exchangeable Shares owned by the
Company and its affiliates. Holders of common stock and the Special Voting Share
are collectively referred to as "Stockholders." Votes cast with respect to
Exchangeable Shares will be voted through the Special Voting Share by the
Trustee as directed by the holders of Exchangeable Shares, except votes cast at
the Annual Meeting with respect to Exchangeable Shares whose holders request to
vote directly in person as proxy for the Trustee, or who request that a proxy be
given by the Trustee to a designated agent or other representative of the
management of the company to exercise such votes.
All votes will be tabulated by the Inspector of Elections appointed for the
Annual Meeting, who will separately tabulate affirmative and negative votes,
abstentions, and broker non-votes. Abstentions will be counted toward 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 toward a
quorum, but are not counted for any purpose in determining whether a matter has
been approved.
2
Revocability of Proxies
Any stockholder 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 headquarters, 420 Chipeta Way,
Salt Lake City, Utah 84108-1256, a written notice of revocation or a duly
executed proxy bearing a later date, or it may be revoked by attending the
Annual Meeting and voting in person. Attendance at the Annual Meeting will not,
by itself, revoke a proxy. Holders of Exchangeable Shares who wish to direct the
Trustee to cast the votes attached to the Special Voting Share on their behalf
should follow carefully the instructions provided by the Trustee, which
accompany this Proxy Statement. The procedure for instructing the Trustee
differs in certain respects from the procedure for delivering a proxy, including
the place for depositing the instructions and manner for revoking the proxy.
Stockholder Proposals
No stockholder proposals were submitted and none are included for
consideration at this Annual Meeting of Stockholders. Stockholder proposals to
be presented at the Company's 2002 annual meeting of stockholders and considered
for inclusion in the proxy statement relating to such meeting must be received
by the Company not later than December 25, 2001. In order to be timely,
stockholder proposals and director nominations intended to be presented at the
Company's 2001 annual meeting, but not included in the proxy statement for the
meeting, must be received by the Company no earlier than March 23, 2001 and no
later than April 22, 2001.
PROPOSAL 1
ELECTION OF DIRECTORS
The Company's Amended and Restated Certificate of Incorporation and the
Amended and Restated Bylaws provide that directors are to be elected at the
Annual Meeting to serve for a term of one year and until their respective
successors are duly elected and qualified or until their respective death,
resignation, or removal. Vacancies on the Board resulting from death,
resignation, disqualification, removal, or other causes and any newly created
directorships resulting from any increase in the number of directors shall be
filled by the affirmative vote of a majority of the directors then in office,
unless the Board of Directors determines by resolution that any such vacancy
shall be filled by the stockholders. A director elected by the Board to fill a
vacancy (including a vacancy created by an increase in the Board of Directors)
shall serve for the remainder of the full term of the director for which the
vacancy was created or occurred and until such director's successor is elected
and qualified.
Directors are elected by a plurality of the votes present in person or
represented by proxy and entitled to vote at the Annual Meeting. Shares
represented by executed proxies will be voted, if authority to do so is not
withheld, for the election of the eleven nominees 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 the Board may propose.
Pursuant to the Company's Amended and Restated Certificate of Incorporation
and the Amended and Restated Bylaws, the number of directors which constitute
the whole Board of Directors is to be fixed by one or more resolutions adopted
by the Board of Directors. Each of the eleven nominees is currently a director
of the Company, and each nominee has agreed to serve if elected. Mr. Jensen,
Vice President of Corporate Development and Legal Affairs, and Secretary, has
served on the Company's Board of Directors since 1987 and is not standing for
re-election. The Board has no reason to believe that any nominee will be unable
to serve. If and when elected at the Annual Meeting, each of the nominees is
expected to serve until the 2002 Annual Meeting of Stockholders and until such
elected nominee's successor is duly elected and qualified, or until such elected
nominee's earlier death, resignation, or removal.
Set forth below, in alphabetical order, is biographical information for
each person nominated to serve on the Company's Board of Directors.
3
NOMINEES FOR ELECTION
Santo J. Costa, J.D.
Mr. Costa, 55, has served as a director since 1995. Mr. Costa has been a
director of Quintiles Transnational Corporation, a publicly held global contract
research organization since April 1994 and has served as their Vice-Chairman
since November 1999. From April 1994 to November 1999 he served as President and
Chief Operating Officer for Quintiles. From 1986 to 1993, he was employed by
Glaxo, Inc., a worldwide pharmaceutical company, where he served as Senior Vice
President, Administration and General Counsel and was a member of that company's
board of directors. Mr. Costa received his J.D. from St. John's University.
John R. Evans, M.D.
Dr. Evans, 71, has served as a director and Vice-Chairman of our board
since the closing of our acquisition of Allelix in December 1999. Previously,
Dr. Evans was Chairman of the Board of Allelix since 1983. From 1979 to 1983,
Dr. Evans served as a Director of the Population, Health and Nutrition
Department of the World Bank in Washington. From 1972 to 1978 he served as
President of the University of Toronto. Currently, Dr. Evans is Chairman of the
Canada Foundation for Innovation and serves as Chairman of the Board for both
Alcan Aluminum Limited in Montreal and Torstar Corporation in Toronto. He is a
member of the board of directors of MDS Inc., a publicly held health and life
sciences company listed on the New York Stock Exchange and the Toronto Stock
Exchange, and GlycoDesign, Inc. Dr. Evans received his M.D. from the University
of Toronto and engaged in specialty training in internal medicine and cardiology
in London, Boston and Toronto.
James G. Groninger
Mr. Groninger, 56, has served as a director since 1988. Mr. Groninger
founded in January 1995 and is President of The Bay South Company, a Richmond,
Virginia-based provider of financial advisory and investment banking services.
From 1988 through 1994, he served as a Managing Director, Investment Banking
Division, of PaineWebber Incorporated. Mr. Groninger is on the board of
directors of Cygne Designs, Inc., a publicly traded company, and Layton
BioScience, Inc., a private biotechnology company. Mr. Groninger received an
M.B.A. from Harvard Business School.
Tamar Howson
Ms. Howson, 51, has served as a director since her appointment to the Board
on July 2000.Between April 1993 and April 2000, Ms. Howson served as the Senior
Vice President and Director, Worldwide Business Development, for SmithKline
Beecham and managed S.R. One, a $100MM venture fund. Between 1991 and 1993, she
served as Vice President and Director, Worldwide Business Development for
SmithKline. Before joining SmithKline, Ms. Howson was Vice President, Venture
Investments at Johnston Associates, a venture capital firm. Before that, she
was director of Worldwide Business Development and Licensing for Squibb
Corporation. Ms. Howson received an M.B.A. from Columbia University. She holds
a M.Sc. from City College of New York. Ms. Howson also serves on the Board of
Directors for Ariad Pharmaceuticals and SkyePharma, PLC.
Hunter Jackson, Ph.D.
Dr. Jackson, 51, has been Chief Executive Officer and Chairman of our board
since founding NPS in 1986. He was appointed to the additional position of
President in January 1994. Before founding NPS, he was an Associate Professor in
the Department of Anatomy at the University of Utah School of Medicine. Dr.
Jackson received a Ph.D. in Psychobiology from Yale University. He received
postdoctoral training in the Department of Neurosurgery, University of Virginia
Medical School.
