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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
TEXAS BIOTECHNOLOGY CORPORATION
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
------------------------------------------------------------------------
(NAME OF PERSON(S) FILING PROXY STATEMENT, IF OTHER THAN THE REGISTRANT)
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Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which the
transaction applies:
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(2) Aggregate number of securities to which the
transaction applies:
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(3) Per unit price or other underlying value of the
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):
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(5) Total fee paid:
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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:
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(2) Form, Schedule or Registration Statement:
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TEXAS BIOTECHNOLOGY CORPORATION
7000 FANNIN STREET, 20TH FLOOR
HOUSTON, TEXAS 77030
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held May 30, 2001
-------------------------
You are cordially invited to attend the annual meeting of the
stockholders of Texas Biotechnology Corporation which will be held at 9:00 a.m.
(Houston time) on May 30, 2001 at The Four Seasons Hotel, 1300 Lamar Street,
Houston, Texas 77010. At the meeting we will:
1. elect nine directors;
2. consider and act on a proposal to amend the 1999 Stock
Incentive Plan; and
3. consider and act on such other business as may properly come
before the meeting or any adjournment of the meeting.
If you were a stockholder at the close of business on April 16, 2001,
you are entitled to notice of and to vote at the meeting. A stockholders' list
will be available at our offices, 7000 Fannin Street, 20th Floor, Houston, Texas
77030, for a period of ten days prior to the meeting, or any adjournment of the
meeting.
Your vote is important. Whether or not you expect to attend the
meeting, please sign and date the enclosed proxy card and return it to us
promptly. A stamped envelope has been provided for your convenience. The prompt
return of proxies will ensure a quorum and save us the expense of further
solicitation.
By Order of the Board of Directors,
/s/ STEPHEN L. MUELLER
STEPHEN L. MUELLER,
Vice President, Finance and Administration,
Secretary and Treasurer
April 24, 2001
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TEXAS BIOTECHNOLOGY CORPORATION
7000 FANNIN STREET, 20TH FLOOR
HOUSTON, TEXAS 77030
PROXY STATEMENT
Our Board of Directors is soliciting proxies for the annual meeting of
our stockholders to be held in Houston, Texas on May 30, 2001, and at any
adjournment thereof, for the purposes set forth in the accompanying notice. This
proxy statement and the accompanying proxy card are first being mailed to
stockholders on or about April 24, 2001. Because many stockholders are unable to
attend the meeting, the board of directors solicits proxies to ensure that each
stockholder has an opportunity to vote on all matters scheduled to come before
the meeting. Stockholders are urged to read carefully the material in this proxy
statement.
QUESTIONS AND ANSWERS
Q: Who can attend and vote at the meeting?
A: You can attend and vote at the meeting if you were a stockholder at the
close of business on the record date, April 16, 2001. On that date,
there were 43,771,186 shares of common stock outstanding and entitled
to vote at the meeting.
Q: What am I voting on?
A: You are voting on:
- The election of directors; and
- The approval of an amendment to the 1999 Stock Incentive Plan.
Q: How do I cast my vote?
A: If you hold your shares as a stockholder of record, you can vote in
person at the annual meeting or you can vote by mail. The enclosed
proxy card contains instructions for voting by mail. If you are a
street-name stockholder, you will receive instructions from your bank,
broker or other nominee describing how to vote your shares. If you do
not instruct your broker or nominee how to vote such shares, they may
vote your shares as they decide as to matters for which they have
discretionary authority under American Stock Exchange rules.
The proxies identified on the back of the proxy card, Messrs.
McWilliams and Mueller and Dr. Dixon, will vote the shares of which you
are the stockholder of record in
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accordance with your instructions. If you submit a proxy card without
giving specific voting instructions, the proxies will vote those shares
as recommended by the board of directors.
Q: How does the board recommend I vote on the proposals?
A: The board recommends you vote "FOR" each of the nominees to the board
of directors and "FOR" the amendment to the 1999 Stock Incentive Plan.
Q: Can I revoke my proxy?
A: Yes. You can revoke your proxy at any time before it is exercised by:
- submitting a properly signed proxy card with a more recent
date;
- giving written notice of your revocation before the meeting to
our Secretary, Mr. Mueller, at our offices, 7000 Fannin
Street, 20th Floor, Houston, Texas 77030; or
- attending the meeting and voting your shares in person.
Q: Who will count the vote?
A: A representative of our transfer agent, Bank of New York, will act as
the inspector of the election and will count the vote.
Q: What is a "quorum?"
A: A quorum is the presence at the meeting, in person or by proxy, of the
holders of a majority of the outstanding shares as of the record date.
There must be a quorum for the meeting to be held. If you submit a
valid proxy card or attend the meeting, your shares will be counted to
determine whether there is a quorum. Abstentions and broker non-votes
will be counted toward the quorum. "Broker non-votes" occur when
nominees (such as banks and brokers) that hold shares on behalf of
beneficial owners do not receive voting instructions from the
beneficial owners before the meeting and do not have discretionary
voting authority to vote those shares.
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Q: What vote is required to approve each item?
A: The nominees for election as directors at the annual meeting who
receive the greatest number of votes cast by the stockholders, a
plurality, will be elected as directors. In the election of directors,
you may vote "FOR" all nominees, "AGAINST" all nominees or withhold
your vote for any one or more of the nominees. The approval of the
amendment to the 1999 Stock Incentive Plan, commonly referred to as the
1999 Plan, and all other matters to be considered at the meeting
require the affirmative vote of a majority of the shares entitled to
vote and present in person or by proxy at the meeting. For the approval
of the amendment to the 1999 Plan, you may vote "FOR" or "AGAINST" or
abstain from voting. In a plurality vote, abstentions are not
considered a vote cast and will not affect the outcome. In a majority
vote, however, express abstentions have the effect of a vote against a
particular proposal. Broker non-votes will not affect the outcome of
any vote on the proposals presented at the annual meeting because the
broker or nominee lacks the authority to vote on these matters.
Q: What shares are included on my proxy card?
A: Your proxy card represents all shares registered to your account in the
same social security number and address.
Q: What does it mean if I get more than one proxy card?
A: Your shares are probably registered in more than one account. You
should vote each proxy card you receive. We encourage you to
consolidate all your accounts by registering them in the same name,
social security number and address.
Q: How many votes can I cast?
A: On all matters you are entitled to one vote per share of common stock.
Q: When are stockholder proposals due for the 2002 Annual Meeting of
Stockholders?
A: If you want to present a proposal from the floor at the 2002 Annual
Meeting, you must give us written notice of your proposal no later than
March 10, 2002. If instead of presenting your proposal at the meeting
you want your proposal to be considered for inclusion in next year's
proxy statement, you must submit the proposal in writing to the
Secretary so that it is received at the above address by December 25,
2001. Your notice
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should be sent to the Secretary, Texas Biotechnology Corporation,
7000 Fannin, 20th Floor, Houston, Texas 77030.
Q: Where can I find the voting results of the meeting?
A: The preliminary voting results will be announced at the meeting. The
final results will be published in our quarterly report on Form 10-Q
for the second quarter of fiscal 2001.
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TABLE OF CONTENTS
PAGE
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ELECTION OF DIRECTORS................................................................ 6
Nominees.................................................................... 6
Director Compensation and Board Committees.................................. 9
APPROVAL OF THE AMENDMENT TO THE 1999 STOCK INCENTIVE PLAN........................... 11
OTHER INFORMATION.................................................................... 12
Principal Stockholders...................................................... 12
Executive Officers.......................................................... 13
Executive Compensation...................................................... 14
Compensation and Personnel Committee Report on Executive Compensation....... 16
Audit Committee Report...................................................... 18
Performance Graph........................................................... 19
Executive Employment and Severance Agreements............................... 20
Auditors.................................................................... 20
Section 16(a) Beneficial Ownership Reporting Compliance..................... 21
Stockholder Proposal Information............................................ 21
Other Matters............................................................... 22
Appendix A -- 1999 Stock Incentive Plan Amendment.................................... A-1
Appendix B -- Charter of the Audit Committee of the Board of Directors............... B-1
A Copy of the Annual Report which includes the Form 10-K of Texas
Biotechnology Corporation for the fiscal year ended December 31, 2000
is being mailed with this proxy statement. You may receive an
additional copy of the Form 10-K, our Quarterly Reports on Form 10-Q
and other information at no charge upon request directed to: Stephen L.
Mueller, Secretary, Texas Biotechnology Corporation, 7000 Fannin, 20th
Floor, Houston, Texas 77030.
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PROPOSAL 1
ELECTION OF DIRECTORS
At the annual meeting, nine directors are to be elected. Each director
is to hold office until the next annual meeting of stockholders or until his
successor is elected and qualified. The persons designated as proxies on the
accompanying proxy card intend, unless authority is withheld, to vote for the
election of the nominees named below to the board of directors. All of the
nominees have previously been elected by our stockholders. If any nominee should
become unavailable for election, the proxy may be voted for a substitute nominee
selected by the persons named in the proxy or the board of directors may be
reduced accordingly; however, we are not aware of any circumstances likely to
render any nominee unavailable.
NOMINEES
Certain information regarding the nominees is set forth below:
NAME AGE POSITION DIRECTOR SINCE
---- --- -------- --------------
John M. Pietruski (1)(2) 68 Chairman of the Board of Directors 1990
David B. McWilliams (1) 58 President, Chief Executive Officer
and Director 1992
Richard A. F. Dixon, Ph.D. (1) 47 Senior Vice President, Research,
Chief Scientific Officer and Director 1990
James T. Willerson, M.D. (1)(3) 61 Chairman of the Scientific Advisory
Board and Director 1990
Ron J. Anderson, M.D. (3) 54 Director 1997
Frank C. Carlucci (2) 70 Director 1990
Robert J. Cruikshank (3) 70 Director 1993
Suzanne Oparil, M.D. (3) 59 Director 1999
James A. Thomson, Ph.D. (2) 56 Director 1994
---------------
(1) Member of the Executive Committee of the board of directors
(2) Member of the Compensation and Personnel Committee of the
board of directors
(3) Member of the Audit Committee of the board of directors
John M. Pietruski has served as our chairman of the board of directors
since May 1990. Mr. Pietruski has served as President of Dansara Company, a
private investment consulting firm, since 1988. He served as Chairman of the
board of directors and Chief Executive Officer of Sterling Drug Inc., a
pharmaceutical company, from 1985 to 1988 and as President and Chief Operating
Officer from 1983 to 1985. Mr. Pietruski currently serves as a director of
General Public Utilities Corporation, Hershey Foods Corporation, Lincoln
National Corporation and Professional Detailing, Inc. Mr. Pietruski received a
B.S. degree with honors in business administration from Rutgers University,
where he graduated Phi Beta Kappa.
David B. McWilliams has served as our President and Chief Executive
Officer and as a member of the board of directors since July 1992. Mr.
McWilliams joined us after serving as President, Chief Executive Officer of
Zonagen, Inc., a pharmaceutical research company involved in reproductive
health, from June 1989 to July 1992, where he was also a director. He
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was also President and Chief Executive Officer of Kallestad Diagnostics, a
medical diagnostics manufacturing company, from 1984 to 1988. Mr. McWilliams
served as President of E.M. Industries, Harleco Diagnostics Division from 1980
to 1984. He has held various executive and senior management positions with
Abbott Laboratories, McKinsey & Company and Amoco Chemicals Corporation and
currently serves as a director of Structural Bioinformatics, Inc. Mr. McWilliams
received a B.S. from Washington and Jefferson College in chemistry, graduating
magna cum laude and Phi Beta Kappa, and received an M.B.A. from the University
of Chicago.
Richard A.F. Dixon, Ph.D. has served as our Senior Vice President,
Research and Chief Scientific Officer since March 2000, and as a member of the
board of directors since July 1990. Dr. Dixon served as our Vice President,
Research from December 1992 to March 2000 and as Scientific Director and
Director of Molecular Biology from July 1990 to December 1992. Dr. Dixon joined
us after serving as a Director and Head of Molecular Biology at Merck Sharp &
Dohme Research Laboratories, a division of Merck & Co. from 1988 to July 1990.
In addition, Dr. Dixon serves as a Professor of the Department of Internal
Medicine at The University of Texas Medical School at Houston. Dr. Dixon is the
author or co-author of more than 100 scientific papers and has invented twelve
patented therapeutic technologies. He received a B.S. degree from Texas A & M
University, graduating cum laude, and received a Ph.D. in virology from the
Baylor College of Medicine.
James T. Willerson, M.D. has served as chairman of our scientific
advisory board since January 1990 and has been a member of the board of
directors since May 1990. Dr. Willerson was appointed in March 2001 to serve as
President of The University of Texas -- Houston Health Science Center and is
also a professor at this institution. He served as the chairman of the
Department of Internal Medicine at The University of Texas Medical School at
Houston from 1989 to 2001. In 1995, he was appointed Medical Director of the
Texas Heart Institute, Houston, Texas. He was Chief of Cardiology of Parkland
Memorial Hospital in Dallas, Texas from 1975 to 1989, director and principal
investigator of The University of Texas Southwestern Medical School Ischemic
Heart Disease, Specialized Center of Research, in Dallas from 1975 to 1989,
director of the cardiology division at The University of Texas Southwestern
Medical School from 1977 to 1989, and professor of medicine and professor of
radiology from 1979 to 1989. He also served as co-director of the Bugher
Molecular Biology and Cardiology Research Center at The University of Texas
Health Science Center in Dallas from 1986 to 1989. Dr. Willerson has published
nearly 700 manuscripts and has been editor or co-editor of 18 textbooks. He was
selected for membership in the Institute of Medicine of the National Academy of
Science in 1998 and named "Distinguished Scientist" of the American College of
Cardiology for 2000. In 1961, Dr. Willerson received a B.A. from The University
of Texas at Austin, graduating Phi Beta Kappa. In 1965, he received an M.D. from
the Baylor College of Medicine, graduating as a member of Alpha Omega Alpha. Dr.
Willerson's medical and cardiology training was undertaken at the Massachusetts
General Hospital, Boston, Massachusetts.
Ron J. Anderson, M.D. has served as a member of the board of directors
since December 1997. He has been President and Chief Executive Officer of
Parkland Health & Hospital System since 1982. Parkland is the general public
hospital for Dallas County, Texas and the primary teaching hospital for The
University of Texas Southwestern Medical Center at Dallas. He previously served
as Parkland's Medical Director for Ambulatory Care and Emergency Services. He
served concurrently as head of the Division of Ambulatory Care, which became the
Division
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of General Internal Medicine under his guidance in the Department of Internal
Medicine at Southwestern. Dr. Anderson has remained on the faculty of the
Medical School as Professor of Internal Medicine. Dr. Anderson is also a
director of Parkland Foundation and Texans Care for Children. He is the Chief
Executive Officer and serves on the Board of Directors of Parkland Community
Health Plan and is an advisory board member of Texas Health Choice. Dr. Anderson
is also the Chairman of the Texas Hospital Association, a member of the board of
directors of the National Association of Public Hospitals and National Public
Health and Hospital Institute. In 1997 he was elected to the Institute of
Medicine of the National Academy of Sciences. He has authored and co-authored
more than 200 articles on medicine, ethics, and health policy. Dr. Anderson
received his medical degree from the University of Oklahoma and his pharmacy
degree from Southwestern Oklahoma State University where he was selected as a
Distinguished Alumni in 1987.
Frank C. Carlucci has served as a member of the board of directors
since May 1990. He has been principally employed as Chairman and a Partner in
The Carlyle Group, a Washington, D. C. based merchant bank since 1989. Mr.
Carlucci served as Secretary of Defense from 1987-1989 and as President Reagan's
National Security Advisor in 1987. Prior to returning to Government service, Mr.