4
Joseph Klein, III
Mr. Klein, 40, has served as a director since 1998. Currently, Mr. Klein is
Managing Director of Gauss Capital Advisors, LLC, a financial and investment
advisory firm. From 1999 to 2000, Mr. Klein was Vice President, Strategy for
Medical Manager Corporation, a physician office management information system
vendor. From 1998 to 1999, Mr. Klein was a Health Care Investment Analyst with
the Kaufmann Fund, Inc. From 1995 to 1998, Mr. Klein was a Portfolio Manager and
Chairman of the Investment Advisory Committee of T. Rowe Price Health Sciences
Fund, Inc. From 1990 to 1998, Mr. Klein was Vice President and Health Care
Investment Analyst for T. Rowe Price Associates, Inc., an investment management
firm. Mr. Klein serves as a director of Guilford Pharmaceuticals, a publicly
held biotechnology company, and Synbiotics Corporation, a publicly held
veterinary diagnostic products company. Mr. Klein received an M.B.A. from
Stanford Graduate School of Business.
Donald E. Kuhla, Ph.D.
Dr. Kuhla, 59, has served as a director since 1991. Since 1998, Dr. Kuhla
has been President and Chief Operating Officer of Albany Molecular Research,
Inc., a chemical contract research organization, where he has also been a
director since 1995. From 1994 through 1998 Dr. Kuhla was Vice President of
Plexus Ventures, Inc., a business consulting firm. From 1990 to 1994, Dr. Kuhla
held senior management positions with two venture capital-backed, biotechnology
start-up companies. His early career was spent in research and development and
operations management positions with Pfizer Inc. and Rorer Group, Inc., his last
position at Rorer being Senior Vice President of Operations. Dr. Kuhla received
a Ph.D. in Organic Chemistry from Ohio State University.
Thomas N. Parks, Ph.D.
Dr. Parks, 50, has served as a director since our founding in 1986. Dr.
Parks also serves as a scientific consultant to us. He is currently the George
and Lorna Winder Professor of Neuroscience and Chairman of the Department of
Neurobiology and Anatomy at the University of Utah Medical School. Dr. Parks
joined the faculty at the University of Utah Medical School in 1978 as an
assistant professor. Dr. Parks received a Ph.D. in Psychobiology from Yale
University. He was a postdoctoral fellow in Development Neurology at the
University of Virginia Medical School.
Edward K. Rygiel
Mr. Rygiel, 61, has served as a director since the closing of our
acquisition of Allelix in December 1999. Mr. Rygiel served on the board of
Allelix since 1995. Since January 2000, Mr. Rygiel has been Executive Vice
President of MDS Inc., and since 1988 he has been President and Chief Executive
Officer of MDS Capital Corp., a subsidiary of MDS Inc. From 1988 to 2000, Mr.
Rygiel was Senior Vice President, Strategic Investments, of MDS Inc. Mr. Rygiel
currently is a director of Hemosol, Inc., a biotechnology company. Mr. Rygiel
earned a B.A.Sc. from the University of Toronto, School of Chemical Engineering.
Calvin R. Stiller, MD
Dr. Stiller, 60, has served as a director since the closing of our
acquisition of Allelix in December 1999. Mr. Stiller served on the board of
Allelix since April 1999. Since 1996, Mr. Stiller has served as Chairman and
Chief Executive Officer of Canadian Medical Discoveries Fund. Dr. Stiller served
as the Chief of the Multi-Organ Transplant Service at the University Hospital in
London, Ontario from 1984 through 1996. He is a full professor of medicine at
the University of Western Ontario. Dr. Stiller is the Chairman of the Ontario
Research and Development Challenge Fund and sits as a director of Drug Royalty
Corp. Inc., and CPL Trust, a public company. Dr. Stiller obtained his M.D. from
the University of Saskatchewan.
Peter G. Tombros
Mr. Tombros, 59, has served as a director since 1998. Since 1994, Mr.
Tombros has served as President, Chief Executive Officer, and a Director of
Enzon, Inc., a public biopharmaceutical company. Prior to joining Enzon, Mr.
Tombros spent 25 years with Pfizer, Inc., a global healthcare company. Mr.
Tombros served as Vice President of Pfizer, Inc. in the following areas:
Executive Vice President of Pfizer Pharmaceuticals, Corporate Strategic Planning
and Investor Relations. Currently, Mr. Tombros serves on the board of directors
of the following public companies: Enzon, Inc. and Alpharma, Inc., a
pharmaceutical company. Mr. Tombros received a B.S. and a M.S. from Pennsylvania
State University and an M.B.A. from the Wharton Graduate School of Business.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE IN FAVOR OF EACH NAMED NOMINEE
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5
Board Committees and Meetings
The Board has standing Audit, Compensation, and Nominating Committees each
with a formal, written charter.
The purpose of the Audit Committee is to monitor the integrity of the
Company's financial reporting process and systems of internal control, to
monitor the independence and performance of the Company's independent auditors,
to provide an avenue of communication among the independent auditors,
management, and the Board, and to provide such additional information and
materials the Audit Committee may deem necessary to make the Board aware of
significant financial matters which require the Board's attention. The Audit
committee also submits the Report of the Audit Committee set out below. During
2000, the Audit Committee was composed of three independent directors, Mr.
Klein, Dr. Parks, and Mr. Rygiel. Mr. Kuhla and Mr. Groninger served on the
Audit Committee through May 2000 when they moved to the Nominating Committee and
the Compensation Committee, respectively. The Audit Committee met three times
during the fiscal year ended December 31, 2000. A copy of the Audit Committee
Charter is included in this Proxy Statement as Appendix A.
The Compensation Committee's functions include: establishing, reviewing,
and overseeing salaries, incentive compensation, and other forms of compensation
paid to officers and employees of the Company; administering the Company's
incentive compensation and benefit plans, including the 1998 Stock Option Plan,
1994 Employee Stock Purchase Plan, the 1994 Equity Incentive Plan, and the 1987
Stock Option Plan; and performing such other functions regarding compensation as
the Board of Directors may delegate. The Compensation Committee reviews the
performance of the Company's officers, particularly the CEO and submits the
Report of the Compensation Committee set out below. During 2000, the
Compensation Committee was composed of non-employee directors, Mr. Tombros, Mr.
Costa, Mr. Evans, and Mr. Groninger. Mr. Klein served on the Compensation
Committee through May 2000 when he became Chairman of the Audit Committee. The
Compensation Committee met two times during the fiscal year ended December 31,
2000.
The Nominating Committee's functions include: evaluating Director
performance on at least an annual basis; providing information and materials
relating to the nomination of directors; interviewing, nominating, and
recommending individuals for membership on the Company's Board of Directors and
its committees; and performing such other functions as the Board of Directors
may delegate. The Nominating Committee will consider nominees for directors
nominated by stockholders upon submission in writing to the Secretary of the
Company of the names of such nominees, together with their qualifications for
service as a director of the Company. In order for any nominees for directors
nominated by stockholders to be considered by the Nominating Committee, such
nominations must be submitted no later than December 1st of the year preceding
the Annual Meeting. During 2000, the members of the Nominating Committee were
Dr. Kuhla, Mr. James U. Jensen, and Dr. Stiller. The Nominating Committee did
not meet during the fiscal year ended December 31, 2000.
During the fiscal year ended December 31, 2000, the Board of Directors held
nine meetings. At certain meetings for limited periods of time and for limited
considerations, the Board met as an Executive Committee where only the
independent directors and the Chairman were represented on such Executive
Committee, and where only such committee members were present. Each Board member
standing for reelection attended 75% or more of the aggregate of the meetings
held by the Board and by the respective committees on which such Board member
served during the period for which he or she was a director or a member of such
committee.