Carlucci was Chairman and CEO of Sears World Trade, a business he joined in
1983. His Government service included positions as Deputy Secretary of Defense
(1980-82), Deputy Director of Central Intelligence (1978-80), Ambassador to
Portugal (1975-78), Under Secretary of Health Education and Welfare (1973-75),
Deputy Director of OMB (1970-72), and Director of the Office of Economic
Opportunity (1969). Mr. Carlucci was a Foreign Service Officer from 1956 to
1980. Mr. Carlucci is the Chairman of the Neurogen Corporation board of
directors, the Nortel Networks board of directors and the US-ROC Taiwan Business
Council. Mr. Carlucci is also a director of Ashland Inc., Kaman Corporation, The
Quaker Oats Company, SunResorts, Ltd., N.V., and Pharmacia Corp. Mr. Carlucci
graduated from Princeton University and also attended Harvard Business School.
Robert J. Cruikshank has served as a member of the board of directors
since May 1993. Mr. Cruikshank was a senior partner at Deloitte & Touche LLP
from 1989 until retiring in March 1993. Mr. Cruikshank was a partner, office
managing partner and member of the board of directors of the predecessor firms
to Deloitte & Touche LLP in Houston from 1968 until 1989. He is a trustee of the
Ray C. Fish Foundation and Texas Medical Center. He also serves as a director of
Reliant Energy Incorporated, MAXXAM Incorporated, Kaiser Aluminum Corporation,
Weingarten Realty Investors and as an advisory board member of Compass Bank of
Houston. Mr. Cruikshank is a past chairman of the American Heart Association, is
active at the affiliate levels and is a past Regent of the University of Texas
System. Mr. Cruikshank received a B.A. in economics and accounting from Rice
University and completed the Advanced Management Program at Harvard University.
Suzanne Oparil, M.D. has served as a member of the board of directors
since May 1999. She has been a professor of medicine since 1981, Director of the
Vascular Biology and Hypertension since 1985, and professor of physiology and
biophysics since 1993, in the Division of Cardiovascular Disease at The
University of Alabama at Birmingham. She has served as president of the American
Federation of Clinical Research. Dr. Oparil is also a member of the American
Society of Clinical Investigation, the Association of American Physicians, and
of the Institute of Medicine of the National Academy of Sciences. In addition,
she has held advisory
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positions with the National Institutes of Health, including membership on a
number of task forces, advisory committees and peer review committees. Dr.
Oparil was a past president of the American Heart Association and is an active
volunteer at both the national and affiliate levels. She was a recipient of the
University of Alabama President's Achievement Award. Dr. Oparil has an extensive
bibliography in clinical cardiology and hypertension, including over 350 journal
articles, books and book chapters. Dr. Oparil received her medical degree from
Columbia University, College of Physicians and Surgeons in 1965.
James A. Thomson, Ph.D. has served as a member of the board of
directors since May 1994. He has been President and Chief Executive Officer of
the RAND Corporation since 1989 and has served the institution in a variety of
roles beginning in 1981. The RAND Corporation is a non-profit institution that
seeks to improve public policy through research analysis in such areas as
national defense, education and health. He also serves as a director of AK Steel
Holding Co. and of Entrust Technologies Corp. From 1977 until 1981, he served on
the National Security Council, at the White House. From 1974 until 1977, Dr.
Thomson served as an operations research analyst in the Office of the Secretary
of Defense, the Pentagon. Dr. Thomson is the author of numerous scholarly
articles and reports on defense and scientific subjects. Dr. Thomson graduated
from the University of New Hampshire in 1967 and received an M.S. and Ph.D. in
Physics from Purdue University.
VOTE REQUIRED FOR ELECTION
The nine nominees for election as directors at the annual meeting who
receive the greatest number of votes cast for election by the stockholders will
be elected as our directors.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR EACH NOMINEE TO OUR BOARD
OF DIRECTORS.
DIRECTOR COMPENSATION AND BOARD COMMITTEES
During 2000, the board of directors held nine meetings. All directors,
except for Dr. Ron Anderson, attended at least 75% of the total meetings of the
board and the committees on which they serve. We believe that attendance at
meetings of the board is only one criterion for judging the contribution of
individual directors, and that all directors have made substantial and valuable
contributions.
Director Compensation. During the year ended December 31, 2000, each
non-employee director received a retainer of $2,000 per quarter, fees of $1,000
for each meeting of the board of directors attended in person and $150 for each
meeting conducted by telephone. Non-employee directors received a fee of $200
for each committee meeting attended in person and a fee of $100 for each
committee meeting conducted by telephone. Dr. Willerson, however, has declined
all retainer or meeting fees. In addition, directors are reimbursed for expenses
incurred in attending meetings of the board and its committees. Non-employee
directors may elect to receive part or all of the quarterly retainer and fees in
common stock. Each non-employee director also receives options to purchase
15,000 shares of common stock on their initial election to the board and options
to purchase 7,500 shares of common stock on each subsequent election to the
board.
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Executive Committee. The current members of the executive committee are
David B. McWilliams (Chair), Richard A.F. Dixon, James T. Willerson and John M.
Pietruski. The executive committee met once during 2000. The executive committee
may act on behalf of the board on all matters permitted by Delaware corporate
law except as limited by our Certificate of Incorporation and Bylaws. All
actions taken by the executive committee must be reported at the board's next
meeting.
Audit Committee. The current members of the audit committee are Robert
J. Cruikshank (Chair), Ron J. Anderson, James T. Willerson and Suzanne Oparil.
Under the rules of the American Stock Exchange, all of the members of the Audit
Committee are independent. The Audit Committee operates under a written charter
adopted by the Board of Directors on June 6, 2000. The audit committee met twice
during 2000. The audit committee assists the board in fulfilling its oversight
responsibilities to stockholders and other matters relating to our corporate
accounting and reporting practices and the quality and integrity of our
financial reports. The audit committee recommends the selection of independent
accountants, reviews the independent accountants' report on our internal control
systems and reviews the scope and results of the external audit process.
Compensation and Personnel Committee. The current members of the
compensation and personnel committee are John M. Pietruski (Chair), Frank C.
Carlucci and James A. Thomson. The compensation and personnel committee met five
times during 2000. The compensation and personnel committee reviews and
recommends to the board of directors the compensation and employee benefits for
our elected officers, and the key officers and employees who participate in
various incentive compensation plans. This committee approves the grant of
employee stock awards in accordance with our various incentive stock plans and
administers any incentive plans and bonus plans. The compensation and personnel
committee is also responsible for reviewing our significant personnel
compensation policies and benefit programs and major changes thereto, and our
management's long-range planning for executive development and succession. This
committee establishes policies on management perquisites, and also monitors our
non-discrimination polices and practices. Following the compensation and
personnel committee's review and approval, all issues pertaining to officer
compensation, other than employee stock awards, are submitted to the full board
of directors for approval.
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PROPOSAL 2
APPROVAL OF THE AMENDMENT TO THE 1999 STOCK INCENTIVE PLAN
The 1999 Plan provides for the grant of:
- incentive and non-qualified stock options;
- incentive stock options;
- shares of restricted stock; and
- stock bonuses.
Currently, the 1999 Plan provides that the maximum amount of shares
subject to the plan is 1,000,000. As of March 31, 2001, no shares remained
available for grant under the 1999 Plan. Because of this, the board adopted this
amendment, subject to stockholder approval, to assure that adequate shares will
be available for grant pursuant to the 1999 Plan. The amendment to the 1999 Plan
is intended to (i) further our efforts in attracting, retaining and motivating
key employees, consultants, and non-employee directors and (ii) continue to
closely align the interests of participants in the 1999 Plan with those of
stockholders by encouraging stock ownership and by tying compensation to the
long term growth of our business and the performance of the Common Stock. If
this amendment is approved, the authorized shares available for use pursuant to
the 1999 Plan will be increased from 1,000,000 to 3,000,000. If approved, this
amendment will not change any other material term of the 1999 Plan.
The 1999 Stock Incentive Plan Amendment appears as Exhibit A to this
proxy statement.
VOTE REQUIRED FOR APPROVAL
The affirmative vote of the holders of a majority of the shares of
common stock outstanding, entitled to vote and represented at the annual
meeting, in person or by proxy, is required to approve the 1999 Plan amendment.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF THE AMENDMENT
TO THE 1999 PLAN.