6
PROPOSAL 2
RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS
The Board of Directors has selected KPMG LLP as the Company's independent
auditors for the fiscal year ending December 31, 2001, and has further directed
that management submit the selection of independent public auditors for
ratification by the stockholders at the Annual Meeting. KPMG has audited the
Company's financial statements since the Company's inception in 1986.
Representatives of KPMG 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.
Audit Fees.
KPMG served as independent auditors to the Company for the fiscal year
ended December 31, 2000. Fees for the audit of the Company's annual
financial statements and reviews of our quarterly financial statements
included in our reports on Form 10-Q for 2000 were $91,000.
Financial Information Systems Design and Implementation Fees.
No services were performed by, and no fees were incurred to KPMG in
connection with financial information systems design and implementation
projects for 2000.
All Other Fees.
The aggregate fees invoiced to the Company by KPMG for all other services
for 2000 were $438,600.
Stockholder ratification of the selection of KPMG as the Company's
independent auditors is not required by the Company's Bylaws or otherwise.
However, the Board is submitting the selection of KPMG to the stockholders for
ratification as a matter of good corporate practice. If the stockholders fail to
ratify the selection, the Board will reconsider whether or not to retain that
firm. Even if the selection is ratified, the Board in its discretion may direct
the appointment of a different independent accounting firm at any time if the
Board determines that such a change would be in the best interests of the
Company and its stockholders.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE IN FAVOR OF PROPOSAL 2
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7
REPORT OF THE AUDIT COMMITTEE (1)
for 2000
The Audit Committee of the Board is responsible for, among other things,
considering the appointment of the independent auditors for the Company,
reviewing with the auditors the plan and scope of the audit and audit fees,
monitoring the adequacy of reporting and internal controls, and meeting
periodically with independent auditors. Under the rules of the National
Association of Securities Dealers, all of the members of the Audit Committee are
independent.
In 2000, the Audit Committee approved and adopted a written Audit Committee
Charter, which is attached to this Proxy Statement as Appendix A.
In connection with the December 31, 2000 audited financial statements, the
Audit Committee (1) reviewed and discussed the audited financial statements with
management; (2) discussed with the independent auditors the matters required to
be discussed by Statement on Auditing Standards No. 61; and (3) received and
discussed with the auditors the written disclosures and the letter from the
independent accountants required by Independence Standards Board Statement No. 1
and considered the compatibility of non-audit services with the auditor's
independence. The Committee also met with the Company's Chief Financial Officer
and the Company's Controller and utilized such services of the Company, as the
Committee thought reasonably necessary. Based upon all these reviews and
discussions, the Audit Committee has recommended to the Board of Directors, and
the Board of Directors has approved, that the Company's audited financial
statements be included in the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 2000.
The Audit Committee
Joseph Klein, III, Chairman
Thomas N. Parks
Edward Rygiel
___________________________
(1) This Report of the Audit Committee shall not be deemed incorporated by
reference in previous or future documents filed by the Company with the
Securities and Exchange Commission under the Securities Act of 1933 or
under the Securities Exchange Act of 1934, except to the extent the Company
specifically incorporates this Report by reference in any such document..
8
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the ownership
of NPS common stock as of April 9, 2001 by: (a) all those known by the Company
to be beneficial owners of more than five percent of the Company's common stock;
(b) each current director and nominee for director; (c) each of the executive
officers named in the Summary Compensation Table; and (d) all executive officers
and directors of the Company as a group.
Name and Address of Beneficial Owner Amount of Beneficial Percent of
------------------------------------ -------------------- ----------
(unless otherwise noted) Ownership Total 1
--------- -----
T. Rowe Price Associates, Inc./2/ 2,474,900 8.30%
100 E. Pratt Street
Baltimore, MD 21202
Scudder Kemper Investments, Inc. 1,948,300 6.54%
345 Park Avenue
New York, NY 10154-0010
Merlin BioMed Group, LLC 1,705,400 5.72%
230 Park Avenue, Suite 928
New York, NY 10169
Hunter Jackson, Ph.D./3/ 589,555 1.96%
Calvin R. Stiller/4/ 442,030 1.48%
Thomas N. Parks, Ph.D./5/ 365,180 1.22%
Edward F. Nemeth, Ph.D./6/ 264,667 *
John R. Evans/7/ 152,322 *
Thomas B. Marriott, Ph.D./8/ 150,719 *
James U. Jensen, J.D./9/ 109,149 *
Edward K. Rygiel/10/ 85,104 *
Joseph Klein, III /11/ 76,280 *
James G. Groninger/12/ 19,760 *
Donald E. Kuhla, Ph.D./13/ 63,180 *
Robert K. Merrell/14/ 60,600 *
Peter Tombros/15/ 22,020 *
Santo J. Costa, J.D./16/ 10,280 *
All directors and executive officers as a group/17/ 2,559,915 8.31%
________________________
* Means less than 1%.
The above table is based upon information supplied by officers, directors,
and principal stockholders and Schedules 13D and 13G filed with the
Commission. Beneficial ownership is determined in accordance with the rules
of the Commission and generally includes voting or investment power with
respect to securities.
Except as set forth herein, the address of the persons set forth above is
the address of the Company appearing elsewhere in this Proxy Statement.
9
(1) The number of shares of common stock issued and outstanding on April 9,
2001 was 29,801,939 shares, which amount includes 911,898 exchangeable
shares. The calculation of percentage ownership for each listed beneficial
owner is based upon the number of shares of common stock issued and
outstanding at April 9, 2001, plus shares of common stock subject to
options held by such person at April 9, 2001 and exercisable within 60 days
thereafter. The persons and entities named in the table have sole voting
and investment power with respect to all shares shown as beneficially owned
by them, except as noted below.
(2) These securities are owned by various individual and institutional
investors including T. Rowe Price New Horizons Fund, Inc. which owns
1,400,000 shares, which represents 5.78% of the shares outstanding, for
which T. Rowe Price Associates, Inc. serves as investment adviser with
power to direct investments and/or sole power to vote the securities. For
purposes of the reporting requirements of the Securities Exchange Act of
1934, T. Rowe Price Associates is deemed to be a beneficial owner of such
securities; however, T. Rowe Price Associates expressly disclaims that it
is, in fact, the beneficial owner of such securities.
(3) Includes 271,553 shares held in a trust and 2 shares held by Dr. Jackson's
children, of which he disclaims beneficial ownership. Also includes 318,000
shares subject to options exercisable within 60 days of April 9, 2001.
(4) Includes 432,044 shares held by Canadian Medical Discoveries Fund, of which
Dr. Stiller disclaims beneficial ownership. Also includes 8,586 shares
subject to options exercisable within 60 days of April 9, 2001.
(5) Includes 10,000 shares held in a trust of which Dr. Parks disclaims
beneficial ownership. Also includes 22,680 shares subject to options
exercisable within 60 days of April 9, 2001.
(6) Includes 189,000 shares subject to options exercisable within 60 days of
April 9, 2001.
(7) Includes 21,473 shares subject to options exercisable within 60 days of
April 9, 2001.
(8) Includes 3,241 shares held by spouse, 721 shares held by children, of which
Mr. Marriott disclaims beneficial ownership. Also includes 134,000 shares
subject to options exercisable within 60 days of April 9, 2001.
(9) Includes 52,200 shares subject to options exercisable within 60 days of
April 9, 2001.