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OTHER INFORMATION
PRINCIPAL STOCKHOLDERS
The following table sets forth the beneficial ownership of our common
stock as of April 16, 2001 by:
- each person who is known by us to be the beneficial owner of
more than 5% of our outstanding common stock;
- each of our executive officers and directors; and
- all of our directors and executive officers as a group.
Unless otherwise noted, each person has sole investment and voting
power of the shares listed. The information in the following table is based on
information supplied by officers, directors and principal stockholders and
filings, if any, filed with the Securities and Exchange Commission by each
person.
NUMBER OF SHARES
------------------------------------------
EXERCISABLE
OPTIONS PERCENT
TO PURCHASE OF
NAME AND ADDRESS OF BENEFICIAL OWNER (1) SHARES SHARES TOTAL CLASS
- ---------------------------------------- --------- ----------- --------- -------
Larry N. Feinberg (2).............................. 4,175,324 -- 4,175,324 9.5%
Franklin Resources, Inc. (3)....................... 2,344,100 -- 2,344,100 5.4%
Ron J. Anderson, M.D............................... -- 30,250 30,250 *
Frank C. Carlucci.................................. 40,571 50,327 90,898 *
Robert J. Cruikshank............................... 10,307 46,469 56,776 *
Richard A. F. Dixon, Ph.D.......................... 93,776(7) 507,888 601,664 1.4%
David B. McWilliams................................ 72,724(7) 664,369 737,093 1.7%
Stephen L. Mueller................................. 13,410(7) 167,973 181,383 *
Pamela M. Murphy................................... 4,676(7) 42,500 47,176 *
Suzanne Oparil, M.D................................ 1,383 13,750 15,133 *
John M. Pietruski.................................. 44,600(4) 60,142 104,742 *
James A. Thomson, Ph.D............................. 2,361(5) 40,957 43,318 *
Joseph M. Welch.................................... 7,531(7) 162,465 169,996 *
James T. Willerson, M.D............................ 99,999(6) 42,122 142,121 *
All directors and executive officers
as a group (12 persons).................... 391,338 1,829,212 2,220,550 4.9%
- ---------------
* Less than 1%
(1) Unless otherwise indicated, the address of all persons set forth above
is 7000 Fannin, 20th Floor, Houston, Texas 77030.
(2) The address of Mr. Feinberg is 200 Greenwich Avenue, 3rd Floor,
Greenwich, Connecticut 06830. Mr. Feinberg is the deemed beneficial
holder of shares of common stock held by various partnerships and by
managed accounts over which Oracle Investment Management, Inc. has
investment discretion. The above information was included in a Schedule
13G filed with the Securities and Exchange Commission on March 9, 2001.
(3) The address of Franklin Resources, Inc. is 777 Mariners Island Blvd.,
P. O. Box 7777, San Mateo, California 94403-7777. The securities
reported on herein are beneficially owned by one or more open or
closed-end investment companies or other managed accounts which are
advised by direct and indirect
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investment advisory subsidiaries of Franklin Resources, Inc. The above
information was included in a Schedule 13G filed with the Securities
and Exchange Commission on February 9, 2001.
(4) Includes 42,857 shares held by the Pietruski Family Partnership, of
which Mr. Pietruski is the general partner.
(5) Includes 200 shares held by Mr. Thomson's granddaughter.
(6) Includes 14,285 shares owned by The James T. Willerson Fund, Inc., a
not-for-profit corporation, of which Dr. Willerson is the Chairman of
the board of directors.
(7) Includes the following shares of restricted common stock: Dr. Dixon
8,062; Mr. McWilliams 14,512; Mr. Mueller 5,160; Ms. Murphy 4,676; Mr.
Welch 5,531. The shares of restricted common stock vest in three equal
amounts over three years.
EXECUTIVE OFFICERS
Our executive officers serve at the pleasure of the board of directors
and are subject to annual appointment by the board. All of our executive
officers are listed in the following table, and certain information concerning
those officers, except for Mr. McWilliams and Dr. Dixon who are also members of
the board of directors, follows the table:
NAME AGE POSITION
---- --- --------
David B. McWilliams 58 President, Chief Executive Officer and Director
Richard A. F. Dixon, Ph.D. 47 Senior Vice President, Research and Chief Scientific Officer
Stephen L. Mueller 53 Vice President, Finance and Administration, Secretary
and Treasurer
Pamela M. Murphy 50 Vice President, Corporate Communications
Joseph M. Welch 60 Vice President, Business Development
Stephen L. Mueller has served as Vice President, Finance and
Administration since March 1998, as Vice President of Administration since March
1995, as Secretary since May 1994 and as Treasurer since December 1991. From
September 1991 to March 1995, Mr. Mueller served as Director of Finance and
Administration. Prior to joining us, Mr. Mueller was a financial consultant for
wholesale distribution and oil and gas companies. Mr. Mueller was Vice President
and Controller of Bado Equipment Co., Inc. in Houston, Texas from 1976 to 1990.
He was associated with Deloitte & Touche, Certified Public Accountants in
Houston, Texas from 1973 to 1976. Mr. Mueller received a B.B.A. from The
University of Texas at Austin in accounting and is a Certified Public Accountant
in the State of Texas.
Pamela M. Murphy joined us in March 1998 as Vice President, Corporate
Communications. Prior to joining us, from July 1997 through March 1998, Mrs.
Murphy served as president of PMM Partners, a marketing communication firm
focused on emerging technology companies. From April 1994 through January 1996,
she was Vice President, Corporate Communications at CYTOGEN Corporation and from
December 1989 through March 1994, she was Vice President, Corporate
Communications and Administration at Greenwich Pharmaceuticals. Mrs. Murphy
received her B.S. in education and psychology from Northern Arizona University
and is a member of the National Investor Relations Institute Senior Round Table.
Joseph M. Welch has served as Vice President, Business Development
since September 1993, after serving as a consultant to us from April to August
1993. Prior to joining us, Mr. Welch spent 26 years with the Pharmaceutical
Division of DuPont and the DuPont Merck Pharmaceutical Company. From January
1991 to February 1993, Mr. Welch was Associate
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Director of Licensing for DuPont Merck Pharmaceutical Company. Prior to that,
Mr. Welch spent seven years in business development. In these positions, he
participated in the evaluation and negotiation of a number of major projects,
including the DuPont/Merck joint venture. Mr. Welch has an M.B.A. from the
University of Denver.
EXECUTIVE COMPENSATION
Summary Compensation Table. The following table provides information
concerning compensation paid or accrued during the fiscal years ended December
31, 2000, 1999 and 1998 to our Chief Executive Officer and each of the other
four most highly-paid executive officers of the company, collectively referred
to as the Named Executive Officers, determined at the end of the last fiscal
year:
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
--------------------- ----------------------------
RESTRICTED SHARES
NAME AND STOCK AWARDS UNDERLYING ALL OTHER
PRINCIPAL POSITION YEAR SALARY BONUS (3) OPTIONS (1) COMPENSATION
- ---------------------------------------- ---- -------- --------- ------------ ----------- -------------
David B. McWilliams.................. 2000 $283,086 $ 140,625 $ 140,621 56,823 --
President and Chief 1999 $265,767 -- -- 21,250 --
Executive Officer 1998 $250,717 $ 35,800 -- 123,125 --
Richard A.F. Dixon, Ph.D............. 2000 $245,492 $ 78,127 $ 78,121 81,929 --
Senior Vice President, Research 1999 $233,783 -- -- 44,100 --
Chief Scientific Officer 1998 $220,933 $ 31,800 -- 74,700 --
Stephen L. Mueller................... 2000 $147,398 $ 50,001 $ 50,000 24,831 --
Vice President, Finance and 1999 $137,667 -- -- 9,450 --
Administration, Secretary 1998 $128,300 $ 17,200 -- 41,825 --
and Treasurer
Pamela M. Murphy (2)................. 2000 $136,186 $ 45,313 $ 45,310 16,913 --
Vice President, Corporate 1999 $130,000 -- -- 19,250 --
Communications 1998 $ 97,115 -- -- 35,000 --
Joseph M. Welch...................... 2000 $169,792 $ 53,595 $ 53,595 24,857 --
Vice President, 1999 $161,450 -- -- 12,000 --
Business Development 1998 $152,717 $ 22,200 -- 32,000 --
- ---------------
(1) See "Option Grants in Last Fiscal Year" for certain information with
respect to options granted during the fiscal year ended December 31,
2000.
(2) Mrs. Murphy joined us on March 23, 1998 and was appointed as an
executive officer on March 2, 1999.
(3) Represents restricted shares of common stock issued pursuant to the
1999 Plan under a bonus plan for executive officers and other key
personnel. The restricted shares vest in three equal amounts over three
years beginning January 26, 2002. The shares are eligible for dividend
distributions should any dividends be declared. The shares awarded
under this plan were: Mr. McWilliams 14,512; Dr. Dixon 8,062; Mr.
Mueller 5,160; Ms. Murphy 4,676; and Mr. Welch 5,531. The dollar
amounts reported in the table represent the value of the restricted
shares on the date of grant.
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Option Grants in Last Fiscal Year. The following table provides
information concerning stock options granted to the Named Executive Officers
during the year ended December 31, 2000:
NUMBER OF % OF TOTAL POTENTIAL REALIZABLE VALUE AT
SECURITIES OPTIONS ASSUMED ANNUAL RATES OF
UNDERLYING GRANTED TO STOCK PRICE APPRECIATION
OPTIONS EMPLOYEES IN EXERCISE EXPIRATION FOR OPTION TERM(1)
NAME GRANTED FISCAL YEAR PRICE DATE 5% 10%
- --------------------------- ---------- ------------ --------- ----------- ----------- -----------
David B. McWilliams 22,500(2) 3.9% $ 20.1250 03/06/2010 $ 284,771 $ 721,667
David B. McWilliams 34,323(3) 5.9% $ 16.9375 09/08/2010 $ 365,605 $ 926,516
Richard A.F. Dixon, Ph.D. 54,000(2) 9.3% $ 20.1250 03/06/2010 $ 683,451 $ 1,732,000
Richard A. F. Dixon, Ph.D. 27,929(3) 4.8% $ 16.9375 09/08/2010 $ 297,497 $ 753,916
Stephen L. Mueller 15,750(2) 2.7% $ 20.1250 03/06/2010 $ 199,340 $ 505,167
Stephen L. Mueller 9,081(3) 1.6% $ 16.9375 09/08/2010 $ 96,730 $ 245,133
Pamela M. Murphy 14,000(2) 2.4% $ 20.1250 03/06/2010 $ 177,191 $ 449,037
Pamela M. Murphy 2,913(3) 0.5% $ 16.9375 09/08/2010 $ 31,029 $ 78,634
Joseph M. Welch 16,000(2) 2.8% $ 20.1250 03/06/2010 $ 202,504 $ 513,185
Joseph M. Welch 8,857(3) 1.5% $ 16.9375 09/08/2010 $ 94,344 $ 239,086
- ---------------
(1) Potential Realizable Value is based on the assumed annual growth rates
for each of the grants shown over their ten-year option term. Actual
gains, if any, on option exercises are dependent on the future
performance of the common stock. Because the exercise price of options
granted is equal to the fair market value of the common stock a zero
percent appreciation in stock price will result in no gain.
(2) These are incentive stock options, to the extent allowed by law, and
vest and become exercisable in approximately equal annual installments
over a three-year period beginning March 6, 2001.
(3) These are incentive stock options, to the extent allowed by law, and
vest and become exercisable in approximately equal annual installments
over a three-year period beginning September 8, 2001.
Aggregated Option Exercises In Last Fiscal Year and Year-End Option
Values. The following table provides information concerning the number of
unexercised options and the value of in-the-money options held by the Named
Executive Officers as of December 31, 2000:
SHARES NUMBER OF UNEXERCISED VALUE OF UNEXERCISED
ACQUIRED ON VALUE OPTIONS AT FY-END IN-THE-MONEY OPTIONS (1)
NAME EXERCISE (#) REALIZED ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ------------ ------------ ----------- ------------- ----------- -------------
David B. McWilliams .......... 50,000 523,500 608,745 112,030 $2,439,076 $ 119,926
Richard A.F. Dixon, Ph.D. .... 50,000 515,500 450,288 136,229 $1,994,551 $ 164,356
Stephen L. Mueller............ 34,250 694,189 145,632 45,072 $ 501,103 $ 47,288
Pamela M. Murphy.............. 10,000 65,176 19,751 41,412 $ 27,701 $ 72,859
Joseph M. Welch .............. 12,500 128,875 142,466 43,523 $ 571,641 $ 50,179
- ---------------
(1) Value of in-the-money options calculated based on the closing price of
$8.59 per share of common stock on December 29, 2000, as reported by
the American Stock Exchange.
Compensation Committee Interlocks and Insider Participation. In January
1992, we entered into a consulting agreement with John M. Pietruski, Chairman of
our board of directors. Under the terms of the agreement, Mr. Pietruski is
expected to devote an average of one day per week of his consulting services to
us, for which he receives an annual fee of $75,000. On January 1, 2001, the
agreement was extended for a two-year period at the same annual fee.
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COMPENSATION AND PERSONNEL COMMITTEE REPORT ON EXECUTIVE COMPENSATION
Our compensation program for officers (including the Chief Executive
Officer and the other Named Executive Officers) is administered by the
Compensation and Personnel Committee, which is composed of three non-employee
directors. The committee makes decisions regarding the reward of stock options
and stock incentives under the company's stock option plans. Following review
and approval by the Committee, all other issues pertaining to officer
compensation (other than stock options and stock incentives) are submitted to
the full board of directors for approval. The objective of our compensation
program is to provide a total compensation package that will enable us to
attract, motivate and retain outstanding individuals and align their success
with that of the stockholders.
Base salaries for management employees are determined initially by
evaluating the responsibilities of the position held and the experience of the
individual, and by reference to the competitive marketplace for management
talent, including a comparison of base salaries for comparable positions at
comparable companies within the biotechnology industry. We entered into an
employment contract with David McWilliams, the company's President and Chief
Executive Officer, because we felt that the terms of this agreement were
necessary in order to retain a candidate of Mr. McWilliams' experience and
reputation in the biopharmaceutical industry, which in turn was deemed necessary
in order to enable us to move towards our long-range goal of developing and
marketing commercially viable biopharmaceutical products. In furtherance of
these goals, we have also entered into employment contracts with our other key
management personnel. See "Employment Agreements." The employment agreements
with key personnel establish annual base salary amounts that the board of
directors, on recommendation of the committee, may increase from time to time.
Annual salary adjustments are determined by evaluating the competitive
marketplace, our performance, the performance of the executive, and any
increased responsibilities assumed by the executive. We attained a number of
important milestones during the year 2000 including the approval and launch of
Argatroban, execution of development agreements with ICOS Corporation and
Schering-Plough, a successful equity offering, creation and funding of Revotar,
a German subsidiary, and progress in research and clinical development of
certain compounds. Based on the attainment of these significant milestones, the
committee recommended and the board of directors approved an increase in Mr.
McWilliams' compensation by 6.5% effective September 1, 2000 and 8.33% effective
March 1, 2001.
The Revenue Reconciliation Act of 1993 restricts the ability of a
publicly held corporation to deduct compensation in excess of $1,000,000 paid to
its chief executive officer and the four most highly compensated officers. The
committee intends to maintain executive compensation packages below this
threshold, and based on its current compensation structure, the company does not
anticipate that any of its officers will reach the $1,000,000 threshold in the
near future.
The principal methods for long-term incentive compensation are the
company's incentive stock plans. Compensation under these plans principally
takes the form of incentive and non-qualified stock options with an exercise
price of market price at time of grant and restricted stock
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grants. In this manner, key individuals are rewarded commensurate with increases
in stockholder value. Moreover, the company's incentive stock plans provide a
non-cash form of compensation, which is intended to benefit the company by
enabling it to continue to attract and to retain qualified personnel. In
addition, during 1998, the board of directors instituted a bonus plan for
executive officers and certain other key personnel. Bonuses are paid based upon
attainment of annual corporate goals as approved by the board of directors.
Payments are a combination of cash and restricted common stock. The restricted
stock vests in three equal amounts over three years beginning one year from date
of grant. No bonuses were paid for years prior to 2000. During 2000, Mr.