(10) Includes 63,954 shares held by NeuroScience Partners, L.P.; MDS Health
Ventures (TC) Inc.; and MDS Health Ventures (PC) Inc.; of which Mr. Rygiel
disclaims beneficial ownership. Also includes 18,950 shares subject to
options exercisable within 60 days of April 9, 2001.
(11) Includes 16,680 shares subject to options exercisable within 60 days of
April 9, 2001.
(12) Includes 1,000 shares owned by spouse of which Mr. Groninger disclaims
beneficial ownership. Also includes 13,860 shares subject to options
exercisable within 60 days of April 9, 2001.
(13) Includes 13,680 shares subject to options exercisable within 60 days of
April 9, 2001.
(14) Includes 51,600 shares subject to options exercisable within 60 days of
April 9, 2001.
(15) Includes 12,420 shares subject to options exercisable within 60 days of
April 9, 2001.
(16) Includes 7,680 shares subject to options exercisable within 60 days of
April 9, 2001.
(17) Includes 18 people. An aggregate of 1,006,897 shares are subject to options
held by such 18 people and exercisable within 60 days of April 9, 2001.
10
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Exchange Act requires the Company's directors and
executive officers, and persons who own more than 10% of the Company's common
stock, to file with the Commission reports of ownership and changes in ownership
of NPS common stock. Officers, directors, and greater than 10% stockholders are
required by the Commission 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 or written representations that no other
reports were required, during the fiscal year ended December 31, 2000, the
Company believes that all reporting persons complied with all applicable Section
16(a) filing requirements except that Mr. Rygiel and Dr. Stiller each filed late
Form 4s, reporting sales of common stock held by Canadian Medical Discoveries
Fund and NeuroScience Partners, L.P.
EXECUTIVE COMPENSATION
----------------------
Compensation of Directors
The Company's directors do not currently receive any cash compensation for
service on the Board or any Committee thereof. Outside directors are reimbursed
for out-of-pocket expenses in connection with attendance at Board and Committee
meetings. Directors are eligible to receive stock options and stock bonuses
under the stock plans described below.
1994 Non-Employee Directors' Stock Option Plan
- ----------------------------------------------
In January 1994, the Board adopted, and the stockholders subsequently
approved, the 1994 Non-Employee Directors' Stock Option Plan (Directors' Plan).
An amendment to increase from 90,000 to 160,000 the number of shares available
for grant under the Directors' Plan was approved by the stockholders in July
1996. In May 1999 a subsequent amendment was approved by stockholders to
increase the number of shares available for issuance from 160,000 to 260,000.
Under the Directors' Plan, non-employee directors of the Company are eligible to
receive options. Options granted under the Directors' Plan are automatic and
non-discretionary and do not qualify as ISOs. Pursuant to the terms of the
Directors' Plan, each person who is elected for the first time to be an outside
director of the Company and who is not otherwise employed by the Company or an
affiliate of the Company (a "Non-Employee Director") will automatically be
granted an option to purchase 15,000 shares of common stock (subject to
adjustment as provided in the Directors' Plan) upon the date of his or her
election to the Board. Originally, under the Directors' Plan, on December 1 of
each year, each person who was then a Non-Employee Director and had been a Non-
Employee Director for at least three months was automatically granted an option
to purchase 3,000 shares of common stock. In May 2000, this date was amended to
provide that the grant date would be the same date as the grant date for
employee options, which date was historically in December and was changed to May
as part of arrangements made by the Company incident to the Company's
acquisition of Allelix Biopharmaceuticals Inc., effective December 29, 1999.
No option granted under the Directors' Plan may be exercised after the
expiration of ten years from the date such option was granted. Options granted
under the Directors' Plan vest at a rate of 28% of the shares subject to the
option one year after date of grant and 3% of the shares become exercisable each
month thereafter, so long as the optionee has, during the entire period prior to
such vesting date, continuously served as a non-employee director or in other
continuous affiliation as provided under the Directors' Plan. If the optionee's
service as a non-employee director terminates for any reason other than death,
the option will remain exercisable for twelve months after the date of
termination, of such directorship or later if other affiliations with the
Company continued thereafter, or until the option's expiration date, if earlier.
If the optionee dies, the option will remain exercisable for eighteen months
following the date of death or until the expiration date of the option,
whichever is earlier. In the event of a change in control transaction in which
the Company is not the surviving corporation, or in which more than 50% of the
shares of the Company's common stock entitled to vote are exchanged, the time
during which options outstanding under the Directors' Plan vest shall be
accelerated. The exercise price of options granted under the Directors' Plan is
100% of the fair market value of the common stock on the date of grant. Options
granted under the Directors' Plan are generally non-transferable. Unless
otherwise terminated by the Board, the Directors' Plan automatically terminates
in January 2004.
As of December 31, 2000, options to purchase a total of 42,490 shares of
common stock had been exercised under the Directors' Plan at an exercise price
of $3.00 per share. As of that date, options to purchase 195,180 shares of
common stock with exercise prices from $3.00 to $26.75 per share and a weighted
average exercise price per share of $9.53 were outstanding. Prior to the
adoption of the Directors' Plan, the Company granted options to directors under
the 1987 Stock Option Plan.
11
Non-Employee Directors' Stock Bonus Program
- -------------------------------------------
In December 1994, the Board adopted the Non-Employee Directors' Stock Bonus
Program under the 1994 Equity Incentive Plan (Stock Bonus Program). Under the
Stock Bonus Program, non-employee directors are eligible to receive grants of
shares of common stock for attendance at Board and Committee meetings. The Stock
Bonus Program provides each Non-Employee Director of the Company with a non-
discretionary award of 200 shares of common stock for each Board meeting
attended and through December 31, 2000, 200 shares of common stock per year for
serving on a Board Committee. Beginning in January 2001, this same formulas
remains in effect except that each non-employee director will receive 200 shares
of common stock for each committee meeting attended and no shares for membership
on such committee. A total of 17,800 shares were granted under the Stock Bonus
Program for meetings attended in 2000.
The right to receive awards under the Stock Bonus Program is generally non-
transferable. The stock awards are usually made during the first quarter of each
year for Board activities during the previous year. Non-employee directors
entitled to stock bonus awards shall not possess any rights of a stockholder of
the Company until such shares are delivered to the non-employee director. Unless
otherwise terminated by the Board, the Stock Bonus Program terminates in January
2004.
Compensation of Executive Officers
The following table shows for the fiscal years ended December 31, 2000,
December 31, 1999 and December 31, 1998, certain compensation awarded, paid to,
or earned by, the Company's Chief Executive Officer and its other four most
highly compensated executive officers (the "Named Executive Officers"):
Summary Compensation Table
Annual Compensation Long-Term Compensation
Name and Principal Position Year Salary($) Other($) Stock Options Granted(#)
--------------------------- ---- --------- -------- ------------------------
Hunter Jackson, Ph.D. 2000 309,642 152,620 (1) 40,000
Chief Executive Officer, President and 1999 275,619 4,800 (2) 40,000
Chairman of the Board
1998 264,231 60,000
James U. Jensen, J.D. 2000 190,115 5,100 (2) 20,000
Vice President, Corporate Development 1999 182,758 4,800 (2) 20,000
and Legal Affairs and Secretary
1998 173,539 30,000
Thomas B. Marriott, Ph.D. 2000 197,404 5,100 (2) 20,000
Vice President, Development Research 1999 189,757 4,800 (2) 20,000
1998 182,846 30,000
Robert K. Merrell 2000 161,538 5,100 (2) 20,000
Vice President, Finance, Chief Financial 1999 155,272 4,800 (2) 24,000
Officer, and Treasurer
1998 149,569 30,000
Edward F. Nemeth, Ph.D. 2000 181,531 2,726 (2) 20,000
Vice President, and Chief Scientific 1999 173,758 2,621 (2) 20,000
Officer
1998 165,754 30,000
(1) Represents payments by the Company in 2000 for expenses incurred in
connection with Dr. Jackson's relocation to Toronto, Canada, including
moving, transportation, legal and tax services, and costs incurred by Dr.