McWilliams earned $281,246 pursuant to the bonus plan of which a cash component
in the amount of $140,625 and restricted stock valued at $140,621 was paid
during 2001 following the attainment of the goals established by the committee.
The committee is authorized to make incentive awards under the stock
plans mentioned above to key employees, including officers of the company. In
determining incentive awards for management, the committee considers
management's ability to implement our research and clinical development
programs, successful completion of corporate partnering agreements, financing
activities, and control of expenses. The committee utilizes incentive awards as
a key element to provide incentives for employees and officers consistent with
the goal of increasing stockholder value.
Based on these criteria, during the fiscal year ended December 31,
2000, we granted Mr. McWilliams options to purchase 22,500 shares of common
stock at an exercise price of $20.125 per share and 34,323 shares at $16.9375
per share. At December 31, 2000, Mr. McWilliams held options covering an
aggregate of 720,775 shares of common stock. Of those, options covering an
aggregate of 608,745 shares were vested and exercisable.
John M. Pietruski, Chair
Frank C. Carlucci
James A. Thomson
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AUDIT COMMITTEE REPORT
The Audit Committee of the board of directors is responsible for
monitoring the integrity of the company's consolidated financial statements, its
system of internal controls and the independence and performance of its
independent accountants. The Audit Committee also recommends to the board of
directors the retention and selection of the company's independent accountants.
A copy of the Audit Committee Charter is attached to this Proxy Statement as
Appendix B.
The Audit Committee is also responsible for oversight of the financial
reporting process, including the system of internal control, and the preparation
of consolidated financial statements in accordance with generally accepted
accounting principles. The company's independent accountants are responsible for
auditing those financial statements. Our responsibility is to monitor and review
these processes. However, we are not professionally engaged in the practice of
accounting or auditing and are not experts in the fields of accounting or
auditing. We rely, without independent verification, on the information provided
to us and on the representations made by management and the independent
accountants.
We have met with the company's independent accountants, KPMG LLP, and
discussed the overall scope and plans for their audit. We have also met with the
independent accountants, with and without management present, to discuss the
results of their examinations and their evaluations of the company's internal
controls. We also discussed with the independent accountants matters required to
be discussed with audit committees under generally accepted auditing standards,
including, among other things, matters related to the conduct of the audit of
the company's consolidated financial statement and the matters required to be
discussed by Statement on Auditing Standards No. 61 as amended.
The independent accountants also provided to us the written disclosures
and the letter required by Independence Standards Board Standard No. 1, and we
discussed with the independent accountants their independence from the company.
When considering KPMG's independence, we considered the non-audit services
provided by the independent accountants and concluded that such services are
compatible with maintaining their independence.
We have reviewed and discussed the audited consolidated financial
statements for the fiscal year ended December 31, 2000 with management and KPMG.
Based on our review of the audited consolidated financial statements and the
meetings and discussions with management and the independent accountants, and
subject to the limitations on our role and responsibilities referred to above
and in the Audit Committee Charter, we recommended to the board of directors
that the company's audited consolidated financial statements be included in the
company's Annual Report on Form 10-K filed with the Securities and Exchange
Commission.
Robert J. Cruikshank, Chair
Ron Anderson
Suzanne Oparil
James T. Willerson
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PERFORMANCE GRAPH
COMPARISON OF 5-YEAR CUMULATIVE TOTAL RETURN
AMONG TEXAS BIOTECHNOLOGY CORPORATION,
AMEX MARKET INDEX AND PEER GROUP INDEX
[GRAPH]
ASSUMES $100 INVESTED ON JAN. 01, 1996
ASSUMES DIVIDEND REINVESTED
FISCAL YEAR ENDING DECEMBER 31, 2000
FISCAL YEAR ENDING
1996 1997 1998 1999 2000
------ ------ ------ ------ ------
COMPANY
Texas Biotechnology Corporation 212.12 300.00 239.39 384.85 416.48
Peer Group 128.66 145.54 111.62 167.97 522.95
AMEX Market Index 105.52 126.97 125.25 156.15 154.23
The peer group consists of COR Therapeutics, Inc., Sicor, Inc., Corvas
International, Inc., and Vertex Pharmaceuticals Incorporated. We are in the same
industry as the companies in the peer group and we believe that this peer group,
is at approximately the same stage of development as we are.
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EXECUTIVE EMPLOYMENT AND SEVERANCE AGREEMENTS
In July 1992, we entered into a three-year employment agreement with
David B. McWilliams to serve as our President and Chief Executive Officer. Upon
the expiration of the initial term, the agreement automatically renews for
successive one-year periods unless either party provides notice at least sixty
days before scheduled expiration. Effective March 1, 2001, the compensation
committee increased Mr. McWilliams' annual salary package to $325,000. We may
terminate Mr. McWilliams' employment for any reason; however, if such
termination is not due to disability or for cause, Mr. McWilliams will be
entitled to receive his salary and benefits under the agreement for one year
following termination.
In July 1990, we entered into a five-year employment agreement with Dr.
Richard A.F. Dixon to serve as our Scientific Director and Director of Molecular
Biology. Upon the expiration of the initial term, the agreement automatically
renews for successive one-year periods unless either party provides written
notice at least thirty days before scheduled expiration. If we terminate this
agreement with Dr. Dixon for cause, he will be entitled to one month salary,
otherwise, salary is due for the remaining contract term. Effective March 1,
2001, the compensation committee increased Dr. Dixon's annual salary to
$270,000.
We entered into an employment agreement with Pamela M. Murphy in March
1998. Effective March 1, 2001, the compensation committee increased Ms. Murphy's
annual salary to $157,000. This agreement may be terminated at any time, with or
without cause, by either Ms. Murphy or us. However, if we terminate this
agreement with Ms. Murphy other than for cause, she will be entitled to receive
six months salary.
We entered into an employment agreement with Joseph M. Welch in June
1993. Effective March 1, 2000, the compensation committee increased Mr. Welch's
annual salary to $171,150. This agreement may be terminated at any time, with or
without cause, by either Mr. Welch or us. However, if we terminate this
agreement with Mr. Welch other than for cause, he will be entitled to receive
six months salary.
In addition, we signed agreements with the Named Executive Officers to
provide certain benefits in the event of a change of control. The agreements
provide for a lump-sum payment in cash ranging from 18 months to three years of
annual base salary and annual bonus if any. Presently, the base salary portion
payable under these agreements would aggregate approximately $3.1 million. In
addition, the agreements provide for gross-up for certain taxes on the lump-sum
payment, continuation of certain insurance and other benefits for periods of 18
months to three years and reimbursement of certain legal expenses in conjunction
with the agreements. These provisions are intended to replace compensation
continuation provisions of any other agreement in effect for an officer if the
specified event occurs.
AUDITORS
KPMG LLP has served as our independent auditors for a number of years.
Although we anticipate that this relationship will continue to be maintained
during fiscal 2001, we have not proposed any formal action be taken at the
meeting concerning the continued employment of KPMG LLP, because no such action
is legally required. Representatives of KPMG LLP plan to
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attend the annual meeting and will be available to answer appropriate questions.
These representatives will be able to make a statement at the meeting if they
wish, although we do not expect them to do so.
During the calendar year 2000, we incurred professional service fees
with KPMG LLP as indicated below:
AUDIT FEES
The aggregate fees billed or expected to be billed by KPMG
related to the 2000 annual financial statement audit and reviews of
quarterly financial statements included in our Quarterly Reports filed
on Form 10-Q were $77,000.
FINANCIAL INFORMATION SYSTEMS DESIGN AND IMPLEMENTATION FEES
KPMG provided no information technology services relating to
financial information systems design and implementation during the
fiscal year ended December 31, 2000.
ALL OTHER FEES
The aggregate fees billed or expected to be billed by KPMG for
services rendered to us, other than the services described above under
"Audit Fees", for the fiscal year ended December 31, 2000 are
approximately $137,000. Of this amount, $100,000 represented fees
associated with work performed in conjunction with the public offering
of common stock during the year 2000 and the remainder is primarily for
tax services.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended,
requires our directors and executive officers, and persons who own more than 10%
of our equity securities to file initial reports of ownership and reports of
changes in ownership of our common stock with the Securities and Exchange
Commission and to furnish us a copy of each filed report.
Except for Mr. McWilliams, who filed a Form 4 regarding one late
transaction, to our knowledge, based solely on review of the copies of such
reports furnished to us and written representations that no other reports were
required, during the fiscal year ended December 31, 2000, our officers,
directors and greater than 10% beneficial owners timely filed all required
Section 16(a) reports.
STOCKHOLDER PROPOSAL INFORMATION
If you want to present a proposal from the floor at the 2002 Annual
Meeting or nominate a person for election to the board at such meeting, you must
give us written notice no later than March 10, 2002 and follow the procedures
outlined in our by-laws. Your notice should be sent to our Secretary at 7000
Fannin, 20th Floor, Houston, Texas 77030.
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If instead of presenting your proposal at the meeting you want your
proposal to be considered for inclusion in next year's proxy statement, you must
submit the proposal in writing to our Secretary so that it is received at the
above address by December 25, 2001.
OTHER MATTERS
We have included a copy of our 2000 annual report to stockholders,
which includes our Form 10-K covering the fiscal year ended December 31, 2000.
We will bear the cost of soliciting proxies in the accompanying form. We have
engaged Corporate Investor Communications, Inc. to assist in the solicitation of
proxies for a fee of $4,750, plus out-of-pocket expenses. In addition to
solicitation by mail and by Corporate Investor Communications, our officers and
regular employees may solicit your proxy by telephone, by facsimile transmission
or in person, for which they will not be compensated.
By Order of the board of directors,
/S/ STEPHEN L. MUELLER
STEPHEN L. MUELLER,
Vice President, Finance and Administration
Secretary and Treasurer
April 24, 2001
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APPENDIX A
1999 STOCK INCENTIVE PLAN AMENDMENT
The 1999 Stock Incentive Plan (the "1999 Plan") of Texas Biotechnology
Corporation (the "Company") is hereby amended as follows effective March 13,
2001.
1. Section 1.4 is amended to read as follows in its entirety:
Subject to adjustment under Section 5.5, there shall be
available for Incentive Awards under the Plan granted wholly or partly
in Common Stock (including rights or Stock Options that may be
exercised for or settled in Common Stock) Three Million (3,000,000)
Shares of Common Stock. Three Million (3,000,000) of the Shares
reserved under the Plan shall be available for grants of Incentive
Stock Options. The number of Shares of Common Stock that are the
subject of Incentive Awards under this Plan, that are forfeited or
terminated, expire unexercised, are settled in cash in lieu of Common
Stock or in a manner such that all or some of the Shares covered by an
Incentive Award are not issued to a Grantee or are exchanged for
Incentive Awards that do not involve Common Stock, shall again
immediately become available for Incentive Awards hereunder. The
Committee may from time to time adopt and observe such procedures
concerning the counting of Shares against the Plan maximum as it may
deem appropriate. The Board and the appropriate officers of the Company
shall from time to time take whatever actions are necessary to file any
required documents with governmental authorities, stock exchanges and
transaction reporting systems to ensure that Shares are available for
issuance pursuant to Incentive Awards.
During such period that the Company is a Publicly Held
Corporation, then unless and until the Committee determines that a
particular Incentive Award granted to a Covered Employee is not
intended to comply with the Performance-Based Exception, the following
rules shall apply to grants of Incentive Awards to Covered Employees:
(a) Subject to adjustment as provided in Section
5.5, the maximum aggregate number of Shares of Common Stock
(including Stock Options, Restricted Stock, or Other
Stock-Based Awards paid out in Shares) that may be granted or
that may vest, as applicable, in any calendar year pursuant to
any Incentive Award held by any individual Covered Employee
shall be 3,000,000 Shares.
(b) The maximum aggregate cash payout (including
Other Stock-Based Awards paid out in cash) with respect to
Incentive Awards granted in any calendar year which may be
made to any Covered Employee shall be Ten Million dollars
($10,000,000).
(c) With respect to any Stock Option granted to
a Covered Employee that is canceled or repriced, the number of
Shares subject to such Stock Option
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shall continue to count against the maximum number of Shares
that may be the subject of Stock Options granted to such
Covered Employee hereunder and, in this regard, such maximum
number shall be determined in accordance with Section 162(m)
of the Code.
(d) The limitations of subsections (a), (b) and
(c) above shall be construed and administered so as to comply
with the Performance-Based Exception.
A-2
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APPENDIX B
TEXAS BIOTECHNOLOGY CORPORATION
CHARTER
OF THE
AUDIT COMMITTEE
OF THE
BOARD OF DIRECTORS
(As initially adopted June 6, 2000)
I. PURPOSE
The Audit Committee is a standing committee of the Board of Directors
(the "Board") of Texas Biotechnology Corporation, a Delaware
corporation (the "Company"). Its primary function is to assist the
Board in fulfilling its oversight responsibilities by:
- Reviewing the financial reports and other financial
information provided by the Company to any governmental body
or the public;
- Reviewing the Company's system of internal controls regarding
finance, accounting, legal compliance and ethics that
management and the Board have established; and the Company's
auditing, accounting and financial reporting processes
generally;
- Reviewing the independence and performance of the Company's
independent auditors; and
- Providing an open avenue of communication among the
independent auditors, financial and senior management, and the
Board.
The Audit Committee will primarily fulfill these responsibilities by
carrying out the activities enumerated in Section IV of this Charter.
The Audit Committee has direct access to the Company's independent
auditors and anyone in the Company. The Audit Committee has authority
to retain, at the Company's expense, special legal, accounting, or
other consultants or experts it deems necessary in the performance of
its duties.
II. COMPOSITION
The Audit Committee shall be comprised of at least three directors,
each of whom shall be independent directors, and free from any
relationship that, in the opinion of the Board, would interfere with
the exercise of his or her independent judgment as a member of the
B-1
28
Audit Committee. Directors with any of the following relationships will
not be considered independent:
- a director being employed by the Company or any of its
affiliates for the current year or any of the past three
years;
- a director accepting any compensation from the Company or any
of its affiliates in excess of $60,000 during the previous
fiscal year, other than compensation for Board service,
benefits under a tax-qualified retirement plan or
non-discretionary compensation;
- a director being a member of the immediate family of an
individual who is, or has been in any of the past three years,
employed by the Company or any of its affiliates as an
executive officer (immediate family includes a person's
spouse, parents, children, siblings, mother-in-law,
father-in-law, brother-in-law, sister-in-law, son-in-law,
daughter-in-law, and anyone who resides in such person's
home);
- a director being a partner in, or a controlling stockholder or
an executive officer of, any for-profit business organization
to which the Company made, or from which the Company received,
payments (other than those arising solely from investments in
the Company's securities) that exceed 5% of the Company's or
the business organization's consolidated gross revenues for
that year, or $200,000, whichever is more, in any of the past
three years; or
- a director being employed as an executive of another entity
where any of the Company's executives serves on that entity's
compensation committee.
One director who is not independent and is not a current employee or an
immediate family member of such employee may be appointed to the Audit
Committee if the Board, under exceptional and limited circumstances,
determines that membership on the Audit Committee by the individual is
required by the best interest of the Company and its stockholders, and
the Company discloses, in the next annual proxy statement subsequent to
such determination, the nature of the relationship and the reasons for
that determination.
All members of the Audit Committee shall be able to read and understand
fundamental financial statements, including the Company's balance
sheet, income statement, and cash flow statement, or will be able to do
so within a reasonable period of time after appointment to the Audit
Committee. Audit Committee members may enhance their familiarity with
finance and accounting by participating in educational programs
conducted by the Company or an outside consultant. At least one member
of the Audit Committee shall have past employment experience in finance
or accounting, requisite professional certification in accounting, or
any other comparable experience or background which results in the
individual's financial sophistication, including being or having been a
chief executive officer, chief financial officer or other senior
officer with financial oversight responsibilities.