Jackson in connection with selling his prior residence and purchasing a
residence in Toronto ($147,520); and 401(k) Company match ($5,100).
(2) 401(k) Company match
12
1987 Stock Option Plan
- ----------------------
The 1987 Stock Option Plan (1987 Plan) was adopted in June 1987. The purposes
of the 1987 Plan were to attract and retain qualified personnel, to provide
additional incentives to employees, officers, advisors, directors, and
consultants of the Company, and to promote the success of the Company's
business. No options have been granted under the 1987 Plan since December 1993,
and the Company will not make any future grants under the 1987 Plan. As of
December 31, 2000, options to purchase a total of 1,111,392 shares of common
stock had been exercised for cash and services under the 1987 Plan at a weighted
average exercise price of $0.91 per share. As of December 31, 2000, options to
purchase a total of 197,550 shares of common stock were outstanding, with
exercise prices ranging from $0.67 to $2.00 per share and a weighted average
exercise price per share of $1.70.
Options granted under the 1987 Plan generally became exercisable at a rate of
one-third of the shares subject to the option on the first anniversary of the
option grant and one-third of the remaining shares subject to the option on each
of the second and third anniversary of the option grant. In the event of a
change in control transaction, all outstanding, unvested options shall vest and
become immediately exercisable. The maximum term of a stock option under the
1987 Plan was ten years; however, if the optionee at the time of grant had
voting power over more than ten percent of the Company's outstanding capital
stock (a "10% Holder"), the maximum term of any ISO granted under the 1987 Plan
was five years. The aggregate fair market value of the stock with respect to
which ISOs are exercisable for the first time by an optionee in any calendar
year may not exceed $100,000. The exercise prices of ISOs granted under the 1987
Plan were at least equal to 100%, 110% with respect to 10% Holders, of the fair
market value of the stock subject to the option on the date of grant. Although
no minimum exercise price of NSOs was required under the 1987 Plan, the exercise
price of NSOs previously granted under the 1987 Plan generally has been at least
equal to the fair market value of the stock subject to the option on the date of
the grant. Any option that is exercisable at the time of grant and which expires
no sooner than three years from the grant date is subject to an option exercise
price equal to the fair market value of the option on the grant date.
1994 Equity Incentive Plan
- --------------------------
In January 1994, the Board adopted the 1994 Equity Incentive Plan (1994
Plan), which was subsequently approved by the stockholders in February 1994.
Under the 1994 Plan, 1,702,503 shares have been authorized for issuance. The
purposes of the 1994 Plan are to attract and retain qualified personnel, to
provide additional incentives to employees, officers, directors, and consultants
of the Company and its affiliates and to promote the success of the Company's
business. Under the 1994 Plan, the Company may grant NSOs to employees,
officers, directors, and consultants to the Company and its affiliates, and may
grant ISOs to employees of the Company and its affiliates. As of December 31,
2000, options to purchase a total of 618,179 shares of common stock had been
exercised for cash and services under the 1994 Plan at a weighted average
exercise price of $7.93 per share. As of December 31, 2000, options to purchase
779,580 shares of common stock were outstanding with exercise prices ranging
from $3.00 to $14.50 per share, and a weighted average exercise price per share
of $8.64.
Options granted under the 1994 Plan prior to December 1, 1997, generally
become exercisable at a rate of 28% of the shares subject to the option at the
end of the first year and 3% of the shares subject to the option at the end of
each calendar month thereafter. Options granted under the 1994 Plan after
December 1, 1997 generally become exercisable at a rate of 28% of the shares
subject to the option at the end of the first year and 2% of the shares subject
to the options at the end of each calendar month thereafter. The maximum term of
a stock option under the 1994 Plan is ten years; however, if the optionee who is
granted an ISO at the time of grant is a 10% Holder, the maximum term of any ISO
granted under the 1994 Plan is five years. If an optionee terminates his or her
service to the Company, the optionee may exercise only those option shares
vested as of the date of termination and must effect such exercise within three
months of termination of service for any reason other than death or disability,
one year after termination due to disability, and eighteen months after
termination due to death. In the event of a change in control transaction, all
outstanding, unvested options shall vest and become immediately exercisable. The
aggregate fair market value with respect to which ISOs are exercisable for the
first time by an optionee in any calendar year may not exceed $100,000. The
exercise price of ISOs granted under the 1994 Plan must be at least 100%, 110%
with respect to 10% Holders, of the fair market value of the common stock of the
Company on the date of grant. The exercise price of NSOs granted under the 1994
Plan is the fair market value of the Company's common stock on the date of grant
or such other exercise price as is set by the Board at the date of grant.
Payment of the exercise price may be made in cash or by shares of NPS common
stock valued at the fair market value of such shares on the date of exercise or
in any other form acceptable to the Board. The 1994 Plan also allows the Company
to grant stock bonuses, reload options, rights to purchase restricted stock, and
stock appreciation rights. The 1994 Plan may be amended at any time by the
Board, although certain amendments require stockholder approval. The 1994 Plan
will terminate in January 2004, unless earlier terminated by the Board.
13
1998 Stock Option Plan
- ----------------------
On March 3, 1998, the Board adopted the 1998 Stock Option Plan (1998 Plan),
which was subsequently approved by the stockholders on May 20, 1998. One million
shares were authorized for issuance under the 1998 Plan. Pursuant to Board and
shareholder approval, this amount was increased to three million shares in June
2000. The purposes of the 1998 Plan are to attract and retain qualified
personnel, to provide additional incentives to employees, officers, directors,
and consultants of the Company, and its affiliates, and to promote the success
of the Company's business. Under the 1998 Plan, the Company may grant NSOs to
employees, officers, directors, and consultants of the Company, and its
affiliates, and may grant ISOs to employees of the Company, and its affiliates.
As of December 31, 2000, options to purchase a total of 101,615 shares of common
stock had been exercised for cash and services under the 1998 Plan at a weighted
average exercise price of $6.63 per share. As of December 31, 2000, options to
purchase 1,213,895 shares of common stock were outstanding with exercise prices
ranging from $4.50 to $56.3125 per share, and a weighted average exercise price
per share of $9.30.
Options granted under the 1998 Plan generally become exercisable at a rate of
28% of the shares subject to the option at the end of the first year and 2% of
the shares subject to the options at the end of each calendar month thereafter.
The maximum term of a stock option under the 1998 Plan is ten years; however, if
the optionee who is granted an ISO at the time of grant is a 10% Holder, the
maximum term of any ISO granted under the 1998 Plan is five years. If an
optionee terminates his or her service to the Company, the optionee may exercise
only those option shares vested as of the date of termination and must effect
such exercise within three months of termination of service for any reason other
than death or disability, one year after termination due to disability, and
eighteen months after termination due to death. In the event of a change in
control transaction, all outstanding, unvested options shall vest and become
immediately exercisable. The aggregate fair market value with respect to which
ISOs are exercisable for the first time by an optionee in any calendar year may
not exceed $100,000. The exercise price of ISOs granted under the 1998 Plan must
be at least 100%, 110% with respect to 10% Holders, of the fair market value of
NPS common stock on the date of grant. The exercise price of NSOs granted under
the 1998 Plan is the fair market value of NPS common stock on the date of grant
or such other exercise price as is set by the Board at the date of grant.
Payment of the exercise price may be made in cash or by shares of NPS common
stock valued at the fair market value of such shares on the date of exercise or
in any other form acceptable to the Board.
The 1998 Plan may be amended at any time by the Board, although certain
amendments require stockholder approval. The 1998 Plan will terminate in May
2008, unless earlier terminated by the Board.
1994 Employee Stock Purchase Plan
- ---------------------------------
In January 1994, the Board adopted the 1994 Employee Stock Purchase Plan
(ESPP) which was subsequently approved by the stockholders in February 1994.
There were a total of 90,000 shares reserved for issuance under the ESPP.
Pursuant to Board and stockholder approval this amount was increased to 160,000
shares in 1996 and to 260,000 in 1999. As of December 31, 2000, a total of
165,206 shares of common stock had been purchased under the ESPP at prices from
$2.76 to $34.37 per share. During 2000, under the ESPP, executive officers as a
group purchased 4,675 shares at an average weighted purchase price of $7.87 per
share and all employees (excluding executive officers) as a group purchased
12,568 shares at an average exercise price of $7.87 per share.
The purpose of the ESPP is to assist the Company in retaining the services of
its employees, to secure and retain the services of new employees, and to
provide incentives for such persons to exert maximum efforts for the success of
the Company. The ESPP provides a means by which employees of the Company and its
affiliates may purchase common stock of the company at a discount through
accumulated payroll deductions. The rights to purchase common stock granted
under the ESPP are intended to qualify as options issued under an "employee
stock purchase plan" as that term is defined in Section 423(b) of the Code. The
ESPP is implemented by offerings of rights to eligible employees. Eligible
participants in the ESPP include all employees, including executive officers who
work at least 20 hours per week and are customarily employed by the Company or
an affiliate of the Company for at least five months per calendar year.
Generally, each offering is of 24 months' duration with purchases occurring
every six months. Participants may authorize payroll deductions of up to 15% of
their base compensation for the purchase of common stock under the ESPP. The
ESPP will terminate in January 2004.
14
The following table sets forth each grant of options to purchase common stock
made during the year ended December 31, 2000 to each of the Named Executive
Officers. Grants of options to each of the Named Executive Officers were made
under the 1998 Plan:
OPTION GRANTS IN 2000
Potential Realizable Value at Assumed
Securities Annual Rates of Stock
Underlying % of Total Options Exercise Price Appreciation
Name Options Granted in or Base Price Expiration for Option Term (2)
------ Granted Fiscal Year Per Share Date (1) 5% 10%
-------- ------------------ --------- ----------- -------- --------
Hunter Jackson 40,000 5.6% $10.75 5/24/10 $270,425 $685,309
James U. Jensen 20,000 2.8% $10.75 5/24/10 $135,212 $342,655
Thomas B. Marriott 20,000 2.8% $10.75 5/24/10 $135,212 $342,655
Robert K. Merrell 20,000 2.8% $10.75 5/24/10 $135,212 $342,655
Edward F. Nemeth 20,000 2.8% $10.75 5/24/10 $135,212 $342,655
______________________
(1) These options have a ten-year term, subject to earlier termination upon
death, disability, or termination of employment.
(2) The potential realizable value is calculated based on the term of the
option at its time of grant (ten years). It is calculated by assuming that
the stock price on the date of grant appreciates at the indicated annual
rate compounded annually for the entire term of the option and that the
option is exercised and sold on the last day of its term for the
appreciated stock price. No gain to the optionee is possible unless the
stock price increases over the option term, which will benefit all
stockholders.
The following table sets forth information for fiscal year ended
December 31, 2000 with respect to (a) the exercise of stock options by the Named
Executive Officers in 2000; (b) the number of unexercised options held by the
Named Executive Officers as of December 31, 2000; and (c) the value of
unexercised in-the-money options as of December 31, 2000.
OPTION EXERCISES IN 2000 AND YEAR-END VALUE TABLE
Number of Value of In-the-Money
Shares Acquired Value Unexercised Options Options (2)
Name On Exercise Realized (1) Exercisable Unexercisable Exercisable Unexercisable
----- ----------- ------------- ----------- ------------- ----------- -------------
Hunter Jackson 0 $ 0 292,400 97,600 $12,306,225 $3,904,400
James U. Jensen 44,600 $ 909,619 46,600 48,800 $ 1,804,975 $1,952,200
Thomas B. Marriott 10,000 $ 235,625 129,200 48,800 $ 5,327,675 $1,952,200
Robert K. Merrell 61,000 $1,134,626 38,320 51,680 $ 1,499,770 $2,077,281
Edward F. Nemeth 0 $ 0 211,200 48,800 $ 9,055,650 $1,952,200
_________________
(1) Value realized is based on the fair market value of NPS common stock on the
date of exercise (the closing sales price reported on the Nasdaq National
Market on such date) minus the exercise price, and does not necessarily
indicate that the optionee sold such stock.
(2) Represents the difference between the option exercise price and the closing
price of NPS common stock as reported on the Nasdaq National Market on
December 31, 2000 ($48.00) times the corresponding number of shares. On
April 9, 2001 the closing price of the Company's common stock was $21.75 as
reported on the Nasdaq National Market.
15
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Consulting Agreement with Plexus
Dr. Kuhla, one of our directors since 1991, was a Vice President of Plexus
Ventures from February 1994 through June 1998. We had a consulting agreement
with Plexus through December 31, 1995, under which Plexus assisted us with our
efforts to establish a collaboration for our hyperparathyroidism program. Plexus
may earn an additional $400,000 in fees as we receive payments from Amgen. We
also granted Plexus an option to purchase 20,000 shares of our common stock at
$10.50 per share, with vesting contingent on milestone payments from Amgen. Dr.
Kuhla holds a one-third interest in Plexus.
Consulting Agreement with Dr. Kuhla
We also entered into a Consultant Services Agreement with Dr. Kuhla,
effective November 1, 1996, under which Dr. Kuhla provides us with scientific
consulting services. In return for those services, Dr. Kuhla is paid with shares
of our common stock. In fiscal year 2000, Dr. Kuhla received no shares of our
common stock under the consulting services agreement.
Pharmaceutical Services Agreement with MDS
Dr. Evans, a director and vice-chairman of our board since December 1999,
is a director of MDS, Inc. In addition, Mr. Rygiel, a director since December
1999 is Executive Vice President of MDS, Inc. In February 2000, NPS Allelix
entered into a Pharmaceutical Services Agreement with MDS, Inc. for clinical
laboratory services related to clinical trials with ALX1-11. In March 2000, NPS
Allelix also entered into a Clinical Laboratory Analysis Agreement with Harris
Laboratories, a subsidiary of MDS, Inc. Under the agreements, NPS Allelix
expects to pay to MDS approximately $1.8 million over the next three years for
services rendered under the agreements.
Contract Research Agreement with Quintiles
Mr. Costa, a director since 1995, is Vice Chairman of Quintiles
Transnational Corporation. NPS Allelix entered into an agreement with Quintiles
Canada, Inc., a subsidiary of Quintiles, under which Quintiles will provide
certain contract research services with respect to clinical trials of ALX1-11.