B-2
29
The members of the Audit Committee shall be appointed by the Board at
the annual meeting of the Board, and shall serve on the Audit Committee
for a term coinciding with their Board term. If a Chair of the Audit
Committee is not appointed by the Board, the Audit Committee shall
itself designate a Chair.
III. MEETINGS
The Audit Committee shall meet at least two times annually, or more
frequently as circumstances dictate. The purpose of the two scheduled
meetings of the Audit Committee is to review and approve the annual
financial results of the Company prior to release and to review and
approve the scope of the annual audit to be performed by the Company's
independent auditors. As part of its job to foster open communication,
the Audit Committee should meet at least annually with management and
the independent auditors in separate executive sessions to discuss any
matters that the Audit Committee and each of these groups believe
should be discussed privately. In addition, the Audit Committee or at
least its Chair should meet with the independent auditors and
management quarterly to review the Company's financial statements
consistent with IV. 4 below.
IV. RESPONSIBILITIES AND DUTIES
To fulfill its responsibilities and duties the Audit Committee shall:
Documents/Reports and Review Procedures
1. Review and reassess the adequacy of this Charter annually and
report to the Board any recommended changes to this Charter.
The Audit Committee shall submit the Charter to the full Board
for approval and have the document published at least every
three years in accordance with the Regulations of the
Securities and Exchange Commission ("SEC").
2. Review the Company's annual audited financial statements prior
to filing with, or distribution to, the SEC, any governmental
body, or the public, including any certification, report,
opinion, or review rendered by the independent auditors. The
review should include discussion with management and
independent auditors of significant issues regarding
accounting principles, practices, estimates and judgments.
3. In consultation with management and the independent auditors,
consider the integrity of the Company's financial reporting
processes and controls. Discuss significant financial risk
exposures and the steps management has taken to monitor,
control and report such exposures. The Audit Committee should
also review significant findings prepared by the independent
auditors, with management's responses, the status of
management's responses to previous
B-3
30
recommendations from the independent auditors and the status of any
previous instructions to management from the Audit Committee.
4. Review the Company's quarterly financial results prior to the
release of results and/or the Company's quarterly financial
statements prior to filing with the SEC. In connection with
such review, discuss with financial management and the
independent auditors, any significant changes to the Company's
accounting principles and any items required to be
communicated by the independent auditors in accordance with
AICPA SAS 61 (see item 11). The Chair of the Audit Committee
may represent the entire Audit Committee for purposes of these
reviews and discussions.
5. Review with independent auditors the recommendations included
in their management letter, if any, and their informal
observations regarding the competence and adequacy of
financial and accounting procedures of the Company. On the
basis of this review, make recommendations to the Board for
any changes that seem appropriate.
Independent auditors
6. Subject to any action that may be taken by the full Board,
have the ultimate authority and responsibility to select,
evaluate, and, where appropriate replace the independent
auditors, thus making the independent auditors ultimately
accountable to the Audit Committee and the Board as
representatives of the stockholders.
7. Review the performance of, and approve the fees and other
significant compensation to be paid to, the independent
auditors' firm.
8. On an annual basis, ensure its receipt from the independent
auditors of a formal written statement delineating all
relationships between the independent auditors and the Company
consistent with Independence Standards Board Standard 1, and
actively engage in a dialogue with the independent auditors
with respect to any disclosed relationships or services that
may impact the auditors' objectivity and independence.
9. Take, or recommend that the full Board take, appropriate
action to oversee the independence of the independent
auditors.
10. Review the independent auditors audit plan -- discuss scope,
staffing, locations, reliance upon management, and internal
audit and general audit approach.
11. Prior to releasing the year-end results, discuss the results
of the audit with the independent auditors. Discuss certain
matters required to be communicated to audit committees in
accordance with AICPA SAS 61.
B-4
31
12. Consider the independent auditors' judgments about the quality
and appropriateness of the Company's accounting principles as
applied in its financial reporting.
Legal Compliance
13. On at least an annual basis, review 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, and inquiries received from
regulators or governmental agencies.
Other Matters
14. Annually prepare a report to stockholders as required by the
SEC. The report should be included in the Company's annual
proxy statement.
15. Perform any other activities consistent with this Charter, the
Company's by-laws, and governing law, as the Audit Committee
or the Board deems necessary or appropriate.
16. Review financial and accounting personnel succession planning
with the Company.
17. Annually review policies and procedures as well as audit
results associated with directors' and officers' expense
accounts and perquisites. Annually review a summary of
directors' and officers' related party transactions and
potential conflicts of interest.
18. Annually consult with the independent auditors out of the
presence of management about internal controls and the
fullness and accuracy of the organization's financial
statements.
19. Maintain minutes of meetings and periodically report to the
Board on significant results of the foregoing activities.
B-5
32
I, Stephen L. Mueller, do hereby certify that I am the duly elected Secretary of
the Company and that the above is a true and correct copy of the Charter for the
Audit Committee adopted at a meeting of the Board on June 6, 2000, and that this
Charter is now in full force and effect.
/s/ STEPHEN L. MUELLER
-------------------------------------------
Stephen L. Mueller, Secretary
B-6
33
TEXAS BIOTECHNOLOGY CORPORATION
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
FOR THE ANNUAL STOCKHOLDERS' MEETING TO BE HELD ON MAY 30, 2001
The undersigned stockholder of Texas Biotechnology Corporation (the
"Company") hereby appoints David B. McWilliams, Richard A.F. Dixon and Stephen
L. Mueller, or any of them, attorneys and proxies of the undersigned, each with
full power of substitution, to vote on behalf of the undersigned at the Annual
Meeting of Stockholders of the Company to be held at The Four Seasons Hotel,
1300 Lamar Street, Houston, Texas 77010, on May 30, 2001, at 9:00 a.m. (Houston
time), and at any adjournments of said meeting, all of the shares of common
stock in the name of the undersigned or which the undersigned may be entitled to
vote.
The board of directors recommends a vote FOR the nominees listed on the
reverse side and FOR adoption of the amendment to the 1999 Stock Incentive Plan
and IF NO SPECIFICATION IS MADE, THE SHARES WILL BE VOTED FOR THE ELECTION OF
THE NOMINEES NAMED HEREIN AND FOR ADOPTION OF THE AMENDMENT TO THE 1999 STOCK
INCENTIVE PLAN.
The undersigned hereby acknowledges receipt of the Notice of Annual
Meeting of Stockholders, the Annual Report and the Proxy Statement furnished
herewith.
(Please sign the reverse side of this card and return it promptly.)
TEXAS BIOTECHNOLOGY CORPORATION
P.O. BOX 11061
NEW YORK, N.Y. 10203-0061
34
- DETACH PROXY CARD HERE -
- -------------------------------------------------------------------------------
PLEASE DETACH HERE
[ ] You Must Detach This Portion of the Proxy Card
- Before Returning it in the Enclosed Envelope -
1. Election of Directors FOR all nominees [ ] WITHHOLD AUTHORITY to vote [ ] *EXCEPTIONS [ ]
listed below for all nominees listed below
Nominees: John M. Pietruski, Ron J. Anderson, Frank C. Carlucci,
Robert J. Cruikshank, Richard A.F. Dixon, David B. McWilliams,
Suzanne Oparil, James A. Thomson and James T. Willerson.
(INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE,
MARK THE "EXCEPTIONS" BOX AND WRITE THAT NOMINEE'S NAME IN THE SPACE
PROVIDED BELOW.)
*EXCEPTIONS
-------------------------------------------------------------
2. Proposal to amend the 1999 Stock Incentive Plan. 3. In their discretion, upon such other matters as may
properly come before the meeting; hereby revoking
any proxy or proxies heretofore given by the
undersigned.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
Address Change [ ]
and/or Comments
Signatures should agree with name printed hereon. If
Stock is held in the name of more than one person,
EACH joint owner should sign. Executors,
administrators, trustees, guardians, and attorneys
should indicate the capacity in which they sign.
Attorneys should submit powers of attorney.
Dated , 2001
----------------------------------------
----------------------------------------------------
Signature of Shareholder
----------------------------------------------------
Signature of Shareholder
VOTES MUST BE INDICATED [X]
SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY (x) IN BLACK OR BLUE INK.
USING THE ENCLOSED ENVELOPE.