Under the terms of the agreement, NPS Allelix expects to pay approximately $7.3
million to Quintiles over the next three years for services rendered under the
agreement.
Consulting Agreement with Tamar Howson
Ms. Howson, who was recently appointed to our board of directors, has
entered into a one-year consulting services agreement with us, effective July
2000 under which she will provide general consulting services. We agreed to pay
Ms. Howson $144,000 per year under the agreement and granted her an option to
purchase 24,000 shares of our common stock at $28.50 per share. The Company and
Ms. Howson have made no decision concerning any extension or renewal of that
one-year consulting services agreement.
Indemnification Agreements
The Company's policy is to enter into agreements with each of its directors
and executive officers providing for the indemnification of such persons to the
fullest extent permitted by law for any liability they may incur by reason of
their service as officers and/or directors to the Company. The Company has
entered into indemnity agreements with each of its directors and executive
officers.
16
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Mr. Tombros, Mr. Costa, Mr. Evans, and Mr. Groninger, and Mr. Klein
(through May 2000) served on the Compensation Committee during the fiscal year
2000. No officer or employee of the Company sits on the Compensation Committee.
No member of the Compensation Committee has at any time been an officer or
employee of the Company. Mr. Groninger is a brother-in-law of Dr. Jackson, the
Company's Chief Executive Officer, President and Chairman of the Board. Mr.
Groninger abstains from participating in the determination of the proper
compensation package for Dr. Jackson.
Pharmaceutical Services Agreement with MDS
Dr. Evans, a director and vice-chairman of our board since December 1999,
is a director of MDS, Inc. In addition, Mr. Rygiel, a director since December
1999 is Executive Vice President of MDS, Inc. In February 2000, NPS Allelix
entered into a Pharmaceutical Services Agreement with MDS, Inc. for clinical
laboratory services related to clinical trials with ALX1-11. In March 2000, NPS
Allelix also entered into a Clinical Laboratory Analysis Agreement with Harris
Laboratories, a subsidiary of MDS, Inc. Under the agreements, NPS Allelix
expects to pay to MDS approximately $1.8 million over the next three years for
services rendered under the agreements.
Contract Research Agreement with Quintiles
Mr. Costa, a director since 1995, is Vice Chairman of Quintiles
Transnational Corporation. NPS Allelix entered into an agreement with Quintiles
Canada, Inc., a subsidiary of Quintiles, under which Quintiles will provide
certain contract research services with respect to clinical trials of ALX1-11.
Under the terms of the agreement, NPS Allelix expects to pay approximately $7.3
million to Quintiles over the next three years for services rendered under the
agreement.
17
REPORT OF THE COMPENSATION COMMITTEE(1)
for 2000
The Compensation Committee (the "Committee") evaluates the performance of
management and determines compensation policies and levels for the Company's
executive officers, including the named executive officers in the summary
compensation table of this Proxy Statement. During 2000, the Committee consisted
of four directors, each of whom is an independent, non-employee director.
Compensation Policy
The Committee believes that it is critical to the Company's success that
the Company utilizes programs designed to attract, retain, and motivate highly
talented and team oriented employees at all levels. Compensation programs are
also designed to encourage the attainment of corporate objectives on a
collective effort. In an effort to set appropriate levels of compensation for
the executive officers, the Committee utilizes the advice of compensation
consultants engaged by the Company and reviews the result of an annual
compensation survey of similarly situated biotechnology/biopharmaceutical
companies.
Executive compensation includes a combination of cash, in the form of a
fixed salary, and long-term incentive compensation, in the form of stock options
that vest over time. The Company has rarely granted individual cash bonuses or
options contingent on stated events for individual executives and the Company
does not have a formal bonus program in place.
Salaries
Base salaries represent the fixed component of the Company's executive
compensation package. Salary compensation is determined by evaluating the
compensation of executives in similar positions in peer biotechnology and
pharmaceutical companies, the level of experience of the particular executive
officer, and the executive officer's specific responsibilities. The Committee
also evaluates individual performance and the achievement of Company objectives
in determining base salaries for the executive officers.
The Committee also receives the recommendation of the Company's CEO
concerning salary for each executive as part of a general company-wide salary
assessment performed by Company management.
Long-Term Incentives
The Company seeks to encourage the long-term retention of executive
officers by equity purchase programs and equity-based compensation. The
executive officers are eligible to participate in the Company's Employee Stock
Purchase Plan, and participating executives receive the price discount allowed
by applicable laws and regulations. Additionally, all executive officers are
eligible to participate in the Company's 401(k) retirement plan. Beginning in
1999, the Company contributed to each executive officer's 401(k) account at the
rate of 50% of the employee's direct contribution up to a maximum contribution
by the Company of the lesser of 3% of the employee's salary, or $5,100 for the
year 2000.
Potentially, the most valuable long-term incentive compensation is the
granting of stock options. The granting of stock options at all levels of the
Company is an integral part of the Company's compensation philosophy and policy.
The Committee believes that options vesting over a period of years align the
interests of the employees with the long-term interests of the Company and its
stockholders. Stock option grants have been made, historically, during the first
part of December. In May 2000, the Board changed the annual grant date from
December to May as part of arrangements made incident to the Company's
acquisition of Allelix in late December 1999. Grants for 2000 occurred in May,
not December, and the Committee expects this practice to continue. Executives
received grants vesting over four years and generally in the same amounts as for
prior years. Customarily, the grants to all Vice Presidents have been in the
same amounts with variations based on subjective factors and upon the
recommendation of the CEO. This practice was followed again in 2000.
18
CEO Evaluation and Compensation
The Chief Executive Officer was a founder of the Company in 1986 and has
served in that capacity since then. In order to determine the appropriate salary
increase and stock option grant for the Chief Executive Officer, the
Compensation Committee considered the salaries of other chief executive officers
in the biotechnology industry, the results of the formal evaluation of the CEO
and Company accomplishments in 2000. Significant progress was made in several
areas and the Company met or exceeded most of its performance goals. Included
within these accomplishments were each of the Company's financings, which
resulted in gross proceeds to the Company of $240 million and the development
agreement with Abbott for NPS 1776. The following developments also were
considered: Dr. Jackson's overall leadership of the Company as President, CEO,
and Chairman of the Board; the overall status and progress of the Company's
strategic partnerships; the continued progress of NPS compounds in discovery and
in the clinic; and progress in integrating the operations of Allelix with
ongoing operations of the Company. In December 2000, the Committee recommended
an increase in compensation for the CEO for 2000. The CEO and the Board then
implemented this increase to the annual rate of $386,000 effective January 1,
2001.
Policy Regarding Deductibility
We are required to disclose our policy regarding qualifying executive
compensation for deductibility under Section 162(m) of the Code, which provides
that, for purposes of regular income tax and the alternative minimum tax, the
allowable deduction for compensation paid or accrued with respect to a covered
employee of a publicly-held corporation is limited to no more than $1 million
per year. We do not anticipate that compensation payable to any executive
officer will exceed $1 million for fiscal year 2001. The Committee will continue
to evaluate the advisability of qualifying the deductibility of such
compensation in the future.
Compensation Committee
Peter Tombros, Chairman
Santo J. Costa
John R. Evans
James G. Groninger
April 2001
19
PERFORMANCE MEASUREMENT COMPARISON (1)
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN*
AMONG NPS PHARMACEUTICALS, INC., THE NASAQ STOCK MARKET-US
INDEX AND THE NASDAQ PHARMACEUTICALS INDEX
[GRAPH]
*$100 INVESTED ON 12/31/95 IN STOCK OR INDEX, INCLUDING REINVESTMENT OF
DIVIDENDS.
FISCAL YEAR ENDING DECEMBER 31.
______________________
(1) The "Compensation Committee Report" and the "Performance Measurement
Comparison" chart are not "soliciting material," are not deemed filed with the
Commision and are not to be incorporated by reference in any filing of the
Company under the Securities Act or the Exchange Act, whether made before or
after the date hereof and irrespective of any general incorporation language in
such filing.
20
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 Annual 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/ James U. Jensen
James U. Jensen,
Secretary
April 24, 2001
A copy of the Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 2000 is available without charge upon written
request to:
NPS Pharmaceuticals, Inc.
Attn: Investor Relations
420 Chipeta Way
Salt Lake City, Utah 84108
21
"APPENDIX A"
to the
Proxy Statement
NPS Pharmaceuticals, Inc.
CHARTER OF THE AUDIT COMMITTEE
OF THE BOARD OF DIRECTORS
(adopted June 2000)
Purpose:
The Audit Committee (Committee) is appointed by the Board of Directors to assist
the Board in fulfilling its duties. The purpose of the Committee shall be to
monitor the integrity of the Company's financial reporting process and systems
of internal control, to monitor the independence and performance of the
Company's independent auditors, to provide an avenue of communication among the
independent auditors, management, and the Board, and to provide such additional
information and materials as it may deem necessary to make the Board aware of
significant financial matters which require the Board's attention.
Composition:
The Committee will be comprised of three or more members of the Board. The
members of the Committee and its Chair will be appointed by and serve at the
discretion of the Board. Each Committee member will meet the requirements
specified by the National Association of Securities Dealers (NASD) for financial
literacy and independence.
Functions and Authority:
The operation of the Committee shall be subject to the provisions of the Bylaws
of the Company, as in effect from time to time, and to Section 141 of the
Delaware General Corporation Law. The Committee shall have the full power and
authority to carry out the following responsibilities:
1. To review and reassess the adequacy of this Charter at least annually and to
have the document filed in accordance with Securities and Exchange
Commission (SEC) regulations.
2. To review with management and the independent auditors upon completion of
the audit but prior to the release of earnings and filing or distribution
of the Company's financial statements, the financial results for the year
including significant issues regarding accounting principles, practices and
judgements. To discuss any items required to be communicated by the
independent auditors in accordance with AICPA Statement of Auditing
Standards No. 61 (SAS 61).
3. To review with management and the independent auditors the Company's
quarterly financial results prior to the release of earnings and filing or
distribution of the Company's quarterly financial statements. To discuss
any significant changes to the Company's accounting principles and any
items required to be communicated by the independent auditors in accordance
with SAS 61. The Chairman of the Committee may represent the entire Audit
Committee for purposes of this review.
4. To recommend annually to the full Board the firm of certified public
accountants to be employed by the Company as its independent auditors for
the ensuing year.
5. To review the engagement of the independent auditors, including the scope,
extent, and procedures of the audit and the compensation to be paid
therefore, and all other matters the Committee deems appropriate. The
independent auditors are ultimately accountable to the Audit Committee and
the Board of Directors.
1
6. To review and approve all professional services provided to the Company by
its independent auditors and consider the possible effects of such services
on the independence of such auditors. To consider the independent auditors'
judgements about the quality and appropriateness of the Company's
accounting principles as applied in its financial reporting.
7. To consult with the independent auditors and discuss with Company
management the scope and quality of internal accounting and financial
reporting controls in effect.
8. To investigate, review, and report to the Board the propriety and ethical
implications of any transactions as reported or disclosed to the Committee
by the independent auditors, employees, officers, members of the Board or
otherwise, between (a) the Company, and (b) any employee, officer, or
member of the Board of the Company, or any affiliates of the foregoing.
9. To review at least annually with the Company's counsel, any legal matters
that could have a significant impact on the Company's financial statements,
the Company's compliance with applicable laws and regulations, inquiries
received from regulators aor governmental agencies.
10. To prepare an annual report to shareholders as required by the SEC, with
assistance from management, to be included in the Company's proxy
statement.
11. To perform such other functions and have such power as may be necessary or
convenient in the efficient and lawful discharge of the foregoing.
Meetings:
The Committee will hold at least three meetings per year to review financial
results, company activities, and risks and to perform such other activities as
may be necessary or desirable with the power and authority set out above.
Additional meetings may be called as the Chairman or Committee deem appropriate.
Such meetings may be attended in person or by telephone or video conferencing or
any other electronic communications. Any or all of the Chief Executive Officer,
Chief Financial Officer or General Counsel, may attend any meeting of the
Committee, except for portions of the meetings where his, her, or their presence
would be inappropriate, as determined by the Committee Chairman.
Minutes and Reports:
The Chairman of the Committee shall arrange with the Corporate Secretary's
office and Corporate Counsel for the completion of an official set of minutes of
each Committee meeting. The official minutes shall be approved by the Committee
members, signed by the Chairman, and shall be given to the Corporate Secretary
for filing with the Corporate Records. The Chairman shall report to the Board
from time to time and as requested by the Board.
2
NPS PHARMACEUTICALS, INC.
ANNUAL MEETING OF STOCKHOLDERS
MAY 24, 2001
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned constitutes and appoints Hunter Jackson and James U. Jensen
(with full power to act alone), the attorneys and proxies of the undersigned,
with power of substitution to each, to vote all shares of common stock of NPS
Pharmaceuticals, Inc., registered in the name provided herein which the
undersigned is entitled to vote, at the 2001 Annual Meeting of Stockholders.
This meeting will be held at the Park Hyatt Hotel located at 4 Avenue Road,
Toronto, Ontario, Canada on May 24, 2001 at 3:00 p.m., local time. This Proxy
is given in accordance with the following instructions, and carries
discretionary authority related to any and all other matters that may come
before the meeting and any adjournments thereof.
1. To elect eleven (11) directors as set forth in the Proxy Statement:
[_] FOR all nominees [_] WITHHOLD AUTHORITY
listed below(except to vote for all
as indicated to the nominees listed
contrary below) below:
Santo J. Costa, John R. Evans, James G. Groninger, Tamar Howson, Hunter
Jackson, Joseph Klein III, Donald E. Kuhla, Thomas N. Parks, Edward Rygiel,
Calvin Stiller, and Peter G. Tombros
(INSTRUCTION: To withhold authority to vote for any individual nominee, write
that nominee's name on the space provided below)
- --------------------------------------------------------------------------------
2. To ratify the appointment of KPMG LLP as independent auditors for the
Company for the 2001 fiscal year:
[_] FOR [_] AGAINST [_] ABSTAIN
This Proxy when properly executed will be voted as directed above. If no
direction is made, this Proxy will be voted FOR the election of the eleven (11)
directors and FOR the ratification of the board's appointment of KPMG LLP as
NPS's independent auditors for the 2001 fiscal year.
Dated ________________________________________
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Please sign here
Do you plan to attend the Annual
Meeting? [_] Yes [_] No
Please date this Proxy and sign your name
exactly as it appears hereon. Joint owners
should each sign. When signing as an agent,
attorney, administrator, executor, guardian,
or trustee, please indicate your title as
such. If executed by a corporation, the Proxy
should be signed in the corporate name by a
duly authorized officer who should indicate
his title.
Please date, sign, and mail this proxy card
in the enclosed envelope.